Insights | Opportunities | Trends
Every little bit helps. It doesn’t matter who you are, where you live or what you earn. You have the power to make a big difference. All you have to do is to
S&S/44573/E/49M
switch off what you don’t need. To find out more, visit www.49m.co.za
BUSINESSES EMBRACE ENERGY SAVINGS AND SAVE MONEY POWER SAVING TIPS
KITCHEN TIPS • • • •
Under their own roofs, these leading South African businesses are demonstrating their own capacity to save electricity and reduce operating costs.
49M PARTNERS WHO HAVE SAVED
FNB introduced energy efficient lighting solutions and installed variable-speed drives at its head office. These simple changes meant the bank saved R800 000 on air-conditioning and R1.4 million on lighting.
The SABC embarked on a 5-year energy saving drive three years ago. At that point, 45% of their electricity was consumed by air-conditioning. By introducing modern, energy efficnient equipment the organization has been able to save
units instead of magnetic ballasts, in over 97 stores, Pick ’n Pay is saving 568 MWh per month. This is a saving of 20%, or R1.5 million a year.
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SHOWER TIPS •
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Don’t shower for longer than 7 minutes Install a low-flow showerhead
LIGHT BULB TIP •
Replace incandescent light bulbs with energy efficient fluorescent light bulbs
STANDBY POWER TIP •
Always unplug unnecessary appliances at the wall socket
GEYSER TIPS •
Install a geyser blanket
QUESTIONS & ANSWERS The healthcare group introduced a number of energy efficient lighting and heating measures, saving an average of R1.2 million per year. These savings covered the initial cost of the energy savings measures within two years.
Through their efforts, these businesses are showing what can be achieved when people take active steps to R500 000 a moth. reduce electricity use. If everyone, as individuals and businesses, do their Lighting makes up a bit, no matter how large portion of the retailer’s energy bill. By small, we can make using fluorescent fittings a big difference in with electronic ballast the long run.
What is 49m? 49M is an Eskom initiative, endorsed by government and business partners. It wants South Africans to embrace energy saving as a national culture to create a more sustainable future.
Where does the 49M movement get its name from? 49M stands for 49 million South Africans, because every single one of us has a part to play in saving electricity.
Why is it being launched now? South Africa’s power system, as in many other countries, is under growing pressure as the population grows. 49M wants to ensure sustainability in the long-term.
When was it launched? On 18 March 2011.
How long will it be in place? The 49M campaign is a longterm movement, envisaged to run for five years. It will be adapted over time and grow
as required to meet specific challenges and demands.
What will 49M’s central theme be? 49M will mobilise and partner with South Africans, creating awareness, providing solutions, and establishing a platform through which South African’s can talk about saving power.
How will people become involved? South Africans are encouraged to think about their power consumption and to remind one another that every little bit of electricity each of us saves makes a big difference collectively.
How will the media become involved? 49M calls on media partners to engage with the campaign and to help drive interaction.
How will businesses become involved? Corporate and retail partners can activate the 49M campaign amongst staff, suppliers and customers, becoming role models and spokespersons to keep the conversation alive.
S&S/445704/E/49M/Advertorial
More than 30 big businesses have pledged support for 49M, saving power, the planet and their own pockets in the process. Through their support of the 49M power saving initiative, supported by Eskom and endorsed by government, these corporate partners are helping South Africans to embrace energy savings as a national culture.
Only boil as much water as you need Time your oven and keep it clean Fill up your freezer Only use the dishwasher when it’s filled up Check that new appliances are A-rated or energy efficient before you buy them
Contents REGULARS 9 Foreword 12 Editor’s Note 14 Contributors 16 News Snippets 108 Inspirational Places
FEATURES 20 Reframing Global Risk In this excerpt from the upcoming book, Grow Rich in the New Africa, which was published in March 2012, Hartmut Sieper looks at the changing risk profiles of developed and developing countries which leave a number of economies in Africa winners and a number of Western markets losers.
26 Where to invest in Africa.. To help clients invest in Africa, Rand Merchant Bank (RMB) last year launched one of the most comprehensive documents on the subject, Where to invest in Africa? which analyses all 45 countries in Sub-Saharan Africa.
32 The scramble for land Triggered by rising global food and fuel prices foreign countries and corporations are scrambling for land in Africa. However, local resistance to these new land-grabs by food, forestry and biofuel companies is growing, while international humanitarian and NGO groups are also concerned.
38 Being sociable To some it’s a swear term, to some as alien as quality content on the SABC and to others its as vital to their daily lives as breathing. Marc Pienaar debunks a couple of myths about social networking and shares some advice on how SMEs in Africa can use this phenomena to their advantage.
50 All that glitters The mining sector in Africa has gone through some major changes in the past few years. Sharda Naidoo explores some of these changes as Africa begins to fall increasingly under the global commodity trade spotlight.
56 Going home Africa hides secrets, treasures and ancient wisdom in the forms of lost civilizations, architecture, art and cultures. The Zamani Project, founded as “The African Cultural Heritage Sites and Landscapes Project”, developed out of years of heritage documentation activities aims to document African heritage sites, using cuttingedge technology. Editor Jo Kromberg went exploring....
64 The Dragon awakens As partnership and cooperation in trade and investment between China and Africa are growing, Chinese Special Economic Zones have in recent years caught the eyes of many African leaders. Dr. Daouda Cisse at the Centre for Chinese Studies at Stellenbosch university explains why.
72 Africa bucks global growth trends While the rest of the world is still grappling with the effects of adverse economic conditions, Africa is bucking the trend. Investment analysts and researchers are predicting further astonishing growth for the continent and say it will bypass Asia within the next 5 years.
76 Power in South Africa Standard Bank’s Paul Eardley-Taylor and Nicholas Green shares some hard-hitting truths about potentially looming power shortages in South Africa and offer some solutions to the problem.
84 But is it art? African art is something that most collectors feel passionate about, seeing that there are hundreds of different tribes on the continent – each with their own artistic expression. David Norden tells us why it’s also a good investment...
44 Everything must go
94 Africa’s North-South Corridor Brings Opportunities
With the South African market maturing, many retailers and fast-food chains have ventured north of the border with Africa providing them with huge opportunities to reach relatively untapped markets which add healthy margin growth. On page 45, we look at the hidden heroes of retail in Africa.
The ambitious North-South Corridor connecting Central, Eastern and Southern Africa is set to significantly enhance the investment and trade potential of this region. The project involves massive investment in the redevelopment of road and rail infrastructure across eight countries.
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TRADE & INVEST AFRICA A F R I CA’ S L E A D I N G T R A D E & I N V E S T M E N T J O U R N A L By Ocean Rock Media © Copyright 2010\2011 Ocean Rock Media and/or Trade & Invest. No section or part of this publication may be copied, reproduced or distributed for any purpose in any format whatsoever without written permission of the publishers. All information provided and opinions expressed in this publication are provided in good faith but do not necessarily represent the opinions of this publication, publisher, or editor. Although every possible care has been taken to provide information that is true, correct, up to date and not malicious, Ocean Rock Media, its owners, staff and associates cannot be held legally liable in any way for any loss, damage, injury or expense however caused, arising from the use of or reliance upon, in any manner, of the information or opinions provided in this publication and does not warrant the truth, accuracy or completeness of the information provided.
| Editor Jo Kromberg kromberg@vodamail.co.za | Art Director Kurt Daniels kurt@oceanrockmedia.co.za | Finance Control Gail Florus gail@oceanrockmedia.co.za | Production Manager Jenna Fourie jenna@oceanrockmedia.co.za | Sales Manager Gavin Payne Gavin@oceanrockmedia.co.za | Marketing Advisors Brandon Rowland, Gerhardt Burger, Debra Wicks, Noel Sands | Advertising Enquiries Gavin Payne | Circulation and Subscription Enquiries Jenna Fourie | Publisher Shakier Brenner Ocean Rock Media Suite 401, 95 Sirlowry Studios, Sirlowry Road, Cape Town, South Africa Email: info@oceanrockmedia.co.za Tel: +27 (0)21 461 7482 Fax: +27 (0)21 461 7471
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Dr Denis Worrall Foreword
Doing Business in Africa: A Mainly Positive Picture Over the past three or four years and gaining momentum, there has been a significant change in international business perceptions of Africa. In a way this started with China’s very considerable involvement in Africa some seven or eight years ago. The US and European countries began to take notice. Angela Merkel in particular told Europeans to get involved. The changes have been reflected in a number of key research documents. Standard Chartered, Citibank, Rand Merchant Bank and the auditing companies – notably Ernst & Young - produced reports highlighting the change in perceptions and also reality. Ernst & Young’s 2011 Africa Attractiveness Survey was captioned It’s time for Africa! And, of course, late last year The Economist came with its cover story under the heading “Africa Rising”. We at Omega Investment Research – because this is our beat – have naturally been aware of these changes, and so in organising our 14th Annual Euro-African trade and investment January series, we chose as the theme “Africa’s time to rise and shine is now!” And we have not been disappointed. Both the audiences in London and in Munich have validated this theme, as have the presenters – and they have been heavyweights. Of course, the message is not all positive, and there are rough patches. Chris Hart, a preeminent South African economist, and somebody who is particularly effective in getting his message across to European audiences, spells it out as follows: •
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African countries don’t have the problem many developed economies have in that so many people are dependent on Government. In other words, the social welfare cost in Africa is not as great as it is in European countries and Japan. The economic base of African countries has changed quite dramatically. They are no longer small economies. Angola, for example, has grown from an $8bn to an $80bn economy. The same is true of other Sub-Saharan African economies. Whereas the solvency of many developed countries is under question, debt levels are much lower in Africa and, surprisingly, fiscal management in many cases has enormously improved. The demographics favour Africa, with its largely young
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growing populations in contrast to the developed countries with their aging populations. Although far from general, governance levels have nonetheless greatly improved. Successful elections are happening, with change increasingly occurring through the ballot box rather than through violence. Ghana and Zambia are two good examples. Corruption is also being pushed back. Growth in Africa is tending to be a multi-sectoral phenomenon. African economies are no longer just singlecommodity dependent economies.
Investec Bank’s Thabo Khojane, presenting in both London and Munich, puts the African growth story like this: • • • • • •
As evidenced by compelling growth rates. Resulting from stability, reform, improving governance, rising labour productivity. Africa has an abundance of resources, not just commodities. Emerging middle-classes are producing demographics favourable to economy development. Strengthening ties with the BRICs; and There are impressive investment case studies.
The result is that World Capital is increasingly taking note. African capital inflows have grown by 400% since 2000 and the rate of return on FDI in Africa is higher than in any other developing countries. Denis Worrall is Chairman of Omega Investment Research, a South African based investment advisory and strategic marketing consultancy. He is a graduate of the University Cape Town (M. A.), University of South Africa (LLB) and Cornell University (Ph.D) where he was a Fulbright Scholar. He started his career as an academic lecturing at universities in the US, Nigeria and South Africa. His last post was as research Professor at Rhodes University. He practised as an advocate for seven years in Cape Town, before going into public life. He has been a Member of Parliament, chairman of the Constitutional committee of the Presidents’ council, South African Ambassador to Australia and the Court of St James (London).
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Contributors
MARC PIENAAR – BIO Marc Pienaar is a freelance writer and subeditor. He specialises in all types of website content, social media content, technical content and online marketing content, as well as information architecture and SEO. He has worked in the online industry since 1997 and has written content for South African and international companies, including Vodacom (Vodafone), Deloitte, Investec, Nokia, Deutsche Telekom, SA Tourism, Microsoft and Nedbank. He has also contributed to various publications, like Financial Mail and ITWeb. Prior to his freelance career he worked as a web developer, strategic project manager and business analyst. His previous life as a professional musician is perhaps best not discussed in polite company. He uses Facebook far too much, and can often be found engaging in long debates on everything from the merits of the Oxford comma to the most likely forms that online convergence will take. He is more measured on LinkedIn (as he would advise clients to be) and finds the 160-character tweet to be a good way to hone semantic skills. He has come to realise that he is probably addicted to the Internet, which does not bother him in the least. He does not enjoy writing about himself.
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Contributors
Dr Daouda Cisse – BIO Dr. Cisse is a research fellow at the Centre for Chinese Studies. He completed his Masters Degree in ‘Foreign Languages Applied to Business and International Trade’ at Gaston Berger University in Saint-Louis, Senegal. In 2006, he was awarded a scholarship to study Chinese language and start his Ph.D. program in International Trade in China. the following year. In December 2010, he finished his Ph.D. thesis on ‘Influence of Globalization on Trade: the case of China about imports and exports with African countries.’ Dr. Cisse speaks French, English, Spanish, Mandarin and some Senegalese local languages such as Wolof, Mandingue, Bambara, and Peul. After his stay in China and his Ph.D. thesis, his research interests are: China-Africa trade relations, China-Africa economic cooperation.
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News Snippets
News & Views
In every issue of TIA we bring you the latest news, views and current affairs about what’s what in the world of business in Africa
Compiled by Jo Kromberg
Howzit MSN expands into Africa Howzit MSN, a web portal in South Africa has expanded its reach into the rest of the continent with the launch of a dedicated channel for Africa. This move is in response to the growing demand of internet users for locally relevant content and from advertisers for advertising inventory that reaches a panAfrican market. The new African channel targets all of the major English-speaking countries in SubSaharan Africa. Microsoft is redirecting African traffic from its global MSN property to the Howzit MSN African channel (african.howzit.msn.com), allowing users to find localised content across topics such as business, local and international news, travel, lifestyle and technology. In addition, the African channel will source and aggregate content from a range of top African publishers and news providers including I-Net Bridge, CNBC Africa and AFP. This will give users a one-stop destination for news and information about their countries and the rest of the continent. Marcus Stephens, general manager at Howzit MSN says, “The time is ripe for us to expand more aggressively in Africa because the audience for local web content and the advertiser support are growing rapidly as internet access becomes cheaper and more widespread. “Nigeria alone offers a potential market of 43 million people with some form of internet access - nearly as many people as the entire South African population and up
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TIA
from only 200 000 internet users in 2000. Other key markets, such as Kenya, Zimbabwe, Uganda and Ghana are also all gathering a critical mass of millions of Web users.” Stephens says that Africa’s economic progress over the past decade has caught the attention of South African and multinational companies who want to market their products and services to the continent’s fast-growing middle-class. Howzit MSN is positioning itself to give them a vehicle that is cost-effective, efficient and has a wide reach into the market. Source: CNBC Africa
New reality show searches for Top Trader In 2012 CNBC Africa will broadcast a new reality television show, titled Top Trader, which will follow the trials and tribulations of South Africa’s top amateur traders as they search for the winning combination to walk away with R250 000 in prize money. Hosted by CNBC Africa anchor, Eleni Giokos, the show will start with the basic principles of trading, moving on to stock selection, portfolio management and a range of other elements of trading. The competition will see contestants in different locations in and around Sandton and Johannesburg, South Africa, making it an exciting as well as an educational show for viewers each week. Eight contestants who meet the criteria will be chosen from entries online to com-
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pete on the show. From the fourth week on, one contestant will be eliminated each week, leaving three contestants in the final show. Contestants will be faced with a different challenge in each episode and viewers will be able to interact with contestants on the ABN digital website and other social media platforms. The ultimate winner will be the contestant with the best performing portfolio in the final episode. Throughout the series, a panel of expert mentors will guide and advise the contestants. CNBC Africa chief editor, Godfrey Mutizwa said Top Trader is part of a new suite of programmes being launched in the new year on Africa’s business news television channel and plugs a definite gap in the market. “As a business news channel we thought there should be a platform to showcase the rich talent that Africa has to offer,” Mutizwa said. “Top Trader will bring the trading floor to living rooms while at the same time allowing us to reach audiences traditionally seen as out of our range.” Top Trader will premiere on 11 July 2012 and will run weekly in prime time on Wednesday nights and the finale will be screened live on 28 August 2012. Source: CNBC Africa
Africa 2011 PE deals reach $3bn Private equity investors closed $3billion worth of deals in 2011, with South Africa and Nigeria attracting the most capital, according to Preqin data.
Deal making was bolstered by a number of last minute closures in December, including the $70million investment in South Africa’s Umcebo Mining led by US-based investors Black Rock and First Reserve Corporation. China-based Hanhong Private Equity also closed a $16.9 million transaction in the month, backing Stonewall Mining. Part of the financing went into the bolt-on acquisition of Transvaal Gold Mining Estates in South Africa. South Africa continued to account for the bulk of the deal making in 2011, with investors closing $1.86billion worth of transactions in the country. Nigeria came in second with about $1billion, lifted by the $750 million investment in Union Bank by a consortium led by Africa Capital Alliance (ACA). The deal is the largest private equity transaction across Africa in 2011. Interestingly, the year saw a buzz of deal making from US-based private equity houses that are traditionally not focused on Africa. In addition to Black Rock and First Reserve closing the Umcebo transaction, Bayside Capital sealed a number of deals including an undisclosed investment in GDP and GDP Tech Tunisia, alongside its parent company HIG Capital. Bayside additionally seized opportunity to close a restaurant deal in October, backing Hooters of South Africa. ACA’s Union Bank deal also drew in a number of US-based investors, including The Keffi Group, which invested through Keffi Group VIII, a vehicle backed by global private equity giant JC Flowers. Discovery Group, a US-based hedge fund manager, also backed the Union Bank deal. Compass Capital was also in the market, backing Egypt’s 10th of Ramadan for Pharmaceutical & Diagnostic Reagents Company in January. Africa also saw some interesting deals from China-based private equity players including the China Investment Corporation which bought Shanduka from Investec et al. Hony Capital was also active in the market, reportedly agreeing to commit up to $100 million to Madagascar-based iron ore mining company Wisco Guangxin Kam Wah Resources in February. source:http://www.privateequityafrica. com/analysis/africa-2011-pe-deals-closeat-3bn/
Frontier investors find Africa more attractive than Asia A good number of investors view investing in Africa as more attractive than Asia, ac-
cording to a recent survey by Silk Invest. Forty-three percent of the group surveyed ranked Africa as the most attractive destination, while Asia came in second at 37%. Within Africa, investor interest is almost evenly spilt between listed and private equity. Listed equities are seen by 48% of investors as the most attractive asset class in Africa, while 47% ranked private equity first. More than half of the respondents thought that population-related economic drivers, particularly emerging middle class and growing consumerism, were the main reasons to consider investing in Africa. Silk Invest estimates that around 750 million people in Africa now live above the poverty line. Investor are also being lured by high economic growth rates. Investors however continue to be con-cerned about political risks in Africa. About 68% shared this concerned, while 58% said they were worried about corporate governance and cultural issues. Silk Invest covered 157 investors, 80% of which were based in Europe with the remainder being in Middle East and the US. source:http://www.privateequityafrica. com/uncategorized/Frontier-investors-findafrica-more-attractive-than-asia
Geldof Africa fund raises $200 million Irish rock star Bob Geldof has raised $200 million (126 million pounds) for his “8 Mile” African private equity fund, cementing a shift in his global anti-poverty crusade from rich world debt forgiveness to promoting private enterprise. “Africa is now a continent of extraordinary business and investment opportunity,” Geldof, who has become one of Africa’s most astute and knowledgeable economic commentators, said in a statement on Monday. “Private equity is one way to support the enterprise and dynamism of the people of the continent and help provide the jobs and skills that are needed.” The fund, named after the shortest distance between Europe and Africa, will invest in companies that promised to provide jobs and long-term growth. Commercial agriculture, consumer and retail firms, health, telecommunications and financial services are among the main sectors it is looking at, the statement added. Besides institutional and private investors, the fund’s backers include the World
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Bank’s International Finance Corporation, the African Development Bank and the CDC, Britain’s development finance arm. Geldof ’s announcement is the latest example of the private equity industry training its sights on Africa, home to more than a billion people and many economies growing at 6 percent a year or more. U.S. firm Carlyle Group has opened offices in Johannesburg and Lagos and is expected to announce the closing of its first Africa fund soon. London-based Helios is likely to deploy capital after closing a $900 million Africa fund in June last year. Boomtown Rats frontman Geldof shot to global prominence in 1980s as organisers of the Band Aid and Live Aid concerts that raised millions of dollars for African aid. He also led a major push in 2005 to get rich countries to write off debt to the poorest African countries and double their aid spending by 2010. (Reporting by Ed Cropley; Editing by David Dolan) source: http://uk.news.yahoo.com/geldofafrica-fund-raises-200-million-103039988. html
Rwanda: Regional Economies to Grow By 6.8 Percent By Edmund Kagire A recent report released by the Sub-Region Office for Eastern Africa (SRO-EA) of Economic Commission for Africa (ECA) shows that the Eastern Africa region grew by 6.6 percent in 2011, and is expected to grow at 6.8 percent in 2012. The report entitled, ‘Tracking Progress on Macroeconomic and Social Developments in the Eastern Africa Region 2011” was presented in February during the SROEA 16th meeting of Intergovernmental Committee of Experts in Dar-es-Salaam. It shows that in terms of GDP growth, a number of regional economies have been among the best performing economies in the world over the last four years of global economic turmoil, with Rwanda, Ethiopia, Tanzania and Uganda at the head of the pack. Andrew Mold, Head of the Macroeconomic and Social cluster at SRO-EA, who presented the report, cautioned that policymakers needed to keep an eye on a number of macroeconomic imbalances which could undermine growth, particularly inflationary pressures. “During the second half of 2011, these pressures have been strong in a number of
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News Snippets
TIA
Rwanda: Regional Economies to Grow By 6.8 Percent countries in the region, especially in Ethiopia, South Sudan, and Uganda,” he said, noting that Rwanda is the only country that managed to keep inflation in check. On his part, Antonio Pedro, the SROEA Director said if countries like Rwanda and Ethiopia maintain the pace, they will be able to achieve their target to become middle income economies by 2030. “As long as this stronger growth performance is sustained, more than half the countries in the region will have reached middle-income status by 2030,” The report argues however that unless more concerted efforts are made regarding family planning, there was little chance that the region could benefit from the kind of ‘demographic dividend’ that has propelled growth in China and, more recently, India. In China and India, the demographic dividend is the result of a declining fertility rate, leading to a decrease in the ratio of dependents to workers in an economy. The report tracks social spending in the region, and finds that half the governments are spending more than 20% of their budgets on the education sector. Countries reaching this target include
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Rwanda, Comoros, Djibouti, Ethiopia, Kenya, Tanzania, Madagascar and Uganda. Source:http://allafrica.com stories/201202220149.html
UK’s BG Group to invest $500 in Tanzania gas exploration
British gas and oil firm BG Group plans to step up its presence in gas exploration in east Africa’s second-biggest economy by investing $500 million in Tanzania this year, the government said in late Feubruary. The east African coastline is fast becoming a major gas hub with even bigger discoveries made farther south in Mozambique, and demand appears to be growing, considering how close India is with its rapidly expanding economy.
