lifecycle services
Why rent?
• Focus on your core business
• Scale up your existing fleet
• Pay only for the equipment and services you need
• Eliminate costs
Every day we solve water for our construction, mining, municipal, and industrial customers across Africa and around the world.
By partnering with Xylem, you can rent best-in-class pumping equipment, without capital expenditures. Plus, you gain access to our skilled engineers, product experts, and service technicians who will keep your operations running. Get fast access to regional engineering and application expertise, and our broad range of Godwin and Flygt pumps.
Get it right every time
Unlike most, we design, build, test, and rent our own equipment. Our deep knowledge of the product means we’ll always select and apply the right solution for your needs. With over 100 years of heritage behind both our Godwin and Flygt brands, you can trust us to solve your most complex and urgent dewatering needs.
Maximize productivity
Access to the world’s largest pump rental fleet means you will have equipment when you need it. 24/7 delivery and service keeps your operations running smoothly and efficiently.
Gain cost control
Get your application sized correctly the first time so you don’t pay for a job twice. Our experts will analyze your job’s operating conditions and select the most cost efficient solution from our broad range of diesel or electric driven pumps.
Expert service.
No-hassle equipment maintenance. Seamless operations.
Delivering on the promise of safe, compliant, always operational water is more challenging than ever across all sectors and water applications.
From severe weather and outdated infrastructure to a lack of expertise and staffing shortages, today’s obstacles often lead to unpredictable breakdowns, reactive maintenance and unforeseen costly repairs.
A Preventative Maintenance Agreement (PMA) with Xylem provides proactive, expert equipment maintenance services, regardless of the manufacturer, tailored to your needs and budget.
Xylem innovates and collaborates with global reach, combined with local know-how, to champion those who make water work every day.
Together, we are building a more water-secure world.
xylem.com
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Towards a sustainable energy future in Africa
The African continent is rich in traditional energy sources and has enormous potential for renewables. However, many countries are still energy-poor and lack investment in the sector to enable them to develop. CLG CEO Zion Adeoye explains the issues hindering investment and highlights Africa’s potential as an energy powerhouse, the strategies needed to boost development, and South Africa’s role in helping the continent meet the demand for sustainable energy solutions.
Zion Adeoye: Chief Executive Officer & Managing Partner
Zion Adeoye is the Chief Executive Officer at CLG, overseeing Legal Affairs in Project Finance, Infrastructure, Real Estate, Taxation, and Energy law. He advises clients across Africa on major energy deals, particularly in South Sudan, Uganda, Nigeria, Zambia, Equatorial Guinea, Congo, Ghana, Gabon, and Senegal. Previously, Zion was Lead Transaction Counsel at Transnational Energy Group, managing significant Oil & Gas and Power projects in Nigeria. He also worked at KPMG Nigeria and NNPC, advising multinationals. A strategic adviser for the Nigerian Petroleum Act amendments, he is completing his MBA at the University of Dundee and holds degrees from the University of Ibadan, Nigerian Law School, and Columbia Law School. Admitted to the Nigerian Bar, he is a member of the Nigerian Bar Association and AIPN.
There is a lot of excitement about energy opportunities. How is this translating into tangible investment in Africa? Africa is where energy is needed the most. Currently over 600 million people have no access to electricity. Interestingly Africa is where the world will benefit the most from energy availability because it has the world’s largest deposit of untapped resources (human and mineral) that will shape the future of the world.
The fact is that Africa is blessed with a combination of traditional energy sources and significant potential for renewables. Unfortunately, the continent is not enjoying the required level of investment in energy, especially with the continent’s vast oil, gas, and renewable resources for a number of reasons.
While a lot of sentiments and politics continue to get in the way of adequate financing for Africa’s energy needs, the silver lining is that African governments are taking the right steps across the board by implementing policies to attract foreign direct investment (FDI) and private sector participation in energy, including introducing favourable and inclusive licensing conditions, sectoral liberalisation and opening up partnerships between public and private sectors.
ZION ADEOYE | CLG CEO
Translating this into tangible results requires sustained efforts in infrastructure development, regulatory alignment, and risk mitigation. Tough decisions will have to be made to ensure that fair deals are being secured in the face of the significant pressures including the sheer understanding of the degree of investment required in the energy sector.
What are some of the key challenges for investors in the African energy space? Investors face several challenges, with regulatory uncertainty, political instability, currency fluctuations, and infrastructure deficiency having the most significant impact.
Additionally, in many African countries, self-inflicted wounds such as bureaucratic delays and inconsistent enforcement of policies can make the investment environment untenable for investors.
Legal frameworks across the continent vary significantly and navigating them without local expertise often makes the bad cases worse.
Finding credible local partners is another issue investors face, even though African countries and project owners have fared better in recent times with the logistical challenges of large-scale energy projects, including the planning and negotiation.
How does CLG help mitigate these challenges?
CLG plays a critical role in helping investors navigate these challenges by providing tailored legal, regulatory, and advisory services. With a strong presence in both frontier and established markets, CLG offers a bootson-the-ground approach, which ensures deep local expertise and effective risk management.
We believe that the availability of world class lawyers and business advisers to assist investors in navigating the local business environment is itself a key incentive for investment. We have therefore curated a team of over 300 lawyers and business advisors with world-class training and experience across the continent.
Investors can rely on CLG’s expertise and quality in both frontier and established markets, and we particularly take pride in the fact that we are the frontier market leaders on the continent by far.
The firm provides project-critical services such as assisting with the securing of necessary permits, contract negotiation, regulatory compliance, and providing strategic advice to optimise operations and reduce exposure to risks.
Additionally, CLG’s multidisciplinary and multilingual teams across Africa, which include tax professionals, immigration specialists, and energy lawyers, offer comprehensive support throughout the lifecycle of energy projects.
Tell us a bit about the energy opportunities that South Africa can tap into from a local, continental, and global perspective.
South Africa is well-positioned to leverage its abundant natural resources, including its rich solar and wind energy potential, to meet both local and continental demand. The country’s Renewable Energy Independent Power Producer Procurement Programme is a standout initiative, attracting significant investment and paving the way for increased renewable energy deployment.
On a continental scale, South Africa’s sophisticated financial and legal systems make it an ideal hub for energy investments, particularly in renewable energy projects. Globally, South Africa can play a pivotal role in helping the continent meet the world’s growing demand for sustainable energy solutions, while also facilitating cross-border energy trade through networks under its leadership like the Southern African Power Pool.
In South Africa our rich mix of clients have been wellserved by our experience in multiple jurisdictions and the business advisory reflexes we continue to pick up by the second. We have, therefore, not only become trusted hands for our clients, but to our competitors as well, who continue to call on us to support their clients across the continent.
Africa's abundant renewable resources provide a unique opportunity to build a sustainable energy future that could serve as an example for the rest of the world. This will, however, require significant investments in infrastructure, policy alignment, and the development of human capital to manage and operate energy projects.
Meet the
CLG team
CINDY ONEYKA OJOGBO Deputy Managing Partner at CLG
Cindy Oneyka Ojogbo
Cindy Oneyka Ojogbo embodies the essence of legal excellence at CLG, where her journey reflects a profound commitment to the legal profession.
“I am qualified to practise in both New York State and Nigeria, having earned my degrees from Columbia University and the University of Ibadan. As I’ve honed my skills to better align with industry demands, I’ve specialised in Projects and Finance to leverage my analytical and problem-solving strengths. Over time, I have been drawn to the intricate intersection of law and finance, particularly within the energy and infrastructure sectors. This is undoubtedly one of the fastest-evolving sectors on the continent, with energy needs playing a critical role in the much-needed industrialisation of Africa,” says Oneyka Ojogbo.
“The opportunity to work on transformational projects, especially in emerging markets, has been incredibly fulfilling. There’s a unique challenge and reward in helping to build the legal frameworks and structures that support development in these regions. Whether advising on cross-border energy projects or structuring finance for infrastructure initiatives, I find immense professional satisfaction in contributing to efforts that yield long-term, tangible benefits for communities and economies.”
Having dedicated nearly seven years to CLG, Oneyka Ojogbo has witnessed the firm’s growth alongside her, embracing its innovative, Africa-focused vision. She champions a client-centred approach, ensuring that legal strategies align seamlessly with business objectives while navigating the diverse regulatory landscapes across Africa.
Manuel Oliveira
As a leading legal expert and Partner at CLG Equatorial Guinea, Manuel Oliveira has built a career rooted in the conviction that law is the ultimate tool for societal transformation. With a solid corporate and financial law foundation, Oliveira has played a pivotal role in guiding investors and businesses through the complex regulatory landscape of the CEMAC Special Economic Zone.
Oliveira: “I am of Equatorial Guinean origin and completed my legal studies at the University of Zaragoza in Spain, where I earned my law degree. I later pursued a specialisation in Corporate and Financial Law at Widener University in Delaware, United States. My career has largely focused on providing comprehensive legal advice to investors and companies within the CEMAC Special Economic Zone. I chose to become a lawyer because I believe law is a powerful tool for societal transformation. It offers me the opportunity to influence others and engage meaningfully in the dynamic world of business and corporate law.”
