South African Business 2017 by Global Africa Network Media

2017 EDITION

SOUTH AFRICAN BUSINESS THE GUIDE TO BUSINESS AND INVESTMENT IN SOUTH AFRICA

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WHAT HAPPENS TO YOUR WASTE? 108 MILLION TONNES

Waste SA Generates Per Year

90% is sent to landfill

50%

of this is general waste (domestic, building and demolition waste, business waste)

10%

only 10% of this total waste is recycled

44%

is unclassified waste (electronic waste, sewage sludge, brine, bottom ash, dust) and 0.93% is hazardous (batteries, toxic chemical waste).

BUT TYRES ARE DIFFERENT - NOW 70% ARE BEING DEALT WITH, UP FROM ONLY 4% TWO YEARS AGO.

WHICH HAS RESULTED IN 3219 JOBS AND 227 SMMES

ENTREPRENEURSHIP COMES TO LIFE THROUGH CIRCULAR ECONOMIES Hermann Erdmann, CEO at REDISA (Recycling and Economic Development Initiative of South Africa) Small businesses are critical in that they form the building blocks of any society. According to a 2010 research report, 91 percent of formal business entities in South Africa are small medium and micro enterprises (SMMEs), contributing between 52 and 57 percent to the country’s GDP, and about 61 percent to employment. These form the bread and butter of our country, as job providers, poverty reducers, service delivery agents and economy boosters. South Africa’s role on the global stage as a hub for economic growth and empowerment opportunities continues to gather pace. There are, however, critical challenges, in particular the need to create a significant number of jobs for the growing population and to develop home-grown business leaders who are able to access global markets and drive growth in a sustainable and inclusive manner. Transforming ideas into economic opportunities is the crux of entrepreneurship and at REDISA we recognise the possibilities which lie in circular economies, specifically for all those who are willing to look at waste not as waste but as a commodity. The current levels of production and consumption are no longer sustainable. It is anticipated that, by 2030, the world’s population could sit at 9 billion, with an additional 3 billion new middle-class consumers over and above today’s 1.8 billion. Expanding the supply of consumer goods and services to meet this future demand presents a great challenge, but one that a circular economy model is capable of meeting – particularly if it is implemented within every country, region and community. The World Economic Forum estimates that the circular economy could be worth $1 trillion worldwide by 2025. This means that doing more with less would result in additional wealth and jobs, fewer landfill sites, and less resource depletion and environmental damage. Currently, there are only a few countries who are experimenting with more circular thinking – these include the United Kingdom, the Netherlands, France, China, Japan and South Africa. The promise of circular economy initiatives is that they will provide brand new business needs which will simultaneously address resource and environmental challenges, and generate economic activity to fund those needs. Entrepreneurship is acknowledged as one of the drivers of sustainable economic growth because entrepreneurs create new businesses, drive and shape innovation and, ultimately, contribute to productivity. The circular economy focuses on creating and promoting new business opportunities that entail entrepreneurship and eco-innovation with the aim of waste being fed back into the production process as a raw material. I believe that entrepreneurs will be the key custodians responsible for leading the transition to a circular economy business model and closing the loop on dwindling resources. Essentially this is what we need to be focusing on, pairing both entrepreneurial spirit and the concerted effort to finding solutions to the many challenges and problems that we face as a country and a continent.

JOIN THE JOURNEY | www.redisa.org.za |

/wasteintoworth |

@wasteintoworth

CONTENTS

CONTENTS South African Business 2017 Edition

Introduction Foreword A unique guide to business and investment in South Africa.

Special features South African economy at a glance

Insight into the performance of the South African economy is provided through graphical representations of key statistics. Special Economic Zones

Transforming the way business is done. Renewable energy programme powers ahead

A private energy producers’ programme has already attracted R200-billion in private investment – and more is in the pipeline. Looking north

South African companies are looking to intra-African trade to expand their businesses and improved infrastructure is key. SOUTH AFRICAN BUSINESS 2017

CONTENTS Skills development

Detailed national plans are in place to promote skills training.

Economic sectors Agriculture

Agri-processing is a key focus of future investment. Mining

South Africa has vast mineral reserves and excellent infrastructure. Mineral beneficiation

Industrialisation is to be boosted by adding value to minerals. Oil and gas

South Africa is turning to gas. Energy

Energy efficiency is a win-win. Water Innovative solutions to water scarcity are being pursued.

Engineering

Transnet Engineering is targeting international orders. Manufacturing

Several state programmes are promoting manufacturing. Chemicals and pharmaceuticals

Both sectors are attracting internal and foreign investment. Food and beverages

Food and drink account for a quarter of all manufacturing. Automotive

Car makers exported a record number of cars in 2015. SOUTH AFRICAN BUSINESS 2017

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CONTENTS Transport

South Africa's port and rail infrastructure is being upgraded. Information and communications technology

Fibre optic networks are growing quickly. Education and training

New universities are improving access to higher education but funding is under the microscope. Tourism

Tourism is a growth industry that quickly creates jobs. Banking

102

Despite general economic concerns, South African banks have increased operating income. Development finance and SMME support Studies are showing that township markets are much bigger than previously thought.

104

Regions Eastern Cape

110

Free State

116

Gauteng

118

KwaZulu-Natal

126

Limpopo

128

Mpumalanga

134

Northern Cape

136

North West

140

Western Cape

142

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CONTENTS

Government South African National Government

106

Reference Sector contents

Index

144

Mbombela

Mahikeng

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SOUTH AFRICAN BUSINESS 2017

FOREWORD

CREDITS Publisher: Chris Whales Publishing director: Robert Arendse Editor: Simon Lewis Writing: John Young and Karen Kühlcke Online editor: Christoff Scholtz Art director: Brent Meder Design: Colin Carter Production: Lizel Olivier Ad sales: Sam Oliver, Gabriel Venter, Jeremy Petersen, Nigel Williams and Sydwell Adonis Managing director: Clive During Administration & accounts: Charlene Steynberg and Natalie Koopman Distribution and circulation: Edward MacDonald Printing: FA Print

South African Business A unique guide to business and investment in South Africa.

elcome to the fifth edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa, supported by an e-book edition at www.southafricanbusiness.co.za. In addition to an up-to-date economic overview of the country, analyses of the main industrial sectors, plus profiles of the nine provincial economies, this edition of South African Business includes special features on key topical issues such as skills development and education, renewable energy and the REIPPPP programme, and trade with Africa. South African Business is complemented by nine regional publications. The e-book editions can also be viewed online: Western Cape Business | www.westerncapebusiness.co.za Gauteng Business | www.gautengbusinessguide.co.za Limpopo Business | www.limpopobusiness.co.za KwaZulu-Natal Business | www.kwazulunatalbusiness.co.za Eastern Cape Business | www.easterncapebusiness.co.za North West Business | www.northwestbusiness.co.za Mpumalanga Business | www.mpumalangabusiness.co.za Free State Business | www.freestatebusiness.co.za Northern Cape Business | www.northerncapebusiness.co.za These unique titles are supported by a monthly business e-newsletter with a circulation of over 35 000. Chris Whales Publisher, Global Africa Network Media Email: chris@gan.co.za

DISTRIBUTION

PUBLISHED BY

South African Business is distributed internationally on outgoing and incoming trade missions, through trade and investment agencies; to foreign offices in South Africa’s main trading partners around the world; at top national and international events; through the offices of foreign representatives in South Africa; as well as nationally and regionally via chambers of commerce, tourism offices, airport lounges, provincial government departments, municipalities and companies.