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The BG Group has previously said it expects to see growth from Tanzania, where it has made three gas discoveries off the coast of the country and hopes to develop a floating liquid natural gas plant. The BG Group this month said appraisal work showed its new discoveries offshore Tanzania contained 3 trillion cubic feet of resources. Norwegian oil and gas firm Statoil announced on Friday it has found natural gas offshore Tanzania, marking the latest in a series of discoveries on the doorstep of Asia’s fast growing markets. Tanzania’s natural gas reserves are estimated to have risen to more than 10 trillion cubic feet (tcf) from a previous estimate of 7.5 tcf following major gas discoveries in the country’s deep-water offshore region. Mozambique, the fastest growing energy player in the region, this month estimated that energy firms will spend $50 billion over the next decade to develop its liquefied natural gas (LNG) industry. Source:http://news.yahoo.com/uksbg-group-invest-500-mln-tanzaniagas-172351952.html (Reuters)
Feature on Africa
TIA
Reframing global risk in favour of business and investment in Africa By Hartmut Sieper
This is an excerpt from the upcoming book, Grow Rich in the New Africa, which was published in March 2012. With the downgrade of nine euro zone countries recently, this piece speaks directly to the changing risk profiles of developed and developing countries which leave a number of economies in Africa winners and a number of Western markets losers.
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e are living in a world that is changing very quickly. The breakdown of socialism and planned economies in Eastern Europe has dramatically transformed the economic landscape of the world and led into the process of globalization. The former system of two superpowers, the United States of America and the Soviet Union - and two competing political and economic systems - is no longer in place. What we have now is a multi-polar world, which (I wrote) about in Redefining Business in the New Africa, with new dominant players gaining momentum and influence, such as China, India, Brazil, Russia, and South Africa (also known as the BRICS countries). Rising commodity prices are benefiting resource-rich countries. The most dramatic change can be observed in the global financial system. Since the sub-prime crisis and the default of Lehman Brothers, its stability is deteriorating quickly. Now we are facing
allowing the existing union to break up and form another. Investment and business risks are rising tremendously. It is increasingly hard to measure and value risk properly. Socalled safe havens in the financial industry are vanishing as sovereign bonds and major currencies are at risk and legislative changes dry up some offshore financial centers. Currencies that were considered stable are about to lose their reputation as anchors of stability. This is not only true for the euro - which is set to break up in 2012, as one or more countries might be forced to leave the euro zone - but also for the Swiss franc that is now tied closely to the euro. The US dollar as the number one world currency is increasingly vulnerable because sovereign debt has reached a level that is not sustainable. The same is true for Japan and the yen. A growing number of renowned financial experts are heralding the end of
The crisis of the euro zone, in particular, has the destructive power of derailing the whole financial system a sovereign debt crisis of most countries of the developed world. The crisis of the euro zone, in particular, has the destructive power of derailing the whole financial system. The possibility I alluded to early in 2011 in Redefining Business in the New Africa, and for which many told me I was wrong, has become a likelihood with discussions among European nations
the financial system as we know it. There are clear signs that support this gloomy view. Greece is about to collapse. Interest rates of Italian sovereign bonds have recently crossed the level of 7%, which is considered as a line that must not be crossed – otherwise the country would no longer be able to serve its huge debt. Also, Portugal and Ireland are in dire
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crises. Spain is in acute danger as well. The national economy of the UK is heavily dependent on the financial industry, which makes it vulnerable in case of a financial collapse. The big banks in France and Germany are lacking equity; some of them might have to be nationalized in case of major problems with sovereign bonds of some southern European nations. This negative outlook is confirmed with Standard & Poor’s downgrading the U.S. AAA crediting rating it has held for decades last year and downgrading nine euro zone countries – Austria, Cyprus, France, Italy, Malta, Portugal, Slovakia, Slovenia, and Spain – in January 2012. Italy’s credit rating is now at the same level as Kazakhstan’s and Portugal’s credit rating is considered junk status. Investment risk in developed nations has increased dramatically over the last five years. If you take a look at the interest rates that are remaining at absurdly low levels (not reflecting the inherent risk adequately), you must come to the conclusion that the vast majority of market participants are not yet realizing how big the risk really is. Let me ask you a question: Would you be ready to lend money for 10 or even 20 years to someone who will never be able to pay back his overall debt, whose income is constantly lower than his expenses, and whose currency will probably be devalued before the loan’s redemption? Probably not. As an example, the European Union expected China to help them but China has shown no inclination in this current environment to do so. However, all owners of treasury bonds issued by the United States and Japan are
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doing exactly this. The current yield of 10-year US treasury bonds is 2% while Japanese bonds are yielding 1%. This is considerably less than the inflation rate. So, the real yield is negative. If you invest capital in such financial instruments, you are losing wealth each year. It is high time to set out for new frontiers. If the profitability of businesses and yields of the capital markets in your home country is too low, you have to look for higher returns elsewhere. In other words, you should diversify your assets and sources of income. Africa is an excellent region in which to do so.
In past years, I spoke to many people about the tremendous opportunities that Africa has to offer. A few of them where already invested in the capital markets or involved in doing business in African countries. Some of them were planning ahead for entering Africa markets. But most of them are still afraid of making a positive decision and taking action. Whenever I asked these people for their reasons, they answered that the risk was too high. In many cases, prejudices or bad experiences in the past played a major role. However, this is about to change. More and more companies and investors are
not only thinking about entering African markets, but are already putting together implementation teams, founding legal entities, opening liaison offices, and working with local representatives. I think it is safe to state that more companies will follow those early adopters as soon as more convincing success stories are told. However, whether you choose to wait to hear more success stories or not, the international risk climate has changed in Africa’s favour.
More and more companies and investors are not only thinking about entering African markets, but are already putting together implementation teams, founding legal entities, opening liaison offices, and working with local representatives. New risk perception paradigms
The paradigms of risk perception are shifting fast as the following tables demonstrate. Macroeconomic Risk The old paradigm
The new paradigm
European countries and the U.S. include low macroeconomic risk as debt levels seemed to be sustainable and the long-term economic uptrend was intact, only interrupted by some shortlived periods of cyclical recession.
The probability of a double-dip recession in the United States and troubled European countries has risen considerably. In an adverse financial environment, even a depression is possible that might last for several years. Balance sheet recessions are more difficult to manage and to overcome than cyclical recessions because debt reduction and de-leveraging take some time
Commodity and energy prices go up and down in minor swings, yet remain predictable and controllable, thus offering a stable business environment.
Commodity and energy prices have entered a major secular bull market that will continue for a long time, as populous emerging markets like China, India, Brazil, and many prospering frontier markets will heavily invest in infrastructure in order to narrow the huge gap with the developed countries.
Developed countries are more prosperous, more stable, and less indebted than developing nations.
Developing countries are growing faster than developed countries. Most of them are less indebted than developed countries. Many of them are becoming more stable in economic, financial, and political terms.
Valuable sources for measuring macroeconomic risk are:
• • • • • • •
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The United Nations organizations, e.g., UNSTAT, UNDP, UNCTAD, UNIDO, and UN-HABITAT The International Monetary Fund (IMF) The Organization for Economic Cooperation and Development (OECD) The World Trade Organization (WTO) The World Bank Local and bilateral chambers of commerce National organizations
TRADE & INVEST AFRICA
Financial Risk The old paradigm
The new paradigm
Western European countries, most Eastern European countries and the U.S. are safe.
The sovereign debt crisis and the banking crisis in the Western world cannot be easily solved. Each possible way out is very painful. There is an imminent threat of imposing onetime wealth taxes (also known as confiscation), nationalization, solidarity payments (newspeak for transferring wealth from performing countries to defaulting countries), and other draconian measures.
Developed countries are more prosperous, more stable and less indebted than developing nations.
Developing countries are growing faster than industrialized nations. Most of them are less indebted than developed countries. Many of them are becoming more stable in economic, financial, and political terms.
Before the euro currency was introduced, European national economies were mostly stable. This was also true during the first decade after the Euro was established as a common currency.
The European Stability Mechanism (ESM) that will be introduced into European and national laws in 2012/13 represents a shift toward an autocratic, centralized political system. Investors and business owners should be prepared for unconventional political decisions leading to unwelcome results.
Political Risk The old paradigm
The new paradigm
Africa is high risk. Africa is seen as a single, high-risk investment target rather than as a continent consisting of many different nations offering great varieties of risk exposure.
A better understanding of African markets leads to a more detailed approach of measuring and anticipating political risk. The trend towards democracy and good governance in Africa is fully intact.
High predictability of political decisions and actions in Western, developed countries.
Low predictability of political decision and actions. This is not only true for many European countries, but also for the MENA region, including Egypt, Libya, and Tunisia.
European countries enjoy sophisticated democratic political systems and are considered as safe places for doing business and making investments. The level of economic and financial freedom is very high.
The European Union is increasing its political power by issuing thousands of new laws and regulations and imposing control mechanisms, although various bodies of the EU are lacking democratic legitimacy.
Middle East and North Africa (MENA region) are relatively stable. Although the Israeli-Palestinian conflict cannot be solved, and Iran is threatening the region, most players and decision-makers are known and somewhat predictable. Egypt was a stabilizing factor in that game.
Following sudden and unexpected revolutions in Tunisia, Egypt and Libya, as well as dangerous situations in Syria, Iraq, and Iran, the whole region is destabilizing. The political shift in North African countries toward Islamism removes the stabilizing factor regarding Israel. The breakout of a regional armed conflict with Iran as a center piece is a likely scenario. Even a full-scale war in the Persian Gulf is a possibility.
So, it is obvious that risk is everywhere – in the US, Europe and emerging markets. In today’s environment, the risk profiles between developed and developing economies are evening out with some emerging markets looking better than developed markets. Source: Afribiz
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“The detailed research answers the question our clients might have on investing in Africa,” says Louis Jordaan, RMB’s head of Fixed Income Currency and Commodities (FICC) Africa. “Our comprehensive analysis of the African investment environment will help us partner our clients in their expansion into Africa.”
Feature on Africa
TIA
FDI Focus
Investing in Africa - which countries should companies choose? The case for investing in Africa has been widely made. The continent is booming and offers a largely untapped market. But Africa has many economies with differing populations, wealth and operating conditions. Africa offers both the best and the worst.
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o help clients invest in Africa, Rand Merchant Bank (RMB) last year launched one of the most comprehensive documents on the subject, Where to invest in Africa? which analyses all 45 countries in Sub-Saharan Africa (SSA). The document analyses market size, growth on the continent, the operating environment, financing, resources, consumption and infrastructure development. It also presents snapshots of the 20 largest economies in SSA as well as another five countries which are becoming increasingly popular as investment destinations. The snapshots set out key data, relative rankings, investment opportunities and challenges for these countries. “Africa is a tricky continent in which to invest but having access to comprehensive information helps with making the correct investment decisions,” says Celeste Fauconnier, RMB’s FICC research Africa analyst. Where to invest in Africa? gives the reasons for investing on the continent as: •
An estimated growth rate of 5.6% average in the last decade with six of the 10 fastest growing economies in the world in SSA during that time. Seven of the 10 fastest growing economies in the next five years will be in SSA: • A market of 840 million people, with a total US$1.9 trillion in purchasing power; • A sharp reduction in political conflicts; • An improved macroeconomic environment, with inflation and budgets broadly under control; • A better business climate owing to regulatory reform and privatisation; • Improved access to, and integration with, international capital markets; • Favourable demographics: from a rapidly growing population and labour force, to urbanisation and growth in the middle class; and • The perception of Africa as the
“last frontier”. The document provides detailed analysis on: Market Size Africa’s Big 5 doesn’t necessarily relate to the lion, leopard, elephant, rhino and buffalo but also refers to SSA’s largest economies of South Africa, Nigeria, Angola, Ethiopia and Kenya. Together, the Big 5 account for 61% of SSA GDP with South Africa and Nigeria standing out as the biggest. RMB ranks these markets and looks at others which are not as big but still have investment potential. Growth A key reason to invest in Africa is that it offers rapid growth. RMB looks at forecasts for various countries and analyses what this means for investment opportunities. Operational environment Sub-Saharan Africa has some of the toughest operating conditions on the planet. The lack of access to financing, high corruption, poor infrastructure, inefficient bureaucracy, differing tax regimes, and an inadequately educated workforce, all make it tough to do business. RMB provides a ranking of the operating environment across the continent and its assessment of the challenges these provide. Finance Some SSA countries are increasingly developing their local capital markets to improve the flexibility and effectiveness with which corporate financing is raised. However, access to financing is still one of the major challenges facing businesses wanting to operate in the region. RMB highlights the different means of accessing funds, as well as the complexities of transacting in foreign currency. Resources Africa offers huge potential for resources companies. As global demand for com-
TRADE & INVEST AFRICA
modities is expected to continue its upward trajectory, the continent’s extractive industries (including mining, oil and gas) have high growth potential. RMB looks at resource reserves and where they are found, as well as potential and investment attractiveness. Consumption There are a number of structural factors supporting the prospects for the SSA consumer market including: •
A large population (840 million people); • Forecast of average population growth rate of 2.25% per annum over the next few years; • A young demographic profile; • Forecasts of high levels of income growth; and • Forecasts of higher urbanisation rates. RMB ranks the countries which are most attractive in terms of consumption criteria. Infrastructure The lack of adequate infrastructure is the third largest challenge faced when doing business in Africa. The lack of infrastructure stretches across all capital goods that are important to facilitate the business environment. RMB compares the stock of infrastructure of middle-income African countries with that of other middle-income countries across the globe and analyses the shortfalls this presents. Where to invest in Africa? also provides detailed statistics on 45 countries including rankings on global competitiveness and financial market development. The document is available to clients on request. Over the next few issues of TIA, we will provide you with the unique analysis in the report as well as detailed opportunities in each country sector.
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Overview The case for investing in sub-Saharan Africa (SSA) is strong; economies are booming, political risks have been reduced, and the macroeconomic and business climates have improved. SSA comprises 46 countries (including South Sudan) with vastly different population sizes, income levels, growth rates and operating conditions. How you choose between these countries will depend on your particular company’s circumstances. Luckily, there is now a huge amount of information that can help, which this document sets out in extensive detail. We look in detail at three issues of key importance: market
size, market growth and the operating environment. Putting these together graphically as in Figure 1 helps us to identify key countries. Weighing the three issues equally provides us with a ranking of the most attractive countries to invest in (Table 1). The top 10 countries in this ranking are: South Africa, Nigeria, Ghana, Ethiopia, Tanzania, Botswana, Kenya, Uganda, Angola and Zambia. Given the differing needs of individual companies, these rankings should be considered indicative rather than prescriptive.
Figure 1: Most attractive countries in Africa based on market size, market growth and the ease of operating¹
1 Forecast GDP growth is based on IMF figures for 2011 – 2016. The operating environment index is explained in the text; a higher number represents a better environment. Circle sizes represent the size of the economy in 2010 on a PPP basis. Colours denote different country groupings: blue = the continental giants, green = other attractive economies, yellow = countries that are not particularly attractive, orange = countries with very problematic operating environments Source: RMB FICC Research Data as at August 2010 Rank Score
Country
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
South Africa Nigeria Ghana Ethiopia Tanzania Botswana Kenya Uganda Angola Zambia Mauritius Rwanda Mozambique Sudan Namibia Côte d’Ivoire Burkina Faso Senegal Cameroon
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5.6 4.9 4.4 4.3 3.9 3.9 3.9 3.7 3.5 3.5 3.4 3.3 3.3 3.1 3.0 3.0 3.0 2.9 2.9
20 2.7 Malawi 21 2.7 Niger 22 2.7 Madagascar 23 2.7 Mali 24 2.5 Benin 25 2.4 Gabon 26 2.4 Congo, Democratic Republic (DRC) 27 2.3 Congo, Republic 28 2.3 Cape Verde 29 2.3 Gambia 30 2.2 Guinea 31 2.2 Sierra Leone 32 2.1 Seychelles 33 2.0 Liberia 34 2.0 Equatorial Guinea 35 2.0 Lesotho 36 1.9 Togo 37 1.9 Chad
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38 1.8 Centra African Republic (CAR) 39 1.8 Swaziland 40 1.7 Sao Tome and Principe 41 1.6 Burundi 42 1.5 Eritrea 43 1.5 Zimbabwe 44 1.5 Guinea-Bissau 45 1.2 Comoros
As the score is dependent on the size and growth rate of the economy there is no minimum or maximum rating. Source: RMB FICC Research Data as at August 2011
Aim and structure of the research SSA is in the spotlight as an investment destination. We have seen a notable pick up in interest from our clients and the past year has seen a rush of papers setting out the attractions of the continent. Rand Merchant Bank and our sister company First National Bank (all part of the FirstRand Group) are expanding rapidly into SSA. Making the decision to invest in SSA is one thing, it’s quite another to know exactly which countries to go into. This document moves the research agenda forward into this space. Our research cannot be prescriptive. A country that is attractive for a low-end retailer might not be appealing to a company looking to build roads, or even for a high-end retailer. As such, the focus of this document is to provide the analysis, information and hard data to allow companies to make their own decisions. We start by looking at the case for investing in Africa. Since these arguments have been widely made, we mostly summarise the key reasons without going into too much depth. Arguments focus primarily on SSA’s improved growth outlook. We caution that many may be getting too optimistic in their forecasts given that they understate the effect rising commodity prices have had, although we do agree that SSA offers an attractive investment opportunity. We then turn to looking at issues that will help determine where to invest. Companies wanting to sell into Africa will need to know about market size and potential market growth — the topics of our next two sections. All companies will be exposed to the operating environment in each country: infrastructure, corruption, bureaucracy, tax rates and so on. We lay out this information in- depth, putting particular emphasis on the financial sector. We then turn our attention to the three key sectors we identified as being most relevant for assessing opportunities and challenges: consumption, infrastructure and resources. Our country snapshots set out key data, relative rankings, investment opportunities and challenges, as well as the most problematic factors for doing business in the 20 largest economies, plus another five that are increasingly popular as investment destinations. The appendices set out the data we have used as sources for this document as well as additional useful information.