MANUEL OLIVEIRA
Partner at CLG, Equatorial Guinea
When questioned about managing compliance and conflicting regulations across African countries, Oliveira says, “We adopt a global compliance framework with internationally accepted minimum standards, which we then customise to align with the specific legal requirements of each jurisdiction. This flexible approach ensures the framework is adaptable enough to be fully implemented in various countries while maintaining consistency across the board.”
Yves Ollivier
Yves Ollivier is a seasoned legal professional with an impressive background and diverse legal expertise. His journey through the legal world and his deep understanding of the African legal landscape have positioned him as a pivotal figure in CLG’s operations. With a specialisation spanning multiple areas of law, Ollivier’s contributions continue to shape the energy and business sectors across Africa.
“My expertise lies in business law, but my experiences in the Congo and Cameroon have expanded my specialisation into energy law, maritime law, competition law, and labour law, among others. I’m qualified to practice in these jurisdictions, with a particular focus on the legal frameworks affecting businesses,” says Ollivier.
“I ensure that I adhere to local laws, regardless of the global context. This ensures that my legal strategies remain relevant and applicable to the jurisdiction I’m working in,” he adds.
“One of my proudest achievements was the amendment of the electricity distribution contract between ENEO and the State of Cameroon. I was present when the amended version was signed by the Minister of Finance and the Minister of Energy, marking a significant milestone in my legal career.”
YVES OLLIVIER
Managing Director at CLG, Pointe-Noire
Rachel Mushabati
Mushabati has carved a niche in commercial law, oil, and gas, where her expertise and innovative approaches have earned her high regard. Although unplanned, her journey into law is a testament to her dedication to societal betterment and her relentless pursuit of excellence.
“I hail from Namibia, where I completed my Bachelor of Laws (Hons.) degree at the University of Namibia and became an admitted practitioner of the High Court of Namibia. Interestingly, law wasn’t my initial career path, but today I am fuelled by a profound passion for the legal space and the desire to contribute meaningfully to the progress of our society,” she says.
“My focus is on commercial law, with a strong emphasis on the oil and gas sector. I am qualified to practise in Namibia, and my expertise lies in navigating the intricate legal frameworks of the energy industry, ensuring compliance, and facilitating key transactions. Staying ahead in this everevolving field requires continuous learning. I attend industry conferences, take specialised courses, and maintain strong networks with peers across different sectors. Regulatory updates and must-read legal blogs are also essential tools that ensure I remain on top of legal developments and ready to tackle new challenges.”
“One of my proudest moments was drafting key agreements and providing strategic advice that led to the establishment of fully Namibian-owned service stations. Additionally, my contributions to the groundwork for Namibia’s first oil discoveries mark a significant milestone, not just for my career, but for Namibia’s burgeoning energy sector.”
Leon van der Merwe
Van der Merwe’s career is built on faith and a commitment to justice. His expertise spans corporate, commercial, and regulatory law, while his mission aligns with serving clients across Africa.
“I specialise in Corporate Law, Commercial Law, Law of Contract, General and Commercial Litigation, Insolvency, Compliance, Property Law, Regulatory Law, Competition Law, Company Law, and Risk Management. My work involves drafting and negotiating complex contracts, conducting in-depth risk analyses, and providing detailed corporate advisory services. My jurisdictional reach spans across Africa, with a primary focus on South Africa and several other African nations where my expertise is applied,” says van der Merwe.
Committed to the legal profession, he adds, “I joined CLG in 2019, and what captivated me was the diversity and richness of the firm’s work – cross-border deals, interacting with different legal systems, and collaborating with a multitude of cultures across Africa. It’s like having a treasure map of the continent, with each client and case offering a new discovery. My love for Africa – its people, laws, and untapped potential – finds its perfect platform in CLG, where we are deeply connected to the intricacies of the continent’s evolving legal landscape.”
Van der Merwe highlights that strategy is paramount in the legal sphere. “I begin by crafting a solid legal framework
and then work to align it with my clients' goals and expectations. It’s a process of fine-tuning and collaboration that ensures both the vision and the legal realities are in sync. This thoughtfulness creates a strong alignment between strategy and execution, which is key to delivering effective results.”
LEON VAN DER MERWE
Director at CLG, South Africa
RACHEL MUSHABATI
Senior Associate Attorney and Country Head at CLG, Namibia
CLG: leaders in law
CLG is a premier legal and business advisory firm dedicated to providing innovative solutions that empower our clients to navigate the complexities of today’s legal landscape. As the first Africa-focused firm to be listed on the German Stock Exchange, we combine a strong presence across more than ten countries with a diverse team of over 300 attorneys and business advisors from more than 50 nationalities to deliver tailored services.
We understand that our clients face unique challenges that require legal knowledge, strategic foresight, and practical solutions. Our multidisciplinary teams are equipped to handle various issues, ensuring that our clients receive comprehensive support tailored to their specific needs.
Our Rebranding
In response to the evolving demands of the legal industry, we have undertaken a strategic rebranding initiative. Our new identity reflects our commitment to excellence, adaptability, and a forward-thinking approach.
Our Presence
With offices strategically located in key regions, CLG is positioned to serve many clients, from multinational corporations to local enterprises. Our experienced professionals understand our clients' unique legal and business challenges, enabling us to provide practical, context-driven solutions.
Core Practice Areas
We specialise in a wide range of practice areas, including:
• Energy and infrastructure
• Tax and investments
• Mining, metals and natural resources
• Agriculture and agro-allied industries
• ESG and sustainability
• Corporate and commercial
• Sports and entertainment
• Dispute resolution
• Banking and finance
• Employment and business support
• Technology and innovation
• Regulatory and compliance
CLG Plus
CLG Plus offers unique opportunities for Africafocused businesses growing into new territories or upscaling local offices. Large companies can utilise our flexible lawyers and advisors to upscale quickly, take on new projects, or expand into new markets while benefiting from the quality control and knowledge base provided by CLG’s head office in Johannesburg.
CLG Plus combines the strengths of independent, European, and North American-trained lawyers and advisors with CLG’s local networks for international law firms expanding in Africa or taking on new projects. This ensures that global firms have the skills, people, and experience necessary to tackle specific projects across a full range of practice areas swiftly and confidently. When your business sees an opportunity, you must rapidly grow your skills and team. CLG Plus provides lawyers and advisors who work within your company on a project basis.
At CLG, we are legal advisors and partners in our clients' success and are committed to delivering exceptional service.
Import duty to stimulate skills development opportunities
By Teslim Mohammed Yusuf (Executive for Planning, Monitoring and Evaluations at EWSETA) and Prof. Raj. Naidoo (Head of the Department of Electrical, Electronic, and Computer Engineering, University of Pretoria)
The significant growth in South Africa’s solar photovoltaic (PV) market and a recently implemented 10% import duty tax by the Minister of Finance, Enoch Godongwana, on solar photovoltaic (PV) panels, cells, and modules presents a skills development opportunity for the country.
Various factors, including government policies, decreasing costs of solar technology, and increasing awareness of renewable energy benefits, drive the growth in the PV market. According to a Mordor Intelligence report, South Africa’s solar PV installed capacity grew from 1,064 MW in 2014 to 5,664 MW by 2023. The market is projected to continue expanding, with the government targeting a solar PV capacity of 8,400 MW by 2030 and 18,000 MW by 2050
This anticipated growth could provide South Africa with numerous economic and skills development prospects. In an effort to boost local solar panel manufacturing in the country, Finance Minister Enoch Godongwana signed a 10% import duty on solar photovoltaic
(PV) panels, cells, and modules on 28 June 2024, which came into immediate effect.
The solar PV import tax is a component of the broader South African Renewable Energy Masterplan (SAREM), which aims to create 25 000 jobs by 2030 and attract ZAR15bn in new investments through green energy initiatives. The SAREM seeks to leverage the increasing demand for renewable energy to boost industrial development and job creation.
With increased opportunities for local development and manufacture of solar PV panels, cells, and modules comes a need for improved and increased local skills."
China leads the way in manufacturing solar panels According to the International Energy Agency (IEA), China controls over 80% of the global manufacturing stages of solar panels. This dominance in the solar panel manufacturing industry has allowed China to significantly drive down the cost of solar energy globally.
With increased opportunities for local development and manufacture of solar PV panels, cells, and modules comes a need for improved and increased local skills. The Energy and Water Sector Education and Training Authority (EWSETA) has embarked on several innovative and impactful partnerships to fill this gap.
As a result of a partnership between EWSETA and the Chinese Culture and International Education Exchange Centre (CCIEEC), 54 learners and six lecturers from six Technical Vocational Education and Training (TVET) are currently in China for a year-long experiential learning programme in the field of solar PV manufacturing.
The programme will leverage Chinese experience and technology in education, enhance the technical quality of participating South African TVETs through international collaboration, integrate educational programmes with industry, and provide students with practical skills and real-world experience.
From a skills development perspective, the programme will address critical skills for renewable energy and other sectors, as well as prepare students and educators for emerging technologies and industries.
Promoting gender inclusivity in the energy sector
Another innovative project demonstrating EWSETA’s commitment to advancing skills development in the Renewable Energy sector is the United States Agency for International Development (USAID) partnership in support of Power Africa, a U.S. government-led partnership and the United Nations Development Programme (UNDP).
