South African Business 2018 by Global Africa Network Media

2018 EDITION

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

EASTERN CAPE PROVINCE

FREE STATE PROVINCE

GAUTENG PROVINCE

KWAZULU-NATAL PROVINCE

LIMPOPO PROVINCE

MPUMALANGA PROVINCE

NORTHERN CAPE PROVINCE

NORTH WEST PROVINCE

WESTERN CAPE PROVINCE

JOIN US ONLINE WWW.GLOBALAFRICANETWORK.COM | WWW.SOUTHAFRICANBUSINESS.CO.ZA

Commercial Vehicles

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 Earth’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 Africa’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

Welcome to Durban! A lifestyle of business and pleasure together. Facilitating sustainable investment in Durban for the benefit of all

nvest Durban (previously DIPA) is an entity of the eThekwini Municipality, recommended by the Durban City Council and organised private business as the most appropriate vehicle to promote and facilitate new investment into the Durban metropolitan area. Invest Durban’s primary objective is to accelerate sustainable investment in Durban for the benefit of all through the: • Proactive investment promotion and marketing of Durban Metro as a premium investment destination • Proac tive communication and marketing of the City’s large investment projects and core strategies

•

Identification and development of new investment opportunities, especially for previously disadvantaged groups Attraction, support and facilitation for prospective foreign investors in Durban Improvement in the investment and economic development environment, in partnership with National, Provincial, City and Business Authorities.

Invest Durban offers FREE: • Investment Information and Facilitation Services • Immigration, Import and Legal Services • Business Establishment and Incentives • Investor Administration Services

Doing business in Durban Durban has been developed around a natural ocean port, major industrial base and scenic tourism assets which play key roles in the city, plus across Africa. Strategic location The port of Durban is modern and wellequipped. It offers investors a range of competitive and strategic advantages. The city has emerged as the de facto coastal trade ‘gateway’ to Southern Africa. It boasts the largest port in Africa, as regards value of cargo, and is South Africa’s premier general cargo and container port. It is positioned to access international shipping links to the Americas, Europe, the Persian Gulf, South East Asia, the Pacific Rim and Australia/New Zealand and perfectly located for the transshipment of cargoes between Eastern, Middle-Eastern and Western economies. Infrastructure and business Durban offers established and advanced road, rail, sea, air and ICT network infrastructure. This underpins the second largest industrial base in SA.

Quality logistics systems include: • Port operation facilities • Rail network – cargo and passenger • International airport with air cargo facilities • Extensive road network with national and regional linkages • Oil/petroleum pipeline to Gauteng and Free State Provinces • Gas pipeline emanating from Sasol, in Mpumalanga province • Metro-wide fibre-optic systems. Durban provides a number of new opportunity areas for investors, both large and small. Investment opportunities may be categorised into the following fields: • Agri-processing • Auto and allied manufacturing • ICT, BPO and shared service centres • Medical devices, health services and pharmaceutical manufacturing • Logistics and maritime All of the above driven by world-class innovation and holistic sustainability

Invest Durban, eThekwini Municipality 11th Floor, 41 Margaret Mncadi Avenue (old Vic. Embankment), Durban, 4001 South Africa Tel: +27 31 311 4227 | Email: invest@durban.gov.za Website: www.durban.gov.za

CONTENTS

CONTENTS South African Business 2018 Edition.

Introduction Foreword 10 A unique guide to business and investment in South Africa.

Special features An economic overview of South Africa

South Africa is a country of great diversity – of its population, its landscapes and its natural resources. Business expands into Africa

Manufacturing and services are targeted for export growth. Invest in the Mountain Kingdom

The Lesotho National Development Corporation has attractive projects in several sectors. Sustainability is a new priority for business

The circular economy, renewable energy and energy efficiency are creating new industries. Skills development

Job-relevant training is key to economic growth. Realising the promise of the Oceans Economy

South Africa’s coastline is to become a catalyst for new business opportunities, economic growth and job creation.

Economic sectors Agriculture

Agriculture companies are active on the stock exchange.

SOUTH AFRICAN BUSINESS 2018

O&M CAPE TOWN 2382/E

www.amarok.co.za

IT‘S NOT JUST THE AMAROK DRIVING UP A HILL.

IT’S THE ABILITY TO HAUL A 1-TON LOAD UP A 45 INCLINE. O

On the outside, you’ll see the Amarok making tough look effortless. But what you don’t see is the German-engineered TDI engine that combines 132kW of power and 420Nm of torque with outstanding fuel efficiency. You don’t see the permanent 4MOTION® system or unique off-road ABS, ASR and ESP that ensure a steady ride over even the harshest terrain. You see the one ton payload being effortlessly hauled up a 45° slope, but you don’t see the under-the-skin technology that makes tough possible.

The Amarok. Not just tough, smart.

Commercial Vehicles

Range includes: 103kW TDI Comfortline 4x2 and 4MOTION® manual; 132kW BiTDI® Highline 4x2 and 4MOTION®, manual and automatic; 132kW BiTDI® Highline Plus 4x2 and 4MOTION® automatic; 132kW BiTDI® Extreme 4MOTION® automatic; 165kW V6 TDI 4MOTION® automatic available in Highline, Highline Plus and Extreme.

CONTENTS Mining

The South African mining landscape is changing. Oil, gas and petrochemicals

The sector is alive with activity. Energy

South Africa’s energy mix is becoming more diverse. Water

Water infrastructure is a priority. Engineering

The renewable energy sector holds great promise for engineering firms. Manufacturing

Large incentives are available to investors in manufacturing. Automotive

100

Multi-billion-rand investments are boosting vehicle production. Chemicals and pharmaceuticals

103

Drug research is in the spotlight. Food and beverages

104

Consumer companies are looking to Africa for growth. Transport

106

Investments in rail are increasing. Business services

110

Consulting is a growth industry. Tourism

116

Ten-million tourists visited South Africa in 2016. Information and communications technology A rural network is providing free local calls.

SOUTH AFRICAN BUSINESS 2018

126

A city so good you’ll want to invest in it.

live | play | invest Aerotropolis City

The City of Ekurhuleni is home to OR Tambo International Airport, Africa’s biggest and busiest airport on the continent. The City is also considered the manufacturing hub of the country, which boasts a significant logistics corridor along the R21 highway and an extensive transport network across rail, road and air.

Come invest in Ekurhuleni, the Aerotropolis City.

CONTENTS Banking and financial services

128

New banks and new stock exchanges are adding to South Africans’ choices. Development finance and SMME support

130

South Africa has over two-million SMMEs.

Government South African National Government

134

Regions Eastern Cape

140

Free State

142

Gauteng

144

KwaZulu-Natal

148

Limpopo

150

Mpumalanga

152

Northern Cape

154

North West

156

Western Cape

158

Reference 58

ZIMBABWE MOZAMBIQUE

Sector contents

BOTSWANA Limpopo

Index 160

NAMIBIA Mpumalanga Gauteng

North West

Maps South African provincial map.

Detailed map of South Africa.

137

Northern Cape

LESOTHO

Eastern Cape Western Cape

SOUTH AFRICAN BUSINESS 2018

SWAZILAND

Free State

KwaZuluNatal

EPC IN POWER GENERATION Leaders in execution of turnkey engineering in South Africa

Having completed numerous projects, primarily at Eskom’s Koeberg Nuclear Power Plant, construction of the 14X150MW Open Cycle Gas Turbine Power Plant in the Western Cape, and executing EPC contracts for the balance of plant systems for Eskom’s Medupi and Kusile Coal Power Plants - still under construction - Lesedi is well-placed to play a leading role in offering competitive EPC proposals to the country’s power infrastructure industry. Lesedi is now a Level Three B-BBEE (Empowering supplier) company and has registered *8EP, 9ME, 7SF certification levels with the Construction Industry Development Board. The company’s main shareholder is global nuclear company, AREVA, with the remaining shares split between Group Five, the J&J Group and local Lesedi management. Since 2001, Lesedi Nuclear Services has provided a wide range of services to Koeberg Nuclear Power Station. Our major involvement has been in the supply of technical

personnel for plant upgrades (150 modifications), engineering, project management, procurement and maintenance. Lesedi has a number of key partnerships, one being our partnership with Exosun. Exosun is a worldwide leading supplier of advanced, cost-effective solar tracking solutions for ground-mounted photovoltaic (PV) plants. Since the partnership of Exosun and Lesedi took place in March 2017, Lesedi has been focusing on optimising its local supply chain with a target of cost reduction and an increase in local content in order to benefit its clients and prospects. In parallel to the progress made on local manufacturing, Lesedi is also focusing on optimising logistics with local transporters and installation with our certified installers. Due to some uncertainty in the REIPPP in South Africa, Lesedi is getting more involved in private projects, and also assessing a number of opportunities in SADC.

Lesedi’s Competencies Include:

• Project Development • Project Management • Construction Management • Design Engineering • Engineering Procurement and Construction (EPC) • Specialised Shutdown Maintenance Activities (Globally) • Provision of Technical Personnel • Heating, Ventilation and Air–Conditioning • Power Plant Construction • Nuclear, Gas Turbine, Coal Power Stations, Solar Single Excess Trucking • Biomass, BioEnergy, Hydrogen, Hydro, Waste-to- Energy

LESEDI NUCLEAR SERVICES (PTY) Ltd

GET IN TOUCH

Home-grown Lesedi Nuclear Services is a leading EPC (Engineering, Procurement and Construction) company with extensive experience in the execution of turnkey engineering projects, in both nuclear and conventional environments. It has operational footprints throughout the South African power industry.

12 Edison Way, Century City, 7441, Cape Town, South Africa Tel: +27 21 525 1300 Fax: +27 21 525 1333 Email: lesedi@lesedins.co.za www.lesedins.co.za / www.areva.com *8EP Certification expected by August 2017

FOREWORD

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

elcome to the sixth 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. 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. Feature articles on topical issues such as sustainability and African trade provide unique insights, together with an interview with the newly elected chairman of the African Association of Automotive Manufacturers, Mr Thomas Schaefer. Another special feature focusses on an exciting project to transform South Africa’s small harbours and coastal properties. 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 35 000.

DISTRIBUTION

Member of the Audit Bureau of Circulations 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. PHOTO CREDITS | Pictures supplied by flickr.com, Mainstream Power, Wikimedia Commons, Anglo American, SA Tourism, Bloomberg, Eugene Armer, RailPictures, Trans Caledon Tunnel Authority, Paul Saad, BM Jackson, Aveng, Philip Mostert and Shutterstock.

Join us!

Publisher: Chris Whales Publishing director: Robert Arendse Editor: John Young Online editor: Christoff Scholtz Art director: Brent Meder Design: Colin Carter Production: Lizel Olivier Ad sales: Sydwell Adonis, Nigel Williams, Gavin van der Merwe, Sam Oliver, Gabriel Venter, Siyawamkela Sthunda, Vanessa Wallace, Jeremy Petersen and Reginald Motsoahae Managing director: Clive During Administration & accounts: Charlene Steynberg and Natalie Koopman Distribution & circulation manager: Edward MacDonald

Chris Whales Publisher, Global Africa Network Media Email: chris@gan.co.za

South African Business is distributed internationally on outgoing and incoming trade missions; to foreign offices in South Africa’s main trading partners; 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, trade and investment agencies, provincial government departments, municipalities, airport lounges and companies.

CREDITS

Printing: FA Print

PUBLISHED BY 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

ISSN 2221-4194 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 representations as to the accuracy, quality, time-liness, or completeness of the information. Global Africa Network Media will not accept responsibility for any loss or damage suffered as a result of the use of or any reliance placed on such information.

Advertise your organisation in this journal to reach business and government. Contact sales@gan.co.za

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

AN ECONOMIC OVERVIEW OF

SOUTH AFRICA South Africa is a country of great diversity – of its population, its landscapes and its natural resources. Great mineral wealth has underpinned the South African economy ever since the first diamond was stumbled upon in 1867. Gold was found soon afterwards and that industry effectively saw to it that South Africa became an industrialised nation. Now those gold mines are tapering off production but iron ore and platinum reserves are impressively large. Global demand for these resources, however, has been very variable, dependent to a large extent on the Chinese market. This is part of the reason why South Africa’s economic growth in 2015 and 2016 was very modest. The other reason is policy and political uncertainty. The national government is run by the African National Congress and its president, who is also president of the country, Jacob Zuma. He has repeatedly changed cabinet ministers and his decision to fire the respected Finance Minister Pravin Gordhan led to several ratings agencies downgrading South Africa’s credit rating. The other historically strong economic sector, agriculture, brought good cheer to the overall economic picture in the second quarter of 2017, boosting GDP growth by 2.5%. This was

because of a tremendous rally off a bad period caused by a long-term drought. So good was the recovery that South Africa reported record grain crops and exports. The grains of the central regions of the country, together with the fruits and vegetables of Mpumalanga and Limpopo, the wines and grapes of the Western Cape, and the sheep and mohair of the Eastern Cape, all contribute to a diverse and vibrant agricultural sector. There are many strong agricultural companies in the sector. KwaZulu-Natal is the country’s leading sugar area, and has a strong suite in forestry and paper production. The other economic sector that has held up well is automotive manufacturing and automotive components.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE out a list of 18 major projects called the Strategic Integrated Projects (SIPs) which are intended to spur growth and development in a sector or geographical area. The focus is spread across seven primary concerns to be addressed: geographic focus (five SIPs), spatial (three), energy (three), social infrastructure (three), knowledge (two), regional integration (one), water and sanitation (one). They cover all nine provinces with an emphasis on areas that need more investment, and focus on economic and social infrastructure. The 18 projects themselves contain many smaller plans and projects, each with budgets and deadlines. These projects are: 1. Unlocking the Northern Mineral Belt with Waterberg as the catalyst 2. The Durban-Free State-Gauteng Logistics and Industrial Corridor 3. South-eastern node and corridor development 4. Unlocking the economic opportunities in North West Province 5. Saldanha-Northern Cape Development Corridor 6. Integrated Municipal Infrastructure Project 7. Integrated Urban Space and Public Transport Programme 8. Green energy in support of the South African economy 9. Electricity generation to support socio-economic development 10. Electricity transmission and distribution for all 11. Agri-logistics and rural infrastructure 12. Revitalisation of public hospitals and other health facilities 13. National school build programme 14. Higher education infrastructure 15. Expanding access to communication technology 16. SKA and MeerKat (international radio astronomy project) 17. Regional Integration for African cooperation and development 18. Water and Sanitation Infrastructure Master Plan. To illustrate how many projects are undertaken in support of an SIP, there has been a lot of action to support the overall goal of creating an integrated logistics corridor between Durban and Johannesburg (SIP 2). Projects within the SIP include:

Trends There are several areas in which new or revitalised sectors are providing employment and creating new opportunities: • tourists are visiting South Africa in record numbers • the successful renewable energy private investor programme is due to be restarted • companies are trading into Africa with considerable success • niche agricultural markets are booming with macadamia nuts being the most successful. Wine and grape exports to China also hold great potential. • several provincial governments and investment agencies are establishing trade relations and study programmes with BRICS countries • private education (at school and tertiary level) is a boom sector • new banking licences have been issued and several more are in the pipeline • new stock exchanges came on line in 2017 and more are expected • investment in infrastructure (especially ICT and railways) is strong • national government has committed to the National Development Plan (NDP), a blueprint for how to move the country forward. Part of that plan entails setting up deliverable schemes, such as the Strategic Integrated Projects.

Strategic Integrated Projects (SIPs) The National Department of Economic Development is responsible for economic planning. It has set SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE ZIMBABWE

MOZAMBIQUE

BOTSWANA

Limpopo 0.9% (7.1%)

NAMIBIA

Gauteng Mpumalanga 2.7% 2.1% (7.5%) (34.3%) SWAZI-

North West -3.6% (6.5%)

LAND

Free State 1.8% (5%) Northern Cape 2.8% (2.1%)

LESOTHO

KwaZuluNatal 2.3% (16.1%)

Eastern Cape 1.0% (7.6%) Western Cape 2.0% (13.6%)

SA GDP: Percentage of growth per province (2014) and percentage contribution to national GDP (figures in brackets). SOURCE: STATS SA WWW.STATSSA.GOV.ZA

• • • • •

a R2.3-billion container terminal at City Deep, Johannesburg a R3.9-billion project to upgrade Pier 2 at the Port of Durban R14.9-billion of rolling stock for the rail line R30.4-billion completion of the New MultiProduct Pipeline by Transnet Pipelines official inauguration in 2017 of the Maluti-APhofung Special Economic Zone (logistics hub, fuel distribution depot, manufacturing) at Harrismith in the Free State.

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, mostly 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 is currently experiencing a severe drought.

Geography South Africa’s location between the Atlantic and Indian oceans ensures a generally temperate climate. The 2 954km coastline stretches from the border with Namibia on the Atlantic to the border with Mozambique in the east. The cold Benguela current sweeps along the

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE The Orange and Vaal rivers play important roles in water schemes and irrigation and the Limpopo River defines the country’s northern boundary. A number of rivers run strongly from the Drakensberg to the sea but South Africa has no navigable rivers. Maize is produced in large quantities in the interior. The dry interior mostly supports livestock in the form of sheep and cattle. South Africa is the world leader in mohair production. Wines and fruit are specialities of the Western Cape while KwaZulu-Natal and the low-lying areas of Mpumalanga are known for sugar cane and tropical and subtropical fruits. Limpopo is a major vegetable producer.

speak the language as a home language, are Pedi, English, Setswana, Sotho, Tsonga, Swati, Tshivenda and Ndebele. Historically, the Nguni-speaking people (Zulu, Xhosa, Swazi and Ndebele) settled along South Africa’s east coast (and what is now Swaziland) while Venda and Tsonga people made their homes south of the Limpopo River. The Mapungubwe cultural landscape, a UNESCO World Heritage Site, in northern Limpopo Province illustrates a highly sophisticated kingdom that flourished between 900 and 1300AD. The central regions of South Africa (and Lesotho) were populated by Sotho and Tswana. The Cape was colonised first by the Dutch, by the Batavian Republic and by the British. Prolonged British rule began in 1806. By the late 19th century there were four territories in what is now South Africa: two British colonies (Cape Colony and Natal) and two independent Boer republics. The Anglo-Boer War was fought between 1899 and 1901 and ultimately led to the creation of the Union of South Africa in 1910, uniting the four territories but ignoring the wishes of the black population. South Africa became a republic in 1960 and severed ties with Britain soon afterwards. After Nelson Mandela was released and a series of negotiating conferences were held, South Africa held its first democratic elections in 1994. South Africa reentered the Commonwealth after 1994.

History One of South Africa’s premier museums and tourist attractions is known as the Cradle of Humankind, pointing to the fact that what is now South Africa has been home to the human species for thousands of years. Each of the country’s nine provinces presents its official documents in the relevant regional languages so the Western Cape, for example, presents material in Xhosa, Afrikaans and English. The most widely spoken languages are Zulu and Xhosa. Other languages, in order of the number of people who PROVINCE

CAPITAL

Eastern Cape

Bhisho

Free State

Bloemfontein

Gauteng

Johannesburg

KwaZuluNatal

PREMIER

POPULATION

AREA

GRP BILLION RAND

6 916 200

168 966km2

R289.9

2 817 900

129 825km2

R189.1

David Makhura

13 400 000

18 178km2

R1 305.6

Pietermaritzburg Willies Mchunu

11 919 100

94 361km

R610.1

5 800 000

125 754km2

R271.5

4 283 900

76 495km

R284.2

3 707 000

104 882km2

R249.5

Phumulo Masualle Elias Sekgobelo "Ace" Magashule

Stanley Mathabatha David Mabuza Supra Mahumapelo

Limpopo

Polokwane

Mpumalanga

Mbombela

North West

Mahikeng

Northern Cape

Kimberley

Sylvia Lucas

1 185 600

372 889km2

R79.9

Western Cape

Cape Town

Helen Zille

6 200 100

129 462km²

R518.1

Snapshot of South Africa’s provinces SOURCE: STATSSA, 2016.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

FACT FILE: REPUBLIC OF SOUTH AFRICA President: Jacob Zuma (African National Congress) Capitals: Pretoria/Tshwane (administrative, seat of government), Cape Town (legislative), Bloemfontein (judicial). Provinces and provincial capitals: Western Cape (Cape Town), Eastern Cape (Bhisho), KwaZuluNatal (Pietermaritzburg), Mpumalanga (Nelspruit), Limpopo (Polokwane), Gauteng ( Johannesburg), North West (Mafikeng), Northern Cape (Kimberley), Free State (Bloemfontein). Time: GMT+2 Population: 55.91-million (2016) Population under 15 years: 30% Population over 60 years: 8% Life expectancy: 65.1 (female); 59.7 (male) Size: 1 220 813km² Major languages: South Africa has 11 official languages but the main language of government and business is English. Zulu, Xhosa and Afrikaans are widely spoken. Religion: There is no state religion. The majority of the population are Christian but many other religions are followed such as Islam, Jewish and Hindu. Currency: The rand (100 cents). R13.48 = $1 (October 2017) Political system: South Africa is a republic with an executive president who is appointed by the political party that wins the majority of votes in parliamentary elections. There are three tiers of government: national, provincial and municipal but the revenue raising capacity of the latter two spheres is limited. Allocations for health and education for example, are made by national government and then administrated by provinces. Eight of South Africa’s nine provinces are run by premiers from the African National Congress; the Western Cape is administered by the Democratic Alliance. In 2016, municipal elections saw the DA come to power in some of South Africa’s biggest cities, supported by other parties such as the Congress of the People and the United Democratic Front.

Legal system: South Africa is a constitutional state with separation of powers between the legal and executive authorities. All laws must pass muster with the Constitutional Court which is the ultimate court of appeal on legislation. South Africa’s legal system is based on Roman Dutch law. Infrastructure: Ports of Cape Town, Saldanha, Mossel Bay, Port Elizabeth, Ngqura East London, Durban and Richards’ Bay. International airports at Cape Town, Johannesburg and Durban and domestic airports at all major cities. South Africa has 34 000km of railway track and half of the country’s road network is paved. Most of South Africa’s power is generated by coal-fired power stations run by the state utility Eskom. A vigorous programme to encourage private investment into renewable energy began in 2012. Resouces: Platinum, gold, iron ore, chromium, vanadium, manganese, alumino-silicates, coal, copper, diamonds, uranium, zirconium. GDP: R3 055-billion (2015) GDP growth: 0.5% (2016), projected 1.3% (2017) (SA Treasury) Exports: Precious and semi-precious stones, mineral products, base metals, vehicles, machinery, chemical products, vegetable products, fruits, foodstuffs and beverages, paper and pulp. Main export markets: China, USA, Japan, Germany, UK, India. Imports: Machinery, mineral products, vehicles, chemicals, original equipment, base metals, plastics and rubber, textiles, optical and medical, foodstuffs and beverages. Main import markets: China, Germany, USA, Japan, Saudi Arabia, Iran, UK, India, France, Nigeria.

SOUTH AFRICAN BUSINESS 2018

MESSAGE

City of Ekurhuleni Message from the Executive Mayor Councillor Mzwandile Masina.

In May 2016, our council embarked on a journey of social transformation, to ensure that our residents see improved and impactful service delivery, with accelerated access to a constant provision of quality services. This commitment includes a focus on economic development and increased investment.

A KEY POINT OF CONNECTIVITY AND INDUSTRY Councillor Mzwandile Masina

Priorities Immediate and clear priorities include security of water and energy supply; completion of transport infrastructure and launch of the much anticipated bus rapid transit system – Harambee; rollout of Wi-Fi; unleashing of strategic land parcels for development; and implementation of our 10-point economic plan. The economic plan is a comprehensive programme of economic growth and development, intended to create jobs and attract investment into the city. The Aerotropolis development is one of the key points in this economic plan.

Building a pact

ur city is named to This term of office is one in which we will focus on building a humane reflect the aspira- pact between the city and its citizens, in which the aspirations of our tions of our residents people, regardless of their current circumstances, can be given a fair as a place of peace. In opportunity for progress. The City of Ekurhuleni can’t attain these this spirit, we welcome you to the ambitious goals without the support of all of our stakeholders. In turn, City of Ekurhuleni. Ekurhuleni is a we commit ourselves to deliver on our mandate, efficiently, effectively major hub that connects South and in a way which improves the city and the state of its people. Africa to the world, and serves In conclusion, let me reiterate our commitment to working as a key point of connectivity with all of our stakeholders, in growing and developing our city, and industry for the country and so that we can ensure increased equality and prosperity for all of continent. our residents. SOUTH AFRICAN BUSINESS 2018

PROFILE

City of Ekurhuleni Africa’s first Aerotroplis holds great promise.

A new identity for the City of Ekurhuleni is being forged out of the towns and urban nodes surrounding Africa’s biggest and busiest airport, OR Tambo International Airport. The airport is the epicentre of Africa’s first Aerotropolis, which will set it apart from any other South African city and turbocharge the regional economy. The city has prime residential estates, glitzy entertainment venues, mega shopping malls, lively townships, historical villages, good schools, recreational facilities and wide open spaces. Ekurhuleni is a digital city and is investing in digital infrastructure that will streamline the way it delivers services to the community, including smart grids, payment gateways, e-learning and e-health systems, and closed-circuit TV to improve safety and security.

Carnival Junction, Lordsview Industrial Park and the Riverfields R21 development, taking shape along the R21 Albertina Sisulu Highway which links Ekurhuleni to Pretoria. And the city has the infrastructure to support investments like Prasa-Gibela, which will see the building and maintenance of 600 new trains for South Africa’s rail commuter network over the next two decades. Other public-sector strategic developments which promise to bring economic development include the Tambo Springs inland port and the OR Tambo Airport cargo terminal expansion.

Ekurhuleni has long been known as the manufacturing hub of the country and it is building on this history to create a smart city that will underpin the new economic growth trajectory. The city boasts a world-class transport network, telecommunications and energy grid, a youthful citizenry and a strong financial position. Its connectivity across rail, road and air is significant. The Gillooly’s interchange is the busiest in the southern hemisphere, and Germiston railway hub is one of the busiest on the continent.

Come LIVE PLAY INVEST in Ekurhuleni, the Aerotropolis City. The rebirth of Ekurhuleni is not just a dream. Several companies have taken up residence in their new premises and a significant logistics corridor has mushroomed along the R21 highway. Designed to strengthen the logistics, aviation and transport sector, key projects are laying the groundwork for

The city is being developed through a series of strategic mixed-used urban developments and transformational projects like the GreenReef Megaproject, S&J Industrial Estate, Glen Gory, Leeuwpoort Housing Development, TwentyOne Industrial Park,

SOUTH AFRICAN BUSINESS 2018

PROFILE a powerful distribution centre and logistics node, including Blue Sky Logistics, Jonsson Workwear, Fast Freight, DB Schenker, Würth and DHL Supply Chain. Additional strategic land for industry is due to be released for development.

Over and above this there are also six mega housing projects that are being planned across the City over the next five years. Mega human settlements are housing projects of 100,000 units or more. They offer various types of housing from fully subsidised, gap housing, social housing and bonded units. These settlements help the city to transform its disparate urban special patterns, increase access to socio economic opportunities and encourage social cohesion. These developments offer significant opportunities for investors across the full value chain including land acquisition, supply of goods and services, as well as actual implementation.

One of the ways in which planners will promote competitiveness is to create an environment that will allow disruptive innovation through technology. One such project is the Alternative and Renewable Energy strategy which will limit the City’s dependence on the national grid. Ekurhuleni hopes to derive about 10% of overall electricity supply from renewable energy by 2021.

SOUTH AFRICAN BUSINESS 2018

PROFILE

Investment facilitation

Another exciting project is the redevelopment of Germiston into an administrative headquarters for the city, with other precincts following a similar path. The Kempton Park-to-Germiston corridor aims to develop a new urban core and central business district for a metro that was formed out of nine small towns, each with its own business district. The precinct comprises 10 major projects which are mostly owned by the city – the court is owned by national government and one is privately owned. Projects include a new administration building, hotel and conference centre, knowledge centre and magistrates square. Partnership between the public and private sector will be important in enabling these developments.

The city has an Investment and Development Facilitation Strategic Policy Framework, which has been developed to improve turnaround times in facilitating and decision-making on investment and development applications, thus improving the city’s investment-friendly environment. The city boasts a business and investment onestop-shop established within the city’s Aerotropolis core. The Ekurhuleni Business Facilitation Network is situated in Kempton Park and houses the business centre to support local enterprise development and the investment centre (EIC). The Ekurhuleni Investment Committee meets twice a month to appraise and provide technical support including pre-application support to mega investment and development applications.

With this initiative and others like it, city planners are expanding the horizon that will see Ekurhuleni blossom into a prosperous region for all its citizens.

The EIC also provides aftercare to newly established and existing businesses within the city. The centre collaborates with various provincial and national departments to provide unmatched facilitation of investments and developments within the city and support to local businesses.

CONTACT INFO Ekurhuleni Investment Centre Tel: +27 11 999 3516 / 20 Email: eic@ekurhuleni.gov.za Website: www.ekurhuleni.gov.za

SOUTH AFRICAN BUSINESS 2018

Business expands into Africa Manufacturing and services are targeted for export growth.

hoprite is a household name for many South Africans who buy their weekly groceries at one of hundreds of outlets across the country, but that is an experience which many Africans living in other parts of the continent are sharing more and more frequently, and in large numbers. Retailers and bankers from South Africa have been exploring opportunities north of the Limpopo River for many years, and they have been followed by engineering firms, consulting companies and, more recently, automotive manufacturers. They key attraction is the size of the market, and the potential of that market to grow and to grow more sophisticated in its tastes. Africa has a population of 1.2-billion. South African and international hotel brands are investing strongly in Africa. Tsogo Sun has hotels in Zambia, Tanzania, Kenya, Nigeria and Mozambique. Sun International operates in six countries outside South Africa. Marriott International’s acquisition of Protea Hotels has given it an expanded footprint in Africa. SOUTH AFRICAN BUSINESS 2018

Hyatt Hotels & Resorts will double its presence in Africa by 2020, with new investments in Cameroon, Senegal and Algeria, to go with its existing hotels in Morocco and Tanzania. The group is eyeing East Africa, citing increased infrastructure spending there as a reason to consider investing. While South Africa is still seen as a good staging post for international firms to base their Africa strategies, some industries have refined that process. In the automotive industry, for example, head offices in Europe and the US have mandated their South African operations to lead the drive into Africa. According to the CEO of Sanlam Africa Investments, St John Bungey, the subtleties of investing in Africa should be respected. The growth path and the demographics are solid reasons to invest in Africa but specific strategies are needed. He notes three key ingredients: respect for local knowledge, understanding the local environment and partnering with the right local people (Sunday Times).

SPECIAL FEATURE Fully 30% of South Africa’s exports are to other countries in Africa, but a massive 83% of this volume is into Southern Africa. This means that the potential for South Africa to grow its exports into other parts of Africa is enormous. The Export Credit Insurance Corporation of South Africa (ECIC) exists to help trade and investment across borders. ECIC provides insurance for bank loans that are taken by investors and South Africans can get insurance for investments, and for small and medium enterprises there is a product available (performance bonds) to anyone exporting capital goods and services. The South African Department of Trade and Industry (dti) plays a key role in promoting trade between South Africa and the rest of Africa. South African exporters can enroll in the dti’s training programme, Global Export Passport Programme (GEPP). The dti wants to expand South African exports in manufacturing (which it wants to double in 10 years) and services (40% of the export basket by 2030). The Integrated National Export Strategy (INES) is managed by a unit called Trade and Investment South Africa (Tisa), which is targeting emerging markets, including the BRIC states (Brazil, Russia, India and China).

spends about R20 000 per week in permits, and long waits at border posts are routine. The revamped Chirundu one-stop border post in Zambia has reduced transit times by a third. There are plans to create a Tripartite Free Trade Area covering three regional groupings across 26 countries. Extending from South Africa in the south to Uganda and Kenya in the north, the proposed free trade area would encompass more than 620-million consumers in three regional organisations: the Southern African Development Community (SADC), the Common Market for East and Southern Africa (Comesa) and the East African Community (EAC). The Sustainable Development Investment Partnership (SDIP) comprises 30 institutions and aims to fund 16 African infrastructure projects, valued at more than $20-billion. The founders of the SDIP were the World Economic Forum (WEF) and the Organisation for Economic Co-operation and Development (OECD). China has pledged to support the rehabilitation of the railway line between Zambia and Tanzania while the Industrial and Commercial Bank of China is to invest R20-billion in renewable energy in Africa. Railway upgrades will probably reap the quickest rewards in the push to promote intra-African trade. Fully 70% of the freight that arrives in South Africa is delivered by road: this is both a problem and an opportunity. One of the companies eyeing that opportunity is South African rail operator Sheltam Group. It has created a rail track infrastructure funding vehicle with a dedicated African mandate. The Development Bank of Southern Africa and Transnet have developed a financing scheme for selected buyers of rail rolling stock and port equipment. Transnet is already very active in African countries north of the South African border. This is part of Transnet’s Market Demand Strategy (MDS), which aims to sell it products and services around the world. Transnet Engineering’s TransAfrica Locomotive (for branch lines and shunting yards) is being marketed to other African countries and mining companies. Transnet Engineering plans is establishing Maintenance Repair and Operations centres in four African countries.

Connecting Intra-African trade currently stands at 16% of trade volumes. This is in contrast to the continent of Europe, where 60% of all trade is conducted among European nations, and in Asia, where the figure is 40%. Border delays, tariffs and infrastructure are the biggest barriers to expanding this trade. Shoprite

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SPECIAL FEATURE

Automotive opportunities in Africa The African Association of Automotive Manufacturers chairperson Thomas Schaefer (CEO of Volkswagen SA) explains why new African markets are vital for growth.

What are the primary goals of the AAAM?

knock-down, and finally full-scale construction. It is dependent on the annual volume you produce. Indonesia and other countries in the world have gone through this development phase. To build up a body shop with welding and all the logistics, you can only do that beyond production of 20 000 or 30 000 cars per year.

The AAAM was founded with a strategic view regarding all South African original equipment manufacturers (OEMs), namely, that Africa is super important for our future. We need Africa so that South Africa can thrive. The AAAM is for the industry to say how can we work with Nigeria or Kenya for the good of both countries.

What is current Volkswagen operation in Kenya?

Is the intention to set up full-scale plants of SA OEMs or to create independent industries?

We are planning on a thousand Polo vehicles per year for now, but at the moment it is a little slow because of the political aspects.

In Kenya at the moment there is no passenger car manufacturing other than what we have started. There is some truck manufacturing but nothing else, so you have to start slowly. This entails starting with semi-knock-down assembly, then medium SOUTH AFRICAN BUSINESS 2018

Do you have something in Nigeria?

In Nigeria we have had an operation since 2014; however, it was dormant until recently due to the oil and

SPECIAL FEATURE

forex issues. It’s getting invigorated and we have had good meetings with the Nigerian and South African governments. They are serious about curbing used car sales – that is the drag that keeps them off the new car market, the used cars getting dumped.

is about regional trade, and that is the most important aspect for the South Africa OEM industry. If we don’t get the regional trade and regional industry right then it’s going to be difficult in the future. Labour and logistics costs are high but with regional trade we could offset most of it. We are pushing the dti for better incentives to help us to open those markets.

What other markets Volkswagen targeting?

Is Africa the key?

If production stays far below a million cars production per year, we will never be profitable or sustainable, so Africa could be the key? When you look at the number of cars per thousand inhabitants in most African countries there is opportunity in places like Kenya and Nigeria. If you take away the used car drag, there’s no reason why their market could not grow. If Kenya came to a level like South Africa they could achieve a market of five or six hundred thousand.

We are focusing on the East African market, in countries like Rwanda and Tanzania. Ethiopia is very promising but their massive dam for the Nile is where they are spending all their forex at the moment. Are all South Africa’s OEMs looking north?

All OEMs operating in South Africa have now received the guardianship of Africa from head office. They are probably continuously looking up north to see opportunities. We are not all looking at the same countries: Ford is looking at Angola and Nissan is looking at Nigeria.

So you are positive about the future?

Nobody else can do it better than from Africa for Africa. Although it is a South African initiative, it needs to be an African initiative. It must benefit the other countries as well. We are working to refocus the AAAM to make this a significant organisation that will bring the auto industry further in Africa. It takes determination to create an auto industry. If you focus on it, it will come – there is a real opportunity.

Is the Department of Trade and Industry (dti) encouraging an African focus?