Angola
Cape Town
What factors decide the investment location? Various studies have looked at the drivers of international investment decisions. These findings support what common sense suggests. To summarise: • For investment on a vertical basis (where production facilities are set up for production/export): labour costs and skills, the size of the domestic market, the proximity to other markets, openness to trade and the operating environment • For investment on a horizontal basis (where investment is to sell into the local market): market size, market growth and the operating environment. The ephemeral variable here is the operating environment. Studies have shown various issues to be important: the availability of infrastructure, reasonable tax levels and stability in the tax regime, a stable political environment, physical and personal safety, the legal framework and the rule of law, corruption, governance, the efficiency of the public service and so on.
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Sudan 29
Figure 2: Most problematic factors for doing business in SSA (% of respondents)
Figure 3: Sectors in Africa that investors think offer the best potential (% of respondents)
Source: World Economic Forum Data as at August 2011 Where are corporates going?
Accessing information
According to UN statistics, within SSA, South Africa and Nigeria have the greatest amount of foreign capital invested, with Sudan, Angola and the DRC falling some way behind. Angola has been receiving a huge share of new investment more recently, with Ghana, Equatorial Guinea, Zambia, Uganda, the DRC and Madagascar also seeing meaningful inflows.
There is now a huge amount of information freely available to investors. This isn’t only the usual macroeconomic data: inflation, GDP, growth, etc. but it stretches to more objective and microeconomic issues such as the business environment, infrastructure, complexities of the tax regime, rental rates, corruption, etc. Care should be taken when using this data; definitions and sources should be carefully checked. The data is not always comprehensive or easily accessible, but it is there for those who want it. This report attempts to lay out as much of this data as possible.
We have noticed a huge pick up in investment activity from our South African clients. The rollout strategy is generally quite similar, with firms first looking at neighbouring countries, then Zambia and East Africa before moving on to either the DRC or one of the big three West African nations — Nigeria, Ghana or, until recently, Côte d’Ivoire. Surveys confirm that investors are primarily interested in SSA as a resource play, secondly as a market to sell goods, but it is still largely off the map in terms of being seen as a manufacturing centre (Figure 3). Note: 1 Respondents (562 business leaders) selected several answers Source: Ernst and Young Data as at August 2011
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Contributing analysts for RMB: Celeste Fauconnier celeste.fauconnier@rmb.co.za +27 11 282-1923 John Cairns john.cairns@rmb.co.za +27 11 282-8656 Theuns de Wet theuns.dewet@rmb.co.za +27 11 269-9503
TRADE & INVEST AFRICA
Land Feature
TIA
The scramble for land
Companies move in as communities resist By Stef Terblanche
A
s global food and fuel prices continue to rise – with expectations of more future increases –foreign countries and corporations are engaged in a new scramble for Africa: this time for land where both land and labour are cheap, restrictive regulations are few and profits are big. But resistance to these new landgrabs by large foreign food, forestry and biofuel companies is growing within affected African communities and among international humanitarian groups, research institutes and NGOs. Not only is this scramble for land threatening food security across Africa, but it is also leaving many small farmers and entire communities destitute. And a number of foreign companies have also abandoned projects in Africa once they learnt that the grass was not necessarily greener here. A variety of reports point out that not only did their investments come unstuck because of local resistance and resentment, but they also fell afoul of climatic issues, scarce resources, lack of infrastructure, corruption, government red tape, financing problems, insufficient soil fertility, and unworkable business plans. As a result, for example, some large biofuels projects in Mozambique and Tanzania were recently abandoned. But that still failed to deter the bulk of the new land occupiers flooding into Africa from Asia, the Middle East, Europe and the Americas. In fact, in the most comprehensive study of land acquisition to date, the World Bank stated conservatively in a report published September 2010 that over 46 million hectares in large scale farmland acquisitions or negotiations were announced between October 2008 and August 2009. Of these it said two-thirds, or 31 million hectares of the land in question
TRADE & INVEST AFRICA
was in sub-Saharan Africa. But the methodology used implies that the actual total land involved could be more than double the World Bank’s figure of 46 million hectares. In a more recent study released in April last year and conducted by the Land Deals Politics Initiative, the estimated area of land deals stood at over 80 million hectares. Of this 37% was acquired for food production, 21% for cash crops, and 21% for biofuels production. In the vast majority of cases these land grabs are facilitated by governments won over by slick corporate presentations about economic benefits, growth and development, as well as – in many cases – the handsome kickbacks and bribes paid to politicians and officials. Another report published last year raised serious questions about the terms of the contracts that governments are signing with foreign governments and companies. Some of these deals are for immensely large areas, such as a recent concession in Liberia which awarded 220,000 hectares to one company. And in another case in Uganda, for example, some 20,000 people claim to have been evicted from their land and have brought an application to court to overturn this. And in yet another instance, early in 2011 nearly half a million hectares of farmland in Sierra Leone, a small West African country of about 6-million people that had emerged from a devastating civil war in 2002, had been leased or was under negotiation, reported the Californiabased Oakland Institute. The land had been transferred to foreign companies under favourable conditions created by the government of President Ernest Bai Koroma, who makes no secret of his desire to lure foreign investment. The country’s struggling economy relies heavily on its agricultural sector.
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“These private sector enterprises have not only made substantial investments in the agricultural sector but have created thousands of jobs for our people,” said Koroma as he tried to justify the land deals. But the World Food Programme estimates that about half the population of Sierra Leone remains food insecure. And a recent study on foreign land acquisitions and usage in newly independent South Sudan called “The New Frontier” and which was commissioned by the Norwegian People’s Aid (NPA) found that between 2007 and 2010 “foreign interests sought or acquired a total of 2.64 million hectares of land (6.52 million acres) in the agriculture, forestry and biofuel sectors alone”. David Kuol Mading, who wrote the report, noted that this involved a land area larger than the entire country of Rwanda. He further reported that to date
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foreign companies have taken over a total of 5.74-million hectares of land in South Sudan, their focus being on agriculture, forestry, biofuels, eco-tourism and carbon trading. In fact companies from India, Norway, the US, China, South Africa, Malaysia, and Turkey among others had already started taking over land in South Sudan’s Juba region since 2005, long before South Sudan’s secession from the north. Here too the “invasion” by foreign companies has led to local inhabitants being moved off their land, leaving them destitute and undermining their livelihoods. Inter Press Service recently quoted Joseph Rahall of the Sierra Leonean NGO Green Scenery in a report as saying that local government and landowners were most vulnerable to exploitation, and that talk of employment and economic development is simply “the bell they (governments) ring
TRADE & INVEST AFRICA
to sweet talk people into accepting these things”. The trigger that set off this new rush for land in Africa by large foreign investors was the food and fuel crisis of 2008. But these land deals brought little benefit or comfort for Africans in most cases. Oxfam International reported in a new study this year that most of these land deals were for export commodities, including biofuels, minerals and luxury export items such as cut flowers. Where food was being produced it also was mostly for export. The Oxfam report says up to 227-million hectares of land has been sold or leased in developing countries, much of it in Africa, since 2001. Other reports are heavily critical as well. “As much of the rural population in Africa crucially depend on land for their livelihoods and food security, loss of land is likely to have major negative
impacts on local people,” says a 130-page report compiled jointly by the by the UN Food and Agriculture Organisation, the International Fund for Agricultural Development and the International Institute for Environment and Development. As a direct result of these developments the UN Committee on World Food Security has tried to produce a set of guidelines on tenure of land, fisheries and forests to protect poor communities and farmers. However, failure to reach agreement on details of the conditions for large-scale investments has delayed finalisation of the guidelines. When the government of Sierra Leone recently transferred 12,500 hectares of land to a Belgian company without consulting the affected local community,this trig-gered protests in which police arrested about 100 people. Other communities across Africa are also resisting. Some are growing impatient and are no longer willing to simply wait for governments and international agencies to take up their plight. In Mali some 200 farmers belonging to the National Coordination of Farming Organisations who have been affected by such land grabs have joined forces with the international farmers’ movement Via Campesina, researchers, political leaders and NGOs to host a conference in November in Sélingué with the purpose of strengthening the fight against land grabs. They see as their “enemy” the large international corporations, the hedge funds, and local governments among others. Other threats are also emerging in tandem with the land grabs. Among these are increased regional tensions over sharing scarce water resources as the demand for water increases. In March the Stockholm-based International Water Institute released its report, Land Acquisitions: How will they impact trans-boundary waters, at the 6thWorld Water Forum in Marseille, France and noted that there is very little systematic analysis of land investment. There are, however, always two sides to every story. The very same global demand for food and agricultural commodities that has triggered the scramble for land in Africa has also created new opportunities for African farmers. What is in short supply are public policies and infrastructure to support the various local types of farming in Africa. Here foreign private investments can play a meaningful role to improve productivity or market access can be structured in ways that support local farmers, says Lorenzo Cotula who leads the land rights team at the UK-based International Institute for Environment and Development. And Anders Jagerskog, director of applied research at the International Water Institute and co-author of its report says there “could be a positive spin to all these investments – technological transfer, foreign direct investment that, if managed in a good way, boost the economies of these African countries”. “But the evidence seems to point in the other direction. That these deals are not necessarily that good for the countries that are seeing these investments,” he said.
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TRADE & INVEST AFRICA
Advisory Feature
TIA
Taming The Social Networking Monster By Marc Pienaar
Social networking websites and channels have proliferated and gained many millions of users. They have almost become woven into the very fabric of our online lives. No, make that just: our lives.
T
he extent of this was brought home to me recently. Not in a big city, but in the small town of Graaff-Reinet. While waiting for some Karoo lamb in a local butchery, I overheard two particular conversations. The first snippet was between two young women. I picked up from their conversation that they were residents of one of the semi-formal townships nearby. They were discussing what they had seen on Facebook the previous evening. Now, this is a rural farming town, with a population of around 20 000. It’s about as far from a city as you can get and still find town planning. The main geographical attraction in the area is a vast stretch of semi-arid nothingness called the Valley of Desolation. Yet people who live here are using social media on mobile phones. If that isn’t “global reach” then I don’t know what is. The second snatch of conversation came from the cashier, a middle-aged woman. She said something very odd. Replying to a customer’s mention of the Internet, she said: “I don’t use the Internet. I only use Facebook.” At first I was a bit taken aback at her faux pas. Perhaps a little judgemental. Then I realised that to her, Facebook IS the Internet. That’s significant. It means that there must be many more people out there like her whose only online interaction is via social networking. That makes it important – especially if those people are the ones your business is trying to reach. What is social networking? Social networking refers to using online platforms that have been built for people to
share “stuff ”. This can be anything from the oft-cited “what I’m having for breakfast” to news alerts, photo albums, written content, music and so on. Crucially for businesses, these platforms have also become channels for sharing opinions on companies, products and services. Well-known examples are Facebook, Twitter, LinkedIn, MXit, Google+ and Tumblr. Specifically African platforms include Motribe and Veepiz. So what’s the difference between social networking platforms and websites, blogs or newsfeeds? The difference lies in all the underlying engineering that enables people to use them instantly, without having to configure anything themselves. This vast array of tools allows for the kind of interactions listed above – with more features constantly being added. Is it for everyone? As a business owner you may well be wondering if it’s absolutely necessary to get into social networking. It may appear daunting; even risky. Or irrelevant to your operation. Perhaps so. The question to ask is whether or not your company in any way depends on customers or consumers for its operation or revenue. If so, I hope I’ve made the point that these people are using social networking – the implications should be obvious. All such companies can benefit, no matter their size. As long as a few simple guidelines are followed, it can become a valuable marketing and communications tool. Simple doesn’t necessarily mean easy, mind. To do it properly, your company is going to have to apply itself and be mindful
TRADE & INVEST AFRICA
of the dos and don’ts below. Bear in mind that it’s easier for a small business than for a large one, which often has to negotiate corporate communications requirements. Buy-in and cooperation from multiple departments with those tasked with social network implementation is important. This can present quite a logistical challenge. So prepare adequately. What about Africa? Social networking in Africa has one very specific aspect that separates it from uses on other continents. Recent research shows that Africans use mobile phones to access social networks to a higher degree than anyone else in the world. These findings echo previous research indicating that the main method of Internet access in Africa is the mobile device. This tells us that we need to take a mobile approach to social networks. It means, for example, keeping your content short and concise – designed to be read on a mobile phone. It means becoming familiar with using social media on a mobile device yourself, to understand the user’s experience. One excellent way of taking advantage of the mobile slant is to develop apps for smartphones. There are tools to help you do this. For example, a company that sells educational books can create an app that mobile users can download, which will automatically give them previews of new book releases. Communication, communication Social networking is about talking. Not talking at people or talking about yourself.
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Recent research shows that Africans use mobile phones to access social networks to a higher degree than anyone else in the world
Talking with people. That’s the single biggest thing for a business to understand about social networking. Moreover, it’s a two-way conversation. Customers are now active participants in your marketing efforts. You can’t shut them out. In fact, the worst thing you can do is to try. It’s even more damaging than offending them by making a mistake and rendering bad service. They’re not your customers anymore Admittedly, this isn’t really a new idea. Savvy marketers have long understood that treating each “customer” as a real, individual person is what makes the difference between building loyal customer relationships and merely creating an assembly line of once-off purchasers who are not really engaged beyond the transaction. Social networks are beautifully tailored for this. You MUST engage. It’s not about branding or PR – it’s about a having real “live” conversations with real live people. Don’t use marketing-speak. Talk to them as a real people. Tell them real things in a personal way. Listen to them, find out what they really value and give it to them. Ready to take the plunge? Let’s have a quick look at the pros and cons that you should consider when approaching social media from a business point of view: On the plus side: • • • • • •
You can build a loyal, engaged audience that can be translated into revenue You can get richly detailed insights into the preferences of your target markets By getting to know your audience you learn what they want and tailor your offerings accordingly It’s immediate – you can get your message out there instantly It’s viral – give people something interesting and they will share it exponentially It’s measurable – you can track your ROI tightly
... to (this rural woman), Facebook IS the Internet
On the negative side: •
It can be time and resource intensive – but it’s also one of the best time and resource investments you can make: interacting with your customers and creating sustainable channels for attracting new ones.
•
It requires facing up to negative public criticism. This also gives you the opportunity to address it immediately and positively. A very successful restaurateur taught a priceless lesson: a well-handled complaint is the best opportunity to gain a loyal customer.
Do this - don’t do that Here are some keys to the correct approach to social media:
The first thing to take into account is that you should task specific people in your organisation with social media. Don’t just dump it onto your existing marketing staff. It may cost a little more, but creating a dedicated position will pay off. Use social networks yourself. Encourage your employees to use it. It’s the best way to get a feel for how it really works. You’ll develop a sense of what works and what doesn’t; what is acceptable and what isn’t; what gets a positive reaction and what doesn’t. Once you’ve created a social media presence, you can’t come and go. You need to be continually engaged and as immediately responsive as you can be. Do not gatecrash. Remember that you are engaging with people in a space that they consider to be theirs. Approach social media in the same way that you would a group of people that you have just been
introduced to. You’re not friends yet; you have to earn it first. Don’t post scripted sales pitches. They will sound as false as when you listen to a telesales agent read you a pitch. You know how you feel when that happens. Your social networking audience will feel the same. Plan your campaigns carefully, taking into account everything you learn about the people you are marketing to. Set campaign objectives and measurements upfront. Don’t ignore people. Even if they post scathing comments about your company. See it as opportunities to convince them otherwise. Just like you would when differing with a friend. Whatever you do, don’t delete negative comments. They will make you pay for it in ways that hurt the most – your bottom line.
Retail Feature
TIA
African consumer feature
The changing face of retail in Africa
South African retailers are revolutionizing consumer shopping habits across the whole continent, changing the way consumers shop and what they buy.