In its second phase, this programme has realised the training of women electricians and artisans at three TVET colleges in Mpumalanga during phase 1. Phase 2 saw 140 women put through their paces at seven TVET colleges in Limpopo.
Through targeted training and capacity building, the EWSETA is creating pathways for women to enter and excel in this dynamic industry. It epitomises
our steadfast commitment to amplifying women’s engagement in historically underrepresented domains.
As the renewable energy sector expands, these trained women will be pivotal in driving innovation, fostering local entrepreneurship and promoting environmental sustainability. This programme advances the Just Energy Transition and catalyses broader socio-economic transformation. By investing in women empowerment and renewable energy education, we are building a more sustainable energy future and paving the way for a more equitable and prosperous society for all.
Programmes like these, which forge local and international strategic alliances, will prove to be crucial in propelling skills development, capacitating our TVET Colleges and championing gender inclusivity within the energy sector.
www.ewseta.org.za
keeping South Africa's data centres lit and reliable Renewables rule:
Our data centres are feeling the heat – not in a good way. These digital powerhouses not only keep our online world spinning but are also fuelling the recent AI revolution – yet their everexpanding capabilities hinge on one critical requirement: an uninterrupted power supply.
By Mandy Hattingh, Senior Associate, NSDV
Renewable energy has emerged as a promising solution to this pressing issue. By harnessing abundant solar and wind resources, coupled with battery storage to account for intermittency, South Africa could secure a stable energy supply for its data centres. This approach addresses the immediate need for reliable power and aligns with national and global efforts towards sustainability.
The global appetite for digital services drives unprecedented demand for data centre capacity, with significant implications for energy consumption. The International Energy Agency highlighted in its 2024 Electricity Report that data centres, AI, and cryptocurrencies accounted for 2% of global power generated in 2023. This figure is expected to more than double year-on-year until 2026, with some researchers considering even this estimate conservative.
To put this into perspective, a single query to ChatGPT uses approximately as much electricity as it takes to power a light bulb for 20 minutes – about ten times the energy of a standard Google search. As AI becomes more sophisticated, its energy demands increase correspondingly. Recent sustainability reports indicate that Google’s power usage was up 48% in 2023 compared to 2019, and Microsoft’s was up 29% from 2020.1 Each of these companies attributes the rise to the development of AI.
South Africa’s situation is particularly challenging. The country battles with an energy availability factor hovering around 70%, significantly better than Nigeria’s 35%, but it is still far from ideal. Loadshedding has become a daily reality, affecting individuals and businesses and hampering the country’s ability to attract and maintain data centres crucial for economic growth and technological advancement.
The
advantage of AI data centres
However, this challenge presents a unique opportunity. Unlike traditional data centres, which require proximity to urban centres for low-latency services, AI data centres have more flexibility in their location. They can be strategically positioned closer to renewable energy sources like solar or wind farms, often in more remote areas. This proximity can significantly reduce the need for long-distance power transmission, which often results in energy losses and increased costs.
By adopting this approach, South Africa could address its data centre power needs and contribute to broader energy access goals. For instance, these renewable-powered data centres’ excess capacity could be shared with local grids, benefiting nearby communities.
Recent developments in South Africa show promise in this direction. The publication of Exclusion Norms for solar PV and battery facilities from specific environmental authorisation requirements under the National Environmental Management Act, 1998 is a step towards streamlining the development of renewable energy projects. Additionally, amendments to the Electricity Regulation Act of 2006 have made it easier for some projects to avoid licensing requirements from the National Energy Regulator of South Africa (NERSA).
However, the country has also seen some setbacks. The 2023 tax break for solar panel installations, which contributed to a 349% surge in rooftop solar capacity between March and June 20232, was not renewed for the 2024/25 financial year. Moreover, a recent 10% tariff on imported solar panels, while boosting local manufacturing, may inadvertently discourage investment in solar infrastructure due to increased costs and limited regional supply.
Examples from other African countries may provide solutions
Looking at examples from other African countries could provide valuable insights. For instance, in 2013, Burkina Faso exempted solar energy equipment from import duties and VAT for five years, which saw a surge in demand, while Cameroon offered a full VAT exemption for equipment used in solar PV panels until 2025. Nigeria provides income tax holidays to manufacturers engaged in renewable energy production.
Novel solutions like floating solar installations, which have shown promise in countries like Ghana, Rwanda, and Ethiopia, could also be explored in South Africa. These installations can generate significant portions of national energy demand while utilising existing water bodies.3 These installations could be implemented in man-made reservoirs and dams, thereby preserving the natural environment.
As South Africa aims to position itself at the forefront of the AI revolution and reap the benefits of this expanding industry, it must take decisive steps to incentivise the development of data centres powered by renewable energy. This approach addresses the immediate power needs of data centres and contributes to the country's broader energy security and sustainability goals.
South Africa can transform its current energy challenges into opportunities by leveraging its abundant renewable resources and implementing supportive policies. This would ensure reliable power for data centres and position the country as an attractive destination for sustainable tech infrastructure, driving economic growth and innovation in the process.
Novel solutions like floating solar installations, which have shown promise in countries like Ghana, Rwanda, and Ethiopia, could also be explored in South Africa."
Reference:
1. https://www.npr.org/2024/07/12/g-s1-9545
2. https://businesstech.co.za/news/energy/709246
3. https://theconversation.com/floating-solar-panels-couldprovide-much-of-africas-energy-new-research
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meaningful change ESG can impact
Conway Williams, Head of Credit at Prescient Investment Management, shares insights with South African Business Integrator about ESG within the investment landscape.
CONWAY WILLIAMS | HEAD OF CREDIT AT PRESCIENT INVESTMENT MANAGEMENT
ESG has been a buzzword in the business field for several years. Is enough attention, resources, and investment being made to drive efficient ESG initiatives?
We are aware of the ongoing debate about and criticism of including ESG criteria in investment decisions. Still, we believe it is invaluable for assessing non-quantitative risks and fostering sustainable investment practices. It is evolving and maturing and firmly belongs in the toolkit of modern investors.
The importance of ESG integration in investment today cannot be understated. Research consistently affirms that considering ESG factors helps make informed investment choices and mitigate long-term risks. In Regulation 28 of the Pension Funds Act, fiduciary investors are encouraged and mandated to consider both quantitative and qualitative risks in their decision-making process, including ESG factors.
For ESG to enact meaningful change, however, the industry must make a collective effort. We believe there should be a common assessment methodology: a framework that ensures ESG is rigorously evaluated and implemented across the investment spectrum in a standardised and consistent manner for all stakeholders.
We seek collaboration and engagement with the industry to drive this vision forward. By collectively working towards a shared understanding of the seriousness of embedding ESG factors, we can redefine the norms of our industry and shape a future where ESG is a fundamental aspect of investment decisions. ESG delivers benefits to all stakeholders in the investment ecosystem. The benefits include enhanced risk management, improved longterm returns, positive societal impact, and a resilient, sustainable economy. Prescient Investment Management (Prescient) remains committed to championing ESG integration, recognising its vital role in securing a sustainable and prosperous future for everyone. We envisage a promising future for ESG.
What trends are you seeing from investors concerning ESG – locally and globally?
As a South African asset manager with a diverse investor base, we are seeing the following:
1. Increased demand for sustainable investments Investors are showing a growing preference for ESGaligned assets. Given the importance of energy security in SA, renewable remains a key focus area. Further, it is driven by heightened awareness of climate change and regulatory pressures.
2. Regulatory and policy influence
• Regulation, particularly in South Africa with frameworks like Regulation 28, pushes investors towards ESG considerations. Globally, the push from regulatory bodies is increasing.
• Investors, especially in South Africa, are increasingly integrating ESG factors into their risk management frameworks, recognising that these considerations are essential for long-term portfolio resilience and sustainability.
• There is a more substantial alignment with global ESG standards, such as the UNPRI, and adherence to local guidelines like CRISA. This has led to increased investor scrutiny of ESG practices, particularly in South Africa, where Regulation 28 has heightened the importance of non-financial risk assessment in fiduciary duties.
3. Focus on impact and measurement (and reporting)
• Globally, there is a trend towards investing in ESGfriendly assets and measuring their impact.
• Our investors are not just asking for this; it is increasingly becoming a mandated practice. With this being said, clients are detailing their need for transparent reporting and measurable outcomes in their ESG investments.
• Globally, this is also the case – investors demand more transparency in ESG reporting. They seek detailed disclosures on how ESG factors are integrated into investment decisions, the impact of these investments, and how they contribute to sustainable development goals.
4. Integration of ESG in core/vanilla offerings
• Given global backlash and negativity towards ESG, we see investors moving beyond thematic ESG funds to integrate ESG factors into traditional investment strategies.
• This shift is driven by the recognition that ESG considerations can enhance long-term returns and reduce risk, making it a critical component of comprehensive portfolio management.
5. Growing interest in impact investing
• There is a notable rise in interest in impact investing, particularly in renewable energy and infrastructure projects that deliver measurable social and environmental benefits.
• Given the South African developmental narrative (and socio-economic issues), our research and reading into the situation suggest that this trend is attracting renewed interest, with investors seeking to address local challenges, such as energy security and socio-economic development, through their investments.
How does ESG enable sustainable growth and a competitive advantage?
