Africa SEZ Magazine by 44ten Media

AFRICA SEZâ&#x20AC;&#x2122;S SPECIaL ECONOmIC ZONES

M A G A Z I N E

September 2018 IN THIS ISSUE: NwDC

Leading Industrialisation in the North West page 12

HOw TO

Investing in the Atlantis SEZ page 09

SECTOR fOCUS: Minerals page 28

fINaNCE INTERVENTIONS By the dti page 60

SPECIaL ECONOmIC ZONES Why are they Important? page 06

LONDON

FRANKFURT MUNICH BEIJING

NEW YORK WASHINGTON DC

HONG KONG MUMBAI

DAKAR

ENTEBBE COTONOU

ABIDJAN

LAGOS DOUALA

ACCRA LIBREVILLE POINTE-NOIRE LUANDA

SÃO PAULO

BUENOS AIRES

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BUJUMBURA

KIGALI

KINSHASA BRAZZAVILLE

NAIROBI DAR ES SALAAM

NDOLA LILONGWE LUSAKA BLANTYRE LIVINGSTONE VICTORIA FALLS HARARE WINDHOEK MAPUTO JOHANNESBURG CAPE TOWN

MAURITIUS PERTH

DURBAN EAST LONDON PORT ELIZABETH

CONTENTS

Bank of China Johannesburg Branch Your Financial Partner of Choice in Sub-Saharan Africa

Rabat

Cairo

Abuja Accra

Kampala

Yaoundé

Nairobi Luanda

Kitwe Lusaka

Johannesburg

Mauritius

05 06 08 09 12 19 20 24 26

Publisher’s note

HOw TO

The importance of SEZ’s

Investing in the Atlantis SEZ

Meeting of the SEZ minds How to invest in the Atlantis SEZ

SEZ Profile: NWDC Special Economic Zones

An efficient instrument to increase industrialisation

COEGA IDZ: Thought Leadership

In this issue we dig deeper into Minerals

Hawassa

A Masterpiece of Ethiopia’s Industrial Parks

Adoption of Victoria Falls (SEZ) to boost tourism arrivals

Durban

CONTRIBUTORS: Kifara Investment Group Elias Tibane, GciS - South African Year Book 2017-18

Based in South Africa with business expansion to other African countries, Bank of China Johannesburg Branch has witnessed and participated into the rapid development of economic and trade exchanges between China and Africa. With advantages of BOC Group’s leading position in RMB business, global service network and experienced professional teams, Bank of China Johannesburg Branch, as leading bank of RMB business in Africa and prioritised Bank in regard to China-related business, is providing clients with comprehensive tailor-made RMB service solutions to support your economic and trade activities. Bank of China Johannesburg Branch is serving Sub-Saharan Africa from South Africa by consistently offering financial services of high quality and efficiency. The Branch will carry forward Bank of China’s outstanding century-long heritage to make renewed and larger contributions in enhancing Sino-Africa cooperation and mutual benefit.

www.boc.co.za

Tel: + 27 11 520 9600

crc@boc.co.za trade@boc.co.za banking@boc.co.za

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SECTOR fOCUS:

Deloitte - A review of South Africa’s trade and investment relationship with Bric (10th BricS Summit) will Huang, ENS South Africa Bilal Derso dti (IPaP 2018-19)

DESIGN aND LayOUT DESIGNER BUSINESS DEVELOPmENT PRINTERS

Mary Everard Reggie Jooste Dali Chiwara Tandym Printers

PUBLISHER PUBLISHED By

28 38 40 41 42 60

Sector Focus: Minerals Key Highlights of South Africa’s Trade and Investment Relationship with BRIC Since 2001 A Snapshot of Total Investment into South Africa from BRIC 2003-2017 Doing Business in South Africa: Key Factors to Consider

Policy Focus: IPAP Dti Financial Support Interventions

Jehad Kasu Dali Chiwara 44ten Media +27 11 886 1343 www.44tenmedia.co.za

PUBLISHER’S NOTE

Africa is a Continent teeming with opportunities for prosperity. This is not more adequately demonstrated than by the decades of colinisation that African countries had to endure. This colonisation happened not only because our land is fertile and laden with an abundance of natural resources. But also because we are a hard working nation that pioneered many innovations. Decorated archaeologist Professor Christopher Henshilwood of Wits University in South Africa, who led a new study into the source of modern human technology, says the most recent research decisively shows that Africa is the birthplace of modern human cognition. According to his research, modern human technology began more than 70,000 years ago in South Africa, before spreading to communities elsewhere. It is here that our ancestors made the first bone tools, the first abstract art, the first jewellery and probably the first stone tipped spears and arrows, as research shows. ‘All of these innovations, plus many others we are just discovering, clearly show that Homo sapiens in Southern Africa at that time, were cognitively modern and behaving in many ways like ourselves,’ he said.

Dali Chiwara Managing Director

The narrative of intellectual inferiority that was forced upon Africa and its Africans and perpetuated by media for centuries is now being vigorously challenged at every opportunity. It’s being challenged through the arts in films such as Black Panther, a record-breaking behemoth that proved to Hollywood that Afrocentric content is relevant, valuable and will be successful. Another example is Professor Tshilidzi Marwala, the Vice-Chancellor of the University of Johannesburg who holds no less than 45 honours and awards as well as three international patents, who is leading the 4th Industrial Revolution through his research in the theory and application of computation to engineering, computer science, finance, social science and medicine – do yourself a favour and google him.

For more information contact Tamsin Freemantle +27 11 520 7725 | www.jse.co.za/brics | tamsinf@jse.co.za The JSE is one of the top 20 exchanges in the world in terms of market capitalisation and a member of the World Federation of Exchanges.

By the introduction of this SEZ quarterly magazine, we position Africa as open for collaboration. Africa is not only good for its incentive schemes, affordable labour, land and minerals. But also for the wealth of intellectual capital that exists within its continental borders. On behalf of Africa we present the industrial and manufacturing opportunities that it has to offer as well as the powerful minds that are the impetus behind it.

Jehad Kasu Managing Publisher Jehad Kasu Managing Publisher

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SPECIaL ECONOmIC ZONES

THE ImPORTaNCE Of SEZ’S SITUaTIONaL aNaLySIS Special Economic Zones (SEZs) have proven to be an effective policy instrument for propelling industrialisation in some of the world’s leading developing economies. Substantively, the SEZ Programme underpins most of China’s current manufacturing capacity, and this has enabled it to be, amongst other things, a highly-competitive net exporter of value-added goods. Through its more than 200 SEZs, China has been able to sustain a positive trading account for a protracted period of time. Moreover, the SEZ Programme has contributed immensely towards gainful job creation in that country. A similar trend is emerging in some African countries: Ethiopia, Kenya, Zambia, Botswana and Nigeria have all begun to develop and implement pro-industrialisation policy initiatives. with an eye to international trends, the South african government has also sought to employ the SEZ policy instrument - with the following defined objectives: • Promotion of the mastery of targeted industrial capabilities within the framework of the IPAP and the NDP. • Promotion of beneficiation and value-addition to the country’s minerals and other natural resources. • Development of the world-class infrastructure required to support the development of the targeted industrial activities. • Attraction of foreign and domestic direct investment. • Acceleration of economic growth and the creation of much needed jobs. Over the past few years, work in this programme has focused on the design of a regulatory framework for effective design, planning, development and management of zones. This included the introduction of a package of incentives for qualifying investments located within designated zones and undertaking feasibility studies to determine the long-term economic viability of proposed new zones. The current work package for the SEZ Programme is mainly centred on the following:

DESIGNaTION Of SPECIaL ECONOmIC ZONES

INSTITUTIONaL aND CaPaCITy DEVELOPmENT

maRKETING PLaN fOR SPECIaL ECONOmIC ZONES

NaTURE aND PURPOSE Of THE INTERVENTION

NaTURE Of INTERVENTION

The designation of an area as a Special Economic Zone to authorise the applicant to develop the zone. The formal assessment of applications for designations, determination of economically viable zones and authorisation of the development of a special economic zone in a specific region of the country.

The one conspicuous challenge in relation to the development of the SEZs is the capacity constraint with respect to the technical knowhow among development practitioners across the three spheres of government. Lessons from international experience suggest that the success of an SEZ Programme depends on the capacity of implementing agencies to plan, design, develop, manage and operate the zones. Continuous institution- and capacity-building is therefore necessary for the success of any SEZ Programme.

Marketing and Promotion of the SEZ is one of the critical pillars of the SEZ. This is mainly used to promote South African Special Economic Zones opportunities both locally and internationally. The marketing and promotion of SEZ are implemented through strategic partnerships with internal and external stakeholders such as TISA, ISA, ITED, Embassies, FDIs, and designated SEZs.

The application includes, amongst other things, feasibilities studies, environmental authorisation, land approvals, business plan, investment attraction strategy and commitments from various critical stakeholders. In terms of the SEZ legislation, the power to designate an area as a Special Economic Zone is vested in the Minister of Trade and Industry. The Minister, however, receives advice from the SEZ Advisory Board, confers with the Minister of Finance and seeks the concurrence of Cabinet.

TaRGETED OUTCOmES Identification and approval of high-impact, economically viable SEZ projects, developed and properly managed to significantly contribute to the attraction of foreign and domestic direct investment, building of targeted industries, and development of new industrial hubs.

KEy mILESTONES 2018 q 1: Review of one application for designation by the Secretariat and Technical Subcommittee of the Board. 2018 q 2: Review of the application by the full Board. 2018 q 3: Gazette notice published for public comments. 2018 q 4: Designation.

Given this context, the South African government (through the dti) has entered into a ve-year Agreement with China with a view to creating a platform for Chineseofficialsto share their valuable SEZ experience, thus better equipping South Africa’s policy-makers, development practitioners and operators with the required planning, technical, managerial and operational know-how. To date, 120 representatives from National and Provincial Government Departments and Provincial Development Agencies have benefitted from the Chinese training programme.

TaRGETED OUTCOmES A larger pool of skills and expertise available locally to contribute to the planning, design, development, and management of Special Economic Zones.

Clear communication with investors on the investment opportunities and incentives available in the special economic zones is vital for the success of the zones. This requires clear packaging of investment opportunities and clear strategies and programme for engaging the targeted domestic and foreign investors.

TaRGETED OUTCOmES Increased awareness that would in turn increase both domestic and foreign investments.

KEy mILESTONES quarterly milestones: one Investment mission per quarter.

KEy mILESTONES 2018 q 1: Recruitment of further candidates for SEZ training in China. 2018 q 2: Training in China taking place. 2018 q 3: Report on the training in China approved.

a) designation of new SEZs; b) compliance with legislation; c) investment promotion and marketing; d) infrastructure development; e) institutional development; f) capacitybuilding; and g) stakeholder management.

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Source: IPAP 2018-19

mEETING Of THE SEZ mINDS The Special Economic Zones’ (SEZs) Chief Executive Oﬃcers met to share information on performance, strategies and incentives under the banner of “SEZ CEOs Forum” in Port Elizabeth. The forum which was established to strengthen the implementation of the SEZ Act, as well as to strengthen the coordination, stakeholder relations and sharing of best practices between the provinces, met in Port Elizabeth, Coega IDZ (SEZ). In his opening remarks, the Chief Director of Special Economic Zones at Department of Trade and Industry (the dti), Mr Maoto Molefane told the forum that as the forum meets, it was signiﬁcant to prioritise working together and explore ways to ensure the zones are attracting investors, creating jobs and most importantly demonstrate long-term economic sustainability. He said the world and the continent was taking the direction of SEZ to improve their economies, and that presented an opportunity for new strategies and models of linking the SEZs in other countries with those of South Africa and ensure complementarity and regional integration. “We are currently in talks with the Port of Maputo to utilise and align the Nkomazi SEZ and with the activities of the port. In addition, the dti is also in talks with Transnet to strengthen the collaboration with the SEZs on rail networks, and the ports. This move would ensure the SEZs complement each other; are economically sustainable and creating jobs,” says Molefane. Molefane said one of the achievements by the dti and the SEZ CEOs forum, was the operationalisation of the Tax Incentives; he said these incentives would attract more investments and increase jobs from the current R15 billion to R34 Billon value of private investments and 12000 to more than 20 000 direct jobs in the next two to three years. He added that this is based on the current number and value of investments secured by the zones, which include the R11 billion investment from BAIC that is under construction in COEGA. This package of tax incentives will be available to qualifying companies locating in approved SEZs, subject to certain criteria. The tax incentives for qualifying companies include: VAT and customs relief, if located within a Customs-Controlled Area (CCA); the employment tax incentive; building allowance; and reduced corporate income tax rate, he said.

mEmBERS Of THE SEZ CEOS fORUm

“the dti has also established a process to embark on an aggressive marketing and investment promotion drive to assist Richards Bay IDZ, Saldanha Bay IDZ, Maluti a Phofung and OR Tambo SEZ to perform better and actively contribute to the country’s industrialisation agenda,” said Molefane. The Chief Executive Office of Coega IDZ Mr Pepi Silinga told his colleagues that the best way to financial sustainability is in maximising utilities. He said the zones needed to own or control the provision of water, gas, energy and ICT to their tenants, otherwise they would be perpetually dependent on government. He added that it was imperative not to regard utility providers as just SEZs investments as the zone require their own long-term financial sustainability initiatives. He said Coega IDZ has to date managed to attract 43 operational investors and created over 17 767 jobs in the 2017/18 financial year. The Project Executive Director at Musina-Makhado SEZ Mr Mxolisi Matshamba said investors have shown much interest in the zone and the community is excited about the zone, which is poised to create jobs for them. Musina-Makhado Special Economic Zone is one of the newly designated zones, situated in the Vhembe Region of Limpopo. The zone focuses on mineral beneficiation, agro-processing, petro-chemicals, and other light industries. The SEZ has recently signed Memorandums of Understanding (MOUs) and a Memorandum of Agreement (MOAs) with nine Chinese companies who committed to investing more than US$10 billion in the Musina-Makhado Special Economic Zone. A Special Economic Zone (SEZ) is an economic development tool to promote national economic growth and export by using support measures in order to attract targeted foreign and domestic investments and technology. Enquiries: Sidwell Medupe-Departmental Spokesperson Tel: (012) 394 1650 Mobile: 079 492 1774 E-mail: MSMedupe@thedti.gov.za Follow us on Twitter: @the_dti

HOw TO:

INVEST IN THE ATLANTIS SEZ FOR GREEN TECHNOLOGIES

Businesses or investors with ventures in green technologies (or ‘greentech’) can apply to invest and establish operations in the Atlantis SEZ (ASEZ). Green technology businesses include, but are not limited to, solar panel component manufacturers, waste recyclers, manufacturers and/or suppliers of green building materials, and manufacturers and/or suppliers of water efficiency technologies. If a business or investor qualifies to locate in the zone, the SEZ project team will support the selection of an appropriate piece of land, based on the spatial plan for the ASEZ. Investors will lease land from the ASEZ and will pay rates based on the services and infrastructure made available. Steps for application 1. Ensure you have a new venture in a business that is “greentech”. 2. Contact the Investment Promotions Manager: Jarrod Lyons jarrod@ greencape.co.za / 021 811 0250. 3. If your business passes the initial screening, you will be provided with an application form. You will need to complete the form and submit supporting documentation, including a business plan. 4. The application will be evaluated through a process which includes representatives of the Western Cape Government’s Department of Economic Development and Tourism DEDAT), the City of Cape Town, Wesgro and GreenCape. 5. If your application is successful, the land area will be confirmed and the investment promotion team will support you in moving forward and setting up operations in the ASEZ. The SEZ is still in the process of establishing operations and core infrastructure through the national and provincial government legislative processes. Formal processing timeframes for potential investors will be affected by this. Confirmation of successful applicants are expected to run into 2019 and core infrastructure build timeframe is expected to run into 2020. As part of the establishment of the SEZ, the framework for support of SMMEs, and for skills-, enterprise- and supplier development is being developed and is expected to be implemented during 2019. Options for non-qualifying SMMEs If your business qualifies as a greentech venture, but is not yet ready for investment, you could consider seeking enterprise development support, for example through the South African Renewable Energy Business Incubator (SAREBI), which is based in Atlantis. They can be contacted through their website: www.sarebi.co.za. If your business does not qualify as a greentech venture, it may be possible to provide services to businesses in the ASEZ. As noted, a supplier development programme is being developed. In the meantime, ensure that your business is registered with the City of Cape Town and GreenCape’s databases.

CONTaCTS

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Investment in SEZ, GreenCape: Jarrod Lyons – 021 811 0250 or jarrod@greencape.co.za To add to supplier database, Greencape: Charlotte Perang – 021 577 2719/1034 or charlotte@greencape.co.za City of Cape Town: Timothy Hadingham – 021 417 0518 or timothy.hadingham@capetown.gov.za SAREBI: Helmut Herzog – 021 577 2719 or helmut@sarebi.co.za Symbiosis Business Development Hub: Cornelius Scheepers – 082 467 8200 or cornelius@symbiosisiac.co.za Atlantis SEZ website: www.greencape.co.za/content/sector/atlantis-sez

The Richards Bay Industrial Development Zone Company (SOC) Ltd (RBIDZ)

The Richards Bay Industrial Development Zone Company (SOC) Ltd (RBIDZ) is a purposebuilt and secure industrial estate on the north - eastern coast of KwaZulu-Natal, linked to the international deep-water port of Richards Bay. It is tailored for the manufacturing of goods and production of services to boost beneficiation, investment, economic growth and the development of skills and employment. The RBIDZ is deemed to be a Special Economic Zone (SEZ) that aims to encourage international competitiveness through world-class infrastructure as well as tax, VAT and duty-free incentives to qualify ing investors. The RBIDZ strategy is geared to provide significant contribution to the country’s economic growth through creation of employment opportunities, upgrading the skills, technology transfer, deepening economic empowerment of historically disadvantaged individuals and broadening of South Africa’s basket of export products.

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Incentives provided by RBIDZ to investors • Reduction in corporate income tax from 28% to 15%. • VAT exemption for supplies procured in South Africa. • Duty-free on imports for production-related wra materials including machinery and assets used in production. • Location in a secured and Customs Controlled Area (CCA) • World–class industrial infrastructure. The RBIDZ’s objectives: • To attract local and foreign direct investment; • To attract advanced foreign production and technology methods in order to gain experience in global manufacturing and production networks; • To develop linkages between domestic and zone based industries; • To provide world–class industrial infrastructure. The RBIDZ’s key focus sectors: • Metals Bene� ciation (Aluminium, Iron Ore, Titanium) • ICT (Techno–parks , Innovation Hubs) • Renewable Energy (Solar , Fuel Cells, Biomass) • Agro-Processing • Marine Industry Development

A GATEWAY TO WORLD MARKETS Vision To be the preferred Special Economic Zone for quality investments while delivering value to our stakeholders.

Mission To utilise the competitive advantage of the Richards Bay area to attract sustainable investments that stimulate economic growth, job creation, beneficiation of resources and the empowerment of people.

Company profile Company Name: Richards Bay Industrial Development Zone SOC Ltd (RBIDZ) Industry sector : Manufacturing Date established: Year 2002 Key personnel: CEO – Pumi Motsoahae

LEaDING INDUSTRIaLISaTION IN THE NORTH WEST The North West Development Corporation is an agency of the Government of North West Province. It was established to plan, finance, coordinate, promote and carry out the economic development of the Province and its people in the fields of industry, commerce, finance, mining, tourism enterprise related activities. The objective of the corporation is to create wealth and jobs while taking cognizance of aims and objectives of the Reconstruction and Development of the Republic of South Africa. It is listed as a Schedule 3D provincial government entity in terms of the PFMA, Act no 1 of 1999. The NWDC’s mission is to contribute to the economic growth and transformation of the North West Province through: • Industrial Development; • Commercial investment; • Property development and management; • Development of sustainable enterprises; • Trade and investment attraction and • Project management and implementation. The NWDC Key Strategic Programmes: • SMMES and Corporative development (financial and non-financial); • Project Management Services • Property Development and Management; • Mining • Agro-processing • Tourism • Trade and Investment • Special Economic Zone

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The leading mind behind industrialization in North West Province is Mr Tshepo Phetla, who joined the corporation as the NWDC CEO from the 1st June 2017. Mr Phetla brings to the corporation a firm foundation in business administration and project management.

TSHEPO PHETLa

Is the CEO of the North West Development Corporation

Mr. Phetla is an alumnus of leading tertiary institutions such as the University of the Western Cape, Harvard Business School and the Wits Business School. Complimentary to his B. Admin and Honours Degrees, he obtained two additional business and project management certificates. He was previously employed by the Gover nment Communication & Information System (GCIS), City of Tshwane, Tshwane University of Technology (TUT) and the University of Pretoria. He brings with him a wealth of experience in

economic development, having been employed in this sector in the Limpopo Province for over twelve years; of which his last position was that of Group Chief Operations Officer of the Limpopo Economic Development Agency (LEDA). He serves on amongst others the Boards of North West Development Corporation (NWDC), Pilanesberg Resorts and Limpopo Connexion. He is the Chairperson of the Boards of Housing Company Tshwane, and the Musina Makhado Special Economic Zone (SEZ). Coupled with another eight past directorships, Mr. Phetla brings with him solid leadership qualities and insights into organisational design and project management that is of great advantage to the Platinum Valley SEZ.

Purpose of the SEZ Sez’s are strategic initiatives led by the dti, to spread industrial development; ensure promotion of industrial agglomeration in the region; and to build the required industrial infrastructure regionally. The implementation of the Industrial Policy Action Plan by government seeks to address the key challenges of Economic and industrial growth in South Africa. It is one of the key components of Government’s Nine Point Plan to deal with the challenges of poverty, inequality and unemployment in the various regions of the country especially in rural provinces like North West. Profile of the Platinum Valley SEZ At its core, the Platinum Valley SEZ is an industrial park that once formally designated as an SEZ, will offer special incentives to attract investment and business in targeted segments to the North West province. An industrial park is an area zoned for industrial activity, with the following advantages: provision of concentrated and dedicated infrastructure required by industry such as high voltage (three phase electric power); large volumes of clean or desalinated water; fibre and other high-end communication systems and road, rail, air infrastructure (Pilanesburg Airport). Platinum Valley SEZ will be a 1037-hectare site which provides for three phase site development for: • Logistics park • Light Manufacturing • Heavy Manufacturing The development will take place in three phases: Phase 1A- 80ha brownfield Phase 1B- top structure development on the 80ha serviced land; Phase1C- bulk infrastructure on the 20ha Phase 2- 433ha and Phase 3- 471ha

Mining Capital Equipment Manufacturing & Supply The development of the mining equipment manufacturing cluster is a complementary opportunity to the mineral beneficiation strategy above. The viability of mining depends on the availability of the right equipment, modern technology and skilled labour force. Research in mining procurement has found that about 85% of the mines procurement budget is spent outside North West province in Gauteng and out of the country. The PMU is currently engaging the mines to compile the procurement requirement database for the goods and products in the next 5 to 10 years. Agro-Processing & Manufacturing Citrus and tobacco as well other crops were the mainstay of the economy many years ago, hence citrus farming is still pursued at a reduced scale in the different pockets of the district. The Pt Valley is currently consolidating all the different efforts by different institutions i n c l u d i n g c o m m u n i t y s t r u c t u re s a n d government to develop a clear strategy for agro-processing and manufacturing. Agriculture in the rest of the province is highly is mechanized with significant amounts of money spend on the importation of agricultural capital goods and products. The Pt Valley SEZ is been positioned to create industrial capacity to manufacture agriculture machinery in the province.

Renewable Energy Projects & Components Manufacturing.

Manufacturing: Packaging Products

Energy storage has huge opportunities for Bojanala Region in both mining and mineral beneficiation as well as commercial exploitation. The SEZ will provide for local industry development, innovation and research and developmental and also other development impact including skills development and technology transfer. Since the establishment of the PMU, a number of investment proposals have been received in the Renewable Energy Cluster – for the manufacture of solar panels, energy storage systems and conversion of waste to energy technologies. The sector has huge economic opportunities and spin-offs in the development of electricity cars and bikes both locally and overseas.

Bodirelo Industrial Park within the earmarked Platinum Valley SEZ, is home to Golden Era Group of Companies packaging cluster for over 20 years. The Waxpak founded in 1996, offers three product ranges: Disposable plastic products; contract packing and crimp cups. The New Era Paper bags offers a range of choices: Matt Carrier bags, glossy carrier bags and flexo carrier bags.

