www.opportunityonline.co.za
JULY/AUG/SEPT 2021 • ISSUE 98
INFRASTRUCTURE INVESTMENT ESTATE PROPERTIES Ten of the best
What AfCFTA means for transport and logistics JOIN US ONLINE SMME Virtual Roadshow
AGILE AND RESPONSIVE LOCAL
GOVERNMENT Opportunity interviews Midvaal Executive Mayor Bongani Baloyi
Public and private players are aligned to make it count
AUTOMOTIVE
Toyota’s newest passenger model is to be built in Durban
The Toyota Corolla Cross to be built at the Prospecton Plant in Durban will generate around R 2.85-billion a year in local component purchases.
T
oyota South Africa Motors (TSAM) announced earlier this TSAM’s Executive Vice President of Manufacturing and year that it would be manufacturing and selling the brandManufacturing Support Group, Nigel Ward, adds that the new Corolla Cross... The model reveal, made by TSAM manufacturing of the new model will also include the development of President and CEO Andrew Kirby at the annual State of three new Tier 1 and a number of Tier 2 suppliers, which is a significant the Motor Industry (SOMI) address in January, follows the step towards the transformation of the automotive value chain. company’s announcement in 2019 that it was investing R2.43-billion in the production of a new passenger A significant milestone _________________ vehicle in South Africa. In addition to the investment, the “As announced at the Presidential local production of the Corolla Cross Corolla Cross aims to build on the Investment Summit in November also ushers in a couple of “firsts” for 2019, Toyota pledged to invest legacy of Hilux Toughness and will be TSAM’s manufacturing team at the R2.43-billion in the production of a Prospecton Plant. “This is a significant new passenger model, and I am so milestone for Toyota South Africa. It’s exported to 43 countries in Africa. ________________ pleased to say that we are making not often that we get to produce a good on that promise. We will be brand-new body shape in our factory; manufacturing this very model plus, it is the very first time that we will [Corolla Cross] in both right- and left-hand drive… on schedule… for South be manufacturing a Hybrid model which I believe will fast become Africa and the rest of Africa… right here at Prospecton! The Corolla Cross a very popular choice. And it’s the first time for us to manufacture is based on the acclaimed new Corolla TNGA platform and will be built on using the Toyota New Global Architecture (TNGA) – which allows us our passenger car production line alongside the Corolla Quest,” says Kirby. to keep up with global technology and trends,” says Ward.
AUTOMOTIVE
From a skills and manufacturing p o i nt o f v i e w, T SA M b e li e ve s that – besides being a crisis of unparalleled proportions – Covid-19 has inadver tently encour age d plant production teams to be more self-reliant. According to Ward, “Restriction on international travel
_________________ Covid-19 has inadvertently encouraged plant production teams to be more self-reliant. ________ ________ due to Covid-19 necessitated that we rely on local expertise on many elements of the project instead of flying in engineers from Japan and Thailand. To ensure that we are on schedule to commence production in October, we have had to do a lot of things ourselves, in addition to receiving support virtually from Japan and Thailand on some occasions. In terms of strategy, Corolla Cross aims to build on the legacy of Hilux Toughness and will be exported to 43 countries in Africa. The new model is also expected to push Toyota export volumes to about 15-20% per annum. Toyota is projecting growth of 7% per annum in the SUV market in Africa – offering significant growth opportunities to expand production of this new model. With the Prospecton-built Hilux already dubbed
The project will generate more than 500 jobs at Toyota.
“built for Africa” in some parts of the continent, the Corolla Cross has been strategically positioned to expand the local SUV line-up of Fortuner and C-HR. According to Kirby, "This is an ideal vehicle for our market. It provides an exceptional balance between drivability, roominess, comfort and high-tech features – truly a game-changing SUV. It combines everything you love about Corolla with the utilitarian and rugged aesthetics of a segment-leading SUV. Overall, the expectation is that the Corolla Cross will not only contribute significant sales towards the Toyota brand, but also accelerate the growth of the mini-SUV segment, increase the overall size of the passenger market in South Africa and give momentum to electrification technologies.”
Toyota has invested R2.43-billion in the Corolla Cross project.
www.opportunityonline.co.za | 1
Contents ISSUE 98 | JULY / AUG / SEPT 2021
06 08 10 16 18 24 30 38 46
SACCI FOREWORD Banishing corruption and building a competent state NEWS & SNIPPETS What has been and what is to come
10
ABILITY, AGILITY AND SUSTAINABILITY: WHAT MODERN GOVERNMENT CAN LOOK LIKE The Executive Mayor of Midvaal Local Municipality, Alderman Bongani Baloyi, is proud of seven consecutive clean audits and believes that stability and good systems are vital in attracting investors GUIDING THE TRANSITION A recent special meeting of the South African Local Government Association (SALGA) focussed on renewal in the runup to elections THE KEY TO A SUCCESSFUL ECONOMY IS A BETTER BALANCE OF SMES As financier Business Partners Limited marks its 40th anniversary milestone, Managing Director Ben Bierman reflects on how the local SME sector has still not reached its full potential ACHIEVING ECONOMIC RECOVERY THROUGH A BRICKS-AND-MORTAR PATH Researcher and writer Sello Mabotja investigates how infrastructure investment is set to play a leading role in reversing the effects of the Covid-19 pandemic and weathering the simmering economic maelstrom SOUTH AFRICA’S PETROLEUM BILL: WILL IT RETAIN AND ATTRACT INVESTORS? Nonkululeko Zondo and Callie-Jo Bouman of Bowmans run the rule over the latest draft of the Upstream Petroleum Resources Development Bill which has come before parliament
30
POLICY NEEDS TO MATCH INFRASTRUCTURE FOR AFRICA’S TRADE TO THRIVE Hubs around ports and links to transport corridors will enable the newly-minted African Continental Free Trade Area to thrive, as a recent report by Dianna Games shows INVESTMENTS IN ESTATE PROPERTIES ARE PROVING THEIR WORTH A new review by New World Wealth selects 10 of the best lifestyle estates in the world, with three South African estates listed Quarterly journal for business and industry in South Africa
www.opportunityonline.co.za
JULY/AUG/SEPT 2021 • ISSUE 98
46
38
INFRASTRUCTURE INVESTMENT ESTATE PROPERTIES
Public and private players are aligned to make it count
Ten of the best
What AfCFTA means for transport and logistics JOIN US ONLINE SMME Virtual Roadshow
AGILE AND RESPONSIVE LOCAL
GOVERNMENT Opportunity interviews Midvaal Executive Mayor Bongani Baloyi
ABOUT THE COVER: Three significant assets in the Midvaal Local Municipality are shown on the cover: the wall of the Vaal Dam (Credit: Vaal Explorer); the Heineken brewery (Credit: Heineken); Bass Lake (Credit: Burnesseo Internet Marketing Service: www. burnesseo.co.za)
ADVISORY SERVICES
Mint Fresh Advisory Services Founder Thuli Magubane reflects on the popularity of innovation workshops for entrepreneurs and small businesses.
W
hen Thuli Magubane bought a shelf company in 2010, she liked the “Mint Fresh” part of the name and so that’s what this 100% black women-owned and managed boutique management consulting firm became, and it’s a name that’s become a trusted brand over the last 11 years. Mint Fresh Advisory Services arose out of Thuli’s desire to expand her horizons, something she’s been doing ever since she switched from studying politics to commerce. “I knew I was going to go into business from that time,” says Thuli. Her first business was in BEE consulting but because she didn’t want to get boxed in, she had a five-year stint in banking with Absa and Investec before launching Mint Fresh. The company offers a wide range of services from strategic and business planning, project management and market and customer strategies to financial advisory services. When the company evolved over the years, Thuli found that she had come full circle. “I found myself back in the BEE space with the focus on enterprise and supplier development.” In the early days, getting clients’ trust was tough. "'Who is this Mint Fresh?' It takes time to build trust and a rapport.” As the company built up a portfolio of work, Thuli found she could use successful projects as a reference point. “The more you do, the easier it becomes,” she says of those early days. A successful programme with Sasol showed what can be achieved. Young people were selected for an Entrepreneurship programme programme which was run by Mint Fresh while Sasol donated equipment and made facilities available at an incubator at Sasolburg.
Thuli Magubane
Biography Recognised in 2018 by the Entrepreneur Magazine as one of the top 50 businesswomen to watch in South Africa, Thuli was also selected by Money Today SA as one of the country’s Top 12 businesswomen in 2019. Thuli is a graduate of UCT, having majored in Political Science, and holds a Postgraduate Diploma in Management (PDM) from the Wits Business School. She completed a Master’s programme in Leadership and Strategy at Instituto de Empresa (IE) Business School in Madrid, Spain.
Services Sometimes corporates ask the company to find a small business as a supplier, but Mint Fresh is also asked to assist or train SMMEs that the larger company has already identified. In the case of a taxi association in the Northern Cape, Mint Fresh helped the group register as a company (as a prerequisite for trading with the mining company) and advised it on systems and compliance issues. Clients include Nedbank, Standard Bank, Tata, South32, Sasol, the National Empowerment Fund (NEF) and Transnet. The fastest-growing aspect of Mint Fresh’s business is the series of workshops that it runs on innovation. “We focus on getting small businesses to think more about innovation and helping those with an idea but who don’t know how to implement it,” says Thuli. These sessions are generally sponsored by government or corporates, who contract Mint Fresh to offer the service, which is about to be rolled out in rural areas. There are practical benefits. As Thuli asserts, “At the end of the workshop, participants walk away with a concrete action plan.” Thuli credits mentors who have helped her as an individual and supported her in her career path. Now mentorship is built into programmes that Mint Fresh offers to entrepreneurs. “We work with people who are currently running their own business and are willing to make the time to mentor,” she says. Having mentors spread around the country is an advantage because participants on Mint Fresh programmes can then “engage with someone who can direct them and they can introduce them to a network”. Mint Fresh Advisory Services Office: 63 Braam Fischer Drive, Ferndale, Randburg | Tel: +27 (011) 086 0629 Email: info@mintfreshas.co.za | Website: www.mintfreshas.co.za
EDITOR’S NOTE
Midvaal shows the D
way
elivery and accountability are buzzwords that take on extra weight in the time of elections. With local elections due to take place across South Africa in 2021, Covid-19 permitting, citizens are increasingly becoming aware of how directly their lives are affected by the performance of local government. The decision by Clover to close its cheese-making factory in the North West town of Lichtenburg was a depressing but predictable reminder that the quality of local government is vital to business. Although the town is the administrative centre of the Ditsobotla Local Municipality, services had deteriorated to such an extent that the company felt it had no choice but to move operations to KwaZulu-Natal. The resulting job losses will be felt hard in the small town. Astral Foods recently won a court order to force the national government and Treasury to come up with a financial recovery plan for the Lekwa Local Municipality. The company’s poultry factory in Standerton has been badly affected by electricity outages and water shortages. In this context, it is heartening to read about the successes of the Midvaal Local Municipality, not only in attracting and working creatively with a major investor such as Heineken, but in consistently delivering services to its citizens and racking up a shining record in achieving clean audits. To read of Midvaal’s achievements is to be reminded that there are many public officials in South Africa who take pride in their work and who understand that they have a responsibility to provide for the common good. Infrastructure programmes have been touted as a possible economic saviour ever since the 2010 World Cup was held in South Africa. Could current plans actually start to bear fruit? Sello Mabotja interrogates this issue from page 24. Elsewhere in this magazine, the implications of parliament’s approval of the Upstream Petroleum Resources Development Bill are outlined (page 30) and an extract from a recent report by Africa-expert Dianna Games (page 38) looks at what the newly-minted African Continental Free Trade Area agreement (AfCFTA) will mean for the transport and logistics sectors. Africa and South Africa are seldom short of plans. The Mayor of Midvaal and his council have shown that plans can be turned into reality, and that’s good to know. John Young, Editor
4 | www.opportunityonline.co.za
www.opportunityonline.co.za Editor: John Young Publishing director: Chris Whales Managing director: Clive During Online editor: Christoff Scholtz Designer: Tyra Martin Production: Aneeqah Solomon Ad sales: Venesia Fowler Joy Peter Norman Robson Gabriel Venter Tennyson Naidoo Tahlia Wyngaard Administration & accounts: Charlene Steynberg Kathy Wootton Distribution and circulation manager: Edward MacDonald Printing: FA Print
PUBLISHED BY
Gl obal Africa Network Media (Pty) Ltd Co mpany 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 No portion of this book may be reproduced without written consent of the copyright owner. The opinions expressed are not necessarily those of Opportunity, nor the publisher, none of whom accept liability of any nature arising out of, or in connection with, the contents of this book. The publishers would like to express thanks to those who support this publication by their submission of articles and with their advertising. All rights reserved.
Welcome to South Africa’s
fabled diamond fields In 1870 diamond diggers proclaimed it the Republic of Klipdrift. Other towns in the area include Delportshoop, Longlands, Kutlwano, Sydney on Vaal, Ulco and Windsorton. Dikgatlong is the site of the first alluvial diamond digging in the region and is renowned for its excellent fly-fishing spots and luxury game lodges. The adventurous are encouraged to go in search of the Gong-Gong waterfall on the Vaal where the quiet river suddenly tumbles into a gully and fills out into a tranquil pool. MAGARENG MUNICIPALITY
SOL PLAATJE MUNICIPALITY
This municipality is named after the first secretary-general of the African National Congress and writer, Solomon “Sol” Plaatje. At the heart of Sol Plaatje Municipality is the bright metropolis of Kimberley, the capital city of the Northern Cape. The municipality also includes the towns of Modder River, Ritchie, Riverton, Beaconsfield, Kenilworth, Ronald’s Vlei and Spytfontein. Kimberley is a diverse city with a vibrant, colourful history. The city is renowned for its Big Hole and Mine Museum, the largest excavated hole on earth, and important archaeological discoveries; Kamfers Dam, a wetland that supports the largest permanent population of lesser flamingos; Wildebeest Kuil Rock Art Centre, a premier rock art centre with over 400 San rock engravings; and the sprawling and vibrant Galeshewe Township, the first and oldest township in South Africa.
