Gauteng Business 2020-21 by Global Africa Network Media

2020/21 EDITION

GAUTENG BUSINESS

SPECIAL FOCUS: INFRASTRUCTURE INVESTMENT IN GAUTENG

THE GUIDE TO BUSINESS AND INVESTMENT IN THE GAUTENG PROVINCE

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CONTENTS

CONTENTS Gauteng Business 2020/21 Edition

Introduction Foreword 5 A unique guide to business and investment in Gauteng.

Special features Regional overview of Gauteng

Special Economic Zones and expanded infrastructure are central elements to the strategies being devised to grow the Gauteng economy.

Spatial planning and infrastructure underpin Gauteng’s growth plans

Builing mega-cities

GDP growth is directly related to infrastructure investment. Ambitious construction plans are afoot in Gauteng.

Economic sectors Agriculture 26 A major starch business is changing hands.

Mining 27 AngloGold Ashanti has sold its last South African asset.

Energy

Oil and gas

Transport and logistics

Companies are generating their own power. Various types of gas are available as fuels. Achieving ambitious export goals will boost the logistics sector. GAUTENG BUSINESS 2020/21

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CONTENTS

Manufacturing 36 The OR Tambo Aerotropolis is attracting manufacturing.

Tourism 38 Tourism operators are determined to rise again.

ICT 40 Financial services is leading the way in ICT investment.

Banking and financial services

Development finance and SMME support

Education and training

Banks are looking at insurance and funeral policies. Government pledges to spend R4-billion with SMMEs annually. Skills training is a public and private priority.

References Key sector contents

Index

Overviews of the main economic sectors of Gauteng.

ABOUT THE COVER: Arnold Petersen/iStock by Getty Images. Sandton at night. With the Liberty Group among the financiers, Sandton City shopping centre, with 50 000m² of lettable space, opened in 1973 and sparked fantastically fast growth around it, transforming farmland to the richest square mile in Africa. Several new corporate headquarters have been built in recent years in the town that drew its name from two of its well-known suburbs, Sandown and Bryanston.

GAUTENG BUSINESS 2020/21

FOREWORD

Gauteng Business A unique guide to business and investment in Gauteng.

Credits Publishing director: Chris Whales Editor: John Young Managing director: Clive During Online editor: Christoff Scholtz Designer: Simon Lewis Production: Lizel Olivier Ad sales: Gavin van der Merwe Sam Oliver Jeremy Petersen Gabriel Venter Vanessa Wallace Shiko Diala Administration & accounts: Charlene Steynberg Kathy Wootton Printing: FA Print

he 2020/21 edition of Gauteng Business is the 12th issue of this highly successful publication that has established itself as the premier business and investment guide for the Gauteng Province. In addition to the regular articles providing insight into each of the key economic sectors of the province, there are special features on infrastructure investment programmes and plans for the establishment of Special Economic Zones (SEZs) as a means to boost economic growth. Another feature on construction and property underlines the importance of spatial planning in the region’s future. Ambitious plans for the City of Johannesburg are outlined, both in the journal’s editorial pages and by the Johannesburg Development Agency (JDA). To complement the extensive local, national and international distribution of the print edition, the full content can also be viewed online at www.globalafricanetwork.com under e-books. Updated information on Gauteng is also available through our monthly e-newsletter, which you can subscribe to online at www.gan.co.za, in addition to our complementary business-to-business titles that cover all nine provinces as well as our flagship South African Business title and the new addition to our list of titles, African Business, which was launched in 2020. ■ Chris Whales Publisher, Global Africa Network Media | Email: chris@gan.co.za

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Global Africa Network Media (Pty) Ltd Company Registration No: 2004/004982/07 Directors: Clive During, Chris Whales Physical address: 28 Main Road, Rondebosch 7700 Postal address: PO Box 292, Newlands 7701 Tel: +27 21 657 6200 | Fax: +27 21 674 6943 Email: info@gan.co.za | Website: www.gan.co.za ISSN 1990-0621

COPYRIGHT | Gauteng Business is an independent publication published by Global Africa Network Media (Pty) Ltd. Full copyright to the publication vests with Global Africa Network Media (Pty) Ltd. No part of the publication may be reproduced in any form without the written permission of Global Africa Network Media (Pty) Ltd. PHOTO CREDITS | Arnold Petersen/iStock by Getty Images, ACSA, Boogertman and Partners, Coega Development Corporation (CDC), Diesel Electric Services, Commvault, CNG Holdings, 5M2T, Harmony, Knight Piésold, Marriott International, Mark Hillary/Flickr, Gauteng Partnership

Fund (GPF), Johannesburg Development Agency (JDA), Tongaat Hulett, Venter Consulting Engineers, Wits Business School. DISCLAIMER | While the publisher, Global Africa Network Media (Pty) Ltd, has used all reasonable efforts to ensure that the information contained in Gauteng Business is accurate and up-to-date, the publishers make no representations as to the accuracy, quality, timeliness, or completeness of the information. Global Africa Network will not accept responsibility for any loss or damage suffered as a result of the use of or any reliance placed on such information.

GAUTENG BUSINESS 2020/21

A REGIONAL OVERVIEW OF

GAUTENG Special Economic Zones and expanded infrastructure are central elements to the strategies being devised to grow the Gauteng economy. By John Young

Gauteng have flowed to the manufacturing sector and its subsectors. In the five years to 2019, the Gauteng CityRegion attracted 447 FDI projects valued at R264-billion, which created more than 69 000 jobs (FDI Markets). The GGDA is an implementing agency which aims to facilitate business enablement, develop small, medium and micro-enterprises (SMMEs) and to promote investment and job creation. Focussed support for these specific subsectors is intended to spur other investments: automotive sector, mineral beneficiation, capital equipment, agro-processing, pharmaceuticals and tertiary

ne of the plans to boost Gauteng, “Growing Gauteng Together” (GGT 2030) prioritises the economy, jobs and infrastructure, with the manufacturing sector earmarked as a key driver. Gauteng accounts for 45% of the South Africa’s manufacturing capacity, so the province is wellplaced to expand an already strong and diverse sector. Manufacturing makes up 14.5% of formal sector output in Gauteng, making it the fourthlargest sector. One in nine jobs in the province are created in the sector. According to the Gauteng Growth Development Agency (GGDA), six out of 10 foreign direct investment (FDI) projects in

GAUTENG BUSINESS 2020/21

SPECIAL FEATURE Tech SEZ (Tshwane), the Vaal SEZ (Sedibeng), and the Tshwane Automotive SEZ. The National Department of Trade, Industry and Competition (dtic) is the lead agent in the creation of SEZs, which are part of the national Industrial Policy Action Plan (IPAP). SEZs are designed to attract investment, create jobs and boost exports. The Provincial Government of Gauteng has identified 10 “high-growth” sectors where it intends concentrating its efforts to build infrastructure and to attract public and private sector investment: • Energy: new technologies and a diverse Transportation and logistics. • ICT, media and digital services. • Tourism and hospitality. • Agricultural value chain. • Construction and infrastructure. • Automotive, aerospace and defence. • Financial services. • Cultural and creative industries. • Industrialisation of cannabis. These priorities were announced before the onset of the Covid-19 global pandemic, so obviously there will be some major adjustments, especially with regard to tourism and hospitality which has suffered major setbacks during the local and international lockdowns. It could be that the focus shifts more strongly to another one of the priorities of local and regional government, affordable housing. Much has been done to provide housing since the dawn of the democratic era in 1994, but much more needs to be done in response to rapid urbanisation. Gauteng Province has pledged to provide 100 000 service stands to qualifying Gauteng residents who want to and are able build their own homes and it wants an additional 250 000 people to be able to recent “decent accommodation” over the next five to 10 years. This is in addition to facilitating the development of mega-cities, one to the west of Lanseria and the other to the south of Vereeniging. Vaal River City will span the Orange River and eventually link up with Sasolburg in the Free State, according to the blueprint. Another housing initiative will see provincial funds ring-fenced to formalise informal settlements

Credit: ACSA services such as the BPO, ICT services, tourism and the knowledge economy. GGDA subsidiaries include The Innovation Hub (technology), the Automotive Industry Development Centre (AIDC), which manages the Automotive Supplier Park (ASP) and InvestSA Gauteng (red tape remover for investors). The Johannesburg Development Agency (JDA) plays a similar role as the City of Johannesburg’s development agency. JDA’s focus is on helping create resilient, sustainable and liveable urban areas in identified transit nodes and corridors. In 15 years, 387 projects have been implemented. Special Economic Zones (SEZs) are being created and expanded across the province to support manufacturers, providing them with the necessary infrastructure and access to related businesses. This has seen the expansion of the OR Tambo International Airport (ORTIA) SEZ (Ekurhuleni) and the establishment of the High-

GAUTENG BUSINESS 2020/21

SPECIAL FEATURE The 14.3-million people living in Gauteng in 2017 generated a gross domestic product of R1.59trillion, about a third of South Africa’s GDP (StatsSA). Gauteng shares borders with four provinces, the Free State, North West, Limpopo and Mpumalanga. The southern border of the province is the Vaal River and most of the province is located on the Highveld. The Witwatersrand, which runs through Johannesburg, marks the continental divide: rivers running to the north drain into the Indian Ocean, rivers running south drain into the Atlantic Ocean via the Vaal into the Orange River. Gauteng draws its water from a series of interconnected river transfer systems. A major source of water is the Lesotho Water Highlands Project. The Witwatersrand was the source of the gold that drew so many thousands of people to the area in the late 19th century and was the origin of the word for South 15 Alice Lane Annex. Image: Andrew Bell/Paragon Architects Africa’s currency, the “rand”. Gauteng is a leader in a wide range of economic Overview of the province sectors: finance, manufacturing, commerce, IT and Gauteng is South Africa’s smallest province in media among them. The Bureau of Market Research terms of landmass but in every other respect it is (BMR) has shown that Gauteng accounts for 35% of a giant. The province is the nation’s key economic total household consumption in South Africa. growth engine. The leading economic sectors are finance, real At 18 176km², the province makes up just 1.5% estate and business, manufacturing, government of South Africa’s territory, but even that aspect services and wholesale, retail, motor trade showed growth in 2018 when the territory and accommodation. The creative industries of Ekangala was formally transferred from (including advertising and the film sector) employ Mpumalanga Province to Gauteng Province. upwards of 180 000 people and contribute more Theland had previously been part of the than R3.3-billion to the provincial economy. This KwaNdebele homeland. and to upgrade hostels into family units. All of these programmes should provide a boost to the construction and property sector and to small businesses in both sectors.

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Nelson Mandela Bridge at night. Image: SA Tourism

sector is seen as a driver of future growth. In Johannesburg, financial services and commerce predominate. The JSE, Africa’s largest stock exchange, is in Sandton and several new stock exchanges have recently received licences. Tshwane (which includes Pretoria) is home to many government services and is the base of the automotive industry and many research institutions. The Ekurhuleni metropole has the largest concentration of manufacturing concerns, ranging from heavy to light industry, in the country. The western part of the province is concerned mainly with mining and agriculture, while the south has a combination of maize farming, tobacco production and the heavy industrial work associated with steel and iron-ore workings. Individually, the biggest Gauteng cities contribute to the national GDP as follows: Johannesburg (15%), Tshwane (9%) and Ekurhuleni (7%). Gauteng is not just an important centre of economic activity it is also an important launching pad for local and international businesses to enter

the African market. The country’s biggest airport, OR Tambo International Airport, is at the core of the province’s logistical network. Other airports include Rand Airport (Germiston), Wonderboom (Pretoria) Lanseria and Grand Central (Midrand). The Gauteng Division of the High Court of South Africa (which has seats in Pretoria and Johannesburg) is a superior court with general jurisdiction over the province. Johannesburg is also home to the Constitutional Court, South Africa’s highest court, and to a branch of the Labour Court and the Labour Appeal Court. The province has several outstanding universities, and the majority of South Africa’s research takes place at well-regarded institutions such as the Council for Scientific and Industrial Research (CSIR), the South African Bureau of Standards (SABS), Mintek, the South African Nuclear Energy Corporation (NECSA), the Human Sciences Research Council (HSRC) and several sites where the work of the Agricultural Research Council (ARC) is done. ■

GAUTENG BUSINESS 2020/21

SPECIAL FEATURE

Spatial planning and infrastructure underpin Gauteng’s growth plans GDP growth is directly related to infrastructure investment.

