Essential Business Magazine Issue 16 2016 by Optic Juice

Africa

www.essentialbusinessmag.com|Issue 16

The bold ambition of Huawei Technologies Africa Also in this issue: Microsoft South Africa p30 Global Communications p36 Integrated Convoy Protection p42 Khulani Trading Enterprises p52

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E X E C U T I V E

D I R E C T O R S

his issue of features profiles of two tech giants, Huawei and Microsoft, both making large contributions to Africa’s ICT infrastructure and encouraging various kinds of development. The defence industry also receives attention. An expert interview with CEO of South Africa’s Armscor discusses its involvement with Africa Aerospace and Defence Expo 2016, and we also have a detailed look at Integrated Convoy Protection’s successful REVA line of armoured vehicles. Meanwhile, Global Communications continues to make gains in the telecommunications market, and Khulani Trading Enterprises demonstrates the benefits of black female empowerment. With an opening feature on the sectors to look out for during Africa’s growth and a round-up of news from various industries, this issues promises to be a well-rounded look at what’s happening in Africa’s thriving business world.

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Contents Thriving under pressure 6 A look at six key sectors set to drive Africa’s growth into the future.

Strategic defence 10 An interview with the CEO of Armscor, Kevin Wakeford, on the recently held AAD and the company’s history and future.

News round-up 14 Our sector-by-sector round-up of African business news, including the recent struggles of the Nigerian economy and the drive for African renewable energy.

Global Communications

A profile of Global Communications, a company aiming to be the largest telecommunication solutions provider in Africa.

Integrated Convoy Protection 42 An interview with managing director Nadine Rynners on ICP’s progress in the rapidly changing defence and research markets.

Huawei Technologies Africa 16 interview Stephen Wu of Huawei‘s African division on the development of Africa’s 4.5G networks and the booming cellphone market.

Khulani Trading Enterprises 52 talk to CEO Gladness Msiska on the ups and downs of a black female-owned company in the current market.

Microsoft South Africa 30

Coega Development Corporation 56

A look at Microsoft’s business plans for the lucrative South African market and its development efforts elsewhere on the continent.

A tour through an enormous land and business management project, with the Coega Development Corporation at its helm.

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OnTopic

n 2011, the Harvard Business Report gave an insightful overview into the growth of Africa’s diverse range of economic interests. Five years on, much has changed, with many headlines focusing on the challenges facing even the most robust African nations. Nigeria, hit by the collapse in oil and gas prices, has been one of the worse affected, with S&P Global Ratings recently downgrading the country to a ‘B’ rating as it teeters on the brink of its first full recession since 1991. However, with the government reallocating fiscal resources from a formerly oil-centric economic strategy, S&P has also stated that 2017 will see growth in Nigeria’s GDP once again.

Shopping for success

For many leading business minds, the huge promise offered by African retail is no surprise. New malls across the continent draw local and international chains to new areas, and burgeoning growth in middle

“Much of the upheaval has been due to socio-political tensions rather than fundamental business or industrial concerns

In a recent Harvard Business Report study, six key sectors of Africa’s collective economic interests were singled out as promising areas of growth, despite the current challenges facing the region’s economies. From heavy industry and construction to retail and agriculture, the potential is clear to see.

Africa’s growing population and vast resources positions the continent uniquely on the globe. Yet the energy and mining sectors are conspicuous in their absence from Harvard’s data. Instead, the emphasis is on growth in construction, retail, agriculture, healthcare, light manufacturing and financial services – domestic-focused industries that cut a longstanding reliance on commodities exports.

class spending has spelled good news for Shoprite, the continent’s largest home and food retail supermarket network. The firm is expanding rapidly across the continent, with further stores due to open in Nigeria, Angola and other promising African countries. Connected to that success is the prospect of growth in intraAfrican trade and manufacture. More specifically, reports suggest that a third of all food, drink and processed goods in Africa are imported, despite the immense investment and expansion potential in Africa’s intrinsic manufacturing capability. The Harvard Business Report’s analysis forecast a supremely healthy manufacturing output of US$930 billion as attainable as soon as 2025 – almost double today’s output figure of US$500

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On billion. Catering to domestic demand alone would produce 75% of that sum.

uncommitted until Eskom’s involvement in the project is confirmed.

Building the next phase

Connecting the dots

Africa is also well ahead of the curve in growth of construction. The Ethiopian Great Renaissance Dam promises to vastly improve the country’s infrastructure, while Egypt is developing a new residential and administrative region east of Cairo that will eventually house five million people. Coupled with the multi-billion dollar addition of a second lane of the Suez Canal, as well as growing renewable energy projects across the continent, the opportunities speak for themselves. These projects demonstrate the tremendous incentive to provide sufficient infrastructure and energy to fuel Africa’s industrial development. In Zimbabwe, an agreement has been reached with China’s State Nuclear Electric Power Planning Design & Research Institute to build a 2,800MW coal-fired plant in Sengwa. The facility will greatly ease the high demand and domestic shortages of electricity, although funding hinges on the involvement of South Africa’s Eskom, which has been approached to sign an off take agreement of some 2,000MW. Investors from across the continent, as well as Dubai in the United Arab Emirates, are interested in the facility but

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The report highlights patience, the cultivation of trustworthy business practices and the creation of next-generation talent as the key components in realising the enormous potential offered by African economies.

“The time to motivate tomorrow’s geniuses and empower the new generation of wealth generation is here today.

Although continental GDP growth has slowed in many instances, much of the upheaval has been due to socio-political tensions rather than fundamental business or industrial concerns. Internationally, Africa’s potential has not gone unnoticed either. The mobilisation of capital integral to many domestic projects is being met by growing interest from both domestic incentives as much as international groups. The Norwegian Investment Fund for Developing Countries – Norfund – has pledged its support to SMEs in Sub-Saharan Africa, in a move that is hoped to engender greater business development for those who would otherwise lack the capital to get their entrepreneurship ideas off the ground. To facilitate the change, Norfund has joined the Dutch Development Bank and Rabobank in forming Arise, which will be active in 20 countries and begin operations with US$660 million in assets. That figure is projected to hit US$1 billion going forward. Norfund is just one of numerous incentives actively pursuing economic growth in Africa, yet however such progress manifests, one thing is clear – attention on natural exhaustible resources is waning, and the time to motivate tomorrow’s geniuses and empower the new generation of wealth generation is here today.