The name Magareng is a Setswana word meaning “The Middle” and is derived from the fact that this region is literally in the middle of the country. Warrenton is an agricultural town located 70km north of Kimberley on the Vaal River and is the administrative centre of the municipality. Diamonds were first discovered in Warrenton in 1888. The town was originally known as Stanger’s Rest, then Fourteen Streams, but was finally named Warrenton after Charles Warren in 1880. PHOKWANE MUNICIPALITY
Phokwane embraces Hartswater, Pampierstad and Jan Kempdorp, originally named Andalusia. Hartswater is home to Olives South Africa and boasts a variety of nuts and local wines from Hartswater Wine Cellar. The town offers accommodation, leisure activities and historical attractions such as the burial site of Chief Galeshewe and the Women’s Memorial building. The town of Jan Kempdorp hosts two World War II concentration camps and lies in the heart of the Vaalharts Valley and irrigation area.
DIKGATLONG MUNICIPALITY
Dikgatlong is a Setswana name meaning “confluence”, referring to the place where the Harts and Vaal Rivers flow into one another. The hub of Dikgatlong Local Municipality, Barkly West, was founded as a mission village in an area known as Pniel, “Face of God”.
_____ ____ FRANCES BAARD DISTRICT MUNICIPALITY Tel: +27 (0) 53 838 0911 | www.visitdiamondfields.co.za
PROFILE
Frances Baard District Municipality is nestled in the north-eastern corner of the Northern Cape Province, and contains four local municipalities, namely Sol Plaatje, Dikgatlong, Magareng and Phokwane Municipality.
FOREWORD
Banishing corruption and building a competent state The virtues of meritocratic government are obvious.
M
Credit: Sasol
ore so, now than ever, South Africa needs competent bureaucrats running the state, from the municipalities right through to the top tiers of national government. Citizens are crying out for a competent state. Mint Fresh Advisory Services arose out of Thuli’s desire to expand her horizons, something she’s been doing ever since she switched from studying politics to commerce. “I knew I was going to go into business from that time,” says Thuli. Reeling this back to the national lockdown in March 2020, the country has witnessed tender corruption in the Covid-19 procurement process. SACCI has publicly advocated for the principle of a competent state and officials being appointed because they can do the job. The country cannot continue to operate in a situation where jobs for pals, nepotism and cadre deployment practices continue to prevail to the detriment of the country, its taxpayer base and its international image. The image is of a corrupt system which has attracted an international status of a country with junk-bond status, not investment grade status. During 2020, various pronouncements were made by SACCI calling for current practices to be reviewed.
Credit: Hannelie Coetzee/Brand SA
In December 2020 government listened to SACCI and published a government gazette which espoused the virtues of a meritocratic government. In recent weeks we have seen the President and even cabinet ministers talking to this subject. The Minister of Police has supported the principle of competency within the force. The first hurdle was always going to be bringing about a mind-set change from the top down and this is now starting to materialise. But this is not something that is going to happen overnight. It’s a
_________________ The years of patent corruption in government appear to be gradually coming to an end as the legal system is slowly catching up with the culprits.
________________
process which requires a gradual phasing out of people who are offered generous packages to step down, and for new best-ofbreed bureaucrats to be appointed. The argument that this is going to cost the taxpayers significantly needs to be brought into perspective. Government and state - owned enterprises currently deploy hundreds of billions of rand annually to consulting houses to buy the exper tise to manage their projects. Having this exper tise in-house will cost a fraction of this amount annually. Clearly, this does not require political savvy – it just makes business sense. The years of patent corruption in government appear to be gradually coming to an end as the legal system is slowly catching up with the culprits. Generally, we believe this augers well for South Africa, the economy and a bureaucracy we can all be Alan Mukoki, SACCI CEO proud of going into the future.
SMME VIRTUAL ROADSHOW PRACTICAL AND USEFUL INFORMATION ON SMALL, MEDIUM AND MICRO-BUSINESS IN SOUTH AFRICA.
TO REGISTER: Visit www.gan.co.za and then SMME Virtual Roadshow
Since 2014, the SMME Roadshow has supported small business in South Africa. Following the unprecedented challenges of 2020, Global Africa Network is relaunching the SMME Roadshow in a fully virtual, nationwide format. The SMME Virtual Roadshow, brought to you by Global Africa Network Media with Nemesis Accounting, SME Warrior and Aurum Wealth Creators, takes the form of presentations and practical guidance from thought leaders and experts in their fields. Presentations are pre-recorded for quality and convenience and presenters and their teams will be on hand to engage and interact with delegates. Delegates will also be able to network with other delegates. Who should attend? SMMEs requiring support and guidance on the following topics should attend:
ABOUT GLOBAL AFRICA NETWORK Global Africa Network Media (GAN) is an established authority on business development in South Africa’s nine provinces. GAN’s online products include its well-established B2B portal, www. globalafricanetwork.com, and its monthly business and investment e-newsletters, with a reach of over 53 000 subscribers. Each of the nine titles and the national journal, South African Business, has been utilised by all levels of government, parastatals, corporates, and national and provincial businesses. GAN is a specialist in small and developing business, and the company is a trusted partner of business chambers and other representatives of organised business in each province. For information on sponsorship opportunities, email info@gan.co.za
• • • • • • •
Access to funding Access to markets Business revival Training and skills development Compliance and regulatory Technology support Running a business
Each of South Africa’s nine provinces will be represented at the Roadshow, and will showcase incentives, services and opportunities available to SMMEs.
News & snippets Industry insights from the past quarter
Mamonkwe Trading is seizing the moment Mamonkwe Trading, a 100% black-owned company with a permanent staff complement of more than 150, is growing its footprint in a range of fields. Mamonkwe Trading is the mother body for a number of subsidiary companies trading under the same banner with the main focus being plant hire, mining rehabilitation, coal transportation and logistics. The business philosophy of founder and CEO, Robby Mogashoa, can be summed up as, “An opportunity presents itself for a moment to be seized by a prepared person.” The company was founded 14 years ago by this dynamic son of Limpopo’s soil. Says Robby, “We offer the right solution at a compatible rate. We distribute and deliver only high-quality products and services through reliable and efficient solution systems.” Clients of Mamonkwe Trading include Pan African Resources, Evander Gold Mine, Manana Chemicals, Eskom and Universal Coal.
Robby Mogashoa has been going beyond expectations since moving from a rural area to Kinross in Mpumalanga to look for opportunities. He started selling cars but then started a business providing services to Evander Gold Mine.
John Deere expands across Africa John Deere, the agricultural giant, announced in April 2021 that it will bring its construction and forestry product line back into its Africa Middle East branch. This expansion marks the first time that the John Deere construction products will be sold under the John Deere name in these 18 countries: South Africa, Botswana, Zimbabwe, Swaziland, Namibia, Zambia, Kenya, Uganda, Mozambique, Angola, Malawi, Tanzania, Ethiopia, Egypt, Rwanda, Burundi, South Sudan and Sudan. John Deere is taking full control of the marketing and support of its own branded construction products. “This expansion provides an opportunity for us to increase our global footprint in the construction industry, as we build upon our existing presence in Africa and deliver our product portfolio under the John Deere brand for the first time to these key markets,” says Jaco Beyers, Managing Director for John Deere Africa Middle East. “As we move into these new countries, we are delivering on what customers expect from the John Deere brand.”
Social ce in Energy E)
VENT
ble energy to io-economic ing social oners?
1 T/ 06-07am EDT
Inspiring the renewable energy sector
DRA Global lists on the JSE
Many energy projects have community participation and CSI projects but a new initiative wants to ensure that a real impact is made. INSPIRE (the Initiative for Social Performance in Renewable Energy) aims to ensure that Africa’s just energy transition delivers transformational socioeconomic benefits. The initiative was virtually launched in June by several companies and entities in the renewable energy sector. The participants in the venture are Synergy Global Consulting, Actis, Lekela Power, Biotherm, the South African Wind Energy Association (SAWEA) and the South African Photovoltaic Industry Association (SAPVIA).
The trading of DRA Global’s shares commenced on the Johannesburg Stock Exchange (JSE) in July, giving South African investors an opportunity to invest in the diversified global engineering, project and operations management company. Founded in South Africa in 1984, but headquartered in Perth, Australia, DRA Global operates mainly in the mineral resources sector, where it provides end-to-end integrated engineering, project and operations management services to customers developing and operating mining assets. The company’s primary listing is on the Australian Stock Exchange (ASX), and it also has operations across several key markets spanning Europe, Middle East and Africa, Asia-Pacific and the Americas. Valdene Reddy, Director of Capital Markets at the JSE, says DRA Global is the sixth company to list on the JSE in 2021, supporting the appeal of the Johannesburg-based bourse as a capital-raising platform.
supported by Actis, Lekela and Biotherm
in partnership with the renewable energy industry associations SAWEA and SAPVIA
JULY/AUG/SEPT 2021 • ISSUE 98 www.opportunityonline.co.za
JULY/AUG/SEPT 2021 • ISSUE 98
Momentum boosts women-owned businesses The country’s official unemployment rate currently stands at 32.6% and the Covid-19 pandemic will cause more job losses. In the spirit of bolstering small and medium enterprises (SME) in order to increase job opportunities, Momentum recently chose five women-led businesses to receive a share of R1-million as well as some invaluable coaching as part of its Budget Speech #AdviceForSuccess competition. Charlotte Nsubuga-Mukasa, Head of Momentum Brand at Momentum, says that SMEs make up 98.5% of formal businesses in South Africa, which means that successful SMEs can have a significant impact on our economy. The latest Momentum | UNISA Household Financial Wellness Insights shows that women were hardest hit by the lockdown. Just over a million either lost their jobs or were prevented from working. The Budget Speech #AdviceForSuccess competition asked people to nominate deserving, local woman-owned businesses. One of those chosen was The Trea Garden, an outdoor area and café based in Midrand (Gauteng), owned and run by Amanda Yoyo.
Vodacom’s launches VodaPay Super App Vodacom’s VodaPay Super App aims to be a game-changer for driving financial inclusion and economic growth in South Africa. Developed by Vodacom Financial Services in partnership with digital lifestyle services platform Alipay, VodaPay is an all-encompassing mobile payments solution that has been customised to meet the specific lifestyle and payment needs of consumers, businesses and tech developers. Developers and businesses of all sizes are invited to join the VodaPay ecosystem by building their own Mini Programmes. This allows them to leverage off world-class technology to accelerate digital engagement and increase access to market. The VodaPay Super App offers endless possibilities in acquiring new customers, trading, and advertising. These third-party downloadable sub applications run within the VodaPay Super App and are available to all consumers to enhance their lifestyle. Shameel Joosub, Vodacom Group Chief Executive Officer, says, “Since we announced the VodaPay Super App in July last year, we have made significant strides in developing this technology solution that will transform the fintech ecosystem in South Africa.
Fortress REIT kickstarts logistics strategy
Rand-Air aims for best fit
Fortress Logistics Real Estate’s commitment to develop over a million square metres of logistics assets over the next two to three years, effectively transforming the weighting of its portfolio to two-thirds big box logistics, came into its own in 2020/2021. “The strategy equipped South Africa’s largest supplier of logistics real estate with the ready-built runway to support key clients’ new supply and logistics strategies in response to the Covid-19 pandemic,” said Jason Cooper, Head of Development at Fortress REIT. Fortress Logistics Real Estate’s focus combined with its commitment to developing quality infrastructure at prime locations close to the airport and the Port of Durban saw all of its speculative buildings let. Increased roof heights and yard dimensions in logistics parks meeting increased global fire regulation, security and insurance standards underpinned Fortress Logistic Real Estate’s success throughout the Covid-19 period.
Rand-Air has announced a fleet renewal programme to ensure customers receive the best fit possible: “the right fleet, at the right time and at the right price”. Rand-Air, a supplier of air, nitrogen, power, flow (pumps), steam boiler and lighting solutions, is part of the global Atlas Copco Specialty Rental division. Having an up-to-date fleet allows for operational agility and is critical to the success of customers. “Continuous fleet renewal is imperative, as this practice enables Rand-Air to retain and effectively manage a constantly updated fleet of equipment – featuring the latest world-class technologies, improved lifespans, efficiencies, reduced environmental impacts and increased user-friendliness. Such a fleet reflects our ethos and tagline of “making agility count” for our customers, by ensuring lower operating costs, efficient production and sustainable profitability,” says Rand-Air Sales and Marketing Manager, Byrone Thorne. While the “best fit” offer is effective for short-term rental solutions, longer-term rental solutions may be more customised according to requirements. With more specific factors
Fortress’s Clairwood Logistics Park (pictured) concluded large deals with Kings Rest Container Group and African Sugar Logistics. The development of a 56 000m² container terminal within Clairwood for Kings Rest to be completed in September 2021 will extend the ability of King Rest’s existing container facility within the port of Durban.
taken into consideration, such as energy consumption, Rand-Air’s products may feature variable speed drives (VSDs) for enhanced energy efficiency over longer periods, Thorne explains.