Credit: Coega Development Corporation

R100-billion will be spent on infrastructure projects in the province by a variety of stateowned enterprises (SOEs) and national departments in the next decade. The overall estimate for the injection of capital related to infrastructure, including private initiatives, is calculated at R760-billion in the period to 2030. A 15-year Gauteng Infrastructure Master Plan has been adopted but multiple sources of funding are needed for the plan to succeed in areas such as the provision of water, logistics, broadband connectivity, public transport, energy and the reshaping of cities to accommodate citizens in a better way than was the case under apartheid. A World Bank report has shown that a 10% increase in infrastructure spending results in a 1% growth in GDP. Gauteng began laying the groundwork for

nfrastructure spending and areas dedicated to specific kinds of manufacturing are intended to drive economic growth in the Gauteng Province. Both concepts fall within broader national plans to boost industrialisation through various kinds of Special Economic Zones (SEZs) and infrastructural initiatives. A number of national and provincial planning frameworks inform the planning of Gauteng’s economic future. These include the National Development Plan, Growing Gauteng Together (GGT 2030), Gauteng 2055 Vision and the City of Johannesburg’s Growth Development Strategy and Spatial Development Framework. The Gauteng Provincial Government will spend R60-billion on building and maintaining infrastructure in the five years to 2025. The provincial authorities further estimate that about

GAUTENG BUSINESS 2020/21

SPECIAL FEATURE and Competition, and the City of Tshwane. The implementing agent is the Coega Development Corporation (CDC), the developer and operator of the Coega Special Economic Zone (SEZ). The TASEZ, branded as “Africa’s First Automotive City”, has a mandate to promote economic participation for SMMEs and create employment in the region. Sectors targeted include security, ICT maintenance, facility maintenance, construction, automotive supply chain, marketing and advertising, catering and events. The benefits that arise from clustering of businesses in related sectors is a key element of an SEZ. Both the Nissan and BMW plants are expanding and Ford is investing in Silverton. An Incubation Centre for SMMEs has been launched at Nissan’s assembly plant in Rosslyn. The facility supports small enterprises through subsidised rental and mentorship and training. Management of the centre is done by the Automotive Industry Development Centre (AIDC), a subsidiary of the Gauteng Growth and Development Agency (GGDA). The Jobs Fund contributes to financing the project. Other focus sectors in this corridor include agriculture and agro-processing, defence, the aerospace and aviation industries together with the innovation, research and development cluster anchored around the Gauteng Innovation Hub, universities and research institutes. The OR Tambo SEZ is at the centre of the Eastern Corridor, which underscores Ekurhuleni’s strengths in manufacturing and logistics. The OR Tambo SEZ has launched the biggest food processing operation in the southern hemisphere (and the world’s second-largest refrigeration plant). With a special focus on export-oriented value-added industry, the OR Tambo SEZ leverages its connection to the country’s busiest airport. The focus of this SEZ is on agro-processing, jewellery manufacturing and mineral beneficiation as well as the development of hydrogen fuel cell technology. This is another subsidiary of the GGDA. Other Eastern Corridor sectors include rail and bus manufacturing (including the PRASA-Gibela rail manufacturing hub in Nigel), defence and aerospace and food and beverages. The Western Corridor encompasses the economy of the West Rand and has been targeted

creating a research base for urban planning as far back as 2008 when the Gauteng City-Region Observatory (GCRO) was established. A partnership between the University of Johannesburg (UJ), the University of the Witwatersrand, Johannesburg (Wits) and the Gauteng Provincial Government, the GCRO does research on which planners can base their projections. A Township Economic Development Bill is to be introduced in the provincial legislature to reduce the amount of red tape faced by small businesses. Growth strategies are to be integrated to ensure that township SMMEs and black industrialists are considered when programmes such as the focus on 10 “high-growth sectors” are implemented. Youth employment will be factored in to plans to support those sectors.

Corridors and SEZs Five corridors have been identified for development purposes. Each has core existing economic activities which will be supported and expanded. In addition, new activities will be encouraged to diversify the area’s economic potential and create jobs. The Gauteng City-Region will have three fully operating Special Economic Zones (SEZs) by 2025. These will be based in Ekurhuleni, Tshwane and Sedibeng with an additional Special AgroProcessing Zone located in the West Rand. The province intends reviving 15 industrial parks and creating 12 agri-parks and five agro-processing facilities across the province. By 2030, Gauteng will have the biggest inland logistics hub and dry port in Africa – the Transnet Tambo-Springs Logistics Gateway. These area-based infrastructure and logistics projects are expected to contribute to giving the province a competitive edge in the 10 economic sectors that have been identified as “high-growth”. This in turn will create opportunities for small, medium and micro-enterprises (SMMEs) and township businesses. The Tshwane Automotive Special Economic Zone (TASEZ) (pictured) is a key project within the Northern Corridor. It is a project of the Gauteng Province, the Department of Trade, Industry

GAUTENG BUSINESS 2020/21

SPECIAL FEATURE

Credit: Mark Hillary/Flickr The City of Johannesburg has recently completed a review of its policy of nodal development with a view to creating a fairer spatial framework for the city than that created by the racist planning laws of the apartheid era. As Member of the Mayoral Committee Lawrence Khoza puts it, “Nowhere is the legacy of our painful past expressed more vividly than in the racially divided spatial character of South Africa’s cities.” Johannesburg has designated eight zones: Inner-city: high-intensity use. Metropolitan: mix of land uses which currently includes Sandton and Rosebank and will expand to include parts of Soweto. General urban: designed to be transformative, mix of economic and residential use. Local economic development: interventions planned to create economic opportunities in areas with poor facilities (Zandspruit, Orange Farm, parts of Soweto). Suburban: lower density with local mixing of land use (homes, offices, offices, shops). Dark green: a limit of 8% coverage of buildings. Peri-urban/agriculture: low density.

for the creation of new zones for development, housing, and industry. The aim is to diversify away from mining towards renewable energy, tourism, bus manufacturing and agro-processing. The release of 30 000 hectares of land by Sibanye Gold has unlocked the potential for major investment projects. A Smart City is envisaged for Lanseria and the area to its west. Where steel used to be the anchor industry in the Southern Corridor, today the aim is to build new industries through an SEZ that will cover both sides of the Vaal River and thus extend into the Free State Province. Among the investments that will create impetus are the Savannah City development, Vaal River City development, a cargo airport and logistics hub, the AB InBev investment project, the Gauteng Highlands water project, the Vaal Marina development and logistics and mining investments in the Lesedi Local Municipality, which includes Heidelberg and Nigel.

Metropolitan drivers The Central Development Corridor revolves around the City of Johannesburg as the hub the of financial services, information and communication technology, services and pharmaceutical sectors. New investments are planned for the Joburg Inner-City and the South, from Soweto, N12 which includes Masingita City, Southern Farms to Orange Farm. GAUTENG BUSINESS 2020/21

Another transformative initiative being undertaken in Johannesburg is the use of Transit-Oriented Development (TOD) to drive investment and development. Implemented by the Johannesburg Development Agency (JDA), the TODs are another attempt to improve the lives of people living in previously neglected areas.

SPECIAL FEATURE

One such TOD is the Jabulani TOD in Soweto where a seven-phase project is underway that includes a multi-purpose hall, a library, counselling facilities, sports facilities, offices and meeting rooms. A pedestrian bridge over a railway line and new roads underscore the transport element, with the facilities near the Bus Rapid Transport (BRT) route that runs through Soweto to central Johannesburg. TODs are designed to attract further investment and are supported by the Neighbourhood Development Partnership Grant from National Treasury. Other projects undertaken by the JDA range from the upgrading of Constitution Hill, the Faraday Station precinct, work on the Fashion District and pavements of the inner city, renovation of the Drill Hall and the big Newtown make-over. Johannesburg has been the focus of a major tax incentive initiative, the Urban Development Zone (UDZ). The inner city of Johannesburg, comprising just less than 18km², is the largest UDZ in South Africa and it is expanding its footprint in response to significant successes that have been achieved. The Johannesburg Social Housing Company (Joshco) has plans to provide affordable rental accommodation in 12 inner-city buildings that were recently identified for that purpose. But the main target for the UDZ is private investors. The City of Johannesburg has identified the following nodes for development: • Carlton Precinct: Johannesburg’s tallest building attracts tourists; undergoing revamp; Sky Rink TV and film studio being developed; conference centre planned.

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• • •

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Park Station: intermodal node catering for cars, buses, rail commuters and taxis; Gautrain link to OR Tambo International Airport; wide variety of users. Central park: JDA has worked on greening and community engagement and wants the park to be a symbol of the successful city. Doornfontein/Ellis Park railroad corridor: planned retail hub and student village. Fordsburg: interior design focus; more offices and accommodation can be built. Newtown: cultural precinct with the potential to cater to students and university departments with specialised offices and spaces. Hillbrow, Berea, Parktown, Bellvue, Yeoville: creation of new public open space; opportunities for office and hotel developments.

National Infrastructure boost An Investment and Infrastructure Office has been created in the Presidency. It is headed by the former Gauteng MEC for Economic Development, Dr Kgosientso Ramokgopa. In 2020, 51 infrastructure projects with a total investment value of more than R340-billion were gazetted. Ten of the 18 affordable housing projects listed are located in Gauteng. These include Malibongwe Ridge, Green Creek, Mooikloof Mega Residential City, Fochville Extension 11 and Germiston Ext 4 Social Housing Project. A large project is underway in Tshwane, Salvokop Precinct, to house government departments and commercial buildings. The energy projects identified by national government will have an impact on Gauteng, the country’s biggest consumer of energy. Priorities include embedded generation and the huge water supply project, Phase 2 of the Lesotho Highlands Water Project, will create many opportunities. ■

GAUTENG BUSINESS 2020/21

FOCUS

Selby Bus Rapid Transit depot is taking shape The Johannesburg Development Agency (JDA) is building infrastructure to make the city more resilient, liveable and sustainable. citizens. This is aligned to the City of Johannesburg’s Growth and Development Strategy (GDS) 2040. One of the GDS 2040 outcomes is to provide a resilient, liveable and sustainable urban environment – underpinned by smart infrastructure supportive of a low-carbon economy. The JDA is currently revamping the existing Selby bus depot in the Johannesburg inner city, to turn it into a state-of-the-art Rea Vaya Bus Rapid Transit (BRT) depot for Phase 1B and Phase 1C operations. The JDA, on behalf of the City of Johannesburg’s Department of Transport, is undertaking the construction of the Selby BRT in three phases, namely phase 2A, phase 2B and phase 2C. The Selby BRT depot, which will service two Rea Vaya BRT operating companies, will be utilised for major and minor maintenance of buses by maintaining in-service buses and out-of-service buses. The centrally-located depot will minimise dead mileage, as well as minimise the time lost by buses in traffic congestion between depots and route starting points.

elby BRT depot, which will service two Rea Vaya BRT operating companies, will be utilised for major and minor maintenance of buses for maintaining in-service buses and out-of-service buses. The centrally-located depot will minimise dead mileage as well as minimise the time lost by buses in traffic congestion between depots and route starting points. The JDA is a wholly-owned area-based development agency of the City of Johannesburg with an emphasis on the development of resilient, sustainable and liveable urban areas in identified transit nodes and corridors. This means that as an area-based development agency, we are more than just a project management agency or an economic development agency. The JDA operates within the context of the spatial transformation of South African cities to correct the spatial and systemic inequalities created by past regimes of segregation. This is the foremost goal of urban development in the coming years. A more equitable, more just city is one that extends access to a range of opportunities and services to all of its

GAUTENG BUSINESS 2020/21

An Intelligent Transport System monitors traffic via multiple screens.