The idc is of the view that energy storage is a “new wave” in the energy sector and as such it is increasingly becoming a reality; according to the corporation the country needs to prepare itself if it wishes to take advantage of the energy storage growth opportunities within the energy storage stationary value chain and the mobility value chain. The Pt Valley SEZ is positioned to take advantage of such opportunities.

The New Era Packaging, ISO 9000 accredited since 1996, manufactures own board to produce corrugated boxes – Bflute, C- flute and E-flute board; in three ply, five ply offering benefits of: protection of products during the value chain distribution, greater efficiency, better planning. Gaytri cans manufactures twopiece aluminium cans for the beverage sector.

Sectoral Focus Area In the Platinum Valley SEZ; the following sectors have been prioritized: • Mineral Beneficiation: (Platinum Group Metals- PGMs); • Mining Capital Equipment Manufacturing and Supply; • Agro-Processing and Manufacturing; and • Renewable Energy Projects and Components Manufacturing. (Energy Storage) • Manufacturing – Packaging

Rationale for the Selection AND Identification of the Industrial Clusters Mineral Beneficiation (PGMs) South Africa owns the majority of the world’s reserves of the Platinum Group Metals (PGMs) and all the main multinational mining farms and upstream processing farms are involved in the South African PGMs mining and processing industry. The reserves are found largely in the Limpopo and North West provinces. The PGMs are mined and processed in South Africa to the point where the metals can be used as inputs for fabrication of value added applications, but the metals are almost entirely exported for further processing overseas. There are opportunities to process and add value to the PGMs to earn more revenue to our mineral wealth.

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INVESTMENT OPPORTUNITIES Platinum Beneficiation: The Platinum play a significant role in many value chains, including, but not limited to: Automotive and Transport Applications - Catalytic converters/ Auto-catalyst - Fuel Cells - Hydrogen purification - Petroleum Refining - Antilock Braking Systems - Airbag Initiators - Engine Management Systems - Care and Aircraft Spark Plugs - Aircraft Turbine

Industrial

- Alloys and Industrial Crucibles: Glass, Crystal Growth and Glass fibre - Nitric Acid and Other Chemical Catalyst - Industrial Applications: Caustic soda, Nylon, Silicones, Synthetic Rubber, Thermocouples

Environmental - Platinum Gauses used for N2O abatement - Air purification Panels - Ethylene Absorber - Water Treatment

Medical - Implants and Tools: Aural and Retinal implants, Pacemakers and Defibrillators,Catheters and Stents, Neuromodulation, Cancer Treatment. - Dental solutions

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Electronics - Ceramic Capacitors - Computer Hard Discs - Electrodes - Military equipment

Jewellery Everyday Products - Glass and Glassware Glaze - Photography - Razor Coatings - Smoke and Carbon Monoxide Detectors - Forensic Staining

Agro-Processing and Manufacturing - Conveyor systems - Agriculture Machinery (OEMs) - Processors - Storage tanks - Pumps and valves - Refrigeration - Heating Equipment

Renewable Energy Products - Solar Panels - Battery Storage Systems - Wind Turbines

Mining Capital Equipment

Packaging products

The mining products and equipment are critical for any mining operations both for underground and open-cast mining. There can be no mining without the right capital equipment, including:

- Aluminium closures - Alcoholic beverages - ROPP screw caps - Aluminium tubes - Crown corks - Cans for chemicals

- Mineral Processing equipment - Conveyor systems - Rock drills - Pumps and valves - Off-road Special Vehicles - Sorting Machinery - Plant Hire Equipment

LOCATION ADVANTAGES The Platinum Valley SEZ is located in Mogwase – in the heart of South Africa’s PGM reserves, resources and deposits. Mogwase is located within 46km of Rustenburg Town, 140km from City of Tshwane, 180 km from the City of Johannesburg. There are over 24 mining shafts within the radius of 60km. The Mankwe FET Campus is 10km away offering technical qualification including boilermakers, artisans, mechanic etc. The Pt Valley SEZ falls within the originally conceptualized Platinum Corridor, with the focus on the North West portion of the East-West Corridor that links Maputo with Walvis Bay through Nelspruit, Pretoria, Rustenburg, Lobatse and Windhoek; the Treasure Corridor, to strengthen developments from Johannesburg to Potchefstroom, Klerksdorp and the Western Corridor, to strengthen a North- South initiative from SADC through Botswana.

SEZ INCENTIVES The Investment Strategy for the Platinum Valley SEZ will be informed and targeted at companies that are playing in all the above economic sectors The incentives offered include: - CIT Tax rate of 15% - Allowances on buildings and Improvements - Wage Incentives - Special Customs and VAT Incentives - Sunset Clause until 2024

SEZ Allowances - Industrial Policy Investments allowances - Depreciation Allowance - Capital Allowance - Learnership Allowance - Certified emissions reductions – tradable carbon emissions - Research and Development Allowance

DEVELOPMENT PLANS

LATEST NEWS

The Integrated Infrastructure Master Plan will provide a vision for the future use and development of the Platinum Valley SEZ, provide the understanding of how the SEZ is currently developed, its use patterns, and the spatial implication of all industrial, residential and retail developments in the MKLM municipal area. The Master Plan will also identify opportunities for improvement and development of infrastructure inclusive of the SEZ through an incrementally staged plan to guide development and provide investor certainty for the next 20 years.

Investment promotion and attraction remains a critical component of a successful SEZ. In that regard the PMU will be participating in the three investment missions led by the dti, firstly during the Special Economic Zone Roadshow to Shanghai, China from the 28th to 30th May 2018; Secondly to: The 2018 Africa Trade & amp; Investment Global Summit (ATIGS), scheduled on June 24 to 26, 2018 at the World Trade Centre Washington D.C, under the main theme “Driving Trade, Unleashing Investment and Enhancing Economic Development: the Gateway to African Markets” and thirdly and lastly at: The 20th China International Fair for Investment Trade (abbreviated as “CIFIT”) scheduled to take place during September 8th-11th in Xiamen, China.

However, the Master Plan will not only focus on the SEZ site but extend to the entire municipal area of Moses Kotane Local Municipality and even the Bojana District Municipality and Rustenberg Local Municipality to cater for other tertiary services that are not in place within MKLM for instance, tertiary hospitals and schools, other mandatory services offered by the District Municipality. The Master Plan will identify Government’s needs, strategies, policies and immediate priorities in key economic infrastructure sub-sectors (transport, energy/power, water supply, sanitation and drainage, solid waste management, telecommunications and ICT for the next 20 years and prioritize the needs for future capital investments. The Master Plan will overlay a series of networks to identify opportunities for improving connectivity, usability, sustainability, social inclusion and economic benefits of the SEZ for all citizens of the district and the North West Province related to bulk infrastructure planning, provision and funding.

FUTURE PLANS The Project Management Unit is currently implementing the dti Planning Guidelines which will enable the NWDC to apply for the SEZ designation. The SEZ license will give the NWDC the authority to offer incentives and grant new investors the SEZ the special allowances. An understanding has been reached between the NWDC and the dti to complete these work in terms of the published planning guidelines by the end of the second quarter September 2018. The PMU is on track to meet these milestone.

• Outline the arrangements of the development of a Master Plan for the Platinum Valley Special Economic Zone (SEZ); • Set out the parameters of the project and the expected outcomes of the Project • Set out the relationships between all parties to the Platinum Valley SEZ; • Arm the partnership model underpinning this project infrastructure planning, provision and funding; • Strengthen the planning, financing and management capabilities of key government agencies and departments such as NWDC, MKLM, BDM, RLM, NWPG, dti, etc; • Improve coordination among stakeholders and development partners in the planning, prioritizing and delivery of infrastructure services.

Contact person for enquiries: Mr Davis Sadike | Project Executive: SEZ PMU North West Development Corporation | Mobile- +27 71 106 0406

| AFRICA SEZ’S MAGAZINE | Issue 1

Special Economic Zones

An efficient instrument to increase industrialisation

By Will Huang

Special Economic Zones (“Sez’s”) are geographically designated areas within a country that are set aside for specifically targeted economic activities, supported through special arrangements (that may include laws) and systems to promote industrial development. An SEZ is meant to be an economic development tool to promote rapid economic growth by using various support measures to attract targeted foreign and domestic investments and technology. President Jacob Zuma stated in his recent speech at the Forum on China-Africa Cooperation that the government intends to enhance collaboration in the development of industrial production capabilities and value addition by establishing industrial parks and clusters, technology parks, Sez’s and engineering centres, as well as providing training for engineering and technical personnel and managers. Certainly, Sez’s will focus highly on the government’s agenda going forward. South Africa, like many developing countries, faces a series of daunting socioeconomic challenges, including high levels of unemployment, income inequality, subdued economic growth, an amalgamation of previously racially defined areas, abject disparity, as well as special development challenges and regional differences. This situation calls for urgent policy initiatives from the government that will propel the country into a higher growth trajectory and improve the livelihood of South Africans. The South African policy for economic growth and development recognises that it must respond to these rising challenges. The existing global and domestic economic conditions demand a focus by the government on new sources of competitiveness that are based on innovation and productivity, with an entrenched base in skills development for its citizens, as well as infrastructure development and efficient, responsive state action. The government also recognises that it needs to take drastic measures to implement and enhance local and regional demand, increase foreign direct investment, and to extend export promotions to rapidly growing economies in the region and, ultimately, to other parts of the world. Linkages with the local economy will allow Sez’s to build on comparative advantages in the regions in which they operate and will also allow for participation by local suppliers/clusters in the respective value chains. In order to raise levels of direct investment by domestic and foreign investors to accelerate growth, employment and re-integration into the global economy, the government initially introduced the concept of Industrial Development Zones (“IDZs”) in 2000. Five IDZs were subsequently designated, namely Coega (2001), OR Tambo International Airport (2002), East London (2002), Richards Bay (2002) and Saldanha Bay (2013). The intention is to integrate these existing IDZs into some of the SEZs in the country once the legal frameworks are put in place. Government has been inspired by developments in Europe and Asia, which have provided valuable lessons and examples. The benefit of long-term industrialisation and a strong manufacturing base has long been an attraction for the

South African economy, and by strengthening and expanding the manufacturing sector, an anchor for long-term economic prosperity can be established. This, coupled with the right legislative framework and commitment by the necessary spheres of government, can lead to economic growth and development that will ultimately create much-needed jobs in South Africa. Going forward, South Africa has promulgated the Special Economic Zones Act, 2014 to address its socio-economic challenges. Unfortunately, the Act has not yet come into effect, but the current benefits on offer are: • 15% corporate tax benefit in comparison to other regions in the country; • Building allowances; • Employment incentives; • Customs controlled areas; and • 12i tax allowances (designed to support greenfield investments). Besides the Act serving as a medium for the South African government to effectively regulate all Sez’s and IDZs (which are now one of the categories of SEZ in terms of the Act), it also proposes an internationally competitive SEZ value proposition and standard aimed at assisting and attracting both domestic and foreign direct investments into the various Sez’s. The intention is that industrial production in the Sez’s will focus largely on the manufacture of value-added goods and services. Once designated and established, it is expected that each SEZ will have strong backward and forward linkages with other sectors in its locality, thus building and strengthening the region through supplier development programmes. This should ultimately translate into the socio-economic development so desired for many parts of the country. This approach is a slight departure from the traditional SEZ models employed by other countries, where Sez’s are treated as separate enclaves.

The concept of Sez’s is still relatively new to South Africa. The approach that the government has adopted is to focus on the socio-economic and development challenges unique to the region in which the specific SEZ is located. Although the implementation of the SEZ strategy appears to be flexible, it does bring about additional problems that will only be ironed out through time and experience. The World Bank already recognises the success of the SEZ initiatives in China and has recommended suitable Sez’s as an effective instrument for African countries to achieve industrialisation. With a little more time, dedication and effort, Sez’s are potentially successful projects that the government should invest in that could bring about unrivalled rewards for the country as a whole. This article was first published by ENSafrica (www.ENSafrica.com). No information provided herein may in any way be construed as legal advice from ENSafrica and/or any of its personnel. Professional advice must be sought from ENSafrica before any action is taken based on the information provided herein, and consent must be obtained from ENSafrica before the information provided herein is reproduced in any way. ENSafrica disclaims any responsibility for positions taken without due consultation and/or information reproduced without due consent, and no person shall have any claim of any nature whatsoever arising out of, or in connection with, the information provided herein against ENSafrica and/or any of its personnel. Any values, such as currency (and their indicators), and/or dates provided herein are indicative and for information purposes only, and ENSafrica does not warrant the correctness, completeness or accuracy of the information provided herein in any way.

There are a number of questions that the government still needs to address: Who owns land on which the SEZ will be situated? What of new businesses with no track record – will they be allowed to locate into an SEZ? Is the reliance on tax incentives really the key to make Sez’s flourish? What are the types of incentives to be offered by a local government in which a SEZ is located?

COEGa ECONOmIC TRaJECTORy

Simlindele Manqina, cdc corporate communications & Stakeholder Manager outlines the organisations economic trajectory. Taking Stock: Reflecting on progress & what lies ahead The year 2018, understood in some circles as the year of a “new dawn” marks seventeen years of the Coega Development Corporation (CDC) operations. Reflecting on the years spent navigating a turbulent economic environment, the country’s industrial development programme has recorded significant achievements coupled with some major advances over the years. Equally, the introduction of the Special Economic Zone (SEZ) Act replacing the Industrial Development Zone (IDZ) regulations, which had been the tool that governed IDZs in South Africa, introduced another dimension, the concept of an integrated ecosystem. The integrated ecosystem approach, initially explored by the Chinese in the early 1980s saw the establishment of the first Economic Development Area - Chinese reference to special economic zone (SEZ), some of the zones having achieved success, with the Tianjin Economic-Technical Development Area (TEDA) and the Shenzhen Economic Development Area being the most successful. The adaptation of the concept into the SEZ act seeks to boost private investment (domestic and foreign) in labour intensive areas in order to stimulate job creation, competitiveness, skills and technology transfer as well as increasing exports of beneficiated products through the establishment of special economic zones. The CDCs growth trajectory over the past five years has seen it diversify its core targeted sector approach and investment market target to incorporate the changing global landscape. This has seen the organisation surpassing the double-digit growth in new investments for three consecutive years. Furthermore, the “Look East Approach” has resulted in the organisation expanding into the Asian market with commendable success acquiring two Fortune 500 companies in the automotive sector. This has led to a R600 million investment by First Automotive Works (FAW), a truck assembly plant. Another acquisition includes a R11 billion investment by BAIC a car manufacture, currently under construction in Zone 1 of the Coega SEZ. This feat has contributed in propelling the SEZ into a new realm as an investment hot spot offering total investor solutions with purpose-built manufacturing including beneficiation of export goods, investment and local socioeconomic growth – skills development and job creation. The work put in by the CDC in attracting domestic and foreign investors has received recognition from global shores including the Chinese Vice President Dr Li Yuanchao in his visit at the Coega SEZ: “I’ve been to many developing countries and industrial development zones; the Coega IDZ is by far the best of them all”. Coega SEZ performance has seen it leading the pack in South Africa in attracting investors. Currently the SEZ has forty-two (42) operational investors worth a combined investment value of seven billion (R7 bill).

what lies ahead? The affirmation of South Africa’s investment-grade credit rating and the revised outlook from negative to stable by Moody’s sets a new path for sustained efforts in building on existing domestic and foreign direct investment. In the year 2018, the CDC is poignant with enthusiasm as it awaits the completion of investment projects valued in excess of R12 billion. The projects, which include, Osho Cement – R600 million; Customs Control Area (in the logistics sector); Beijing Automobile International Corporation (BAIC SA) – R11 billion; Hella (Automotive investment in the CDC Logistics Park) – R53.3 million and MM Engineering – R350 million. In conclusion, as a state owned entity, the CDC is mindful of the competing priorities of the national fiscus. Appreciating the dwindling funding allocation over the years, the organisation has focused its efforts towards a long-term view of becoming selfsustainable. This has led to several efforts undertaken by the organisation in generating revenue separate from the funding allocation by the provincial government. As a result, for the first time since the CDC’s inception, the organisation exceeded the half-a-billion rand (R541,8 million) revenue mark in the last financial year.

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about Coega The Coega Development Corporation (Pty) Ltd (CDC) is the operator of the Coega Industrial Development Zone (SEZ) in Nelson Mandela Bay, South Africa. Established in 1999, the CDC is wholly-owned by the South African Government. The Coega SEZ is South Africa’s premier location for new industrial investments. The CDC aims to provide a competitive investment location and a total business solution for its customers, as well as ensuring sustainable economic development in the region. The CDC’s SEZ Zone 1&2 is a fully registered Customs Control Area. To date, the CDC has delivered on its mandate to provide socio-economic development for the Eastern Cape, has enabled the creation of 102,794 direct and indirect jobs since inception. Currently, there are 42 operational investors in the Coega SEZ with investment value of R7 billion. Investment portfolio is in excess of R181-billion. The CDC has also trained 92 583 people since inception.

PROJECTS UNDER CONSTRUCTION AT THE COEGA SPECIAL ECONOMIC ZONE

for more information contact:

Mr Simlindele Manqina Manager Corporate Communications & Stakeholder Relations Coega Development Corporation Work: 041 403 00807 E-mail: simlindele.manqina@coega.co.za

Simlindele manqina

The Coega SEZ has four (4) projects under construction, pictured is BAIC, the largest investment in South Africa over 40 years with an investment value of R11.5 billion. The other investors under construction include Osho Cement (metals sector), MM Engineering (Metals sector) and the Customs Control Area in Zone 1 (logistics sector) accumulatively valued at twelve billion rand (R12 billion).

View CDC’s Annual Report

| AFRICA SEZ’S MAGAZINE | Issue 1

www.coega.co.za

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The Energy projects at Coega are turning the Eastern Cape into a thriving energy hub with over R40-billion investment

TOP 9 REASONS TO INVEST

would satisfy the bulk of the Eastern Cape electricity requirements. As part of CDC’s preparation for the LNG facilities and Gas-to-Power plant in the Coega SEZ & Port of Ngqura, the organisation has identified three suitable sites within the SEZ, and in close proximity to the Port of Ngqura, electricity Sub-Stations and Services Corridor.

AT THE COEGA SPECIAL ECONOMIC ZONE

Furthermore, extensive preliminary work has been completed to advance Coega’s Gas Readiness. EIA for rezoning Coega IDZ

2009 Pre-Feasibility Study

Marine pipeline servitude/ sea water intake EA underway

Approved Coega East Masterplan

CDC initiated Environmental Studies for New Gas-to-Power Projects

400kV TX Line EA and associated services corridor approved

Supported by existing Eskom and municipal substations

Established Environmental Liaison Committee and Environmental Management Committee

World Class Infrastructure

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Green Initiatives at Coega Energy projects in the Coega Special Economic Zone, adjacent to the deep-water port of Ngqura

Coega SEZ continues to spark interest from the energy sector, and is earmarked for the 1000 MW of gas to power plant valued in excess of R25-billion. South Africa is presently one of the world’s most exciting energy markets. The Eastern Cape stands to benefit from the world energy markets because the province is endowed with good resources for a diverse energy mix. To this end, the CDC plays a central role in advancing readiness for the realisation of various energy projects. Having created a foundation for Coega’s readiness for energy projects since the early 2000’s, the CDC has successfully been able to attract investors in the energy sector because of a decade long of extensive work in preparation for more energy projects. What is center stage for the CDC is developing an industrial and commercial energy offtake market in the Eastern Cape and specifically the Nelson Mandela May Metro, says Sandisiwe Ncemane, CDC’s Energy Sector Manager. “The Department of Energy, as an outcome of the Gas Options of 2016, announced the Coega SEZ as one of the preferred locations identified to host the Gas-to-Power plant, with an allocation of 1000MW.The estimated investment value for the gas-driven power facility is R25-billion.The CDC has initiated an Environmental Impact Assessment (EIA) study for the gas to power programme, and strategically further explored the SEZ’s full potential beyond the current allocation of 1000MW,” says Ncemane. In addition to the Gas-to-Power plant, the CDC has successfully attracted R4 billion worth of energy projects. These include the R3,5 billion Dedisa Peaking Power Plant, as well as the R9 million lay down area for normal and abnormal cargo, including wind turbines infrastructure and/or components. The 12ha lay down area in Zone 1 of the Coega SEZ is located on the boundary between the Port of Ngqura and the Coega SEZ and has played an integral role in the regional connection of wind power. Complementing this project is also a million rand 48KW Solar Plant, which feeds power to the CDC building. Therefore, Coega is key for energy security diversification and transformational energy-related initiatives in the region, which include generation and manufacturing orientated projects for energy sector. Initiatives

Experience and Capability

Localisation & Manufacturing

Manufacturing sites, with close proximity to Port and logistics network in Coega SEZ.

Industry Engagement

Investment Attraction & Project Development. Participation in international and national industry activities. Engagement with various Government agencies & State Owned Entities.

SMME & Supplier Development

Facilitation of Emerging entrants into the manufacturing sector in particular black and women owned enterprises. Assistance with the commercialisation of newly developed home-grown patents and technology, ensuring technology transfer.

Human Capital Solution

The CDC prepared the initial Labour absorption forecasts related to transformational projects on behalf of the Eastern Cape Province for submission to the National Infrastructure Skills Planning Committee.

Labour Management

Support Recruitment, Placement & facilitates Labour relations. Recent experience with Dedisa Peaking Power Project at Coega SEZ

Skills & Training

Coega’s Skills Development Centre is accredited for various learning programmes comprised of apprenticeships, learnerships and part qualifications.

Infrastructure Programme Implementation

Project Management Services for the Development of Supporting Infrastructure and logistics i.e. Port Infrastructure liaison, Roads, Bridges, Housing & support infrastructure.

This aligns to the broader CDC mandate, anchored on advancing industrialisation through stimulating local content manufacturing. Therefore, the key focus areas include: • Locating LNG & Gas-to-Power power solution at Coega; • Building socio-economic linkage to Indigenous Gas Prospects and related value chain; • Advancing the Nuclear Readiness Programme to support Thyspunt; • Expanding Renewable Energy implementation to drive socio-economic growth; • Leveraging lessons from Dedisa PPP & REIPPPP experience; and • Advancing the development of the Oil Refinery at Coega.

Coega has a mix of wind farm investment projects planned with an overall capacity of 183 MW, a 12 MW Photovoltaic (PV) solar farm, with Bioenergy projects in the pipeline.The Coega Solar Rooftop Project entails the installation of solar solutions on more than 35 suitable industrial buildings in the Coega SEZ and Nelson Mandela Bay Logistics Park.

A prominent component of the Integrated Resource Plan (IRP) is the requirement for 9 600 MW of new nuclear capacity. Thyspunt, which is 90 km away from the Coega SEZ, has been earmarked as a likely location for the nuclear fleet in South Africa. CDC has identified advanced component manufacturing and localisation opportunities.

More interest is expected in the sector resulting from a memorandum of understanding (MoU) signed between Eskom and the CDC in March 2017. This relates to advancing readiness for South Africa’s planned nuclear-powered project.The two state-owned companies, Eskom and CDC, are working together in support of government’s plans to build local capacity through supplier development and localisation around the unfolding infrastructure for the nuclear programme.

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Dedisa Peaking Power Plant Experience Dedisa Peaking Power Plant, a diesel powered plant, is one of the biggest operational investment in the Coega SEZ to date at R3,5 billion, 342 MW Power Station. The success of this investment together with learnings from other existing energy investment projects, are a living proof of the attractiveness of Coega SEZ, as a preferred destination for energy investments and related sectors.

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Geographic Information System helps investors make informed decisions on positioning their plant. ICT Solutions for supply chain management, budgeting, procurement and financial management. Customs Control Areas (CCA) in the Logistics and Automotive Zones. Customs compliance infrastructure management. Proven in-house expertise in delivering infrastructure projects of all sizes on budget and on time.

One Stop Investor Services Centre

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THEFT / FRAUD / DISHONESTY / BRIBERY / BLACKMAIL / INTIMIDATION / CORRUPTION

The Coega SEZ is strategically positioned on the main Southern Hemisphere east-west shipping routes. It is the only SEZ in Africa to be served by two ports, with a combined capacity of over two million TEU (Twenty Foot Equivalent Unit) a year. The deep-water port of Ngqura is the designated South African hub for container traffic, and is served by the world’s top shipping lines. Named day services connect the port to the main global markets and supply centres. The Port of Port Elizabeth operates world class container, vehicle, breakbulk and bulk terminals. The shipping links are complemented by direct road and rail links to the rest of South and Southern Africa.

World Class Support Systems

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Tip-Off Anonymous Call Toll-free TODAY: 0800 007 035 and remain anonymous.

