SA Business Integrator - Volume 5 l Issue 2 by Media Xpose - South African Business Integrator

South African Business Integrator

Vol 5 n Issue 2

A B U S I N E S S I N T E R A C T I O N P U B L I C AT I O N Volume 5 n Issue 2 September 2019/February 2020

September 2019/February 2020

Transforming gender parity in post-school education and training

5 Tips to keep your business profitable during off-peak season

Transforming the transport sector www.sabusinessintegrator.co.za

sabusinessintegrator.co.za

How SA businesses can ensure the security of their power supply COVER STORY

Invincible Valves:

company culture intrinsic to success

Current Affairs I Economic Development I Business Integration NEW SABI Vol10 Sep19 - Feb 20.indd 115

2019/09/01 1:29 PM

‘The RMI is a proactive, relevant, retail and associated motor industry organisation. It is recognised as the leading voice in South Africa’s automotive aftermarket, serving the daily needs of its members and playing a key role in enabling motor traders to deliver top-class service to motoring consumers.’ - Jakkie Olivier, CEO of RMI

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retail motor industry professions. We also envisage the opportunity for individuals to become IMI UK Professional Body members. This means that these individuals could also choose to become a member of a global automotive industry sector professional body over and above the RMI professional body membership. We anticipate a future where working in the retail motor industry is regarded as a profession with clear career paths.

Do apprenticeships make financial sense for your business?

RMI

continues to grow The Retail Motor Industry Organisation (RMI) is the largest organisation of employers and businesses in the South African retail motor industry – with almost 8 000 members. It includes businesses across all sectors of the retail motor industry, including vehicle bodybuilding and component manufacturing.

for formal businesses to engage with informal sector entrepreneurs to uplift the industry and channel additional growth through successful mentoring and collaboration. The RMI and its proud associations stand together as a collective to influence various forums for improved business conditions. Our collective voice is strong and flexible. We are fortunate that the organisation continues to grow and displays the highest levels of integrity and competence. We have our members to thank for this. The RMI facilitates cross-sectional networking between associational members and businesses alike, encouraging business development and growth. The principle of the organisation is fostered on participation and collaboration between members in the pursuit of opportunities. It provides guidance and assists in the training and development of personnel and adherence to regulatory compliance requirements for South African businesses, not the least of which is the renowned RMI IR services. Every three years the experienced negotiating team enters wage negotiations with NUMSA and MISA. It is the intention to ensure these do not compromise or affect the future sustainability of RMI members’ businesses in any way. The mandate is to protect the industry from unrealistic trade union demands. The organisation relies on members for their continued support, as it needs a strong representative position to navigate successfully through the negotiations. The RMI is committed to the transformation of the South African retail motor industry. Through concerted efforts, stakeholders create opportunities

DO BUSINESS WITH RMI-ACCREDITED MEMBERS FOR MOTORING PEACE OF MIND.

On the road to professionalising the motor sector Professionalising the motor sector in South Africa is the RMI’s goal and we are working tirelessly to make this a reality soon. For too long the role that professionals in the industry play has been undervalued and through professionalising, we aim to change this. However, what exactly is professionalisation? It is a process in which a trade or occupation transforms itself into a true profession of the highest integrity and competence. As a professional body, the RMI will register designations, recommend best practice and oversee the conduct of members of the profession. The result will be acceptable designations that clearly demarcate the qualified professional from the unqualified and non-designated individual. We strongly believe that through skills development and professionalisation we will see reduced unemployment, economic growth, better returns on investments for employers, more profits to employ more people, reinvestment in business growth and sustainability. Of course, there should also be increased consumer satisfaction because of professional services and advice they would receive, whether it is when buying a vehicle,

parts or equipment, or when repairing, servicing and maintaining their vehicles. We also need to make working in the sector attractive for up and coming young people. Through professionalising, we will change the traditional stereotypes and negative perceptions associated with a career in the industry.

So where is the RMI in the process? In August 2018, we expressed an interest in being recognised by the South African Qualifications Authority (SAQA) as a professional body. We contracted the services of an expert to prepare the SAQA application and to assist the RMI in professional body-readiness. IT platform development has also started to ensure compatibility to the National Learner’s Records Database of SAQA. The first six months of 2019 were dedicated to the application to SAQA. Initially, we plan to start with at least one designation in the Automotive Sales & Support Services field. Other designations, including technical jobs, will follow. Once implemented, the project will run in close liaison with the Institute for the Motor Industry (IMI) UK. To meet SAQA requirements, we need advocacy from all stakeholders. We must define the role of the RMI as a professional body for retail motor industry practitioners in South Africa and register designations with SAQA. We must also implement a process of Continuous Professional Development (CPD) points to maintain the professional status. Lastly, we need to prove that our level of professionalism is comparable internationally. We are currently working on three ‘must-have’ policies that cover recognition of prior learning, NQF levels, and national standards of designations, work experience, CPD and more. There will be access to a wealth of information and global recognition through this process. We are busy garnering close working relationships with alliance partners and stakeholders such as DHET, SETAs, QCTO, NAMB, and MIBCO, which will strengthen the

For two years, the RMI, merSETA and IMI UK embarked on a research project to decide whether it makes financial sense for automotive employers in South Africa to take on apprentices. On completion of the project in 2018, the resounding answer was ‘yes’. South African automotive employers can achieve up to a 200% return on their investment from contracting or employing apprentices. The research focussed on three occupations: auto mechanic, body repair and spray paint. The research criteria were made-up of three parts: 1. To apply modern data collection and analysis techniques at automotive employers for the three trades. 2. Next, to ascertain the estimated business value in Rands that an apprentice can be expected to deliver, and 3. lastly to develop a Return on Investment (ROI) calculator for use by employers. The data collection and analysis included utilisation which referred to worked hours in proportion to attended hours, efficiency which was sold hours compared to work hours, and productivity – sold hours in relation to attended hours. A ratio was then formulated to identify the ROI. What’s interesting is that small and medium-sized employers are reluctant to contract and train apprentices. Why? Because the perception is that apprentices don’t pay their way and it’s costly to train them. This perception has now been disproved by scientific research. Historically, there has been a lack of measurable apprentice performance and productivity data, essentially, no access to current and reliable information. We believe this problem has been resolved by the ROI calculator, which is available, free of charge, to employers.

The ROI calculator The ROI calculator is a web-based and user-friendly tool. Employers only need to input three items - expected sold hours for the selected occupation, the charge-out rate applicable in the business, and the apprenticeship duration. Using this information, the ROI calculator’s algorithm will calculate in seconds the estimated ROI for the apprentices, as if they were employed by the business. It incorporates actual employer costs, including time and level-based national minimum apprentice wages, training, level and trade testing, and ancillary costs and opportunity costs to calculate a truly reliable ROI. The ROI calculator intelligence has productivity data

Tel: (011) 886 6300 Website: www.rmi.org.za www.facebook.com/retailmotorindustry

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(in the form of standard productivity curves) attributed to actual apprentices enrolled on the Competency Based Modular Training programme installed. All data remains anonymous. It is such an easy process – there are literally three steps. As an employer all you need to do is logon to http://roi.merseta.org.za/, follow the steps, and a headline figure of the gross benefit in Rands is displayed, with a choice of three apprenticeship durations. The ROI calculator shows, without doubt, that when well-recruited and guided through an apprenticeship, an apprentice can pay back the investment (and more) that the employer made during the apprenticeship period. The RMI, along with merSETA and the IMI, are proud to promote the apprentice ROI calculator. We need more automotive employers to recruit apprentices for the economic benefit of our sector and communities. We are appealing to all our RMI members to make use of this ROI tool. The reality is that there has been no real skills development or investment in human capital for many years in our country. Skills have been outpaced by technology and there has been a loss of businesses and profits. Improved skills will result in increased productivity. It is all about professional standards and changing of perceptions.

Retail Motor Industry Organisation - RMI

@AutomobilSA

2019/09/01 1:42 PM

foreword ‘Buy local’ and retain and create jobs in South Africa By Eustace Mashimbye, CEO of Proudly South African

The period since the last edition of this magazine was marked by the limbo in which we found ourselves ahead of May’s elections. A ‘wait and see’ attitude seemed to prevail, and many businesses suspended any significant decision-making, pending the outcome of our sixth democratic round of national and provincial voting.

Eustace Mashimbye, CEO of Proudly South African

Nevertheless, Proudly South African proceeded with a ‘business as usual’ approach, and our activities continued apace. We started the roll out of our 2019 cycle of provincial public sector procurement forums, as well as our business forums. We added a furniture sector specific event, putting the spotlight on the potential for growth of a manufacturing industry that has been severely impacted by cheap imports. The Furniture Sector Business Forum, which was held in July in Gauteng, offered many opportunities for different contributors to the furniture value chain, to network and develop new relationships that will ensure that more of the content of our couches, bedroom suites, dining room suites, office equipment, school desks, etc, is locally manufactured. We have waged a campaign to support the sector by writing to financial institutions, furniture retailers and private education groups, amongst other organisations, urging them when equipping their offices and establishments with desks, chairs and storage furniture, to procure locally and support our local manufacturers. We have been rewarded with pledges from a number of companies which have undertaken to be mindful of ‘buying local’ for all future furniture procurement. Without access to markets, the furniture manufacturers and any other supplier to retail will, however, make little progress in the recovery or growth of their businesses. Together with the Consumer Goods Council of SA, the DTI and Manufacturing Circle, Proudly SA convened a workshop with key SA retailers in July to establish exactly what the challenges and barriers are to stock more local products on their shelves. As a result, we are planning to schedule a series of one-on-one meetings with individual retailers and their teams of buyers, where confidentiality can be protected. Here we can begin to get a clearer picture of the most common items that are imported, and work on assisting with import replacement and inclusivity programmes. These are just some of the activities we undertake that benefit our members, with a strong focus on access to markets and business-tobusiness opportunities and support. We are all consumers – whatever your business may be, you procure furniture, stationery, cleaning materials, possibly uniforms and car fleets and everything else needed for the day-to-day functioning of your office or factory. We ask that as a business, you make a conscious effort to procure from another local business – when we import goods and services, we are exporting jobs. By buying local, we retain and create jobs here in South Africa. As recent statistics have shown, job creation is one of the country’s biggest current imperatives. This magazine is all about business interaction and linkages, and so we urge you to make local interactions your own imperative.

sabusinessintegrator.co.za

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Editor’s L E T T E R

The first quarter of the year kicked off surprisingly well, but ever since it seems corporates are looking at everything through a different lens, especially when it comes to spending money and investing in new opportunities. With dips during off-peak seasons, marketing budgets are being cut more and more, which is affecting every business. Cutting marketing budgets can lead to phones going silent and empty email boxes, all extremely frustrating for business owners. For some great tips on keeping your business going during off-peak season, refer to page 26. Then there is the continuous hike in electricity costs. According to World Bank projections, South Africa’s growth for 2019 is deeply concerning, considering the ongoing strikes, carbon taxes, toll costs, freight looting, and added security and monitoring costs. Read more about this on page 78 for insights on mature risk retention strategies for fleet owners. Recently, I read an insightful article by Chris Botha, Group Managing Director of Park Advertising, about the impact of corruption on the media Rand. I refer to his comment about the challenges at the South African Post Office, which is simply not delivering mail, or delivering very late - especially magazines to subscribers. We have noticed the increase in return of our magazines from the South African Post Office, which has left us with no alternative but to use more direct distribution channels, which in turn are more expensive. At the same time, we cannot increase advertising rates to cover increased production costs as this might chase advertisers away. Where does it leave us, as magazine publishers? Botha also refers to an article written by Britta Reid, in which she mentions that during heavy load shedding weeks, up to 35% of TV audiences are lost. What a waste of advertising spend indeed! And it appears that more and more individuals are opting to cancel their TV subscriptions and instead, subscribe to Netflix. So, even more people are not seeing TV adverts! Online advertising doesn’t fare any better. Personally, I do not like advertising popups while online - I click “skip” the moment I can. How effective is this form of advertising at the end of the day? I cannot wait for my weekly printed specials from my regular grocery stores. Digitalisation is a monster in many ways, and not always as effective as many businesses would like to think; even though we depend so much on the internet to be efficient. People that subscribe to print magazines or newspapers are serious buyers and potential investors. PR consultants, media planners and buyers need to encourage businesses to use print more often; it has a longer shelf-life and is great value for any advertising spend.

CMY

Regards Elroy van Heerden editor@sabusinessintegrator.co.za

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CMY

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Tel.: + 27 (0)861 277 227 E-mail: info@sabs.co.za Website: www.sabs.co.za

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Contents Cover Story: Invincible Valves: Company culture intrinsic to success.....................................................11

Infrastructure: Lack of road maintenance in SA will cost billions............................................................. 54

Africa Opportunity: Can Africa fill the glass?.................16

Mergers: Higher penalties on the cards for failing to notify of mergers................................................ 56

Artificial Intelligence: SA manufactures must look to the next generation of AI to improve competitiveness........................................................................20 Addressing Absenteeism: Why you should harness technology to battle absenteeism.........................22 Profile: Mdito Business Enterprise – From humble beginnings to a R45-million company..................................24 Business Savvy: 5 tips to keep your business profitable during off-peak season..........................................26 Carbon Tax: Are you ready for the Carbon Tax Bill?......28 Crowdfunding: An untapped funding resource for renewable energy.............................................................. 30 Cybersecurity: Is your organisation safe from third-party data breaches........................................................32 Emerging Markets: The investment case for emerging markets.............................................................. 34 Profile: LFP Group – SA’s leading provider of end-to-end BEE compliance services.............................37 Advertorial: LFP Group – Unpacking our service offering......................................................................... 38 Financing: Borrow money in a way that won’t break the bank.......................................................................... 40 Advertorial: AVBOB – 101 years of sharing value and values........................................................................42 Gender Parity: Transforming gender parity in post-school education and training................................. 44 Interviews: Tshwane South TVET College...................... 46 Profile: Tshwane South TVET College – A centre of specialisation....................................................... 50 Profile: CPT Skills Development Solutions – The importance of educated training & learning path choices...............................................................................52

Mining: DMR’s 2018 Mine Health & Safety Statistics.................................................................................... 60 New Energy Technology: Private sector help welcomed to alleviate SA’s power crisis............................ 64 Organisational Culture: Are one of these five gaps blocking your organisation’s high-performance culture?...................................................................................... 66 Renewable Energy: How SA businesses can ensure the security of their power supply.................. 68 Renewable Energy: Understanding section 12B renewable energy tax allowances.........................................72 Risk Management: Investors can manage political risks in sub-Saharan Africa......................................74 Profile: Audit & Risk Management Solutions celebrates 13 years..................................................................76 Risk Management: Mature risk retention strategies benefit fleet owners as the economy bites.........................78 Profile: Twinstar Precast – Precast custom products..................................................................................... 84 Transport: Transformation of the transport sector.......................................................................................... 86 Profile: Motus – Leading automotive group committed to positive change............................................... 90 Transport: Violence and declining GDP impact on truck sales.............................................................................92 Advertorial: Bosch Diesel Service – Bosch does diesel boost........................................................93 Profile: Bosch Car Assist – Bosch Car Service plays the part............................................................................ 94

40 13 6

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087 55 111 11 NEW SABI Vol10 Sep19 - Feb 20.indd 7

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South African Business Integrator

Publisher

Vol 5 n ISSue 2

A B U S I N E S S I N T E R A C T I O N P U B L I C AT I O N Volume 5 n Issue 2 September 2019/February 2020

Media XPOSE

September 2019/February 2020

excellence in exposure Tel: +27 21 424 3625 | Fax: +27 86 516 7277 6 Carlton Crescent Parklands 7441 Transforming gender parity in post-school education and training

5 Tips to keep your business

How SA businesses can ensure the security of their power supply

profitable during off-peak season

Transforming the transport sector www.sabusinessintegrator.co.za

sabusinessintegrator.co.za

COVER STORY

Invincible Valves:

company culture intrinsic to success

Current Affairs I Economic Development I Business Integration

Photography: Invincible Valves

Editor Elroy van Heerden editor@sabusinessintegrator.co.za Editor’s assistant Wadoeda Adams wadoeda@mediaxpose.co.za Sub-Editor Tessa O’Hara tessa.ohara@gmail.com Ad Traffic Controller Melanie Taylor artwork@mediaxpose.co.za Editorial Contributors Burton Phillips Dr. Nthabiseng Moleko Mohamed Cassoojee Shane Johnson Kevin Howell Zandile Ncube Gugu Mjadu Logan Ramotlou Carey-Anne Jennings Alexandra Felekis Seshree Govender Pam Lewis Doug Clare Charl Du Plessis Adrian Saville Dalene Sechele-Manana Terry Billson Andre du Sart Dr Blade Nzimande Fikile Mbalula Saied Solomons Design & Layout CDC Design carla@cdcdesign.co.za Advertising Sales Manager Rashiedah Wyngaardt rashiedah@sabusinessintegrator.co.za Advertising Sales Consultant Mphumzi Njovana advertising2@sabusinessintergrator.co.za Social Media & Digital Manager Sasha-Jade Burgess digital@mediaxpose.co.za

South African Business Integrator @SA_Business_Mag

Social Media Assistant Kyla van Heerden social@mediaxpose.co.za

Our 6,500m² facility in Knights is made up of 4,500m² under roof being our stores and workshop. The facility is fully equipped to offer a one-stop resource for valves and ancillary equipment which we transport globally.

Chief Financial Officer Shaun Mays shaun@mediaxpose.co.za

As an approved BBBEE Level 2 supplier to all major industries within South Africa, we maintain expertise and experience across a broad spectrum of industries and applications with a wide range of products. We offer a comprehensive range of local and imported valves and accessories for the mining, petro-chemical, power generation, water, sewerage and general industries. We have agents in all major centres around the country and service all four corners of the globe.

Distribution & Subscriptions Shihaam Gyer distribution@mediaxpose.co.za Reception Daniëla Daniels receptionist@mediaxpose.co.za

We offer an in-house rubber lining service for valves, pipes, fittings and vessels which is utilized by many of the country’s major valve manufacturers. In addition we offer complete service, repair and valve reconditioning services for all types of valves.

Printed by

Our Core Values: We believe in treating our customers with respect. We grow through creativity, invention and innovation. We integrate honesty, integrity and business ethics into all aspects of our business functioning.

South African Business Integrator

Our Mission Statement: Build long term relationships with our customers and clients, to provide exceptional customer services by pursuing business through innovation and advanced technology. Our Purpose: To be a leader in the Valve Industry by providing enhanced services, customer service and profitability.

A B U S I N E S S I N T E R A C T I O N P U B L I C AT I O N

Our Vision: To provide a quality service that exceeds the expectations of our esteemed customers.

, a division of Novus Holdings

Disclaimer: The views expressed in this publication are not necessarily those of the publisher or its agents. While every effort has been made to ensure the accuracy of the information published, the publisher does not accept responsibility for any error or omission contained herein. Consequently, no person connected with the publication of this journal will be liable for any loss or damage sustained by any reader as a result of action following statements or opinions expressed herein. The publisher will give consideration to all material submitted, but does not take responsibility for damage or its safe return.

Invincible Valves is a proud supplier of quality valve products and

sabusinessintegrator.co.za equipment backed by service excellence around the globe. It is 8ancillary the combination of these values that allows us to form lasting business relationships.

NEW SABI Vol10 Sep19 - Invincible Feb 20.indd 8Valves

(Pty) Ltd

If it's not INVAL®, it's not Invincible 33 Shaft Road, Knights, Germiston TEL: +27 (0) 11 822 1777 | FAX: +27 (0) 11 822 3666 EMAIL: enquiries@invalve.co.za | WEB: www.invalve.co.za

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Invincible Valves (Pty) Ltd was established in 1982 and since has grown to a medium sized enterprise located in Knights, Germiston Invincible Valves prides itself on service excellent and flexibility by striving to enhance our customer’s bottom line. Our 6,500m² facility in Knights is made up of 4,500m² under roof being our stores and workshop. The facility is fully equipped to offer a one-stop resource for valves and ancillary equipment which we transport globally. As an approved BBBEE Level 2 supplier to all major industries within South Africa, we maintain expertise and experience across a broad spectrum of industries and applications with a wide range of products. We offer a comprehensive range of local and imported valves and accessories for the mining, petro-chemical, power generation, water, sewerage and general industries. We have agents in all major centres around the country and service all four corners of the globe. We offer an in-house rubber lining service for valves, pipes, fittings and vessels which is utilized by many of the country’s major valve manufacturers. In addition we offer complete service, repair and valve reconditioning services for all types of valves. Our Core Values: We believe in treating our customers with respect. We grow through creativity, invention and innovation. We integrate honesty, integrity and business ethics into all aspects of our business functioning. Our Mission Statement: Build long term relationships with our customers and clients, to provide exceptional customer services by pursuing business through innovation and advanced technology. Our Purpose: To be a leader in the Valve Industry by providing enhanced services, customer service and profitability. Our Vision: To provide a quality service that exceeds the expectations of our esteemed customers. Invincible Valves is a proud supplier of quality valve products and ancillary equipment backed by service excellence around the globe. It is the combination of these values that allows us to form lasting business relationships.