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

ISSN 2221-4194

COPYRIGHT | South African Business is an independent publication published by Global Africa Network Media (Pty) Ltd. Full copyright to the publication vests with Global Africa Network Media (Pty) Ltd. No part of the publication may be reproduced in any form without the written permission of Global Africa Network Media (Pty) Ltd. PHOTO CREDITS | Pictures supplied by flickr.com, Mainstream Power, Wikimedia Commons, MAN.co.za, icc.co.za, Boogertman + Partners, Mapio.net, Anglo American, SA Tourism, Bloomberg, Coega Dairy, and Eugene Armer RailPictures.

DISCLAIMER | While the publisher, Global Africa Network Media (Pty) Ltd, has used all reasonable efforts to ensure that the information contained in South African Business is accurate and up-to-date, the publishers make no representations as to the accuracy, quality, time-liness, or completeness of the information. Global Africa Network Media will not accept responsibility for any loss or damage suffered as a result of the use of or any reliance placed on such information.

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE

South African economy at a glance Insight into the performance of the South African economy is provided through these graphical representations of key statistics. ZIMBABWE

MOZAMBIQUE

BOTSWANA

Limpopo 0.9% (7.1%)

NAMIBIA

Gauteng Mpumalanga 2.7% 2.1% (7.5%) (34.3%) SWAZI-

North West -3.6% (6.5%)

LAND

Free State 1.8% (5%) Northern Cape 2.8% (2.1%)

LESOTHO

KwaZuluNatal 2.3% (16.1%)

Eastern Cape 1.0% (7.6%) Western Cape 2.0% (13.6%)

SA GDP: Percentage of growth per province (2014) and percentage contribution to national GDP (figures in brackets). SOURCE: STATS SA WWW.STATSSA.GOV.ZA

PROVINCE

CAPITAL

PREMIER

POPULATION (2015)

AREA

GRP BILLION RAND

6 916 200

168 966km2

R289.9

2 817 900

129 825km2

R189.1 R1 305.6

Phumulo Masualle Elias Sekgobelo "Ace" Magashule

Eastern Cape

Bhisho

Free State

Bloemfontein

Gauteng

Johannesburg

David Makhura

13 200 300

18 178km2

KwaZuluNatal

Pietermaritzburg

Willies Mchunu

10 919 100

94 361km2

R610.1

Stanley Mathabatha David Mabuza Supra Mahumapelo

5 726 800

125 754km

4 283 900

76 495km2

R284.2

3 707 000

104 882km2

R249.5

R271.5

Limpopo

Polokwane

Mpumalanga

Mbombela

North West

Mahikeng

Northern Cape

Kimberley

Sylvia Lucas

1 185 600

372 889km2

R79.9

Western Cape

Cape Town

Helen Zille

6 200 100

129 462km

R518.1

Snapshot of South Africa’s provinces SOURCE: INSTITUTE OF RACE RELATION’S SOUTH AFRICA SURVEY 2016 AS REPORTED ON BUSINESSTECH.CO.ZA

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE

How South Africa’s economy performed in 2015. * * PRELIMINARY RESULTS | SOURCE: GROSS DOMESTIC PRODUCT, 4TH QUARTER 2015 | WWW.STATSSA.GOV.ZA

SECTOR

KZN

2.5

2.8

0.4

2.1

3.8

4.3

6.0

7.5

3.5

29.4

24.9

3.3

33.6

1.9

13.3

26.7

0.2

0.3

Manufacturing

2.5

11.5

13.5

4.4

15.8

8.5

2.1

12.2

11.8

Electricity

2.8

5.4

2.4

1.4

2.5

3.1

3.0

1.4

2.0

Construction

2.5

3.3

4.3

2.6

3.0

2.0

1.6

2.1

4.3

Wholesale

10.8

10.3

14.2

9.3

15.5

12.3

9.9

14.7

17.0

Transport

5.4

5.8

8.3

6.1

11.9

7.1

7.8

7.9

9.1

Finances

14.0

10.9

22.8

11.1

16.5

14.2

11.6

18.6

26.6

Personal Services

3.8

4.3

3.6

7.0

5.8

10.2

8.1

9.1

5.1

Government Services

16.0

10.5

17.0

12.1

13.3

14.7

12.8

22.0

10.2

Taxes

10.3

10.1

10.3

10.0

10.3

10.2

10.0

Agriculture Mining

Gross Domestic Product by province, percentage contribution. SOURCE: STATS SA W W W.STATSSA.GOV.ZA/?PAGE_ID=735&ID=1

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE 7% 6% 5% 4% 3% 2% 1% 0

2011 2012 2013 2014 2015 2016 PPI (percentages in order from 2011 to 2016) CPI (percentages in order from 2011 to 2016) denotes data for September 2016 rather than the average for the full year.

Inflation rate 2011 to 2016 SOURCE: WWW.STATSSA.GOV.ZA

Mineral products 20.41% Precious metals 18.24% Vehicles, aircraft and vessels 12.57% Products iron and steel 12.02% Machinery 9.69% Chemicals 6.47% Vegetables (including fruit, nuts and cereals) 4.96% Prepared foodstuff (including beverages) 4.29% Plastic and rubber 2.11% Wood pulp and paper 1.92%

South Africa’s top 10 export commodity categories: 2015 SOURCE: SOUTH AFRICAN REVENUE SERVICE WWW.SARS.GOV.ZA

Machinery 25.02% Mineral products 16.12% Vehicles, aircraft and vessels 10.4% Chemicals 10.37% Equipment components 7.3% Products iron and steel 5.54% Plastic and rubber 4.13% Textiles 3.72% Prepared foodstuff (including beverages) 2.93% Photographic, medical equipment 2.71% South Africa’s top 10 import commodity categories: 2015 SOURCE: SOUTH AFRICAN REVENUE SERVICE WWW.SARS.GOV.ZA

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE Million Rand R600 000

R400 000

R200 000

Africa 2010

Europe 2011

America 2012

Asia 2013

Other unclassified

Oceania 2014

2015

2016

Exports year on year world zone comparison (Including BLNS) 2010 to 2016

PRELIMINARY RESULTS | SOURCE: GROSS DOMESTIC PRODUCT, 4TH QUARTER 2015 | WWW.STATSSA.GOV.ZA

Million Rand R600 000

R400 000

R200 000

Africa 2010

Europe 2011

America 2012

Asia 2013

Oceania 2014

2015

Other unclassified 2016

Imports year on year world zone comparison (Including BLNS) 2010 to 2016

PRELIMINARY RESULTS | SOURCE: GROSS DOMESTIC PRODUCT, 4TH QUARTER 2015 | WWW.STATSSA.GOV.ZA

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE

Special Economic Zones Transforming the way business is done.