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In a recent independent survey by Muffin Consulting, 84% of the companies invested and operating in DEDISA Peaking Power Plant in the Coega Special the Coega SEZ reported a significant increase in Economic Zone, operational from 2015 profitability. More than 90% of current operational investors described the Coega SEZ and its logistics park, where VWSA is located, as the ideal location for industries wishing to grow. Nearly 85% of investors at Coega had increased their workforce since opening in the SEZ, while over 60% had expanded their factories. More than 50% of companies surveyed are sourcing more than 78% of their inputs locally, thus boosting the local economy. Coega Dairy and PE Cold Storage, for example, have increased their capacity through various plant expansions within a short period of 5 years, thus creating more sustainable jobs for the Nelson Mandela Bay Municipality, concludes Dr Ayanda Vilakazi.

The CDC, and various State organs, including DoE, Eskom, and CEF have conducted extensive preliminary work to advance the Readiness of Coega to host or locate the Gas-to-Power Project. The project entails the generation of over 2 500 MW of electricity, which

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The aforementioned success of the Coega’s energy sector is proving that the Coega SEZ is an ideal location for mega projects in Africa and for global investors wishing to increase revenue and profitability. The CDC leverages innovation and business ecosystems and strategic collaboration in order to enhance competitiveness and attractiveness as investor location of choice for Energy projects, while ensuring that Coega remains relevant to the developmental trajectory of South Africa.

There is a rail connection between the SEZ, the rest of South Africa and neighbouring countries. Major roads provide a seamless link into the national N2 arterial highway, which connects the SEZ to the rest of the region. The zone is integrated into Africa’s newest deep-water harbour, the Port of Ngqura. National and international connectivity for passengers and freight is provided by the Port Elizabeth International Airport (PLZ), which is around 20 minutes travelling time away on the N2 Freeway. It takes just 1 hour 40 minutes to fly from PLZ to OR Tambo International Airport on a route serviced by a number of airlines. The distance to the main banking and business precincts in Port Elizabeth is around 20 km, which takes about 15 minutes.

Regional and International Logistics

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One of the key pillars for CDC’s success with the Dedisa Peaking Power Plant and other related projects in the SEZ is the Zone Labour Agreement (ZLA), the only ZLA in effect in Southern Africa. The ZLA contains agreements negotiated between stakeholders in the South African construction industry in 2003. The ZLA has effectively ensured the rights of employees and the interest of employers are maintained while working on the Coega SEZ and Port of Ngqura. “Looking ahead, I am confident that in the frame of South Africa’s Gas Master Plan we will be able to convert the Dedisa facility to baseload and combined cycle as envisaged by the Department of Energy”, says Arnaud de Limburg, CEO of Dedisa Peaking Power Plant.

STOP:

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The need for new refining capacity and security of supply is a critical factor that ought to keep the country sober during turbulent times.The new crude oil refinery to be based in Coega will lead to significant economic benefits especially when one considers the country’s dependency on liquid fuels for the transportation of goods and people. The Refinery project has the potential to transform the province’s economic landscape given the high unemployment rate in the EC, as the project is estimated to create 24,000 jobs during the peak of the construction phase, which includes 5,000 to 10,000 highly skilled artisans. Approximately 1,000 permanent refinery jobs and 11,000 indirect jobs would be created, while it is estimated to to contribute 5.5% per annum to the local GDP and the spin-offs from the localisation initiative amounting to approximately R20 billion. The Coega SEZ has allocated the necessary industrial land and infrastructure for the project’s implementation.

CDC has robust internal governance structures in place to prevent corruption. Strong and proven supply chain processes ensure minor and mega infrastructure projects are implemented on time, within scope and on budget.

A Connected Zone

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Crude Oil Refinery Developments at Coega

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Governance

Coega Readiness for Nuclear Localisation

Gas Readiness at Coega

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The Coega SEZ is ready to “plug and play”. All the necessary infrastructure is in place, including roads, bulk water and sewer networks, telecommunication sleeve networks, electrical substations (HV and MV), and overhead power lines (HV and MV) – all that investors are looking for and more in a world class industrial development zone.

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Full Human Relations support, including recruitment, training and managing labour relations. Assistance with visa applications, work and study permits, applications for municipal services. Assistance with applying for incentives. Facilitation of environmental approvals and licence requirements for project development (EIAs, Basic Assessment, Air Quality Licence,Waste Licence and OEMP). Customs services to assist with all SARS Customs

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Incentives

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The CDC assists investors in their application for incentives offered by the national government, provincial legislature and local municipality. They include incentives for: – Training – Automotive Production and Development Programme (APDP) – Production Incentive Programme – Aquaculture Development and Enhancement Programme – Research and Development (S11D) – Export promotion incentives – Infrastructure support – Reduced municipal costs The Coega SEZ also provides some of the most affordable rates for developed and zoned industrial land in Africa.

Skills Development

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registrations and permit processes in preparation for approval of facility for operational phases. Incentives: Assist all investors to ensure optimal use of all necessary incentives available to industry (SEZ, Municipal, and Sector Specific Incentives). Construction management and operational Safety, Health and Environment (SHE) management systems in place. SHE systems monitor and control construction and operational phases (waste management, water and air quality, storm water and effluent, alien plant eradication, open space management). The CDC clinic provides services during construction and operational phases.

Systems are in place to assist investors with skills development. Advanced systems for registering work-seeker and competency based recruitment functionality. Advanced labour management systems in place. Co-ordinated transport services. Induction training capacity. Central wage payment services. Construction Village facilities provide accommodation, conference and training venues. Partnership with internationally recognised university (NMMU) for research and development. Apprenticeship training centre (construction, manufacturing and MEI).

Lifestyle – the Best of All Worlds

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Nelson Mandela Bay and its surroundings offer a lifestyle that is the envy of other SEZ operators around the world. It offers a cosmopolitan Indian Ocean lifestyle that is a unique mix of the best of African, European and Asian cultures. Executives and key staff will find comfortable homes within a 20 minute commute of the SEZ. Nelson Mandela Bay has world-class theatres, including an opera house, museums, restaurants, beaches, public gardens, sports stadiums, gymnasiums, hospitals and shopping malls. It is home to some of South Africa’s top schools, as well as the Nelson Mandela Metropolitan University. There is plenty of opportunity to enjoy the great outdoors – Nelson Mandela Bay is the sunniest metro complex in South Africa. Algoa Bay, the metro, is rated as one of the top water sport venues in the world and has world-renowned Blue Flag beaches. Nelson Mandela Bay is the gateway to the world-famous Garden Route. For those venturing further afield, the Metro is 750 km from Cape Town along the Garden Route, 1 000 km from Durban, and 1 300 km from Gauteng.

Free fax: 0800 200 796 | Email: fraud@kpmg.co.za Website: www.thornhill.co.za/kpmgethicslinereport Postal Address: BNT 371, P.O Box 14671, Sinoville, 0129

Identified site locations for new Gas-to-Power projects at Coega

The KPMG Ethics Line service allows all stakeholders to report concerns of misconduct.

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Hawassa:

A Masterpiece of Ethiopia’s Industrial Parks

By Bilal Derso

Due to its unwavering commitment to make the country the leading manufacturing hub in Africa by 2025, the government has been executing a massive industrial parks development and expansions. Development of world- class, specialized sustainable, integrated, exportdriven and competitive industrial parks is the centrepiece of government’s vision of economic transformation. Through industrial parks, the country has been working to ensure agricultural transformation; enhancing export capacity and augmenting the manufacturing sector’s share in the national economy. Built in just nine months in the outlay of 250 million USD, Hawassa Industrial Park (HIP) is the largest specialized textile and apparel park in Africa and Ethiopia’s flagship project of economic transformation. The park located at the heart of Hawassa, the administrative centre of the Southern Nations, Nationalities, and Peoples’ State and a premium holiday destination some 275 kms south of the capital Addis Ababa. Hawassa, known for its hospitality and home to a diverse group of people, has added to its profile an ultra-modern and country’s leading textile and apparel industrial park that has equipped with world- class infrastructure. HIP is strategically located along a very key economic corridor and situated closer to Hawassa Airport. The Park is also closely working with Hawassa University which offers various engineering courses at undergraduate and post-graduate levels thereby satisfying

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Parks’ demand for skilled manpower. HIP covers a land area of 1.4 million square meters, of which 410,000 square meters of factory space consisting 37 sheds. Furthermore, the Park has an extensive road, electricity, telecom and fresh water supply lines. The Park accommodates fabric mill, garment and accessory manufacturers and a One Stop Shop Service building dedicated for bringing government services such as issuance of business licenses, registration of trade name, customs clearance as well as work and visa permits closer to industries. Furthermore, various governments organs have been offering land, electricity, water and other amenities for investors in the HIP in effective and efficient manner. Shared facilities such as expat employees’ dormitories and commercial buildings covering a land area more than 26,000 square meters destined for the use of food court, shopping and exhibition centres, clinics and banking services have been built. Dedicated power sub-station, telecom and a fire brigade are also available in the Park. Consistent with the Ethiopian government’s commitment to a green economy, HIP is developed to be eco-friendly industrial park. Hence, the Park fitted with a state-of-the-art effluent and sewerage treatment plant that uses the latest technology and operated in conformity with international standards. Apart from minimizing impact on surrounding soil salinity, groundwater pollution or ecology of river bodies, the technology helps to conserve water resource through recovery and re-use of treated sewage. Thus, it enables the treatment and recycling of approximately

90 percent of water used in the Park. The technology further enables recovery and re-use of salt used in the textile dyeing process. To this end, more than 32,700-meter square-wide Zero Liquid Discharge (ZLD) facility, a first of its kind in Africa, have been constructed. The Park has also extensive sewerage, recycle and integrated drainage lines. Concerning job creation, HIP will employ about 80,000 employees in two-shifts once it fully operational. The entrants are meticulously selected to ensure cohesive and cordial relationships among tenants with a shared vision of ensuring higher productivity and competitiveness in the Park. Hawassa amasses a labour supply of up to five million people within 50 kilometres radius making it an ideal investment destination for labourintensive industries. This means a labour cost 20-25 percent lower than Addis Ababa and a low turnover of employees due to a less competition from other industries and sectors.

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Through industrial parks, the country has been working to ensure agricultural transformation; enhancing export capacity and augmenting the manufacturing sector’s share in the national economy.”

globally by attracting FDI in the textile and garment industry next to Vietnam. Hawassa Industrial Park set to be engaged in exporting high-end products to international market and currently fully occupied by foreign companies. The Ethiopian Investment Commission (EIC), however, is engaged in recruiting and encouraging potential domestic investors to involve in the Park. Ethiopia has secured 4.17 billion USD from FDI during the 2016/17 fiscal year and the amount surpassed that of the past year same period by 900 million USD. As country’s leading industrial Park, the contribution of HIP in attracting FDI is expected to be raised in many years to come. In realms of foreign currency earnings, the government set a plan to obtain one billion USD annually once HIP starts operations in its full potential and supplement the current shortage of reserves.

The presence of an industrial park generating a huge amount of jobs for the residents of Hawassa and environs. According to a UKbased bi-monthly publication, fDi magazine, Hawassa became the leading city in the Middle East and Africa in creating 6,546 new Foreign Direct Investment (FDI) jobs in the first half of 2017 followed by Dubai and Jerusalem with 4,600 and 3,498 occupations.

Information obtained from EIC in September 2017 stated that the three-operational industrial parks of Ethiopia namely Hawassa, Bole Lemi and Eastern Zone have exported 248 million USD worth of goods in the last fiscal year. HIP has a lion’s share in the total export revenue and has generated 200 million USD in its four months operation in the reported period. Bole Lemi and Eastern Industrial Zone have also exported 24 million USD of goods each, according to the Commission.

HIP has also been playing a very significant role in luring more foreign investment to the country and gaining the interests of leading textile and apparel companies. The Park, in this regard, is the primary factor to Ethiopia stood second

To put in the nutshell, the aforementioned outcomes of Hawassa Industrial Park are some tangible manifestations for the feasibility of government’s economic transformation plans and strategies.

Adoption of Victoria Falls (SEZ) to boost tourism arrivals By Maxwell Teedzai, Buluwayo News24

The Government of Zimbabwe is set to consider the adoption of the Victoria Falls Tourism Special Economic Zone corridor approach which will go a long way in addressing imbalances in product profiling within Matebelaland North region, a move which is set to benefit marginalised communities especially such as Gwanda and the part of lower Zambezi area which have been excluded for a quite a long time with women and children the most affected. “This will go a long way in ensuring tourism development does not only concentrate on Victoria Falls but spreads to the entire province”, said the Minister of Tourism and Hospitality Industry, Hon Prisca Mupfumira while speaking during a consultative workshop on the National Tourism Sector Strategy (NTSS) in Victoria Falls. Minister Mupfumira further emphasised that the designation of the region as a Special Economic Zone (SEZ) should not only concentrate on investment from outside the country while ignoring the local people at the grassroots level. The project will, upon successful implementation, enable the Victoria Falls Tourism Special Economic Zone to see the emergency of world class tourism and hospitality training institutions that will capture the attention of the entire SADC region. She said Gover nment through her ministry had shown preparedness and commitment to the development of the Victoria Falls Tourism Special Economic Zone by placing the project under the ministry’s 100~day work programme.

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Hon Mupfumira also challenged the accommodation sector in Victoria Falls to seriously consider the domestic tourism market and not only be glued on international tourism, as it presents opportunity for economic growth and sustainability of the hospitality industry. Presently, Victoria Falls has 1 781 rooms and hotels constitute 1 125 of the rooms while the remaining balance being lodges and other accommodation facilities. The project which was funded at the tune of US$80k saw the training of women and youth residents in Victoria Falls in housekeeping, food and beverage services, food preparation, tour guiding and business management for Small to Medium Enterprises (SMEs) and women co~operatives in the tourism sector. This development by the Tourism sector in Zimbabwe through Government’s adoption of the Victoria Falls Tourism Special Economic Zone will see a boost in arrivals not only for Victoria Falls but also stimulate growth for tourism for other towns along the railway line corridors such as Gwanda.

South Africa is a leading producer and supplier of a range of minerals, with over 1 700 mines and quarries across the country. Mining contributes about 8% directly to South Africa’s Gross Domestic Product (GDP) and just under 460 000 direct jobs, with an estimated US$2,5 trillion to US$3 trillion non-energy mineral resource base. The Department of Mineral Resources (DMR) assumes the custodianship of all mineral resources in South Africa on behalf of its citizens. To this end, the DMR promotes and regulates the minerals and mining sector for transformation, growth and development as well as ensures that all South Africans derive sustainable benefit from the country’s mineral wealth. Various specialised divisions of the DMR and associated institutions are responsible for the administration of the mining legislation and regulations and for promoting the development of the industry. The DMR’s strategic goals are to:

SECTOR fOCUS: miner a ls

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• promote and facilitate an increase in mining activity and in value added to mineral resources extracted in South Africa • implement transformation policies that redress past imbalances through broader participation in the mineral sector • provide a framework for managing health and safety risks, enforce compliance and promote best practice in the mineral sector • promote sustainable resource management, contribute to skills d e v e l o p m e n t a n d t h e c re a t i o n o f sustainable jobs in the mining sector • contribute to a reduction in the adverse impacts of mining on the environment • attract, develop and retain appropriate skills and ensure the optimal utilisation of resources • implement risk-management strategies and promote corporate governance. Mining is regulated by three branches: the Mineral Policy and Promotion Branch, the Mineral Regulation Branch and the Mine Health and Safety Inspectorate.

mINERaL POLICy aND PROmOTION BRaNCH The Mineral Policy and Promotion Branch was created in April 2005, resulting from the split of the Mineral Development Branch. The strategic plan behind this restructuring was based on the fact that the functions performed by the former Mineral Development Branch could broadly be divided into three main streams: regulation, promotion and policy formulation. The branch is responsible for formulating mineral-related policies and helps promote the mining and minerals industry of South Africa to make it attractive to investors.

mINERaL REGULaTION BRaNCH The Mineral Regulation Branch consists of four chief directorates. Their functions are to: • administer the Mineral and Petroleum Resources Development Act, 2002 (Act 28 of 2002) and other applicable legislation to ensure the granting of prospecting and mining rights in terms of the Act promote mineral development including urban renewal, rural development and black economic empowerment • address past legacies with regard to derelict and owner-less mines and enforce legislation regarding mine rehabilitation by means of regulated environmental management plans • coordinate and liaise with national, provincial and local government structures for efficient governance.

mINE HEaLTH aND SafETy INSPECTORaTE The Mine Health and Safety Inspectorate was established in terms of the Mine Health and Safety Act, 1996 (Act 29 of 1996), as amended, for the purpose of executing the statutory mandate of the DMR to safeguard the health and safety of mine employees and communities affected by mining operations. The activities of the inspectorate are geared to achieve the following strategic objectives: • active contribution to sustainable development and growth • regulation of the minerals sector • promotion of health and safety in the minerals sector • efficient and effective service delivery • management of the culture, systems and people • ensuring financial stewardship. The main functions of the Mine Health and Safety Inspectorate are as follows: • p ro v i d i n g p o l i c y i n p u t s f o r t h e establishment and application of mine safety standards at mining operations and promoting the application thereof • providing policy inputs towards the establishment and application of mine equipment safety standards at mining operations and promoting their application • establishing and applying mine health standards at mining operations and promoting these applications • ensuring an effective support and inspection service.

BUDGET aND fUNDING The department was allocated a budget of

R1,669 billion for 2016/17. The bulk of this budget was transferred to its entities: • Council for Geoscience (CGS): R378,6 million • Council for Mineral Technology and Research (Mintek): R356,4 million • Mine Health and Safety Council (MHSC): R6,2 million • South African Diamond and Precious Metals Regulator (SADPMR): R53,2 million • State Diamond Trader (SDT): R631,3 million.

ROLE PLayERS mINING qUaLIfICaTIONS aUTHORITy (mqa)

Government’s influence within the mineral industry is not only confined to orderly regulation and the promotion of equal opportunity for all its citizens and investors, but government also participates in mining operations through stateowned companies such as Alexkor, the African Exploration Mining and Finance Corporation (Pty) Ltd and the Industrial Development Corporation. All stakeholders in the industry need to intensify skills development efforts to ensure that the mining industry operates in a sustainable and competitive environment. The future of mining in the country largely depends on the successful implementation of skills development initiatives. Particular focus is placed on artisans and artisan aid as well as other technical skills. Capacitybuilding within the department and associated institutions has also been prioritised in respect of identified critical areas of skills shortage; necessary interventions have been introduced, which include learnership programmes and bursary schemes. The MQA was established as a sector education and training authority. It facilitates the development of appropriate knowledge and skills in the mining, minerals and jewellery sectors to: • enable the development and transformation of the sector • contribute to the health, safety and competitiveness of the sector • improve access to quality education and training for all • redress past inequalities in education and training. The MQA is responsible for: • developing and implementing a sector skills plan • developing unit standards and qualifications for the sector • establishing, registering, administering and promoting lear nerships and apprenticeships • maintaining the quality of standards, qualifications and learning • disbursing grants from the skillsdevelopment levy.

Chamber of Mines

Corporate restructuring of the South African mining industry remains an ongoing exercise. The introduction of the Mining Charter in South Africa was aimed at transforming the mining industry to redress historical imbalances so that the industry is aligned with the changes in the country’s overall transformation of its social, political and economic landscape. The transformation of the mining industry has included the consolidation of ownership through minority buy-outs, separation of large diversified companies into two or more specialised companies as well as the purchase of South African mining assets by foreign companies. The Chamber of Mines of South Africa is a voluntary, private sector employers’ organisation founded in 1889, three years after gold was discovered on the Witwatersrand. It is an association of mining companies and mines operating in the gold, coal, diamond, platinum and other mineral commodity sectors. The organisation acts as the principal advocate of the major policy positions endorsed by mining employers. The organisation represents the formalised views of its membership to various organs and spheres of government, and to other relevant policy-making and opinion-forming entities, both within and outside the country.

South African Mining Development Association (SAMDA)

SAMDA, which was formed in 2000 as a junior mining initiative by a group of people associated with various South African junior and Black Economic Empowerment mining companies, aims to create an enabling environment for raising finance, developing technical and other skills, practising responsible environmental management and sustainable development as well as the maintenance of standards of good practice in the junior mining sector.

Voluntary associations

• The Southern African Institute of Mining and Metallurgy was founded in 1894. This is a professional institute with local and international links aimed at helping members to source news and views about technological developments in the mining, metallurgical and related sectors as well as embracing a professional code of ethics. • The South African Colliery Managers Association represents eight mining houses and some smaller operators with 43 mine operations in four provinces. Current SACMA membership totals 434 coal mining. The association’s operations have an annual turnover of over R35 billion with a labour bill contribution of over R6 billion to the South African workforce comprising 47 000 direct employees. • The Association of Mine Managers South Africa provides a platform for mining industry professionals to discuss, evaluate

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and debate mining and minerals policy, technical innovations, safety and health challenges and advancements in mining in South Africa. Current membership stands at 825 in seven categories – candidate (student), junior associate, ordinary, associate, honorary life, honorary associate and retired members. • Geological Society of South Africa was established in 1895 and is one of the oldest scientific societies in South Africa. It is a society that exists for geologists and earth scientists with an interest in southern Africa and has over 2 500 members and student members. • The Engineering Council of South Africa is a statutory body established in terms of the Engineering Profession Act, 2000 (Act 46 of 2000). Its primary role is the regulation of the engineering profession in terms of this Act. Its core functions are the accreditation of engineering programmes, registration of persons as professionals in specified categories, and the regulation of the practice of registered persons. • The South African Council for Natural Scientific Professions is a legislated regulatory body for natural science practitioners in South Africa. The natural sciences encompass a wide range of scientific fields covering basic sciences and many of their applied derivatives.

South African Diamond and Precious Metals Regulator

The SADPMR regulates the diamond, platinum and gold industries and accelerates beneficiation in the jewellery industry. The SADPMR’s objectives are to: • ensure that precious metal and diamond resources are exploited and developed in the best interests of all South Africans • promote equitable access to and local beneficiation of precious metals and diamonds • promote the development of precious metal and diamond enterprises advance broad-based socio-economic empowerment • ensure compliance with the Kimberley Process Certification Scheme (KPCS). Its functions regarding diamonds include: • implementing, administering and controlling all matters relating to the purchase, sale, beneficiation, import and export of diamonds • establishing diamond exchange and export centres to facilitate the buying, selling, export and import of diamonds. While the South African Diamond Board essentially has a regulatory role, the SADPMR has a promotional role as well. By administering licences and export approvals, the SADPMR ensures that local demand for diamonds and precious metals is catered for, and that there is growth in local beneficiation of diamonds and precious metals.

Council for Mineral Technology and Research

Mintek helps the minerals industry to operate more effectively by developing and making available the most appropriate and costeffective mineral recovery and mineral beneficiation technologies. It is engaged in the full spectrum of minerals research: from the mineralogical examination of ores to the development of processing, extraction and refining technologies, as well as conducting research into the production of added value products and feasibility and economic studies. Much of this work is carried out in close liaison with the local and international minerals and metallurgical industries. Mintek is involved in research into the use of nanotechnology for medical applications of gold as well as giving effect to the Hydrogen Strategy. This is intended to create future demand for gold and platinum in keeping with the national objective of achieving 20% global market share of platinum catalysis by 2020.

Mine Health and Safety Council

The MHSC is a national public entity established in terms of the Mine Health and Safety Act of 1996, as amended. The entity comprises a tripartite board represented by the State, employer, and labour members under chairpersonship of the Chief Inspector of Mines. The MHSC is funded by public revenue and is accountable to Parliament. Its main task is to advise the Minister of Mineral Resources on occupational health and safety legislation and research outcomes focused on improving and promoting occupational health and safety in South African mines. In addition, the council is tasked with: • overseeing the activities of its committees • promoting a culture of health and safety in the mining industry • arranging a summit every two years to review the state of occupational health and safety at mines • liaising with the MQA and any other statutory bodies about mining health and safety. With effect from 1 April 2016, the MHSC started doing business only with suppliers who are registered on the Central Supplier Database with National Treasury.

Council for Geoscience

The CGS undertakes geological mapping and carries out studies pertaining to the identification, nature, extent and genesis of ore deposits and also maintains national databases of the country’s geoscientific data and information. The CGS is also able to provide commercial geoscientific services. The CGS participates in various Southern African Development Community (SADC) projects aimed at promoting the economic development of the souther n African subcontinent. International cooperative projects that have been carried out, or are in progress, include geological mapping, geochemical and

geophysical surveys, and the production of maps in many countries, either on a bilateral basis or collaboratively in the SADC region.