INTERVIEW
Ability, agility and sustainability:
what modern government can look like
The Executive Mayor of Midvaal Local Municipality, Alderman Bongani Baloyi, is proud of seven consecutive clean audits and believes that stability and good systems are vital in attracting investors. Midvaal is a local municipality within the Sedibeng District Municipality in Gauteng. 10 | www.opportunityonline.co.za
What are the main economic activities of Midvaal? The main activities centre around manufacturing in the steel industry and manufacturing components, followed by some financial services and government services and trading. The manufacturing sector is positively linked to the steel industry with companies linked to downstream beneficiation. They tend to be small engineering companies and the mining sector has been a key contributor with Afrimat Mines and a few other quarries. Has your economy been affected by the problems in the steel industry? We struggled a bit when there were the challenges caused by the import of cheaper products from China. The immediate impact was that manufacturing production went down. Coupled with the unreliable electricity from Eskom and also the price of electricity, companies complained that it was making them uncompetitive. Our municipal income decreased because some companies went from running four premises to two premises so electricity revenue was reduced. What is council doing to assist existing businesses? Firstly, we must do our work, that is the most important thing for us to keep and retain or even attract businesses. I must ensure that efficient services are given which people are paying for. There is reliability and stability. When you go to a bigger company, then you can start intervening in specific ways. They might say, “Can we do a reservoir if the municipality does not have the money?” They build it and then donate it to the municipality. Then the municipality can look at a longer-term deal for water and electricity, assisting them to remain in the municipality. This is how we come up with practical solutions for growth. At most there must be two people and an executive committee which ultimately makes the decision to ensure that we remain competitive and agile in our ability to make decisions. Agile is not a word one often hears with regard to government. We often say to our businesses they must engage directly with our Head of Development and Planning. That is the first touch point. When there’s an escalation, it goes to myself and the Municipal Manager. That may result in a requirement for a decision by the mayoral committee or council so it goes back to the two people and one committee and a decision is to be made. If you are running at such a pace you make it nearly impossible for people not to want to invest in the area. Through word-of-mouth people say, in our area we had two calls and the issue was resolved, we met with the mayor. We made a compromise and we are moving ahead and a decision has been made. That type of agility is needed to ensure that we set the bar and ensure what a modern government can look like insofar as its ability, its agility and its sustainability. And start-ups? What we can do with regard to start-ups is very limited. We can streamline some of the procedures and the key question is which leg of these applications don’t require a permanent change of a land use. We might be able to go the consent route. What are the main economic sectors you are targeting? Residential has grown significantly. Farm portions are now settlements but that has also meant that the agriculture sector has declined. So we believe that with agro-processing and beneficiation down the value chain, we can harness the jobs that we need for the skill level of the unemployed. That way, it can be much more sustainable. The second part is tourism: with the biggest nature reserve in Gauteng and attractive water bodies, we can combine the wonders of nature with the political
Biography Repaying a debt Bongani Baloyi grew up on the East Rand and clearly remembers the bloodshed of the 1990s. He can remember the smell of teargas. His commitment to public service had its origins in those years. Says Baloyi, “I think it has been frustration from a very young age that things were moving very slowly. I realised that society is not the way it should be.” He quickly worked out that his mother having to work as hard as she did for little return was “a function of human control”. It became “important for me to change the one thing” that could improve the lives of people, and decided that politics was the vehicle. He was schooled at well-resourced, formerly white schools, partly through the drive of his mother to ensure that her first-born had access to education and partly through the generosity of sponsors. Many times someone came forward to assist. Throughout my school education various people assisted. The difficult part for me is that there are many people whom I don’t know how to say thanks today to, because they wanted to remain anonymous. “So much of my approach to help those who can’t help themselves is to try to repay this debt. I would not be who I am today without that help from those who assisted me through schooling.”
INTERVIEW heritage. We are not doing that very well at this stage; it is just a 20-minute drive from Johannesburg to enjoy all of these things. Please tell us the story of Heineken in Midvaal. Is this an example of partnership? Heineken is a great development. To date they have spent in excess of R7-billion in the municipality upscaling their facility and really gearing themselves to compete progressively. It was a flagship development. Now if you look around there’s so many other industries and businesses that have moved, some are part of the value-chain for Heineken. This is getting development going along the R59. Heineken has been a really good corporate citizen. We have partnered on some incredible CSI projects which have left a lasting legacy in the municipality from primary healthcare, monitoring vehicles and others. From the bulk services point of view there have been some interesting solutions. We are currently in a discussion with them about a 10MW solar plant. What is the R59 development? This is an iconic part of the municipality, demonstrating our intention to draw and attract business. The R59 is a major regional route which goes through the municipality from Johannesburg to the Free State. The route also hosts two-way infrastructure, one is a Sasol pipeline, the second part is the Rand Water pipeline that feeds Gauteng. We want to help industry develop along that spine. The R59 today is what Midrand was 10 or 15 years ago. These nodes have been identified for projects: Wildebeest Fontein, De Deur, Mamello, Waterval and Sicelo. Midvaal has received international awards for “excellence in investment and innovation” – what are the factors that won that award? It reflects the idea of service to the community, the strength of our governance in Midvaal that has created the stability and predictability and our agility in making decisions. In the Heineken experience, we had to work within different time zones when the executives from Heineken were sitting in Holland. We even signed an agreement which had penalty clauses where if we could not make decisions in a timeframe, then we would pay penalties. My predecessors started a very different strategy compared to everyone else. We started to operate outside of what people see as normal limitations. We started saying what do you need, let’s see how we can make it possible, and go the extra mile because we understand the importance of these developments. What are the most attractive opportunities for future investors? We want to engage with unlocking access to industries that are important for the future. Energy is incredibly important, whether it is through the traditional means or alternatives means or through waste-to-energy.
12 | www.opportunityonline.co.za
The Heineken brewery has expanded operations several times in recent years. Credit: Esaba Consulting Engineers
I believe grey water is the liquid platinum of the future. We should have innovative mechanisms to reutilise water in various stages in an efficient and effective manner. Finance is linked to technology and I think that municipalities should venture into integrating research and development in those industries. If a fintech company wanted to invest, would you have enough bandwidth? It has to start with finding a partner who is prepared to lay the foundation of the infrastructure. With Heineken we did not have a reservoir and a sub-station at first. We need an initial partner, then we would be able to get in other players later. How did your organisation achieve seven consecutive clean audits? Fortunately, I am head of a stable municipality which has the basic policies all in good working condition and the right institutional memory. What I had to do was build and improve the systems and processes. You need to worry about the thing that delivers consistency. It has brought the culture of performance, accountability and transparency but also we have a deeply embedded culture of compliance. On average, we are achieving 94% with our audits, year-on-year, so the system is also able to deliver. We are strengthening our governance: every year we are finding flaws and the Auditor General is assisting us to say you could improve in specific areas. This an opportunity to improve our systems. Are your staff proud of their record? Oh absolutely. All of them they would walk around with their medal if medals were presented every year! I think they know the public appreciates them. My responsibility is to remind them of the goal. When people tell us how wonderful and fantastic we are, I am the guy to remind them of the road still ahead, and what we still need to achieve. The worst thing is to believe the hype and drop your performance and your integrity and the respect that you have for the system and for the consumer we are working for. Those are the things we must guard against.
PROFILE
Midvaal Local Municipality Inclusively serving the needs of the community. Contact details Customer Services: 0861 643 8225 Fax: +27 (16) 360 7519 Email: via website Website: www.midvaal.gov.za
Fast facts Size: 1722km² Population: 111 600 Major sectors Manufacturing: 29.5% Financial and business services: 18.5% Trade: 14.5% Major routes R59 freeway (Midvaal's major development corridor); N1; N3; R82 Awards 2021 Golden Arrow award, PMR Africa 2021 Most proactive Mayor award in Sedibeng District 2020 Seventh consecutive clean audit 2018 Best Performing Municipality: service delivery satisfaction, GCRO survey Vision To inclusively serve the needs of our community.
Credit: Property24
Midvaal Local Municipality is one of three local municipalities within the Sedibeng District Municipality, located in the Southern region of Gauteng Province. The principal towns in the municipality are Meyerton, where the municipal offices are located, Daleside, Randvaal, Henley on Klip, Walkerville and De Deur. Natural features include the Vaal River and Dam, Klip River and the Suikerbosrand Nature Reserve.
Mission We strive daily to enrich the lives of our people, by: • Adopting a mindset of innovation to revolutionise the way we operate • Leveraging partnerships to realise our full potential • Driving sustainability within the local ecosystem • Growing the economy in Midvaal, premised on incubating entrepreneurship, socio-economic growth and environmental responsibility • Providing excellent and standardised service delivery for all • Prioritising the upliftment of our youth • Being an ethical and proactive local municipality • Elevating Midvaal to be the best and most attractive municipality in the country
www.opportunityonline.co.za | 13
LOCAL GOVERNMENT
Promoting women in business and giving youth opportunity The Midvaal Local Municipality is committing resources to uplifting women and young people.
Junior Council The Junior Council Programme is one of the ways in which the municipality contributes towards educating and developing the youth in Midvaal. It helps to fosters and create a sense of civic awareness and pride among youth. T his p ro gr amm e has h elp e d to p rom ote tolerance by introducing leaners to various cultures, languages and practices.
14 | www.opportunityonline.co.za
Midvaal Junior Council meets monthly to cater for academic activities from participating schools. After every meeting, the Junior Council debate different topics with an emphasis on citizen responsibility. Youth Council activities include but are not limited to: computer training programmes; learners’ licence preprogramme; “Donate 67 minutes” to cleaning up the results of illegal dumping; report-writing skills; life skills; active participation in community development programmes; conservation.
Sebenza Mbokodo Women’s Project The Sebenza Mbokodo Women’s Project was established in 2019 by the Midvaal Local Municipality Executive Mayor, Alderman Bongani Baloyi. Its primary focus is to provide access to funding, specifically to qualifying women-owned businesses that operate in the informal trading sector of the municipality. Through this project, womenowned businesses will not only be provided with funding but access to development where needed. Midvaal Local Municipality and Standard Bank Enterprise Development will fund the Sebenza Mbokodo Women’s Project. Both parties will contribute towards a fund which will be established by Standard Bank for the sole purpose of supporting this project. This collaboration is a result of both parties sharing the same sentiments and focus where business development is concerned. The partnership is built on the premise that the municipality intends to empower, capacitate and support women-led informal businesses. Funds from the Sebenza Mbokodo Women's Project Fund will be provided to qualifying women-owned businesses so that they can: • Grow their business • Be able to compete with formal business • Obtain materials and equipment for their business • Prepare business plans for future expansion • Provide goods and services to the current markets and to new markets • Obtain relevant training and experience to grow their business. Potential beneficiaries of the fund are all informal traders (unregistered women-owned businesses) operating from the township or town within the informal trading sectors operated by women with spaza shops, fruit and vegetables, food preparation and selling, hair salons, sewing and dress-making. Standard Bank is proud to be part of this project and will continue providing a zero-percent interest-free loan of R10 000 to qualifying SMMEs for 24 months. Through this partnership, the bank wants to see women entrepreneurship thrive through local economic empowerment. As a municipality that cares, the Midvaal Local Municipality is committed to creating a conducive environment for growth and development for all its inhabitants, businesses, residents, investors and other relevant stakeholders. Kgatelopele Youth Development Programme Midvaal is committed to promoting and supporting the development of the youth within its municipal jurisdiction through programmes that are aimed at: • Skills development and training • Entrepreneurship • Business development • Support for co-operatives and small, micro and medium enterprises • Support graduates who can’t find employment.
The Executive Mayor has identified youth development as one of the critical areas that needs intervention to alleviate the high unemployment rate, poverty and socio-economic ills. The programme trains youth in skills development, business administration and management, entrepreneurship, and sectorspecific technical skills. About R1-million was used for training and development, and R30-million worth of opportunities was set aside for this programme. Youths who graduate from the programme are considered and linked to job opportunities for further training programmes. The Kgatelopele Youth Development Programme was conceptualised and implemented with an objective to empower and capacitate the youth so that they can compete fairly within the municipality’s procurement processes and other business interests. Kgatelopele companies are continuing to express interest in municipal procurement opportunities and some have been awarded tenders. Some of the Kgatelopele companies participated in the “War on Leaks” programme which was implemented across the municipality. The municipality will continue to explore opportunities for Kgatelopele companies.
Tenacity brings success In the early days of the Kgatelopele Youth Development Programme, success rates were low but the drive of one enterprising entrepreneur to build a good business shows what can be done. When Alfred Taikie Ngaloshe (also known as Wes) decided to sign up for the programme, he didn’t just sit on his hands. Executive Mayor Bongani Baloyi remembers being “hounded” by the garden services entrepreneur, but also being hugely impressed by his “tenacity”. “He wanted a response on consecutive days. How do I do this, why is this like this, why is this like that,” recalls Baloyi. “He wouldn’t just wait for things to happen. He was really empowered and this is why this fellow is successful; the differentiator is the attitude.” In the 18 months since Wes joined the programme Woodpeckers Garden has expanded operations, bought new equipment and taken on staff. The company has also expanded into the construction sector. As Mayor Baloyi puts it, “When you see the passion and the drive then you realise why he is successful compared to the others in the group.”
www.opportunityonline.co.za | 15
LOCAL GOVERNMENT
Guiding the transition A recent special meeting of the South African Local Government Association (SALGA) focussed on renewal in the runup to elections.
S
Credit: SALGA
ALGA President Councillor T h embi Nk a dim en g c alle d for practical plans for improvement in municipal p er fo r man ce as th e S ou th African Local Government Association (SALGA) convened for a special National Members Assembly (NMA) in May. The hybrid two-day event brought together people from government, heads of Chapter Nine institutions, civil society and the research community with a limited number of delegates attending in person at the Radisson Blu Gautrain Hotel in Sandton, Johannesburg. The event was held under the theme, “Guiding the Transition: An opportunity to renew as we usher in the 5th Term of Democratic and People-Centred Local Government.” T he aim of improving ser vice deliver y was at the centre of deliberations. Co u n cill o r N k a d im e n g ( p i c t u re d ) stressed that prac tical ac tions plans would strengthen municipal capacity and performance, which in turn will help improve service delivery outcomes over the next five years of local government. “As we are all aware, the local government elections are scheduled to take place towards the end of October this year. It has therefore become necessary to prepare for the transition that municipalities will experience before, during and post the elections,” Cllr Nkadimeng said. As the fourth term of democratic local government nears an end, the NMA assessed preparations for the upcoming local government elections on 27 October and adopted a management and transition framework for the fifth term of democratic local government.
16 | www.opportunityonline.co.za
“Our intention is to ensure the development o f a co mp reh ensi ve p ro gr amm e o f guidance and support, in response to potential challenges that may be faced by municipalities during the transition.” Cllr Nkadimeng also announced that the Statutor y Af fairs Commit tee of SALGA was tasked with the role of draf ting governance and reputation management protocols that will guide the organisation’s handling of National Executive Commit tee (NEC) and Provincial E xecutive Commitee (PEC) members facing serious allegations of impropriety and unethical conduct. She added that the NMA would take these protocols a step closer to reality. Delivering the keynote address, Chairperson of the National Council of Provinces (NCOP) Amos Masondo pointed out that many countries across the globe and international institutions such as the United Nations (UN) regard South Africa as having one of the most progressive constitutions in the world. He said South Africa’s constitution enjoys high acclaim for how it defines a co n s t i t u t i o n a l d e m o c r a c y w i t h a three-tier system of government and an independent judiciary. “Under our constitution, a municipality has the right to govern, on its initiative, the local government affairs of its community, subject to national and provincial legislation,” said Masondo. Panel discussions triggered an exchange of ideas, collaboration and engagement on a broad range of topics in the field of local government. Panel moderators Sakina Kamwendo and Clement Manyathela were tasked with the responsibility of keeping the conversations on track throughout the two-day event.