n 1750 the king and queen of Sweden invited skilled craftsmen from all over Europe to take up residence on their royal estate on the outskirts of Stockholm. The little cottages that were given to the experts still stand today, although they are no longer home to lace-makers, silk-weavers and cutlery creators. Today the idea of creating specialised areas in which new kinds of economic activity can thrive SOUTH AFRICAN BUSINESS 2017

is popular, and various forms fall under the heading of Special Economic Zones (SEZs). Like King Adolf Fredrik and Queen Lovisa Ulrika, modern South African industrial planners want to create a model for manufacturing goods locally that will replace imports. South Africa is investing in SEZs as a major plank of its industrial development policy that seeks to attract new skills and develop new industries.

SPECIAL FEATURE Key goals behind the establishment of SEZs are: to encourage industries to develop in clusters, leading to economies of scale, skills-sharing and easier access by suppliers • to create industrial infrastructure to promote investment • to promote cooperation between the public and private sectors • to use the zones as a launching pad for other plans to further development Apart from attracting foreign direct investment (FDI) and boosting employment, SEZs can also play a role in helping to add new sectors or sub-sectors to an economy. There is a cautionary aspect to the Swedish tale in that the scheme only worked as long as subsidies were available – but if SEZs are properly implemented there is no reason why they should not become selfsupporting in time. South Africa is targeting a variety of sectors in SEZs around the country, but there is a decided emphasis on beneficiation, mainly of minerals but also of agricultural products. There is a strong feeling that South Africa can do much more with the product of its soils – whether that be using manganese to convert iron into steel or creating fruit juices out of apples and pears. Special Economic Zones are created in terms of the Special Economic Zones Act of 2014 (Act 16 of 2014). The act defines an SEZ as "geographically designated areas of the country that are set aside for specifically targeted economic activities, and supported through special arrangements and systems that are often different from those that apply to the rest of the country". Lower corporate tax rates and duty-free imports are among the advantages that accrue to investors. SEZs come in different forms: South Africa has several existing Industrial Development Zones (IDZs) and a Free Trade Port (FTP). The Coega IDZ (Nelson Mandela Bay Metropole) and the Dube TradePort at the King Shaka International Airport outside Durban are two well-known examples. Other licensed IDZs are at Saldanha Bay, East London and Richards Bay. The Dube TradePort aims to leverage its proximity to an airport. In the same way, "aerotropolis" developments are mooted for Ekurhuleni (OR Tambo airport) and Cape Town International Airport.

Coega IDZ has recently attracted huge investments from a variety of Chinese firms in the engineering, solar manufacturing and automotive sectors. The latest investment is from BAIC, who will take a 65% stake in a multi-billion-rand joint venture with the Industrial Development Corporation with the intention of producing 100 000 vehicles. First Automotive Works (FAW) has already established a R600-million assembly plant in Zone 2 at Coega. Richards Bay, apart from being the country's main site for the export of coal, is also a registered Industrial Development Zone and consequently is in a position to attract investors in a range of sectors. Recent developments at RBIDZ have seen an investment in an oil and gas facility and it is hoped that the ocean will yield finds of gas to provide cheap feedstock. Another type of SEZ is an Export Processing Zone (EPZ). All of these interventions are intended to form part of broader trade and investment plans such as the National Development Plan (NDP) and the Industrial Policy Action Plan (IPAP). The NDP is a broad-strokes plan that seeks to coordinate development in a range of sectors, and promotes ambitious infrastructural projects. South Africa's most recent IPAP has a manufacturing focus, so beneficiation fits well into the idea of diversifying and strengthening the country's ability to make things. In the context of the new and burgeoning renewable energy sector, the state, through the Department of Trade and Industry (dti), can pass legislation that requires developers to increase the level of local content on the solar panels or wind turbines that are used. In this way, a totally new local industry can be created; and an SEZ would be the place to do it. Skills transfer is another stated aim behind the SEZ programme. Various incentives are available to investors in an SEZ. These include tax breaks from the South African Revenue Service (SARS), subsidised interest rates from the Industrial Development Corporation (IDC), subsidies for employees earning below a certain level and subsidies for the training of the workforce, incentives and grants from the dti, and incentives available from national electricity utility Eskom. Other benefits might include a building

•

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE R150-billion, will generate 1 000MW in its first phase. Forty renewable projects have already been approved in the Northern Cape with the majority of projects (27) using the solar photovoltaic method with just seven using the concentrated solar power (CSP) technology. The Northern Cape is also home to five approved wind farms and one small (10MW) hydroelectric project on the Orange River. Maluti-A-Phofung, Free State The Maluti-A-Phofung Special Economic Zone takes advantage of the strategic position Harrismith holds in the Free State's north-eastern corner. The N3 highway carries huge volumes of cargo between Gauteng and the ports of KwaZulu-Natal so it is logical that the first focus of this SEZ is logistics. Over and above the Gauteng-KwaZulu-Natal route, another logistics axis extends between Harrismith and Bloemfontein for the delivery of products by rail and road. Within the Maluti-A-Phofung SEZ, the Tshiame Food Processing Park has 60 000m² available for investors in food production, storage and distribution. To entice investors, services such as logistics will be provided as will warehousing, cold storage and manufacturing facilities. A strong focus is to try to get more local produce turned into products that can be exported.

allowance, employment incentives and the fact that an SEZ is a customs-controlled area. Specific incentives relating to energy savings and reductions in environmental impact are available, both from Eskom and the dti. Within the dti's Manufacturing Competitiveness Enhancement Programme, there is a Green Energy Efficiency Fund, all of which are designed to make (the right kind of) investment more attractive.

New zones Upington, Northern Cape The 400ha site of the Upington SEZ in the Northern Cape Province is close to the regional airport and is well served by access roads. One of the goals is to capitalise on the already existing (and fastgrowing) solar power industry by promoting special investment packages to investors in that field, and encouraging the development of skills and services to support that sector within the SEZ. Feasibility plans are being done by Eskom on building a massive solar park that will generate an eighth of the county's electricity needs – 5 000MW – near Upington. Sixteen square kilometres of land have been identified and Eskom is looking for private partners. The park, which will cost more than SOUTH AFRICAN BUSINESS 2017

Musina-Makhado, Limpopo In July 2016 the national cabinet approved the MusinaMakhado Special Economic Zone (SEZ). Located in the far north of Limpopo in the Vhembe district, Musina is strategically located near the border of Zimbabwe and on the Great North Road, which links South Africa to the broader Southern African region. The location of the Musina SEZ, with links to Zimbabwe, Botswana and Mozambique, promotes

SPECIAL FEATURE the Trans-Limpopo Spatial Development Initiative. Logistics will be one of the key focus areas of the SEZ. Other sectors that will be concentrated on include agri-processing, energy and mineral beneficiation. De Beers' giant Venetia diamond mine is nearby. The company's most recent life-of-mine expansion project, worth about R30-billion, will result in the mine producing until 2046. Soon after the announcement of the designation of the SEZ, the dti announced that a consortium of Chinese investors, Sino, has agreed to put R40-billion into the Musina SEZ where they will operate the mineral beneficiation operations. The first phase of this is to build a power plant. The dti estimates that the completed SEZ could create more than 20 000 jobs.