FOCUS In 2013, the JDA developed the first depot in Meadowlands in Soweto. The Selby BRT depot is being revamped to be on par with the Meadowlands depot, which is environmentally friendly and custom-made for Rea Vaya buses. Phase 2B, covering the construction of the bus depot workshops and refuelling garages and Phase 2C, which involves the construction of the administration building, are currently underway. The scope of work for Phase 2B includes extensive alterations, refurbishments and additions to an existing workshop building. This includes the construction of a new refuelling building, a new double-volume wash-bay building, two new refuse buildings, a new gate house, civil works, stormwater infrastructure, concrete paving panels with layerworks, and mechanical and electrical installations.

works to various areas, the refurbishment of workshop areas, construction of a new canteen and gymnasium, the construction of new offices, administration rooms, boardrooms and storerooms, the construction of a new main foyer and reception areas and the refurbishment of courtyard spaces. The construction of additional toilet blocks, new lifts to aid accessibility, service ducts, new pedestrian and vehicular access with security offices, external works and the installation of electrical and mechanical infrastructure will also be undertaken. Phase 2A, now complete, entailed the construction of the perimeter fence, bus parking area platform, site access road, main parking area driveway upgrade and the construction of the main entrance road into the depot (along the Pat Mbatha Road intersection with Ignatius Street). Once completed, the Selby BRT depot, which was formerly used by Putco Bus Company, will accommodate up to 270 buses and feature an administration building, maintenance building, washing and refuelling bays and an Intelligent Transport System (ITS) control centre. The administration block features ablution facilities, a canteen, offices and staff and visitors parking.

This construction also plays a role in job creation and skills development, with 30% of the contract value being awarded to SMMEs. Environmentally-friendly features include lights controlled by sensors, a robust, mild-steel sheeting for the roof, cladding to help with climate control, and a noise-wall barrier erected around the premises. The roof structures will also allow direct sunlight into the building to reduce the need for artificial lighting. Water is recycled for reuse in the buildings and the wash bay. Work planned for Phase 2C includes the redevelopment and refurbishment of an existing administration building. This comprises demolition

Contact details Physical address: The Bus Factory No 3, Helen Joseph Street Newtown, Johannesburg Postal address: PO Box 61877, Marshalltown 2107 Tel: + 27 11 688 7851 | Fax: +27 11 688 7899 Email: info@jda.org.za | Web: www.jda.org.za

GAUTENG BUSINESS 2020/21

SPECIAL FEATURE

Building mega-cities Ambitious construction plans are afoot in Gauteng.

Housing at Fleurhof Ext 2, sponsored by the Madulamoho Housing Association. CREDIT: Gauteng Partnership Fund

he fourth quarter of 2020 and the first half of 2021 must be growth periods for the construction and property sectors – for the simple reason that they barely functioned during the lockdown caused by the global pandemic. South Africa is fortunate in that it is emerging from the lockdown at the same time as summer days lengthen and the national government is getting down to brass tacks with its long-awaited infrastructure programme. With a dedicated unit within the Presidency, a conference has been held and more than 200 hundred possible projects have been whittled down to 51 projects that have been gazetted. By 2030 Gauteng will have two huge new cities, socially diverse, digitally connected and ecologically responsible and sustainable. That’s if the Provincial Government of Gauteng brings to fruition its plans for the west (Lanseria to Haartbeespoort Dam) and in the south, where Vaal River City will stretch from Vereeniging to Sasolburg in the Free State. In the 25 years since South Africa has been a democracy, more than 1.2-million subsidised houses have been built by government in Gauteng. Provincial government has pledged to release 10 000 serviced stands as part of its Rapid Land Release GAUTENG BUSINESS 2020/21

programme and it intends finishing incomplete housing projects in Alexandra, Evaton, K liptown, Bek k ersdal and Winterveldt. Bodies such as the National Housing Finance Corporation, Indlu and Umastandi (social capital entrepreneurs) are working together with provincial authorities to find ways to formalise and monetise the township market so that sustainable incomes can be generated and affordable housing and rental stock becomes more readily available. An important concept for developers in Johannesburg is the tax incentive that accompanies the Urban Development Zone (UDZ). The City of Johannesburg and the South African Property Owners Association (SAPOA) have developed a database for all UDZ proper ties. Information about the owner of the plot, the valuation and zoning rights is available for every stand. Va r i o u s “i m p rove m e n t districts” have also been created, for example the RID (Retail Improvement District) where businesses in a designated area pay levies to secure improved cleaning and security services. The Johannesburg City Improvement District Forum shares information among the CIDs. Expenditure by CIDs

SPECIAL FEATURE

collectively on supplementary public space safety, cleaning and maintenance is estimated to be about R61-million annually. The Gauteng Partnership Fund (GPF) has attracted more than R3.5-billion in private sector funding for affordable housing in the province since 2012. The Brickfields housing and rental development in Newtown was funded by the GPF and implemented by the Johannesburg Housing Company (JHC) as one of the first inner-city rejuvenation projects. JHC is a leader in converting bad buildings to useable rental space. The Johannesburg Development Agency (JDA) projects range broadly across many areas within the city, and include plans to use transport hubs to improve the lives of residents living in previously neglected areas. Private developer Indluplace Proper ties has purchased nine large apar tment blocks, tak ing its total buildings in central Johannesburg CBD, Berea and Hillbrow to 23: 33% of the units are bachelor pads, 22% are two-bedroomed flats. The listed company (its major shareholder is Arrowhead) intends to “aggressively grow its portfolio” of high-yielding properties as it believes the rental market has huge potential.

Property developments Quite what the future of office space will be remains to be seen in the wake of Covid-19. Investment and pension funds are heavily invested in commercial and residential p ro p e r t y s o t h i s i s s o m e t h i n g t h a t w i l l b e c l o s e l y monitored in the early 2020s. The hugely successful Sandton model of office and accommodation development is being replicated across the province. Sandton’s 10 000 businesses and 300 000 residents are spoilt for accommodation choices, but city-like developments are springing up in other parts of Gauteng as well. The newest is Castle Gate Lifestyle Centre, which is being built in Pretoria as the first phase in a multi-use development that will eventually comprise offices, medical facilities, a hotel along with a retail centre and more than 1 000 residential units. The R6-billion project is being undertaken by Atterbury and the Carl Erasmus Trust. The biggest is Menlyn Maine in the eastern suburbs of Pretoria. Not only is this a huge multi-use project, it also aims to be South Africa’s first “Green Precinct”. Professional services and consulting firm PwC has chosen the Waterfall City estate near Midrand as the site for its R1.5-billion headquarters, housing 3 500 employees with a total of 40 000m² of lettable space. The building is owned by Attacq and developed by Atterbury. Rosebank’s popularity as an office node continues to grow and Melrose Arch has proved a popular development, but none of this has stopped Sandton continue to expand and it remains first choice as the national base for several large companies. Recent new headquarters have been constructed for Discovery and Sasol. The trend called “semigration” has been having a downward effect on Gauteng’s residential property prices for some time. Semigration refers to people moving within the country – not quite emigrating – to the Western Cape. Pam Golding Properties CEO Andrew Golding told the Sunday Times in November 2019 that the Cape drought had led to other areas such as the Garden Route and the north coast of KwaZulu-Natal becoming more popular as destinations. ■

GAUTENG BUSINESS 2020/21

10 REASONS WHY YOU SHOULD INVEST IN SOUTH AFRICA

01.

HOT EMERGING MARKET Growing middle class, affluent consumer base, excellent returns on investment.

02.

MOST DIVERSIFIED ECONOMY IN AFRICA

South Africa (SA) has the most industrialised economy in Africa. It is the region’s principal manufacturing hub and a leading services destination.

LARGEST PRESENCE OF MULTINATIONALS ON THE AFRICAN CONTINENT SA is the location of choice of multinationals in Africa. Global corporates reap the benefits of doing business in SA, which has a supportive and growing ecosystem as a hub for innovation, technology and fintech.

04. 03.

FAVOURABLE ACCESS TO GLOBAL MARKETS

05.

The African Continental Free Trade Area will boost intra-African trade and create a market of over one billion people and a combined gross domestic product (GDP) of USD2.2-trillion that will unlock industrial development. SA has several trade agreements in place as an export platform into global markets.

SA has a progressive Constitution and an independent judiciary. The country has a mature and accessible legal system, providing certainty and respect for the rule of law. It is ranked number one in Africa for the protection of investments and minority investors.

06.

ABUNDANT NATURAL RESOURCES

SA is endowed with an abundance of natural resources. It is the leading producer of platinum-group metals (PGMs) globally. Numerous listed mining companies operate in SA, which also has world-renowned underground mining expertise.

08.

ADVANCED FINANCIAL SERVICES & BANKING SECTOR SA has a sophisticated banking sector with a major footprint in Africa. It is the continent’s financial hub, with the JSE being Africa’s largest stock exchange by market capitalisation.

PROGRESSIVE CONSTITUTION & INDEPENDENT JUDICIARY

07.

WORLD-CLASS INFRASTRUCTURE AND LOGISTICS

A massive governmental investment programme in infrastructure development has been under way for several years. SA has the largest air, ports and logistics networks in Africa, and is ranked number one in Africa in the World Bank’s Logistics Performance Index.

YOUNG, EAGER LABOUR FORCE SA has a number of world-class universities and colleges producing a skilled, talented and capable workforce. It boasts a diversified skills set, emerging talent, a large pool of prospective workers and government support for training and skills development.

Page | 2

09. 10.

EXCELLENT QUALITY OF LIFE

SA offers a favourable cost of living, with a diversified cultural, cuisine and sports offering all year round and a world-renowned hospitality sector.