LOCAL GOVERNMENT
Lechesa Tsenoli, Deput y Speaker of O n t h e s e d ay s , a l l 2 3 14 6 v o t i n g A critical reflection on the fourth term of the National Assembly (NA), emphasised stations around the countr y will open democratic local government the importance of SALGA’s Integrated from 8am to 5pm to assist new voters During discussion on this topic, SALGA Councillor Induction Programme (ICIP), to register and existing voters to check President Nkadimeng outlined the role which caters for newly ele c te d and an d, w h ere n e cess ar y, up date th eir of SALGA in supporting, promoting and returning councillors with the aim of registration details. improving local government in line with the organisation’s mandate. She honed in improving professional prac tice and Managing the transition on SALGA’s efforts to improve the financial institutional capacity in local government. reporting quality and processes of their Nkosinathi Mthethwa, Minister of Sports, Arts members’ municipalities across the country. The state of readiness for the electoral and Culture, spoke about the transformation After noting SALGA’s eight clean audits transition of South Africa’s heritage landscape. He in a row she stated, “With the limited Thabo Manyoni, chairperson of the Municipal emphasised that to build a truly non-racial, resources we have, we’ll adopt non-sexist, democratic and prosperous 10 municipalities per financial society, processes of removing the _________________ year, and take our expertise as vestiges of colonialism and apartheid SALGA to municipalities to assist. racism were important. “This Special NMA has witnessed We can’t be bystanders when we He also spoke on how cer tain realise that there’s a problem.” monuments, symbols, signs and an unprecedented and major Masondo said that despite the statues in public spaces carried a numerous critical local governance convergence of views that is ground- history of oppression and tyranny challenges that needed immediate and that it was important for South breaking for local government. attention, local government has Africans to begin having conversations made meaningful progress in on what their role should be in a Despite the complexity of using transforming the lives of the country’s democratic dispensation. black majority, who had been “Do we create a concentration this hybrid format of engagement, denied participation in political and camp of unwanted statues with a from a content perspective we economic life under apartheid. narrative or do we leave it to those “People who are saying that who still value them to preser ve all agree that we must not only there’s nothing at all that has been them thus running a risk of reigniting done are removed from reality. If o l d r i g ht- w i n g n a t i o n a l i s m b y adopt and embrace the Special you open a tap, there’s water, there’s privatising public property. Do we NMA Declaration, but also take electricity. There may be problems allow for a juxtaposition of these about supply and outages, there statues as it is the case in the Union bold and proactive steps to are roads, rubbish gets picked up Building where President Mandela regularly,” said Masondo is given prominence and centrality implement and accelerate it.” ________________ “This is not to say that there while Hertzog was moved to a less are no problems, problems are prominent space?” he asked. there but we must not also deny D r N ko s a z a n a D l a m i n i -Zu m a , the reality of things and progress that has Demarcation Board (MDB), briefed the NMA Minis ter of Co op erative G overnance been made since 1994.” on the delimitation of the municipal wards in and Traditional Af fairs (COGTA), spoke Professor Jaap de Visser, Director of preparation of the 2021 municipal elections. about the feasibility of conducting free the Dullah Omar Institute, University of Wards are delimited every five years in and fair elections in the shadow of the the Western Cape (UWC), recommended metropolitan and local municipalities for Covid-19 pandemic. political parties to improve their candidate electoral purposes caused by changes in She emphasised that while the country selection lists ahead of the 27 October the number of registered voters as a result was ready to hold elections in October, municipal elec tions, where councils of migration and the enrolment of new several other considerations, including the for all district, metropolitan and local voters on the voters’ roll. legal, socio-political, health and practical municipalities in each of the country’s nine “On the 1st of December 2020, the MDB would also be assessed. provinces will be elected. Cllr Nkadimeng brought the NMA to a handed 4 468 ward boundaries to the “ Po l i t i c a l p a r t i e s w o u l d h a v e t o IEC to prepare for the Local Government close, saying she was confident that the distinguish the opportunists from the Elections in 2021,” said Manyoni. discussions emanating from the NMA real leaders,” Prof De Visser said. “Political July 17-18 has been announced as the voter would translate into actionable strategies parties must ask themselves what should registration weekend for the local government to improve service delivery outcomes over disqualify a person to run for election.” the next five years of local government. elections taking place on 27 October.
www.opportunityonline.co.za | 17
SMALL BUSINESS
The key to a successful economy is a better balance of SMEs As financier Business Partners Limited marks its 40th-anniversary milestone, Managing Director Ben Bierman reflects on how the local SME sector has still not reached its full potential.
T
he positive role that small and medium enterprises (SMEs) play in the local economy has been raised time and time again and is largely undisputed. From providing employment opportunities, to solving business challenges, these businesses can offer an innovative and agile approach oftentimes lacking in larger companies. SMEs have, however recently had to overcome economic headwinds, even pre-Covid-19, due to a sluggish economy and, added to the recent challenges of the pandemic, will likely continue to face challenges such as the high cost of running a business, excessive red tape, access to markets, financing and technical knowledge. This is according to Ben Bierman, Managing Director of Business Partners Limited, a specialist risk finance company for formal small and medium owner-managed businesses, reflecting on the company’s past four decades in the local SME financing landscape. “Looking at various first-world economies, it’s clear that a good balance of different-sized businesses and equally distributed wealth in the business sector is crucial to a thriving economy,” Bierman points out. “In South Africa, most of the economic power has for too long been held by the large corporates, and for our economy to grow and thrive, a larger base of mediumsized businesses is required. This key shift, however, requires an ecosystem that better supports these businesses.” Bierman adds that Business Partners Limited is proud of the contributions made to the SME ecosystem, albeit more remains to be done. The year 2021 marks the company’s 40th anniversary, and
18 | www.opportunityonline.co.za
to date Business Partners Limited has provided R20-billion in finance to South African business owners via more than 71 000 transactions, which has in turn assisted in facilitating over 671 000 jobs in the country. Bierman says that over the past 40 years some of the key challenges that were facing the industry have remained and include a lack of financial literacy among business owners, non-compliance with legislation and the availability of collateral which hinders access to much-needed financing opportunities. The challenges are even more pressing today as SMEs battle to survive the current pandemic. He highlights some of the key changes he has witnessed, as well as urgent efforts that need to be taken by both South Africa’s government and private sector, in order to better support SMEs as the country paves the road to recovery:
Tshepo Mekoa’s business Brima Logistics was expanding until Covid-19 hit, then he had to adapt and show resilience. One of the sources of support finance for the business was an emergency loan from Business Partners Limited.
THERE ARE MANY BUSINESS FINANCIERS OUT THERE. BUT NONE LIKE US. So, who are we? We’re the company that’s been supporting and financing business owners for over 40 years. That’s longer than some of Africa’s largest banks have existed. We’ve provided over R20,5 billion in tailor-made finance to small and medium businesses. Helped facilitate over 658,000 jobs and counting. With finance from R500,000 to R50 million, imagine the potential we can unlock in your business. Apply for our specialised business finance at businesspartners.co.za
MINIMUM 2 YEARS IN BUSINESS
R500K TO R50M BUSINESS FINANCE
UP TO 100% PROPERTY FINANCE
SMALL BUSINESS
_________________ “As a business, this responsiveness has contributed greatly to us remaining relevant over four decades. With the disruption caused by Covid-19, we have had to respond to what our clients tell us and introduced a variety of relief initiatives aimed at SMEs." ________________
Harness technology to become more client-centric and give support quicker and more efficiently There have been great forces of change in the macroeconomic environment and the biggest driver of change in the past few years has been technology. Due to improvement and access to technology, we have had to adapt to doing things quicker to meet client demand in terms of decision-making and support. Big data, fintech and systems play an ever-increasing role in shaping the way financial institutions operate, especially to improve the understanding of the client’s needs and the ability to assess business risk. Red tape to be trimmed to increase ease of doing business SMEs often lack resources within their organisation to deal with legislative red tape. Often the entrepreneur or business owner spends more time jumping through administrative hoops rather than focus on running their businesses. Cumbersome legislation often becomes the biggest stumbling block for SMEs to develop access to markets, improve the ease of doing business, grow their businesses, or create much-needed jobs. It’s more important now than ever to invest capital and other resources into SMEs, as well as cut some of the red tape that exists in the legislative environment that makes it difficult to grow and create jobs. In comparison to big corporates, SMEs can often create more jobs at a lower cost. Innovate and adapt to meet needs of SMEs In this ever-changing and uncertain environment, it is difficult for any business to commit to a long-term plan. By staying close to and prioritising SMEs, both government and the private sector can better respond to SME needs and thereby contribute to a greater survival rate for these vital businesses.
20 | www.opportunityonline.co.za
About Business Partners Ltd Business Partners Limited (Business Partners Ltd) is a specialist risk finance company for formal small and medium ownermanaged businesses in South Africa and selected African countries. The company ac tively supports entrepreneurial g ro w t h b y p ro v i d i n g financing from R500 000 to R50-million, specialist Ben Bierman, Managing Director, Business Partners sectoral knowledge, business premises and added-value ser vices for viable small and medium businesses. Since its establishment in 1981, Business Partners Ltd has provided business finance worth over R20billion in over 71 600 transactions facilitating over 671 000 jobs. Business Partners Ltd was named the 2019 Gold winner in the SME Bank of the Year – Africa category at the Global SME Finance Awards. Visit www.businesspartners.co.za for more information.
www.opportunityonline.co.za | 21
SMALL BUSINESS
Fuel for growth Why access to capital is important for SMEs
R
egardless of the size of your company or how great yo ur p ro du c t might b e, at s o m e p o int every business will need more finance than they have immediately available. When this happens, accessing additional funding will help to give your company the fuel it needs to grow. It may seem counterintuitive, but Trevor Gosling, co-founder and CEO of Lulalend – financing partner to South Africa’s smallto-medium enterprises (SMEs), explains that fast access to capital plays an important part of any business growth strategy. Gosling says that there is often a misconception that all debt is bad or that it is only used by struggling companies. “In fact, the opposite is often the reason why some of the world’s largest companies routinely seek capital infusions to drive growth, keep profits within the company and assist with short-term financial obligations.” When raising funds, the financing option selected will play an important role in determining how a business accesses capital and its long-term profits. “For business owners, debt can help to improve the bottom line of a company because it makes expansion possible. It can enable increased marketing efforts or the purchasing of new equipment and products,” says Gosling. Loans can also support seasonally-driven companies that are often extremely profitable during peak-season trading but need the extra cash to buy inventory and supplies during the quieter months. This is where debt can help to bridge the gap and balance out uneven cash flows throughout the year. Generally, the two most common ways in which debt is raised are through selling equity in the business or with debt financing.
22 | www.opportunityonline.co.za
For many of South Africa’s burgeoning SMEs, what matters most is the overall cost of business funding and the speed at which it can be acquired. While both financing options can help to give access to capital, using debt to support growth rather than equity is generally preferred. As Gosling explains, “While you will owe interest on debt, unlike equity, the funding that it provides doesn’t mean you will have to lose a stake in your business. Any profits that are made will be yours to keep.” Additionally, if you choose to take on a partner to increase capital, it will also mean that you lose full control of your business and you will be asked to share profits in the future, which for many fast-growing start-ups is not an attractive option. While fixed-term loans are a great tool to finance inventory or e quipm ent purchases, an increasingly p opular debt instrument is a business line of credit, or Credit Facilit y. Gosling says that a Credit Facility is one of the best ways to manage cash flow, especially if a business needs immediate access to funds to cover short-term expenses while waiting for customer payments. Have a plan to use additional funding If you manage your debt responsibly by making on-time payments, this can also help to improve a business’s creditworthiness. In turn, these smart credit habits can help to increase your overall spending limit, lower future borrowing costs, and help you to obtain better terms for future loans. “The critical step that business owners need to consider before taking on any form of debt is to ensure that they have a plan on how to use any additional funding to generate a return and improve profits,” Gosling explains. “If you don’t have a plan, or if you feel that the company is struggling financially, taking on debt for the wrong reasons can cripple your business,” he adds. To assist businesses to recover and grow during these difficult times, Lulalend is offering its first-time customers the opportunity to take out funding but only start repaying after 60 days, which gives them two months of cost-free capital. “It is not just about your bottom line. If done correctly, responsible debt can grow your company and give it the strategic advantage needed for a profitable future,” says Gosling.
INFRASTRUCTURE
Researcher and writer Sello Mabotja investigates how infrastructure investment is set to play a leading role in reversing the effects of the Covid-19 pandemic and weathering the simmering economic maelstrom.
_____________________
“Government recognises that infrastructure investment is a critical driver for the future growth of the South African economy. South Africa requires a catalytic kind of infrastructure investment that will contribute to higher long-term growth, and address spatial disparities, transform the economy and create much-needed jobs.” - The Presidency ____________________
24 | www.opportunityonline.co.za
INFRASTRUCTURE
ACHIEVING ECONOMIC RECOVERY THROUGH A BRICKS-AND-MORTAR PATH
Giant cranes shift thousands of tons of coal every year at the Richards Bay Coal Terminal. Credit: RBCT
T
he ubiquity of the “I” word in South Africa’s economic recovery lexicon permeates almost all plans when strategies about how to arrest the decline plaguing the domestic economy are mooted and discussed. Infrastructure-led economic growth and development appears to be on the cusp of being the in thing and it is often touted as a key driver of envisaged economic recovery. But this newfound panacea will not be a plain-sailing exercise as there are hurdles which still need to be overcome. In the next three years, an amount of R791-billion has been allocated to spending on infrastructure and this includes expenditure by State-Owned Enterprises (SOEs). This is in line with
the objective of shifting expenditure from consumption to investment and over the medium term, expenditure on capital assets is intended to grow by an estimated 12.5%. Infrastructure spend has over the years declined below 20% of total spending but government aims to increase its level to 30% by 2030 in order to achieve the targets set in the National Development Plan (NDP). A precipitous fall in investment has been the Achilles’ heel of infrastructure development, which according to a Business Leadership South Africa report, has declined from 20.3% of GDP in 2015 to 17.9% in 2019. The report notes that public sector spending was 27% or R70 billion below budget in the 2019/20 financial year compared to the previous year.
www.opportunityonline.co.za | 25
INFRASTRUCTURE
One of the major areas of focus of the national infrastructure programme is student accommodation, as illustrated by this new development at the University of Fort Hare. Credit: Stag African
Increased spending on infrastructure is therefore a sure signal that the domestic economy is on an expansion trajectory and economic activity is on the rise. In the long run, improvements in productivity may be achieved and this will drive sustainable economic growth, which leads to a faster pace of job creation. The ultimate result is to achieve stabilisation and recovery of government finances. Amid a mixture of economic misfortunes include worsening unemployment, rising poverty and inequality, and sovereign debt downgrades by three rating agencies, South Africa also experienced a record contraction of the Gross Domestic Product (GDP) in the second quarter at the worse-thanexpected 51% at seasonally adjusted annual rate — which is disconcertingly the fourth consecutive quarterly contraction. Enter the Covid-19 pandemic era and a major spanner is thrown into these works, already in disarray. Unlike in the past where a smorgasbord of unrelated avenues were being touted as the panacea for the ailing economy, there is now a single view that massive investment in infrastructure will undoubtedly turn the fortunes of the economy around. Some of growth path alternatives punted as a saving grace for the near-parlous economic situation included the tourism and hospitality, beneficiation and trade sectors. However, none of these have delivered as expected. There are strong indications that players in both the public and private sectors agree on this issue. The ruling party has been among the leading proponents of this bricks-and–mortar approach as a way of negotiating the economic pathway. Paul Mashatile, ANC Treasurer-General, recently went public and punted infrastructure spending as the main tool that will ensure that the ruling party keeps most of its electoral promises and thus fulfils its mandate. “When voters cast their votes, it is not so much about what a party promises to deliver but they are actually looking at what has been done,” he said.
