South African Business 2021 by Global Africa Network Media

2021 EDITION

SOUTH AFRICAN BUSINESS THE GUIDE TO BUSINESS AND INVESTMENT IN SOUTH AFRICA

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BUY LOCAL INVEST LOCAL Let’s come together and heal as a nation. Let’s focus on Renewing, Restoring and Rebuilding successful partnerships and investment opportunities so we can get back to promoting our city as the ideal destination for business and pleasure to the rest of the world. Your support coupled with our world-class infrastructure, innovative business environment and ever evolving investment opportunities, means we can get back to ‘connecting continents’ in no time.

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Tel: +27 31 311 4227 Email: invest@durban.gov.za web: invest.durban

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Extensive first-world road, rail, sea and air

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The city of Durban (eThekwini Municipality) is South Africa’s second most important economic region

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Dube 0 TradePort 11 and King Shaka International1 Airport - 60year Master Plan - driving growth of aerotropolis, or airport city 0 01 00 1

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Rated in top 5 ‘Quality of Living’ cities in Africa and Middle East by Mercer Consulting in 2015 Named one of the New 7 Wonders Cities by the Swiss-based New 7 Wonders Foundation in 2014 1 01 00 1

Coega fast-tracking economic recovery

Cecilia Makiwane Hospital is a large, provincial, government-funded hospital situated in the Mdantsane township of East London, Eastern Cape.

Coega’s expertise in Infrastructure Project Management will help South Africa fast-track economic recovery amid the Covid-19 pandemic.

he Coega Development Corporation (CDC), developer and operator of the number-one Special Economic Zone (SEZ) on the African continent, namely the Coega SEZ, provides expertise in the fast and efficient delivery of minor and mega complex infrastructure development projects in South Africa and the rest of the African continent. The CDC has a 20-year proven record in infrastructure development and facilities maintenance.

“We can assist all government departments to fast-track the implementation of their infrastructure projects, amid the coronavirus pandemic challenges, to stimulate the local economy, lift local SMMEs, and create job opportunities. “We are the infrastructure implementing agency of choice in the country because of our cuttingedge customised solutions, international best practices and methodology. Coega has ISO-certified systems and processes that guarantee the effective delivery of the projects within scope, time and budget. We can even save our clients money through our project accounting solutions. Our record of unqualified audit opinion by the Auditor General of South Africa on our projects speak for itself,” said Dr Ayanda Vilakazi, CDC’s Head of Marketing, Brand and Communications.

Lusikisiki Village Clinic opened by the President of South Africa, HE Cyril Ramaphosa, in 2019.

The CDC’s Infrastruc ture Projec t Management Services include: • Project methodology and system. • Development of reporting and monitoring services. • Stakeholder analysis and engagement programmes. • Integrated planning and budgeting. • Development of business plans. • Procurement of service providers and required equipment. • On-the-job training and contractor development. • Human capital solutions. • Post-implementation monitoring and facilities maintenance.

Kingsburgh Primary School, Nolitha Clinic opened by Nolitha Clinic opened by the the Honourable Honourable Premier Premier Nolitha Clinic op Lovu KwaZulu-Natal. of the Eastern Cape, of theTown, Eastern Cape, Lubabalo Lubabalo Oscar Oscar Mabuyane, Mabuyane, of the Eastern C on on 22 22 November November 2019 2019.. Eastern Cape Departments of Health. Furthermore, on 22 Novembe the CDC has worked with other clients outside of Furthermore, the CDC has Furthermore, theNolitha CDC has worked worked these departments to fast-track the implementation Clinic opened by the Hon Furthermor with other clients outside of these with other clients outside of these of their projects. These include, among others, the of the Eastern Cape, Lubabalo with otherO Mpumalanga Economic Growth Agency (MEGA), departments to departments to fast-track on 22fast-track November 2019the .the department Northern Cape Developmentof Agency (NCEDA) and implementation their projects; implementation of their projects; implementa Richards Bay SEZ. these include, amongst these include, Furthermore, amongst others, others, the CDC these incl On the African continent, the CDC is taking Mpumalanga Economic Growth Mpumalanga Economic Growth withtrade, other clients outs full advantage of inter-Africa which has Mpumalang Agency (MEGA), Northern Cape Agency (MEGA), Northern Cape to fas The CDC’s infrastructure project expertise and stra- been made possible by thedepartments signing of the African Agency (M Development Agency (NCEDA), and Development Agency (NCEDA), and tegic solutions are utilised by various government Continental Free Trade Area (AfCFTA) agreement implementation of th Developmen Bay SEZ. On African Richards Bay SEZ. On the the African departments and the private sector, locally and in by Richards African countries to promote greater economic these include, amon Richards B INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE DEVELOPMENT the rest of the African continent. integration across the continent. To this end, the Econom continent, the CDC is taking full continent, the CDC is taking full INFRASTRUCTURE DEVELOPMENT Mpumalanga continent, PROJECTS: Cecilia Makiwane Hospital PROJECTS: (left) Cecilia Makiwane Hospital Our clients(left) include, among others, the Eastern CDC’s International Business under Coega Africa advantage of the Inter-Africa trade, advantage of theAgency Inter-Africa trade, Nor PROJECTS: (left) Cecilia Makiwane Hospital (MEGA), advantage --Cape aa large, government-funded large, provincial, government-funded andprovincial, KwaZulu-Natal Departments of Basic Programme is managing the implementation of by which has made which has been beenDevelopment made possible possible by - a large, provincial, government-funded Agency hospital situated in Mdantsane township which has ( hospital situated in the the Mdantsane township infrastructure projects in Zimbabwe, Central African Education, Eastern Cape and National Departments the of the Africa Free Trade hospital situated insigning the Mdantsane township the signing of the Africa Free Trade Richards Bay SEZ. On of Eastern Cape Africa; Public Works and Infrastructure, and National and Republic and Cameroon, among other countries. of East East London, London, Eastern Cape in in South South Africa; the■ signing INFRASTRUCTURE DEVELOPMENT of East London, Eastern Capeby in South Africa;countries Agreement African to Agreement by African countries to continent, the CDC (right) (right) and and the the Kingsburgh Kingsburgh Primary Primary School School -Agreementis PROJECTS: (left) Cecilia Hospital (right) andMakiwane thepromote Kingsburgh Primaryeconomic School - integration greater promote greater economic integration advantage of the Inter Lovu Town in KwaZulu-Natal. Lovu Town - in KwaZulu-Natal. La Mercy Maths, Science and Technology (MST) Academy in KwaZulu-Natal. promote gre - a large, provincial, Lovugovernment-funded Town - inacross KwaZulu-Natal. the To this across the continent. continent. Tohas this end, end, the the which been made Coega is an Infrastructure Implementing Agency. across the c hospital situated in the Mdantsane township CDC’s International CDC’s International Business under the Business signing CDC’s ofunder the Inter Afric of East London, Eastern CapeCoega in SouthAfrica Africa;Programme is managing Coega Africa Programme is managing Agreement by African Coega Afric (right) and the Kingsburgh Primary School the of the implementation implementation of infrastructure infrastructure promote greater econom the implem Lovu Town - in KwaZulu-Natal.

ef w ca th S au of sp projects Central African projects in in Zimbabwe, Zimbabwe, Central African V across the continent. ToZ projects in Republic, amongst Republic, and and Cameroon, Cameroon, amongst CDC’s International Bu Republic, Ba other other countries. countries. Coega Africa Programm

Lusikisiki other count Lusikisiki Village Village Clinic Clinic opened opened by by the the President President Lusikisiki Village Clinic opened by the President the implementation of i of of South South Africa, Africa, H.E. H.E. Cyril Cyril Ramaphosa, Ramaphosa, on on 17 17 of South Africa, H.E. Cyril Ramaphosa, on 17 September projects in Zimbabwe, C September 2019. 2019. September 2019.

Th Republic, and Camero For For more more information information on on the the CDC’s CDC’s Project Project Management Management Services, Services, For more information on the other CDC’scountries. Project Managem M Lusikisiki Village Clinic opened byProject the President please our expert in Management, please contact our expert in Infrastructure Infrastructure Project Management, For morecontact information on the CDC’s Project Management of South Africa, please H.E. Cyrilcontact Ramaphosa, onexpert 17 our in Infrastructure Project INFRASTRUCTURE DEVELOPMENT Mr. Chuma Mbande on: Mr. Chuma Mbande on: •M Services, please contact our expert in Infrastructure September 2019. Mr. Chuma Mbande on: Project Management, Mr Chuma Mbande. PROJECTS: La Mercy

Maths, Science

For more information on the CDC’s Project Management Services andchuma.mbande@coega.co.za Technology Academy in Project Management contact our(MST) expert in Infrastructure Email:please • Tel: +27 43 711 1600 Mr. Chuma Mbande on: is an Infrastructure KwaZulu-Natal. Coega

Fax: +27 43 721 0210 E-mail: chuma.mbande@coega.co.za E-mail: chuma.mbande@coega.co.za Telephone: Telephone:+27 +2743 43711 7111600 1600 Fax: +27 43 0210 Fax: +27 43 721 0210 PRETORIA721 OFFICE

chuma.mbande@coega.co.za Implementing Agency.E-mail: Telephone: +27 43 711 1600 Fax: +27 43 721 0210

BBBEE BBBEE LEVEL LEVEL 22 CONTRIBUTOR CONTRIBUTOR ISO ISO9001:2015 9001:2015 ISO ISO14001:2015 14001:2015 ISO ISO45001:2018 45001:2018 ISO ISO20000-1:2011 20000-1:2011 ISO ISO27001:2013 27001:2013

PRETORIA PRETORIA OFFICE: Address:OFFICE: 145 Herbert Road, East Wood, PRETORIA OFFICE: 145 Arcadia, www.coega.co.za 145Herbert HerbertRoad, Road,East EastWood, www.coega.co.za Arcadia, Pretoria 0083Wood, Arcadia, 145 Herbert Road, East Wood, Arcadia, Pretoria, 0083 Pretoria, 0083 Pretoria, 0083 Tel: +27 12 451 8300 Telephone: +27 12 Telephone: +27 12451 4518300 8300 Telephone: +27 12 451 8300 E-mail: chuma.mbande@coega.co.za Telephone: +27 43 711 1600 Fax: +27 43 721 0210

The Coega Development Corporation

• • •

BBB ISO 9001:201

CONTENTS

CONTENTS South African Business 2021 Edition

Introduction Foreword

A unique guide to business and investment in South Africa.

Special features An economic overview of South Africa

Provinces of South Africa

Building infrastructure is a presidential priority

The Maritime Economy offers blue water opportunities

Building a more sustainable future while reducing debt will require great skill from the countryâ&#x20AC;&#x2122;s leaders. A snapshot of South Africaâ&#x20AC;&#x2122;s nine provinces.

Projects worth R340-billion have been gazetted for implementation.

Contribution to GDP could rise to R177-billion by 2033.

Economic sectors Agriculture 40 Berry production is up as exports rise.

Mining 44 Exploration is the next frontier.

Energy 56 Solar and wind projects are regularly coming onstream.

ICT 61 Data centres are booming.

Oil, gas and petrochemicals

Exploration for gas off the south-eastern coast is hotting up. SOUTH AFRICAN BUSINESS 2021

SABS - 75 Years of dedication to Quality Compliance The South African Bureau of Standards supports the industrialisation effort of the dtic. SABS has an established network of national, regional and international partners that develop technical solutions adopted as South African National Standards (SANS), this in return enables business and government to: Improve the quality of products and services Enhance competitiveness and access to markets Ensure that procurement of products and services meet quality standards Improve the delivery of services underpinned by best practice and support policy and regulatory objectives

SABS_SA-Bus.Journal_09/2020

SABS provides services to assist the implementation of best practice solutions • • • • • •

More than 7000 South African National Standards Laboratory Testing Services for a diverse range of Products Certification of Companies to Management System Standards Certification of Products and the Application of the SABS Mark Scheme Training of Management and Employees on Implementations of SANS Local Content Verification for South African manufacturing industry

SABS a Trusted Partner in Delivering Quality Assurance. Contact SABS to establish support for your Standardisation, Testing, Training and Certification Aspirations.

CONTENTS

Water 66 Infrastructure spending will have to be consistently high.

Engineering 70 Many engineering groups are selling off assets.

Construction and property

Logistics property is strongly placed for growth.

Manufacturing 74 TFG plans to double manufacturing capacity..

Food and beverages

Starch mills are changing hands.

Automotive 78 The automotive sector makes up a third of South Africaâ&#x20AC;&#x2122;s manufacturing capacity.

Transport and logistics

Tourism and events

Banking and financial services

Development finance and SMME support

Decongestion of ports is a priority. The MICE sector faces special challenges. Investors are getting behind fintech.

A new fund aims to make R5-billion available at a fair price.

References Key sector contents

Index

Overviews of the main economic sectors of South Africa.

ABOUT THE COVER: Sasol One at Sasolburg was established in 1950 and converted from coal gasification in 2004. It now uses more efficient natural gas in its production processes of products such as ammonia, ammonium nitrate, catalyst, ethylene, mining chemicals, phenolics, solvents and wax. With more than 25 000 employees, Sasol is a global integrated chemicals and energy company active in 33 countries.

SOUTH AFRICAN BUSINESS 2021

FOCUS

e reliability of forehead infrared The reliability of forehead infrared ermometers in South thermometers in Africa South Africa

ublic can check with the Metrology Institute of South Africa. of South Africa. The public can National check with the National Metrology Institute

National Metrology Institute of South Institute of South he screening of people using non-contact The National Metrology he screening of people using The non-contact Africaone (NMISA), a platform where a a platform where a hermometers hasthermometers become one of Africa (NMISA), has established hasthe become of thehas established Team of Experts, representing the relevant public the relevant public many striking images to come out of the many striking images to come out of the Team of Experts, representing entities as well as private Covid-19 crisis in South Africa.crisis in South Africa. entitiescalibration as well as laboratories, private calibration laboratories, Covid-19 review and provide reliableand responses ed (forehead)Infrared thermometers are thermometers widely are able are able to review provide reliable responses (forehead) aretowidely to topical screening related questions. screen people fever, one for of the temperature screening related questions. usedfor to high screen people high fever, one temperature of the to topical A video on temperature screening is available ms of the coronavirus, tothe identify people to identify A video on temperature screening is available symptoms of coronavirus, people and the the Team be of contacted at: be contacted at: y be infected risk reducing and thecan Team Experts can thatthereby may bereducing infected the thereby riskof Experts ding the virus in workplaces, schools and www.nmisa.org/Pages/Temperature.aspx. of spreading the virus in workplaces, schools and www.nmisa.org/Pages/Temperature.aspx. eas. Since an elevated does temperature does public areas.temperature Since an elevated Aboutinfection, NMISA clusively indicate a Covid-19 infection, About NMISA not conclusively indicate a Covid-19 by to the Measurement medical evaluation is necessary to isMandated Mandated by the Measurement further medical evaluation necessary e if a person is infected. determine if a person is infected. U n i t s a n d M e aUsnui rt es maenndt M e a s u r e m e n t Standards Act, 2006, NMISAAct, 2006, NMISA Standards provides for the accuracy providesand for the accuracy and international recognition of recognition of international local measurement localresults. measurement results. This enables trade,This component enables trade, component manufacturing, legalmanufacturing, acceptance legal acceptance of measurement ofresults for measurement results for law enforcement, lawaccurate enforcement, accurate measurement in environment measurement in environment and safety, and isand crucial for and is crucial for safety, healthcare. healthcare. NMISA is part of the Department Trade, NMISA is part ofofthe Department of Trade, Industry and Competition’s family of the Industry(the and dtic) Competition’s (the dtic) family of the Technical Infrastructure (TI) Institutes, which(TI) also Technical Infrastructure Institutes, which also includes the Southincludes African Bureau of Standards the South African Bureau of Standards National Regulator for Compulsory ever, many questions have been raised byhave(SABS), National Regulator for Compulsory However, many questions been raised by (SABS), Specification and the South es about thebusinesses reliability of the measurement Specification (NRCS)African and the South African about the reliability of the measurement(NRCS) National Accreditation System (SANAS) that obtained results from such thermometers. National Accreditation System (SANAS) that obtained from such thermometers. togetherofprovide confidence in local and in local goods and actors influence accuracy of these provide forgoods confidence Severalthe factors influence the accuracy these fortogether products and allows for successful prosecution in ement results, including the type of products and allows for successful prosecution in measurement results, including the type of cases of non-compliance. nt used, theinstrument accuracy of the the thermometer cases of■non-compliance. ■ used, accuracy of the thermometer d through (obtained calibration), the measurement through calibration), the measurement e followed,procedure ambient conditions, etc. followed, ambient conditions, etc.

t details

Contact details

7 12 841 4152Tel: + 27 12 841 4152 nfo@nmisa.org Email: info@nmisa.org e: www.nmisa.org Website: www.nmisa.org

FRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 202156

FOREWORD

South African Business A unique guide to business and investment in South Africa.

Credits Publishing director: Chris Whales Editor: John Young Managing director: Clive During Online editor: Christoff Scholtz Designer: Simon Lewis Production: Lizel Olivier Ad sales: Gavin van der Merwe Sam Oliver Jeremy Petersen Gabriel Venter Vanessa Wallace Shiko Diala Administration & accounts: Charlene Steynberg Kathy Wootton Printing: FA Print

elcome to the ninth edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa, supported by an e-book edition at www.southafricanbusiness.co.za.

This issue has a focus on economic recovery plans which have been put in place to tackle the challenges thrown up by the global Covid-19 pandemic. National government’s focus on infrastructure and the use of Special Economic Zones is highlighted, together with a feature on the nascent maritime economy. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provincial economies. South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces. The e-book editions can be viewed online at www.globalafricanetwork. com. These unique titles are supported by a monthly business e-newsletter with a circulation of over 23 000. In 2020, the inaugural African Business joined the Global African Network stable of publications. ■ Chris Whales Publisher, Global Africa Network Media | Email: chris@gan.co.za PUBLISHED BY

DISTRIBUTION

South African Business is distributed internationally on outgoing and incoming trade missions, through trade and investment agencies; to foreign offices in South Africa’s main trading partners around the world; at top national and international events; through the offices of foreign representatives in South Africa; as well as nationally and regionally via chambers of commerce, tourism offices, airport lounges, provincial government departments, municipalities and companies.

Global Africa Network Media (Pty) Ltd Company Registration No: 2004/004982/07 Directors: Clive During, Chris Whales Physical address: 28 Main Road, Rondebosch 7700 Postal address: PO Box 292, Newlands 7701 Tel: +27 21 657 6200 | Fax: +27 21 674 6943 Email: info@gan.co.za | Website: www.gan.co.za

Member of the Audit Bureau of Circulations

ISSN 2221-4194

COPYRIGHT | South African Business is an independent publication published by Global Africa Network Media (Pty) Ltd. Full copyright to the publication vests with Global Africa Network Media (Pty) Ltd. No part of the publication may be reproduced in any form without the written permission of Global Africa Network Media (Pty) Ltd.

Town, SA Furniture Forum, SA Heavy Haul Association, SANRAL, SASOL, THEGIFT777/iStock, TNPA, Tongaat Hulett, Utopia_88/iStock. . DISCLAIMER | While the publisher, Global Africa Network Media (Pty) Ltd, has used all reasonable efforts to ensure that the information contained in South African Business is accurate and up-to-date, the publishers make no PHOTO CREDITS | Africamps at Ingwe, Amatola Water, AngloAmerican, representations as to the accuracy, quality, timeliness, or completeness of Betterect,Buckler’s Africa Lodge, Council for Geoscience, Data Centre the information. Global Africa Network will not accept responsibility for any Map, De Beers Group, ELIDZ, Equites, 5M2T, Fortress Fund, Implats, loss or damage suffered as a result of the use of or any reliance placed on Khobab Wind Farm, Nissan, Perdekraal East Wind Farm, Port of Cape such information.

SOUTH AFRICAN BUSINESS 2021

INTERVIEW

Early engagement with the private sector is vital Jason Lightfoot, Portfolio Manager at Futuregrowth, assesses the latest moves to attract the private sector to invest in infrastructure. What is constraining infrastructure investment in South Africa? The concern is that a lot of noise has been made previously around government’s infrastructure plans which have in few instances resulted in real opportunities for investors to play a role. Many of these issues have been around policy certainty and also ensuring that such projects actually reach a level of bankability for such investors to make an investment that will offer a proper risk-adjusted return. Perhaps this time is different with the recent engagement with the private sector. Do you mean the Sustainable Infrastructure Development Symposium of South Africa (SIDSSA)? This is a step in the right direction. It crowds in potential private sector investors in a much more coordinated manner and includes them in assessing how these various initiatives can be funded.

Jason Lightfoot Why is gross fixed capital formation an important benchmark? This measure captures how much money as a proportion of total economic activity is being invested in capital goods, such as equipment, tools, transportation assets and electricity and various measurable outputs of these. The extent of infrastructure spending in an economy is reflected in the level of gross fixed capital formation (GFCF) as a percentage of Gross Domestic Product (GDP) which is an important precursor of economic growth.

BIOGRAPHY Jason is the Portfolio Manager of the ﬂagship Futuregrowth Infrastructure & Development Bond Fund, as well as the Yield Enhanced ALBI benchmarked range of portfolios. In addition, he plays a mentoring role within the Credit team and is involved in various aspects of risk assessment within the investment process.

What can be learnt from the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP)? Before capital market players invest, they need to have confidence that the policy environment is stable and that such potential investments will offer sufficiently attractive risk-related returns. To a great extent, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) met these criteria, enabling the private sector to play an important role. REIPPPP is an important success story. Of the major infrastructure projects being discussed at the moment, which are the most significant? Energy generation remains of utmost importance in an environment where a massive strain on the system remains and the launch of Emergency Procurement round of up to 2000MW will address that. ■

9 41

SOUTH AFRICAN BUSINESS 2021

AN ECONOMIC OVERVIEW OF

SOUTH AFRICA Building a more sustainable future while reducing debt will require great skill from the country’s leaders. By John Young

need to plot a better way forward. The National Economic Development and Labour Council (Nedlac) came up with an agreement which focussed on infrastructure investment, creating a supportive policy environment and the promotion of “strategic localisation” and exports. An umbrella business body, Business for SA (B4SA), identified 12 initiatives which, if accompanied by policy reforms, would boost the economy significantly. The African National Congress (ANC) produced its own economic recovery document. Having consulted with all these bodies, President Cyril Ramaphosa on 15 October revealed government’s recovery plan. The Economic Reconstruction and Recovery Plan (EcoRRP) names infrastructure investment and building up the country’s manufacturing base as priorities. The plan intends to unlock R1-trillion in private investment. Furthermore, a commitment is made to improving the capability of the state

uild back better has become the new catchphrase. There is a lot of building to do for the South African economy after two recessions, a decade of looting of state resources and a health crisis that all but shut down the economy for several months. The Chief Executive O fficer of the Johannesburg Stock Exchange, Leila Fourie, wrote in June 2020 that she wants to “contribute towards a better, fairer, more sustainable world” (Business Day). As co-chair of the Global Investors for Sustainable Development (GISD) Alliance, a grouping of banks, bourses and asset managers, Fourie has been working to promote investment in Covid-19 bonds, the Sustainable Development 500 fund and renewable energy. This kind of thinking informs many of the plans that were put forward by business, labour and political parties as the Covid-19 lockdown served to focus the minds of all South Africans about the

SOUTH AFRICAN BUSINESS 2021

SPECIAL FEATURE and to remove barriers to doing business or investing in the country. Soon afterwards, Finance Minister Tito Mboweni announced the medium-term budget policy statement where the most significant promise related to reducing the state’s wage bill. Mboweni is a former Reserve Bank Governor and Labour Minister. The President is a former miner and trade unionist. Both men have been engaged for years in drafting the economic policy of the ANC but it remains to be seen if they can persuade the unions representing workers in the public sector to accept a three-year freeze on wage increases. This will be a major test because South Africa’s debt to GDP ratio is high. The cost of servicing debt is equal to nearly 14% of revenue. A step that President Ramaphosa took in July did not receive many headlines, but his amendment of the regulations governing the enquiry into state capture made a big difference to the work of the National Prosecuting Authority (NPA). Enabled by the amendment to work with the evidence presented to the commission, prosecutors quickly finalised cases and arrests started happening. After a decade in which it seemed that immunity was guaranteed for corrupt officials and employees of state-owned enterprises, the tide started to turn. Prosecutions obviously do not provide certainty against future corruption, but at least the prospect of arrest might be a deterrent. One of the biggest obstacles to economic recovery is South Africa’s level of debt, and that is caused largely by the state electricity utility, Eskom, where corruption was rife for years. The government’s directory lists 131 stateowned entities but there are said to be about 700 altogether, at various levels of government. The three biggest, all of which fall under the Department of Public Enterprises, are Eskom, South African Airways (SAA) and Transnet, with five large divisions covering ports, railways and logistics. Eskom and SAA are significant drains on the country’s finances and getting control of all of the country’s SOEs is another major priority. Agriculture was one industry that saw some positives during the Covid-19 lockdown. Although sectors like wine suffered badly, a

reported increase in maize exports, as well as greater international demand for citrus fruits and pecan nuts, helped the industry expand by 15% (StatsSA). Grain crops such as maize, wheat, barley and soya beans are among the county’s most important crops. Only rice is imported. Wine, corn and sugar are other major exports. Basing economic growth on a devaluing currency is not always the best long-term method of boosting economic growth, but high-value agricultural exports and increased numbers of highspending international tourists hold some promise for helping to get the South African economy back on a growth path. Horticulture in particular is seen as holding great potential not only for increased earnings, but for creating jobs.