At Prescient Investment Management, we have long championed integrating ESG factors into our investment processes. Our commitment to responsible investing is rooted in a systematic, datadriven approach that ensures our clients benefit from sustainable, risk-adjusted returns. We view ESG integration as a critical component of comprehensive risk management.
Integrating ESG considerations into the investment process provides a deeper understanding of potential risks and opportunities. For instance, environmental risks like climate change can affect asset values, while social issues such as labour disputes can disrupt operations. Governance lapses may lead to regulatory penalties and reputational damage.
By thoroughly analysing these non-financial factors, investors can anticipate potential risks more effectively and proactively address them. This comprehensive approach fortifies individual investments against unforeseen challenges and contributes to their entire portfolio’s overall resilience and stability. This ensures a more robust and sustainable investment strategy, prompting fund managers to consider risks holistically and consider how investments can weather market fluctuations and other external pressures.
Research has shown that companies with effective environmental stewardship, strong social responsibility, and robust governance practices tend to perform better operationally, experience lower volatility, and demonstrate higher resilience during market stress. These companies are more sustainable, generate more resilient cash flows, and are in a better position to honour their debt obligations. Conversely, avoiding companies with poor ESG practices helps sidestep regulatory fines, reputational damage, and operational disruptions, which put cash flows at risk.
SA Renewables Energy Market Update
Prescient's Clean Energy Fund has committed over R4 billion to 30 initiatives over the last decade. These investments have added 2.2 gigawatts of clean energy to the grid, equivalent to powering one million average South African households. Conway Williams, Head of Credit at Prescient Investment Management shares some insights.
Recap of key events
• We await the finalisation of the Draft Integrated Resource Plan, however, given the recent separation of the Department of Mineral Resources and Power/ Energy, we believe this process will be reviewed.
• The DMRE announced an extension of the bid submission deadline for REIPPPP Round 7 and the deadline for BESIPPPP Round 2. Further to this, it released the RFP for BESIPPPP Round 3. This calls for bids to be submitted for 616MW of battery energy storage projects in respect of five substation sites located in the Free State Province, which were preselected by Eskom.
• The Minister of Forestry, Fisheries and Environment detailed measures to streamline authorisation of Renewable Energy and Battery Storage Facilities.
• The National Nuclear Regulatory Amendment Bill was adopted by the National Assembly in March 2024. However, we highlight a continued challenge to the ministerial determination for new nuclear power.
Market opportunities
A key theme continues to be the looming risk of refinance. As the market evolves, careful consideration must be given to the implications of refinance on fund returns and pricing strategies for future investment rounds. Maintaining fund yields amidst evolving market dynamics remains a priority.
Looking ahead, the outlook for our portfolio remains promising as we continue to grow our pipeline. We anticipate continued outperformance relative to benchmarks, driven by our robust pipeline and disciplined investment approach. From a market
perspective, while we note that senior debt spreads are tightening, we remain discerning in our selection process, prioritising opportunities that align with our investment objectives. The flexibility to optimise fund performance through strategic swaps further strengthens our position.
Medium-term risks and opportunities
• Demand for renewable energy deals continues to grow while assets remain scarce. However, we note the continued risk around the grid, which, in our view, could be counterbalanced by interposing independent transmission providers. While challenging, this presents capital providers with a further means to deploy capital into the system.
• Institutional investors are considering various options, from traditional REIPPP to private power to independent transmission players.
• In the medium term, the prospect of earlier project refinance poses a potential risk. However, we observe a gradual uptake as developers prioritise new Bid Windows. Our approach allows us to opt out of refinance opportunities if they do not align with our risk-return criteria.
While the SA renewables energy market faces specific challenges, the prevailing opportunities and our strategic approach position us well to navigate and capitalise on its potential.
Disclaimer: Prescient Investment Management (Pty) Ltd is an authorised Financial Services Provider (FSP 612).Please note that there are risks involved in buying or selling a financial product, and past performance of a financial product is not necessarily a guide to future performance. The value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. There is no guarantee in respect of capital or returns in a portfolio. No action should be taken on the basis of this information without first seeking independent professional advice. This document is for information purposes only and does not constitute or form part of any offer to issue or sell or any solicitation of any offer to subscribe for or purchase any particular investment. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever that may be suffered as a result of or which may be attributable directly or indirectly to the use of or reliance upon the information. For more information, visit www.prescient.co.za
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Accounting
for the E and S in ESG
Environmental, Social, and Governance (ESG) initiatives have grown exponentially in recent years, driven by a heightened awareness of sustainability and ethical considerations among stakeholders and investors. However, integrating ESG into financial analysis presents unique challenges, particularly when measuring their impact and outcomes using traditional financial metrics. Traditional metrics, such as revenue, profit margins, and return on investment, may fall short of capturing the full scope and complexities of ESG initiatives.
By Andrew Harding, FCMA, CGMA, Chief Executive – Management Accounting at AICPA & CIMA, together as the Association of International Certified Professional Accountants
This poses a significant challenge to the finance and accounting profession in how it adapts to leading more significant organisational outcomes and enabling decision-making that creates, measures, and maintains value for a sustainable world. With the rise of social and investor activism, the meanings of "value" and "return on investment" are undergoing dramatic
changes, and the shareholders and the financial services community have had to adjust their expectations about how enterprises create value and measure the impact of their ESG initiatives. The Environment and Social components within ESG drive the shift towards value defined by a much broader set of stakeholders than shareholders.
Unpacking the complexity of ESG reporting
Historically, the finance function has focused on promoting organisational efficiencies and reducing operational costs. However, the role of today’s finance and accounting professional must expand to be at the centre of an organisation’s ESG and sustainability activities, helping to define, enable, and articulate how an organisation creates and preserves sustainable value for the entity and society. An essential aspect of this is how an organisation measures and manages its intangible value, ultimately driving long-term success and profitability. In an ever-changing and complex business environment, we can no longer focus solely on financial data to assess business performance, drive long-term strategies, and generate sustainable value.
In a world where ESG is fast becoming the lens through which an organisation is judged, there is no disputing that ESG has the potential to impact financial value. The challenge for finance and accounting professionals lies in clearly and effectively sharing this information, clearly articulating the value of such investments, and demonstrating their commitment to ESG priorities.
Some of the challenges that ESG presents in terms of integrated reporting
1
The multidimensional nature of ESG factors
Traditional financial metrics are quantitative, focusing on measurable financial data and outcomes. In contrast, ESG factors, particularly environmental and social, encompass a broad range of qualitative and quantitative elements that are not necessarily easily measurable, and the outcomes are often long-tailed in nature. For example, carbon footprint, water usage, and waste management practices are complex and multidimensional. Similarly, community impact frequently involves subjective assessments and long-term societal changes over an extended time frame that cannot easily be directly reflected in financial terms.
2
The long-term horizon of ESG impacts
Traditional financial metrics typically focus on short- to medium-term performance, such as quarterly earnings reports and annual revenue growth. ESG initiatives, however, often yield benefits and outcomes over a much longer horizon, often years in
the making. Environmental initiatives such as investing in renewable energy or sustainable agriculture can take years or even decades to show significant financial returns. Social initiatives such as supporting community development may improve community relations over time, but these effects may be gradual and not immediately apparent in financial metrics. Governance improvement initiatives can lead to enhanced corporate resilience and reduced risk, but these benefits are often realised in the long term and often incrementally.
3
Intangible benefits and risks
ESG initiatives often generate intangible benefits and mitigate risks not easily captured within a traditional financial purview, such as reputational enhancement. Companies with strong ESG practices can build a positive reputation, attracting customers, investors, and talent. This reputational capital is invaluable but not directly measurable through conventional financial metrics.
Furthermore, business strategies that effectively integrate ESG initiatives can reduce operational and regulatory risks, such as avoiding environmental fines, penalties, or labour disputes. These risk mitigations contribute to long-term stability but may not be reflected in financial performance indicators.
4 Complex interdependencies
ESG factors are often interdependent and interconnected, creating complex relationships that traditional financial metrics are not designed to capture. For example, a company’s environmental practices can have significant social implications, such as
the impact of pollution on local communities. These interactions and their impact require holistic analysis beyond financial metrics. Firm governance can enhance overall ESG performance, but this relationship involves multiple variables and feedback loops that are not easily distilled into integrated reports.
While ROI and financial sustainability of the business are rightfully essential considerations for every finance and accounting professional, understanding the interplay between ESG performance and ESG impact is critical. ESG performance is easily measured and quantified, such as investing R1 million in crime prevention measures in a local community. However, measuring the ESG impact of the R1 million investment (performance) is challenging as outcomes and impacts differ. Outcomes are the intended and unintended results and consequences of your activities and are categorised into short, medium and longerterm results. Impacts are long-term outcomes with a broader impact on the community or environment. In this example, the short-term outcome might be reduced crime rates in the local community. At the same time, the longer-term impact may be a stronger sense of community, a deeper perception of personal safety and an increase in families participating in social activities in the evening.
Furthermore, interdependent factors also add to the complexity. For example, there may be a reduction in crime statistics in the community, but can this be solely attributed to the R1 million investment when many parties are working towards the same goal, such as local churches, community policing forums, security providers and the like? Finance and accounting professionals need to be aware of the attribution risks around their performance, especially for listed companies, which potentially impact share price and reputation.