The OEMs’ focus on Africa aligns well with the dti’s review of the Automotive Production and Development Programme (APDP) – the new APDP

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Proudly supporting South African exporters and investors.

he Export Credit Insurance Corporation of South Africa (ECIC) was established 16 years ago, in July 2001, when it was given the mandate of filling a market gap through the provision of medium to long-term export credit and investment guarantees by underwriting bank loans for political and commercial risk insurance cover, on behalf of the South African government. The short-term transaction market was amply catered for, but medium to long-term export transactions still had a need for a dedicated export credit agency, hence the formation of the ECIC. Acting as a catalyst for private investment, the ECIC steps in where commercial lenders are either unwilling to or unable to accept long-term risks While the ECIC is part of a broader government policy, it remains an independent limited liability company, but with the government as its sole shareholder. The institution is enabled under the amended Export Credit and Foreign Investments Insurance Act of 1957. The ECIC has recently developed new products including lines of credit, lease and return of plant equipment. It also continues to be a catalyst for increased lending capacity by financial institutions by entering agreements with other export credit agencies (ECAs). In this way, it creates a framework for both re- and co-insurance. To this end, it has adopted a comprehensive plan of action aimed at actualising cooperation programmes for mutual benefit in conjunction with, among SOUTH AFRICAN BUSINESS 2018

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others, BRICS ECAs, Afreximbank and African Trade Insurance. Most African markets are considered as uncharted territories with challenging business environments. Thus, the business strategies foreign investors apply elsewhere in the world cannot be used in the continent. Access to competitively priced export credit creates the ability for local contractors to bulk up and compete more effectively in foreign markets. With the ECIC in support of such transactions, the South African export market is enabled and contractors are becoming more credible. This has a far-reaching impact on fostering a stronger economy and drives domestic job creation, contributions to fixed capital formation and the GDP, as well as the generation of fiscal revenue. The ECIC is committed to sustainable business through innovative solutions, operational and service excellence, business development and strategic partnerships. In enabling frontier markets to optimise production, the ECIC is effectively motivating a positive socioeconomic impact.

SPECIAL FEATURE

Invest in the Kingdom of Lesotho The Lesotho National Development Corporation has attractive projects in several areas.

esotho is richly endowed in mineral resources such as diamonds and has abundant water reserves. Lesotho is branded as “The Kingdom in the Sky” owing to its beautiful sceneries especially in winter when it has snowed or in spring when the alpine flora of Lesotho blossom. Lesotho is a high-altitude country, landlocked by the Republic of South Africa and criss-crossed by a network of rivers and mountain ranges. Lesotho covers an area of 30 355 square kilometres and has a population of just over two-million. The vast majority of the population is Basotho (Lesotho natives) with a small group of Europeans and Asians. The official languages of Lesotho are English and Sesotho. The country’s GDP growth rate in 2016 is estimated at 3.1%. The country is actively seeking new investments into a wide variety of sectors to boost the economy and provide employment for its people. The Lesotho National Development Corporation (LNDC) is the main parastatal of the Government of Lesotho charged with the implementation of the country’s trade and industrial development policies. The role of the Corporation is to promote Lesotho as an attractive investment location for both foreign and indigenous investors. The LNDC is the first point of contact for investors who intend to set up projects in the manufacturing and processing industries in Lesotho. In 2016, the LNDC received a best IPA (Investment Promotion Agency) Award from UNCTAD (United Nations Conference on Trade and Development) at the 14th UNCTAD Conference. Lesotho has progressed in moving from a predominantly subsistence-oriented economy to an economy exporting natural resources (diamonds and water) and manufactured goods (excelling in textiles and apparel). This has been driven by the country’s dutySOUTH AFRICAN BUSINESS 2018

free quota-free market access to major international markets and an improving investment climate. Priority sectors for investment include: • Agriculture and agri-processing • Manufacturing • Renewable energy • Infrastructure and construction • Services • Tourism

Selected projects Agri-processing Basotho Fruit and Vegetable Canners is a manufacturing company that processes raw materials to produce consumer products, canned baked beans, organic peaches and asparagus, fruit juice and tomatoes. It was operating as an export-oriented company with success in exporting its products to South Africa and other international markets (EU). The existing plant is currently not in operation. A joint venture investment partner is sought to operate Basotho Canners on a management contract basis. The objective is to resuscitate and expand the current facilities. • Project size/cost: US$30-million • Proposed procurement process: Joint Venture – Management Contract • Financing status, amount and structure required: US$30-million in equity • Government guarantee or involvement: Policy sponsorship, land allocation, infrastructure, energy and water supply, visa facilitation for scarce skills. Manufacturing and hospitality Makeka Mollometsi is a multi-pronged business concern, geared towards the large-scale quality

SPECIAL FEATURE beneficiation of aloe and agave lifestyle products. An investor is sought to inject capital to develop the world’s highest altitude eco-distillery for the production of spirits from agave. Mollometsi (mollo – fire; metsi – water) is an alcoholic beverage product. Historical and modern techniques are used to produce and bottle a range of premium and entry-level “Firewaters” from the agave plant. The core business will be a Lesotho-based bottling and distillation plant and packaging, distribution and sales of Mollometsi. The business is also looking to establish a fourstar boutique hotel at a demonstration farm in Botha Bothe, which will also have a spa and mud baths; conferencing facility for groups of up to 100 people; a restaurant and spirit bar for tasting and sales; a chapel; staff housing; a library and the potential of a nine-hole golf course. The tourism success of nearby AfriSki Mountain Resort provides a basis for good occupancy rates. • Project size/cost: US$25-million • Proposed procurement process: Joint Venture – Management Contract • Financing status, amount and structure required: US$25-million in equity • Government guarantee or involvement: Policy sponsorship, land allocation, infrastructure, energy and water supply, visa facilitation for scarce skills.

Telecommunications Infrastructure Company, a telecommunications infrastructure investor – a strategic partner – is sought to partner with the LNDC (anchor investor) and the Lesotho Telecommunications service providers. The scope of the NBN is to consolidate available telecoms infrastructure, expand the consolidated base and make it available on an open-access, non-discriminatory and uniform pricing basis to a large number of service providers. To ensure international communication price efficiency, it is proposed to consolidate multiple international capacity links into the NBN. The NBN will also deploy additional ICT infrastructure to stimulate bandwidth demand in the form of an e-government program,, inclusive of data centre and call centre infrastructure. Capital required by the NBN will be raised against the shareholder balance sheets as well as long term off-take agreements for use of infrastructure by existing operators. • Project size/cost: US$150-million • Proposed procurement process: Joint Venture – Technical Partner • Financing status, amount and structure required: US$150-million in equity • Government guarantee or involvement: Policy sponsorship, visa facilitation for scarce skills.

ICT services The establishment of a Lesotho Call Centre: call centre outsourcing is a big business opportunity for developing countries with a qualified workforce and high unemployment rates. A country like India has proven this point. Hosting call centres for foreign organisations creates job opportunities and grows the economy. • Project size/cost: Unknown • Proposed procurement process: Joint Venture – Technical Partner • Financing status, amount and structure required: Equity • Government guarantee or involvement: Policy sponsorship, visa facilitation for scarce skills.

CONTACT INFO Lesotho National Development Corporation Address: Development House, P Bag A96, Kingsway Road, Maseru 100 Contact person: Marina Bizabani, Foreign Investment Manager Tel: +266 22 312012 Email: bizabani@lndc.org.ls or ip@lndc.org.ls Website: www.lndc.org.ls

Infrastructure: ICT National Broadband Network (NBN) Initiative: for the establishment of the Lesotho Shared

SOUTH AFRICAN BUSINESS 2018

Sustainability is a new priority for business The circular economy, renewable energy and energy efficiency are creating new industries.

n June 2017 the Jeppe Park Primary School in Johannesburg became the 250th building to receive a green building certificate from the Green Building Council South Africa. In the process, it became the first school building in Africa to receive such a certificate. The combined effect of the 250 buildings being built in a sustainable way will lead to annual savings of 450-million kilograms of CO2, 350-million litres of water and 380-million kilowatt hours of energy. Awareness of sustainability has grown exponentially in the last few years and every sector is trying to become greener, cleaner and more efficient. Buildings are massive consumers of energy and so it is fitting that they have been targeted for savings, or energyefficiency drives. But paying attention to sustainability in every sector in the economy makes good sense, both economically and for the health of the planet and its inhabitants. The idea of the circular economy is taking hold: rather than using resources and simply throwing them away, thought is given to the source of energy (renewable rather than finite), the efficiency of the production process (reducing leaks and getting optimal use of resources) and recycling or reusing materials (rather than dumping them). Organisations such as the National Cleaner Production Centre (NCPC-SA) encourages “Industrial Symbiosis”, the use of unused or left-over resources by one company after another company has used them. The material itself could be material, energy, water or waste. The last three are at the core of the sustainability debate. GreenCape puts the value of South Africa’s waste economy at R15-billion but suggests that another R17-billion could be unlocked if all of a specified 13 waste cycles were recycled (Waste Economy Market Intelligence Report). SOUTH AFRICAN BUSINESS 2018

Household waste is managed by municipalities or companies contracted to municipalities. Only 10% of South Africa’s waste is currently recycled and the waste industry is dominated by collection and landfilling. A national goal is to double that percentage by 2019 but finding alternatives could be an expensive process. GreenCape suggests that there are several business opportunities for the private sector in these sectors: recyclables (plastics), organics, e-waste, and construction and demolition waste. The Southern African Energy Efficiency Confederation (SAEEC) website refers to the areas it covers, and listing them illustrates the scope of the field: energy engineering and energy management, renewable and alternative energy, power generation, energy services, sustainability, and all related areas. South Africa’s moves towards sustainability are happening in a global context that includes the adoption in 2015 of the United Nation’s 17 Sustainable Development Goals. The Paris Agreement on climate change in 2016 is providing further stimulus on the road to reduced carbon emissions and reduced reliance on fossil fuels. These agreements set out to protect the planet from destruction, but they also represent an opportunity to create new markets: wind, solar, biogass, fuel efficiency, improved roofing and window sealant materials – the list is long.

Practical steps South Africa embarked on an ambitious programme to promote renewable energy with its Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). Between 2012 and 2016 it generated nearly R20-billion in actual or

SPECIAL FEATURE Secondary materials: growing market for plastics, metals and e-waste Water: industrial water reuse; recycling and resource recovery Food value retention: better cold chain management and waste reduction; solar thermal (in agri-processing, the SA market potential is R3.7-billion); biogas.

committed investments into mostly solar and wind power. The programme stalled when energy utility Eskom baulked at paying for power it said it didn’t need but the programme will restart in late 2017. Nobody does renewable energy more enthusiastically than Denmark and South Africa has entered into multiple agreements with the northern European country. Denmark is the world leader in wind power and a trend-setter in energy-efficiency building codes. According to the Danish Energy Association, the best instruments to achieve energy efficiency are building standards, equipment standards, obligation schemes for energy utilities, energy audits and tax rebates, and taxation. Architects and builders often get ahead of targets: in 2013, 30% of all new floorspace in Denmark was built to 2015 standards. In terms of energy per square metre, if the country continues to meet its targets, it will soon be at 6% of the norm in the 1970s. When a Danish building is finished, an energy audit is done before it can be used. The Energy Efficiency Directorate in the South African Department of Energy aims to optimise the energy sector through efficient use, production and consumption of energy resources. A Draft National Energy Efficiency Strategy was published in December 2016. Among the directorate’s collaborations is one with Danish Energy Management and the International Energy Agency (IEA). An advisor from the Danish Energy Association has been seconded to South Africa as part of an inter-governmental energy partnership. The Danes have created an export industry out of their expertise in energy: in 2015 it was worth about R140-billion and they want to expand it to “at least” R280-billion by 2030. GreenCape’s report on South Africa’s waste market includes some references to broader economic opportunities in the sustainable economy. Some examples: Agriculture: solar-powered irrigation (SA market, R2.9-billion) Energy services: energy efficiency retrofitting; solar PV systems; local manufacturing Utility-scale renewable energy: independent power production; rest of Africa; local manufacturing Waste: private-public partnerships, construction and demolition waste; growing reuse and recycle market SOUTH AFRICAN BUSINESS 2018

TRANSITIONING INDUSTRY TO A LOW CARBON ECONOMY The Centur y City Conference Centre in Cape Town was host to more than 400 delegates from industry, business and government who gathered in September 2017 to discuss how to make industry and commerce cleaner, greener and more resource efficient. The biennial Industrial Efficiency Conference of the National Cleaner Production Centre South Africa (NCPC-SA) had as its theme, “Transitioning industry to a low carbon economy” and offered workshops, presentations and panel discussions on a range of resource efficient and cleaner production (RECP) methodologies. The two-day programme offered information on better use of energy, water, materials and waste, as well as analysis of legislation and policy that may affect business operations. The presentation of successful case studies formed an integral part of the conference. The NCPC-SA is a national programme, funded by the National Department of Trade and Industry and hosted by the Council for Scientific and Industrial Research (CSIR). It exists to support industrial companies to reduce their environmental impact through the use of RECP. The biennial conference is offered as one of these support mechanisms, which is why there is no cost for attendance. Both days included a non-commercial exhibition, allowing delegates to interact with government and industry programmes that may be of assistance.

PROFILE

Protecting roofs and stopping leaks worldwide since 1958 Topps Products delivers sustainable, commercial roof and industrial roof maintenance solutions. Our roof coatings and roof sealants have been protecting and sealing roofs, stopping roof leaks and extending roof life for decades. The Topps® company roots in this business – which date back to 1958 – are based upon a simple concept: product selection for your roofing needs is as important as the company that installs it. Our roof coating systems work together to restore, protect and enhance the energy efficiency of commercial and industrial buildings. These systems always include a versatile group of surface preparation, reinforcement, roof repair and roof coating products which all work together to improve the performance of your roof.

PolyCore embedded into Polyprene around vent.

Fits in and forms around vent.

At Topps, our production management team oversees the purchase of all raw materials and the production for every litre of roofing product produced for you. Our business development division assists and helps train roofing contractors with certification seminars and on-site training worldwide.

Providing effective roofing solutions to contractors, building owners and facility managers – and supporting our full line of roof coating and roof repair products with a dedicated support team – is our top priority.

SUPPORT TEAM

We pride ourselves on our attention to customer service. Strict product production guidelines involving our own people together with local certified independent installers helps ensure results.

At Topps, our support team works closely with you to ensure the project goes smoothly. Our support team is experienced in the roofing industry and can provide you with what you need to get the job done right. Our roofing products are second to none, exceeding industry standards and standing up in the harshest of climates.

Because Topps® products are used in virtually every climate of the world, including Antarctica and others typically referred to as the graveyard of protective coatings, Topps® likely has the best option to serve you. Let our staff and trained independent installers assist you.

CONTACT INFO

Nothing can be more important to your project’s success than the confidence that comes with quality roofing products, combined with the reliability of both local installers and the manufacturer’s resources working together.

Tel: 087 813 0349 Email: admin@toppsproductssa.co.za Website: www.toppsproductssa.co.za

SOUTH AFRICAN BUSINESS 2018

Skills development Job-relevant training is key to economic growth.

wenty-two South Africans headed to Abu Dhabi in October 2017 for the WorldSkills International competition. The South Africans were selected from 20 skills areas which forms part of the WorldSkills South Africa project and The Decade of the Artisan campaign, both supported by the National Department of Higher Education and Training (DHET). Participation in the WorldSkills International (WSI) competition showcases talented young South Africans, but also highlights the need to get young people enthused by the idea of becoming artisans and technicians. The National Development Plan (NDP) envisages South Africa producing 30 000 artisans per year by the year 2030. The current figure is about 13 000 per year. WSI participants from South Africa included skilled young people in the fields of water technology, mechatronics, IT networks, graphic design, plumbing and heating, welding, bricklaying, cookSOUTH AFRICAN BUSINESS 2018

ing, refrigeration, spray painting, hairdressing and mobile robotics. South Africa has one engineer to every 3 166 citizens, compared to Malaysia where the figure is 543 citizens per engineer. The Skills Development Amendment Act is intended to improve the situation, and not only in engineering. Several institutions have been created to help guide policy in skills and training, and to guide the actions of training institutions. Sector Education and Training Authorities (SETAs) collect dues from companies in a particular industry (Wholesale and Retail, Banking, Construction, Chemical Industries, for example) to promote training in that industry. A percentage of this money is returned to the company if that company can show that they have a workplace training plan. The rest of the money is used by the SETA to offer skills training. In the Eastern Cape the Manufacturing, Engineering and Related Services Authority

SPECIAL FEATURE (MerSETA) plays an important role in supporting skills development in the automotive and automotive parts sector. The authority is involved in the National Tooling Initiative and artisan training, especially with regard to creating a skilled workforce for the Coega Industrial Development Zone. MerSETA helped establish the Centre of Excellence for Welding at the Eastcape Midlands T VET College in Uitenhage. A national programme of the Local Government SETA (LGSETA) offers learnerships in auditing to municipal employees. The National Skills Authority (NSA) works with SETAs in carr ying out the National Skills Development Strategy (NSDS). The Human Resource Development Council of South Africa (HRDCSA) is an over-arching body that aims to give guidance to the many institutions working on skills development and training. It is managed by the DHET. A key element in delivering skills training are Technical and Vocational Education and Training (TVET) colleges, which are tasked with bridging the skills gap in South Africa. TVET colleges are concentrating on 13 trade areas, including bricklayers, millwrights, boilermakers and riggers. Large amounts of money are spent on basic education at schools, but there has also been a big increase in spending on TVET colleges, reflecting the state’s concern to develop the skills of the country’s workforce. R16.5-billion has been allocated by national government to skills development and infrastructure over the medium term. The HRDCSA has identified five key areas where the skills pipeline must be improved: access to TVET colleges; intermediate skills (artisans in particular) and professionals; production of

academics; collaboration between industry and educational institutions in research and development; worker education; foundational learning. In KwaZulu-Natal, the Maritime School of Excellence trains students for the Sharks Board, Transnet Port Terminals (TPT), Transnet National Ports Authority (TNPA) and for the wider field of maritime and logistics employers. More than 250 students graduated in 2016 as cargo coordinators, marine pilots, tug masters and operators of lifting equipment. The South African Maritime Safety Authority (SAMSA) is investigating the feasibility of establishing specialist maritime schools in South Africa’s coastal provinces, including the Eastern Cape and Western Cape.

Industry Creative interventions from industry bodies such as the Engineering Council of South Africa (ECSA) are also creating new pathways for training. The ECSA has started a programme whereby trainees can earn certificates in specific disciplines from a broader range of institutions. The qualifications will be 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 which will be deployed to fund programmes that will teach relevant skills. The Jobs Fund (run by National Treasury) supports several initiatives around the country. Among them is a programme to put 135 unemployed engineers to work, in partnership with the Automotive Industry Development Centre Eastern Cape (AIDC EC) and its members. Among the companies supporting the programme are Lumotech, Benteler, G.U.D Holdings and Johnson Contols. In-house training is a vital component of the sector. Training at Work is a consultancy that specialises in offering exactly that: programmes can be customised to suit the employer’s and the employees’ needs. DaySeven Training is another company that offers courses that include Business Skills, Leadership and Workplace Readiness.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE Roof maintenance specialists Topps Group South Africa has developed a detailed training module where roofers and waterproofers can attain qualifications while learning about the characteristics of the products they will apply to roofing surfaces. The programme is delivered by the company that applies the roofing products after their staff have been trained by Topps. Volkswagen South Africa has several skills and training programmes which include the Commercial Trainee Programme, the Graduate Trainees, Further Education Training and Wanderjahre programmes. In the motor manufacturer’s home town of Uitenhage, Volkswagen has five learning academies. Open to employees and suppliers, the academies’ programmes are SETA-accredited. and offer a range of courses available through workshops, exercises, e-learning or on-the-job-training.

of specialisation or to understand new developments in a particular field. Sometimes an employer will ask CPUT to structure a course for a group of employees, for example, in ICT. These courses do not earn candidates diplomas, but may be used to gain credits. Traditional universities are also aware of the need to align their courses and research programmes with the needs of the economy. There are three World Health Organisation (WHO) Collaborating Centres at UWC and the Centre of Excellence in Food Security (with Pretoria University) is funded by the National Research Foundation and the Department of Science and Technology. Biotechnology and food security come together in the Plant Biotechnology Research group at UWC, which studies ways of developing crops that can resist drought. This kind of focus on specific challenges facing society in South Africa is an example of universities working to make their research relevant. The University of Cape Town is offering a course in Health Innovation that encourages talented young South Africans to find solutions to the country’s health problems. Another UCT degree that tackles a specific challenge faced in the South African economy is a master’s in Sustainable Mineral Resource Development. Private colleges such as MANCOSA (Management College of Southern Africa) often specialise in particular fields. In this case, a range of certificates, diplomas and degrees in business, commerce and administration is presented at five sites around South Africa.

Higher education With the inauguration of the Sol Plaatje University (Northern Cape) and the University of Mpumalanga, every province now has its own university, of which there are 26 in all. The Sefako Makgatho Health Sciences University has also opened in Gauteng. There are three categories of university: universities offering only degrees and post-graduate courses with a strong research component, comprehensive universities offering a mix of degrees and diplomas and universities of technology, formerly known as technikons. There are also 87 registered and 27 provisionally registered private higher education institutions. Universities of technology have a specific focus on educating young people in fields that will enhance the country’s economic performance. Some of the courses can be very demanding. Among the new courses on offer at the Cape Peninsula University of Technology (CPUT) are diplomas in geomatics (one of South Africa’s most sought-after skills to aid surveyors, town planners and civil engineers), clothing and textile technology, and horticulture and landscape architecture. CPUT also offers a range of short courses, allowing employed people the opportunity to get up to speed in an area SOUTH AFRICAN BUSINESS 2018

INTERVIEW

Empowerment through training Marius Alberts, Sales Manager for Topps Products Group Africa, explains how the company’s training programme is empowering roofers and waterproofers.

Tell us about the training you offer.

Marius Alberts

We offer training for the coating application in waterproofing. We developed training which is focused on workmanship and consumer satisfaction. What underpins the training programme?

In our Corporate Social Responsibility programme, we understand that there are challenges in South Africa. If you can understand your challenges, that knowledge becomes power. It is not always about the money. If you are completing the value chain and the main focus is the end consumer, they will get the benefit, and that is a story to tell!

BIOGRAPHY Marius Alberts received his Diploma as Coating Inspector Level 2 from the NACE Corrosion Institute in 2013 and is planning to finish Level 3 soon. He has extensive experience in the coating industry: Coating and Waterproofing. For Marius, you can see him as a life coach. His core values you can measure ongoing, which are: Integrity, not being Complacent, Honest and Transparent in all dealings.

What is the focus of the course? To enhance the surface preparation, workmanship, customer satisfaction as well as product knowledge. We have done training with 42 companies; these companies offer the training to their staff. We offer a back-to-back guarantee, which means the company takes responsibility for the workmanship and we as Topps Products SA give the product guarantee. Is the training certified? Yes, absolutely. The regulation speaks for itself. Now the consumer gets a pillow to sleep on. What is the next phase?

Our Corporate Social Responsibility programme is focused on uplifting the value chain. We will be measuring the growth of every student and report back, ongoing. What next for Topps Products SA? With the green movement in SA, our products fit like a glove. We see the trend in the market for green products and there is a big appetite out there. With our proven track record of over two decades we will roll out in every sector of SA. We are focused on contractors and retail stores.

SOUTH AFRICAN BUSINESS 2018

INTERVIEW

Training at Work Founder and CEO Patricia Chiloane is committed to rural upliftment through skills training and education.

Patricia Chiloane

Is Training at Work officially accredited? Training at Work is a 16-year-old accredited and registered organisation with the Department of Higher Education as a Private College within the TVET band. We are further accredited by 12 Sector Education and Training Authorities (SETAs). Do you have a particular focus on training young people?

BIOGRAPHY Patricia Malegoba Chiloane has been involved in skills development since the inception of Sector Education and Training Authorities (SETAs). After founding her own business, Training at Work Private College, accreditation with the Services SETA was achieved in 2003. Chiloane founded a Non-Profit Organisation called Bohlale Foundation which has engaged in a number of events and community projects for women in Bushbuck Ridge. Chiloane has dedicated herself to skills development. Her passion is community development through education. SOUTH AFRICAN BUSINESS 2018

Training at Work has programmes that cover young people, organisations, government and the private sector. Our focus on youth is both in qualifications, learnerships and short courses in programmes like SMME training, life and employability skills, career guidance, mentorship and coaching. There are also courses in health and welfare training, OHS training and IT-related programmes. What do you offer an agency or government department that needs training?

We offer them customised training based on their request in both aligned and non-aligned programmes. In a nutshell, we are offering credit-bearing programmes (Accredited) and workshop-based (Nonaccredited) learning to government and agencies. Are rural people able to gain access to the training you offer?

Training at Work is a mobile training provider meaning we can make our services available anywhere in the country where there is a learner. We have also established ourselves in the rural areas of the Lowveld.

Excellent education through innovation VISION Excellent education through innovation

ABOUT US Training at Work (also inscribed as Training@Work) is a training and consulting private company established in 2001. In 2006 the company was converted from a close corporate to a limited private company. The company is 100% woman owned by Patricia Chiloane. Training at Work develops and offers a flexible range of learning solutions that meet specific needs of individuals, government, private and non-profit organisations. A range of these solutions are aimed at developing the competencies of young people, local communities, the unemployed, corporate agencies, officials in local government and local development agencies. Services • Training • Development • Consulting

Specialised fields • Water and Sanitation • Traffic Training • Professional Driving • Information Technology

• Entrepreneurship • Artisanal • Agricultural Training • Local Government • OD-ETDP and Services

OUR PROGRAMMES QUALIFICATIONS

FOCUS

TARGET

Short courses

Unemployed

Rural

Learnerships Artisan development Skills training Mentoring and coaching

Employed Youth and young people Work readiness Entrepreneurs

Organisational Unorganised formations NPOs and CBOs Cooperatives Industries Government and state agencies

TRAINING AT WORK (PTY) LTD Registration Number: 2006/0285516/07 • Date Registered: April 2006 • DHET registration: 2011/FE07/057

Address: 15 Leonie Street Cnr Rifle Range Winchester Hills Johannesburg 2019 Tel: +27 11 433 9318 or +27 11 433 3096 | Fax: +27 86 519 2889 Email: info@trainingatwork.co.za | Website: www.trainingatwork.co.za

The hardest workers

You shouldn’t have a favourite, but you will.

Get more than you bargained

A school’s transport requirements vary as much as the excuses scholars give for not having done their homework. Thankfully the Caddy Crew Bus combines flexibility, versatility and reliability to deal with any situation. The Caddy Crew Bus is Volkswagen’s hard-working compact people mover that exceeds expectations. It seats 5 comfortably and has an optional 7-seater package if you’re looking for even more of an overachiever in your vehicle. Add to that comprehensive standard safety features such as Automatic Post-Collision Braking, ESP, EDL, Hill Hold and Traction Control and you’ll be hard pressed to find a situation on the school run that the Caddy Crew Bus can’t handle with ease. All of that and we haven’t even mentioned the German-engineered technology that results in a low cost of ownership. It’s the ultimate runabout school shuttle, a bit of a teacher’s pet really.

With every generation the Transporter Crew Bus just keeps getting better. Its versatile nature means it doesn’t just adapt to any situation, it excels at them. There are two wheelbases available, short and long, meaning you can have from five seats all the way up to eleven seats! With all the extra space for people you’ll be glad to know it has the full host of enhanced safety features including ESP, Automatic PostCollision Braking and 4MOTION®, our permanent all-wheel-drive system that delivers power to all four wheels as required. Not only does it meet international safety regulations, but parental safety expectations too. Topping it off, the Transporter Crew Bus is covered by a 2-year / unlimited kilometre warranty and a 3-year / 60,000km Genuine AutoMotion Service Plan.

for, without having to bargain.

O&M CAPE TOWN 2382/E

in the faculty.

The longest serving member of the faculty.

Member of the rugby, netball and chess teams.

For over 70 years the Kombi has been transporting parents, teachers, kids, teens, kids who think they’re teens and teens who think they’re kids. It’s South Africa’s most loved people mover and an iconic member of our school shuttle fleet. Excellent fuel efficiency, performance and torque are made possible thanks to Volkswagen’s TDI engines paired with the smooth DSG® gearbox. The Kombi is comfortable, reliable and so spacious that you won’t even hear the scholars at the back asking, “Are we there yet?” Its list of safety and driver assistance systems resembles the impressive mass of scrolls on a head boy’s blazer: ESC, ESP, ASR, EDL, MCB, Hill Hold Assist and Traction Control. And it comes with a 5-year / 60,000km Genuine AutoMotion Maintenance Plan meaning not only are your services covered, but so is wear and tear. The Kombi will very quickly become one of your most loved staff members.

There is no school shuttle task too large for this Volkswagen. The Crafter has been crafted to meet all your scholars’ travel needs and proudly represent your school. Sold by our network of dedicated Commercial Vehicles Dealerships, the Crafter is converted through Dealer partners into the perfect transport solution for students, teams, coaches and teachers. Its efficient TDI and BiTDI® engines welcome out-of-town field trips, while its up-to 23 seats allow for the entire first team, reserves and kit to travel comfortably. The 100% all-new Crafter will be arriving in the second quarter of 2018, ready to get to work.

Commercial Vehicles

INTERVIEW

Meeting national development imperatives As the Head of Secretariat: Human Resource Development Council of South Africa, Brenda Ntombela is responsible for the overall leadership and management of the Secretariat.

Brenda Ntombela

What are the key goals of the Revised HRD Strategy Towards 2030?

The HRD Strategy aims to: • Strengthen basic education and foundation programmes in Science, Technology, Engineering, Maths, Languages and Life Orientation/Skills • Expand access to quality post-schooling education and training • Improve research and technological innovation outcomes • Produce appropriately skilled people for the economy • Promote a developmental/capable state

BIOGRAPHY Brenda Ntombela is a graduate of the University of Limpopo, has a Master’s Degree in Nursing from the University of South Africa and has completed various management courses. She has worked in Higher Education and ICT. She has served as a Councillor for the Independent Communications Authority of South Africa (ICASA), is currently a Council member at the Durban University of Technology and on the transformation Committee of the South African Council for Project and Construction Management Professions. SOUTH AFRICAN BUSINESS 2018

How does the plan differ from its predecessor? Various new government priorities and plans have been developed including the National Development Plan (NDP). Global trends and developments have also been taken into account, particularly the impact of the Fourth Industrial Revolution on government, business, individuals and society. These changes required a review of the Human Resource Development Strategy of South Africa (HRDSA) 2010 to 2030. This Revised HRD Strategy outlines the human resource development imperatives that are needed to meet national development imperatives. What are the roles of various social partners in the strategy?

Labour: Focuses on worker education including the training of shop stewards and negotiators to improve their understanding of labour law. Supports the analysis of requirements, including the implementation of skills audit and identifies programmes, general education as well as technical skills and supports training for the unemployed. Business: Continue to work on commitments within the Skills Accord. Implement the Chief Executive Officer initiative to support a Youth Employment Scheme (YES) which aims to put one-million youth into

INTERVIEW internships. Provide additional funding for bursaries as well as other skills priorities (over and above the skills levy).

Priority Programmes are: Programme 1 Foundation Education with Science, Technology, Engineering, Maths and Languages and Life Government: Ensure that cross-departmental Orientation/Skills. blockages can be addressed. In addition, provinces Programme 2 may also adopt special programmes that are specific TVET and the Rest of the College System. to the province. Programme 3 Higher Education and Training, Research and Civil Society: Communities act as a direct mecha- Innovation. nism for channelling HRD imperatives through par- Programme 4 ticipation. Community involvement enables citizens Skills for the transformation of society and the to influence the decisions that affect their lives, economy. as well providing vital information on community Programme 5 development issues. Communities will be able to Development/capable state. make decisions on impacts associated with the implementation of the strategy. These decisions How does the Strategy tackle youth will be made through their representatives who unemployment? It supports various interventions to create employparticipate in the HRD Council structures. ment and reiterates the need for the involvement Who are the key beneficiaries? of all stakeholders in the HRD processes. The HRD The key beneficiaries that the revised HRD Strategy Council is strengthening the partnerships between towards 2030 is targeting are Government as key TVET colleges and industries to help reduce youth leaders, Social partners (organised labour, business unemployment by calling on industries to open up and civil society), Women, Youth, Communities, doors for workplace experience for youth. Vulnerable groups and Small, Medium and Micro Does the Strategy deal with “radical Enterprise (SMMEs). economic transformation”? What are the current projects being Yes, the HRD Strategy promotes social and economic implemented? development. It also supports the Government’s The HRD Council is currently coordinating the fol- Medium Term Expenditure Framework (MTSF) lowing projects: Strengthening of Maths & Science which focuses on a competitive economy, createachers education, development & implemen- tion of decent work opportunities, encouragetation of a funding model for worker education ment of investment and promotes inclusive partnerships between TVET Colleges and Industry. growth. This allows every individual in South Africa to access Human Resource Development facilities and resources.

CONTACT INFO Physical address: 6th Floor, Ndinaye House, 178 Francis Baard Street, Pretoria Telephone: +27 12 943 3187 Mobile: +27 82 573 3716 Email: ntombela.b@dhet.gov.za Website: www.hrdcsa.org.za

SOUTH AFRICAN BUSINESS 2018

PROFILE

College of Cape Town The forward-looking college has a history dating back to the early 20th century.

The College is a public Technical and Vocational Education & Training (TVET) College, under the Department of Higher Education and Training. Qualifications offered are accredited, affordable and quality assured by Umalusi, various SETAs and SAQA.

Description of educational offerings The College is a leading provider of education and training in mainly the Technical and Vocational Education and Training (TVET) band and has much to offer students and prospective partners as an alternative to Basic and Higher Education and Training. Qualifications include skills programmes, technical, vocational and occupational training that lead to recognised, accredited qualifications that are in high demand by commerce and industry.

colleges in which some 150 colleges around the country were reduced to 50. No of staff: 670 (full-time) No of registered students: 14 379 Faculties offered: Art & Design, Beauty Therapy, Building & Civil Engineering, Business Studies, Education & Training, Electrical Engineering, Haircare, Hospitality, Information & Communication Technology, Mechanical Engineering, Travel & Tourism Qualifications offered: Certificates, Higher Certificates, Diplomas, UNISA B.Ed Degree (Foundation Phase), Skills Programmes, Learnerships, Accredited Trade Test Centre

Description of location of facilities The College is situated in the central area of the Peninsula with campuses located in Athlone, Cape Town city centre, Crawford, Gardens, Guguletu, Pinelands, Thornton and Wynberg. The central office is located in Salt River, Cape Town. The College of Cape Town also has three residences.

CONTACT INFO Key contact people: Louis van Niekerk, Principal. Wilfred Jackson, Chief Financial Officer. Sharon Grobbelaar, Marketing Manager. Physical address: 334 Albert Road, Salt River, Cape Town 7945 Postal address: PO Box 1054, Cape Town 8000 Tel: +27 21 404 6700 / 086 010 3682 Fax: +27 21 404 6701 / 086 615 0582 Email: info@cct.edu.za Website: www.cct.edu.za

Key facts and figures Year established: The College of Cape Town is the oldest Technical and Vocational Education and Training institution in South Africa with a proud history dating back to the beginning of the 20th century. As the name suggests, we are based in Cape Town. Four former technical colleges, Athlone College, Cape College, Sivuyile College and Western Province Technical College, were officially merged on 1 February 2002 to become the College of Cape Town. This arose from a rationalisation in TVET SOUTH AFRICAN BUSINESS 2018

Realising the promise of the Oceans Economy Hundreds of state properties along South Africa’s coast are to become sites of new business opportunities and catalysts for economic growth and job creation. The Oceans Economy is a new strategic opportunity for South Africa. A broad national strategy to tackle projects that will reap benefits quickly–Operation Phakisa– has a number of priority streams, one of which is the Oceans Economy.