New economic sectors Another new area that holds great potential for the South African economy is the Oceans Economy. South Africa has 3 000km of coastline and the extent of the country’s territorial waters is greater than its land size. And yet the country does not have a merchant marine fleet and only scrapes the surface in terms of the percentage of repair and maintenance of boats and oilrigs which could potentially bring work to its ports. The introduction of renewable energy into the South African energy market via the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was successful but the programme stalled. Hopes were raised with the publication of a new Integrated Resource Plan (IRP) because investors crave certainty. The IRP is a road map for South Africa’s electricity generation and the previous administration seemed determined to push for an expensive nuclear programme. The latest plan confirms that the already hugely successful drive for renewable energy will be continued and expanded. South Africa’s traditional strength in minerals still holds good. Although gold mining is declining in volumes (even while prices rise), the major investment of Vedanta Zinc International in a project in the Northern Cape and Sibanye-

SOUTH AFRICAN BUSINESS 2021

SPECIAL FEATURE

New roads such as this link to the North West from Gauteng are important parts of infrastructural development. Credit: SANRAL Stillwater’s acquisition drive in the platinum group metals (PGM) sector are significant economic drivers. Coal and iron ore continue to be exported in large volumes through the Richards Bay Coal Terminal on the east coast and the Port of Saldanha on the west coast. Automotive manufacturing and automotive components continue to thrive, with large investments by most of the major marques and increased exports a feature of the sector. There has been inward investment in recent years, most notably by the Beijing Automotive International Corporation (BAIC) in the Coega Special Economic Zone outside Port Elizabeth. The Tshwane Automotive Special Economic Zone (TASEZ) has been launched at Silverton in Pretoria. A new SEZ has been formally declared in the northern part of Limpopo, the Musina-Makhado SEZ. The Namakwa SEZ in the Northern Cape is awaiting its licence, as is the Tubatse SEZ in eastern Limpopo.

border with Namibia on the Atlantic to the border with Mozambique in the east. The cold Benguela current sweeps along the western coast while the warm Indian Ocean ensures that the Mozambique/ Agulhas current is temperate. South Africa’s coastal plain is separated from the interior by several mountain ranges, most notably the Drakensberg which runs down the country’s eastern flank. Smaller ranges in the south and west mark the distinction between the fertile coastal strip and the dry interior known as the Karoo. The city of Johannesburg is located on the continental divide, whereby water runs south of the city towards the Atlantic Ocean while waters to the north drain towards the north and east. Johannesburg is 1 753m above sea-level. Most of the country has summer rainfall but the Western Cape, which has a Mediterranean climate, receives its rain in winter. Droughts are not uncommon and although the national average is 464mm, most of the country receives less than 500mm of rain every year. The Western Cape experienced a severe drought which was broken in 2018. The Orange and Vaal rivers play important roles in water schemes and irrigation and the Limpopo River defines the country’s northern boundary. ■

Geography South Africa’s location between the Atlantic and Indian oceans ensures a generally temperate climate. The 2 954km coastline stretches from the SOUTH AFRICAN BUSINESS 2021

10 REASONS WHY YOU SHOULD INVEST IN SOUTH AFRICA

01.

HOT EMERGING MARKET Growing middle class, affluent consumer base, excellent returns on investment.

02.

MOST DIVERSIFIED ECONOMY IN AFRICA

South Africa (SA) has the most industrialised economy in Africa. It is the region’s principal manufacturing hub and a leading services destination.

LARGEST PRESENCE OF MULTINATIONALS ON THE AFRICAN CONTINENT SA is the location of choice of multinationals in Africa. Global corporates reap the benefits of doing business in SA, which has a supportive and growing ecosystem as a hub for innovation, technology and fintech.

04. 03.

FAVOURABLE ACCESS TO GLOBAL MARKETS

05.

The African Continental Free Trade Area will boost intra-African trade and create a market of over one billion people and a combined gross domestic product (GDP) of USD2.2-trillion that will unlock industrial development. SA has several trade agreements in place as an export platform into global markets.

SA has a progressive Constitution and an independent judiciary. The country has a mature and accessible legal system, providing certainty and respect for the rule of law. It is ranked number one in Africa for the protection of investments and minority investors.

06.

ABUNDANT NATURAL RESOURCES

SA is endowed with an abundance of natural resources. It is the leading producer of platinum-group metals (PGMs) globally. Numerous listed mining companies operate in SA, which also has world-renowned underground mining expertise.

08.

ADVANCED FINANCIAL SERVICES & BANKING SECTOR SA has a sophisticated banking sector with a major footprint in Africa. It is the continent’s financial hub, with the JSE being Africa’s largest stock exchange by market capitalisation.

PROGRESSIVE CONSTITUTION & INDEPENDENT JUDICIARY

07.

WORLD-CLASS INFRASTRUCTURE AND LOGISTICS

A massive governmental investment programme in infrastructure development has been under way for several years. SA has the largest air, ports and logistics networks in Africa, and is ranked number one in Africa in the World Bank’s Logistics Performance Index.

YOUNG, EAGER LABOUR FORCE SA has a number of world-class universities and colleges producing a skilled, talented and capable workforce. It boasts a diversified skills set, emerging talent, a large pool of prospective workers and government support for training and skills development.

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09. 10.

EXCELLENT QUALITY OF LIFE

SA offers a favourable cost of living, with a diversified cultural, cuisine and sports offering all year round and a world-renowned hospitality sector.

SOUTH AFRICAN BUSINESS 2020

Why Invest in Space OUR IMPACT is derived from our national capacity, experience and expertise in space science and technology through six thematic focus areas: • Earth Observation - SANSA collects, assimilates and disseminates Earth observation data to support South Africa’s policy making, economic growth and sustainable development initiatives. Earth observation data is used for human settlement growth mapping, infrastructure monitoring, as well as disaster and water resource management. Earth observation satellite data contributes to monitoring environmental variables in the water cycle such as water quantity, quality, soil erosion and vegetative health which ensures water safety and security for the country. • Space Operations - SANSA provides global competitive space operations and applications, tracking, telemetry and command services while managing ground stations for international clients. Space Operations provides world class launch support for space missions (from Earth into our solar system) and ensures satellites are continuously monitored when they are travelling over African skies. • Space Science - SANSA conducts cutting edge space science research, development and magnetic technology innovation. Space science research is vital for gaining a deeper understanding of our space environment in order to protect essential infrastructure such as power grids and communication and

navigation systems on Earth and in space. SANSA operates the Space Weather Regional Warning Centre for Africa, providing forecasts and warnings on space weather conditions. Extreme space weather may impact technological systems such as satellites, power grids, avionics and radio communication. • Space Engineering – SANSA aims to provide access to state-ofthe-art satellite assembly, integration and testing services, as well as satellite systems coordination and development, to ensure an environment conducive to industrial participation in satellite programmes. • Human Capital Development - SANSA aims to advance human capital development to grow the knowledge economy and create awareness about opportunities in engineering, science and technology. This is achieved through scarce skills development, summer and winter schools, the supervision of MSc and PhD students, and teaching at partner universities. • Science Advancement and Public Engagement - SANSA promotes science advancement and public engagement through participation in national science awareness events and through using the fascination of space to drive a greater uptake of studies in science, maths, engineering and technology.

SANSA monitors the Earthâ&#x20AC;&#x2122;s magnetic field and space weather storms to assist in protecting technology on Earth and in space.

SANSA provides stateof-the-art ground station facilities and services including satellite tracking, launch support, mission control and space navigation.

Satellite imagery helps manage food and water security as well as natural disasters on Earth like floods, droughts and fires.

In a country faced with numerous challenges in housing, crime, poverty and the provision of basic necessities, you may ask why invest in space? The answer is clear.

Space investment is essential for economic sustainability and development! Without space applications we would not be able to mitigate disasters or effectively manage our resources such as water, food, land and housing. Mobile phones, internet, GPS, ATMs, meteorological forecasting and safe land and sea travel all rely on satellites positioned

in space. Government, industry and academia also rely on space data to deliver on their priorities through the creation of applied knowledge, products and services. SANSA provides value-added products and services that are utilised in both space and non-space applications. Space information enables everyday decision making at all levels of society. SANSA has contributed towards goals within the National Development Plan (NDP) and the goals of the Department of Science and Technology (DST) by delivering products and services to its stakeholders and the public. South Africaâ&#x20AC;&#x2122;s next earth observation satellite is an example of one of these deliverables and is also one of the incredible opportunities to showcase the importance of investment in space science, engineering and technology and for South Africa to take its place in the global space arena.

@SANSA7

South African National Space Agency

South African National Space Agency Enterprise Building, Mark Shuttleworth Street, Innovtion Hub, Pretoria, 0087 T: 012 844 0500 | F: 012 844 0396 | information@sansa.org.za | www.sansa.org.za

SPECIAL FEATURE

Provinces of South Africa A snapshot of South Africa’s nine provinces.

Eastern Cape

Free State

Gauteng

Capital: Bhisho Main towns: Port Elizabeth, East London, Uitenhage, GraaffReinet, Mthatha, Grahamstown (Makhanda) Population: 6 916 200 (2015) Area: 168 966km² (13.8% of South Africa)

Capital: Bloemfontein Main towns: Welkom, Sasolburg, Parys, Kroonstad

Capital: Johannesburg Main towns: Tshwane (including Pretoria), Ekurhuleni, Vanderbijlpark, Roodepoort

Population: 2 817 900 (2015) Area: 129 825km² (10.6% of South Africa)

Population: 13 200 300 (2015) Area: 18 178km² (1.5% of South Africa)

Premier: Lubabalo Oscar Mabuyane (ANC)

Premier: Sefora Hixsonia Ntombela (ANC)

Premier: David Makhura (ANC)

Key sectors: Automotive, agriculture, agri-processing, forestry, finance, retail, tourism, renewable energy. Infrastructure: Coega Industrial Development Zone, East London Industrial Development Zone, ports of East London, Port Elizabeth and Ngqura, airports at Port Elizabeth and East London.

Key sectors: Financial and banking, manufacturing, trade, creative industries, media.

Notable tourism assets: Addo Elephant National Park, Mountain Zebra National Park, Wild Coast, Jeffreys Bay, National Arts Festival.

Key sectors: Agriculture, agri-processing, chemical manufacturing, mining, transport and logistics. Infrastructure: Maluti-A-Phofung Special Economic Zone, Bram Fischer International Airport, University of the Free State, Central University of Technology, N8 Corridor. Notable tourism assets: Vaal River, Gariep Dam, Golden Gate Highlands National Park, Cherry Festival, Mangaung African Cultural Festival (Macufe).

Provincial government website: www.ecprov.gov.za Eastern Cape Development Corporation: www.ecdc.co.za

Provincial government website: www.freestateonline.fs.gov.za Free State Development Corporation: www.fdc.co.za

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Infrastructure: OR Tambo International Airport, Gautrain, major universities and research institutions, large convention centres, FNB Stadium (Soccer City). Notable tourism assets: Cradle of Humankind, Apartheid Museum, Constitution Hill, Magaliesberg, Soweto tours, Dinokeng. Provincial government website: www.gauteng.gov.za Gauteng Growth and Development Agency: www.ggda.co.za

FEATURE SPECIALSPECIAL FEATURE

KwaZulu-Natal

Limpopo

Mpumalanga

Capital: Pietermaritzburg Main towns: Durban, Newcastle, Ballito, Port Shepstone, Empangeni, Ulundi Population: 10 919 100 (2015) Area: 125 755km² (7.7% of South Africa)

Capital: Polokwane Main towns: Musina, Ba-Phalabora, Bela-Bela, Steelpoort, Tzaneen, Thohoyandou Population: 5 726 800 (2015) Area: 125 755km² (10.2% of South Africa)

Capital: Mbombela Main towns: Emalahleni, Middelburg, Sabie, Lydenburg

Premier: Sihle Zikalala (ANC)

Premier: Chupu Stanley Mathabatha (ANC)

Premier: Refilwe Mtshweni-Tsipane (ANC)

Key sectors: Chemicals, dissolving pulp manufacture, sugar, forestry, automotive, textiles and footwear, mining, oil and gas, logistics. Infrastructure: King Shaka International Airport, Dube TradePort, Richards Bay Industrial Development Zone, ports of Richards Bay and Durban, Albert Luthuli International Convention Centre Complex. Notable tourism assets: HluhluweiMfolozi Park, the Drakensberg mountains, iSimangilso Wetlands Park, Durban beaches, South Coast, Zulu cultural heritage, historical battlefields.

Key sectors: Mining, agriculture, tourism, logistics.

Key sectors: Agriculture, forestry, mining, steel manufacturing, petrochemicals, pulp and paper, power generation, tourism. Infrastructure: Nkomazi Special Economic Zone, Mbombela International Fresh Produce Market, Maputo Development Corridor, Kruger Mpumalanga International Airport. Notable tourism assets: Kruger National Park, Blyde River Canyon, Barberton Makhonjwa Mountains (a UNESCO World Heritage Site).

Provincial government website: www.kznonline.gov.za Trade and Investment KwaZuluNatal: www.tikzn.co.za

Infrastructure: Musina-Makhado Special Economic Zone, N1 highway and rail network, new Medupi power station.

Notable tourism assets: Kruger National Park, Mapungubwe Heritage Site, Makapans Valley, Marula Festival, Waterberg Biosphere. Provincial government website: www.limpopo.gov.za Limpopo Economic Development Agency: www.lieda.gov.za

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Population: 4 283 900 (2015) Area: 76 495km² (6.3% of South Africa)

Provincial government website: www.mpumalanga.gov.za Mpumalanga Economic Growth Agency: www.mega.gov.za

SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2020

SPECIAL FEATURE

Northern Cape

North West

Western Cape

Capital: Kimberley Main towns: Douglas, Upington, De Aar, Port Nolloth, Colesberg

Capital: Mahikeng Main towns: Klerksdorp, Rustenburg, Brits, Potchefstroom

Population: 1 185 600 (2015) Area: 372 889km² (30.5% of South Africa)

Population: 3 707 000 (2015) Area: 104 882km² (8.6% of South Africa)

Capital: Cape Town Main towns: Stellenbosch, George, Plettenberg Bay, Beaufort West, Oudtshoorn, Worcester, Malmesbury Population: 6 200 100 (2015) Area: 129 462km² (10.6% of South Africa)

Premier: Dr Zamani Saul (ANC)

Premier: Professor Tebogo Job Mokgoro (ANC)

Premier: Alan Winde (DA)

Key sectors: Agriculture, mining, renewable energy, astronomy.

Key sectors: Mining, agriculture, agri-processing, automotive components.

Infrastructure: Upington Special Economic Zone, Sol Plaatje University, Vaalharts Irrigation Scheme.

Infrastructure: Hartbeespoort Dam, Pelindaba nuclear research unit, North West University, Bakwena Platinum Highway.

Notable tourism assets: Six national parks including the Kgalagadi Transfrontier Park, Orange River, spring flower displays, diamond routes.

Notable tourism assets: Sun City, Mmbatho Palms Hotel Casino Convention Resort, Pilanesberg National Park, 18 luxury lodges in Madikwe Game Reserve.

Provincial government website: www.northern-cape.gov.za Department of Economic Development and Tourism: www.northern-cape.gov.za/dedat

Key sectors: Agriculture, agriprocessing, wine and grapes, financial services, manufacturing, tourism, oil and gas, boatbuilding. Infrastructure: Ports of Cape Town, Saldanha and Mossel Bay, Mossgas oil-to-gas refinery, Cape Town International Airport, Cape Town International Convention Centre, Koeberg nuclear power station. Notable tourism assets: Table Mountain, Garden Route National Park, Karoo National Park, West Coast National Park, Kirstenbosch Botanical Gardens, Cape Point, V&A Waterfront, Plettenberg Bay, Route 62, Zeitz Museum of Contemporary Art.

Provincial government website: www.nwpg.gov.za North West Development Corporation: www.nwdc.co.za

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Provincial government website: www.westerncape.gov.za Wesgro: www.wesgro.co.za

An ExtrAordinAry BusinEss EvEnts dEstinAtion northern Cape, south Africa An award winning business and incentive destination, this ageless land offers a seamless fusion of first world technologies and infrastructure with ancient authentic cultures, dramatic natural beauty and awesome adventure. This is the Northern Cape. Now come and experience it for yourselfâ&#x20AC;Ś

For more information do visit w w w.experiecenor therncape.com businessevents@experiencenor therncape.com

Northern Cape Tourism

@NorthernCapeSA

northerncapetourism

northerncapesa

FOCUS

Sectoral strengths of South African provinces SECTORAL STRENGTHS OF SOUTH AFRICA’S PROVINCES

A wide variety of investments are available.

Gauteng: • Financial and business services • Information and communications technology • Transport and logistics • Basic iron and steel, steel products • Fabricated metal products • Motor vehicles, parts and accessories • Appliances • Machinery and equipment • Chemical products, pharmaceuticals • Agro-processing

North West: • Mining • Agriculture and agro-processing • Tourism • Metal products • Machinery and equipment • Renewable energy (solar)

Limpopo: • Mining • Fertilisers • Tourism • Agriculture • Agro-processing • Energy, including renewables (solar)

KwaZulu-Natal: • Transport and logistics • Tourism • Motor vehicles, parts and accessories • Petrochemicals • Aluminium • Clothing and textiles • Machinery and equipment • Agriculture and agroprocessing • Forestry, pulp and paper, wood and wood products

Northern Cape: Mining Agriculture and agro-processing Fisheries and aquaculture Renewable energy (solar, wind) Jewellery manufacturing

• • • • •

Western Cape: • Tourism • Financial and business services • Transport and logistics • ICT • Agriculture and agro-processing • Fisheries and aquaculture • Petrochemicals • Basic iron and steel • Clothing and textiles • Renewable energy (solar, wind)

Mpumalanga: • Mining • Tourism • Forestry, paper and paper products, wood and wood products • Agriculture and agroprocessing • Metal products

Eastern Cape: Motor vehicles, parts and accessories • Forestry, wood and wood products • Clothing and textiles • Pharmaceuticals • Leather and leather products • Tourism • Renewable energy (wind)

•

Free State: • Agriculture and agro-processing • Mining • Petrochemicals • Machinery and equipment • Tourism

Source: Industrial Development Corporation (IDC); The Case for Investing in South Africa, Executive Summary Source: Industrial Development Corporation (IDC) (South African Investment Conference, 2018). Page | 40

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PROFILE

Gert Sibande District Municipality A national leader in job creation through the EPWP programme.

Executive Mayor Councillor Muzi Chirwa

ert Sibande District Municipality received an unqualified audit opinion from the Auditor-General for the 2018/19 financial year for the second consecutive year. Running a clean municipality in terms of financial management and governance has been a priority for the current administration since coming into office in 2016. Gert Sibande District Municipality (GSDM) has a comprehensive and credible Integrated Development Plan. The 2020/21 IDP document is in line with the Municipal Systems Act which makes community participation in the affairs of the municipality a legal obligation. The municipality has been consultative and transparent in its approach.

GSDM cannot govern alone; the developmental agenda must be determined by residents. The impact of Covid-19 has put a huge strain on the economy. Having been placed as a leading district in South Africa in terms of job creation through the EPWP programme, GSDM commits to grow this programme and to find more innovative ways to create sustainable and dignified jobs. Further interventions are planned in the agricultural and forestry sector, informal traders, construction, manufacturing, mining and the tourism industry as we rejuvenate our economy and the realise the economic freedom for our people. Gert Sibande District Municipality is the largest of the three districts in Mpumalanga Province at 31 841km², covering 40% of the province’s land mass. According to Stats SA, Gert Sibande’s population increased from 1 043 194 in 2011 to 1 135 409 people in 2016. This makes it the smallest district in population. Name of Local Municipality

Main Admin Location

Area (km²)

Population Size (2016)

Chief Albert Luthuli

Carolina

5 559

187 630

Dipaleseng

Balfour

2 616

45 232

Dr Pixley Isaka Ka Seme

Volksrust

5 227

85 395

Govan Mbeki

Secunda

2 955

340 091

Lekwa

Standerton

4 585

123 419

Mkhondo

Piet Retief

4 882

189 036

Msukaligwa

Ermelo

6 017

164 608

Vision A community-driven district of excellence and development. Mission To support and coordinate our local municipalities to provide excellent services and development.

Contact details Tel: +27 17 801 7000 Email: records@gsibande.gov.za | Website: www@gsibande.gov.za Follow us on Facebook & Twitter @GertSibandeDM

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SPECIAL FEATURE

Building infrastructure is a presidential priority Projects worth R340-billion have been gazetted for implementation.

• •

A reconstituted Council of the Presidential Infrastructure Coordinating Commission met for the first time in July 2020. With President Cyril Ramaphosa in the chair, the commission includes national ministers, provincial premiers, mayors of big cities and representatives of the South African Local Government Association. Where the council intends doing things differently is by paying close attention to: • Preventing corruption through transparent tender processes and strong due diligence. • Community involvement in planning and implementation. • Emphasis on local employment and procurement and targeted involvement of SMMEs. • Blended financing through the Infrastructure Fund to mobilise more resources from the private sector, multilateral development banks and development finance institutions.

Richards Bay SEZ.

he two central planks of the South African government’s post-Covid rebuilding programme are infrastructure and industrialisation. To promote and monitor the first priority, an Investment and Infrastructure Office has been created in the Presidency. It is headed by the former Gauteng MEC for Economic Development, Dr Kgosientso Ramokgopa. In 2020 national government gazetted 51 priority infrastructure projects, with a total investment value of more than R340-billion. Sectors targeted for intervention include energy, housing, transport, water and sanitation, agriculture, agro-processing and digital infrastructure. Some of the “special projects” that fall outside sector categories include: • Rural pedestrian bridges and rural roads. • Energ y and water s av ings on gover n ment buildings. • Digitising of government information: 10 000

SOUTH AFRICAN BUSINESS 2021

young people will be employed to digitise government information, including hospital files and police dockets. Student accommodation. SA Connect Phase 1B, broadband expansion.