State Diamond Trader

The SDT’s main business is to buy and sell rough diamonds to promote equitable access to and beneficiation of diamond resources. The main aim of the SDT is to address distortions in the diamond industry and correct historical market failures to develop and grow South Africa’s diamond cutting and polishing industry. The SDT is a state-owned entity established in terms of the Diamonds Amendment Act, 2005 (Act 29 of 2005). The company is classified as a Schedule 3b entity in terms of the Public Finance Management Act, 1999 (Act 1 of 1999). The SDT sells to approved customers through the SDT’s application and approval process. The entity is eligible by law and proclamation to purchase up to 10% of the running rights of all diamond-producing mines in South Africa.

Petroleum Agency South Africa (PASA)

PASA promotes exploration for onshore and offshore oil and gas resources, as well as their optimal development on behalf of Government, as designated in terms of the Mineral and Petroleum Resources Development Act of 2002. The agency regulates exploration and production activities, and acts as the custodian of the national petroleum exploration and production database.

African Mining Partnership (AMP)

The AMP, whose main function is to drive the New Partnership for Africa’s Development mining initiatives, was established during the African Mining Minister’s meeting in Cape Town in February 2004. South Africa, as a major role player in this body, has played an important role as the Secretariat, in hosting as well as coordinating the affairs of the AMP. The AMP merged with the African Union Conference of Ministers Responsible for Mineral Resources Development.

African Diamond Producers Association (ADPA)

ADPA is an association of diamond-producing African countries, 11 of which have full membership while seven only enjoy observer status. The association is chaired on a rotational basis. The main focus of the ADPA revolves around the implementation of aligned policies and strategies intended to maximise the benefits derived from revenue of diamonds across the African continent. In doing so, the ADPA explores the development of a best practice document that will promote the realisation of harmonised policies across Africa with a goal to increase foreign investment in the diamond sector for the benefit of all member states.

The Kimberley Process

South Africa is one of the founding members

of the Kimberley Process, which brought into existence the KPCS. The Kimberley Process was established when diamond producing countries convened in Kimberley, South Africa, in May 2000, to discuss ways to stem the trade in “conflict diamonds” and ensure that the diamond trade was not fuelling armed conflicts. In December 2000, the United Nations General Assembly adopted the landmark Resolution 55/56 of 2000, which supported the establishment of an international certification scheme for rough diamonds. By November 2002, negotiations between governments, the international diamond industry and civil society organisations resulted in the creation of the KPCS, which was launched in Kimberley, South Africa, in 2003. As one of the founding members of the KPCS, South Africa played a pivotal role in the establishment of the KPCS as well as the harmonisation of the regulatory framework relating to the sale and export of diamonds. The KPCS has 54 participants representing 81 countries that counts for 99,8% of the global production of rough diamonds. Its core document (statutes) governs the global production of rough diamonds and stipulates the objectives, definitions, internal controls and, with which most importantly, minimum requirements that each participant must comply. Australia was the 2017 Chairperson of the KPCS.

Projects and initiatives With significant resources of gold, uranium, chrome, manganese, Platinum Group Metals (PGM), titanium minerals, vanadium, coal, limestone, vermiculite and zirconium, South African mining real estate remains attractive for development. South Africa has significant known reserves and resources of mineral commodities, with almost 60 minerals being actively mined and prospects for exploitation of an additional two new minerals over the short to medium term. A large number of these known reserves was discovered using conventional exploration methodologies. For this reason, there is still considerable residual potential for discovery of world-class deposits using modern exploration technology. This is further supported by existing mining infrastructure, which enables investors to leverage maximum value from their investment while simultaneously contributing to sociopolitical improvement.

Shale-gas exploration

The potential of shale-gas exploration and exploitation provides an opportunity for South Africa to begin exploring the production of its own fuel and marks the beginning of the reindustrialisation of the economy. The proposed regulations on petroleum exploration and exploitation prescribe good international petroleum industry practices and standards, which enhance safe exploration and production of all petroleum and will further ensure that petroleum exploration is conducted in a

socially and environmentally balanced manner. The technical regulations provide for the assessment of the potential impact of the proposed activities on the environment; the protection of freshwater resources and mechanisms for the co-existence of shale gas exploitation and the Square Kilometre Array project. The South African Government would have a free-carried shareholding of 20% in entities producing shale gas in the Karoo in future. The security of energy supply, in light of the demand, has galvanised the need for a diverse energy mix. The DMR would therefore continue to promote, among others, exploration for shale gas. It would put in place the necessary legal framework to ensure that the exploration of resources is undertaken in a responsible manner, to ensure that the environment is protected for future generations. Working with other government departments and institutions, the DMR will continue to promote mineral value addition, which would strengthen the interface between the industry and the socio-economic development of South Africa. As part of improving the socioeconomic development of mining towns, the department would continue to support the Special Presidential Package in distressed mining towns. In 2016/17, five applications for mining shale gas were being considered for licensing. Research on shale gas is progressing, following the additional allocation of R108 million for the department’s shale gas project in 2014/15.

Stability in the mining sector Although growth in the mining sector turned around from a decrease of 1,6% in 2014 to an increase of 3,0% in 2015, global demand for commodities remained weak during 2016, resulting in lower mining export volumes. Despite the weaker exchange rate and a recovery in commodity prices, the mining sector thus saw its share of South Africa’s export basket decline marginally. Stability within the mining industry remains imperative to ensure its sustainable growth and competitiveness. The importance of healthy relations between mining companies, communities and local government cannot be overstated. For mining to be sustainable, mutual respect and cooperation are critical. Right-holders must also engage continuously with the relevant communities, for the duration of their right, to pre-emptively address issues as they arise. The DMR continues to engage various community structures, where discontent between mining companies and some host communities – often characterised by violence and destruction to property – has become more pronounced. While employment of people living close to the mines remains important, South Africa belongs to all who live in it, and opportunities from mining cannot only be limited to those residing nearer mining

operations. Mineral resources must be used to benefit the country as a whole.

Mine health and safety The purpose of the Promotion of Mine Safety and Health programme is to ensure the safe mining of minerals under healthy working conditions. In 2016/17, the DME promoted mine health and safety over the medium term by: • conducting 8 396 inspections and audits, and implementing the occupational health and safety strategy to reduce occupational fatalities by 20% and occupational injuries by 20% • reducing occupational diseases among mine workers by 10% • implementing the occupational health and safety improvement strategy and enforcing its guidelines. The Mineral Regulations and Mine Health and Safety programmes contribute 58,90% of the total budget for employees’ compensation. The higher contribution to compensation of employees is due to the labour-intensive nature of inspections and technical expertise required for the job.

Skills development The DMR aimed to contribute to skills development in the mining sector by reviewing and implementing the certificate of competency model, developed with the MQA and universities, as well as improve healthcare turnaround times on an ongoing basis by: • ensuring 80% adherence to prescribed time frames for resolving medical appeals • ensuring 90% adherence to time frames for appeals to the Chief inspector of Mines • ensuring 80% adherence to time frames for applications in terms of the Mineral and Petroleum Resources Development Act of 2002.

Illegal mining Illegal mining is often organised and carried out by organised crime syndicates. Illegal miners, known as zama zamas, operate in disused mines and set ambushes and traps for employees, security and rival groups of illegal miners. Illegal miners risk their lives by using explosives to open cemented shafts at abandoned mines or live underground for extended periods of time, without necessary protective gear, once they have gained access to operational mines. The illegal mining market is a well-managed five-tier system. The Chamber of Mines has recognised that the only way to deal with the problem is to focus on both the supply and demand side of illegal mining and all five levels of the syndicates need to be addressed, namely:

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• the underground workers who do the physical mining – many have worked in the mines previously and use chemical substances to refine the products • the buyers are on the surface around the mines and also organise the level one illegal miners and support them with food, protection and equipment • the regional bulk buyers are usually entities which in most cases have permits issued in terms of the Precious Metals Act, 2005 (Act 37 of 2005) to trade in precious metals • those who distribute nationally and sometimes internationally do so through front companies or legitimate exporters • the top international receivers and distributors are usually international refineries and intermediary companies.

Integrated licensing The construct of the Mining Regulatory Framework is fragmented and has been identified as one of the binding constraints to the growth and competitiveness of the South African mining sector. The departments of mineral resources, water affairs and environmental affairs have agreed on the modalities of integrating the time frames and processes of environmental authorisation and water-use licensing for prospecting and mining operations. The modalities include the departments implementing the National Environmental Management Act, 1998 (Act 107 of 1998), for the industry to be regulated by a single environmental piece of legislation. Processes of environmental authorisation will be contained within the same time frames that apply to prospecting and mining authorisations, and the process of approving water use licences will also be finalised within the same time frames. This represents a significant improvement in service delivery, both in terms of certainty regarding security of tenure when mining or prospecting rights are issued and in terms of improved turnaround times resulting from the processes being finalised in parallel rather than sequentially as was previously the case.

Job creation and sustainable development The South African Government is committed to ensuring a conducive environment for investment. The amendment of the principal legislation, the Mineral and Petroleum Resources Development Act of 2002, was expected to finalised in 2017. The Mining Charter was expected to be gazetted by midMarch 2017.

Rehabilitation of mines The mine rehabilitation programme has had a positive effect on communities where the projects include economic growth owing to sourcing labour and material locally. The programme also results in improved health and well-being of communities. The rehabilitation programme reduces the risk of humans and animals being exposed to asbestos fibres originating from sites where asbestos used to be mined. Job creation is one of the key requirements of the rehabilitation project. This contributes to some of the priorities of the National Development Plan. The DMR also develops reports on mine closures as well as derelict and ownerless mines. The strategy for managing and rehabilitating derelict and ownerless mines aims to guide the management of the environmental legacies of mining. It proposes a prudent course of action for the state to discharge its responsibility regarding constitutional rights as contemplated in Section 24 of the Constitution. The implementation of the strategy will continue with annual updates, completed by actuarial scientists commissioned by the department, estimating the State’s liability for the rehabilitation of derelict or ownerless mines. The DMR plans to rehabilitate 220 derelict, ownerless and dangerous mine sites by 2019.

Acid mine drainage (AMD)

By August 2015, harmful effects of AMD on the environment were being successfully mitigated by a drainage plant in Germiston, Gauteng, which contains a comprehensive mixing system. The plant consists of a combination of 53 specialised mixers. In May 2016, the Department of Water and Sanitation announced that National Treasury would commit R600 million, annually, to the AMD initiative. This long-term intervention will therefore turn the AMD problem into a long-term sustainable solution by producing fully treated water that will significantly increase water supply to the Vaal River System and defer the need for further costly augmentation beyond Phase 2 of the Lesotho Highlands Water Project for at least 30 years.

Resources South Africa’s mineral wealth is typically found in the following well-known geological formations and settings: • the Witwatersrand Basin yields some 93% of South Africa’s gold output and contains considerable uranium, silver, pyrite and osmiridium resources • the Bushveld Complex is known for PGMs (with associated copper, nickel and cobalt mineralisation), chromium and vanadiumbearing titanium-iron ore formations as well as large deposits of industrial minerals, including fluorspar and andalusite • the Transvaal Supergroup contains

enormous resources of manganese and iron ore • the Karoo Basin extends through Mpumalanga, KwaZulu- Natal, the Free State as well as Limpopo, hosting considerable bituminous coal and anthracite resources • the Phalaborwa Igneous Complex hosts extensive deposits of copper, phosphate, titanium, vermiculite, feldspar and zirconium ores • kimberlite pipes host diamonds that also occur in alluvial, fluvial and marine settings • heavy mineral sands contain ilmenite, rutile and zircon • significant deposits of lead-zinc ores associated with copper and silver are found in the Northern Cape near Aggeneys.

Gold

South Africa dominated global gold production in the 20th century. There are 35 largescale gold mines operating in South Africa, including the record setting TauTona mine, which extends 3,9 km underground. TauTona means “great lion” in Setswana. South Africa accounts for 11% of the world’s gold reserves. Gold production fell to 143 711 kg in 2015 compared to 151 622 kg mined the previous year. The seasonally adjusted production index decreased by 5,4% in 2015. Although the dollar price of gold decreased by 10,3% in 2015, the depreciation of the local currency saw the rand price of gold rising by 7,4% in 2015 (R474 090 per kg in 2015 compared with R441 246 per kg in 2014).

Coal

The accelerated demand for coal, accompanied by an increase in international coal prices, has invariably changed the buying patterns and structure of the local coal export industry. The emergence of the export market for lower-grade coal has presented government with a challenge in that it has constrained the availability of coal that was historically sold to Eskom. During the winter of 2015, coal production declined by 4,1% compared to 2014’s winter. There was a 2,9% fall in national electricity generation and a 2,3% fall in electricity consumed. For the entire 2015, seasonally adjusted coal production fell by 3,3%. Some other factors affecting the coal sector include: • rapidly increasing production costs over the past few years • the impact of declining reserves • challenges with securing capital for future and expansion projects • the impact of previous above-inflation increases • a weak global thermal coal market, meaning slower commodity demand • declining yields, ageing mines, more difficult geology, poorer quality coal reserves and rising regulatory costs.

Platinum group metals (PGMs)

Platinum, palladium, rhodium, osmium, ruthenium and iridium occur together in nature alongside nickel and copper. Platinum, palladium and rhodium, the most economically significant of the PGMs, are found in the largest quantities. The remaining PGMs are produced as coproducts. South Africa is the world’s leading platinum and rhodium producer, and the second- largest palladium producer after Russia. South Africa’s production is sourced entirely from the Bushveld Complex, the largest known PGM-resource in the world. PGMs were the main contributor to the 3,5% rise in overall mining production. Of the four major minerals, the PGM group was the only one to record a production increase in 2015. The low base created in 2014 by the PGM miners’ strike saw PGMs performing strongly year-on-year in the first half of 2015, with production rising by 46,2% for the year as a whole.

Platinum

South Africa accounts for 96% of known global reserves of the PGMs. The Merensky Reef, stretching from southern Zimbabwe through to the Rustenburg and Pretoria regions, is the centre of platinum mining in South Africa, playing host to companies such as Rustenburg Platinum Mines and Bafokeng Rasimone Platinum Mines. Amplats is the industry leader in the mining, marketing, and distribution of platinum. Amplats produces 40% of the world’s total PGMs. Other key platinum mining companies in South Africa include BHP Billiton and Impala Platinum. Platinum mining in South Africa is growing. The establishment of projects such as the R7,1 billion Twickenham Expansion Project, 100 km south-east of Polokwane, will see the production of 250 000 t/m pure platinum. The Impala Platinum No. 20 Shaft Project is geared to produce 185 000 ounces of platinum a year on the Bushveld Complex. Many platinum mines are implementing mechanisation with about 30% of the country’s current underground platinum production coming from mechanised mining. Mechanisation is difficult for the gold-mining industry because orebodies are steeper than those of platinum mines.

Palladium

South Africa is the world’s second-largest palladium producer. All of South Africa’s production is sourced from the Bushveld Igneous Complex, which hosts the world’s largest resource of PGMs. Palladium and platinum are more abundant than any other PGM.

Ferrous minerals

South Africa is the largest producer of chromium and vanadium ores and a leading supplier of their alloys. It is also a significant producer of iron and manganese ores, and a minor producer of ferrosilicon and silicon

metal. Ferrous minerals are produced from some 32 mines and 23 ferroalloys smelters.

Copper

Palabora, a large copper mine, smelter and refinery complex managed by the Palabora Mining Company at the town of Phalaborwa in Limpopo, is South Africa’s only producer of refined copper. Producing about 80 000 t per year, it supplies most of South Africa’s copper needs and exports the balance. Useful byproduct metals and minerals include zirconium chemicals, magnetite and nickel sulphate as well as small quantities of gold, silver and platinum. Palabora’s large block cave copper mine and smelter complex employs approximately 2 200 people. Palabora also owns a nearby vermiculite deposit, which is mined and processed for sale worldwide. Vermiculite is a versatile industrial mineral.

Chrome

South Africa accounts for 74% of chrome reserves globally.

Manganese

South Africa accounts for 26% of manganese reserves, but exploitation of the mineral has not reflected its development potential.

Diamonds

South Africa, the site of the biggest diamond discovery, plans to process a greater proportion of its gems locally to keep more profit in the country. Government wants to cut and refine 70% of the diamonds mined in South Africa by 2023. Currently, only 4% is processed locally.

Industrial minerals

There are some 680 producers of industrial minerals in South Africa, of which almost half are in the sand and aggregate sector. There are some 153 producers of clays (brick-making and special), 40 limestone and dolomite, 79 dimension stone, 28 salt and 20 silica producers. Bulk consumption of industrial minerals is realised in the domestic market, as most are low priced commodities and sold in bulk, making their economic exploitation highly dependent on transport costs and distance to markets.

Mineral Regulation

The purpose of the Mineral Regulation Programme is to regulate the minerals and mining sector to promote economic development and employment and also ensure transformation and environmental compliance. There was a 5% increase in the budget allocation for Mineral Regulation. Expenditure in the Management Mineral Regulation subprogramme is planned to almost double to R40 million. This subprogramme provides overall management of the programme. Expenditure is planned to increase because of responsibilities transferred from the Department of Environmental Affairs. The staff complement for the branch was expected to increase to 403 in 2015/16. This is a 35%

increase over the staffing levels in 2013/14, and includes the appointment of environmental mineral resource inspectors who will work within the DMR to ensure that the provisions of national environmental legislation are applied across the mining sector.

Geology

South Africa has a long and complex geological history dating back more than 3 700 billion years. Significant fragments of this geology have been preserved and, along with them, mineral deposits. The preservation of Archaean geology, dating back more than 2 500 million years, has resulted in the Archaean Witwatersrand Basin, as well as several greenstone belts, being preserved.

Barberton mountain land

This beautiful and rugged tract of country with some of the oldest rocks on Earth is found south of Nelspruit, Mpumalanga. The greenstone formations represent the remains of some of the earliest clearly decipherable geological events on the Earth’s surface. Silicarich layers within the greenstone have revealed traces of a very early life form – minute bluegreen algae. Granites surround the formations and gneisses that are more than 3 000 million years old. Gold, iron ore, magnesite, talc, barite and verdite are mined in the area.

Witwatersrand

The geology and gold mines of the Witwatersrand (Ridge of White Waters) are world famous. More than 50 055 t of gold have been produced from seven major goldfields distributed in a crescent-like shape along the 350-km long basin, from Welkom in the Free State in the southwest, to Evander in the east. The geology of the region can be seen at many outcrops in the suburbs of Johannesburg. The sequence is divided into a lower shale-rich group and an upper sandstone-rich group. The latter contains the important gold-bearing quartz-pebble conglomerates.

Bushveld Complex and escarpment

The Bushveld Complex extends over an area of 65 000 km2 and reaches up to 8 km in thickness. It is by far the largest known layered igneous intrusion in the world and contains most of the world’s resources of chromium, PMGs and vanadium. The impressive igneous geology of the Bushveld Complex can best be viewed in Mpumalanga, in the mountainous terrain around the Steelpoort Valley. The imposing Dwars River chromitite layers, platinum-bearing dunite pipes, the discovery site of the platinum-rich Merensky Reef, and extensive magnetite-ilmenite layers and pipes near Magnet Heights and Kennedy’s Vale are in this area. The Great Escarpment of Mpumalanga is one of South Africa’s most scenic landscapes. This area features the Bourke’s Luck Potholes, which have become a major tourist attraction.

Drakensberg Escarpment and Golden Gate Highlands National Park

The main ramparts of the Drakensberg range, which reach heights of more than 3 000 m, lie in KwaZulu-Natal and on the Lesotho border. These precipitous mountains are the highest in southern Africa and provide the most dramatic scenery. They were formed by the partial erosion of a high plateau of basaltic lava, which is more than 1 500 m thick, and covers the Clarens sandstones. Prior to its erosion, the continental basalt field covered significantly more of the continent. The uKhahlambaDrakensberg Park, which covers 243 000 ha, has been declared a world heritage site. More than 40% of all known San cave paintings in southern Africa are found here. The scenic Golden Gate Highlands National Park in the Free State features spectacular sandstone bluffs and cliffs. The sandstone reflects a sandy desert environment that existed around 200 million years ago. Dinosaur fossils are still found in the area.

Karoo

Rocks of the Karoo Supergroup cover about two-thirds of South Africa and reach a thickness of several thousand metres. The sedimentary portion of this rock sequence reveals an almost continuous record of deposition and life, from the end of the Carboniferous into the mid-Jurassic periods, between 300 million and 180 million years ago. Karoo rocks are internationally renowned for their wealth of continental fossils, and particularly for the fossils of mammal-like reptiles that show the transition from reptiles to early mammals, and for their early dinosaur evolution. During this long period of the Earth’s history, southern Africa was a lowland area in the centre of the Gondwana supercontinent. Initially, the prehistoric Karoo was a place of vast glaciation. It then became a shallow inland sea, before this was replaced by huge rivers, with lush flood plains and swampy deltas, which dried out to form a sandy desert. Finally, vast outpourings of continental basaltic lava accompanied by the break-up of Gondwana occurred.

Diamond fields

Kimberlite is the primary host-rock of diamonds and was first mined as weathered “yellow ground” from the Kimberley mines, starting in 1871 at Colesberg koppie, now the site of the Big Hole of Kimberley. At increasing depths, less-weathered “blue ground” that continued to yield diamonds was encountered. The discovery of kimberlite-hosted diamonds was a key event in South Africa’s economic and social development, and paved the way for the later development of the Witwatersrand goldfields. The Orange and Vaal rivers’ alluvial diamond fields and the rich West Coast marine diamond deposits all originated by erosion from primary kimberlite pipes.

Meteorite impact sites

Impacts by large meteoritic projectiles played a major role in shaping the surface of the Earth.

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The Vredefort Dome is the oldest and largest visible impact structure known on Earth and is a World Heritage Site. It lies some 110 km south-west of Johannesburg, in the vicinity of Parys and Vredefort in the Free State and North West. About 40 km north of Pretoria is the small bowl-shaped Tswaing meteorite-impact crater. Just one kilometre in diameter, this is one of the best-preserved and accessible impact craters of its kind on Earth. It was created about 220 000 years ago when a meteorite, about 50 m, wide slammed into the Earth, and is one of the few impact craters containing a crater lake.

INVEST in NORTH WEST

Pilanesberg

The Pilanesberg Complex and National Park in North West is a major scientific attraction which includes a number of unique geological sites. The complex consists of an almost perfectly circular, dissected mountain massif some 25 km in diameter, making it the third largest alkaline ring complex in the world. The geology reflects the roots of an ancient volcano that erupted some 1,5 billion years ago. The remains of ancient lava flows and volcanic breccias can be seen. The dominant feature of the complex is the concentric cone sheets formed by resurgent magma that intruded ring fractures created during the collapse of the volcano. There are old mining sites for fluorite and dimension stone, and a non-diamond bearing kimberlite pipe in the region.

Cradle of Humankind

This World Heritage Site extends from the Witwatersrand in the south to the Magaliesberg in the north, and is considered to be of universal value because of the outstanding richness of its fossil hominid cave sites. The Sterkfontein area near Krugersdorp is the most prolific and accessible fossil hominid site on Earth. It comprises several scientifically important cave locations, including Sterkfontein, Swartkrans, Drimolen, Kromdraai, Gladysvale and Plover’s Lake, all of which have produced a wealth of material crucial to palaeoanthropological research.

Table Mountain and the Cape Peninsula

Table Mountain is South Africa’s best known and most spectacular geological feature, comprising a number of major rock formations. The earliest of these are the deformed slates of the Malmesbury Group, which formed between 560 million and 700 million years ago. Coarse-grained Cape granite intruded about 540 million years ago. The Table Mountain Group, which started forming about 450 million years ago, consists of basalt, reddish mudstone and sandstone that is well exposed along Chapman’s Peak. Overlying this is the light-coloured sandstone that makes up the higher mountains and major cliff faces of the Cape Peninsula, as far south as Cape Point. Much younger sandy formations make up the Cape Flats and other low-lying areas adjacent to Table Mountain. The Table Mountain Group continues further inland across False Bay in the strongly deformed Cape Fold Belt.