Invincible Valves (Pty) Ltd

NEW SABI Vol10 Sep19 - Feb 20.indd 10

If it's not INVAL®, it's not Invincible 33 Shaft Road, Knights, Germiston TEL: +27 (0) 11 822 1777 | FAX: +27 (0) 11 822 3666 EMAIL: enquiries@invalve.co.za | WEB: www.invalve.co.za

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COVER STORY: INVINCIBLE VALVES

Invincible Valves – company culture intrinsic to success From the desk of Pam du Plessis, MD of Invincible Valves

Company culture guides discretionary behaviour and picks up where the employee code finishes off. This is the glue that keeps the company together. Culture tells us how to respond to an extraordinary request, it tells us whether to risk telling our leaders about new ideas, and whether to raise or hide problems in the workplace. Our employees make hundreds of decisions on behalf of the organisation during a single workday – the company culture will guide them in making good, solid decisions. Culture tells us what to do and how to behave when the CEO isn’t in the room, just like integrity does when you continue doing the right thing, especially when no one is looking. The workplace should not be a place that your employees dread; instead they should be excited and enthusiastic to be at work every day. Ideally, you want to have a situation where your employees have a hard time leaving work because they enjoy the challenges, their co-workers, the atmosphere and the company’s contribution to the economy. Company culture shouldn’t add stress, but should alleviate work-related stress; it should sustain employee enthusiasm and passion and enhance the company’s productivity. Culture should be used as a useful tool when it comes to recruiting and finding talented people to fit your mix and enhance overall performance. The company’s

culture will determine the boundaries that you allow your employees to operate within.

Consistency in a company culture is vital At Invincible Valves, we use our culture to always engage in a transparent fashion and allow a certain amount of freedom, which gives our employees the peace of mind that they are always trusted to do their best without having someone looking over their shoulder all the time. We play our cards openly from the very first meeting and we follow through right to the end. Consistency in a company culture is vital. This makes it easier for employees to make decisions; they know and understand the culture and can therefore make informed decisions based on past experience.

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COVER STORY: INVINCIBLE VALVES

“

Shaping your culture is more than half done when you hire your team. – Jessica Herrin, founder of Stella & Dot

Our culture extends far beyond the employee’s job title. It includes social responsibility, skills development and personal development. We never employ people just because they apply for the job; instead we look at the person and their scope for growth before making them an offer. If we can’t see the potential for further growth, then we are not going to make the offer. The reason for this is because we are committed to uplifting people in a safe and caring environment, which is within our business culture. It also means that our employees are open to training in multi-skilled disciplines because of our transparency and honesty from day one. They are also more committed to working as a team and assisting in other areas of the business when necessary.

to read at home or during their lunch break. We also encourage our employees to learn to drive and offer textbooks for learners and drivers license tests. The library also offers current publications that promote industry awareness and insight into current affairs. The adhoc external training programmes for our employees are run in groups of six. This means that if we only have two employees on the programme we then offer the same training to four community members, giving them an opportunity to brush up their skills or to learn a new skill. This this is just one of the ways we try to uplift and give back to our immediate community. Another training opportunity at Invincible Valves includes our partnership with a local trade school and a technical high school. We make use of these facilities to train our employees, along with other unemployed candidates; we also source talent through these two institutions. This has proven to be beneficial in the past with qualified artisans as well as learnership candidates and have enhanced our manufacturing and reconditioning area of our company.

Social responsibility

Knowledge and skills transfer Knowledge and skills transfer are of utmost importance at Invincible Valves and our company culture is evidence of this. We created the Inval Training Centre for this reason; a space within our factory that is conducive to learning and sharing. The Inval Training Centre hosts several ongoing and adhoc education programmes throughout the year. The Centre houses our own library which promotes reading on every level. We offer a full learn-to-read programme and invite employees to take out books

“

Company culture shouldn’t add stress, but should alleviate work-related stress; it should sustain employee enthusiasm and passion and enhance the company’s productivity.

“

At Invincible Valves we offer many out-of-our scope opportunities to our employees, including personal health care, charitable events within our local community and much more. Twice a year we sponsor Tuberculosis x-rays free of charge for all our employees, along with an annual HIV/Aids screening, which is always followed up with a day of educational talks and demonstrations. We feel that it is our duty to provide these opportunities for the benefit of our employees and their loved ones. We also encourage our employees to share their newfound knowledge with others in their communities. We partner with a number of organisations and get involved in uplifting schools in South Africa. Our employees are always ready to assist. Recently we had a team of 10 employees assist in painting a farm school, and working with several other companies we managed to complete the task in just a couple of hours, changing the learning experience for more than 1 000 students every day. We helped to create an environment that these children can be proud to call their school; where through donations, they now have access to more sporting equipment and educational material.

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COVER STORY: INVINCIBLE VALVES

“

There’s no magic formula for great company culture. The key is just to treat your staff how you would like to be treated. – Richard Branson, founder of the Virgin Group

It gives us great joy to see our employees develop their skill set and grow as individuals. The moral of the story is that if your employees are happy and feel valued, respected and considered in all aspects of their work, you will see a whole new level of commitment and success. We attribute our business success to the success of our employees; the fact that they consider our esteemed customers to be their own esteemed customers; the fact that they think before they act or react - and always in a positive manner. n

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COVER STORY: INVINCIBLE VALVES

Invincible Valves enriches social responsibility values The mining industry can be considered as one of the most competitive and hardfought markets for suppliers of equipment and components. Achieving success in this industry requires dedication and long-term, lasting relationships, which in many cases can run into decades of business partnerships. Economic conditions play a role in the supply chain, and mine operators are hard pressed to maintain the balance between economies of scale and product quality. One of the most important attributes for any company doing business with the mining industry, or any industry for that matter, is its ability to provide total solutions to suit their clients' needs. One such company is Invincible Valves, established 37 years ago and based on these sound principles. Its successful track record throughout the industry has earned it an enviable reputation amongst its clients and stakeholders. Invincible Valves is a respected distributor and the largest stockist in Africa of a comprehensive range of locally manufactured and imported valves and accessories for the mining, petro-chemical, power generation, water and sanitation and general industries. The company also offers full reconditioning facilities for valves, and a rubber lining division that meets the most stringent specifications for lining pipes, tanks, valves and any other specialised requirements. 'We have built this company on old fashioned family values without losing sight of good corporate governance. Our personnel are well trained and are put through regular programmes to enhance their business skills. Even the accounts personnel are given product training so that they can relate better to the products, the names of which they only see on paper,' explains Pam du Plessis, Managing Director. 'We also offer our staff empowerment opportunities by working in small teams with a team leader to co-ordinate daily activities. This business model gives us the opportunity to reward achievements within the company.' Pam's passion for people and education has prompted her to establish an education facility as a part of Invincible Valves' social development programme. The Centre will be inaugurated by the Mayor of Ekurhuleni once completed. 'Here, learners and staff members can be taught life skills as well as introduced to the world of business. We also have an intern programme that gives disadvantaged scholars an opportunity to gain hands-on experience within the company, at the same time earning a wage. A number of technical schools and colleges have

embraced this initiative and we have offered scholarships to both girls and boys, creating equal opportunities for both genders within our industry,' she adds.

Accolades and awards Pam du Plessis is regarded as somewhat of a human dynamo in this male-dominated industry and has achieved numerous accolades and awards as a businesswoman. The innovative approach that she has developed as a business model for the company has proved to be the core value of her success. Among her various awards, Pam travelled to Fort Lauderdale in the USA, to receive an award as part of the 2017 Enterprising Woman of The Year Awards ceremony, an annual tribute to the world’s top women entrepreneurs. The Enterprising Woman of the Year is widely considered one of the most prestigious recognition programmes for women business owners. To win, nominees must demonstrate that they have fast-growth businesses, mentor or actively support other women and girls involved in entrepreneurship, and stand out as leaders in their communities. Many of the honourees also stand as leaders of key organisations that support the growth of women’s entrepreneurship. Award winners are recognised in seven categories and recipients represent an amazing group of woman entrepreneurs from across Africa, the USA, Europe, UK and Canada. Late last year, Pam was again recognised and awarded as Africa’s Most Influential Businesswoman in the Engineering Sector. With 76 finalists throughout Africa, this is no small feat! It is also inspirational to know that there are many more successful women working in the sector across the African continent. In November this year, Pam will be honoured with the International Women’s Entrepreneurial Challenge (IWEC) award in New Delhi, India. This is yet another achievement proving that her love for the company, the brand and the culture is present in her everyday activities. Mentoring young entrepreneurs, adding value to her local community and enhancing her employees’ lives is exceedingly high on her agenda. n www.invalve.co.za

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AFRICA OPPORTUNITY

Can Africa fill the glass? By Dr Nthabiseng Moleko, faculty member at the University of Stellenbosch

Africa, often regarded as the last frontier in the global economy, can either be viewed as the glass half-full or half-empty. However, at a recent panel discussion hosted by the University of Stellenbosch Business School (USB), the view was that it can also be viewed as â&#x20AC;&#x153;a third of a glass fullâ&#x20AC;? and on the way up. The panel further stated that while Africa offers a vast amount of opportunities, it does come with extra risk and a challenging environment to do business in.

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AFRICA OPPORTUNITY

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If you can make it in Africa, you can make it anywhere.

Education the best solution Dr Nthabiseng Moleko, faculty member at the University of Stellenbosch.

The discussion was moderated by Dr Nthabiseng Moleko, faculty member at the USB. The panel included Mpane Maneli, Portfolio Manager at Argon Asset Management; Casper de Villiers, co-founder of Clickatell; Ivette du Toit, Group Tax Director at Clickatell; Brendan Langeveldt, CEO of Kallos Exporters and Thapelo Lippe, CEO of The RightSource. Maneli opened the discussion by explaining how Africa’s diversity makes it more difficult to do business. ‘Africa has what the world wants but requires a 30-year instead of a 5-year view of the continent,’ he added. De Villiers concurred and added that there are plenty of opportunities for business, but not for all types of business. The panel further agreed that the African challenge required specific types of skills and Du Toit encapsulated this argument, saying: ‘If you can make it in Africa, you can make it anywhere.’

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Africa has what the world wants but requires a 30-year instead of a 5-year view.

The panel members were unanimous in arguing that education offered the best solution for Africa’s problems, however, there were conflicting views on the role business should play to support it. Maneli suggested that government force companies to invest in educational endeavours, whereas Langeveld argued that companies making fixed investments already contribute to education through the training and intellectual property that accompany such investments. De Villiers proposed using crowdsourcing and enabling technologies to develop videos aimed at educating the masses. Langeveldt concluded: ‘Do not wait for government to start doing something, do it yourself.’

The 4th Industrial Revolution’s impact on Africa An interesting debate was the panel’s views on the 4th Industrial Revolution and its potential impact on the continent. Moleko opened the discussion by asking whether the 4th Industrial Revolution presented a double-edged sword, to which Lippe responded with: ‘Tech is great, but it is not the solution to Africa’s problems.’ Lippe further argued that the ‘dark side of tech’, for example, the ability to influence elections, presented a problem and was also concerned about the threat of job losses. This argument was opposed by the other panellists, with De Villiers stating that ‘technology is the best enabler in the world’ and can open new opportunities in other sectors, which result in more jobs than were lost, and Langeveld indicating how it dramatically reduces the risk of doing business. The discussion concluded with members of the panel emphasising the opportunities Africa presented, but cautioned on the risks and challenges. ‘Look for something good, you will find it, but know what you are doing,’ said Langeveldt, encapsulating the discussion. n

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Petroleum Agency SA encourages investment in the oil and gas sector by assessing South Africa's oil and gas resources, and presenting these opportunities for exploration to oil and gas exploration and production companies. Compliance with all applicable legislation in place to protect the environment is very important, and rights cannot be granted without an approved Environmental Management Plan. Explorers must prove financial and technical ability to meet their commitments in safe-guarding and rehabilitation of the environment. Preparation of Environmental Management Plans requires public consultation and a clear demonstration that valid concerns will be addressed.

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OF PETR O LE UM

SOU TH

C AGEN Y FOR

ION OT M

AN IC

TION ITA O L

PETROLEUM AGENCY SA

ORATION AN D PL EX EX P

Petroleum Agency SA, based in Bellville, Cape Town, is responsible for the promotion and regulation of exploration and exploitation of oil and gas (petroleum) resources.

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Contact us to find out about: - Onshore or offshore exploration opportunities - Permits and rights - Availability of geotechnical data.

+27 21 938 3500 plu@petroleumagencysa.com www.petroleumagencysa.com

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ARTIFICIAL INTELLIGENCE

SA manufacturers must look to the next generation of AI to improve competitiveness By Mohamed Cassoojee, Managing Director of IFS South Africa

South Africa’s manufacturing sector is under enormous pressure, contracting by 8.8% quarter-on-quarter in the first quarter of 2019, according to Stats SA. This poor performance was one of the main contributors towards the country’s GDP shrinking by 3.2% for the quarter. Against this backdrop, it has become critical for local manufacturers to look at ways to improve efficiencies and productivity.

As manufacturers around the world embrace Fourth Industrial Revolution technologies such as advanced robotics, the Industrial Internet of Things (IIoT), 3D printing and artificial intelligence (AI), the local industry needs to look at how it will remain relevant and competitive. One of the major opportunities lies in smart automation solutions like robots, robotic process automation and AI. IFS predict that more than half of the world’s manufacturing companies will use some form of AI by

the end of 2021. AI is poised to change how the supply chain works, giving the leading organisations a significant competitive edge. Organisations around the world are taking a pragmatic, realistic view on AI, hitting the ground running with targeted, project-based AI solutions.

Small, iterative projects The problem is that not many manufacturers understand what the term AI really means. Some see AI as a costly,

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ARTIFICIAL INTELLIGENCE gives us the ability to move beyond our natural limits and make sense of the vast amounts of data that are continuously generated. Artificial Intelligence is made up of a slew of connected technologies - machine learning, automation, analytics, facial recognition and natural language processing. Each of these has its own use and benefits and the potential to eliminate mundane tasks. One thing these technologies have in common is their ability to achieve speed and accuracy beyond what any human is capable of. One example would be LG, which operates smart factories that employ Azure Machine Learning to pinpoint and predict defects in their equipment before any problems occur. In this way, predictive maintenance is enabled, which in turn eliminates unexpected delays, the cost of which can run into hundreds of thousands of Rands.

One weapon in the arsenal However, AI can’t simply be implemented. Before embarking on any AI journey, the business needs to identify a problem and decide whether AI is the technology to help solve it. Businesses shouldn’t feel pressured by the fact that they perceive AI as being mainstream. The best approach to AI is a holistic one that considers the business, industry and strategy. Manufacturers need to consider the impact across all areas of the organisation, including HR, operations and so on, and think too about the timing of the proposed changes, not only the technology itself. AI should only be one weapon in the arsenal used to address and solve real business problems. Ultimately, in the manufacturing sector the goal is to remove the onerous and mundane tasks that can easily be accomplished by machines, and free up human resources to focus on core business objectives. It isn’t about cutting jobs, but about increasing productivity and getting humans and machines to work in unison. n

overarching system. And although it isn’t, the assumed complexity and cost has frightened off many South African manufacturers, many of which are bogged down with vast legacy systems and barely enough IT budget to keep the lights on. Yet the reality is that AI can be deployed in small, iterative projects with a proven path to return on investment. AI technologies demonstrate many behaviours associated with human intelligence, such as planning, learning, reasoning and problem solving. Essentially AI

Mohamed Cassoojee, Managing Director of IFS South Africa.

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ADDRESSING ABSENTEEISM

Why you should harness technology to battle absenteeism Absenteeism is costing South African businesses thousands of Rands every month. But how do you take on the challenge of mitigating this cost when employees don’t even have to pick up the phone anymore to call in sick? Today, skipping work can be as simple as sending a brief text or email message to your supervisor. This, and the costs associated with absenteeism, can be better managed, says Ouch! founder, Kevin Howell.

According to Howell, founder of time and attendance firm, Ouch!, the simplicity of communication in today’s workplace brought about by modern technology, offers numerous benefits. However, that simplicity can come at a cost in the form of lost productivity and other consequences. Yet in an age of obsession with data, many companies still don’t track employee absences, nor do they address the reasons behind them. Absenteeism is defined as an employee's intentional or habitual absence from work. This definition includes being away from work as well as taking sick days when well, arriving late and leaving early, taking extended tea or lunch breaks, attending to private business during working hours, or unexplained absences from the workstation or the employer's premises. According to the most recent data on the cost of absenteeism, the Momentum Effective Employee Index published in September 2018, local companies lose an estimated R25 billion a year to absenteeism. The index research estimated that around half of this can be considered as “excessive absenteeism” meaning the amount of days employees are absent is over and above the reasonable amount expected for companies based on their size. Despite the cost impact of absenteeism, many companies fail to track it and are therefore missing out on the opportunity to mitigate the amount of money they are losing. ‘In my experience, small- and medium-sized businesses, blame a lack of resources while the big corporations seem to think that they can carry the cost,’ says Howell. He adds that companies also avoid following up on absences because it is rarely a pleasant exercise. He stresses, however, that at some point the conversation must take place. ‘When looking at the cost of absenteeism in the broader sense, i.e. the overall effect on our economy, it

Ouch! founder, Kevin Howell.

becomes clear that this mindset needs to change. Given the current economic climate, few employers can afford to continue to overlook the direct and indirect costs of absenteeism,’ says Howell.

Beware of the indirect costs The direct costs of absent employees include wages paid to absent employees, the cost of replacement or temporary workers, and overtime pay for employees filling in. Most employers believe that indirect costs are limited to lost productivity, but they also include reduced quality of goods and services due to “fill-in” labour that is likely to be less productive or knowledgeable than the person they are filling in for. They also include low morale among employees who must witness continuous absenteeism and carry the slack for absent employees. Indirect costs also include the time that managers lose to find replacement workers and to attend disciplinary measures for the habitually absent employee.

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ADDRESSING ABSENTEEISM

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Local companies lose an estimated R25 billion a year to absenteeism.

‘Ultimately, best practice would be to implement a time and attendance tracking and management system. Day-to-day responsibility for managing time and attendance will usually fall to frontline managers. But they may not have the right tools at their disposal and as a result, may not take actions such as following up on why an employee was absent,’ he adds.

Time and attendance management products In the end, says Howell, day-to-day business operations are also affected. ‘The average rate of absenteeism is 4% to 5%, which represents a two to three-week absence per employee on an annual basis, resulting in a substantial loss of productivity and efficiency.’ In tackling habitual absenteeism, you need to start with why there is an empty chair in your office in the first place. The causes of absenteeism are varied, says Howell, but he asserts that many absences aren’t due to illness, noting that personal commitments, family obligations, stress and lack of motivation play a greater role in absenteeism than the odd cold or sprained ankle. When looking at the broader definition of absenteeism that includes lost company time, even when an employee has turned up for work, a lack of employee discipline can also be added as a cause.

Take a strategic approach to address absenteeism To ensure best practices and effective monitoring, companies need to take a strategic approach to address absenteeism. ‘This typically starts in the HR department where we recommend putting a strategy in place to foster a culture of employee discipline within the workforce, along with additional pro-active measures such as physical and mental wellness programmes for employees,’ Howell explains.

Ouch! has developed innovative biometric and time and attendance management products, including a mobile app, that manage employee attendance. This provides your company with a structure that promotes employee discipline and ultimately will save you money on your salary expense. ‘Why not harness modern technology to track time and attendance as we have for every other aspect of our business?” Howell questions. A biometric employee clocking system that is linked to payroll software and provides regular reports on attendance is the best place to start. These tools give frontline managers and team leaders a platform for collecting accurate time and attendance data that can provide them with an accurate measurement of the level of employee discipline within their workforce. ‘From here they can start to tackle the causes of absenteeism and start to enforce employee discipline. It can take as little as a month to start seeing this reflected in payroll savings,’ says Howell. ‘From there, the benefits start to extend to better morale and increased productivity. It’s a no brainer – harnessing technology to better manage absenteeism is a win-win. n

Ouch! T +27 (0)86 111 OUCH E info@getouch.co.za W www.getouch.co.za

About Ouch! Ouch! provides innovative solutions for employee time and attendance management, including biometric clock-in products and a mobile app, backed up by a cloud-based software and data capture system, and consulting services. Their products are designed to help businesses optimise productivity and increase employee discipline. Ouch! has a proven track record of providing time and attendance management for all types of companies. Their team analyses your business and provides you with a solution that will make your day to day operational and employee management easier. The Ouch! system is cloud-based and accessible from anywhere in the world. Scheduled reports on employee time and attendance management are automatically sent via email and SMS on a daily, weekly and monthly basis.