SOUTH AFRICAN BUSINESS 2020

FOCUS FOCUSFOCUS

Sectoral strengths Sectoral strengths of of South African provinces South African provinces

SECTORAL STRENGTHS SECTORAL STRENGTHS OF OF A wide variety of investments are available. A wide SOUTH variety of investments arePROVINCES available. AFRICA’S SOUTH AFRICA’S PROVINCES

Mpumalanga: Mpumalanga: • Mining • Mining Gauteng: Gauteng: • Tourism • Tourism • Financial and business • Financial and business services services • Forestry, • Forestry, paper andpaper paperand paper • Information and communications • Information and communications products, wood products, wood and woodand wood technology technology products products • Transport and logistics • Transport and logistics Limpopo: • Agriculture • Agriculture and agro-and agrosteel, steel productsLimpopo: • Basic• ironBasic and iron steel,and steel products • Mining processing • Mining processing • Fabricated metal products • Fabricated metal products • Fertilisers • products Metal products • Fertilisers • Metal • vehicles, Motor vehicles, and accessories • Motor parts andparts accessories • Tourism • Tourism • Appliances • Appliances • Agriculture • Agriculture • Machinery and equipment • Machinery and equipment • Agro-processing • Agro-processing • Chemical pharmaceuticals • Chemical products,products, pharmaceuticals • including Energy, including • Energy, • Agro-processing • Agro-processing renewables renewables (solar) (solar)

North West: North West: • Mining • Mining • Agriculture and agro-processing • Agriculture and agro-processing • Tourism • Tourism • products Metal products • Metal • Machinery and equipment • Machinery and equipment • Renewable energy (solar) • Renewable energy (solar)

KwaZulu-Natal: KwaZulu-Natal: • Transport and logistics • Transport and logistics • Tourism • Tourism • vehicles, Motor vehicles, • Motor parts andparts and accessories accessories • Petrochemicals • Petrochemicals • Aluminium • Aluminium • Clothing and textiles • Clothing and textiles • Machinery and equipment • Machinery and equipment • Agriculture • Agriculture and agro-and agroprocessing processing • Forestry, and paper, • Forestry, pulp andpulp paper, wood products wood andwood woodand products

Northern Northern Cape: Cape: • Mining Mining • Agriculture and agro-processing Agriculture and agro-processing • Fisheries and aquaculture Fisheries and aquaculture • Renewable energywind) (solar, wind) Renewable energy (solar, • Jewellery manufacturing Jewellery manufacturing

• • • • •

WesternWestern Cape: Cape: • Tourism • Tourism • Financial and business • Financial and business services services • Transport and logistics • Transport and logistics • ICT • ICT Free State: • Agriculture and agro-processingFree State: • Agriculture and agro-processing • Agriculture and agro-processing • Agriculture and agro-processing • Fisheries and aquaculture • Fisheries and aquaculture • Mining • Mining • Petrochemicals • Petrochemicals • Petrochemicals • Petrochemicals • Basic• ironBasic and iron steeland steel • Machinery and equipment • Machinery and equipment • Clothing and textiles • Clothing and textiles • Tourism • Tourism • Renewable energywind) (solar, wind) • Renewable energy (solar,

Eastern Eastern Cape: Cape: • vehicles, Motor vehicles, Motor parts andparts and accessories accessories • Forestry, wood products • Forestry, wood andwood woodand products • Clothing and textiles • Clothing and textiles • Pharmaceuticals • Pharmaceuticals • and Leather andproducts leather products • Leather leather • Tourism • Tourism • Renewable energy (wind) • Renewable energy (wind)

•

Source: Industrial Development Corporation (IDC); The for Investing inAfrica, South Africa, Executive Summary Source: Development Corporation (IDC); The Case forCase Investing in South Executive Summary Source: Industrial Corporation Source: Industrial Development Corporation (IDC)(IDC); The Case for Investing in South Africa, Executive Summary Source: Industrial Corporation (IDC) (SouthDevelopment African Investment Conference, (South African Conference, 2018). (South Investment 2018). 2018). Page | 40 Page | 40

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GAUTENG BUSINESS 2020/21 AFRICAN BUSINESS SOUTHSOUTH AFRICAN BUSINESS 2020 2020

ADVERTORIAL

see money differently

RELATIONSHIPS AND UNDERSTANDING CLIENT NEEDS ARE KEY, SAYS EXPERT Pedro Rhode, Nedbank’s Provincial General Manager for Gauteng East, explains how brand values built on the bank’s expertise can benefit Nedbank clients, especially in what is now ‘the new normal’.

‘O

ur client-centred strategy and digital innovation enabled us to continue serving clients in the comfort of their homes through the Covid-19 lockdown. It brought convenience to clients and helped them to comply with lockdown regulations,' he says. Rhode says that for small- and mediumsized business clients, Nedbank continues to deliver end-to-end solutions through a dedicated business manager. ‘Our biggerpicture business approach ensures that we are able to take a holistic view of each business by understanding the vision, cashflow cycle, and transactional and capital expenditure needs. This way, we become trusted advisors to the business owners who strive to grow their business.’ Small businesses often lack formalisation, as shown by many not qualifying for Covid-19 assistance due to out-of-date records and not meeting regulatory requirements. Rhode says that Nedbank’s experts are available to provide all the support small businesses need, beyond affordable banking solutions. ‘We offer value-added services to get and keep your business going, such as our free-to-join networking

‘

Nedbank Retail Banking helps clients with debt consolidation to ease their financial difficulties …

’

portal, SimplyBiz.co.za, The Essential Guide for Small-business Owners, business registration services and free smallbusiness seminars.’ Rhode adds that the current economic climate has highlighted low financial literacy levels among South Africans who find themselves highly indebted. 'Nedbank Retail Banking helps clients with debt consolidation to ease their financial difficulties, and financial literacy programmes and tailormade solutions to empower them to save and make better financial decisions for the future.'

To take your financial wellness to the next level or for more information about Nedbank’s specialised service offering, email Pedro Rhode at pedror@nedbank.co.za or visit www.nedbank.co.za/business.

ADVERTORIAL

see money differently

NEDBANK OFFERS SPECIALIST SUPPORT IN POST COVID-19 ENVIRONMENT

rigitte Ryder, Nedbank’s Provincial General Manager for Gauteng North, says that Nedbank believes that clients need a flexible, resilient financial partner who understands their circumstances and aspirations, and provides relevant solutions and a banking experience that is hassle-free. Ryder says that, as South Africa progresses through the various stages of Covid-19, Nedbank is working through recovery scenarios with its clients and prospective clients while staying true to its brand promise, which is to use its financial expertise to do good for individuals, families, businesses and communities in which it operates. ‘Through the Covid-19 pandemic, we have elevated our client engagement and extended tailor-made relief assistance to many of our clients, equipping and enabling them to benefit from the various digital and remote solutions available. This ensures uninterrupted transactional and informational access while not compromising on security,’ says Ryder. Ryder says that Gauteng North Business Banking has, over the years, established

‘

Through the Covid-19 pandemic, we have elevated our client engagement and extended tailor-made relief assistance to many of our clients …

’

itself as a leader in providing banking solutions to various sectors. ‘These include the professional services industry, which values our bespoke funding, investment and transactional solutions, large manufacturing concerns covering various sub-sectors, and the information technology industry. As a result, we have been shielded from specific industry slowdowns, while adding to the financial and business acumen and ‘street cred’ of our frontline sales and service staff.’ To find out more about how Nedbank can partner with your business to grow a greater South Africa, please email Brigitte Ryder at brigitter@nedbank.co.za or visit www.nedbank.co.za/business.

ADVERTORIAL

see money differently

SOLUTIONS AIMED AT CREATING JOBS AND GROWING THE ECONOMY Nedbank’s Provincial General Manager for Gauteng West, Mawande Shugu, explains how Nedbank is committed to partnering with businesses and the youth for growth.

‘S

mall businesses are the mainstay of the economy. Nedbank has, over the years, instituted various interventions aimed at giving support to the smallbusiness sector. Over and above our Small Business Services solutions, we provide small-business owners with support that goes beyond banking – freeing up their time to truly focus on running their businesses,’ he says.

Nedbank has built a solid reputation as a bank for small businesses through initiatives such as its free-to-join networking portal, SimplyBiz.co.za, The Essential Guide for Small-business Owners, business registration services and free smallbusiness seminars – all geared to support small- and medium-sized enterprises. Shugu is passionate about supporting South Africa’s youth. ‘I believe it is important for the business community to invest in our youth as they are our future. Investing in this market is crucial for the sustainability of any business and requires an extensive investment in agile technological development. At Nedbank we pride ourselves in developing products that provide lifestyle benefits and offerings that enable the financial

‘

I believe it is important for the business community to invest in our youth as they are our future …

’

aspirations of our youth market. For example, our Unlock.Me Account offers a zero monthly maintenance fee, with additional lifestyle benefits perfect for clients between the ages of 16 and 26,’ he says. Shugu says that, through an evolving and agile digital strategy supported by the Nedbank Money app and the Nedbank Contact Centre, Nedbank remains committed to bringing convenience to its clients by making essential banking services available 24 hours, seven days a week. If you wish to tap into our expertise to reach your personal and business goals, please email Mawande Shugu at mawandes@nedbank.co.za or visit www.nedbank.co.za.

ADVERTORIAL

see money differently

MONEY EXPERTS SERVING THE TSHWANE BUSINESS COMMUNITY Mohammed Salim Kadoo, Nedbank’s Provincial General Manager for Tshwane and North West, says that a deep commitment to partnership is what underlies the team's personal and professional values.

The bank caters for all industries, but the Tshwane team has many clients in the franchising and agricultural sectors. 'The banking products and services tailored specifically for these sectors and designed to achieve overall business efficiency, profitability and sustainability make Nedbank one of the most franchise-friendly banks in South Africa and one of the market-leading banks in the agricultural space,' says Kadoo. Nedbank’s highly competitive pricing is structured to the needs and individual risk

‘

… business efficiency, profitability and sustainability make Nedbank one of the most franchise-friendly banks in South Africa …

’

profile and track record of each franchise business. Products include point-of-sale (POS) devices and Nedbank’s POSPlus management system, e-commerce solutions and cash acceptance devices, as well as a broad spectrum of tailored financing options. Nedbank understands that if the various challenges faced by the agricultural sector are not addressed, it will threaten economic growth, food security, employment and investment. To this end Nedbank has developed innovative funding solutions designed to support farmers with sustainable farming interventions, ranging from water efficiency mechanisms and cutting-edge irrigation to renewable-energy financing. If you are interested in taking your business to the next level, please email Mohammed Salim Kadoo at mohammedk@nedbank.co.za or visit www.nedbank.co.za/business. Nedbank Ltd Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP16).

SPO6013

‘O

ur bigger-picture banking approach enables us not only to provide you with the banking solutions you need, but also to give you a holistic view of how our products are connected to create a framework that yields maximum impact across every facet of your business and beyond. We know that success in business is about partnerships, so we put the building of deep, lasting, value-adding relationships at the centre of everything we do. This means your goals are our goals, your vision is our vision, and your success is our success – while you rely on our additional support that is most needed in times of change and uncertainty,’ he says.