SPECIAL FEATURE

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

s part of the Oceans Economy strategy within Operation Phakisa, a unit within the National Department of Public Works has been created, the name of which explains its mandate – the Small Harbours and State Coastal Property Development unit (SH&SCPD). The key objectives of the Small Harbours and State Coastal Property Development unit are to: • attract investment in state coastal maritime infrastructure and properties • grow businesses • create jobs • stimulate economic growth • redistribute wealth. The new unit has four main tasks: it lets out state coastal property for economic development; it manages state coastal properties (including all occupied and vacant Admiralty Reserve, land parcels, buildings, estuaries and unproclaimed harbours); it oversees the maintenance of small harbours and coastal properties and it is responsible for a special intervention programme to repair and maintain 12 proclaimed fishing harbours in the Western Cape. South Africa is bordered by the ocean on three sides. In 2010 the ocean contributed approximately R54-billion to South Africa’s GDP and accounted for approximately 316 000 jobs. Studies suggest that the ocean has the potential to contribute up to R177-billion to GDP and between 800 000 and one-million direct jobs. A series of investment conferences were launched in each of South Africa’s coastal provinces in 2017, introducing the investors community to “Small Harbours and State Coastal Property Development”. A wide range of sectors in the Northern Cape, Western Cape, Eastern Cape and KwaZulu-Natal are being targeted for investment. The scheme aims to attract a minimum of R12billion in investment proposals, generate over 2 000 job opportunities in the short to medium term and 500 permanent jobs over the long term. The products generated should be viable and contribute to growing the economy, small businesses should have a chance to be part of large-scale manufacturing and construction initiatives, and the regularisation of business activities along the coastal belts will promote increased revenue for local SOUTH AFRICAN BUSINESS 2018

municipalities through the collection of rates and municipal services. The country’s 2 800km of coastline already supports many communities and businesses but the potential to increase and improve yields is enormous. At the moment, there are more than 300 businesses leasing state-owned land in sectors ranging from mining, farming and fishing to logistics, leisure and retail. The SH&SCPD unit wants to increase these opportunities in partnership with other national government departments such as National Treasury, the Department of Agriculture, Forestry and Fisheries and the Department of Environmental Affairs, provincial governments, district municipalities and local municipalities. Several priority projects have been identified, but the scope for further smaller projects is huge. Much will depend on the initiative of local business people and local municipalities. The first five priorities identified under the project are: 1. development of the harbour at Port Nolloth, Northern Cape 2. development of the harbour at Port St Johns, Eastern Cape 3. development of a new harbour at Port Edward, KwaZulu-Natal 4. repair and maintenance of proclaimed fishing harbours, Western Cape 5. one priority project per coastal municipality (on Public Works land). State coastal land and buildings will be available to private-sector investors to achieve any of the following objectives: expand an existing business; create a new business; stimulate the local economy; create new jobs; generate revenue; deepen economic transformation. Investment proposals will be evaluated on a set of criteria that include: • scale of investment • projected growth of business and turn over • retention and creation of jobs • degree of empowerment • project revenue • appropriateness with regard to zoning • commitment to support small, medium and micro-enterprises (SMMEs) and localisation.

SPECIAL FEATURE

Local economic development

• •

Economic sectors that have been identified as suitable for local economic development through investment are Education and Training; Renewable Energy; Farming; Fish Processing and Packaging; Food and Beverages; Hospitality; Infrastructure Development; Logistics; Maintenance and Repair (Vessels and Harbour Infrastructure); Manufacturing and Engineering Services; Mining; Pipelines and Pump Houses; Rescue, Safety and Security; Sport and Recreation; Tourism; Transport (Commercial and Leisure); Water and Waste Management. The range of sectors and business opportunities available to potential investors into the Small Harbours and State Coastal Property Development project is wide. They include: • Water theme parks • Fishing and fish processing • Fuel supply • Special Economic Zones • Desalination • Energy production • Caravan parks/holiday resorts • Shipwreck museums • Yacht mole facilities • Transport (ferries and water taxis) • Energy production • Public beaches • Slipways • Warehousing

• • • • • • • • • • •

Breweries and distilleries Aquaculture Mariculture Small ship/boat-building Ship maintenance and repairs Restaurants Retail Fish processing factories Offices Tourism Ice-making and supplies Education (Maritime and Aquaculture Training Centres) Renewable energy

Small harbours Small harbours can play a big role in driving new economic activity. Small harbours are also important in terms of safety, security and safeguarding the territorial integrity of the South African state. As a first step in the small harbours programme, 12 Proclaimed Fishing Harbours in the Western Cape were identified and work began on a series of projects to start the revival process: repairing slipways, towing away sunken vessels and dredging. The repair and maintenance project should be completed by March 2019. Many more creative and value-adding interventions lie ahead, and are expected to be undertaken

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

even in areas that are currently not Proclaimed Fishing Harbours. South Africa’s four coastal provinces have as many as 50 potential and existing unproclaimed harbours. There is a particular emphasis on developing assets beyond the Western Cape, traditionally the home of maritime activity. The key is to use small harbours to stimulate the local economy. Activities to promote primary maritime activity could include: • infrastructure to support fishers: processing, ice production, cold storage • infrastructure for boat-building and repair • additional berthing and launching facilities • new recreational fishing points • access to better amenities for fishers. Business opportunities that might work at a small harbour include ice-making, desalination, yacht mole facilities, water taxis and a variety of tourism ventures. Tourism could be promoted through relatively simple interventions such as: • improved pedestrian access • cleaning and maintenance • policing • stalls or shelters to sell crafts SOUTH AFRICAN BUSINESS 2018

partnerships with developers to develop restaurant, curio shops, retail, maritime/marine museum or wreck museum and accommodation options • infrastructure that allows for water recreation and sports. Steps are being taken to include the country’s small harbours as national assets in terms of the Government Immovable Assets Management Act (GIAMA). DPW is the custodian of the state’s immovable assets. The unit intends implementing the Spatial and Economic Development Frameworks (SEDFs) for the 12 proclaimed fishing harbours which were completed in 2014 and develop SEDFs for the remaining small harbours along South Africa’s coastline. An audit of all state coastal reserves needs to be done, and land for aquaculture projects is to be made available for these enterprises. Short-term leases within harbours are also to be converted to three-to-five-year leases so that business owners can have better security of tenure, allowing them to plan and expand. The 12 existing and Proclaimed Fishing Harbours are all in the Western Cape. Outside the Western •

SPECIAL FEATURE Cape, the Small Harbours and State Coastal Property unit has plans in hand for priority projects at nine locations in three provinces: • Northern Cape: Port Nolloth; Hondeklip Bay and Kleinsee. • Eastern Cape: Port St Johns; Port Alfred and Gonubie. • KwaZulu-Natal: Port Edward; Hibberdene and Port Shepstone.

crime and unemployment. It involved setting up clear targets and following up with monitoring process and making the results public. The Malaysian government registered impressive results within a short period. In the South African plan, there are eight steps. Various knowledgeable and relevant people from the public and private sectors, academia as well as civil society organisations are brought together to collaborate in “laboratories” so there is, for example, a Health Lab, an Education Lab and an Oceans Economy Lab. From these sessions, detailed plans are developed with timelines and delivery dates. The Oceans Economy has been chosen as one of the key sectors for Operation Phakisa because of the massive opportunity to create value that resides onshore and offshore. There are five target areas within the Oceans Economy strategy: • aquaculture • offshore oil and gas • marine protection and governance • marine transport and manufacturing • Small Harbours and State Coastal Property.

Operation Phakisa Operation Phakisa is a national plan that targets sectors that can best achieve quick returns in terms of growth and job creation. Operation Phakisa falls under the National Department of Planning, Monitoring and Evaluation and is aligned with the National Development Plan (NDP) 2030. The plan seeks to get things done quickly. Phakisa mean “hurry up” in SeSotho and is adopted from the Malaysian method of delivering economic transformation, “Big Fast Results”. That operation addressed Malaysia’s key priorities such as poverty,

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Northern Cape

will be the focus of a project on Public Works land, brokered by the Small Harbours and State Coastal Property Development unit.

The Northern Cape has a coastline of 313km but the economic value of this asset has barely been touched, despite a growth in the abalone industry in recent years and some fishing and lobster operations. The province has been allocated an increased quota for landing fish (primarily hake) which makes Port Nolloth more attractive as a site for investors in fish processing. A pilot abalone ranching project located south of Port Nolloth will start operating soon. Bigger plans are under way to convert Port Nolloth into a deepwater port capable of receiving large vessels. Both a pre-feasibility study and a follow-up Gap Analysis have been done, and the plans have been registered with the provincial and national Treasuries. In terms of the Small Harbours and State Coastal Property Development project, plans for Port Nolloth include the creation of a waterfront for retail and tourist activity, expanding fishing and aquaculture, and developing a boat-building and maintenance industry. The Namakwa District Municipality is one of five district municipalities in the Northern Cape and the only one with access to the coast. Each of the three coastal local municipalities within Namakwa DM SOUTH AFRICAN BUSINESS 2018

Priority projects

Port Nolloth: a new harbour development with economic activities such as alluvial mining, boatbuilding and maintenance, fishing and aquaculture and the development of a waterfront. Hondeklip Bay: development of coastal property; with economic activities such as alluvial mining, aquaculture and fishing. Kleinsee: development of coastal property; with economic activities such as aquaculture and the creation of an economic zone. Northern Cape Provincial Government Department of Economic Development and Tourism: www.economic.ncape.gov.za Namakwa District Municipality Website: www.namakwa-dm.gov.za Coastal local municipalities: Richtersveld LM; Nama Khoi LM; Kamiesberg LM. Coastal assets include: Alexander Bay, Port Nolloth, Hondeklip Bay, Koingaas and Kleinzee.

SPECIAL FEATURE Western Cape

harbours has economic activity to a greater or lesser extent, but upgrades and diversification will serve them (and potential investors) well. By way of example, budgeted amounts for repairs, upgrades, dredging and security for Hout Bay harbour for the period 2015-2018 are set at R14.4million. Gordons Bay harbour is to have some of its access roads rerouted to create separate zones for operations and tourism/commerce. At Kalk Bay harbour the focus is on creating a dedicated area for small-scale fishers which will also create new cold-storage facilities.

The Port of Cape Town (general trade), Saldanha Bay (exportation of iron ore and trawler fleets), Mossel Bay (gas and trawler fleets) and Simon’s Town harbour (naval headquarters) are major port facilities underpinning the maritime sector in the Western Cape. The Small Harbours and State Coastal Property Development project has committed to a programme of repair and maintenance of the Western Cape’s 12 Proclaimed Fishing Harbours. In addition, a capital and maintenance programme valued at R400-million has been outlined. Several of the smaller harbours being targeted for these repair projects and for further development fall within the metropolitan area of the City of Cape Town; the others are distributed across four of the province’s five district municipalities. Saldanha is a base for deep-sea trawling operators. The port of Mossel Bay is the region’s fishing industry base with facilities for fleet maintenance and for processing catches. The Harbour Road development at Kleinmond near Hermanus has seen the area leading to the sea near the slipway upgraded and transformed: roadside trees shade coffee shops and traders, and bookshops and restaurants line the cobbled road leading to the water’s edge. Several new apartments are for sale or available for holiday rental. This kind of upmarket development will not suit every small harbour, jetty or cove along the coast of South Africa, but it highlights what can be done with a bit of imagination and intelligent partnerships between public landowners and private developers.

Western Cape Provincial Government Department of Economic Development and Tourism: www.westerncape.gov.za/dept/edat City of Cape Town Website: www.capetown.gov.za Proclaimed Fishing Harbours: Hout Bay, Gordons Bay and Kalk Bay. West Coast District Municipality Website: www.westcoastdm.co.za Coastal local municipalities: Matzikama LM; Cederberg LM; Bergriver LM; Saldanha Bay LM; Swartland LM. Proclaimed Fishing Harbours: Lamberts Bay, Laaiplek, St Helena, Saldanha Bay. Other coastal assets include: Doring Bay, Elands Bay, Ysterfontein. Overberg District Municipality Website: www.odm.org.za Coastal local municipalities: Overstrand LM; Cape Agulhas LM. Proclaimed fishing harbours: Hermanus, Ganbsaai, Struisbaai. Other coastal assets: Kleinmond, Hawston, Arniston.

Priority projects The unit will implement the Spatial and Economic Development Frameworks (SEDFs) for the 12 Proclaimed Fishing Harbours of the Western Cape which were completed in 2014. Various projects are at different stages in the development pipeline. On the West Coast there is Lamberts Bay, Laaiplek, St Helena and Saldanha Bay. Within the City of Cape Town lie Hout Bay and Kalk Bay and around False Bay is Gordons Bay. Further east are Hermanus, Gansbaai, Struisbaai, Arniston and Stilbaai. Each of these

Eden District Municipality Website: www.edendm.co.za Coastal local municipalities: Hessequa LM; Mossel Bay LM; Knysna LM; Bitou LM. Coastal assets include: Port of Mossel Bay, Plettenberg Bay, Knysna lagoon and jetties, Stillbaai and Witsand.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE Eastern Cape

Priority projects

Port St Johns: development of a new harbour and development of coastal property, with economic activities such as a new economic zone, fishing and aquaculture and the establishment of a waterfront. Port Alfred: development of coastal property, with economic activities such as tourism and aquaculture. Gonubie: development of coastal property, with economic activities such as a mini-waterfront, leisure activities and recreation.

The Eastern Cape is perfectly positioned to take advantage of the new interest in developing a maritime economy. The province has 800km of coastline, three ports, two Industrial Development Zones and an academic community geared to maritime research. The Eastern Cape’s maritime sector is anchored by its three large ports in the metropolitan municipalities of Buffalo City (Port of East London) and Nelson Mandela Bay (Port Elizabeth and Ngqura). The Nelson Mandela University has established a campus for Ocean Sciences. The ports of East London and Ngqura serve Industrial Development Zones, the ELIDZ and the Coega IDZ. Apart from attracting foreign direct investment and boosting employment, IDZs play a role in helping to add new sectors or subsectors to an economy. Beyond the metropolitan municipalities, three district municipalities host other coastal properties, existing small harbours or areas that could become small harbours. The tourism potential of the sandy beaches along the Eastern Cape coastline is already well known. With investment and targeted projects, some of the “hidden gems” among the small harbours, bays and coastal properties may turn out to be providers of income and improved turnover in unexpected ways.

Eastern Cape Provincial Government Department of Economic Development, Environmental Affairs and Tourism: www.dedea.gov.za Nelson Mandela Bay Metropolitan Municipality Website: www.nelsonmandebay.gov.za Assets: Ports of Port Elizabeth, Ngqura. Sarah Baartman District Municipality Website: www.sarahbaartman.gov.za Coastal local municipalities: Greater Kei LM; Sundays River LM; Kouga LM; Ndlambe LM. Coastal assets: Jeffreys Bay, Port St Francis, Port Alfred. Buffalo City Metropolitan Municipality Website: www.buffalocity.gov.za Assets: Port of East London, Gonubie. OR Tambo District Municipality Website: www.ortambodm.go.za Coastal local municipalities: King Sabata Dalindyebo LM; Nyandeni LM; Port St Johns LM; Ingquza LM; Mbizana LM. Coastal assets: Port St Johns, Mcwasa, Hole in the Wall. Amathole District Municipality Website: www.amathole.gov.za Coastal local municipalities: Ngqushwa LM; Great Kei LM; Mnquma LM; Mbashe LM. Coastal assets: Morgan Bay, Kei Mouth.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE KwaZulu-Natal With its two important ports, KwaZulu-Natal is very much a maritime province. Between them, Durban and Richards Bay handle 78% of South Africa’s cargo tonnage. Richards Bay, apart from being the country’s main site for the export of coal, is also a registered Industrial Development Zone (IDZ) and consequently attracts a range of investors. The state owns property adjacent to many of the province’s fine beaches and these will be used to further develop tourist infrastructure, primarily on the South Coast. The great annual Sardine Run is one of the highlights on the tourism calendar and generally involves thousands of individuals plunging into the surf in search of silvery treasure. Some of planned infrastructure involves fish processing. The remote destinations in the northern parts of KwaZulu-Natal have been mentioned in some of the preliminary planning for the project, but no details have yet been announced. Four district municipalities and the metropolitan municipality of eThekwini preside over ports, small harbours and coastal properties in the province.

Ugu District Municipality Website: www.ugu.gov.za Coastal local municipalities: Ray Nkonyeni LM; Umdoni LM. Coastal assets: Port Shepstone, Port Edward, Hibberdene, Shelley Beach.

Priority projects

Port Edward: development of a new harbour and coastal property, with economic activities such as fish and processing, fishing and leisure activities. Hibberdene: development of coastal property, with economic activities such as the creation of a waterfront and a Music City. Port Shepstone: development of coastal property, with economic activities such as boat-building and repairs and the creation of an economic zone.

iLembe District Municipality Website: www.ilembe.gov.za Coastal local municipalities: Mandeni LM; KwaDukuza LM. Coastal assets: Ballito, Zinkwazi beach.

KwaZulu-Natal Provincial Government Department of Economic Development, Tourism and Environmental Affairs: www.kzndedt.gov.za

King Cetshwayo District Municipality Website: www.uthungulu.gov.za Coastal local municipalities: uMlalazi LM; uMhlatuze LM; uMfolozi LM. Coastal assets: Port of Richards Bay, Richards Bay IDZ.

eThekwini Metropolitan Municipality Website: www.durban.gov.za Coastal assets: Port of Durban, Umkomaas, Amanzimtoti, Umhlanga.

uMkhanyakude District Municipality Website: www.ukdm.gov.za Coastal local municipalities: Mhlabuyalingana LM. Coastal assets: Kosi Bay, St Lucia.

SOUTH AFRICAN BUSINESS 2018

Small Harbours and State Coastal Property Development Unlocking the potential of South Africa’s oceans economy. A unit has been established within the National Department of Public Works to focus on the enormous potential that South Africa’s coastline holds for economic upliftment and job creation. The key objectives of the Small Harbours and State Coastal Property Development unit are to: • attract investment in state coastal maritime infrastructure and properties • grow businesses • create jobs • stimulate economic growth • redistribute wealth.

Mandate and functions • Letting out of state coastal property for economic development. • Management of state coastal properties. (This includes all occupied and vacant Admiralty Reserve, land parcels, buildings, estuaries and unproclaimed harbours.) • Maintenance of state coastal properties and infrastructure. • Special intervention programme: repair and maintenance of 12 proclaimed fishing harbours in the Western Cape.

“Ensuring inclusive Economic Growth and Development through the Empowerment of Local Communities”

Local economic development Economic sectors that have been identified as suitable for local economic development through investment are Education and Training; Renewable Energy; Farming; Fish Processing and Packaging; Food and Beverage; Hospitality Industry; Infrastructure Development; Logistics; Maintenance and Repair (Vessels and Harbour Infrastructure); Manufacturing and Engineering Services; Mining; Pipelines and Pump Houses; Rescue, Safety and Security; Sport and Recreation; Tourism; Transport (Commercial and Leisure); Water and Waste Management and others. National priority projects DPW intends building three new small harbours in the Northern Cape, Eastern Cape and KwaZulu-Natal provinces. Phase one: The new harbours to be developed under Phase one are as follows: • Port Nolloth of Richtersveld Municipality (Northern Cape) • Port St Johns of PSJ Municipality (Eastern Cape) • Port Edward of Ray Nkonyeni Municipality (KwaZulu-Natal) Phase two: Phase two projects under consideration for development of the following areas: • Northern Cape: Kleinzee and Hondeklip Bay. • Eastern Cape: Port Alfred, Gonubie, Port Grosvenor and Coffee Bay. • KwaZulu-Natal: Port Shepstone, Shelley Beach, Mthunzini and Richards Bay La Mercy.

Enquiries: shscpd@dpw.gov.za

KEY SECTORS Overviews of the main economic sectors in South Africa Agriculture

Mining

Oil, gas and petrochemicals

Energy

Water

Engineering 88 Manufacturing 94 Automotive 100 Chemicals and pharmaceuticals 103 Food and beverages

104

Transport 106 Business services 110

Tourism 116 Information and communications technology 126

Banking

128

Development finance and SMME support 130

OVERVIEW

Agriculture Agriculture companies are active on the stock exchange.

hen South Africa’s first alternative stock exchange in South Africa started trading in February 2017, the first listing was agricultural company Senwes and its holding company. On the JSE, agricultural companies make up 4.3% of market cap. Senwes has been described as a “rock solid, conservatively run agricultural titan” (Anthony Clark) while Kaap-Agri, which listed on the JSE in June 2017, might be, according to Investors Monthly, “the best retailing conglomerate in South Africa”. Afgri, biggest of the former co-operatives that are now multi-dimensional companies, has delisted from the JSE but in 2017 bought the South African Bank of Athens. The JSE has also launched a wool futures contract as the sector strives to add 25-million kilograms to the existing crop of about 44-million kilograms. Zeder Investments is the agricultural arm of investment holding company PSG Group (which has become well known through Capitec Bank and Curro schools). Zeder has been increasing its stake in agricultural companies, most notably Capespan. Capespan has a turnover of R7.6-billion across three divisions: farms, logistics and fruit. Zeder also owns 27.1% of Pioneer Foods which makes and distributes many big food and drink brands across Southern Africa, including Weet-Bix, Liqui-Fruit, Ceres, Sasko and White Star. The company has an SOUTH AFRICAN BUSINESS 2018

SECTOR INSIGHT A record maize harvest is boosting exports. • Land under macadamia nuts is increasing rapidly. annual turnover of R20-billion and it has two Bokomo facilities producing wheat biscuits, cereal and muesli in the United Kingdom. These facts give an indication of the large influence which the agricultural sector has in South Africa. When national agricultural output surged in mid-2017 on the back of good rains and harvests, the country was lifted out of the technical recession into which it had fallen in the first quarter. A maize crop of 16.4-million tons for 2016/17 means a surplus

OVERVIEW of about four-million tons, definitive proof that the long drought which hit South Africa is over, at least in the central and northern regions. The Western Cape drought continues. The Land Bank intends to put aside R1-billion in supporting black agricultural entrepreneurs. The hope is that by making the sector more inclusive, long-term food security will be ensured. Fruit, sugar and wine make up about 7% of the country’s total export basket. Avocadoes, tomatoes and macadamias are among other important export crops. More than 50% of agricultural export is made up of processed agricultural products, a promising development for the future of agriprocessing. National trade policy strategies are intended to enhance this trend. Primary agriculture provides 5% of formal employment in South Africa. Several of the Special Economic Zones around South Africa either have or will in the future have agri - pro cessing f acilities . Examples include existing tomato paste and dairy facilities at Coega IDZ and plans to develop the SEZ at Harrismith (Maluti-A-Phofung) into a hub for agri-processing. Several former farmers’ cooperatives are now substantial agri-businesses. Most have a specific geographic and farming sector focus (BKB is strong in the eastern Free State and Eastern Cape and concentrates on wool and mohair) while others like Afgri have a national presence. Senwes has a strong grain division and it controls 68 silos. Its operations are run from Klerksdorp in

the centre of the country in North West Province. Other companies include NTKLA (Limpopo), GWK (Northern Cape), Klein Karoo Agri, VKB (eastern Free State and Limpopo), Kaap Agri (from the Boland to the Eastern Cape and up to Namibia), SSK (Overberg) and TWK (KZN and Mpumalanga).

Crops A total of 70% of South Africa’s grain production is maize, which covers 60% of the cropping area of the country. The North West Province produces one third of South Africa’s maize and about 15% of its wheat. The Free State is the country’s largest supplier of wheat (37%) and maize (34%). The Western Cape has 350 000ha of wheat-producing land. Macadamia nuts is one of the fastest-growing sectors in South Africa. Almost all of nuts produced are exported and the global market is expanding every year: nearly 2 000ha are added to the land under macadamias every year. Mpumalanga and Limpopo provinces are big nut-growing provinces. Another sector enjoying a boom (mainly because of Chinese demand) is avocadoes, with almost 1 000ha per year of new land being planted. The South Africa feed industry has an annual turnover of about R50-billion with most of the raw material being soya and maize. Two of the country’s big three sugar producers (Illovo Sugar and Tongaat Hulett) each shut down one of their mills because of the extended drought and the broader trend for sugar production and the amount of land under sugar cane is downwards. The prospect of a sugar tax will not help sales. Both of these companies have diversified portfolios with Tongaat Hulett active in property in KwaZulu-Natal. The other big sugar company, TSB Sugar, has been acquired by RCL Foods. The Free State Province supplies significant proportions of the nation’s sorghum, sunflower, potatoes, groundnuts, dry beans, and almost all of its cherries. Barley and canola are produced in the Western Cape. Products distinctive to South Africa, such as rooibos tea (Western Cape) and marula berries (Limpopo) hold great potential to capture niche markets internationally.

Fruit 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. Export volumes, particularly in tropical fruits such as mangoes and avocadoes, have been growing rapidly in recent years. The sector is highly sophisticated and is skilled at the refrigeration and packing required for European Union standards. With clarity now achieved on refrigeration protocols in China, South Africa intends increasing table grape exports to that country to R2.5-billion within five years.

SOUTH AFRICAN BUSINESS 2018

OVERVIEW Wine

Large volumes of exports are achieved in deciduous fruits such as apples, table grapes, pears, peaches, plums and apricots. Avocadoes thrive in Mpumalanga and Limpopo and production volumes above 110 000 tons per year have been achieved. About 45% of production is exported. Most of South Africa’s citrus and subtropical fruit comes from the eastern part of Limpopo. Some of the world’s biggest farming enterprises operate in Limpopo Province. Westfalia, part of the Hans Merensky Group, is an avocado grower of note while ZZ2 is a huge fresh tomato enterprise. Halls has an international reputation for avocadoes and litchis. Companies such as Capespan and DoleSA move huge quantities of fruit around the world. South Africa exports about 650 000 metric tons to the EU (about 40% of the total). A new development in the citrus sector is the establishment for small growers of the Growers’ Development Corporation. The Orange River supports the cultivation of citrus and grapes of many kinds. The region is particularly well suited for the cultivation of Valencia oranges, lemons and grapefruit and the dry, hot conditions mean that it is easy to control pests.

ONLINE RESOURCES Agricultural Research Council: www.arc.agric.za Fresh Produce Exporters’ Forum: www.fpef.co.za Grain SA: www.grainsa.co.za Land Bank: www.landbank.co.za National Department of Agriculture, Forestry and Fisheries: www.daff.gov.za SA Table Grape Industry: www.satgi.co.za

SOUTH AFRICAN BUSINESS 2018

Export volumes have been steadily rising for South African wines. There are about 3 500 wine producers in South Africa, with the large majority located in the Western Cape. There are 54 producer cellars. The industry earned R17.5-billion in exports in 2016. Europe is the main market but exports to China and Russia are growing as South Africa seeks to exploit its membership of BRICS. The industry is located for the most part in the Western Cape but Orange River Cellars in the Northern Cape is growing production volumes. The Distell group produces about a third of the country’s natural and sparkling wine, and is ranked 12th in the world in global wine volumes sold.

Livestock Livestock farming is the largest agricultural subsector in South Africa. The Eastern Cape is the largest livestock province. South Africa has a beef-herd of 14-million. There are 6.4-million goats in South Africa. The Kalahari Kid Corporation (KKC) intends to raise the standard of goat meat and expand the export market. South Africa produces about 55% of the world’s mohair, the high-quality speciality fibre taken from Angora goats. Almost all mohair farming is done in the Eastern Cape. Clover is Africa’s largest milk processor. The Eastern Cape provides approximately a quarter of South Africa’s milk. Parmalat has two plants in Port Elizabeth.

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OVERVIEW

Mining The South African mining landscape is changing.

hen Gold Fields in 2013 spun off some of its older mines to a new company to be called Sibanye Gold, most of the attention was focussed on the older company’s remaining asset in South Africa, the South Deep mine. The thinking was that South Deep would be a more attractive investment proposition if it was uncoupled from the less profitable mines. What has happened instead is that Sibanye has diversified and grown to such an extent that it now has a new name, Sibanye Stillwater, which reflects its R30-billion purchase of mines in the US that produce platinum and palladium. It also bought several South African platinum assets including Aquarius Platinum and the Rustenburg mines of Amplats. Sibanye is now the third-largest producer of palladium and platinum in the world, and one of the 10 biggest gold producers. The gold sector has lost thousands of jobs in the last five years. Part of the reason for Gold Fields wanting to unbundle was political uncertainty in the mining sector. A new mining charter (Mining Charter 3) has not gone down well with mining companies. The level of black ownership and whether or not that percentage must be “topped up” every time a black shareholder sells, are just two of the contentious issues. The Chamber of Mines says that the value of

SECTOR INSIGHT Sibanye Stillwater has become a global leader in just three years. • Operation Mining Phakisa Lab aims to fast-track solutions. BBBEE deals since the year 2000 is R205-billion. The mining industry itself is looking at new ways of doing business. At its 127th annual general meeting where a new CEO was appointed in May 2017, the Chamber of Mines announced that it would be rebranding. Guided by the Zambezi Protocol, the Chamber wants mining to be more positive and construcSOUTH AFRICAN BUSINESS 2018

OVERVIEW tive, working better with the communities in which it operates. New CEO, Mxolisi Mgojo, is simultaneously leading his company, Exxaro Resources, on a programme to make mining sustainable through measures such as water sharing with local communities and finding ways to help communities gain access to energy. The national government’s Phakisa programme is also to be applied to mining. Intended to fast-track solutions to development problems, an Operation Mining Phakisa Lab has been set up to create concrete plans. Another significant change in the South African mining landscape was the decision of Anglo American to focus on three minerals: copper, platinum and diamonds. Although Anglo has not begun a wholesale sell-off of coal, manganese and platinum assets (because rising prices have made some mines very profitable again), sales have begun. The first move came in April 2017 with the sale of Anglo’s thermal coal operations to Seriti, a blackowned company lead by Mike Teke, the outgoing president of the Chamber of Mines. Seriti paid R2.3-billion for the New Vaal, New Denmark and Kriel collieries as well as four closed collieries. Seriti thus became the second-largest provider of thermal coal to Eskom. The other big supplier to Eskom is Exxaro, which supplies about 33-million tons. Exxaro’s recent purchase of Total Coal South Africa (TCSA) took to six the number of mines the comSOUTH AFRICAN BUSINESS 2018

pany has in Mpumalanga. Exxaro’s Grootgeluk mine in Limpopo is a huge operation and gives the company a presence in the Waterberg area, where an estimated 40% of South Africa’s coal reserves lie. This amounts to about 75-billion tons of coal, but to get that coal to the coast for export would mean a rail extension of 464km at a cost of R37-billion. Transnet Freight Rail (TFR) is conducting a feasibility study.

Assets South Africa has huge reserves of platinum and chrome and produces about 40% of the world’s vanadium and vermiculite. The country has large reserves of ilmenite, palladium, rutile and zirconium and 80% of the world’s known manganese reserves are located in the Northern Cape Province. South Africa also produces 75% of the world’s platinum and 73% of its chrome. Despite uncertainty on the global market, Northam Platinum has continued to buy assets. In 2015 it bought Everest South in Limpopo from Aquarius, a move that will allow it to consolidate operations at its adjacent property, Booysendal South. Northam, which also has assets in the North West province, aims to produce 850 000oz of PMGs from 2022. A court ruling in February 2017 has opened the way for Ivanhoe to build its Platreef Project on the northern limb of the Bushveld Igneous Complex. R70-million has been committed to the first phase. If the mine achieves the projected production rate of 12 Mtpa with 1.2-million ounces of PMG, it will rank as the biggest PGM mine in the world. Amplats and Lonmin are trying to reduce costs. Amplats has sold its Rustenburg operations to Sibanye and Lonmin has put some shafts that are expensive to run on care and maintenance. With a depressed platinum price, platinum miners are hoping that

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OVERVIEW demand from the fuel cell industry will replace the decline in demand for catalytic converters. Other areas that are being investigated are jewellery, where the Platinum Guild International will try to stimulate more demand. Coal and platinum group metals (PGMs) have overtaken gold as the minerals generating the biggest sales volumes. Coal, iron ore, gold and platinum group metals collectively make up 80% of South Africa’s mineral sales. South Africa is the second-largest exporter of steam coal in the world and is the number-one producer of andalusite. Copper mines in Aggeneys in Namaqualand are responsible for approximately 93% of South Africa’s lead production and 12% of all world lead exports. There are 20 chromite mines in the North West Province located along a reef running from Brits to Rustenburg and serviced by several ferrochrome smelters. The Northern Cape produces more than 84% of South Africa’s iron ore. Kumba Iron Ore is the country’s biggest iron-ore miner. Its two mines (Sishen and Kolomela) produced 69.8-million tons in 2016. The company’s Thabazimbi mine was sold to ArcelorMittal South Africa in 2017. ArcelorMittal also stepped in to keep the structural mill of Evraz Highveld Steel in Mpumalanga running. Evraz Highveld went into business rescue in 2015. Assmang (a joint venture between Assore and African Rainbow Minerals) is the other big iron-ore producer. Analysts at Investorintel.com expect the South African ferrochrome market to be dominated by two major players, Samancor and Glencore. This follows the closure of three operations: Tata (in KwaZulu-Natal), International Ferro Metals and ASA Metals. Mitsubishi has said that it wants to sell its shareholding in Hernic Ferrochrome. Afarak and Traxys are smaller operators in the sector. A new iron-ore sampling plant at Saldanha, a joint venture between Kumba and Transnet, allows exporters to certify the quality of their product before the ore is loaded on to ships for export. The Kalahari Basin contains 80% of the world’s manganese reserve, but only 15% of global production comes from this area so there is enormous scope for development. Several new black-owned manganese projects are under way. Vedanta started work in 2015 on its R9.4-billion Gamsberg Zinc project. The new mine is near to Vedanta’s existing Black Mountain mine in the Northern Cape Province.

ONLINE RESOURCES Chamber of Mines of South Africa: www.chamberofmines.org.za Geological Society of South Africa: www.gssa.org.za Mining Qualifications Authority (MQA): www.mqa.org.za National Department of Mineral Resources: www.dmr.gov.za South African Institute of Mining and Metallurgy: www.saimm.co.za

SOUTH AFRICAN BUSINESS 2018

Anglo American is investing R2-billion to expand production at its diamond mine near the town of Musina in Limpopo. In the Free State, De Beers’ Voorspoed mine will have a production capacity of 800 000 carats per year when it is fully operational. A new mineral sands project on the West Coast near Lutzville and Koekenaap has started sending product to China. Australian miner Mineral Commodities says it will spend R5-billion at its Tormin mine to 2019 in search of zircon, rutile, ilmenite and garnet. Sixteen rare earth minerals have been identified north of Vanrhynsdorp, with the most prevalent being cerium, an important component of catalytic converters. South Africa is a world leader in converters. Other minerals found at the site are used in magnets, batteries and electric-powered cars.

OVERVIEW

Oil, gas and petrochemicals The sector is alive with activity.

icences for onshore and offshore exploration for gas, allocation of sites for liquified national gas power plants, the creation of new units within national departments, investment in a new helium plant, testing for shale gas, massive investments by Sasol – these are some of the things that are putting a spark into the South African oil, gas and petrochemicals sector. An agreement has been signed between PetroSA and Russia’s geological exploration company, Rosgeo, which will see $400-million invested. The agreement relates to offshore exploration blocks which, it is hoped, will deliver four-million cubic metres of gas every day to the gas-to-liquids refinery at Mossel Bay (Mossgas). The refinery has been struggling to find new feedstock for some time, and a great deal of money was spent on a project called Ikhwesi, which was supposed to find gas. The South African oil industry generates annual sales of about R365billion. Companies in the oil sector include global giants such as Engen, BP, Shell, Total and Caltex. In 2016 Chevron began the process of exiting South Africa. Sinopec of China has bought a 75% share in Chevron

SECTOR INSIGHT A Russian exploration company will supply gas to Mossgas. • A R200-million helium plant is under construction.

South Africa for R12.6-billion. Assets include a lubricants plant in Durban, an oil refinery in Cape Town and 820 petrol stations across South Africa and Botswana. South Africa’s own global giant, Sasol, is a major player in the oil sector and the only player in the petrochemicals sector. SOUTH AFRICAN BUSINESS 2018

OVERVIEW Assets Most of the oil that feeds the country’s four crude-oil refineries is imported. 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. The Chevref oil refinery in the Cape Town suburb of Milnerton produces about 110 000 barrels a day of South Africa’s total production of 703 000 barrels a day. The Natref refinery is strategically placed at Sasolburg near to the industrial hub of southern Gauteng. The petrochemical complex at Sasolburg is a major national asset. One of Sasol’s many companies, Sasol New Energy, has been working on moving the group away from reliance on fossil fuels. The Natref refinery is a joint venture between Sasol Oil (63.6%) and Total SA (36.3%). It is a technologically advanced facility, which refines heavy crude oil into petrol, diesel, commercial propane, jet fuel and bitumen. The capacity is 92 000 barrels per day. KwaZulu-Natal hosts two oil refineries which jointly account for more than 300 000 barrels of refined crude oil that South Africa produces. South Africa’s biggest refinery is Sapref in Durban. Owned jointly by Shell SA Refining (25%), Thebe Investments (25%) and BP Southern Africa (50%), it has a capacity to produce 180 000 barrels per day. The refinery also makes propylene feedstock, solvents, sulphur, asphalt, industrial processing oils and liquefied petroleum gas. The Enref refinery owned by Engen can produce 135 000 barrels per day. This sophisticated refinery can convert light and heavy crude oil into high-value products that include jet and diesel fuel, solvents, bitumen, sulphur, bunker oil and aviation gasoline. Safor is a base-oil production facility (jointly owned by Engen, Caltex and Total but operated by Engen) that produces 45% of Southern Africa’s base oils. Engen also owns the adjoining Lube Oil Blend Plant, which produces more than 72-million litres of finished lubricants annually. A new facility has been added to the oil and gas sector in Cape Town, a 118 000m³ fuel storage unit. The Bergan terminal comprises 12 tanks located on the Eastern Mole of the Port of Cape Town.