A World Bank report has shown that a 10% increase in infrastructure spending results in a 1% growth in GDP. A study carried out by KMPG for the Gauteng Province found that spending on infrastructure resulted in additional economic activity worth R26-billion in the province and created 92 000 direct jobs. In the country ’s biggest province in terms of economic activity, the Provincial Government of Gauteng spent R30-billion on infrastructure between 2013 and 2016. The Gauteng Infrastructure Master Plan is expected to account for expenditure of about R1.8-trillion over a 15-year period.

SPECIAL FEATURE

Special Economic Zones A key component of the strategy to boost the value of the country’s products is to develop infrastructure where manufacturing can take place, namely Special Economic Zones (SEZs) and industrial parks. Each province has been allocated SEZs that play to regional strengths. Described as “major catalytic projects” for the northern province of Limpopo, the Musina-Makhado SEZ (MMSEZ), the proposed Tubatse SEZ and several industrial parks are central to the strategy of expanding Limpopo’s manufacturing capacity. As of February 2020, Shaanxi CEI Investment Holdings had committed to a $5-billion investment in a vanadium and titanium smelter project at the MMSEZ and a further $1.1-billion had been pledged from other sources. The first-phase focus is on energy and metallurgical processes but agroprocessing, logistics and general manufacturing are expected to follow. In the Pretoria area, already home to several Original Equipment Manufacturers (OEMs), the Tshwane Automotive Special Economic Zone (TASEZ) has been launched. It is a joint project of the Gauteng Province, the Department of Trade, Industry and Competition, and the City of Tshwane. The implementing agent is the Coega Development Corporation (CDC), the developer and operator of the Coega Special Economic Zone (SEZ). The Coega SEZ is at the Port of Ngqura near Port Elizabeth and it too has an automotive component, recently strengthened by the large investment of the Beijing International Automobile Corporation (BIAC). East London’s Industrial Development Zone (ELIDZ) has many companies that sell to and service the nearby Mercedes-Benz plant while both coastal SEZs have a strong suite in logistics and are planning expanded aquaculture parks. Energy is a key infrastructural requirement for the growth of any economy, and SEZs are playing a role. The Coega SEZ has been named as the site for one of two liquefied natural gas (LNG) plants to be built (if partners can be found) in terms of the national gas-to-power plan. The Richards Bay Industrial Development Zone (RBIDZ) in KwaZulu-Natal is the other site

Gauteng Premier David Makhura visited the Nissan plant at Rosslyn in 2020. designated for an LNG plant, with the capacity planned for 2 000MW. RBIDZ is also the location of a new biomass plant. The OR Tambo SEZ in Gauteng underscores Ekurhuleni’s strengths in manufacturing and logistics. The OR Tambo SEZ has launched the biggest food processing operation in the southern hemisphere (and the world’s second-largest refrigeration plant). With a special focus on exportoriented value-added industry, the OR Tambo SEZ leverages its connection to the country’s busiest airport. The focus of this SEZ is on agro-processing, jewellery manufacturing and mineral beneficiation as well as the development of hydrogen fuel cell technology. The SEZ is a subsidiary of the Gauteng Growth and Development Agency (GGDA). Two of the largest infrastructure projects in South Africa’s history have unfortunately been delayed and are running over budget. National utility Eskom set out to build two huge power stations in Mpumalanga (Kusile) and Limpopo (Medupi). Both are near existing power stations and should have a stable supply of coal. Eskom committed to completing Medupi in 2020 and intends finishing Kusile by 2023. Medupi will be able to feed 4 764MW into the South African power grid when in full commission. Kusile will have a capacity of 4 800MW and will be the fourth-largest coal-fired power station in the world. It will also the first in South Africa to use flue-gas desulphurisation (FGD), a technology that removes oxides of sulphur, such as sulphur dioxide, from exhaust flue gases. ■

SOUTH AFRICAN BUSINESS 2021

FOCUS

Ready to get behind government’s ambitious infrastructure programme Jason Lightfoot, Portfolio Manager at Futuregrowth, explains how private capital can be mobilised to support infrastructure projects.

n a world in which the government and central bank have several means available to stimulate the economy, infrastructure spend is a powerful anti-recessionary fiscal policy tool. However, in South Africa economic growth has been constrained by lower levels of investment in infrastructure than in other developing economies, which has been exacerbated by specific issues such as ageing infrastructure and infrastructure bottlenecks. The Covid-19 crisis and the fiscal support needed to alleviate the damage done to businesses and the most vulnerable citizens as a result of the lockdown could also put the government’s future infrastructure ambitions at risk. The extent of infrastructure spending in an economy is reflected in the level of gross fixed capital formation (GFCF) as a percentage of Gross Domestic Product (GDP). The measure captures how much money as a proportion of total economic activity is being invested in capital goods, such as equipment, tools, transportation assets and electricity and various measurable outputs of these. South Africa’s reported GFCF has been historically low, with the exception of the build-up to the FIFA World Cup in 2010. Latest statistics show GFCF as a percentage of GDP was 18.19% in 2019, which is considered far too low for a developing economy. Several studies consider an acceptable norm to be in the region of 30% to 35% of GDP. South Africa’s GFCF ratio also has some way to go before it will achieve the target in the government’s National Development Plan of 30% by 2030. While assessing this, it is important to note that a country’s current debt level does have a bearing on its ability to fund infrastructure initiatives – and South Africa’s government debt burden doesn’t bode well for the country’s infrastructure funding capacity.

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When you include guarantees to State-Owned Enterprises (SOEs), the government’s debt-toGDP ratio is expected to rise to well above 100% compared to the average emerging market level of around 45%. A debt-to-GDP level of more than twice as large as the average emerging market means that the South African government will have very little scope to fund large-scale infrastructure and developmental initiatives and thus the burden will fall elsewhere. Although there are historical reasons for this high debt-to-GDP burden, the government’s finances have also been stretched by the social and economic measures it has needed to put in place to alleviate the economic fallout from Covid-19. A fiscal rescue package of R500-billion will add to the already high debt burden and economic lockdowns have already resulted in lower levels of revenue generation, putting the government in a difficult position fiscally.

If the environment is right, private investors are ready Banks, as well institutional investors, are no strangers to fulfilling a funding role but have become more apprehensive about doing so, given the government’s governance, financial and operational SOE failures. While the various developmental finance institutions need to fulfil a specific role when it comes to industrial policy, economic development and providing credit-enhancing capital, capital market players need to have confidence that the policy environment will remain stable and that potential investments will offer sufficiently attractive risk-related returns. To a great extent, the Renewable Energy Independent Power Producer Procurement

FOCUS Programme (REIPPPP) met these criteria, enabling which have been traditionally underserviced, with the private sector to play an important role, affordable access to broadband connectivity. committing about R200-billion to the programme The infrastructure initiatives under conto date. REIPPPP is seen as an important success sideration could be important contributors to story, particularly in respect of the impressive getting South Africa out of its current low-growth implementation role that the Independent Power trap. Although the estimated R1.5-trillion needed Producers Office played in that programme. to fund the projects over the next decade is a tall Unfortunately, the success of this prog- ask, the private sector is ready to fund them as ramme has not been emulated in other sectors long as they are well structured and managed, and there hasn’t been a coordinated approach that investors are compensated for the risks that to address the other necessary infrastructure they are taking and that they ultimately have investments until now. That may change with the policy certainty. Investment and Infrastructure Office set up by President Cyril Ramaphosa. The government gauged private sector investment appetite recently when it presented various project pitches for various sectors deemed a priority to the broader market, as a precursor to the inaugural Sustainable Infrastructure Development Symposium of South Africa (SIDSSA). Sectors the government has identified as in need of infrastructure investment include energy, digital infrastructure, water and sanitation, human settlement, agriculture and transport. Futuregrowth is an investor in the Khobab Wind Farm. The government’s latest engagement with the private sector is a step in the right Futuregrowth direction. It crowds in potential private sector investors in a much more coordinated manner Futuregrowth has been a long-standing and includes them in assessing how these various institutional investment partner in infrastructure initiatives can be funded. and developmental finance, funding projects for It is encouraging that the government is close on 24 years. It manages the largest debt engaging with capital market participants during fund of this nature in Sub-Saharan Africa, the the conceptual stage of some of these projects Futuregrowth Infrastructure and Development because it will allow concerns to be addressed Bond Fund, which has a market value of more earlier and thereby potentially ensure a much than R15-billion. It has funded various transactions higher success rate. over the last two decades to the benefit of all South Africans – and will continue investing in projects that provide the impetus the domestic Breaking out of SA’s low-growth trap economy needs to lift its economic growth rate to Although the range of projects is wide, there are sustainable levels in the future, while earning riskseveral significant ones that could change the adjusted returns. ■ South African landscape to the benefit of all. From a digital perspective, infrastructure investment in broadband fibre connectivity could provide peri-urban (townships) and rural communities, FUTUREGROWTH ASSET MANAGEMENT IS A LICENSED FINANCIAL SERVICES PROVIDER

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The game-changer: Musina-Makhado Special Economic Zone Revitalising the Limpopo economy through industrialisation.

he Economic Reconstruction and Recovery Plan outlines immediate actions to rebuild the national economy and to provide jobs and relief to the South African people. These actions include an aggressive infrastructure programme, far-reaching reforms to increase our competitiveness and inclusiveness, measures to catalyse industrialisation, relief for vulnerable households and individuals, and a public investment in employment programmes. This plan is a response to a severe economic contraction unlike any we have experienced in recent memory. South Africa is not alone in experiencing an economic crisis of this depth and extent. Unemployment has risen across the world and nearly every economy has shrunk. As President Cyril Ramaphosa has noted, “It is true that the measures that were necessary to delay the spread of the virus and prevent deaths led to a sharp decline in economic activity.” The strategic geographic location of the Musina‐Makhado Special Economic Zone (MMSEZ) and its close proximity to the main land‐based route into SADC and the African continent, together with supporting incentives and a good

logistics backbone, will make it the location of choice for investment in mineral beneficiation, agro‐processing industries, manufacturing and logistics. This will provide job opportunities to the people of Limpopo province currently in need of jobs and skills development. The establishment of the metallurgical cluster in close proximity to the source of raw materials, along with a logistics hub in the SEZ with access to markets, presents unique opportunities for mineral beneficiation, which is a key priority of national government.

Genesis of the MMSEZ Following the enactment of the Special Economic Zones Act, the Limpopo provincial government submitted a comprehensive proposal on strategic areas for consideration to develop the province’s economy through industrialisation to the Department of Trade, Industry and Competition (dtic). The dtic designated the MMSEZ, which has become the flagship of the provincial government. Subsequently, the Musina-Makhado State Owned Company (SOC), a subsidiary of the Limpopo Economic Development Agency was established. This entity is tasked with the responsibility of facilitating and managing the planning and development of the MMSEZ.

MMSEZ business case The essence behind the creation of the MMSEZ is the establishment of a new industrial hub in the Vhembe District Municipality, which forms part of the Trans‐Limpopo Spatial Development Initiative, situated at two locations, Makhado and Musina, each with its own unique industrial focus. The energy and metallurgical cluster (power plant, SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2021

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FOCUS LEDET MEC Thabo Mokone, MMSEZ Executive Manager: Investment Promotion Richard Zitha and MMSEZ CEO Lehlogonolo Masoga. steel plant, stainless steel plant, coking plant, pig iron plant, ferromanganese plant, ferrochrome plant, chrome plating, lime plant, ferromanganese, silicon-manganese and calcium carbide plants and vanadium-titanium magnetite plant) is located on the Makhado side and the Northern Site in Musina is focussing on general manufacturing, agroprocessing and logistics. â&#x20AC;&#x153; The MMSEZ has positioned itself as a platform to revitalise the Limpopo economy through industrialisation. Our focus is to generate much-needed base-load electricity, establish a metallurgical complex, develop a manufacturing hub, enhance agro-processing and to develop a regional logistics centre. The close proximity of

chain. The beauty of the MMSEZ lies in the diversity of opportunities across sectors both at the downstream and upstream with backward and forward linkages. The North-South Corridor makes the Musina-Makhado location a strategic passage for trade between South Africa and the rest of the

Artistic Impression of the MMSEZ.

the Beit Bridge border post and the abundance of mineral and agricultural resources gives the MMSEZ a competitive advantage,â&#x20AC;? says Lehlogonolo Masoga, MMSEZ Chief Executive Officer. The MMSEZ SOC has another critical responsibility of attracting and mobilising both domestic and foreign direct investment in the identified industrial activities across the value

SADC region and the African continent, further given impetus by the Africa Continental Free Trade Agreement. Limpopo Province has always enjoyed a niche of being a gateway to the rest of Africa as a home to one of the busiest ports of entry, Beit Bridge Border Post. The development of the MMSEZ becomes an ideal platform to cement this strategic socio-economic position of the province.

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Agro-processing potential

the automotive sector value chain such as vehicles and components manufacturing, storage and distribution hub, after-care products distribution hub, tyre manufacturing and distribution hub, etc. The manufacturing cluster of the MMSEZ will provide a platform for various Original Equipment Manufacturers to manufacture products in the SEZ for both domestic consumption and export markets in Africa and beyond. A strategic opportunity exists for manufacturers of products such as fertilisers, agro-chemicals, industrial chemicals, steel fabrication, etc.

Vhembe Region is the food basket of Limpopo province as it is endowed with various agricultural resources. some of which are sought after in lucrative world markets. Exotic fruits and vegetables are available in abundance, which creates a viable potential for agro-processing of value-added products for domestic consumption and export markets. Food production has over the years become a multi-billion industry that requires the creativity of entrepreneurs to exploit. Complemented by logistics support, the agroprocessing cluster of the MMSEZ is destined to become a big success over the next few years. Various opportunities exist within the agroprocessing cluster such as food processing, fresh-produce handling, dry-fruits packaging, food canning, timber processing, furniture manufacturing, etc.

Sustainable development The South African Constitution enjoins us to pursue economic development in a sustainable manner and preserve the environment for the benefit of current and future generations. Section 24 states that everyone has the right to an environment that is not harmful to their health or well‐being and to have the environment protected for the benefit of present and future generations, through reasonable legislative and other measures, that prevents pollution and ecological degradation, promotes conservation and secures ecologically sustainable development and the use of natural resources while promoting justifiable economic and social development. This constitutional provision is supported by the National Environmental Act (NEMA) which provides that negative impacts on the environment and on people’s environmental rights must be anticipated and prevented, and where they cannot be altogether prevented, are minimised and remedied. Our country aspires to be a sustainable, economically prosperous and self‐reliant nation state that safeguards its democracy by meeting the fundamental human needs of its people, managing its limited ecological resources responsibly for current and future generations, and by advancing efficient and effective integrated planning and governance through national,

Manufacturing within the automotive sector South Africa has established itself as the powerhouse of the automotive industry in Sub-Saharan Africa. Over 10% of the vehicles manufactured in South Africa are supplied by road via the Beit Bridge Border post to markets to the north of South Africa in the SADC region. This window of opportunity makes the MMSEZ an ideal location for various opportunities across

MEC of Limpopo Economic Development Environment and Tourism, Thabo Mokone (left) and MMSEZ CEO Lehlogonolo Masoga at the launch of the MMSEZ Corporate Identity. Credit: MMSEZ SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2021

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Artistic Impression of the MMSEZ. regional and global collaboration. Our application for the environmental impact assessment (EIA) was guided by the above fundamental values, principles, directives and the entityâ&#x20AC;&#x2122;s environmental, social and governance (ESG) policy provisions. We recognise that sustainable development and sustainable use and exploitation of natural resources are at the core of the protection of the environment. The months of September and October 2020 were dedicated to a public consultation process for the EIA application for the South site, energy and metallurgical cluster. The outcome of the EIA process indicated that the benefits of the MMSEZ will potentially promote justifiable economic and social development although a negative impact upon the environment will become inevitable. The ultimate goal of the EIA process is to protect ecologically sensitive areas and support sustainable development and the use of natural resources, whilst promoting justifiable socio-economic development in the location of the project. In our endeavour to ensure the effective implementation

of the mitigation and management actions, an environmental management plan has been developed to provide mitigation measures necessary to ensure that the project is planned, constructed, operated, and decommissioned in an environmentally responsible manner. The Draft EIA Report identified and assessed all the potential impacts of the project as well as the proposed mitigation measures and management actions. Various specialist studies have been conducted beyond the approved EIA scoping report which included the aquatic impact assessment, ecological impact assessment, heritage impact assessment, palaeontology / archaeology impact assessment, soil and land capability assessment, visual impact assessment, climate change assessment, air quality assessment, socio-economic assessment, noise impact assessment, health impact assessment, traffic impact assessment, water assessment, high-level energy study, economic analysis, biodiversity study, biodiversity offset study, biodiversity offset strategy, waste impact assessment, town-planning

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SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2020/21

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Artistic Impression of the MMSEZ. impact assessment, tourism and food security study, security of water study, energy requirement study and energy generation technology options.

Integrating SMMEs within the SEZ Special Economic Zones are predisposed to attract foreign direct investment which could translate into blue-chip international enterprises locating in the zone. Although it is a good thing to attract international companies to locate in the SEZ, this should not happen at the expense of local enterprises. Skills and technology transfer forms an integral part of the essence of the SEZ phenomena. In the MMSEZ, SMME promotion and integration is inherent to the business model. An instrument SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2021

has been developed in the form of an Enterprise Development Strategy to mainstream SMMEs development into the life cycle of the MMSEZ. The strategy is supported by an ambitious programme to develop an SMME Incubation Centre as a platform for entrepreneurship excellence, creativity and skills and technology localisation. The MMSEZ is partnering with the Department of Small Business Development to roll out this magnificent initiative. During the month of October 2020, a Memorandum of Agreement was concluded with the Council for Scientific and Industrial Research (CSIR) to collaborate on suppor ting SMMEs in the MMSEZ and ensuring technology localisation through various initiatives across sectors.

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Lehlogonolo Masoga has been a driving force behind the development of the MMSEZ.

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Developing small towns into cities The MEC of Limpopo Economic Development Environment and Tourism (LEDET), Thabo Mokone, stated on the occasion of the launch of the MMSEZ Corporate Identity, “We are pleased that finally the province has established a capable and agile entity seized with a mandate to implement the MMSEZ. Our ambition is not just to build an industrial park but rather to use the SEZ as a catalyst to unlock a plethora of other economic opportunities, including the potential of realising a new Smart City in our province.” It is our anticipation that the MMSEZ as a mega-industrial project will transform the spatial configuration of the two towns of Musina and Makhado. According to the external masterplan report, the two towns requires an investment of R133-billion in socioeconomic infrastructure such as roads, rail, human settlement, schools, health facilities, ICT infrastructure, airport, electricity, water and sewerage. Catalytic projects such as the envisaged High-Speed Rail Project connecting Johannesburg and Musina will add the much-desired impetus of engendering the creation of a new smart city. The province is currently developing a model for a new smart city based on the principles of smart economy, smart mobility, smart housing, smart environment, smart governance, artificial intelligence and the internet-of-things. With the creation of opportunities for local people to earn a decent income, entrepreneurs to create wealth and investment in socio-economic infrastructure, such conditions will lay a solid base for the new smart city to take shape.

CONTACTS MUSINA-MAKHADO SEZ SOC 29 Market Street, Polokwane, Limpopo Province (RSA) www.mmsez.co.za

Investment opportunities outside the zone SEZ projects are by their nature catalytic. They stimulate growth and development which is felt outside the delimited geographic space. In Musina and Makhado towns various stimulus packages have been identified as investment opportunities for the private sector outside the confinement of the SEZ spaces. Among such opportunities are the new Musina Dam, High Speed Rail Project, Manaledzi Mega Housing Project in Makhado, Musina Airport, MMSEZ human settlement, private hospital, private schools and training centres, retail property and hotels.

The launch of the MMSEZ Corporate Identity. It is for this reason, among others, that the Musina-Makhado Special Economic Zone is “a world of game-changing opportunities”. ■

MR SHAVANA MUSHWANA Marketing and Communication Manager Tel: +27(0) 15 295 5120 Cell: +27 (0)66 173 8957 Shavana.Mushwana@lieda.co.z 31 29

MR RICHARD ZITHA Executive Manager: Investment Promotion Tel: +27(0) 15 295 5120 Cell: +27 (0)71 391 8188 Richard.Zitha@lieda.co.za SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2020/21

SPECIAL FEATURE

The Maritime Economy offers blue water opportunities Contribution to GDP could rise to R177-billion by 2033.

Richards Bay is the site of South Africa’s largest coal export terminal.

each port to focus on its strengths. Transnet spent R2.5-billion on new port equipment in 2019/20. On the west coast, Saldanha is the main port for the export of iron ore. Large industrial operations already exist and the Saldanha Bay Industrial Development Zone (SBIDZ) is set to become a hub for maritime repair activities and oil rig maintenance and repair. About 1 800km to the east and five degrees further north, Richards Bay Coal Terminal (RBCT) is South Africa’s primary export portal. Although volumes dipped somewhat to 72.1-million tons in 2019, the fact remains that the infrastructure is in place to support expansion of aspects of the Maritime Economy through the Richards Bay Special Economic Zone (RBSEZ). Sectors under investigation include alternative energy generation and opportunities in the gas sector. A feasibility study is being done on a gas-topower plant and a large liquid petroleum gas import and storage terminal was recently built for Petredec by Bidvest Tank Terminals. Saldanha Bay can offload Very Large Crude Carriers as can the Port of Durban, which is Africa’s busiest port. Durban handled more than 81-million tons of cargo in 2019, which included 2.84-million

arely does a country have an opportunity to start a new sector from scratch, let alone two. When the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) began in 2011 to find new sources of electricity, a strong new economic sector came into being. In eight years, investment totalling R209.4-billion was committed to the energy programme by local and foreign entities. If anything, the potential of the Maritime Economy, sometimes called the Oceans or the Blue Economy, is even greater. The anticipated numbers are impressive. The share of the Maritime Economy to South Africa’s gross domestic product (GDP) will by 2033 grow by upwards of 250% (and perhaps as much as 350%) compared to its current value, to a figure between R129-billion and R177-billion. A million new jobs are expected to be created. In every field South Africa either has existing infrastructure or is in the process of creating or reviving it: ship-building and repairs, oil rig maintenance, oil and gas operations, port operations, logistics, marine engineering and bunkering. South Africa’s eight ports are run by the stateowned group Transnet, which has a strategic plan for

SOUTH AFRICAN BUSINESS 2021

SPECIAL FEATURE R700-million have been made. The Coega Special Economic Zone is planning a 440ha Aquaculture Development Zone to accommodate new projects. One possibility is to promote import substitution, for example, with salmon, of which South Africa currently imports more than 5 000 tons every year. The allocation of commercial fishing rights in 12 sectors that was due to happen in 2020 has been postponed to December 2021. It is likely that the quotas of larger fishing companies will be reduced in favour of small-scale fishing companies. There have been several changes in ownership in the fishing industry, most likely linked to the upcoming determination of new fishing rights in which black shareholding will be a factor. The acquisition by black-controlled Sea Harvest Group of Viking Fishing is part of a larger trend. Tiger Brands has unbundled its 42% stake in Oceana Group. Oceana holds the popular pilchards brand Lucky Star, which enjoys 80% of market share in South Africa, and has the highest market value of fishing companies in South Africa. The Oceana Group recently purchased Foodcorp’s fishing rights and a US fishmeal and oil company, Daybrook. ■

TEUs (twenty-foot container equivalent). The Durban Car Terminal handled 521 280 vehicles (Africa Ports & Ships). Durban is responsible for about 60% of the total volume of containers handled by the country’s ports. The Port of Durban is home to many maritime companies. EBH SA has been in marine engineering and ship repair since it began as Elgin Brown and Hamer in 1878. Three South African shipbuilders (SAS, Damen Shipyards Cape Town and Nautic Africa) have agreed to pool resources on contracts to become more competitive. The KwaZulu Cruise Terminal (KCT) consortium won the contract from TNPA to finance, build and run the new Durban Cruise Terminal. The Port of Cape Town has also launched a dedicated cruise-ship terminal. A renewed focus on ship repair through facilities such as the Sturrock and Robinson drydocks is on the cards for the Port of Cape Town, which has a diverse offering through its Container Terminal, Multipurpose Terminal, Liquid Bulk Terminal and Fresh Produce Terminal. Drilling off the southern coast has revealed vast resources in the Brulpadda field in the Southern Outeniqua Basin. If some of this gas can be recovered, the two SEZs on the Eastern Cape coast would become critical to its utilisation. The Port of East London is aligned to the East London Industrial Development Zone while Port Elizabeth has two ports, the city port being joined by the Port of Ngqura which anchors the Coega Special Economic Zone.