26 | www.opportunityonline.co.za
Addressing Chatham House, the London-based think-tank, on prospects for the growth of the domestic economy, especially in the aftermath of the Covid-19 pandemic, Mashatile noted that the current health crisis has exposed gaps in the provision of infrastructure and basic needs such as healthcare, education, public transport, roads, water and housing. Unofficial estimates are that the country may need about US$100-billion to recover from the coronavirus outbreak. “Our point of departure is that the new economy we are building must be more inclusive, resilient and sustainable. We have taken the view that in building a post Covid-19 economy, we need to go back to the fundamental insights contained in the Reconstruction and Development Programme (RDP) of the early 1990s.”
Private sector role Against this background, government has engaged the private sector and the multilateral development banks and designed an infrastructure project pipeline totalling more than $20.5-billion (an estimated R350billion), focusing on network industries such as rail and ports, energy, ICT, water, sanitation and human settlements. In the 2021 Budget the government’s Infrastructure Fund was allocated a whopping R18-billion over the next three years, This is part of the R100-billion committed by government over a period of 10 years. Managed by the Development Bank of Southern Africa (DBSA), the fund intends to leverage R10 from the private sector for every R1 spent by government. The ultimate aim is to achieve a R1-trillion infrastructure spending programme and transform public infrastructure financing through this blended finance approach. The DBSA advanced close to R635-million as part of the capital to set up this R100-billion fund. An estimated 177 projects across the public and private sectors are already under consideration. Having taken some time prior to being established after being mooted by the President in September 2018, work has now started on three major projects: student housing, water infrastructure and digital infrastructure. The establishment of the Infrastructure Investment Office (IIO) last year by President Ramaphosa is further evidence that economic recovery may hinge overwhelmingly on big investment in this area and adds further impetus to the infrastructure spending drive. Led by Dr Kgosientsho Ramokgopa, the former Gauteng MEC for Economic Development, this agency hit the ground running with the hosting of the Sustainable Infrastructure Development Symposium (SIDS) in June 2020. Notwithstanding all these laudable initiatives on the part of government, the main challenge appears to be the details of the financing of infrastructure spending. While experts are upbeat about this economic direction, some have expressed concerns that the tight national purse may affect the efficacy of this drive. Says Siyanda Mflathelwa, Senior Infrastructure Finance Transactor at Rand Merchant Bank, “The government has stated that infrastructure development is one way to revive the ailing economy. Given the fiscal
YOU SEE
AN INDUSTRY BEING TRANSFORMED
WE SEE
WHAT WENT INTO THAT Putting eager minds in touch with the training that can change their lives and transform an industry is a passion at PPC. That’s why we are training the next generation of bricklayers and plasterers to fill an urgent industry need, and it’s why we say: Together We’re Stronger
PPC CETA ACCREDITED TRAINING COURSES - BRICKLAYING - PLASTERING - CONSTRUCTION MANAGEMENT SHORT SKILLS PROGRAMME
130 hours
CLASSROOM TRAINING
80 HOURS
ONSITE TRAINING
129 years
EXPERIENCE
www.ppc.africa 0800 236 368
INFRASTRUCTURE constraints the government is facing, it seems that public-private partnerships may just be the appropriate tonic.” Shawn Hagedorn, an independent strategy adviser, argues that a feasible growth plan should be the main anchor of the country’s economic recovery if infrastructure is to have the desired effect. “None of our leaders has produced a viable growth plan, yet many support ramping up infrastructure projects to spark jobs and growth. While it is unrealistic for any country to expect infrastructure investment to spur growth without a plan, SA has special challenges. If we view the global economy as a computer network, the cost of upgrading SA’s hardware is high, whereas exceptional performance gains are to be realised through better network integration,” says Hagedorn. Hagedorn’s main concern is what he calls South Africa’s “central political-economic disconnect”, which he explains as a situation that is a diametric opposite of all successful economies worldwide which thrive through extraordinary integration into the global economy. He blames the failure of the domestic economy’s ability to take off on the ruling ANC’s strong emphasis on redistributive economic policies which focused predominantly not on global competitiveness but redressing economic inequities without concomitant growth, failure to embrace possibilities due to focus on correcting legacies as well as an incessant debate of the imperfections of successful policies as opposed to adopting and adapting those prescriptions. “The country’s meagre growth prospects are due to overreliance on domestic spending, despite most households being poor. Government efforts to induce growth have been expensive, ineffective and unsustainable in the decade preceding the Covid-19 pandemic, households and government became over-burdened with servicing expensive debt, while GDP growth barely tracked population growth. We are far along the path of triggering mutually reinforcing debt and poverty traps.” Notable successes for PPP The exploration of the infrastructure-led economic growth path is, however, not a novelty. In 1998 the new public-private partnership framework was inaugurated with the view to boosting the overall wellbeing of the domestic economy. Using a hybrid mix of private and public sector funding, estimates are that R90-billion has to date been procured via
Private steel fabricator and steel erector Betterect has recently invested in semi-portable cranes by RGM Cranes. Credit: Betterect
28 | www.opportunityonline.co.za
this framework and government contributed at least R30-million to the kitty. The model allows for the crowding in of public sector investment and the acute shortage of funds on the part of government is addressed as a result. Among the most notable successes of the PPP framework is the Gautrain Rail Link Concession. Although there appears no dissonance regarding this developmental paradigm, some hurdles along this laudable recovery path need to be tackled. For instance, the market should not be forced to invest in low-yield, high-risk projects but those which link funding to performance. Also, the use of any sort of legislative instruments to force the market to direct its investments into a sector for which its appetite is next to nothing may create a huge disincentive. In a nutshell, any form of a prescribed assets regime may seriously stifle the investment spending drive. According to infrastructure investment expert, Jurie Swart, CEO of African Infrastructure Investment Managers (AIIM), the private sector has an appetite to partner with the government on its massive and unprecedented infrastructure investment drive. However, he points to the urgent need for high-level discussions to iron out the finer details of the initiative, especially the governance procedures. He adds that his organisation will, as the most experienced private equity investment partner on infrastructure development on the continent, with an estimated $2.1-billion under its management in seven savings funds, be meticulous before it commits funds to any project. “We are the custodians of South Africa’s savings and it makes sense that these savings are committed to sustainable projects that offer appropriate risk-adjusted returns. These should improve the economic wellbeing of the savers,” says Swart. Despite concerns about rampant malfeasance and shoddy corporate governance, government has in some instances notched up an impressive record in managing PPPs. A case in point is the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which boasts an estimated R7-billion in investments to date. Commercial banks have also added close to R90-billion in this programme in a bid to ameliorate the funding challenge. As infrastructure spending gains impetus, construction and engineering group WBHO is among its earliest beneficiaries and has been awarded a R1.88-billion public-private partnership contract to build a new accommodation office for the Department of Rural Development and Land Reform. Maybe government has finally found a path that will navigate the domestic economy out of the doldrums and enable it to take off to greater heights of prosperity. As KH Plant, a specialist construction equipment company, noted in its 2021 Outlook for the South African Construction Industry about the prospects of government’s infrastructure endeavours coming to fruition and powering the domestic economy to the long-awaited recovery: “Despite the country’s economic standing, the fundamental need for infrastructure remains. Demand is high for better and more roads and other transport options, housing, power and other utilities and so on. Government has already committed to using infrastructure projects to drive post-Covid-19 economic recovery.”
CONSTRUCTION
Delivering high-quality services and products Mamonkwe Trading goes beyond expectations.
M
amonk we Trading is a supplier of top quality products and services within the indus tries of logis tic s, plant hire and projec ts, contrac t mining and mining services. With specialised skills in these sectors, we offer the right solution at a compatible price. We distribute and deliver only high-quality products and services through reliable and efficient solution systems. Mamonkwe Trading is a black-owned multi-dimensional services and products supply corporation based in Mpumalanga, with offices on Winkelhaak Farm, Evander. Mamonkwe Trading is a distinctive beacon in the industry because we go beyond expectations in delivering a service to our clients. Based on our humble beginnings, we are committed to giving back to our community as part of our social responsibility.
Our Mission Is to provide high-quality products and services that meet our clients’ specific needs and provide valuable advice on our products to assist our clients to save on operational costs. Furthermore, we aim to deliver back to our communities as part of our social responsibility obligations through outreach initiatives. Our Vison Is to be a leading corporation that provides a diversified service offering in the various fields such as distribution, logistics and equipment supply in South Africa. Through tireless provision of high-quality products and services, we will ultimately grow our business into our neighbouring countries and beyond. Heavy-duty equipment We offer high-quality heavy-duty machinery: • Compaction equipment • Demolition equipment • Drill rigs and rock drills • Moving equipment • Crushing and screening (bulk material handling) • Generators and lighting tower plants Transport We specialise in the transportation of aggregates, earthmoving equipment and access equipment.
Our services We have a diversified service offering which is provided to various industries such as the energy industry, the mining industry, the logistics industry, earth moving, rehabilitation and the construction industry. Earth moving Plant hire, construction, transportation, excavation, crushing, screen plant and dry bulk material handling. Civil construction • Mining and mining reclamations • General building • Mass excavating • Conveyor-belt maintenance • Bulk water supply and dam cleaning • Shaft plugs • Shaft demolition • Concrete works and road works • Rehabilitations Our team Mamonkwe Trading is a young, dynamic and adventurous company that was established by young professionals who saw an opportunity to establish a company that will empower young professionals while contributing to the economy. We encourage the idea and fundamental purpose of black empowerment in the new era of entrepreneurship. The main goal of Mamonkwe Trading is empowerment and contribution to the economy of South Africa and also to the global economy in the transportation/logistics, mining and plant-hiring industries with a new dynamic way of doing business. We have over 10 years of collective experience and skills in leadership and senior management positions, in both small and large businesses, and are therefore geared to tackle the transportation/ logistics, mining and plant-hiring industries head on.
Mamonkwe Trading CC Address: Portion 54-55, Winkelhaak Farm, Evander | Tel: 017 200 2018 } Fax: 086 591 5155 | Email: info@mamonkwe.co.sa | Website: www.mamonkwe.co.sa
www.opportunityonline.co.za | 29
ENERGY
South Africa's Petroleum Bill Will it retain and attract investors in the sector? By Callie-Jo Bouman and Nonkululeko Zondo, Bowmans
T
he latest draft of the Upstream Petroleum Resources Development Bill has come under scrutiny since its publication in June 2021. The bill comes at a time when South Africa's upstream oil and gas industry shows promise, as evidenced by the Brulpadda and Luiperd prospects discovered in 2019 and 2020, respectively. Simultaneously, the role of fossil fuels in the future of energy is under question in light of the global aspiration to reach net-zero carbon emissions by 2050. Notwithstanding the mounting pressure to reduce reliance on fossil fuels, the upstream oil and gas sector still plays a vital role in South Africa's energy policy and goals to achieve an “energy mix” that is not reliant on coal. The objectives of the bill include: • expanding opportunities for meaningful black participation • promoting local employment and skills development and • creating an enabling environment for the acceleration of exploration and production of the nation's petroleum resources. Some of the bill's key features include mandated state participation of 20%, 10% participation by black persons, and the empowerment of the Petroleum Agency of South Africa to administer the development of the upstream petroleum industry. Existing rightsholders will perceive the bill differently from those new entrants to the industry who will be governed entirely by the bill once it comes into operation. Existing rightsholders will be guided by the detailed transitional schedule, which will guide current asset holders’ compliance and ensure the security of tenure in respect of existing rights.
Credit: Anton Swanepoel
30 | www.opportunityonline.co.za
The impact of state participation Under the Upstream Petroleum Resources Development Bill (UPRDB), the state has 20% right to a carried interest in petroleum rights, including both the exploration and production phase. The state's participation includes a cost-recovery mechanism, which will allow the exploration company to recover 50% and 100% of the state's proportionate share of exploration and production costs. This cost recovery mechanism is indicative of the state's willingness to accept some of the risks associated with the exploration efforts that involve high sunk costs, which are often upwards of $100-million, and often no guaranteed return. The challenge, however, is that these costs must be recovered from the state's share of production
ENERGY or revenue generated from the project. Where the project does not move to the production phase and generate revenue, there will be no cost recovery. Even where the project generates revenue, it is debatable whether the entire portion of the state's returns will be capable of being allocated to cost recovery, which will extend the repayment period. National Treasury has not yet commented on the bill and we expect that the exact cost-recovery mechanisms will be detailed in subsequent regulations. Still, it will be interesting to see how these cost-recovery mechanisms will interact with the capital uplift and other tax deduction provisions in the Income Tax Act's Tenth Schedule for oil and gas. The interplay between the Income Tax Act and the cost-recovery mechanisms presents a further opportunity to introduce a more attractive fiscal package to potential investors. A further change proposed by the UPRDB includes giving the state an active role through joint operating agreements (JOAs) that must be entered into with the state. The state is entitled to voting rights corresponding to their 20% participation. Depending on how the voting processes of the JOA are structured, this may encumber the exploration company's interests. While creating more transparency and reducing the asymmetry of geological and commercial information available to the state, this active participation may be perceived as being more cumbersome to the companies' commercial decisionmaking processes. For current rightsholders whose rights do not provide for state participation, these state participation provisions will only kick in when the company applies for approval to progress to the production phase in terms of the new bill. BEE participation In terms of the UPRDB, every petroleum right (which includes the exploration and production phase) must have a minimum of 10% undivided participating interest by black persons. The BEE participation is on full commercial terms, and BEE partners will be expected to fully fund their involvement at both the exploration and production phase. Whilst this is welcome news for investors, there is a limited pool of BEE
companies and partners that would be able to field the costs associated with exploration and production. As mentioned, exploration activities are often estimated to be upwards of $100-million, and a BEE company participating on full commercial terms will be expected to fund 10% of those costs (approximately $10-million). There may be instances where investor companies will have to provide nominal funding to structure their ventures to comply with the BEE provisions. In recognition of some of the funding challenges, the bill permits the dilution of the BEE interest to no less than 5% to raise capital. This dilution will not trigger any requirements to “top up” the BEE participation to 10% leading us to conclude that the “once empowered, always empowered” principle will likely apply to BEE participation. The Upstream Petroleum Resources Development Bill is a welcome intervention in the sector and moves towards creating certainty and clarity in the upstream regulatory environment. The bill also introduces greatly expanded and tightened regulatory processes for the industry. Still, it remains to be seen if investment communities will find this attractive and whether it achieves its objective to create an enabling environment that also meaningfully expands opportunities for black participation in the sector.