Source: IPAP 2018-19

INVEST NORTH WEST

SOUTH AFRICA

... the heartbeat of trade and investment “Invest North West is the Trade and Investment Promotion agency for the North West Province, focusing on investment promotion, trade and investment facilitation and by providing business retention and expansion services.”

t: 014 594 2570 • f: 014 594 2575 • www.inw.org.za • po box 6352, rustenburg, 0300

The

VOICE of

LOCAL GOVERNMENT Established in 1996 the South African Local Government Association serves as the representative voice for 278

• Develop capacity in municipalities • To act as an employer body on behalf of municipalities

member municipalities tasked with four main functions:

SALGA interfaces with Parliament, the National Council of Provinces

• To represent, promote and protect the interests of local

(NCOP), Cabinet as well as provincial legislatures.

government • To transform local government to fulfil its developmental role • Raise the profile of local government • Ensure the full participation of women in local government

Our vision is to be consultative, informed, mandated, credible and accountable in our quest to be an association that is relevant to its members, that is at the cutting edge of quality and sustainable services.

Contact Details SALGA (012) 369 8000 (tel) (012) 369 8001 (fax) 175 Corobay Street Waterkloof Glen Ext 11

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Visit us on www.salga.org.za

SALGA

South African Local Government Association

BRICS REVIEW

Key Highlights of South Africa’s Trade and Investment Relationship with BRIC Since 2001

Key Agreements Supporting Trade and Investment Between South Africa and BRIC Counterparty

Agreements

IBSA Brazil

MERCOSUR Preferential Trade Agreement (PTA)

Main Objective/Terms The IBSA Dialogue Forum aims to promote South-South cooperation and increasing the trade opportunities between India, South Africa and Brazil, as well as facilitate trilateral exchange of information, technologies and skills to complement each others strengths. It also aims to explore avenues to promote cooperation in broad range of areas, which include agriculture, climate change, culture, defence, education, energy, health, information society, science and technology, social development, trade and investment, tourism and transport. Tariff reductions on about 1 000 product lines on each side of the border.

Formation of the New Development Bank (NDB): In late March 2013, during the 5th BRICS summit in Durban, South Africa, the BRICS member countries agreed to create a global financial institution which they intended to rival the westerndominated IMF and World Bank. After the summit, the BRICS stated that they planned to finalise the arrangements for this New Development Bank by 2014. Then in 2014 at the BRICS 6th summit in Fortaleza, Brazil, the member states signed the long-anticipated document to create the US$100bn NDB (formerly known as the “BRICS Development Bank”) and a reserve currency pool (the BRICS Contingent Reserve Arrangement) worth over another US$100bn. The member states also signed documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation. Finally the 7th BRICS summit in July 2015 marked the entry into force of the Agreement on the New Development Bank and in 2016 the bank opened its Headquarters in Shanghai.

Formation of the BRICS Contingent Reserve Arrangement (CRA): The CRA was established in 2015 by the BRICS countries as a framework for providing protection against global liquidity pressures. The legal basis was formed by the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement, signed at Fortaleza, Brazil on 15 July 2014. With its inaugural meetings of the BRICS CRA Governing Council and Standing Committee, held on September 4, 2014, in Ankara, Turkey it entered into force upon rati cation by all BRICS states, announced at the 7th BRICS summit in July 2015. Once the CRA was established, South Africa contributed US$5bn, China US$40bn and India, Brazil and Russia US$18bn each. South Africa receives 1st BRICS Development Bank loan: In the 1st year of operation (2016), the NDB Board of Directors approved seven projects in all member states of the bank involving financial assistance of over US$1.5bn. Out of this South Africa received US$180m as a sovereign guaranteed project loan to ESKOM for a renewable energy transmission project. On

completion the project is expected to increase ESKOM’s capacity by 670 MW avoiding 1.3m tonnes in CO2 emissions per year. South Africa launches BRICS first regional office: In 2017 the NDB, committed US$1.5bn over 18 months towards South Africa’s development projects as it launched the groups first regional office in Sandton, Johannesburg. The regional office is known as the Africa Regional Centre and it is expected to be the face of the NDB on the continent and aid with identifying key infrastructure projects for the country. South Africa receives 2nd BRICS Development Bank loan: In May 2018 Finance Minister Nhlanhla Nene was elected as chairperson of the board of governors of the New Development Bank (NDB). Upon his election the board approved a US$200m loan to the South African government. The loan was approved to finance the Durban container terminal berth reconstruction project. The reconstruction project is aimed at helping the transport parastatal Transnet to enhance capacity of its port in Durban.

Russia

India

China

BRICS

Generalised System of Preferences (GSP)

IBSA

Specified industrial and agricultural products from South Africa qualify for preferential market access.

(See details under Brazil)

India-SACU

SACU and India are in the process of exchanging tariff requests but once ratified the agreement will entail tariff reductions on selected goods

MOU with People’s Republic of China and to support SA and Comprehensive Strategic Partnership Agreement (CSPA)

The Memorandum of Understanding between the Government of the Republic of South Africa and the Government of the People’s Republic of China and the CSPA serves to promote bilateral trade and economic co-operation between the two countries. The MOU and CSPA China aim to promote industrialisation and value-added South African exports to China and increased inward investment in projects for beneficiation.

New Development Bank

The bank aims to contribute to development plans established nationally through projects that are socially, environmentally and economically sustainable. Taking this into account, the main objectives of the NDB can be summarised as follows: •

Promote infrastructure and sustainable development projects with a significant development impact in member countries.

•

Establish an extensive network of global partnerships with other multilateral development institutions and national development banks.

•

Build a balanced project portfolio giving proper respect to their geographic location, financing requirements and other factors. 7

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Source: Deloitte - A Review of South Africa’s Trade and Investment Relationship with BRIC (10th BRICS Summit)

A Snapshot of Total Investment into South Africa from BRIC 2003-2017

Taxes

Rates • 18% to 45% - Individual tax

Between 2003 and 2017 BRIC together officially invested a total of US$17.8bn in 189 projects and created 36852 jobs in South Africa

• 28% - Companies Income tax

• 45% - Trusts • 0% to 28% - Small business corporations • 20% - Dividend tax

Doing Business in South Africa Key Country Indicators GDP 2017 US$349 billion Population 54 million Inﬂation 2017 5.19% India Projects: 88 Capex:US$5.4bn Jobs Created: 11875

South Africa

Russia Projects: 17 Capex: US$466m Jobs Created: 1478 China Projects: 77 Capex: US$11.9bn Jobs Created: 22863

Brazil Projects: 7 Capex: US$72m Jobs Created: 636

Average size of investment (US$m) Average number of jobs created per project

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Russia

India

China

10.3

27.4

61.2

154.5

135

301

Transfer duty

0% to 13%

Turnover tax for micro businesses

0% to 3%

Royalties

15%

Imports and export tariffs

0% to 30%

Foreign Investment Benefits

Incentives • Preferential 15% Corporate Tax for qualifying entities

Special Economic Zones (Musina/ Makhado, OR Tambo, Maliti–APhofung, Dube Trade Port)

• Building Allowance: 10% per annum for qualifying buildings and fixed structures • Employment Incentives for low salary workers • Import duty rebates for production-related and exported products, and VAT exemptions under specific conditions for supplies procured in South Africa • Enhanced 12i Tax Incentive for greenfield and brownfield investments

The Tshiame Food Processing Park

Provides logistical services, warehousing, cold storage and manufacturing facilities • VAT exemptions under special conditions for supplies procured in SA

Key Government Departments for Foreign Investors Department of Trade and Industry Postal Address: the dti, Private Bag X84, Pretoria, Gauteng, 0001 Physical Address: the dti, 77 Meintjies Street, Sunnyside, Pretoria, Gauteng, 0002 E-mail: contactus@thedti.gov.za Tel: +27 (0) 12 394 9500

Brazil

Doing Business Ranking 2018 82/190

• 18% to 22.4% - Capital gains tax

Companies and International Property Commission (CIPC) Postal Address: PO Box 429, Pretoria, 0001 Physical Address: the dti Campus, Block F, 77 Meintjies Street, Sunnyside, Pretoria E-mail: info@cipc.co.za Tel: +27 (0)12-394-9500

Industrial Development Zones

• Duty suspensions on imported inputs • Dedicated SARS officials to provide customs and VAT support • Industrial infrastructure linked to an international port of entry

Business process services (BPS) grant

The BPS grant pays up to R124 000 per job created by a Business Process Outsourcing operation located in South Africa

Key Sectors for Investment 01. Agro-processing

07. Boatbuilding

02. Business process outsourcing 08. Pulp, paper and furniture and it-enabled services

09. Automotive and components

13. Tourism 14. Chemicals, plastic fabrication and pharmaceuticals

03. Machinery and equipment

10. Green economy industries

15. Creative and design industry

04. Electro-technical

11. Advanced manufacturing

16. Infrastructure development

05. Textile, clothing and leather

12. Bio-manufacturing

17. Oil and gas

06. Consumer goods 38

Source: Deloitte - A Review of South Africa’s Trade and Investment Relationship with BRIC (10th BRICS Summit)

Industrial Policy Action Plan

OVERVIEW Looking back over the first ten years of IPAP, we can draw up a highlevel balance sheet of successes and failures, areas of excellence achieved, and areas where interventions were blocked or slowed by external and internal headwinds and structural constraints. We can point to significant areas of achievement at scale in various sectors – most notably, in Automotives, Clothing, Textiles Leather and Footwear (CTLF), Business Process Services (BPS), Film Production and Boat building. But none of these successes would have been achieved without the creation of a platform of cross-cutting and sector-specific interventions, including: • industrial financing; • the deployment of conditional incentives; • local procurement and the offset programme the National Industrial Participation Programme (NIPP); and • a wide variety of demand- and supply-side industrial policy levers designed to secure higher levels of investment and raise the competitiveness of the productive sectors of the economy. The latter include: • developmental trade policies; including the technical infrastructure institutions which support the industrial effort; • efforts to stem the tide of illegal imports, working with Customs; • technology support measures; and • competition policy (which addresses anti-competitive behaviour and lowers barriers to entry). These are some of the basic elements of the industrial toolkit that government has developed over the successive iterations of IPAP, following a ‘learning-by-doing’ approach. But the conditions have been very difficult throughout.

year review

on the South African Industrial Policy Action Plan

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The implementation of IPAP coincided with the global financial crisis, whose effects rippled through the SA economy from 2009 onwards and were compounded by the tapering of the commodity super-cycle and subsequent fall in demand for commodities (as China adjusted by rebalancing its policy, with strong adverse effects on South Africa’s commodity exports). The total economy shed 1 million jobs, with the manufacturing sector losing almost 320,000. Only those subsectors that are less sensitive to boom-bust economic cycles created jobs over this period. But it is important to note that government’s resolute counter-cyclical industrialisation efforts arrested the scale of job losses during this period, preventing potentially catastrophic full-scale deindustrialisation. In the face of very stiff global and domestic headwinds, the manufacturing sector was able to weather the worst of the Great Recession and its lingering low-growth aftermath. While the share of manufacturing value-added to total GDP declined from 15% to 13%, (which was a trend experienced by many developed and developing countries) manufacturing value-added in real terms grew from R338 billion in 2009 to R383 billion in 2016. This was led by sectors such as food and beverages, automotives, chemicals and plastics, averaging 2% annual growth. Over the 10-year IPAP period, manufactured exports have grown four-fold, while imports have doubled. South Africa’s exports of manufactured goods were dominated by metals, metal products, machinery and equipment, (including capital equipment and mining machinery and equipment). Although manufactured imports remained higher than exports in real terms – thereby resulting in a trade deficit for manufacturing as a whole - significant diversity in the trade performance of different manufacturing sectors and sub-sectors has been reflected in the

trade data. Overall growth has also been bolstered by robust growth in manufactured exports to Africa, where the trade balance shows a strong surplus. Overall, the evidence to date suggests that industrial policy succeeds under the following circumstances: • Where it is properly targeted and well designed, with strong oversight and continuous upgrading; • Where it is the subject of a collaborative engagement and agreement with the private sector and labour and where publicsector support requires reciprocal conditions from social partners; • Where it is adequately resourced; • Where institutional failure (driven by corruption and rent-seeking) have been held at bay and policy coherence and programme alignment achieved in support of the industrial effort; • Where coherent coordination efforts have been developed to create the conditions for an orderly transition to a less carbon- and more technology-intensive industrial economy; • Where there is common cause that innovation and dynamism is required across government to ensure that developmental regulatory frameworks support the industrialisation effort.

SECTORAL RECORD 1. Automotive sector In the face of very stiff competition from other national production centres, SA has maintained a world class automotive production capability, with significant support from the state in an ongoing collaborative arrangement with global OEMs, component manufacturers and labour. 33% mnf. GDP R171 bn exports 6% total GDP 113,000 jobs The sector contributes 33% to manufacturing GDP and about 6% to overall GDP. It produces approximately 600,000 vehicles per year, / supporting 113,000 jobs. Exports have doubled in this period, which has also seen R45 bn worth of investment by the majority of the world’s leading global vehicle manufacturers – MB, Toyota, VW, BMW, Ford, BAIC, BAW, Isuzu etc. As part of the ongoing effort to sustain SA’s competitive capabilities in this sector the dti has developed an Automotive Masterplan 2020, working together with the automotive companies, component suppliers and labour, to ensure that SA retains and grows its automotive sector, is able to continue to compete with other national jurisdictions for production platforms, grows its exports and secures higher levels of empowerment across the sectoral value chains. This record contrasts sharply with recent developments in some other countries. The significance of this achievement cannot be underestimated – particularly in terms of the economic and employment multipliers that derive from it and the many spillover effects that it generates: technology absorption, new skills and industrial capabilities.

2. Clothing, Textiles, Leather and Footwear sector In the wake of the devastation of the sector that followed from the liberalisation and restructuring of the industry in the 1990s (with approximately 120,000 jobs lost) over the past decade the sector has been saved from extinction and stabilised. As a result of the conditional support measures offered under the Clothing and Textile Competitiveness Programme (CTCP) the sector now employs 95,000 workers, contributing 8% to manufacturing GDP and 2.9% to overall GDP. In the leather sector 22 new factories have been opened,

supporting 2,200 jobs. 8% mnf. GDP R24 bn exports 2.9% total GDP 95 ,000 jobs

and the National Foundry Technology Network (NFTN) – initiatives targeted at increasing the competitiveness of these sectors through critical skills development and job creation programmes, technology development and adoption, enterprise development and export promotion.

Manufacturing value addition for companies receiving the incentive has grown by 60.8%, and productivity by 22.3%. Two national and eight regional clusters have been established, providing a platform for cooperation between government, labour and the textile and apparel manufacturers and retail value chains. This has allowed for the development of a robust market in fast-turnaround, quick fashions items. However, no industrial policy sector strategy can afford to be static in the face of rapidly evolving and dynamic market conditions, massive increases in productivity and continually intensifying global competition. With this very much in mind, the dti has recently launched a wide-ranging collaborative study with all the relevant sectoral players to raise competitiveness, deepen localisation and support job creation across the value chain.

This led to the development of a skills pipeline comprising more than 1,800 students over 4 cycles - with 98% of students from previously disadvantaged communities, 30% females, and above average learner-retention rates. All programme participants received on-thejob training, resulting in more than 80% of toolmaker students finding permanent jobs.

3. Agro-processing The agro-processing sector has been identified as one of the critical sectors earmarked for special attention under the Presidential NinePoint Plan. The core issue here is to defend and expand the agricultural and agro-processing value chain as a key provider of labour-intensive growth. (It currently employs around 283,000 people, contributing 20.3% to manufacturing GDP and 2.7% to total GDP). 20.3% mnf. GDP R50 bn exports 2.7% total GDP 283,000 jobs Since 2009, the dti has supported agro-processing industries to the tune of R1.2 billion through various incentive schemes. The sector also benefited from total investments of around R7 billion, both by multinationals and local players. The next step – as a direct response to the 9-Point Plan – was taken in 2017, with the launch of R1 billion Agro-Processing Support Scheme (APSS), aimed at further ramping up investment and value- addition across the sector. Over the past 5-year period significant investments have taken place in this sector. Summary numbers were as follows: FABCOS/the dti - R1.2 billion; Nestlé - R1.2 billion; Tiger Brands - R1 billion; Unilever - R600 million; P G Bison - R600 million; Dursots-All Joy - R100 million; GWK Farm Foods - R400 million; Astral Foods/ the dti - R200 million; Coega Development Corporation/the dti - R86 million; R420 million in investment projects aimed at emerging farmers in the deciduous fruit industry; and the dti/IDC support for 6 new smallscale maize mills

4. Metal fabrication, capital & rail transport equipment The metal fabrication, capital & rail transport equipment as a cluster of industries forms a very important component of local manufacturing. Over the years South Africa has developed niche capabilities in areas such as capital and rail transport equipment and structural steel, but recent years have seen stagnation and/or decline in key sub-sectors like casting, tooling and foundries. 16.7% mnf. GDP R 212 bn exports 2.2% total GDP 31, 404 jobs In an effort to turn this trajectory around, government and industry players came together to develop the National Tooling Initiative (NTI)

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Three Centres of Excellence (Western Cape, Pretoria and KwaZuluNatal) and two Trade Test Centres (Pretoria and Western Cape) – all with state-of-the art equipment - have also been established. In parallel, upwards of 100 Tool, Die and Mould (TDM) companies have been supported through the Enterprise Development Programme. Under the NFTN umbrella, a total of 44 foundries have so far been assisted through the Competitive Improvement Initiatives (CII) Programme, with interventions ranging from baseline assessments to technology-transfer, lean manufacturing and energy management. 32 foundries were also assisted with technical and regulatory support interventions. Also included was help with acquiring accreditation for Quality Management Systems, Pressure Equipment Directive (PED) and Atmospheric Emission Licences (AELs). Through the Scaw Metals supplier development programme, local foundries will be able to supply coupler components to Transnet. Other successes achieved through this programme over the review period include: • Industrial Valves Manufacturers – NFTN supported five foundries (Duvha Foundry, Forbes Foundry, Hi Alloy Foundry, Active Foundry and GE Patterns) selected by IVM (OEM) to supply wedge gate, butter y and nozzle check valves (previously imported products) for Vaal Gamagara Water Supply Scheme (Sedibeng Water Pipeline) • Transnet Engineering Tender (MicroValve)- supply and manufacture of 250 valves (relieve valves, cut-out cocks and autodrain valves) for use in the assembly of locomotives. Microcast and Dhuva foundries will be used to cast these valves. The other major area of IPAP intervention in the sector has been the leveraging of procurement for both freight and passenger rolling stock through designation of systems and products under the PPPFA. Locomotives, wagons and coaches for freight and commuter rail were amongst the top ten identified large and strategic procurement fleets. On the back of these designations, PRASA issued a tender for the procurement of 3,600 new coaches (600 train-sets) in 2012. The contract was awarded in 2014 to Alstom-Gibela and includes a Manufacture Supply Agreement (MSA) for 10 years and Technical Support and Spares Supply Agreement (TSSSA) for 18 years. This contract is expected to deliver 5,256 coaches to satisfy existing rail passenger demand on the current network until the year 2020; 456 vehicles to satisfy growth in rail passenger demand to the year 2030 on the existing network; and a possible further 1,512 vehicles to satisfy long-term rolling stock needs on new corridors to be constructed as part of future expansion of the existing network and the development of a new network. In 2013, Transnet Freight Rail (TFR) issued a tender for the procurement of 1,064 locomotives, with the contract being split in 2014 between four OEMS. The contracts stipulate minimum local production and content thresholds of 55% for diesel locomotives; 60% for electric locomotives; and 65% for passenger coaches. Over 60 companies in the sector are currently benefiting from the TFR & PRASA contracts, either directly (in the case of OEMs) or indirectly (in the case of Tier-1 suppliers).

Notwithstanding issues related to import leakages and shortcomings with respect to supplier development, the efforts to rebuild SA’s rail industrial capabilities have begun to meet with some success. The following rail sector company launches or expansions in 2017/18 may be summarily noted: Morgan Advanced Materials (electric carbon components); ABB Modderfontein (traction transformer factory); Electro-Inductive Industries/Siemens (transformers); Lucchini (railway forged wheels); Timken (train wheel bearings); Transnet Engineering (the SAdesigned Trans-Africa Locomotive); PRASA’s Dunnotar Park facility (train manufacturing); Koedoespoort assembly plant (locomotive assembly for Transnet Freight Rail and General Electric); Bombardier Transportation South Africa (BT) and CRRC Dalian Locomotive & Rolling Stock (new-build locomotives currently undergoing trials and test runs).

The G20 and OECD Steel Committee recognised SA’s exemplary policy intervention during the steel crisis, noting that it was implemented with good social dialogue between government, industry and labour. An independent process under the Competition Commission resulted in a R1.5bn fine and R4.6 bn investment commitments by AMSA.

5. Steel Industry

14.5% mnf. GDP R24 bn exports 1.9% total GDP 60,000 jobs

The onset of the steel crisis in late 2014 saw SA’s dominant steel producer, ArcelorMittal South Africa (AMSA) approach government for support, demonstrating a willingness to engage on legacy battles related to pricing and investment. For government, the targeted outcome is an optimal ‘end state’ of a viable, competitive and sustainable steel industry in SA, balancing support as far as possible between the interests of both upstream and downstream players. The problems of the SA steel industry are not unique. Countries around the world are grappling with a continuing steel crisis characterised by massive global excess capacity, exacerbated by weak economic recovery and depressed market demand. In South Africa and the region, the effects have been severe as iron-ore mines, primary steel mills and manufacturers struggle to compete, retain jobs and invest. As also happened in a number of other jurisdictions such as the EU, India and the USA, the SA government intervened to save the industry from the threat of collapse, with all its attendant consequences in terms of skills and capacity losses. The first support measures put in place were a) increasing the general rate of customs duty on primary steel products to 10%; b) increasing the tariff on a range of downstream products; and c) the deployment of various rebates. A Steel Development Fund of R1.5 bn was also established to support key downstream steel sectors/sub sectors. Agreement was also reached with AMSA on a set of principles for appropriate at steel pricing in SA to ensure that both upstream steel mills and downstream steel-dependent industries remain competitive and sustainable. To further increase industry competitiveness, government retracted the deeming of primary steel in designated products (requiring the use of locally manufactured primary steel) and designated downstream steelintensive construction steel products and components. This meant that all steel would be sourced locally. The level of coordination between the Economic Development Department (Competition, Trade, Industrial funding, and Social Dialogue) and the dti (industrial incentives, local designation, tariffs and business coordination) was extensive, and an example of joinedup government that yielded positive results.

6. Plastics and Cosmetics Sector 6.1. Plastics The downstream plastics sector is largely comprised of small firms, due to the relative ease of entry in the industry. The sector as a whole has been growing at an average rate of 3-5% annually for the past 10 years. Its current contribution to manufacturing GDP is 14.5% (1.9% of overall GDP) – with plastic packaging the largest contributor.

Total investment under the period of review is approximately R7.5 billion, which includes both newly-formed companies and expansions to increase capacity to satisfy the growing demand for polyethylene polymers. The downstream industry, which tends towards greater labourintensity, has shown steady employment growth, with employment by plastic fabricators having risen to roughly 60, 000 – nearly double the number for 2007 (38,000). This growth is also contributed to by the chemicals sector’s promotion of downstream fabrication of polymers, which requires far more competitive pricing of polymer inputs, skills development, support for firm and industry level technical capabilities such as R&D and tooling, and stronger matching of final product demand patterns to intermediate plastic inputs. Aside from legitimate international competition, the domestic economy has over recent years witnessed significant penetration by illegal imports. In response, the dti, SARS and the industry coordinated efforts to design and implement a risk engine to combat customs fraud and under-invoicing at customs. The initiative – which is already showing strong quarterly results - is aimed at encouraging and supporting local production of components to help the sector compete effectively and sustainably in the local market. Some of the key company launches and/or upgrades/expansions in the Plastics Industry over the period include: • Mpact Polymers (Polyethylene terephthalate recycling plant); • SRF Flexi-Pack (biaxial-orientated polypropylene lm manufacturing line); • Sasol Polymers (R1.9 billion ethylene puri cation unit); • KAP Industrial (4.1-billion acquisition of Sasolburg-based polypropylene and high-density polyethylene manufacturer Safripol); • CSIR (development of 100% biodegradable plastic bags made from agricultural by-products). Further worth mentioning was the establishment of the Nelson Mandela Bay Composites Cluster, with funding from the Cluster Development Programme.