KEY SECTORS Overviews of the main economic sectors of Gauteng Agriculture 26 Mining 27 Energy 28 Oil and gas 29 Transport and logistics 34 Manufacturing 36 Tourism 38

Information and communications technology Banking and financial services Development finance and SMME support Education and training

40 41 44 46

CREDIT: Boogertman and Partners

OVERVIEW

Agriculture A major starch business is changing hands. SECTOR INSIGHT An alternative market opened in double-quick time in Midrand.

ongaat Hulett, best known as a sugar producer, is selling its starch business (with three milling plants in southern Gauteng) to the KLL Group, a wholly-owned subsidiary of Barloworld Logistics Africa. The Meyerton plant is pictured. The R5.3-billion transaction was in doubt because of concerns about the value of the business expressed by the buyer in the context of Covid-19 but the Competition Tribunal in July 2020 approved the deal. The temporary closure of the Tshwane Market due to the pandemic brought a quick reaction from RSA Group and Freshling. Within 48 hours a new facility in Midrand was up and running and on the first day, more than 340 pallets of fresh produce were available for sale. The Fresh Produce Market in Johannesburg is South Africa’s biggest market. The region’s other metropolitan areas, Tshwane and Ekurhuleni, also have busy markets. The Springs Fresh Produce Market accounts for 3% of South African market share. Gauteng’s agricultural sector is concentrated on producing vegetables. There is commercial farming in the southern sector of the province (part of South Africa’s maize triangle) and the farming of cotton, groundnuts and sorghum is undertaken in areas near Bronkhorstspruit (east) and Heidelberg (in the south). The province is home to some of South Africa’s biggest agricultural companies, including AFGRI. Africa’s largest feedlot for cattle is located in Heidelberg: Karan Beef’s facility can accommodate 120 000 cattle. The feedmill processes 1 400 tons per day and the associated abattoir in Balfour in neighbouring Mpumalanga sometimes deals with 1 800 head of cattle per day. The Kanhym Agrimill in Vereeniging is one of three in the

ONLINE RESOURCES Agricultural Research Council: www.arc.agric.za AgriSA: www.agrisa.co.za Red Meat Producers’ Organisation: www.rpo.co.za South African Poultry Association: www.sapoultry.co.za

GAUTENG BUSINESS 2020/21

company’s portfolio, which collectively processes 250 000 tons of animal feed annually. Kanhym Estates is the largest producer of pigs in the country. There are many poultry farm and production facilities in Gauteng. Companies include Astral Foods, RCL Foods and Daybreak Farms. A R400-million agro-processing plant was launched in 2019 in the Gauteng Industrial Development Zone (GIDZ). The GIDZ is located at OR Tambo International Airport and is intended to encourage exports of high-value goods. The Provincial Government of Gauteng has set up Action Labs to focus on agriculture and agro-processing with a focus on land tenure issues and improving food security. If food producers can be linked to the value chain then township economies can benefit. In almost every aspect of the spatial planning being carried out by the Gauteng Provincial G o v e r n m e n t , a g r i c u l t u re and agro-processing are key components, either of Special Economic Zones (SEZ), industrial parks or agri-parks. Plans for the Western Corridor, for example, include an agro-processing park and logistics hub. ■

OVERVIEW

Mining AngloGold Ashanti has sold its last South African asset.

he sale in 2020 by AngloGold Ashanti of its Mponeng mine and Mine Waste Solutions to Harmony Gold for $300-million (about R4.4-billion) marks the end of an era. Although the company’s headquarters will continue to be in Johannesburg and it will be listed on the JSE, its mines are in Ghana, the Americas and Australia. AngloGold Ashanti was the successor to the mining company formed by Ernest Oppenheimer in 1917. Harmony Gold’s acquisition strategy, including the purchase from AngloGold of Moab Khotsong mine in 2017, will result in it being the country’s biggest gold producer. With 350 000 new ounces coming from Mponeng, it could produce an annual total of 1.7-million ounces. Cullinan diamond mine produced 30% more in the first half of 2019 than it did the year before. Run-of-mine production increased to 785 444ct. The company is engaged in an expansion programme called the C-Cut Phase 1 project. Cullinan is famous for its rare blue diamonds. The University of the Witwatersrand started life as the South African School of Mines. The School of Mining Engineering at Wits is now one of many at the university, but it is the highest ranked in terms of the QS World University Rankings. Gauteng is home to most of the research and training bodies associated with mining. Sibanye-Stillwater is one of many companies supporting research in the province: the Wits Mining Institute’s Digital Mining Laboratory (Digimine) is the focus of its funding. AECI, the explosives and chemicals company, sponsors the Virtual Reality Mine Design Centre at the University of Pretoria. The Mandela Mining Precinct is a joint venture between three government departments and the Minerals Council South Africa which aims to develop research into mining, showcase the country’s manufacturing abilities and to continue to create jobs and wealth as ore bodies are depleted. Mintek is an autonomous body based in Randburg which receives about 30% of its budget from the Department of Mineral Resources. The balance comes from joint ventures with private-sector partners,

ONLINE RESOURCES Council for Geoscience: www.geoscience.org.za Minerals Council South Africa: www.mineralscouncil.org.za Mintek: www.mintek.co.za National Department of Mineral Resources: www.dmr.gov.za

SECTOR INSIGHT Harmony Gold’s purchase of Mponeng mine boosts its overall volumes.

or is earned in research and development income, the sale of services or products and from technology licensing agreements. Pretoria University has a Department of Mining Engineering, the University of South Africa offers three national diplomas in mine-related fields, the University of Johannesburg has mine-surveying courses and the Vaal and Tshwane universities of technology have engineering faculties. The national government’s Phakisa programme is to be applied to mining. Intended to fast-track solutions to development problems, an Operation Mining Phakisa Lab has been set up to create concrete plans. Similarly, the Provincial Government of Gauteng has initiated Action Labs in the mining sector. ■ GAUTENG BUSINESS 2020/21

OVERVIEW

Energy Companies are generating their own power. SECTOR INSIGHT Energy zones could boost old mining areas.

Credit: Knight Piésold

reas in the Gauteng province that can no longer rely on the mining industry to drive their economies could become focus zones for solar PV projects. Renewable Energy Development Zones (REDZs) have been allocated in other provinces (two for solar, one for wind) but the potential for REDZs in Gauteng is huge, because vast amounts of energy are needed to drive the country’s biggest economy. These zones would be developed in line with the national Integrated Resources Plan (IRP 2019) which the Gauteng Provincial Government is hoping will enable it to unlock several renewable energy projects. Other projects include promoting gas usage, the development of hydrogen fuel-cell technology and the recommissioning of power stations. National power regulator, NERSA, has been asked by the National Minister of Energy to consider granting licences to small-scale power producers to sell any excess power. The likely granting of these licences will open up the market and help small manufacturers to cover the cost of installing generating capacity. Many companies and institutions are generating their own power. In Johannesburg, the Northern Wastewater Treatment Works (pictured) has its own electricity source in a 1.1MW biogas plant. It produces electricity using cogeneration, which is combined heat and power. A landfill site at Robinson Deep in Johannesburg has started generating 3MW of gas. This is the first of five renewable energy projects that Energy Systems SA has lined up in Johannesburg. At the Cavalier abattoir in Cullinan, biowaste conversion company ibert provides about

ONLINE RESOURCES National Energy Regulator of South Africa: www.nersa.org.za South African Photovoltaic Industry Association: www.sapvia.co.za South African National Energy Development Institute: www.sanedi.org.za

GAUTENG BUSINESS 2020/21

a quarter of the power that the abattoir needs to function. Absa Bank has followed up on its decision to take its central Johannesburg campus off the national electricity grid. Investments in a 6 000-panel rooftop solar system (which cost R10-million), the synchronisation of gas and diesel generators and sophisticated water and underfloor heating systems have all contributed to massive energy savings. The rooftop solar installation at Absa’s Pretoria office provides 17% of its electricity needs and the bank intends rolling out solar solutions for another five offices soon in addition to investigating battery solutions in pursuit of what it calls “net zero offices”. One of the biggest roofs in South Africa is to get one of the largest solar installations. Mall of Africa, a joint venture by Attacq and Atterbury in Waterfall City, Midrand, will produce about 7 800 MWh/y from panels on 45 000 m² of roof space. Vukile Property Fund has decided to equip all of the malls in its portfolio with rooftop solar panels. Retrofitting of light fittings has also taken place, to improve energy efficiency. ■

OVERVIEW

Oil and gas Various types of gas are available as fuels. SECTOR INSIGHT Rebranded Total petrol stations will sell liquified natural gas.

energen, which owns rights to a field of liquified natural gas (LNG) in the Free State, has started taking orders for its product from logistics companies. Bulk Hauliers International Transport (BHIT) has signed an agreement to take LNG to fuel 50 of its trucks, which should lead to lower operating and maintenance costs. South African Breweries is another client. The first two dedicated filling stations will be Total stations in Johannesburg and Durban that will be rebranded in green. One station is planned for Harrismith on the busy N3 highway which links the cities. Delta Natural Gas (DNG) Energy announced in 2019 the rollout of 400 natural gas refuelling sites across South Africa with a focus on the taxi and logistics sectors. The first sites will be Johannesburg and Tshwane. The Provincial Government of Gauteng has announced that it wants to take “decisive steps” to increase the availability and use of gas. NGV Gas, a subsidiary of CNG Holdings, is promoting compressed natural gas (CNG) as a versatile alternative across all sectors. Another subsidiary, CNG Technology supplies equipment for filling stations and distributions, converts petrol and diesel-powered vehicles and advises companies on conversions. The major economic sectors using gas are the metals sector and the chemical, pulp and paper sector. Brick and glass manufacturers are also big consumers. National policy is driving a switch to the use of gas. A national Gas Utilisation Master Plan (GUMP) is being developed. Transnet Pipelines has completed a sophisticated new multiproduct pipeline (NMPP) between the coast and Gauteng which is

ONLINE RESOURCES National Energy Regulator of South Africa: www.nersa.org.za South African Oil & Gas Alliance: www.saoga.org.za South African Petroleum Industry Association: www.sapia.co.za

bringing a range of products to the manufacturing heartland of South Africa. The company operates a 3 800km network of underground, high-pressure petroleum and gas pipelines throughout the eastern parts of South Africa. The country’s biggest supplier of industrial heating fluids, FFS Refiners, supplies this product out of a plant at Chloorkop while the company’s Evander site is responsible for heavy fuel oils. Evander also has a tank with installed capacity of 8 500m³. Egoli Gas has a pipeline network that extends over 1 200km in and around Johannesburg and the company has 7 500 domestic, industrial and commercial customers. Vopak completed a new storage terminal in Lesedi on the East Rand in 2017 to receive product from the NMPP. The company that owns Egoli Gas, Reatile, has a 30% stake in Vopak and a stake in CNG Holdings. The regulator and promoter of oil and gas exploration in South Africa, Petroleum Agency South Africa, has awarded coalbedmethane -gas and natural gas rights in the provinces on Gauteng’s border, Free State and KwaZulu-Natal. ■ GAUTENG BUSINESS 2020/21

a key player

As stated in the National Development Plan (NDP), the government’s intention is to “enable exploratory drilling to identify economically recoverable coal seam and shale gas reserves, while environmental investigations will continue to ascertain whether sustainable exploitation of these resources is possible: “If gas reserves are proven and environmental concerns alleviated, then development of these resources and gas-to power projects should be fast-tracked.” The plan also calls for the need to incorporate a greater share of gas in South Africa’s energy mix, through importing liquefied natural gas (LNG), using shale gas if reserves prove commercial, and developing infrastructure for the import of LNG, mainly for power production, over the short to medium term.

in a vital sector South Africa’s oil and gas exploration and production sector offers an excellent investment

Petroleum Agency SA plays an important role in developing South Africa’s gas market by attracting qualified and competent companies to explore for gas in the country, as well as monitoring and regulating their activities. In addition to ensuring operators always comply with the law, a major area of focus is increasing the inclusion of historically disadvantaged South African-owned entities in the upstream industry. South Africa needs large discoveries of indigenous gas as well as fair access to opportunities and social licence to develop a healthy gas market. Currently, natural gas supplies about just 3% of South Africa’s primary energy. A significant challenge facing the development of a major gas market in South Africa is the extreme dominance of coal as a primary energy source, and industry’s historic reliance on coal-generated electricity. A lack of extensive gas transport and reticulation infrastructure goes hand in hand with this, while other challenges include uncertainty about volumes of indigenous gas available to industry; security of supply; switching and conversion costs; gas pricing; and negativity around the ongoing use of fossil fuels. End users require certainty before committing, while explorers look for a guaranteed market. On a more positive note, opportunities for gas lie in the realisation of South Africa’s NDP and the Integrated

Resource Plan (IRP). Both call for indigenous hydrocarbons – conventional and unconventional – and independent power production to play an increasing role in the nation’s energy mix. The national power utility also intends to replace coal-fired power stations with gas-fired counterparts, in line with the vision of the NDP. The advent of gas-fired power stations will represent a ready, indigenous market for operators that make discoveries of gas in South Africa, ensuring it will be far easier to monetise smaller discoveries that may otherwise have remained undeveloped. As custodian, Petroleum Agency SA ensures that companies applying for gas rights are vetted to make sure they are financially qualified and technically capable. Applicants also need to have a good track record in terms of oil and gas exploration activity, as well as regard for the environment. This applies to both local and foreign companies. Oil and gas exploration requires enormous capital outlay and can represent a risk to workers, communities and the environment. Applicants are therefore required to prove their capabilities and safety record and must carry insurance for environmental rehabilitation. SOCIAL AND LABOUR PLANS In addition, all planned activities can only be carried out after completion of an environmental impact assessment and under an approved environmental management plan, after consultation with the public as well as interested and affected parties. Explorers are also required to contribute to skills development through the agency’s Upstream Training Trust. Oil and gas exploration in South Africa is regulated in terms of the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, which stipulates that applicants for production rights are required to submit social and labour plans (SLPs) to assist in transforming the industry, promoting employment and advancing social and economic welfare in South Africa. Applicants must develop and implement, where applicable, comprehensive SLPs that cover human resources-development programmes, community development, housing and living conditions, and employment equity. In addition to the MPRDA, other acts also regulate the sector – including the National Environmental Management Act, the Royalties Act, the Mining Titles Registration Act and the National Water Act. These acts and regulations have served the upstream industry well and are all in line with international standards. Minister of Mineral Resources Gwede Mantashe and President Cyril Ramaphosa have recently stated that oil and gas exploration and production activities should have their own standalone legislation, separate from that applicable to hard mineral mining. This legislation is being drafted and the Agency is part of the team at the Department of Mineral Resources working on it. In today’s world, oil and gas remain the most critical of energy resources, and Petroleum Agency SA is in full support of those entering the South African oil and gas exploration and production industries. The Agency is fully committed to ensuring that our government and policy-makers sustain the sector for the benefit of all involved and will do everything in its power to advance the industry.