Charting the way forward Source:
AICPA & CIMA’s latest whitepaper, “Future of Finance 2.0: Re-defining finance for a sustainable world”, highlights that organisational performance is no longer judged purely on shortterm financial returns to shareholders. Now, an organisation’s customers, workforce, and investors — as well as governments and society — demand greater transparency beyond the traditional financial metrics.
Finance functions are stepping up to meet the challenges that having a greater corporate sustainability focus presents, acknowledging that it is the lifeblood of resilient organisations. This adoption requires finance teams to embrace their stewardship role fully. Finance and accounting professionals must be able to participate in reporting how the organisation has created value and in co-creating long-term value. An essential aspect of this is how an organisation measures and manages its intangible ESG value, ultimately driving long-term success and profitability.
ESG initiatives and corporate sustainability have a significant strategic impact on the office of the CFO and the finance function. It demands that finance leaders shift from a cost and compliance focus to a resilience and systemic risks focus, from siloed thinking to systems thinking, from assessing financial performance to evaluating performance on the broader economy and society while understanding their organisation’s impacts on the environment and community.
Organisations require finance and accounting professionals with the appropriate skills and knowledge to embed best practices within their operating models and build trust with all stakeholders to successfully make this shift. To this end, AICPA & CIMA are working to provide educational resources to upskill the profession and support its work in helping organisations and economies grow sustainably. Ultimately, how an organisation manages corporate sustainability and its ESG pillars directly impacts the value it creates - or erodes.
The Evolving Landscape of Sustainability Standards is one of the critical topics to be unpacked at the ENGAGE 2024 conference at The Capital Zimbali Resort in Durban, South Africa, from August 21- 23, 2024. AICPA & CIMA will bring hundreds of accounting, finance, and business professionals across Africa and abroad at the three-day conference to discuss the latest trends affecting the profession.
forensics point of view Considerations from a
The election of a new South African government under the leadership of President Cyril Ramaphosa has ushered in a renewed commitment to tackling some of the country’s most pressing issues. Among the key priorities unveiled by the President in his July Opening of Parliament Address were the drive for inclusive growth, the reduction of poverty, and the building of a capable, ethical, and developmental state. These ambitions, while noble, require an equally ambitious approach to governance – one that places accountability, transparency, and stringent financial controls at the core of national policy, writes Annemari Krugel, Director of the Forensic Services Department at BDO South Africa.
From a forensic services perspective, the newly formed Government of National Unity (GNU) has a critical role in addressing systemic corruption and ensuring that government expenditures are aligned with national objectives. The stakes are high, as corruption not only undermines our financial systems but also erodes public trust and threatens the very fabric of our democracy.
One of the most pressing concerns facing the new administration is the prevalence of corruption in public procurement processes. Research commissioned by the South African Anti-Money Laundering Integrated Task Force (SAMLIT) highlights unacceptable levels of corruption in South Africa, emphasising its impact on financial systems and its disproportionate effect on people with low incomes who depend on the state for basic services. If left unchecked, corruption can become institutionalised, further entrenching socio-economic inequality.
In particular, politically exposed persons (PEPs) and prominently influential persons (PIPs) are often implicated in misusing their influence to control public funds. The irregular awarding of tenders to individuals within corrupt political networks is a common scheme, with specifications and awards manipulated to serve private interests rather than the public good. To combat this, it’s crucial for the new government to closely monitor tender processes closely, ensuring that awards are transparent and based on merit.
Banks, too, face significant financial crime risks as perpetrators use various accounts to launder proceeds from irregular tenders. The government must partner with financial institutions to identify suspicious transaction patterns and proactively address these risks as part of a holistic forensic strategy.
The role of internal controls in preventing financial misconduct
Internal controls play a vital role in preventing financial misconduct. Adequate controls signal employees, vendors, and the public that corruption and fraud will not be tolerated. Key to this process is the proactive identification of improper conduct and the individuals responsible for it.
Organisations should regularly review their internal controls, ensuring they remain robust and fit for purpose. This means annual assessments of financial procedures, procurement protocols, and reporting structures for government departments. Fraud examiners, while not directly responsible for the prevention of fraud, can provide invaluable insights by identifying weaknesses in existing controls and recommending improvements.
Fraud examinations, as outlined by the Association of Certified Fraud Examiners (ACFE), offer a comprehensive methodology for resolving allegations of fraud from inception to resolution. These examinations can detect corruption by scrutinising accounting records, personnel files, and transaction reports, among other documents. They also often include digital investigations, where structured and unstructured data is analysed to substantiate evidence of suspicious activities.
Harnessing data analytics and artificial intelligence (AI)
The rapid advancements in data analytics and artificial intelligence (AI) present new opportunities for detecting and preventing fraud. AI technologies like machine learning can identify patterns and outliers in large datasets, helping investigators uncover previously hidden fraud schemes. In a country like South Africa, where resources are often stretched thin, the ability to automate data analysis and derive meaningful insights can significantly enhance forensic capabilities.
By leveraging AI, the government can implement proactive fraud detection measures, reducing the likelihood of financial misconduct going undetected. The use of automated data analysis tools can also help fast-track investigations into high-risk matters, enabling forensic teams to act swiftly when irregularities are identified.
Enhancing transparency and accountability
Increased transparency and accountability in government financial operations can be achieved by mandating the implementation of controls identified during internal audits. This ensures that corrective actions are taken promptly, preventing further misuse of public funds. Technology can play a critical role in this effort. For instance, more businesses are adopting automated data analysis technology to detect fraud, which can be similarly implemented across government departments.
Whistleblower protections must also be strengthened to encourage the reporting of unethical behaviour without fear of retaliation. The training of individuals who receive whistleblower reports should be mandatory, ensuring that these reports are handled with the appropriate level of care and confidentiality.
Empowering government employees
Training and education are essential in equipping government employees with the skills to recognise and prevent corruption. The government should require professional accreditation and continuous employee development training, focusing on global best practices in fraud detection and prevention, which form part of their KPIs. Sharing lessons learned from internal audits, especially by the Auditor-General’s office, can also help build institutional knowledge and foster a culture of accountability.
Ultimately, stringent consequence management processes must address the repeat of wrongdoing by government employees. Financial delegations should be suspended until investigations are concluded, and employees convicted of wrongdoing should have their delegations of authority revoked.
As the new administration embarks on its mandate, forensic services and governance structures must work hand-in-hand to root out corruption, strengthen accountability, and restore public trust in government institutions. By investing in the necessary tools, training, and technologies, South Africa can build the capable, ethical state that its citizens deserve.
water and sanitation Boosting development and finance in
As South Africa faces an intensifying water crisis, the government is spotlighting the water and sanitation sector by shifting from the “business as usual” approach to unlocking innovative funding for increased water infrastructure development.
By Calvin Nchabeleng, Partner and Makgati Makgatho, Senior Associate at Webber Wentzel
On Tuesday, 27 August 2024, President Cyril Ramaphosa approved the South African National Water Resources Infrastructure Agency SOC Limited Bill (the Bill). The Bill aims to establish the South African National Water Resources Infrastructure Agency (the Agency) as a Schedule 2 major public entity under the Public Finance Management Act, 2000 (PFMA). The Bill also provides that the Agency should be incorporated as a company in terms of the Companies Act, 2008 (Companies Act). Thus, the PFMA and the Companies Act will apply to the Agency.
"The Bill offers an opportunity for the Agency to raise commercial and development finance, which unlocks opportunities..."
The Department of Water and Sanitation (DWS) is the custodian of national water resources. This includes large dams that supply raw water to water boards that treat and provide it to municipalities. To fund and implement bulk raw water infrastructure, the DWS uses the Trans-Caledon Tunnel Authority (TCTA), a state-owned entity charged with financing and implementing bulk raw water infrastructure projects. As TCTA does not have a substantial asset base to leverage the funding required for these projects (given that the bulk raw infrastructure is owned by the government and not TCTA), TCTA raises funding to build bulk raw water infrastructure against the back of guarantees issued by the National Treasury.
Given the prevailing economic climate and the National Treasury’s intention to reduce the government’s exposure from guarantees, DWS saw the need for a new mechanism to unlock funding to address the water crisis in South Africa. On reading the Bill, it becomes apparent that DWS, through the establishment of the Agency, is providing a mechanism to further develop and fund national water infrastructure in a manner that is less reliant on the fiscus. The Bill offers an opportunity for the Agency to raise commercial and development finance, which unlocks opportunities for increased infrastructure development and finance in the water and sanitation sector.
According to section 2 of the Bill, the Agency will be able to acquire, dispose of, fund, provide, maintain, operate, manage, and secure funding for national resources infrastructure in an efficient and cost-effective manner. This will enable the government to meet the social and economic developmental needs of current and future water users within the framework of national government policy, amongst other things.
The state will be the sole shareholder of the Agency, with the Agency’s powers and functions exercised and performed under the Minister of Water and Sanitation (Minister).
Transfer of National Water Resources Infrastructure and Disestablishment of the TCTA
Chapter 6 of the Bill deals with transferring national water resources infrastructure to the Agency and disestablishing the TCTA. The provisions in Chapter 6 of the Bill aim to create a healthy balance sheet with substantial assets and revenues for the Agency. This should attract private sector investment in public infrastructure through commercial and development finance and allow the Agency to enter into transactions such as public-private partnerships without complete dependence on allocation by and guarantees from the National Treasury. This becomes apparent when reading Chapter 6 of the Bill, together with the functions of the Agency.