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ith the South African market maturing, many retailers and fastfood chains have ventured north of the border with Africa providing them with huge opportunities to reach relatively untapped markets which add healthy margin growth. The changing face of retail in Africa is most evident in those capital cities which have the highest concentration of affluent consumers and expatriates who have previously been exposed to formal retail. However, the real momentum for the transformation has come from the major retail chains and property developers who have worked together to pioneer a new ‘shopping mall culture’ in many of the major centres. A consumer culture has not been the norm across the continent, but the growing presence of many of the big South African retailers including Clicks, Edgars, Game, Jet, Mr Price, Pep, Pick n Pay, Shoprite, Truworths and Woolworths has provided
having a major impact on driving consumption demand. The new retail precincts are not only changing consumers’ buying behaviour but are also changing their social behaviour by providing a venue for consumers to congregate. In fact, many people are foregoing other activities and traditional meeting places in favour of ‘mall socialising’. One of the most significant retail trends emerging in Africa is the offering of quality goods in a First World retail outlet such as fresh deli and butchery. It’s also an irreversible trend. Younger consumers will become accustomed to the new retail offering and the combination of convenience and aspiration will drive demand. The advancement of South African retailers is predominantly in Sub-Saharan Africa but as more and more organisations recognise the growth opportunities in untapped markets, the footprint will expand. Distribution and the cold chain in particular is - and remains - a major ob-
One of the most significant retail trends emerging in Africa is the offering of quality goods in a First World retail outlet such as fresh deli and butchery. It’s also an irreversible trend. the more affluent and middle-income consumer with access to formal retail shopping for the first time. Never before have consumers had access to such choice and convenience - and this new landscape is
stacle to successful operation, but there are many retailers and retail suppliers who have invested in Africa and are realizing robust margin growth. This is sweetened by the fact that consumer credit is still not
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an option in many countries, and cash is the major currency which enables retailers to build robust and liquid trading platforms with limited financial risks other than low trade volumes and interest rate fluctuations. When there is increased access to consumer credit (by the financial institutions and/or the retailers themselves), this will provide even greater impetus for growth but will also increase trading risks for the retailers. Opportunities for growth remain open to both existing as well as new entrants, but site selection is paramount and latecomers could miss out. Location, leases, management, logistics, local legislation and supplier agreements are also pivotal to success - as is a deep and thorough understanding of local consumer trends and preferences. Efficient product merchandising is also vital and those retailers that deliver on the fundamentals of value, convenience and product availability will be the success stories. The global trend of urbanisation is also very evident throughout Africa with the result that retailers now have sufficient numbers of consumers driving a sustainable demand for their goods. In turn, this means choice and convenience available to consumers where previously there had been none. This formal retail advancement comes at the expense of the informal trader as economies of scale enable the more sophisticated retailers to offer consumers cheaper prices, greater value and a much wider range of products. Despite the changes however, the informal sector will always
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The following African countries were highlighted as potentially exuberant markets by the report:
Algeria • Economic environment –36 million people and growing –Relatively youthful population –High dependence on oil and gas –Modest growth in GDP expected –Rising real wages –Negatives: • High unemployment • Social instability • Inadequate investment in non-energy • • • •
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• • • • •
Consumer market –Strong growth expected due to: Population growth Household formation Rising incomes –Fragmented retail market –Small foreign presence –Protectionism boosts food prices Kenya Economic environment –40 million people, 90% rural –Skewed income distribution –Double-digit inflation –Ethnic conflict –And yet: Rapid GDP growth Growing middle class Diversified economy Strong banking and telecoms sectors Consumer market
–Growing rapidly –Modern retail only 10% of total –Few regulations of retailing –Highly developed M-commerce –Foreigners welcome –Relatively free trade •
•
• • • •
• • • •
Morocco Economic environment –32 million people and rising –Youthful population –Huge remittances from workers in Europe –Strong tourism, competitive manufacturing –Vulnerable to European problems –Rising investment from Middle East –Strong growth expected Consumer market –Growing modern sector –Hypermarkets especially popular –Industry remains very fragmented –Largest mall in Africa opening soon –Foreign retail experience is mixed: Auchanand Metro are exiting Gap and GaleriesLafayette are coming BIM is expanding Nigeria Economic environment –160 million people, youthful, growing –Many headaches: Poor infrastructure and unreliable electric grid Political instability and ethnic conflict High inflation Excessive dependence on oil
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–Much potential: Strong GDP growth expected to continue Strong investment in non-oil sector Rising middle class Consumer market –Second largest retail market in Africa –Strong growth expected to continue –Highly fragmented retailing –Strong investment in modern stores, malls –Convenience stores highly popular –European, South African retailers investing
South Africa • Economic environment –50 million people –Youthful population –High unemployment –Moderate growth, expanding black middle class –Rising consumer incomes fuel spending –Sophisticated business environment •
Consumer market –Consumers paying down debts, improving cashflow –Retail sector quite sophisticated –Walmart!! –Well-developed supermarket industry –Hypermarkets just starting out –Informal sector focused on poor –Modern retailers now focused on poor –Expect more foreigners
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have its place as consumers will ‘top up’ their primary purchases with products supplied by a nearby informal outlet or street trader. Africa’s formal retail growth could impact on the number of ‘tourist consumers’ who have traditionally visited South Africa to shop, but the upswing in trade in the new markets would more than offset any decline in volumes. South Africa will continue to be seen as an aspirational destination and despite the growing presence of South African retailers and products in tourists’ own countries, they will continue to travel south to purchase luxury items. The increased strategic focus on Africa by the major retailers also provides significant growth opportunities for secondary and specialist retailers as well as for service providers. Observing the many people stepping onto an escalator in a shopping mall in cities across Africa for the very first time, it’s clear that the only way for retail on the continent is up. (source:http://www.supermarket.co.za/) Hidden Heroes Speaking at the World Retail Congress in Berlin towards the end of last year, Deloitte unveiled the updated and extended version of its Hidden Heroes: the next generation of retail markets report, compiled in conjunction with Planet Retail. The first annual Hidden Heroes report identified the most attractive emerging markets for retailers, beyond China. The other BRIC economies of Brazil, Russia
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and India led the way, along with rising stars such as Indonesia and Turkey. This latest report casts a wider net to look at the next generation of emerging retail hotspots. Whilst some countries will be of immediate interest, such as Vietnam and South Africa, others have been included to give a longer term view of where international retail might find growth in five, ten or fifteen years. What was of interest, was the fact that the report this time revealed that several African countries should be on the radar of international retailers as they seek growth opportunities in emerging markets, reiterating the view of the continent as having solid prospects for consumer driven businesses. African countries dominated the report, making up half of those featured, with Algeria, Kenya, Morocco, Nigeria and South Africa highlighted as the brightest longer term opportunities. In a press statement released by Deloitte, Robert Gregory, Global Research Director at Planet Retail, said: “Walmart’s entry into South Africa has thrown the spotlight on a region that has typically been overshadowed by Asia, Latin America, the Middle East and Eastern Europe when talking about future retail growth.” “Walmart’s acquisition of Massmart, however, not only gives it a foothold in the key South African market but also a presence in 13 other African markets – ranging from Botswana to Zambia. With the world’s largest retailer now active in the continent, it seems likely that other leading global retailers will investigate opportunities in the region for themselves.”
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Ira Kalish, Director of Consumer Business for Deloitte Research in the United States, added: “While the African markets in our report vary significantly in terms of size and level of development, they all represent opportunities for growth. All have fast growing economies, young and growing populations and fragmented retail sectors. For example, 70% of the population of Algeria are aged between 15-64, whilst 25% are 14 years old or younger. Morocco is a relatively stable, high growth economy with close economic ties to Western Europe, whilst Kenya is leading a number of sub-Saharan countries in generating significant growth and increasing consumer spending power.” The continent’s economic powerhouse, South Africa, is likely to remain the first market international retailers venture into as they embark on an African strategy, with a per capita income similar to that of Turkey, which means it is a relatively affluent market among emerging countries. Consumer spending, at 61% of GDP, is high relative to other emerging countries and is likely to remain so for many years. This report is further confirmation that Africa really is more than just a commodities story.
Source: Imara Investment Banking and Asset Management group. The Group is renowned for its knowledge of African markets.
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Minerals Feature
Red Gold
China’s growing appetite for minerals and commodities will keep it hungry for South African assets for at least 10 years, writes Sharda Naidoo xactly 12 years ago, the then Chinese President Jiang Zemin paid a state visit to South Africa. He was on a charm offensive – China wanted to tap South Africa’s large mineral reserves to feed the emerging economic Asian powerhouse. Jiang succeeded in wooing his South African counterpart. Two years later, a presidential Bi-National Commission was set up, kick-starting a cozy relationship that has arguably largely benefited the Chinese’s thirst for minerals and commodities. At a political level, South Africa regards China as a key player in the global debates that characterize the shift to multi-polarity, but at the same time is mindful the trade gains are skewed towards its communist Asian counterpart. The Red Dragon (that is China) is a hungry rising power. As it steps up its rapid industrialization and urbanization growth path, its appetite for minerals and commodities is growing. It has set its sights on Africa to feed that hungry industrial
which negotiates deals between the South Africans and Chinese. “Given the favourable political environment between the two countries, South Africa is well positioned to take advantage of this capital flows. The prospects of SA investment from China are looking strong. I don’t see any let up; there is constant interest, which is gaining traction.” China, at the end of 2009, became South Africa’s largest export partner followed by the United States, Japan, Germany and the UK. During the same period China became South Africa’s number one import partner in the world. Total trade between South Africa and China has been steadily increasing since 1998 to 2009: from R5.2-billion to R120billion. The bulk (about 60%) of South Africa’s exports to China are mineral, base metals, and commodities products, according to Department of Trade and Industry statistics. By contrast, South Africa imports a widening range to higher
total trade. The share of exports to China increased from 1% in 1996 to 4% in 2006, according to statistics from the Department of Trade and Industry. Exports to China grew by 50% per annum from R789 million in 1996 to over R4 billion in 2000 whereas imports to China increased by 29% during the same period. Precious Metals was the best performing export sector from 2001 to 2006 with an average annual growth rate of 141%. However, mineral products and base metals accounts for 74% of South Africa’s exports to China and had an annual growth rate of 31% and 29% respectively. In 2011 exports to China grew on average 46.1% from the previous year. In rand value, exports to China have climbed from R 24-billion in 2007 to R34-billion in 2008, R48.6-billion in 2009, R58.5-billion in 2010 and R78.4-billion in 2011. SA exports to China in zinc ores and concentrates, for example, have grown
Exports to China grew by 50% per annum from R789 million in 1996 to over R4 billion in 2000 whereas imports to China increased by 29% during the same period. monster, and more recently South Africa has become a hunting ground for strategic resource acquisitions (mining, oil and gas assets) to keep the Asian economy fuelled with raw commodity inputs. There is a “very big pipeline of capital from the Chinese” that will flow into South Africa over at least the next five years, says Martyn Davies of Frontier Advisory,
value-added products from China such as clothing, data processing machines, printing machinery, electrical consumer goods, bulldozers and motor vehicles. South Africa’s exports to China have been increasing faster than imports and South Africa’s trade with China, in both imports and exports, has grown significantly quicker than South Africa’s
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851% between 2010 and 2011. Similarly, exports in bituminous coal have increased 169.5%, according to the DTI. South Africa also has one of the richest coal deposits in the world and about 40-50 years of supplies at current rates of extraction. China recently became a net importer of coal as core to its infrastructure.
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Even during the recession of 2008 and 2009, trade between the two countries grew 2%. According to South African government data, the trade balance has always favoured China since 2001. The trade surplus in China’s favour climbed from R5-billion in 2001 to R46.6-billion in 2008 but increased to R22-billion in 2009. The Chinese authorities have always disputed these figures, consistently arguing that bilateral trade is balanced. It appears the discrepancy lies largely in recording indirect trade, particularly gold – South Africa records Hong Kong as the destination for gold exports, while the final destination may be China. China
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records gold imports via Hong Kong as imports from South Africa. As China continues to procure raw materials from South Africa, the government is concerned that the current structure of trade is not being addressed adequately. This might be because of President Jacob Zuma’s very cozy political relationship with the Chinese. In 2007, both countries signed a Partnership for Growth and Development (PGD) agreement to tackle the structure of trade currently in favour of China, anchored around market access for South Africa’s value-added export to China, mineral beneficiation
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as well as infrastructure facilitation and development. Trade and Industry says in a document that the PGD process had not yielded any positive results, and during a working visit to China in February 2010, government officials elevated the Bilateral Partnership Agreement to a Comprehensive Strategic Partnership Agreement (CSPA). The two countries have also signed a memorandum of understanding on mineral resources co-operation, including the beneficiation of raw materials and minerals. This MOU has given rise to increased Chinese investment in South Africa.
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China has rapidly emerged as a significant global investor over the last few years. In 2010, the country was ranked the fifth largest international investor with its outbound mergers and acquisitions (M&A) activities totaling a new high of US$62 billion (up 157% from 2009). Despite the ongoing turbulence in international markets and the aftermath of the global financial crisis of 2008/2009, Chinese companies continued their overseas acquisitions and became more adept in acquiring key assets. According to Deloitte, Chinese M&A activities were concentrated in a few sectors in the first six months of 2011,
with resources and energy remaining the largest in both volume (25%) and value (32%), followed by manufacturing, telecommunications, consumer business & transportation and global financial services. The investments have been supported by China’s “going global” policy and implemented by largely stateowned enterprises (SOEs). With intense competition at home, private Chinese companies in sectors such as mining, trading, property and renewable energy are investigating opportunities of increasing their market share abroad, says Frontier Advisory.
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Despite Chinese investment slowing down recently in other parts of the world and concerns of a hard landing for the world’s second largest economy after the United States, investment in South Africa is expected to increase. “Given the drivers mentioned above, we expect Chinese M&A activity to become increasingly more diversified and to enter a much broader range of deals by industry and geography,” says Davies. In 2011, China secured direct supplies and strategic access to oil, gold, platinum, copper, nickel and manganese through its M&A deals on the continent. In South Africa, investment from China has been in
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Mining Feature
In the 1950s South Africa was the world’s leading producer of rare earth minerals (such as thorium, a nuclear fuel used as alternative to uranium), a position that the United States took over in the 1960s. Today, China totally dominates the global market, producing 97% of all rare earth minerals even though it only has 37% of the world’s rare earth resource. Over the past three years China has placed restrictions on its export, which combined with increased demand driven by a green technology boom, has sparked an increase in the price of rare earth minerals to five or ten-fold, according to TIPS. Rare earths from producers other than China are therefore particularly in demand.
excess of R37-billion since 2003. Analysis by the DTI shows that Chinese investments have been focused mainly in metals (around R3.8 billion or US$ 440 millions) and the mining sector (mainly chrome). South Africa ranks second in China’s mining investment in Africa, behind the DRC (six projects), and ahead of Zambia (five) and Zimbabwe (four), according to Trade Invest SA. During the second half of 2011, three key deals in Africa were concluded, totaling US$1.734-billion. A further five major deals — all in the extractive
industry — valued at US$2.868 billion have been publicly announced or are still pending. Jinchuan Group has been an active player in the South Africa, acquiring a 45% stake in Wesizwe Platinum in May last year, and an announcing a bid for Metorex in July. Once successful, China Guangdong Nuclear Power Group’s acquisition of Kalahari Minerals PLC will become the second largest foreign acquisition by a Chinese company in history.
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China’s M&A Play in Africa Africa’s share in China’s outbound M&A activities remained small in the past. More than 80% of the Chinese outbound M&A activities were focused on the targets located in Canada, the UK, Australia, the US, and recently Brazil and Argentina. However, in the past six months a number of deals have been making news in Africa. Chinese companies, instead of seeking short-term financial gains, are now focused on expanding capabilities in Africa and, in rhetoric, seeking to promote development within the continent, says Davies. In 2011, Chinese companies’ approach to M&A in Africa has been more assertive than previously. During the second half of 2011, three major deals totaling US$1.734 billion were concluded and five major deals worth US$2.868 billion were announced or pending. These form a small part of 207 deals that have been inked by China globally in 2011, totaling US$42.9 billion, according to Price Waterhouse Coopers. Over the six-year period between 2005 – 2011, China’s M&A transactions into Africa’s energy and resource space – largely into small to medium firms – amounted to only 11 deals, worth US$7.6 billion, according to Frontier Advisory research. This amount is set to rise in the short to medium term in excess of US$1.5 billion per annum considering the size of the transactions either completed or announced thus far in 2011. A key trend emerging from Chinese outbound transactions is the focus of M&A activities into Africa associated with acquiring resource and energy assets – a similar trend witnessed in Australia between 2007 and 2010. After the initial wave of acquisitions by state-backed companies, such as oil giant China National Offshore Oil Corporation and aluminium company Chinalco, a second generation of Chinese resource- and energy-seeking companies has emerged. These companies have grown into proportions that require expansion beyond the domestic market. On the other hand, an increasing number of smaller, private Chinese firms are also entering the space through private placements of equity in order to secure involvement in the development of projects in a cost-effective way.
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Feature on Africa
Rising from ruins By Jo Kromberg
M
iguel de Cervantes Saavedra, the Spanish writer and author of the masterwork El quijote, once said: “The phoenix hope can wing her way through the desert skies, and still defying fortune’s spite; revive from ashes and rise.” But sometimes even the Phoenix needs help... Africa is arguably the most misunderstood continent on earth in many senses. It hides secrets, treasures and ancient wisdom in the forms of lost civilizations, architecture, art and cultures. But there is one unit of scientists – very little known and unassuming – that is attempting to uncover and preserve at least a small part of Africa. Under the expert supervision of Professor Heinz Rüther, The Zamani Project was initiated in the Geomatics Division of the University of Cape Town and is currently funded by the Andrew W. Mellon Foundation. The project, founded as “The African Cultural Heritage Sites and Landscapes Project”, developed out of years of heritage documentation activities by Prof. Rüther. “Zamani is the Swahili word for ‘the past’,” he tells me one sunny morning in his modest office at the Engineering Faculty at UCT as I attempt to find out more about the fascinating work they do. I’d never even heard of the term “geomatics” before... “In layman’s terms, the Zamani Project is a documentation project on African heritage sites which preserves Africa’s history for the future in digital format. The data can be used for conservation, restoration, research and education,” he says. “The documentation comprises of 3D computer models of historical buildings and structures, of Geographic Information Systems, 3D terrain models of surrounding landscapes , panorama photography, videos and other spatial information. It
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is in the view of modern archaeologists that knowledge of the context of the environment is necessary for the understanding of a site. A historical site cannot be seen in isolation. We have a geographic information system and a complex database of each site – we also produce sections, elevations and ground plans of the structures. All this is supported by contextual information which is collected by JStor/Aluka in New York and published in the JStor digital library.” In other words, the Project attempts to capture the spatial domain of heritage, by accurately recording its physical and architectural nature and dimensions. Sites are seen in the context of their physical environment and landscapes surrounding sites are documented based on satellite and aerial imagery, wherever possible. The documentation project was initiated to increase international awareness of African heritage and provide material for research while, at the same time, creating a permanent metrically accurate record of important sites for restoration and conservation purposes. The project is based on state-ofthe art data acquisition and pre-sentation technologies, including laser scanning and close-range photogrammetry, which are used to generate Geographic Information Systems, 3D computer models and other spatial data. The work is often complex and difficult in the field. The team has completed documentation work in Ghana, Mali, Kenya, Sudan, Egypt, Cameroon, Mozambique, Ethiopia, Tanzania and South Africa. So what are the main objectives of the project? “To provide data for the future, should sites deteriorate or be destroyed,” says Heinz. “In our efforts to digitally record them we are trying to be holistic. We combine technologies and different
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ways of conveying information and also our data is used for conservation and restoration which is an additional objective. At present the data is used for restoration, for instance at Lalibela in Ethiopia by UNESCO and the World Monument Fund and in Songo Mnara in Tanzania by an international team of conservators and archaeologists. The data can also be used for site management, for example at the Wonderwerk Cave in South Africa, the design of a tourist walkway will be based on our data. We also intend to use the data to create replicas (true to scale) of rock art shelters to allow people who cannot physically visit the sites to get an impression in 3D.” It seems the data has endless applications. It can also be used, the professor tells me, to assist in the control of the effects of natural disasters by providing, for example, information for the design of structures built to protect important archaeological sites from flooding. Rock art is especially exposed to vandalism and, while we cannot protect a site from destruction, our data can help
Saharan Africa. I must confess that this is not entirely altruistic, I find working in Africa fascinating and challenging and feel greatly privileged being able to work on these sites.” The Andrew W, Mellon Foundation is currently funding the project, he says. “We have documented about 35 sites over the last five years in 12 countries but there are many more sites to document and we are running out of funding.” He says the project has generally been well received by the countries in which they work. “At first there is some hesitation and suspicion and our motivation is often questioned – they are wondering why we are doing it for free! But once the fieldwork begins we always include local experts and students for on-the-job training and once that happens and they see the results they become very positive. We are then asked to do further sites.” The professor says there are serious concerns about potential misuse of the data as well. “We are very careful to make the data available to respected bodies and researchers and
In terms of the anthropological context of the area, the data helps us to understand how people who lived hundreds and even thousands of years ago... to restore sites.. The data can also serve to monitor changes due to erosion, human impact or sea levels rising such as in the case of the fortress on Kilwa Kisiwani in Tanzania which is right on the shore. “In Cameroon there are dry stone strongholds where the structure of the original building is hard to understand by visual on-site inspection. The researchers working there hope to use our 3D models to restore or reconstruct damaged structures, and determine their original use.” Generally the data can be used to restore some semblance of life as it was before. So how did his passion for this line of research begin and why Africa? “It started a long time ago. I was always fascinated with cultures. In high school I had a classic education in Greek and Latin. When I came to Africa I realised that not enough was done about preserving African heritage and culture, albeit for understandable reasons. The sites are difficult to access and there is very little money available to protect sites. Many sites are not widely known and only accessible to researchers. I always had a love for Africa and I saw a need and opportunity to do something for sub-
scholars only. Unscrupulous tour operators and other opportunistic industries can do a great deal of damage. And we certainly do not want to see our computer models in the form of inappropriate or disrespectful video games. We only trust appropriate government officials, heritage authorities and accredited custodians with the results of our work and we are DEFINITELY not in it for commercial gain. All the work is done pro bono and no one is ever charged a cent for their amazing services. Heinz says it is impossible to say how many sites there are still to be documented in Africa. “There could be hundreds more. In addition to historical and archaeological sites, there are also a wide variety of traditional hut forms in Africa reflecting cultural diversity and different responses to the environment. All these should be recorded before they are replaced with modern dwellings.” So how many other institutions around the world are doing similar work and to what extent? “There are a few yes. But to my knowledge nobody in sub-Saharan Africa does the work to this scientific and holistic extent as we do. There are possibly a couple
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of laser scans here and there but I am not aware of a similarly complex approach to a holistic documentation of sites in subSaharan Africa.” “In terms of the anthropological context of the area, the data helps us to understand how people who lived hundreds and even thousands of years ago, coped in the environment of the time, how they managed to use materials which were naturally available and how they were able to construct a life which made living there acceptable. For instance, they used natural material and ingenious designs for cooling purposes which are more appropriate than our buildings with minimal damage to the environment. In some ways they interacted more sensibly with the environment than us because of their more direct dependence on it. We often feel removed from, if not superior to, nature and don’t accept the need to protect it. African cultures seemed more able to adapt to the environment as, for example reflected in the adobe structures in Mali.” But the future of this amazing project is bleak. “At this stage it’s in limbo,” says Heinz. “We are using our last funds to complete three more projects this year, after which the project might have to close down The Zamani team is extremely dedicated and experienced and I consider myself very lucky to work with such a group. We have grown together in the difficult conditions of fieldwork and travelling in remote parts of Africa and developed a very positive team spirit. The thought of the team disintegrating and the project terminating because of a lack of funding is depressing. We are not just a production unit but we are developing methodologies as well and post-grad research is attached to the project. There always have been problems to find funding for research but the recent economic crisis has worsened the problems substantially .” Working as a geomatician in remote parts of Africa may sound like something from a romance novel but is filled with peril of all kinds. “We do get volunteers to help us but they need to understand that it’s not a picnic out there. They can’t have any illusions of the territory and the often-harsh conditions. It is physically demanding and there are risks like health, safety etc.” The biggest risk, however, is that these dedicated, deeply committed and passionate scientists may not be able to continue with their work due to lack of funding. As a continent, we simply cannot afford to lose them. As they say, we are borrowing this land from our children and we owe them a vision of their past...