6.2. Cosmetics The sector contributes 1% to manufacturing GDP and employs 60,000 people in manufacturing, plus thousands of jobs in the services sector like hair salons, health spas and retail. With the global natural ingredients and organic cosmetics sector growing rapidly, the dti has taken the initiative to support a wide range

of the Mandela Mining Precinct, which is a partnership between the mining industry (Chamber of Mines) and government (DST, the dti, DPME) that is formally managing the implementation of the South African Mining Extraction Research Development and Innovation (SAMERDI) programme. The Mandela Mining Precinct has been allocated an operational and capital expenditure budget for the next 3 years until it is selfsustaining, coupled with a significant contribution from industry. The Mandela Mining Precinct started operating in May 2016 and the CSIR moved its mining scientists to the facility, along with representatives from the Chamber of Mines, Mining Equipment Manufacturers of South Africa and the dti. The formal launch of the mining hub will take place in May 2018. There are several R&D programmes and a supplier development initiative under way at the Mandela Mining Precinct and funding of R222 million has been allocated by National Treasury for the R&D programmes until 2021, specifically for project implementation. The Chamber of Mines has raised R33 million to fund the shortfalls in the ve R&D project streams for 2018. In mid-2016 government also initiated the establishment of the Mining Equipment Manufacturers Cluster (MEMSA), which now resides at the Mandela Mining Precinct.

9. Business Process Services (BPS)

of companies in the value chain. There has been a huge uptake of natural ingredients like Aloe ferox, marula, baobab, rooibos and Kalahari melon, and more than 549 products containing natural ingredients from indigenous plants are on the shelves. Total revenue produced from value-added bio-products in the domestic retail market was approximately R1.5 billion in 2013. 70 % of these products are personal care and cosmetic products, with the remaining 30% being complementary medicine and food flavouring. Most notable recent investments include the following: • The Bespoke Amenities Company (TBAC) – which benefitted from an MCEP grant to expand its manufacturing facility in Johannesburg - now exports amenities (hotel lotions, liquid and bar soaps) to 18 African countries and services 3,500 clients. • MCEP also provided support for AMKA’s R900 million project to build and equip a new factory and warehouse extension. • In 2013, Unilever officially opened a R1.4 billion Home Care factory that will increase production capacity by 67% from 90,000 to 150,000 tons annually.

7. Mineral Beneficiation Government policy-making over the IPAP years has focussed with increasing intensity on the need to diversify away from mining and resource extraction towards a manufacturing, value-adding and job creating economy. Globally, resource-based economies have been findingitdifficultto perform consistently because of commodity price volatility and a sharp decline at the tail-end of the commodity supercycle. In South Africa, this tendency was clearly evident as mineral export prices dropped between 2011 (35%) to 2014 (26%), while gaining back some ground in 2015 (28%). In this context. mineral beneficiation has been identified in IPAP as a key instrument for the industrialisation agenda. On the back of detailed research and collaborative work, South Africa is well poised to assume a globally comparative role in the hydrogen economy and energy storage space - with a number of key projects already being implemented by government, the IDC and the industry. Creating new demand for Platinum Group Minerals (PGM) has become a major objective, with fuel cells and energy storage technology development

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at the leading edge. The developing fuel cell industry will also help to boost energy efficiency and carbon reduction. Some projects that benefitted from government interventions include the SEZ Fund which provided catalytic funding to support the feasibility and demonstration of a world-class 100KW fuel cell at the Chamber of Mines (COM). A number of other fuel cell initiatives have been launched. For example: • Isondo Precious Metals acquired the rights to manufacture, use, market and sell licensed fuel cell components worldwide. • Anglo-American set up a fuel cell project powering the financial Trust Community in Kroonstad, supplying 34 households through a 60kVA peak power fuel cell system delivered via a mini-grid. • A demonstration fuel cell forklift with on-board metal hydride storage was developed by the DST’s HySA initiative for Impala Platinum Refineries. • The Black Industrialist Programme is supporting the commercialisation of a high-purity battery grade Nickel Sulphate (NISO4) from Lonmin’s crude nickel sulphate stream. This has led to the establishment of a R251 million 25,000 t/a pure nickel sulphate plant in the NW. • In 2013 IPAP identified the development and rollout of a Gold Loan Scheme to support jewellery manufacturers to buy gold competitively as a raw material. The Scheme was launched on 30 September 2014, with R100 million allocated under the Manufacturing Competitive Enhancement Programme (MCEP)’s niche funding scheme to support large jewellery manufacturers to finance gold for jewellery manufacturing. • De Beers launched a diamond beneficiation scheme with five emerging diamond cutters and polishers.

8. Mining Capital Equipment Highlights of the decade mainly centred on collaborative government/ industry programmes and projects. The key stand-out Programme is described below. In discussions with industry, a shared understanding was developed that for South Africa to once again assert itself as a centre of excellence for the development of goods and services in the mining sector, it had to actively rebuild its R&D capability. This resulted in the establishment

South Africa has positioned itself as a leading offshoring destination, expanding into broader BPO services and winning international recognition as a preferred customer service location. The international industry is now complemented by a thriving local market. A strong government support base has facilitated exponential growth within the BPO/ contact centre sector, which now employs an estimated 220,000 people across both the domestic and the international segments, with approximately 32,000 servicing international markets. Over the period, the domestic market has grown at an average of 10.7% per annum since 2002, while the offshore/International market has grown at 26.7%. In 2016, South Africa was named Offshoring Destination of the Year at the Global Sourcing Association (GSA) awards in London. It also received the NOA (National Outsourcing Association)’s Offshoring Destination of the Year award in 2012, the European Outsourcing Association’s (EOA) Offshoring Destination of the Year award in 2013 and the NOA Skills Development Project of the Year award in 2014. Further recognition of South Africa as a major international BPS player is evidenced by the fact that he Global Sourcing Association has confirmed that South Africa will host its 2018 Summit. The key instrument in leveraging achievements has been the BPS Incentive Programme. This was recently revised to include a condition that binds grant recipients to achieve 80% youth representation in their overall staff complement, thereby aligning the scheme with commitments made in the National Youth Accord. In addition to the BPS incentive, the dti has also partnered with industry, the National Skills Fund and the Jobs Fund to prepare unemployed youth to work in the industry through the Monyetla Work Readiness Programme. Since its launch in 2006, Monyetla – meaning “opportunity” in seTswana - has offered training grants to the industry and helped over 16,000 young people across the country to gain training through a model which guarantees commitment by the industry to employ learners post- training. Some key sectoral progress indicators over the review period include the following: • In 1998, Lufthansa became the first offshore operation to outsource to South Africa. • Following this, South Africa expanded into other global BPO markets and is now home to operators including Aegis, Capita, CCI, EXL, Barclays, Conduent, Infosys, Genpact, Teleperformance,

Webhelp and WNS. Capita, the largest UK outsourcer located in SA, has already created 2,300 jobs and will be creating an additional 1,200 over the next 12 months. • SA is also the offshore destination of choice for International brands such as Amazon, Asda, Bloomberg, British Gas, Direct Line Group, iiNet, 02, Shell and Shop Direct. • The international industry is complemented by a thriving local market, which includes companies such as Old Mutual, Sanlam, Woolworths Financial Services, Discovery Health, The Foschini Group, Metropolitan Health Group and others.

10. Film sector the dti has been supporting the film sector since 2004 through two complementary programmes - the South African Film and Television Co-Production Incentive and the Foreign Film and Television PostProduction Incentive.

Government support provided to the film and television sectors has been a major contributing factor in assisting these sectors to become firmly entrenched on the global stage for film and television production, whilst also providing strong support for local production and employment creation.

Since 2011/12, 574 productions (113 foreign, 461 local) have been approved under the Film Incentive Scheme, with a projected spending of R13 billion and the total value of claims paid by the dti standing at R2.1 billion. 249,641 direct jobs and 22,960 full time equivalent jobs have been created. In 2014/15, the dti launched the newly-developed R1 million threshold South African Emerging Black Film-Makers Incentive Programme. The objective of the programme is evident from its title - support emerging black filmmakers to nurture and grow their talent from small movies to big productions, thus further contributing to skilled employment creation in the sector. In parallel with this programme, the IDC and the National Film and Video Foundation (NFVF) launched the Emerging Black Filmmakers Transformation Fund (EBFTF) as a further support measure. Over the years the two incentive schemes have facilitated the production of several ‘blockbuster’ movies in South Africa. For instance: • Mad Max 4 – Fury Road (starring Charlize Theron and Tom Hardy). At US$ 125 million, this was the biggest feature film to have been produced by Warner Bros in South Africa. • Other major films include Chronicle and Safe House (starring Denzel Washington and Ryan Reynolds), the 3D comic-book adventure Dredd and the television drama Mary and Martha (starring Hilary Swank). • The Adventures of Zambezia, a locally-produced animated feature film, has received outstanding accolades and nominations.

11. Green industries As a first step towards reversing South Africa’s historical dependence on fossil fuels for energy generation, government has pledged to peak, plateau and reduce the country’s greenhouse gas (GHG) emissions over the coming decades – a commitment that will have major implications for the country’s industrial and trade agenda.

In parallel, government realised that renewable energy generation could become a highly significant catalyst for industrial development and consumer benefit. A critical mass of renewable energy-generation projects can achieve a range of objectives including localisation of components, job creation and competitiveness improvement. In an initial move to develop the country’s renewable energy sector, government introduced the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in 2012. The programme aims to develop South Africa’s renewable energy sector through a competitive bidding process. At the present stage of development of the industry, all projects in Bid Windows 1 and 2, and 10 projects in Bid Window 3 are now operational.

Furthermore, under the designation policy, approximately R3.42 billion in tenders (Navy, National Research Foundation, Transnet) was awarded to local companies. These included tenders to build workboat ferries and (in the biggest contract) the construction of a highly complex hydrographic survey vessel. Other support provided through the dti incentives leveraged investments worth R503 million. Marine manufacturing performance has greatly improved, and industry exports increased by 174% between 2007 and 2016.

13. Aerospace & Defence

6,422 MW of electricity have been procured from 112 renewable energy producers in seven bidding rounds, whilst 3,162 MW of electricity generation capacity from 57 IPP projects have been connected to the national grid. 16,991 GWh of energy has been generated by renewable energy sources procured under REIPPPP. Of the 57 projects that have reached commercial operation date, 44 projects have already been operational for longer than a year.

Several initiatives were developed over the period, in collaboration with Armscor, the Department of Defence, Aerospace Maritime and the Defence Industries Association. Notable outcomes have been building up the National Defence Council, the launch of a BBBEE Charter and the launch of the Aerospace Industry Support Initiative (AISI), an initiative of the dti, hosted by the CSIR and closely aligned with key IPAP sectoral priorities and the jobs drivers of the New Growth Path.

The total committed investment is R201.8 billion, of which REIPPPP has attracted R48.8 billion in foreign investment and financing. This created 32,532 new job years for South African citizens and has secured carbon emission reductions of 17.25 M tonnes of CO2.

0.2% mnf. GDP R2.5 bn exports R6.9 bn in investments 4,507 jobs

It has also contributed to localisation objectives, with local content commitments by IPPs amounted to R67.1 billion, or 45% of the total project value of R147.6 billion for all the bid windows. Actual local content spend - where construction has already started - amounts to R38.1 billion.

AISI is a fully government-funded mechanism, and works across many sectors of South African industry, engaging with local players and international aerospace OEMs in support of the local South African aeronautics, defence and space industry.

11. National Cleaner Production Centre The National Cleaner Production Centre (NCPC), established in 2002, is a government programme that drives the country’s transition towards a low carbon economy. Since 2013, 806 companies have been assessed, resulting in potential savings of R12.4 billion.

12. Marine manufacturing and associated services The Marine Manufacturing Sector Programme, as defined in IPAP, encompasses support works in: • boat building/shipbuilding; • ship and rig maintenance and repairs; • manufacturing of marine components; and • equipment industries in the upstream and downstream value chain. The Marine Manufacturing Industry is at the core of economic growth, job creation, and transformation in the oceans economy. A total investment value amounting to approximately R26.2 billion has been disbursed in the Oceans Economy and over 6,545 jobs have been created in the various sectors. 0.2% mnf. GDP R2.5 bn exports R6.9 bn in investments 4,507 jobs The Industry has secured R6.9 billion or 26.4% of total sectoral investment, creating 4,507 jobs (or 69.88% of the jobs created in the oceans economy). Building on other recommendations owing from Operation Phakisa, the dti embarked on an extensive engagement with industry which produced a comprehensive strategy, namely, The Marine Manufacturing Development Plan (MMDP). It has now launched

a sector development programme that has so far resulted in 5 tenders for new builds and 5 tenders for maintenance, advertised with a conditionality of 60% local content.

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As result of AISI’s financial support, Daliff Precision Engineering (Pty) Ltd. is now on the Airbus Quali ed Parts List (AQPL). The localisation project has led to import substitution and increased ability to supply local companies. Following a directive from EDD in support of the green economy, the IDC also played an important role. Other beneficiaries of the programme include TraX’s and Aerosud. TraX’s is now positioned as a supplier of Class-3 printed circuit boards (PCBs) to the aerospace and defence industries in South Africa, and as a preferred supplier of the SKA project, the national flagship astronomy programme. AISI support also contributed to more international contracts being won by Aerosud and Denel Aerostructures with companies such as Airbus, Boeing and Spirit Aerosystems. SMMEs were involved in these projects and benefited from technology transfer and process improvement. The sector has also seen the unveiling of a range of significant new products, including: • a new generation 8x8 infantry combat vehicle; • the Advanced High-Performance Reconnaissance Light Aircraft (Ahrlac); • the lightest 7.62 mm general-purpose machine gun in the world; • the Falcon 402 single-engined passenger and utility aircraft, and • the design and build of a nano-satellite in South Africa, launched from the International Space Station as part of the European Commission’s research project.

14. Electro-technical Sector The Electro-technical sector is divided into Information and Communications Technology, Electronics and Electrical Engineering, including White Goods. Each of these is in turn made up of various sub-sectors with their own areas of specialisation. In 2008, as part of its on-going effort to sustain competitive capabilities across the sector, the dti developed a Customised Sector Program (CSP) to support its growth, create global industry awareness of South African electro-technical capabilities and assist contract manufacturers

to get access to large-scale contracts from multinational corporations. It is also aimed at promoting job retention and growth in the South African television manufacturing industry, increasing competitiveness and quality in software development, expanding the domestic manufacturing base in the White Goods industry and increasing SA’s production capacity in Compact Fluorescent Lamps within SACU. Considerable success has been achieved in most of the areas above, as illustrated by the following achievements since the implementation of the CSP: • In 2011, in terms of the regulations of the PPPFA agreed between the dti, National Treasury and EDD, designation of set-top boxes was set at 30% local content, electrical and telecom cables at 90%; residential prepaid electricity meters at 70%; post-paid meters at 70%; smart meters at 50%; water meters at 40% and two-way radio terminals at 60%. • UI Cables, based in Alberton, launched a new R100m cable manufacturing plant. This 90% black-owned company - which manufactures specialised cables for clients in the energy, transport, communication and mining sectors - has received R46 million in support from the dti, through the Black Industrialists Incentive Scheme. UI will produce a wide range of copper cables including optical ground wires. • Now in its fourth year of operation, Hi-Sense South Africa produced both its one- millionth television set and its one-millionth fridge at its local manufacturing facility in Atlantis, Western Cape. • Whirlpool South Africa invested R100 million in the Isithebe Industrial Park near Mandeni - recently upgraded by the dti - where it manufactures KIC refrigerators and freezers and other home appliances for the SA white goods market. 1,000 jobs have been retained and 100 new jobs created. A skills development programme is to be put in place, together with the creation of an integrated local supply chain. • the dti - in partnership with the South African Electrotechnical Export Council and the four leading white goods OEMs - Defy SA, Hi-Sense, Whirlpool and Zero Appliances - established the White Goods Manufacturers Cluster. The partnership seeks to position South Africa as a leading exporter of locally manufactured white goods, especially

to the African continent.

TRANSVERSAL RECORD 1. Procurement 1.1. Designation

From its first iteration, IPAP has identified public procurement as a key lever for industrialisation and re-industrialisation, by raising aggregate domestic demand through the promotion of local production and an aggregate increase in the productive sectors’ share of production and employment. A review of the technical specification SANS 1286:2017 was carried out in 2017. The specification provides the standard definition of local content - expressed as a percentage of the tender price and primarily

based on local manufacturing. Bidders are therefore compelled to use the standard formula in calculating their local content. To date, a total of 23 sectors/products have been designated for local production, with varying minimum local content thresholds. Below is a table with all the designated sectors/products thus far.

On Regulation 9.3 (2011 PPPFA Regulations) and Regulation 8.4 (2017 PPPFA Regulations), 43 bids utilised these provisions in the absence of designated products to ensure localisation.

Between 2015 and July 2017, almost R59.95 billion was reported to the dti as value for local content in public procurement. The major transaction was on the rail rolling stock fleet procurement, amounting to about R49.5 billion.

The NIP secretariat is currently managing a range of obligations estimated at R18 billion in total, to be fulfilled over the next 7 years. Apart from this, it is also negotiating obligations arising from the pharmaceutical industry which are estimated at R10 billion.

However, the challenge remains the verification of the real achieved value. SABS has been given an urgent mandate to step up its efforts to carry out accurate and trustworthy local content verifications. The dti has conducted over 155 training workshops since July 2012.

1.2. National Industrial Participation Programme (NIPP)

Over the period, the programme has attracted obligations across sectors including Defence, Oil and Gas, Automotive, Aerospace, Rail, Energy and ICT. The chart belowreflectsthe spread of obligations across the sectors and their relative size, as a percentage of the total NIP obligations (R28 billion) currently being managed and negotiated.

Sectors already designated Category/description

RAIL ROLLING STOCK Diesel locomotives Electric locomotives Electric multiple units Wagons

55% 60% 65% 80%

Bus bodies

from 70% -80%

Canned/processed vegetables

80%

Clothing, textiles, leather & footwear sector

100%

Solar water heaters (tank & collector)

70%

Set-top boxes

80%

Certain pharmaceutical products Per tender

Per tender

Furniture products

from 85% - 100%

Electrical and telecom cables

90%

10.

Valves and actuators

70%

11.

Working vessels

60%

12.

Residential electricity and water meter

from 50 to 70%

13.

Steel conveyance pipes, pipe fittings and specials

from 80% to 100%

14.

Powerline hardware and structures

100%

15.

Transformers

from 10% to 90%

16.

Two-way radios

60%

17.

Solar PV components

from 15% to 90%

18.

Rail signalling system

65%

19.

Wheelie-bins

100%

Fire Fighting Vehicles

30%

21.

Steel Products and Components for Construction

100%

22.

Rail Permanent Way

90%

23.

Pumps & MV Motors

70%

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1.3 Proudly SA / Localisation

Since re-modelling itself to give priority support to IPAP sectors, Proudly SA has rolled out sustained campaigns on “buying Local” and consumer education for the public and private sectors. Its growing database of local products and services demonstrates that the campaign has begun to play a crucial role in opening market access for locally manufactured products. Since the re-launch of the database on 1 April 2017, company membership has increased to 1,130, with the number of items being promoted totalling 9,700. In its support for the local manufacturing sector, Proudly SA has concluded localisation partnerships with several companies in the retail sector (including Edcon, Massmart, Foschini and others). Through its “Buy Back SA” campaign consumers and businesses are encouraged to make local procurement decisions to allow more money to ow back into the domestic economy.

Table 1: Sectors/products designated for local production in public sector procurement #

on developing technologies and software modules for both the domestic and international markets, including 4.5G/5G for the cellular phone industry, smart home solutions, mobile money technologies and application platforms for high-end smart phones. • Hewlett-Packard (HP) has committed to investing R30 million in a South African Company, Ideco, to design and manufacture an electronic device that consists of personal computer, camera, scanner and fingerprint reader for both local and export markets. The device is specifically designed for voter registration, management of elections and security services.

Minimum local content thresholds

The EDD has also pursued a range of initiatives to support local procurement, including agreements with Edcon and Massmart and dialogue with other retailers. The Massmart and Edcon agreements were incorporated as conditions in Competition filings. A Local Procurement Accord was developed with the support of social partners.”

2. Industrial Financing 182 local companies have been supported to improve their competitiveness and to increase their export capabilities. This has been done either through funding, technology transfer or linking local players with the global value supply chains of OEMs. Investments have been attracted to a value of R3.8 billion, for both capital equipment and technology transfer, creating approximately 594 new direct jobs. The focus of NIP projects remains the creation of company capabilities in maintenance, repair and overhaul, with a strong emphasis on transfers of equipment, tools and technological know-how from obligors and certification (including personnel training) to meet European standards. Specific support has also been given for the manufacture of aerospace composite components. Apart from negotiating these NIP obligation agreements, the business unit has concluded agreements on the following stand-out projects: • the dti reached an agreement with an obligor to provide a full suite of Product Lifecycle Management (PLM) software to the CSIR. This will enable the CSIR to support SMME development through the various product lifecycle stages. It is estimated that 2,000 companies will be supported over a seven-year period. • Moipone-Marce JV has committed to investing approximately R10 million in a production facility in Centurion that will produce four components for trucks, increasing local content from a designated threshold of 30% to an average of 70% per truck. • Cargotec has committed to investing approximately R15 million to expand the manufacturing capacity of CZ Electronics Manufacturing (Pty) Ltd in Boksburg. The investment will be used for the acquisition of the necessary equipment to set up production lines for local manufacture of open-view decoder boxes and affordable television sets. • Huawei has committed to investing R2.1 billion to establish a Joint Innovation Centre (JIC) in South Africa. The centre will focus

Industrial financing is available via incentives administered by government departments and loans / equity facilitated through development finance institutions. The dti is a major provider of industrial incentives. The industrial Development Corporation, under the direction of the Minister of Economic Development, has greatly expanded the level and range of industrial funding, with an investment approvals target for the IDC, set by EDD, of R100 billion over five years. This support from the IDC / EDD is a critical element of the resourcing of IPAP at rm-level.

2.1. Incentives

One of the most effective dti contributions in support of broadening economic participation, inclusive growth and job creation has been its continuous provision of incentive packages. From 2011/12 to January 2018, the department stimulated and facilitated enterprise and industrial development by supporting 14,226 enterprises through various incentives totalling some R61 billion. These were mainly targeted at investments in plant, machinery and equipment, export marketing activities and the acquisition of business development services. In a highly competitive global economy, incentive support to local and foreign investment is paramount for achieving business and economic growth. Incentive approvals have resulted in projected investment of R326 billion and the creation of an estimated 670,994 new jobs. Over the past 7 years, the department’s incentives have impacted profoundly on corporate behaviour in the various supported sectors. The first major initiative of this type was the Manufacturing Competitiveness Enhancement Programme (MCEP), launched in 2012. Through the MCEP, local manufacturers were able to discard obsolete and antiquated machinery and equipment for new investments valued at R30 billion in both production assets and competitiveness improvement measures.

This was later followed up by three major sector-specific incentives: 1. The Automotive Incentive Scheme, which helped secure investment commitments of over R45 billion by auto assemblers and component suppliers, retaining 38,267 jobs. 2. The Aquaculture Development Enhancement Programme which issued its first approvals in March 2013 – and was designed to encourage the geographic spread of aquaculture development beyond the established Western Cape region. ADEP has achieved this objective with approved projects valued at R254 million in Gauteng, Mpumalanga, KwaZulu-Natal, North West and Limpopo. 3. The Business Process Services (BPS) Incentive has projected the creation of 43,657 jobs, 80% of which are going to employees under 35 years. The revised BPS incentive (implemented in October 2014), has reported over R24 billion in projected export revenue. During 2015/16, the dti diversified its strategy by supporting the development of new products and processes through incentives such as the Technology and Human Resources for Industry Programme (THRIP), which attracted the involvement of 223 students from various universities across the country and a number of small, medium and micro enterprises innovating from their premises. THRIP promotes collaboration between government, industry and higher education institutions to produce technology solutions and the appropriate highly skilled human resources to implement them. The 2015/16 financial year also saw renewed support for state-owned industrial parks under the Critical Infrastructure Support Programme, which leverages investment by supporting infrastructure upgrades and lowering the cost of doing business. Supported Industrial parks received R240 million and are located in the Free State, Gauteng, Limpopo, Mpumalanga and North West.

Black Industrialists Scheme (BIS) In November 2015 government launched the Black Industrialist Scheme, aimed at supporting the emergence of committed black industrialists rather than merely transferring ownership in existing large companies to empowered individuals without any real change in decision-making and control. The programme – which has benefited from specifically targeted funding earmarked by the IDC2 and the National Empowerment Fund - has provided support through measures such as access to finance, access to markets, skills development, standards, quality and productivity improvements. Figure 1. Actual /projected IDC funding for black-empowered / black-owned companies 2013-2017

a total value R1.9 billion, leveraging R7.2 billion in private investment. (See Table 1 below). Table 1. Sectoral funding under BIS, with investments leveraged Sector

the dti Grant

Investment leveraged

Plastics & pharmaceuticals Agro-processing Metals Electronics Pulp and paper Green sector Manufacturing logistics Automotive Clothing and textiles Oil and gas Mineral beneficiation

R567 million R316 million R279 million R98 million R123 million R149 million R116 million R93 million R102 million R101 million R50 million

R1.9 billion R1 billion R1 billion R600 million R524 million R473 million R328 million R268 million R238 million R236 million R208 million

The IDC also played an important role in support of the renewable energy programme, resulting in green industries receiving the second largest portion of funding. (See above). Its participation in these industries included funding for renewable energy generation projects, sectoral component manufacturing and additional funding to assist companies to become more energy-efficient.