Mining and Metals Technology Park, Steve Tshwete Local Municipality • Petro Chemical Industrial Technology Park, Secunda • Agriculture and Forestry Industrial Centre of Competence, Mbombela area The planned SEZ falls within this quite large geographical area and the two other focus points are an International Fresh Produce Market (Mbombela) and a Forestry Technology Park in the town of Sabie. •

Tubatse, Limpopo An application for an SEZ at Tubatse is pending. Tubatse is in the Sekhukhune District Municipality and hosts a number of mining operations. The SEZ in Tubatse will focus on the beneficiation of platinum group metals and mining-related manufacturing. The province of Bashkortostan in Russia has also expressed an interest in the SEZs of Limpopo. Nkomazi, Mpumalanga The Nkomazi Local Municipality has already earmarked land for the SEZ that will be established in terms of the Special Economic Zones Act. The location of the SEZ near the Mozambique border and along the Mozambique Corridor gives investors in the SEZ logistical advantages and opportunities. There are tax advantages for investors in the SEZ and proximity to the Mozambican port of Matola would be a large benefit to anyone wanting to create a dry port or logistics base. The provincial government has a broader plan to create what Premier David Mabuza has called "industrial centres of competence". The idea is to cluster in a particular geographical area centres that will provide economies of scale for manufacturers and traders but also training and research facilities that will benefit the relevant sector. These could also be described as sector hubs. Plans are in place for the creation of several such hubs, including:

Bojanala, North West The SEZ in the platinum-rich Bojanala district will be known as Platinum Valley SEZ and will focus on mineral beneficiation. The SEZ will centre on Bodirelo Industrial Park, near the town of Mogwase. Atlantis,Western Cape The Atlantis Greentech SEZ should encourage industrial development and employment opportunities in the Green economy. Specific incentives are available to investors in this SEZ. Agri-parks Five agri-parks are planned in each of the Free State's district municipalities. Within these parks, support for rural smallholders will be available in terms of equipment hire from a central source, storage facilities, packaging of produce and getting products to market. The agri-park intends to provide a network for farmers and manufacturers. Training will also be available.

SOUTH AFRICAN BUSINESS 2017

3 600 people. 26 months turnaround time. 8 million man-hours worked. The biggest platinum plant in the world. Impossible? Not for DRA. With an output of 600 000 tpm, Anglo Platinum’s Mogalakwena Platinum Mine remains the biggest producer of platinum in the world. From project management to detailed design work, construction and associated infrastructure, it marks one of the biggest project undertakings for DRA to date. A first in terms of its size but not experience, DRA has delivered 80% of the world’s platinum plants over the past 20 years, Mogalakwena not only required us to work around an extremely tight time frame, its scope demanded our utmost attention to detail, uncompromising quality control and dedicated, passionate team work. From 2 817 drawings to 27 000 m³ of poured concrete, it’s our desire to pioneer uncharted challenges that continue to ensure we deliver every time, even when it’s the first time.

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Extraordinary Possibilities

SPECIAL FEATURE

Renewable energy programme powers ahead A private energy producers' programme has already attracted R200-billion in private investment – and more is in the pipeline.

ast, efficient and adaptable – these are not always the first words that spring to mind when businessmen and investors get together to talk about government. But in the case of South Africa's programme to allow private investors to build renewable energy plants and sell power to the national grid, efficiency and speed have been the watchwords. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) had by May 2016 delivered the promise of 6 377 megawatts (MW) with an investment value of R250-billion and many of the projects are already delivering electricity to South Africa's grid. The REIPPPP has so far seen four phases of bidding (known as bidding windows), and competition among investors is fierce. The most recent, fourth, window attracted 77 bids from which just 13 were SOUTH AFRICAN BUSINESS 2017

chosen, but a further 13 bids were accepted later. Collectively the 26 projects will add 2 205MW of power and inject R23-billion into the economy. The generation mix accepted by the Department of Energy in the fourth window gives a good indication of the preferred types of energy that have characterised the whole REIPPPP: • 12 wind projects (1 368MW) • 12 solar photo-voltaic (solar PV) projects (813MW) • one hydro-power project (5MW) • one bio-mass project (25MW) Solar and wind have been the most popular projects over the life of the REIPPPP (which started accepting the first bids in November 2011), with solar PV generating more interest than the concentrated solar power (CSP) method. According to the South African Wind Energy Association (SAWEA), shareholding for local com-

SPECIAL FEATURE Van den Berg points out that the figure represented 30% of all foreign direct investment in South Africa, a remarkable percentage for a very young sector. "Additionally," he adds, "the cost of wind power has steadily lowered to approximately 40% below the cost of new coal power at Medupi.” Other research, by GlobalData, estimates that a further three GW of wind energy will be added to South Africa's grid by 2020, taking the total up to 5.6GW. The growth of the solar energy sector has been quite spectacular, particularly in the Northern Cape Province. The railway junction town of De Aar is no longer famous only for being in the middle of everywhere – it now boasts significant energy-generating power. Not least because of the 175MW Solar Capital project outside the town, the largest solar plant of its type on the continent. The multi-phase project will eventually attract investment to the tune of R4.8-billion. The Department of Energy has another programme intended to complement the REIPPPP, the Small Projects Renewable Energy Independent Power Producer Programme. This is intended to encourage smaller investors to get involved in pitching for projects in the 5-10MW range. The Department of Trade and Industry (dti) believes there is great scope for local manufacturing in some of the downstream sectors, for example in building infrastructure for renewable energy plants and in the commercial and industrial solar rooftop market. PV panels of public entities will soon have to be made in South Africa and the glass industry could get involved in coating glass for CSP heliostats. The dti has also put forward the idea that there might be some cross-over in capabilities between the automotive sector and the manufacturing sector for renewable energy plants.

munities has reached an estimated net income of R29.2-billion over the lifespan of the projects, in most cases estimated to be about 20 years. Some 14 000 new jobs are expected to be created, mostly in rural areas, and more than R30-billion has already been spent on black economic empowerment (BEE) in the construction phase. Johan van den Berg, the CEO of the South African Wind Energy Association draws on a recent report by Moody's Corporation that South Africa has the world's fastest-growing green economy when he says, "We’ve built a R7-billion infrastructure sector in four years, all with private money, creating many jobs and significant new manufacturing capability, while quickly increasing local content beyond 45%." Moody's reported that in 2015 South Africa attracted R63-billion in asset financing for renewable energy projects – a year-on-year growth of 300%.