New gas policies and fields The Liquefied Natural Gas Independent Power Producer Procurement Programme (LNG IPPPP) is part of the broader programme of the Department of Energy which encourages private investment in renewable energy, namely the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The total allocated to gas-to-power in the national power plan is 3 726MW, of which 3 000MW is for LNG. SOUTH AFRICAN BUSINESS 2018

The first two sites identified by the DoE for LNG plants are Richards Bay (2 000MW) and the Coega IDZ (1 000MW). To produce its allocation of 2 000MW, the KwaZulu-Natal plant would have to use a million tons a year of liquid natural gas (LNG). In 2016 the Department of Trade and Industry (dti) established a Gas Industrialisation Unit (GIU) which will make plans to exploit the huge fields of natural gas off the coasts of Mozambique and Angola and boost industrialisation in South Africa. At Coega, it is estimated that the new plant will inject R25-billion into the Eastern Cape economy. Large commercial gas companies such as Afrox and Air Products have plants within the Coega IDZ. First Automobile Works has established its motor assembly plant next door to Air Products’ air separation unit, allowing it ready access to the industrial gas that it needs. Liquid oxygen and nitrogen play important roles in the metals processing sector for cutting and laser applications. Companies like Hydra Arc are big gas users in welding operations as well as the construction and refinery maintenance that they undertake in the petrochemical, construction, mining and power generation industries. The Coega IDZ is also home to the country first gas-fired plant to be run by a private consortium. The Dedisa power plant is controlled by a consortium including Engie, Legend Power Solutions, Mitsui (Japan) and the Peaker Trust. A new gas turbine open

OVERVIEW cycle power plant near Durban has been commissioned by Avon Peaking Power. The regulator and promoter of oil and gas exploration in South Africa, Petroleum Agency South Africa, has awarded coalbedmethane-gas exploration rights in KwaZulu-Natal and natural gas exploration permits in the Free State. Early data suggests that the Free State has 23-billion cubic feet of gas underground. If this is confirmed, then four new power stations could be built in the province. A major investment by Afrox will see a R200-million plant built to extract helium in the Free State. Afrox will operate the plant and sell the helium and compressed gas. Tests have begun in the Karoo in search of shale gas. Estimates vary greatly and detailed testing still needs to be done to determine whether there are viable quantities available. Environmental concerns must also be addressed. 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 aims to deliver gas to Johannesburg and the nearby towns in 2020. The Port of Saldanha in the Western Cape launched a new open-access liquefied petroleum gas (LPG) plant in 2017. It will be run by Sunrise Energy. 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. SOUTH AFRICAN BUSINESS 2018

GOING BIG, GOING LOCAL A large new tandem horizontal boring mill installed in Mpumalanga has given the local steel fabrication sector a welcome boost. The sophisticated boring mill not only gives Hydra Arc the capacity to do work that previously could only be done overseas but the company’s machine shop expansion allows it to take on apprentice machinists, providing much-needed training in valuable skills. Installed at the Sky Hill fabrication facility in Secunda, the mill’s two rotary platforms can manage loads of 60 tons and 40 tons. The machine can also handle more delicate work and can automatically change tools inside the milling head. A great deal of research and development went into the project, with the result that the mill’s two machines can work together or individually, giving great flexibility to managers. The mill was made by TOS Varnsdorf of the Czech Republic, who sent mechanical and installation engineers to South Africa to assist Machine Tool Promotions, who oversaw the installation process. Hydra Arc is now able to do big projects which previously had to be contracted to companies outside of South Africa. This will have a positive effect on the local economy and on employment.

ONLINE RESOURCES Independent Power Producers Programme: www.ipp-projects.co.za National Department of Trade and Industry: www.thedti.gov.za 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 Transnet Pipelines: www.transnetpipelines.net

Service that delivers the

Difference

Air Products South Africa (Pty) Limited manufactures, supplies and distributes a diverse portfolio of atmospheric gases, specialty gases, performance materials, equipment and services to the Southern African region. Air Products touches the lives of consumers in positive ways every day, and serves customers across a wide range of industries from food and beverage, mining and petrochemicals, primary metal and steel manufacturers, chemical applications, welding and cutting applications to laboratory applications. Founded in 1969, Air Products South Africa has built a reputation for its innovative culture, operational excellence and commitment to safety, quality and the environment. In addition the company aims to continue its growth and market leadership position in the Southern African region.

www.airproducts.co.za

TRANSNET PIPELINES MULTI-PRODUCT PIPELINE: Enabling South Africa's Future Transnet Pipelines owns, operates and maintains a 3 800km network of high pressure underground petroleum and gas pipelines. Established in 1965, the company plays a strategic role in the supply of petroleum products to South Africa's economic hub in Gouteng. To ensure security of supply, a new 24-inch Multi-Product Pipeline (MPP) was constructed and commissioned in 2012. Lennie Moodley, Chief Executive ofTransnet Pipelines, discusses the latest milestone in the MPP project. Is the Multi-Product Pipeline working to expectations? Yes, since it was brought into operation in January 2012 it has transported over 18 billion litres of diesel. We have now successfully brought it into multi-product operation. In addition to transporting two grades of diesel (D50 and D500) we are now transporting 93 and 95 unleaded petrol as well as jet fuel. Can you put a figure on the number of road trips (or number of tankers) that have been reduced because of the introduction of the Multi-Product Pipeline? Not directly as all modes of transport are required to service the market, pipelines are ideal for large volumes and long distance, whilst road and rail service other areas. We can however say that if we did not have the Multi-Product Pipeline you would need an additional 1 ODO road tankers per day between Durban and Gauteng. What are current volumes of throughput in the various categories? The capacity of the line is 1 080 cubic metres per hour and the average throughput is approximately 115 million litres per week. The volume split per product depends on weekly market demand and varies from week to week. Is TPL on target with regard to these volumes? The volumes are slightly behind target, but this is reflective of the lower demand in the market due to the slowdown of the economy. From a capacity and operational point of view TPL is able to meet the demand required by its customers. And the balance sheet? Pipelines is currently forecast to exceed financial targets in the 2017/18 year: • Revenue of R4.2bn • EBITDA margin of 74% • Return on assets of 6.7% • Asset base of R36bn excluding capital work in progress • Cash generated from operations of R3.l bn Please tell us about your journey to the CEO's desk? What was your first job at TPL? Was there a moment/ event where you thought, "Yes, pipelines is where I want to be"? My journey started in Transnet Pipelines in 2002 as an Executive Business Manager in charge

of operations and has evolved through various roles since then. From the onset I knew this is where I want to be and approached each day with enthusiasm and determination. Pipelines is a fascinating. complex and challenging environment. In 2002, Transnet Pipelines, then known as Petronet, transmitted 334 million m3 of gas and 13.8 billion litres of fuel and our revenue was R719 million. In comparison to the previous year. we have transported 17 billion litres of fuel and our revenue was R4 285 million. I have aspirations of growing the company even further, with specific focus on diversification into the liquefied natural gas (LNG) market and expanding our footprint into Africa. Do you feel that your stint in Operations gives you an especially good perspective on the complexities of the business? Yes, it provides good insight into the operational and technical aspects of the business. It also provided great understanding into the various roleplayers in the market segment and the number of challenges faced by the industry. Furthermore, it empowers me to challenge views and make informed decisions. How much success is TPL having in terms of applying the relatively new policy of diversifying revenue streams? Please expand on which are working best, and give examples (eg, training in Africa). Our initiatives to diversify our revenue streams are at an infancy. However we are confident that we will achieve our aspirations in the medium term. In addition to becoming a key player in the LNG market, Pipelines is also committed to operate and maintain pipelines, operate and maintain terminals in other African countries and provide pipeline-specific training to the oil and gas Industry.

How do you ensure security of supply? Our biggest challenge is to stay ahead of market demand and ensure efficient operations. We meet regularly with our customers to understand their market and needs and execute our plan accordingly, thus ensuring that their market demands are met and facilitating security of supply. We have pertinent KPls that we track to ensure our performance is in line with what the market requires. In addition to just the pipeline as a mode of transport, we also use rail, our Transnet Value CC initiative, whereby areas not serviced by pipelines are still serviced by rail; one such example is the supply of jet fuel to ORTIA, whereby both rail and pipeline is used. How do you protect pipes from corrosion? In addition to the pipeline being coated, we have an extensive cathodic protection programme in place that monitors and deals with stray currents thus preventing corrosion. We also do periodic "intelligent pig" investigations to check the integrity of the pipeline. What risk is involved for the environment through which pipelines pass? Pipelines by their nature are a

safe, environmentally friendly mode of transport. The biggest threat is unauthorised third party activities, encroachments and attempted pilferage. In saying this, incidents do happen, however our track record to date is exemplary and we have an emergency response plan to react to any incident together with all stakeholders. Are you getting the rates you want from the National Energy Regulator of South Africa {NERSA}? Yes, the Regulator has an approved tariff methodology which we comply with that allows us a fair return on assets managed. Please outline TPL's skills development programmes? Most of our programmes are focussed on pipeline specific requirements both technical and operational. But we also have specific courses such as the "Women in Pipelines" course which we are now going to expand to all employees in Pipelines to equip them with skills that will allow them to grow personally and in their careers, with specific focus on diversity, finance management, self-esteem and leadership skills.

Constructed according to international standards and best practices, the pipeline runs underground over 555km from Durban to Heidelberg. Developed to ensure security of fuel supply for the industrial heartland of our country, both now and into the future, the pipeline is currently transporting four types of fuel: Diesel 50, Diesel 500, ULP 93, and ULP 95. It can transport 1 million litres of fuel per hour, and with future investments this can increase to 3 million litres per hour. We're committed to fueling our country's economic hub for many decades to come.

...

1RANSNEr

pipelines

www.transnetpipelines.net

OVERVIEW

Energy South Africa’s energy mix is becoming more diverse.

etween November 2011 and July 2016, South Africa received commitments of investments to the value of nearly R200billion through an innovative and efficient programme which encouraged private investment into the South African power generation sector. The Renewable Energy Independent

SOUTH AFRICA: INSTALLED CAPACITY Eskom: legacy coal plants

Decommissioning from 2020

Eskom: peaking power

Gas, pumped storage, hydro 5 819MW

Eskom: new coal

Medupi and Kusile

9 564MW

Nuclear

Koeberg, Cape Town

1 940MW

37 754MW

Eskom: RE IPP, renewable energy

100MW REIPPPP

3 314MW

Other IPPs

1 713MW Total

60 204MW

SOURCE: ESKOM INTEGRATED ENERGY REPORT, 2017

SOUTH AFRICAN BUSINESS 2018

SECTOR INSIGHT Private investors have put nearly R200-billion into renewable energy. Private Producers Procurement Programme (REIPPPP) came about in a hurry because the lights went out in South Africa – literally – in 2008. Officials within Treasury were mandated to set up a programme to attract private investors. According to figures released by the Department of Energy, the REIPPPP by 2016 had not only delivered multiple millions in investments, but also created more than 30 000 jobs and benefited local community development to the tune of R256-million.

OVERVIEW Whereas national utility Eskom’s supply of power was insufficient for a booming South African economy in 2008, the global economic slowdown that kicked in later that year meant that by the time independent producers were selling to the grid (also controlled by Eskom), electricity demand was much reduced. Eskom itself had been adding power to the grid and improving the maintenance of its existing fleet. Eskom is investing heavily in two new coal-fired power stations. Medupi and Kusile power stations will jointly generate 9 564MW. These factors resulted in Eskom refusing to sign any more power purchase agreements with independent producers. Although Eskom’s shareholder, the Minister of Energy, said that the REIPPPP was still government policy, it was not until the third quarter of 2017 that the process was started again, but this time with a limit imposed by the state on how much could be charged for energy in new contracts. Many in the renewable energy sector believe that the price cap of 77 cents per kilowatt-hour (kWh) will deter many possible investors and make small-scale renewable energy projects (such as small-hydro) impossible. One of the consequences of the policy uncertainty of 20162017 was that DCD Group sold its share in the Coega IDZ-based DCD Wind Towers joint venture for R1. South Africa’s electricity comes mainly from Eskom’s coal-fired power stations. The Koeberg

WATERPROOFING PROMOTES ENERGY EFFICIENCY With energy efficiency being a vital part of all new building codes, having a cool roof coating pays off in a number of ways. With the surface and the interior of the building being cooler, air-conditioning costs are reduced, the environment is better off, the building is code compliant and incentives and tax breaks could come into play. Roof coatings available from Topps make all of this possible. A cool roof acts like a sunshade in the windshield of a car. The white coating deflects the sun’s rays away from the building. An industrial grade cool roof maintenance coating like Topps Seal® brings the additional benefit of extending the life of the roof. In Knoxville, Tennessee, a retail store recorded 24.5% energy reduction after the application of Topps Seal®. Topps Seal® is triple-certified, by Miami-Dade County (US), CRRC and Energy Star. Energy Star-qualified products can reduce the amount of air conditioning needed in buildings and can reduce peak demand by 10%-15%. A cool roof reduces greenhouse gases and keeps the building cooler inside by deflecting the sun’s rays. Some government and local utilities offer incentives and tax breaks for roofs that qualify as a “cool roof” along with tax deductions for performing roof maintenance. Topps Seal® won’t freeze and it won’t wash off, saving unwanted expenses and mess. Use of the world’s leading repair product, Topps Polyprene®, ensures that what is sealed remains sealed. With roofing materials expanding and contracting at different rates, stresses develop on seams and the areas around penetrations – vents, signs, flashings, pitch pockets, joints and rooftop equipment. Heavily fibred Polyprene won’t crack when it gets cold. It stays pliable permanently and stops leaks from recurring. It has been voted the #1 repair compound among professional roofers. Creating a reliable seal promotes building efficiency by keeping the building’s heat within the envelope, reducing costs by avoiding heating loss. The same is true for cooling systems. A long-lasting seal also contributes to reducing maintenance costs.

SOUTH AFRICAN BUSINESS 2018

OVERVIEW Strengths

nuclear power station supplies about 5% of the nation’s needs and has been operating since 1984. South Africa’s long-term energy plan is underpinned by the Integrated Energy Plan of which the electricity-specific Integrated Resource Plan (IRP) forms a part. There is considerable debate about the methodologies and scenarios which underpin the Draft 2016 Integrated Resource Plan Base Case. The South African Renewable Energy Council represents four industry associations, one of which is the South African Photovoltaic Industry Association (SAPVIA). The CEO of SAPVIA, Mike Levington, had this response to the new plan: “The biggest issue with the draft IRP2016 is that it artificially limits the amount of renewable energy that can be added to the grid over the next 20 years with no rationale for imposing them. Under this constrained scenario there will be greater allocations given to nuclear and coal in the IRP at significantly more expensive cost than new solar and wind energy.” Proponents of coal and nuclear argue that there are some hidden costs that renewable energy advocates don’t reveal. They also argue that coal and nuclear are necessary to provide stable supply. There are also questions about the ability of the grid to cope with multiple sources of energy. Two recent reports (a “Flexibility Study” and a CSIR study) have concluded that South Africa’s grid could be flexible enough and renewables supported by gas could provide base load.

ONLINE RESOURCES IPP Projects: www.ipp-projects.co.za National Energy Regulator: www.nersa.org.za National Department of Energy: www.dme.gov.za South African National Energy Association: www.sanea.org.za South African Nuclear Energy Corporation: www.necsa.co.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

SOUTH AFRICAN BUSINESS 2018

The Northern Cape is South Africa’s hotspot for solar power and the Eastern Cape has attracted most of the approved wind power projects. Although KwaZulu-Natal received few REIPPPP bids, the Richards Bay Industrial Development Zone is positioning itself to be a hub for renewable energy, with the proximity of the rich gas fields off the shores of Mozambique a major selling point. The huge forestry, timber, paper and pulp industries of the province can provide feedstock for the renewable energy sector. KwaZulu-Natal’s most widely grown crops, sugar cane and sugar beet, are among the most efficient and cost-effective feedstock for the creation of biofuel. The Provincial Government of the Western Cape is another entity prioritising energy and this includes generation (gas, biogas and renewables), distribution and energy-saving. In the REIPPPP, the Western Cape has so far been allocated 11 projects, six wind projects and five photo-voltaic solar power projects. Western Cape Minister of Economic Opportunities Alan Winde says that Cape Town alone has 2 000 private producers. These range from a solar panel on the roof of a single household to major installations in the Waterfront. Winde is lobbying for the allocation of a gas-to-power plant to Saldanha Bay where there are already bulk power consumers like ArcelorMittal Steel. This could be a catalyst for the use of gas in many other sectors.

INTERVIEW

Pele Natural Energy Managing Director Obakeng Moloabi explains how his company is expanding into other African countries.

What is the core mandate of Pele Natural Energy? To develop, own and operate traditional fuel power assets in the drive for inclusive growth.

Obakeng Moloabi

How do you go about identifying possible projects? Establishing customer demand is the cornerstone of every project. Availability of feedstock and project viability from a technical and financial perspective is the next element to consider. Social impact becomes the final and most important consideration as this will speak to the sustainability of the project. Please tell us about your first plant being developed beyond South Africa’s borders?

We are almost at commercial operations for a gas-to-power 40MW project located in Mozambique.

BIOGRAPHY Obakeng Moloabi is a founding member of the Pele Energy Group and the Managing Director of the conventional power subsidiary, Pele Natural Energy. Obakeng holds an undergraduate degree in Investment Management from the University of Johannesburg. Under Obakeng’s leadership, Pele Natural Energy has developed its presence across Southern Africa with an asset portfolio of 340MW, 40MW in Mozambique (commercial operations) and 300MW (financial closed asset) in South Africa.

How much generating capacity is under development, and what are your goals in this regard?

We have 40MW under construction, 300MW expected to reach financial close in the next few months and 1 000MW in development.

SOUTH AFRICAN BUSINESS 2018

INTERVIEW

Knowledge Pele Knowledge Pele Managing Director Fumani Mthembi shares her company’s commitment to using knowledge for economic transformation.

Fumani Mthembi

Please explain the concept of linking power and knowledge. The philosophical premise of our company is that it is our duty to make a material contribution to the imperative of structural transformation. We understand that power and knowledge are the bedrock of the modern social structure. Therefore, through our research division, we focus on surfacing the knowledge of those who have been historically silenced to ensure that they can reclaim their power by reassuming their rightful place as architects of social progress. Please explain the concept of “community industrialisation”.

BIOGRAPHY Fumani Mthembi is a founding member of the Pele Energy Group and the Managing Director of its research and development subsidiary, Knowledge Pele. She holds an undergraduate degree in Politics, Philosophy and Economics from UCT and an MA Science, Society and Development from Sussex University. Under Fumani’s leadership, Knowledge Pele has grown into a reputable firm, leading development thought and practice, particularly in the renewable energy sector and related host communities. SOUTH AFRICAN BUSINESS 2018

Community Industrialisation is one of Knowledge Pele’s instruments for undoing the historical construct that is the poverty of the majority. It is common knowledge that the majority live in communities that are best described as labour reserves, spaces of consumption with limited production capabilities. Knowledge Pele’s community industrialisation division is focused on recreating these township, peri-urban and rural communities into thriving, knowledge-based economies. We do this by researching the economic development possibilities of these communities, understanding the types of industries that can emerge and the related knowledge and skills necessary to sustain them. This work, along with an articulation of the type of future that communities seek for themselves, forms what we then identify as the community industrialisation strategy. We then work with our clients to invest aggressively in training programmes at the community level, for which we are SETA-accredited. We structure co-investment vehicles between industry and communities to build local industries that are both run and owned by local community members. In the long run our intention is to build sovereign wealth funds for communities on the basis of the portfolio of industrial assets that they will own. Please tell us about your partnership with UCT? We recognise that our work has policy relevance and therefore our partnership with UCT is vital for ensuring that we remain in constant dialogue with academics and policy-makers who share our concerns.

INTERVIEW

Pele Green Energy Renewable energy has enormous potential, according to the Managing Director of Pele Green Energy, Gqi Raoleka.

What are the key principles that underlie your business? An unending commitment to excellence, value creation and effecting structural change in the communities we provide power to.

Gqi Raoleka

BIOGRAPHY Gqi Raoleka is a founding member of the Pele Energy Group and the Managing Director of the renewable energy subsidiary, Pele Green Energy, which was founded in 2009. He has a degree in Economics and Econometrics and an Honours degree in International and Monetary Finance from the Johannesburg University. Under Gqi’s leadership, Pele Green Energy has developed into one of the largest Independent Power Producers in South Africa with a portfolio of over 850MW.

Please explain the concept of new value creation? The ability to build one’s own enterprise in contrast to only seeking to acquire that which has already been created and is in circulation. How important is research in community projects? In the absence of research, there is limited to no knowledge. Without knowledge there can be no development. Research is one of the key tools towards the attainment of knowledge and the only tangible answer to a community’s blueprint towards sustainable development. Research forms the base upon which community projects will bring about structural and meaningful change. The patterns and propensity towards certain types of physical and mental work styles that a specific community may have is best uncovered through detailed and targeted research. This enables industries to map their location based on the geographical spread of the workforce they may require and fosters more effective involvement and participation of the local community. What are the proportions of RE in your portfolio?

Our renewable portfolio consists of 291MW of solar PV projects and 613MW of wind farms. Where do you see the greatest growth potential? The growth prospects across the wind and solar technologies is immense. The reduction in prices of solar PV modules continues to fall at a rapid rate; the economies of scale, optimisations and efficiencies being reached are helping to keep the price reduction momentum. Decentralised power generation represents the largest growth prospect in the South African market. The decreasing costs of storage together with the falling prices in PV modules are allowing large, medium and small users of power the ability to consider alternate independent power sources for their domestic consumption.

SOUTH AFRICAN BUSINESS 2018

PELE BRINGS POWER TO THE PEOPLE

Together, THE PELE GROUP of companies complement each other in driving structural change and delivering essential services. The building of sustainable and reliable electrical infrastructure, to light up and brighten our continent, confirms that they understand that power is about people. With their huge investment in infrastructure and development programmes they are deeply invested in the sustainable growth of African communities. Through Knowledge And Power – Rea Ko Pele

PELE ENERGY GROUP

PELE GREEN ENERGY

PELE ENERGY GROUP (PEG) is a wholly black-owned company, comprising of three subsidiaries. PEG was founded in 2009 by five young black South Africans with the dream to contribute to the structural reform of the African continent. An objective they contribute to is making freedom tangible, through their operating subsidiaries: Pele Green Energy, Knowledge Pele and Pele Natural Energy.

PELE GREEN ENERGY (PGE) is an independent power producer that develops, owns and operates renewable-energy power-generation plants and solutions. Through PGE, the group aims to deliver electrical power that is clean and safe to households and industries. It is also invested in creating off-grid solutions that can be delivered to geographically remote communities at affordable prices. PGE owns and operates 895MW of renewable-energy power plants, including wind, solar PV and concentrated solar power technology.

PELE BRINGS POWER TO THE PEOPLE

KNOWLEDGE PELE

PELE NATURAL ENERGY

KNOWLEDGE PELE (KP) is a research and development company through which the group works to transform township, peri-urban and rural communities into thriving economic hubs. KP gives a voice to the needs and assets of thousands of historically excluded community members, and leverages its position to implement development programmes on behalf of public and corporate social investors. It delivers socio-economic and accredited enterprise-development programmes across the country and currently they are working in the Western Cape.

PELE NATURAL ENERGY (PNE) develops, owns and operates base load power stations. The latter is defined as power that can be generated at all hours of the day; as well as easily dispatched to match demand. Through PNE, the group is contributing to the continent-wide need for stable, grid-connected power. PNE is part of the consortium that owns the Kuvaninga project, a 40.29MW natural gas-fired powered plant in Mozambique. It was also announced as the preferred bidder for the 300MW Khanyisa coal-fired power plant to be located in Mpumalanga.

3 Centex Close, Brooklyn Place, Eastgate Kramerville, Sandton + 27 11 262 0515 info@peleenergygroup.com www.peleenergygroup.com

OVERVIEW

Water Water infrastructure is a priority.

n 2017/18 the National Department of Water and Sanitation will spend R12.5-billion on dams, water transfer schemes and bulk distribution. Improving and expanding water infrastructure are key elements to ensuring water security in a water-scarce country. The completion of the De Hoop Dam in eastern Limpopo means that people living in small municipalities can now expect bulk water delivery. The Trans Caldeon Tunnel Authority (TCTA) is responsible for seeing that bulk water supplies are laid on, but making the local connections and physically delivering the water is up to municipalities and water boards. The De Hoop Dam is the centrepiece in the large Olifants River Water Resource Development Project which is transforming the water environment for industrial, commercial and private users. The Olifants River System feeds the region that is South Africa’s greatest producer of citrus and subtropical fruits, and supplies many platinum mines with vital water. A long drought was finally broken in most of the country in late 2016, but the Western Cape continues to experience severe shortages. Tenders for desalination in various guises (including barges in Cape Town harbour) have been issued. According to Water Wheel magazine, 37% of water delivered to the nation’s municipalities is lost, at a cost of R7-billion per year. This presents an opportunity for companies to provide better pipes and SOUTH AFRICAN BUSINESS 2018

SECTOR INSIGHT The De Hoop Dam has been completed. smart meters. Government plans to arrest this trend include a training programme for plumbers and artisans. Many small municipalities and water boards have not been able to properly manage their water facilities. In response, a new national strategy gives a bigger role to well-resourced water boards such as Umgeni Water and Sedibeng Water. Rand Water has expanded its original footprint and now serves an area which includes Gauteng, and parts of Limpopo, North West, Mpumalanga and the Free State.

OVERVIEW The national Minister of Water and Sanitation is the shareholder, representing the government of South Africa. 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 ImkomatiUsuthu Catchment Management Agency covers Mpumalanga, parts of Limpopo and part of the Kingdom of Swaziland. Another example of a CMA is the BreedeGouritz Catchment Management Agency in the Western Cape. Among the responsibilities of a CMA are checking that water is being used lawfully, allocating resources to parties along a river (farmers, municipalities or businesses), long-term planning, dam safety and checking on the quality of water. In the 1950s, the Orange River Project delivered water from the Orange River to citrus farmers in the far-away Eastern Cape. In a mostly dry country such as South Africa, this kind of transfer scheme is the norm. South Africa’s river systems are mostly not where its people are, so 80% of Gauteng Province’s water is imported, mostly from the Vaal River, which is supplemented by complex transfers from the Thukela River and the Lesotho Highlands Water Project, an ongoing project that is behind schedule. The Vaal basin, which serves the most populated and industrialised part of the country including Johannesburg, receives water from seven inter-basin transfer schemes.

SBS TANKS SBS® Water Systems (Pty) Ltd, the visionary company that pioneered Zincalume ™ tanks to the South African marketplace in 1998 and the proud manufacturer of SBS Tanks®, will be celebrating its 20th year of unparalleled service excellence as the premium liquid storage solution for multiple applications. SBS Tanks® are the preferred liquid storage solution in the South African mining, municipal, fixed fire protection, water conservation and food and beverage industries. What sets the company apart is the ability to go beyond supplying a liquid storage solution. It engages on all levels of a project from brief and design through to completion, ensuring not only a world-class installation, but a positive client experience. This proficiency is key to the company’s high level of return business. The SBS® range of tanks has been engineered, designed and developed from years of practical experience in the water storage industry and continues to improve from strength to strength. SBS® Water Systems (Pty) Ltd is ISO 9001:2015 accredited. The company is also proudly affiliated to various professional bodies and organisations. The company operates from a 5 000m² manufacturing facility in Pinetown, Durban. The City of Durban also boasts the largest and busiest port on the African continent and the company’s proximity to this facility is extremely advantageous in terms of export logistics. SBS® services South Africa and the African continent and has a large network of approved distributors worldwide. SBS® Water Systems was the proud recipient of the 2016 Durban Chamber of Commerce Exporter of the Year Award. SBS® Water Systems (Pty) Ltd employs 60 highly skilled staff members. The company prides itself on continual improvement and staff training ranks high on the company’s corporate objectives. SBS® strives to manufacture and supply a comprehensive range of world-class liquid storage solutions to a diverse market. The company endeavours to optimise services by delivering the right product and service on time and within budget. SBS® undertakes to provide technical assistance and after-sales service. The company maintains an ethical and honest business practice.

ONLINE RESOURCES National Department of Water and Sanitation: www.dwa.gov.za South African Water Research Commission: www.wrc.org.za Trans Caledon Tunnel Authority: www.tcta.co.za Water Institute of South Africa: www.wisa.org.za

SOUTH AFRICAN BUSINESS 2018

Grundfos A global leader in efficient pump solutions Grundfos is a global leader in advanced pump solutions and a trendsetter in water technology. We contribute to global sustainability with focus on clean water, sanitation and climate change by pioneering technologies that improve the quality of life for people and show concern for the planet. It is our commitment to being responsible, thinking ahead and innovating that enables us to meet all our clients’ needs on all levels. Water gives life to people, animals and plants and is a necessity for industry to maintain production. Water is essential when heating and cooling buildings, and is also used to drain off waste products. Therefore, anywhere where water is a coveted resource, or needs to be drained away, Grundfos plays a central role. We specialise in circulator pumps for heating and air-conditioning as well as other centrifugal pumps for industrial applications, water supply, sewage, dosing and disinfection and fire protection.

Fast Facts • Grundfos developed and produced the first solar power driven borehole pump range. • Grundfos is a global leader in advanced pump solutions and a trendsetter in water technology. • Grundfos produces more than 16 million pump units annually • Grundfos is a full systems solution provider – Water Supply, Wastewater & Water Treatment • Grundfos introduced the first integrated drive technology onto pump motors

In addition to pumps and pump systems, Grundfos develops, manufactures and sells energy-efficient standard and submersible motors and state-of-the-art electronics for monitoring and controlling pumps. With electronic built into the pumps, they become “intelligent”, i.e. capable of assessing the current demand for water and adapting their performance accordingly – all of which results in a significant reduction in energy consumption. Grundfos has developed a number of groundbreaking technologies within a sustainable perspective; for example Grundfos BioBooster which effectively cleans industrial wastewater at source; and Grundfos LIFELINK, AQtap water dispenser unit and AQpure a solar-powered water treatment unit for drinking water in the poorest areas of the world.

GRUNDFOS (PTY) LTD Physical address: 16 Lascelles Road, ZA-1609 Germiston South Africa Postal address: P O Box 1456 Bedfordview South Africa Tel: (+27) 10 248 6000 Email: info_za@grundfos.com Website: www.za.grundfos.com

OPTIMISED SOLUTIONS

FOR THE ENTIRE WATER CYCLE OUR OPTIMISED SOLUTIONS AND SERVICES COMPLEMENT AN UNRIVALLED FOCUS ON RESOURCE EFFICIENCY, DESIGN VERIFICATION AND PROJECT CONSULTANCY AND EXECUTION. THAT IS WHAT YOU GET FROM GRUNDFOS, A FULL-LINE SUPPLIER OF PRODUCTS AND SOLUTIONS FOR ALL WATER UTILITY APPLICATIONS.

OVERVIEW

Engineering The renewable energy sector holds great promise for engineering firms.

everal South African engineering firms are restructuring, aiming to become more flexible and better able to pursue projects in other countries in Africa and overseas. South Africa has many vertically integrated engineering and consulting companies that offer a wide range of services. South African companies have a presence in South American and Australian mining, African energy and infrastructure and Middle Eastern construction and project management. All of the biggest construction companies (including Aveng, Aurecon, Raubex and WBHO) are multidisciplinary companies. WorleyParsons has a minerals, metals and chemicals project cluster (and a presence in 17 cities) in Southern Africa. Its other major divisions are hydrocarbons and infrastructure. Group Five, which relies on its engineering and construction division for 80% of turnover, announced in 2017 that it was to split the division. The group has more than 8 500 employees in Africa and is active in Europe. As part of its plan to become a diversified project engineering, procurement and construction group in specific natural resource sectors, Murray & Roberts sold Murray & Roberts Infrastructure and Building Platform to Firefly Investments for R314-million in 2016. Investors in Firefly include the Government Employees Pension Fund. The sale does SOUTH AFRICAN BUSINESS 2018

SECTOR INSIGHT South African engineering companies are restructuring. • T h e Wo r l e y P ar s o ns Mining Centre of Excellence is based in Johannesburg. not include a share in the consortium which runs the Gautrain. Whereas Murray & Roberts had a focus on construction and mining in South Africa, the drive is now more international and focussed on four sectors: power, oil and gas, metals and minerals, and water. While there are many large projects to occupy engineers in South Africa, the level of

INTERVIEW

iX Engineers CEO Lebo Leshabane reflects on prospects for growth in a number of engineering sectors in South Africa.

Lebo Leshabane

How and when did iX Engineers come into existence? iX Engineers is a product of a merger between WorleyParsons Infrastructure business and Black Jill’s Engineers Consulting business. The merger took place in 2016. I was the founder and Managing Director of Black Jill’s Engineers, which I started 10 years ago. What is the role of women in the business? Women play a role in all levels of management and operations from the board, Exco and other management positions. Black women own 36% of the company and overall, we are sitting at 37.5%.

BIOGRAPHY Lebo Leshabane is a Civil Engineer with 15 years’ experience in infrastructure delivery, project management and business management. With a BSc. Eng. Civil (Hons) from Wits University and diplomas in business management and engineering (GDE), she worked for a consulting engineering firm, Transnet Freight Rail and South African Airways before becoming founder and Managing Director of Black Jill’s Engineers. She sat on the Board of Spectrum Asset Management Company and the Gauteng Partnership Fund (GPF) and is an ECSA council member.

What is the focus of your business? We are a multi-disciplinary engineering company, and we participate in all sectors: water, roads, sanitation, buildings, power and asset management and HSE. We are also broadening our focus to turkey projects due to clients requests and preferences, therefore we’re partnering with construction companies to offer turnkey solutions. What are the prospects for the infrastructure sector?

In the short term the market is under some pressure. We see good prospects in the water, and waste-water treatment sectors. We’re also working on some desalination projects to address the current water shortages. Any other sectors showing potential?

Integrated human settlement development where you don’t only provide housing but all the supporting services. Shopping centres, clinics, office space and light industrial, all within the same developments are becoming more and more popular. Describe some of your other key projects. We have worked on the Kusile Power Station and a new airport, which was built from scratch at St Helena Island. Also the Mokolo Crocodile Water Augmentation Scheme in Limpopo, Gautrain Phase 1 and the Vale Rail Line in Mozambique.

SOUTH AFRICAN BUSINESS 2018

OVERVIEW investment in infrastructure by the state has not been at levels that were expected in the years since South Africa hosted the 2010 World Cup. With slow growth, national freight and logistics company Transnet has not been able to pursue its R300billion infrastructure programme at the speed that it wanted to. Aspects of the programme, such as the acquisition of locomotives, are going ahead and the expansion programmes of Gautrain and the Passenger Rail Agency of South Africa (PRASA) are also keeping engineers busy. Transnet Engineering’s mechanical workshop complex at Koedoespoort in eastern Pretoria has been tasked with making 90 locomotives. The high-level specifications of the modern locomotive are engaging the intense focus of the facility’s 3 692 employees. There are seven business units located at Koedoespoort, including a foundry. Transnet Pipelines recently completed a sophisticated new multi-product pipeline between the coast and Gauteng. It operates a 3 800km network of underground, high-pressure petroleum and gas pipelines throughout the eastern parts of South Africa, as well as the infrastructure and property associated with them. The Renewable Energy Independent Power Producers Procurement Programme 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 huge opportunities for engineers of every sort. The SOUTH AFRICAN BUSINESS 2018

programme stalled in 2016 but is set to begin again in the fourth quarter of 2017. Two of the world’s largest coal-fired power stations are still under construction in Limpopo (Medupi) and Mpumalanga (Kusile) and there are several coal and platinum projects in both of those provinces that are also sources of work for engineering companies. The South African National Roads Agency Limited (Sanral) has a good credit rating and it continues to pursue projects in all parts of South Africa. South Africa has one engineer to every 3 166 citizens, compared to Malaysia where the figure is 543 citizens per engineer. 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 started a programme whereby trainees can earn certificates in specific disciplines from a broader range of institutions. The qualifications will be in line with the council’s Exit Level outcomes. Gauteng’s long history in mining has given its engineers decades of experience in that field and they have developed over the years into highly competent all-rounders. In its early days, the University of the Witwatersrand (Wits) was called the South African School of Mines and Technology. According to Mining Weekly, Wits and the University of Pretoria enrol more first-year mining engineering students than the combined enrolment of Canada, the USA, Australia and New Zealand. The University of Pretoria’s Graduate School of Technology Management (GSTM) offers a range of degrees and short courses, including Masters in Engineering Management, Project Management and Technology Management. At a national level, the National Skills Authority (NSA) works with SETAs in carrying out the National Skills Development Strategy (NSDS). The Human Resource Development Council of South Africa (HRDCSA) is an over-arching body that aims to give guidance to the many institutions working on skills development and training. It is managed by the DHET. 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 Transnet Engineering: www.transnet.net

Transforming South Africa’s engineering sector Building on the success of its Enterprise Development programme, which saw a combined turnover growth of the initial ED partner companies by 204% and the creation of over 100 permanent and temporary jobs in South Africa, WorleyParsons is collaborating with small- and medium-sized black-owned enterprises to jointly deliver services in the mining, water, energy and infrastructure sectors, says WorleyParsons’ CEO Denver Dreyer. “As part of our unwavering commitment to transformation, we are leading this agenda in engineering across all sectors in South Africa and are partnering with sustainable, empowered businesses that are capable of growing with us,” says Dreyer. “We do not consider transformation a ‘numbers game’ in terms of BEE points. It is imperative for long-term success as our traditional markets are changing. Service providers have to adjust their business models to reflect the transformation agenda or else be at risk of becoming obsolete. “The partnerships that we are creating are mutually beneficial. We will evaluate the strengths that each party brings to the table and identify where we can help each other. These enterprises will benefit from skills transfer and gain an understanding of how to successfully deliver bigger projects with our support, while we do our part to transform the engineering sector in South Africa,” says Dreyer. Referred to as the Enterprise and Supplier Development (ESD) programme, WorleyParsons RSA is also assisting the ESD partner companies with branding, marketing collateral, legal compliance, market positioning, financial compliance and introducing potential clients that WorleyParsons RSA is already servicing to ESD partner companies. Conversely, these SMEs have introduced

WorleyParsons RSA to their own client base, enabling a mutually beneficial relationship of growth. “We are entering into agreements with suitable companies as equals for the benefit of both parties. Transformation is the right thing to do for our country, but on an enterprise level, it will also secure a better future for all the people engaged in our organisation, regardless of who they are. Through our transformation partnerships, we will be able to land bigger projects alongside those partners, which will benefit everyone in our employ,” adds Dreyer.