The TCTA is a Schedule 2 major public entity in the PFMA, founded in December 1986. Its initial mandate was to finance and build the South African portion of the Lesotho Highlands Water Project, which delivers water to the Vaal River System in South Africa. The TCTA’s mandate was extended in March 2000 to allow the TCTA to engage in other projects, including the Olifants River Water Resources Development, uMzibuvubu River Water and Kriel Off-take projects. Some of the functions and powers of the TCTA are to acquire or dispose of any right in or to movable or immovable property and invest money. As indicated above, notwithstanding TCTA’s right to acquire immovable property and invest money, it does not have a substantial asset base to leverage funding for bulk raw water infrastructure.
Section 36 of the Bill provides that 12 months after the incorporation of the Agency, the Minister must transfer the commercial enterprise of the TCTA, including all its assets, rights and obligations to the Agency as a going concern. The treaty and non-treaty functions of the TCTA must also be transferred to the Agency. A result of the transfer is that all assets in the asset register of the TCTA that fell under the control or custody of the TCTA, that were possessed, occupied or used by the TCTA and were registered with any registrar of deeds in the name of the TCTA will form part of the balance sheet of the Agency. These will also increase the asset base that can be leveraged for funding.
In addition, section 36(2) of the Bill directs the Minister to, 12 months after the date of incorporation of the Agency, and in consultation with the Agency, determine by notice in the Government Gazette a date on which the Minister will transfer to the Agency the national water resources infrastructure, which immediately before that date, was vested in the DWS. The subsection confers on the Minister the power to declare which government waterworks are deemed national water resources infrastructure and are to be vested in the Agency.
Functions of the Agency
Section 6(1) of the Bill provides that the Agency must, among other things:
• secure funding and, where necessary, refinancing of national water infrastructure;
• collect water use charges due to it in terms of Chapter 5 of the National Water Act;
• manage an asset inventory and information system associated with the national water resources infrastructure;
• ensure sustainable, equitable and reliable development of national water resources infrastructure;
• agree with (i) water users and (ii) other parties for purposes of maintaining and sustaining reliable national water resources infrastructure;
• acquire or dispose of any right, title or interest in movable or immovable property as may be necessary for the Agency to fulfil its functions; and
Governance of the Agency
• obtain by agreement, in writing, the services of any person, including any organ of state, for the performance of any specific act, task or assignment for and on behalf of the Agency.
Section 6(4) of the Bill requires the Agency to promote the development of projects that meet social needs and facilitate suitable financial arrangements for their funding.
From an overall governance perspective, DWS retains its role as regulator, and the Agency assumes the role of developing and implementing national water infrastructure management initiatives.
According to Chapter 3 of the Bill, the Agency will consist of a board comprising:
two executive members;
not less than nine and not more than 11 non-executive members, which must include (i) a member designated by the Minister who is a senior officer of DWS, (ii) a member designated by the Minister of Finance and, (iii) a member appointed through a public process.
The board must, among other duties:
retain adequate control over the Agency;
provide effective and transparent corporate governance;
ensure compliance with all applicable laws, regulations, agreements and codes of best business practice; and report to the Minister.
Therefore, functions such as asset management and revenue collection concerning national water infrastructure will be integrated into the Agency.
The preamble to the Bill acknowledges that the current national water infrastructure asset base and associated revenue stream could be better utilised to procure funding for the development, operation and maintenance of national water resources infrastructure required for meeting social and economic needs. The Bill creates an opportunity for the national government to address issues relating to water security outside of South Africa’s constrained fiscal environment. It also creates further opportunities for increased public-private partnerships to construct, operate and maintain national water infrastructure.
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• Innovation Award and Teams of the Year for Competition and Regulatory, Intellectual Property and Tax African Legal Awards, 2024
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in alliance with
the answer? Is automation
With SA’s newly minted and somewhat “cosmopolitan” cabinet at the dawn of its term of office, all the country’s eyes are on its leadership to see if it will bring about the many changes sorely needed across many areas.
Although the pause in load shedding continues – with South Africans last experiencing load shedding on 26 March (correct at the time of writing), bringing with it a sense that the country has started turning the corner on its infrastructure woes -the reality is they’re far from over.
In early June, for example, the country’s four major ports – Cape Town, Nqura, Port Elizabeth, and Durban – fell into the bottom 20 for performance, according to the World Bank and rating agency S&P. Worryingly, Cape Town came rock bottom out of 405 ports worldwide. Ports aren’t the only problem area either. Thanks to decades of infrastructural neglect, Johannesburg is in the midst of a significant water crisis. And while there has been some movement on passenger rail, commuter numbers are still dramatically down from where they were at the beginning of 2010. Further to that, drive through most towns, and you’ll also see how neglected many of the country’s roads have become.
So SA’s new cabinet may have its work cut out, facing myriad challenges over and above crumbling infrastructure – including unemployment, visa issues putting the handbrake on tourism, and the rising cost of living driving many South Africans into debt or poverty.
Fixing all of these issues won’t come cheaply either. The cost of delivering just infrastructure to meet its development goals is expected to exceed R6 trillion by 2040, according to the government’s own National Infrastructure Plan 2050. And money alone won’t be enough; because infrastructure repair and development touch so many parties across multiple ministerial portfolios – from public works to electricity and energy, water and sanitation, transport, and employment and labour – incredibly high levels of efficiency and organisation will also be required.
Getting that combination of financial buy-in and efficiency right will be critical for the Government of National Unity (GNU)’s cabinet – with the task (and historical burden) of uplifting existing infrastructure and in the development and rollout of new infrastructure, doing it strategically and with the right management structures in place.
Introducing Field Service Management Software
According to Anand Subbaraj, CEO of software company Zuper – whose management product is utilised by field service teams across multiple areas, including solar, facilities management, security and surveillance, and manufacturing and electrical – field service management (FSM) software could prove essential for providing the requisite levels of efficiency an organisation needs.
“Whether it’s a new infrastructure project, such as installing an HVAC system into a new factory or manufacturing plant, repairs to existing infrastructure such as activating repairs to a plumbing system, or even critical maintenance such as to a business’s surveillance system, there are a lot of moving parts at play at any given time,” he says. “FSM technology can go a long way in ensuring that everyone working on those parts is doing so as efficiently as possible.”
For those unfamiliar with the term, FSM can be described as follows: when a worker leaves his or her home base –whether that is their own home or an office to which they report – and goes into the field to install, repair, maintain, inspect, calibrate, remove, or relocate any kind of equipment or material, that is Field Service. These Field Service activities occur in virtually every industry, from residential and commercial landscaping HVAC and plumbing services to every type of discrete and process manufacturing, sophisticated medical and surgical devices and instruments, extremely complex aerospace and defence products, and everything in between.
According to Subbaraj, there are several ways that this kind of automation could help ease South Africa’s infrastructure woes, which should be in our infrastructure ministers’ artillery.
“Take water treatment for example,” he says. “In a country as water scarce as South Africa is, it’s critical that all available drinking water is properly treated and that breakdowns in water treatment plants are kept to a minimum. FSM software can automatically schedule maintenance on specific parts and then alert and dispatch maintenance teams to sites at regular intervals.”
“This not only helps ensure that critical infrastructure receives vital maintenance work before it turns into a repair job,” he adds, “it also means that more resources can be dedicated to repairs where they’re most needed.”
But that’s not the only application for FSM software in the infrastructure sector. “Another useful feature of good FSM software is that it can help with things like contracts, invoicing, and time management,” the Zuper CEO says. “That’s especially helpful on large projects, including municipality infrastructure and tracking and dispatching at city level where there can be multiple service providers involved. Tightly managing those service providers can help avoid overburden on costs and also ensure that they’re delivering to their capability.”
Municipal uses of FSM software
Good FSM software also benefits ordinary citizens, according to Subbaraj. “If FSM software is integrated into municipal fault reporting systems, for example, it can help ensure that things like burst pipes and electrical faults are dealt with faster and more efficiently than would otherwise be the case,” he says. “That in turn means a happier citizenry who feel less grudging about paying their rates and tariffs.”
The same is valid for internet/WiFi connectivity, adds Subbaraj. “South Africa, like the rest of the world, conducts a vast amount of business virtually – be it through the use of emails, virtual meetings, sales, invoicing and payment systems, or tracking and reporting systems. Unexpected downtime in connectivity can have a massive effect on business operations and, at the end of the day, the bottom line. But having a system in place that provides technicians with the information they need, enables them to be able to service the equipment efficiently and hopefully fix it in a first visit, by providing the back-office data to look for trends. This allows for both preventative maintenance scheduling and break/fix scheduling.”
While Subbaraj is careful to note that FSM software isn’t a cure-all to infrastructure issues, it can be a valuable tool in addressing them and supporting the development of dependable infrastructure systems that have longevity and durability.