Partnerships and prices Many partnerships between local and international companies have already been established, with various consortiums winning several of the bigger bids in the REIPPPP. Even where a foreign company is carrying the bulk of the investment, they are obliged

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE

to have South African partners. These are often local energy companies and representatives of residents. Typically, a community trust is established to represent the interest of the local community. Among the international investors active in the REIPPPP process are Enel Green Power (Italy), Scatec Solar (Norway), Globeleq (UK), Mainstream Renewable Power (Ireland), Gestamp Renewable Energies and Abengoa (Spain), Solar Capital (subsidiary of Phelan Energy Group Ireland), SunEdison (USA), ACWA Power (Saudi Arabia), China Longyuan Power Group (China), Engie (France), juwi Group (Germany) and Tata Power of India. The lastnamed company has teamed up with the energy unit of Exxaro Resources to form a company called Cennergi. Partnerships with foreign utilities or power companies are becoming more common as the REIPPPP progresses, in part because the competition is bringing down the price at which bidders are offering to sell power. This makes it difficult for South African firms to compete on their own. Johannes Horstmann of Arup wrote in Engineering News in April 2016 that prices have dropped signifiSOUTH AFRICAN BUSINESS 2017

cantly in the course of the REIPPPP: he cites a 29% cheaper tariff for solar PV in round three than the round before (R786/MWh); and a 25% drop in wind prices (to R619/MWh). This obviously sounds nice for the consumer, but is it sustainable for investors? Horstmann notes that the trend suggests that solar PV prices could further decrease by 19% and wind by 8% but these are likely to correct to rates closer to 6% and 3%. The other factor favouring foreign investors is the fact that many of them have strong reserves of cash and don't need to borrow money. The high price of borrowing makes it difficult for South African firms to compete independently. The national utility, Eskom, is the only buyer of the energy that private companies produce. Central to the business plan of every private producer's bid is the agreement with Eskom that it can sell what it produces, at an agreed price. So there was understandable consternation when senior Eskom executives started questioning whether they would indeed continue to buy power from independent producers. Eskom's single shareholder, the South African government, quickly assured the markets (through

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SPECIAL FEATURE

the Minister of Energy and an announcement from the Office of the President) that the REIPPPP was still central to government policy. President Zuma put out a statement to the effect that, "The Presidency wishes to clarify that all the Independent Power Producer Programmes, namely renewable energy, coal and gas and any other determinations made by the Minister of Energy are and remain government policy and are supported by the Presidency." There are some energy planners (including senior Eskom personnel) who think that South Africa needs a new fleet of nuclear power stations. At the moment South Africa has one, at Koeberg in Cape Town, whose two reactors supply about 5% of South Africa's electricity. However, the amount of power produced by the renewable energy programme is growing so rapidly – and prices are coming down so fast – that some researchers are questioning whether coal and nuclear are the only kinds of energy that can supply the so-called "base load" for the national grid. The base load is the permanent minimum amount of power that the grid must be able to deliver at all times. SOUTH AFRICAN BUSINESS 2017

Conventional wisdom says that only coal and nuclear can provide that base load. But a study done by the Energy Centre of the Centre for Scientific and Industrial Research (CSIR) suggests that wind and solar power (supported by natural gas, biogas and hydro-electric power) might be up to the task. There is particular interest in natural gas as a source of a very versatile and mobile back-up for the main types of renewable energy: if the sun goes behind a cloud or the wind does not blow, it is very easy to turn on the gas. As it happens, the Department of Energy is very keen to promote gas-to-power. It is targeting the procurement of 3 126MW through its programme and intends spending R64-billion on port, pipeline, generation and transmission infrastructure at three key ports, Richards Bay, Coega and Saldanha Bay. South Africa's long-term energy plan is underpinned by the Integrated Resource Plan (IRP) but many industry watchers feel that a new one is due: the latest (published) version of the IRP is dated 2010, and the economic situation has changed quite a bit since then.

LESEDI NUCLEAR SERVICES Leaders in the South African Power Industry Home grown Lesedi Nuclear Services is a leading EPC (Engineering, Procurement and Construction) company with extensive experience in the execution of turnkey engineering projects. It has operational footprints throughout the South African power industry.

LESEDI NUCLEAR SERVICES Lesedi’s Competencies Include:

Having completed numerous projects in both nuclear and conventional environments, primarily at Eskom’s Koeberg Power Plant, construction • Project Management of the Open Cycle Gas Turbine Power Plans in the Western Cape, and • Construction Management executing EPC contracts for the balance of plants to Eskom’s Medupi • Design Engineering grown Nuclear Services-isLesedi a leading andHome Kusile Coal PowerLesedi Plants - still under construction is well- EPC (Engineering, Procurement and • Engineering Procurement and Construction) with extensive experience execution of turnkey engineering placed to play a leadingcompany role in offering competitive EPC services to the in the projects. has operational African(EPC) power industry. Construction country’s power It infrastructure industry. footprints throughout the South

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• Specialised Shutdown Maintenance Lesedi is now a level Four B-BBEE (Value Added) company and has activities (Globally) registered 9ME, 7EP, 7SF, 1GB, 1ISI and 1CE certification levels with • Provision of Technical Personnel completed projects both nuclear main a wide range of services to Koeberg Nuclear Pow the Having Construction Industrynumerous Development Board.inThe company’s Heating, Ventilation and and conventional environments, primarily Eskom’sshares Station.• Our major involvement has been in shareholder is global nuclear company, AREVA, with theatremaining Koeberg Power Plant, construction of the Open Cycle supply of personnel for plant upgrad Airtechnical – Conditioning split between Group Five, the J&J Group and local Lesedi management. Gas Turbine Power Plans in the Western Cape, and engineering, project management, • Power Plant Construction procurement a Since 2001, Lesedi Nuclear Services has provided a wide range of services executing EPC contracts for the balance of plants to

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• Nuclear, Gas Turbine, Coal Power to Koeberg Nuclear Power Station. Our major involvement has been in Eskom’s Medupi and Kusile Coal Power Plants - still the under supply ofconstruction technical personnel for plant upgrades, engineering, over Stations, Wind Turbines, Solar - Lesedi is well-placed to play aproject To date, 150 different modifications have be management, procurement and maintenance. leading role in offering competitive EPC services to completed by Lesedi at Koeberg. Our Outa • Biomass, BioEnergy, Hydrogen,

the country’s power infrastructure industry. services divisionWaste-to-Energy also provides key nuclear skil To date, over 150 different modifications have been completed bypersonnelHydro, to various nuclear facilities internationa Lesedi at Koeberg. Outage services division alsoAdded) provides keynotably in Europe, North America and South Ameri Lesedi is now Our a level Four B-BBEE (Value nuclear skilled personnel various nuclear company and hastoregistered 7EP,facilities 9ME, internationally, 7SF, 1SI LESEDI NUCLEAR SERVICES (PTY) Ltd certifi with the Lesedi also provides operational supp notably incation Europe, levels North America and Construction South America. Industry Lesedi Nuclearcontinuous Services, 12 Edison Way, Board.