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Expert

Armscor is one of the largest corporations in the South African defence sector, trading internationally across Africa and bringing plentiful business opportunities to the domestic African and foreign markets. CEO Kevin Wakeford discusses their operations and future strategy.

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Could you tell us about the history of Armscor and the nature of the companyâ&#x20AC;&#x2122;s current operations?

Armscor is the Armaments Corporation of South Africa, the acquisition agency for the South African Department of Defence (DOD). The corporationâ&#x20AC;&#x2122;s history goes back to the 1960s when it was founded to procure weaponry and equipment for the SADF during the South African Border War.

Armscor was established in terms of the Armaments Corporation of South Africa, Limited Act (Act 51 of 2003), as amended (called the Armscor Act). It is therefore a state-owned company (SOC) as defined in the Companies Act, 2008. Furthermore, it is listed as a schedule 2 Public Entity in terms of the Public Finance Management Act (Act 1 of 1999), as amended (the PFMA). It is further regulated by the Regulations issued in terms of the PFMA and those of the Companies Act, 2008. The Minister of Defence and Military Veterans is the executive authority responsible for Armscor.

Armscor’s corporate operations are strongly tied in to the needs and requirements of the South African National Defence Force (SANDF). How do you work with the Department of Defence and the SANDF? As stated previously, Armscor is the Acquisition agency for the Department of Defence, which is one of our shareholders. The SANDF is Armscor’s major client, although we do have others. The SANDF informs Armscor of acquisition and related logistic requirements. Armscor then meet the requirements of the SANDF and other clients, on time and in a financially and operationally sustainable manner.

“Armscor’s mission is to proactively meet the defence materiel, defence technology, research, development, analysis, tests and evaluation requirements of the Department of Defence and other organs of state effectively, efficiently, economically and holistically Armscor’s mission is to proactively meet the defence materiel, defence technology, research, development, analysis, tests and evaluation requirements of the Department of Defence and other organs of state effectively, efficiently, economically and holistically.

Armscor was heavily involved in the recent Africa Aerospace and Defence expo 2016. What did this entail? Africa Aerospace and Defence (AAD) is Africa’s only defence and aerospace exhibition, combining exhibitions of air, sea

and land technologies, static aircraft displays and an air show and display. AAD is held every two years in the City of Tshwane – South Africa’s administrative capital. Hosted over five days, the show opens to the trade for three days and to the general public over the last days, typically over a weekend. AAD is managed through the partnership between Armscor, the Armaments Corporation of South Africa SOC Ltd, AMD (South African Aerospace Maritime and Defence Industries Association) and CAASA (Commercial Aviation Association of Southern Africa) and the Department of Defence and Military Veterans (DOD). Armscor was the lead partner for AAD2016.

In your opinion, what were some of the highlights of the expo? AAD2016 was a phenomenal success attracting a record number of displays and about 34000 visitors from 105 countries.

In line with the 2016 theme of Unlocking Africa’s Aerospace and Defence Potential AAD featured an African Unity Pavilion for the first time in the history of the expo. Defence companies from Nigeria, Namibia, Uganda, Zimbabwe and the Republic of the Sudan shared exhibition space with the more established companies from the northern hemisphere.

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The Honourable Minister of Defence and Military Veterans, Nosiviwe Mapisa-Nqakula officially opened the pavilion at a ribbon cutting ceremony, joined by the Premier of Gauteng, David Makhura, the Mayor of Tshwane, Solly Msimanga, the Secretary of Defence, Dr Sam Gulube and the Chief of the SANDF, General Solly Shoke. This year’s expo saw 33,862 trade visitors visiting 532 exhibitors from 105 countries over 54,000 square metres of expo space. More than 57,000 members of the public came to see the air show and exhibits on display as well, with nearly 450 media outlets present.

As you point out, AAD2016’s theme was ‘Unlocking Africa’s Aerospace & Defence Potential’. Can you describe the ways in which ARMSCOR are contributing to this aim, for example through the company’s Corporate Social Investment?

AAD has a dedicated Youth Development Programme (YDP) as part of the event, which attracted over 7000 learners aged 14-17 over the five day event. Armscor invited learners from previously disadvantaged communities to take part in this programme to gain exposure of the technical field of the aerospace industry and defence industry.

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“AAD2016 was a phenomenal success attracting a record number of displays and about 34000 visitors from 105 countries Armscor is also committed to procuring from and supporting SMMEs, black owned and managed enterprises, femaleled enterprises and youth and veteran groups.

Can you tell us about ARMSCOR’s Defence Industrial Participation (DIP) deals?

DIP involves obligation incurred by a foreign supplier to reciprocate defence-related business in South Africa as a result of a defence acquisition. DIP forms an integral part of the DOD’s policy to develop the South African defence industry, helping to ensure a steady flow of business. At present, Armscor is managing 13 DIP agreements from capital acquisition projects, 1 for small arms from the South African Police Service and an obligation from the Strategic Defence Package deal from the DOD itself. All of these agreements provide further business for South African defence firms or additional capital from contractual penalties at some point in the near future.

Has Armscor met its obligations over the past two years? What is your turnaround strategy for expanding your corporation’s business? As is stated in our annual report for the 2015/2016 fi nancial year the turnaround strategy of the organisation does not only seek to meet SANDF requirements but also to reduce reliance on the fi scus, increase employment and grow the SA economy, all within the principles of good corporate governance.