“Like many countries, it will take time, effort, resources, innovative, future-forward thinking by the leadership, and money, to turn South Africa’s infrastructural issues around,” he concludes. “But if all of those things can be deployed as efficiently as possible, with crossover ministerial portfolios working together towards infrastructure stability and longevity, then the scale of the problem becomes that much more manageable.”
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of the coal industry ADDRESSING MISCONCEPTIONS
The continued importance of coal underestimated in the debates and the growth of renewable sources of energy. Yet, as a coalthe world’s coal reserves, and with in the ground, South Africa needs to plot its own path in developing sustainable coal mining and
The continued importance of coal to South Africa’s economy is often underestimated in the debates about environmental pollution and the growth of renewable sources of energy. Yet, as a coalrich nation, holding around 3% of the world’s coal reserves, and with approximately 173 years of coal in the ground, South Africa needs to plot its own path in developing sustainable coal mining and utilisation as part of a diversified energy mix.
By Prof Nikki Wagner: Director DSI-NRF CIMERA, Department of Geology, University of Johannesburg; Chair, FFF Carbon
"South Africa should plan a route that is best for the country and not immediately follow what is best for other countries that typically have a well-developed economy and history of fossil-fuel utilisation."
The coal industry in South Africa, as in many countries, has been the backbone of economic development for hundreds of years. The success of the gold industry can be directly linked to the reliable, readily available energy source (coal) that enables miners to work at great depths to extract the mineral wealth. But, like the gold mines, historically, coal mining has resulted in environmental degradation, producing acid mine drainage and massive discard piles, as well as dust and release of other toxins impacting human health and the environment.
However, with tightened legislation, increased environmental awareness, and enhanced corporate social responsibility (and now environmental social governance action planning), coal mines operate under stringent regulations and internal procedures. Coal mining is still not a pretty site at the time of extraction due to the nature of the beast, but rehabilitating the mined area post-mining enhances the soil conditions and promotes rapid plant regrowth. The mines (small and large) I have visited recently have been well managed, with strict water management practices, and the rehabilitation projects are impressive. Thungela was recently featured in the news, having treated an extensive river system following AMD contamination and the reintroduction of fish species.
Coal mining itself is not the main issue with regards to CO2 emissions or other air pollutants – coal utilisation or coal conversion processes, by the very nature of their operation, will emit substantial volumes of carbon dioxide, as well as SOx’s and NOx’s, particulate matter, and an array of other chemicals and elements. If the CO2 is not ‘captured’ (using off-the-shelf technology), compressed, and used or stored (CCUS), it is released into the environment. If particulate capture devices, such as bag filters and ESPs, are not operational, PM10’s will continue to be released to the air. Coal utilisation processes have given coal its bad name regarding greenhouse gas emissions and air pollution. Unless coal users, including Eskom, Sasol, Sappi, cement manufacturers and over 4 000 small-scale users in South Africa, limit their air-polluting emissions, calls to halt and close coal mines will continue. Coal mines become the scapegoat: if coal is not mined, it cannot contribute to air pollution.
This is true. However, can we do without coal in the immediate or medium-term future in South Africa or globally? Suppose one considers the number of fossil fuel power plants that have closed since 2021 (very few worldwide) and the number of coal-fired power plants continuing to operate in developed and developing countries (2 435 globally, with 39 in Africa and 58 in Germany for context). In that case, it is evident that society needs to remain heated/cooled/fed with coalbased energy despite the ideological intentions of certain global compacts.
South Africa should plan a route that is best for the country and not immediately follow what is best for other countries that typically have a well-developed economy and history of fossil-fuel utilisation. South Africa is a coal-rich nation, with approximately 3% of the global coal reserves, according to Worldometer, thus hosting the eighth largest coal reserves, with about 173 years remaining based on 2016 coal production.
Coal mining employs over 94 500 people, predominantly in the Mpumalanga and Limpopo Provinces, with minor coal mining in KZN. The mid-stream and downstream value chain employs well over 1 million residents. As the country typically exports just over 35% of the coal produced, the coal export market provides significant foreign revenue, providing coal to countries seeking to grow their economies. The domestic or internal market
provides coal to generate electricity for petrochemicals, ferroalloys, other metallurgical applications, cement manufacturing, paper manufacturing, and many smaller applications dependent on coal for power and steam generation. Research into carbon use in advanced materials and rare Earth elements continues to grow in South Africa.
Hence, coal demand may be grouped into power and non-power use. If we close the coal mines, the non-power users will become stranded, resulting in substantial job losses and significant economic repercussions.
South Africa is one of the largest coal consumers, ranked seventh in production and consumption (but consuming far less compared to volumes consumed in China and the USA). South Africa has primarily adopted the Just Energy Transition (JET) concept and should work towards a diversified energy mix. At least three existing Eskom coal-fired power fleets will remain in operation until 2050, with several power plants only seeing closure dates in the late 2030s. Coal mining is required to feed the power stations and provide stable, baseload power. In the Western nations, the decline in coal demand for primary electricity is discernible (around 1% per annum) due to the increase in renewable energy. However, it should be noted that in many countries, renewable energy is additive to the power grid and not replacing coal.
To open a coal mine, it is necessary to explore, obtain the required water-use permits, conduct environmental impact assessments, determine the financial feasibility, and then apply for the mining license. At each stage of this process, the mining company, whether big or small, must engage with the DMRE and other government departments, including Water Affairs and DoE. The permitting process and obtaining mining rights are prolonged processes that impact the number of coal mines operating. A consequence of not encouraging the development of new coal mines or expanding current mines is that coal will not be available for export or local markets in the near future. This is already impacting employment in the coal mining sector, with a domino effect along the entire coal value chain and negative consequences to civil society and non-power users.
The coal industry requires reform, without a doubt. The unequal purchase price paid by Eskom per ton of coal
is well known, but the procurement process is far from transparent. The number of abandoned coal mines is well known, but where is the rehabilitation trust fund money required by the DMRE before opening a mine?
Traditionally, mining companies have cared little about understanding coal quality. Specifications required by Eskom are manipulated – the coal can be blended, so on average, the shipment meets the average specification necessary, but this does not necessarily reduce the pollution levels. Acid mine drainage is a problem; scrupulous miners do not implement the required environmental requirements, and government agencies do not implement the required controls. Far too many companies – miners and consumers alike – get away with non-compliance, as compliance generally requires economic input for little to no financial gain. Despite all the corporate governance blurb in the annual reports, doing the ‘right thing’ is not always adopted across the industry.
The JET plan must recognise the need for coal in many other applications beyond electricity generation – the non-power users – and consider the vital need for stable, reliable, affordable baseload power. Eskom announced that its safety margin has been restored, which will encourage economic confidence in the country. Even without the JET, coal communities should have reskilling opportunities.
Technology development and deployment of readily available HELE (high-efficiency emission) technologies must be implemented by Eskom and other coal users to provide baseload power and power to large industries. Even without the JET, the government must actively encourage additional energy sources, such as roof-top solar for domestic use. Industry must be held accountable for non-compliance (this infrequently happens, hence the pollution issues). South Africa must encourage the re-opening of the large smelters and recreate the iron and steel industries, as well as other downstream activities requiring stable power, using advanced, low-emission technology (the technology exists). As a country, we need to maximise our mineral wealth to benefit our economic growth and stabilise the government: to do so, we need to invest in our coal industry for at least two decades and develop our diversified energy mix. Globally, there is a shift back towards fossil-fuel utilisation.
Tailored support for women entrepreneurs needed
South African women are exiting their businesses at a higher rate than they are starting and running businesses, indicating they need more support in growing start-ups to the established stage of over 3.5 years.
This is a crucial finding of the Global Entrepreneurship Monitor (GEM) South Africa Report 2023/2024 by Stellenbosch Business School.
The gap between men and women entrepreneurs widens as businesses mature, with almost double the number of men owning established businesses (7.9% vs 4.1% of women), indicating that women find it more challenging to sustain a business than to start one.
Natanya Meyer, lead author of the report and associate professor in the Department of Business Management and SARChI for Entrepreneurship Education at the University of Johannesburg, says the lack of business support tailored to women’s specific challenges and needs puts South Africa’s women entrepreneurs on the back foot in realising their potential to make a more significant contribution to economic growth and job creation.
“Women entrepreneurs matter. Women make up half the global population but are less engaged than men in entrepreneurial activities. It thus makes sense to find out how better to invest in and support women’s entrepreneurship, with its high potential to be one of the most effective means of achieving sustainable economic growth,” she says.
“Moreover, supporting women entrepreneurship potentially has a significant impact on development, as women entrepreneurs tend to allocate more of their funds towards the improvement of health, education, and overall welfare of their families and communities. Women are also more motivated to go into business to make a social impact.”
While GEM has tracked women’s entrepreneurial activities at a global level over the past 25 years, the Special Report on Women Entrepreneurship 2023/2024,
titled “Women Entrepreneurship in South Africa: what does the future hold?”, is the first GEM report to focus on the motivations, progress in business, and support needs of women entrepreneurs in South Africa specifically.
Prof Meyer co-authored the report with Stellenbosch Business School research fellows Mahsa Samsami and Angus Bowmaker-Falconer. The GEM SA national study team is hosted at Stellenbosch Business School and supported by the Small Enterprise Development Agency (Seda), the University of Johannesburg and Ontbytsake.