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Axum The Team... Christoph Held was born in Freiburg, Germany and studied computer science and media in Furtwangen, a small town, hidden somewhere deep in the Black Forest. As he had not seen much of the world at that stage and because of his interest in 3D visualization, he grabbed the chance to join Prof. Rüther’s project in Cape Town the first team member and he is now writing his postgraduate degree thesis under his supervision. Ralph Schroeder was born in 1971 in Cologne, Germany. After he finished his Geomatics Degree at the University of Bonn, he completed his two years’ Articles at the regional government in Dusseldorf. Looking for new experiences he visited South Africa on holiday and ended up joining the Zamani project as a scientific officer in 2005. Currently, Roshan Bhurtha is a scientific officer in the Zamani Project. Roshan, born in Mauritius, is an electrical engineer who graduated from the University of Cape Town with an MSc. He has been attached to the Zamani Project since 2007. He is happy to be one of the first, if not the first, Mauritian to visit Africa’s remote and fascinating sites Stephen Wessels was born in Durban where he spent his holidays on the Wild Coast, and on the family farm in East Griqualand. In Cape Town he attended Westerford High and his love for the outdoors guided him to study Geomatics, at UCT, after seeing a flyer featuring a surveyor’s theodolite set up next to a Land Rover silhouetted in the sunset.
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China in Africa
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The China/Africa Report
South Africa’s Special Economic Zones – inspiration from China? By Dr. Daouda Cisse
Special Economic Zones are designated geographic areas with specifically designated liberal commercial and economic policies aimed at attracting more foreign investments. or many African countries China is seen as an economic growth model; the ‘middle kingdom’ ranks as the world’s second largest economy. The increasing density of Sino-African relationships over the last decade has boosted investments and trade in Africa, and it has contributed to China’s modernisation and its rise on the international scene. For example Shenzhen, which was a small village, has rapidly become a modern city right next to Hong Kong. With its Special Economic Zones, China has attracted outward Foreign Direct Investment which has enhanced the creation of employment and generated investments and technology transfer. Such success was achieved through economic reforms following the “open door” policy in the late 1970s, namely trade liberalisation and market openness, as well as extremely liberal labour regulations. Many African countries have also developed industrial spaces or hubs to
Africa, four IDZs were established: Richard Bay, Coega, East London and OR Tambo International Airport which is the only one not yet operational. In many countries on the African continent, these zones have not lived up to expectations. Lack of transport, communications and ICT infrastructure have been the main constraints for African countries to develop businesses. As partnership and cooperation in trade and investment between China and Africa are growing, Chinese Special Economic Zones have in recent years caught the eye of many African leaders. During FOCAC III in Beijing in 2006, China approached a number of African states with the suggestion to establish SEZs on the continent. In Africa, attempts are made to replicate the successful Chinese experience with SEZs – the most successful in the last three decades. Countries such as Zambia (with SEZs in Chambishi and Lusaka), Nigeria (SEZs in Lekki and Ogun), Ethiopia (in Oriental, near Addis), Mauritius
As partnership and cooperation in trade and investment between China and Africa are growing, Chinese Special Economic Zones have in recent years caught the eye of many African leaders. enhance entrepreneurship and competitiveness of the manufacturing sector in the 1990s. Industrial Development Zones (IDZ) or Zones Franches Industrielles were de rigueur in economic policy. In South
(Jinfei) and Egypt (Suez) have welcomed China-driven SEZs. Special Economic Zones (SEZ) have become investment- and industrial hubs for developing countries seeking economic
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growth and development since China successfully established its first economic zones in its southern region, mainly in Shenzhen, Xiamen, Shantou and Zhuhai in the 1980s. The ‘model’ is sought after for application across Africa. Recently, South Africa, through its Department of Trade and Industry (DTI) has issued a draft bill which considers creating SEZs. What is the experience with SEZs in China and Africa and what are lessons from other such zones for South Africa? Where are the benefits? For China, such SEZs in specific African countries can create markets for manufacturing industries that nowadays face fierce competition and rising costs of production and labour in China itself. Targeted African countries hope to see the Chinese-initiated SEZs generate technology and skills transfer that will benefit local companies in order to be competitive in regional and global markets. However, these results are not automatically achieved, nor are gains evenly distributed, even if the Chinese SEZs in Africa can alleviate the infrastructure gap, attract investments and create jobs respectively for local entrepreneurs and people. As for investments for instance, local entrepreneurs in African SEZhost countries have complained about not being allowed to invest and develop their businesses in the zones. Besides, modernisation and urbanisation around the regions that host the SEZs can create social and spatial inequalities between these hubs and other parts of the country. People who were living in the areas where the zones are built have been displaced – sometimes without compensation – and lost their livelihoods.
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Chinese Special Economic Zones in African countries currently do not really appear to involve local entrepreneurs and populations’ needs in term of investments and employment
Chinese Special Economic Zones in African countries currently do not really appear to involve local entrepreneurs and populations’ needs in terms of investments and employment. National policies around the SEZ therefore have to be strategic and well managed. The South African SEZs are meant to improve the performance of the existing Industrial Development Zones. According to the DTI, South Africa’s IDZs have generated investments in the range of ZAR
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11.8 billion, resulting in 33,000 jobs. For the South African government and policymakers, the SEZs will contribute to industrial and economic decentralization by creating new hubs in the country – beyond the current economically strong provinces of Gauteng, the Western Cape and KwaZulu-Natal. The establishment of the special economic zones aspires to accelerate industrial development, economic growth and employment outside current established hubs in order to make South Africa
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an attractive destination for foreign direct investment. This, it is hoped, will also help the country address its economic development challenges and disparities between different provinces. South Africa’s SEZs aim at favouring domestic investments and expanding access for business opportunities to previously marginalised citizens and regions. In the South African context, zones will have to guarantee access of local companies and will need to train local workers.
China in Africa
Furthermore, infrastructure development is crucial for South Africa’s zones success. Road construction, access to water, energy, modern ICT infrastructure and port facilities will have to be provided. Having a closer look at the regulatory and legal framework in order to include social and environmental issues that challenge the Special Economic Zones in Zambia, Nigeria, Ethiopia, Egypt and Mauritius can contribute to the development of the zones in South Africa.
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In any case, strong coordination – often across perceived political fault lines – is needed to make South Africa’s SEZs a success. This coordination will crucially have to include policymakers, financial and business planning actors, and will need to be accompanied by social and environmental policies. Inspiration can indeed be taken from China, but policies will have to be adapted to the local context; the result, therefore, might in detail look very different from Chinese practices.
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Source: The Centre for Chinese Studies (CCS), Stellenbosch University The Centre for Chinese Studies (CCS) at Stellenbosch University is the leading African research institution for innovative and policy relevant analysis of the relations between China and Africa. For more information, please check the CCS website: www.sun.ac.za/ccs or contact them under ccsinfo@sun.ac.za
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African Economy
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Continent keeps bucking global growth trends
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hile much of the rest of the world continues to battle with economic woes and poor prospects, business and investor confidence in Africa is at an unprecedented high. Bucking the global trends, sub-Saharan Africa continues posting impressive growth figures that are attracting investors like never before. Analysts at firms such as Ernst & Young, Investec and Frost & Sullivan have since the beginning of this year gone on record saying investors were impressed by the African growth picture and that they were diverting risk and exposure away from the struggling developed economies. “Much has changed since The Economist labelled Africa ‘The Hopeless Continent’ ten years ago,” Frost & Sullivan’s Operational Director for Africa, Hendrik Malan, remarked recently. “Africa’s growth is not fuelled purely by resources anymore. For a number of key countries, diversified economies drive up to 75% of real GDP expansion, creating a multitude of opportunities across industries from agriculture to manufacturing to real-estate.” By last year The Economist had changed its tune and was writing that it is expected that Africa will outperform Asia over the next 5 years in terms of growth. The publication also found that over the ten years to 2010, no fewer than six of the world’s ten fastest-growing economies were in sub-Saharan Africa. These were listed as Angola, Nigeria, Ethiopia, Chad, Mozambique and Rwanda. All of them had annual growth rates of around 8% or more. The Economist went further, stating that in the 5 years between 2011 and 2015 Africa would deliver no fewer than 7 of the top 10 fastest growing economies in the world. These were listed as Ethiopia, Tanzania, Mozambique, Congo, Ghana, Zambia and
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By Stef Terblanche
Nigeria. It noted that over the past decade sub-Saharan Africa’s real GDP growth rate jumped to an annual average of 5.7%, up from only 2.4% over the previous two decades. While it would be foolish not to acknowledge that many problems remain in various parts of Africa, it certainly has progressed far in terms of political stability, advancing democratic systems, dealing with conflicts, creating infrastructure, reducing political risk and removing barriers to trade and investment. African countries are also making strong moves to shift away from resource-based economies. The Asian giants, China and India, as well as Brazil, have been quick to tap into the emerging African phenomenon. However, Western and other countries have also taken note and are trying to catch up. Researchers at South Africa’s Standard Bank say one should look beyond the BRICS countries (Brazil, Russia, India, China and South Africa) at countries like Turkey that have increased their footprint in Africa significantly. Turkish trade with the continent was expected to be around US$19 billion last year. Another country that has stepped up its presence in Africa is Indonesia with trade between it and South Africa alone last year standing at around US$1.4 billion, and with the declared intention of pushing it up US$5 billion. Saudi Arabia and Thailand are two more countries Standard Bank says are hoping to become more involved in Africa. Standard Bank also acknowledges that the United States, Europe, and Japan will continue to be big players in Africa, but that they will be taking serious note of the “new kids” on the block and will reorientate their strategies accordingly. And former British Prime Minis-
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ter Tony Blair, who now runs his Africa Governance Initiative, told a recent conference in London that with its “new sense of hope and confidence” Africa can end its dependence on aid within a generation. Blair said while poverty and conflict still posed “immense” problems, there had nonetheless been significant advances in economic growth, democracy and leadership. “I am noticing in my frequent visits there that there is a new generation of leaders in politics, business and civic society who don’t simply have a new competence about how they approach their tasks, but a new attitude, a new frame of thinking, a new way of looking at their own situation.” Another indicator of the new confidence in Africa comes from Ernst & Young which says it estimates that foreign direct investment (FDI) into Africa could reach US$150 billion by 2015, up from US$84 billion in 2010. “There is an increasing recognition that the continent is on an upward trajectory; economically, politically and socially,” the firm said in its 2011 Africa attractiveness survey. And the International Monetary Fund (IMF) has also reiterated its forecast of 5.9% GDP growth for Africa this year, with some African countries expected to grow even faster at levels above 8%. In the continent itself business confidence remains positive. The September Africa Business Confidence Index (ABCI) noted that the prospects for the manufacturing and non-manufacturing business sectors across Africa look very promising. The index is a monthly measure based on feedback from senior managers, entrepreneurs or private sector professionals from 42 African countries – including South Africa – who make up the Africa Business Panel.
African Economy
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The ABCI’s September results rate confidence and growth with an index of 51.3 and 53.3 respectively for the manufacturing and non-manufacturing sectors in the continent. A level of 50 and above indicates expansion. The ABCI says it follows a similar methodology and logic as the PMI indices which set the global standard. In Southern Africa various indices indicate steady or improving business confidence. South Africa has also continued attracting the most private equity investment over the past two years. However, over the past five years a higher proportion of capital has been directed towards sub-Saharan Africa’s so-called frontier markets. And in East Africa rising business confidence and consumer demand have attracted increased interest from private equity funds. The East African Community expects more than US$200-million worth of deals being directed at the region this year. In the West African Economic and Monetary Union growth fell to below 1% in 2011, but is now expected to rebound and shoot up to about 7%, the IMF has estimated. Finally, professional services provider Deloitte also says the outlook for Africa is extremely positive. In a presentation by Deloitte in South Africa based on extensive research by Professor Roger George and Dr Jacqueline Chimhanzi of Deloitte Consulting, the firm said economic growth on the African continent was expected to buck international trends by returning between 7 and 10% GDP growth in some markets over the following five years. In stark contrast, the developed world, could expect no more than 2% growth. Africa is indeed on a roll, it seems.
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For this reason it is increasingly important that there is strong leadership within Africa’s governments and industry’s and that proper strategies, well-designed policy measures, adapted regulations, good practices, sound technologies and suitable financing mechanisms come together to enhance energy efficiency on the continent.
Energy feature
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Energy efficiency – A priority for Africa’s sustainable development Africa’s sustainable development relies heavily on energy efficient solutions. However, while this is the case, Africa urgently needs to improve its energy sector so that it can realise its energy efficiency potential and give way to cost-effective results and opportunities that positively impact on the continent’s socio-economic development and environmental sustainability.
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n order for the continent’s to achieve greater sustainability in its energy sector, energy efficiency improvements should rank high on the continents priority list and should not only address Africa’s energy needs but its lack of adequate energy infrastructure and facilities, frequent energy shortages (fuel, electricity) and load shedding, says Dr. Latsoucabé Fall, regional manager of the Africa Region at the World Energy Council. Also needing urgent attention is Africa’s high energy
The IMD report shows that South Africa’s competitiveness declined from 44th out of 58 countries last year to 52nd out of 59 countries in 2011. South Africa – which is the only African country included faired rather poorly in the infrastructure category, occupying the second-last position after being rated 51st in 2010. For this reason forward planning becomes even more essential as in the next 30 or so years some countries in Africa could
According to the United Nations Industrial Development Organization, South Africa’s energy crisis directly threatens the country’s growth rate and that of the region. prices, the huge and inefficient use of biomass fuels, the lack of energy in rural and poverty stricken communities, Africa’s vulnerability to climate change and the lack of resources Africa requires in order to adapt. According to the United Nations Industrial Development Organization, South Africa’s energy crisis directly threatens the country’s growth rate and that of the region. Proof of this is seen in the latest competitiveness report released by the Swiss International Institute for Management Development (IMD). The IMD defines national economic competitiveness as “how a nation manages the totality of its resources and competencies to increase the prosperity of its people.” Through this definition the IMD analyses the facts and policies that shape the ability of a nation to create and maintain an environment that facilitates the competitiveness of enterprises and encourages long-term sustainability.
experience the kind of rapid growth in energy consumption that is currently being observed in the industrialising countries of Asia and Latin America. Fall believes that Africa needs an energy efficient strategy that focuses on: • • • • •
Identifying the potential of energy efficiency improvements and the related opportunities Overcoming the barriers & obstacles Putting in place or developing the capabilities (human, capital, infrastructure, facilities etc) Implementing the policy measures Evaluating the results to ensure that things happen in a sustainable way.
Fall acknowledges that there are several hurdles standing in the way of increased penetration of energy efficient tools, appli-
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ances and equipment in Africa. The passive attitude of most African governments to set up and foster national energy efficiency and conservation programmes is arguably the greatest challenge. Not forgetting appropriate policy measures - including incentives for substantial energy efficiency improvements and financing for energy efficient projects and programmes. These challenges according to Fall are the results of low public and political awareness concerning the benefits of implementing energy efficiency measures and the lack of energy-efficient technologies. Fall recognises that in Africa, there is a lack of appropriate human, industrial and manufacturing capabilities to facilitate viable energy efficient projects and programmes. This of course, is exacerbated by low private sector involvement in energy efficiency businesses, unsustainable energy tariffs in some countries and the fact that Africa’s low-income households - which are in the majority – cannot deal with the high upfront costs of energy efficient appliances and equipment. While it’s clear that Africa has many challenges to overcome there are equally as many opportunities that exist in its energy sector. Africa has the potential to progress from its current traditional energy consumption patterns to more sustainable energy options. Africa’s challenge is to ensure access to cleaner energy services through energy efficiency and promote sustainable energy consumption to its people. By Karabo Keepile
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Energy Feature
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Power in South Africa: Striking a balance? By Paul Eardley-Taylor and Nicholas Green (Standard Bank)
Increased electricity tariffs and historic, and potentially looming, power shortages have lead to a widespread debate in the South African electricity sector. In line with the National Energy Regulator of South Africa (‘’NERSA’’) approved tariff increases, the increased electricity tariff that the country is already paying is projected to continue increasing for the foreseeable future.
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ome naturally argue “the tariff is too high” and that “it’s going to negatively affect the economy”. Clearly, increased tariffs mean greater monthly expenses for industry and for the residential consumer. However, a more in-depth analysis of the energy economics underlying the sector is argued necessary to determine whether the balance is appropriate. Demand and Supply South Africa’s Integrated Resource Plan (‘’IRP2010/Report’’) uses a top-down approach to forecast electricity demand for the country. The demand forecast is based upon the close relationship between electricity sales growth and GDP growth. The report assumes a moderate GDP growth trajectory of an average of 4.5% for the next 25 years, which one can assume to be reasonable. It additionally assumes a gradual shift from a traditionally energy intensive economy, both industrial and residential, to a less energy intensive
portion of these energy efficiency gains will come from specific Energy Efficiency and Demand Side Management (‘’EEDSM’’) initiatives. The likelihood, efficiency and effect of these initiatives would need to be interrogated further. This assumption of a substantial reduction in energy intensity goes against one of the key pillars of South Africa’s industrial policies (maintained under successive governments); to promote industrialisation based on mineral beneficiation and manufacturing sector output. Any gains in efficiency, and thus reduction, in energy intensity derived from the price elasticity and efficient technology effects, may therefore be partially eroded by any increases in industrial activity, especially the expansion of platinum, manganese mines and chrome smelters that are planned, and for which South Africa has comparative advantages in terms of reserves. The specific breakdown of the suggested 35% demand reduction due
This assumption of a substantial reduction in energy intensity goes against one of the key pillars of South Africa’s industrial policies... economy, with energy efficiency steadily increasing over time until electricity demand is 35% below a ‘business as usual’ baseline by 2034. It is expected that a
to EEDSM is not clearly explained in the IRP2010, it simply states that it is attributable to efficiency gains from the reduction in energy intensity.
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It is reasonable to assume that if the tariff continues to increase, electricity consumption may decrease. The debate that will have a greater impact on the demand for electricity, is around whether the Energy Intensive Users (‘’EIUs’’) will consume less, even with the tariff increasing – in essence are they sensitive to operating cost increases? One cannot overlook the importance of security of supply for users and could even potentially outweigh the impact of price. South Africa does not have sufficient installed electricity capacity, negatively affecting the security of supply, and hence stunting potential growth and dissuading the much needed and important Foreign Direct Investment (‘’FDI’’). As with any investment decision, FDI decisions are made around return on investment. In comparing South Africa to other developing countries/economies; such as India, China, Brazil, Eastern Europe and the Rest of Africa, South Africa not only needs to be price competitive in the resource sector, but the country also needs to be able to ensure the security of supply. Disruptions to supply, as South Africa experienced in 2008, can lead to the loss of billions of Rands in forgone production and GDP. With electricity being a large cost component in this sector, as well as the energy intensity of the associated industry, the electricity tariff and security of supply have a great impact in an investment decision of this nature. The South African government therefore ideally needs to increase the available capacity, whilst keeping the passthrough of cost increases as low as possible.