ABOUT BOWMANS Bowmans helps clients overcome legal complexity and unlock opportunity in Africa. Our track record of providing specialist legal services in the fields of corporate law, banking and finance law and dispute resolution, spans over a century. With eight offices in six African countries and over 400 specialist lawyers, we draw on our unique knowledge of the business and socio-political environment to advise clients on a wide range of legal issues. Our clients include corporates, multinationals and state-owned enterprises across a range of industry sectors as well as financial institutions and governments. Nonkululeko Zondo is an associate in the Corporate M&A practice at Bowmans, and is completing a PhD on oil and gas law at UCT. Callie-Jo Bouman is a candidate attorney in the Corporate M&A practice.
Credit: PASA
www.opportunityonline.co.za | 31
INTERVIEW
Making investment in the South African oil and gas sector as attractive as possible Dr Phindile Masangane, CEO of Petroleum Agency SA, outlines PASA’s new strategic objectives as interest in South Africa’s resources grows internationally.
What is the thrust of PASA’s new five-year strategy? The Agency has identified five new strategic objectives to enable it to effectively deliver on its mandate by capturing the opportunities presented by the changes in the environment as well as ensure that the Agency overcomes the challenges that it faces. These are: • Increasing exploration activity: to move the industry from a predominately exploration phase to development and production phase • Sustainability: to ensure the company has sufficient financial and human resources to carry out its responsibilities into the foreseeable future • Advocacy: to provide input into policy and regulations • Digital transformation: to adopt new, more efficient technologies • Operational excellence: to ensure efficiency of our process. These five strategic objectives will position the Agency as a strategic entity of government in its goal of diversifying the energy mix and developing the domestic gas market, embracing digitisation and automation to improve efficiency, rising to the requirements of the new legislation and finding a place in the global transition towards a low-carbon future.
What is the mandate of PASA in terms of being a “custodian” of the country’s oil and gas rights? PASA’s mandate is threefold. Firstly to attract investment to South Africa’s upstream industry, secondly to regulate the activities of oil and gas explorers and producers, and thirdly to act as the national archive and database for all data and information produced in the process of oil and gas exploration and production. The upstream oil and gas exploration industry requires technological capacity and is extremely high risk in terms of capital investment and needs long-term investment of resources. Many countries share the risk of oil and gas exploration and production with private companies, and South Africa follows this model. Government has designated PASA as the custodian of South Africa’s oil and gas resources. Its role is to attract these companies to our investment opportunities and facilitate their entry into operations in the upstream industry.
32 | www.opportunityonline.co.za
When will the moratorium on new applications for rights be lifted and PASA be open for new bids? As of December 2020, there is no longer a moratorium on applications for rights onshore, other than those for shale gas in a specified area covering the central Karoo. Other onshore applications continue to be received and processed in terms of the MPRDA. The moratorium for shale-gas rights and new offshore applications remains in place and is expected to be lifted with the enactment of the hydraulic fracturing regulations (for environmental management and water use) for the shale-gas extraction technologies. With a strong international focus on decarbonisation, what is PASA’s position on the continued exploitation of fossil fuels? The transition to cleaner fuels and renewables is inevitable if the world is to reduce the negative impact of climate change. South Africa is a signatory to the Paris Agreement and has committed to a “Peak-Plateau-Decline” carbon emission trajectory. Government policy is to diversify the country’s energy mix which is currently coal-dominated, to a lower-carbon future by introducing proportionately higher renewable energy resources such as wind and solar, into the energy mix as well as gas-to-power. Gas burns with less than half the CO2 emissions than coal and additionally has no SOx emissions. It is thus a suitable transition fuel
INTERVIEW Is there international interest in South Africa’s oil and gas resources? The exploration map on our website shows that international companies such as Total, Shell, ENI, Kosmos, Africa Energy Corporation, Azinam, Impact Oil and Gas, CNR, Qatar Petroleum, New Age and others all hold interests in exploration acreage. In addition, we have agreements in place with international service providers to acquire seismic data.
towards a lower-carbon economy for South Africa especially since gas-to-power technologies are flexible and would therefore complement the intermittent renewable energy being added to the national grid. What is PASA doing to attract investment and promote new drilling projects? PASA continues with its programme of promoting investment opportunities at local and international oil and gas conferences and exhibitions. South Africa has a history of political stability. The new administration is widely regarded as business-friendly and the new UPRD bill will assist the Agency in expediting exploration through close management of acreage allocation and work programmes. The bill also empowers the Agency to commission multi-client or speculative surveys, enabling the acquisition of data to attract investment. South Africa currently offers an attractive fiscal framework. These positive factors create a conducive environment for the Agency to pursue its mandate of attracting investment into the upstream petroleum industry. Does PASA have a strategy to retain existing investors? All investors want to see a return on their investment and a reward for taking on risk. PASA’s approach is to facilitate their activities and guide them through compliance and regulatory requirements to achieve the best outcome for both government and the investing companies. Advocacy plays an important role and PASA is concentrating on communicating the role that the upstream industry can play in reconstruction and development. A recent example was the facilitation of logistics for the drilling of the Luiperd well during Covid-19 lockdown.
What are the implications of the passing of the Upstream Petroleum Resources Development Bill (UPRD) by the South African parliament? Oil and gas exploration and production is currently regulated under the Mineral and Petroleum Resources Development Act, 2002 (MPRDA). The UPRD will repeal and replace the relevant sections pertaining to upstream petroleum activities in the MPRDA. The draft bill therefore provides greater policy certainty and a stable environment for investment in the South African oil and gas sector. The bill provides security of tenure by combining the rights for the exploration, development and production phase under one permit. What changes are envisaged in the amendment to the National Environmental Management Act of 1998 (NEMA)? The National Environmental Management Laws Amendment Bill, which was revived in June 2020, proposes various amendments to the National Environmental Management Act, 1998. Proposals that may positively impact upstream petroleum operations include the provisions empowering the minister responsible for mineral resources to delegate to any organ of state and designate as an environmental petroleum inspector any staff member of any other organ of state that executes a regulatory function. The minister may delegate certain competent authority functions to the Petroleum Agency SA, which may improve the turnaround timelines for making decisions on EA applications. Furthermore, designating staff members of the Agency as environmental petroleum inspectors means that all compliance monitoring and enforcement functions prescribed in the act as far as upstream petroleum operations would be efficiently executed.
Dr Phindile Masangane, CEO of Petroleum Agency SA
ENERGY
William Price, Country Manager of Enel Green Power South Africa, explains to Opportunity how the company brings extensive global experience to multiple renewable technologies. What is Enel’s footprint in South Africa? Our footprint in South Africa includes 12 renewable energy projects, using diverse technology, wind, and solar. Our office in South Africa also supports developments in Kenya, Ethiopia, and an operating solar project in Zambia. Our structure is such that we have three business units: Business Development, Engineering, and Construction, as well as Operations and Maintenance. Our Business Development group has successfully won tenders for the development of 1 260 MW, as well as developing a pipeline for future growth. Once a successful tendered project has achieved financial close, it is handed over to our Engineering and Construction (E&C) team who have, to date, built nine projects with a capacity of 800 MW and are nearing the completion of another three projects with a capacity of 420 MW this year.
What does Enel bring to South Africa in terms of expertise and technology? Enel brings global experience and expertise in the management of projects and in growing teams, consistently; globally, we’re operating in over 30 different countries. We have expertise in many aspects; however, sustainability is one of our key drivers. The solar farms and wind facilities that Enel is building are assisting the South African market to transition to a renewable energy future. Enel believes in creating shared value where we have project sites. We also look at the impact on the communities in which we operate. From a renewable energy technology perspective, there are not many companies like Enel. We are a multitechnology company and constantly strive to improve and learn from the projects where we employ cuttingedge technology.
_____
Solar farms are helping South Africa transition to renewable energy while creating shared value with local communities.
What is Enel’s view on the state of the REIPPPP? The REIPPP programme is among the best – if not the best – renewable energy and Independent Power Producer programme in Africa. It aims to accomplish many goals that are commonly misunderstood. The programme is not just about the procurement of green power and renewable energy. Local content is also significant, as is local manufacturing, local ownership, a sustainable contribution to the community and preferential procurement. If there’s a negative, it relates to time frames. Now that frequent load-reduction is being implemented, we need the energy to come online and there’s a lot of fine-tuning and tweaking in the programme which may cause significant delays. Although there’s definitely been an improvement in the realisation that we need greater power capacity and delivery, rather urgently. Is renewable energy on the rise globally in terms of markets, prices and sustainability? The uptake of renewable energy is certainly on the rise, because the world is finally ‘getting it’. Government entities are finally seeing the value of renewable energy and its impact on the environment. There’s the transportation of the coal, the heavy truck emitting pollution, and damage to the road infrastructure as well as the environment. People are getting that. Renewable energy prices have come down. Independent Power Producers and manufacturers are trying to figure out how to produce more with the available resources they have. As equipment efficiencies improve and the ability to produce energy improves, the project tariffs will continue to drop. Technological improvements have led to Enel installing 4.2 MW wind turbines, which are currently the largest onshore units in Africa, and soon even larger units can be available. All these things have an impact on the pricing and on sustainability. We understand the value of doing projects in a sustainable way, as well as providing value in the communities in which we operate. It’s an important distinction which we pride ourselves on. What can be done to accelerate the ‘global transition’? It has a lot to do with the government’s policies, regulatory markets and opening up transmission access. There are many Independent Power Producers and energy companies that would like to establish these projects. They don’t require the same degree of specifications that combined cycle, coal plants or nuclear power plants do. To know how to run these projects and to build technical knowledge is important. All renewable
The Local Control Room of Operation and Maintenance South Africa in Johannesburg allows for real-time updates on energy production, the resources available, and any issues that require attention. An intern programme has been running since 2017. projects have various types of technology and varying levels of required skills, but many companies can build a solar plant, so that creates competition – it opens up the markets. Pricing is re-established through a procurement process. A transparent credible tender will determine the market pricing. To do that requires government actions in establishing the regulatory policy and transmission access. More clarity on the opening of South Africa’s transmission structure is needed. There is some open access, but the operating rules are somewhat unclear. The cost mechanism is a key aspect that needs to be ready for the time that open access is achieved. A good comparison can be made with road infrastructure. The government initially established the roads infrastructure. The same thing should occur with the transmission so that entities can enter into the transmission line just like a road and deliver products to any customer along the ‘freeway’. There are technological challenges with that, but it has been done in other places in the world.
_____
The Local Control Room of Operation and Maintenance South Africa in Johannesburg allows for real-time updates on energy production, the resources available and any issues that require attention. An intern programme has been running since 2017.
Is Enel supporting local business and suppliers? Certainly, it is in Enel’s and the local economies’ best interest to do so – a locally manufactured product carries less issues from a logistics point of view. It makes business sense, rather than getting components and labour externally, we can positively contribute to the empowering of the local community. In terms of corporate social responsibility, what are the focus areas for Enel? Sustainable businesses create shared value. In its Strategy, Enel addresses the UN Sustainable Development Goals – some of which are education, healthcare, and access to electricity. Overall, the Group is significantly growing its renewable capacity, while gradually decommissioning its coal fleet.
_____
William Price, Country Manager of Enel Green Power South Africa
www.opportunityonline.co.za | 35
in the atomosphere
2.6 TWh each year
Enel Green South Afric Solar and W Enel Green Power Our greatest mis South Africa (EGP energy, is to ensu Solar and Wind O Enel Green Power As a global leader in renewable energy, Enel Green Power’s greatest mission is to Our greatest mission, as a g empower sustainable progress. South Africa (EGP RSA) energy, is to ensure the futu Solar and Wind Operatio
to Enel Green Power:
power.com
ENEL GREEN POWER SOUTH AFRICA
Introduction to Enel Green Po
Global: Founded in December 2008 as p of energy from renewable sources world
Introduction to Enel Green Power South Africa capacity of over 43 GW and over 1,200 p
PROFILE
hydroelectric and geothermal. Worldwide produced mainly from water, sun, wind a
Global reach Global: Founded in December 2008 as part of Enel Group, Enel Gr Founded in December 2008 as part of Enel Group, of energy from renewable sources worldwide. Enel Green Power is Introduction to Enel Green Power South Africa Enel Green Power develops and manages activities capacity of over 43 GW and over 1,200 plants. The Group’s product hydroelectric and geothermal. Worldwide, we are one of the main r for the generation of energy from renewable sources produced mainly from water, sun, wind and heat from the earth. worldwide. Enel Green Power is present in more than 30 countries on five continents with a managed capacity Wind Projects Solar Proj in Operation in Operat of over 48GW and over 1 200 plants. The Group’s 199MW 323.5MW production mix includes the main renewable sources: Global: Founded in December 2008 as part of Enel Group, Enel Green Power develops and wind, solar, hydroelectric and geothermal. of energy from renewable sources worldwide. Enel Green Power is present in 29 countries We are one of the world’s main renewable operators capacity of over 43 GWSouth and overAfrica 1,200 plants. The Group’s production mix includes the main to Enel Green Power with an annual production of about 82TWh,Introduction produced Stay to Enel Green Power: hydroelectric and geothermal. Worldwide, we are one ofConnected the main renewable operators with mainly from water, sun, wind and heat from the earth. produced mainly from water, sun, wind and heat from the earth.