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PROFILE: MDITO BUSINESS ENTERPRISE

From humble beginnings to a R45-million company Mdito Business Enterprise (MBE) is a black women-owned, registered small/ medium entity founded in 2004 by Dorah Mavis Sibanyoni (known to many as Sis Mavis). MBE currently specialises in cleaning and janitorial services.

Sibanyoni is South African, born on the farmlands in Mpumalanga to the royal Manala-Mgibe Clan under Chief A. Mabena. In her own words: ‘From my humble beginnings, supplying stationary to Eskom Arnot Power Station, to cleaning services and a small consignment shop at Exxaro Arnot Coal Mine, to where I am today, various companies have contributed immensely to the growth of my business. I appreciate the change and development that these companies have brought to my life, which in turn has allowed us to bring hope and change to many others.’ The companies that have contributed to the growth of MBE include: • Eskom Arnot Power Station • Exxaro Arnot Coal • Thyssenkrupp Industrial Solutions • Roshcon Site Services • Eskom Kusile Power Station • Eskom Kendal/Wilge • Murray and Roberts • Mitsubishi Hitachi Power Systems Africa • Transnet SOC Ltd • Eskom Hendrina Power Station • Eskom Komati Power Station • Eskom Grootvlei Power Station • Thermon South Africa ‘It all began in 2005. I started working with Exxaro Arnot Coal Mine where I rendered cleaning services to residential homes and hostels for the mining staff. Times were tough as work depended on the number of call-outs I got, and with only four casual workers at the time, I could not have imagined that I would be where I am today,’ says Sibanyoni.

The beginning of a life-changing chapter

CEO, Dorah Mavis Sibanyoni

In 2009 Sibanyoni was offered the opportunity to render her services to Roshcon - little did she know that this was the beginning of a life-changing chapter in her business career. During this period, Sibanyoni and her company went through a drastic learning curve.

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PROFILE: MDITO BUSINESS ENTERPRISE She underwent training to learn all the requirements concerning safety and environmental policies, and at the same time, her staff capacity expanded from four to 14 employees. In 2010, MBE tendered for and was awarded the opportunity to render services to Eskom Kusile Power Station. ‘Through successful tendering and customer satisfaction, I have continued working on the Kusile project to this day,’ says Sibanyoni. The Kusile project contributed abundantly towards the growth and development of Mdito Business Enterprise by enrolling Sibanyoni in learning programmes such as Bridging the Gap (BTG) and Business Management. In 2010, the company’s net value was R7-million in annual turnover with 24 employees. Today MBE boasts a staff complement of 354 employees and a net value of R45million in annual turnover. ‘My experience while working on the Kusile project has allowed me to implement the knowledge and skills that I have acquired to tender efficiently, manage my business and to build and sustain new business relations. Through this I have been able to further acquire tenders with Eskom, Hitachi Power Systems South Africa (now known as Mitsubishi Hitachi Power Systems Africa), Thermon South Africa and Thyssenkrupp Industrial Solutions,’ says Sibanyoni.

Skills development training for employees & giving back to the community Through partnership with some of their clients, MBE have implemented skills development training for MBE employees through pilot programmes in which MBE cleaning staff are trained and evaluated in computer literacy and administration. Successful candidates are then interviewed and absorbed by the client, which then allows MBE to create employment opportunities for other local residents. ‘MBE have a tradition of giving back to our community. We offer employment to residents from surrounding areas and farms and we also provide transportation service opportunities that in turn aid and uplift the local taxi industries,’ Sibanyoni explains. MBE has also assisted the co-ops in the Nkangala District with financial services and start-up capital, as well as giving them business i.e. supplying consumable products for MBE. The company also participated in Enterprise Development programmes led by their clients to assist other small and upcoming businesses, for example, co-ops in the Nkangala District. Other CSI and community development projects in which MBE is involved include: • building houses for impoverished MBE employees • donations to local churches • donations to local residents older than 100

• donations to fund-raising efforts for the needy and less fortunate • donations of windows during the building of the Delmas clinic • Cleaning of local schools and police stations ‘At MBE we believe that the employees are the fuel that feeds the company’s success. They play a vital role in the upkeep of the standard of cleaning offered by our company. Our staff clean with a passion and they value and take pride in the service that they render. This is embodied and evident in the company slogan – we love what we do,’ says Sibanyoni.

Recognition and awards It is no surprise then to learn that Mdito Business Enterprise has won several awards and been recognised on various platforms for its business excellence, including: • SMME of the Year at the Nkangala District Business Expo in 2014 • Dorah Mavis Sibanyoni was recognised and nominated by Standard Bank and TOP Media as one of South Africa’s Top Women in Business in 2016 • MBE was awarded for qualifying as one of South Africa’s Top Gender Empowerment Companies in the years 2016, 2017, 2018 and 2019. ‘Words cannot describe how humbled and grateful I am. The company has come a long way and still has a lot to accomplish. God has been faithful, and we look forward to a big and brighter future. I would not have made it this far without the support and business acquired from my clients and core management team who include Aaron Mbhele (HR/IR Manager), Pamela Lekoma (Operations Manager), Nomusa Sibanyoni (Senior Administrator), and Phila Veti (Payroll Manager),’ Sibanyoni says. n

MDITO BUSINESS ENTERPRISES CC T +27 013 650 0896 C +27 083 210 6365 F +27 086 546 1263

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BUSINESS SAVVY

5 tips to keep your business profitable during off-peak season By Gugu Mjadu, spokesperson for the 2019 Entrepreneur of the Year

Many business-to-consumer enterprises routinely experience a seasonal slowdown, which can cripple the business if this is not factored into planning for the businessâ&#x20AC;&#x2122; cash flow. It is critical for businesses to prepare for depressed sales numbers as a result of seasonal shifts, weather and other economic factors â&#x20AC;&#x201C; like ice cream stores in winter or inner-city restaurants during holiday season when consumers tend to make for more exotic destinations. Yet, anticipating a slowdown and experiencing one are two completely different things.

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BUSINESS SAVVY

Photo credit: Gugu Mjadu

This is according to Gugu Mjadu, Marketing Executive at Business Partners Limited and spokesperson for the Entrepreneur of the Year® competition, who says that when the phone goes silent, the inbox remains empty, or the queues disappear and the stock doesn’t move – it can be an extremely scary experience for business owners. ‘But the good news is that while you likely can’t control the seasonality itself, you are in control of how you prepare for and manage your quieter season to reduce the financial impact on your business,’ she adds. Mjadu shares five tips to tide you over the low season: 1. Get to grips with your business’ cycle When a business is still in its growth phase, it can be tricky to identify the real fluctuations of the industry from the non-seasonal ups and downs that are common with any growing business. A certain amount of analysis of the company’s figures, compared with industry norms,

Gugu Mjadu, spokesperson for the 2019 Entrepreneur of the Year.

may therefore be necessary to identify patterns. The better you know your industry’s seasonal curves, the better you can plan. Winners in the Entrepreneur of the Year® competition can use the technical assistance and mentorship support that forms part of their competition prizes to improve their insight into their industries. 2. Get money savvy It may seem obvious to state that you should set aside some of your gains from the busy season to tide the business over the off season, but it is easy to spend too much in the middle of the peak when your focus is on the here and now. Cultivate the discipline of focusing on the whole cycle and build a buffer in time for the slow season. If you have financing, it is difficult to maintain the instalments on a straight bank loan in the off season. However, it is possible to negotiate a repayment scheme to suit your seasonality, particularly with risk financiers. One option is to link repayments to turnover or to agree that in certain months only the interest of the loan will be serviced. 3. Put the slow season to good use Rather than slowing down and losing focus, identify other ways to use the time productively. A quiet period in a business is the ideal time for maintenance, retooling and clearing out, not only of physical equipment and infrastructure, but also for operational systems, clearing bottlenecks, identifying inefficiencies, training and reflection. 4. Cut expenses but don’t stop marketing One of the advantages of the introspection you have time for during the slow season is clarity on where you can cut unnecessary expenses. It might be necessary to reduce your stock, or to negotiate a more efficient stock delivery system with your suppliers. While marketing is often seen as a nice-to-have and á budget that usually gets slashed first in hard times, rather investigate additional markets and cost-effective marketing methods, such as improving your social media presence or catching the attention of influential bloggers. Salary bills are a big expense and not many seasonal businesses can keep a full staff complement throughout the year. But the risk of losing staff to more permanent employment can also be time consuming and costly. One of the ways of minimising staff fluctuation is to reduce everyone’s shifts rather than letting some stay and some go. When short-term contracts or a reduction of shifts are unavoidable, clear and open communication with your staff members is important. Avoid disputes and bad feelings by drawing up proper contracts and making sure that everyone understands the nature of the business and the path to becoming a permanent staff member. 5. Keep positive Watching your sales goals slip can be demoralising. But negativity spreads and in an owner-managed business the entrepreneur sets the tone for the rest of the business. If you become despondent, your staff may lose motivation – which won’t help productivity. During these periods it is therefore best to avoid showing signs of panic and actively cultivate a positive mind-set. n

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CARBON TAX

Are you ready for the Carbon Tax Bill? The Carbon Tax Bill will come into effect on 1 June 2019. This is the culmination of nearly a decade of preparation and consultation with industry stakeholders.

The Climate Neutral Group (CNG), in partnership with IsoMetrix, have developed a turnkey solution to help organisations manage their carbon footprint and associated tax liabilities.

What is the Carbon Tax Bill? The Carbon Tax Bill imposes a R120 levy on each ton of CO2e (carbon dioxide equivalent) directly emitted by a companyâ&#x20AC;&#x2122;s operations. The implementation of this tax follows a phased approach. The first phase started

on 1 June 2019 and will last until 31 December 2022. The biggest difference between the first and following phases is that during the first phase companies enjoy a basic tax-allowance of 60 or 70%. This feature is envisaged to fall away by the next phase of the carbon tax. The rationale behind tax-free allowances is to allow businesses time to implement measures that will reduce their emissions in preparation for a time where basic allowances no longer apply, and each ton of emissions is taxed.

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CARBON TAX

What does this mean for South African businesses? ‘South Africa is a carbon intensive country. This is largely due to a legacy of large coal reserves and low electricity costs that allowed industry to flourish,’ explains Silvana Claassen, Senior Carbon Advisor at the Climate Neutral Group South Africa. ‘South African industry has been resistant to the implementation of the Carbon Tax Bill. However, global attitudes to curbing greenhouse gas emissions are turning in the direction of zero emissions technologies. As such, it is very much for the long-term benefit of organisations to reduce their carbon footprint.’ Silvana says that it is typically companies with vested international interests that have done their homework and are on top of their carbon footprint, enabling them to identify opportunities to reduce emissions, resulting in a direct positive impact on their bottom line. ‘Calculating a carbon footprint is not an easy task,’ Silvana says, ‘especially when you consider that your supply chain may pass on the cost of their carbon emissions to you. With carbon tax on the horizon, your carbon footprint comes at a cost. By reducing your emissions, you save costs. It is that simple.’

An opportunity to future-proof your company Robin Bolton, Head of Sustainability at IsoMetrix emphasises that companies should use the time before the Carbon Tax Bill comes into effect to put their house in order. ‘Organisations that take advantage of this time will get their administration sorted out,’ he says, ‘and then implement a tool to manage and track carbon emissions.’

The South African government has afforded a grace period to ease companies into their obligations that come with the Carbon Tax Bill, including the requirement to report on emissions. ‘This grace period is temporary, by 1 January 2023, the requirements will be far stricter and the consequences far more serious,’ Bolton adds. Silvana says that companies must view the next few years as an opportunity to future-proof themselves while the tax-free allowances are in place, as after this period not only do the allowances fall away but the rate per ton of CO2e will increase.

IsoMetrix Carbon Tax Solution The IsoMetrix Carbon Management solution is designed to help companies calculate and manage their carbon footprint. Because of its agility, this solution meets the requirements of a variety of published guidelines and protocols and allows the use of specific factors and formulae. The added value that the IsoMetrix systems bring is that objectives and targets can be set with actions captured and tracked to ensure compliance and to meet objectives. The partnership between IsoMetrix and the CNG is synergistic in nature: CNG provides expert advice on identifying a company’s activities so that the Carbon Management solution can be tailored to include reporting of associated emissions. IsoMetrix provides the technology tool to track and report a company’s emissions and CNG can propose strategies to reduce a company’s footprint and ultimately pay less tax. Get in touch with IsoMetrix for more information on how they can assist you in your carbon tax reporting.

About IsoMetrix IsoMetrix is a South African company and a leading developer of integrated risk and compliance management software solutions with 20 years’ experience working with global companies. n

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The rationale behind tax-free allowances is to allow businesses time to implement measures that will reduce their emissions in preparation for a time where basic allowances no longer apply.

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Companies must view the next few years as an opportunity to futureproof themselves while the tax-free allowances are in place.

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Implementing a carbon tax in one of the world’s top carbon producing countries will benefit all South Africans in the long run and is in line with the country’s commitment to the Paris Agreement. ‘Climate change poses the greatest threat to humanity and South Africa intends to play its role in the world as part of the global efforts to reduce greenhouse gas emissions,’ says South African Finance Minister, Tito Mboweni.

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CROWDFUNDING

Crowdfunding: An untapped funding resource for renewable energy By Carey-Anne Jennings and Seshree Govender, Webber Wentzel

Small and innovative renewable energy projects battle to raise funds through formal channels. One possible solution is to reach out to communities with an interest in those projects to help fund them through crowdfunding initiatives. While there has been a marked increase in the number of renewable energy projects being funded globally, these are traditionally larger projects generating in excess of 5MW, funded by traditional funders in the form of commercial banks and development finance institutions. Yet smaller projects around the 5MW mark are becoming increasingly attractive to development finance institutions (DFIs) as they generate deal flow and often have less red tape. Funding can make or break a sector, but there are instances where the focus of funding renewable energy should not necessarily be done solely on the traditional project finance principles, where this does not make commercial sense for the developer. Developers of small-scale renewable energy projects in South Africa and elsewhere in Africa, who are battling to

source the funds they need, could consider crowdfunding as an alternative. This is becoming increasingly popular on the continent following the success of crowdfunding initiatives in the European market. Sun Exchange has identified this market as micro projects around 1 to 5000 kW.

Entrepreneurs leveraging off social media and online platforms Crowdfunding is fast becoming the preferred alternative financing model as entrepreneurs, with projects ranging from building innovative technologies to real estate development, are tapping into a wider investor pool while leveraging off social media and online platforms to gain traction and support for their ventures. Crowdfunding allows an entrepreneur, or proposer, to approach funders directly through an online platform which showcases their project or campaign and the funding target they hope to achieve. Funders can then contribute as much or as little as they wish toward the funding target and, in doing so, are able to access investment opportunities or directly support social development projects. Crowdfunding is an ideal mechanism for the funding of small-scale, off-grid captive power projects which are intended to benefit a specific community or client or make use of a new technology. Examples include supplementing the electricity needs of a school or animal welfare centre or funding the development of a portable solar power kit.

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CROWDFUNDING Even if traditional bank lending was available, the costs of a loan could make the project unviable. In the preface to an ebook funded by the European Union, “Crowdfunding Renewable Energy”, University of Buckingham’s Professor Matthias Klaes said over 1 000 investors had contributed more than €10 million for individual projects in Europe by February 2018. Some of the successful crowdfunded projects cited in the book include the 9.6MW Toreilles Solar Park in France and the Solease company, which rents out solar PV systems for households. Toreilles raised €800 000 from 438 investors while Solease raised €1 million from 291 investors.

Cryptocurrency and blockchain-based crowdfunding The latest development in crowdfunding is the advent of cryptocurrency and blockchain technology. Cryptocurrency and blockchain-based crowdfunding taps into a decentralised “crowd” and raises funds through a frictionless source of value, namely cryptocurrencies. The Sun Exchange project at the Stellenbosch Waldorf School was the first solar power plant to be funded by cryptocurrency and it now has six other fully operational solar projects in South Africa, also financed through crowdfunding initiatives. Blockchain-based crowdfunding, better known as initial coin offerings (ICOs), work like this. The proposer mints a quantity of cryptocurrency which is sold in the form of tokens to investors to raise a specific amount. The tokens are sold in exchange for fiat currency (legal tender) or other cryptocurrencies. The tokens are future units of value which entitle the holder to a share of an income stream (e.g. payments by energy customers in a lease type arrangement) or could act like a voucher (to buy a certain amount of energy) or even result in priority access or an ownership right of the underlying asset (e.g. solar panels). The funds generated from these tokens can be used in the project development as well as implementation and operational stages of a project. These uses are detailed in

Carey-Anne Jennings, Partner in the Projects team at Webber Wentzel, Johannesburg.

the ICO White Paper published by the proposer, along with cautionary notices about the risks of cryptocurrency, details about the tokens and information about the project team. While ICOs do provide an efficient and frictionless means of raising funds, they are still subject to the volatility and regulatory uncertainty that currently plagues the global cryptocurrency industry. The regulation of cryptocurrency and ICOs varies between jurisdictions, with some regulatory authorities choosing to not impose regulation and others opting to ban it completely. In South Africa, for instance, the regulators have proposed a “soft touch” regulatory approach as they do not want to close off this avenue of funding for entrepreneurs, or a potential source of wealth accumulation for individuals, given the financial exclusivity of the formal banking sector. Various global platforms have emerged that offer hosting and rating of renewable energy crowdfunding projects, like ICOBench (which lists a range of projects, not only in energy), SunEx (mentioned above) or XiWATT, which lists viable renewables projects and provides the tools to assist in raising funds from potential investors. XiWATT also distributes the proceeds, either in the form of fiat or cryptocurrency, or tokens that can be used (in the US) to pay utility bills. The responsibility of promoting clean energy resources is extended to the individual who can play an active role in encouraging and facilitating renewable energy resources by investing in clean energy projects through a crowdfunding initiative. At the same time, it promotes the fruition of these projects, which historically would not make it off the ground for lack of funding. The need for small-scale and off-grid/captive renewable projects in South Africa and elsewhere on the continent is obvious. Crowdfunding offers enormous potential to meet that need. Carey-Anne Jennings is a Partner in the Projects team at Webber Wentzel, Johannesburg and Seshree Govender is a Senior Associate in the Financial Regulatory team. n

Seshree Govender, Senior Associate in the Financial Regulatory team at Webber Wentzel, Johannesburg.

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CYBERSECURITY

Is your organisation safe from third-party data breaches? By Doug Clare, Vice President of the cyber security initiative at analytics software firm FICO

TPRM stands for third-party risk management, and it’s a vital concept in cybersecurity. Today, nearly every vendor or partner you do business with poses a potential security threat to your business. You can have the best cybersecurity in the world, but if your vendor suffers a breach, your data, your customers and your reputation are at risk. Scott Zoldi, Chief Analytics Officer at FICO

South Africa’s largest third-party data breach can be traced to a web server registered to Jigsaw Holdings, a holding company for several real estate franchises. Over 60 million records consisting of personal data of South African citizens were exposed. The immense leak highlighted how Jigsaw had unbelievably weak security on their web server, with a thread of errors exposing South Africans’ sensitive data to the world. Although the data was simply exposed and not overtly hacked, it still signals a long road ahead in terms of data protection. Though governments have regulatory laws in place, such as the Protection of Personal Information Act in South Africa, which serve to protect the public from harm by protecting their personal information, what happens when companies that have legitimate access to private data are hacked? As a business, how can you measure the cyber soundness of your entire supply chain? This is where advanced analytics, such as those that power the FICO Cyber Risk Score, come in to play. The objective metric provided by the score provides an accurate and continuous assessment of cyber breach risk that can help you prioritise the work of your cybersecurity and TPRM teams. This is why T-Mobile, one of the leading global mobile carriers, has signed on to use the FICO® Cyber Risk

Score as a key quantitative risk metric in its vendor management programme. The score, which indicates the likelihood that an organisation will be breached, will help T-Mobile assess the effectiveness of vendors’ data protection procedures. Improving its third-party risk management will enable T-Mobile to take targeted actions to reduce its supply chain risk. The FICO® Cyber Risk Score is based on billions of cyber risk indicators that are monitored at Internet scale. It relies on machine learning to interpret the network hygiene practices of thousands of previously breached organisations and form predictors that amplify the signals associated with risk of data loss. Organisations can get their FICO® Cyber Risk Score, for free, to gauge their security effectiveness and understand how business partners view their cybersecurity hygiene. Register for a free subscription at cyberscore.fico.com. Once you understand how the score works, the logical next step is to apply it to your supply chain as well. n

FICO W www.fico.com/en

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Conference & Exhibition: 12-14 November 2019 Cape Town International Convention Centre South Africa

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@Connects_Africa

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@connectingafrica

Connecting Africa Series

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EMERGING MARKETS

The investment case for emerging markets? By Adrian Saville, Chief Executive, Cannon Asset Managers

Investment manager and author, Mebane Faber, recently argued for ‘investing entirely in emerging markets (EMs) for the long haul’, reasoning that the endemic features of these markets make a compelling case for the long run.