OUR VISION A diverse upstream industry contributing to energy security through sustainable growth in exploration and development of oil and gas. OUR MISSION To promote, facilitate and regulate exploration and sustainable development of oil and gas contributing to energy security in South Africa.

ABOUT PETROLEUM AGENCY SA Petroleum Agency SA was established in 1999 by Ministerial directive and is mandated through the Mineral and Petroleum Resources Development Act, 2002 (Act No.28 of 2002) together with the National Environmental Management Act, 1998 (Act No.107 of 1998). These Acts provide for Petroleum Agency SA to evaluate and promote oil and gas potential exploration and production activities in South Africa, to regulate oil and gas exploration and the production industry and to archive all geotechnical data produced through oil and gas exploration. The Agency acts as an advisor to the government on issues regarding oil and gas exploration and production and carries out special projects at the request of the Minister.

OVERVIEW

Transport and logistics Achieving ambitious export goals will boost the logistics sector. SECTOR INSIGHT An African free trade agreement is certain to increase transport volumes.

lans to expand exports in a variety of sectors will rest heavily on the transport and logistics sector being up to the task of handling increased volumes. A total of 82% of South Africa’s air cargo is transported through OR Tambo International Airport and Gauteng has several cargo and freight handling facilities well-equipped to deal with rail and road deliveries and despatches. A specific goal of the Provincial Government of Gauteng is to make the Transnet Tambo-Springs Logistics Gateway the biggest inland logistics hub and dry port in Africa by 2030. The Tambo-Springs Gateway near Katlehong is an inter-modal facility which can transfer containers from rail or road to storage facilities and ultimately to the customer. Existing freight rail lines run through the site and link it to the seaports of Durban, Cape Town and Ngqura (Port Elizabeth). The aim with this new facility is to improve efficiency. It is run by the Tambo Springs Development Company. The intention is to add to the port: • a logistics park (transportation, processing, manufacture, warehousing and distribution). • a business park with a retail element. • a residential component. • an agro-industrial section. At an Innovation in Transport Seminar held in 2019, the provincial government stressed the importance of digital competence (“smart mobility”) in the transport sector as ever-more complex transactions take place across international borders. This will only grow as the effect of the African Continental Trade Agreement (AfCTA), signed in 2019, comes into effect, allowing for greater and freer trade across the continent.

GAUTENG BUSINESS 2020/21

The health of the transport and logistics networks of the province is key to any economic growth plans. The provincial government has identified logistics hubs, the road network, intermodal facilities, rolling stock, and buses and taxis as key components of the drive to transform, modernise and reindustrialise the regional economy. Road infrastructure projects are intended to bring in other major investments and connect new economic nodes such as the Tambo Springs Logistics Gateway, the planned new megacities ( Vaal River City and Lanseria), the new Special Economic Zones with current economic nodes and existing townships. In the short term, 18 major roads will be rehabilitated, upgraded and constructed, especially in Sedibeng and the West Rand. The concept of a Gauteng City Region is key to much of the planning for the area’s economic future. Infrastructure development is under way along corridors, each of which has a specific focus and it is instructive that each of them has a transport and/or logistics element.

OVERVIEW The corridors and focus areas are: • Thami Mnyele: transport, BRT, M&T Development and Plumbago Industrial Park. • OR Tambo Aerotropolis: creative sector, technology, research and development and logistics. • Thelle Mogoerane: logistics, Carnival Junction, OR Tambo inland port, Prasa rolling stock manufacturing facility run by Gibela Rail Consortium. The OR Tambo International Airport Special Economic Zone (ORTIA SEZ) has diversified beyond the existing Jewellery Manufacturing Precinct in the shape of a R400-million agro-processing plant. The concept of an aerotropolis is for the airport to become a hub of economic activity in the same way that cities anchor various economic sectors that grow up around the centre.

Airports OR Tambo International Airport caters for more than 20-million passengers every year. Lanseria Airport has grown in importance with kulula, FlySafair and Mango using the airport located to the north of Johannesburg. It is a convenient landing point for travellers bound for regional centres like Rustenburg in the North West. Four airlines continued to offer flights during the Covid-19 lockdown: FlySafair, Airlink, Cemair and Mango. Three airlines went into business rescue: SAA, SA Express and Comair (which is a British Airways franchisee and runs the low-cost kulula brand). Gauteng has several smaller airports that host mostly commercial aircraft: • Rand Airport in Germiston. • Grand Central Airport in Midrand. • Wonderboom Airport in Pretoria North. • Waterkloof Air Force base, south of Pretoria. The Commercial Aviation Manufacturing Association South Africa (CAMASA) reports that 50 companies are active in the sector, employing more than 3 000 people in highly skilled jobs. Almost all the activity is around Johannesburg and Cape

ONLINE RESOURCES Airports Company South Africa: www.acsa.co.za Road Freight Association of South Africa: www.rfa.co.za South African Association of Freight Forwarders: saaff.org.za South African National Road Agency: www.sanral.co.za Tambo Springs Logistics Gateway: www.tambosprings.co.za

Town and the sector (which encompasses aero-structures and systems, manufacturing, design and engineering) is responsible for R3-billion in exports every year.

Rail The Gautrain, a high-speed train linking the centre of Johannesburg, Sandton, ORTIA and Pretoria, has been successful in terms of its original brief. But the Gautrain is expensive and not designed to cater for mass public transportation. A feasibility study has been completed on the expansion of the Gautrain and its full integration into the public transport system. New areas that will be covered according to the plan include Mamelodi in Tshwane, Boksburg in Ekurhuleni, Randburg-Lanseria in Johannesburg, Mogale City and Syferfontein in the West Rand and Roodepoort/Jabulani. The Gautrain has reactivated proper ty development in many areas around its stations and made sites near stations attractive to developers and investors. Transnet Rail Engineering (TRE) has a major presence in Gauteng and the metropolitan lines that ferry commuters are run by the Passenger Rail Agency (PRASA). The Wits Metrorail system serves Johannesburg and its surrounds. Park Station, in the north of the central business district, is the largest station in Africa and acts as the metropolitan hub. ■ GAUTENG BUSINESS 2020/21

OVERVIEW

Manufacturing The OR Tambo Aerotropolis is attracting manufacturing.

he Eastern Corridor of Gauteng, centred on the metropole of Ekurhuleni, is consolidating its leading position in manufacturing by leveraging the advantages of hosting the OR Tambo International Airport and related Special Economic Zones and industrial parks. Ekurhuleni Metropolitan Municipality has the greatest concentration of manufacturing enterprises, especially between Wadeville and Alrode, south-west of Alberton. Germiston is the country’s biggest rail junction and Transnet Engineering has invested hundreds of millions of rands in new equipment at its facility there. The Provincial Government of Gauteng has tabled plans to bolster manufacturing capacity in the province’s western areas. The priorities are mining and mineral beneficiation, capital equipment and machinery, agriculture and agro-processing, tourism, retail and economic development in townships. The industrial parks at Babelegi, GaRankuwa and Ekandustria are to be renovated. Manufacturing contributes 14% to Gauteng’s real economy output and provides 40% of South Africa’s manufacturing overall. Manufacturing related to the mining industry, historically the lynchpin of the Gauteng economy, is still important. Employer organisations like the Manufacturing Circle and government at national and provincial levels are engaging in initiatives to grow the sector, including incentives such as the Manufacturing and Competitiveness Enhancement Programme (MCEP) of the Department of Trade, Industry and Competition (dtic). Sectors that have received support include plastics, pharmaceuticals, chemicals, metal fabrication, transport equipment and agri-processing. The Support Programme for Industrial Innovation (SPII), run by the Industrial Development Corporation (IDC) on behalf of the dtic, promotes technology development. Another IDC initiative has allocated R23-billion over three years to support the Black Industrialist Programme to help existing entrepreneurs grow their businesses. Venter Consulting Engineers, manufacturer of precision engineering equipment, recently attracted the attention of Italian company Danieli and won a contract to create two sophisticated globoid gear sets. Also called the hour-glass gear, this technology allows for an increased number of teeth that are simultaneously in mesh and improves the conditions of force transmission. A handful of firms globally are in a position to make these gears, which can stand massive amounts of stress. GAUTENG BUSINESS 2020/21

SECTOR INSIGHT A precision engineering firm is gearing up for international contracts. Packaging company Nampak, which in 2019 celebrated its 50th year as a listed company on the JSE, has metals, plastic, paper and glass operations at various locations. It is the market leader in beverage cans. The country’s biggest glass producer, Consol Glass, has facilities in Clayville, Wadeville and Nigel. Household products manufacturer Unilever represents an example of the lighter industrial capacity of the East Rand. Kellogg’s, KimberlyClark South Africa and Procter & Gamble all have significant manufacturing capacity in the area. Corrugated paper manufacturer Corruseal has purchased the Enstra Mill in Springs from Sappi, giving it greater control of production. The southern portion of Gauteng around Vanderbijlpark and Vereeniging is synonymous with steel production. Flat iron is made at the large plants of ArcelorMittal. Scaw Metals has a chain-making factory in Vereeniging. There are 35 aluminium processing firms in Gauteng, involved in both secondary processing to produce foils,