Enel Green Power Our greatest mission, as a global lead South Africa (EGP RSA) energy, is to ensure the future of the p Solar and Wind Operations
Enel Green Power Our greatest mission, as a global leader of renew South Africa (EGP RSA) energy, is to ensure the future of the planet. Solar and Wind Operations
Wind Projects Solar Projects Avoiding an African growth www.enelgreenpower.com in Operation in Operation emissions of According to the forecasts of the International Energy 2.7-million ton 199MW 323.5MW CO2 in the atm Agency (IEA), renewable energy will have a key role in African development, with growth of installed power Global: Founded in December 2008 as part of Enel Group, Enel Green Power develops and manages activities for the estimated at 100GW by 2030. Enel Green Powerworldwide. South Africa of energy from renewable sources Enel Green Power is present in 29 countries in five continents with a m Stay Connected to as Enel Green Power: capacity of over 43 GW and over 1,200 plants. The Group’s production mix the main renewable sources: wind Enel Green Power arrived in South Africa in 2011 a includes EGP is now the main private operator in the Introduction to Enel Green Power South Africa hydroelectric and geothermal. Worldwide, we are one of the main renewable renewables sector in Africa in terms of installed MW, partner of the REIPPPP (Renewable Energy Independent operators with an annual production of a produced mainly from water, sun, wind and heat from the earth. Procurement Programme), the first with a stable presence in South Africa, Zambia, Ethiopia, Power Producer Wind Projects Solar Projects Avoiding annual Five wind pr www.enelgreenpower.com in Operation inof Operation emissions of roughly African programme for the development renewable Kenya and Morocco. expected 2.7-million tonnes of 199MW 323.5MW produce aro energy with a competitive tender system. Enel Green CO2 in the atmosphere 2.6TWh each Power South Africa (EGP RSA) has built a significant presence in the local market with more than 520MW of Global: Founded in December 2008 as part of Enel Group, Enel Green Power develops and manages activities for the generation wind Enel andStay solarConnected projects operation a further fivecontinents with a managed of energy from renewable sources worldwide. Green Power isin present in 29and countries in five to Enel Green Power: plants in progress. capacity of over 43 GW and over 1,200 plants. The Group’s production mix includes the main renewable sources: wind, solar,
Our greatest mission, as a global leader of renewable energy, is to ensure the future of the planet.
hydroelectric and geothermal. Worldwide, we are one of the main renewable operators with an annual production of about 82 TWh, produced mainly from water, sun, wind and heat from the earth. Sustainability www.enelgreenpower.com Wind Projects Solar Projects Avoiding annual EGP is committed to meaningful socio-economic and in Operation in Operation emissions of roughly = 199 MW 323.5 MWpreferential 2.7procurement, million tonnes of CO2 enterprise development, and in the atomosphere
______________
job creation in communities surrounding our projects, involving local businesses as suppliers in all its operations and projects in execution.
Five wind projects expected to produce around 2.6 TWh each year
Stay Connected to Enel Green Power:
ENEL GREEN POWER SOUTH AFRICA www.enelgreenpower.com Projects Solar Projects Avoiding annual Tel: +27 10 344 0200 | Wind General email: communications.egprsa@enel.com in Operation in Operation emissions of roughly 2.7-million tonnes of 199MW Business development: egprsa.bd@enel.com | 323.5MW Website: www.enelgreenpower.com CO2 in the atmosphere
Five wind projects expected to produce around 2.6TWh each year
Total Awarded Projects 700MW of capacity
Total Awarded Pro 700 MW of ca
n Power ca (EGP RSA) Wind Operations r as a global leader of renewable Pssion, RSA) ure the future of the planet. Operations Renewable Renewableenergy energy
ower South Africa
part of Enel Group, Enel Green Power develops and manages activities for the generation dwide. Enel Green Power is present in 29 countries in five continents with a managed plants. The Group’s production mix includes the main renewable sources: wind, solar, e, we are one of the main renewable operators with an annual production of about 82 TWh, and heat from the earth.
for fora asustainable sustainablefuture future
global leader of renewable WeWe seek out energy around thethe globe: seek out energy around globe: ure of the planet. in the power of wind and water, in the heat of of thethe sun, in the power of wind and water, in the heat sun, ons . . in in thethe depths of of thethe earth and, above all,all, in people depths earth and, above in people
reen Power develops and manages activities for the generation s present in 29 countries in five continents with a managed tion mix includes the main renewable sources: wind, solar, renewable operators with an annual production of about 82 TWh,
der of renewable planet.
jects tion W
Avoiding annual emissions of roughly 2.7-million tonnes of CO2 in the atmosphere
Five wind projects expected to produce around 2.6TWh each year
manages activities for the generation in five continents with a managed n renewable sources: wind, solar, h an annual production of about 82 TWh,
wable
nnual roughly nnes of mosphere
Five wind projects expected to produce around 2.6TWh each year
e generation managed d, solar, about 82 TWh,
rojects d to ound h year
ojects apacity
Total Awarded Projects 700MW of capacity
Total Awarded Projects 700MW of capacity
Total Awarded Projects 700MW of capacity
TRANSPORT
Policy needs to match infrastructure for Africa’s trade to thrive Hubs around ports and links to transport corridors will enable the newly-minted African Continental Free Trade Area to thrive, as a recent report by Dianna Games shows.
Credit: Transnet National Ports Authority
An extract focussing on transport and logistics from the discussion paper “The African Continental Free Trade Area: A Pipe Dream or Silver Bullet?” by Dianna Games. First published by The Brenthurst Foundation, May 2021.
I
n May 2021, the bridge across the Zambezi River linking Botswana and Zambia was opened by the presidents of the two countries. The construction of the bridge, which replaces the longstanding, slow ferry service across the river, means trucks on regional routes can now cross the river in a few hours, or less, rather than the previous three days to a week. It also means they can avoid using the biggest crossing between the ports and factories of South Africa and the rest of Southern Africa – Beit Bridge, which is also one of the most congested borders in Africa. A one-stop border post at the bridge will allow easier thoroughfare. This project embodies the benefits that good infrastructure and joined-up bureaucracy offer regional trade, both of them generally in short supply. More than 250 trucks a day should be able to cross the Zambezi instead of the handful that were able to cross before, bringing down costs, increasing the security of cargo and providing an alternative route for trade to the sea for inland markets. Travelling by road across Africa can be a sobering experience, characterised by delays, inefficiency and overzealous bureaucracy. There are a range of literal and figurative potholes that are major constraints to trade. Even as trucks battle with bad roads and congested border posts, they also need to navigate a host of other issues such as roadblocks
38 | www.opportunityonline.co.za
designed mostly to extort money from drivers. Transport costs make Africa one of the least competitive regions for exports and trade. The continent’s import dependence and colonial trade patterns are reflected in traffic movements – trucks laden with minerals and other raw materials heading for the sea, returning either empty or loaded with imports. This is the reality that faces Africa as it unrolls its flagship project, the African Continental Free Trade Area (AfCFTA), which started trading under the agreement in January 2021. The initiative brings together a potential market of more than a billion people and has a lofty ambition of increasing intra-African trade from under 20% currently to more than 30% in just a few years by attracting investment into manufacturing, agriculture and other sectors and building regional value chains. What could go wrong? The report details five areas where problems could arise. These are non-tariff barriers; rules of origin; manufacturing and industrialisation; connectivity and infrastructure deficits. This extract focusses on the final one. Infrastructure deficits Africa’s infrastructure backlog, regarded as the biggest constraint to improving trade, is well known. The funding gap for addressing the
LET’S BUILD AFRICA TOGETHER.
John Deere now offers the continent with a fitted range of construction equipment Believe in greater
Check out our latest promotional offer
Visit our dealerships for more info or contact our Sales Manager directly:
MakgateGriffiths@JohnDeere.com *Terms and conditions apply (available at www.deere.com/sub-saharan) www.deere.com/sub-saharan I africa@johndeere.com I Client Service: 0800 983 821
JohnDeereAfrica
TRANSPORT
Credit: Group Five
deficit is estimated at between $68bn and $108bn, says the African Development Bank (AfDB). Factors affecting infrastructure rollout include onerous lending processes by multilateral banks, poorly prepared projects on the ground, a lack of sufficient off-takers and commercial viability for lenders. China has stepped into the gap, with the value of loans to Africa increasing from less than $1bn to more than $30bn between 2000 and 2016. Although much of this funding lacks transparency and is costly for African states, it is helping to fill the gaps in areas such as roads, railways and airports. Poor maintenance of existing infrastructure is proving to be costly with colonial railways barely functioning in many countries and historical trade routes suffering from years of under-investment and over-use. Only 0.8-million of Sub-Saharan Africa’s 2.8-million kilometres of roads are paved and only half of these roads are in good condition. The roads are battered because dilapidated rail infrastructure has pushed most of Africa’s trade onto these roads. Only 84% of the 82 000km rail network is operational and most of these are low-speed, small-scale, undercapitalised and poorly managed networks. Up to 90% of Africa’s trade is conducted by sea but there are few deepwater ports to handle large cargo volumes, resulting in long waiting times for ships, which is compounded by limited berth and docking facilities, weak terminal freight and handling management, and an oversupply of government agencies that delay clearing processes. Few countries have inter-modal infrastructure linking ports to road and rail infrastructure. The African Development Bank maintains that transport costs alone are 63% higher in Africa than in developed countries, with transport costs representing between 30% and 50% of total export in value, which is higher for the region’s 16 landlocked countries. Energy deficits are also significant, with up to 70% of people in SubSaharan Africa lacking reliable grid access. One-third of the continent’s total installed capacity is in South Africa and yet it is suffering frequent power outages as a result of under-investment and poor management of its state-owned power utility. Renewable power is not yet being rolled out at scale, with many governments reluctant to loosen regulation in this key sector. Border posts across the continent are a significant part of Africa’s competitiveness challenge. The average waiting time for trucks to cross borders with goods in Africa is 97 hours or four days.
40 | www.opportunityonline.co.za
Electronic pre-clearance procedures are often ignored by overzealous border officials, who continue to search vehicles. Electronic payment systems can be frustrated by poor Internet connectivity. New systems and technology put in place by trade facilitators hardly dent age-old ways of managing border crossings by officials on the ground, even at one-stop border posts. The busiest crossings are often the least efficient. These include Beit Bridge, the gateway from South Africa to the region, Chirundu between Zimbabwe and Zambia, and Kasembulesa, a chokepoint between Zambia and the DRC. Efforts to upgrade infrastructure and processes have yielded few improvements. The new Kazungula bridge offers logistics companies options as do improving conditions in Beira and Dar es Salaam. These factors go some way towards explaining why the cost of moving a forty-foot (FEU) container from Beira to Lilongwe in Malawi is about $4 750, including port and handling charges totalling $2 000 – nearly 10 times the cost through Antwerp, for example. The cost of moving a container through Beira and on to Harare is $3 800, BeiraLusaka is $5 300, and Beira to the Congo a hefty $9 000. The comparative cost of shipping an FEU 10 000km from Shanghai to Beira is $6 000. +++ Choices: moving the afcfta forward Given the realities on the ground described in this report, is it realistic to expect the AfCFTA to be the game-changer that it is widely expected to be? In a likely scenario of clear winners and losers, will the free trade tide eventually lift all boats? Given the complexity of existing trade arrangements, and the effort to simultaneously simplify and expand them, a big task lies ahead. The AfCFTA does provide a template for change, with a raft of support structures and mechanisms to address problems of economic asymmetry, trade disputes and issues of unfair trade practices, among others. The odds are stacked against significant change, given the history. But there are many reasons to be optimistic of incremental improvements. For example, trade agreements can do more than lower tariffs and make trade more efficient. They can improve transparency and create a legal framework more hospitable to trade and investment from both within and outside the region.
Geo Hydraulic and Environmental Technology (Pty) Ltd Specialists in groundwater and environmental services.
Credit: Luis Tosta on Unsplash
S
upported by decades of experience in the industry and in the fields of consulting and research, we are committed to providing our clients with high-quality and cost-effective solutions to their groundwater and environmental challenges. Our technical expertise is the basis of our pride in providing safe, technically sound and environmentally sensitive services. Our team combines geological, hydrogeological, geophysical and hydrological skills, and our skilled operatives are ready and able to meet our clients’ needs. Managing Director John Kalaka Ngeleka has over 20 years of fieldwork and project management experience in the research, mining and oil and gas sectors, firstly as a geologist in the Democratic Republic of Congo and following completion of his MSc in South Africa, as a hydrogeologist. He is SACNASP (Water Resources Science) registered.
Vision GET aims to actively support local and international communities in maintaining and enjoying a safe and sustainable water provision and limited human health-risk environment.
Geo Hydraulic and Environmental Technology (GET) specialises in: • Groundwater development and supply, monitoring and management • Soil and groundwater risk assessment and management at contaminated sites • Geophysical investigations using imaging systems • Numerical groundwater flow and transport modelling • Basic assessment, scoping, Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) • Water-use licence and waste-management licence applications.
Clients Our clients include companies in the oil and gas, mining, agriculture, manufacturing and construction industries, international and nongovernmental organisations, government and municipalities. Current clients include: • Eskom, Two Rivers Platnium Mine • Palabora Copper (Pty) Limited • West Australia Drilling • German Development Cooperation • Institute of Natural Resources
Mission To provide clients with innovative, cost-effective and sustainable services related to water and the environment. GET is committed to train young professionals, advise government regulators and private companies and organisations, and to provide technical skills and capabilities to overcome water and environmental challenges. Values Employee and client safety, client satisfaction and innovative costreduction skills.