To start, EMs are home to large and growing populations that drive household and business spending. As many as 6.4 billion people, or 86% of the world’s population, live in EM countries. China and India alone are home to 37% of the world’s population, and by 2030 the World Bank estimates that as many as one in five consumers will live in Africa. Additionally, EM populations have a young demographic make-up compared to developed markets (DMs), with positive implications for human capital, productivity growth and business competitiveness. The median age in Japan is 48 years old, whereas the median age in the Philippines is 24. Along with rapid market growth, EMs are also the birthplace of innovative and disruptive business models. For example, China’s Ant Financial has built the world’s largest money-market fund in five years and achieved a valuation of $150 billion, while India’s Narayana Health performs heart surgeries – with first-world results – for $800. Further to this, valuations are much more attractive in EMs than DMs.

Caveats to the EM argument

Adrian Saville, Chief Executive, Cannon Asset Managers.

But things are seldom as simple as they first appear, and closer analysis raises several caveats. As Stephen Arnold of Aoris Investment Management cautions that the above arguments are of no consequence if economic growth and demographic drivers in EMs don’t translate into growth in company earnings.

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EMERGING MARKETS Conventional wisdom posits that superior economic growth produces superior growth in company earnings which, in turn, translates into corporate prosperity. Put simply, faster economic growth should mean faster company growth, and vice versa. Yet, at an index level, inflationadjusted earnings per share (EPS) have declined in three of the five BRICS over the past ten years. In the case of Brazil, earnings have halved. And in nine of the fastgrowing Next 11 (N11) countries, the numbers are as disappointing, with earnings growth having lagged economic growth, as measured by the “growth gap”. Further emphasising the disconnect, EM economies have grown at 4.9% per annum over the last 10 years, as compared to 1.4% produced by DMs. However, of the 16 BRICS and N11 countries, only Nigeria and the Philippines have recorded real earnings growth faster than the 3.9% DM average. Evidently, as Stephen Arnold notes, the relationship between economic growth and market EPS growth does not assert itself equally. Additionally, adjusted for inflation, earnings in nine of the 16 EMs are lower today than they were 10 years ago – notwithstanding that EM economies grew materially faster than DM economies.

Link between economic growth & equity returns should not be taken at face-value For at least four reasons, the causal link between economic growth and equity returns should not be taken at face-value. First, the ratio of corporate profits to GDP changes over time. For instance, the profits of all companies in the US relative to GDP rose after the global financial crisis and have remained relatively buoyant (above 100). By contrast, although profit share in India also lifted after 2009, the profitability of Indian companies has been far more erratic, falling to nearly half the 2010 peak. Second, companies listed in one country often do business outside of their local market, particularly larger listed EM companies. Consider the examples of British American Tobacco, Naspers and Richemont. As a result, the home economy has very little to do with these companies’ earnings. Third, while a country’s stock exchange often resembles the country’s economy, many EMs remain heavily commodity based, which pins domestic firm performance to global growth rather than domestic growth. Brazil, Egypt, Nigeria and Russia are a few cases in point. Additionally, markets in these countries are

Source: Thomson Reuters Datastream (2019

A Decade of Economic Growth and Earnings Growth: 2009-2018 Real GDP (% p.a.)

Real Earnings Growth Gap (% p.a.) (% p.a.)

Brazil

1.2

-7.0

-8.2

Russia

0.7

-3.2

-3.9

India

7.1

-2.3

-9.4

China

8.1

0.8

-7.3

South Africa

1.6

0.4

-1.2

Pakistan

4.0

-1.4

-5.4

South Korea

3.1

-2.4

-5.5

Turkey

5.6

1.1

-4.5

Bangladesh

6.3

-5.3

-11.6

Egypt

3.5

3.8

0.3

Indonesia

5.4

1.1

-4.4

Mexico

2.2

-4.5

-6.7

Nigeria

4.5

5.3

0.8

Pakistan

4.0

-1.4

-5.4

Philippines

5.8

4.0

-1.8

Vietnam

6.0

-5.4

-11.4

BRICS

3.7

-2.3

-6.0

Next 11

4.6

-0.5

-5.1

4.9

-1.2

-6.1

1.4

3.9

2.5

Source: World Bank, Thomson Reuters Datastream and Cannon Asset Managers (2019)

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EMERGING MARKETS

Source: FRED, Economic Times of India (2019)

Ultimately, you may feel bullish on the Chinese economy, or the prospects of a recovery in Brazil. But your view on an economy needs to accommodate a range of elements before it has any real bearing on your expectations for EPS growth from your investment – counterintuitive though this may feel. The past decade demonstrates that if you want economic growth, you will find it in EMs; but if you want earnings growth, you will find it in DMs. As compelling as the economic cases might be, investors need to examine the more carefully identified investment drivers – and not the more easily told EM investment narrative.

NOTE: The contents of this article do not consider the individual needs or circumstances of any person, and do not constitute investment advice. While all opinions expressed herein are based upon our research and all information is accurate to the best of our knowledge, Source: Factset and Stephen Arnold, Aoris Investment Management (2019) Cannon Asset Managers does not accept any liability whatsoever for any loss arising from reliance on this article. Individuals seeking to invest often immature. For instance, the Rwandan economy has should first consult a professional financial advisor before grown at 8.1% per annum since 2001 but has just eight taking any decisions. companies listed on the stock exchange – none of which Cannon Asset Managers’ is committed to fairness are in the agricultural sector that makes up 40% of its and integrity in all investment activities and attempts to GDP. align the interests of its investment team with clients. Finally, investors should be concerned with per share Consequently, members of the investment team may have earnings, and not company earnings, which poses one a personal interest in the shares or portfolios mentioned last hurdle: dilution. EPS growth relies on net profits within this article. growing more quickly than the number of shares in issue. Cannon Asset Managers Proprietary Limited But a large proportion of listed EM businesses are in (registration number 2000/025176/07) is licensed as capital-intensive sectors such as resources and financials, a financial services provider in terms of the Financial or are young and growing off low bases, which translates Advisory and Intermediary Services Act, 2002. n into the dilution of profits from share issuances.

About Cannon Asset Managers A member of the Bidvest Financial Services Group, Cannon Asset Managers has built a reputation for results since the company’s founding in 1998. We are true investors, seeking out the best investment opportunities across all asset classes locally and internationally. Through our rigorous research process, we look to buy the right assets at the right prices, rising above speculative thinking, with the knowledge that a sound philosophy, patience and resilience are rewarded.

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PROFILE: LFP GROUP

SA’s leading provider of end-to-end BEE compliance services They call us the ‘Agents of Transformation’, why? You have heard this term countless times, but what does it mean? At LFP Group, we strive to change perceptions and evoke positive conversations around BEE compliance in South Africa. Rather than viewing BEE compliance as a “tick box exercise”, we see it as the much-needed catalyst for change and growth in our country. By incorporating BEE into your company’s big-picture thinking, you reap financial benefits while making a change in the lives of those who need it most. ‘We understand the importance of the role that we play, and we advocate BEE as a revenue growth possibility rather than a “grudge purchase”,’ says Group CEO, Louis Pulzone. ‘LFP’s vision is now set to connect these concepts in such a way that our entire economy can benefit from it,’ Pulzone continues. As the industry leaders in the Skills Development and BEE compliance sector in South Africa, LFP Group sets the tone for innovation and continuously develops new strategies to deliver significant value. While we strongly believe that Skills Development initiatives is still one of the most crucial and impactful elements on the BEE scorecard, we understand that it does not operate in isolation. The LFP Group’s service offering goes beyond our SETAaccredited learnerships and B-BBEE consulting services to bring you recruitment services, permanent placement services, outsourced payroll solutions, YES programme implementation, a BEE management tool and BEE-Connex. LFP are the disruptors of the BEE industry. ‘We thrive on innovation and are always looking for ways to do things more effectively and efficiently. We set the tone and have produced several industry-firsts, such as the industry’s first BEE supplier database app, SA’s first free BEE management tool and our blended online learnership platform’, adds Pulzone. The LFP Group has helped companies around the country to make a difference in the lives of those who can’t do so for themselves. When you join LFP, you join a family. As such, LFP promise dedicated service, reliability and a legally compliant, transparent service offering. ‘Our company exists to help transform South Africa. We work with corporate SA to take the unemployment crisis into our own hands,’ Pulzone comments. To date, LFP’s national team of 200 members have helped 700 clients to transform South Africa. From large financial institutions to medium-sized enterprises, each of LFP’s clients has achieved a 100% pass rate in their verification audits.

LFP Group CEO , Louis Pulzone.

LFP Group is a Level 1 B-BBEE: Generic Company status and 30% Black Women Owned status. By partnering with the company, you can claim up to 135% towards your procurement recognition which is enhanced to 162% as a new supplier.

Proud sponsors LFP Group is a proud sponsor of Miss South Africa 2019, the Vodacom Blue Bulls, the DHL Stormers and the Cell C Sharks. n

LFP Group W www.lfpgroup.co.za

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ADVERTORIAL: LFP GROUP

Unpacking our service offering LFP training Thanks to our unmatched methodology, LFP training delivers industry-first, SETA-accredited learnership programmes at world-class training facilities around the country for unemployed and disabled learners.

LFP permanent placements Our in-house recruiting service attracts top talent for your business. Our attentive team of trained experts recruits talent in line with your company’s B-BBEE scale. We predominantly recruit for roles in the fields of administration, healthcare, technology, retail and start-up hiring.

Outsourced payroll solutions Let our dedicated and trained administration team handle the day-to-day management of your learners’ stipends and internal payroll, thanks to our outsourced payroll solution. Enjoy nationwide, day-to-day support courtesy of LFP.

YES (Youth Employment Services) Programme implementation In support of the Youth Empowerment Services (YES) programme, LFP acknowledges the critical role that youths play in shaping our economy. Based on this, our learnerships are aligned to YES for enhanced recognition.

BEE-Connex Gain instant access to the largest network of BEE experts in the country, matched to your requirements at the touch of a button on BEE-Connex. Let this first-of-akind app break down the jargon and cut down the search time to bring you exactly what you need.

BEE verification facilitation LFP manages your entire verification compliance exercise – accurately and independently. We work with your business to seamlessly deliver on all required documentation.

reducing the need for manual administration. Maximise your investment with an outsourced, comprehensive solution.

B-BBEE consulting Dedicated to the industry, the LFP Group’s national team of trained and knowledgeable B-BBEE consultants are here to walk the journey with you. n

BEE management tool Calculate your BEE points with SA’s first free BEE Management Tool. This user-friendly service allows you to analyse your company’s scorecard, calculate your current points and plan your company’s BEE requirements going forward.

Outsourced procurement Sophisticated software has been developed to efficiently manage and analyse your procurement data while

LFP Group T JHB: +27 (0)11 791 1602 CT: +27 (0)21 201 1134 KZN: +27 (0)31 941 1468 E info@lfpgroup.co.za W www.lfpgroup.co.za

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FINANCING

Borrow money in a way that won’t break the bank By Dalene Sechele-Manana, Head: Specialised Markets at Mercantile

Entrepreneurs looking for funding are often overwhelmed by the different options available and could wonder, with good reason, which financing options to use for their business.

A personal banker that knows your company should be able to tailor a funding solution to suit your business’s unique requirements, but it would be wise for entrepreneurs to familiarise themselves with the different options available. A suite of borrowing products usually includes working capital facilities (overdrafts), asset finance, and business loans.

Working capital facilities The intention of working capital facilities is to help a business to finance its day-to-day activities. The most common example of this type of borrowing is an overdraft. This type of borrowing is important for businesses to help them finance their daily operations – their short-term operational needs – and help to manage their cash flow to pay, amongst others, employees, rent and suppliers when these are due.

Dalene Sechele-Manana, Head: Specialised Markets at Mercantile.

Asset finance These are financing options for your business to acquire longterm assets such as vehicles, machinery and equipment.

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FINANCING

With asset finance you own the asset and keep it on your balance sheet by paying monthly instalments over a fixed term.

An entrepreneur that owns their own property can also have multiple tenants and thereby have an additional source of income in the form of monthly rental income.

Rental finance

Business loans

This type of finance is useful for a business that is looking to rent assets, typically â&#x20AC;&#x153;commodityâ&#x20AC;? items, like office and computer equipment, with a shorter lifespan compared to machinery and vehicles. Rental agreements can be specifically designed and have varying periods attached to them, ranging from 24 to 60 months.

In the case of business or term loans, the entrepreneur borrows money, normally for a fixed period, and pays it back with interest at a determined monthly amount. Collateral is usually required for these types of loans because they are larger and longer-term loans in most cases. An example for using a term loan would be when one partner wants to buy out other partners in the business.

Property finance When a business wants to buy the property it is operating from, property finance is the option. Banks prefer and are more likely to lend an entrepreneur money (on better terms) if the property is owner-occupied. The benefit of this is that the entrepreneur has a vested interest in the property and will make sure it is maintained and knows what is going on at the property.

Conclusion Entrepreneurs should be aware of the different financing options available and what it means for their business in terms of, amongst others, cash flow and ownership of assets. However, it is always a good idea to have a dedicated banker that understands your business and provides the right option for your business to grow. n

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AVBOB: 101 YEARS OF SHARING VALUE AND VALUES

In 2006, American strategy experts Michael Porter and Mark Kramer raised the profile of “shared value” business models in an article they authored for the Harvard Business Review. Since then, the concept of “creating shared value” has become not so much a buzzword as the increasingly loud voice of corporate conscience for the sake of all concerned.

Unpacking this paradigm-shifting model within the context of South Africa’s socio-economic landscape, it is clear that AVBOB started practising in 1918 what Porter and Kramer started preaching in 2006.

AVBOB believes that shared value is not a feel-good strategy they have adopted to gain competitive advantage or to improve their corporate image. It is fundamentally who they are. And it is not a one-size-fits-all solution.

“Shared value is a fundamental business strategy that makes social needs the object of value creation.” – Marc Pfitzer

Underpinning their commitment to shared value is a deep understanding that each continent and country has its own challenges, which is perhaps why it embraces the one term that perfectly encapsulates the core of creating shared value at the southernmost tip of Africa: “ubuntu”. Ubuntu, in the words of the late, great Nelson Mandela, is “the profound sense that we are human only through the humanity of others; that if we are to accomplish anything in this world, it will in equal measure be due to the work and achievement of others.”

The resurgence in interest in shared value business models was forged in the crucible of the 2008 financial crisis, where many accused big business of earning obscene profits at the expense of society. While AVBOB’s humble beginnings were also rooted in pain, its founding purpose was for the benefit – not the detriment – of its members. To understand AVBOB’s compassionate roots, one has to go back to the Spanish Flu epidemic that arrived in South Africa in the wake of the First World War. This caused countless deaths and infinite trauma, both emotional and financial, with many families unable to afford dignified funerals. It was amidst this death and trauma that the original founders of AVBOB stepped forward with a solution: a business started by a community for the upliftment of the community. From day one, the concept of uplifting their members has been not only AVBOB’s guiding force, but part of their corporate DNA. In addition,

NEW SABI Vol10 Sep19 - Feb 20.indd 42

Recognising the wide disparity of income and wealth distribution in South Africa and our responsibility to all citizens, AVBOB is deeply invested in the concept and reality of connectedness through caring and sharing. Informing everything they do, is their understanding of the reality that the costs associated with funeral preparations can often deplete savings and drive families into debt. Without access to financial markets and without meaningful participation in economic growth, the cycle of poverty is never broken. And so, never before has AVBOB had a more relevant role to play in South African society than today. AVBOB’s shared value business model is rooted in its status as a “mutual society”. As a mutual, it has no shareholders. The profits that

2019/08/30 1:24 PM

arise from the various businesses in the Group are deployed solely for the benefit of its members (who are its policyholders). As strong as AVBOB’s commitment to their policyholders is their passion for improving literacy in South Africa. AVBOB is actively engaged in the communities in which they operate. To date, they have donated 54 container libraries to underprivileged schools, with six more to follow. They have also pledged to invest R150 million to the refurbishment and upgrading of rural schools in partnership with the Department of Basic Education. And on the economic front, AVBOB funeral branches procure services from the local communities, thus stimulating local economies.

Equally important and ultimately crucial is AVBOB’s positioning of itself as a company that is part of the solution, not part of the problem. As a country with a renewed sense of optimism and business confidence arising from the ‘new dawn’, South Africa is finally moving into a political and individual space where the silver lining starts outshining the dark cloud. AVBOB is taking their lead from this and, as a corporation involved with millions of individuals, they are mobilised and inspired by the realisation that the time has come to stand up and be counted.

“A company cannot succeed in a society that is failing.” – Sanda Ojiambo

What distinguishes AVBOB’s initiatives from CSI and moves it into the broader sphere of shared value, is arguably the fact that they are boosting the economic engines of tomorrow by improving the lives of all stakeholders – from policyholders and learners to entrepreneurs – today.

6 YEARS

54 LIBRARIES

= 1 container library

Each library contains ±3 000 brand-new books

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GENDER PARITY

Transforming gender parity in post-school education and training By Dr Blade Nzimande, Minister of Higher Education, Science and Technology

The South African Ministry of Science and Technology has developed a range of programmes and developed new laws since 1994 â&#x20AC;&#x201C; yet the scourge of violence, especially gender-based violence, seems increasingly brazen.

Dr Blade Nzimande, Minister of Higher Education, Science and Technology.

South Africa honours Womenâ&#x20AC;&#x2122;s Month in August as a tribute to more than 20 000 women who marched to the Union Buildings on 9 August 1956, in protest against the extension of Pass Laws to women. Women face many challenges in South Africa. These challenges relate to their voice and representation being undermined on many fronts. Women are economically, socially and politically disempowered due to social attributes and gender norms that hinder their access to opportunities of employment and socialisation. In dealing with women empowerment, the Ministry of Science and Technology aspires to transform our higher education system to be high-quality, demographically representative, and to provide students and staff with good opportunities for better access and success with the Post-School Education and Training (PSET) sector. While gender equity in other sectors of South African institutions have been attempted with success, gender equity in academic circles still remains a challenge to attain, particularly in senior university management positions. The Ministry of Science and Technology therefore aim to restructure and transform its academic programmes in all its institutions to better respond to the human resource, economic and developmental needs of our country, whilst ensuring that past discrimination, insufficient representativity and lack of access are effectively addressed. The new PSET system will be diverse, differentiated and articulated, relevant and responsive to local and regional contexts, at the same time able to be rated

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GENDER PARITY amongst the best internationally in terms of teaching, research and engagements. The University Capacity Development Programme (UCDP) is also being implemented to support universities to improve student success, enable equitable and quality staff development opportunities, and to implement initiatives to reform and strengthen programmes and curricula. Universities are implementing three-year capacity development plans and the year 2019/20 is the second year of the implementation of these plans. In the 2019/20 financial year, R997.9 million will be invested to implement the UCDP. In addition, a range of national collaborative capacity development projects are being implemented, including the University Staff Doctoral Programme (USPD). Phase 1 of the USDP has been implemented and involves supporting approximately 140 USDP scholars to achieve Doctoral degrees over a period of four years. USPD scholars are permanently employed as academics or professionals at a public university and 80% are black and/or women South Africans under the age of 45. The new Generation of Academics programme (nGAP) is growing from strength to strength and from 2018/19, a minimum of 100 new nGAP lecturers will be recruited each year, of which 80% must be black/or women South Africans under the age of 45. To further deal with the injustices of access to higher education, which were in the main created by the apartheid government, a PSET system is being created based on lifelong learning model. This model ensures that South Africans, particularly women, the youth and people with disabilities continue to be trained in niche areas that are aligned to industry needs. This is being done by offering programmes in the academic and vocational space from Higher Certificates to Doctoral Studies, through both distance and contact modes of delivery. Work is also underway to popularise and grow community education and training through these CET Colleges. In collaboration with Umalusi, a National Senior Certificate for Adults and the General Education and Training Certificate for Adults (GETCA) has been developed and work is underway to mobilise financial resources to support CET Colleges. The Ministerial Task Team on the Fourth Industrial Revolution (4IR) has been established to provide critical policy advice on how its PSET system should respond to opportunities and challenges presented by the 4IR, particularly on issues relating to curriculum development, science and innovation. A Skills Master Plan, which will be complemented by a national list of Occupations in High Demand and the Critical Skills List, is currently also being created. The new Sector Education and Training Authority (SETA) will be mobilized from 1 April 2020, with the aim

of strengthening, realigning and repurposing the SETA system. The Department of Higher Education and Training remains committed to create a safer and caring society with a concerted focus on safety and protection of all people, in particular its female students and staff. The Higher Education and Training Health, Wellness and Development Centre (HEAIDS) has been mandated to implement a GBV programme in university and TVET college campuses to mitigate the problem. HEAIDS aims to: • d evelop an integrated model for managing sexual and GBV at PSET institutions, with specific emphasis on policy interventions to eradicate GBV • improve victim/survivor support services, and • address GBV more broadly in society. It is against this backdrop that HEAIDS led several key activities in collaboration with key role players across the country, including government and donor partners to develop a GBV Policy Framework for the PSET system. However, these interventions alone will never stem the rising tide of gender-based violence and a concerted effort is needed by all in society. By working together, by confronting difficult issues, and by mobilising everyone in and around our institutions, we shall create a society where everyone, especially women, feel safe and are safe at all times and in all places. n

Department of Higher Education and Training 123 Francis Baard Street Pretoria 0001 T +27 12 312 5911 W www.dhet.gov.za Call Centre Information: T 0800 87 2222 E callcentre@dhet.gov.za

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INTERVIEW: TSHWANE SOUTH TVET COLLEGE

Advocate Tokelo Joseph Chiloane – ‘Do the right thing and fear nothing!’ SA Business Integrator spoke to Advocate Tokelo Joseph Chiloane, Chief Executive Officer and Principal at Tshwane South TVET College, as well as the owner of his own legal practice.