Fishing South Africa has 3 000km of coastline and the extent of the country’s territorial waters is greater than its land size. About half of the fish that South Africans eat is caught locally, and almost all of that comes from the waters off the Western Cape. The two most popular types of fish are hake and sardines, which are harvested by deep-sea trawlers. The fishing industry earns R3.4-billion in foreign earnings annually and employs 26 500 people across 22 sectors, the main ones being deep-sea trawling and aquaculture (JSE). The aquaculture industry is currently small, but since 2014 investment commitments of about

Work underway at Durban’s drydock facilities.

SOUTH AFRICAN BUSINESS 2021

P O S I T I V E LY I M PAC T I N G L I V E S

Now more than ever before the Oceans Economy will be one of the key pillars on which the South African economy of the future will be rebuilt. The Ocean, or Oceans Economy, is positioned within the South African Government’s National Development Plan (NDP) as a key driver of economic activity and growth which will help eliminate widespread poverty and inequality by 2030. As Africa’s largest fishing company, and home to the South Africa’s iconic brand, Lucky Star, Oceana is focused on protecting the integrity of the country’s marine ecosystems, promoting sustainable employment opportunities, and contributing to the country’s food security.

have borne the brunt of poverty. From humble beginnings in the tiny West Coast fishing village of Lamberts Bay when the Lamberts Bay Canning Company Ltd was established in 1918, Oceana has over the course of the last century grown to be a leading global fish protein company and Africa’s largest fishing company. Oceana is ranked among the top 5 most empowered companies on the Johannesburg Stock Exchange and listed on the Namibian Stock Exchange as well.

The Group operates in South Africa, Namibia and the Oceana believes that South Africa’s USA and markets fish-based more than 3 000km of coastline products in 46 countries along a major international across the world. strategic shipping route presents the perfect platform for sustainable and long-term usage of our oceans and coastline for responsible growth and development and shared prosperity. A sustainable oceans economy incorporating both the traditional and newer industries such as fishing and maritime transport, allied to newer sectors such as marine tourism, renewable energy, aquaculture and marine biotechnology, have the potential to meet the needs of all peoples, particularly those who make up rural coastal communities who

The fishing industry estimates that it accounts for 20 000 direct jobs and a further 60 000 indirect jobs across the economy in South Africa, where the Group continues to drive economic empowerment, real transformation and environmental stewardship for current as well as future generations. Government launched Operation Phakisa (“hurry up” in Sesotho) in mid-2014 to spur sustainable economic growth across key areas in a bid to address poverty, inequality and unemployment.

The Oceans Economy was one of seven targeted sectors, and listed six priority areas including offshore Oil & Gas, Aquaculture, the further development of Small Harbours, Coastal and Marine Tourism, Marine Transport and Manufacturing & Marine Protection Services & Ocean Governance. The fishing sector was not included as one of the key priority areas under the Oceans Economy despite its significant socio-economic contribution which is estimated at over R14 billion a year. The fishing sector is far more established than some of the newer maritime industries punted under Operation Phakisa but this does not mean that fishing is not a key contributor and enabler to national imperatives of economic growth, job retention and creation, and sustainable economic development, particularly in

coastal areas and communities where unemployment and underdevelopment are chronic issues. The commercial fishing sector, of which Oceana is an important stakeholder, makes a socioeconomic contribution of Rl4.3 billion per annum, employing in excess of 20 000 people directly and a further 60 000 indirectly, and has an annual spend of over Rl billion in developing and supporting around 2 000 SMMEs all across South Africa. The sector is also noted for its capital intensive nature and, as such, lists fleet and processing facilities valued at over R13,5 billion, with further capital investments of R7,5 billion over the last 15 years. The sector furthermore can speak to demonstrable transformation, having moved from one of the most untransformed sectors into one of the most transformed. Under Apartheid only 1% of commercial fishing rights were held by black South Africans, but black ownership has grown and has continued to rise, from 35% in 2004 to over 75% currently. Oceana operates 11 factories across the world and also manages a fleet of 54 vessels and 8 cold storage facilities. The Oceana Group works hard to empower communities and contribute to environmental sustainability throughout all the communities in which the company operates. Oceana is also committed to job security, investing in skills development, and bringing new technologies to bear to support and uplift coastal communities. The Group is working hard to drive positive transformation in fishing to ensure that the small scale fishing sector participates

in and contributes towards the broader economic development of South Africa by creating better job opportunities, shared prosperity and enabling sustainable development in coastal communities. While the commercial fishing industry is well transformed in terms of broad ownership, here is still a need for greater transformation at participation levels. Continuity through certainty and long-term stability provides the platform for significant further growth and economic development and it is imperative that all stakeholders work together with a unified sense of purpose. A fully transformed commercial fishing industry is key to unlocking economic development in South Africa because the fishing value chain offers enormous opportunities for inclusive growth and employment and enterprise development in coastal communities.

At Oceana, we believe that any company that is afforded the right to fish must prove their tangible commitment to converting these rights into broad-based social and economic benefits. This should at all times be done in a sustainable and inclusive

manner. As such, the company launched the Oceana Empowerment Trust (OET) in 2006 to unlock and convert the value of harvesting fishing rights into shared, broad-based value for eligible black South African employees. The OET has a 10% shareholding in Oceana with a market value of almost Rl-billion, making the Trust the largest 100% black-owned fishing entity in South Africa in terms of ownership value. As of September 2019, 2 447 beneficiaries had received over R400 million through the Trust, allowing them to become financially empowered and active participants in South Africaâ&#x20AC;&#x2122;s formal economy. The Oceana Group will also continue to play its part in skills development as it is vital for South Africa and the greater continentâ&#x20AC;&#x2122;s growth. Oceanaâ&#x20AC;&#x2122;s interventions are premised on the fact that holistic skills development is central to enabling young people and women in particular to be active economic participants and not mere bystanders. Oceana recognises that the development of the small scale fishing sector and the enhancing of skills in this area is paramount to longer term success, to empower individuals and communities to participate to a greater degree in the formal economy, but crucially, also creating the opportunities and platforms to support and meet these ambitions. Communities need to move beyond just survival mode to a state where they are empowered enough to become agents of economic change, where dignity is restored and long-held dreams fulfilled. I am confident that we have a sustainability strategy that enables

us to convert fishing rights into shared value and continue to deliver social and environmental dividends to society.

Oceana Group employees, as well as anyone interested in a career in the fishing industry, and offer training in a broad range of skills.

Areas of potential growth include marine science, engineering, vessel crewing, supply chain, artisans, food safety and supply of vessels and related equipment.

This shared value initiative will not only strengthen the Oceana business and the talent pipeline pool for the entire industry, but will help build a stronger, more prosperous and equitable country.

Oceana invested R28.3 million in skills development in South Africa and Namibia in 2019 and offered leamerships, internships and graduate programmes to empower the youth. A key part of the Oceana Group’s strategy in terms of empowerment and greater participation in the Oceans Economy is the Oceana Maritime Academy which will be launched and fully operational in the first quarter of 2021. Oceana has launched this exciting initiative with an initial R40 million capital investment and will spend R35 million a year on fishing sector skills and training with a particular focus on small scale fishers. The state-of-the-art facility in the Hout Bay harbour precinct is an investment in the future of the South African and international fishing industry, being the only academy in South Africa that focuses exclusively on the needs of the fishing industry, both small scale and commercial. Seeking to address the scarce and critical skills shortage in the industry, the Oceana Maritime Academy will offer world-class, accredited and industry relevant maritime skills and training that will provide the industry with new talent while enabling small scale fishers to fish more productively, profitably and sustainably. The Academy will draw attendees from the local Hout Bay community, the small scale fishing sector from all over South Africa,

While Oceana’s strength lies in fishing, with its core business being the catching, procuring, processing, marketing and distribution of canned fish, fishmeal, fish oil, horse mackerel, hake, lobster & squid, the Group has a diversified portfolio of operations which extend to the provision of refrigerated warehouse facilities and logistical support. Oceana markets and sells close to 300,000 tons of fish and fish products in 46 countries in Africa, North America, Asia, Europe and Australia and as part of further diversification in the Blue Economy, is seeking to move into longer term sustainable fish supply in aquaculture. Oceana views the Oceans Economy as a key driver of sustainable economic growth, job creation and food security, yet the Group remains fully committed to protecting the integrity of the country’s marine ecosystems. Yet fishing is but one way in which the Oceana Group is seeking to empower the communities in which it operates. Through the Group’s flagship brand Lucky Star, the company has partnered with the West Coast Business Development Centre (WCBDC) to assist aspirant and existing business owners in the small West Coast towns of Laingville, Steenberg’s Cove, Stompneusbaai, Velddrif and Lamberts Bay.

Lucky Star provided the WCBDC with the building to be able to provide its services to the St Helena Bay community, resulting in the WCBDC in 2019 assisting almost 200 entrepreneurs with a variety of services. Oceana recognises that the Small and Medium-sized Enterprise (SME) sector will be one of the key drivers of economic growth and development and employment in years to come and therefore is an active enabler and supporter through initiatives such as interestfree loans, training and infrastructure support, which seek to unlock the inherent potential in this sector, particularly for rural coastal communities. At Oceana, we believe that by working together, the glaring inequalities which so blight South Africa’s beautiful landscape, can be overcome and we can create a country where opportunity, inclusivity and prosperity for all can find a home.

SPECIAL FEATURE Main ports, controlled and managed by Transnet National Ports Authority

Facilities

Key cargo/function

Plans

Saldanha

Slipways, quayside facilities (Mossgas Jetty). Fabrication facility (FerroMarine Africa).

Iron ore.

Industrial Development Zone. Oil and gas supply base and rig repair.

Cape Town

SWL floating crane, two graving docks, syncrolift. Cruiseship terminal.

Mossel Bay

Two offshore mooring points. Slipway. PetroSA logistics base.

Fishing.

Slipway upgrade.

Ngqura

Rig repair.

Containers, dry and liquid bulk.

Expand rig repair. Serve Coega IDZ.

Port Elizabeth

Container terminals, bunkering, slipway.

Vehicles, manganese, general cargo.

Removal of manganese to Ngqura, creation of leisure waterfront.

East London

Dry dock and repair quay.

Vehicles and grain.

Serves East London IDZ. Recent upgrades have been done.

Durban

Ship repair. One graving dock, several floating docks. Three repair quays. Private quayside facilities (EBH and Dormac). Cruise-ship terminal.

Vehicles and multicargo.

Improve access for trucks, back-of-port. New storage areas.

Richards Bay

Richards Bay Coal Terminal. Repair berth in small craft harbour. Serves IDZ.

Coal.

Possible gas and renewable energy hub. Service offshore oil and gas sector.

General cargo, General cargo. containers, drydocking.

4337

Enhance marineinvest engiPromote drydock, neering for in marine capability fleet, improve oil and gas sector. loading times.

SOUTH AFRICAN WESTERN CAPEBUSINESS BUSINESS2021 2019

KEY SECTORS Overviews of the main economic sectors of South Africa Agriculture 40 Mining 44 Energy 56 ICT 61 Oil and gas 62 Water 66 Engineering 70 Construction and property 72 Manufacturing 74 Food and beverages 76 Automotive 78 Transport and logistics 80 Tourism and events 82 Banking and financial services 84 Development finance and SMME support 86

OVERVIEW

Agriculture Berry production is up as exports rise.

he number of hectares of blueberries will rise over a fiveyear period by 136% in Limpopo and 102% in Mpumalanga, an agricultural economist has told the South African Berry Producers’ Association (SABPA). Nina Viljoen’s findings have big implications for employment and exports, especially as blueberries are growing in popularity globally as a so-called “superfood”. Wandile Sihlobo of Agbiz promotes the idea of South Africa focussing on horticulture, partly because it is so labour intensive. He cites blueberries, which need 2.64 workers for every hectare planted. Signs are promising; gross value rose from R15.8-million in 2008 to R1.25-billion in 2018 with the total area planted expanding four times. More than 70% of the blueberry crop is exported. The major production companies are Berryworld South Africa, United Exports and Haygrove SA, an affiliate of UK-based Haygro. There is plenty of scope for berry exports to grow. Current annual exports are at about 13 500t compared to over 200 000t for table grapes and about 300 000t for apples (SABPA). Once South African producers pass muster with Chinese import authorities, volumes can be expected to grow quickly. An application launched by Fedgroup Ventures gives investors a chance to invest in blueberry bushes without getting soil on their hands. Fedgroup Impact Farming expects investors to earn 10-15% over an eight-year timeframe and also offers investments in beehives and solar panels. SOUTH AFRICAN BUSINESS 2021

SECTOR INSIGHT The University of Pretoria has joined an African alliance to tackle food security. Another subsec tor to exper ience rapid expor t growth is oranges. As a source of vitamin C, oranges grew in popularity as the Covid-19 pandemic spread. South Africa is the world’s second-largest citrus exporter, after Spain, and the number 11 in the world in terms of production. Citrus exports earned South Africa about R20-billion in 2019. By contrast, flower growers were badly hit by the effects of the global shutdown. Normally, Europe accounts for 80% of exports with the Americas and Japan accounting for the balance.

OVERVIEW Wool exports suffered too, although this was mostly related to China stopping imports due to a foot-and-mouth disease scare. About 70% of South Africa’s export of this commodity are to China in a normal year. Avocado exports were worth about R4.3-billion in 2019, with more than 1 000ha of new plantings taking place every year to try to meet growing demand. South Africa is among the top three countries exporting to Europe and the Chinese market is growing at a rapid rate. Beef exports increased from 8 292 tons in 2001 to 31 888 tons in 2018 with the largest areas of growth in Muslim countries. A record crop of 59 050 tons of in-shell macadamias was achieved in 2019 and production was up by more than 2 500 tons over 2018. A less fruitful year is expected in 2020. Total South African agricultural exports reached R175-billion in 2019 with about 40% going to other African countries and 25% to Europe. The grain and fruit harvests in 2020 were good with the maize return of 15.5-million tons the second-largest ever and fully 38% better than the previous year’s figure. The global shutdown threatened the agricultural products that South Africa imports: rice and palm oil are 100% dependent and half of the maize that South Africans consume comes from abroad. South Africa imports 80% of its fertiliser and 98% of its agri-chemicals.

Variety and quality While agriculture’s contribution to national GDP is variously given in the range of 2.0-2.5%, the upstream and downstream links to agriculture through processing and logistics mean that the real contribution is more like 15%. AgriSA states that the amount of agricultural land in South Africa in 2016 stood at 93.5-million hectares. This represents 76.3% of South Africa’s total land mass of 122.5-million hectares and about 3% less than in 1994. A total of 70% of South Africa’s grain production is maize, which covers 60% of the cropping area of the country. KwaZulu-Natal and Mpumalanga produce sugar, but volumes are down. The Free State Province supplies

ONLINE RESOURCES Agricultural Research Council: www.arc.agric.za Grain SA: www.grainsa.co.za National Department of Agriculture, Forestry and Fisheries: www.daff.gov.za SA Table Grape Industry: www.satgi.co.za South African Berry Producers’ Association: www.berriesza.co.za

significant proportions of the nation’s sorghum, sunflower, potatoes, groundnuts, dry beans, and almost all of its cherries. South Africa is famous for its fruit, of which 35% is citrus, 23% subtropical and nuts, 26% pome fruit, 11% stone fruit and 9% table grapes. Most of South Africa’s citrus and subtropical fruit comes from the eastern part of Limpopo. There are about 3 500 wine producers in South Africa, with the majority located in the Western Cape, where canola (pictured) is also grown. The Eastern Cape is the largest livestock province. South Africa has a beef herd of 14-million. South Africa’s m i l k p ro d u c e r s n o r m a l l y produce about 3.3-billion litres of milk every year (Milk Producers Association). The Faculty of Natural and Agricultural Sciences at the University of Pretoria (UP) has joined an African Research Universities Alliance programme together with the University of Nairobi and the University of Ghana. The Centre of Excellence for Food Security that has been established intends to create a network to find solutions to food security challenges in Africa. The UP Department of Plant and Soil Sciences is working with Impilo Projects to research aeroponics for deployment in urban areas. The faculty has a R13-million facility to grow plants in different conditions which mimic possible future climate scenarios. Potatoes are being grown in a first experimental phase. ■ SOUTH AFRICAN BUSINESS 2021

INTERVIEW

Crafters and knitters are returning to their passion Michael Brosnahan, CEO of SAMIL, unpacks the effects of the Covid-19 lockdown on the mohair industry.

Michael Brosnahan, CEO

With people at home during the Covid-19 lockdown, was there greater demand from creative people? Happily for SAMIL the crafters and knitters of the world took refuge in their art, many of them returning to their passion, with time on their hands. The demand for our hand knitting and crochet yarns increased dramatically during the hard lockdown periods and this increase in demand shows no signs of abating. What were other eﬀects of the pandemic? Sadly, the effect on farmers and processors was quite devastating financially, particularly in the months of April to June, when we were unable to export our mohair tops. This obviously impacted all who are employed in the industry by way of significantly reduced income. We are very grateful for the assistance provided by the government via the UIF TERS system which helped to reduce the impact.

BIOGRAPHY Michael emigrated from the UK to KwaZulu-Natal in South Africa in 1981 in order to take up the position of Quality Assurance Manager with the Frame Group. A chartered member of the Textile Institute in South Africa, he has managed several large textile companies since then. Mooi River Textiles was awarded Cotton Spinner of the Year for three consecutive years under his leadership. He was appointed CEO of Samil Natural Fibres in Port Elizabeth in 2016. SOUTH SOUTH AFRICAN AFRICAN BUSINESS BUSINESS 2021 2021

How will the “new normal” aﬀect the mohair industry? Providing that South Africa and other countries do not return to a hard lockdown situation, it should not have a further impact. Demand for high-fashion goods will always be there and due to the reduction in availability caused by the ongoing drought conditions in the Karoo region, where most of the mohair is farmed, demand outstrips supply. Is there a growing awareness of the importance of sustainability among customers? There is no doubt that the consumer of today makes purchase decisions no longer merely on price alone, but also on their understanding of the ethicality of the manufacturing process. They want to know that the goods have not harmed the environment in any way. This concern extends further to the welfare of the people producing the items and the treatment of the animals. The Responsible Mohair Standard is an established set of rules drawn up by the global non-profit organisation, Textile Exchange. These rules govern all aspects of the mohair industry, from the care of the environment to the welfare of the animals and all the individuals employed in the industry. ■

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Sharing Africa’s beauty with the Sharing Africa’s beauty world with the world

SAMIL produces and processes SAMIL produces and processes mohair, the noble fibre. mohair, the noble fibre.

S S

outh African Mohair Industries Limited (SAMIL) outh African Mohair Industries Limited is the link between (SAMIL) is themohair link producers, between procesmohair sorsproducers, and consumers. Our vision is to be an Our inprocessors and consumers. novative African companySouth specialising vision South is to be an innovative African in the production andinprocessing of natural fibres, as company specialising the production and processing well as speciality spun of natural fibres, as wellyarns. as speciality spun yarns. Mohair, thethe fleece of the Angora goat, is: is: Mohair, fleece of the Angora goat, • the noble fibre, known as the diamond fibre • the noble fibre, known as the diamond fibre • lustrous, resilient and offers exceptional colour • lustrous, resilient and offers exceptional colour refl ection reflection •• one oneofofthe theworld’s world’smost mostbeautiful beautifulsustainable sustainable natural fibres natural fibres • a symbol of luxury and exclusivity. • a symbol of luxury and exclusivity.

African Expressions African Expressions Our local brand African Expressions was born of the Our local brand African Expressions was born of the desire to share Africa’s natural beauty with the rest desire share Africa’s natural the of restyarns, of the of thetoworld. Through our beauty uniquewith range world. Through unique of yarns, we express we express the our essence of range that which makes Africa the essence that which makes Africawho magical. magical. Ourofnetwork of local farmers, farmOur in network of local farmers, who farmbreed in optimal optimal Angora goat conditions, stock Angora which goat bearthat excellent fibres. bearconditions, excellent breed fibres.stock Thiswhich ensures our yarns This that ourto yarns naturally softtoto knit the touch, are ensures naturally soft thearetouch, easy and easy to knit and luxuriously versatile. luxuriously versatile.

SAMIL SAMIL divisions divisions Farming: was established established with with Farming: SAMIL Farming, Farming was the of stabilising stabilising and and possibly possibly the primary objective of increasing mohair increasing mohair supply supplyto tothe theprocessors. processors. Combing: SAMIL Natural Fibres Combing: Fibres Combing CombingisisininBerlin, Berlin, outside East London in outside in the the Eastern EasternCape. Cape.As Asmohair mohair processing has decreased decreased in processing inother otherparts partsof ofthe theworld, world, SAMIL Combing has become one SAMIL one of of the the world’s world’s leading processors. processors. Unlike leading Unlike many many processing processingplants plants

SAMIL Combing Combing focusses on and SAMIL and isis committed committedto to processing only mohair. processing mohair. Trading:Through Through a strong support base liated Trading: base of ofaffi affiliated companies, partners and agents, has companies, partners and agents, SAMIL hasSAMIL established established strong connections throughout strong connections throughout the world for the the world forand thesale purchase and saleand of finished raw materials purchase of raw materials goods. and finished goods. inSouth in South Africa processes excessAfrica of 80%processes of the world’s excess production. of 80% of the world’ s mohair mohair The advantage of production. having bothThe topadvantage havingoperations both top-making spinning making andof spinning in Southand Africa, as well operations in South Africa, as well as access to raw as access to raw material produced within the company, produced within the company, is that SAMIL ismaterial that SAMIL is able to offer lots guaranteed from origin, is able to offer lots guaranteed from origin, a rare a rare luxury in today’s business environment. luxury in today’s business environment. Spinning and dyeing: SAMIL Spinning is a global Spinning and dyeing: SAMIL Spinning is a global manufacturer of outstanding quality mohair yarns, manufacturer of outstanding quality mohair yarns, producing a wide and exclusive range of mohair and producing a wide and exclusive range of mohair mohair blended fancy fancy and fine-spun yarns inyarns both and mohair blended and fine-spun fine-count and coarserand varieties. Wevarieties. are internationally in both fine-count coarser We are renowned for our superiorfor product range and cater internationally renowned our superior product for the and handcater knitting, machine knitting, machine weaving, range for the hand knitting, hosiery decor markets. we markets. specialise knitting,and weaving, hosieryAlthough and decor in pure mohair, we alsoinblend mohairwe with range Although we specialise pure mohair, alsoa blend of otherwith natural and of man-made fibres. can be mohair a range other natural andYarns man-made custom dyedcan to any at dyed SAMIL’s of the art fibres. Yarns be shade custom tostate any shade at dye house. SAMIL’ s state of the art dye house. Genetic venture under underthe theSAMIL SAMIL Genetic research: research: The latest venture umbrella project called called ANGELA ANGELA umbrella isis the research project which goats and and the the which aims aims to enhance Angora goats mohair industry, industry, from increasing mohair increasing kidding kidding rates rates to to the improvement improvement of the different different hair qualities. the qualities.The The project will make available its project its results results to to all all inin the the mohair farming farming community. mohair community.