Denver Dreyer Chief Executive Officer of WorleyParsons RSA Denver Dreyer is a vibrant executive with 20 years of strategic business development and operational experience in the chemicals, infrastructure, power and hydrocarbons sectors in sub-Saharan Africa. Denver is the CEO of WorleyParsons RSA, part of the global WorleyParsons Group, and is responsible for the company’s mining, hydrocarbons and power operations based in Johannesburg, South Africa. He is passionate about the meaningful and sustainable transformation of engineering in South Africa.

Helping our customers meet the world’s changing resources and energy needs WorleyParsons delivers projects, provides expertise in engineering, procurement and construction, and offers a wide range of consulting and advisory services. We cover the full lifecycle, from creating new assets to sustaining and enhancing operating assets, in the hydrocarbons, minerals, metals and chemicals, and infrastructure sectors. Our resources and energy are focused on responding to and meeting the changing needs of our customers over the long term and thereby creating value for our shareholders. The WorleyParsons global operations is headquartered in Australia and listed on the Australian Stock Exchange. In operation since the 1970s, WorleyParsons is one of the world’s largest project-delivery organisations. Our comprehensive geographic presence enables us to provide our customers with a unique combination of extensive global resources, world-recognised technical expertise and deep local knowledge to deliver small studies through to mega-projects. To better meet our customers’ needs, and leverage our global skills, WorleyParsons’ operating model has been reorganised across four business lines: Advisian provides management and strategic advisory services, coupled with technical consulting and deep domain expertise, to address our clients’ business and asset challenges. Our dedicated Major Projects business line is focused on successfully delivering projects that pose a

higher level of commercial risk due to their size, complexity and scope. Our Services business line delivers projects of all sizes across a range of industry sectors, bringing the best of global thinking, technology and experience to local challenges. The Integrated Solutions

metals projects across the world. We specialise in new project developments and existing facility upgrades or expansions, across a whole range of commodities, including base metals, precious metals, coal, chemicals, ferrous metals, alumina, aluminium and iron ore. WorleyParsons’ Zero Harm is our corporate vision for health, Mining Centre of Excellence in Johannesburg safety and the environment (HSE). We are has niche expertise in underground mining, committed to our vision and apply it to all operations, at all times, in all locations, and at all particularly in hard rock and precious minerals levels of responsibility. EcoNomics™ provides and metals. This local capability, coupled with our customers with the systems, technologies WorleyParsons’ global expertise, enables us to and expertise to optimise and balance financial, deliver successful pit-to-port infrastructure social and environmental outcomes, improving projects across the whole customer value chain. sustainability performance while enhancing profit and long-term viability. Infrastructure business line focuses on EPC engineering activities in the brownfield space and offers our customers a single point of responsibility in the management of their existing assets.

WorleyParsons’ infrastructure business supports our resource and energy sector WorleyParsons has been delivering engineering projects and offers complete infrastructure and project management services to the global solutions for urban markets. Our service offering covers environmental and restoration services, hydrocarbons industry for over 60 years. Our development of water gathering and processing full-scope global project services span the entire asset lifecycle from the initial conceptual facilities, rail and port assets, power generation (across coal, gas, renewables and nuclear) phase of major greenfield developments and transmission. to ongoing asset services and brownfield modifications projects. Our capability and experience spans all oil and gas extraction and Supported by the global business, WorleyParsons processing facility types. RSA prides itself on understanding and committing to its customers’ goals in the sectors that we operate. Minerals, Metals & Chemicals

Hydrocarbons

WorleyParsons has over 50 years’ experience, gained through the delivery of some of the most complex and challenging minerals and

Website: www.worleyparsons.com Email: wprsainfo@worleyparsons.com

OVERVIEW

Manufacturing Large incentives are available to investors in manufacturing.

SECTOR INSIGHT The Manufacturing Circle aims to create one-million jobs. • The structural mill at Evraz Highveld is working again.

he Manufacturing and Competitiveness Enhancement Programme (MCEP) of the National Department of Trade and Industry (dti) announced in 2017 that it had disbursed a total of 1 552 grants to the value of R5.8-billion which had resulted in 230 000 jobs being “sustained”. Plastics, pharmaceuticals and chemicals received 31% of the money, metal fabrication, capital and real transport equipment 28% and agri-processing 21%. Italian forged wheel manufacturer Lucchini received tax and training allowances from the dti which helped it decide to invest R200-million in a new forged wheel-making facility. Blank railway wheels imported from Italy will be completed at the Germiston plant. Industry support from the state is necessary because the manufacturing sector’s contribution to the national economy has slipped to below 13% from a high of 24% in the 1980s. This is according to the chairperson of the Manufacturing Circle, as reported in Engineering News. Andre de Ruyter added that if the percentage could be brought to 30%, the sector could contribute up to one-million more jobs. The Manufacturing Circle is in talks with government about how to improve policy to bring this about. The sector that has done best since 1994 in terms of growth is the automotive sector, followed by resource-based manufacturing. The latter sector includes steel, aluminium, petrochemicals, paper and pulp, and non-metallic minerals. SOUTH AFRICAN BUSINESS 2018

Among other important sectors are metals beneficiation (more than 50% of the world’s ferrochrome is produced in South Africa), coke and refined petroleum products, and information and communication technology. Steel and petroleum collectively make up about 45% of South Africa’s total manufacturing production capacity. Steel has been experiencing a volatile few years, with reduced demand from China severely reducing production volumes in South Africa. The Steel and Engineering Industries Federation of Southern Africa (Seifsa) reported that 19 000 jobs were lost in the metals and engineering sector in the nine months to September 2016. This sector makes up 28% of manufacturing. Cheap imports have been at the heart of problems for the steel sector, as they have for textiles, but other issues include energy prices and labour costs.

OVERVIEW The National Department of Trade and Industry has moved to try to protect the local steel industry by regulating the use in the construction sector of locally produced and manufactured steel and steel products. Another possible intervention is related to energy prices. Silicon Smelters, which has plants in Mpumalanga and Limpopo, has asked for a two-year negotiated price agreement (NPA) on electricity, which would allow it to resume production. The National Energy Regulator of South Africa (Nersa) has the power to grant such exemptions where the industry is regarded as strategic. The structural mill of Evraz Highveld Steel in Witbank was officially relaunched in June 2017 after ArcelorMittal South Africa signed a contract to supply blooms and slabs for the mill to make into heavy structural steel. Evraz Highveld went into business rescue in 2015. The contract is for two years with an option to renew for another year. Alternately, ArcelorMittal may buy the mill after the two years. Elsewhere in Mpumalanga, the presence of Ferrometals means that Mpumalanga is still an important place for metals and machinery manufacturing, but the turbulence in the steel sector has reminded everyone of the need to diversify. Samancor Chrome (which runs Ferrometals) is the second-largest ferrochrome producer in the world with three plants. Middelburg-based Columbus Stainless is a major supplier of stainless-steel products to the

SOLUTIONS FOR AFRICA Modern manufacturers are coming up with ways to improve efficiency. In Africa, water saving and conservation is becoming a vital part of doing business. Marley Pipe Systems has released a revolutionary new hot and cold water supply solution called Pro-fit. Not only is Pro-fit made from the highest grade PE-RT (Polyethylene with Raised Temperature Resistance), which reduces loss through punctures and tears, but it also reduces installation costs by 50% and is resistant to corrosion and impact. Water passing through the system is healthier and by avoiding the use of metal any scrap value is eliminated, thus making the product more secure. The recent extended drought has reminded all South Africans of how fragile water supply can be. The Marley Vynadeep® Rainwater System efficiently channels roofwater into tanks, reducing demand on ground water and supplying vital back-up for individual private or corporate premises. Marley Pipe Systems is active in several parts of Africa and with an increased uptake in the use of gas, Marley’s presence is growing. As big retailers expand their footprints in Namibia, Mozambique and Malawi, so Marley distributes larger volumes through those channels. With the mining sectors of countries such as Zambia, Tanzania and the DRC showing signs of recovery, so the gas market is growing further still.

domestic and international market. The Manganese Metal Company in Nelspruit is the largest producer of pure electrolytic manganese metal in the world. Delta EMD, in the same town, is one of the biggest producers of electrolytic manganese dioxide. Iron production at Saldanha in the Western Cape includes hot-rolled coil produced by ArcelorMittal and cold-rolled and galvanised steel by DSP, a joint venture between South Africa’s Industrial Development Corporation (IDC) and a Belgian company, Duferco.

Local production The manufacturing sector employs the third most people, about 1.7-million, after financial services and retail. Three of South Africa’s

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

most important manufacturing sectors (automotive, food and beverages, and pharmaceuticals and chemicals) are dealt with in separate sections of this book. The Department of Trade and Industry (dti) is the state’s lead promoter of the sector, as seen in the MCEP example above. The main vehicle for the dti is the Industrial Policy Action Plan (IPAP), the seventh version of which was launched in 2016. The Support Programme for Industrial Innovation (SPII), run by the Industrial Development Corporation (IDC) on behalf of the dti, promotes technology development. New technology has been embraced by some innovative manufacturers. Desert Wolf’s Skunk Riot Control Chopper is an unmanned light aerial vehicles (UAV) that has proved popular in the world market. Denel makes a drone product that can be adapted for use by conservationists. Another IDC initiative has allocated R23-billion over three years to support the Black Industrialist Programme to help existing entrepreneurs grow. Part of the drive to improve South Africa’s rail infrastructure involves getting local companies to manufacture rolling stock. The Passenger Rail

ONLINE RESOURCES Aluminium Federation of South Africa: www.afsa.org.za Centre for Advanced Manufacturing: www.cfam.co.za Manufacturing Circle: www.manufacturingcircle.co.za National Department of Trade and Industry: www.thedti.gov.za South African Textile Federation: www.texfed.co.za Steel and Engineering Industries Federation of Southern Africa: www.seifsa.co.za

SOUTH AFRICAN BUSINESS 2018

Agency of South Africa (PRASA) has signed local consortium Gibela to deliver 600 passenger trains. Transnet Freight Rail has contracted four suppliers to build 1 064 new diesel and electric locomotives. There has been a recovery in the textiles sector, greatly helped by an injection of R7-billion from the state in various forms since 2009. There are about 90 000 workers employed in the sector, which means numbers are increasing after a big dip when the sector suffered from cheap imports. KwaZulu-Natal is home to 219 clothing companies (Coface). Ninian & Lester is one of the larger employers in the textile sector, with 1 500 people making clothing (including the Jockey brand), textiles and polypropylene. The footwear sector is also showing a good recovery. Two international safety footwear firms operate out of Pinetown: Bata Industrial and Beier. The latter company joined forces with three other South African safety footwear manufacturers in 2014 to form the BBF Safety Group, making them more competitive. K-Way is a very successful outdoor clothing manufacturer with a factory in Cape Town which supplies Cape Union Mart. The furniture sector is not growing but there are about 2 200 companies in the country, employing more than 26 400 workers (1% of manufacturing GDP and 1.1% of manufacturing employment).

INTERVIEW

Marley Pipe Systems Managing Director Brett Kimber explains how quality is at the heart of this expanding company.

Brett Kimber

Has the decision to create two divisions paid dividends? It has created the understanding that mining and industrial is really focused on projects. Our PVC plumbing business in Nigel is mainly focused on replenishment of stocks at retail outlets. Do you have partnerships with multiple retailers? We have relationships with all the major retailers but also with smaller hardware stores, so we supply across the board.

BIOGRAPHY Brett Kimber studied at the universities of KwaZulu-Natal, Cape Town and Johannesburg for degrees in Chemistry, Geology and Mineral Economics. He worked as a senior geologist for Anglo American before working for Afrox (South Africa) and parent group Linde in the US and the Far East. He was CEO and Managing Director of Afrox and has been nonexecutive Chairman of renewable energy resources company Renergen since 2015. In May 2016, Kimber was appointed Managing Director of Marley Pipe Systems.

Please tell us about being part of Aliaxis. They are focussing on the professional market. The focus is on key major megatrends such as high-rise developments and irrigation for farming and food production. We also cater for both markets. What does Marley stand for? There has been a deterioration in standards in the country, with SABS struggling to meet its mandates and shortcuts being taken. Importantly, what Marley stands for is quality and has done so for fifty years. What is your key offering? We have a full range of products and we have more than enough capacity to meet customer demands. We have a large footprint throughout the SADC countries. We have the quality, the range, the capacity and the service levels so that’s the key commitment that Marley offers our customers. Are there any popular new products?

Marley Pipe Systems has recently relaunched their revolutionary hot and cold water supply solution called Pro-fit. Not only is Pro-fit made from the highest PE-RT (Polyethylene with Raised Temperature Resistance), which reduces loss through punctures and tears but it also reduces installation costs by up to 50% and is resistant to corrosion and impact.

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

Automotive Multi-billion-rand investments are boosting vehicle production.

SECTOR INSIGHT Auto manufacturers and government are setting ambitious targets. • General Motors has sold to Isuzu.

outh Africa’s automotive industry is on course to produce a record number of cars in 2017, a remarkable achievement in the face of the wider economy’s modest performance. In September 2017, the National Association of Automobile Manufacturers of South Africa (NAAMSA) was projecting a figure of 622 000, which would beat the volume produced in 2015 by about 5 000. 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 decision in 2017 of General Motors to disinvest from South Africa does not seem to have had any kind of knock-on effect. The company’s selling of its plant in Port Elizabeth was just one sale of many around the world; Isuzu has bought the factory. Many analysts believe that a figure of one-million vehicles must be achieved for the industry to become truly sustainable. In the context of policy uncertainty in some areas of the South African economy it was significant that a South African Auto Master Plan was announced in July 2017, soon after the policy congress of the African National Congress. The Department of Trade and Industry, working together with NAAMSA, set targets for 2035 to increase production to 1% of world volumes (which would mean 1.4-million vehicles made in SA), to increase local content and to double employment and black-owned businesses in the sector. SOUTH AFRICAN BUSINESS 2018

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Automotive and automotive components make up 30.2% of total manufacturing output and about 7% of the nation’s Gross Domestic Product (GDP). Automotive manufacturing takes place in three provinces: Gauteng (Nissan-Renault, BMW and Ford); KwaZulu-Natal (Toyota, Bell Equipment); and the Eastern Cape (Volkswagen, MercedesBenz, General Motors and Ford engines). Armoured cars are also produced in Gauteng. DCD Protected Mobility makes armoured cars in Boksburg, which are branded as Vehicle Mounted Mine Detectors. In Benoni, BAE Systems OMC designs and manufactures protected vehicles. Volkswagen and Ford are the country’s only engine manufacturers. Policy certainty is allowing for major domestic investments and it is attracting foreign direct investment. Some recent milestones include:

O&M CAPE TOWN 2382/E

www.vwcommercial.co.za

Volkswagen Economy Parts

Your vehicle is not merely a means of transport to fulfill your clients’ needs. It forms a critical part of your business success. Volkswagen Commercial Vehicles understands that your vehicle is your Business Partner. In order to keep your out-of-warranty Volkswagen Commercial Vehicle a 100% pure Volkswagen, we’ve developed a cost-effective range of genuine parts that we hold to the highest standards: Volkswagen Economy Parts. Economy Parts are manufactured to Volkswagen’s Global Quality Standards and, when fitted by trained technicians in our Dealer network, will ensure the critically important service and repair history of your vehicle. Volkswagen Economy Parts, along with our Dealers’ technical experts will ensure you have the support and peace of mind to keep your Business Partner on the road for many more kilometres. And because we uphold the highest international standards, there is no compromise on safety, performance, or durability in these parts. Now you might be wondering: How do we keep the price of Volkswagen Economy Parts down? That’s simple, we manufacture each part so it can be fitted to multiple out-ofwarranty vehicle models. Critical to understand, is that Volkswagen will never compromise on quality. The materials used, manufacturing and quality assurance processes of Economy Parts are similar to that of Volkswagen Genuine Parts, and both Volkswagen Economy and Genuine Parts carry the same warranty. Ask your Volkswagen Commercial Dealership about the range of Economy Parts available for your commercial vehicle.

Commercial Vehicles

OVERVIEW Volkswagen SA exported 20% more Polos in 2015 than the year before, and kept up the momentum into 2016 and 2017. In 2018, the Uitenhage plant will introduce three shifts, increasing export volumes even further. • National export volumes reached a record 344 822 in 2016, earning R118.1-billion. • Mercedes-Benz exported more than 10 000 vehicles out of the Port of East London in one month in April 2016. • BMW will invest R6-billion to start producing the X3 sportutility vehicle. • Nissan will double local production from 2018. • Ford will hire 1 200 new staff as it ramps up production of the Ford Ranger and introduces the Ford Everest. • In 2016, Toyota invested R6.1-billion into a large plant at Prospecton, Durban. The company regularly sells about a quarter of the vehicles sold in South Africa, and accounts for the same proportion of exports. The latest foreign investment, and one of the biggest, will see Beijing Automobile Corporation (BAIC) take a 65% stake in a multi-billion-rand joint venture with the Industrial Development Corporation at the Coega Industrial Development Zone outside Port Elizabeth. BAIC is a Chinese state-owned enterprise with several brands. The intention is to start production on the 85 000m² site in 2018 and the target is annual production of 100 000 cars, bakkies and sport•

SOUTH AFRICAN BUSINESS 2018

utility vehicles. About 2 500 jobs are expected to be created. This follows the earlier investment of Chinese manufacturer First Automotive Works (FAW), which has established a R600-million assembly plant in Zone 2 at Coega. Companies like BAIC and FAW may well be positioning themselves to push into Africa, not only for selling vehicles but for sending automotive parts and partly-assembled kits further north. A new pan-African organisation has been established to promote the auto industry on the continent, the African Association of Automotive Manufacturers (AAAM).

Automotive components South Africa has a sophisticated automotive component sector. The catalytic converter sector experienced incredible growth for a number of years but some volatility in the platinum mining sector, together with increased interest in electric vehicles and hybrids, means that exporters (largely based in Port Elizabeth) have had to work harder. A catalytic converter changes bad gasses coming out of exhausts into less harmful gas. The converter uses platinum group metals (PGMs), of which South Africa has about three-quarters of the world’s reserves. Tyre and glass manufacturers are clustered around the areas where the automotive industry is active. Sumitomo Rubber South Africa, which includes Dunlop among its brands, is spending R2-billion on expanding production in Ladysmith, KwaZulu-Natal. Bridgestone Tyres has plants in Port Elizabeth and Brits and Continental makes tyres in Port Elizabeth. The large number of vehicle models produced in South Africa is a complicating factor for the components sector: low volumes often mean high prices. Two Port Elizabeth companies export significant portions of their production to overcome this: Schaeffler SA exports to its international parent so that it can achieve higher volumes. Shatterprufe supplies the majority of windscreens to the South African market but there are 12 model ranges to serve.

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

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OVERVIEW

Chemicals and pharmaceuticals Drug research is in the spotlight.

he Drug Discovery and Development Centre (H3D) at the University of Cape Town wants to become the African continent’s first drug discovery entity. Companies such as Merck, Novartis and Janssen and non-profits like the Bill and Melinda Gates Foundation are working with the centre. Pharmaceuticals are manufactured primarily in Gauteng and the Eastern Cape. Although there are more than 200 pharmaceutical firms in the country, large companies dominate the field. In 2016 Aspen had a market capitalisation of R160-billion and Adcock-Ingram R7.6-billion. Ascendis, which was established in 2008 and now has a market cap of R6.9-billion, has been acquiring companies such as a genetic manufacturer based in Cyprus. Cipla Medpro is another big company. Aspen SA produces about 10-billion tablets per year at its Port Elizabeth facility. The company has another factory in Gauteng and successful operations in South America and Australia. South Africa’s chemical industry contributes 5% to national gross domestic product (GDP) and about 60% of earnings are derived from exports. The complexes run by Sasol at Secunda (Mpumalanga) and Sasolburg (Free State) underpin the national manufacturing capacity in chemicals. Sasol Chemical Industries makes about 60% of South Africa’s polypropylene. Safripol is South Africa’s only other producer. More than half of Sasol’s production of 625 000 tons is exported. Omnia and Kynoch (fertiliser), Karbochem (rubber and carbo-chemical), Safripol (plastics) and Afrox are among the other major companies operating out of Sasolburg. The by-products of the sugar and forestry processing plants of KwaZulu-Natal benefit the chemicals sector. Illovo Sugar manufactures downstream products such furfural, furfuryl, alcohol, diacetyl and ethyl alcohol.

ONLINE RESOURCES Chemical and Allied Industries’ Association: www.caia.co.za National Association of Pharmaceutical Manufacturers: www.napm.org.za Plastics SA: www.plasticsinfo.co.za

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SECTOR INSIGHT Sappi makes 17% of the world’s dissolving wood pulp. Sappi makes 17% of the world’s dissolving wood pulp. Two of the company’s three mills are in South Africa, Ngodwana (Mpumalanga) and Saiccor (KwaZulu-Natal). The latter mill has a capacity of 800 000 tons per annum of sulphite dissolving wood pulp, making it the world’s single largest manufacturing site. Two large oil refineries and a sophisticated sugar milling and refining industry underpin chemical manufacturing in KwaZuluNatal. German chemicals group Lanxess has built a carbon dioxide concentration unit at its existing plant in Newcastle where the steel works of ArcelorMittal produce by-products such as ammonium sulphate. Large companies such as Karbochem, Bayer, African Amines and SA Calcium Carbide also operate in the area. AECI is one of South Africa’s biggest groups. The two principal divisions are AEL Mining Services and Chemical Services . Foskor is the country’s only vertically integrated phosphates producer. SOUTH AFRICAN BUSINESS 2018

OVERVIEW

Food and beverages Consumer companies are looking to Africa for growth.

lobal consumer goods company Unilever has invested nearly R4-billion in recent years, including R600-million in a Gauteng ice-cream factory that will boost the company’s drive into Africa. This highlights a trend across the food and beverage sector. In 2016 Nestlé South Africa invested R1.2-billion in adding instant coffee to the products it makes in South Africa. Heineken’s fairly new brewery in Gauteng is already undergoing expansion, with cider production set to increase. The food and beverage sector experienced 18% growth from 1996 to 2013. A very serious drought and higher input costs led to tough conditions for companies in the sector in the six months to June 2017. An Ernst & Young analysis of consumer products companies with collective annual revenues of R180-billion stated that the period had been “one of the weakest” because of a combination of political, economic and climate conditions. Some of the biggest companies in the sector are Tiger Brands, RCL Foods, Pioneer Foods, Clover, AVI and Astral. According to the EY report, the industry’s revenue comes mostly from agri-business (25.8% of total industry revenue), diversified companies (23%), food producers (13.6%), beverage producers (12.5%) and sugar producers (8.9%). The food and beverage sector is responsible for 24.4% of total manufacturing production and employs 230 000 people. Beverages account 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 agri-industries derives from agri-processing. Gauteng, the Western Cape and KwaZulu-Natal are the leading provinces, with about half of the companies in the sector located in Gauteng.

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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SECTOR INSIGHT Agri-business contributes a quarter of revenue in the sector.

The South African beer market is growing by 1.5% per year. Key players in the industry in South Africa include South Africa Breweries (SAB) (malt beer), United National Breweries (sorghum beer), Distell (spirits and flavoured alcoholic beverages, or FABs) and Brandhouse (malt beer, spirits and FABs). SAB became part of Anheuser-Busch in 2016. RCL Foods, formerly Rainbow Chickens, has been on an aggressive run of acquisitions. RCL is reconsidering its business model with a thought to producing fewer frozen chickens and doing more in the fast-food sector. The fast-food and familyrestaurant franchise sectors are sophisticated and cover a broad range, from the indigenous Spur and Nando’s brands to international giants such as KFC, McDonald’s and recent arrival of Burger King. Wimpy is the second largestfranchise operation in SA (after KFC).

PROFILE

SYSPRO software is an award-winning, best-of-breed Enterprise Resource Planning (ERP) software solution for on-premise and cloud-based utilisation. Scalable for rapid growth, SYSPRO is acknowledged by industry analysts to be among the finest enterprise resource planning solutions in the world. SYSPRO software’s powerful features, simplicity of use, information visibility, analytic and reporting capabilities, business process and rapid deployment methodology are unmatched in its sector. While SYSPRO customers represent all industry segments, rich extensions for food, medical devices, electronics and machinery companies, make SYSPRO the first choice for growing companies looking for a cost-effective ERP solution. SYSPRO, formed in 1978, has earned the trust of thousands of companies globally for its suite of visionary software that enhances the competitive thrust of small and mid-sized manufacturers and distributors. SYSPRO enjoys one of the highest customer retention rates in the industry.

CASE STUDY Integrating manufacturing and distribution pays off for packaging company Cibapac, one of the largest manufacturers of PVC stretch film in South Africa, that also holds a major share of the expanded polystyrene tray market for fresh produce, meat, poultry and fast foods. Disjointed processes between the manufacturing and distribution departments meant that efficiencies were suffering. Production rosters and stock levels were not based on accurate sales forecasts or demand estimates. A fully integrated SYSPRO ERP solution with multiple core modules was implemented. As a result, Cibapac was able to bring its independent supply chain processes and components into one seamless supply chain. Modules included financial modules, core distribution and manufacturing. Improved data tracking, streamlined inventory management and accurate accounting practices are just some of the more noticeable benefits.

What is ERP? Enterprise Resource Planning (ERP) Software automates and integrates core business processes such as customer orders, production, inventory control, and reporting. An ERP system can drive significant improvements in manufacturing, distribution and financial management. “With SYSPRO, our data tracking ability is phenomenal. Improved visibility of sales history is also a powerful tool. SYSPRO provides the quality reporting and analysis of our business needs.” Sandi Loggenberg – Cibapac’s Chief Technology Officer.

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CONTACT INFO Physical address: Block A, Sunninghill Place, 9 Simba Road, Sunninghill 2191 Tel: +27 11 461 1000 Email: info@za.syspro.com Website: www.syspro.com

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OVERVIEW

Transport and logistics Investments in rail are increasing.

SECTOR INSIGHT Sheltam is expanding its rail operations into Africa.

outh Africa has 21 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. Investment in improved infrastructure is being made at all of South Africa’s ports. Special Economic Zones are in place at the ports of Saldanha on the West Coast, Coega (Port Elizabeth), East London, and Richards Bay in northern KwaZulu-Natal. The Maputo Development Corridor is Africa’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. Transnet is the state-owned enterprise focussed on transport and logistics. It comprises Transnet Freight Rail, Transnet Engineering, Transnet National Ports Authority, Transnet Port Terminals and Transnet Pipelines. 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. The major rail haulage lines are the manganese line from the Northern Cape to Port Elizabeth; from Sishen in the Northern Cape to the Port of Saldanha (iron ore); and from the coalfields of Mpumalanga to Richards Bay. More than 55-million tons is regularly transported SOUTH AFRICAN BUSINESS 2018

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along the former and upwards of 70-million tons can travel annually along the latter. Almost 90% of freight is transported by road and the logistics sector is very reliable. However, these volumes are not good for the condition of the country’s roads and Transnet is working hard to attract more business to the rail network. TFR has put 28 new electric locomotives on the line supporting steel producer ArcelorMittal to improve service. The rail sector is receiving many investments. The speedy Gautrain which started life as a service to the main airport in Johannesburg has been tremendously popular and there are plans to expand its network. Bids to supply 12 new trains will be adjudicated on in 2018. A total of 600 new passenger trains will be added to Metrorail’s fleet at a cost of R51-billion. Transnet Freight Rail has ordered 1 064 diesel and electric locomotives from four suppliers. Sheltam Group is expanding its services beyond rail services. A new lease company (for rolling

OVERVIEW stock) and an investment company (focussed on rail infrastructure) underpin the group’s African ambitions. Multi-billion-rand road projects planned by the South African National Roads Agency Limited (Sanral) include a Wild Coast toll road project. The bridge over the Mtentu River will be the highest bridge in the country at 217m and will cost R1.6-billion.

Air Airports Company South Africa (Acsa) owns and operates the country’s 10 biggest airports. The company also manages airports in India and Brazil. In 2016/17 the company reported a profit of R2-billion. 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 17-million passengers every year. The Cape Town International Airport has been expanded and improved and recorded 10-million passengers in 2016. King Shaka International Airport (KSIA) is north of Durban. Several airports are possible future regional freight nodes: Wonderboom Airport in Pretoria, Polokwane Airport in Limpopo and Mafikeng Airport in North West Province. The South African Ministry of Transport has several agencies and businesses reporting to it: Air Traffic and Navigation Services Company, Airports Company South Africa (Acsa), National Transport

Information System, Road Accident Fund, South African Civil Aviation Authority, South African Maritime Safety Authority (SAMSA), South African National Roads Agency Limited (Sanral) and the Passenger Rail Agency of SA (PRASA).

TAKEN – ACROSS THE BORDER Stolen cars being driven over the border to neighbouring countries has been a phenomenon for some time in South Africa, but new markets are emerging. According to a January 2017 article on sowetanlive, some cars are going through Maputo harbour to buyers in the Middle East. The article reported on six luxury vehicles taken from one dealership in a single heist. The Chief Operating Officer of the SA Insurance Crime Bureau, Hugo van Zyl, said there was “certainly an increase” in the hijacking and theft of luxury cars. In response to this trend, EKS Secure Technologies has created a highly proactive Tactical Reaction Recovery Team that is fully skilled to deal with any treacherous situation. A force of over 200 tactical officers and high-response recovery units positioned throughout South Africa and across the borders are at all times armed with a rifle to cater for any unforeseen situations. Vehicles and helicopters are deployed as appropriate. Team members all have a minimum of three years’ experience in the security environment and undergo rigorous training, shooting tests, fitness training, polygraphs and vetting. The EKS Team is assisted by the South African Police Service with arrests and recovery in the event of theft.

ONLINE RESOURCES Airports Company South Africa: www.acsa.co.za National Department of Transport: www.transport.gov.za Passenger Rail Agency of South Africa: www.prasa.com South African National Roads Agency: www.sanral.co.za Transnet: www.transnet.net

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PROFILE

EKS Secure Technologies Securing assets in South Africa, and beyond.

EKS Secure Technologies is a certified Tracking Company. A fully fledged black and proudly South African-owned company, EKS was founded in 2016 and operates nationwide. The company’s head office is in Pretoria. We have a footprint of over 200 ground recovery vehicles and choppers in all nine provinces and we have a cross-border recovery team. With these resources, we can definitely assure our clients of state-of-the-art security, nationwide. We specialise in Vehicle Tracking, Asset Tracking, Asset Management Solutions, Fleet Management Solutions and ground security such as Guarding and CCTV Monitoring. EKS Secure Technologies has built a formidable reputation of delivering efficient, quality service at a competitive price on all levels of tracking. Through a culture of continuous innovation, driven by an experienced and dynamic team, EKS has built a reputation of providing proactive value-added service to our partners and clients.

Mission To provide clients with innovative security solutions in vehicle tracking, fleet management solutions, asset management and ground security using excellent technology, teamwork and professionalism, while growing rapidly and developing in terms of the political landscape and demographics of South Africa.

• An emphasis on the implementation of the

service and delivery of all pre-agreed outcomes

• Recognition of a unique opportunity to make a difference in everything we do

• A “can do “attitude as well as crafting solutions for our clients

• Empowerment: creating opportunities through training and employment

Services and scope of work • Vehicle tracking • Asset tracking • Fleet management • Asset management • Security and guarding

Quality assurance All EKS Secure Technologies’ hardware and software is well within the standard of SABS and ICASA regulations. We have our own team of qualified hardware and software engineers who are fully capable of building and manufacturing cutting-edge hardware that is compatible with our software to deliver immediate service and configuration as required.

The way we work • An unconventional, innovative and yet compliant professional approach to delivering our services SOUTH AFRICAN BUSINESS 2018

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CONTACT INFO EKS Secure Technologies (Pty) Ltd Tel: +27 12 003 4126 | Fax: 086 123 4231 Email: info@ekssecure.co.za Physical address: 22 Pretorius Street, Pretoria 0001 Website: www.ekssecure.co.za

INTERVIEW

EKS Secure Technologies Live Tracking and Monitoring that gives peace of mind.

What technologies give your company an edge?

Cornelius Rambelani, CEO

Our products and technology are flexible in that we customise to every client’s need. The main driver is for clients to see substantial return on investment and cost reduction. Please describe the EKS Mobile Solution. Our Mobile Solution brings your assets closer to you. Clients view and monitor their vehicles on their mobile phone, giving them total control of the whereabouts of the vehicle. What are some of your consumer products?

BIOGRAPHY Cornelius Rambelani has an Advanced Diploma in Management from the Milpark Business School and extensive experience in the motor industry and in fleet management. Having started as an apprentice in Port Elizabeth, Cornelius worked in various car dealerships in Gauteng, up to the position of Aftersales Manager. As Technical Manager at a tracking company, he had 36 technicians reporting to him before becoming Operations Manager of a fleet support company with branches in three cities. He is currently the CEO of EKS Secure Technologies.

EKS Recovery, EKS Live Tacking and EKS Monitoring. These products are backed by our 24/7 Call Centre and a recovery team countrywide meaning wherever the car gets stolen, we will go and recover it. What are the benefits of the Fleet Solution?

It is used by all companies from small fleet to large fleet. Everyone benefits, from the fleet manager right through to the business owner: • The system gathers data, saving you time. • You receive customised reports when you want them. • Reminders are sent to clients of their licence disc renewals, service reminders, PDP renewals, etc. • Clients can print reports without contacting the office. What is your flagship product?

Our camera solution gives the client live tracking and history retrieval with benefits such as on-road and in-cab camera; recording of all alerts; 2Gig of space; video in HD quality; monitoring driver behaviour; and scoring and rating of drivers among themselves. Do you deal with a lot of cross-border asset searches? Our products work across the globe with our immediate emphasis being SADC countries like Zimbabwe, Mozambique, Swaziland, Botswana and Zambia.

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OVERVIEW

Business services Consulting is a growth industry.

outh Africa represents about 75% of Africa’s consulting market, but there has been good growth in other parts of Africa in recent years. Several large international consulting firms are active in South Africa and offer a broad range of services. After South Africa achieved democratic status in 1994, the sector experienced a boom. Companies such as PricewaterhouseCoopers (PwC), Deloitte, Accenture, McKinsey & Company, Bain & Company and EY are amongst the biggest consulting firms operating in South Africa. A major controversy erupted in 2017 when KPMG South Africa became embroiled in the issue of state capture because of its auditing contract with the Gupta family and its report on an alleged secret unit within the South African Revenue Service (SARS). Eight senior executives resigned. The “Big Four” auditing firms, all of which have diverse consulting divisions, are responsible for auditing South Africa’s big banks so they play a vital role in the financial system. The other three are Deloitte, EY and PwC. The uproar about KPMG illustrated the importance of the role of industry regulators such as the South African Institute of Chartered Accountants and the Independent Regulatory Board for Auditors. The Southern African management consulting market was estimated to be worth R15.6-billion in 2014 (Source Information Services). South African consultancies such as DaySeven Group offer management consulting, advisory services and research. In the financial sector, banks have divisions that offer advice when big transactions are made in areas such as the structuring of deals,

ONLINE RESOURCES Business Process enabling South Africa (BPeSA): www.bpesa.co.za Independent Regulatory Board for Auditors: www.irba.co.za Institute of Management Consultants and Master Coaches of South Africa: www.imcsa.org.za National Department of Trade and Industry: www.dti.gov.za South African Institute of Chartered Accountants: www.saica.co.za

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SECTOR INSIGHT Regulators were active in 2017. equity finance and asset finance. Several consulting firms specialise in economic policy, strategy and risk management. Among these are DNA Economic, Econometrix, Eunomix and Genesis Analytics, the largest economic consulting firm in Africa. Business support services include those services that companies may prefer to outsource to specialist providers so that they can focus on their own core competencies. This might include security, catering, cleaning, legal services, furniture and stationery supply, software and hardware management, recruitment, call centres, customer care and many other key services that are better left to the experts. Call centres are a key element of the Business Process Outsourcing (BPO) sector. The national Minister of Trade and Industry, Rob Davies, says that the local BPO sector has had compounded growth since 2012 of 25% year-on-year. There are approximately 30 000 jobs nationally with the top market being the UK.