Armscor has overwhelmingly achieved all its goals set in the SLA with the Department of Defence. These include the acquisition of defence materiel, systems support, management and execution of defence technology, research, test and evaluation. Armscor achieved a net surplus of R200.1m (2015/16) compared to R84.2m in 2014/15 due to gains from the revaluation of fixed and investment properties. Operating expenditure went up by 13% resulting in a lower revenue although a net gain of R320.9 million was achieved.

With 2016 drawing to a close, what can you tell us about Armscor’s plans for the next two years? How is the company’s strategy

Expert Interview

changing to meet its obligations while also adapting to a changing defence sector?

Over the next two years Armscor will of course work to support the SANDF in its acquisition of defence materiel and fulfil our standard obligations. Our programmes to unlock alternate income streams for the SANDF as required in the most recent defence review will be ongoing as will our R&D programmes to develop innovative technology solutions, able to respond to current challenges and agile enough to meet future encounters. We are also looking to develop an alternative funding concept for the Defence Review, and proactively develop new policies for the inclusive economy in the defence industry.

â&#x20AC;&#x153;Armscor also plans to become the leading supplier to the ten UN peacekeeping missions and services in Africa, as well as expanding our services to our various African clients in Nigeria, Kenya and Uganda Armscor also plans to become the leading supplier to the ten UN peacekeeping missions and services in Africa, as well as expanding our services to our various African clients in Nigeria, Kenya and Uganda. We are planning to provide project oversight for the relocation of the Defence Intelligence HQ and improve our existing acquisition processes.

The defence sector is often over looked, but it is a sector that leads research and spills over into the civilian sector, driving growth in Africa. It has been predicted that in ten years, the South African defence sector will be primarily trading with African markets. Between supplying this new market and moving into the business of peace through partnerships with the UN, Armscor has a number of new markets to work in.

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News T R A D E

S C

hinese investment in African markets continues to be strongly felt and discussed, with surveys claiming that it has become the second most popular model for national development after the USA, particularly in Central Africa. 56% of Africans see China’s development assistance as doing a good job of meeting the needs of their countries.

An example of this assistance can be seen in the recently completed Addis Ababa–Djibouti Railway. Built by a joint Ethiopian/Chinese venture, the railway replaces an obsolete 90cm railway track that used to run along the route and will dramatically shorten rail journeys between the two countries. Meanwhile, as a result of the UK’s Brexit vote a British parliamentary enquiry has called for the implementation of pro-development trade policy with Africa. Co-chair of the Inquiry Committee Ali Mufuruki was reported by African Business to have said that the Brexit vote “presents a big prize – the opportunity for the UK to lead the world in structuring a pro-development trade policy with Africa, becoming a model for other OECD countries to follow.”

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enegal’s renewable energy drive continues with the unveiling of a new 20 megawatt solar power plant in Bokho, Senergy 2. The project is part of a COP21 commitment by president Sall to cut greenhouse gas E N G emissions in the West African state and push Senegal as a major player in the region’s energy sector.

The plant was built in partnership with the French green investor Greenwish and cost around $28 million. It is intended to serve 160,000 people and contribute to Senegal’s renewable energy targets. The country plans to generate 20% of its electricity needs from renewables by the end of 2017. At the launch, President Sall urged Senegal’s national electricity company to consider reducing electricity costs. “Senegal is now fully entering the era of clean energy, helping to save the planet by reducing greenhouse gases. Therefore, from here on in Bokhol, I call on all partners who wish to support us in the development of alternative energy.” Other countries are also joining the boom in African solar power, with South Africa bringing the 86 megawatt Mulilo-Sonnedix-Prieska PV project into commercial operation on the 22nd of July, after just 17 months of construction. The plant has an expected 20 year lifespan. The International Renewable Energy Agency has said that renewables could supply almost a quarter of Africa’s energy needs within the next 15 years, citing both the abundant renewable energy resources on the continent and the relatively economic nature of renewable power generation.

E R Y

News O

n the 21st of October the IMF confirmed that Zimbabwe cleared its debt with the organisation and now qualifies for financial aid. The debt has been in arrears since 2001, reaching around $107.9 million. This leaves Zimbabwe owing $1.15 billion to the World Bank and $601 million to the AfDB. The IMF will not immediately release new loans to Zimbabwe until it clears these debts and implements a strong reform F I agenda. It is predicted that Zimbabwe will have a recession this year despite previous growth.

T R AV E L

he travel sector has been hit hard by recent economic troubles, with domestic and international airlines having difficulties and cutting back flights. Some, United Airlines and Iberia in particular, have already halted their Nigerian operations entirely, citing an inability to repatriate their profits because forex is unavailable in the country. Emirates and Kenya Airways are suspending flights to Abuja by the end of the month, although they are continuing flights to Lagos. Analysts say that further devaluation is expected within the year.

The Etihad Aviation Group is predicted to contribute $3.6 billion to the African economy and create around 425,000 jobs, a report by The Oxford Economics Group suggests. The prediction comes after Etihad Airways signing a codeshare agreement with South African lowcost carrier kulula earlier in the month.

N A N C E

The World Bank has rated Rwanda as the second best place to do business in Africa, behind Mauritius, which ranked 49th globally in the recent Doing Business 2016 report. The report praises the pace of reform activity in sub-Saharan African economies, with 37 economies conducting around 80 business reforms in the last year. Rwandaâ&#x20AC;&#x2122;s transparency, accountability and strategic direction of investments were praised, along with its eased restrictions on cross-border trade. Gender equality was also praised, with a 30% quota for women in all decisionmaking positions and positive results in equality of ownership between men and women in registration, ownership and business rights. According to the report, Uganda, Kenya, Mauritania, Senegal and Benin were among the most improved economies while sub-Saharan Africa accounted for more than 30% of the reforms implemented worldwide.