Contact details Tel: +27 41 486 2430 Email: yarns@samil.co.za Contact www.samil.co.za details Website:

Tel: +27 41 486 2430 SOUTH AFRICAN BUSINESS 2021 Email: yarns@samil.co.za Website: www.samil.co.za

OVERVIEW

Mining Exploration is the next frontier.

outh Africa is currently attracting just 1% of global spending on mining exploration, a figure that normally reaches R160-billion annually. Several industry leaders have expressed concern about the low level of exploration activity but in 2020 they were joined by the Economic Transformation Committee (ETC) of the African National Congress (ANC), the country’s majority political party. The ETC sees exploration as a way of broadening the scope of ownership within the mining industry. Gwede Mantashe, South Africa’s Minister of Mineral Resources and Energy, wants to see South Africa attracting at least 5% of global exploration. For exploration to expand a reliable cadastre is required. A cadastre is a record of property boundaries and ownership. The Council for Geoscience is working on this. Drone technology could take the mapping process forward, allowing for more exploration at a lower cost. I n his 2019/20 budget vote, M antashe noted that about 4 000 permanent jobs would be created by the recent investment of about R45-billion through projects such as Exxaro’s Belfast expansion (coal), Sasol’s coal mine replacement programme and Vedanta Resources’ huge zinc mine in the Northern Cape. Many mining companies want to start generating their own power, particularly in the light of unreliable supply from the national utility, Eskom.

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SECTOR INSIGHT Good mineral prices kept mining shares buoyant during the lockdown. African Rainbow Minerals is currently operating just three of its 10 plants in the ferroalloy sector, with the cost of electricity the main reason for reduced activity. ARM is constructing a demonstration ferromanganese plant to test alternative energy systems with the hope that costs can be significantly reduced. Th e C E O o f M i n e r a l s Council SA, Roger Baxter, calls the hurdles faced by mining companies tr ying to put alternative power projects in place, a “serious challenge”. In 2019 Minister Mantashe wrote to the National Energy

OVERVIEW

Regulator of South Africa (NERSA) granting a deviation from the existing Integrated Resources Plan (IRP) to allow for the quick licensing of generation facilities up to 10MW. Coal giant Exxaro has disposed of its stake in Tronox Holdings (mining and processing of titanium ore, zircon and other minerals) but in 2019 took full ownership of renewable energy company Cennergi, which owns two wind farms in the Eastern Cape. Indian company Tata Power held 50% of the company through a whollyowned subsidiary before the sale. Despite the global lockdown Exxaro expected earnings for the first six months of 2020 to be higher than the R3.2-billion earned in 2019. The weaker rand and record coal exports helped to balance lower dollar prices achieved. Coal continues to be an important part of the South African mining landscape, despite pressure to move to renewable resources. As Baxter points out, “In 2018 the sector employed almost 90 000 people (representing about 19% of total employment in the mining sector), with an estimated 180 000 further people employed as a result of coal mining activities.” Gold Fields’ earnings for the half-year to June 2020 increased four-fold because of a buoyant gold price. The August 2020 price for gold reached nearly $2 000. Analysts warned against reading too much into some of the more extreme rises in the value of gold mining stocks (DRD Gold went up some 240% between January and July) because the underlying conditions for gold mining in South Africa are tough. Implats (Impala Platinum) was expecting to report annual headline earnings five times better as a result of improved commodity prices. Another company to report improved half-year results was Sibanye-Stillwater which increased volumes at its platinum group metals (PGM) operations and its gold mines in the first half of 2020. Some production was lost due to the steps taken to deal with Covid-19 but, because of the inclusion of the Marikana operations (bought from Lonmin), South African PGM production actually increased by 5% year-on-year to 657 828 ounces. Gold production within the group was also up after strikes affected volumes in 2019. Production of 403 621 ounces was 17% higher than the previous year’s figure. The group expects all of its South African operations to be running at optimal production levels by the end of 2020. The sale in 2020 by AngloGold Ashanti of its Mponeng mine and Mine Waste Solutions to Harmony Gold for $300-million (about R4.4-billion) marks the end of an era. Although the company’s headquarters will continue to be in Johannesburg and it will be listed on the JSE, its mines are in Ghana, the Americas and Australia.

AngloGold Ashanti was the successor to the mining company formed by Ernest Oppenheimer in 1917. Harmony Gold’s acquisition s t r a t e g y, i n c l u d i n g t h e purchase from AngloGold of Moab Khotsong mine in 2017, will result in it being the country’s biggest gold producer. With 350 000 new ounces coming from Mponeng, it could produce an annual total of 1.7-million ounces. A f r i m a t c o n t i n u e d to expand its commodities portfolio in 2020. Previously focussed on construction materials, Afrimat bought a 27.27% stake in a highgrade anthracite mine in Mpumalanga, Nkomati, and followed this with the purchase of Coza Mining, an iron ore and manganese company in the Northern Cape. Afrimat’s first foray into commodities was also in that province, the R322-million acquisition of the Diro mine. In October 2020 Afrimat applied for Nkomati to be placed under business rescue because of the Covid-19 lockdown but stated that it believed the business could indeed be resuscitated.

Diamonds An ongoing project by De Beers to convert its Musina mine from an open-pit mine to a vertical-shaft mine will extend the life of mine of this northern Limpopo project SOUTH AFRICAN BUSINESS 2021

OVERVIEW

to 2045. Venetia Mine is by far the most important part of De Beers’ South African operation, accounting for 3.1-million of the 5.4-million carats recovered by the company from its six operations. Petra Diamonds has made it known that it will consider offers for parts of its business or all of its operations. This follows a strategic review where the issue of a R11.25-billion debt repayable in 2022 loomed large. The review began when the South African Covid-19 lockdown began. Most of the company’s major expenditure on expansion projects is behind it but reduced demand, even before the lockdown, has affected earnings. Revenue for the six months to December 2019 was down by 6%. Of the company’s three South African mines Finsch (Northern Cape) and Cullinan (Gauteng) generate 90% of output and 75% of revenue. In the Northern Cape, Ekapa Mining paid R300-million to buy out Petra Diamonds from a JV.

Zinc When phase three is reached, the biggest new mining project in South Africa will deliver 600 000 tons of zinc for Vedanta Zinc International. Located at Aggeneys in the Northern Cape near the border with Namibia, the Gamsberg zinc project has so far attracted $400-million in investment from the company and has started trucking product to the Port of Saldanha. Phase one of the open-pit operation will deliver an annual load of 250 000 tons of zinc. If it proceeds to phase three, it will likely go underground. The Northern Cape Province is planning for a deep harbour at Boegoebaai. Part of the strategy involves the creation of a commodities corridor linking the Upington Industrial Park with the port. In August 2020 Australian miner Orion announced it had raised $6.2-million in share capital towards its Prieska Zinc-Copper Project.

Iron ore and manganese In 2019 Sitatunga Resources purchased the East Manganese project on the Hotazel-K alahari ore belt from Southern

ONLINE RESOURCES Council for Geoscience: www.geoscience.org.za Minerals Council South Africa: www.mineralscouncil.org.za Mintek: www.mintek.co.za National Department of Mineral Resources and Energy: www.dmr.gov.za

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Ambition. Menar Holdings, which controls a majority share in Sitatunga, is mostly invested in coal. The overwhelming m a j o r i t y o f t h e w o r l d ’s manganese comes from the Postmasburg and K alahari regions of the Northern Cape. Assmang has two manganese mines in the province: Nchwaning and Gloria. The Northern Cape produces more than 84% of South Africa’s iron ore. The province has two major iron belts, from Postmasburg to Hotazel, and running through Sishen and Kathu. Sishen is the most important iron-ore mine in South Africa, where operations include extraction and four beneficiation plants. Kumba Iron Ore has the huge Sishen facility at Kathu and Kolomela. Assmang, a joint venture compr ising African Rainbow Minerals and Assore, mines at Khumani. The company will spend R2.7-billion on upgrading its Gloria mine. South32 is active in the Nor thern Cape: Hotazel Manganese Mines is made up of two mines, Wessels (underground) and Mamatwan (open cut), and the Metalloys manganese smelter. ■

COUNCIL FOR GEOSCIENCE November 2020

The Council for Geoscience (CGS) is the national custodian responsible for the collection, compilation and curation of all onshore and oﬀshore geoscience data and information. The CGS aims to use this information and knowledge to develop geoscience solutions to real-world challenges in South Africa.

ENGINEERING GEOLOGY AND GEOHAZARDS

GEOSCIENCE MAPPING Geoscience mapping is the core function of the CGS and aims to develop fundamental geoscience knowledge using an integrated and multidisciplinary approach as well as innovation that merges several onshore and oﬀshore geoscience themes such as geology, geotechnical studies, geochemistry, geophysics and economic geology for mineral and energy resources and their mineralising systems information to boost sustainable exploration for economic growth.

As the custodian of the national seismological network, the CGS monitors and maintains a geohazard inventory for South Africa. This information is primarily used in developing eﬀective and novel geohazard mitigation solutions for safe and judicious land use. Modern artiﬁcial intelligence techniques are applied in subsidence mapping and seismic hazards characterization.

WORLD CLASS FACILITIES

AFRICAN FOOTPRINT AND OTHER COLLABORATIONS

The geoscience functions are supported by a multi-faceted laboratory that performs a wide range of analytical services such as petrography, whole rock geochemistry, petrophysics, coal science and hydrochemistry. The CGS also manages a geoscience museum, library, bookshop, and national core repository which are used by the scientific community and the general public.

As the permanent secretariat of the Organisation of African Geological Surveys (OAGS), the CGS has an impressive footprint in the African continent where various geoscience services have been rendered in line with global standards, international policy and governance. The CGS also collaborates with various academic institutions and science councils around the world.

WATER AND ENVIRONMENT The CGS carries out hydrogeological studies and aquifer modelling and is also responsible for environmental geoscience research which aims to provide sustainable solutions to monitor and mitigate the impact of geology and mining activities on the health of the environment including its inhabitants.

CGS AT WORK • The CGS is undertaking integrated and multidisciplinary geoscience mapping programme across South Africa. • Some of the recent projects include: - Multidisciplinary geoenvironmental baseline investigations in the Southern Karoo for possible shale gas development, which uncovered previously undeﬁned groundwater aquifers. - Regional soil geochemical sampling and detailed follow-up surveys, particularly within the Northern Cape, North West and Mpumalanga provinces. - Geothermal energy and carbon capture and storage research, which aims to expand the current renewable energy mix of South Africa and decrease the carbon footprint. - Ground stability and geotechnical assessments for infrastructure development in the Northern Cape and Free State Provinces.

CONTACT US @CGS_RSA I I Our head oﬃce is located at: 280 Pretoria Street, Pretoria, 0184 I Tel: +27 (0)12 841 1911 I Email: info@geoscience.org.za I Web: www.geoscience.org.za

CREATING LASTING LEGACIES By: Casper Badenhorst, Chief Operations Officer, Pilanesberg Platinum Mines

Despite facing a tough economic period, the mining sector continues to play an important role in our economy and still has the potential to make a significant impact in the socioeconomic development of our country. We trust the upswing experienced in 2019 will spill over into 2020 and reclaim profitability in the industry. Pilanesberg Platinum Mines is cautiously optimistic; a productive 2020 will support the continuation of our plans to expand mining operations thus increasing our staff component and benefitting the communities in which we operate. As a growing mine, we are proud that we sustained production in a constrained environment, ensuring continued contribution towards the social and economic development of our wider community. As we enter a new decade, I reminisce on our achievements. In 2019, we purposefully held ourselves accountable to our core values of zero harm, upliftment and innovation.

Our specific focus on zero harm resulted in no fatalities. In fact, because of our commitment to the safety of our people, we wrapped up this past decade with over 5 million fatality-free shifts.

We have taken innovative steps towards decreasing our negative impact on the environment, including the termination of polystyrene packaging in our canteens.

In addition, our efforts in uplifting our female employees, has gained some traction. Tebogo Metsileng was nominated in the mining category for the Womenâ&#x20AC;&#x2122;s Lifestyle Award. Tebogo, a Lab Technician, has been recognised for her community service as a PPM Wellness Team Member and for her contribution as a Lab Technician.

We will continuously strive to improve the lives of our people, our immediate communities; and protect the environment, as we contribute to the growth and transformation of this sector. Over and above our operational accomplishments, I am proud of what we have achieved in our respective communities. Our top three achievements include:

She has also been recognised for her motivation of the youth in her community, making her a worthy recipient of the 2019 Women Lifestyle Award. This recognition will pave the way for many women in this industry. Furthermore, our commitment to reduce our impact on the environment remains a core focus.

Supporting small businesses In creating a meaningful impact in our communities, we realised that supporting small businesses is critical. The â&#x20AC;&#x2DC;Community Crusherâ&#x20AC;&#x2122; which started as a non-profit project is now proving its potential to be a fully-fledged business, rendering a service to most of our building projects.

Most importantly, 14 community members are employed in this project, of which 64% are women – securing future female community leaders! Furthermore, the ongoing support of the relocated farmers is anchored in our mission to train, develop skills and build capacity of the small-scale subsistence livestock keeper; and grow them to become sustainable and independent commercial farmers. To this end, a professional Extension Offi cer has been Officer allocated to service and capacitate them and all the basic farming support infrastructure has been set up.

Enabling economic development in communities As part of our contribution to socioeconomic development in the Moses Kotane Local Municipality and the Bakgatla Ba Kgafela, our conviction is that infrastructure interventions can play a major role in enabling and catalysing economic development. Consequently, we have concluded construction of Legkraal - Bofule paving and phase one of the Motlhabe - Ngweding roads. This will enable village to village connectivity and access, with subsequent boosting of the economies of the aff ected areas. affected To secure a sustainable and productive mine is not only about our employees’ jobs, but it is also about the impact that these jobs and our operations have on our people. As a mine, we are constantly reminded that the future is a legacy in the making and the best tomorrow for all, relies on the crucial decisions we make today.

“As a mine, we are constantly reminded that the future is a legacy in the making and the best tomorrow for all, relies on the crucial decisions we make today“

Educating the youth Education is important for our youth, who are the real bastions of tomorrow. Maths and Science are key tools to understand, analyse and impact local communities. We assisted over 200 students with their studies through a Saturday school programme. As a result, the 2019 academic results have improved signifi cantly from a pass significantly rate of 40% to 80% providing more opportunities to these learners.

Tel: 014 555 1800

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World-class zinc operation in the heart of the Northern Cape R5-billion investment by Vedanta Zinc International is a major catalyst for growth.

edanta Zinc International ( VZI) is a grouping of zinc assets located in South Africa and Namibia, owned by the sixthlargest diversified resources company in the world, Vedanta Limited. Vedanta Limited recently invested R5-billion into VZI’s flagship, Gamsberg open-pit and concentrator project in the Northern Cape province, which is now fully operational and was inaugurated in February 2019 by President Cyril Ramaphosa.

President Cyril Ramaphosa and Vedanta chairman Anil Agarwal at the Gamsberg mine opening. VZI’s operations include Black Mountain Mining (Pty) Ltd (consisting of underground operations Deeps and Swartberg as well as the flagship surface operation, Gamsberg Project) located in South Africa’s Northern Cape province and the Skorpion Zinc Mine and refinery in Namibia’s //Kharas region. VZI’s vision is to create an integrated, world-class regional zinc complex with the values of Safety, Trust, Entrepreneurship, Innovation, Excellence, Integrity, Respect and Care at the core of their business. As of March 2020, VZI employed more than 4 200 people (including business partners), of which 99% are South Africans: 80% are from the Northern Cape and 60% from the Namakwa District. SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2021

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VZI’s Gamsberg Phase I open-pit mine represents $400-million worth of investment into South Africa by the Vedanta Group. Life of mine extension at other mines in the complex ($46-million), Gambserg Phase II ($350-million) and a further $850-million worth of investment on a possible Gamsberg Smelter-Refinery Complex are potential future investments in the South African mining sector. The smelter-refinery is subject to the availability of power and support from government to make the project economically viable.

Leveraging technology Gamsberg has implemented a unique flotation system, the Staged Flotation Reactors. They break the conventional flotation paradigm into individual, optimised reactors which drastically reduce energy and air consumption. The footprint in the plant gets reduced by around 50%, operations become easier and maintenance costs are lower. VZI is the first company in Africa to adopt Staged Floatation Reactors. Backfilling operations is an integral part of Black Mountain. Underground mining creates voids which need to be filled. This provides opportunities for mining operations like Black Mountain to dispose of waste material underground and provide support and stability to the surrounding rock mass. <<<END OF PAGE ONE>>>>>>>>>>>

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The Gamsberg Nursery houses 379 different species and will have a capacity of 129 000 plants after the upgrade.

R7.1-million were provided. Childcare and education suppor t programmes benefit more than 1 800 children at a cost of R6million per annum. Youth and spor ts clubs are supported. The total spend on corporate social responsibility and community work is over $14-million to FY2020. During the Covid-19 lockdown period, many outreaches were made throughout the region. Items distributed included masks, hand sanitiser, gloves, care packages, face shields, food and clothing to areas within the Khai Ma and Nama Khoi municipal areas. Visits were made to old-age homes and disability care centres and schools. ■

Biodiversity The Succulent Karoo Biome is unique in its floral diversity. Among the 36 global biodiversity hotspots, the biome is home to at least 6 000 species of plants that have evolved over millennia. VZI’s environmental specialists have worked closely with a wide range of experts, including those from the International Union for Conservation of Nature (IUCN), to ensure the site’s necessary protection, preservation and ultimate restoration. The Gamsberg Nursery is derived from the Environmental Management Plan (EMP) and the requirements for the Integrated Flora Permit. Since October 2019, there have been 12 000 plants grown with 379 different species. After the upgrade, 129 000 plants will be housed in the nursery. Community commitment VZI has joined hands with PinkDrive NPC, a significant player in the gender-related cancer sector, to bring critical screening to the Northern Cape. The outreach programme is for the communities of Okiep, Nababeep, Bergsig, Pella and Pofadder. The campaign aims to create awareness, provide education and render health-related services to community members. Community members are also provided with free screening and testing for Covid-19. In 2015, 12 new local businesses were created and commercial opportunities to the value of

The outreach programme delivers groceries to local communities and organisations.

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Showcasing Ivanhoe’s education initiatives Ensuring inclusive and equitable quality education.

vanhoe Mines places great value on the level of host community acceptance and trust, which underpins its social licence to operate. We strongly believe in collaborative problem-solving and employ a sustainability strategy that includes social development goals, targets and projects in alignment with host country regulatory frameworks and international frameworks such as the UN’s Sustainable Development Goals (SDGs). Our sustainability strategy recognises the power of education and aims to advance the objectives of ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all (SDG 4). Ivanhoe has, accordingly, developed and implemented various educational initiatives across its three principal projects.

• Investment into the development of the Lesedi Centre and its staff capacity to support the Early Childhood Development Function. • U nder its scholarship programme, Platreef supported 426 learners from underprivileged families. Platreef further provided study assistance to 79 employees, and external bursaries to 37 employees and host community members, also partnering with universities in Canada and Japan for post-graduate qualifications. • Platreef established five E-learning venues with support from the Department of Education, which remain crucial during the Covid-19 pandemic to maintain momentum for learners at beneficiary schools. Expansion to four more schools is planned for 2021. • Platreef introduced the MiniChess programme at the Motshitshi Primary School through the Entrust Foundation. This resulted in a marked improvement in numeracy and mathematical abilities, spatial perspective development, critical/strategic thinking development and mastery of English mathematical terminology among learners. • Infrastructure support (food garden, irrigation system) was provided to the Thobela Disability Centre, which caters for 30 young people of various ages. • Free Wi-Fi access to the host communities has enabled digital inclusion.

A case study at the Platreef Project To enable access to education, and raise the quality of education across all stages of the education value chain (including the vulnerable in society), we have invested numerous educational infrastructure and support initiatives at our Platreef Project under the first Social and Labour Plan (2015-2019):

The phased development plan Ivanhoe is investigating a phased development plan for the Platreef Project, targeting significantly lower initial capital, to accelerate first production by using Shaft 1 as the mine’s initial production shaft. This plan will focus on initially targeting the development of mining zones accessible from Shaft 1 and maximising the hoisting capacity of this shaft, followed by expansions to the production rate as outlined in the 2017 Definitive Feasibility Study. www.ivanhoemines.com

The MiniChess programme at Motshitshi Primary School has been a huge success for learners. SOUTH AFRICAN BUSINESS 2021

Platreef-sponsored science laboratories help bring the subject to life and make it fun.

SOUTH AFRICAN BUSINESS 2021

OVERVIEW

Energy Solar and wind projects are regularly coming onstream.

Credit: Abengoa

outh Africa’s acclaimed Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) attracted about R200-billion in committed investments, mostly in solar and wind power, in just five years. The early rounds of the independent power producers’ programme continue to produce regular dividends. In October 2020, another wind farm started commercial operations. Located about 80km north-east of Ceres in the Witzenberg Local Municipality, the Paardekraal East Wind Farm is in the Western Cape. The 110MW project was constructed by the Concor and Conco Consortium, Siemens Gamesa Renewable Energy supplied and installed the wind turbines, the towers were built by GRI in Atlantis and Mainstream Asset Management South Africa will manage the operations. According to the Department of Energy, the REIPPPP by 2016 had created more than 30 000 jobs and benefited local community development to the tune of R256-million. Figures released by the South African Wind Energy Association (SAWEA) showed shareholding for local communities reached an estimated net income of R29.2-billion over the lifespan of the projects. Some 14 000 new jobs are expected to be created, mostly in rural areas, and more than R30-billion has already been spent on Black Economic Empowerment (BEE) in the construction phase. The majority of wind projects have been allocated to the Eastern

SOUTH AFRICAN BUSINESS 2021

SECTOR INSIGHT Training for a renewable future is a new priority. Cape, but approximately 60% of the solar projects so far allocated in the programme have been in the Northern Cape, the nation’s sunniest province. Gas is also in the mix. The Department of Energy is targeting the procurement of 3 126MW and intends spending R64-billion on port, pipeline, generation and transmission infrastructure at three key ports, Richards Bay, Coega and Saldanha Bay. The most popular method relies on solar panels, namely solar photovoltaic (PV ). The other form of solar power (concentrated solar power, CSP) is effective and some projects

INTERVIEW

INTERVIEW INTERVIEW

Liqueﬁed natural gas can help South Africa reach its decarbonisation goals

Liquee Liqueﬁ helpSoS help decar decarbo

Aldworth Mbalati, CEO of DNG Energy, reveals how his company will offer a cleaner Aldworth Mb Aldworth Mbalati fuel stop for ships that travel along the South African coastline. for s fuelfuel stopstop for ships What are the main advantages of liquefied natural gas (LNG)? Liquefied natural gas is a cleaner and cheaper fuel alternative for the energy market. The environmental, social and economic benefits will help the country meet its targets in reducing greenhouse gas emissions, drive economic growth and improve the lives of its citizens.