OVERVIEW

DaySeven Group Patrick Ooro, Director of DaySeven Group, outlines the growth strategy for this fast-growing group.

Patrick Ooro

Please describe the main areas of your business. DaySeven Group comprises four companies: • DaySeven Consulting – Management Consulting, Advisory Services and Research Services • DaySeven Training – Training facilitation services and courses • DaySeven Projects – Project identification, development, execution and management • DaySeven Technology – Technology consulting and custom ICT solution development What is your area of operation?

I am involved mainly in the management and strategic business expansion of the entire DaySeven Group. I also have roles within DaySeven Consulting, Projects and Technology. When was DaySeven formed?

BIOGRAPHY Patrick Ooro is a Director at DaySeven Group and is responsible for business and project identification and development across Sub-Saharan Africa. He was previously the Marketing Manager, Sub-Saharan Africa at Hitachi Europe (Johannesburg office) and has been involved in several projects in the energy, water, healthcare and ICT sectors across SubSaharan Africa. Qualified in economics, he has worked in the banking sector as well as in private sector consulting, advisory and research across Sub-Saharan Africa.

DaySeven Group was formed in 2008 and has evolved over the past nine years to encompass the different specialist companies. What is the story behind the group’s name? The group’s name is inspired firstly by a week having seven days and secondly by the belief in the perfection of the number seven. Please tell us about recent successful projects? DaySeven Consulting provided research services for Hitachi Chemical Ltd on the South African market and the different potential entry strategies that they could use to enter the market and be competitive. DaySeven Technology was contracted to develop, publish and host an online survey to collect data on behalf of the African Capacity Building Foundation. The survey collected data on the awareness and alignment of UN Strategic Development Goals (SDGs) to country-based National Development Plans. What is planned for the future?

DaySeven Group plans to expand and focus on projects outside South Africa in Sub-Saharan Africa. Our focus areas will be technology solutions and water and sanitation projects.

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PROFILE

DaySeven Group Providing world-class business services.

DaySeven Group is a Level 3 BBBEE company providing world-class services across several core areas of expertise. These include management consulting, advisory services and research to clients across SubSaharan Africa.

Vision DaySeven Group follows a value-based culture and as such, undertakes to uphold the following values in providing services to its clients: • Maintain, and use, international best practices • Strive towards excellence, growth and industry development • Maintain the highest levels of ethical and professional business practices • Ensure that our clients’ needs and objectives are always met.

client representatives, analysts and other core team members as we grow. We also employ the services of appropriately skilled and experienced professionals on various projects that we undertake.

Services offered DaySeven Consulting DaySeven Consulting focuses on three key areas of expertise that are critical to any business: • Management consulting covers strategy identification, development and implementation, business development and strategic leadership • Advisory services specialises in sustainable development, investment and infrastructure advisory with a focus on Sub-Saharan Africa • Research services conducts country research, cross-sector research and develops and implements surveys.

Mission DaySeven Group ensures that every client receives the best and appropriate service according to the client’s needs and objectives. All the services we offer are based on international best practices and policies. We always strive to ensure that all best practices and policies are passed onto you as a client, in order to develop and have an impact on your business, your life and your community.

Staff

DaySeven Training DaySeven Training is a Level 2 BBBEE company facilitating certified training courses on construction contracts covering GCC2010, NEC3, JBCC, FIDIC and customised training courses for our clients. We use

Our consultants are highly experienced and seasoned professionals. We draw on other highly experienced consultants in the relevant professional fields as and when required. DaySeven is continually seeking to employ administrative staff, sales and SOUTH AFRICAN BUSINESS 2018

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PROFILE facilitators who are qualified industry specialists in their areas of expertise. DaySeven Training is based in Johannesburg and provides training services to a diverse pool of clients covering both the public and private sectors across the African continent. The four core components are: • Business skills • Learnerships (including project management and business administration) • Workplace readiness (including prioritising and organising, conflict resolution and workplace ethics) • Customised courses (ICT and customer defined). DaySeven Technology DaySeven Technology is a Level 2 BBBEE company offering a full suite of technology solutions: • Graphic and web design • Doman registration and web hosting • Custom ICT solutions • Software and hardware.

Our team uses the world-leading project management methodologies, and modern tools to provide cutting-edge services and stay relevant and competitive. We offer a full range of services with a focus on the following key aspects: • Project identification and development: cross-sector; Sub-Saharan Africa focus; critical infrastructure; development to commercialisation. • Project management: modern methodologies; full project management cycle; project rescue. • Process design and re-design: business process analysis and mapping; business process redesign; total quality management. • Project development. • Project management services. • Process engineering: we assist and support our clients to redesign processes and achieve efficiency.

DaySeven Projects DaySeven Projects is a Level 2 BBBEE company currently focusing on project identification, development, execution and management.

DaySeven Projects has grown from humble beginnings and has become a key business unit within DaySeven Group. DaySeven Projects currently develops and leads projects across multiple sectors, providing world-class services. We currently hold CIDB ratings of 1GB and 1CE.

CONTACT INFO Physical address: Regus Business Centre, 1st Floor, 292 Surrey Avenue, Randburg, Johannesburg. Tel: +27 81 247 5246 Email: info@dayseven.co.za Website: www.dayseven.co.za

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PROFILE

VeriFi VeriFi is the leader in the business of verification and certification for BBBEE recognition.

South Africa requires an economy that can meet the needs of all its economic citizens, its people and their enterprises in a sustainable manner. Government’s objective is to achieve this vision of an adaptive economy characterised by growth, employment and equity. Achieving authentic BEE has required a reassessment of traditional business models and corporate cultures. The Bill, code and strategy document rely upon core policy instruments that have been designed to bring about BEE. These instruments are essentially measurement tools that will permit the public and private sectors to evaluate the BEE status of a particular enterprise. Failure to adapt to the new paradigm will have significant consequences. A real commitment to BEE is now a business imperative.

Target markets

Description of services • • •

assess and certify BBBEE rating; provide insight into BBBEE challenges facing various organisations; provide insight and guidance on the actions required to elevate BBBEE status; and verification of supplier BBBEE status.

With BBBEE recognised as an imperative by companies committed to building an equitable South Africa, verification is an essential requirement that confirms a company’s participation and contribution. Verification is performed in a manner similar to that of a financial audit: it provides an independent SOUTH AFRICAN BUSINESS 2018

assessment of investment, performance and initiatives in a control system. Criteria against which companies are measured are provided by government and like an audit, verification must be performed annually.

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Small, medium and large enterprises achieving an annual turnover of below R10-million and over R50-million respectively (including all charter sectors).

Pricing Pricing for BEE consultancy services is based on the client’s requirements and can be structured on an hourly or monthly basis. For BEE Verification and issue of a BEE Compliance Certificate, please contact the office for the current rates.

PROFILE

The value of verification With BBBEE recognised as an imperative by companies committed to building an equitable South Africa, verification is an essential requirement that confirms a company’s participation and contribution. Verification is performed in a manner similar to that of a financial audit: it provides an independent assessment of investment, performance and initiatives as a control system. Criteria against which companies are measured are provided by government, and like an audit, verification must be performed annually.

Advantages of BEE certificate from VeriFi • •

•

BBBEE explained Government BBBEE legislation consists of: • The Strategy for Broad-Based Black Economic Empowerment • T he Broad - Base d Black Economic Empowerment Act, No 53 of 2003 • The Codes of Good Practice for Black Economic Empowerment • Various sectoral BEE Charters or Codes

proposals for new business with government; the licensing of regulated activities which include mining, liquor sales and the granting of credit; leasing of premises from government or private businesses; and the creation or continuance of business relations with clients seeking assurance of a company’s BEE compliance

Once a verification and certified rating through VeriFi is accomplished, a company can perform business in confidence, as its commitment to equality, nationbuilding and unique South African business processes will be recognised.

Key facts and figures

In terms of these Codes of Good Practice, businesses are divided into three categories: • Where turnover is less than R10-million a year, or when in the first year of incorporation, a business is categorised as an Exempt Micro Enterprise (EME). However, it is necessary to confirm this status by providing proof of annual income. • Businesses with a turnover of between R10-million and R50-million a year are categorised as Qualifying Small Enterprises (QSEs). The criteria for each of these elements are less onerous for QSEs than for companies with turnovers exceeding R50-million per annum.

Year established: 2005 No of staff: 15 Major clients: BP, Public Investment Corporation Limited, IBM South Africa, Saab Grintek Defence, Independent Newspapers, Premier Fishing & Brands Limited, African Equity Empowerment Investment Limited, South African Express Airways SOC LTD.

CONTACT INFO Tel: +27 86 175 3233 Email: info@verifibee.co.za Website: www.verifibee.co.za

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OVERVIEW

Tourism Ten-million tourists visited South Africa in 2016.

rowth of close to 4% propelled South Africa’s incoming tourist arrivals to over 10-million in 2016, with year-on-year statistics from China showing an increase of 38%. The Indian market grew by 22% and Africa accounted for about 7.5-million of the visitors. The UK remains the number-one source of overseas tourists with more than 400 000 visitors in 2016, followed by the US and Germany. There are 711 745 people employed in the tourism industry, 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) and the national tourism ministry wants to increase that. The rise in tourist numbers follows determined efforts by national and provincial tourism bodies to promote the country. In Mpumalanga, links to BRICS countries have yielded results and in KwaZulu-Natal there has been a strong focus on the meetings, incentives, conference and exhibition sector (MICE). A dedicated unit within the KZN Tourism Authority, the Convention Bureau, has booked more than 50 events and conferences since 2012, bringing about R3-billion into the provincial economy. A Western Cape project to increase the number of seats on routes to and from Cape Town called Cape Town Air Access has been spectacularly successful. Cape Town International Airport’s capacity has increased by more than 600 000 seats in the two years that the programme has been running. Destinations include Turkey, Dubai, SOUTH AFRICAN BUSINESS 2018

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SECTOR INSIGHT The R500-million Zeitz Museum of Contemporary Art will attract international visitors to Cape Town. • Cullinan Holdings has expanded its tourist offering. • Cape Town Air Access has added 600 000 new aeroplane seats.

Ethiopia, Victoria Falls and the Netherlands. A big push has been made to increase access to the US. Cape Town Air Access is a partnership between investment agency Wesgro, the City of Cape Town, the Western Cape Provincial Government, Airports Company South Africa, Cape Town Tourism and South African Tourism.

OVERVIEW 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. The precinct, called the Yacht Club, includes a hotel, residential and commercial complex owned by the Amdec Group, and will be linked to the Waterfront by the extension of the existing canal. Elsewhere on the Foreshore, a major development is in the works which will include two Marriott hotels. In the Cape Town CBD there are going to be 500 new rooms, courtesy of two Tsogo Sun hotels, plus a smaller hotel in the De Waterkant (Capital Mirage). Tsogo Sun already operates several hotels in greater Cape Town, including three full-service hotels in the city centre, the Cullinan, Southern Sun Waterfront and Southern Sun Cape Sun. The other seven hotels cover five brands in the Tsogo Sun stable. Elsewhere in the Western Cape, Tsogo Sun has hotels in Caledon, Beaufort West, Mossel Bay and Plettenberg Bay. The opening of the R500million Zeitz Museum of Contemporary Art in the Victoria & Alfred Waterfront in Cape Town made a huge impact in 2017. With a footfall of 24-million visitors going through the Waterfront every year, the Zeitz is well located to attract good crowds. It is expected to attract global art lovers as well. The conversion of the old grain silos which created 6 000m² of gallery space was paid for by the owners of the Waterfront, Growthpoint Properties and the Public Investment Corporation.

The Waterfront has two new hotels: Radisson Red and the Silo Hotel attached to the Zeitz Museum. The Port of Durban envisages a 32 000m² area that will cater for two ships and at least 5 000 passengers. South Africa attracts 0.5% of the world’s cruise-ship market which comprises about 15.4-million passengers annually. South Africa is bidding for the Rugby World Cup 2023. The bidding committee claim that the tournament will produce an economic effect of R27.3-billion (direct, indirect and “induced”). The plan envisages using seven cities where existing infrastructure already exists. No major building will be necessary as South Africa has good stadiums. The international HSBC Rugby Sevens tournament was held for the first time in Cape Town in 2015 and has been successful. The City of Cape Town says that the tournament attracted more than 100 000 fans, at least 25 000 of whom were international visitors. The local economy benefited to the tune of R539-million.

Trends The newest global trend in tourism, Airbnb, has come to South Africa. A total of 394 000 visitors stayed in Airbnb accommodation in South Africa in 2016, something that hoteliers and managers of guest lodges will have to take into account for planning purposes. Roughly 50% of the bed nights were taken up by foreigners with the majority visiting the country’s three big metropolitan areas. Cape Town and Durban showed the most growth, with 29 000 reported for Johannesburg. The Airbnb visitors in South Africa are estimated at have engaged in R2.4-billion worth of economic activity. Another trend that is being explored is Halaal tourism, a global market that is expected to reach $300-billion by 2026. The Western

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OVERVIEW Cape has upwards of 200 mosques and a cosmopolitan lifestyle that has seen various faiths coexist for many years. Another potential growth area is health tourism. Upwards of sevenmillion people travel the world annually for procedures, and South Africa is well placed to receive a percentage of this market. A conference held in Richards Bay in 2017 put the focus on issues such as investment, training and the development of products. A significant move in the South African hotel sector is the decision by Marriott International to develop Marriott branded hotels in Johannesburg and Cape Town. After acquiring the Protea brand in 2014, Marriott introduced “Protea Hotel by Marriott” as the model but the decision in 2016 to use the mother brand for new hotels suggests an increased commitment to the local market. In partnership with the Amdec group, the group will spend about R1-billion on the Marriott Hotel Melrose Arch (150 rooms) and Marriott Executive Apartments Johannesburg Melrose Arch (200 flats). Buying into Protea Hotels has given Marriott access not only to the South African market, but to many other African countries. Between Tshwane and Johannesburg (and in the nearby Magaliesberg mountains), Protea by Marriott has no fewer than 17 hotels across three brands: Fire and Ice, Protea; Protea Hotels and African Pride Hotels, the premier brand. Carlson Rezidor is another group wanting to expand, with plans for hotels in eight of South African provinces on the schedule. A lot of effort has gone into increasing the number of South Africans who take trips within the country. In the 2016/17 financial year, South African Tourism has committed R100-million to

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promote domestic tourism. Domestic tourism generated R8.8-billion in the first quarter of 2016, an improvement on the same period in the year before. A Tourism Incentive Programme (TIP) has been launched by the National Department of Tourism. Tourism has been earmarked as one of the six key growth sectors in national government’s New Growth Path. An Enterprise Development Project Management Unit (PMU) has been established. Among the PMU’s tasks will be to manage an Enterprise Development Online Information Portal for small, medium and microenterprises. Two tourism incubator hubs are also to be established in the Pilanesberg (North West Province) and Manyeleti (Mpumalanga Province). One of the reasons for the success of South Africa’s tourism sector is its diversity. Superb natural beauty, excellent beaches (45 have Blue Flag status), incomparable wildlife, vibrant cities and cultural and heritage attractions that represent a heterogeneous population and a dramatic history, South Africa really does have it all. Culture and heritage accounts for fully 40% of world tourism and is one of the fastest-growing subsectors. In the five years to 2021, South Africa will be the venue for more than 200 conferences that will add R1.6-billion to the economy and attract about 300 000 participants. South Africa has 19 national parks and each province has its own reserves. There are many

OVERVIEW private game farms and nature reserves, a number of which cater to the luxury market. There are eight UNESCO World Heritage Sites in South Africa: Robben Island Museum, Cradle of Humankind, Mapungubwe Cultural Landscape, iSimangaliso Wetland Park, uKhahlamba Drakensberg (newly named Maloti Drakensberg Transfrontier Park), Richtersveld, Cape Floral Kingdom and Vredefort Dome. O ther p opular his tor y or cultural sites include the Nelson Mandela Museum, Hector Petersen Memorial, Apartheid Museum, Freedom Park, Voortrekker Monument, Constitution Hill, District Six Museum and Bo-Kaap Museum. There are a number of opportunities to further develop the full potential of tourism in heritage sites. The Department of Arts and Culture is responsible for the promotion of Heritage Month, including Heritage Day.

Structure The South African tourism industry is well segmented. The distribution channel is dominated by four major groups, each of which runs several companies in different parts of the value chain. According to Wesgro, the Western Cape’s investment promotion agency, the biggest groups are: • Imperial Holdings: mostly logistics, companies include Europcar and Tempest Car Hire. • Bidvest Travel and Aviation: Budget Rent a Car, Bidvest Sky

Lounge, Rennies Foreign Exchange, BidTravel, Harvey World Travel, HRG Rennies Travel and BidAir Services. • Cullinan Holdings: iKapa Tours and Travel, Thompsons, Hylton Ross Tours, Pentravel, Grosvenor Tours and Springbok Atlas. The latter two were bought by Cullinan from Imperial in 2013. • Tourvest: The group controls 63 companies dealing with many aspects of the tourist experience: tour operators and conference organisers, foreign exchange, retail (gift shops and duty-free shops) and hotels (African Hotels and Adventures). The principal airline operators in South Africa are SAA, the alliance of British Airways, Comair, and Kulula, a low-cost airline. SAA has ties with SA Express and owns low-cost carrier Mango. SA Express and SA Airlink fly to smaller destinations in South Africa and Southern Africa. Safair is owned by ASL Aviation Group. Casinos are a popular part of many entertainment and accommodation complexes around the country, although relatively few licences are in operation. Private game reserves and golf resorts has been one of the fastestgrowing markets in recent years. The Garden Route and the KwaZulu-Natal coastline are areas rich in golfing venues. Between George and Cape St Francis there are many highly-rated golf courses including Pinnacle Point, Fancourt (three courses), Simola, Plettenberg Bay Country Club and St Francis Links. Wine tourism is said to contribute indirectly more than R4.5-billion to the South African tourism sector (South African Wine Industry Information and Systems, SAWIS). According to Wine Tourism South Africa, a website and publishing concern that provides information about the wine industry, 43% of visitors to South Africa visit the Cape Winelands. The Industrial Development Corporation has committed to investing R2-billion in local resorts (and in the African hotel market). There are several unused or under-used facilities in South Africa that could be fixed up to cater to the many South Africans who currently don’t take holidays. An audit of possible properties is underway. One suggestion is that former military bases could be converted into low-fee resorts. Other niche areas that are being explored include astrology and adventure tourism.

ONLINE RESOURCES African Business Travel Association: www.abta.co.za National Department of Tourism: www.tourism.gov.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

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INDABA HOTEL, SPA & CONFERENCE CENTRE YOUR AFRICAN DESTINATION IN JOHANNESBURG

Just north of the fast paced business world of Sandton in the upmarket residential suburb of Fourways, lies the 258 bedroom Indaba Hotel, Spa & Conference Centre. It is a compelling blend of business-like convenience and efficiency, with a relaxed and warm country atmosphere. Coupled with easy and convenient access to all main highways, OR Tambo International Airport and a mere 15km from Lanseria International Airport, the hotel features an impressive selection of some 24 multi-purpose conference venues that can accommodate up to 2 000 delegates in total with banqueting facilities for up to 500 guests. With two restaurants on property, there is no need to leave the comfort of the hotel to enjoy world class cuisine. Our 300 seater Chief’s Boma Restaurant caters for all tasted with over 120 African inspired dished ranging from North African Moroccan cuisine to Koeksisters and Melktert from the cape – and with a “Shisa Nyama” grill boasting a variety of game meats sizzled to your specification, everyone is sure to find their favourite. Well known for the lavish full South African Breakfast Buffet, the Epsom Terrace Restaurant also boasts an evening Bistro Menu which will delight even the most demanding gourmand’s exacting standards. A traditional Carvery Lunch with live music can be enjoyed every Sunday with limited outdoor seating available for those who prefer dining al fresco – after all, Jo’burg really has the best weather in South Africa.

INDABA HOTEL, SPA & CONFERENCE CENTRE C/O WILLIAM NICOL DRIVE & PIETER WENNING ROAD, FOURWAYS Phone: +27 11 840 6600 | Email: indaba@indabahotel.co.za | Website: www.indabahotel.co.za

Take a wander through the 17 hectares of lush bushveld gardens and you will find the Mowana Spa - a wellness sanctuary which will revive your senses, rejuvenate your body and soothe your soul. The Mowana Spa, which takes its name from the majestic Baobab Tree of African Lore and Legend, offers wellness journeys based on the recognized healing energy of Tribal Massaging. Signature Pamper Journeys include the decadent Mowana Full Day African Rejuvenation Spa pamper which is an indulgent spa experience including breakfast, lunch, complimentary beverages and six revitalizing treatments; the romantic Mowana African Skies Night Spa pamper with includes dinner, complimentary beverages and 3 relaxing treatments; and the indulgent Mowana African Escape Spa & Stay Pamper Journey for the ultimate decadent relaxation. Our commitment to service excellence and staff empowerment through training and mentoring will ensure that your needs are met and your expectations exceeded as you enjoy a Day of Pampering at Mowana Spa. The Indaba Hotel and Mowana Spa are also PROUDLY GREEN ensuring responsible tourism and minimising carbon foot print through extensive recycling of waste products, water-wise gardening, greening conference initiatives, better material choices, minimising power usage and buying local - after all, a better place to live is a better place to visit. The Indaba Hotel is sure to meet all your business and leisure requirements. We look forward to welcoming you to our oasis in the City.

15 MINUTES FROM SANDTON ... A MILLION MILES AWAY

Nothing says welcome like a Volkswagen. From bergs, to bushes, to beaches, a Volkswagen will always make your guests feel at home while they’re away.

Your executive suite on wheels. Your vehicles are your business. They’re how you give travellers the best experience they could hope for. So don’t just choose a vehicle that gets people from A to B. Choose a vehicle that will make the luxurious journey in between a memorable part of the experience. Whatever your guests need, the Caravelle delivers. Its comfortable interior, combined with a versatile driver workplace make it the ideal vehicle to take your business class guests on the open road. Or a dirt road. Or a mountain pass. Any road really, thanks to Volkswagen’s 4MOTION® all-wheel-drive system. Second row seats that swivel to face fellow passengers in the back row, a pop-up table and a plethora of storage areas all over mean that your guests will always travel in absolute comfort and with convenience. There is only one problem: you might struggle to get your passengers out of it when you arrive at your destination…

O&M CAPE TOWN 2382/E

Your ready-to-go shuttle solution. No other vehicle in its class combines versatility, reliability and durability as perfectly as the Caddy Crew Bus. Its hard-wearing interior can be extended from five to an optional seven seats and, with just a few adjustments, can also be converted into a 2-seater with a very generous 3.2m 3 load compartment if you need to swap out some guests to deliver larger goods (4.1m 3 on the Maxi). You can always trust the Caddy Crew Bus to get the job done. It’s like your star tour guide: once you’ve got one, you’ll wonder how you ever managed without it.

Your group adventure partner. There is so much to see in our diverse and beautiful country: mountain tops, beaches, desert pans, game parks, bustling cities and tranquil villages. The options are as varied as the roads you travel to get there. So you need a vehicle that can deal with everything this unique country puts in your path. Capable of taking anything from 5 to 11 people, the Transporter Crew Bus is ready to go at a moment’s notice. It’s spacious, comfortable, practical and packed with safety features like ESP, ASR, EDL, Traction Control and Hill Hold control, for when you’re feeling really adventurous. What’s more, Volkswagen’s 4MOTION® all-wheel drive helps you on every road South Africa lays out in front of you and will get you to those slightly harder to reach spots for the perfect photo opportunity. The Transporter Crew Bus is your ideal fun-loving, adrenaline seeking tourist co-host.

Commercial Vehicles

PROFILE

African Business Travel Association Bringing together Africa’s Corporate Travel Professionals.

As the only corporate travel association focusing not just on South Africa but also Africa’s emerging markets, the African Business Travel Association (ABTA) provides a platform for corporate travel management stakeholders across the continent through education and the sharing of best practice. The association holds region-specific events and facilitates information flow using various platforms in countries across Africa, including Angola, Ghana, Kenya, Nigeria and South Africa. These events bring together corporate travel buyers, travel management companies and industry suppliers from across Africa’s emerging markets and are the best attended events of their kind. These events allow all industry sectors the opportunity to engage with each other, share challenges, brainstorm solutions, identify trends and investigate best practice, thereby elevating the level of communication between sectors and building stronger industry practices. ABTA has over 300 members and member companies spanning the African continent and all industry sectors. ABTA membership is a key advantage in assisting stakeholders and companies in information gathering, educational input and peer-to-peer networking opportunities whether they are booking, buying, managing or supplying business travel products or services.

• Travel buyers • Finance managers • Procurement managers • Supply chain and sourcing managers • Travel consultants • Travel agents and TMCs • Industry suppliers • Travel press • Academics. Although ABTA initiatives are open and relevant to all industry sectors, educational focus is aimed at the corporate sector, with the belief that a bettereducated buying community will drive the continued advancement of the business travel industry. Through Education, Innovation and Collaboration, ABTA assists in raising the standard of the business travel sector across Africa; increases awareness of Africa among the global travel fraternity; assists members in adding value to their organisations; creates a platform for region-specific travel management education, networking opportunities and continued professional development; provides cross-border benchmarks on travel services, and finally, plays a pivotal role in Africa’s emergence as a global player in the business travel industry.

Any individual with a direct or indirect involvement in business travel should become a member of ABTA, including: • Personal assistants • Travel bookers and coordinators SOUTH AFRICAN BUSINESS 2018

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CONTACT INFO Physical address: 54 Milner Avenue, Roosevelt Park, Johannesburg Postal address: PO Box 2594, Pinegowrie 2123 Tel: +27 11 888 8178 Email: monique@abta.co.za Website: www.abta.co.za

OVERVIEW

Information and communications technology A rural network is providing free local calls.

SECTOR INSIGHT Barclays Africa Group spent R3.1-billion on ICT in 2016. • Farmers and Vodacom are working on a sheeptracking collar.

he biggest spenders on information communications technology (ICT) are banks and other financial institutions. Existing banks may have large customer bases but agile new competitors are able to do without branch infrastructure and can connect directly with clients via mobile phones and other devices. The financial sector is responding via large investments in fintech. One example is Barclays Africa Group’s expenditure of R3.1-billion on ICT in 2016. The Big Four banks spent R30-billion in the year to June 2016, with Standard Bank laying out R14-billion in that period (Tech Central). Companies in the sector are also spending heavily to stay ahead in terms of technology. By way of example, Vodacom has spent approximately R577-million over three years in the province of Limpopo alone. South Africa’s appetite for fast Internet connectivity is growing fast. The state-owned company Telkom controls most of the country’s fibre cable but several smaller private companies are winning contracts to lay fibre-optic cables around the country. The Mail & Guardian reported in April 2016 that “nimble new entrants” such as Vumatel, Fibrehoods, Link Africa (which runs its network in the sewerage system, obviating the need to dig new trenches) and Dark Fibre Africa are forcing the bigger telecommunications companies to up their game. With faster Internet speeds, customers could switch away from subscriber television services. SOUTH AFRICAN BUSINESS 2018

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Allowing access to the Internet to rural people and poorer people in urban areas is a policy priority. Access in South Africa is improving all the time. As part of its mandate, the Independent Communications Authority of South Africa (ICASA) has seen to it that various private operators have connected more than 623 schools around the country. The Western Cape Provincial Government and Neotel will roll out 384 Wi-Fi hotspots in public areas, and is aiming for complete coverage by 2019. Private companies like Vodacom allocate specific budget items to rural access and in September 2017 it announced that it would zero-rate its services for university student and staff who are Vodacom subscribers. To illustrate the vastly different uses to which technology can be put, Vodacom is also developing an affordable sheep-tracking collar with farmers in the Eastern Cape. There are also city programmes such as the TshWifi (Tshwane), a

OVERVIEW free service available in 780 zones such as libraries, educational institutions and clinics and libraries. More than 1 500km of network fibre has been rolled out in Gauteng province since 2014. A total of 3 000 access sites should be connected by 2020. T h e Small Enter pr is e Development Agency runs ICT incubators in several parts of South Africa. The SoftstartBTI ICT incubator is in Midrand and Tuksnovation, a high-tech incubator, is at Pretoria University. In the Nelson Mandela Bay Metropolitan Municipality there is the SEDA Nelson Mandela Bay ICT Incubator (SNII). A new research and development laboratory was established by SNII in 2016, focussing on apps, mechanical and technical prototypes, and software solutions. SNII also hosted a national conference on “Universal Affordable Access to Communications in South Africa” in 2016. An example of what can be done to reduce telecommunication costs in rural areas was presented by the University of the Western Cape, who teamed up with the Mankosi community in a rural part of the Eastern Cape to create the Zenzeleni Network. This is essentially a community telecoms company where local calls are free, data is considerably cheaper and calls to other networks are half the normal cost. The Universal Service and Access Agency of South Africa (USAASA) is providing connectivity for schools in five provinces and smart devices have been distributed to schools.

Incentives relevant to companies and educational bodies in the ICT sector are available from the Department of Trade and Industry (dti) and include: • The Technology and Human Resources for Industry Programme (THRIP): companies and educational institutions working to improve technology; 50/50 cost sharing grant to a maximum of R8-million • Technology Development Fund: the Technology Innovation Agency makes up to R50-million available for up to 10 years • Technology Venture Capital: managed by the Industrial Development Corporation; commercialisation of innovative products, processes and technologies. The National Electronic Media Institute of South Africa (NEMISA) was originally created to develop skills for the broadcasting environment, but is now being integrated with eSkills Network and the Institute for Satellite and Software Applications (ISSA) to form Ikamva National e-Skills Institute (iNeSI). The focus is on developing e-skills capacity by creating partnerships that guide e-skills initiatives. There are many opportunities for employment in the sector. It is ironic that in a country with a very high unemployment rate, the Johannesburg Centre for Software Engineering (JCSE) in 2016 put the number of vacancies in software and application development, cloud computing and information security at 40 000 (Sunday Times). Training is available from organisations such as the Quad Digital Academy, a Standard Bank initiative, an ICT Incubator in Port Elizabeth run by the Small Enterprise Development Agency (Seda) and from the City of Johannesburg (which runs a digital intern programme called COJEDI). Scarce skills training is offered by the City of Cape Town (in partnership with SAP Africa) in software programming. The programme is called “Western Cape Skills for Africa”.

ONLINE RESOURCES Ikamva National eSkills Institute: www.enesi.org.za Independent Communications Authority: www.icasa.org.za State Information Technology Agency: www.sita.co.za Technology Innovation Agency: www.tia.org.za

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OVERVIEW

Banking and financial services New banks and new stock exchanges are adding to South Africans’ choices.

SECTOR INSIGHT Tyme has the first new banking licence since 1999.

outh Africa’s banking and financial services sector is experiencing a surge of innovation with several new banking licences expected to be granted before the end of 2018. First to get over the line in 2017 was Tyme, which stands for Take Your Money Everywhere and refers to the bank’s digital origins and its plans for the future which do not involve opening a branch network. Commonweath Bank of Australia bought a controlling share of Tyme when it was a loans company and African Rainbow Capital is the venture’s BEE partner. The banking licence is the first to be issued since Capitec was granted a licence by the South African Reserve Bank in 1999. Capitec has since gone on to become a major player on the South African retail banking scene. It now merits inclusion in a new “Big Five”, with Standard Bank, Absa, FNB and Nedbank. In terms of assets, the five biggest banks are Standard Bank, FirstRand (which owns FNB), Absa (which is part of Barclays Group Africa), Nedbank and Investec. According to the Reserve Bank, this group had 89% of market share in 2015. SOUTH AFRICAN BUSINESS 2018

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Merchant banking and investment banking are the most competitive sectors with companies such as BoE Private Clients, Rand Merchant Bank and Investec prominent. There are 40 international banks with offices in South Africa, including Bank of China, Standard Chartered, JP Morgan Chase, HSBC and Citibank. Afgri, South Africa’s largest agricultural company which already offers financial services, bought the South African Bank of Athens in 2017. The bank was purchased from the National Bank of Greece Group and is still subject to regulatory approval. Most South African agricultural companies have financial divisions. Other applicants for new banking licences are Discovery and Post Bank, a division of the South African Post Office. Discovery is already a giant on the JSE (market value of R83-billion) with a wide range of products and services that give it access to millions of customers. Life

OVERVIEW insurer MMI Holdings is entering a partnership with African Bank to enable it to start taking deposits and loaning money. A further two state banks are planned: Ithala (currently an enterprise funder in KwaZulu-Natal) and the Human Settlements Development Bank which will focus on housing for poorer households and state-funded housing projects. Financial services group Old Mutual (a 54% stakeholder in Nedbank) is set to create four stand-alone businesses out of the Old Mutual Group. This will allow the UK-based wealth management business and the New York-based asset managers to be free of linkages to the rand, while the South African businesses, Nedbank and Old Mutual Emerging Markets, can focus on their specialities. Fintech is the new buzz word in the world of banking. Barclays has established a worldwide organisation to promote the latest thinking in app development. Rise has seven outlets around the world, including one in Woodstock in Cape Town. The photograph on the previous page shows Nedbank’s new property venture office in Mount Edgecombe. The insurance market has become more varied over time, with a greater variety of products available to more market segments, including middle-income earners. An example of a product responding to new realities is Old Mutual’s iWYZE medical gap cover, designed to pay the difference between what a medical aid scheme is willing to pay and what the hospital or doctor is charging.

Framework The South African banking and financial-services sector has a good international reputation because of a strong regulatory and legal framework. In 2017 this was tested when several auditing and consulting firms were implicated in accusations of “state capture”. The fact that the allegations were brought into the open by alert civil society organisations and the media has been cited by some commentators as positive factors. The South African Reserve Bank (SARB) is the central bank and falls under the National Department of Finance. It sets monetary policy and decides on domestic interest rates. The SARB oversees the banking-services sector, while the Financial Services Board (FSB) governs the non-banking financial-services industry. The Banking Association South Africa represents all registered banks, local and international. Major sub-committees oversee capital supervision, credit risk, consumer affairs and the SA Securities Lending Association. The JSE is the world’s 19th-biggest exchange and nearly 400 companies are listed on the JSE or AltX, the JSE-owned exchange for smaller companies. Other investment options that are available through the JSE are Yield X (interest rate and currency instruments), the South African Futures Exchange (SAFEX) and the Bond Exchange of South Africa (BESA). In 2017 several new exchanges won regulatory approval, with ZAR X winning the nod from the Financial Services Board (FSB). There is no trading in derivatives or high-frequency trading on this exchange. A2X, in which African Rainbow Capital is an investor, will offer secondary listings platform for JSE-listed companies and aims to cut costs for investors. 4 Africa Exchange (4AX) will focus on companies with market capitalisation of up to R8-billion. Agricultural trading company NWK is a shareholder in this venture. The newcomers all promise to use the latest technology to make trading simpler, quicker and cheaper.

ONLINE RESOURCES Auditor-General South Africa: www.agsa.co.za Financial Services Board: www.fsb.co.za Insurance Institute of South Africa: www.iisa.co.za Insurance South Africa: www.insurance.za.org JSE Limited: www.jse.co.za The South African Institute for Chartered Accountants: www.saica.co.za

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OVERVIEW

Development finance and SMME support South Africa has over two-million SMMEs.