Overall, between 2013/14 and 2016/17, TIA funding and support activities resulted in the achievement of an economic multiplier effect of 3.38 - meaning that for every Rand that TIA spends, an equivalent of R3.38 of economic activity is achieved. (This compared with 2.87 in the 2010/11 financial year). This has resulted in a contribution of R4.48 billion to the national economy and to the creation of 14,022 jobs.

As the graphic below illustrates, apart from primary minerals beneficiation, the largest job numbers were recorded in the clothing, textiles, leather and footwear and the agriculture and agro-processing industries. Downstream metals industries such as fabricated metals and the motor vehicle industry also contributed large numbers of jobs.

3.2. TECHNOLOGY COMMERCIALISATION HIGHLIGHTS

Further highlights on this technology • The Zambian Ministry of Agriculture - with whom CSIR collaborates through the Zambian Central Veterinary Research institute (CVRI) - requested the CSIR team to assist with the epidemiology of their two most recent FMD outbreaks. This was the first time that such depth of information was collated for an FMD outbreak in Zambia. • The July/August FMD outbreak in Rwanda prompted an invitation by the Rwandan Ministry of Agriculture to the Molecular Diagnostics Group of the CSIR to participate in control and scientific analysis of the situation.

It is estimated that this will result in the retention of 7,999 jobs and the creation of 9,459 new jobs. Projects approved under the Black Industrialists Scheme include: • K9 Pet Foods in the agro-processing sector, based in the Western Cape; • Maneli Pets in the agro-processing sector, based in Gauteng; • Dursorts Group in the agro-processing sector, based in Limpopo; • Micro finish in the automotive sector, based in KwaZulu-Natal; • United Industrial Cables in the industrial infrastructure sector, based in Gauteng; • Mthembu Tissue in the pulp and paper sector, based in KwaZuluNatal.

Industrial Development Corporation Over the 10-year review period the Corporation increasingly focused its efforts on implementing a funding strategy closely aligned with key IPAP sectoral priorities. From 2007 to March 2017, R91.7 billion of the value of IDC’s funding for South African businesses went to industries currently prioritised in IPAP. This represented 81% of total IDC funding in South Africa over the period. As can be seen in the following graphic, the primary minerals beneficiation industry attracted the largest portion of IDC funding; the rationale being that, despite its capital- intensity, it has several important linkages with the rest of the economy and provides a cornerstone for other manufacturing industries to build on. It also contributed to the largest number of jobs expected to be created through IDC funding (62,900).

3. Innovation and technology 3.1. TECHNOLOGY INNOVATION AGENCY (TIA)

Over the past ten years the Department of Science and Technology (DST) has focused on the creation and strengthening of new entities to serve as innovation, technology transfer and commercialisation support structures. The aim has been to enable the translation of an even greater number of innovative ideas into prototypes for further commercial and industrial development. Beginning in 2008, this entailed the conceptualisation and establishment of the Technology Innovation Agency (TIA) by 2010. Today, TIA continues to be tasked with the primary responsibility of maturing technologies with industrial potential between Technology Readiness Levels (TRLs) 4 to 7. To this end, TIA’s mandate is to enable and support technological innovation across all sectors of the economy to deliver socio-economic benefits for South Africa and enhance its global competitiveness. This is achieved by supporting the development and commercialisation of research outputs from Higher Education Institutions (HEIs), Science Councils (SCs), Public Entities and private research institutions. (Bringing ideas to market).

To date, incentive grant support has been approved for 79 projects to

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CSIR veterinary pathogen screening technology: TokaBio TokaBio is a spin-out company that was set up in 2017 to focus on veterinary health and point-of-care diagnostics for control and management of Foot and Mouth disease (FMD). It emanated from the Molecular Diagnostics group within Biosciences, whose objective is to commercialise its developed technologies. Its assays, tests and analyses in the field of FMD are already proving worthwhile for other countries, where these diseases are endemic – in particular, Rwanda and Zambia. It is therefore conceivable that the commercialisation strategy may include these two countries as early adopters.

Over the past four years (2013/14 to 2016/17) the outcomes of some of TIA’s ongoing initiatives have begun to bear witness to its growing impact within a maturing national system of innovation (NSI). This has included the disbursement of a total of R1.6 billion to support new technological developments; the emergence of 205 new knowledge innovation products (i.e. protectable intellectual property (IP) and technology demonstrators). TIA has also provided technical support to over 8,550 SMMEs to further develop and commercialise their products and services. It is very encouraging to see that a number of technologies supported by TIA have proved attractive in both local and international markets; by the end of the 2016/17 financial year, 44 technologies had already successfully penetrated markets).

Development of research reagents based on SA’s biodiversity: Cape Bio Important research work is currently being developed on Protein and Enzyme Reagent (PER) technologies, with an emphasis on molecular biology reagent enzymes isolated from the Kogelberg Biosphere Reserve. The aim is to develop and commercialise marketready technologies for recombinant production of protein and enzyme reagents in response to market needs. In addition, the team aims to create new PER bio-manufacturing licensing opportunities and spinout companies for commercialisation of the recombinant reagent protein portfolio. End-user testing of one product prototype has been completed; and expanded fully branded and packaged beta-testing of an advanced prototype is ongoing. In the firstyear, further effort was invested in enhancing the underpinning technology platform. These platform enhancement activities have resulted in a strong IP-base for the initiative and have resulted in the identification of several additional enzymes for further development in the coming years. Licensing of Nutri-drink to Elvema In 2015, a project to produce a commercial version of Nutri-drink (a nutrient-dense drink formulated from indigenous South African plants) was initiated, in a partnership between the National Food Technology Research Centre (NFTRC) in Botswana and Elvema Nutrition (Pty) Ltd. The commercialisation project was funded by SANBio- BioFISA, and the product launched in South Africa in March 2018.

3.3. HIGHLIGHTS: SUPPLY-SIDE RDI INTERVENTIONS

Enterprise Creation for Development (ECD) Furniture Manufacturing Hub (FMH) During 2016 and 2017, ECD undertook a project on behalf of the dti to identify possible interventions that could upgrade the productivity and competitiveness of small-scale furniture manufacturers. The agreed outcome was the establishment of a Furniture Manufacturing Hub, which would incorporate a business incubator and shared manufacturing facilities to deliver a comprehensive package of business development support services. The basic aims would be to increase skills levels, introduce modern manufacturing systems and techniques, and open up greater market access.

the dti has now received a high-level business case for the establishment of such a facility, and it is expected that funding for its establishment will be secured during 2017/18 for implementation in 2018/19. This initiative has been prioritised in IPAP 2018 and is being co-driven by the dti and the South African Furniture Initiative. The CSIR has been identified in as a leading support institution. Single-dose Malaria treatment The Material Science and Manufacturing (MSM) unit of the CSIR secured a US $1 million contract with the World Health Organisation to produce a single-dose malaria pill, based on MSM’s encapsulation technology. R&D-led industry development initiatives DST-funded R&D investments over the past 10 years have started to yield industrial impact. The time required for maturing the knowledge/ research and technology to a viable industrial product/service varies according to the nature of the innovation. As an example, investments in disruptive technologies such as Aeroswift (3-D printing) or the direct manufacturing of titanium powder require approximately ten years to reach maturity (also depending on the level of funding/effort).

Infrastructure Rebuild Programmes of Eskom and Transnet. However, over the life cycle of the TLIU the Unit has been re-aligned to support other imperatives linked to the National Development Plan (NDP). Since 2012 the TLIU has provided supplier development and localisation support to over 200 locally-owned manufacturing companies. The companies supported are directly and indirectly involved in the localisation programmes of state projects. Over 65% of these companies are Qualifying Small Enterprises (QSE) or Emerging Micro- Enterprises (EME). The companies supported by the TLIU are based in Gauteng, KwaZulu-Natal, Western Cape, Eastern Cape, Mpumalanga and Northern Cape. Through the support provided by the TLIU there are now many instances where previously imported products are being produced locally. The list below indicates the impacts that has been achieved in replacing foreign manufactured components with locally manufactured components. Exhibit 1: outputs and impact from providing technological assistance to 154 rms • 700 jobs created. • 7,910 jobs retained at companies that received technology support. • 103 new projects secured by such companies, to a value of R488 million. • R122 million generated from company tax (due to increased turnover). • 252% return on DST investment (based on tax payable). • Enhancements in skills, capabilities and technology is contributing towards increasing rm competitiveness. Mining Occupational Health and Safety The CSIR helps to ensure the health and safety of South African mine workers by offering specialised analytical, testing and training services and by doing research and development in the field of mining occupational health and safety.

Currently the following projects/initiatives are close to being introduced into the market: • Ti-metal powder production: technology maturation is progressing slowly due to the inherent complexity of scaling up the volume of production per hour. The next step will be the execution of a techno-economic review; to be followed by the first commercialisation step, the establishment of a special purpose delivery vehicle to further upscale the technology for an industrial and commercial environment. • Aeroswift: technology development up to prototype stage has been completed, with the effort now on verification and validation of the printed components. In addition, the first commercial versions are being designed and manufacturing of two commercial Aeroswift versions is expected to commence in FY 2018/19.

3.4 HIGHLIGHTS: DEMAND-SIDE RDI INTERVENTIONS

The Technology Localisation Implementation Unit (TLIU) The DST set up the Technology Localisation Implementation Unit (TLIU) in 2012. Its initial mandate was to help achieve the outcomes of the Competitive Supplier Development Plan (CSDP) linked to the

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(post-harvest), fish breeding and mining and minerals.

4. Special Economic Zones and Industrial Parks 4.1. Special Economic Zones (SEZs)

The SEZ programme is one of the critical tools government has prioritised for accelerating South Africa’s industrialisation. It is specifically designed to attract foreign direct investment (FDI), improve existing infrastructure, develop new industrial hubs and create significant numbers of new, decent jobs. The Special Economic Zones Act (No 16 of 2014) has now entered its implementation phase and the key legislative frameworks have been established. These include (beyond the founding Act) the promulgation of SEZ Regulations, a Monitoring and Evaluation Framework, SEZ Fund Guidelines and SEZ Incentive Guidelines. the dti has also recently finalised the process of public consultation on draft SEZ Governance Regulations. The total number of designated Special Economic Zones has to date increased to eight. These are: Saldanha Bay (WC), Dube Trade Port (KZN), OR Tambo (GP) Coega (EC), East London (EC), Richards Bay (KZN), Musina (Limpopo), and Maluti a Phofung (FS). The number of operational investors in designated SEZs has increased from 72 to 85, with a total investment value of over R9 billion. The number of direct jobs created currently stands 13,561; but this is expected to increase substantially as the new investments come onstream. Considerable investments are already owing into a number of the SEZs:

• At Coega, various projects with a combined value of some R12 billion are under construction. These include investments by BAIC automotive, Osho Cement, MM Engineering, and the construction of a Customs Control Area Warehouse (CCA) in Zone 1. Dube TradePort SEZ has secured R1.2 billion of operational investments and attracted a further R1.8 billion of committed investments. The DTP SEZ’s total assets increased to R4,3 billion, generating revenue of R111 million. • In Richards Bay SEZ, a R300 million PVC pipe manufacturing plant has been established and is in operation. • In Maluti-a-Phofung SEZ, investments valued at a combined R350 million in the beef processing and chemical sectors have been secured. The construction of the two factories commenced in February 2018. • the dti has recently completed a process of public consultation for the proposed Atlantis Green-Tech SEZ in the Western Cape province, and the process of designating the zone is almost complete. Five companies are already operational in Atlantis, with a total investment value of around R680 million. • The SEZ Operator Permit to authorise the development and management of the Musina-Makhado SEZ (Metallurgical Zone) has been issued to South African Energy Metallurgical Base, a subsidiary of a Chinese conglomerate, Shenzhen Hoi Mor Resources Holding Company. The total investment is currently estimated at around R56.9 billion. To derive maximum benefit from the development and implementation of SEZ policies, a five-year agreement was signed in 2014 between the dti and the Ministry of Commerce (MOFCOM) of the Peoples’ Republic of China. Through this MoU 108officialshave already been trained.

Highlights from the MOHS • More than 5,000 pieces of safety and emergency equipment are tested annually to ensure equipment is safe for use and to enable mines to comply with the related legislative requirements. Equipment tested includes lifting and hoisting gear, emergency breathing equipment and steel wire ropes. • Safety awareness training in the field of mine fires, methane ignitions and coal dust explosions was provided to more than 3,500 mine workers each year. • The CSIR has developed and patented several products that improve the safety and performance of self-contained self-rescuers (emergency breathing equipment). The most recent development is an innovative training device that provides the user with a realistic experience of the use of a self-contained self-rescuer. • The CSIR operates national testing and research facilities that offer unique capabilities in the fields of mechanical testing and in the evaluation of products intended to prevent, suppress and mitigate explosions in coal mines. Manufacturers of mining equipment and products rely on the CSIR to provide mandatory product verification testing as part of their development and quality control processes. • Through directed research in the field of air quality the CSIR has contributed to the improvement of the health of mine workers and the communities close to mines and mineral processing plants. Industry Innovation Partnership Fund (IIPF) A number of instruments have been devised to raise industry R&D levels and help improve competitiveness in specific industry sectors/ sub-sectors through technology development or pre-competitive R&D. The Sector Innovation Fund (SIF) jointly funds R&D and postgraduate human capital development in sector-related technologies, addressing problems identified by the respective sectors. Currently there are active SIF programmes in the domains of wine technology, sugar

4.2. Industrial Parks

In September 2015, the dti launched a structured programme for the revitalisation of industrial parks in a number of old industrial areas across the country. The main objective is to accelerate economic development in the lagging regions by attracting investment, supporting job creation in the manufacturing sector and assisting regions to build, strengthen and develop strategic industrial capabilities. This programme is currently focused on 11 industrial parks countrywide and is implemented through national government partnerships with the provinces, their agencies and municipalities. A budget of R415 million has been allocated, of which R231 million has already been spent. To date 55,000 people have found employment through the programme.

5. Foreign Direct Investment (FDI) Effort Over the review period foreign direct investment (FDI) has played a significant, if volatile, role in the development of the economy. South Africa was Africa’s best foreign direct investment (FDI) performer in 2013, as well as leading the trend towards increasing intra- African investment, according to UNCTAD’s 2014 World Investment Report. The UNCTAD report showed that FDI in ows to South Africa jumped from US$4.5-billion in 2012 to a record-high $8.1-billion in 2013, mainly driven by investments in infrastructure. However, FDI tapered off sharply in 2014/15, before increasing by 38% In 2016 to a (still rather modest) US$ 2.4 billion (UNCTAD, 2017). The sectors attracting the most FDI are energy, telecommunication and services. The 2016 Foreign Direct Investment Projects Database from Trade and Industrial Policy Strategies (TIPS) identified a total of 30 large-scale investments, either ongoing or

announced, with a combined investment value of R123 billion and the potential to create around 22,000 permanent jobs. Notable recent developments have included: • BMW’s construction of a state-of-theart regional parts distribution centre in Midrand. The project includes a training centre and offices for its IT operations hub. The investment value of the distribution centre is R200 million. • Amplats’ launch of a new R474 million chrome recovery plant which will produce commercial grade chromite concentrate.

6. National Export Effort The dti has played a critical role in the promotion of economic development and in increasing exports in selected target markets. In partnership with the Provincial Investment Promotion Agencies (PIPAs), it undertakes export promotion activities, specifically in markets that are aligned to South Africa’s international relations and co-operation agreements. The Department has introduced the National Exporter Development Programme (NEDP) with a particular view to increasing exports of products and services that add value, contribute to employment and develop the green economy. In 2016, the Integrated National Export Strategy (INES) was launched to help advance the global competitiveness of South African exporters and try to tap into exportled economic growth benefits. Since the establishment of the Export Marketing and Investment Assistance (EMIA) fund, 5,288 companies have been supported to a value of R738.56 million. These companies have generated export sales to a total value of R22.5 billion. This implies that for every Rand the Department spent, the companies generated R30.53 worth of sales.

Source: IPAP 2018-19

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Financial REVIEW

Industrial financing

Key Action Programme

Situational analysis

1. Enhancing Incentive Programmes to support the growth and diversification of the manufacturing sector.

South Africa’s Industrial Policy Action Plan (IPAP) recognises the need for the country’s industrial financing incentive packages to be competitive in respect of their accessibility, costs, terms and conditions, in order to attract investment in a competitive global context. Incentives are part of SA’s industrial policy tool kit to create the best conditions for South African businesses to manufacture products, innovate, and create job here in South Africa. South African manufacturers are facing international competitors who benefit from carefully-orchestrated national manufacturing strategies which typically include: (i) financial support (in the form of grants and tax incentives) for the procurement of productive assets; (ii) research and skills development initiatives; and (iii) support for infrastructure development. While South Africa has recognised the importance of such interventions for some time, what is now needed is a much a much sharper, better coordinated and sustained national focus, to ensure that policies are appropriately targeted and flexible enough to help manufacturers compete globally and to strongly incentivise the reindustrialise the economy. The key issue here is to design and impose meaningful conditionalities wherever incentive support is given. Ongoing work to strengthen conditionalities is now beginning to bear fruit. A number of manufacturers have put in place measures to include participation of historically disadvantaged individuals in company ownership and management, procurement and skills training. Supplier development requirements have been in place since 2017 to facilitate the entry of new suppliers into established supply chains. Manufacturers including Black industrialist are already being exposed to a range of new markets around the world. Assisted companies are typically retaining (and some also increasing) their core work force. Industrial Parks are being refurbished and upgraded in various townships to provide state-of-the-art facilities to local entrepreneurs at reasonable cost. Another key driver of competitive incentive programmes is the promotion of publicprivate partnerships in the manufacturing sector. This requires a better mix of public and private sector funding to support growth and diversification. The focus for this iteration of IPAP will be on consolidating a competitive incentive programme to support the growth and diversification of the manufacturing sector in the context of a constrained fiscal space.

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1. Realignment of technical infrastructure activities with IPAP sectors and 9 Point Plan priorities

Nature and purpose of the intervention

Development of Incentive Programmes that draw on public and private sector sources of funding, to support the growth and diversification of the manufacturing sector through the adoption of production technologies appropriate for the challenges of the Digital Industrial Revolution.

This intervention is a continuation of the commitment made in IPAP 2017 to align technical infrastructure activities more fully with the Presidential 9-Point Plan and core IPAP imperatives; most notably, targeted interventions to grow the manufacturing sectors of the economy.

Targeted outcomes • An approach to industrial financing and other forms of incentives that can be offered by public and private sector role players across the industrial financing value chain. • Prioritisation of funding support based on the country’s developmental objectives, assigning meaningful conditionalities wherever incentive support is given. Key milestones 2 0 1 8 / 1 9 Q 1 - Q 2 : F o r m a l i s e a n i n t e rgovernmental structure to consolidate and enhance South Africa’s investment incentive offering, guided by the outcomes of the ongoing review by DPME of South Africa’s business incentives. 2018/19 Q2-Q4: Develop a Patriot (National Champion) Corporation Incentive for companies that maintain their headquarters in South Africa voluntarily, produce a significant amount of their goods and services in South Africa, spend 50% or more of their R&D costs in South Africa and source 60% of their inputs from South Africa. 2018/19 Q1-Q3: Explore tax support to stimulate demand for products with significant local content in labour absorbing sectors. 2018/19 Q3-Q4: Provide support to metal beneficiation for products linked to the Digital Industrial Revolution, including the localisation of some activities in the fields of artificial intelligence, robotics and machine learning wearable electronics and smart living applications. 2018/19 Q1: Collaboration with the Department of Agriculture, Forestry and Fisheries to roll out a Black Industrialist-type programme for Black farmers in rural areas across South Africa 2018/19 Q1-Q2: Scope further assistance for manufacturers to pursue opportunities in global and domestic supply chains. 2018/19 Q1-Q3: Formalise a collaborative forum with private sector financiers to increase funding dedicated to supporting competitive enhancement and transformation in the manufacturing sector. Lead Department/agencies: the dti, NT Supporting Department/agencies: DAFF, DST, DOL, DHET, DFIs, private sector financiers

Key Action Programmes

NMISA will continue to strengthen its dimensional measuring capabilities in support of areas such as fibre optics that require constant improvement of national measurement standards to perform tests with higher accuracy. The Length Laboratory will use its recently acquired equipment to provide measurement and testing support to the automotive sector as well as the locomotive building sector by means of component three-dimensional compliance testing as well as on-site large artefact measurement of jigs and fixtures. In addition, there will be a focus on calibrating machine tools to higher accuracies. Targeted outcomes Increased domestic industrial capabilities within priority sectors; improved compliance with technical regulations; indirect job creation. Re-aligned and synchronised technical infrastructure institutions activities, better able to support IPAP and 9-Point Plan priorities. 2 . Auto m otive P roducts a nd Components Nature and purpose of the intervention NMISA provides traceability to the automotive industry through calibration of the standards required to support a large number of Coordinate Measuring Machines (CMMs) and other dimensional measuring instruments enabling component manufacturing and final assembly. There is a shift in technology whereby measuring is moving from quality control at the end of the production cycle to continuous inspection on the production line; and there is a parallel shift towards eliminating the human error dimension from quality control through more automation and robotic measurements. NMISA will align its strategy to support these changes in the industry. 2019/20 Q1-Q4: Upgraded national measurement laboratories for force in support of transport, manufacturing and the automotive sector. 2018/21 Q1-Q4: Recapitalise SABS testing laboratories in IPAP sectors in order to provide

testing services that manufacturers require. 2019/20 Q1-Q4: Re-established and accredit the calibration articulated arm facility to provide traceability to this growing technology in manufacturing. 2020/21 Q1-Q4: Re-establish and expand the calibration range of the torque measurement facility to 20 KN-m, in support, particularly, of renewable energy drive train technology. Lead departments/ agencies: NMISA Supporting Departments/agencies: the dti, NT 3. Metal Fabrication, Capital and Transport Equipment Nature and purpose of the intervention In support of the automotive industry, NMISA provides advanced materials characterisation services essential to the quality assurance of automotive parts. Industry relies on highresolution image analysis to aid in product development and quality control. NMISA must benchmark its capability with other international institutes. Key milestones 2018/19 Q4: Develop an accreditation programme for the Railway Safety Regulator. 2019/20 Q3: Roll out the accreditation programme for the Railway Safety Regulator. 2019/20 Q1-Q4: Expand the Material Characterisation facility to include internationally benchmarked and recognised capabilities in support of metal beneficiation and fabrication. Lead departments/ agencies: NMISA, SANAS Supporting Departments/agencies: the dti, NT 4. Revitalisation of Agriculture and Agro Processing Value Chain Nature and purpose of the intervention In response to an industry need for matrix reference materials that are relevant to both South African and African analytical measurement requirements, NMISA is establishing a reference analysis and reference material production facility. The Reference Materials Facility’s first project is to provide matrix reference materials for feed and food (mycotoxins in maize, a atoxins in peanut butter, etc.). Quality is a prerequisite for exports and standards provide crucial quality assurance on export products. With this in mind, SABS will continue to develop standards and provide the required conformity assessment services and SANAS will continue to provide recognition of conformity assessment bodies’ technical competency to support the food industry in producing safe, high-quality products both for

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local consumption and for export. Key milestones

herbal medicines. Key milestones

2018/19 Q1-Q4: Provide reference materials for pesticides in fruit and vegetable matrices. 2018/19 Q1 - Q4: Expansion of the proficiency testing schemes for aqueous ethanol and aqueous sodium fluoride, in support of alcohol content and blood alcohol analysis, as well as for pesticides in fruit. 2019/20 Q1-Q: Provide reference materials for toxins in peanuts. 2019/20 Q1-Q4: New standard on flexible retort pouches for the food industry. 2020/21 Q1-Q4: Provide reference materials for nutritional content in food in support of new food labelling regulations. 2020/21 Q1-Q4: Provide reference material for antibiotic drug residue in chicken.