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Energy Feature
This can only be achieved by spreading the cost of “new generation” over the longest time possible. Electricity generation assets have a long lifespan, thus making this possible if there is the capital available to fund the new build. Fundamentally, the decision to build South Africa’s two new, somewhat controversial, mega coal-fired power stations, Medupi and Kusile, should potentially have been the outcome of a comprehensive government policy, such as an IRP. However, the decision to build the power plants was made outside of a robust and conclusive publicly debated policy document process. Electricity tariffs have been increased largely to fund higher operating costs (coal, mid-life maintenance) and will further be increased in order to fund the Medupi and Kusile build programmes. However, the IRP2010 debate only started some two and a half years after Medupi’s start of construction, likely inferring the economic analysis at the time imperfect. Tariff Paths In order to better understand the themes touched upon already, a further breakdown of the tariff increase drivers is necessary.
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Eskom’s tariffs have historically been amongst the lowest in the world. Real tariffs were broadly flat to slightly declining for much of the mid 1980s-2000s. Since June 2007, and due to its New Build Programme (‘’NBP’’), increased maintenance capex and fuel / operating costs has led Eskom to request high nominal and real price increases, which NERSA has “settled” for at lower rates than requested – albeit representing large increases. Blended wholesale tariffs have significantly increased in recent years, from R0.18/kWh in 2006/2007 to a current R0.55KWh (2011/2012). Per NERSA’s most recent approval, tariffs will be R0.66 kWh by 2012/2013. Based upon Eskom’s presentation to Parliament (May 2010), it assumes 25% annual increases in each of 2013-2014 and 2014-2015, and a 6% increase in 20152016. This would take average wholesale tariffs to R 1.09 kWh by 1 April 2015. On top of this, most end consumers also pay additional charges to help fund municipal distributors. Even with these highly publically contested NERSA-approved electricity tariff increases, Eskom stated it was
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exposed to a R190 billion funding gap (although this number has not recently been updated). It is thus likely that Eskom would require further increases by 2017. The approved increases in tariffs will make alternative technologies, specifically wind power, increasingly price competitive. There are, however, ongoing debates that the economy is becoming less energy intensive, due to price elasticity – but the tariff is still increasing. The consequence is the EIUs do not want these tariffs to increase disproportionately to that of countries competing for the same FDI that would potentially flow into the South Africa borders; such as India, Kazakhstan, China, to name a few. It is likely that they understand that an increase in the tariff is justifiable and required to ensure security of supply, but it is the rate at which it is increasing that is being debated, balanced with the associated risks to security of supply. Carbon Taxes Further to increasing electricity tariffs, the National Treasury (NT) published a discussion paper on proposed carbon taxes in December 2010. The government
believes that a carbon tax appears to be the most appropriate mechanism to reduce Greenhouse Gas (‘’GHG’’) emissions, creating incentives for emissions reduction at the least cost to the economy. While it would not guarantee a fixed quantitative reduction in such emissions over the short term, NT purports that a carbon tax set at an appropriate level and phased in over time would provide a strong price signal and certainty to both producers and consumers, acting as an incentive for more environmentallyfriendly behaviour over the long term. NT believes the pricing of carbon through an appropriate tax will create the necessary incentives to change behaviour and achieve emission reductions at least overall cost to the economy. They further argue that practicalities favour a proxy tax base based on the carbon content of fuel inputs. It would appear that they believe, a tax of R75 per ton of CO2, with an increase to about R200 per ton CO2 (at 2005 prices) would be both feasible and appropriate to achieve the desired behavioural changes and emissions-reduction targets. Ultimately, any introduction of a carbon tax will boost the competitiveness of renewable energy technologies in South Africa due to no CO2 charge being passed through. Market Drivers In terms of the political landscape, Government has provided significant guarantees – R 350 bn guarantees plus R 60bn shareholder loans – R410bn in total - required to fund the NBP, due to Eskom’s internal inability to fund the NBP on its own balance sheet. This has provided additional pressure on the fiscus, when one takes into account that there are more power consumers than actual taxpayers. Expenditure pressure needs to be passed onto the user through tariff increases – sooner or later. Government therefore has the onerous task of striking a critical balance between their own fiscal budget, the existing capacity of Eskom’s balance sheet and the rate of borrowing for the Medupi and Kusile builds. The Impact of Renewable Energy Essentially, we should not compare the cost of new capacity to that of the existing capacity. Due to the historic legacy of Eskom, the existing capacity is old, and produces electricity at tariffs cheaper than almost all other countries. Moreover, Eskom has committed to a New Build Programme which will increase future tariffs. This is where the IRP comes in and its allocation to renewable energy technologies enters the market. South Africa is presently
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one of the world’s most exciting renewable energy markets, adopting the technologies ‘late’ in comparison to more developed markets, but with a high expected growth rate over the next 10 to 20 years; a mechanism that will aide in addressing the electricity supply shortfall that South Africa faces. The IRP2010 is, in effect, the South African Government’s 20-year energy sector master-plan, issued for public consultation in October 2010; Cabinet approved on 16th March 2011 and promulgated on 6th May 2011. It states that going forward, 42% (17.8 GW) of South Africa’s new generation capacity is proposed to come from renewable energy, per the below: • • •
Solar PV: 8,400MW Concentrated Solar Power (CSP): 1,000MW Wind: 8,400MW
The IPPP A Renewable Energy Feed-In Tariff (‘’REFIT’’) was the initially planned route to market for renewable energy. This has since been replaced by the Independent Power Producer Procurements Programme (‘’IPPPP’’), which was released on 3 August 2011. The IPPPP is to account for the initial 3,725 MW of renewable energy in South Africa, of which 91%
per year from 2012 to 2024, 400 MW of Wind from 2014-2023, 200 MW CSP by 2015, followed by 100 MW per year through to 2025. Eskom will be the buyer of the power produced through a standardised PPA. The government will provide support for PPA payment obligations through the Implementation Agreement with DoE. It is the intention of the DoE to update the IRP on a bi-annual basis, therefore allowing for changes in technology allocation. This has a meaningful potential outcome, whereby the current allocation may become differently weighted going forward. The existing 9.6GW nuclear allocation was finalized and included in the IRP2010 prior to the subsequent accident at the Fukushima Daiichi plant in Japan; which has since raised numerous questions and spurred on debates globally as to the safety of this powerful energy source. Most observers question whether a new nuclear power station will be built in South Africa but the decision will ultimately sit with the DoE. Taking note of this, we now turn our attention to the potential for Gas-to-Power in South Africa and the surrounding countries. Due to the increasing gas discoveries and advances in gas extraction technologies, we foresee greater focus on gas in the South African market and in
South Africa is presently one of the world’s most exciting renewable energy markets, adopting the technologies ‘late’ in comparison to more developed markets, but with a high expected growth rate over the next 10 to 20 years... relates to Wind and Solar. The programme specifically relates to renewable energy Independent Power Projects (IPPs) and incorporates a competitive price bidding process, for which the revised tariff is set per technology, per the below diagram. The IPPPP includes the following technologies: • • • • • •
Onshore Wind, Solar Photo-Voltaic, Concentrated Solar Power, Small Hydro, Landfill Gas (LFG), and Biogas
The IRP2010 requires 300 MW Solar PV
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future iterations of the IRP. There are currently multiple choices surrounding the supply of gas to South Africa: 1. West Coast - Substantial gas deposits have been found off the west-coast of both South Africa and Namibia 2. East Coast - Mozambique and Tanzanian Gas 3. Shale Gas - The US EIA estimates the potential for 485 TCF of Shale Gas in the Karoo basin These options can be used in multiple configurations. For example, they could provide a secure supply of gas to the existing OCGT plants at Ankerlig and Gourikwa, as well as fuel new CCGT plants or, for that matter, the Mossell Bay GTL
Energy Feature
plant. Additionally, the carbon emissions associated with the burning of natural gas is lower than that of our existing energy infrastructure, lowering the impact of carbon taxes and thus the tariff. The potential clearly exists, but the window of opportunity to secure this supply is not wide (for example, 2-3 years to agree commercial terms). The Mozambican and Tanzanian gas supply could solely be sold to alternative offtakers in the global markets due to oilbased contracting structures in place for LNG. SA power players as is known sell at Rand denominated prices. Should South Africa decide to take advantage of the opportunity, it should place an increased impetus on the development of a more robust gas infrastructure. It would naturally be critical that we would need to get it right first time round to ensure that the correct balance can be struck. South Africa faces a difficult balancing act in relation to its power sector. Official projections note current and projected shortfalls and the need to diversify generation sources and increase tariffs. However, implementing such increases raises challenges in an open society facing
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multiple social and economic trade-offs. At the time of writing, South Africa appears to have made a good start in addressing one policy objective – renewable energy, but numerous other challenges must be successfully faced to ensure policy success in order to facilitate continued economic growth and achievement of industrial policy objectives. About the authors: Paul Eardley-Taylor Paul Eardley-Taylor is responsible for Standard Bank’s investment banking coverage activities in Johannesburg for the energy, utilities and infrastructure sectors. Paul has over 13 years experience of energy investment banking of over 60 client assignments covering over 90 individual transactions, spanning privatisation, project development, project financing, M&A, acquisition finance and corporate banking. Within the South African power sector, Paul has experience of advising/arranging finance for the following clients: ACED; Anglo Coal; Basil Read Energy; Biotherm Energy; CGNPC; Enel Green Power / Built
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Africa / The Power Company; Eskom; Forest Oil Corporation; Gestamp Renewables/Shanduka/SARGE; Langa Energy; Metrowind; Oelsner Group; PBMR; Redcap; Solar Capital; SunEdison; Windlab among others. Accordingly, Paul has a clear insight into the objectives, strategies and offerings of clients in the South African power sector, as well as the applicable energy economics, investment and financing considerations. Nicholas Green Nicholas Green is a member of Standard Bank’s investment banking coverage team for the Energy, Utilities and Infrastructure sectors. Transactions worked on include multiple advisory and arranging client mandates for the Department of Energy’s IPP procurement programme, as well as projects outside of the IPPPP scope. Prior to joining Standard Bank, Nicholas completed a BBusSci in Finance at UCT and worked as an international hedge fund accountant and he is currently studying towards a MSc(Eng) in energy and development studies at UCT.
Crest Mask: Photo Credit Franko Khoury, National Museum of African Art
Art In Africa
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Authentic African art – a good investment? By David Norden
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hat is even more amazing is that some collectors who have already been in the field for many years have collections filled with contemporary art works, yet also live under the illusion that they are building a strong collection of traditional, authentic African art. They don’t want to accept the idea that they could have some “fakes” in their collection; that the pieces they collect are only made with the intention to resell them, and were not made to be of use in any tribal context. It even goes further when you see that some universities in the US mount exhibitions with all these fake pieces and provide outlandish explanations to the unknowing public in order to “educate” them. They just believe what the collector tells them, and do not consult reputable institutions, like the Smithsonian, Fowler, Yale, and dozens of others who already have curators with knowledge about authentic African art. They give credit
Most collectors of African art don’t have a clue about how to recognise whether or not an African art piece is authentic. It is today impossible to build a collection with genuine African art pieces of any worth if you only buy in Africa or from African runners, and don’t have contact with other African art collectors, dealers and museum curators of African art from around the world. If you want to invest in African art you will have to invest in education and buy your pieces from reliable sources, read many books on the subjects, visit museum exhibitions and permanent collections and travel to the fairs, conventions and exhibitions globally. You will find enough good pieces sometimes even at low prices if you get to know some dealers, members of international organisations, or participate in some vetted fairs. There are also international auction houses where you can buy selected pieces. And on the Internet there are also many international dealers participating in these fairs who have sites where you can see some of the
the continent – each with their own artistic expression. Some collectors choose to collect some specific aspects of the African art field. I know collectors who only collect pieces from one tribe or region, like Gabon or Lega. Or another collector may choose only objects, like Ibedji dolls or headdle pulleys. The possibilities are infinite. Also a field that remains largely untapped today if you don’t want to be confronted with the authenticity problem, is the many expressions of contemporary African art that are not just copying the traditional, clichéd African art stereotype. There are today, thanks to the Internet, so many opportunities to discover African art and with the many discussion groups and hubs, you will learn to discover likeminded people that can help you to build a genuine collection. One that may become very valuable indeed...
... some universities in the US mount exhibitions with all these fake pieces and provide outlandish explanations to the unknowing public in order to “educate” them. to ignorant collectors and explain the pieces with much enthusiasm in the terms they choose to share, but they discredit themselves horribly in the process.
pieces they have for sale. African art is something that most collectors feel passionate about, seeing that there are hundreds of different tribes on
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Helmet mask (gye); Africa, Cote d’Ivoire, Guro peoples; mid-twentieth century; Dallas Museum of Art, The Otis and Velma Davis Dozier Fund
Close circuit wastewater system sustainable solution for current challenges in Municipalities. Municipalities with limited water resources were forced to find water efficient technologies that could enable them to meet the target for their bucket eradication programme.
In terms of shifting water demand patterns, urban water supply is the fastest growing sector of national water use. This has implications both for water supply and for wastewater management. The inability of many municipalities to manage water services and current and future assets effectively raises the question as to how local government will cope with the increasing complexity of water provision as urban demand increases. This includes the challenges of climate change to water resources. The historical bias of rural, largely commercial, agriculture consuming the bulk (62%) of South Africa’s water is beginning to shift towards increasing consumption for urban uses (currently 23%). As the demand for water increases more rapidly than the population growth rate, the pressures on South Africa’s existing water availability will rise significantly. The situation is compounded by the fact that, over the past decade, water demand from South
Provinces such as the Free State were faced with a huge bucket sanitation backlog coupled with the community rejection of dry sanitation technology options such as VIP forced the municipality to find water efficient technologies that could enable them to meet their target date for the eradication of all buckets. Due to the community rejection of the VIP toilets as replacement of the bucket system, the Tokologo LM introduced the closed circuit grey water system as an alternative source of water for flushing the toilets.
Africa’s urban areas has grown faster than both the population growth rate and the economic growth rate. The complexity of this demographic change is due to service levels in urban areas being predominantly higher, for example for yard and in-house connections and need for sanitation. Wastewater volumes have risen significantly, thus adding greatly to the wastewater treatment responsibilities of municipal service providers.
The advantage of the system was that it did not require development of new water sources which would be very costly and unaffordable for the municipality. The WWTW was completed in early 2010 and has been in operation for less than a year in Seretse Township in Boshof. Currently 500 households were connected to the system. It was implemented as a pilot project supported through a partnership between Department of Water Affairs, Department of Cooperative Governance and Traditional Affairs and Tokologo LM. TDB & C Agency was appointed to implement the close circuit wastewater treatment and recycling plant. The plant has a design capacity for 3000 households but the current project aims to connect 1000 households and the spare capacity will be used to connect future housing development in this township.
Close circuit wastewater technology add a value on wastewater management in Tokologo Municipality in the Free State Province.
A research was conducted by Water Research Commission under water research project No.2016: Evaluation of the bucket eradication programme, led by Dr. Nozi
Mtjoli, Hlathi Development project. All the recommendations made by this research were implemented in subsequent project at Tweespruit and Hobhouse communities in Mantsopa Municipality. The Rapid Reactor Recycling System proves to be the ultimate solution for the current water and waste water management challenges facing South Africa regarding high water consumption and source pollution which is evident by the results published on the green and Blue Drop compliance by water services authorities. And also addresses the imbalances when coming to basic human rights “ Better Life for all” on service delivery. “Now everybody can afford to flush away”.
KL.Mofokeng (Managing Director) Tel: +27 (0) 51 448 1959 Fax: +27 (0) 51 448 1980 or +27 (0) 865 272 639 Cell: +27 (0)79 991 3057 email:mofokengkl@vodamail.co.za 48 Glen Road, Hilton, Bloemfontein, 9313. P.O Box 22353, Extonweg, Bloemfonten, 9313
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Helmet mask (gye); Africa, Cote d’Ivoire, Guro peoples; mid-twentieth century; Dallas Museum of Art, The Otis and Velma Davis Dozier Fund
African art is something that most collectors feel passionate about, seeing that there are hundreds of different tribes on the continent – each with their own artistic expression In May 2007, Bonhams Auctioneers held an auction devoted entirely to South African art, the first time such a major sale had been held outside of South Africa. That auction, which Bonhams estimated would bring in $1.6 million, ended up collecting more than $2.8 million. An Irma Stern ‘Still Life with Gladioli’ sold at Bonhams for R7,57m in 2009, setting a new record for South African art whose proponents include such illustrious names as Pierneef, Boonzaaier and Laubsher. Showing this trend was no flash in the pan, Anton van Wouw’s sculpture “Die Nooitjie van die Onderveld” sold for R946 900, the highest amount ever paid for a South African sculpture. Other South African old master artists also sold for the highest price ever, amongst them Wolf Kibel’s “Self Portrait” selling for R1 225 400 and Jean Welz’s still life “Cezannesque” also selling for R1 225 400. Maggie Laubsher achieved her highest ever amount for a painting and J.H. Pierneef ’s paintings remain in demand and are escalating in value. Pierneef ’s painting, “The Baobab Tree” holds the record for a South African painting at R11.8 million (GBP 826 400). About David Norden: David Norden is a dealer and collector of African art living in Belgium. He runs the sites african-antiques.com and africanarts. info and you can see some of the pieces he sells at buyafricanantiques.com , and he also has a very interesting newsletter you can subscribe to. He learned African Art from his mother who already collected African Art in the 1960’ s-1970 at a moment African Art was not a fashionable as it is today, and want to advise those who are willing to know African Antiques better. Source: http://nordend.hubpages.com/ hub/African-Art
Reni Power Solutions COMPANY PROFILE
I take pleasure to introduce to you our company Reni International Co. Ltd. a part of the R.P Vassa group of Mbeya, Tanzania, was promoted by a team of professionals in 1998, when they envisioned a need to shift from a mere utility based water supply system to an eco friendly and cost effective one, developed on the highest parameters of utility, health and quality. The achievement of this vision led us to an acme of distinction and today we reign in the market in the category of Pipes, Purifiers and Pumps, recently we have also added Streamline Power and Three Sixty Power Products - Inverters and Online UPS to its range of products. We at Reni International Co. Ltd. are the sole distributor for heat fusion PPRC green pipes from Dizayn Group Turkey, water purifiers from EurekaForbes - India and a dealer in wide range of centrifugal and submersible pumps from CRI Pumps - India, we are also the sole importer and distributor of power products and power backup systems from Streamline Power & Three Sixty Power Products. Three Sixty Power products is a leader in home power back up systems in India, while Streamline Power products are the leaders in industrial power backups. Our association with international counterparts is further evidence that Reni International Co. Ltd.’s undeniable commitment to highest levels of quality. Mission statement: We at Reni International believe that we can be your total solution to all Water and Power Backup Problems. Reni International Co. Ltd. Jamhuri / Asia Street, P. O. Box 2073, Dar-es-Salaam. Tanzania. +255-22-2126486, +255-22-2122221, +255-789-234-601, +255-782-399-266 (Ketan) reni.tanzania@gmail.com Regards, Dipak Vassa. Managing Director
“Reni International Company Limited” was awarded a certificate and placed 16th on the list of Top 100 Mid-Sized Companies in Tanzania for the year 2010/2011”
Infrastructure
TIA
Africa’s north-south corridor brings vast opportunities W
ith growth prospects in Africa still outstripping those of the rest of the recession-hammered world, the central, eastern and southern regions of Africa are set to become a major investment and trade destination. The key to this is its ambitious NorthSouth Corridor (NSC), a road and rail infrastructure project spanning eight countries which is well underway. The corridor project involves massive investment and redevelopment of infrastructure by the eight African countries with the involvement also of the region’s various development communities. The latter are the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC). The NSC is a model project enabling COMESA, EAC and SADC, their member states and the international community to implement an economic corridor-based approach to reducing costs of cross-border trade. It seeks to enable producers and traders to be more competitive, thereby creating higher levels of economic growth, employment creation and therefore also reducing poverty. When completed, the NSC will link the participating countries - Tanzania, Democratic Republic of Congo, Zambia, Malawi, Botswana, Zimbabwe, Mozambique, and South Africa – from the port of Dar es Salaam, Tanzania to the Copperbelts of Zambia and the DRC, and stretch through Zimbabwe and Botswana to the worldclass ports of South Africa.