Aldworth Mbalati, CEO

BIOGRAPHY Aldworth Mbalati started his entrepreneurial journey as owner and CEO of Vutomi Properties in 2002. In 2005 he was involved at Bayethe Investment Company, a company investing in coal and other energy assets. Five years later, he expanded into oil and gas exploration, production and midstream activities such as gas-to-power as the major shareholder and CEO of African International Energy, Africa. He started DNG Energy in 2013. He obtained rights and developed an LNG import terminal in Mozambique.

SOUTH AFRICAN BUSINESS 2021

Transnet National Ports Authority recently gave permission for you to begin bunkering operations: how significant is that? The promulgation of regulations by the International Maritime Organisation (IMO) in January 2020 requiring all ships to use fuel that has sulphur content of no more than 0.5% has put LNG to the fore as a solution for decarbonising the marine industry. Finalisation of a bunkering licence for DNG Energy at Coega gives us a go-ahead to begin our integrated gas infrastructure for on-shore and off-shore LNG logistics. We are building the first floating storage unit (FSU) Aldworth for Africa Aldworth Mbala Mbalati, C and the largest in the southern hemisphere. Our position at Coega gives us an opportunity to optimise trade for the global marine industry by offering a cleaner fuel stop for ships that pass through Algoa Bay, estimated at 57 000 ships every year.

What will be the impact of DNG Energy’s bunkering activities? BIOGRAPHY BIOGRAPHY We support government’s strategy to develop the Coega Industrial Aldworth Mbalati Aldworth start Development Zone as a gas hub. Our operations will reduce the energy Mbalati trepreneurial journe trepreneurial journey as costs of doing business, expand the marine economy by creating jobs, CEO of Vutomi Pro CEO of Vutomi Properti developing skills and will also move South Africa closer to meeting its In 2005 heinvolved was invo In 2005 he was climate change objectives. Investment Compa Investment Company, a investing in and coal ot a in coal Who do you see as your customers in the LNG space? investing assets. Five years Five years later, la he Our customers are global and local shipping companies, assets. intensive intoand oil gas and explor gas e into oil energy users, logistics companies, industrial and commercial operations, the taxi industry and households. duction and mids duction and midstream as gas-to-pow such such as gas-to-power as What are the strengths of your team? shareholder shareholder and and CEO DNG Energy’s team has unity in vision, values and shared culture. The Energy, International Energy International Afric working environment is steeped in a culture of hard workersedwho edare DNG Energy in 20 DNG Energy in 2013. H focused on the value proposition needed by the market. To those rights and develope rightswho and developed an say it cannot be done, DNG Energy asks, “Why not?” ■ terminal in Mozamb terminal in Mozambique

SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN B SOUTH AFRICAN BUSIN

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have been commissioned, but it is relatively expensive. Projects such as Kathu Solar Park (100MW ), a concentrated solar power project, and the Roggeveld Wind Farm (147MW) are indicative of the large scale of most of the energy generation that is being rolled out. At Black Rock Mine solar power is being put to use on a smaller scale. To light the intersections leading to the mine, BEKA Schréder has installed solar-powered streetlights. All of Abengoa’s three plants in the Northern Cape use CSP which reflects the sun’s rays during the day into a molten salt storage system. The energy is then slowly released during the night. The 205m tower that collects the rays at the Khi Solar One site is one of the tallest structures in South Africa. Despite the emphasis on renewables in South Africa’s latest integrated resources plan (IRP), South Africa’s energy mix is still weighted towards coal. Two huge new power stations, Kusile and Medupi, are being built by Eskom and 1 000MW has been allocated to private producers to build coal-powered stations known as Thabametsi and Khanyisa. The IRP Credit: Perdekraal East Wind Farm has attracted criticism for enabling an expansion of the coal industry. Koeberg nuclear power station is due to Hulett. This company’s sugar be decommissioned soon after 2045. mills are producing between A new centre has been established at Wits Business School 12MW and 14MW of power. to teach the new skills that are needed for new kinds of energy. The company believes that the The Africa Energy Leadership Centre (AELC) is supported by the national sugar industry could Chemical Industries Education and Training Authority (CHIETA). generate between 700MW Another body active in energy training is the Energy and Water and 900MW. The managing Sector Education and Training Authority (EWSETA). director of South Africa’s other Regulations in the energy sector are being keenly watched. sugar major, Illovo Sugar SA, The 2019 decision that power projects generating less than 10MW was quoted in the Sunday do not have to get licences from national departments has given Times in March 2020, saying, hope to independent power producers and city governments “There are opportunities around across South Africa that a new era in energy policy has begun. how do we sell power into These smaller projects can go ahead (up to a total of 500MW) the grid, opportunities within outside of the country’s IRP but the next step – allowing the whole biofuel, bio-energy companies to sell any excess power they generate to the grid – sphere.” Mamongae Mahlare will be a real game-changer. also said that the key to the Mining companies such as Sibanye-Stillwater and Gold sugar industry’s future lay in Fields have made it clear that they want to marshall renewable diversifying into energy. energy resources to power their own operations, to the Many of the same conditions tune of 150MW and 40MW respectively, but clearance from exist for Sappi’s wood and fibre government is still needed. mills in Mpumalanga and An example of the potential that lies within companies is Tongaat

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South African partners are often local energy companies and representatives of residents. Typically, a community trust is established to represent the interests of the local community. Investment by black people into the renewable energy programme is not limited to community trusts. Pele Green Energy is engaged with a photovoltaic plant at Touwsrivier in the Western Cape as a shareholder and as a provider of construction management services. Once the facility starts generating power, Pele will operate and maintain the plant. Among the international investors active are Enel Green Power (Italy), Scatec Solar (Norway), Globeleq (UK), Mainstream R e n e w a b l e Po w e r ( I r e l a n d ) , G e s t a m p Renewable Energies and Abengoa (Spain), Solar Capital (Phelan Energy Group, Ireland), SunEdison (USA), ACWA Power (Saudi Arabia), China Longyuan Power Group (China), Engie (France), juwi Group (Germany) and Tata Power of India. The last-named company recently sold to partner Exxaro Resources its 50% stake in Cennergi, which owns two wind farms in the Eastern Cape. Partnerships with foreign utilities or power companies are becoming more common, in part because the competition is bringing down the price which bidders are offering to sell power. This makes it difficult for South African firms to compete on their own. Many foreign investors such as large national utilities have strong reserves of cash and do not need to borrow money. The bank created by the five nations of BRICS, the New Development Bank (NDB), has made $180-million available to Eskom to help it integrate power from renewable energy sources to the national grid. â&#x2013;

KwaZulu-Natal and all of the breweries making beer across South Africa. Discussions about feed-in tariffs will have to be finalised before the huge potential of the relevant sectors can be fulfilled with regard to energy generation. If national utility Eskom is broken into separate business units then the likelihood of the tariff discussions taking place will greatly increase.

Funding Enel Green Power has adopted a new approach to funding its renewable energy projects. Law firm Norton Rose Fulbright has concluded a R3.5-billion financing arrangement with Absa and Nedbank which treats five wind farms to be built by Enel as one project, resulting in better terms. This is the first time such a method has been adopted in Africa. Investec intends listing a renewable energy fund on the JSE, to be called Revego Africa Energy. In addition, private banking clients of Investec may now receive loans to fund the installation of solar power in their homes, which payment can be linked to the home loan. The suppor t of two of South Africaâ&#x20AC;&#x2122;s biggest institutional investors, the Industrial Development Corporation (IDC) and the Public Investment Corporation (PIC), has been crucial in getting the renewable energy sector off the ground. They have also played a role in helping communities fund their participation in community trusts. Many partnerships between local and international companies have been established.

ONLINE RESOURCES IPP projects: www.ipp-projects.co.za National Energy Regulator of South Africa: www.nersa.org.za South African National Energy Development Institute: www.sanedi.org.za South African Photovoltaic Industry Association: www.sapvia.co.za South African Renewable Energy Council: www.sarec.org.za South African Wind Energy Association: www.sawea.org.za

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ICT Data centres are booming.

s South Africa joins the global trend towards online shopping and with the first networks rolling out 5G in 2020, data centres are going up all over the country. Teraco stores data in Johannesburg, Durban and Cape Town. A second 30MW site is under construction in Brackenfell to complement the existing facility in Rondebosch (pictured). Microsoft Azure has facilities in Cape Town and Johannesburg and Amazon has two sites in Cape Town. Huawei Cloud Services will use a partner company in Johannesburg to store its data. Africa Data Centre (ADC), part of the Liquid Telecom Group, has purchased a Tier IV data centre in Johannesburg, previously used by Standard Bank. A 2019 study by Microsoft found that the cloud ecosystem will create around 112 000 new jobs in South Africa by 2022 (IT Web). The number of permanent employees of Amazon Web Services reached 7 000 in October 2020. Acuity Consultants was quoted in 2019 as saying that software developers’ salaries had risen by 30% in a year (Business Times). A new entrant to the South African market relies entirely on the cloud. Uniconta, an enterprise resource planning (ERP) system for small and medium-sized businesses, opened its first offices in Cape Town in 2019, a precursor to plans to expand elsewhere in Africa. Cell C became South Africa’s third mobile operator in 2001, following MTN and Vodacom. Cell C was in the news early in 2020 when it defaulted on interest payments on a loan and this had an effect on the shares of Blue Label Telecoms, which owns 45% of the operator. When Cell C’s results were announced in October 2020, reference was made to a turnaround strategy. Telkom, which became the country’s fourth operator in 2010, intends selling its cellphone towers and masts (estimated to be worth about R12-billion) in order to invest in 5G. The Council for Scientific and Industrial Research (CSIR) in Pretoria will host a new body aimed at preparing South Africa for the Fourth Industrial Revolution (4IR), the South African

ONLINE RESOURCES Business Process Enabling SA: www.bpesa.org.za Independent Communications Authority: www.icasa.org.za Technology Innovation Agency: www.tia.org.za

SECTOR INSIGHT Vodacom is rolling out 5G.

Credit: Data Centre Map Affiliate Centre of the World Economic Forum. The Small Enterprise Development Agency (Seda) runs the SoftstartBTI IC T incubator in M idrand and Tuksnovation, a hightech incubator, at Pretoria University. Several incentives relevant to companies and educational bodies in the ICT sector are available from the Department of Trade, Industry and Competition (dtic). The Information Technology Association (ITA) is the trade and employer body of the I nfor mation Technology industry in South Africa. The ITA represents more than 200 companies which supply information technology equipment, systems, software and ser vices. Members include IBM, Microsoft SA, Siemens, SAP and Axiz. ■ SOUTH AFRICAN BUSINESS 2021

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Oil, gas and petrochemicals Exploration for gas off the south-eastern coast is hotting up. SECTOR INSIGHT Sasol is selling assets to reduce debt.

The Karoo Deep Drilling and Geo-environmental Baseline Project is investigating the potential impact of shale gas drilling. (Credit: Council for Geoscience)

here was great excitement in the oil and gas sector when Total and its joint venture partners announced in the 2019 that they had made a discovery at a site called Brulpadda, off the coast of Mossel Bay. The drilling was successful enough to warrant the return of the semisubmersible rig Deepsea Stavenger from Norway to South Africa and in August 2020 the rig was in place to drill the nearby Luiperd prospect in Block 11B/12B. The block, in the Outeniqua Basin 175km off the southern coast, covers an area of about 19 000km² in water depths of 200-1 800m. In October 2020, Total announced that it made a second significant gas condensate discovery on the Luiperd prospect. Total E&P South Africa BV is the operator (45%) with partners Qatar Petroleum International Upstream LLC (25%), CNR SOUTH AFRICAN BUSINESS 2021

International (South Africa) Ltd (20%) and Main Street 1549 Proprietary Ltd (10%, of which Africa Energy has a 49% stake). Petroleum Agency South Africa (PASA), which encourages exploration and regulates the oil and gas industry, has noted the significance of international oil companies committing to exploration off South Africa’s coast. Increased confidence by such companies can only lead to growth in the industry, and with the massive gas finds in the Rovuma Basin off Mozambique in 2020, there are sure to be more companies interested in South Africa’s potential. Another drilling project – on land this time – was launched in September 2020 in the Karoo. The Council for Geoscience (CGS) announced phase two of the Karoo Deep Drilling and Geo-environmental Baseline Project (KDD) in Beaufort West. The geoscientific research project in the Karoo Basin is aimed at developing a geoenvironmental baseline model with a focus on assessing the potential environmental impacts of shale gas development in the Karoo. A Gas Utilisation Master Plan (GUMP) is being developed as a

OVERVIEW part of national energy policy. Private companies are responding to this changed environment. Renergen, which owns rights to a field of liquified natural gas (LNG) in the Free State, has started taking orders for its product from logistics companies. Bulk Hauliers International Transport (BHIT) has signed an agreement to take LNG to fuel 50 of its trucks, which should lead to lower operating and maintenance costs. South African Breweries is another client. Delta Natural Gas (DNG) Energy announced in 2019 the rollout of 400 natural gas refuelling sites across South Africa with a focus on the taxi and logistics sectors. The major economic sectors using gas are the metals sector and the chemical, pulp and paper sector. Brick and glass manufacturers are also big consumers. Anadarko Petroleum, a US company, is investing $20-billion to build a liquid natural gas (LNG) plant in Mozambique. The projected spin-offs for the South African economy are estimated to top R7-billion. A new addition to South Africa’s pipeline network is a pipe to get natural gas from Mozambique to Gauteng. SacOil’s R90-billion project will deliver gas to Johannesburg and nearby towns. International chemicals and energy company Sasol has several large plants in Mpumalanga and the Free State. Sasol Gas is one of the four Sasol operations at Secunda, supplying natural gas to Sasol Synfuels and buying Sasol Synfuels’ methane-rich pipeline gas. Air Liquide Large Industries SA, a subsidiary of French company Air Liquide, has purchased Sasol’s oxygen production site in Secunda for R8.5-billion. The site, which contains 16 air separations units, will continue to supply gas and oxygen to Sasol’s various plants in terms of a supply agreement. Sasol is selling a number of its assets in an effort to reduce debt. Large quantities of oil are transported around the Cape of Good Hope every year: 32.2% of West Africa’s oil and 23.7% of oil emanating from the Middle East. Irrespective of market volatility, the longterm prospects for shipping and oil and gas are strong enough for national government to pursue Operation Phakisa (which includes a strong maritime economy element) and for Transnet National Ports Authority to spend heavily on upgrading the nation’s ports. The Port of Saldanha has a new open-access liquefied petroleum gas (LPG) plant run by Sunrise Energy. The Department of Trade, Industry and Competition (dtic) has established a Gas Industrialisation Unit (GIU). The first two

ONLINE RESOURCES National Energy Regulator of South Africa: www.nersa.org.za Petroleum Agency SA: www.petroleumagencysa.com South African National Energy Association: www.sanea.org.za South African Petroleum Industry Association: www.sapia.co.za

sites identified by the DoE for liquefied natural gas (LNG) plants are Richards Bay (2 000MW ) and the Coega Industrial Development Zone (1 000MW) in the Eastern Cape. This has the potential to turn the Richards Bay Industrial Development Zone (RBIDZ) and its Eastern Cape counterpart into energy hubs. The Coega IDZ is also home to the country first gasfired plant run by a private consortium, the Dedisa power plant. A new gas turbine open cycle power plant near Durban has been commissioned by Avon Peaking Power. The South African oil industry generates annual sales of about R365-billion and includes global giants such as Engen, BP, Shell, Total and Chevron. Most of the oil that feeds the country’s four crude-oil refineries is imported. The refineries are in Cape Town, Sasolburg and Durban (two). In addition to South Africa’s crude-oil refineries, natural-gas conversion plant, coal-to-fuel and gas-to-liquid crude-oil refineries, Sasol produces fuel from coal at its Secunda facility and PetroSA has the country’s only gas-to-liquid (GTL) facility at Mossel Bay. Getting fuel to the province of Gauteng is the key mission of the new multi-purpose pipeline (NMPP) which started delivering fluids in 2012. The NMPP terminals allow for greater flexibility in supply. Refined products such as jet fuel, sulphur diesel and both kinds of octane petrol are carried. ■ SOUTH AFRICAN BUSINESS 2021

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A game-changer for South African oil and gas Light oil and gas condensate discoveries could be the start of something big off the Southern Cape coast.

f the South African gas market is to take off and thrive, significant drilling has to take place. As the new CEO of Petroleum Agency SA, Dr Phindile Masangane, describes the situation: “That would be a game-changer for South Africa’s upstream oil and gas industry.” As it happens, a major discovery has been made at a site south-east of Mossel Bay called Brulpadda. Says Dr Masangane: “The recent discovery by Total and its JV partners in Block 11B/12B (Brulpadda) is the first giant step in that direction.” Odfjell’s Deepsea Stavanger semi-submersible oil rig relocated from Norway to South Africa in June 2020 to start exploratory drilling. The Luiperdpadda prospect where the rig is drilling is the second of five prospects in the group. With light oil and gas condensate having been found in the Brulpadda well, it is possible that other prospects will be found with this further drilling. Africa Energy holds a 4.9% effective interest in the Exploration Right for Block 11B/12B.

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The Company owns 49% of the shares in Main Street 1549 Proprietary Limited, which has a 10% participating interest in the block. Total as operator holds a 45% participating interest in Block 11B/12B, while Qatar Petroleum (25%) and CNRI (20%) are the other participants. The exploration drilling in Block 11B/12B is in deep waters similar to where the gigantic Mozambique Rovuma Basin gas discoveries were made in 2010. The drilling campaign has long-term benefits to South Africa which include introducing frontier deepwater (>1400m) exploration drilling, building confidence and potentially shifting petroleum exploration activities to private international oil companies (IOCs), de-risking deep-water acreage which is believed to be prospective for large oil and gas resources. This will encourage other IOCs to take risk in drilling deepwater prospects, which could result in the country discovering more oil and gas resources. In June 2020, the Block 11B/12B joint venture received the fast-track 3D seismic dataset from Petroleum Geo-Services ASA for the 2 305km² 3D seismic programme completed earlier in the year on the block. Initial interpretive work has identified a number of additional leads, including a potential northern extension to the Luiperd Prospect. When the Block 11B/12B JV receives the fully-processed 3D dataset it will then integrate the PGS data with the Polarcus 3D seismic data from 2019 in order to mature previously identified leads into prospects. “Further development of the discovery is highly dependent on the success of this further drilling,” comments Dr Masangane. “Possible development could see condensate being piped to the PetroSA facility in Mossel Bay,” she adds, “but these decisions are ultimately up to the operator, Total and its partners.”

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Petroleum Agency SA: promoting and regulating exploration and production. Petroleum Agency SA evaluates, promotes and regulates oil and gas exploration as well as related production activities in South Africa, in addition to archiving all relevant geotechnical data. The Agency acts as an advisor to the government and carries out special projects at the request of the Minister of Mineral Resources and Energy. South Africa’s energy mix is changing to include more gas through importing liquefied natural gas (LNG), using shale gas if reserves prove commercial, and developing infrastructure for the import of LNG. Petroleum Agency SA plays an important role in developing South Africa’s gas market by attracting qualified and competent companies to explore for gas. Another major focus is increasing the inclusion of historically disadvantaged South African-owned entities in the upstream industry. Currently, natural gas supplies just 3% of South Africa’s primary energy. A significant challenge facing the development of a major gas market is the dominance of coal. Opportunities for gas lie in the realisation of South Africa’s National Development Plan (NDP) and the Integrated Resource Plan (IRP). As custodian, Petroleum Agency SA ensures that companies applying for gas rights are

vetted to make sure they are financially qualified and technically capable, as well having a good environmental track record. Oil and gas exploration requires enormous capital outlay and can represent a risk to workers, communities and the environment. Applicants are therefore required to prove their capabilities and safety record and must carry insurance for environmental rehabilitation. ■

Contact details Tel: +27 21 938 3500 Email: plu@petroleumagencysa.com Website: www.petroleumagency.com

PASA’S NEW CEO HAS A BACKGROUND IN ENERGY POLICY AND STRATEGY Dr Phindile Masangane was appointed as the CEO of the South African upstream oil and gas regulatory authority, Petroleum Agency South Africa, in May 2020. Before then, Dr Masangane was an executive at the South African state-owned energy company, CEF (SOC) Ltd, which is the holding company of PASA. Dr Masangane was responsible for clean, renewable and alternative energy projects. In partnership with private companies, she led the development of energy projects including the deal structuring, project economic modelling and financing on behalf of the CEF Group of Companies. Her responsibilities included supporting the national government in developing energy policy and regulations for diversifying the

country’s energy mix. In 2019, Dr Masangane was Head of Strategy for the CEF Group of Companies where she led the development of the group’s long-term strategic plan, Vision 2040+ as well as the group’s gas strategy. From 2010 to 2013, she was a partner and director at KPMG, responsible for the Energy Advisory Division. She successfully led the capital raising of $2-billion for hydro and coal power plants expansion programmes of the Zimbabwean power utility, ZESA/ZPC. An alumnus of three universities, Dr Masangane has a BSc (mathematics and chemistry) from the University of Swaziland, a PhD in Chemistry from Imperial College, London and an MBA from the University of the Witwatersrand. ■

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Water Infrastructure spending will have to be consistently high. SECTOR INSIGHT The National Cleaner Production Centre South Africa is finding ways to use less water.

Amatola Water.

he National Department of Water and Sanitation has released a master plan in response to the severe droughts that have affected the country in recent years. It calls for annual investment for a decade of R3.3-billion in infrastructure to achieve water security. This is a figure that can only be achieved with the help of the private sector. In 2030 South African demand for water will be 17% greater than supply. That is the verdict of the 2030 Water Resources Group, an international consor tium of private companies, agencies and development banks that has established a South African chapter, the Strategic Water Partners Network. The National Cleaner Production Centre South Africa (NCPC) is the technical partner for the water use part of Phase 2 of the Strategic Water Sector Cooperation between the governments of Denmark and South Africa. NCPC, which runs the Industrial Water Efficiency project, has found that more efficient use of energy (a key focus area of its work) has also led to less water being used in production processes. A strategic review led Aveng to dispose of Aveng Water and Aveng Namibia Water in June 2019, together with a range of other businesses deemed to be non-core. The buyer was Infinity Partners, a 100% black-owned company jointly held by investor E-Squared Investments and Suzie Nkambule, who was the MD of Aveng Water up until the time it was sold. Another sale in 2019 resulted in Inzalo Capital Holdings taking a 60% stake in the water group of Sebata Group Holdings. The two companies affected are USC Metering and Amanzi Meters which, SOUTH AFRICAN BUSINESS 2021

as a result of the transaction, qualify as “Black Industrialist” businesses in terms of the Black Industrialist Policy (BIP) of the Department of Trade, Industry and Competition (dtic). The Western Cape, which bore the brunt of a fierce drought for several years, fares well in terms of providing water infrastructure and maintaining its wastewater treatments plants. The Western Cape Department of Agriculture has launched a climate action plan called Smart Agri which includes doing studies on conservation agriculture. When the long-term drought was at its worst, tourists to Cape Town were encouraged to “Save like a Local”. Together with a range of technical and legislative m e a s u re s, t h e c a m p a i gn to use less water worked remarkably well. The drought also led t o c re a t i v e t h i n k i n g b y corporate South Africa. Old M u t u a l ’s l a rg e Pi n e l a n d s camp u s ( accommodat ing approximately 9 000 staff members) is producing its own water by purifying wastewater.