OVERVIEW

cans, bars, rods and sheets, with final fabrication in the form of die-casting and sheet metal work. Within Gauteng, the automotive and pack aging industries are the chief consumers of these products. AECI is a large manufacturing company with its roots in the mining industry. It comprises two principal divisions: AEL Mining Services (with a large factory site at Modderfontein south of Johannesburg) and Chemical Services, which presides over 20 separate companies (including Senmin, the group’s mining chemicals company). More than half of the companies operating in the food and beverage sector in South Africa are in Gauteng, including Nestlé, Tiger Brands, Pioneer Foods, RCL, AVI and Astral. There are CREDIT: Venter Consulting Engineers approximately 4 000 food-processing companies in the province, employing These include Scania, TFM more than 100 000 people. Industries and MAN Truck and Although there are more than 200 pharmaceutical firms in Bus South Africa, as well as the the country, large companies dominate the field, with Aspen Chinese truck manufacturer Pharmacare (34%) and Adcock Ingram (25%) the two key players, FAW, which owns an assembly followed by Sanofi, Pharmaplan and Cipla Medpro. Among the p l a n t i n I s a n d o. B e i j i n g other big international brands active in Gauteng are Merck, which Automotive Wor ks (BAW ) has a 55 000m² plant at Modderfontein, and Pfizer SA, which runs a assembles taxis at Springs. laboratory in Sandton amongst its facilities in South Africa. Armoured cars are also All of Gauteng’s large automobile manufacturers are investing produced. The Paramount in new model production. Nissan is spending R3-billion on Group has signed a contract production of the Navara pick-up vehicle. Other major investments to supply the United Arab include R3-billion by Ford at Silverton, R6.1-billion by BMW at E m i r a te s w i t h i t s l a te s t Rosslyn, R260-million by BMW on an expanded campus at Midrand. armoured personnel carrier, the UD Trucks, a part of the Volvo group, will assemble the Croner Mbombe 4. Paramount South heavy commercial vehicle at Rosslyn. Africa has been created to work Gauteng is also home to a strong automotive components in the local market. industry, together with several bus and truck assembly plants. DCD Protected Mobility manufactures armoured cars in ONLINE RESOURCES Boksburg, which are branded Centre for Advanced Manufacturing: www.cfam.co.za as Vehicle Mounted Mine Chemical and Allied Industries’ Association: www.caia.co.za Detectors. In nearby Benoni, Gauteng Department of Economic Development: BAE Systems OMC designs www.ecodev.gpg.gov.za and manufactures protected Manufacturing Circle: www.manufacturingcircle.co.za vehicles. ■

GAUTENG BUSINESS 2020/21

OVERVIEW

Tourism Tourism operators are determined to rise again.

Credit: Marriott International

hen the Marriott International hotel group closed three of its South African hotels during the Covid-19 lockdown, Tsogo Sun Hotels, which owns a controlling stake in all three hotels, stepped up its commitment by agreeing to bring them into its portfolio, keep them open and run them. One of these hotels is the The Mount Grace in the Magaliesberg which was developed by the Brand family and was the sister hotel to The Grace in Rosebank. Tsogo bought and restored The Grace in 2015 and it currently operates as 54 on Bath. The Tsogo group believes that demand for conferencing, weddings and shorter family getaways will grow and that The Mount Grace, with its close proximity to Johannesburg, is in a good position to respond to those markets. Tsogo Sun Holdings split its casino and hotel operations in 2019 in order to unlock value in the two sectors. With a market cap of R25-billion, Tsogo is the country’s biggest hotel group. It has 36 hotels and three casinos in Gauteng. The hotel brands cover four market segments, and they include a handful of stand-alone hotels such as the Palazzo (at Montecasino) and the boutique hotel in Rosebank. SunSquare, Southern Sun Hotels, Southern Sun Resorts, Garden Court and StayEasy are among the group’s brands.

GAUTENG BUSINESS 2020/21

SECTOR INSIGHT Tsogo Sun Hotel took over The Mount Grace during lockdown. The move by Marriott International into the South African market was seen as significant, and it retains most of its properties. In partnership with the Amdec Group, Marriott spent about R1-billion on the Marriott Hotel Melrose Arch and Marriott Executive Apartments Johannesburg Melrose Arch. Buying into Protea Hotels has also given Marriott access to other African countries. Although all projections about the tourism sector and

OVERVIEW its potential for growth and for job creation were short-circuited by the Covid-19 pandemic, the fact remains that the sector can grow quickly and it is a good job creator. Growing Gauteng Together (GGT2030) is a plan of action formulated by the Gauteng Provincial Government which intends to transform, modernise and industrialise the provincial economy. The expansion of the tourism sector is seen as one of the key methods of achieving those goals. This was emphasised when the 2020 State of the Province Address included Tourism and Hospitality as one of 10 “high-growth” sectors. In June 2020, as part of preparation for the reopening of the sector, the Gauteng Tourism Authority (GTA) launched its first webinar in a four-part series of targeted engagements. It was agreed that local tourism would have to take up the slack that occurred with the collapse of international arrivals and that safety protocols were vital to restoring confidence. Virtual tours have been taken up by heritage operators such as Constitution Hill and Liliesleaf Farm and this option is likely to grow as people in other countries seek out a South African experience free from any worries. Founder and CEO of the heritage site honouring the South African liberation movement, Nicholas Wolpe, said, “There are now over 1 400 hours of archive material that we will be taking online and through virtual tours and information banks that can be accessed off-site.” The CEO of Emerald Resorts, Mark Hands, commented, “We are repackaging our strategy for visitors to include more digital offerings as we will have to limit physical numbers as social distancing may well be with us into 2022 to manage infections brought about by large groups of people.” A strong theme at the webinar was solidarity. “We have to adapt to the new normal even as it is unknown at the moment,” said Fezile Ngqobe, acting CEO for GTA. “What we do know is that as a sector, we are all in this together.” The Legacy Group was one of the first to introduce apartments to the hotel development mix in South Africa when it added the Davinci Hotel on Nelson Mandela Square to its portfolio just before South Africa hosted the soccer World Cup in 2010. The effects of the Covid-19 pandemic may lead to this trend growing within other hotel groups. The Legacy collection includes the Michelangelo Hotel and Michelangelo Towers. The Davinci was designed with 166 hotel

ONLINE RESOURCES Cradle of Humankind: www.maropeng.co.za Gauteng Tourism Authority: www.gauteng.net Johannesburg Tourism Company: www.joburgtourism.com

rooms, 54 apartments in the upper reaches, with a further four luxurious penthouses above that.

Culture and history Heritage tourism is a strong component of the tourism offering in Gauteng. The Cradle of Humankind is a U N E S CO Wo r l d H e r i t a g e Site and attracts thousands of visitors every year to the interactive visitor’s centre at Maropeng. The Sterkfontein Caves have ex traordinar y displays, showing the origins of humanity through artefacts such as the 2.1-million-yearold skull known as Mrs Ples. The Origins Centre at the University of the Witwatersrand provides insights into the origins of mankind through art and science. The Centre hosts superb representations of Khoi and San rock art. Histor y relating to the struggle against apartheid centres on attractions such as the moving exhibitions housed at the Apar theid Museum and the history of the battle for human rights and democracy embodied in Constitution Hill. Kliptown in Soweto is the site of the signing of the Freedom Charter. Another site where South Africa’s history is on display is at Freedom Park, a sprawling complex of museums, open spaces and memorials on a hillside overlooking Pretoria in Tshwane. ■ GAUTENG BUSINESS 2020/21

OVERVIEW

Information and communications technology Financial services is leading the way in ICT investment.

he biggest investors in new technology are banks and other players in the financial sector, where technology is rapidly lowering the barriers to entry for new businesses. This trend is illustrated by the rapid development of new exchanges which are based on sophisticated ICT hardware and software. One of the provincial government’s stated goals is to get several ICT initiatives to work together. If the work of the Innovation Hub, several Ekasi laboratories, the Tshimologong precinct, universities and research institutes could be integrated, a more powerful ecosystem would be the result. A High-Tech Special Economic Zone (SEZ) is another idea that is being pursued. Making broadband connectivity and free Wi-Fi available to poor households in Actonville Primary School in Benoni has received a donation of laptops from data protection and the province is another management company Commvault. task. Gauteng’s Premier will appoint a Digital Transformation Advisory Panel to assist in driving these initiatives. Various large spatial plans for the province include an element whereby these new cities or settlements will be built as “smart cities”. Johannesburg is now one of two South African cities to host a Microsoft Azure data centre. The Industrial Development Corporation (IDC) estimates that spending on cloud services in South Africa will reach R11.5-billion by 2022, nearly three times its level in 2017 (Tech Central). This trend could generate more than 100 000 new jobs. The Council for Scientific and Industrial Research (CSIR) in Pretoria hosts a new body aimed at preparing South Africa for the Fourth Industrial Revolution (4IR), the South African Affiliate Centre of the World Economic Forum. With several global companies choosing to station their South African headquarters in Gauteng, the province is well

ONLINE RESOURCES eKasiLabs: www.theinnovationhub.com Independent Communications Authority: www.icasa.org.za Technology Innovation Agency: www.tia.org.za

GAUTENG BUSINESS 2020/21

SECTOR INSIGHT Smart cities are planned. connected. More than 1 500 kilometres of network fibre has been connected throughout the province, with 1 066 sites such as schools, health facilities, libraries and community centres giving community members and entrepreneurs the chance to be connect with the digital world. A Gauteng Growth and Development Agency (GGDA) subsidiary, the Innovation Hub, has a programme called eKasiLabs which supports entrepreneurs and young people with good business ideas. The “ Tshepo 1 Million” campaign links the provincial government with the successful Harambee Youth Employment Accelerator and more than 40 large companies. Both Johannesburg and Tshwane have free Wifi networks with Tshwane’s covering 780 zones in places such as libraries, educational institutions and clinics. The Small Enterprise Development Agency (Seda) runs the SoftstartBTI ICT incubator in Midrand and Tuksnovation, a high-tech incubator, at Pretoria University. Private mobile communications company Vodacom has pledged to spend R50-billion on network infrastructure in rural areas. ■

OVERVIEW

Banking and financial services Banks are looking at insurance and funeral policies.

he financial-services industry contributes 21% to Gauteng’s gross domestic product. The revitalised African Bank, which was put under curatorship in 2014 by the Reserve Bank, is making a play for new customers with an interesting offering that does not rely so much on digital wizardry as on presenting the customer with enhanced banking facilities. African Bank has created an account that allows up to five additional accounts to be created in the name of the main account. Fees are only charged for drawing cash or at the time of a transaction. There are no monthly fees for any of the accounts which can be either for saving or transactional. Each user has his or her own card and monies can be moved between accounts, ideal for families. Sanlam has entered two partnerships in the insurance market. African Rainbow Life has launched life cover policies in the low and middle-income market, in association with Sanlam and African Rainbow Capital. Sanlam is also in a venture with Capitec. Financial Mail quoted Capitec CEO Gerrie Fourie in 2019 saying that the bank was selling 3 000 funeral policies a day. In 2017 Tyme Digital received a licence to run a bank. By early 2019, TymeBank was available in 500 Pick n Pay and Boxer stores and more than 50 000 customers around South Africa had an account. Second to market among the country’s new banks was Discovery Bank, which officially launched in March 2019. Discovery Bank applies the behavioural model it uses in its health business to reward good financial behaviour. The decision by pharmaceutical giant Aspen Pharmacare to conduct a second listing on one of South Africa’s newest exchanges, A2X, suggests good timing by the people behind the latest trend in the country’s financial services sector.

SECTOR INSIGHT Discovery Bank is using the behavioural model pioneered by its health business. A2X has attracted nearly 20 companies in a wide range of sectors in less than two years, with a primary focus on secondary listings. Patrice Motsepe’s African Rainbow Capital is an investor in A2X. Of the four new exchanges, Equity Express Securities Exchange (EESE) trades in Black Ec o n o m i c E m p owe r m e n t (BEE) while ZARX and 4AX are targeting companies that are not listed elsewhere. ZARX has agricultural holding companies like TWK and Senwes among its first clients. The newcomers all promise to use the latest technology to make trading simpler, quicker and cheaper. The JSE is the world’s 19thbiggest exchange and nearly 400 companies are listed on the JSE or AltX, the JSE-owned exchange for smaller companies. ■

ONLINE RESOURCES Association for Savings and Investment South Africa: www.asisa.org.za Chartered Institute of Government Finance, Audit and Risk Officers: www.cigfaro.co.za Financial Sector Conduct Authority: www.fsca.co.za

GAUTENG BUSINESS 2020/21

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OVERVIEW

Development finance and SMME support Government pledges to spend R4-billion with SMMEs annually.