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By Stef Terblanche
It will also have extended connections to the Great Lakes in the north and to Malawi in the east, as well as linking into a number of smaller regional corridor projects. As a result a number of other countries will also benefit, including Swaziland, Lesotho, Namibia and Angola. A number of local development projects linked to the NSC master project, or feeding into it, are already well under way with financing and backing from institutions like the African Development Bank (ADB), the governments of the participating countries, various Chinese and Indian institutions, and the Japan International Cooperation Agency (JICA) among others. The corridor project will also benefit greatly from South Africa’s ZAR840-billion (USD110-billion) infrastructure upgrade currently underway. South Africa’s President Jacob Zuma indicated in February that work on the project was well underway. “Our infrastructure work extends beyond our borders. South Africa champions the North-South Road and Rail Corridor, which is part of the African Union’s NEPAD Presidential Infrastructure Championing Initiative. Work in this regard, comprises various inter-related projects that cover roads and railways, border crossings, energy and information and communication technologies,” said President Zuma. The corridor relies heavily on road transport, but plans to upgrade the rail infrastructure are also receiving priority attention. As such, say the developers of the corridor, it is a highly flexible road and rail corridor carrying large volumes of regional
TRADE & INVEST AFRICA
trade, in particular exports from South Africa to neighbouring countries. But it is expected that the corridor will eventually facilitate two-way trade traffic in more equal volumes with much increased international trade and investment inputs and inflows bolstering it. The corridor is opening up immense investment opportunities, say the developers and others involved in the project, as facilitating and support infrastructure, services and industries will be developed in tandem. The project grew from recognition that regional trade, investment and development was being severely restrained by poor regional infrastructure and resultant high costs. As a result the central, southern and east African countries involved placed a high priority on the development and upgrading of this infrastructure with a large part of the focus being on efficient and seamless transport corridors. Following from this, the SADC launched the SADC Corridor Strategy in June 2008, which soon led to a proliferation of smaller corridor projects and the NSC. Other development and transport corridor projects in the region, like those in Namibia, were already far advanced by that time. Among the smaller corridor project are the Maputo Corridor linking Johannesburg and Maputo, Mozambique through the coal fields of Mpumalanga Province in South Africa; the Walvis Bay Corridor linking into the Trans-Caprivi and TransKalahari Corridors and which link South Africa’s industrial heartland of Gauteng with Botswana, Walvis Bay and Windhoek
NSC
in Namibia, and the ports of Angola; and a smaller corridor linking Zambia, Zimbabwe and Malawi with the Mozambican port of Beira. Even landlocked Swaziland is getting a slice of the corridor action. Although Swaziland does not play a direct role in the corridor, it is a member of the Maputo Corridor Logistics Initiative ( MCLI). The country’s major interest is in road and rail links to Maputo’s deep-water port, which is much nearer than Richards Bay and Durban. Rail services in the region had over the years become very unpredictable and highly uncompetitive, with on average a 21-day transit time between Durban and Ndola on the Zambian Copper Belt versus 6 to 8 days by road being the norm as recently as a year ago. The rail system also suffered from equipment shortages and poor maintenance, while ports serving the region were experiencing high levels of congestion. However, the corridor project put in place strategies to address these shortcomings and a long term consultant was appointed to manage the corridor project.
Despite good progress, the project nonetheless still has some distance to go and many problems do indeed still remain. According to Gavin Kelly, technical and operations manager of South Africa’s Road Freight Association (RFA) inefficiencies and bottlenecks at border posts have long been a major obstacle to efficient and ontime transport services in the region. “Intra-Africa trade has a tremendous growth potential on our continent. Barriers to easier trade in the Southern African Development Community and the Common Market of Eastern and Southern Africa regions need to be reduced or eliminated. Road transport remains the most important mode of transport in Africa,” he maintains. But the rail issue is also being addressed. South African rail parastatal Transnet is currently looking to engage in various cross-border railway infrastructure projects that will form part of the overall corridor transport network. Transnet Chief Executive Brian Molefe told Ernst & Young’s global Strategic Growth Forum Africa in Cape Town in March that the Swaziland rail link
TRADE & INVEST AFRICA
announced by the company in January and which would connect South Africa, Swaziland and Mozambique, was only a first step. Another prospect being pursued is upgrading the disused railway line connecting South Africa to the Democratic Republic of Congo. Transnet has also already begun talks on developing rail-links falling within the NSC project and Molefe says “in future more bolder projects can be expected out of Transnet”. According to Molefe African countries are struggling to convince private equity entities to commit to long-term investments in Africa. As a result government state business entities such as Transnet would have to be at the forefront of infrastructure investment and development. However, as the prospects improve, the NSC progresses towards finalisation, and Africa maintains its global growth lead, the NSC may just be the economic spur the region needed to change this negative approach among foreign equity players. Right now opportunities abound in the region, and they will not wait for latecomers.
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Regional Profile
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South Africa province overview – The North West Province
A unique vision
Invest North West, the official trade and investment promotion agency for the North West Province in South Africa, invites you to invest in one of South Africa’s fastest growing provinces
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nvest North West, through its passionate, motivated, professional and valued team, has as its mission the following objectives: To position the North West Province as a preferred destination for foreign direct investments; To facilitate trade and investment opportunities that attract new and sustainable businesses to the Province and thereby create employment for the people of the North West Province; To promote products from the North West Province to increase exports; To advocate for conducive investment conditions and environment.
ABOUT INVEST NORTH WEST The strategic intent of Invest North West (INW) is to provide vision and direction to key growth sectors within the North West Province (NWP). This is achieved by focusing on investment promotion, trade and investment facilitation, and the provision of pro-active business retention and expansion services to established local and international businesses. Committed to providing the highest standard of service, the following value added services are provided by INW to new and existing investors in the Province: • • • • • •
Identifying and packaging viable investment opportunities Facilitating joint venture and equity partnerships Providing information on financing options and investment incentives Providing advice on feasibility studies and business plans Assisting investors to obtain work and business permits Providing assistance in obtaining suit-
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able land or factory space Assisting existing firms to expand and re-invest Assisting companies to find export markets for their products.
THE NORTH WEST PROVINCE AT A GLANCE South Africa’s North West Province, also known as the ‘Platinum Province’, is centrally located between Botswana to the north, Gauteng (the financial capital of Africa) to the east, and three other provinces - Limpopo, Free State and Northern Cape on its other borders. The North West has abundant mineral resources, a welldeveloped infrastructure, thriving agricultural and manufacturing sectors and a fast-growing services industry. REASONS TO INVEST IN THE NORTH WEST PROVINCE The North West Province offers great opportunities for further investment and trading partnerships. Factors positioning the Province as a favoured business and investment destination include: • • • • • • • •
The Province is serious about business Politically stable Good infrastructure (road, network, hospitals and schools) Low cost of electricity, water, land and factory rentals Easy access to markets in the SADC region and Africa Affordable pool of labour More than 20 multi-national companies are already resident in the Province Scoped projects ready for investment.
The North West Province economy is
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still dominated by mining but poised for growth across the board. The Province is the richest in the country in mineral production, which contributes 38,4% to Gross Value-Added Regional (GVA-R). Mining in the North West contributes 2,6% to national GDP with its gold mines producing some 19,3% of the nation’s output. Production of platinum group metals (PGMs) is even more impressive with some 64% of the nation’s total. As by-products of PGM mining, all the country’s cobalt and most of its nickel are produced in North West. Mining provides 28,7% of employment in the Province and 26,2% of all labour remuneration. Community services, including Government, is the second largest sector, contributing 18,6% to and accounts for 21.8% of employment opportunities in the sector followed by finance which currently contributes approximately 13% to GVA-R and 5% of employment. ECONOMY Trade ranks fourth with 10,7% of GVA-R and 12,9% of employment, while the transport sector contributes 7,8% to GVA-R and 2,9% of employment. Although the manufacturing sector in the NW Province has not yet reached its precrisis output levels, it is fairly well diversified and currently contributes 5,3% to GVA-R and accounts for 5,2% of all employment opportunities. Averaging an annual growth rate of 3% in 2010, the sector in the Province is very dependent on the performance of a few industries (food and beverage, fuel and chemicals, fabricated metals and non-metallic metals industries) in which the Province enjoys a competitive advantage.
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Regional Profile
Agriculture, also, is an important sector in the NW Province contributing about 3% to GVA-R and providing for approximately 8,9% of employment opportunities in the Province. The Province accounts for about a third of the nation’s maize crop and 40% of total sunflower seed production. It also produces over 10% of the nation’s cattle, goats, pigs and milk. Structurally, the profile of the provincial economy has changed slightly over the past few years and is beginning to mirror the national economy. In this regard, consumption-driven sectors (financial intermediation, insurance and real estate, transport, storage and communication, wholesale and retail, catering and accommodation) do not only contribute more to GVA-R but is also growing at a higher rate than production sectors (agriculture, mining, manufacturing, electricity, water, and construction). The Province needs to diversify its economy more as the primary sectors are particularly vulnerable to external factors such as changes in the global economy and poor weather. As a result, the outlook for mineral beneficiation, manufacturing, the automotive industry, bio-fuels, financial services and tourism is encouraging. RENEWABLE ENERGY A PROMISING SECTOR The growing awareness that climate change has direct impacts on human health, sea levels, global weather patterns and ecosystems and hence the future of all life on earth, has stimulated South Africa to adopt renewable energy (RE) options. South Africa is currently the 14th largest greenhouse gas emitter in the world, a reflection both on the country’s heavy reliance on coal and energy inefficiencies. The White Paper on RE (2003) has set a target of 10 000 GWh of energy to be produced from RE sources (mainly from biomass, wind, solar and small-scale hydro) by 2013 (5% of total electricity). The target was confirmed to be economically viable with subsidies and carbon financing. Achieving the target will: •
Add about 1.667 MW new RE capacity, with a net impact on GDP as high as R1.071 billion a year;.
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0 6 3 R E T N SE n partner in irrigation al
pivot r u o Y –
A f r i c a ’s p i v o t o f s u c c e s s
COMPANY PROFILE SENTER 360 is a South African company. We have a simple policy of doing business with the highest standards of integrity. We therefore pride ourselves on not merely selling a product, but building long term relationships. Designed and built in South Africa in 1994, SENTER 360 centre pivots are known for their superior construction quality and strength – above industry standards, and we as a company are renowned for excellent sales and after-sales service. We have been in the irrigation industry for more than 20 years, specialising in surveying, system design, installation and commissioning of irrigation systems. We have growing business interests in South Africa, Africa and internationally and offer a turn-key project development service from feasibility study phase to implementation and project management. One of our recent achievements has been the allocation of an international tender for the supply of more than 50 centre pivots to the South African Government for the Taung irrigation scheme.
KEY ADVANTAGES OF SENTER 360 • The most effective way of irrigating large areas • Ensures constant high yields • More than 96% water distribution accuracy • Manufactured with high quality materials to very high standards of accuracy • Only the best quality heavy-duty drive train components are used to cope with terrain and ensuring years of reliable service • Senter 360 has the strongest centre pivot span structure available today • We carry high levels of stock to be able to supply when you need it
Tel: +27 (18) 469–1331 Email: info@senter360.co.za www.senter360.co.za
A f r i c a ’s p i v o t o f s u c c e s s Since 1994
Regional Profile
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Create additional Government revenue of R299 million Stimulate additional income that will flow to low-income households by as much as R128 million, creating just over 20 000 new jobs and Contribute to water savings of 16.5 million kilolitres, which translates into a R26.6 million saving.
Additionally, the failure to fulfil the increasing electricity demand and the escalating electricity prices is providing incentives for RE and carbon management options which also usually result in improved efficiencies and significant cost savings. The sustainable development vision of the NW Province is the elimination of poverty and deprivation, the conservation and en-
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hancement of the natural resource base, and a broadening of the concept of development with the integration of social, economic and environmental considerations in decision-making at all levels (North West Province State of the Environment Report). Assessment of Renewable Energy Potential for The North West Province This assessment of the RE potential of the NW Province determined the energy profiles, natural and social resources of NW Province to prioritise RE options for different regions of the Province.
Province using 63% of electricity supplied to the Province; however, nearly 20% of the population in the NW Province does not have access to electricity. RENEWABLE ENERGY OPPORTUNITIES Municipal waste One route for the enhanced delivery of services (energy, water, sewage) is to synergise these development plans so that cost-reduction and increased efficiency is obtained. e.g.: •
Usage In terms of energy demand, mining is the greatest consumer of electricity in the
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•
Agricultural manure and sewage can be used to generate methane-rich biogas with an energy potential of 199 MW. Municipal solid wastes (MSW) have an energy potential of 304 MW
Regional Profile
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and can be used to produce energy either through combustion to electricity, biogas (landfill gas) or using biomass-to-liquid Fis cher-Tropsch technology.
Province (more land availability and higher solar insulation), but the lack of a mainline transmission grid will limit large-scale CSP projects that aim to feed-in to the electricity transmission grid.
RENEWABLE ENERGY
EXPORTING
Energy from bio-gas is appropriate for households, agriculture, SMMEs, municipalities, industry and mining with the added benefit of reducing the costs of treating wastes that may translate into improved efficiency of municipal services and additional environmental benefits.
South Africa participates in a number of preferential trade relationships, both regional and bilateral. It is a signatory of the General Agreement on Tariffs and Trade (1947) (GATT), which is managed by the World Trade Organization (WTO).
Wind power Wind power is most applicable for the agriculture and SMMEs sectors, and may be combined with PV to increase the capacity factor. Wind-power is feasible for some parts of the Province where average wind speeds are >4m/s. Wind pumps are also an attractive option to enable irrigation of crops, which is often necessary for many parts of NW that receives little rainfall, but this may increase soil degradation through salinisation. The pumping of water can enable the storage of the wind-power potential energy that can be recovered through hydroelectric; thereby increasing the capacity factor of the renewable energy supply. Off-grid solar strategies for rural areas Mini-grids or off-grid strategies and hybrid technologies will be the most appropriate options for supplying RE to many rural communities and cottage industries, mainly because of the limitation in the electricity transmission grid. SOLAR TECHNOLOGIES The Province has a favourable solar insulation (approx. 275 MW/ km2) and a suitable area to install solar energy technologies. •
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The application of domestic solar water heaters (SWH) has the greatest benefit with consideration of the energy return per unit cost with little environmental detriment or changes in land use. SWH are applicable to all sectors, The application of concentrated solar power (CSP) and concentrated solar thermal (CST) is appropriate for industry, mining and municipalities. The application of photovoltaics (PV) for electricity is appropriate mainly for households, but agriculture, SMMEs, municipalities and industry could also benefit.
The greatest potential for solar is in the western parts of the
South Africa is committed to the principles of these organizations, and to increasing South Africa’s global competitiveness. Tariffs have been reduced, and non-tariff barriers are being phased out. South Africa and the North West Province have placed greater importance on forming strong economic trading blocs to gain access to key markets. The South African government has actively pursued negotiations for an agreement on trade, development and co-operation with the European Union (EU). This agreement will pave the way for developing secure markets in the EU for SA businesses. South Africa has also turned its attention to pursuing agreements for greater South-South co-operation. The move to establish trade relations with Mercusor via a free trade agreement with Brazil and India, is top of the government’s export-oriented trade agenda. This will facilitate greater trade with South America and the East. South Africa’s participation in the Southern African Development Community (SADC), comprising 14 sub-Saharan African countries, allows access to a market of approximately 170 million, which is expected to grow at an annual rate of around 3%. Contact details: Invest North West North West Province 1st Floor Old Mutual Building 171 Beyers Naudé Drive Rustenburg, 0299 PO Box 6352 Rustenburg, 0300 South Africa Tel: +27 (0) 14 594-2570 Fax: +27 (0) 14 594-2575/6 Email: inw@inw.org.za Website: www.inw.org.za Copy supplied by Invest North West
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Energy Feature
TIA
Africa’s energy explosion
W
hile many countries around the world are grappling with ways of meeting rising electricity demand, countries across Africa have already risen to the challenge with massive investments in bold and innovative new energy projects. A large number of major developments to vastly increase energy capacity and security of supply in respect of nuclear, hydro, gas and other forms of power are already underway in a number of African countries. Not only do these projects create tremendous opportunities in the energy sectors of countries across the continent, but it also stimulates growth and opportunity in downstream industries and other energy-consuming sectors. The electricity supply crisis in South Africa in 2007/2008 – where rolling blackouts led to the introduction of planned and controlled load shedding – served as a rude eye-opener that the continent could not afford to be caught napping. The South African crisis saw power supply to its backbone mining industry being sharply reduced, albeit temporarily, with costly consequences. But, as has almost become the norm with energy projects anywhere in the world, some of the new developments to up electricity standards in Africa are also faced with problems and challenges. While almost everybody agrees about the need for increased, sustainable energy capacity across the continent, not everybody is likeminded as to the how and where. Sustainability As South Africa’s Minister of Energy, Ms Dipuo Peters, pointed out when delivering her keynote address at the Energy Indaba which took place in Johannesburg in February, critical questions revolve around
By Stef Terblanche issues such as improved energy efficiency, sustainability, security of supply, the diversification of the energy mix towards low carbon economies, carbon capture and storage, and universal access. In fact sustainable energy supplies has been a major headache in the past, one that is now being seriously addressed across Africa as government’s invest heavily in energy infrastructure development. In South Africa –once known for its low electricity costs - the cost of electricity to consumers has risen sharply and the state-owned utility, Eskom, has been actively securing finance backed by government investment to fund a massive 5-year ZAR343-billion initial upgrade to be followed by a further multi-billion rand longer-term expansion programme. The programme includes the current construction of two new generation, mega coal-fired power stations, named Medupi and Kusile, the first of which is due to come on stream in 2013. Medupi is set to cost more than ZAR100-billion at completion, part of it funded by a World Bank loan of US$3.75-billion. Eskom is still struggling to find funding for Kusile, expected to cost the same. And in an annexure to South Africa’s budget recently tabled by Finance Minister Pravin Gordhan, there is mention of a possible third coal power station at a projected cost of ZAR111-billion. The third coal power station is still only in the scoping stage, as is South Africa’s next generation nuclear power construction programme pencilled in at a provisional cost of ZAR300-billion over 17 years. But, Minister Gordhan warns: “As pointed out in the Budget Review, the building of nuclear power stations is in the final stages of consideration before financial proposals can be determined. The
TRADE & INVEST AFRICA
Budget makes no provision (yet) for the expenditure of R300 billion on nuclear power stations.” But informed speculation is rife in the industry that it is now only a matter of time before the nuclear build programme is launched as Eskom seeks to diversify its power supply sources into renewable and other types of energy. This has become an imperative for South Africa given substantial criticism due to the fact that its coal-fired power stations are some of the biggest polluters in the world, contributing around 40% of Africa’s total coal derived CO2 emissions. For South Africa’s power diversification programme the World Bank recently approved US$250-million in funding for solar and wind power plants. Hydro projects Still in South Africa oil giant Royal Dutch Shell is engaged in a desperate battle to sway public and government opinion in favour of allowing it to extract massive shale gas deposits in the country’s semi-desert Karoo region through the controversial fracking method. The latest study commissioned by Shell has claimed the Karoo gas reserves could be as much as 485 trillion cubic feet – enough to meet 400 years of oil consumption, create 300,000 new jobs, increase South Africa’s GDP by ZAR80-billion per annum and pump up government revenue by ZAR35-billion per year. Although still considering its verdict, the government believes extraction of the gas will supercharge its economic development and growth plans, and will significantly reduce imports of natural gas and electricity. Elsewhere in the continent other major projects are also unfolding or taking shape.