Prior to joining Tshwane South TVET College, you taught at two different schools in Soweto where you later became Principal at Emshukantambo Secondary School from 1992 to 1998. Please tell us more about your background as a teacher. I began teaching at an eight-class roomed school, Leihlo Primary, where I taught Mathematics, Geography, History and Natural Sciences. My students achieved the top position in Soweto and Alexandra year after year.

When the then Department of Education and Training established a new secondary school in Pimville in 1991, I joined the school on a Tuesday in the middle of January the same year, and by Thursday, I was an Acting Principal. I have never looked back. Emshukantambo Secondary School was one of the best run township institutions, evidenced by the manner in which both the staff and the students conducted themselves, showing a high level of discipline which translated into the best results. Subsequently, I was appointed as Deputy Director, then District Director, until I was approached by the Department to become the Chief Executive Officer and Principal of the Tshwane South (TVET) College. In the early nineties, the Minister in Executive Council for Basic Education, Prof Mary Metcalfe, commended you when she visited Emshukantambo Secondary School. At the time, you were making history in the education fraternity as one of the youngest educators to run the school, obtaining excellent matric results for the school. Can you elaborate on the morals and discipline you instilled in learners that made the school such a highperforming school at the time? I helped to instil respect, punctuality and consistent educative teaching and studying. Later, you were employed at the then Gauteng Department of Education’s head office and were also acting as the District Director of the Benoni district. Please tell us more about your role and responsibilities at the department. I was part of a team tasked with the responsibility to ensure that policy and legislative prescripts used to govern schools were adhered to. Currently you oversee the entire operation at Tshwane South TVET College. What does your job entail and what challenges do you face daily? I oversee the administration and professional management of the institution, where we are lucky to have very few illdisciplined staff members and students. Can you also give us some of the highlights the College can currently boast? Two of the College’s campuses, Pretoria West and Centurion, have been identified as Centres of Specialisation in five trades - mechanical fitter, fitter and turner, electrical, boilermaker and millwright. Do you have any advice and encouragement for our future leaders, especially in the education sector? Do the right thing and fear nothing! n

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INTERVIEW: TSHWANE SOUTH TVET COLLEGE

Mary Legodi – at the forefront of providing influential development for people SA Business Integrator spoke to Mary Legodi, Acting Deputy Principal Corporate Services at Tshwane South TVET College. You have reeled in two National Diplomas in Management Assistance and Human Resources Management. You have also attended several short courses over the years. Please tell us more about your educational background and your career choice. After completing my Matric, I studied a Diploma in Management Assistance, after which came the opportunity to work in the Human Resources Department at the College. I studied further and achieved my qualification in Human Resources Management. I enjoy working with people and helping them find success in their line of work, thus ultimately bringing success to the College. My career started as an admin officer at Carletonville Technical College in 1999. The following year I joined Tshwane South TVET College at Pretoria West Campus as the Human Resources Officer. I worked my way up to become the Assistant Director in Human Resources during 2011 and in 2018 as Acting Deputy Principal Corporate Services at the College. To help equip my growth in the field, I continue to take courses. I like to think of my courses as “hard developments” and “soft developments”. “Hard developments” focus on the development of my core deliverables at the College, including labour relations, employment equity, tax year-end comprehensive, drafting, and managing contracts. My “soft developments” focus on the relational line of my work, including basic counselling, employee wellness and many more that can help equip me to support any personal challenges, as well as any support required from my team, colleagues and stakeholders. Please tell us more about your current role and how you achieve your goals. In my role, I am responsible for HR administration and development, employee health and wellness and labour relations. These HR departments uphold the mandate of the government, the department and the College in ensuring that we provide adequate support services to the principal as the accounting officer, as well as other departments. We provide constructive development for

employees in line with their skills to ensure that good service is rendered to the College and all its stakeholders. My team and the people that I work closely with help me achieve my goals. Without a good team, I would not be able to reach my objectives. It is also very important that as a leader I provide the team with a clear and attainable vision that ensures they stay encouraged and inspired to achieve their goals. My passion for people is what also makes my job enjoyable and exciting. There is a reward in changing people’s lives, not only of our employees, but also of our students. Our students’ future belongs to us as an institution and heavily relies on our support systems to fuel their success. This department is responsible for the achievement and maintenance of the College’s vision and mission. How do you manage to uphold the professionalism and responsiveness of employees of the College? We have legislation and policies that govern and ensure that our employees uphold the values and standards of the institution. However, people are led by the example we set. So, it is imperative that as leaders in the institution, we be an extension of these values and ensures that we are consistent in each of the values in our daily communications and deliverables.

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INTERVIEW: TSHWANE SOUTH TVET COLLEGE Creating a favourable working environment is also critical to making certain that we are not stifled by policies, but effectively make what we do enjoyable in the space we are in with the resources we have. Our vision and mission also govern our professionalism and responsiveness. We work to be a world-class further education and training College by empowering learners through high-quality vocational education training. We value excellence in all we do, fairness in all our dealings, respect towards one another, and trust in one another and integrity in our ethical behaviour.

Do you have any advice for students pursuing a career in Human Resources? Be passionate about people. There is no greater reward than being part of a course that is bigger than you are. The biggest creation God has created is that of the human race and it is a beautiful thing to want to have an impact in people’s lives. If you don’t remember anything else, remember this -PASSION is the only thing that will keep you going in this field as working with different people breeds its own challenges. n

Sonja Bouwer – vigilant about financials SA Business Integrator spoke to Sonja Bouwer, Chief Financial Officer at the Tshwane South TVET College Please tell us more about your personal and educational background I was born in Pretoria and have stayed in Centurion for most of my life. I attended Hoërskool Eldorainge and studied at the University of Pretoria. I have two sisters, of which I am the oldest. For relaxation, I love reading and knitting and it gives me great joy when I’m able to complete a knitting project. You have been in the finance and auditing industries most of your career and are currently Chief Financial Officer. Please tell us more about your functions and responsibilities in this role. I oversee the Supply Chain and Finance departments of the College. I ensure that correct policies and procedures are followed during procurement and until the goods and services are paid for. I am also responsible for ensuring that the annual financial statements are drafted and ready for auditing. It’s my responsibility to ensure that internal and external audits are executed on time and that findings are addressed as they have an impact on the audit outcome. You are also Treasurer of an NGO that cares for mentally disabled women. How do you manage your time? The NGO has an accountant that deals with the dayto-day financial activities, while I oversee the financials

and report to the AMG yearly on progress made, as well as prepare the annual financial statements. I attend the executive and governing body meetings that take about 20 hours a year. What advice do you have for individuals considering a career in finance? They need to be dedicated and able to meet deadlines. They need to be honest and trustworthy as they deal with other people’s money. They must also work very accurately. n

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INTERVIEW: TSHWANE SOUTH TVET COLLEGE

Rachel Madise Ntsimane – a career in education is a calling SA Business Integrator spoke to Rachel Madise Ntsimane, Deputy Principal Academic at the Tshwane South TVET College. You have a vast educational background, which includes a Bachelor of Arts in Development studies, a Diploma in Tertiary Education and an Honours Degree in Public Administration. Please tell us more about why you chose to study all this. Initially, I wanted to study for a BCom degree, but my scores did not allow me to. I had to choose a degree that would keep me in touch with economics and accounting. A Bachelor of Arts in Development Studies provided that. As I studied, I developed an interest in public administration. However, I could not get a job after I obtained my degree and ended up working as a private teacher at a commercial school teaching economics and business economics. While I was teaching, the principal of the school encouraged me to study for a post-graduate diploma in tertiary education so that I could become a qualified teacher, which I did. Because I was already in the public sector, I continued with my honours degree in public administration, which contributed to my performance. Your work career started in 1986. Please give us more background on your work experience. I started working as a private teacher in 1986 and after I obtained my teacher qualification, I got a full-time lecturer post at the Odi Manpower Centre, which is one of the Tshwane South TVET College campuses. I was promoted to senior lecturer, Head of Department, Deputy Campus Manager and subsequently Campus Manager. I was then promoted again to College Academic Manager. When the issue of demarcation came in, Odi campus became part of Tshwane South

TVET College and I became the Deputy Principal Academic of the College. Please tell us more about your scope of work and the challenges you face in your current position. I am responsible for teaching and learning which is the College’s core business. I am also responsible for student support services. The challenge I face is that the TVET Colleges are still not viewed as “first choice” institutions. This needs to change. The other challenge is the shortage of skilful lecturers who can teach vocational subjects. Education is obviously your chosen field of expertise. What advice do you have for students pursuing a career in education? You are not doing it for yourself, but for the nation. You must know that a career in education is not only a field of study, but is a calling. n

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PROFILE: TSHWANE SOUTH TVET COLLEGE

Tshwane South TVET College – a centre of specialisation Tshwane South Technical Vocational Education and Training (TVET) College, operating under the Department of Higher Education & Training, succeeded in enrolling about 25 000 students in 2017. This is inclusive of the National Certificate Certificate Vocational - NC (V), Report 191 NATED Engineering and General Studies programmes and workshops. In 2018 the institution became the fourth largest TVET College in terms of enrolments. Over and above that, the College managed to attain a fifth ranking in the 2019 T119 national results. The College was also selected as one of the Centres of Specialisation for the fields of Mechanical Fitter, and Fitting and Turning, Electrician, Boilermaking and Millwright in two consecutive years, 2017 and 2018 – a huge success for all trimesters, semesters and year programmes. Employing approximately 470 staff members, the College aims to equip students with the skills required by the job market and can boast alumni that work for renowned engineering companies like WBHO, to name just one. Under the auspices of the Department of Higher Education & Training, the College targets learners who have completed their Grade 9 to 11 for NC (V) courses, as well as learners who have completed their Grade 12 for NATED/Report 191 programmes. The College offers Report 191 programmes in: • N1 to N6 Mechanical, Civil and Electrical Engineering • N4 to N6 Management Assistant, Financial Management and Hospitality Studies • NC (V) L2-L4 in Electrical Infrastructure Construction, Engineering and Related Design Information Technology, Tourism, Office Administration, Civil Construction and Hospitality • Learnerships are also offered at the College. Tshwane South TVET College is a merger of three

Colleges: Atteridgeville, Centurion and Pretoria West. Its Odi campus previously belonged to Orbit College in the North West. Currently the College comprises the following campuses: Atteridgeville, Centurion, Odi and Pretoria West. The College’s campus in Centurion is famed for the culinary skills of its hospitality students and for having the best machinery for practical engineering training workshops. Atteridgeville campus is known for its Civil Engineering, while the centralised campus in Pretoria West offers Engineering for both Report 191 and NC (V) and has also been identified for Engineering Report 191 and Engineering and IT courses. Meanwhile, the Odi campus in Mabopane, is acclaimed for its NC (V) Tourism Programme. n

Tshwane South TVET College Head Office 85 Francis Baard Street (Formerly known as Schoeman Street) Pretoria T +27 (0)12 401 5000 (General Enquiries) E marketingadmin@tsc.edu.za W www.tsc.edu.za @tsc_tvet Tshwane South TVET College @tsc_tvet Tshwane South TVET College

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Profile: CPT Skills Development Solutions

The importance of educated training & learning path choices By Gizelle McIntyre, College of Production Technology

Building a career path isn’t quite as easy as enrolling at university, completing a course and seeking employment. Before applying to university, college or enrolling in a short course, you have to make many decisions and consider all circumstances. This can be an overwhelming experience and the confusion about what education really means exacerbates the situation. According to the Merriam-Webster dictionary, education is ‘the action or process of teaching someone, especially in a school, college, or university; the knowledge, skill and understanding that you get from attending a school, college, or university or a field of study that deals with the methods and problems of teaching’. This definition is only about schooling and university. Business dictionaries define education as ‘the wealth of knowledge acquired by an individual after studying particular subject matters or experiencing life lessons that provide an understanding of something’. This implies a certain amount of transfer from a book to an action that does not need to come from formal studies. This is why open education practices fit so snugly into the occupational qualification curricula. Within this context, learning is all about applying and preferably in a workplace!

Define the problem properly before looking for solutions If definitions of the word ‘education’ cannot even agree, what difference will it make to place the word ‘education’ in the spotlight again? An essential starting point in deciding what and where to educate oneself would be to determine exactly what it is that the country needs as a whole, rather than as sectors and government departments, and then determine a definition for these needs. Although it seems the logical process, one should follow first principle of problem solving - define the problem properly before looking for solutions. Determining whether the chosen institution and its delivery methods is the right fit is a daunting process, one that depends on the reason the person is studying. If well-meaning parents, teachers or advisers have made their choices for them, but they have no real passion for the subjects or career, the type of institution is not going to make a difference. The choice of the right institution starts with well-defined career choices and advice. The choice of institution should be the second step in the decision making process; after the learner has a definitive road mapped.

Gizelle McIntyre

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Profile: CPT Skills Development Solutions The College of Production Technology (CPT) emphasises the importance of matching the right person to the right career and then developing the individual’s skills to enable them to succeed. The learner undergoes an advising and selection process when they enrol to assist in placing them on the correct path. Although valuable support is given, learners are not restricted to following the suggested path; it is up to them to evaluate the information they are given and to make an informed decision. This in essence allows the learners to sculpt their own learning experience.

Lifelong learning should be a strong culture in learning institutions and the workplace When choosing a career path, it is also important to evaluate the current level of skill in the area being considered. Lifelong learning should no longer be just a concept, but needs to be a strong culture within the institutions of learning and the workplace. Obtaining a degree that will take you into a saturated market won’t aid in finding sustainable employment. Skills development, as referred to in the White Paper on Post-School Education and the management of this development in the world of work are critical. Learners who follow occupationally based qualifications have the added advantage of knowing that they will be employable, and will in turn uplift and enrich their peers and teams in the future. When deciding on a learning path, making informed choices is possible if the correct approach is taken. It is essential to seek the advice of specialists in the field to evaluate the reasons why the learner is choosing the particular course and to ensure they made the choice for the right reasons. It is also important to ensure that the correct type of course is chosen. Confirm the accreditation, international comparability, employability possibilities, industry and professional body recognition of the course, access to internships and learnerships and scope of the career before making a final decision.

More about the College of Production Technology The College of Production Technology (CPT) originates from a synergy of educators and trainers with many years of experience in educating, training and business and provides access to a wide education and training spectrum. Since CPT was established, the College has successfully provided part-time courses to students of industry in the fields of production technology, planning, logistics, quality, work engineering, human resources and strategic management. The College has programme approval status with the MerSETA (17-QA/ ACC/0030/06), Wholesale and Retail Seta (236) and the Transport Seta (TETA08-175). The College began with academics and business people with knowledge and practical experience of adult

education who identified a need in business and among the public for more education in production and related fields and the business function of manufacturing. The College learnership qualifications can be tailor-made to fit a specific industry. So far, we have contextualised qualification, in particular Production Technology, to fit with the following industries: • Cosmetics • Warehousing • Plastic Pipe Extrusion • Pump Manufacturing, to name a few. The aim of the College is to develop and present comprehensive learning programmes in the manufacturing and supply chain functions of business. This would not only ensure academic progression but also articulate with other institutions.

The CPT Business College The CPT Business College is your business driven action-learning partner. We will assist and empower you and your company through skills development and ensure that you not only upskill for compliance, but create a productive and engaged workforce in the process. From assisting with training needs analysis to WSP and ATR advice, recognition of prior learning interventions, accredited training, work readiness assessments and programmes, customised skills programmes and assisting you with your succession planning, the CPT Business College will engage and customise for context so that your training is not only just in time, but a real return on investment. We focus on professionalism and as such have accreditation with the SABPP and deliver CPD programmes to ensure you continue learning and developing throughout your career. We will guide and skill you in your career aspirations and planning.

The CPT Distance College The CPT Distance College will allow learners to complete any of our management qualifications at NQF 5 via the distance learning method. Our uniquely designed online system allows learners to access all the relevant information needed to complete their qualification, but also take part in forums with other learners and be provided support no matter where they are. n

College of Production Technology 14 Lakeview Crescent, Keinfontein Office Park, Pioneer Drive, Benoni T 0860 278 278 E info@cpt.co.za W www.cpt.co.za

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INFRASTRUCTURE

Lack of road maintenance in SA will cost billions By Saied Solomons, President of the South African Road Federation and CEO of the Southern African Bitumen Association

Roads that are not properly and timeously maintained are costing South Africa millions of Rands and negatively affecting our economy and society. This is according to Saied Solomons, President of the South African Road Federation (SARF) and CEO of the Southern African Bitumen Association (SABITA).

Saied Solomons, President of the South African Road Federation and CEO of the South African Bitumen Association.

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INFRASTRUCTURE

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Roads are a vital public asset and can deliver a higher economic return on investment than any other single type of infrastructure.

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A proper management system should be used to identify areas where maintenance is required to prioritise and action projects.

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April 4 this year, was International Road Maintenance Day, with countries around the globe focusing on road maintenance as a fundamental action to protect the environment, while contributing to socio-economic development. ‘Our focus is geared towards the economic and social imperatives of proper road maintenance, of which the environment is an important part,’ says Solomons. ‘Roads are a vital public asset and can deliver a higher economic return on investment than any other single type of infrastructure. But South Africa’s physical road network is likely to require billions of Rands to restore if maintenance is not taken seriously. ‘The real cost of not maintaining roads is difficult to quantify because poor roads are dangerous and affect road safety, they lead to higher transportation costs and bottlenecks on busy routes, they prevent people from accessing goods and essential services, they increase vehicle operating costs due to frequent repairs and require more fuel use, and they increase CO2 emissions. ‘Maintenance extends the structural life of a road but when this does not take place on time, the road deteriorates rapidly and instead of road maintenance, road rehabilitation is required and the costs soar,’ he adds. Solomons urges all South African road authorities to prioritise road maintenance. ‘A proper Pavement Management System should be used to identify areas where maintenance is required to prioritise and action projects. This will preserve the road network and extend the life of a road,’ he says. Solomons explains that road deterioration happens in stages.