Geo Hydraulic and Environmental Technology (GET) 25 Trichy Road, Raisethorpe, Pietermaritzburg 3201 | Tel: +27 (0) 33 391 0707 | Cell: +27 (0) 78 884 5263 Fax: +27 (0) 86 241 1879 | Email: info@get-sa.co.za | Director: johnkalala.ngeleka@get-sa.co.za | Website: www.get-sa.co.za
TRANSPORT Listed below are a few recommendations that may assist in the success of the initiative. Political continuity. African business leaders have shown great appetite for the AfCFTA but they need to remain committed to its success. Policy choices. There is no universal recipe for industrialisation. It will require smart policy choices backed by supportive regulations and frameworks – and may need a lighter bureaucratic touch than African governments are willing to give. Africa’s internal trade is more diversified and technology and manufacturing driven than its global trade, providing a platform to build on. Connectivity and corridors. This requires matching policy with infrastructure and creating hubs around ports and linked to transport corridors. As neighbouring markets grow interdependent, their requirements are likely to improve export sophistication and develop regional industrial clusters. This requires improved connectivity by road, rail and air, to support growing demand. Africa, while it also requires large infrastructure projects, also needs to invest in joining up existing infrastructure – stretches of rail to each other, roads to rail, bridges at strategic junctures and so on. Improving Africa’s main trade highways should be a priority: removing roadblocks, fixing roads, building supporting infrastructure and services along routes and ensuring better management of border posts, with outputs closely monitored. Business climate. Improving the business climate is a critical element of competitiveness and attracting investment. Governments need to build meritocratic institutions that focus on reducing the cost of doing business. The greater use of technology in improving trade and the capacity of people to trade is critical, as well as a more decisive shift to e-government.
Keeping business on board. Best – and worst – practice. Stakeholders need to look to success and failure at home and elsewhere for how to change the trade trajectory. Financing trade. The banking sector will play a vital role in supporting the AfCFTA and Africa’s development generally. Flag success stories. No matter how small, these may create momentum and aspirational sentiment among businesses in Africa. The big success stories may do the same, possibly prompting African governments to analyse the constraints to their own success nationally, and possibly to act on them.
About the author Dianna Games is Chief Executive of Africa @ Work, an advisory company focusing on African business. She is a leading commentator on business issues, trends and developments in Africa and has travelled extensively around the continent. She specialises in corporate engagements across Africa and has done research into regional economic developments, corporate and government investment trends, sector analysis for private clients and tracks business developments in Africa’s key markets.
ADVISORY SERVICES
Understanding Government’s Tendering Process Tendering and procurement is a uniform process and tender forms are standardised.
T
he tendering process in government is primarily driven by instructions found in the Constitution and in particular in Section 217, which prescribes that a tender system must at all times be “Fair, equitable, transparent, competitive and cost-effective”. It further instructs government to create a “Framework”, giving preference to historically disadvantaged individuals and the Preferential Procurement Policy Framework Act (PPPFA) is a response to that instruction. It introduces a preferential point system, which is either the 80-20 equation for tenders with a value of below R50-million or the 90-10 equation for tenders with a value of above R50-million. The greater part of the point systems is always afforded to the lowest-priced tender as a maximum point, whereas the smaller part is allocated for B-BBEE points, for each bidder. The actual procurement process is either governed by the Public Finance Management Act (PFMA) and Treasury Regulations which is applicable to organs of state above local government, or the Municipal Finance Management Act (MFMA) and Supply Chain Management Regulations, which govern the process at local authority level, which could be a municipality, a water board or even a zoo or a museum. Committee system The regulations of the PFMA and MFMA prescribe a committee system, which must be implemented to manage the whole of the tender process. Committee members are appointed by the Accounting Officer of the specific organ of state. The first structure is the Bid Specifications Committee (BSC), which is tasked with approving the actual requirement of the goods and services as well as the stipulated specifications or scope of works, depending on whether it is a tender for purchases or works. The next structure is the Bid Evaluation Committee (BEC), which is tasked with conducting a technical evaluation on all valid,
Gerrit Davids
qualified and responsive tenders, either by using an “apples vs apples” approach or applying the functionality methodology, which is a points system requiring a minimum score that must be achieved by all bids that have graduated to this stage of the process. Bidders will also be afforded points for price and for B-BBEE. The last structure of the system is the Bid Adjudication Committee (BAC), which will consider a shortlist of potential bidders as compiled by the BEC and has the authority to reject its recommendations, send it back for review and where in agreement, select a recommended bidder for consideration by the Accounting Officer, who will eventually contract on behalf of the organ of state with the successful bidder. According to Gerrit Davids, Lead Advisor at tendering agency TaranisCo Advisor y, Tendering and procurement within the government sphere is a uniform process and tender forms are standardised, as issued by National Treasury. Bidders should be aware that, irrespective of where they tender, the process is exactly the same for all organs of state. “Also, as per the prescript in Section 217, bidders have a right to access a decision made by any of these committees and they have a constitutional right to object, lodge a dispute or an appeal, if they are unhappy with such decisions,” says Davids.
TaranisCo Advisory CC Mobile: +27 (0) 82 496 1657 | E-mail: gerrit@taranisco.co.za | Website: www.taranis.co.za
www.opportunityonline.co.za | 43
Rail regulator embracing change
A
strong brand is one of the most valuable assets an organisation owns. The Railway Safety Regulator (RSR) has undergone a major facelift with the development and adoption of its new corporate identity (CI). The new CI was rolled out at the end of July. Since its promulgation in 2002 and subsequent establishment in 2005, the RSR has experienced tremendous growth, becoming a trusted safety authority in the rail sector. The RSR is bigger and better today, having expanded its footprint to three regional offices in the Western Cape, KwaZulu-Natal and Gauteng, not with standing the Head Office. The evolution of the RSR’s CI marks a significant milestone in the Regulator’s journey to ensure that “rail safety is on the right track”. Gone is the sky-blue swoosh that represented the old RSR; the new look is adorned with a warm, vibrant, bright orange that stands out just like the organisation’s vision to promote
safe, reliable, and sustainable railway operations recognised globally. It is the same trusted Regulator, but with a brand-new look, fresh, modern, distinguished, and memorable. The new RSR logo is an energetic and timeless design which invokes joy, dependability, and safety. Several months were spent collaborating with staff and a brand design agency to redesign the RSR’s new look and feel. “This has been a very exciting project which has involved participation from various stakeholders, both internally and externally, to conceptualize and develop possible logos and taglines. Even though the logo is but one element of the project, it is the most important element by far. Therefore, staff members as primary custodians of the CI, were roped in to assist by voting for their favourite logos,” said Media and Communication Executive, Madelein Williams. A corporate video was also produced with the help of staff members
who eagerly gave insight into their areas of responsibility such as inspections and audits led by the RSR inspectorate teams across the country. In the next couple of months, the new logo will feature prominently in and around our buildings in Midrand, Durban and Cape Town including the RSR website . To follow and keep track of this new and exciting journey, follow us on our website and social media platforms on: www.rsr.org.za RailwaySafetyRegulator @Rail_Safety Railway Safety Regulator Remember although we are changing track, safety is still our number one priority.
GOVERNANCE
Investments in estate properties are proving their worth
A new review by New World Wealth selects 10 of the best lifestyle estates in the world, with three South African estates listed. With increasing numbers of South Africans choosing to invest in estate living, options that include apartments, wildlife, eco-estates and retirement estates are proving popular. Yellowstone Club in the US state of Montana nestles in the Rockies. Credit: Yellowstone Club
S
outh Africans are continuing to choose estate living in greater numbers. The main drivers for the increase in the popularity of estate living in South Africa are safety, shared facilities, communal parks and controlled traffic flows. This is according to Andrew Amoils, wealth analyst and head of research at New World Wealth. New World Wealth has been rating the top lifestyle estates in South Africa for the past five years and has recently published a review in which it shares its top 10 lifestyles for 2021 from around the world. Both South Africa and the United States secured three estates on the list, with estates in the UAE, Mauritius, Italy and New Zealand also featuring in the top 10.
46 | www.opportunityonline.co.za
New World Wealth's top 10 lifestyle estate picks for 2021are as follows: • Yellowstone Club in USA. • Val de Vie in South Africa. • Bighorn Golf Estate in USA. • Steyn City in South Africa. • Kukio in Hawaii, USA. • Fancourt in South Africa. • Anahita in Mauritius. • Jumeirah Golf Estate in the UAE. • Jacks Point in New Zealand. • Toscana Castelfalfi in Italy.
PROPERTY INVESTMENT
The top estates scored strongly in the following areas: appeal to high net worth individuals (HNWIs), maintenance, communal areas (parks), design, location, scenery, security and facilities. A global trend Estate living is already popular in USA, South Africa, Spain and Portugal and is starting to take off globally, especially in the UAE, New Zealand and Mauritius. Reasons for its rising appeal: • Lifestyle and community: parks, playgrounds and schools. • Facilities: in-house gyms, spas, golf, horse-riding, tennis and cycling. • Limited and controlled traffic: safer for children. • Security and privacy: access gate and private security personnel.
_____________________
"Estate living is becoming increasingly popular among the world's HNWIs as they search for more privacy and safety," says ________ ______Andrew. ______
Spotlight on the Yellowstone Club The Yellowstone Club is one of the more impressive lifestyle estates globally. It is situated in Big Sky, Montana (USA), and features a top golf course and its own private ski slopes. The houses on the estate start from a base price of around US$10-million, making it only for the super-rich. The estate is set on 15 000 acres of mountain wilderness with two large rivers that flow through the property. Activities available on the estate include fly-fishing, golf, horseriding and river-rafting during the summer and snowmobiling and skiing for the winter.
Kukio Golf and Beach Club is a gem on Hawaii’s Big Island.
There is also a move away from traditional golf estates towards wildlife and eco-estates. Retirement estates (for over 60s) have also become more popular. Estate properties are good value as investments. As Andrew says, “Over the past 20 years, estate properties have outperformed freestanding homes in terms of price growth.” With regard to the value of estate properties during a time of crisis (such as the Covid-19 pandemic), Andrew makes the point that buyers seeking open spaces are being attracted to estates with parks and wilderness. “Many people have chosen to work remotely and live in smaller towns,” reports Andrew. “For instance, a large number of people are now working remotely from affluent small towns such as Hermanus, Plettenberg Bay and Franschhoek. Lifestyle estates in these towns have benefitted.” About New World Wealth New World Wealth has been tracking the spending habits of the world’s wealthy for over seven years. The company’s research covers 90 countries and 150 cities worldwide. New World Wealth are the researchers and authors of the Africa Wealth Report and the Global Wealth Migration Review. Website: www.newworldwealth.com
South African trends South Africa is a global pioneer in estate living and is home to many of the world's best lifestyle estates, including the likes of: Val de Vie, Steyn City, Fancourt, Pezula, Steenberg, Arabella, Atlantic Beach, Simbithi, Zimbali, Whale Rock Ridge, Leopard Creek, Waterfall Equestrian Estate, De Zalze, Domaine des Anges and Silverhurst Estate. Buyers in SA are increasingly moving towards apartment blocks or estates that have apartments. In line with this, most new luxury developments in the country focus on apartment living rather than houses; notable examples include: Brookfield at Royal, Umhlanga Arch and Steyn City’s “104 on Creek”.
www.opportunityonline.co.za | 47 Steyn City offers a green lung in the heart of the big city. Credit: Steyn City
PROPERTY
Delivering satisfying returns Steyn City is proving a popular property investment.
I
nterest in gated communities and lifestyle estates continues to rise. That’s not surprising, given the drivers behind the trend: for a start, security is a significant and ongoing concern, with crime in the suburbs showing no signs of abating. Added to this, many South Africans are attracted to the idea of living in a place that speaks directly to their interests, such as golf, cycling or horse-riding. Not all developments are equal, and even those which boast of creating the consummate “lifestyle” may be guilty of offering slightly less than residents expect, either in terms of accommodation which falls short of true luxury standards, or limited amenities. Wary of disappointing residents, Steyn City Properties made every effort – from the time of the development’s initial planning stages in developing a masterplan – to ensure that this was not the case. The result is a luxury parkland residence which redefines lifestyle, and in so doing, has ensured it is perfectly matched with consumers’ current demands. After all, location, location, location is no longer seen as the most critical investment criterion; it’s now the lifestyle available which determines whether people are prepared to invest, especially as remote working makes it possible for investors to move away from city centres.
Take the issue of security, for example. Steyn City ensures complete peace of mind with a highly advanced security system, which includes a 24/7 security nerve centre and round-the-clock patrols of the parkland. Would-be buyers wondering about i nv e s t m e nt v a l u e a r e r e a s s u r e d b y the develop er's lifelong inves tment in infrastructure. Indeed, all amenities were developed by the time of launch, so that buyers could experience the reality they were purchasing, rather than setting their hopes on a dream that may fail to materialise. This approach means that Steyn City is a low-risk investment which has already delivered ver y satisfying returns. Many people living in developments value the community which often arises. The community feeling that pervades throughout the parkland residence is further enhanced by the existence of open spaces and a lack of boundary walls where residents get to know their neighbours. The development’s culture is a contributing factor. Steyn City was designed with an outdoororiented, family-centred lifestyle in mind, so that residents are able to access a broad array of amenities, catering to a variety of interests, without leaving the estate. Having these
48 | www.opportunityonline.co.za
facilities right outside one’s front door means that a great deal of time is saved – especially since AAA-grade offices and a world-class educational campus (accommodating grades 000 to matric) are available on-site, too, with the soon to be launched helistop presenting the ultimate convenience for executives who have little time to switch between venues. Shorter commutes translate into less stress, and a better overall lifestyle. More than this, the variety of amenities – from hundreds of kilometres for walking, jogging or trail-running to a purpose-built mountainbike track; from outdoor gym stations to an 18-hole Nicklaus design golf course; from an indoor gym to an indoor aquatic centre and an equestrian centre – means that residents can access so many activities or leisure pursuits with their added convenience. The final drawcard is, of course, Steyn City’s 2 000-acre indigenous parkland: a back garden without compare for every resident, offering space to roam and explore with complete peace of mind. To feed the connection with nature that forms the basis for complete wellbeing is a different kind of investment: an investment in the way you choose to live your life. www.steyncity.co.za
Experience limitless luxury
STANDS FROM
R3.3-18m
ANCHORED IN THE PURSUIT OF NAMIBIA’S VISION. In today’s world, we acknowledge that change is the only constant. That is why at the Namibian Ports Authority, our vision to be the best performing seaports in Africa is embedded in our passion to drive our mission and adhere to our values. As we grow, we maintain our commitment to serve, our desire to connect, and most importantly, to care for our staff and wellbeing of all Namibians. NAMPORT. Africa’s Ultimate Ports Experience.