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Just north-east of South Africa is Mozambique with its enormous hydro-electrical potential. The country is currently considering doubling in size the giant Cahora Bassa dam scheme, which supplies its power mostly to industrialised South Africa. In addition the Mozambican authorities are planning to build another new mega-dam hydro project called Mphanda Nkuwa some 60km downstream from Cahora Bassa on the Zambezi River. The project will cost an estimated US$2-billion and will become the third mega dam to reconfigure the natural flow of the Zambezi and vastly change its surrounding landscape. While the dam will initially export its electricity to neighbouring power-hungry South Africa, the Mozambican government hopes it will help attract energyintensive industries, like more iron-ore smelters in the mould of Mozal 3, to the country. Gas discoveries Meanwhile massive offshore gas fields have also been discovered in Mozambique, with US oil company Anadarko Petroleum just having announced that these finds were actually twice as large as it earlier thought. Anadarko said its Barquentine-3 appraisal well showed the fields to have recoverable reserves of 15 to 30 trillion plus cubic feet (Tcf) of natural gas, three times as much as
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the United Kingdom’s gas reserves of 9 Tcf. While there are no plans as yet to utilise this for electricity production, these finds support hopes that East Africa may soon become a major gas production centre. Meanwhile Tanzania also recently discovered vast offshore gas deposits along its southern coast that can help it meet its energy needs while also exporting some of it to other African countries. Massive investment cash inflows are anticipated here, as elsewhere in Africa. For example, in October last year it was announced that construction on Africa’s second largest dam was about to start in Kenya and would be used for irrigation and hydropower purposes among others. Funding is coming from the AfDB, the governments of Italy and Kenya, the Japan International Co-operative Agency, and the Arab Development Bank. And the AfDB alone has provided some US$300-million for hydropower and dam projects in Africa over the last five years, says Roger Gaillard, a lead specialist with the bank’s Energy, Environment and Climate Change division. However, Gaillard says contributions from investors, governments and other donors raised the capital injections for these projects to be up to four times larger. Other massive dams are also being built across Africa to help generate hydro power, among them Gibe III at a cost of
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US$2.2-billion on Ethiopia’s Omo River to be completed in 2013; the US$705-million Kajbar dam on the Nile River in Sudan; and the US729-million Bui dam on Ghana’s Black Volta River to be completed by 2013. In Cameroon – a country hit by supply problems and load shedding similar to South Africa – the government intends spending CFA 5.800-billion (a little over US$11.5-million) between now and 2020 to upgrade and develop electricity production and distribution. Already the British company Joule Africa and German partner Lahmeyer have signed a US$750-million agreement with Cameroon to construct a massive hydroelectric dam with a capacity of between 400 and 500 megawatts (MW) in north-east Cameroon. Construction is to start sometime between 2013 and 2014, with the project going online two years later. Meanwhile the Democratic Republic of Congo (DRC), with its potential to generate 150,000 megawatts of hydroelectricity, or three times Africa’s current total consumption – has also embarked on various new projects. The upgrading of two relatively small power stations, Inga I and II, has already been completed, tapping into the vast Congo Basin potential. The AfDB supplied funding of US$58-million towards the modernisation of these two hydropower stations and increasing their capacity.
Energy Feature
But it is the scale of the proposed Inga III and Grand Inga projects that have grabbed most of the attention. Inga III will eventually generate between 4,300 and 5,000 MW, while the Grand Inga dam would generate up to 40,000 MW, with countries as distant as South Africa and Egypt tapping into the supply. The DRC already has agreements with South Africa’s Eskom to strengthen the Inga-Kolwezi and Inga-South Africa interconnections and to construct a second power line to supply Kinshasa, the DRC’s capital.
opportunities. The group was joined by representatives from the US Export-Import Bank and the US Trade and Development Authority. Others are also waking up to the African energy explosion, like the Welsh government which is contributing some £60,000 towards developing renewable energy projects in Kenya and The Gambia. This is apart from involvement already by German, Italian, British and Japanese companies and by the Arab Development Bank.
Chinese investment
Resistance
It is perhaps no surprise that most of the African power projects are being funded by China and built by Chinese companies. A recent study by Bloomberg and the Californian environmental group International Rivers showed that major Chinese companies are or have recently been involved in hydropower projects in various African countries valued at no less than US$9.3billion.
However, not all is quite plain sailing, and some of these projects have run into flak from environmental groups, as can be expected. In South Africa Eskom’s planned nuclear programme has been targeted by various groups including Greenpeace and resistance may increase once the plans become more detailed. And Africa’s heavy reliance on hydroelectric schemes has environmental and development scientists up in arms. They are warning that the world’s rivers have become the most endangered natural systems and that climate change will make them even more threatened, thus threatening the sustainability of hydropower. This is apart from their envisaged other negative impacts on the environment and communities.
With American influence in Africa now lagging significantly behind the likes of China, Brazil and India the chief US policymaker for Africa, Assistant Secretary of State Johnnie Carson, recently accompanied representatives of 10 American energy companies to five African countries looking for local electricity-based growth
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In a paper published in September last year in the journal PLoS Biology, John Matthews, director of fresh water and adaptation at Conservation International, and others warned that fundamentally flawed dam-building decisions and methods risk exacerbating climate-initiated changes, and could lead to economic catastrophes. At least two African countries have already heeded such warnings. Both Kenya and Ghana have already started shifting reliance on hydroelectricity to others forms such as geothermal and wind powered plants. However, the opposing case is argued by researchers like Carole Rosenlund of the Norwegian International Centre for Hydropower and Byman Hamududu, a PhD research Fellow at the Norwegian University of Science and Technology. They have argued that with less than 15% of all Africans presently having access to electricity, the continent has one of the lowest hydropower utilisation rates while it has enormous hydropower potential. They propose that exploitation of major African rivers for hydropower generation could alleviate this. Either way, it seems nothing will be able to stop the current energy explosion taking place across the African continent… a continent gearing up for further rapid growth, industrialisation, job-creation and elimination of poverty. It seems it is a case of power to the people…and to investors.
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Inspirational Places
Yesterday, Today and Tomorrow For more than 30 years, Sabi Sabi has evolved, protected and respected the wilderness in its care, and emerged to become the icon it is today – a wildlife oasis in the heart of the African bushveld. Situated in Sabi Sand Wildtuin, a recognised hotspot of biodiversity within the greater Kruger National Park, Sabi Sabi is blessed with a variety of habitat and wildlife. Guests have an excellent chance of close encounters with the Big 5 – lion, leopard, elephant, buffalo and rhino – as well as cheetah, wild dog and all species indigenous to the area. Exciting morning and evening open Land Rover safaris, as well as environmental awareness walking safaris, are led by experienced rangers and trackers. Within this oasis are Sabi Sabi’s four 5-star lodges of Yesterday, Today and Tomorrow, The historically themed Selati Camp is the Sabi Sabi of Yesterday with eight beautifully appointed suites, including the Ivory Presidential Suite. Selati Camp is intimate and romantic with a dash of nostalgic opulence. The Today experience is found at Bush Lodge, which has earned a reputation of warmth, service excellence and personalised attention. Little Bush Camp continues the Today experience of consummate African hospitality. The lodge is intimate, making it an ideal retreat for small groups seeking an idyllic hideaway. Earth Lodge, the Sabi Sabi of Tomorrow, is a celebration of ecological responsibility. Sculpted into a slope of the earth, the lodge merges so well into the surrounding bushveld that it is virtually invisible. Earth Lodge has been transformed to reflect Africa’s mineral wealth in tones of platinum, bronze, silver, gold and copper. Each of the 13 suites, including the famous Amber Presidential Suite, is individually decorated and gloriously luxurious. While maintaining a deep respect and bond with the wilderness, Sabi Sabi continues to be voted one of world’s premier safari destinations. Go to www.sabisabi.com for more information, special packages and reservations
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Into the Blue The Blue Train in its charisma and majesty has been synonymous with luxury hospitality, tourism and leisure since 1946. It offers a unique way of experiencing some of southern Africa’s magnificent landscapes and landmarks. On board the train, guests indulge in fine cuisine accompanied by some of the best wines South Africa, if not the world, has to offer; five-star accommodation and aroundthe-clock personal butlers that see to the guests’ every need and ensure pampering of the highest order for the duration of their trip. This iconic five-star “hotel on wheels” also offers a unique way for your clients to enjoy a memorable event; be it for clients’ incentives, strategic conference meetings, product launches, VIP breakfasts, lunches, dinner and cocktail parties, weddings and more. You can also book a charter with a difference such as a golfing or safari charter through the unique beauty of the South African landscapes and landmarks – to the “Valley of the Olifants” along the Kruger National Park, or to other attractions or other annual premium sporting or entertainment events in Western Cape or KwaZulu-Natal Provinces, amongst others. So take a journey into a timeless world of grace, elegance and romance, where spectacular scenery stirs your imagination and luxurious comfort soothes your mind, body and soul. The Blue Train, A Window To The Soul Of South Africa. For more info, visit them on: Internet: ww.bluetrain.co.za E-mail: info@bluetrain.co.za Pretoria: Tel: 27 12 334-8459 Fax: 27 12 334-8464 Cape Town: Tel: 27 21 449-2672
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Into the Wild
Fourteen years of devotion to conservation has made Inverdoorn Game Reserve a true, sought-after safari experience. The property has grown from strength to strength, re-introducing species to their natural habitat in the Ceres Karoo, including various animals such as the rare Cape Barbary lion, White rhino, hippo, Blue wildebeest, giraffe, buffalo and zebra to name but a few, But the true story of success is that of their cheetah rehabilitation and conservation programme. As is common knowledge, cheetahs are the most endangered Big Cat and if drastic measures aren’t taken, complete extinction of these incredible animals are in the not too distant future. This is why Inverdoorn Game Reserve CEO Damien Vergnaud has initiated the Western Cape Cheetah Conservation program (WCCC). This organization specializes in cheetah conservation and is at the forefront of predator conservation worldwide. The organization aims to educate, conserve and promote cheetah awareness. Today there are 15 cheetahs at Inverdoorn, making it the largest cheetah stronghold in the Western Cape. Recently a new entity, the Rhino Project, was also established to aid in antipoaching, by treating rhino horns with a combination of substances which makes it worthless to poachers. In addition to the spectacular safari experience, guests will also be able to enjoy a moment of peace and tranquility in a semi-dessert environment which has as much bio-diversity as the Amazon. With luxurious accommodation and spectacular views, rest can be the only thing on your agenda. Equipped with all modern conveniences, the chic guesthouses, chalets and luxury chalets can cater to any guest’s requirements. Verandas and roof terraces are available to enjoy the brilliant star-filled night sky. And what breakaway would be complete without a thorough treat for your taste buds? A fusion of French and South African cuisine would please the most stringent palate, with delectable dishes designed by our head chef. A stay at Inverdoorn is something that simply cannot be missed. www.inverdoorn.com
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Events Calendar
TIA
Conferences & Exhibitions
Conferences, Exhibitions and Sumit Diary – March – May 2012
Retail World Africa Conference & Exhibition
Sandton Convention Centre, Johannesburg 12-15 March The definitive conference and exhibition for retail technology and solutions, Retail World Africa is an expo and conference that is collocated with Cards and Payments Africa. It’s about meeting the demand for retail solutions. While major South African retailers are expanding into Africa, international retailers are taking advantage of the opportunities and see Africa’s retail space as the next growth market. This all means that there is an increasing demand for retail solutions for retailers and merchants. Go to http://www.terrapinn.com/conference/retail-world-africa/ for details.
business community, policy leaders and GWU students who are interested in doing business in Africa and African development. The theme for the 2012 conference is Ways Forward to Sustainable Business in Africa. The purpose of this conference is to bring together African business leaders and world leaders for important discussions and presentations about African investment and Entrepreneurship. Keynote speakers include Kadita “A.T.” Tshibaka of Opportunity Bank’s Board of Directors; Carol Pineau, a journalist who has specialized in Africa for more than a decade; and Ms. Mimi Alemayehou, Executive Vice President of OPIC. Go to http://www.gwsbafricaconference.com/index.html for more information.
Bio Energy World Conference & Exhibition Sandton Convention Centre, Johannesburg 27-28 March
Inaugural GW African Business Conference
Investment, development and innovation for utilities, gribusiness, gas producers and developers. Eight reasons why you must attend Bio Energy World Africa 2012:
The George Washington University School of Business March 23 - 24 The Africa Business Association of the George Washington University School of Business invites you to join them at their 1st annual Africa Business Conference. This Conference will bring together participants from the African business community, America political leaders and international organizations, such as the OPIC, IMF, USAID, and IFC. Ultimately, this conference aims to increase networking opportunities among educators, the
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Understand what factors have influenced the success of bio-energy abroad Learn which is the best business approach for bio-energy development Gain insight on successful projects around Africa and how to model yours accordingly Discover the thoughts and processes behind regulation formulation
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Events Calendar • • •
TIA
Learn how to access finance both locally and internationally Understand the interactions between bio-power, bio-gas, biomass and bio-fuels Discover the opportunities and challenges for bio-energy in Africa
Go to http://www.terrapinn.com/exhibition/bio-energy-worldafrica/ for more information.
2012 2nd International Conference on Economics, Trade and Development (ICETD 2012) Bangkok, Thailand 7 - 8 April 2012 2nd International Conference on Economics, Trade and Development (ICETD 2012) is the premier forum for the presentation of new advances and research results in the fields of theoretical, experimental, and applied Economics, Trade and Development. The conference will bring together leading researchers, engineers and scientists in the domain of interest from around the world. Go to http://www.icetd.org/cfp.htm for more information.
East Africa Com
Date: 9-10 May 2012 Venue: The Pavilion Conference Centre, Waterfront, Cape Town Brief Description: ”We have devoted ourselves to food and nutritional safety, and this 2nd Annual Food Security Summit taking place 9 – 10 May 2012 at The Pavilion Conference Centre, Cape Town offers your company the chance to be part of one of the most important global economic developments, up-to-date knowledge and innovation. For more information regarding marketing opportunities, sponsorship, delegate registration and presentation opportunities, please contact: Kim Smith Conference Organiser Email: kims@omegainvest.co.za Telephone: +27 (0)21 689 7881 Website: www.omgainvest.co.za
Safari Park Hotel, Nairobi, Kenya 17-18 April East Africa Com provides the perfect forum for the hotbed of innovation that is taking place in the region. It gathers the “movers and shakers” of the region’s digital world in Nairobi, Kenya for two days of strategic and innovative presentations, panel sessions and interactive debate. Following the spectacular success of East Africa 2011, which attracted 600 senior-ranking delegates from over 33 countries, the organisers have announced the agenda for 2012. For 2012, the organisers will present a brand new conference programme including 40+ C-level speakers and new stakeholders within the digital landscape. To apply for your limited free pass and to register, please visit www.comworldseries.com/eafrica Go to http://eaafrica.comworldseries.com for more information
LC Africa Offshore 2012 Rainham, London, United Kingdom 26 -27 April The LC Africa Offshore 2012 offers an unrivalled opportunity to share your knowledge and experiences with the leaders of the Africa offshore industry. LC Africa Offshore 2012 provides an ideal platform to meet and communicate with customers. Go to http://lancasterconferences.com/lc-africa-offshore for more information. Contact person: Omotolu Ayisire
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Conference: 2nd Annual Food Security Summit
Conference: 4th Annual International Microfinance Conference Date: 22 & 23 May 2012 Venue: IDC – Johannesburg Brief Description: This conference aims at promoting microfinance’s capacity to create jobs at the lower end of the scale by way of financial inclusivity. The first objective of this practical and problem-solving event is getting people economically active through microfinance and inclusive banking – starting branchless banking, providing financial access, much like mobile phones which are already a reality. For more information regarding marketing opportunities, sponsorship, delegate registration and presentation opportunities, please contact: Kamreya Clark Conference Coordinator Tel: +27 (0) 21 689 7881 Email: kamreyac@omegainvest.co.za Website: www.omegainvest.co.za
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The Annual Tourism Indaba Albert Luthuli Convention Centre (Durban ICC), South Africa 12 - 15 May INDABA is one of the largest tourism marketing events on the African calendar and one of the top three ‘must visit’ events of its kind on the global calendar. It showcases the widest variety of Southern Africa’s best tourism products, and attracts international visitors and media from across the world. INDABA is owned by South African Tourism and organised by Witch & Wizard Creative (Pty) Ltd. For two years in a row, INDABA has won the award for Africa’s best travel and tourism show. This award was presented by the Association of World Travel Awards. INDABA is a four-day trade event that attracts well over 13000 delegates from the travel tourism and related industries.
Conferences & Exhibitions
Go to http://www.indaba-southafrica.co.za/ for more information
Conference: Windaba 2012 Date: 22-24 October 2012 Venue: Cape Town International Convention Centre
North Africa Com Sheraton Tunis, Tunisia 15-16 May
Brief Description: Windaba 2012 is an international event on wind energy in South Africa which is hosted by the South African Wind Energy Association (SAWEA). Hosting a very successful inaugural event in 2011, Windaba 2012 again promises to bring together key players in the wind energy sector and provide the platform for networking with peers, government stakeholders, investors and potential clients. Order of events - plenary sessions, (3) parallel workshops, b2b meetings, Wi-Fi Lounge, Company Lounge (for smaller companies to exhibit), international government pavilions, exhibition, gala dinner and wine reception. For more information regarding marketing opportunities, sponsorship, delegate registration and presentation opportunities,
Now in its 6th year, the ONLY conference and exhibition dedicated to the North African digital market moves to Tunisia to address the dynamic French-speaking markets. This year’s North Africa Com caters for all layers within the Digital ecosystem and includes keynotes and sessions dedicated to content & applications, mobile broadband & LTE innovation, networks and devices, regulation, enterprises, customer experience management and much more. At North Africa Com, you can expect to meet 550+ senior level representatives the entire digital ecosystem from mobile and fixed-line operators, Internet Service Providers, regulators, investors, telecoms solution vendors and content providers as before with new additions from OTT service providers, social media players and digital media brands.
please contact:
Go to http://nafrica.comworldseries.com/ for more information
Cheryl Peters Project Manager Tel: +27 (0) 21 689 7881 Email: cheryl@windaba.co.za Website: www.windaba.co.za
Cloud Africa Summit Sandton Sun, Johannesburg 23 -24 May AFRICA’S ONLY CLOUD EVENT FOR THE ICT INDUSTRY AND AFRICAN TELECOM OPERATORS.
Agile Africa Conference Johannesburg, South Africa May 11-12 Welcome to the official Agile (software development) Africa Conference 2012 website. Various local and national pioneers in the Agile, Lean and Kanban fields will provide a platform where Scrum Masters, Product Owners, Agile Project Managers, Team Leads, Testers, Managers, Designers and Developers can learn new techniques to deal with real world problems. Some international speakers are also signed up to add some perspective to the mix of messages. Go to http://www.agileafricaconf.com/ for more information.
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Cloud Africa is a new launch event from the Com World Series – organisers of AfricaCom, the continent’s leading telecoms, media & ICT conference & exhibition. This conference led event, with colocated exhibition, is the premier meeting place for those looking to join the Cloud movement in Africa. The 2-day programme is led by the industry, for the industry - and the exhibition will attract global players displaying world-class solutions. No other event can be relied upon to attract the diverse Cloud ecosystem with such quality learning & networking, a one-stop shop for seeing the future of cloud in Africa and forming all important business partnerships. Go to http://cloudafricasummit.com/ for more information
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