‘It is caused by ultra-violet light from the sun, storm and rainwater and traffic. These stages start with ageing of the bitumen, which causes the surface to crack. This is when road maintenance must start. If it doesn’t, water seeps into the underlying layers, causing them to weaken. If the cracks are not sealed, potholes form which trigger further rapid deterioration of the road. This is all compounded by overloaded trucks – one overloaded truck can carry the same weight as about 20 000 cars. ‘The design life of a road is anything from 15 to 20 years and besides resurfacing, road maintenance is unlikely to be necessary before 15 or 20 years. However, roads must be consistently monitored so that issues are picked up and appropriate maintenance quickly initiated. ‘While some of our road authorities may face the challenges of competency and skills, upskilling and training can be dealt with far more easily than declining roads. We have a rich pool of experienced road and transport experts in South Africa that support the transport sector. Recently, SARF conducted a training programme for the Department of Public Works in the North West province ahead of a major gravel roads maintenance and construction programme,’ Solomons adds. South Africa boasts the world’s 10th longest road network and 18th longest paved road network. The country has an estimated road network length of 750 000km (2015), which consists of 158 124km of paved roads and 591 876km of gravel roads (National Department of Transport, 2016). In 2014, the value of SA’s road network was estimated at around R2 trillion. ‘Dealing with road maintenance across our 750 000km network will help avoid a debt burden on future generations,’ Solomons concludes. n

About the South African Road Federation (SARF) SARF is a not-for-profit organisation dedicated to the promotion of the road industry in South Africa through the dissemination of information, the promotion of sound policies and training and skills development for people working across the road and transport sectors. SARF provides accurate information, credible data and reliable commentary on road funding and road safety as part of its goal to promote prosperity in South Africa though an efficient road network. About the Southern African Bitumen Association The Association is a non-profit organisation that represents producers and applicators of bituminous products, consulting engineers and education institutions. Its main activities are in the fields of advancing best practice in Southern Africa in: • The use and application of bituminous materials • worker safety and environmental conservation • education and training, and • contact with government on the value of road provision and preservation.

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MERGERS

Higher penalties on the cards for failing to notify of mergers By Burton Phillips, partner at Webber Wentzel

When faced with legislation that requires parties to take certain steps or prevents them from implementing a course of action, the questions often asked include â&#x20AC;&#x2DC;what are the consequences and who will be liable to pay?â&#x20AC;&#x2122; There has for a long time been uncertainty about the penalty companies would face if they fail to notify of a merger or implement a merger without the requisite approval of the competition authorities.

The Competition Commission has now provided some guidance by publishing Guidelines for the determination of administrative penalties for failure to notify mergers and implementation of mergers contrary to the Competition Act. The guidelines (which became effective on 1 April 2019) could lead to higher penalties for failure to notify of mergers or prior implementation. The Act requires parties to any transaction that meets the definition of a merger to notify the Commission. The parties may not implement the transaction until approved by the Commission or the Competition Tribunal, as the case may be. The guidelines provide a list of conduct that the Commission requires prior to implementation. This includes the acquiring company changing the name of the target company (if this amounts to material influence in the Commission's view), integrating the parties' operations, the parties marketing themselves as a single entity (including in interactions with customers) and the acquiring company appointing directors to the board of the target company or influencing strategic decision making, prior to the approval of the competition authorities.

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MERGERS The Tribunal has the power to impose penalties of up to 10% of a company's annual turnover in South Africa and exports from South Africa in the preceding financial year for failing to notify of a merger or prior implementation. Historically, penalties imposed by the Tribunal for such cases have ranged from R350 000 to R2 million (in most cases penalties did not exceed R1.5 million). In 2016, the Tribunal, however, imposed a penalty of R10 million for failure to notify and prior implementation, although this case also involved alleged cartel conduct against the same parties. The Tribunal recognised that failure to notify and prior implementation cases cannot be treated the same as cartel conduct or other restricted practices, for which much higher penalties have been imposed. That said, the guidelines stipulate that if a party wilfully or deliberately fails to notify of a merger or implements a merger without approval, the guidelines will not apply, and the Commission will seek the maximum 10% penalty. The guidelines stipulate that the Commission follow the following five steps when determining the appropriate penalty:

Burton Phillips, partner at Webber Wentzel.

Step 1 - Consider the nature of the conduct. The Commission must consider how the failure to notify occurred, whether the parties are competitors, whether they implemented the merger or agreed on prices, allocation of customers, etc. The latter conduct could result in the Commission investigating the parties for price-fixing or market allocation (i.e. cartel conduct). Step 2 - The Commission must then determine a base amount for the penalty, which will be double the merger filing fee. This amounts to R330 000 for an intermediate merger and R1.1 million for a large merger. Step 3 - If the conduct endured for less than a year, the Commission must add 50% of the base amount for each month during which the conduct continued. If the conduct continued between one and two years, the Commission must add 75% to the base amount for each month. For conduct enduring for more than two years, the Commission must double the base amount (i.e. add 100%) for each month during which the conducted was ongoing. Step 4 - Once an amount is determined under Step 3, the Commission must then consider any mitigating or aggravating factors relevant to the parties' conduct. Aggravating factors include undue delays in informing the Commission once parties become aware of the contravention, not cooperating with the Commission's investigation, or the transaction resulting in a substantial lessening of competition. Mitigating factors include being proactive by informing the Commission of the conduct promptly, the parties having sought competition law advice and displaying full transparency and cooperation with the Commission. The Commission may offer parties a discount of up to 50% considering any mitigating factors. Step 5 - After determining the appropriate penalty, the Commission must consider the parties' audited financial statements for the preceding financial year to ensure that the penalty does not exceed 10% of the parties' turnover in or exports from South Africa. These steps could lead to higher penalties for failure to notify of mergers or prior implementation. For example, if parties fail to notify of a large merger and it only comes to their attention two years and two months later, at which point the parties immediately approach the Commission, a penalty of R16.5 million (R1.1 million x 14 months + R1.1 million based amount) could be imposed. This is significantly higher than previous penalties imposed for such cases. Previously, the buyer and the seller would be jointly and severally liable for the penalty. However, the guidelines provide that the Commission may, at its discretion, seek a penalty against either party or its holding companies. Notably, the guidelines do not prevent the Commission from seeking any other redress. The Commission may, for example, seek a divestiture order in circumstances where transactions result in competition concerns. Companies must be even more vigilant in ensuring that transactions are accurately assessed against the notification requirements in the Act to ensure that no steps are taken to implement transactions prior to the approval of the competition authorities. n

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MINING

DMR's 2018 Mine Health & Safety Statistics

At the beginning of March, the Department of Mineral Resources (DMR) released the Mine Health and Safety Statistics (statistics) for 2018. The DMR compiles and publishes these statistics annually. We have analysed the statistics and highlight some important facts, together with some interesting insights which we set out below.

â&#x20AC;&#x153;

The call for the arrest of mining bosses incorrectly assumes that only senior managerial personnel can be criminally prosecuted.

â&#x20AC;&#x153;

By Shane Johnson, Zandile Ncube and Logan Ramotlou (supervised by Kate Collier) at Webber Wentzel

Overview of statistics The statistics consider the performance of the mining industry from the perspective of health and safety. The statistics include information on the number of fatalities, injuries and occupational diseases reported for the 2018 calendar year. Overall, the statistics reveal that there has been a slight decrease in fatalities and injuries across mines in South Africa. We provide the actual statistics published by the DMR at the end of this article.

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MINING The highlights include: Fatalities • 81 fatalities were reported for 2018 • There was a slight decrease in fatalities for 2018 as compared to 2017 • 31% of all fatalities were attributable to fall of ground incidents • The gold sector continues to experience the highest number of fatalities in the mining industry • In 2018, there were three major disasters at mines in South Africa which resulted in loss of life

Mine Health and Safety Statistics

All Mines Percentage Fatalities by classification (Provisional) (01 January - 31 December) -2019

Fog (Falling of Groung)

31%

MISCELLANEOUS

General (Struck by)

General (Drowning)

General (Falling in)

2018

Gold

Coal

Platinum

Others

General (Overcome by Gas)

Heat Exhaustion

Explosives

Miscellaneous

2017

General (Slip and fall)

Transportation and Mining (TMM)

General (Mudrush)

Transportation and Mining Railbound equipment

Transportation & Mining (Winches)

Breakdown of fatalities per commodity

General (Burning & Scalding)

1% Machinery (Conveyors)

Electricity

Injuries • 2 350 injuries were reported for 2018 • In 2017, 2 669 injuries were reported which means that there has been a slight decrease in injuries across the mining industry

Mine Health and Safety Statistics

Mine Health and Safety Statistics Occupational Injuries The breakdown of injuries per commodity

2017

2018

2669

2350

Gold

2017

2018

1021

880

-14

167

-17

12 Coal 202 Occupational Deseases

Platinum

1154

Others

291

% Change

1048

-9

306

2016

2017

4632

Occupational diseases 3 4483 • No statistic was provided for 2018 on medical deaths

Diamond mines reported no medical deaths in 2017 compared to one (1) medical death reported in 2016 – this proves that the slogan of Zero Harm in the mining sector is attainable.

Mine Health and Safety Statistics Occupational Deseases 2016

2017

4632

9024483

902

975

due to occupational diseases • In 2017, the mining industry reported 25 medical deaths due to occupational diseases Although there was a decrease in the number of fatalities and injuries at mines, the DMR reiterated that it would continue to engage with its social partners through the Mine Health and Safety Council to ensure a higher degree of safety for mineworkers.

975

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MINING Call for harsher punishments Despite the decrease in the number of injuries and fatalities, the National Union of Metalworkers (NUMSA) has called on the DMR to amend the Mine Health and Safety Act 29 of 1996 (MHSA) to guarantee the arrest and criminal prosecution of "mine bosses" following fatalities and injuries in South Africa. Notably, there was no statement of support for the taking of disciplinary action against individual employees who may have contravened safety rules and endangered themselves and fellow employees. Notwithstanding the potential constitutional concerns regarding legislation guaranteeing arrest and prosecution in the absence of justifiable reasons for such conduct, the calls for this amendment appear to discount or forget that criminal prosecution in the event of a breach of the MHSA or negligent causing of a serious injury or illness is already provided for in the MHSA. Section 91(1) of the MHSA provides that any person who fails to comply with the provisions of the MHSA commits an offence and may be prosecuted. This applies equally to corporate entities, which may be prosecuted in terms of Section 332 of the Criminal Procedure Act and the responsible individual. The potential penalties for such offences include imprisonment. The call for the arrest of "mining bosses" incorrectly assumes that only senior managerial personnel can be criminally prosecuted. Section 86(1) of the MHSA provides that a negligent act or negligent omission of any person, which causes serious injury or serious illness to another is an offence. Any call for increases in criminal prosecution following mining related fatalities must then equally apply to all employees and any employee that may have acted negligently (such as failing to comply with a safety rule on which such an employee had been trained) should lead to swift prosecution. There is also no need, in our view, to amend the MHSA to ensure that sufficiently serious sentences can be meted out

Zandile-Ncube

Shane Johnson

by the courts. The MHSA already contemplate the ability of the courts to withdraw or suspend mining authorisations of an employer and individuals may face charges of culpable homicide or, even, murder in some instances. NUMSA's call could be attributed to the low number of criminal prosecutions seen in the mining industry. Several factors contribute to the lack of appetite by the national prosecuting authority to initiate criminal proceedings for breaches of the MHSA. The factors include the following: • Successful prosecutions may be dependent, or at least affected, by the information gathered during investigations and inquiries held by the DMR. If the information is insufficient, or has been gathered in a flawed manner, this decreases the chances of success of any prosecution – a consideration required to be taken before charges are brought by State. • The way inquiries are run, and witnesses questioned may lead to procedural and administrative irregularities which can make successful prosecutions impossible. • The lack of capacity or specialised and experienced inspectors who can properly deal with the intricacies of each accident and understand the mining environment and legislation. • The failure (or extensive delay) in issuing post-inquiry reports setting out findings and recommendations.

DMR reminder At the release of the statistics, the DMR confirmed that it plays an important role in ‘monitoring and enforcing compliance with the law’. The DMR also called upon all ‘social partners to play their part to realise the overarching objective of ensuring that every mineworker returns home unharmed, every single day’. Health and safety of mineworkers continues to be a common responsibility of all mine owners together with the DMR and other social partners. Safety at the mines is everybody’s responsibility – companies, workers and government. While there are improvements, we must do more in this area. n

Logan Ramotlou

A en w an th ru g lo

Kate Collier

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NEW ENERGY TECHNOLOGY

Private sector help welcomed to alleviate SAâ&#x20AC;&#x2122;s power crisis By Alexandra Felekis, Partner, Webber Wentzel

Government is looking at ways to accelerate new power projects, while the private sector is examining new technologies and financing options to ease South Africa through its current power shortfall, it emerged at the DLO Africa Power Roundtable.

The most important development highlighted in discussions at the recent DLO Africa Power Roundtable, hosted by Webber Wentzel in Sandton, was that South Africaâ&#x20AC;&#x2122;s private sector has an important role to play in new energy generation and alleviating the constraints caused by the current power shortfall. This was the third Africa Power Roundtable that Webber Wentzel has hosted, and it was well-attended at a time when Eskom loadshedding, restructuring of the power utility, electricity planning and advances in power generation technologies are at the forefront of public discussions. Speakers at the conference examined policy developments and Eskom as well as innovative power

solutions involving hybrid systems combining solar PV with batteries.

Minister confirms importance of private sector involvement Energy Minister, Jeff Radebe, who opened the event, confirmed that Eskom on its own cannot supply the R1 trillion of investment in power generation, transmission and distribution needed by 2030 under the Integrated Resource Plan (IRP). Private sector participation will be essential, he said, and he would use his best efforts to remove obstacles that delay or hinder private sector solutions in the interests of the economy. His comments were echoed by a speaker from Eskom,

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NEW ENERGY TECHNOLOGY who said Eskom was open to assistance from the private sector and invited suggestions and proposals to help alleviate its constraints.

Embedded generation expected to have a greater role in new generation capacity in future In the past few years, heavy electricity users examined embedded generation projects to offset rising Eskom tariffs. These solutions are now urgently needed, both to offset costs and ensure stable electricity supply. It is widely expected that distributed generation (smallscale power generation for own use, described in the draft IRP as embedded generation) will be part of the strategy to help meet the shortfall between capacity and demand in the short term. The annual allocation for distributed generation in the IRP from the years 2019 to 2030 is likely to be increased to 500MW a year. However, players in the distributed generation space are still concerned about the 1-10MW installed capacity restriction in the draft IRP. Several mines and industrial entities are ready with power projects that are between 30-60MW. If the installed capacity restriction is not adjusted in the final IRP, projects with an installed capacity above 10MW will be required to apply for a deviation from the IRP from the Minister of Energy. When Minister Radebe was asked whether he would consider making ministerial determinations under Section 10 (2)(g) of the Electricity Regulation Act to allow licensing of distributed generation projects that are not provided for in the IRP, he reiterated that his department is willing to engage with the private sector directly. He invited motivated submissions in this regard. Funders are also more willing to look at distributed power solutions. The Development Bank of South Africa intends to launch a US$200 million distributed power generation fund shortly after the IRP is finalised, for projects outside the Independent Power Producer Procurement (IPP) office's renewable power programme.

Plans for further bid windows confirmed The IPP office said that shortly after the IRP is finalised, it will release a request for proposals for an expedited bid round for renewable energy. It was confirmed by the IPP office that "expedited" would mean that the qualification criteria will be less stringent than in previous bid windows, with the aim of achieving a quicker evaluation process. Lessons learnt from previous bid windows would underlie the changes made to the bid documents as well as the confidence in the private sector to develop and close feasible projects. A change in some of the bid requirements is expected, particularly those relating to increasing the active participation of previously disadvantaged groups in renewable power projects, from the early development of the project until operations, in addition to equity requirements.

Despite the delays to bid window 4 of the REIPPPP, private sector sponsors in the room expressed confidence in the IPP office. It was clear that the private sector is ready and waiting to participate in the next bid window. Some concerns were raised about a disturbing narrative on social and broadcast media claiming the first and second bid windows of renewable power were excessively expensive. These criticisms ignore the context of the broader considerations that underpinned the renewable energy programme at the time. A spokesman for the South African Renewable Energy Council (SAREC) said the organisation would be working with the IPP office to contradict inaccurate information about the renewable power programme in future. Smaller developers were delighted to hear that the IPP office intends to shortly close the bid round for small projects, which has been on hold for several years.

Eskom will continue to explore battery storage technology Eskom, which is in the process of finalising a pilot project using battery storage technology, will undertake a procurement process facilitated by World Bank funding to install battery solutions at 50-90 transmission sites around South Africa. The focus will be on regions far removed from generating assets. A feasibility study is under way. The numerous use cases of battery storage and the associated cost of this technology compared with baseload technologies were debated. It was recognised that battery storage has a role to play in the energy mix. Battery storage developers believe the greatest hurdle to using this technology is misinformation and lack of awareness about the use cases that largely justify the additional cost.

Gas is still on the table for power developers The private sector believes that there is major potential for gas as an energy source in South Africa. To maximise this potential, there should be more comprehensive and holistic energy planning, the IRP should allocate greater capacity for gas and the time periods for the relevant regulatory approvals should be expedited. n

Alexandra Felekis, a partner at Webber Wentzel.

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ORGANISATIONAL CULTURE

Are one of these five gaps blocking your organisation’s high-performance culture? By Pam Lewis, DB & Associates

Countless empirical evidence and case studies clearly indicates that developing and sustaining high performance in an organisation is a learnt competence, and that it can be done successfully. However, there is also evidence to indicate that many organisations either completely fail in their efforts to sustain high-performance behaviours and practices, or they learn hard lessons from initial failed attempts before getting it right. Pam Lewis, DB & Associates.

The belief that “hard” performance measures are enough to drive high performance pervades many organisations. The focus tends to be around system, task, talent and motivation (transactional aspects of the organisation). In reality, it is the traditionally “soft” measures of organisational culture (i.e. a shared belief in the need for high performance) that drives the “hard” measures onwards and upwards. For an organisation to realise exceptional business performance, high-performance behaviours and practices need to become self-sustaining across all functions and throughout all levels within a high-performance culture.

Creating a high-performance culture Culture includes shared beliefs that evolve over time, guiding behaviours within the organisation and creating a culture of high performance from a transformational level. When gaps appear in the requisite alignment between key success factors versus what is actually taking place, it becomes increasingly difficult for high-performance behaviours and practices to become self-sustaining across the organisation. There is a common theme with three main barriers appearing consistently: 1. The failure to align organisational vision, mission and strategies with current market realities. 2. Specific high-performance behaviours – resulting in orientation, empowerment, responsiveness and

accountability – are not clearly aligned with and integrated into the business strategy. 3. Organisational systems and processes do not accurately support vision and strategy.

Bridging the gaps By considering that every industry sector and organisation has its own peculiarities, the following provides some very general guidelines to the types of actions that could be taken to address the five key gaps. Gap 1: The external environment vs leadership It is not enough for leadership to create a clear strategy for the organisation. The robustness of this strategy needs to be constantly tested against the dynamism of the external environment, frequently re-examined, modified, and possibly re-created to meet the needs of constant change. Gap 2: Leadership’s vision vs core purpose Once leaders have developed a clear appreciation of both the external and internal environment, they need to be able to shape a vision, create a mission and develop goals which clearly align to it. Alignment between external needs and vision, mission, goals and values of the organisation is critical to sustainable high performance. Gap 3: Leaders’ actions vs core purpose When actions or behaviours and core values (such as service excellence or quality product) are not aligned, the result is confusion and frustration.

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ORGANISATIONAL CULTURE

Gap 4: Leadershipâ&#x20AC;&#x2122;s actions vs employee actions Developing a high-performance culture cannot be driven only from an operational level for real and sustainable change. Culture needs to be driven from the top with careful examination of actual current and future capabilities linked to the future requirements and strategic intent of the organisation. There must be clear competency frameworks, job profiles, skills development, talent management and performance management systems in place. Gap 5: Employee actions vs organisational infrastructure Infrastructure should not only be enabling; it also needs to align with the core values and goals of the organisation. This includes a thorough understanding of organisational resources and what capabilities are required to execute strategy, ensuring that effective structures, systems, process and procedures are in place to support the development and sustaining of high performance.

Challenging, yet so rewarding Sustaining high-performance behaviours and practices is not a simple process. However, by being aware of the gaps that appear from time to time between the various

interlinking components of the open system of the organisation, it is possible to make a careful diagnosis and plan appropriate actions and changes. From an individual perspective, for people to maintain energy and sustained high performance, it is necessary for them to have someone to discuss their own levels of personal resilience, and to assist them with dealing with stressors (emotional and physical) and building motivation and confidence. Professional coaching is one of the most effective ways to help people to develop strategies to deal with these stressors, and to develop support networks (systems and processes). DB & Associatesâ&#x20AC;&#x2122; experts can assist organisations with this. Simply get in touch and start creating a sustainable high-performance culture. n

DB & Associates T +27 (0)10 312 6109 E info@dbassociates.consulting W www.dbassociates.consulting

About the author Pam Lewis has 18 yearsâ&#x20AC;&#x2122; experience in organisational development across various industries. Her expertise extends to people, processes and systems in key areas of organisational analysis and design, talent management and capability assessment, as well as related project design and management. Lewis now offers her wealth of expertise, knowledge and experience as an Associate at DB & Associates, helping businesses deliver value, unlock potential and motivate individuals and teams towards personal and collective growth and success.