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INTERVIEW

REDISA: putting waste to work Hermann Erdmann, the dynamic CEO of REDISA, is driving awareness of the value of circular economies and the massive potential for job creation.

Please give a brief overview of the history and activities of REDISA.

Hermann Erdmann

BIOGRAPHY An entrepreneur and businessman, Hermann Erdmann has extensive experience in the manufacturing and retail sectors having served on a number of industry-related boards. Erdmann's interest in environmental sustainability, transformation and empowerment of the previously disadvantaged resulted in the establishment of REDISA, and the development of the first approved Industry Waste Management Plan. SOUTH AFRICAN BUSINESS 2017

The REDISA Plan was gazetted in terms of the National Environmental Management: Waste Act, 2008, and Regulation 11(4) of the Waste Tyre Regulations, 2009. REDISA collects a waste management fee of R2.30 per kilogram of tyres manufactured or imported, paid directly to the organisation. These funds are applied according to the mandates set out in the Plan. The REDISA Plan provides government with an environmental solution at no cost to the fiscus, with its core mandates being both environmental and socio-economic upliftment through the development of both entrepreneurial and job opportunities, ultimately contributing to the economic growth of the country. The REDISA model uses the fees collected to directly fund the development of recycling industries, establishes reverse logistics networks, carries out R&D and promotes secondary interests. It will also provide producers the opportunity to reduce their costs by designing in circularity. Can you update us on progress with the Integrated Industry Waste Tyre Management Plan and new developments at REDISA over the past 12 months?

A number of achievements have been made since inception, including having created over 3 000 jobs, and supporting more than 200 SMMEs. In addition to the milestones reached in the last 12 months, the REDISA Plan has also been lauded on the international stage as a particularly successful model in terms of circular economy development. At the 2015 Global Economic Symposium (GES), the REDISA Plan was presented to an international panel and was adopted by the GES as an official solutions proposal to address critical challenges being faced internationally. In addition, in January 2016, REDISA was announced as runner-up in the Circular Economy Government, Cities & Regions category of the Circular Awards. The awards were presented at a ceremony at the World Economic Forum annual meeting in Davos.

INTERVIEW

The Circulars are the world’s premier circular economy award programme, and offer recognition to all individuals and organisations from commerce and civil society across the globe that have made a notable contribution to driving circular economy principles. R&D is a critical element of the REDISA Plan, and in 2013, REDISA signed an MOU with Nelson Mandela Metropolitan University (NMMU), which was in turn the foundation for an agreement finalised in 2014, which addressed two areas: • REDISA funds students undertaking research projects related to tyre recycling, which both contributes to knowledge in this area, and trains up people who can work in the industry. • REDISA is also using NMMU expertise to support the creation of the Product Testing Institute (PTI) which will carry out tyre testing according to SA homologation standards and international standards, and will be developing a new set of standards which will define an environmental rating for tyres. The completion of the construction of the PTI is expected within the next 18 to 24 months, with full operational capacity as a tyre homologation facility scheduled for within the next 36 months. REDISA is facilitating the establishment of the PTI that has as its main objective to test tyres and environmentally rate and certify each model of tyre.

Currently, the waste management fee paid to REDISA is standardised at R2.30 per kilogram. Once an environmental rating system has been developed and linked to tyre homologation standards, REDISA will be in a position to set a new pricing structure. This will allow those tyres manufactured using better environmental standards to have a lower fee, while those tyres that are manufactured with more adverse effects on the environment will have a higher fee. Broadly, the PTI establishment process will be construction; accreditation for SA homologation; accreditation for EU/US homologation; development of the environmental rating system. What is the vision for the future of REDISA? Since beginning operations mid-2013, REDISA’s Waste into Worth concept has been successfully implemented to further the circular economy within the tyre industry and we have achieved a number of noteworthy milestones. Our strategy for this year is to continue to meet the requirements as outlined in the REDISA Plan, particularly in line with supporting the development of SMMEs and recyclers which will further drive development of the tyre recycling industry in South Africa. This development will be achieved predominantly through investment in infrastructure, business support and research into new applications for waste.

SOUTH AFRICAN BUSINESS 2017

INTERVIEW and developing small businesses by turning waste into worth. From 1 December 2013 to the end of February 2016, REDISA created over 3 000 jobs. REDISA is currently collecting tyres from 1 385 dealers, and as the Plan continues in its five-year rollout, more dealers and collection points will be collected nationwide.

Driving awareness around the value of circular economies and the opportunities created by the concept remains key to REDISA. It is important for us as a nation to explore the notion of a circular economy, which is an exciting approach that will not only eliminate threats to environmental quality and resources, but will also positively contribute to the growth and development of the economy. The Product Testing Institute is an important enabler of circularity in the tyre industry. The circular economy approach could successfully be used to recover and recycle plastic waste, waste from agriculture, organic chemical processes and mining operations, to name a few. This would generate major socio-economic and environmental benefits, going far beyond what has already been achieved in the waste tyre sphere.

"THE CIRCULAR ECONOMY APPROACH COULD SUCCESSFULLY BE USED TO RECOVER AND RECYCLE PLASTIC WASTE, WASTE FROM AGRICULTURE, ORGANIC CHEMICAL PROCESSES AND MINING OPERATIONS."

How have REDISA's activities and opera- In addition, over 200 SMME business operations are tions improved people's lives? working with REDISA as per the Plan and rollout. Developing the entrepreneurial spirit is an important Furthermore, REDISA has put 80% of revenue economic driver and poverty eradicator for South collected from the waste management fee back Africa, and as such the REDISA Plan seeks to sup- into local communities by creating a market for the port small business owners (both new and existing), handling of waste. entrepreneurs and secondary businesses within the informal sector that will, in turn, create even more How has REDISA contributed to small business development in South Africa, job opportunities. REDISA has made significant progress towards and what opportunities are there for building a viable and sustainable circular economy business?

focusing on tyre recycling, and what we are most proud of is the impact the initiative has made to the many people both employed by REDISA, and supported in terms of secondary industry. In a little under three years REDISA has made remarkable progress in South Africa in creating jobs SOUTH AFRICAN BUSINESS 2017

REDISA is committed to small business development and job creation that is essential to help combat the escalating unemployment rate in the country. A key challenge (and one that is common for many small businesses and start-ups) is that access to funding has not been addressed adequately. The solution to

INTERVIEW derived from the OTR tyres can be used in asphalt, roofing tiles, rubber bricks and playground matting, to name but a few. How can businesses in the private sector take up opportunities with REDISA?