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Technology and innovation A plant that makes water from air was launched in 2019. Aqua Air Africa has established an atmospheric water-generation plant at Ga-Rankuwa near Pretoria and is producing about 10 000 litres per day through a process that involves the condensation of water vapour into liquid. Simpler technology is giving the pupils at a school i n L i m p o p o a cc e ss to dr in k ing wa ter. Studen ts f rom the Universit y of Pretoria’s Depar tment of Geography, Geoinformatics and Meteorology have helped to build a net in the mountains where Tshiavha Primary School is located. Fog is captured by a big net and channelled into tanks by a gutter running along the bottom of the net. About 2 500 litres of water is captured per day which means that there is enough to share among the villagers. A new kind of water filtration system has been pioneered by a water entrepreneur from the same province, a system which puts macadamia nut shells to use. The brainchild of Murendeni Mafumo, the idea was first put into action in 2018 and has been used in schools and rural communities by Kusini Water. Powered by solar power, the purification system uses a carbon filter that is made from macadamia nut shells. The province of KwaZulu-Natal is tak ing a lead in desalination technology. R ichards Bay has installed a 10-container desalination plant next to the municipal water treatment plant at Alkanstrand. The first mobile sea water purification unit in South Africa, it comprises 10 containers and is located adjacent to the water treatment plant at Alkantstrand. It can deliver 10 megalitres of drinking water. In 2018 JG Afrika and technology partner NuWater delivered a R72-million desalination plant to South32’s Hillside aluminium smelter in the same town. In an attempt to reduce the amount of water sucked up by alien plants, Coca-Cola aims to recover nearly three-billion litres

ONLINE RESOURCES National Cleaner Production Centre South Africa: www.ncpc.co.za National Department of Water and Sanitation: www.dwa.gov.za South African Water Research Commission: www.wrc.org.za Water Institute of South Africa: www.wisa.org.za

of water through the removal of invasive plants. Supplying water to households and businesses has often been a task beyond the capabilities of some of South Africa’s municipalities. The Municipal Infrastructure Support Agenc y (MISA) falls under the National D epar tment for Cooperative Governance and Traditional Affairs and will assist municipalities to p l a n fo r, p rov i d e a n d maintain infrastructure. The first action of MISA was to commission 81 engineers and town planners to get to work in areas that need the most help. Another response to the municipal problem is a new national strategy which gives a bigger role to wellresourced water boards such as Umgeni Water and Sedibeng Water. In terms of the National Water Resource Strategy, catchment area management agencies have been established to oversee water resource management on a regional basis. The Imkomati-Usuthu Catchment Management Agency covers Mpumalanga, parts of Limpopo and part of the Kingdom of Swaziland. Another example of a CMA is the Breede-Gouritz Catchment Management Agency in the Western Cape. ■ SOUTH AFRICAN BUSINESS 2021

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Gert Sibande Water Quality Testing Laboratory Improving water quality for citizens of the district.

he Gert Sibande Water Quality Testing Laboratory is the only SANASaccredited, government-owned facility in the Mpumalanga Province. It is situated on the N17 corridor in Ermelo, bounded by Ekurhuleni Metro of the Gauteng Province to the west, Sedibeng District Municipality of the Northern Free State to the south-west, Ehlanzeni District Municipality of Mpumalanga Province to the northeast, N k angala Distric t Municipalit y to the north (Mpumalanga Province), Amajuba District Municipality to the south-east of KZN and Swaziland to the east and, therefore, easily accessible.

The facility is evidence of Gert Sibande District Municipality’s vision to be “A community-driven district of excellence and development” and is in line with the National Development Plan (NDP)’s vision 2030 which is: “To ensure that all South Africans have access to clean running water in their homes.” The centrality and the strategic location of this facility ensures easy accessibility by all stakeholders. Informed by the need to improve water quality in the district, the laboratory was established in 2011 to guarantee safe drinking water provided to millions of citizens within the district according to section 9 (1) of the Water Services Act No. 108 of 1997.

GSDM laboratory staff at the GSDM Water Quality Testing Laboratory led by Ms Victoria Tshabalala (centre). SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2021

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Mr Siyabonga Makhathini, the Senior Technician (Chemistry) at the ICP room in the GSDM laboratory. The focus of the facility is on the following: • Chemical analysis. • Microbiological analysis. • Physical analysis. These services are available to all stakeholders and customers including local municipalities and industries. A pricelist is available on request. Gert Sibande District Municipality prides itself about this facility which meets the requirements of the ISO/IEC 17025:2017. In addition, the Gert Sibande Water Quality Testing Laboratory promotes water quality and care for water in communities through active involvement in awareness programmes offered by local municipalities. It also promotes

careers in science by providing opportunities to students in the form of in-service training. The laboratory boasts of the provision and delivery of superior laboratory services and aims to promote and support the development of a culture of scientific learning. The Gert Sibande Laboratory regards its clients as valuable stakeholders whose interests are a priority for the laboratory.

OFFICE HOURS Monday to Thursday: 07h30-13h00; 13h30-16h30 Friday: 07h30 to 14h00.

Contact details Address: Cnr N17 Bethal and Nelspan Roads, Cassim Park. PO Box 1748, Ermelo, 2350. Tel: +27 17 801 7143. Email: laboratoryservices@gsibande.gov.za Website: www.gsibande.gov.za Facebook: @gertsibandedm Twitter: @GertSibandeDM GPS coordinates: S26 31’ 25.73” E29 58’ 19.25

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Engineering Many engineering groups are selling off assets. SECTOR INSIGHT A presidential infrastructure office may breathe new life into the sector.

A semi-portable crane from RGM Cranes. Credit: Betterect.

veng’s disposal of non- core assets is t ypical of the activity of larger companies in the sector. The company ’s website lists Aveng Trident Steel and Aveng ACS (Automotive Control Solution) as solid businesses which will realise good value once a new owner is found and lists another eight businesses (in roads, rail, civils and electrical) which the group sold in 2019. With a renewed focus on infrastructure, resources and mining solutions, Aveng’s main operating companies are now Moolmans in South Africa (contract mining and mining services) and McConnell Dowell (engineering, construction and maintenance) in Australasia, Southeast Asia and the Middle East. Some of the big names such as Group Five, Basil Read and Esor are in business rescue. Others such as Murray & Roberts and WBHO rely heavily on offshore contracts for revenue. Murray & Roberts has completed its transition from being a South African company focussing on contracting to a multinational engineering and construction group with a focus on natural resources markets. An Investment and Infrastructure Office has been created in the Presidency. It is headed by the former Gauteng MEC for

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Economic Development, Dr Kgosientso Ramokgopa. In 2020, 51 infrastructure projects with a total investment value of more than R340-billion were gazetted and hopes are high that this initiative will provide a boost for engineering firms. A study carried out by KMPG found that spending on infrastructure resulted in additional economic activity worth R26-billion and created 92 000 direct jobs. Marine repair and engineering form a significant sector in the Western Cape and KwaZulu-Natal, with established companies such as EBH South Africa offering comprehensive services. Both KwaZulu-Natal ports are expanding (Durban has built a cruise-liner terminal and Richards Bay is undertaking no fewer than 45 projects) and will continue to attract engineers. Dormac, which is headquartered in the Bayhead area of the Port of Durban, is best known for its marine engineering but it offers specialised services to the sugar industry and provides machinery for industrial giants like Toyota and Defy.

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Sector news

Training

Expansion at Betterect’s manufacturing plant in Krugersdorp has helped to push production to a monthly level of 650 tons of steel plate work. This has necessitated the installation of strong and reliable cranes which have been provided by RGM Cranes for more than 30 years. Betterect specialises in mild and stainless steel fabrication, steel erection and corrosion protection. Betterect recently commissioned RGM Cranes to supply a 30-ton semi-portable crane and two 10-ton single-girder cranes. The smaller cranes lift items for the erection of semi-assembled or fully assembled tanks and skids in the workshop area. Most of the RGM cranes are on site at the Chamdor site but when a fuel gantry was constructed at the airport on the island of St Helena, the two companies worked together there. RGM is the South African agent and supplier for Turkish company Güralp. The Güralp hoist is sent to South Africa in kit form (the hoist, cabling and electrics) and RGM manufactures the girders and assembles the crane. A good sign for the engineering sector came in the news that the Boksburg site where DCD Rolling Stock used to make rail wagons and fix locomotives is up and running again, courtesy of TMH Africa, a part of the TMH Group, which has head offices in Switzerland. ELB Group’s Engineering Services division employs more than 1 000 people and the company is currently working full-time on the vast Gamsberg zinc project in the Northern Cape. Manganese, iron ore and coal are other mining sectors where ELB is active and it does work for Eskom (the national utility) and companies such Nestlé and Unilever. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has created an entirely new industry in less than seven years, with investment of about R200-billion in solar parks and wind farms. This has created many opportunities for engineers.

A study jointly commissioned b y t h e Wa t e r R e s e a r c h Commission and the South African Local Government Association (SALGA) found that the country’s four-in-amillion ratio of engineers is a long way from the required 50-per-million. In 2015 there were are 16 423 registered professional engineers in South Africa. One response at national level was the importation of Cuban engineers. Several par tnerships between the public and private sectors are trying to address the skills deficit. One example is the partnership that Wits’ National Aerospace Centre has with Boeing and Airbus. The Skills Development Amendment Act is intended to improve the situation. Universities, universities of technology and companies are increasing their focus on the training of engineers. The Engineering Council of South Africa (ECSA) has a programme where trainees can earn certificates in specific disciplines from a range of institutions. The qualifications are in line with the council’s Exit Level outcomes. Six of South Africa’s biggest construction companies have established a R1.25-billion skills fund. ■

ONLINE RESOURCES Consulting Engineers South Africa: www.cesa.co.za Engineering Council of South Africa: www.ecsa.co.za National Department of Public Works: www.publicworks.gov.za South African Consulting Engineering Firms: www.consultsa.co.za Southern African Institution of Civil Engineering: www.civils.org.za

SOUTH AFRICAN BUSINESS 2021

OVERVIEW

Construction and property Logistics property is strongly placed for growth. SECTOR INSIGHT Cement and brick manufacturers are hoping for a quick recovery.

Credit: Equites

he trend which saw logistics property growing as a sector because of the Amazons of the world needing more space to store their products will speed up in the post-Covid world as more people work and order from home. The Economist focused in its 30 M ay 2020 issue on Prologis, Amazon’s biggest landlord. The American company has assets of $125-billion and 90km² of floor space, and spent $25-billion in 2019 in America and Europe. E-commerce now accounts for about 40% of its construction activity, whereas it was a fifth before the pandemic. A similar trend playing out in South Africa was noted by Nick Wilson in the Business Times (Sunday Times 5 July 2020). The logistics property sector had “boomed in recent years due to the growth of e-commerce” but was likely to do even better because of Covid-19. About a third of Fortress’s R30-billion portfolio is in the logistics sector and it signed contracts in 2020 with Takealot and a Netflix production company. The clients of Equites, a company which focusses on logistics property, include Amazon, Super Group, HDL and DSV, a Danish transport and logistics company. Equites is the only specialist logistics property company listed on the JSE. In six years, its portfolio has grown from R1-billion to R15-billion. There are more than 30 real estate investment trusts (REITs) on the JSE and they generally deliver good value. FNB, which publishes a regular proper t y barometer, has done an in-depth analysis of previous crises to help understand what may occur in the post-Covid proper ty market. According to John Loos, a property strategist at FNB Commercial Property Finance, the most vulnerable sector is likely to be Retail Property. Smaller neighbourhood centres,

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with more essential items and greater convenience, will be less vulnerable. This is borne out by the results announced by Resilient in 2020. Of the company ’s 28 retail centres across South Africa, the ones that did best were the smaller, rural malls. The South African Council of Shopping Centres calculates that the country has the sixthhighest number of shopping malls in the world. R2-billion was recently spent on Menlyn Park in Pretoria to expand it to 177 000m² of gross lettable space while the Gateway T h e a t re o f S h o p p i n g i n Durban, South Africa’s secondbiggest mall, recently spent R750-million. The lockdown accelerated the trend for people to work f ro m h o m e , a n d s o t h e Office Proper ty sector will come under pressure. Many companies will be reducing office space but, as Loos writes, “Improved technology has gradually been driving a greater remote working trend for some years. Covid-19 has merely sped this trend up.”

OVERVIEW

Industrial Proper ty will take a hit but is expected to recover strongly while Residential Property is expected to be the least at risk. Prices will likely go down, but people need a place to live and the work-from-home trend will increase the importance of residential property. Loos concludes that, “In a few decades time, the composition of the proper ty stock may look noticeably different to what it is today, the key features being a smaller portion of the total being retail and office property, and an even larger portion of the stock being residential property than is currently the case.” Statistics SA has found that the percentage of South Africans living in flats has risen markedly. Whereas 26 out of 100 approved plans in 2013 were for flats, this figure reached 59 in 2016. Although the total number of people living in flats is still relatively small (5.4%), this figure will rise as urbanisation increases.

Construction rebuilding Job losses and business rescues have been recurring themes in the South African construction sector for some time. The fact that some kind of recovery must happen after the lockdown will give hope to all construction and construction material companies, and they will hope that increased order books will allow them to restart some of their facilities. Corobrick is a manufacturer of masonr y, pavers and concrete earth retaining systems. The company, which has its headquarters in Durban and employs 1 400 people, announced in 2020 that four of its 13 factories would be closing. PPC Cement suffered losses for the year ending 30 March 2020 with cement demand significantly down from the previous year. The Covid-19 lockdown will have made the situation worse and a rights issue is likely to follow. Road-building, renewable energy and affordable housing have proved good sectors for Raubex, which returned good results in 2020, despite the lockdown occasioned by

ONLINE RESOURCES Construction Industry Development Board: www.cidb.org.za SA Institute of Architects: www.saia.org.za SA Reit Association: www.sareit.prowly.com South African Property Owners Association: www.sapoa.org.za

Credit: Fortress Reit Ltd

Covid-19. The comp any ’s Ear thwor ks and M ater ials division delivers two-thirds of its operating profit but it is upbeat about its Roads division winning contracts in South Africa in the short term. Tenders were entered fo r R 2 2 - b i l l i o n w o r t h o f road construction in the six months to March 2020. The Inner City Local Area Plan (LAP) for Durban has b e e n d e v e l o p e d fo r t h e Strategic Planning unit of the eThekwini Municipality by a Joint Venture called IPPU. A major milestone was reached in 2019 when the beachfront promenade extension reached the harbour. The project began in early 2018 and cost R400-million. According to the organisers of the 2019 KZN Construction Expo, infrastructure will attract more than R200-billion in investment over seven years and R35-billion will be spent over 15 years at the Port Waterfront development. ■

SOUTH AFRICAN BUSINESS 2021

OVERVIEW

Manufacturing TFG plans to double manufacturing capacity.

FG, whose South African brands include TotalSports, Markhams and Foschini, has a five-year plan to double its manufacturing capacity. Having purchased Prestige Clothing Maitland and Prestige Clothing Caledon in 2012 and spent R75-million on expanding the factory in Caledon in 2017, TFG now plans to significantly increase the percentage of locally-made clothing items from the current level of 35% to 55%. This expansion should lead to more jobs within the group, which expanded in 2020 with the purchase of Jet from Edcon. The Manufacturing and Competitiveness Enhancement Programme (MCEP) of the Department of Trade, Industry and Competition (the dtic) has disbursed grants which have resulted in 230 000 jobs being “sustained”. Because of the Clothing and Textile Competitiveness Programme, that sector currently now employs around 95 000 workers, contributing 8% to manufacturing GDP and 2.9% to overall GDP. In the leather sector 22 new factories have been opened, supporting 2 200 jobs. In the Western Cape, this revival is reflected in member companies of the Cape Clothing and Textile Cluster hiring 35% more staff in four years. About 23 600 people are employed in the province and exports from the Cape amounted in 2017 to R4.4-billion with sales up by 34% above inflation. SOUTH AFRICAN BUSINESS 2021

SECTOR INSIGHT The furniture sector is finding ways to grow. The furniture manufacturing sector earned R3.9-billion in exports in 2018 and contributed 1% to the country’s gross domestic product (GDP). Employment across the sector amounts to more than 26 000, but that figure is markedly down from a high of 80 000 in the 1990s. Exposure to foreign imports and distance from lucrative markets continue to pose threats to the sector, but a group of manufacturers, buyers, government and traders has set out to do something about it. A first Furniture Sector Forum (pictured) was held

OVERVIEW Johannesburg in 2019 where government incentives and ideas about how to reduce the cost of expensive machinery through co-ownership and partnerships were shared. The forum was cohosted by the South African Furniture Initiative (SAFI), Proudly South African, PG Bison and the Department of Trade, Industry and Competition. The second Forum took place in October 2020, with the support of Interior Design Professions (IID) and Trend-Forward. The dtic’s Agro Processing Support Scheme (APSS) includes furniture manufacturing as a core sector for future growth and support. Other efforts to get government departments to buy locally were explained. Average employment per manufacturer is 13 people per facility which makes the sector well suited to expansion and to measures requiring flexibility, but it can lead to manufacturers feeling isolated. The idea-sharing forum is one way of overcoming that.

Contribution to GDP Manufacturing’s contribution to South African GDP is 13%, less than half its contribution in the 1980s and a drop of about 11% from the 1990s. In 2018, the real-term contribution to GDP was R386.8-billion (Stats SA). The manufacturing sector employs the third most people of South Africa’s economic sectors, about 1.7-million, after financial services and retail. Two of the manufacturing sectors that have achieved the best results in recent years, automotive and food and beverages, are featured separately. Food and beverages is the most significant, contributing 25% to total manufacturing activity. The global surf ski market is worth about R220-million. According to Dale Granger of biznews, some 30-40% of that niche market belongs to South African manufacturers such as East London’s Fenn and Durban-based Revo and Carbonology. The South African after whom the world’s first surf ski was named, Oscar Chalupsky, is now CEO of Nelo Surf Skis in Portugal. A new surf ski sells for between $3 000 and $6 000. South Africa’s pharmaceutical sector is worth approximately R20-billion annually. Although there are more than 200 pharmaceutical firms in the countr y, large companies dominate, with Aspen (34%) and Adcock Ingram (25%) the key players, followed by Sanofi, Pharmaplan and Cipla Medpro. The National Association of Pharmaceutical Manufacturers (NAPM)

ONLINE RESOURCES Chemical and Allied Industries’ Association: www.caia.co.za Manufacturing Circle: www.manufacturingcircle.co.za South African Furniture Initiative: www.furnituresa.org.za South African Textile Federation: www.texfed.co.za

has re-branded as Generic and Biosimilar Medicines of Southern Africa. The opening in May 2018 of a R1-billion specialised product facility at the Port Elizabeth plant of Aspen Pharmacare will add 500 jobs to the existing complement of 2 000 staff members. South Africa’s chemical i n d u s t r y c o n t r i b u te s 5 % to national gross domestic product and about 60% of earnings are derived from expor ts. The complexes run by Sasol at Secunda (Mpumalanga) and Sasolburg (Free State) underpin the national manufacturing capacit y. Sasol Chemical Industries makes about 60% of South Africa’s polypropylene. AECI is one of S outh Africa’s biggest groups. The two principal divisions are AEL Mining Services (with a large factory site at Modderfontein n e a r J o h a n n e s b u rg ) a n d Chemical Ser vices, which has 20 separate companies. Fo s k o r i s t h e c o u n t r y ’s only ver tically integrated phosphates producer. The by-products of the sugar and forestry processing p l a n t s o f K w a Zu l u - N a t a l benefit the chemicals sector. Illovo Sugar manufactures downstream products such fur fural, fur fur yl, alcohol, diacetyl and ethyl alcohol. Sappi makes 17% of the world’s dissolving wood pulp. Two of the companies three mills are in South Africa, Ngodwana (Mpumalanga) and Saiccor (KwaZulu-Natal). ■ SOUTH AFRICAN BUSINESS 2021

OVERVIEW

Food and beverages Starch mills are changing hands. SECTOR INSIGHT South Africans love chicken and hamburgers.

ongaat Hulett, best known as a sugar producer, is selling its starch business (with three milling plants in Gauteng and one in the Western Cape) to the KLL Group, a whollyowned subsidiary of Barloworld Logistics Africa. The Germiston plant is pictured. The R5.3-billion transaction was in doubt because of concerns about the value of the business expressed by the buyer in the context of Covid-19 but the Competition Tribunal in July 2020 approved the deal. The top five fast-food companies in terms of outlets in 2019 were KFC (900), Steers (600), Debonairs (569), Wimpy (467) and Nando’s (340). McDonald’s, FishAways and King Pie were close together in the next three positions in a survey done by Business Tech. The survey found a total of 5 287 stores, which includes the somewhat vague “over 200 stores” claimed by Chicken Licken. Famous Brands owns Steers, Debonairs, Wimpy and FishAways, a typical scenario in the South African fast-food sector. The Spur Corporation has outlets in several segments including family diners, pizzerias, hamburger outlets and steak houses, including the Hussar Grill. Taste Holdings announced in 2020 that it was placing its food business into voluntary liquidation after a failed attempt to sell the Domino’s Pizza business. The Starbucks franchise was sold for R7-million. More than half of the companies operating in the food and beverage sector in South Africa are in Gauteng, including Nestlé, Tiger Brands, Pioneer Foods, RCL, AVI and Astral. There are approximately 4 000 food processing companies in the province, employing more than 100 000 people.

ONLINE RESOURCES Agricultural Research Council: www.arc.agric.za FoodBev SETA: www.foodbev.co.za National Agricultural Marketing Council: www.namc.co.za

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Two of the best-known large companies in South Africa’s food and beverages sector were purchased by international companies in 2019. PepsiCo bought Pioneer Foods and Central Bottling Co of Israel made on offer on dairy company Clover. Clover’s action in 2019 in closing three small-town plants in rural areas illustrated a less positive aspect of South African manufacturing: the inability of small municipalities to adequately supply services to companies. Clover moved production to Port Elizabeth, Durban and Johannesburg. Food and beverages makes up 26% of the South African consumer products sector, just ahead of agro-business (25%), diversified companies (23%) and sugar producers. Recent capital expenditure in the industry has targeted improving efficiency rather than expansion of production. The food and beverages sector employs about 230 000 people. Beverages accounts for just over 4% of all manufacturing sales while food is responsible for 13.5%. Within the sector, beverages accounts for 24% of sales. One quarter of the 37% of national GDP that is generated by agro-industries derives from agro-processing. ■

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Asset management in the time of Corona

14:4

OVERVIEW

Automotive The automotive sector makes up a third of South Africa’s manufacturing capacity. SECTOR INSIGHT Supplier parks and Special Economic Zones are playing to South Africa’s automotive strength.