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RENEWABLE ENERGY

How SA businesses can ensure the security of their power supply By Charl du Plessis, Head of Sales at Energy Partners Solar, a division of Energy Partners and part of the PSG group of companies

Electricity tariffs have recently been increased by around 14% and the National Energy Regulator of South Africa (NERSA) has approved further above-inflation hikes for the next three financial years. This means that operating costs for all businesses are expected to skyrocket, while load-shedding also remains an ongoing risk. Charl du Plessis, Head of Sales at Energy Partners Solar.

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RENEWABLE ENERGY

“

It is crucial for every company to start looking for capable service providers to ensure they have affordable, uninterrupted power in the coming years.

‘A PV system still requires a stable power grid to feed into, so for intermittent power cuts, one needs a generator that can provide the essential load,’ he explains. The best solution, according to Du Plessis, is a hybridised system that uses both the PV system as well as a diesel generator. ‘For this step, it is crucial to engage with an expert service provider to combine the PV system with a generator in an energy centre that automatically regulates the power supply to the business. That is the only way to guarantee that the system is safely installed and able to perform at maximum efficiency. ‘In an energy centre configuration, the PV system is able to supply the bulk of the power required by the business during loadshedding in peak daylight hours, while the generator either idles on standby or runs at

“

The best solution is a hybridised system that uses both the PV system as well as a diesel generator.

“

This is according to Charl du Plessis, Head of Sales at Energy Partners Solar, a division of Energy Partners and part of the PSG group of companies, who says that the security of electrical supply will increasingly place pressure on businesses across South Africa’s market sectors. ‘First and foremost, we would strongly recommend installing a grid-tied solar photovoltaic (PV) system to mitigate the impact of the massive tariff increases over the coming years. The payback period for a PV system (which can be installed within three to six months) could be as short as three years, including the utilisation of the Section 12B accelerated tax write-off of renewable energy assets. There are also service providers that can offer renewable energy on the basis of a Power Purchase Agreement (PPA), at up to 50% discount to grid rates,’ Du Plessis advises. He adds that a PV system on its own is not suited as an alternative power supply during load-shedding.

reduced capacity to provide additional power. At times when the PV system is unable to operate, such as on cloudy days, the generator takes over bulk power supply. This method can significantly reduce fuel consumption, and typically saves around 70% of the cost of diesel generation.’ Du Plessis notes that there is one other option available – a battery storage system in conjunction with a PV system. ‘While the capital outlay for this is substantially more than a diesel generator, with the approximate cost for a battery system that provides around 100kW of power during loadshedding currently being around R1.5 million, it does offer a few interesting advantages. ‘A battery system can also be used to reduce power costs when the grid is on. Alternatively, you can set the battery system to feed power into the company’s smart grid during operating hours (a method known as peakshaving), or charge the battery during off-peak hours when energy tariffs are lowest and discharge the system during peak hours (known as Time-of Use arbitrage),’ Du Plessis adds. ‘Over the next 10 years, the cost of batteries will reduce substantially, which will make this option much more viable in the near future.’ While an awareness of the importance of security of supply is growing among businesses in South Africa, Du Plessis believes that more still needs to be done. ‘It is crucial for every company to start looking for capable service providers to ensure they have affordable, uninterrupted power in the coming years,’ he concludes. n

Energy Partners W www.energypartners.co.za

About Energy Partners Founded in 2008, Energy Partners is a leading energy solutions provider in South Africa that provides clients with innovative solutions (including fully outsourced supply contracts – e.g. steam generation) to suit their needs. Energy Partners has built a high-quality team of talented individuals and robust processes which offer end-to-end solutions and integrate the different components of energy optimisation to deliver optimum results – including capital solutions that put clients in a positive cash flow positions from day one. Industries in which Energy Partners specialise include food retail, retail, healthcare, hospitality, food processing and logistics. About PSG PSG Group is an investment holding company consisting of underlying investments that operate across industries which include financial services, banking, private equity, agriculture and education. PSG Group has a market capitalisation in excess of R40 billion, with its largest investment being a 30,7% interest in Capitec. Additional group companies include Energy Partners, Impak, Curro and Capitec.

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RESEARCH AND DEVELOPMENT AT

STELLENBOSCH UNIVERSITY The Centre for Renewable and Sustainable Energy Studies (CRSES) at Stellenbosch University facilitates and stimulates research and capacity development activities, relating to a vibrant and viable renewable and sustainable energy sector, in the Southern African region. CRSES plays a coordinating role for a variety renewable energy related contract research projects where specialists from various disciplines participate in the following broad fields: • Solar (photovoltaics [PV] and thermal systems) • Wind • Hydro • Ocean (current, wave and tidal energy) • Bio (biofuels, biogas and biomass based energy) Specific areas of expertise facilitated through the CRSES include; • Energy efficiency • Renewable Energy finance • Renewable grid integration and micro grids • Energy storage CRSES has dedicated renewable energy engineers and researchers and can call on the expertise of the University as well as topical experts from the broader renewable energy community, both locally and abroad, to provide specialized and customizable services. These services include, but are not limited to the following: 1. Feasibility Studies 2. Renewable Energy Tender Evaluations 3. Advisory Services 4. Technology Reviews 5. Concept Evaluation www.crses.ac.za

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6. Equipment Testing and Laboratory Services 7. Renewable Energy Modelling Software Training 8. Resources Assessment 9. Renewable Energy Grid Integration Studies 10. Renewable Energy Market Reviews +27 21 808 4069

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RENEWABLE ENERGY

Understanding section 12B, renewable energy tax allowances By Terry Billson, CEO of Genergy

South Africa has an abundance of natural resources and with the right fiscal incentives to produce renewable energy, we could become a key producer of renewable energy for the continent. The National Treasury has revisited the Section 12B allowance as part of its initiatives to encourage investment in cleaner energy, but what does it mean? Here, Genergy unpacks the Act.

How the allowance works Section 12B of the Income Tax Act (No. 58 of 1962), provides for a capital allowance for any qualifying moveable asset owned by the taxpayer that is used to produce renewable energy for their trade.

It is important to note that the allowance is only available if the asset is brought into use for the first time by the taxpayer. This prevents taxpayers from claiming the section 12B allowance twice on the same asset. Under the 12B allowance you can claim for: â&#x20AC;˘ assets used to produce biodiesel or bioethanol

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RENEWABLE ENERGY • assets used by the taxpayer for the purpose of his trade in the generation of electricity from: o wind power o solar energy • photovoltaic (PV) solar energy of more than 1 megawatt, provided one obtains a generator licence from NERSA • photovoltaic solar energy not exceeding 1 megawatt • concentrated solar energy • hydro power of not more than 30 megawatts • biomass which includes organic wastes which comprise of gas or plant materials. Section 12B provides for an accelerated capital allowance (as opposed to the five-year write-off period of section 12C) on the cost of the asset and can be claimed in full, even if the asset is used for only part of the year of assessment. Section 12B(3) deems the cost of the asset to be the lesser of: • the actual cost to the taxpayer, or • the cost under a cash transaction concluded at arm's length on the date on which the transaction for its acquisition was in fact concluded; plus • the direct cost of its installation or erection. The cost of the asset includes improvements and foundations. If the lessee of government-owned property undertakes obligatory improvements on a leased property in terms of a Public Private Partnership, or for obligations incurred on or after 1 January 2013, the Independent Power Producer Procurement Programme of section 12N (administered by the Department of Energy) will apply. If the lessee uses the property for purposes of earning income, section 12N allows for the depreciation on the improvements to be calculated as if the lessee owned the underlying property directly. From 1 January 2013, the section 12B allowance was also available on foundations or supporting structures that are deemed to be part of the qualifying asset, if1: • the asset is mounted or fixed to any concrete or other supporting structure or foundation • the supporting structure or foundation is designed for the asset in such a way that it is an integral part of the asset, and • the foundation or supporting structure is brought into use on or after 1 January 2013.

Practical considerations When interpreting Section 12B, it can be difficult to understand what the qualifying assets are. Does “generation” simply entail the creation of the electricity (for example, in solar panels of a solar farm) or does it also include the processing or harnessing of such electricity in a form that can be sold?2 The intention of the legislature is to incentivise the industry by expanding the Section 12B allowance in 2006 to include assets used in the production of renewable energy, and it was likely intended that the allowance should be extended to assets that harness electricity. After all, if the energy that is created is not harnessed correctly, it is a worthless investment. So, one would interpret that the word “generation” in the context of Section 12B is intended to include the process of producing electricity to be used or sold; therefore, assets integral to the generation of electricity. If the taxpayer can demonstrate that any related assets are integral to the generation of electricity, they might qualify for the allowance. n

How much can a taxpayer deduct for these assets? For all photovoltaic assets that do not exceed one megawatt, a 100% deduction of the cost of the asset will be allowed if the asset was brought into use on or after January 2016. Included in this is embedded solar PV renewable energy for self-consumption with up to one megawatt of generation capacity. All other qualifying assets will qualify for an allowance over a three-year period: 50%, 30% and 20% respectively. This allowance is not apportioned in the first year of the write-off but fully claimable in the relevant year of assessment.

Terry Billson, CEO of Genergy. Proviso to s12B(1). An issue was identified by Wendy Garner in an article at https:// www.thesait.org.za/news/132687/OpinionSection12BAllowanceAssetsUsedintheGenerationofElectri.htm

1 2

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RISK MANAGEMENT

Investors can manage political risks in sub-Saharan Africa More than two-thirds of the countries in sub-Saharan Africa are at risk from strikes, riots and other types of civil unrest, with a quarter of them at danger of sabotage and terrorist attacks, according to new research from Aon, the leading global professional services company providing a broad range of risk, retirement and health solutions.

Aon’s 2019 Risk Maps, developed in partnership with Continuum Economics and The Risk Advisory Group, examine political risk, terrorism and political violence around the world. This year, findings highlight that investment in the region is particularly affected during elections, which are often flashpoints for disruptive protest, unrest and prolonged political uncertainty. The Risk Maps also found that it is not just during election cycles that there are investment concerns, since political violence and unrest prompted by political dynamics can also affect investments. ‘Investments seen as connected to governments are often the ones most at risk during these periods of unrest – with opposition groups targeting investments in strategic sectors to pressure sitting governments. All these considerations must be considered by companies as they determine where, when and how to invest in the region,’ says Sarah Taylor, Head of Political Risk and Structured Credit at Aon. The Risk Maps found that, in recent years, specific companies have been targeted with shutdowns, labour stoppages and violent acts against workers and plants reported. On top of the immediate impact, this type of action can challenge the viability and profitability of investments and businesses. Political or labour unrest can affect not just the specific company or country targeted, but others in the supply chain; a consideration that must also be considered. ‘Investors need to balance the political risks with

the potential opportunities in the region. There is great potential in areas such as infrastructure development, but our advice to investors would be to consider using political risk insurance. These tools can support that necessary regional development, while at the same time insulate investors from risks, including political intervention and sovereign non-payment,” Taylor adds. Scott Bolton, Director, Crisis Management at Aon says that businesses operating in the Mediterranean and subSaharan African countries have been exposed to political violence for several years. ‘This is a broader risk than pure terrorism. Businesses with a sub-Saharan footprint should review their existing insurance against the Risk Map country exposure to confirm coverage is aligned and responsive,’ he suggests. ‘More than 30 countries in sub-Saharan Africa have an identifiable risk of civil disquiet and strikes in 2019, including in some of the most popular investment destinations, such as Nigeria, Kenya and South Africa,” says Henry Wilkinson, Head of Intelligence & Analysis at the Risk Advisory Group. ‘Unrest is often triggered by predictable political flashpoints such as elections. But more local and fluid issues, such as socio-economic conditions, labour disputes or intercommunal issues also frequently prompt violence. Investing in risk intelligence and assessments on the various markets on the continent helps ensure the security and financial viability of investments,’ he adds. n

About Aon’s Risk Maps Aon’s Risk Maps, developed in collaboration with Continuum Economics and The Risk Advisory Group, are designed to help companies better understand and navigate evolving exposures created by political risk, terrorism and political violence. In today’s complex geopolitical and economic environment, the maps enable clients to identify and track the different sources and degrees of risk, assisting businesses in planning and protecting assets, contracts and loans that could be adversely affected.

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AUDIT & RISK MANAGEMENT SOLUTIONS ‘We promptly exceed our clients’ expectations at an affordable cost”

OUR SERVICES

Advisory & Assurance l Internal Auditing l Governance & Compliance Risk Management l Specialised Training l Forensic Investigations Performance Management Systems l IT Auditing mSCOA implementation, support & training l mSCOA Assurance INTEGRITY . ACCOUNTABILITY . FAIRNESS . HONESTY . RELIABILITY info@armsaudit.co.za

+2711 434 1235 www.armsaudit.co.za

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086 619 9887 Armsaudit

31 David’s Place, Parktown, JHB Arms Audit

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PROFILE: AUDIT & RISK MANAGEMENT SOLUTIONS

ARMS celebrates 13 years Audit & Risk Management Solutions (ARMS) celebrates its 13th year of operations in 2019. The company, under the leadership of its founding directors, Nkuli Swana, Boreka Motlanthe and Namhla Gogo, has become a recognised name in all spheres of government, state-owned entities and private companies in South Africa.

Nkululeko Swana, Executive Chairman of Audit & Risk Management Solutions.

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PROFILE: AUDIT & RISK MANAGEMENT SOLUTIONS

The Audit & Risk Management Solutions audit team.

Together, the founders and partners bring decades of accounting and auditing experience to the business. ARMS’ growing client base is attributed to its passion for transformation, professionalism and uplifting black graduates entering the auditing fraternity. The company has established its base of operations in Gauteng with headquarters in Johannesburg and regional offices in the Eastern Cape (East London) and Limpopo (Polokwane). ARMS assists clients with all matters relating to assurance, enterprise-wide risk management and governance. The company does not merely deliver a service to its clients; but has a role to play in ensuring transformation, empowerment and good corporate governance in South Africa. The value drivers that ensure ARMS provide consistent high-quality service to its clients include: • client focus • using appropriately skilled staff for each assignment • rigorous staff selection and development • innovation • developing in-depth specialised knowledge in each service area, and • competitive pricing. ARMS provide the following services: • Advisory & assurance • Internal auditing

• Governance and compliance • Risk management • Specialised training: MFMA, PFMA and LGSETA accredited programmes • Forensic and special investigations • Taxation • Performance auditing • Performance management systems & support • IT auditing • MSCOA implementation, support & training • MSCOA assurance • VAT compliance and recovery • GRAP conversion & compliance • Municipal support services • Fixed Asset registers • Revenue management and debt collection • Supply chain management consulting n

ARMS Audit & Risk Management Solutions T +27 (0)11 484 1235 F +27 (0)86 619 9887 E info@armsaudit.co.za W www.armsaudit.co.za

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RISK MANAGEMENT

Mature risk retention strategies benefit fleet owners as the economy bites By André du Sart

South Africa’s growth forecast for 2019 is set at a deeply concerning 1,3% according to the World Bank projections, putting it among the worst performers in sub-Saharan Africa. At 1.3%, South Africa’s projected real economic expansion comes in at under a third of the estimated 4.2% growth rate of other emerging markets and is also well below the projected sub-Saharan average of 3.7%.

These major economic challenges, coupled with challenges facing the transport sector, including toll costs, carbon taxes, fuel and maintenance costs, crime such as hijackings, fuel theft and freight looting, added security and monitoring costs as well as deteriorating road infrastructure, all combine to create a fraught environment for fleet operators. Fleet operators will need to invest heavily in pre-emptive and sophisticated risk management strategies and achieve greater efficiencies across operations, safety, security, logistics and allocation of resources if their businesses are to remain sustainable. In the current economic environment, managing fleets to reduce operational costs and exposure to avoidable risks becomes critical. Reducing operational costs and managing exposure to risks demand a robust, effective risk management programme to ensure that a transport business is able to grow, while maintaining its insurability, whether you run a handful of cars or a complex network of thousands of trucks and buses. Adopting high standards for risk assessment has ongoing benefits across the business by identifying risks before they happen and thus reducing costs - both financial and human – as well as managing the insurability and the cost for your fleet. Given the tough economic climate, the reality is that the insurability of commercial fleets is no longer a simple given, as underwriters have become increasingly risk selective and expect clients to have a proper plan in place to minimise and mitigate risks. The emphasis right now must be on the preparation of a scientifically grounded insurance proposition for transport operators and their assets, premised on structured risk management interventions and risk retention

A thorough risk audit is essential From the outset of an insurance application and even at renewal time, a thorough risk audit that identifies and addresses weak links in the insurability of a fleet or business is essential to prepare a case for the underwriters. This also provides a basis from which to evaluate the risk financing options available, which may include elements of self-funding of the risk (i.e. own cash resources) as well as insurance to manage and recover any losses should they occur. Assessments may differ from case-to-case depending on the nature of the business and the associated risks, but there are common elements. Not all of them are necessarily directly insurance related, but as a collective, they contribute towards the insurability of the fleet. For example, aspects such as regular maintenance, avoiding overloading, use of genuine parts, implementation of vehicle tracking and fleet management systems, including telematics, driver training and health checks, are all important checkpoints that can help avoid unplanned and increased maintenance, breakdowns, vehicle damage, accidents, thefts and so on – all of which essentially boils down to an insurance issue at the end of the day. Effective claims management is important too, in that control of a claim from the scene of an accident or incident and taking ownership of the repair process helps with the cost of each and every claim, which, in turn, generates a good claims history that underwriters acknowledge. These and many other interventions generate economies that can be used across the business to improve the bottom line directly and allow the business to grow and expand.

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RISK MANAGEMENT The client in conjunction with their broker would define upfront what the aggregate fund would cover, for example, own damage, assessor’s fees and so on. Aon usually advises clients not to include third-party claims in the aggregate fund as the quantum on these claims is usually quite large and can rapidly deplete the fund. The stop-loss limit is determined by how much risk the client is able to take on in terms of a financial quantum, and at what point they would want to transfer that risk to the insurer. The aggregate fund still forms part of the contract with the insurer and in this regard, claims to the fund get treated like any other and would still get assessed and documented by the insurer. The guidance and advice are invaluable in managing, processing and documenting all claims whether through the fund or insurer. The key benefit of an aggregate fund for a client is the ability to manage their claims better so that should they have money left in their aggregate fund, they can put this towards their insurance premiums for the following year. It’s an ideal solution for fleets from around 30 vehicles and where there is a mature risk assessment strategy in place.

Premium deposit burner Most crucially though, having a mature risk management approach in place provides invaluable actuarial and statistical information in terms of risk patterns and trends, which in turn will inform the nature of the risk retention structures to be implemented, such as an aggregate fund or premium deposit burner. An aggregate fund and premium deposit burner are mechanisms aimed at fleet owners who better manage their risk and insurance costs, all of which are premised on having a mature and scientific risk retention strategy in place from the outset. These mechanisms work as follows:

Aggregate fund This involves a measure of self-insurance whereby the business sets aside a portion of the premium funds, usually off-balance sheet, and often in a self-fund. This fund would cover any specified claims events up to a specified limit (called a stop loss) while the insurer would pick up any claims over and above that limit. To illustrate, if the total annual premium for a fleet is R2 million, this could be split on a basis of R1 million which goes into an aggregate fund that would cover claims for own damage, windscreens and so on up to the specified limit. The insurer would still cover any “catastrophic loss” as well as the balance of any claims that are above the stop-loss limit, or if the fund is depleted. Let’s say the stop-loss limit is R250 000. For any claims under this amount, the cost would be covered by the aggregate fund. But if the claim value is R350 000, the aggregate fund would cover the first R250 000, while the insurer would pick up the balance of R100 000.

A premium deposit burner is typically put in place where a client’s claims trend shows a consistently lower-thanpremium paid trend. For example, if a client’s annual premium is R100 000, and claims typically over a period of three years are only 60% of that premium, they can then arrange to pay a premium deposit of R70 000 (70%) and retain the balance in a self-fund. If claims paid in a 12-month period are less than 65% of the deposit amount (i.e. R45 500), then the insurer would not call for the balance of the premium of R30 000. Obviously, if the claims exceed this, then the client would need to pay the balance of the premium of R30 000 to the insurer. A premium deposit burner can be put in place on a standalone basis or in conjunction with the aggregate fund. Providing clients with a choice of product tailored to their business objectives is the ultimate outcome of the needs analysis undertaken by the broker for the client, ensuring that cover is tailor-made and cost-effective without exposing them to undue risk. For any fleet owner, there are significant financial benefits to be derived from having a mature risk management and retention strategy in place that is premised on actuarial and scientific analysis of their risk and claims profile. n

André du Sart, Motor Manager at Aon South Africa.