this challenge is our approach to entrepreneurship, business development and empowerment. REDISA’s business incubation programme addresses these funding challenges. We support the development of businesses with advisory and administrative support services. Where the business proves to be viable, the ownership is passed to candidates, at market value, who meet with specific performance requirements in terms of compliance, operational management, financial management, and product and market development. Waste Beneficiation is one such example of what is possible through REDISA’s business incubation programme. The business brings a unique solution to downsize and remove large Off the Road Tyres (OTR) from stockpiles, allowing for abatement plans to be developed and implemented at the mines. The company has the capacity to downsize between 50-60 tons of OTR tyres per day with state-of-theart machinery situated to service identified mines. The project addresses the environmental challenge posed by the vast volumes of discarded OTR tyres. In addition, Waste Beneficiation adds to the value chain of the country as the crumbed product

There is a growing demand for more and more waste tyres that can be used for end products made from the rubber, steel and textile derived from processing waste tyres. Crumb rubber is the result of processing automotive and truck scrap tyres in particular. During this process the steel and tyre cord (fluff) is removed, leaving tyre rubber with a granular consistency. This rubber crumb is often used in astro-turf as cushioning, where it is sometimes referred to as astro-dirt, asphalt for tarring the roads, floor mats, carpet padding, vehicle mudguards and adhesives. Due to this growing demand, we see this as an opportunity for new recycling businesses to get involved in the value chain. REDISA welcomes and encourages all compliant small businesses interested in recycling to submit an application to get involved in the REDISA Plan and to assist us to develop the economy of the country. We have always believed that with waste comes opportunity, and that by looking at waste differently from a circular economy perspective we can only grow as an economy. With South Africans generating more than 108-million tons of waste per year and only 10% of this being recycled, there is an opportunity to turn the burden of waste around.

CONTACT INFO Tel: 087-35-73873 Email: customersupport@redisa.org.za Website: www.redisa.org.za.

SOUTH AFRICAN BUSINESS 2017

INTERVIEW

Turning waste into wealth REDISA is helping to clean up the environment and, as the same time, empower and create jobs for thousands of South Africans. REDISA director Stacey Davidson plays a crucial role in the organisation’s community development initiatives.

Stacey Davidson

What message would you like to share with the business community about the work of community-based organisations?

It’s essential to develop some kind of social impact, and it’s best if this is community based or with organisations that are home-grown. After all, when you actually understand the situation then you understand the context in which the stakeholders operate. When you understand the extent of the problem you are in a position to provide basic solutions. I always say that you can’t bring a Japanese model and apply it to Africa. The same applies when we’re looking at ways to deal with community problems. You need to have community players participate and I think that’s where REDISA has been successful because, as a public benefit organisation, we’ve really focused on understanding the South African challenge within the global context. We looked at waste and, where others saw rubbish, we saw potential, we saw opportunity… and we actually saw commodity.

BIOGRAPHY Stacey Davidson joined REDISA in 2010 as a director, after working in various industries including finance. Davidson's interest in the economic empowerment of previously disadvantaged communities resulted in her volunteering for communitybased organisations such as NICRO, CAFDA and Triple Trust Organisation. It was Davidson's passion for community development which prompted her to join REDISA. SOUTH AFRICAN BUSINESS 2017

"WE LOOKED AT WASTE AND WHERE OTHERS SAW RUBBISH WE SAW POTENTIAL, WE SAW OPPORTUNITY AND WE ACTUALLY SAW COMMODITY." What are the challenges in commoditising waste? We developed REDISA’s Waste into Worth concept, and this highlights the legal concept of extended fiduciary responsibility. This effectively means that if you’re manufacturing a product then you are responsible to deal with that product when it no longer has a

INTERVIEW

useful life. The challenge with extended fiduciary responsibility is that we’re looking to industries in the manufacturing sector to solve this problem, and that’s why we say that it's wrong to make the boss the gardener. I’m always astonished by the level of innovation that I am privileged to see among low-skilled workers. They are so capable and bursting with potential, but the problem is that we’re not yet taking the opportunity to these people, and that’s why it’s important to get them into the system. Once these people have been brought into the supply chain we ensure they have access to accredited courses and skills development to ensure that they have the opportunity to improve their own skill levels so they can migrate up the value chain.

"I ALWAYS SAY THAT YOU CAN’T BRING A JAPANESE MODEL AND APPLY IT TO AFRICA." Why is the circular economy so important? When we deplete all of our virgin resources, recycling will be the only place that we will be able to get these resources from, so it makes sense from a strategic perspective. Building a circular economy requires a strong plan for recycling waste, which

requires that you ensure that recyclable material is always picked up and put back into the system. Please give us some background to data sanitisation and a community-based marketing strategy.

Data is a problem in South Africa, specifically for us because most of the communities that REDISA’s initiative aims to empower are informal, so they don’t have a formal address and so on. How we look to overcome the problem is through the mobile technology that we use, a lot of which is GPS-based. For instance, our registration process is done via mobile technology so we’re able to utilise where the person lives and works based on where they’re registered and, from that, we can factor their details into a system. One of the challenges for a community-based organisation is that, when it comes to driving out social impact, I believe that the perception of these organisations needs to change. The challenge is so big that you need to attract the right kinds of minds because, if you are dealing with public and social issues, you need to be the best of the best driving your initiatives. However, if you want to attract foreign investment, for example, then you need to be able to demonstrate the return on that investment. In other words, you need to demonstrate the impact that you are making.

CONTACT INFO Tel: 087-35-73873 Email: customersupport@redisa.org.za Website: www.redisa.org.za

SOUTH AFRICAN BUSINESS 2017

Looking north South African companies are looking to intra-African trade to expand their businesses and improved infrastructure is key.

frica has a population of 1.2-billion, but less than 10% of the trade that happens on the continent is between African countries. Fully 30% of South Africa's exports are to other countries in Africa, but a massive 83% of this volume is into Southern Africa. This means that the potential for South Africa to grow its exports into other parts of Africa is enormous, if the infrastructural obstacles can be overcome. According to Taku Dundira, writing for tralac.org, South African exports into Africa in 2014 amounted to 16% of the total from other countries within Africa, putting SA in second place in the league table (Nigeria was ranked first, Angola third). The value exported by SA into Africa was $28-billion and just over half of the exports coming from the manufacturing sector. The four biggest manufacturing sub-sectors were machinery (33%), transport equipment (including light vehicles, 22%), base metals (20%) and textiles and clothing (5%). A number of South African companies have been looking north to expand their operations. Shoprite has been spectacularly successful in rolling out is supermarkets across the continent, Procter & Gamble has manufacturing facilities in Nigeria and Sanlam has 20% of the insurance market in SubSaharan Africa. Old Mutual has purchased Oceanic Life, a Nigerian life insurance company. There are plans to create a Tripartite Free Trade Area covering three regional groupings across 26 SOUTH AFRICAN BUSINESS 2017

countries. Extending from South Africa in the south and to Uganda and Kenya in the north, the proposed free trade area would encompass more than 620-million consumers in these three regional organisations: Southern African Development Community (SADC), the Common Market for East and Southern Africa (Comesa) and the East African Community (EAC). The buzz-words in promoting intra-African trade are "bureaucracy", "corridors" and "infrastructure". South African retailer Shoprite has noted that it spends about R20 000 per week in permits, and long waits at border posts are routine. But the Chirundu one-stop border post in Zambia has reduced transit times by a third. Passenger transport delays have been reduced from three hours to 30 minutes and freight is now cleared in one day instead of three. A number of corridor projects are in the pipeline or have already been implemented. The Maputo Development Corridor has successfully linked the thriving industrial and business centre of Gauteng Province in South Africa with the Mozambican port city of Maputo. The idea of corridors has been adopted by the Infrastructure Consortium for Africa (ICA), and several corridors have been conceptualised since that decision, for example the Northern Corridor of Central and East Africa. A corridor strategy relies on infrastructure, with inter-related plans being developed involving the