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Huawei

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ICT

chnologies Huawei Te e Chinese Co. Ltd., th ms giant, d teleco networking an g inroads in in has been mak , leading it es d a Africa for dec r player as the ajo to become a m ces the digital ra b continent em oke to the CEO sp n, age. African divisio s yâ&#x20AC;&#x2122; n a p m co e of th bout Huaweiâ&#x20AC;&#x2122;s Stephen Wu, a ions. bold ambit

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• • • • •

H u a w e i

uawei entered Africa in 1998 and operates in 50 countries across the continent, digitalising industries like transportation and education and expanding their lucrative smartphone businesses into the numerous African markets. Fittingly, Wu describes Huawei’s plan as “accelerating the ICT transformation in Africa” and “providing African people with more accesses to the digital world”. In June 2016, Huawei and Vodacom South Africa successfully ran Africa’s first three component carrier test

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“The company is also involved in sponsoring and working with AfricaCom and the African Internet Governance Forum, developing new ways to bring the public and private sector together to bridge the African digital divide and tested Africa’s first 1Gbps network by aggregating long-term evolution (LTE), a standard for high-speed wireless communication for mobile phones and data terminals, in both licensed and unlicensed bands with using its LampSite solution. The peak speed hit over 1Gbps, a milestone in the development of a 4.5G network.

Another live trial successfully demonstrated the co-existence of LTE in unlicensed band in open public areas like Vodacom World’s conference venues and a shopping mall like Sandton City, where existing Wi-Fi services are already being widely used and the spectrum is fairly shared between the different technologies.

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H u a w e i

“We anticipate there will be over 100 billion connections between people to people, machine to machine by 2025 Huawei SA CEO, Steven Wu

The deployed network has a natural evolution path and can be software upgraded to a fully LBT (Listen Before Talk) compliant solution, known as LAA (License Assisted Access). Standard LAA within the 3GPP standards process will ensure fair share use among the multiple users and technologies, such as Wi-Fi, that access the unlicensed bands. For this public trial demonstrating LTE in unlicensed co-existence, Huawei worked with Qualcomm Technologies, Inc. to use a test mobile device based on the Qualcomm® Snapdragon™ 820 processor with X12 LTE for the live network trial. Commercial mobile devices are expected to be released by manufacturers towards the second half of the year.

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H u a w e i

Planting the seed

Huawei also run a corporate social responsibility programme called Seeds for the Future, which works with local governments, higher education institutes and similar organisations to offer work experience and study opportunities to students working in the ICT fields. The programme aims to arrange for students to study cutting-edge technologies such as 5G, LTE, and cloud computing, and offer them opportunities for handson practice in Huawei’s most advanced labs.

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Seeds for the Future is an international initiative that seeks students from every country, but with Huawei’s extensive operations in both South Africa and across the continent as a whole the door is open for African students who wish to study with an industry-leading company. At present, Seeds for the Future has been active in, among others, Kenya, Namibia, Botswana, Nigeria, Zimbabwe and Ghana, with efforts to move into South Africa underway. Further training, support and infrastructure initiatives are

seeing Huawei partnering with the South African government, among other national institutions. Huawei’s Joint Innovation and Experience Centre has signed a corporation contract with the South African Department of Telecommunications and Postal Services which will ensure that African ICT professionals are familiar with Huawei products and methodology while also ensuring that the infrastructure exists to innovate and generate further business for Huawei down the line. As one might expect, the company is also involved

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H u a w e i

in sponsoring and working with AfricaCom and the African Internet Governance Forum, developing new ways to bring the public and private sector together to bridge the African digital divide. Business-wise, Huawei has gained an edge in the sub-Saharan markets with competitive pricing and tailored products, with Wu stating that smartphones like the P9 and its Plus and lite variants have exceeded “even our bullish expectations” in South Africa. Much of this is down to a local focus, with the aim to produce the features and affordable price points suited to their target markets. Huawei’s business is also reliant on a network of suppliers, partner companies and other entities which keep their vast logistics chains active. The company’s stakeholders are a vital part of their business, and relationships with them are “building blocks that Huawei treasures dearly”. According to Wu, “It is safe to say the relations are steady and good. Huawei has various projects and programs in place that provide platforms for us to engage with our stakeholders and share our brand identity, culture, vision and mission, and also understand that of our partners.” Supplier and enterprise development programmes are a key part of the constant process

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“Smartphones like the P9 and its Plus and lite variants are exceeding even our bullish expectations in South Africa

of upgrading the corporation’s supply chain, and Huawei aims to ensure that “regular and close contact” is kept with suppliers, strategic partners, stakeholders and operators in all the areas their business covers. This strategy seems to be paying off – Huawei technology forms a vital part of the operational capacity of a long list of telecoms companies serving countries all over Africa, from Algeria and Egypt in the north to Cameroon, the CAR, Benin, Nigeria, Namibia, Botswana and many others. Huawei currently sells products in over 50 African countries, with others including Tanzania soon to join that number.

Not simply selling

Huawei’s business plan in Africa is similar to the tactics adopted by many other successful multinational and local companies in the rapidly growing ICT sector – not simply trying to sell to developing African nations, but instead establishing longer-term connections to drive progress. The vast and partly un-tapped potential of the African markets, particularly the Sub-Saharan and western regions where the pace of technological development is rapidly snowballing, force multinational entities to stand out and tailor their services accordingly. This environment also provides an opportunity to gain ground where bigger competitors fail. Huawei has successfully competed with giants like Blackberry and Nokia for market

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H u a w e i

that of other Chinese industries across Africa.