She said the “starkly different” reasons for women and men exiting their businesses highlighted the barriers women face in sustaining a business. Lack of profitability for both women (34.4%) and men (21.5%) was the top reason for exiting businesses, while their other main reasons differed significantly.
Women’s two main reasons were personal and family matters (21.5%, almost double that of men at 12.1%) and problems obtaining finance (21.5% vs men 17.8%). After a lack of profitability, men mostly exited their businesses due to an opportunity to sell (18.7% vs 10.8% of women).
Challenges faced by women entrepreneurs Women face not only unequal access to business finance and support resources but are also confronted by gender stereotypes and prejudice. As women bear most caregiving and family responsibilities, they face a more significant burden of managing conflicting demands on their time as they juggle business and family needs.
“It is widely acknowledged that women in business have greater challenges in balancing business and home life due to societal expectations of women as primary homemakers and caregivers. This influences how women in business are perceived, by funders for example, resulting in adverse outcomes,” Prof Meyer said.
The research had previously found that women entrepreneurs were far less likely than men to obtain credit in their founding year, even though those women who did receive start-up loans had a lower default rate than their male counterparts.
Lack of access to funding and support resources, along with women’s more considered approach to risk, were possible reasons for women-led businesses remaining “modest in scale and lacking substantial prospects for expansion,” she said.
"Women
make up half the global population but are less engaged than men in entrepreneurial activities."
The GEM SA research found a notable gender gap in business growth, with 11.8% of men’s business ventures reaching the threshold of employing 20 or more people. In comparison, only 4.9% of women-owned businesses had done so. Meanwhile, women were more likely to be “solopreneurs” at 4.9% compared to 1% of men.
“The data highlights gender disparities in business scaling, with men owning larger businesses at a disproportionately higher rate than women. This could reflect various obstacles women might encounter in business expansion, including limited access to funding, networks, mentorship support and resources,” Prof Meyer said.
Although women’s involvement in entrepreneurship showed a healthy increase from 9.5% in the 2022 GEM SA survey to 13.5% in 2023, men’s participation increased from 11.1% to 19.9%.
The report recommends better promotion of government policies and programmes that offer mentorship, financial and other support to entrepreneurs, and rigorous protocols to evaluate the impact of support programmes."
Prof Meyer notes: “Women have a generally higher unemployment rate than men. Despite a promising increase in women’s entrepreneurial activity, it is concerning that it remains low and lags behind that of men. The results of this survey highlight the importance of improving the supporting environment for entrepreneurship for both women and men in order to reduce high unemployment.”
Co-author and research fellow at Stellenbosch Business School, Angus Bowmaker Falkoner, says the involvement of young women in entrepreneurship was low, at 11.3%, and that with half of South Africa’s youth unemployed (50% of economically active individuals aged 15-34 in Q1, 2023), it was essential to improve exposure to entrepreneurship education at school level.
Lack of exposure to entrepreneurship as a career choice for young women links to the study finding that women are less likely to view themselves as being capable of starting a new business, at 66.2%, compared to men, at 72.4%, even though about twothirds of both men and women say that they see good opportunities to start a new business in the area where they live.
“However, when we narrow this sample to only people already entrepreneurially involved, women entrepreneurs’ perceptions of available opportunities and their business capabilities are higher than those of male entrepreneurs. Women already running their businesses also have a much lower fear of failure than women in the general population,” says BowmakerFalkoner. “This highlights the positive effect that engaging in entrepreneurship has on women’s entrepreneurial mindset and business confidence.”
He sees the report findings as an essential contribution to advancing the economic influence of women entrepreneurs, as it provides policymakers, enterprise development agencies and future funders with a comprehensive understanding, backed by data, of the factors that contribute to developing women in entrepreneurship.
“The GEM methodology provides hard data and analysis on South African women’s level of engagement in entrepreneurial activity across all the stages, from intention to start a business through to established businesses more than 3.5 years old, and the timing and reasons for exiting their business,” Bowmaker-Falkoner said.
In addition to data on actual and forecast job creation, growth expectations and perceptions on the business enabling environment, the report provides detailed insight into the personal motivations and cultural context of women business owners and information on the types of companies and sectors they engage in.
“This research provides important insights to enable informed decision-making, targeted interventions and effective support programmes to foster a more conducive environment for women’s entrepreneurial development and success in South Africa,” BowmakerFalconer said.
Recommendations
The GEM SA Special Report on Women Entrepreneurship in South Africa 2023/2024 recommends improving the entrepreneurship ecosystem by supporting women entrepreneurs.
• Improved implementation and awareness of policies. South Africa has a progressive set of guidelines to promote gender equality but lacks effective implementation. The report recommends better promotion of government policies and programmes that offer mentorship, financial and other support to entrepreneurs, and rigorous protocols to evaluate the impact of support programmes.
• “Government policies promoting women entrepreneurship should prioritise a gender-neutral legal framework, reduce bureaucratic obstacles, and increase access to finance for women entrepreneurs.”
• “Financial literacy and business management skills training should be enhanced for young women, especially in rural areas”.
• “Family-friendly policies should be promoted, and developing specific laws for women-owned small enterprises could significantly impact their success.”
• Promotion of women’s networks and associations. The researchers recommend developing and promoting women-oriented business networks through local governments, business incubators, and private sector initiatives.
• “Establishing small, women entrepreneurial groups led by successful women business owners can promote confidence and increase business growth.”
• Greater media attention on women entrepreneurship. Society still perceives entrepreneurship as a male-dominated field. Increasing media coverage of women’s entrepreneurship and business capabilities and profiling successful women in the industry will contribute to reducing stereotypes and stigma. This would positively impact society and boost confidence in women entrepreneurs.
• Exposing women to the business environment from a young age. The researchers say that mentorship and exposure to business environments early in life can contribute to future entrepreneurial intentions. This includes providing more readily available information and practical guidance to young women to stimulate entrepreneurial intentions.
• Recommendations include visits to local entrepreneurs, hosting school market days and promoting gender equality initiatives, particularly in rural areas with limited resources for education and entrepreneurial initiatives.
• Supporting digitalisation and social and environmental sustainability. The COVID-19 pandemic led many entrepreneurs globally to adopt digital tools, increasing sales and employment. The report recommends developing comprehensive policies and strategies to empower women entrepreneurs to digitalise their businesses and access digital infrastructure and services.
Sustainability initiatives can be costly for small businesses, especially in highly regulated industries. Impact investing and government incentives can support sustainability practices, especially as research has shown that women entrepreneurs prioritise social, health, educational and environmental impacts over profit.
The full report can be downloaded from the Stellenbosch Business School website, www. stellenboschbusiness.ac.za
Reference: All the data in this release are sourced from the research for the GEM SA Special Report 2024 Women Entrepreneurship in South Africa: What Does the future hold?
& emerging risks High net-worth trends
The non-life insurance market in South Africa is continuously evolving, but insurers are regularly faced with new risks, requiring them to respond timeously and responsibly. Over the last five years, there has been a significant increase in the frequency of catastrophic events, particularly in KwaZulu-Natal, leading to substantial premium increases in the region. In the 2023 financial year alone, related claims approached R450 million.1
By Tarina Vlok, MD of Elite Risk Acceptances, a high-net-worth insurer and subsidiary of Old Mutual Insure
Trends in high net-worth customer preferences
The trend towards "semigration," where high net-worth clients are moving away from urban areas, particularly to the coastal areas of the Western Cape, is increasing. Such clients also prefer to engage with intermediaries, and they expect excellent service. Price sensitivity also puts pressure on insurers to mitigate premium increases, despite the potential for such increases based on the risk landscape.
Risks from alternative energy solutions
A continuation of the installation of alternative energy solutions exposes both clients and insurers to risks for which insurers don’t necessarily have sufficient data, particularly in the domestic market.
Emerging risks and climate change
Insurers face rising risks from severe weather, leading to increased industry collaboration for better catastrophe modelling. This requires premium hikes in vulnerable areas and complicates the balance between sustainability and growth due to market price sensitivity.
Infrastructure challenges
Failing infrastructure, coupled with the looming risk of energy demand surpassing generation capabilities, carries significant implications for insurers, including increased claims for vehicle damage caused by potholes and power surge-related damages resulting from load shedding. Insurance coverage is urgently needed to address these emerging challenges.
Crime and evolving threats
Crime continues to evolve. For example, vehicle theft
methods have become so sophisticated that in certain cases and areas, tracking devices are not as effective as expected
Cybersecurity threats
Cybersecurity is one of the top five risks for insurers worldwide. This risk increases with more widespread use of digital payments and online transactions, requiring vigilance and ongoing improvement of device security systems.
Skills gap in the insurance industry
The global insurance industry faces a significant skills gap as experienced underwriters retire. Attracting new recruits to the insurance industry is critical, while emerging AI technologies demand that younger professionals continuously update their skills.
To stay competitive and manage risks effectively, insurers must keep abreast of emerging threats and high net-worth and shifting industry trends. For policyholders, its important to be open with their insurer, and work closely with their broker. On the other hand, in an increasingly challenging non-life insurance market, it is essential for intermediaries and insurers to partner with insurers for the benefit of all parties involved.
1 https://www.news24.com/fin24/climate_future/news/how-extreme-weatheris-influencing-your-insurance-premiums-20240624