SECTOR INSIGHT The Nor thern Cape is supporting co-operatives.

he National Department of Small Business Development (DSBD) has several programmes to assist small, micro and medium enterprises (SMMEs) and co-operatives. These include: • The Black Business Supplier Development Programme, a costsharing grant to promote competitiveness • The Co-operative Incentive Scheme, a 100% grant. The Small Enterprise Development Agency (Seda) is a subsidiary of the DSBD. In a recent publication, Seda reported that the number of SMMEs in South Africa increased by only 3%, from 2.18-million to 2.25-million between 2008 and 2015. Limpopo had the highest growth rate (34%), followed by Gauteng. Rural provinces tend to have more informal SMMEs, due to their high number of hawkers and informal traders. About half of South Africa’s formal SMMEs operate in Gauteng and more than half are in the wholesale and retail sector and the accommodation sector. The next most popular sectors are community, social and personal services. Recent studies have shown that South Africa’s townships represent a substantial market. The CEO of Minanawe Marketing, GG Alcock, told the FMCG Insights conference in 2016 that the “invisible market” was worth R10-billion. Alcock told the Sunday Times that a Johannesburg township fast food operator made R50 000 per day from three outlets. SOUTH AFRICAN BUSINESS 2018

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Seda has 42 incubation centres in South Africa under its Seda Technology Programme (STP). An example is the Zenzele Technology Demonstration Centre, a project that helps smallscale miners and mineral processors to create viable businesses. The National Gazelles is a national SMME accelerator jointly funded by Seda and the DSBD. The aim is to identify and support businesses with growth potential across priority sectors. Businesses can receive up to R1-million for training, productivity advice, business skills development and the purchase of equipment. The Industrial Development Corporation (IDC) supports SMMEs either by disbursing loans or by taking minority shares in enterprises and giving advice. An agricultural project in the Northern Cape is an example of the kind of work it does. Through the IDC’s Transformation and Entrepreneurial Scheme, a black economic empowerment project is underway at Kakamas, where emerging farmers are planting

OVERVIEW citrus. Vaal Community Citrus could create 1 330 jobs. The Provincial Government of the Northern Cape is an example of a government body which puts a strong emphasis on supporting small business as a way of stimulating economic activity, getting more people into the mainstream of the economy and bolstering food security. In 2016, support was given to 210 SMMEs and 91 co-operatives. Business and financial management training was offered to 83 informal traders. In partnership with the Small Enterprise Development Agency, nine cadets received training before receiving work places at various municipalities. The Department of Economic Development and Tourism hosted an Economic Research Day which brought together support agencies, government and private companies such as Petra Diamonds and Anglo American. A Provincial Incubation Strategy is planned, as is a specialist Renewable Energy Incubator. Two of the Eastern Cape Development Corporation’s seven business units are devoted to small business: Development Finance and Enterprise Development. The ECDC and the Technology Innovation Agency (TIA) jointly run the TIA-ECD Innovation Seed Fund Programme which identifies and co-funds early stage technology innovation projects in the Eastern Cape. The National Department of Labour has a programme to support people with disabilities. The Sheltered Employment Factories initiative puts out about 3 000 dif-

ferent product types in fields such as leather and canvas work, furniture, textiles, screen printing and book binding. The Enterprise Investment Programme (EIP) of the National Department of Trade and Industry (dti) is another support programme. In 2017, the success of a uniform and protection equipment company was advertised by the EIP: having received a grant in 2014, Thorax LP Equipment, a 100% black-women-owned company, has subsequently turned over more than R8-million and employed many young people. The Development Bank of Southern Africa (DBSA) is another major funder of projects.

Private sector The major banks all have SMME offerings. Standard Bank runs a Community Investment Fund and Nedbank offers an enterprise development product for businesses with turnovers up to R35-million. Agribusiness and agri-processing are among the three sectors that are targeted by the Masisizane Fund for loan financing. The others are franchising/commercial and supply chain/manufacturing. Training is offered through a Business Accelerator Programme. As a non-profit initiative of the Old Mutual Group, the fund focusses on the cash flow of potential businesses rather than insisting on security in the form of property. Private companies are supporting SMMEs through their buying chain. Woolworths is funding TechnoServe to ensure that small tomato growers can grow produce that will meet the demanding standards of the retailer, and to help them expand production. A regular supplier to Woolworths, Qutom, assists with the project. Using the supply chain to benefit small business is at the heart of Anglo American’s Zimele, which runs four enterprise development and investment funds. Hub managers support small business in the downstream sectors relevant to the resource mined by the Anglo subsidiary. The Thermal Coal Hub and the Platinum Hub are two examples. The Mondi Zimele Hub in Piet Retief supports businesses in the paper and forestry supply chain.

ONLINE RESOURCES Development Bank of Southern Africa: www.dbsa.org Eastern Cape Development Corporation: www.ecdc.co.za Gazelles: www.nationalgazelles.org.za National Empowerment Fund: www.nefcorp.co.za National Department of Small Business Development: www.dsbd.gov.za Small Enterprise Development Agency: www.seda.co.za Small Enterprise Finance Agency: www.sefa.org.za

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Positive change through enterprise development The Masisizane Fund’s new CEO, appointed in mid-2016, has pledged to continue the work of the Fund in contributing to positive change in South Africa.

Zizipho Nyanga, the new CEO of the Masisizane therefore we need to work closely with those that Fund, has 10 years’ experience in business support, have a similar mandate to us in order to make meanentrepreneurship, deal making, financial manage- ingful impact. Maintaining strong and effective partment, auditing, risk advisory and internal control nerships with institutions like SEFA, Productivity SA, improvements in fast-paced organisations. SEDA, SAICA and Department of Rural Development Promoted to the position of CEO in October is very important in ensuring this," Zizipho says. 2016, she initially joined the Masisizane Fund in Zizipho holds a BCom Accounting from the (for2014 as the Head of Post Investment Monitoring mer) University of Transkei and a Higher Diploma in Accounting from Wits University. After graduating and Business Support. During this time she also served as the Alternate she joined Ernst & Young (EY) as a Trainee and later Chairperson of the Executive Committee Credit qualified as CA (SA). EY’s global footprint provided her with an interReview and a Member of the Enterprise and Supplier Development Committee (Mutual & Federal). national opportunity while she was seconded to “Institutions like ours have a very important role to the San Jose office in California. During her time play in creating access to funding for small businesses, there she was exposed to the entrepreneurial culture in small businesses and her passion for rural development and economic transformation was born. “I learnt that the only way to truly bring about economic transformation is to walk a journey with the business and assist them to grow into a thriving enterprise rather than to just give them money, waiting for them to pay back and hoping for the best. Growing and assisting a business successfully can only be done through establishing good and trustworthy partnerships,” Zizipho says. It is evident from her career history that Zizipho has the skills and experience necessary to continue building on the good work of the Masisizane Fund. The Fund is an Old Mutual initiative set up as a non-profit funding company to provide financial and non-financial support to small, medium and micro enterprises.

Zizipho Nyanga SOUTH AFRICAN BUSINESS 2018

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MASISIZANE FUND The Masisizane Fund (NPC) is an initiative of Old Mutual South Africa, established in 2007 following the closure of the Unclaimed Shares Trust. The mandate of the Fund is to contribute meaningfully to employment creation, poverty eradication and reduction of inequality, economic growth and the attraction of investment. This is achieved through the promotion of entrepreneurship, enterprise finance and support to small, micro and medium enterprises. The fund’s focus is on enterprises that are 51% or more owned by previously disadvantaged individual(s) giving priority to rural and peri-urban/township areas. Masisizane gives preference to businesses that are owned by youths, people with disabilities or are owned by (51% or more) women and targets productive and labour absorbing sectors. The Fund’s success is driven by a focused approach on high impact industry sectors, coupled with a comprehensive SMME finance solution that includes business support. The Fund provides loan finance in the following sectors: Agribusiness Franchising Supply Chain The Fund supplies non-financial value adding post investment services including capacity development, business management and technical support, financial education, market development and product/service quality standards and compliance. A Business Accelerator Program has been established where potential clients receive targeted skills training and support to grow into a business eligible to receive financial support. Masisizane operates nationally with its head office in Gauteng and regional offices in KwaZulu-Natal, Limpopo, Eastern Cape and Western Cape. Submit the following documents for an initial screening by the relevant provincial office: • Comprehensive business plan with market analysis and projections; • For established businesses – past financials (preferably 3 years) and latest management accounts; • For start-up businesses – financial projections; • Tax clearance certificate; • Off take agreements and/or letters of intent; • Signed consent for a credit check. Contact details: • Gauteng, North West and Free State – 011 217 1746 • Western and Northern Cape – 021 509 5074 • KwaZulu-Natal – 031 335 0400 • Eastern Cape – 043 704 0116 • Limpopo and Mpumalanga – 015 287 4279

For more information and where to find us visit www.masisizane.co.za

An initiative of the

Old Mutual is a Licensed Financial Services Provider

Group

LISTING

South African National Government An overview of South Africa’s national government departments.

President

Department of Basic Education

Address: Union Buildings, Government Avenue, Arcadia, Pretoria 0001 Postal address: Private Bag X1000, Pretoria 0001 Tel: +27 12 300 5200 Fax: +27 12 323 8246 Website: www.thepresidency.gov.za Website: www.economic.gov.za

Address: Sol Plaatje House, 222 Struben Street, Pretoria 0001 Postal address: Private Bag X9034, 8000 Tel: +27 12 357 3000 Fax: +27 12 323 5989 Website: www.education.gov.za

Deputy President

Address: Tshedimosetso House, 1035 Frances Baard (Cnr Festival Street), Hatfield, Pretoria 0001 Postal address: Private Bag X745, Pretoria 0001 Tel: +27 12 473 0000 Fax: +27 12 462 1646 Website: www.doc.gov.za

Address: Union Buildings, Government Avenue, East Wing, 1st Floor, Arcadia, Pretoria 0001 Postal address: Private Bag X1000, Pretoria 0001 Tel: +27 12 300 5200 Fax: +27 12 323 8246 Website: www.thepresidency.gov.za Minister in the Presidency

Department of Communications

Department of Cooperative Governance and Traditional Affairs

Address: Union Buildings, Government Avenue, East Wing, 1st Floor, Arcadia, Pretoria 0001 Postal address: Private Bag X1000, Pretoria 0001 Tel: +27 12 300 5200 Fax: +27 12 300 5795 Website: www.thepresidency.gov.za

Address: 87 Hamilton Street, Arcadia, Pretoria 0083 Postal address: Private Bag X802, Pretoria 0001 Tel: +27 12 334 0705 Fax: +27 12 326 4478 Website: www.cogta.gov.za

Dept of Agriculture, Forestry and Fisheries

Address: 123 Poyntons Building, West Block, cnr Schubart and Church streets, Pretoria 0001 Postal address: Private Bag X136, Pretoria 0001 Tel: +27 12 307 2934/2884 Fax: +27 12 323 4111 Website: www.dcs.gov.za

Address: No 20, Agriculture Place, Block DA, 1st Floor, cnr Beatrix Street and Soutpansberg Road, Arcadia, Pretoria Postal address: Private Bag X250, Pretoria Tel: +27 12 319 7319 Fax: +27 12 319 6681 Website: www.daff.gov.za Department of Arts and Culture Address: 10th Floor, Kingsley Centre, 481 corner Steve Biko and Stanza Bopape streets, Arcadia, Pretoria 0001 Postal address: Private Bag X899, Pretoria 0001 Tel: +27 12 441 3000 | Fax: +27 12 440 4485 Website: www.dac.gov.za SOUTH AFRICAN BUSINESS 2018

Department of Correctional Services

Department of Economic Development Address: Block A, 3rd Floor, 77 the dti Campus, cnr Meintjies and Esselen streets, Sunnyside, Pretoria 0001 Postal address: Private Bag X149, Pretoria 0001 Tel: +27 12 394 1006 Fax: +27 12 394 0255 Website: www.economic.gov.za

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LISTING Department of Defence

Department of Human Settlements

Address: cnr Delmas Avenue & Nossob St, Erasmuskloof, Pretoria 0001 Postal address: Private Bag X427, Pretoria 0001 Tel: +27 12 355 6101 | F ax: +27 12 347 0118 Website: www.dod.mil.za

Address: Govan Mbeki House, 240 Justice Mahomed, Sunnyside, Pretoria 0001 Postal address: Private Bag X644, Pretoria 0001 Tel: +27 12 421 1310 | Fax: +27 12 341 8513 Website: www.dhs.gov.za

Department of Energy

Department of International Relations and Cooperation

Address: 192 cnr Visagie and Paul Kruger St, Pretoria 0001 Postal address: Private Bag X96, Pretoria 0001 Tel: +27 12 406 8000 Fax: +27 12 319 6681 Website: www.energy.gov.za Department of Environmental Affairs Address: Environment House, 473 Steve Biko and Soutpansberg Road, Arcadia, 0083 Postal address: Private Bag X447, Pretoria 0001 Tel: +27 12 310 3537 | Fax: +27 086 593 6526 Website: www.environment.gov.za Department of Finance (National Treasury) Address: 40 WF Nkomo Street, Old Reserve Bank Building, 2nd Floor, Pretoria Postal address: Private Bag X115, Pretoria 0001 Tel: +27 12 323 8911 | Fax: +27 12 323 3262 Website: www.treasury.gov.za Department of Health Address: 20th Floor, Civitas Building, cnr Struben and Andries Streets, Pretoria 0001 Postal address: Private Bag X399, Pretoria 0001 Tel: +27 12 395 8086/80 | Fax: +27 12 395 9165 Website: www.doh.gov.za Department of Higher Education and Training Address: 123 Francis Baard Street, Pretoria 0001 Postal address: Private Bag X893, Pretoria 0001 Tel: +27 12 312 5555 Fax: +27 12 323 5618 Website: www.dhet.gov.za

Address: OR Tambo Building, 460 Soutpansberg Road, Rietondale, Pretoria 0001 Postal address: Private Bag X152, Pretoria 0001 Tel: +27 12 351 1000 | Fax: +27 12 329 1000 Website: www.dirco.gov.za Department of Justice and Constitutional Development Address: Salu Building, 316 cnr Thabo Sehume and Francis Baard Streets, Pretoria 0001 Postal address: Private Bag X276, Pretoria 0001 Tel: +27 12 406 4669 | Fax: +27 12 406 4680 Website: www.doj.gov.za Department of Labour Address: 215 Laboria House, cnr Francis Baard and Paul Kruger Streets, Pretoria 0001 Postal address: Private Bag X499, Pretoria 0001 Tel: +27 12 392 9620 | Fax: +27 12 320 1942 Website: www.labour.gov.za Department of Military Veterans Address: 328 Festival Street, Hatfield, Pretoria 0001 Postal address: Private Bag X943, Pretoria 0001 Tel: 080 232 3244 (SA only) Website: www.dmv.gov.za Department of Mineral Resources Address: 70 Meintje Street, Trevenna Campus, Sunnyside 0007 Postal address: Private Bag X59, Pretoria 0001 Tel: +27 12 444 3000 | Fax: +27 86 624 5509 Website: www.dmr.gov.za

Department of Home Affairs

Department of Police (Civilian Secretariat for Police Service)

Address: 909 Arcadia Street, Hatfield 0083 Postal address: Private Bag X114, Pretoria 0001 Tel: +27 12 432 6648 | Fax: +27 12 432 6675 Website: www.dha.gov.za

Address: Wachthuis Building, 7th Floor, 231 Pretorius Street, Pretoria 0001 Postal address: Private Bag X463, Pretoria 0001 Tel: +27 12 393 2800 | Fax: +27 12 393 2812 Website: www.saps.gov.za

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LISTING Department of Public Enterprises

Department of Social Development

Address: Infotech Building, 1090 Arcadia Street, Hatfield, Pretoria 0001 Postal address: Private Bag X15, Hatfield 0028 Tel: +27 12 431 1000 | Fax: +27 12 431 1039 Website: www.dpe.gov.za

Address: HSRC Building, North Wing, 134 Pretorius Street, Pretoria 0001 Postal address: Private Bag X904, Pretoria 0001 Tel: +27 12 312 7479 | Fax: +27 086 715 0829 Website: www.dsd.gov.za

Department of Public Service and Administration

Address: Bogare Building, 2 Atterbury Road, Menlyn, Pretoria 0001 Postal address: PO Box 1037, Menlyn 0077 Tel: +27 12 367 0700 | Fax: +27 12 367 0749 Website: www.ssa.gov.za

Address: Batho Pele House, 116 Johannes Ramakhoase Street, Pretoria Postal address: Private Bag X884, Pretoria 0001 Tel: +27 12 336 1700 Fax: +27 12 336 1809 Website: www.dpsa.gov.za Department of Public Works Address: 7th Floor, CGO Building, cnr Bosman and Madiba Streets, Pretoria Central Postal address: Private Bag X65, Pretoria 0001 Tel: +27 12 406 21978 Fax: +27 086 276 8757 Website: www.publicworks.gov.za Department of Rural Development and Land Reform Address: 184 Old Building, cnr Jeff Masemola and Paul Kruger Streets, Pretoria 0001 Postal address: Private Bag X833, Pretoria 0001 Tel: +27 12 312 9300 Fax: +27 12 323 3306 Website: www.ruraldevelopment.gov.za Department of Science and Technology

Department of State Security

Department of Sport and Recreation South Africa Address: Regent Place, 66 cnr Madiba and Florence Ribeiro Street, Pretoria 0001 Postal address: Private Bag X896, Pretoria 0001 Tel: +27 12 304 5000 | Fax: +27 12 323 7196 / 086 644 9583 Website: www.srsa.gov.za Department of Tourism Address: 17 Trevena Street, Tourism House, Sunnyside, Pretoria 0001 Postal address: Private Bag X424, Pretoria 0001 Tel: +27 12 444 6780 | Fax: +27 12 444 7027 Website: www.tourism.gov.za Department of Trade and Industry Address: The dti, 77 Meintjie Street, Block A, Floor 3, Sunnyside, Pretoria 0001 Postal address: Private Bag X274, Pretoria 0001 Tel: +27 12 394 1568 | Fax: +27 12 394 0337 Website: www.thedti.gov.za

Address: DST Building, Building No 53, CSIR South Gate Entrance, Meiring Naude Road, Brummeria, Pretoria 0001 Postal address: Private Bag X727, Pretoria 0001 Tel: +27 12 843 6300 Fax: +27 12 349 1041/8 Website: www.dst.gov.za

Department of Transport

Department of Small Business Development

Department of Telecommunications and Postal Services

Address: The dti, Block A, 3rd Floor, 77 Meintjies Street, Sunnyside, Pretoria 0001 Postal address: Private Bag X84, Pretoria 0001 Tel: +27 12 394 1006 Fax: +27 12 394 1006 Website: www.dsbd.gov.za SOUTH AFRICAN BUSINESS 2018

Address: Forum Building, 159 Struben Street, Room 4111, Pretoria 0001 Postal address: Private Bag X193, Pretoria 0001 Tel: +27 12 309 3131 | Fax: +27 12 328 3194 Website: www.transport.gov.za

Address: Iparioli Office Park, 399 Jan Shoba Street, Hatfield, Pretoria 0001 Postal address: Private Bag X860, Pretoria 0001 Tel: +27 12 427 8000 | Fax: +27 12 427 8016 Website: www.dtps.gov.za

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eMalahleni

Mahikeng

Mbombela

LISTING

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LISTING Department of Water and Sanitation Address: Sedibang Building, 185 Frances Baard Street, Pretoria 0001 Postal address: Private Bag X313, Pretoria 0001 Tel: +27 12 336 8733 Fax: +27 12 336 8850 Website: www.dwa.gov.za Department of Women Address: 36 Hamilton Street, Arcadia Pretoria 0001 Postal address: Private Bag X931, Pretoria 0001 Tel: +27 12 359 0000 Fax: 086 765 3365 Website: www.women.gov.za

National coat of arms The national coat of arms was adopted on 27 April 2000. It is constructed in two circles, which are described as the circle of foundation and the circle of ascendance.

Circle of foundation Shield – The two Khoisan figures on the shield are taken from a Bushman rock painting known as the Linton stone, and represent the common humanity and heritage of South Africans. Depicted in an attitude of greeting, the figures symbolise unity. Spear and knobkierie – Together, these objects symbolise defence and authority, but the flat angle at which they lie symbolises peace. Wheat – The ears of wheat, as emblems of fertility, represent germination, growth and the development of potential, as well as nourishment and agriculture. Elephant tusks – Elephants symbolise wisdom, strength, power, authority, moderation and eternity, and the use of tusks is a tribute to the world’s largest land mammal, Loxodonta Africana, which is found in South Africa. Motto – Taken from the language of the now extinct /Xam Bushmen, the motto translated means ‘people who are different come together’ or ‘diverse people unite’. Circle of ascendance Protea – Protea cynaroides is the national flower of South Africa and is symbolic of the beauty of the country and flowering of the nation’s potential. Secretary bird – Characterised in flight, the secretary bird represents growth and speed, and is a symbol of divine majesty and protection. Rising sun – The sun is an emblem of energy and rebirth, a source of light and life appropriate for a country characterised by sunshine and warmth.

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A REGIONAL OVERVIEW OF THE

EASTERN CAPE T he Eastern Cape extends over 169 580 square kilometres, representing 13.9% of South Africa’s land mass. The dry western interior is one of the country’s premier sheep-rearing and mohairproducing areas. The mountainous regions of the north and east of the province support timber plantations while the coastal belt in the south-west is good for dairy farming. The province has spectacular beaches stretching from the surfer’s paradise at Jeffrey’s Bay all the way to the famed Wild Coast. The province has a strong agricultural base. Aside from being one of the world’s major sources of mohair, the province offers perfect farming conditions for a wide range of produce. The fertile Langkloof Valley in the south-west has enormous deciduous fruit orchards, while the Alexandria and Grahamstown area produces pineapples, chicory and dairy products. It is the leading livestock province in terms of numbers and supplies a quarter of South Africa’s milk. Logistically, the Eastern Cape is well served, with two major airports in Port Elizabeth and East London, and several facilities serving smaller towns such as Mthatha and Bhisho. Many farms and private game SOUTH AFRICAN BUSINESS 2018

reserves also have airstrips. Another key logistics factor is the large port at Ngqura, within the Coega Industrial Development Zone (IDZ). The ports of Port Elizabeth and East London are well-established, with the latter breaking a record in April 2016 by handling 10 000 Mercedes-Benz vehicles for export in the month.

Key sectors The Eastern Cape is best known for its automotive industry and its strong and varied agricultural sector. The established companies in the automotive industry (such as Volkswagen SA and Mercedes-Benz SA) have been making major investments in the automotive sector and they have been joined by two large Chinese concerns. The agri-processing sector continues to attract new investments, such as Famous Brands’ new tomato paste factory at the Coega Industrial Development Zone. Coega Dairy is one of the biggest of its kind in South Africa and manages the Famous Brands Cheese Company. Financial services, real estate and banking are large contributors to the province’s GDP. Absa,

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REGION Nedbank, Standard Bank and Capitec Bank are among several big finance groups which have a strong presence in the Eastern Cape. The automotive industry provides 30% of the jobs in the province’s manufacturing sector and accounts for 32% of gross added value. Half of South Africa’s passenger vehicles are made in the Eastern Cape and 51% of the country’s motor exports originate here. Ford makes engines in Port Elizabeth. General Motors South Africa (GMSA) manufactures and assembles vehicles and is a leader in producing catalytic converters. The Eastern Cape supplies 14% of the world market in catalytic converters. Among the other products exported by GMSA to Mexico, the US, Europe and Australia are seat belts and aluminium heat shields. The Industrial Development Corporation (IDC) has identified the automotive-parts sector as a target sector to grow exports. The largest mall to be constructed in South Africa since 2004 has opened in Port Elizabeth. The Bay West Mall is a sign of confidence in the Eastern Cape economy.

Tourism The Eastern Cape has some unique natural advantages as a tourist destination. For example, the province covers seven different biomes (communities of plants and animals coexisting in a particular place), of which the grassland, Nama Karoo, thicket and savanna biomes are the most extensive. The Eastern Cape has three areas of endemism: Albany, the Drakensberg and Pondoland. The National Arts Festival in Grahamstown is a key national festival. The Addo Elephant National Park is a 164 000ha facility that attracts more visitors than East Africa’s Serengeti National Park. Other national parks in the province are the Camdeboo National Park (around Graaff-Reinet and now home to some lions), the Mountain Zebra Park (near Cradock) and the Garden Route Park, a marine reserve. The Eastern Cape Provincial Government is responsible for 21 nature reserves and is planning to commercialise the administration of many of these facilities.

Economic future More than 6 000 international athletes will line up on a beach in Port Elizabeth in September 2018 for the first African staging of the 2018 IRONMAN 70.3 World Championship. This event illustrates the Eastern Cape’s striving to be a world-class events destination. International conferences on the Oceans Economy have also been held in recent months, indicative of this coastal province’s determination to make the most of its 800km coastline, with three ports and two associated industrial development zones geared to attracting investments in new sectors. Programmes are in place to promote ship-building and repair, aquaculture, offshore oil and gas, marine protection and governance, and marine transport and manufacturing. The Nelson Mandela University (NMU) launched an Oceans Campus in 2017 and already has several research chairs studying this potentially very lucrative field. The Eastern Cape’s long coastline is an asset in the national Oceans Economy strategy. With three major ports, two of which house industrial development zones (IDZs), the province is well placed to leverage the advantages that will come with the promotion of maritime sectors. National government aims for the Oceans Economy to contribute R29-billion to the national gross domestic product (GDP) by 2019 and a possible R177-billion by 2033. This is part of the broader National Development Plan (NDP). Another new area of interest is renewable energy. The Eastern Cape is a favourite destination for wind power investors. Of the 17 projects approved in the province in terms of the national independent producers’ programme, fully 16 are on-shore wind projects. More than 1 500MW has so far been procured within the borders of the province, and there is potential for much more.

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Capital

Bhisho

Population 6 916 200 Area

168 966km2

Premier

Phumulo Masualle (ANC)

Languages

Afrikaans, English, Xhosa

SOUTH AFRICAN BUSINESS 2018

A REGIONAL OVERVIEW OF THE

FREE STATE

he Free State shares borders with six other provinces and the Mountain Kingdom of Lesotho. A summer-rainfall region with a mean annual rainfall of 532mm, the Free State’s climate, soil types and topography vary greatly within the province, with plains in the west and mountains in the east. The western and southern areas are semidesert, with some Karoo vegetation occurring in the south. The Orange and Vaal rivers define the southern, western and northern borders of the Free State. The Free State produces significant proportions of South Africa’s wheat (30%), sunflowers (45%) and maize (45%). Five major national highways intersect the centrally located province which is also well served by rail and air links. The N8 highway extends westwards to the Northern Cape capital of Kimberley, and several projects are planned to leverage the advantages of this busy route. The Maluti-A-Phofung Special Economic Zone (SEZ) takes advantage of the strategic position Harrismith holds in the Free State’s north-eastern corner. The N3 highway carries large volumes of cargo between Gauteng and the ports of KwaZuluNatal so it is logical that the first focus of this SEZ is SOUTH AFRICAN BUSINESS 2018

logistics. Another logistics axis extends between Harrismith and Bloemfontein for the delivery of products by rail and road. Special rules apply within an SEZ, including more liberal taxation for companies that invest in the zone (15% corporate tax applies, as opposed to 28%). Other benefits include a building allowance, employment incentives and the fact that an SEZ is a customs-controlled area. The Bram Fischer International Airport in the provincial capital city of Bloemfontein is the site of a multi-phase industrial and commercial development. Two leading universities (the University of Free State and the Central University of Technology) have several campuses across the province.

Key sectors An important pillar of the economy of the Free State, the chemicals and fuels hub at Sasolburg, is modernising and expanding. International fuel, gas and chemicals company Sasol regularly invests in new technologies and in expanding production of its various products.

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REGION The Provincial Government of the Free State has hosted two events targeting foreign investors, called the Free State Global Investors Trade Bridge. In 2016 the first Free State/Madeira Flower Festival took place in Parys. This is a first step in creating links to export markets in floriculture and horticulture. Mining and agriculture were for many decades the bedrock of the Free State economy. The northwestern part of the province sits on top of a rich gold-bearing reef more than 400km long, known as the goldfields region. South Africa is the world’s largest gold producer, and the country’s largest gold-mining complex is Free State Consolidated Goldfields, with an area of 330km². Gold-mining volumes are down and some towns are having to adjust to changed economic profiles. Diamonds are also found in the south of the province. Large percentages of South Africa’s agricultural production, particularly grains, originate in the Free State. Sorghum, sunflower, wheat, maize, potatoes and groundnuts come from the fertile plains of the western and northern Free State, while the valleys of the east produce almost all of South Africa’s cherries and asparagus. Livestock and flowers are other important agricultural products.

Economic future Although agriculture and mining remain the mainstays of the provincial economy, diversification and expansion through initiatives such as Special Economic Zones (SEZs) are key to the future of the centrally located province. The official launch in April 2017 of the Maluti-A-Phofung Special Economic Zone was thus a significant event for the provincial economy’s future shape. The 1 000ha site will have four zones: agri-processing, light industrial, heavy industrial and a container terminal. The N8 Corridor concept covers Bloemfontein, Botshabelo and Thaba Nchu and encompasses projects such as the ICC Precinct (hotel and convention centre in Bloemfontein), Bio-Medical Park, Airport Node (logistics and supply chain, warehouses, residential apartments, hospitals, schools, hotels and new shopping malls), and tourism infrastructure for the Naval Hill Development.

The Free State also wants to create more valueadded goods out of raw materials. This applies to agriculture (in which the Free State enjoys great riches) and minerals. Five agri-parks are planned in each of the Free State’s district municipalities which will boost production so that more produce is available for beneficiation. Within these parks, support for rural smallholders will be available in terms of equipment hire from a central source, storage facilities, packaging of produce and getting products to market. The use of small towns such as Cornelia, Tweeling, Excelsior and Tweespruit as hubs under the Comprehensive Rural Development Programme (CRDP) will boost the rural economy and provide opportunities for investors. Newly discovered natural gas and helium fields are said to have proven reserves of 25-billion-feet³ and Afrox has become the first of what may soon be a string of investors exploiting this resource. Afrox is a subsidiary of the Linde Group of Germany and has signed a deal with renewable energy company Renergen. A R200-million helium extraction plant will be built, to be ready in 2019. Sasolburg, an important petrochemical site in the Free State, recently fired up a new power plant running solely on gas. This power plant is the largest of its kind in Africa. The plant produces 140MW of power for the usage of Sasol’s chemical factory adjacent to the site, and feeds into the national grid. Eskom’s Ingula pumped storage project scheme, bordering KwaZulu-Natal, has started delivering power. Of the five projects that have been approved in the Free State so far in terms of the country’s Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), two are small hydro projects and there are several solar projects.

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Capital

Bloemfontein

Population 2 817 900 Area

129 825km2

Premier

Elias Sekgobelo "Ace" Magashule (ANC)

Languages

Afrikaans, English, Sotho, Tswana

SOUTH AFRICAN BUSINESS 2018

A REGIONAL OVERVIEW OF

GAUTENG

World Bank report has shown that a 10% increase in infrastructure spending results in a 1% growth in GDP. Consequently, the Gauteng Province is prioritising infrastructure development. The smallest province of South Africa in area is also the most significant economically. About 40% of South Africa’s manufacturing is done here, a third of its electricity, gas and water output, 41% of the country’s construction, 39% of its finance, real estate and business activity and 34% of its wholesale, retail, motor trade and accommodation. Gauteng comprises three large metropolitan municipalities in Tshwane (the administrative capital of South Africa and home to the diplomatic corps and many institutions of higher learning and research); Johannesburg (the capital of Gauteng Province, headquarters to many companies in a wide range of sectors, including the financial sector symbolised by the location of the JSE); Ekurhuleni (the manufacturing hub of South Africa and host of the country’s biggest airport, O.R. Tambo International). The City of Ekurhuleni is creating an “aerotropolis” around the huge transport hub. The province has several outstanding universities, and the majority of South Africa’s research SOUTH AFRICAN BUSINESS 2018

takes place at well-regarded institutions such as the Council for Scientific and Industrial Research (CSIR), the South African Bureau of Standards (SABS), Mintek, the South African Nuclear Energy Corporation (NECSA), the Human Sciences Research Council (HSRC) and a number of sites where the work of the Agricultural Research Council (ARC) is done. The Gauteng Division of the High Court of South Africa (which has seats in Pretoria and Johannesburg) is a superior court with general jurisdiction over the province. Johannesburg is also home to the Constitutional Court, South Africa’s highest court, and to a branch of the Labour Court and the Labour Appeal Court. In 2016 there were interesting developments in the political field in that two of the province’s three metropoles (Tshwane and Johannesburg) came under the control of a coalition of political parties opposed to the ANC, the party that has formed the national government ever since 1994 (the first democratic election) and had control of most provinces and cities across the country. The province’s gross domestic product (GDP) is R811-billion, which is nearly 34% of South Africa’s and about 10% of the GDP of Africa.

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REGION Key sectors The leading economic sectors, as defined by the Gauteng Growth and Development Agency (GGDA), are finance (21% of provincial GDP), manufacturing (19.7%), government services (15.7%) and trade (12.8%). Most of the major banks are positioned around Johannesburg (which is home to Africa’s largest stock exchange, the JSE), and the finance and business services sector is a key focus in the provincial economy. Many international corporates such as Citibank, Microsoft and McDonald’s are headquartered in the province, as it is seen as the commerce capital and the gateway to Africa. Gauteng has a varied manufacturing sector, from heavy-steel, automotive assembly to the food and beverages industry as well as light commercial and industrial activity. Key food and beverage brands have manufacturing plants in Gauteng. Nestlé and Pioneer Foods have spent millions on new developments and improvements. RCL, one the country’s leaders in poultry production, has 18 farms and two feed mills in the province. Companies such as Kimberly-Clark, Proctor & Gamble, ArcelorMittal, Transnet Engineering and Aspen all have facilities in Gauteng Province. The manufacturing sector in Gauteng employs 600 000 people in more than 9 000 enterprises. Gauteng’s contribution to the country’s gold and diamond production is still significant, and the province’s mines account for about 21% of employment in the sector nationally. The other primary sector, agriculture, contributes little to the provincial GDP but there are important districts such as Delmas, Cullinan, Krugersdorp, Bronkhorstspruit and Heidelberg where a variety of crops are cultivated. Large maize- and grain-farming enterprises are found in the western and southern parts of the province. Other products produced in large volumes are vegetables, fruit, dairy, poultry and eggs.

both public and private. Linked to this is the need to continually invest in infrastructure. Gauteng is a national leader in attracting foreign direct investment (FDI). In the period 2014-16, the province attracted R66-billion. The Gauteng Growth and Development Agency has a specialised subsidiary, the Gauteng Investment Centre, which acts as a “one-stop shop” for potential investors looking for advice and support. In 2016, the Gauteng City Region Economic Indaba was attended by all the mayors of the region, the national Minister of Finance and was addressed the South African Deputy President. Gauteng Premier David Makhura gave notice of “how we can unlock, jump-start and reignite a sustainable and inclusive growth trajectory for key sectors of our provincial economy”. Individually, the biggest Gauteng cities contribute to the national GDP as follows: Johannesburg (15%), Tshwane (9%) and Ekurhuleni (7%). At the Indaba, several development corridors of the City Region were identified, each with its own industries and comparative advantages. A 15-year Gauteng Infrastructure Master Plan has been adopted Ekurhuleni is putting considerable resources into infrastructure improvement. With a corridor-based masterplan, the aim is to promote industrial activity. The Gautrain has been an enormous success: based on the connection to O. R. International Airport, the high-speed train also links Pretoria and Johannesburg. User numbers have been so good that a contract went out in 2016 to supply 48 additional coaches for the service, which is also set to be expanded by a further 200km. Property prices near to Gautrain stations have shown steady increases, and whole new property developments have been based on proximity to the rail line.

Economic future The idea of the “City Region” is increasingly driving economic planning and investment priorities,

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Capital

Johannesburg

Population 13 400 000 Area

18 178km2

Premier

David Makhura (ANC)

Languages

Afrikaans, English, Sesotho, Zulu

SOUTH AFRICAN BUSINESS 2018

The Vision and Mission

The Tshwane Economic Development Agency The Vision and Mission The Tshwane Economic Development Agency SOC Ltd (TEDA) is a municipal entity of the Tshwane Metropolitan Municipality (CoT).

VISION

TEDA strives to be a catalyst for economic growth and development to position the City of Tshwane as a globally competitive capital city.

MISSION

The mission of Tshwane Economic Development Agency is: To provide integrated and innovative economic development solutions through investment promotion and funding, programme management and property management.

SERVICE OFFERINGS • Investment promotion and aftercare • Export development and promotion • Project management and development facilitation

CITY OF TSHWANE – AFRICA’S LEADING CAPITAL CITY

The City of Tshwane is a vibrant, diverse and modernising capital city. As the administrative seat of the South African government and the birthplace of South Africa’s democracy, it is home to over 130 foreign embassies and missions. The metro was established in 2000 and has a population of 3.1-million.