2018/19 Q3: Establish testing capability for common contaminants and residues in traditional African herbal medicines. 2018/19 Q1-Q4: Provide support to the Medical Control Council (MCC) on accreditation provision for medical device manufacturers, distributors and importers. 2018/19 Q1-Q4: Build capability to assign purity to peptides in support of biopharma, and protein quantification to support clinical diagnostic measurements. 2019/20 Q1-Q4: Revision of standard on detergent skin cleaners. Expand gas reference material capability to provide traceability for medical gases. 2020/21 Q1-Q4: Develop capability to assign purity to Bisphenol-A in support of plastic product safety measurements.

standards will enable service providers in the ICT sector to provide improved information security management systems to help protect organisations’ information assets from unauthorised access by third parties. These standards will also support initiatives being developed in the National Cybersecurity Policy Framework.

which is critical towards overcoming the country’s electricity supply constraints. Key industry stakeholders and government are making significant progress under the fuel cell technology programme to accelerate manufacturing locally. SABS published the standard relating to the development of the fuel cell industry in September 2017.

Key milestones

Key milestones 2019/20 Q1-Q4: Participate in the Versailles Project on Advanced Materials and Standards (VAMAS) to develop materials metrology as needed for beneficiation in the SADC region. 2020/21 Q1-Q4: Expand materials metrology to support the synthesis and characterisation of advanced materials.

2018/19 Q1-Q4: New standards for personal protective clothing for hazardous industrial environment.

2018/19 Q1-Q4: NETFA renewal programme. 2018/19 Q1-Q4: Revision of standard on electronic cables with extruded solid dielectric insulation for fixed installations (300/500 V to1900/3300 V) –Service Cables. 2018/19 Q1-Q4: Revision of standard on plugs and socket outlets for household and similar purposes – particular requirements for adaptors. 2018/19 Q1-Q4: Establish a national Revision of standards on information technology security techniques. Measurement standard for high voltage direct-current. 2018/19 Q1-Q4: Feasibility study for specific measurement requirements needed to support the national smart grid initiative. 2019/20 Q1-Q4: Develop methods required to measure the photometric properties of Light Emitting Diodes (LEDs).

Lead departments/ agencies: SABS Supporting Departments/agencies: the dti, NT

Lead departments/ agencies: SABS, NMISA Supporting Departments/agencies: the dti, NT

6. Plastics, Pharmaceuticals, Chemicals, Cosmetics

8. Electro-technical and ICT

9. Advancing Beneficiation

Nature and purpose of the intervention

SABS is developing standards to support the electrical and electronics manufacturing sector by providing safety requirements for products. With electric cables now designated for local production; compliance with the standard will enable the sector to produce safe, high-quality electric/electronic cables. The renewal of the testing facilities at NETFA will support the development of the electrotechnical industry. The revitalised facility will also support the fulfilment of regulatory obligations.

Material measurement - and especially accurate characterisation and compositional analysis of the morphology of metals - is a crucial building block for beneficiation and advanced manufacturing. NMISA recently replaced obsolete equipment with state-of- the-art surface and structural analysis capabilities (X-ray Photoelectron Spectroscopy, X-ray Diffraction and an advance 3D electron microscope).

Lead departments/ agencies: NMISA, SABS Supporting Departments/agencies: the dti, NT 5. Forestry, timber, paper and pulp, and furniture

Lead departments/ agencies: NMISA, SABS, SANAS Supporting Departments/agencies: the dti, NT

Nature and purpose of the intervention

7. Clothing, textiles, leather and footwear

Revised standards will support the forestry and timber industry to improve the quality of wooden poles. These products form part of the critical infrastructure supporting the agriculture, telecommunications and energy sectors.

Nature and purpose of the intervention

Key milestones 2018/19 Q4: Revision of standard on wooden poles, droppers, guardrail posts and spacer blocks – softwood species. 2018/19 Q4: Revision of standard on pine poles, cross-arms and spacers for power distribution, telephone systems and street lighting.

Nature and purpose of the intervention SABS is also responding to an industry need for a supply chain product specification for white petroleum goods (i.e., petrol, diesel, jet fuel, lique ed petroleum gas, ethanol and bioethanol) to improve security of supply and ensure quality of products. The cosmetics industry will benefit from a revised standard on detergent skin cleaners, which is being expanded to include other types of detergent skin cleaners to keep in line with evolving industry practices. Its application will protect consumers from potentially harmful products available in the market. Testing capacity will support the health and safety of consumers of traditional African

In the clothing, textiles, footwear and leather sector, SABS is developing standards on personal protective clothing to ensure safety in hazardous industrial environments like mining and the electrical and petroleum industries. Key milestones

The protection of digital resources is critical for all organisations across the different sectors of the economy. The revision of the

This will allow for accurate surface and bulk measurements of the composition, morphology and structural properties of metals and nano-materials. The standard will contribute towards development of the fuel cell industry

Lead departments/ agencies: NMISA Supporting Departments/agencies: the dti, NT 10. Growing the Oceans Economy Nature and purpose of the intervention NMISA’s Ultrasound Laboratory has invested in the procurement of instrumentation for the establishment of an ultrasound calibration capability. This will enable equipment that is used to measure distance under water to be accurately calibrated. Collaborative projects will be initiated with Canada and China for the development of reference materials for aquatic products. NRCS will issue health guarantees for exported consignments to facilitate access into foreign markets. A health guarantee issued by the competent authority in the country of origin will be required for all imported products. The proposed regulation is developed under Section 36(1) (c) to prescribe administrative or procedural matter for NRCS. The Regulations will be cross-cutting: all Compulsory Specifications will require health guarantees or compliance certificates from competent authorities in exporting countries.

Targeted outcomes • Improved South African food safety controls on imported fishery and canned meat products • Standards-based support for the continuing i m p l e m e n t a t i o n o f t h e A q u a c u l t u re Development and Enhancement Programme (ADEP) which aims to boost the ocean economy by providing incentives for marine and freshwater aquaculture operations. A number of aquaculture standards have been published and others are under development, as highlighted below. Key milestones 2019/20 Q1-Q4: Participate in the Versailles Project on Advanced Materials 2018/19 Q1-Q4: Benchmarked capability for ultrasound calibration (mapping of ocean floors, sonar, etc.) 2018/19 Q1-Q4: Feasibility study for developing a Compulsory Specification for fish oil. 2018/19 Q1-Q4: Develop a Compulsory Specification for dried abalone. 2018/19 Q2: Amendment of the Compulsory Specification for frozen rock lobster and frozen lobster products derived therefrom (VC 8020) 2018/19 Q1-Q4: Finalise the amendment of the Compulsory Specification for canned meat products (VC 8019). 2018/19 Q2: Finalise the amendment of the Compulsory specification for canned sh, canned marine molluscs and canned crustaceans and products derived therefrom (VC 8014). 2018/19 Q1-Q4: Finalise the regulation on administrative regulatory requirements for imported fish and fishery and canned meat products regulated under the NRCS Act. 2018/19 Q2: Finalise the new Compulsory Specification for live and raw chilled bivalve molluscs (VC 9107). 2019/20 Q1-Q4: New standard for fish oil. 2019/20 Q1-Q4: Reference materials for fish toxins. Lead departments/ agencies: NMISA, NRCS, SABS Supporting Departments/agencies: the dti, NT

11. Resolving the Energy Challenge/ supporting Green Industries Nature and purpose of the intervention Alternative energy sources are vital to reducing our reliance on fossil fuel sources. NMISA, in partnership with local universities and overseas partners, is actively developing accurate measurement protocols for advanced materials for use in affordable photovoltaics. The outputs will include the development of reliable materials characterisation methods for nanomaterials, organic photovoltaics and hybrid materials. NMISA’s Gas Flow Laboratory is planning to establish a large gas volumetric calibration facility in support of the gas economy. However, such a facility cannot be accommodated within the current NMISA infrastructure and would require new custom-designed and built facilities. The primary reference gas mixtures required for gas ow traceability will be developed. Similarly, a wind tunnel is planned for inclusion into the new NMISA facilities which will provide wind speed (anemometer) calibration services in support of wind farms. Other projects include standards to Improve electrical efficiency, extend the lifespan of lights and ensure consumer safety in the use of lighting products. The SABS is supporting the green economy by providing a standard on general guidelines for implementation of Environmental Management Systems which will contribute towards environmental sustainability through effective implementation of (EMSs) in industries. The availability of testing capacity will further support local manufacturers to meet regulations pertaining to the energy efficiency rating of appliances. Key milestones 2018/19 Q1: Testing capability established for appliances included in the Energy Efficiency Labelling regulations (excluding Air Conditioners). 2018/19 Q2: Upgrading of geyser test facility to increase capacity through automation supported by the UNDP. 2018/19 Q1-Q4: Revision of the standard on

environmental management systems – General Guidelines on Implementation. 2019/20 Q1 -Q4: Natural gas composition and calorific accuracy measurements using traceable Primary Reference Gas Mixtures (PRGMs) in support of the gas economy. 2020/21 Q1-Q2: Development and validation of PRGMs for stack emission Lead departments/agencies: NMISA, SABS monitoring in support of the green economy. Supporting Departments/agencies: the dti, NT 12. Updating of the National Building Regulations and Building Standards Act and its Regulations Nature and purpose of the intervention The National Building Regulations and Building Standards Act (Act No. 103 of 1977) provides for the promotion of uniformity in the law relating to: a) the erection of buildings in the areas of jurisdiction of Local Authorities; b) prescribing building standards and matters connected therewith. The basic aim is to ensure safe buildings based on acceptable building science practice, good workmanship and quality materials. The Act pre-dates the Constitution and the updating of this Act is currently subjected to the required Parliamentary processes. Key milestones 2018/19 Q1-Q2: Amendment of relevant National Building Regulations to include plumbing requirements as per the Water Act. 2019/20 Q1: Feasibility study on the need for an accreditation programme on the Construction Management System. Lead departments/ agencies: the dti, NRCS, SANAS Supporting Departments/agencies: the dti, NT

13. Strategic review of legislation Nature and purpose of the intervention

15. Accreditation programme rollout Key milestones

The current legislation that governs the 4 Technical Infrastructure entities was promulgated between 2006 and 2008. In order to maintain a relevant and responsive South African technical infrastructure, a legislative review was conducted in 2017 to assess the degree to which the current legislation is still effective – and, where appropriate, provide recommendations for amendments.

2018/19 Q4: Develop an accreditation programme for Asset Management System. 2019/20 Q3: Roll out the accreditation programme for Asset Management System.

Key milestones

16. Unlocking the Potential of SMMEs and Cooperatives

2018/19 Q1 -Q4: The recommendations from the legislative review will be used to develop policy statements, reconfirm the mandates of the entities and draft proposals for Amendment Bills, where necessary; preceded by SEIAS. Lead departments/ agencies: the dti Supporting departments/ agencies: NT, NMISA, NRCS, SABS, SANAS 14. Consumer protection initiatives Nature and purpose of the intervention Safety standards have been published to tighten up the quality and safety requirements of children’s toys. These standards will form the basis for the development of a comprehensive Compulsory Specification on toy safety. Key milestones 2018/19 Q1-Q4: Feasibility study on the need for a compulsory specification for Plywood and Composite Board. 2018/19 Q1-Q4: The amendment of VC 9085, the compulsory specification for Cement. 2018/19 Q1-Q4: The development of a new Compulsory Specification for the safety of toys. Lead departments/ agencies: NRCS Supporting Departments/agencies: the dti, NT

Lead departments/ agencies: SANAS Supporting Departments/agencies: the dti, NT

Nature and purpose of the intervention SMME development interventions are primarily designed to support SMMEs in accessing formal commercial markets. SABS and the Jobs Fund Programme are jointly supporting new SMMEs in developing quality products and services that will help them achieve sustainability and profitability. SABS’s role in this is to partner with government departments in delivering on their SMME development mandates by developing and delivering appropriate technical support programmes. NMISA is developing virtual reality-based training modules for SMMEs and regional National Metrology Institutes. These modules will be made available on laptops and smart phones to train SMMEs in the basics of measurement and calibration. A wide range of other measurement capabilities is available for joint research projects with universities and science councils. In 2018 the revised International System of Units (SI) will change the definition of four of the seven base units, rendering the national kilogram (primary standard for mass) a secondary standard and introducing new primary realisations for mass, current, temperature and amount of substance (chemical analysis). NMISA is developing new primary standards for the 4 quantities (kilogram, ampere, kelvin and mole) to shorten the traceability chain for Africa. Collaborative projects have been established with 6 local universities and are being expanded to universities abroad. Cross-cutting research projects on the SI have been initiated with the National Metrology Institutes of Germany, UK, China, India, Brazil, the USA and Italy. PanAfrican research projects are being established with Egypt, Kenya, Ethiopia, Tunisia and Ghana. Key milestones 2018/19 Q4: SMMEs to be assessed for technical competency in measurement and verification. 2018/19 Q4: SABS Design Institute Skills development and job creation programme supported by the Jobs Fund.

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2018/19 Q4: SABS SMME-focused technical support by in collaboration with government departments with SMME development programmes 2018/19 Q1-Q4: Virtual Reality training modules for high accuracy mass calibration (Level E of OIML), calibration of thermometers and calibration of dimensional standards. 2018/19 Q1-Q4: Support SMMEs through training, using a Measurement Practice Improvement Toolkit aimed at assisting SMEs to comply with industry specifications, standards and measurement requirements to improve the quality of the products being manufactured and enhance competitiveness in the market. 2019/20 Q1-Q4: Virtual Reality training modules for the calibration of external micrometers and Vernier callipers and the calibration of pressure transducers.

Key milestones

Lead departments/ agencies: NMISA, SANAS, SABS Supporting Departments/agencies: the dti, NT

Water use in buildings accounts for the largest use of potable water. This standard aims to increase the efficient use of water in buildings, thereby reducing total potable water demand in South Africa. Its introduction will also support building regulations to ensure water efficiency in new constructions.

17. Collaborative research support programme on Science and Technology Nature and purpose of the intervention All levels of research, whether basic, applied or developmental, require measurement to gauge progress. NMISA performs research in measurement to establish comparable measurement standards and capabilities for South Africa, and to support scientific research and development in the broader science community. The Materials Characterisation facility of NMISA has some of the most advanced measurement equipment in Africa, actively supporting nano-science and its applications. A wide range of other measurement capabilities is available for joint research projects with universities and science councils. In 2018 the revised International System of Units (SI) will change the definition of four of the seven base units, rendering the national kilogram (primary standard for mass) a secondary standard and introducing new primary realisations for mass, current, temperature and amount of substance (chemical analysis). NMISA is developing new primary standards for the 4 quantities (kilogram, ampere, kelvin and mole) to shorten the traceability chain for Africa.

2018/19 Q1 -Q4: Quantum hall resistance standard and project plan for primary standards for ampere (current) and kelvin (temperature). 2018/19 Q1-Q4: Prototype Kibble/Watt balance as new primary mass standard. 2019/20 Q1-Q4: Primary standard for Amount of project). Lead departments/agencies: NMISA Supporting Departments/agencies: the dti, NT 18. Water and Sanitation standards support programme Nature and purpose of the intervention

South Africa contributes to water standards and analysis in the region in a number of ways - for example the Water Proficiency Testing (PT) Scheme, which is being coordinated through SADCMET. More than 70 laboratories from the testing field, representing 19 African countries, are currently participating. Gravimetrically prepared water samples are analysed and compared against reference values for 15 nutritional and toxic elements and 5 compounds. NMISA’s Inorganic Laboratory is the reference laboratory, whose results are used to confirm the elemental gravimetric reference values used in the evaluation of other participants’ results. Key milestones 2018/19 Q1-Q4: New standard for water efficiency in buildings. 2018/19 Q1-Q4: Expand the SADCMET PT schemes to include Organochlorine and organophosphate pesticides in water. Lead departments/agencies: NMISA, SABS Supporting Departments/agencies: the dti, NT

Collaborative projects have been established with 6 local universities and are being expanded to universities abroad. Cross-cutting research projects on the SI have been initiated with the National Metrology Institutes of Germany, UK, China, India, Brazil, the USA and Italy. PanAfrican research projects are being established with Egypt, Kenya, Ethiopia, Tunisia and Ghana.

19. Regional integration Co-operation on Standards, Quality Assurance, Metrology and Accreditation (Technical Infrastructure)

is reflected in the hosting and support of the Secretariats of AFRIMETS (NMISA/NRCS), AFSEC (SABS), AFRAC (SANAS), SADCMET (NMISA), SADCMEL (NRCS), SADCAS (SANAS), SADCTRLC (the dti).

Nature and Purpose of the intervention

Targeted Outcome

Developing African capacity for technical infrastructure activities can be viewed as a longterm intervention involving the co-ordination and cooperation of technical infrastructure activities such as standards, metrology and accreditation and conformity assessment services within African countries. In this regard, collaboration amongst the continental technical infrastructure institutions - through the Pan African Quality Infrastructure (PAQI) Joint Committee - is of growing relevance. The capacity to comply with international standards, norms and technical regulations underpins the potential for regional economic and industrial growth and is a precondition for industrialisation efforts particularly with respect to metrology, standards, accreditation and conformity assessment and compliance. As the integration of infrastructure at a continental level expands, the capacity of African countries to collectively influence international Technical Infrastructure standardsetting needs to be strengthened. The pivotal role of ARSO, AFSEC, AFRIMETS and AFRAC in this regard needs to be strengthened, in particular in support of implementation of the Continental Free Trade Area (CFTA). T h e d u m p i n g o f c h e a p , s u b - s t a n d a rd manufactured goods on African markets has sometimes led to the collapse of local industries and acted as a major barrier to industrial development. Tightened implementation of appropriate standards and increased capacity to perform effective conformity assessment, market surveillance and inspection are therefore of immense importance in preventing the influx of sub- standard and injurious products into African markets. Regional trade is key to growing the South African economy and standards are central to market access. South Africa is committed to the African developmental agenda as articulated in the National Development Plan (NDP) and IPAP. To this end, SABS is committed to actively participating and supporting the African Regional Standardisation Organisation (ARSO) and the African Electrotechnical Standardisation Commission (AFSEC); the key issue here being harmonisation of standards as one of the key levers for growing intra-African trade. SABS will also use its CASCO Chairmanship to establish the regional conformity assessment platform. Similarly, NMISA, NRCS, SANAS and the dti are playing a leading role in the advancement of the technical infrastructure within SADC and across the continent. This

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Increased trade and access to regional and international markets through improved quality and enhanced potential access of African products to export markets. South Africa is the current Chairperson of SADC and BRICS and as such will be leading various Technical Infrastructure initiatives in 2018. This will include the hosting of the Annual SADC Technical Barriers to Trade Structure meeting in South Africa in March 2018. Key milestones 2018/19 Q1: Lead the establishment of African CASCO platform. 2018/19 Q1-Q4: Report on the opportunities for harmonisation of SABS standards with those of ARSO, AFSEC and SADCSTAN. 2018/19 Q1-Q4: AFRAC to obtain recognised international Regional Accreditation Cooperation status within ILAC and IAF Mutual Recognition Arrangements. 2018/19 Q1-Q4: Develop and implement the BRICS TBT cooperation framework initiatives in support of South-South trade. 2018/19 Q2: African Food Safety Workshop on Standards and Methods of Analysis for Mycotoxins and Related Contaminants. 2018/19 Q1-Q4: Implement the SADCMET and AFRIMETS Five-Year Strategic Plan aimed at building capacity and strengthening the region’s NMIs in support of the SADC and African Industrialisation Strategy and Roadmap and TBTs. 2018/19 Q1-Q4: Implement the AFRAC and SADCA Five-Year Strategic Plan aimed at building capacity and strengthening AFRAC and SADCA in support of the SADC Industrialisation Strategy and the Tripartite and Continental Free Trade Areas objectives. 2018/19 Q4: Support the development and publication of AFSEC guides for application for standards that support integration of regional infrastructure. Projects for the period under consideration include: (a) Guide for Application of Standards for RuralElectrification in Africa (Revision); and (b) Guide for Application of Standards for Electricity Metering Systems in Africa. 2019/20 Q1-Q4: Develop AFRIMETS strategy for supporting the Continental Free Trade Area (CFTA). Lead departments/agencies: the dti, EDD, NMISA, NRCS, SABS and SANAS Supporting Departments/agencies: NT

20. Ongoing developmental tariff reform: ITAC Nature and purpose of the intervention W i t h c u r re n t p e r s i s t e n t h i g h l e v e l s o f unemployment, tariffs should be selectively used, taking their possible impact on employment carefully into account. Based on the dynamics of each industrial sector, tariff investigations are carried out on a case-by-case basis - and in accordance with World Trade Organisation (WTO) rules and consistent with South African industrial policy, legislation and regulations. Targeted outcomes Reduce input costs for downstream valueadding manufacturers, leading to improved competitiveness through further downstream value-addition and increased manufacturing sector employment. Key milestones 2018/19 – 2020/21 ongoing: Ongoing development of tariff reform in support of downstream value-adding activities; consideration of company applications to ITAC for selective tariff increases on commodities with considerable prospective for preservation and job creation. Lead departments/agencies: the dti, EDD, ITAC Supporting departments/agencies: Industry Associations, Export Councils, SARS, NT 21. Clampdown on the illicit economy, customs fraud, illegal imports and sub- standard products Nature and purpose of the intervention On-going interventions relating to the illicit economy, customs fraud-related issues, illegal imports and sub-standard products, and enforcement of the legislative framework.

Persistent illicit trade has a deeply detrimental impact on the South African economy. According to the State Security Agency (SSA) the South African economy is losing an estimated 10% of its GDP, or R178 billion a year, to the illicit economy. Industry sectors which are mostly affected by this are: • clothing and footwear (including importation of second-hand clothing); • audio-visual (music, motion pictures, CDs, DVDs & software, plastics, electrotechnical components); • automotives (engine parts, body panels, tires, filters, etc.); • chemicals/pesticides (insecticides, herbicides, fungicides, non-stick coatings) and pharmaceuticals (medicines used for treating cancer, HIV, malaria, diabetes, hypertension, cholesterol, cardiovascular disease, obesity, infectious diseases). The illicit economy has a major impact on the viability of South Africa’s economic growth path. It is costing the country thousands of jobs, creating unfair competition to legitimate businesses and industries, eroding the corporate tax base and distorting trade. Counter-interventions to tackle customs fraud issues include a Key Industries Forum (which meets twice a year) and a Tyre and Plastics Industry Forum (which meets quarterly). These oversight bodies will be significantly strengthened by the recently established Nedlac Task Team on Customs Fraud. Targeted outcomes A significant reduction in customs fraud, in support of increased industrial development and competitiveness. Key milestones 2018/19 Q1-Q4: Closer cooperation between the dti, SARS, NCRS and various sectoral industry forums to address all types of custom fraud. Lead departments/agencies: SARS, the dti, EDD Supporting departments/agencies: the dti, SAPS, NRCS, SABS, Unions

Illegal imports are characterised by undervaluation, false declarations (origin and tariff), stage consignments, rerouting via third countries and misuse of duty rebates and credits. The scope of the illicit economy is enormous and hampers the growth of both the domestic and the global economy, whilst also threatening good governance and social stability. Research has indicated that the cost to the global economy of counterfeiting alone reached USD 1.77 trillion in 2015 and it is estimated that the shadow economy in 2014 was $650 billion per annum in the US.

Source: IPAP 2018-19

Scene 1

Little Themba walks into a spaza shop and walks up to the lady at the counter. “ How much is a chocolate cone ice cream?” he asks “ R5” the lady answers rudely. He only has R5 and ponders whether he should spend all of it on ice-cream. “How much is the Vanilla?” “R3” answers the lady, visibly annoyed. Little Themba counts with his tiny ﬁngers and buys the R3 ice cream. He walks out with a big smile on his face. Soon as he is out of sight, the unfriendly lady peers into a plate on her counter. There is a R2 tip that wasn’t there before the boy walked into the shop.

BRICS. The birth of a movie hub.

The National Film and Video Foundation is proud to play a critical role in helping South African filmmakers develop and tell their stories through film. To find out more visit www.nfvf.co.za

South Africa has made great strides in producing great films some of which have gone on to win prestigious international awards. As South Africa moves to partner fellow BRICS nations in co-financing and co-producing joint film projects, local filmmakers will now have the opportunity to reach even more global audiences. With a combined population of over 3billion people, the BRICS nations provide a potentially massive platform for South African filmmakers to tell their stories.

SOUTH AFRICA

an agency of the

Department Of Arts And Culture

Bringing South African stories to life.

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Department Of Arts And Culture

Bringing South African stories to life.

COMPARATIVE ADVANTAGES

KEY SECTORS