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PROFILE: TWINSTAR PRECAST

Some of the non-standard products Twinstar Precast manufacture include manhole covers, junction box slabs, stormwater grid inlets and stormwater manhole slabs.

Precast custom products In the concrete pipe and manhole cover market the emphasis is typically on high volumes, thus the time to design and build moulds for non-standard products disrupts the production line. Manufacturing once-off products is time consuming, will require additional skills and supervision and is usually not profitable for the manufacturing company. Twinstar Precast was established in 2014 after identifying the gap in the market for precast custom products and once-off items. Working with concrete requires specialised knowledge and skills. Not all contractors have the necessary manpower and facilities to manufacture these products on site. Twinstar Precast aims to address precast problems in the civil construction environment in an affordable and timely manner, manufacturing any precast concrete product to the customerâ&#x20AC;&#x2122;s requirements and design. Twinstar Precast typically manufacture precast concrete products which are not already available on the market, as well as once-off items ranging in weight from 20kg to 6 tons. The company manufactures most of its own moulds and offers a mould manufacturing service in steel, fibreglass or polyurethane, depending on the weight and design of the concrete product. Twinstar Precast are solutions driven and with 26 yearsâ&#x20AC;&#x2122; experience in concrete and the precast industry, understand that every site and project have unique challenges and requirements. The company can assist with non-standard products to complete the contract, no matter the size, quantity or complexity. Some of the non-standard products Twinstar Precast manufacture include square manhole covers, junction box slabs, stormwater grid inlets and stormwater manhole slabs. The company also manufactures custom markers to customer specification using a concrete imprint or engraved stainless steel plates.

Polymer products a solution to theft The theft of steel and cast-iron components continues to rise. As a result, Twinstar Precast recently began to

manufacture polymer products which contain no metal components. By replacing metal manhole covers with polymer manhole covers and frames, as well as stormwater gratings, theft and the safety risks associated with open manholes, as well as the cost implications of replacing manhole covers, is significantly reduced. Twinstar Precast offers both medium and heavy-duty polymer products in line with the SANS 1882:2003 specification. These components can be bought as loose items or cast using the required precast concrete slabs. These can be manufactured with specific imprints and colouring for easy identification of services and the service provider. n

Twinstar Precast Hunky Dory Business Park, 9 Goedehoop Ave, Marvyn AH, Olifantsfonten T +27 (0)12 670 9083 M +27 (0)82 552 1915 E info@twinstar.co.za W www.twinstar.co.za

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TRANSPORT

Transformation of the transport sector Transport Minister, Fikile Mbalula, writes about the challenges confronting the transformation of the transport sector in South Africa, and the governmentâ&#x20AC;&#x2122;s ability to position it in a way that makes it responsive to national goals.

Transport Minister, Fikile Mbalula.

As children growing up in dormitory townships away from the glamour of city lights, we were in awe of the allure of the transport industry. The prospect of a young township child becoming a pilot, let alone a seafarer, was a pipe dream that was the preserve of the privileged. Now, one of the most stubborn challenges confronting us is the transformation of the transport sector. Breaking the back of the legacy of our painful past starts with decimating its roots and making deliberate interventions to open up industries to all South Africans, with particular bias towards historically disadvantaged individuals, women and youth. The winds of change must touch every sector in transport. Unbecoming conduct on our roads continues to bring sorrow, create widows, widowers and orphans and rob the country of economically active citizens. We have a road carnage crisis on our hands and it is time to call it what it is: a crisis!

Business UNusual This situation calls for business unusual. The implementation of a 24 hour, 7-day shift structure within traffic law enforcement, has become more urgent than ever before. We must all support the measure to change traffic policing from an 8 to 5 working day and a 5-day working week, to a 24-hour working day and

a 7-day working week. As we take the matter to the Bargaining Council, we call on organised labour to work with us in this intervention. Corruption has no place in our society and we are implementing measures to deal harshly with those who conduct themselves in this manner. We will be implementing a number of measures, not only to deal harshly with traffic law enforcement officers who violate the law and undermine our efforts to enforce safety by soliciting or accepting bribes, but we will without mercy also go after those who offer or pay those bribes.

Implementation of AARTO Among the interventions to deal a decisive blow to lawlessness on our roads, is the long-awaited implementation of the Administrative Adjudication of Road Traffic Offences Act (AARTO). Parliament has passed the AARTO Amendment Bill and this is awaiting assent of the President to make it law. Our President, Cyril Ramaphosa, has also outlined the roadmap for the sixth administration, underpinned by accelerated service delivery. It is this very spirit of Khawuleza that will characterise our service delivery model. It will unleash the potential of the transport system as an enabler of social emancipation and economic inclusion.

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TRANSPORT

After a few weeks in office, we prioritised the appointment of a Director-General, as the Department of Transport had not had a full-time Director General for a prolonged period. I am happy to announce that Alec Moemi has been appointed Director-General with effect from 1 August 2019. The process of appointing Boards, where their terms have expired or where there is an interim Board, is progressing with equal urgency. We are determined to ensure that corporate governance is strengthened in all our entities. We will deliberately seek out young, educated and talented people, especially women, to infuse new energy and fresh thinking at Board level. Similarly, a number of our entities do not have CEOs. We have urged the Boards to act decisively in ensuring that the recruitment of suitable CEOs is prioritised.

Intervention to turn around commuter rail services In our efforts to deliver a transport system that enables economic activity and stimulates growth, the role of commuter rail services cannot be ignored. A decisive intervention to turn around the Passenger Rail Agency of South Africa and improve its operational performance is in place. The recently launched Ministerial War Room will oversee and enable the turnaround strategy and guide interventions to realise three key objectives: 1. The first objective is service recovery to focus on rolling stock availability and reliability, infrastructure availability and reliability and train performance. 2. The second objective is safety management, which entails putting in place effective measures to protect rolling stock, staging yards, electrical and signal infrastructure, depots and stations, and most importantly, passengers on board our trains. Integral to this is achieving full compliance with the Railway Safety Regulator permit conditions and directives. 3. The third objective is accelerated implementation of the modernization programme. This entails urgently creating capacity for PRASA to manage capital projects and spend its capital budget to achieve effective sequencing of critical infrastructure to enable the deployment of the new trains in targeted corridors.

“

We will deliberately seek out young, educated and talented people, especially women, to infuse new energy and fresh thinking at Board level.

“

A decisive intervention to turn around the Passenger Rail Agency of South Africa and improve its operational performance is in place.

“

Appointment of Director-General to Department of Transport

Taxi recapitalisation programme The renewal of the taxi industry through the taxi recapitalisation programme is also critical to ensure an efficient and safe public transport system. After 14 years of implementation, with 72 600 old taxis scrapped, Government undertook a review of this programme. Based on this review, Cabinet approved the continuation of the Revised Taxi Recapitalisation Programme.

Moloto Rail Corridor & high-speed rail are priorities The Department of Transport is hard at work! Building on the foundation of those who came before us, priorities include the finalisation and revision of feasibility studies about the Moloto Rail Corridor between Siyabuswa in Mpumalanga and Tshwane in Gauteng, and the highspeed rail between Johannesburg and Durban. Both these projects are part of a suite of projects identified in the National Transport Master Plan 2050 approved by Cabinet. They will be undertaken as public-private partnerships, with funding mobilised from the private sector through several instruments.

Integrated Public Transport Networks Billions of rands are invested in the implementation of Integrated Public Transport Networks. This is particularly important for our townships, which continue to withstand the worst of apartheid spatial planning. Over the next nine months, these Integrated Public Transport Networks will be operational in five additional cities - Mbombela, eThekwini, Rustenburg, Polokwane and Mangaung. We remain engaged with the process of finding a lasting solution to the demand to scrap e-tolls in Gauteng. A task team, made up of the Department of Transport, SANRAL, the Gauteng Province and National Treasury, will look incisively at all relevant issues and make firm recommendations. Various options towards the resolution of this challenge are being processed. The aforementioned are but a fraction of the many priorities for the Department of Transport. We are under no illusions regarding the magnitude of the task or the gravity thereof, but we do believe that together with all South Africans, we can move transport forward! n

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SOUTH AFRICAâ&#x20AC;&#x2122;S LEADING AUTOMOTIVE GROUP MOTUS has a leading market share in South Africa, a selected international presence (mainly UK and Australia) and more than 70 years in the industry. We are the exclusive importer of Hyundai, KIA, Renault and Mitsubishi and represent 19 other brands through 359 dealerships in South Africa. Our Car Rental business operates through Europcar and Tempest brands. Our Motor-related Financial Services business manages and administrates service, maintenance and warranty plans, and develops and sells vehicle-related value-added products and services. Through our Aftermarket Parts business segment, we distribute, wholesale and retail accessories and parts for out-of-warranty vehicles through brands, amongst others; Midas and Alert Engine Parts.

1 Van Buuren Road, Cnr Geldenhuis Road and van Dort Street, Bedfordview, 2008 l Tel: +27 (0)10 493 4335

www.motuscorp.co.za

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PROFILE: MOTUS

Leading automotive group committed to positive change MOTUS is South Africa’s leading automotive group with a selected international presence (mainly UK and Australia) with more than 70 years in the industry. Participation across the automotive value chain through its four business segments and a diversified portfolio in the industry, provides resilience amid market deterioration.

The fully integrated business model across Import and Distribution, Retail and Rental, Motor-related Financial Services and Aftermarket Parts, provides a unique differentiated value proposition to OEMs, customers and business partners. Motus Holdings Limited (MOTUS) traces its roots back to 1948 when its founding company Imperial Holdings started as a humble motor dealership in downtown Johannesburg. MOTUS was created as the holding company of Imperial’s automotive businesses and unbundled from Imperial Holdings in 2018. On 22 November 2018 MOTUS listed on the JSE, enabling the company to operate in a more focused and efficient manner while giving shareholders an opportunity to participate directly in the company’s success. ‘The listing of MOTUS ensured we retain the entrepreneurial creativity and capital management excellence that underpinned our success, while ensuring that the structure, strategies and value propositions of its divisions were clarified, simplified and focused, for sustainable competitive advantage, growth and returns,’ explains Osman Arbee, MOTUS Chief Executive Officer. Arbee says that the company’s strategic objectives are centred around innovation, investment in human capital and selective acquisitions to improve brand representation and/or extend the footprint in adjacent regions to leverage the company’s existing capabilities and networks. ‘MOTUS is committed to sustainable value creation and choose to effect positive change in our communities,’ he says. ‘We are committed to positively contributing to society and to the foundational education of South Africans. Through the programmes we run, and assistance provided to many learners and teachers,

Osman Arbee, MOTUS Chief Executive Officer.

MOTUS endeavours to execute its business strategy while operating in an environmentally conscious and responsible manner,’ he adds.

A fully integrated business model Representing some of the world’s most recognisable brands, MOTUS provides automotive manufacturers with a highly effective route-to-market and a vital link between the brand and the customer throughout the vehicle ownership cycle. Its fully integrated business model provides opportunities for deeper penetration of the customer base and enables the extension of the customer life cycle within the MOTUS Group. This provides a platform for generation of higher returns. MOTUS is the exclusive South African importer and distributor of Hyundai, Kia, Renault and Mitsubishi vehicles, panels and parts, which collectively have approximately 14% market share in South Africa. In the Retail and Rental segment, MOTUS retails vehicles through dealerships based primarily in South Africa, with a selected presence in the United Kingdom and Australia. The company has a leading retail market share in South Africa. Car rental operates through Tempest and Europcar brands.

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PROFILE: MOTUS MOTUS has 359 vehicle dealerships in South Africa alone representing 23 brands, all in metropolitan areas: 104 pre-owned dealerships (Auto Pedigree), 236 passenger dealerships and 19 commercial dealerships. In the United Kingdom, MOTUS has 121 dealerships, mainly in provincial areas: 85 commercial dealerships and 36 passenger dealerships. In Australia, MOTUS has 27 passenger dealerships based mainly in provincial areas. With regards to Motor-related Financial Services, the company innovates, develops and distributes vehiclerelated financial products and services through importers and distributors, dealers, finance houses, call centres and digital channels. It is a manager and administrator of service, maintenance and warranty plans and develops and sells vehicle related value-added products and services to more than 730 000 clients. Its Aftermarket Parts segment is the distributor, wholesaler and retailer of accessories and parts for out of-warranty vehicles through 35-owned branches, 43-owned retail stores and a network of 720-franchised outlets, supported by distribution centres in South Africa, Taiwan and China.

Looking to the future MOTUS management devotes a substantial amount of time investigating the longer-term trends in the global automotive industry. These include electric cars, shared ownership, autonomous or “self-driving” vehicles, increasing pressure on vehicle affordability and concentration of vehicle ownership in urban areas. ‘The company continues to evaluate how these changes will impact our automotive markets and through innovation, how we can benefit from them and guard against potential risks,’ Arbee explains. ‘Our differentiated business model, unrivalled scale and strong long-standing partnerships with leading OEMs, together with an increased focus on cost containment and innovation, will enable us to respond effectively to the current challenges and position us well in the market to generate sustainable returns and pursue further growth opportunities.’

environments, career-development opportunities and creative initiatives that inspire the best in our people. With a strong focus on diversity and inclusion, MOTUS drives a skilled, diverse and motivated workforce with a highperformance culture,’ she adds.

Social impact At a group level, MOTUS focuses on two pillars for direct CSI sponsorship: education and road safety. Social initiatives include: The Imperial and MOTUS Community Trust Established in 2003, the Trust has established 37 school resource centres, providing access for 42 000 learners daily and assisting 1 400 teachers. The trust also employs 82 full-time staff, many of whom were previously unemployed learners. Safe Scholars Programme - This national campaign has visited more than 1 500 schools, given road safety talks to 1 480 592 learners and distributed 85 300 reflective sashes. The programme is founded on key road safety messages delivered by the company mascot, Bongie Buckle Up Buddy. Highway patrol - MOTUS has committed to sponsoring vehicles to the Bakwena N1/N4 toll concession during the peak Easter and festive holiday seasons. The sponsored vehicles assist in visible policing and faster response time to incidents. Technical training - Owning the largest technical training academy for motor artisans, MOTUS trains 1 960 artisans each year. A total of 780 artisans are required internally, with the balance trained for the broader motor industry. The company recently launched a joint programme with the Department of Higher Education and Training to train an additional 600 artisans over a three-year period. n

Inclusive and collaborative high-performance culture With more than 18 500 employees, with over 15 000 employed in South Africa, MOTUS recognise that people are at the core of what the company does. ‘We recognise that we can only deliver performance through a diverse complement of highly competent and experienced leaders and teams. We strive to create an inclusive and collaborative high-performance culture that enables business results, creates opportunities for all employees and provides the benefit of diverse thinking,’ says Michele Seroke, Chief People Officer at MOTUS. Through training and development, the company aims to unlock the potential of its talented team members. ‘We grow our own talent and offer equality in our work

MOTUS T +27 (0)10 493 4335 W motuscorp.co.za

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TRANSPORT

Violence and declining GDP impact on truck sales The limping South African economy has impacted the transport sector for the first time in many months. In a year-to-date comparison at the end of May, growth in the total commercial vehicle market has shrunk to 2.3%, to a total of 10 252 units.

Negative growth was experienced especially in the Heavy and Extra Heavy Commercial Vehicle segments, with new vehicle sales declining from April to May 2019 by 6.3% and 15.9% respectively. This is according to the latest combined year-todate results released by the National Association of Automobile Manufacturers of South Africa (NAAMSA), Associated Motor Holdings (AMH) and Amalgamated Automobile Distributors (AAD). However, there are still some sprigs of growth to be found. Compared to the first five months of 2018, sales in the Medium Commercial Vehicle segment increased by 11.5% to 3 248 units. On a year-to-date basis, the growth rate in the HCV segment slowed down to 2.9% (1 984 units), while EHCV sales declined by 2.5% to 4 693 units. Bus sales continued to decline, by 11.6%, to 327 units. ‘The drop in South Africa’s GDP by 3.2% during the

first quarter of the year has now eroded some of the positive growth seen in the transport industry so far this year,’ says Gert Swanepoel, Managing Director of UD Trucks Southern Africa. ‘The performance of the local economy during the next two quarters will be critical for our industry.’

Violence on trucks negatively impacting the industry Another factor that is having a negative impact on the industry is the ongoing violence and attacks on trucks, especially along the N3 highway. ‘It is of vital importance that the government and police address and prevent these attacks on trucks and its drivers. Trucks form a crucial part of the economy and drivers’ safety is of utmost importance,’ emphasises Swanepoel. n

About UD Trucks UD Trucks is a leading Japanese commercial vehicle solutions provider, active in more than 60 countries on all continents. Since its inception in 1935, the company has been an innovation leader with a clear vision to provide the trucks and services the world needs today. UD Trucks Southern Africa has been in South Africa for the past 57 years and is committed to go the extra mile for smart logistics with the most dependable solutions for demanding customers. To best support across applications and geographies, UD Trucks offers a full range of trucks, namely Quon, Quester, Croner and Kuzer, as well as associated operational and financial services. The local UD Trucks assembly facility is situated in Rosslyn, Pretoria.

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ADVERTORIAL: BOSCH DIESEL SERVICE

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Bosch Diesel Centres are equipped with the latest diagnostic software, injection testing and calibration equipment to repair or overhaul all makes of diesel injectors from the world’s leading manufacturers. From common rail injectors and mechanical injectors, to unit injectors and others, their skilled team of technicians follows strict repair procedures in accordance with OEM standards. Bosch Diesel Centres specialise in the diagnosis and repair of a range of diesel vehicle issues, including excessive exhaust smoke, hard starts, low power and high fuel consumption.

– Diesel pump, turbocharger and injector repairs, sales, and services – Diagnostics applicable to relative pump repair – Repair, overhaul and testing of all mechanical and electronic units, and hydraulically actuated injectors – Repair, overhaul, service and calibration of all mechanical and electronic diesel injection pumps

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Bosch Diesel Centres go the extra mile Bosch offers a national inter-branch warranty for motoring peace of mind, even when you’re travelling out of the province.

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Profile: Bosch Car SERVICE

Bosch Car Service plays the part World-renowned for having a role in almost every motoring technology, Bosch genuine parts set the benchmark for exceptional quality and reliability. Bosch parts are ranked amongst the best in the world. Heavily featured in nearly all modern cars, these genuine parts set the industry standard – replacing the need for inferior generic or secondhand parts. As part of their dedication to quality, Bosch has also set up a world-wide network of workshops that provides topclass car servicing and repairs. There are currently over 17 000 Bosch-branded shops across the globe, with 148 workshops in South Africa.

For everything your car needs Bosch Car Service’s extensive experience in the car service industry, expert technicians, and advanced diagnostic equipment puts them streets ahead of their competitors. Their offering includes everything from major and minor services to auto electrical, clutch replacement, steering racks, batteries, air conditioning systems and ABS maintenance and repairs. You name it, they’ve got it covered.

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batteries and tyres, mechanical breakdowns, keys locked in cars and more. This includes a dedicated medical emergency call centre to provide professional assistance until help arrives. What’s more, the service is FREE for a year to customers that spend R2 500 or more on a major service.

Why choose a Bosch Car Service? • 12-month warranty on Bosch parts • 6-month or 10 000km workmanship guarantee • Transparent costing system to ensure the price you’re quoted is the price you pay • Genuine Bosch parts wherever possible • Skilled technicians who benefit from regular Bosch training • Access to the latest electronic updates and software • State-of-the-art diagnostic equipment and tools When it comes to world-class parts and services, you simply can’t go wrong with Bosch Car Service. Want to service with Bosch Car? Find a workshop at: www.boschcar.co.za n

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What’s the problem? Bosch Car Service uses state-of-the-art diagnostics to pinpoint problems before they become bigger issues.

Motoring peace of mind All Bosch parts and workmanship come with a 12-month guarantee.

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Bosch Car Assist provides 24-hour emergency roadside support for a number of on-the-road issues, including flat

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Imagine empowered African citizens with a new world at their fingertips through public safety networks, government networks and private dedicated networks over 5G.

CONNECTING A NATION As a leading service provider of digital content delivery SENTECHâ&#x20AC;&#x2122;s Content and Multimedia, Managed Infrastructure and Connectivity services connect customers anywhere, through innovative solutions. At SENTECH, we believe in bridging the rural-urban digital divide by deploying 5G technology to prepare for the Fourth Industrial Revolution.

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