ECONOMIC OVERVIEW • • • •

GVA of R245.1-billion Contributes 25% to the Gauteng economy Accounts for 9% of the South African economy Biggest Free WiFi rollout in Africa

• Highest economic growth among all SA metros,

averaging a growth rate of 3.9% per annum to 2015 • Third-largest Metropolitan Municipality in the world in

terms of land mass

“LEVERAGING RESEARCH AND INNOVATION TO PROMOTE GROWTH.” WHY INVEST IN TSHWANE

RESEARCH AND DEVELOPMENT HUB

Tshwane has an impressive concentration of academic, research, technology and scientific institutes. An estimated 60% of all research and development in South Africa is conducted in Tshwane by institutions such as Armscor, the Medical Research Council, the Council for Scientific and Industrial Research (CSIR), the Human Sciences Research Council and educational institutions such as the Tshwane University of Technology, the University of South Africa and the University of Pretoria.

CENTRAL LOCATION

Tshwane is strategically positioned in the centre of the most prosperous part of South Africa. Located a mere 30km from Africa`s financial hub, Sandton, and bordering three of South Africa`s provinces that lead directly into the SADC, Tshwane offers easy access to a growing market of over 250-million people in the fastest-growing regional economic bloc.

OUTSTANDING INFRASTRUCTURE

Efficient supply of water, power and bulk infrastructure coupled with favourable climatic conditions and affordable industrial sites and office space make Tshwane very attractive to prospective investors.

EASE OF DOING BUSINESS

Recognising the importance of efficient and cost-effective business operations, the City of Tshwane is continuously looking at improving its business and investment climate.

COMPETITIVE INDUSTRIES

Tshwane’s reputation in automotive engineering is well established. Home to motoring giants Nissan, BMW, Ford and Tata, Tshwane accounts for 40% of South Africa’s automotive production. Highly regarded for its manufacturing, technology, electronics, defence design and construction sectors, Tshwane offers many business and investment opportunities in one of the city`s 16 mixed manufacturing industrial estates.

Focus investment sectors Aerospace & Defence Technologies

Tshwane is the key node in aerospace and defence technology development in South Africa. The foundation of the aerospace cluster is the Department of Defence and Air Force headquarters. Industry leaders such as Armscor, the CSIR, Denel Dynamics, Aerosud and Centurion Aerospace Village are key role-players in the cluster.

Agriculture & Agro-processing

access to transport infrastructure. The Automotive Industry Development Centre contains a conference centre and a retail centre. With a turnover of about R30bn in 2012 and contributes 3.3% to the City’s economy, the automotive and components industry constitutes about 25% of Tshwane’s manufacturing output.

Business Process Outsourcing & Offshoring

As the administrative as well an academic centre, the city’s knowledge and information industry is well-developed, which makes Tshwane an ideal location for BPO investments. An established BPO sector includes one of the largest shared services centre for the Barclays Africa operation The Gauteng Growth and Development Agency is developing a BPO&O Park at Hammanskraal.

The Vision and Mission

Although agriculture makes up an insignificant contribution to Tshwane’s GDP, Region 7 has some of the best farming land in Gauteng. TEDA has packaged investment opportunities including an envisaged cotton cluster and Agro-Processing Hub. The sector is strengthened by educational and research facilities such as Onderstepoort Veterinary Institute (VRI) and the Agricultural Research Council (ARC).

The Vision and Mission

Tourism

The City of Tshwane attracts business, leisure as well as shopping, medical and sports tourism. The city also has and is further developing a range of major conference facilities and hotels. Cultural and heritage sites together with facilities such as nature reserves and parks add further variety. Two key project intended to further develop the sector are the Mandela Statue and a plan to build a theme park and waterfront at Cullinan/Bronkhorstspruit.

Green Economy Automotive & Components

The automotive and components industry in South Africa is a major contributor to economic activity and export earnings, with the heart of the industry located in the City of Tshwane. This includes the Automotive Supplier Park (ASP) in Rosslyn (130ha) which is located close to key vehicle manufacturers including BMW, Ford, Nissan, Volvo and Tata, with excellent

Tshwane aims to become a resilient, resource-efficient and leading low-carbon economy by 2030. This translates into opportunities, particularly in power and electricity generation, renewables (including solar and wind technologies), green component manufacturing, related downstream services and general greener production and transport practises, green agriculture and waste management opportunities, and ecotourism.

Contact Details: 5th Floor, Anker Building, 1279 Mike Crawford Road, Centurion CBD Tel: + 27 12 358 6552 | Email: pasekar@tshwane.gov.za | Website: www.teda.org.za www.teda.org.za

A REGIONAL OVERVIEW OF

KWAZULU-NATAL

wo new economic trends will benefit the economy of KwaZulu-Natal and attract investors to South Africa’s east coast: the Oceans Economy and the move to gas. KwaZulu-Natal is famous for its tourism offering that ranges from the majestic Drakensberg mountains to the beautiful beaches along the Indian Ocean, but the province is also home to thousands of manufacturing concerns that play a major role in South Africa’s economy. With two of the country’s busiest ports, Richards Bay and Durban, the province plays a vital role in national logistics and international trade. The Port of Durban’s annual throughput of containers is about one-million, more than 60% of the country’s total. A priority is to improve loading and unloading times. The Port of Richards Bay is the main coal export harbour and has added a new berth on average every second year. Six cargo handling terminals handle 60% of South Africa’s seaborne cargo. The Dube TradePort (DTP) helps to drive economic growth. It is home to the King Shaka International Airport, an agricultural greenhouse, a cargo terminal and various other sections relating to trade, business and transport, all on 3 000ha of land north of Durban. DTP has attracted a R2-billion foreign direct SOUTH AFRICAN BUSINESS 2018

investment through Indian business conglomerate Action Group and is making a solid contribution to KwaZulu-Natal’s economy. The province has shown considerable growth in the business services, transport and retail sectors. Manufacturing in KwaZulu-Natal makes up almost a third of South Africa’s capacity.

Key sectors Manufacturers such as Unilever, RCL and Clover have a big presence in KwaZulu-Natal. Illovo Sugar and the Tongaat-Hulett Group are international companies with substantial sugar-cane holdings, manufacturing plants and downstream beneficiation. Tongaat is also a significant property developer in the province and is active in several large projects. KwaZulu-Natal industries are major exporters. Steel, iron and aluminium account for nearly a third of exports followed by metal products and automotive and automotive components. Chemicals is the other major export-driver. In the base-metals and metal-products sectors, companies such as Hulamin, ArcelorMittal and Assmang have a big presence in the province. Toyota

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REGION and Bell Equipment are important companies in the automotive sector while the Engen Oil Refinery and dissolving pulp manufacturer Sappi are among other strategically important plants. Manufacturing contributes 21.5% of the gross regional product (GRP). Samsung Electrics has chosen the province as the site of a $20-million television factory, a Chinese company intends establishing a multi-billion-rand steel plant at Richards Bay and a pipe-manufacturing concern has put R300-million into a new plant. KwaZulu-Natal is a national leader in the forestry and paper sector. The forest-product export sector in South Africa is made up of paper (45.2%), solid wood (23.3%) and pulp (28.9%). Mondi and Sappi are both large international companies and the pulp and paper sector makes a direct contribution to South Africa’s balance of payments of R4.5-billion. Mpact, the paper manufacturing and plastics packager that was spun out of Mondi, invested a further R200-million in its waste paper and recycling operation at Empangeni. The company collects more than 450 000 tons every year. Tourism plays a vital role in the economy of the region, with the conference and events sector supported by excellent facilities. The jewel in the crown is the huge Albert Luthuli International Convention Centre Complex which hosts the annual Tourism Indaba. The province’s excellent climate lends itself to every kind of outdoor pursuit and its excellent beaches are always popular. Big sports events are regularly hosted in KwaZulu-Natal which has become something of a home to mass participation events such as the Comrades Marathon and Dusi Canoe race. The province has excellent game and nature reserves. Isimangaliso Wetland Park is a World Heritage Site and helps to fund 80 small businesses associated with its business as a tourist site.

The province’s two large ports are natural sites for the increase in Oceans Economy-related sectors such as ship-building and repair, and oil and gas support (rig repair). The creation of a marine manufacturing and repair cluster at Richards Bay is being considered. Ship-building and ship repairs is an existing industry but it is currently not very big. If oil rigs were to start visiting the KZN coastline on a regular basis, this industry would grow exponentially. Richards Bay, apart from being the country’s main site for the export of coal, is also a registered Industrial Development Zone (IDZ) and consequently attracts a diverse range of investors. The decision to build a cruise-ship terminal at the Port of Durban is a good example of the kind of decision that is nicely in line with an Oceans Economy approach. Several fish-farming projects are planned for KwaZulu-Natal (mostly with kob) and a catfish feasibility study is under way. The Provincial Government of KwaZulu-Natal has created the KwaZulu-Natal Maritime Institute. This is administered by the restructured Sharks Board and training programmes are coordinated with Transnet to make sure that relevant courses are offered. Since 2012, 800 students have been studying maritime-related courses. The Richards Bay Industrial Development Zone (RBIDZ) has welcomed SPS Manufacturing (Pty) Ltd, a pipe manufacturer which will invest R300-million in uMhlathuze, creating 87 permanent jobs. With the announcement by national government of its support for major gas-to-power projects, the Richards Bay Industrial Development Zone is in line to host a large facility. The proximity of the RBIDZ to the gas fields of Mozambique makes this a potentially giant project.

Capital

Pietermaritzburg

Population 11 919 100

Economic future The Oceans Economy and a national policy shift towards the use of gas are both developments that will boost the regional economy.

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Area

94 361km2

Premier

Willies Mchunu (ANC)

Languages

English, Zulu

SOUTH AFRICAN BUSINESS 2018

A REGIONAL OVERVIEW OF

LIMPOPO

he proclamation of a Special Economic Zone in the far north of South Africa’s northernmost province could have major economic consequences for Limpopo Province. A large investment by diamond miners De Beers at its Venetia Mine in the same district also promises significant spinoffs for local communities and businesses. Limpopo is a huge province that ranges across the north of South Africa and shares borders with Mozambique, Botswana and Zimbabwe. The Great North Road passes through the middle of the province, so places like Polokwane (the provincial capital) and Musina (on the northern border) are natural bases for logistics companies. The province has superb natural resources, from coal, platinum and chrome to avocadoes, tomatoes and macadamia nuts. Wonderful vistas in very varied landscapes, golf estates and adventure tourism underpin the tourism industry.

Key sectors Subtropical fruit like mangoes, paw-paws, litchis, bananas and pineapples are in abundance in the SOUTH AFRICAN BUSINESS 2018

province and make up the bulk of export income. Cattle, sunflowers, cotton, maize, peanuts, avocados, tea, tomatoes, citrus and macadamias are among Limpopo’s key agricultural resources. Mining is a key sector of the provincial economy and routinely accounts for between 25-30% of provincial GDP. Limpopo has a very rich and varied mineral asset base. Platinum occurs on both limbs of the Bushveld Igneous Complex (BIC), and the Waterberg district is seen as the answer to South Africa’s coal needs for the next several decades. Major investments in Limpopo include an ongoing project by De Beers in Musina to convert its Musina mine from an open-pit mine to a vertical shaft mine and a multi-billion-rand new platinum mine project led by Ivanplats. A key focus area is to try to ensure that 20% of procurement in the mining sector goes to small businesses and co-operatives. In August 2016 Unit 6 of the Medupi power station came on stream. The Medupi power station project is one of the biggest engineering projects undertaken in South Africa. Medupi is located in Lephalale in the far west of Limpopo, and next to an existing power station where coal is abundant.

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REGION Economic future

The De Hoop Dam across the Steelpoort River in the east of Limpopo has started supplying water to rural communities who previously had to walk to rivers to fetch water. These communities in the Waterberg, Capricorn and Sekhukhune districts are beneficiaries of a vast project that will also deliver water to towns and mining operations in the area. More than a million people will get water from the dam. Limpopo has two transfrontier conservation parks, two World Heritage Sites, three biospheres, three national parks, 53 provincial nature reserves and more than 6 000 privately owned game farms. The South African Golf Tourism Association says that up to 10% of visitors to the country are attracted by its golf courses, and Limpopo’s offering has been extended and improved in recent years. At the high end of the luxury offering are the Zebula Golf Estate and Spa (west of Bela Bela) and the Legend Golf and Safari Resort. The growth of the Marula Festival, held annually in February in Phalaborwa, caters mainly to the local market. About 13 000 litres of marula beer are regularly brewed by the 13 co-operatives on duty, and large crowds attend for the outdoor music concerts that are a feature of the festivities. Limpopo Province has very varied tourism assets that include the bare bushveld of the northern regions, the misty mountains of the central highlands, hot springs, a unique cycad forest, great golf courses and the northern part of the Kruger National Park. The provincial government is committed to enhancing the value of Limpopo’s two World Heritage Sites, Mapungubwe Heritage Site and Makapans Valley. Adventurous visitors can choose from off-road biking, hunting, elephant rides and tough 4x4 trails. A vast array of different cultures extends from the Rain Queen and her people in the central districts, to the myth-inspired art of the Venda in the north, to the bright geometric house designs of the Ndabele people in the Sekhukhune district. Although most of the province’s resorts and lodges are in private hands, the province has three national parks, and the provincial government runs 54 nature reserves of different types.

The strategic value of Limpopo’s position as a link to the SADC region is being exploited through the creation of Special Economic Zones (SEZs). The first one has been promulgated at Musina-Makhado where the focus is on logistics operations, agri-processing, energy and mineral beneficiation. Exxaro and De Beers have large mining operations nearby. Located in the Vhembe district in the far north, this SEZ is near the border of Zimbabwe and on the Great North Road, thus linking with the broader Trans-Limpopo Spatial Development Initiative. A second application for an SEZ has been made within the province’s platinum belt in the east of the province. The Tubatse SEZ, in the Sekhukhune District Municipality, will focus on the beneficiation of platinum group metals (PGM) and miningrelated manufacturing. The following areas have been identified as priority zones for the province’s industrialisation strategy: Polokwane, Lephalale, Tubatse, Tzaneen and the Musina-Makhado corridor. The National Department of Trade and Industry (dti) is the lead agent in SEZ creation, which in turn feeds into the national Industrial Policy Action Plan (IPAP). SEZs are designed to attract investment, create jobs and boost exports. The dti says that a consortium of Chinese investors, Sino, has agreed to put R40-billion into the Musina SEZ where they will operate the mineral beneficiation operations.

Capital

Polokwane

Population 5 800 000

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Area

125 754km2

Premier

Stanley Mathabatha (ANC)

Languages

Sesotho, Tshivenda, Xitsonga

SOUTH AFRICAN BUSINESS 2018

A REGIONAL OVERVIEW OF

MPUMALANGA M pumalanga means “the place where the sun rises” and the province lies north of KwaZulu-Natal and shares borders with Swaziland and Mozambique. It constitutes 6.5% of South Africa’s land area. In the north it borders on Limpopo, to the west Gauteng, to the south-west the Free State and to the south KwaZulu-Natal. The provincial capital is Mbombela. More than 80% of South Africa’s coal is sourced in Mpumalanga. Other minerals found in the province include gold, platinum group minerals, chromite, zinc, cobalt, copper, iron and manganese. South Africa’s major power stations, three of which are the biggest in the southern hemisphere, are in Mpumalanga. The building of the new Kusile power station is one of the biggest infrastructure projects in the country’s history. Mpumalanga also has fertile soil that supports diverse farming operations. The province recently welcomed the first students to the University of Mpumalanga. The Kruger Mpumalanga International Airport and Hoedspruit Airport are the province’s two main airports. The Maputo Development Corridor is a transportation corridor comprising road, rail, border posts, port and terminal facilities, running from Pretoria SOUTH AFRICAN BUSINESS 2018

in Gauteng through Mpumalanga to the Port of Maputo in Mozambique. South Africa’s biggest tourist attraction, the Kruger National Park, is mostly in Mpumalanga. Several investment projects aimed at providing infrastructure in the tourism sector have been put forward by the Mpumalanga Economic Growth Agency (MEGA). Heritage and Cultural Tourism are two of the focus areas in the provincial plan because Mpumalanga is already a leader in nature reserves and parks. Large investments are under way on the railways that run to and through Mpumalanga. This includes upgrading the commuter railway linkages to the province from neighbouring Gauteng and building new railway lines to transport coal through Swaziland and on to either Richards Bay or Maputo in Mozambique.

Key sectors The climatic contrasts between the drier Highveld region, with its cold winters, and the hot, humid Lowveld allow for a variety of agricultural activities. More than 68% of Mpumalanga is used for agriculture.

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REGION Most of the province receives summer rainfall, often via thunderstorms. Frost is common on the Highveld, but is almost absent in the subtropical regions where fruit, nuts and citrus thrive. Crops include maize, wheat, sorghum, barley, sunflower seed, soya beans, groundnuts, sugarcane, vegetables, coffee, tea, cotton, tobacco, citrus, subtropical and deciduous fruit. A large proportion of South Africa’s grain, citrus, sugar and soft fruits come from Mpumalanga. The province is an exporter of macadamia nuts, a sector that is growing at a remarkably fast pace. The province’s rich agricultural produce is used by companies such as McCain, Nestlé and PepsiCo and there are also pulp and paper plants (Sappi and Mondi), fertiliser facilities and textile manufacturing concerns. The decision by Sappi to start producing dissolving wood pulp at its Ngodwana Mill has significantly increased the manufacturing capacity of the province. York Timbers is a leading forestry company and the sugar mills and refinery of RCL Foods are large contributors to the provincial economy. Forestry is extensive around Sabie. The province lies at the southern end of the eastern limb of the Bushveld Igneous Complex. Chromite, magnetite and vanadium are found in significant quantities in the province. The ferro-alloy industry is centred on the town of Middelburg. Deposits of chromite, magnetite and vanadium in this area are the basis of the ferro-alloy complex in Witbank-Middelburg and Lydenburg. Nkomati Mine is South Africa’s only purenickel operation. The province’s coalfields are in the south and west of the province. The restarting of the Evraz Highveld steel mill in 2017 was good news for the regional economy, after the company went into business rescue two years before. The province also hosts large companies in the manufacturing sector, with internationally renowned firms such as Sasol (synthetic fuels and chemicals) and Xstrata (ferrochrome) having large operations in the province. Sasol, the integrated oil, gas and chemicals company, runs several plants at Secunda. Products manufactured at the complex include synthetic fuel, petroleum, paraffin, jet fuel, creosote, bitumen, diesel and lubricants. Sasol’s coal liquefaction plant is also located in the town of Secunda. The primary feedstock

for synthetic-fuel production is coal, and the plant is located in the heart of Mpumalanga’s coalfields.

Economic future A major goal of the provincial government’s Mpumalanga Economic Growth and Development Path (MEGDP) is to expand the industrial base of the provincial economy. The focus is on beneficiation, agri-processing and value chain development. The Provincial Government of Mpumalanga has been talking to several foreign countries about investments in the province. An assembly plant for Minsk Tractor Works is one of the outcomes of this activity, and several agreements relating to training and trading have been signed. Russia, Belarus, China and Oman are some of the countries with which Mpumalanga is engaged. The Mpumalanga Economic Growth Agency hosted a People’s Republic of China Business Forum which was attended by 19 large Chinese companies. An ambitious plan to develop a Strategic Economic Zone (SEZ) at Nkomazi is under way. The area is close to both Mozambique and Swaziland and lies on the Maputo Development Corridor that links the economic powerhouse of South Africa (Gauteng) with the ports and gas supplies of Mozambique. There is relatively little agri-processing that takes place in the province, with most of the products being exported in their raw state. The Fresh Produce Market in Mbombela is planned to accommodate investors who want to start factories to manufacture products such as juice, or packaging firms. Land has been bought and registered for the required use in Mbombela as the Mpumalanga International Fresh Produce Market. Investors in fresh produce are invited to be take advantage of Mpumalanga’s superior fruit, vegetables and nuts.

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Capital

Mbombela

Population 4 283 900 Area

76 495km2

Premier

David Mabuza (ANC)

Languages

Ndebele, Swati, Zulu

SOUTH AFRICAN BUSINESS 2018

A REGIONAL OVERVIEW OF THE

NORTHERN CAPE

he Northern Cape is rich in resources. A new zinc mine project at Gamsberg is attracting large amounts of foreign direct investment, as are several solar farms. The province’s huge iron ore mines remain profitable. The prospect of a Special Economic Zone at Upington could boost the manufacturing sector, especially with regard to renewable energy components. The Northern Cape is the largest of South Africa’s provinces but has the smallest population. The Orange River is a green lung that runs through the province, providing water for grape-growers and other irrigation projects, power through hydropower and great opportunities for tourism activities like river rafting. Despite the vast distances, the province enjoys good infrastructure and the ironore export rail line that runs from Sishen to the coast is a technical marvel. The Northern Cape Province is connected to Namibia via the Kalahari and the Orange River Basin Corridors, strengthening trade and transport linkages between the two countries. The province has many tourist attractions, including its 4X4 trails, unique vegetation and the Kgalagadi Transfrontier Park, which is famous for its lions. The SOUTH AFRICAN BUSINESS 2018

Augrabies Falls and the Orange River are very popular. The vast open spaces of the Karoo have attracted one of the great scientific projects of the age, the Square Kilometre Array radio telescope. An international collaboration, the SKA is sponsoring mathematics and science teachers in the Northern Cape and creating great excitement for science. The small eastern portion of the Northern Cape Province bordering the Free State is known as the Diamond Fields. Kimberley, which is also the capital of the Northern Cape and the location of the Kimberley Big Hole, is at the heart of the province’s diamond fields. The province’s first university, Sol Plaatje, has been launched. The university is merging technikon courses with traditional university degrees in one department.

Key sectors Wool, mohair, karakul, Karoo lamb, venison, ostrich meat and leather are produced throughout the province. The province is second only to the Eastern Cape in terms of the number of sheep farmed and it is the

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REGION fourth-largest wool-producing province based on annual sale of producer lots. The karakul-pelt industry is one of the most important in the Gordonia district of Upington. Agri-company KLK is the only organisation that handles these pelts in South Africa, which are sorted in Windhoek before being sent to Europe for auction. Conditions around Colesberg are ideal for horse breeding. Major exports include fruit, especially table grapes and meat. The Vaalharts Irrigation Scheme has supported farming for decades. The newer Namakwa irrigation scheme will link with the agri-parks being established across the province. The plan is to increase production of agricultural products, including grapes and fish from aquaculture schemes and then create new agri-processing plants. Mining contributes 23.4% to the Northern Cape economy and makes up nearly 7% of South Africa’s total mining value. The mineral resource of the province is wide-ranging and impressive with significant deposits of iron ore, manganese, zinc, copper, lead, titanium, pig iron, zircon and gypsum. The majority of the world’s manganese comes from the Postmasburg and Kalahari regions of the Northern Cape. The province is responsible for 25% of the world’s exports of the mineral. 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. Kumba Iron Ore has the huge Sishen facility at Kathu and Kolomela. Petra Diamonds continues to expand production at Finsch mine. Indian giant Vedanta is putting R9.4billion into the Gamsberg Zinc project near Aggenys.

municipalities to create new economic opportunities. Port Nolloth is earmarked as a “new harbour” with other onshore developments such as aquaculture to take place at Hondeklip Bay and Kleinzee. Within the first four bidding periods of the national Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), 92 projects were approved – and 48 of these projects were in the Northern Cape. Most of these were solar photovoltaic projects, with seven employing the concentrated solar power (CSP) technology. The Northern Cape is also home to 12 approved wind farms and one small (10MW) hydro-electric project on the Orange River. The Northern Cape has been earmarked as a manufacturing zone for solar components. A good opportunity exists to increase local content and the creation of a Northern Cape Special Economic Zone (at Upington) will promote this goal. The 400ha site of the Upington SEZ in the Northern Cape Province is close to the Upington International Airport and is well served by access roads. Khara Hais Municipality has agreed to transfer the necessary land to the SEZ, and has approved the infrastructure plan that has been put forward. Airports Company South Africa (ACSA) is a partner in the project. Upington International Airport’s 4.9km runway allows it to land the largest aircraft. Airports Company South Africa has allocated 55ha for the creation of an aviation park to store and maintain aircraft, and a further 30ha for commercial development. ACSA’s research suggests that over the next decade there will be a big demand for aircraft storage and dismantling (a subsector of the broader Maintenance, Repair and Overhaul market).

Economic future Port Nolloth itself is today a small fishing harbour and studies have shown that better potential exists at nearby Boegoe Baai to develop deep-sea facilities. There would be possibilities for linking the port to the gas fields and developing ship-repair facilities. A unit within the National Department of Public Works, Small Harbours and Coastal Property Development, is working with district and local

155

Capital

Kimberley

Population 1 185 600 Area

372 889km2

Premier

Sylvia Lucas (ANC)

Languages

Afrikaans, Setswana, Xhosa

SOUTH AFRICAN BUSINESS 2018

A REGIONAL OVERVIEW OF

NORTH WEST T he North West Province is also known as the “Platinum Province” and the “Texas of South Africa”. Platinum mines, cattle ranches, game reserves and the entertainment complex at Sun City are the province’s best-known features. North West shares a border with the Republic of Botswana (and the Kalahari desert), Gauteng and the Free State. South Africa’s nuclear-research centre is located at Pelindaba near Hartbeespoort Dam, and is run by the South African Nuclear Energy Corporation. A provincial priority is to improve the link between rural and urban economies, something which a strong focus on agri-processing could achieve. As one of the country’s biggest producers of livestock, North West’s automotive industry could profitably source hides for car seats locally. The Industrial Development Corporation (IDC) is one of the bodies that is helping the province to expand (and maintain) the diversity of its manufacturing sector.

Key sectors The North West Province is aligned with the Western Limb of the Bushveld Igneous Complex, a remarkSOUTH AFRICAN BUSINESS 2018

ably rich minerals formation. Mines in the province produce 50% of the platinum produced in the world, and 65% of South Africa’s platinum group metals. Chromite is the other major mineral mined throughout the province, and there are several ferrochrome smelters and other processing plants. Gold and uranium is found along the border of the province with Gauteng and the Free State (Klerksdorp and Orkney). Diamonds are mined at Christiana, Bloemhof and Lichtenburg. Lichtenburg is also the centre of the cement industry. Chromite is the other major mineral mined throughout the province, and there are several ferrochrome smelters and other processing plants. Other minerals found in the North West include fluorspar, vanadium, rhodium, uranium, copper, limestone, slate, phosphate, manganese, coal and nickel. Platinum is found in the Rustenburg and Brits regions. Employment along the Platinum Corridor, from Pretoria to eastern Botswana, accounts for over a third of total employment in North West, but the depressed platinum price in global markets has led to a reduction in production volumes, and many workers being laid off. The North West Province has a strong agricultural sector with several very large companies

156

REGION involved in grain. Cattle and crops such as sunflower seeds are among the other sectors that generate significant income and feed large numbers of South Africans. North West produces about one third of the country’s maize. North West has approximately 1.7-million beef cattle, representing 13% of South Africa’s herd. Major breeds include Simmentaller, Brahman, Bonsmara and Simbra, a cross between the Brahman and Simmentaller breeds. The Marico region is also cattle country, while the areas around Rustenburg and Brits are fertile, mixed-crop farming land. Brits, Rustenburg, Tlokwe (Potchefstroom), Matlosana (Klerksdorp) and Mahikeng account for more than half of the total manufacturing capacity in North West Province. Mining beneficiation, automotive components and food and beverage play important roles in the sector. Food and beverages is the biggest subsector contributing to the manufacturing industry. The town of Brits has several companies in the automotive components sector. Major companies with manufacturing capacity in the North West like Nestlé, RCL, Tydstroom and Clover have all taken advantage of the province’s strategic location adjacent to the business hub of Gauteng. There are several milling operations in North West Province. Masilo Mills is located in Hanneman (where Papa Super Maize is ground) and Tau Roller Mills is in Wolmeranstad.

Economic future The provincial government has pointed out that the share of manufacturing to the Growth Value Add (GVA) of the province is only 5% – a figure that must grow if employment is to grow along with the expanding economy. A provincial Integrated Manufacturing Strategy has been compiled. One of the report’s findings was that because North West is strategically located near to the industrial hub of Gauteng, has low input costs, lies on established trade routes and has easy access to natural resources, it should make the development of the chemical processing sector a good bet. This is especially true for phosphate and nitrogen-based fertilisers.

The Platinum Valley Special Economic Zone (SEZ) is to be established at Mogwase in the Bojanala District, north of Rustenburg and east of Sun City. When fully developed, 200ha of land will be given over to three infrastructure facilities comprising Logistics, Light Manufacturing and Heavy Manufacturing. Areas of investment that are expected to grow fastest include fuel cell technology (in which platinum is a vital component), machinery for mining, energy generation and renewable energy component manufacturing. The Seda Platinum Incubator (SPI) is an initiative of the Platinum Trust of South Africa and is funded by the Small Enterprise Development Agency (Seda) through its Seda Technology Programme (Stp) with the support of the North West Provincial Government and private companies. The sun shines in the North West, on average, 300 days of the year. In addition, the province mines more platinum than any other place on earth. These two facts combine to present a suite of opportunities for energy generation and for the manufacture of equipment for the energy sector. The Department of Trade and Industry (dti) says there is potential in the automotive sector which can be applied to the manufacturing sector for renewable energy. An opportunity for solar panel market manufacturers is being promoted by the North West Development Corporation at Mahikeng. Investors are sought to manufacture and supply panels to farms, housing schemes, the mining industry and government. The Potchefstroom campus of the North West University is home to HySA Infrastructure Centre for hydrogen production, storage and delivery. HySA is part of a national strategy designed to make use of hydrogen and fuel cell technology, particularly arising from platinum group metals (PGM).

157

Capital

Mahikeng

Population 3 707 000 Area

104 882km2

Premier

Supra Mahumapelo (ANC)

Languages

Afrikaans, Sotho, Tsonga, Tswana, Xhosa

SOUTH AFRICAN BUSINESS 2018

A REGIONAL OVERVIEW OF THE

WESTERN CAPE

he Western Cape straddles the west and southeastern coastlines of South Africa. The province’s southernmost point is Aghulus, which is also the southern tip of Africa where the Atlantic and Indian oceans meet. The terrain and climate is varied, from the dry north-western coast to the heavily forested Garden Route regions of the southern Cape via the rugged mountains of the Cedarberg, the rolling winelands of the Boland and the Overberg, the fertile valleys of the Klein Karoo and the wide plains of the Great Karoo. The Western Cape is well served with infrastructure. Three ports at Saldanha, Cape Town and Mossel Bay serve different markets and Cape Town International Airport and George Airport see to air travel needs. In 2016, CTIA welcomed 10-million visitors, a new landmark. The Port of Cape Town recently opened a Cruise Terminal and a large new fuel storage terminal is being constructed in the port. Cape Town also hosts an oil refinery (Chevref) and there is a gas-to-liquids refinery at Mossel Bay run by the national oil company, PetroSA. The Cape Town International Convention Centre is the province’s leading facility in the events and conference field, which is an area of growth for the province. The national parliament is in Cape Town and there is a separate provincial legislature. The Western Cape is unique among South Africa’s nine provinces in that the Democratic Alliance (DA) runs the province. SOUTH AFRICAN BUSINESS 2018

The African National Congress is the majority party in the national parliament and it controls the other eight provinces. The DA also governs most of the provincial municipalities in the province, including the metropolitan municipality of Cape Town. There are five district municipalities which are further divided into 24 local municipalities. Cape Town has three universities and several Technical and Vocational Education and Training (TVET) colleges.

Key sectors Tourism grew at 6.6% for the five years to 2014 and generated jobs growth in the same period of 7.7%. The sector employs 204 000 people in formal jobs and is worth about R17-billion to the regional economy. Growth is expected to continue. The capacity of the Cape Town International Conference Centre (CTICC) is being doubled. The Foreshore is at the heart of a series of new developments that are set to have a major impact on the tourism industry. Finance, business services and real estate combined contribute 28% to the gross domestic product (GDP) of the Western Cape. Asset management and venture capital companies have been growing strongly in recent times.

158

REGION Refined petroleum was the single biggest earner for the Western Cape in 2015, with exports valued at R18.2-billion (Wesgro). The province has a diverse manufacturing sector ranging from textiles, clothing, footwear and furniture to coke and refined petroleum products. Several significant foreign investments have been received into the Western Cape in recent years: Hisense, GlaxoSmithKline and Kimberly-Clark, among others. Saldanha on the West Coast is one of South Africa’s busiest ports. Apart from being home to several trawler fleets, it is the principal iron-ore export port and is gearing itself to service the continent’s oil and gas industry and to be a steel manufacturing hub. Mining is becoming an increasingly important sector, with titanium, zirconium, phosphate and limestone being among the most important finds. Nearly 70% of South Africa’s wine comes from the Cape Winelands District area (Stellenbosch, Paarl, Robertson). A good percentage of this wine is exported but the wine estates themselves attract tourists. Tourism in the Winelands has matured beyond day-trips from Cape Town to incorporate wellness spas, adventure tourism and even game farms boasting the Big Five. Manufacturing is concentrated on processing grapes and fruit into wine, juice, brandy, dried and tinned fruit products. Dairy manufacturer Parmalat has an award-winning cheese-making facility in Bonnievale. Robertson is known for roses and thoroughbred horses. Stellenbosch is home to its eponymous university and houses the headquarters of several large companies. Mossel Bay is home to South Africa’s main gas processing plant while George is a node of manufacturing, trade and administration. Knysna and Plettenberg Bay are favoured tourist destinations. The Klein Karoo has its own wine route, and contains the country’s Port Capital in Calitzdorp, which hosts an annual festival to celebrate its main product. Fruit, vegetables and ostriches are other main products of the Klein Karoo.

sectors to 2020 will be construction, financial services (and real estate and business services) and transport, storage and communication. Financial services is expected to make the biggest contribution overall. The Provincial Government of the Western Cape and the private sector are collaborating to support projects that will best boost economic growth and create jobs: it is called Project Khulisa and it is due to run to 2019. Sector examples include:

Oil and gas With the number of oil rigs passing around the Cape on their way either to the rich fields on both sides of Africa, this is a sector that can grow exponentially. Saldanha Bay has been identified as a hub for rig repair.

Tourism The sector already contributes R17-billion to the provincial economy and jobs are created quite quickly in this sector. A project to increase the number of seats available on aeroplanes flying into Cape Town International Airport, Cape Town Air Access, has reaped remarkable success. Bidding for big events like the World Rugby Sevens tournament has also paid off.

Agri-processing By playing to the Western Cape’s strengths, which include an excellent reputation for fruit and wine in the international market, the province wants to take the agri-processing sector beyond the R12billion that the sector already contributes to the local economy.

Economic future According to the provincial treasury, the fast-growing

159

Capital

Cape Town

Population 6 200 100 Area

129 462km2

Premier

Helen Zille (DA)

Languages

Afrikaans, English, Xhosa

SOUTH AFRICAN BUSINESS 2018

INDEX

INDEX African Business Travel Association (ABTA)..............................................................................................124 Air Products........................................................................................................................................................... 73 AKTV Resorts........................................................................................................................................................IBC APE Pumps............................................................................................................................................................. 67 City of Ekurhuleni................................................................................................................................... 7, 18 - 21 College of Cape Town........................................................................................................................................ 44 DaySeven Group.....................................................................................................................................111 - 113 Eastern Cape Development Corporation (ECDC)..................................................................................139 EKS Secure Technologies................................................................................................................................108 Export Credit Insurance Corporation of South Africa (ECIC)............................................................... 26 Grundfos South Africa....................................................................................................................................... 86 Human Resource Development Council of South Africa (HRDC)...................................................... 42 Hydra Arc................................................................................................................................................................ 71 ICT Training............................................................................................................................................................ 64 Indaba Hotel, Spa & Conference Centre....................................................................................................120 Invest Durban..........................................................................................................................................................2 iX Engineers........................................................................................................................................................... 89 Lesedi Nuclear Services........................................................................................................................................9 Lesotho National Development Corporation (LNDC)............................................................................ 28 Marley Pipe Systems...................................................................................................................................97 - 99 Masisizane Fund................................................................................................................................................132 National Cleaner Production Centre of South Africa (NCPC).............................................................. 31 Pele Green Energy.......................................................................................................................................79 - 83 SBS Tanks................................................................................................................................................................ 11 Sea Harvest............................................................................................................................................................ 55 Small Harbours and State Coastal Property Development (SH&SCPD)........................................... 57 South African National Space Agency (SANSA)......................................................................................IFC Syspro.........................................................................................................................................................105, OBC Topps Products SA....................................................................................................................................... 33, 37 Training at Work................................................................................................................................................... 38 Transnet Pipelines............................................................................................................................................... 74 Tshwane Economic Development Agency (TEDA)...............................................................................146 Verifi.......................................................................................................................................................................114 Volkswagen South Africa....................................................................................................5, 40, 63, 101, 122 WorleyParsons RSA.....................................................................................................................................91 - 93

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