The East London IDZ hosts a number of automotive companies.

ehicle sales declined sharply in the Covid-19 lockdown period. For the year to September 2020, sales of passenger vehicles went down by 34.4% and by a similar amount in light commercial vehicles. Analysts will be closely watching consumer behaviour as economies open again to monitor the effects of working from home and the further growth of the ride-hailing trend. The manufacturing part of the automotive and components sector is a vital part of South Africa’s manufacturing landscape. It is responsible for more than 112 000 jobs which translates to more than 450 000 jobs once the multiplier effect is taken into account. The South African automotive industry also accounts for: • 30.1% of the country’s manufacturing output. • 6.9% of GDP (4.4% manufacturing, 2.5% retail). • 27.6% of value addition within domestic manufacturing. • exports to 151 countries, 74% to EU. • exports in 2018 of vehicles and components of R201.7-billion, a record (and 15.5% of country total). • exports in 2019 of 387 125 vehicles achieved a new record amount of R148-billion and components also set a new record of R53.7-billion. (National Association of Automobile Manufacturers of South Africa, NAAMSA)

SOUTH AFRICAN BUSINESS 2021

Foreign direct investment (FDI) into South Africa from seven of the eight Original Equipment Manufacturers (OEMs) totalled R7.3-billion in 2019 and a further commitment was made of another R40-billion investment over the next five years. The component sector invested R3.5-billion in 2019 (Automotive Industry Development Centre, AIDC). Long-term state support of the industry through the Automotive Production and Development Programme (APDP) is a major reason for the continuing health of this vital sector. The industry itself is looking to Africa for new markets. By increasing total production numbers to onemillion vehicles, the sector will become more viable. The National Department of Trade, Industry and Competition (the dtic), working together with the National Association of Automobile Manufacturers of South Africa (NAAMSA) has set targets for 2035 to increase production to 1% of world volumes (which would mean 1.4-million more vehicles made

OVERVIEW in SA), increasing local content and doubling employment and blackowned businesses in the sector. South Africa has three centres of automotive production: the Eastern Cape, Gauteng and KwaZulu-Natal. In the Eastern Cape, the OEMs are Volkswagen, Mercedes-Benz, Isuzu and Beijing Automobile Investment Corporation (BAIC). Ford has an engine plant in Port Elizabeth. In KwaZulu-Natal Toyota has a large plant just south of Durban. Although the manufacturers of loaders, dump trucks and haulers are not counted in the tally of South African OEMs, Bell Equipment, a global leader in its field, runs a large manufacturing site in Richards Bay. Dezzi Equipment is based in Port Shepstone. In 2018 AIH Logistics started assembling Mahindra and Bolero bakkies from kits imported from India on a site at the Dube TradePort. Pretoria is home to BMW, Nissan and Ford. All three centres are making use of targeted land allocation to try to boost the sector through industrial parks or Special Economic Zones. The idea is to get economies of scale through grouping companies which serve one another. Training becomes easier and costs can be reduced. Chinese OEM BAIC is the first new entrant into the market to set up within an SEZ. The planned investment in the Coega SEZ by BAIC and its partners is R11-billion. BAIC expects to be building 50 000 vehicles per year at its site at the Coega SEZ by 2022. Automotive component suppliers and downstream manufacturers such as electronics components, metal fabrication, plastic moulding, precision machining and trim are expected to take up opportunities in the Automotive Zone within the Coega SEZ, as they do at the East London Industrial Development Zone (ELIDZ). Companies in the ELIDZ which manufacture in support of the Mercedes-Benz operation include Feltex Automotive Trim, TI Automotive (brake and fuel pipes), Yanfeng Automotive Interiors, Linde+Wiemann (seat frames, recliners, metal surface treatment) and Onelogix VDS, which is a logistics company that delivers motor vehicles. In line with the policy of developing industrial economic hubs, the Durban Automotive Supplier Park is being built at Illovo, south of Durban and near to the Toyota plant. The Dube TradePort Corporation will manage the project, which covers 1 013ha. The Durban Automotive Cluster, which has 39 member companies,

ONLINE RESOURCES Automotive Industry Development Centre: www.aidc.co.za Manufacturers: www.naacam.co.za National Association of Automotive Component and Allied National Association of Automobile Manufacturers of South Africa: www.naamsa.co.za

is funded by the municipality. Together, these firms have about 17 000 employees. Trade and I nvestment KwaZulu-Natal (TIKZN) estimates that the province’s component automotive manufacturers enjoy a combined turnover approaching R10-billion. The Tshwane Automotive Special Economic Zone (TASEZ) is a project of the Gauteng Province, the Department of Trade, Industry and Competition (dtic) and the City of Tshwane. The implementing agent is the Coega Development Corporation (CDC), the developer and operator of the Coega SEZ. The TASEZ, branded as “Africa’s First Automotive City”, has a mandate to promote economic participation for SMMEs and create employment in the region. Sectors targeted include security, IC T maintenance, facility maintenance, construction, automotive supply chain, marketing and advertising, catering and events. B oth the N issan and BMW plants are expanding and Ford is investing in Silver ton. An I ncubation Centre for SMMEs has been launched at Nissan’s assembly plant in Rosslyn. The facility supports small enterprises through subsidised rental and mentorship and training. Management of the centre is done by the Automotive Industry Development Centre, a subsidiary of the Gauteng Growth and Development Agency (GGDA). ■ SOUTH AFRICAN BUSINESS 2021

OVERVIEW

Transport and logistics Decongestion of ports is a priority. SECTOR INSIGHT Airlink has signed partnerships with two world-leaders.

Credit: South African Heavy Haul Association

etting freight through South Africa’s ports in a more efficient manner has become an urgent priority. A Port of Durban Decongestion Task Team includes a broad range of private and public sector organisations involved in the port. Through nine targeted workstreams the team is tackling the root causes of Bayhead congestion and is working on improving coordination, planning, operations and cargo flows. A mandatory automated truck booking system has been introduced at Durban Container Terminal Pier 1 and Pier 2, while the Grindrod, FPT and Bulk Terminal depots have also piloted their own booking systems. Although Transnet Port Terminals and Transnet Freight Rail are vital to the smooth running of the loading systems, private operators of storage facilities and trucking companies also need to synchronise their operations. In Cape Town, efforts to work on decongestion include the City of Cape Town, the Cape Chamber of Commerce and Industry and the provincial government. The 2020 Technical Conference of the South African Heavy Haul Association tackled the issue of bringing smart technology to the railway system under the theme, “Smart, Resilient Railway Operations & Infrastructure”. Smart systems can self-monitor and self-diagnose railway conditions and then predict failures or problems before

SOUTH AFRICAN BUSINESS 2021

they occur. One of the biggest problems facing the South African rail system is cable theft, which leads to frequent delays along the network. Transnet Freight Rail (TFR) has had a new CEO since April 2020. Siza Mzimela, with a background in airlines and logistics, wants to divert road freight to rail, which currently attracts just 20% of South Africa’s general freight. One of her goals is to find a South African manufacturer who can produce railway lines. Transnet Freight Rail’s operations represent about 80% of Africa’s rail infrastructure. With 25 000 employees TFR has specialist divisions for hauling coal and iron ore together with a general freight division which transports everything from grain to chemicals. It is on these specialised lines that TFR excels. A new record was set in 2019 when 375 wagons were hitched to the Sishen-Saldanha train that hauls iron ore from the Northern Cape to a dedicated terminal at Saldanha in the Western Cape. The total volume transported in 2019 amounted to 58.4-million tons.

OVERVIEW

Coal tonnage reached 72mt in the same year and general freight accounted for a further 85mt. Increasing the amount of general freight transported by rail would not only bring down costs but it would also take the burden of thousands of heavy trucks off South Africa’s roads. South Africa has 22 000km of railway lines and 747 000km of roads, 325 019 heavy-load vehicles and the road freight industry employs 65 000 drivers. The logistics and courier market is worth R10-billion. There are 135 licensed airports in the country, 10 of which have international status.

Air Four airlines were still flying after the Covid-19 lockdown: Airlink, Mango, Cemair and FlySafair. The business rescue process was applied to SAA, SA Express and Comair. A R1.5-billion business rescue offer was made to Comair that would enable it to restart in time for Christmas 2020. The offer entails delisting from the JSE. Comair operates as a British Airways franchisee on domestic routes and launched its own low-cost airline, kulula. com, in 2001. In October 2020, Airlink signed two deals in quick succession with Qatar Airways and Emirates, giving customers single-ticket travel and one-stop baggage check-in. Airports Company South Africa (ACSA) owns and operates the country’s 10 biggest airports. The company also manages airports in India and Brazil. Ekurhuleni wants to leverage the location of South Africa’s biggest airport, OR Tambo International, into a major economic asset. OR Tambo International in Johannesburg caters for more than 21-million passengers annually. Cape Town International Airport recorded 10-million passengers in 2016, a figure that rose in 2019 to a shade under 11-million. King Shaka International Airport (KSIA) is north of Durban. The South African Ministry of Transport has several agencies and businesses reporting to it: Air Traffic and Navigation Services Company, ACSA, National Transport Information System, Road Accident Fund, South African Civil Aviation Authority, South

ONLINE RESOURCES Airlines Association of Southern Africa: www.aasa.za.net Airports Company South Africa: www.acsa.co.za Road Freight Association of South Africa: www.rfa.co.za South African Association of Freight Forwarders: www.saaff.org.za South African Heavy Haul Association: www.saheavyhaul.co.za

African Maritime Safety Authority (SAMSA), the South African National Roads Agency Limited (Sanral) and the Passenger Rail Agency of SA (PRASA).

Logistics South Africa’s largest agricultural company has signed an agreement with Transnet to partner in upgrading grain facilities at two ports. East London and Durban will receive R100-million revamps as part of a 15-year tender won by Afgri. Transnet is hoping that the partnership will help it towards reaching its goals in its road-torail strategy. The building of the MusinaMakhado Special Economic Zone (SEZ) will boost Limpopo’s role as a transport and logistics hub. The Musina Intermodal Terminal is 15km from the busy Beit Bridge border crossing. It will boost efforts to move cargo from road to rail. The Maputo Development Cor r idor is Afr ica’s most advanced spatial development initiative. Run by the Maputo Development Corridor Logistics Initiative (MCLI), the corridor runs from near Pretoria in Gauteng, to Maputo in Mozambique. The Harrismith Logistics Hub at the Maluti-A-Phofung SEZ on the N3 is an inland port that can handle cargo containers and shift cargo from road to rail, reducing congestion and costs. ■ SOUTH AFRICAN BUSINESS 2021

OVERVIEW

Tourism and events The MICE sector faces special challenges. SECTOR INSIGHT Tsogo Sun Hotels has increased its stake in three hotels post-lockdown.

Credit: AfriCamps at Ingwe

lthough all projections about the tourism sector and its potential for growth and for job creation were shortcircuited by the Covid-19 pandemic, the fact remains that the sector can grow quickly and it is a good job creator. In the short term, domestic tourism will be the focus but the potential of the sector, and South Africa’s riches in terms of what it can offer, remain significant. According to John Loos, a property strategist at FNB Commercial Property Finance, an overlooked factor in many analyses of the Covid-19 lockdown has been how technology has shown that some business travel can be avoided altogether. Corporate travel budgets will be cut, and fewer physical conferences will be held, he predicts, which will put the meetings, incentives, conferences and events (MICE) sector under even more pressure. A relatively small market currently, but one with massive potential, is Muslim tourism. The Western Cape has already started doing research in its agricultural and tourism sectors and there is no doubt that with good marketing, South Africa could start gearing up for a growing number of Muslim tourists. The fact that most of the country’s major cities have a proportion of Muslim residents and mosques are widely spread across the country means that travelling around the country is easy.

SOUTH AFRICAN BUSINESS 2021

The 16 units that comprise the Buckler’s Africa Lodge by BON Hotels on the banks of the Crocodile River overlooking the Kruger National Park has halal certification. A coastal option that allows for selfcatering is AfriCamps Boutique Glamping site at Ingwe near Plettenberg Bay. Situated on a hilltop with great views of the ocean and the Tsitsikamma Mountains, the luxury tents have fully-fitted kitchens. Virtual tours have been taken up by heritage operators such as Constitution Hill and Liliesleaf Farm and this option is likely to grow as people in other countries seek out a South African experience free from any worries. When the Marriott International hotel group closed three of its South African hotels during the Covid-19 lockdown, Tsogo Sun Hotels, which owns a controlling stake in all three hotels, stepped up its commitment by agreeing to bring them into its portfolio, keep them open and run them. Tw o o f t h e a f fe c t e d hotels were the Protea Hotel by M arriott Haz y view in

OVERVIEW

Mpumalanga and Durban’s Protea Hotel by Marriott Durban Edward. The third hotel, the Mount Grace in the Magaliesberg, was originally developed by the Brand family and was the sister hotel to The Grace in Rosebank. Tsogo bought and restored The Grace in 2015 and it currently operates as 54 on Bath. The Tsogo group believes that demand for conferencing, weddings and shorter family getaways will grow and that the Mount Grace, with its close proximity to Johannesburg, is in a good position to respond to those markets. Tsogo Sun Holdings split its casino and hotel operations in 2019 in order to unlock value in the two sectors. With a market cap of R25-billion, Tsogo is the country’s biggest hotel group. It has 36 hotels and three casinos in Gauteng. The hotel brands cover four market segments, and they include a handful of stand-alone hotels such as the Palazzo (at Montecasino) and the boutique hotel in Rosebank. SunSquare, Southern Sun Hotels, Southern Sun Resorts, Garden Court and StayEasy are among the group’s brands. The move by Marriott International into the South African market was seen as significant, and it retains most of its properties. In partnership with the Amdec Group, Marriott spent about R1-billion on the Marriott Hotel Melrose Arch and Marriott Executive Apartments Johannesburg Melrose Arch. Buying into Protea Hotels has also given Marriott access to other African countries. A three-billion-year-old micro-fossil found in the Makhonjwa Mountains in Mpumalanga is thought to be the oldest sign of life on the planet. The Makhonjwa Mountains were declared a World Heritage Site by UNESCO in 2018. Culture and heritage accounts for 40% of world tourism and is one of the fastest-growing subsectors. In Durban, a joint venture between MSA Cruises SA and Africa Armada Consortium is spending R175-million on the financing‚ construction‚ maintenance and operation of a cruise terminal for a 25-year concession period. The Port of Cape Town has launched its dedicated cruise-ship terminal, and the area between the terminal and the Cape Town International Convention Centre is being developed as a multi-use precinct called the Yacht Club. On the western edge of Cape Town’s Foreshore, an ambitious plan envisages two new hotels, flats, retail space and offices rising out

ONLINE RESOURCES African Business Travel Association: www.abta.co.za South African Golf Tourism Association: www.sagta.co.za South African National Parks: www.sanparks.co.za South African Tourism: www.southafrica.net South African Tourism Services: www.satsa.com

Credit: Buckler’s Africa Lodge of ground currently occupied by three car dealerships and a roadwor thy station on Christiaan Barnard Street. The Harbour Arch concept is based on Johannesburg’s Melrose Arch, with seven tower blocks to be constructed on 200 000m², roughly half the footprint of the V&A Waterfront. Peermont Hotels, Casinos and Resorts has added the Emerald Resort & Casino to its portfolio of properties. Peermont purchased the Vanderbijlpark property from US company Caesars Entertainment Corporation, which brings to 11 the number of casino resorts it runs on the subcontinent. There are 711 745 people employed in the tourism industr y nationally, with road transport (29%), food and beverages (20%) and accommodation (19%) absorbing the largest numbers. The sector contributes 9% to South Africa’s gross domestic product (GDP). ■ SOUTH AFRICAN BUSINESS 2021

OVERVIEW

Banking and financial services Investors are getting behind fintech.

aspers Foundry is one of several investment funds looking for opportunities in the financial sector. Insurance technology is of particular interest, together with credit services and payment systems. The appointment by mobile operator Vodacom of a new Chief Financial Officer (CFO) in 2020 gave further insight into the growing link between the digital world and the world of finance. The new executive, Raisibe Morathi, was for 10 years CFO of Nedbank. Morathi also served on the board of Sanlam, a giant in the South African financial sector. In 2019, Sanlam, which has 20 319 South African employees, distributed R190-billion between employees, shareholders, government and clients. Capital Appreciation, which is part-owned by the Public Investment Corporation, is already invested in a software developer, a credit card payment terminal provider and has R500-million available for further investments. African Rainbow Capital, with about 5%, has a stake in the investment company and is the owner of TymeBank, which received a banking licence in 2017. Tyme stands for Take Your Money Everywhere and refers to the bank not having a branch network. Perhaps the lockdown encouraged customers to think in digital terms because Tyme reported in October 2020 that it had 2.4-million customers, up from 1.4-million at the end of March. A 400% increase in the use of services such as airtime and electricity purchases was also noted. Discovery Bank officially launched in March 2019 and is experiencing rapid growth with deposits of R3.7-billion. Discovery Bank is applying the behavioural model it uses in its health business to reward good financial behaviour. Another relatively new bank is Capitec, which is steadily increasing its customer base by providing banking for business and individual customers in what it describes as a simple manner. In

ONLINE RESOURCES Financial Sector Conduct Authority: www.fsca.co.za Insurance Institute of South Africa: www.iisa.co.za South African Institute for Chartered Accountants: www.saica.co.za

SOUTH AFRICAN BUSINESS 2021

SECTOR INSIGHT PSG is selling a big stake in Capitec Bank. May 2020, investment holding company PSG announced that it would reduce its holding in Capitec Bank from 32% to 4%, earning about R4-billion by selling those shares. South Africa’s financial services sector has expanded by the opening of several new stock exchanges. Ph a r m a c e u t i c a l c o m p a ny Aspen Pharmacare has taken a second listing on A2X. Of the four new exchanges, Equit y Express Secur ities Exchange (EESE) trades in Black Economic Empowerment (BEE) while ZARX and 4AX are targeting companies that are not listed elsewhere. ZARX has agricultural holding companies lik e T WK and Senwes among its clients. The JSE is the world’s 19th biggest exchange and nearly 400 companies are listed on the JSE or AltX, the JSEowned exchange for smaller companies. ■

CPD CONTiNUOUS PROFESSiONAL DEVELOPMENT

â&#x20AC;&#x153; Attending CIGFARO Training and webinars has allowed me to earn CPD points while participating in Technical discussions to help improve my professional capacity. This is a great time to be associated with a SAQA recognised Professional Body. â&#x20AC;?

Ms Zanele Malaza (PGFO), CFO City of Mbombela

OVERVIEW

Development finance and SMME support A new fund aims to make R5-billion available at a fair price.

new fund for SMMEs was launched in 2020 with the aim of providing capital at a fair price. Former SA Post Office CEO Mark Barnes, who previously worked in investment banking and private equity, is heading the Kisby Investment Fund. Partners in the fund are Arena Holdings (media), 4AX Africa Exchange, 4AX Debt Services and Rainfin (online credit). Barnes told Business Day that the fund would be compensated for the risk in supporting companies that have to “hunt around in the overpriced debt market” by taking equity in the firm. Kisby is aiming for a R5-billion fund to support companies in the R10-million to R1-billion revenue bracket. Funding is available for technology start-ups in many forms but getting funding early in the process can be difficult because the concept is not proven. For asset management company Futuregrowth, ring-fencing some funding for allocation to early-stage development is a way of ensuring that potential is not overlooked. The company has put 10% of its development equity fund (or R280-million) into businesses such as payment devices ( Yoco), infrastructure platform (Rubicon), fintech (LifeCheq) and an app for domestic workers (SweepSouth). Data company 5M2T (5Minutes2Town) has started offering sophisticated information about the township market. From how many spazas in Soweto have refrigeration units (4 700) to brand loyalty, 5M2T covers 60 000 spazas, salons, barbers and other informal trade outlets an “in-market audit”. This allows for better ordering and planning for suppliers and logistics operators. The Covid-19 lockdown had a severe impact on many small businesses. A survey conducted by risk finance company Business Partners Limited found that 95% of SMME respondents thought they would not survive without help. The company’s packages in response included a Repayment Relief Programme and a Financial Assistance Programme capitalised at R100-million. Most big companies in South Africa have two main programmes to support SMMES: enterprise development (ED) and

ONLINE RESOURCES National Department of Small Business Development: www.dsbd.gov.za National Small Business Chamber: www.nsbc.org.za Small Enterprise Development Agency: www.seda.co.za South African SME Finance Association: www.sasfa.net SOUTH AFRICAN BUSINESS 2021

SECTOR INSIGHT Futuregrowth has a focus on early stage start-ups. local supplier development (or procurement). Venetia Mine in northern Limpopo, a De Beers Group mine, has more than 50 SMMEs enrolled in incubation programmes and 34 locallyowned companies are doing business with the mine. The National Department of Small Business Development (DSBD) has several programmes to assist SMMEs and cooperatives. The Small Enterprise Development Agency (Seda), a subsidiary of the DSDB, has 42 incubation centres in South Africa under its Seda Technology Programme (STP). The National Department of Trade, Industry and Competition (the dtic) is trying to stimulate township and rural economies. Programmes include the Enterprise Investment Programme (EIP). The South African SME Finance Association (SASFA) is a national, self-regulating body for alternative finance companies. ■

FOCUS

Coega Development Corporation

ga.co.zaPromoting small business as a way of sparking economic growth, creating jobs

and tackling inequality.

BBBEE LEVEL 2 CONTRIBUTOR ISO 9001:2015 ISO 14001:2015 ISO 45001:2018 20000-1:2011 27001:2013 CDC has aISO dedicated SMMEISO Business

n championing socio-economic development, the Coega Development Corporation (CDC) places the interests of small businesses at the Arcadia, centre of economic growth. Small business development and support is crucial as a catalyst for addressing poverty, unemployment and inequalities in the society. The National Development Plan 2030 encourages Small, Medium and Micro Enterprise (SMME) support through procurement and developing

The Unit that prioritises empowerment to unlock opportunities particularly in the built environment www.coega.co.za such as infrastructure development and facilities maintenance. “The billions of rands to be spent on infrastructure development in the country to revive our economy should also benefit SMMEs,” says Dr Ayanda Vilakazi, CDC’s Head of Marketing, Brand and Communications. SMME participation on large contracts is

black and female managers and professionals. Between 2015 and 2020, SMME-procurement spend achieved by the CDC was 29%. In 2019, R461.77-million benefited small businesses in all areas where the organisation has operations.

increasing, a sign of the success of the CDC’s SMME development programme. Some highlights: • SMME involvement in the construction of the fourstar Bluewater Bay Sunrise Hotel, Port Elizabeth. • As of March 2020, 383 SMMEs benefited from training, 178 CETA accredited. • In 2019/20 CDC, SARS and CIDB held compliance workshops for 652 SMMEs. • 7 2 SMMEs successfully upgraded on CIDB through CDC intervention and support. A key organisational objective of the CDC is to facilitate, promote and drive the inclusion of SMMEs in procurement opportunities. The CDC is also working at improving its B-BBEE status. The organisation improved its B-BBEE status from level 4 in 2019 to level 2 in 2020. ■

Contact details Head Office: Coega SEZ Business Centre, Corner Alcyon Road and Zibuko Street, Zone 1, Coega SEZ, Port Elizabeth 6100 Tel: (RSA only): 08610 COEGA | 08610 26342 Tel: +27 41 403 0400 | Fax: +27 41 403 0401 Email: info@coega.co.za Website: www.coega.co.za Coega has offices in Pretoria, East London, Cape Town and Durban.

SOUTH AFRICAN BUSINESS 2021

INDEX

INDEX Airlink............................................................................................................................................................................................IBC Air Products............................................................................................................................................................................... 59 Chartered Institute of Government Finance Audit and Risk Officers (CIGFARO)...................... 85 Coega Development Corporation (CDC)....................................................................................................2-3, 87 Council for Geoscience (CGS)................................................................................................................................47-49 DNG Energy.............................................................................................................................................................................. 57 Futuregrowth Asset Management...............................................................................................................9, 24-25 Gert Sibande District Municipality.............................................................................................................21, 68-69 Musina-Makhado Special Economic Zone (MMSEZ)............................................................................26-31 Northern Cape Tourism Authority (NCTA)........................................................................................................... 19 Invest Durban ........................................................................................................................................................................IFC Ivanhoe Mines..................................................................................................................................................................54-55 Kemtek.............................................................................................................................................................................77, OBC National Metrology Institute of South Africa (NMISA)................................................................................... 7 Oceana..................................................................................................................................................................................34-36 Petroleum Agency SA.................................................................................................................................................64-65 Pilanesberg Platinum Mines...................................................................................................................................50-51 South African Bureau of Standards (SABS)............................................................................................................. 5 South African Mohair Industries Limited (SAMIL)....................................................................................42-43 South African National Space Agency (SANSA).......................................................................................14-15 Vedanta Zinc International......................................................................................................................................52-53

SOUTH AFRICAN BUSINESS 2021

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South African Business 2021

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Doubling tourist arrivals is a national priority

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