Connecting everything

Wu offers a fascinating vision of the future: “We anticipate there will be over 100 billion connections between people to people, machine to machine by 2025. We envision the future will be an intelligent world. In an intelligent world, devices will play the role of the ‘feelers’ in an all-sensing environment. Networks will connect everything, and the cloud will be the source of intelligence behind all things. These three elements form a synergetic architecture of devices, information pipes, and the cloud.”

share, hitting 50% of the Kenyan smartphone market share in 2013. Meanwhile, Huawei faces a challenge unique to Chinese companies and manufacturers in Africa, with the stereotype of poor-quality, cheaply-made goods. Recently this feeling has begun to reverse - the widelypublicised story of a South African man who was saved from a robbery when his Huawei P9 lite smartphone stopped a 9mm bullet fired by a mugger was a watershed moment. To counter this prejudice, Wu emphasises that Huawei is focused on “creating premium devices that exhibit our dedication to flawless design and technological innovation at an affordable price point for all consumers.” Satisfied customers with working phones and internet will benefit every factor of Huawei’s business, and

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“The program aims to arrange for students to study cutting-edge technologies such as 5G, LTE, and cloud computing, and offer them opportunities for hands-on practice in Huawei’s most advanced labs

An almost science-fiction vision, perhaps. When Huawei moved into the African markets in 1998 it might have been dismissed as impossible. With the Internet of Things out of the think-tank and into the home, however, Huawei’s preparations to build the technological infrastructure to help African nations follow suit seems like sound business sense. Cloud-based computing remains important to Huawei’s strategy. Wu describes their “strategic focus” as “devices, information pipes and the cloud”. This digital frontier is only expanding, and Huawei aims to be at the forefront.

ICT

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Microsoft SA

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ICT

Empowering

Since the launch of their continent-wide 4Afrika initiative three years ago, Microsoft continues to expand its presence in the take a closer look at African economy. how the technology giant is moving forward.

icrosoft launched the SQL Server 2016 platform locally in South Africa on April 8th 2016, and launched its latest OS, Windows 10, in July 2015, with

several rounds of updates already rolled out. With more than half of South Africaâ&#x20AC;&#x2122;s SMEs using cloudbased systems to connect their employees, the country and the continent are already seeing the benefits of the companyâ&#x20AC;&#x2122;s infrastructure investment.

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M i c r o s o f t

Microsoft’s efforts in South Africa have traditionally focused on expanding their business software and providing their latest products. Since 1992, the company’s Europe, Middle East and Africa division has had subsidiaries and operations in Pretoria, while the corporation established AppFactories and SME Online Hubs in South Africa during their major expansion into the continent’s markets in 2013. It has also provided affordable smartphones tailored specifi cally for Africa in their partnership with the Chinese multinational Huawei. Other key programs have included Microsoft 4Afrika, which has been improving internet connectivity across the continent by providing Africa-focused apps and even providing broadband via unused ‘white space’ in TV frequencies. Meanwhile, while numerous SMEs have adopted Microsoft products and systems, the company has stated that its goal is to double its South African

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S o u t h

A f r i c a

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See our feature on Huawei........

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“With more than half of South Africa’s SMEs using cloud-based systems to connect their employees, the country and the continent are already seeing the benefits of the company’s infrastructure investment

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business by 2025. Windows mobile phones have also outsold the iPhone in South Africa since 2014, part of a larger shift away from Apple products seen worldwide. The expansion is not strictly profit-focused, too. On the 22nd of September this year Microsoft South Africa launched #MSwomen as part of its larger efforts to empower and inspire women entering the maledominated tech industries in South Africa.

No better time

In February 2013, while launching Microsoft 4Afrika, the president of Microsoft International, JeanPhilippe Courtois, said ‘there has never been a better time to invest in Africa’. Microsoft is not simply expanding its reach and its business into a large, relatively untapped market. It is attempting to bring Africa up to speed with the digital age. Upon her appointment in 2015, Microsoft 4Afrika’s regional director Amrote Abdella stated that, ‘at Microsoft,

“Microsoft is not simply expanding its reach and its business into a large, relatively untapped market. It is attempting to bring Africa up to speed with the digital age

S o u t h

A f r i c a

our initiative is to empower every person and organisation on the planet to do more. The 4Afrika initiative is perfectly aligned to accelerate this for the African continent through locally relevant innovation, affordable access and skills development.’ The initiative’s innovations are in use with nearly 273,000 SMEs and the project has expanded to encompass nine innovation hubs. Microsoft is catering to the urgent requirements of rapidly growing African economies, providing skills investments, innovation support and access provision. The corporation provides streamlining of data costs to SMEs that may not have the capital to invest in IT infrastructure and aims to improve youth empowerment, skills development and establishment of digital curricula to optimise the continent’s digital awakening.

Truly interconnected

Since 2014 Microsoft has been striving to deliver cloud computing-based services to everyone in South Africa, aiming to get the service onto every device to provide a truly interconnected environment for users and businesses to flourish. The corporation continues to aim to provide its ever-evolving suite of services to African consumers and to assist in the development of urban and rural areas through programs like Microsoft CityNext and the ongoing Microsoft 4Afrika.

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In addition, as former South Africa MD and current General Manager for the Middle East and African emerging regions Mteto Nyati says, ‘Africa is a very important initiative for us. The corporation has asked me to create a people plan for Microsoft in Africa.’ He emphasises that the corporation’s plans for the continent are still developing. ‘Right now, we need to go from country to country to understand the growth we are looking for.’ Africa is approaching one billion mobile subscriptions, growth fuelled by prices of less than $100 a unit. Universal access to fast broadband in Africa is still some

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“The corporation is both positioning itself to empower people and businesses and to shape the future of Africa’s adolescent digital landscape way away – even in South Africa broadband and internet access are still not universal. ‘The world has recognised the promise of Africa, and Microsoft wants to invest in that promise,’ said 4Afrika’s general manager Fernando De Sousa in 2013. Microsoft’s operations in South Africa and across the continent as a whole are good

business. The corporation is both positioning itself to empower people and businesses and to shape the future of Africa’s adolescent digital landscape. Microsoft’s efforts in this field have been profitable and, in the words of Jean-Philippe Courtois, ‘serve[d] as a great accelerator for African competitiveness.’ Microsoft is involved in a new era of African history.