Credit: 5M2T.

n a drive to spur economic development in Gauteng’s townships, a Township Economic Development Bill will do away with restrictive bylaws. At the same time, taxi ranks are going to be rezoned and developed to allow for the growth of retail outlets and services such as mechanics and panel-beaters. Data company 5M2T (Five minutes to town) has started offering sophisticated information about the township market. From how many spazas in Soweto have refrigeration units (4 700) to brand loyalty, 5M2T covers 60 000 spazas, salons, barbers and other informal trade outlets in an “in-market audit”. Gauteng has 14 registered co-operative banking institutions serving over 16 000 member-owners, with over R100-million in savings and R150-million in assets. The township market of about 250 000 township households holds enormous potential for collective buying. The Gauteng Growth and Development Agency (GGDA) is linking large companies with small businesses at Special Economic Zones (SEZs). The aim is to create a pipeline for SMMEs and to entrench localisation in sectors such as the automotive industry. The Incubation Centre at Nissan’s assembly plant in Rosslyn north of Pretoria hosts eight new businesses at a time. They receive support through subsidised rental and mentorship and training. The Automotive Industry Development Centre (AIDC), a subsidiary of the Gauteng Growth and Development Agency (GGDA),

GAUTENG BUSINESS 2020/21

SECTOR INSIGHT A Township Economic Development Bill aims to reduce red tape. manages the centre. The Jobs Fund contributes to financing the project. The City of Johannesburg runs seven SMME hubs where office space, WiFi and advice and training are available for small business operators. About half of South Africa’s formal SMMEs operate in Gauteng and more than half are in the wholesale and retail sector and the accommodation sector. The next most popular sectors are community, social and personal services. The Provincial Government of Gauteng has pledged to

OVERVIEW spend R4-billion per annum on goods and services through 2 000 township businesses. Over the five years to 2025, there will also be support for 500 co-operatives and for 50 emerging black farmers and 20 black agro-processors to scale up their businesses. The National Department of Small Business Development (DSBD) has several programmes to assist SMMEs and co-operatives. These include: • The Black Business Supplier Development Programme, a costsharing grant to promote competitiveness • The Co-operative Incentive Scheme, a 100% grant. The Small Enterprise Development Agency (Seda) is a subsidiary of the DSDB and gives non-financial support to entrepreneurs through training, assistance with filling in forms, marketing and creating business plans. It helps small businesses draft applications for loan finance. Several of Seda’s technology incubators are in Gauteng. The National Gazelles is a national SMME accelerator jointly funded by Seda and the DSBD. Businesses can receive up to R1-million for training, productivity advice, business skills development and the purchase of equipment on the Gazelles programme. The Industrial Development Corporation (IDC) supports SMMEs either by disbursing loans or by taking minority shares in enterprises and giving advice. The National Department of Labour has a programme to support people with disabilities, the Sheltered Employment Factories initiative. The Enterprise Investment Programme (EIP) of the National Department of Trade, Industry and Competition (dtic) is another support programme. The Shanduka Black Umbrellas incubator helps entrepreneurs convert their good ideas to sustainable business practice.

Private sector Agribusiness and agro-processing are among the sectors that are targeted by the Masisizane Fund for loan financing. The others are franchising/commercial and supply chain/manufacturing. Training is offered through a Business Accelerator Programme. As a nonprofit initiative of the Old Mutual Group, the fund focusses on the cash flow of potential businesses rather than insisting on security in the form of property.

ONLINE RESOURCES Gauteng Growth and Development Agency: www.ggda.co.za National Empowerment Fund: www.nefcorp.co.za Small Enterprise Development Agency: www.seda.co.za

All the major banks have SMME offerings. Standard Bank’s Community Investment Fund (CIF) initiative extends loans to informal businesses. The CIF has distributed more than R7-million to more than 630 businesses through its six funds in three provinces. Nedbank has an enterprisedevelopment product that supports businesses with a turnover up to R35-million with at least 25% black ownership. Private companies also support SMMEs through their buying chain. Woolwor ths is funding TechnoServe to ensure that small tomato growers can grow produce that will meet the demanding standards of the retailer, and to help them expand production. A regular supplier to Woolworths, Qutom, assists with the project. The Shanduka Black Umbrellas incubator helps entrepreneurs convert their good ideas to sustainable business practice. DRA Minerals is putting R3.8-million into the programme over two years. Anglo American Zimele, which runs four enterprise development and investment funds, helps star t and expand SMMEs. Since the introduction of enterprise hubs, the number of projects has grown very quickly and Zimele has processed more than R500-million in loans and two applications are received every day. One of Zimele’s small business hubs operates out of Vanderbijlpark. ■ GAUTENG BUSINESS 2020/21

OVERVIEW

Education and training Skills training is a public and private priority.

Wits Business School

n response to a demand for a more skilled workforce, the Provincial Government of Gauteng has promised by 2025 to establish in every district at least two schools of specialisation linked to the 10 highgrowth sectors that have been identified. Public libraries and community centres will become places where online courses in artisan and digital skills will be readily available. The possibilities of two large institutions being harnessed in the creation of a university-based economic complex are being explored in Sedibeng where the Vaal University of Technology and a campus of the North-West University are already major contributors to the district. The rapid expansion which characterised the early stages of the development of the Curro Group has been halted by Covid-19 but the private education company has still committed itself to expenditure of R1-billion in 2020. This money will be spent on expanding existing infrastructure. Curro will continue to acquire schools and focus on newer brands such as DigiEd and Curro Private Colleges, which offer vocational courses. A focus on water and energy underpins the newly-established Knowledge Pele Academy in Kramerville, Johannesburg. Independent

SECTOR INSIGHT Curro Group will spend R1-billion in 2020. power producer Pele Green Energy aims to develop skills and entrepreneurship in rural, periurban and township communities. The KP Academy has formulated energy and water SETA-approved courses and runs artisan training programmes, learnerships, short courses and workshops. Technical and Vocational Education and Training (TVET) colleges are concentrating on 13 trade areas, including bricklayers, millwrights, boilermakers and riggers. Gauteng has eight TVET colleges.

CMY

GAUTENG BUSINESS 2020/21

OVERVIEW The National Skills Authority (NSA) works with Sector Education Training Authorities (SETAs) in carrying out the National Skills Development Strategy (NSDS). The Human Resource Development Council of South Africa (HRDCSA) is an over-arching body working on skills development and training.

Tertiary Three of South Africa’s top five business schools are in Gauteng: the Wits Business School, the University of South Africa’s (Unisa’s) Graduate School of Business Leadership and the Gordon Institute of Business Science, on the Sandton campus of the University of Pretoria.

Eighty percent of the 1 230 lecturers and researchers at the University of the Witwatersrand (Wits) have post-graduate degrees, and 27 A-rated scientists work there. The university offers studies in more than 40 schools in five faculties. Pretoria hosts the head office of distance university Unisa, which has almost a quarter of a million students. The University of Pretoria (UP) is renowned for research. One of the most famous faculties is veterinary science, which is located at Onderstepoort. The University of Johannesburg (UJ) is a comprehensive institution offering diplomas and degrees through a mix of vocational and academic programmes. The Tshwane University of Technology (TUT) and the Vaal University of Technology (VUT) have several campuses. ■

ONLINE RESOURCES 1 2020/06/19 13:50 Council of Higher Education: www.che.ac.za Gauteng Department of Education: www.education.gpg.gov.za National Research Foundation: www.nrf.ac.za UFSBS-FM BS survey 8026.pdf 1 2020/06/19 13:50 UFSBS-FM BS survey 8026.pdf

UFS Business School

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Management Development | Leadership Development

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Executive Development | Advanced Project Management Various short learning programmes Available online and as inhouse programmes countrywide Contact Ansie Barnard

T: 051 401 3204 | C: 082 900 1080 | barnardam@ufs.ac.za | www.ufs.ac.za/bus | |

UFSUV |

UFSweb |

GAUTENG BUSINESS 2020/21

INDEX

INDEX Africa Biomass Company (ABC) ...................................................................................................................... 3, 8 Ch artered institute of Government Finance, Auditing and Risk Officers (CIGFARO) ....................................................................................................... OBC Johannesburg Development Agency (JDA) ..................................................................................... 14-15 Metropolitan ................................................................................................................................................IFC, 42-43 Nedbank .................................................................................................................................................................. 20-23 Petroleum Agency South Africa ................................................................................................................ 32-33 Randburg Chamber of Commerce and Industry (RCCI) ..................................................................IBC Transnet Pipelines .............................................................................................................................................. 30-31 UFS Business School ...............................................................................................................................................47

GAUTENG BUSINESS 2020/21

INTERVIEW

Randburg Chamber of Commerce and Industry Promoting and representing businesses in the economic powerhouse. What is the geographic footprint of the Chamber? The areas we cover are: Randburg, Sandton, Fourways, Midrand and Lanseria. What are the key functions of the Chamber? Primarily to promote business, to facilitate introductions, to be the voice of business at municipal, provincial and government levels, in defending business in areas of poor decision-making or unintended consequences of various acts that are passed. We also facilitate opportunities into the SADC regions and work very closely with many embassies regarding trade and tourism.

Linda Blackbeard, CEO What does the Chamber do to support SMMEs? One of the Chamber’s primary focus areas is the development of SMMEs, finding opportunities for them, business enhancement in training, helping with business plans, company registrations, giving direction to ideas that entrepreneurs might have. Teaching them to form joint ventures with other small businesses and have an opportunity then to tender for work. We promote our local businesses being awarded work in our areas.

BIOGRAPHY Linda Blackbeard ran her own interior design and hospitality company before taking up the reins as CEO of the RCCI. She is the SACCI Chamber Forum chairlady and a member of the South African Chamber of Commerce and Industry board of directors. She was awarded the Pan African Award in 2018 in recognition of her achievements in the Continental Lifetime Achiever sector, CEO Global Most Influential Women in Business & Government 2018 Awards.

Does the RCCI interact with government? RCCI is affiliated to the only national chamber body, South African Chamber of Commerce & Industry (SACCI). Through SACCI important issues are dealt with directly at government level. We are also heard at provincial level and the Chamber works with the City of Johannesburg, Trade and Investment SA as well as various national government departments responsible for economic development. Are there particular challenges? Randburg Chamber would love to embrace more businesses. There is so much opportunity around and we could facilitate more if businesses joined. The more businesses stand together with their local chamber of commerce, the stronger our voice will be at municipal, provincial and government level. What does the future hold? Our Electronic Certificate of Origin programme for export saves time and is designed for South African markets. Businesses and members can look forward to renewed focus, positive opportunities, and facilitation in the SADC region for business growth and opportunity. www.rcci.co.za

CPD CONTiNUOUS PROFESSiONAL DEVELOPMENT

“ Attending CIGFARO Training and webinars has allowed me to earn CPD points while participating in Technical discussions to help improve my professional capacity. This is a great time to be associated with a SAQA recognised Professional Body. ”

Ms Zanele Malaza (PGFO), CFO City of Mbombela

Gauteng Business 2020-21

Articles inside

Index

Development finance and SMME support

Education and training

Banking and financial services

ICT

Manufacturing

Tourism

Transport and logistics

Regional overview of Gauteng

Oil and gas

Mining

Energy

Agriculture

Introduction

Spatial planning and infrastructure underpin Gauteng’s growth plans

Builing mega-cities