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Global Communication

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The Value of

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ICT

Building on almost 40 years of expertise, Global Communications in South Africa has become a continuously innovative voice in the continent’s ongoing modernisation. Speaking on the organisation’s growing focus on supplying communication technologies across the value chain, Global Communications’ managing director Mr Sean Mervitz shares his vision of the future. 37

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G l o b a l

C o m m u n i c a t i o n

“Global Communications has helped usher in a wide array of technological advances in numerous African nations

The business is headquartered in South Africa in Centurion, just south of Pretoria. Today, its actions in the fi eld of telecommunications strategies

are guided by its managing director, Mr Sean Mervitz. “I’ve been with the company since 1998, and have seen its product range and overall business strategy benefi t from substantial enhancements in recent years,” he refl ects. “It has hugely infl uenced the route and tactics behind the organisation’s growth after 40 years of ownership shifts and market share consolidation.”

s Africa’s mobile communications market is growing at a rapid rate, Global Communications has positioned itself to become a major player in the telecommunications industry and is committed to finding the best and most cost effective solutions for its customer’s communications needs. The company is now present in more than 40 African countries through dealers, integrators and distributors.

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Advent of advancement

Global Communications has helped introduce a wide variety of technological advances in numerous African nations, from telecommunications infrastructure to radio communication systems for emergency services, the military and civilian interaction. Nevertheless, Africa’s journey towards modernisation has seen rapid change influence the continent’s markets. “The spread of technology throughout Africa has introduced a number of changes,” Mr Mervitz affirms. “Initially our business was purely ‘box dropping’ two-way radio communications. That service saw a strong uptake across Africa, which has now developed into both analogue and digital networks becoming much more prominent in the market today.”

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“The diversity of Africa’s countries presents an economic landscape where the needs of one nation may not match the needs of others, presenting both challenges and opportunities

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G l o b a l

The diversity of Africa’s countries presents an economic landscape where the needs of one nation may not match the needs of others, presenting both challenges and opportunities. “People often generalise Africa, but the truth is that no two countries here are ever the same, in terms of demographics, growth prospects, economic capabilities and overall targets for development,” Mr Mervitz explains. “What sets us apart is the relationships that we have developed with numerous industry leaders, such as

Kenwood, Sepura, Rohill, Barrett, Keymile & Webgate to name but a few, which enables us to work alongside even the poorest African countries in discovering solutions for mobilising capital for project advancement that benefits everyone.” The challenge of funding is a stark one that affects several countries with which Global Communications interacts, with even the strongest of Africa’s economies not always equipped to meet their ambitions without external assistance.

C o m m u n i c a t i o n

“The future of the business looks set to benefit from a smart blend of intelligent strategy and the leverage made possible by the respect that the Global Communications name has garnered over the years “In Nigeria, a huge project for telecommunications infrastructure to facilitate emergency service communications hit a standstill for just that reason,” Mr Mervitz recounts. “Fortunately, in South Africa the economic climate is more fertile for those kinds of projects, and there is always capital that can be mobilised.”

A united vision

Operating with a keen comprehension of the challenges that rest ahead in advancing African communications infrastructure, Global Communications functions with the backing of leading minds in its active sectors, which serves to reinforce its expertise in the market. “Our relationship with Kenwood is particularly integral in that

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ICT

2016-10-04 - essential Business magazine (E).pdf 1 04.10.2016 11:32:00

regard,” Mr Mervitz states. “In fact, Kenwood was the company that actively enabled this business to first find its footing on the African continent. Our liaison is a close one – I personally speak with Kenwood UK on a daily basis, and our overarching ambition is to continue to identify targets and opportunities throughout Africa that will bring each of us growth and progression, while simultaneously uplifting the technological capabilities of the communities with whom we work.” The range and scope of applications to which Global Communications applies its products sees network infrastructure, CCTV surveillance systems and radio communication systems supplied, commissioned and supported (SLA) to emergency organisations, residential complexes, businesses, industrial sites and the military. To reach such a varied selection of demographics, the key relationships with technological partners that the firm has cultivated are crucial to mutual advancement, thus the success that Global Communications enjoys is as a result of the close product knowledge and market dynamics. To that end, the future of the business looks set to benefit from a smart blend of intelligent strategy and the leverage made possible by the respect that the Global Communications name has garnered over the years.

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Mr Mervitz summarises, “Our goal is to become the largest telecommunications solutions provider on the continent. We have numerous financial and growth targets to accomplish moving forward, and although our staff complement has increased over the past number of years that we now operate in a corporate environment, ours is a business built on family values and the spirit of teamwork. To that end, I remain grateful to the hard work of our personnel and the opportunities that our valued business partners have opened up to us, and look forward to continuous success ahead.”

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ICP

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Automotive

The Best

The South African company Integrated Convoy Protection’s successful REVA line of armoured vehicles continue to push the envelope as their business expands. ICP’s CEO, Flip Marx details the firm’s progress.

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I n t e g r a t e d

ntegrated Convoy Protection’s REVA family of armoured vehicles has become synonymous with quality, accessibility and safety in a host of markets worldwide. “The company was founded in 2004, and we originally started in both South Africa and Baghdad in Iraq, where we did business through joint contracts,” says Marx. “As our first orders from Iraq came through, it became necessary for us to establish a facility in Pretoria, South Africa, so that we could manufacture the ordered vehicles and export them to the Middle East.”

The bulk of our clients today are still those markets in the Middle East and Far East, although we are looking to expand into other markets Flip Marx - CEO of ICP

C o n v o y

P r o t e c t i o n

Listening to clients

Since 2004, much has changed across the political, economic and defence landscapes but ICP has continued to expand its business. “The bulk of our clients today are still those markets in the Middle East and Far East, although we are looking to expand into other markets,” he adds. “We do much business in Thailand and the like, and our demographics have not changed much. I would say that the bulk of our business, around 90% in fact, is with governmental entities. Work with individuals occurs much more infrequently, owing to the nature of our business.”

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I n t e g r a t e d

Indeed, although ICP sometimes works with high net worth individuals and select interest groups, the firm excels at providing vehicles to military peacekeepers and specialist security units. The strong performance of the REVA line of defence vehicles has boosted the company’s reputation and drawn a variety of prospective clients. “We are governed by close and stringent regulatory process, which makes it imperative that our business is conducted in full compliance with those rules. That is especially true in the military

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P r o t e c t i o n

Indeed, although ICP sometimes works with high net worth individuals and select interest groups, the firm excels at providing vehicles to military peacekeepers and specialist police units sector. Much of the research & development that we engage in is based on the requirements received from our clients. We listen to what they need, undertake the necessary analysis and sustain our competitive edge

through ensuring that each order is custom-built to exactly match the client’s needs. Our vehicles are modular, so implementing changes is a simple feat, and our R&D personnel are some of the finest minds in the industry.”

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P r o t e c t i o n

Peak military performance made possible with Probe As South Africa’s largest importer of premium, ‘fit and forget’ batteries, and a leader in rotating electrics, Probe understands the robust requirements necessary for heavy-duty vehicles. Military vehicles that operate out in the field require starters, alternators and batteries that must faultlessly operate to the highest standards over sustained periods of time and within harsh terrain. Probe is a licensed distributor of top international brands such as Delco Remy, Prestolite and Niehoff amongst others, who manufacture high quality starters, alternators and associated power products that deliver optimal performance. This includes Delco Remy’s heavy-duty starters and alternators that have been used in military markets for over a hundred years and continue to evolve through innovative solutions; Prestolite’s starters and 4000 alternator series that adhere to tough military standards in extremely difficult environments; and Niehoff’s specialist CEN alternators which require less engine horsepower and fuel so as to produce the high output required for military vehicles

Showcasing ingenuity

In September, ICP was present at the AAD Expo, impressing leading industry members with its latest advances. “At the event, we launched the REVA Protection Vehicle,” Marx says. “The REVA Protection Vehicle is a two by four vehicle, and it signifies the shift we are making in our honing new business areas, specifically tailored to the African market. The aim is to be able to supply more affordable security vehicle solutions to the continent.” ICP and the REVA vehicle line are regular and well-respected guests at these events. The solutions they provide meet the

We are governed by close and stringent regulatory process, which makes it imperative that our business is conducted in full compliance with those rules

Probe’s in-house battery range offers a sealed, maintenance-free series that use calcium technology to provide extended battery life. The Probe Performance Plus XHD battery has increased grid strength and internal plate supports making it vibration resistant, extremely durable and robust, ideal for the toughest military conditions. With over 50 years of service and representation within South Africa and sub-Saharan Africa, Probe provides a cost-competitive and comprehensive range of value-added support services and technical expertise to ensure uninterrupted performance when it’s needed most.

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I n t e g r a t e d

They signify the shift we are making in our honing new business areas, specifically tailored to the African market. The aim is to be able to supply more affordable security vehicle solutions to the continent

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needs of a range of sectors, and their development is particularly focusing on expanding the company’s presence in Africa. “In any market, our goal is to help our clients in protecting people’s lives, yet we appreciate that what is occurring today in Africa is very different to what is occurring in the Middle East,” he continues. “It is crucial to look at the different markets in the sense of understanding the target market. In Africa, for example, our target demographic is not so much military as it is safe

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P r o t e c t i o n

transport solutions, and more of a security than a military focus.” Understanding those differences and continuing to work closely with clients is at the core of ICP’s strategy, and a characteristic the company continues to develop. “We pride ourselves on not only selling a vehicle, but a package, we offer support and training for every project we undertake. In every country where our vehicles are deployed, we also deploy a team of technicians, who are able to provide training, give

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vehicular maintenance and offer ad-hoc support. “Looking ahead, we are looking at producing a Fast Attack Vehicle, which we call an FAV – and we will launch it in February 2017. The R&D and the first prototype of that vehicle has been completed. Our overall directive today is moving away from heavy military vehicle types to the more nimble and agile vehicles. That goes hand in hand with our growth strategy of consolidating our position in the Middle East, Far East and current African Markets, while further expanding our presence across Africa.”

email: production@essentialbusinessmag.com

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Khulani Construction

w w w . k h u l a n e . c o . z a

Building on

Khulani Quality Construction has become one of South Africaâ&#x20AC;&#x2122;s most successful construction companies, with a sixteen-year history of infrastructure and industrial development. We spoke to the companyâ&#x20AC;&#x2122;s CEO, Gladness Msiska, on the struggles and successes of a black female-owned business in the current market.

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Construction

hulani Trading Enterprises was founded by Gladness Msiska in January 2000, driven by her vision of creating a black woman-owned construction company. Since then it has gone from strength to strength, carrying out numerous mining, industrial, energy, power and environmental sector projects. Khulani’s reputation, Msiska says, is built on “providing good quality work to all our valued clients” as well as “continuous skills development for our staff in order to ensure excellence at all times”.

Infrastructure and ethics

The two focuses of Khulani’s business are infrastructure and building, which focuses on industrial, mining and other areas requiring large construction projects, and plant operation, providing procurement, commissioning, and repair and refurbishment of company machinery. Assets managed and maintained by the company include tower and mobile cranes, concrete batching plants, concrete truck mixers, and large scaffolding systems. Kuhlani’s fleet of vehicles includes excavators, bulldozers, tipper

“Throughout these twin operations Kuhlani cultivate sustainability, positive practices, and a company ethos that values ethical ways of working.

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K h u l a n i

trucks and all manner of road surfacing machines.

“One year later, Khulani looks set to thrive, with a solid order book and a strong strategy to co-ordinate the company’s operations.

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Throughout these twin operations Kuhlani cultivate sustainability, positive practices, and a company ethos that values ethical ways of working. The company strives to manage the impact of their operations in terms of emissions, disruption and employee health and safety, as well as enforcing positive corporate governance and citizenship, and treats discrimination very seriously. Msiska makes her passion for progressive policy and inclusivity clear. “It is my mandate to promote and encourage black South Africans, especially

C o n s t r u c t i o n

young women, to always feel liberated, through the determination to make a success of themselves without focusing on their gender.” The company’s homepage proudly affirms their compliance with South Africa’s Broad-Based Black Economic Empowerment policies. 25% of the company’s employees are women, and it has created over 150 direct and indirect employment opportunities across South Africa, staying true to its aim of enabling economic and social development.

Bridging the skills gap South Africa is experiencing a much-discussed skills gap at present, with more than 63% of businesses currently concerned that they won’t be able to find new employees with the skills required to fill their requirements. Technology and engineering firms like Khulani are among the most concerned with the shortage of skilled employees. Organisations are now looking overseas to find skilled labour, with many recruiting from Indian and Chinese labour markets. Many CEOs say that creating a

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A turbulent industry

Southern Africa’s construction sector has faced many challenges in recent years, with labour unrest, constant economic setbacks and upheavals and substantial delays on major construction

projects. Co-ordination and management in the industry was blamed, as was a lack of risk and performance management, leaving many contractors open to significant setbacks around minor negative events. Nonetheless, the industry adds significant value to South Africa, and looks set to have a bright future – if firms can cope with short-term liquidity needs. In particular, modernisation and growth in transport infrastructure and retail construction are tipped as some of the larger growth areas in the industry, and Khulani is well equipped to take advantage of this growth. However, the company itself has not been immune to the trials of the industry over the past

few years. Two years ago, the new leadership team at Khulani implemented a one-year strategy for Recovery and Growth through the COSI institute in Chicago, stabilising the business and helping to remedy the underperformance of the company in recent years. “We shall make it” became a catch-phrase used by the company to boost morale. One year later, Khulani looks set to thrive, with a solid order book and a strong strategy to co-ordinate the company’s operations. “All of this has come from hard work,” says Msiska. “I put in countless hours in order to make sure that the company remains on course. Commitment, care and dedication – that is what you need for the best results.”

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Coega w w w . c o e g a . c o . z a

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Diversified

Coega Development Corporation

Founded in the summer of 1999, the Coega Development Corporation is a state-owned company entrusted to manage the highly-coveted Coega Industrial Development Zone (IDZ) – a significant responsibility, considering it includes 11,500 hectares of industrial land. On top of this, Coega’s primary aim is to attract investors to the site in an effort to increase socioeconomic growth within South Africa and bolster the area’s status as an investment hotspot.

For the Coega Development Corporation, nothing is done on a small scale. Managing 11,500 hectares of land in South Africa, it has signed investments worth billions and generated more than 62,000 jobs both locally and overseas.

Coega’s target investors are within export-oriented industries, not least because of the industrial development’s location. The vast plot is adjacent to the Port of Ngqura, a deep water harbour and transhipment hub that’s the largest IDZ in the Southern Hemisphere and acts as a convenient gateway to the rest of the global market. Thus far, Coega’s investors largely span across the automotive, energy and construction industries, with companies specialising in everything from steel and air products to wind towers and cold storage. Additionally, Coega not only offers an opportune location

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D e v e l o p m e n t

– one that’s also within reach of the Nelson Mandela Bay Metropolitan Municipality – but a wealth of money-saving advantages. Investors who choose Coega also benefit from tax incentives and rebates within a duty-free zone, not to mention ample space for large-scale buildings such as factories.

More than just property management

Never one to be limited, Coega’s operations span much further than just managing the IDZ. Coega also provides its investors with business management, human resources and strategy services, all aimed to get companies off their feet and thriving. Coega has also been tasked with helping advance the delivery of infrastructure within the Eastern Cape and KwaZulu-Natal regions, through addressing issues like constrained planning and project management capacity, skill shortages

Investors who choose Coega also benefit from tax incentives and rebates within a duty-free zone, not to mention ample space for large-scale buildings such as factories

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C o r p o r a t i o n

and under-expenditure. When it comes to improving unemployment, Coega has met the task head-on. The Top Employers Institute estimates that Coega has created some ‘62,000 jobs in both local and foreign direct investment’, and subsequently contributed an estimated 2.5% gross domestic product to the local area. As a result, they have been awarded the organisation’s Top Employer Award in South Africa for 2016. The corporation is also committed to growing internally. Beginning in 2011, Coega has since branched out so that its project management services assist not only those found on the IDZ but schools, hospitals and road-building projects, working alongside clients like the South African Departments of Health and Education. As the need for various resources within South Africa expands and their range of clients continues to grow, Coega is devoted to meeting the challenge.

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D e v e l o p m e n t

Investors are confident in the Coega IDZ’s ability to withstand tough times, as such they continue to experience consistent growth year-on-year

On the horizon

Stagnancy within the IDZ is scarce – in the past two fiscal years alone, four of Coega’s investors have opted to expand their facilities within the IDZ. ‘These numbers are impressive, given the macroeconomic challenges facing the domestic and global markets,’ Coega’s Head of Marketing & Communications Dr Ayanda Vilakazi told website RNews. ‘Investors are confident in the Coega IDZ’s ability to withstand tough times, as such they continue to experience consistent growth year-on-year.’ One such expansion has occurred with Coega investor Dynamic Commodities, an agro-processing company. Announced earlier this year, the plan is to tack on an additional warehouse and refrigerated storage facility to Dynamic Commodities’ property, thus generating 500 jobs in total and the resources necessary for expanding the company’s

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clientele. The expansion also allows ‘farmers the opportunity to grow produce on contract specifically for the [IDZ] factory,’ Coega Business Development Senior Manager Johan Fourie told RNews, ‘and in this way, create jobs and opportunities for local farmers who would otherwise not have had a market for their products.’

C o r p o r a t i o n

On top of this, Coega is beginning to see an uptick in dealings with China, one that holds much potential for continued growth. As a result of a recent meeting which included Chinese Prime Minister Xi Jinping and South Africa’s President Jacob Zuma at the Forum on China-Africa Cooperation in Johannesburg at the end of last year, the two Heads of State signed 26 bilateral agreements, according to Engineering News. These agreements reportedly allude to China’s strengthening faith in South Africa’s investment potential. It has already lead to the Beijing Automobile International Corporation signing a multi-billion South African Rand deal with Coega, and, if all goes according to plan, this will only be the beginning.

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