SPECIAL FEATURE of the SDIP were the World Economic Forum (WEF) and the Organisation for Economic Co-operation and Development (OECD) and other members now include the Bill and Melinda Gates Foundation, the Senegal Strategic Investment Fund (FONSIS), US Agency for International Development (USAID), the Industrial Development Corporation of South Africa (IDC) and the Development Bank of Southern Africa (DBSA). The DBSA is concentrating on energy, transport and bulk water projects in its area and has plans to increase its investments to about R20-billion in the short term. The focus of organisations such as the DBSA is on infrastructure, and this will have a positive spin-off for trade of all kinds, through improved ports and roads, and healthier populations in rural and urban areas. China has pledged to support the rehabilitation of the railway line between Zambia and Tanzania while the Industrial and Commercial Bank of China is to invest R20-billion in renewable energy in Africa. Lack of reliable power supply is a constraint to trade so this and other ventures in the power sector will help to foster trade. The South African Department of Trade and Industry (dti) plays a key role in terms of promoting trade between South Africa and the rest of Africa, but also supports regional bodies such as SADC and promotes the kind of integration contained in the plans of the New Partnership for Africa’s Development (NEPAD) and the African Union’s Agenda 2063. During 2016 the dti launched the Trade Invest Africa initiative to coordinate and implement South Africa's economic strategy for Africa. By working with the private sector, government hopes to take advantage of export and investment opportunities on the continent. The Export Credit Insurance Corporation of South Africa (ECIC) exists to help trade and investment across borders. The ECIC can provide insurance for bank loans that are taken by investors and South Africans can get insurance for investments and for small and medium enterprises there is a product available (performance bonds) to anyone exporting capital goods and services.

upgrading and standardisation of facilities at ports, railway lines, customs posts and energy projects. South African rail, ports and pipeline operator Transnet is already active in African countries north of the South African border, and is intending to offer its services more widely. This is part of Transnet's Market Demand Strategy (MDS), which seeks to grow the business by responding to the market. Instead of simply making rail wagons for Transnet Freight Rail, the broader strategy looks for new customers (elsewhere in Africa, or in India, China or Australia) where rail wagons can be sold. Transnet Engineering's own TransAfrica Locomotive (for branch lines and shunting yards) is being marketed to other African countries and mining companies. Another strand of the MDS is evident in Transnet Engineering planning to set up Maintenance Repair and Operations (MRO) centres in four African countries. Transnet Ports Authority might similarly offer its expertise in running harbours and logistics to countries in the corridor. The Sustainable Development Investment Partnership (SDIP) comprises 30 institutions that aim to see 16 African infrastructure projects (valued at more than $20-billion) carried out. The founders

SOUTH AFRICAN BUSINESS 2017

FOCUS

ECIC: 15 years of export project excellence The Export Credit Insurance Corporation of South Africa has a unique understanding of Africa’s export dynamics.

he creation of the ECIC began 15 years ago in July 2001 when the Export Credit Insurance Corporation of South Africa Ltd (ECIC) was given a mandate of filling a market gap through provision of medium to long-term export credit and investment insurance by underwriting bank loans against political and commercial risk, on behalf of the South African government. The short-term transaction market was amply catered for, but medium to long-term export transactions still had a need for a dedicated export credit agency, hence the establishment of the ECIC. Although regarded as the "insurer of last resort", the ECIC is as much of an enabling development organisation as it is an export credit agency (ECA), explains its chief executive officer, Kutoane Kutoane. Acting as a catalyst for private investment, the ECIC steps in where commercial lenders are either unwilling or unable to accept long-term risks. While the ECIC is part of a broader government policy, it remains an autonomous limited liability company, but with the government as its sole shareholder. The institution is enabled under the amended Export Credit and Foreign Investments Insurance Act of 1957.

"ACTING AS A CATALYST FOR PRIVATE INVESTMENT, THE ECIC STEPS IN WHERE COMMERCIAL LENDERS ARE EITHER UNWILLING OR UNABLE TO ACCEPT LONG-TERM RISKS." Along with the major shareholder, the Department of Trade and Industry, the ECIC makes use of market research tools and specialised business development units to develop new insurance products that support government’s export promotion objectives. SOUTH AFRICAN BUSINESS 2017

ECIC CEO, Kutoane Kutoane

Performance Bond insurance cover, which was launched in 2015, is one such example. Currently, the ECIC is working on covering credit lines and return of plant and equipment, but it also continues to motivate for the release of increased lending capacity by financial institutions by entering into agreements with other ECAs. In this way it creates a framework for both re-insurance and co-insurance and, to this end the ECIC has adopted a comprehensive plan of action aimed at actualising cooperation programmes for mutual benefi t in conjunction with, among others, BRICS, ECAs, Afreximbank and Africa Trade Insurance.

FOCUS

The ECIC is strategically positioned as a key player in facilitating the availability and affordability of long-term finance to aid in unlocking the development potential of such operations, particularly in economically frustrated regions that experience fiscal constraints. It is well known that Africans are extremely proud of their heritage and that the strategies that foreign investors might apply elsewhere in the world need to be revised for the continent. The dynamics of the problems that African leaders and financiers face need comprehensive understanding and this is where the ECIC excels. The ECIC addresses

obstacles through facilitation and by aiding in the release of funding required for infrastructure, and this is of particular concern to global organisations seeking an African presence. Export credit is imperative for the specific reason that capital exports are long-dated assets and it is customary for firms to finance such exports with bank debt for cash-flow management purposes. Export credit financing is, therefore, an important and key aspect of international trade. Access to competitively priced export credit creates the ability for our local contractors to bulk up and compete more effectively in foreign markets. With the ECIC in support of such transactions, the South African export market is enabled and contractors become more credible. This has a far-reaching impact on fostering a stronger economy and drives domestic job creation, contributes to fixed-capital formation and the GDP, as well as the generation of fiscal revenue. "The ECIC is able to price African risk more effectively given its indigenous status even though demands might be universally similar. Ideally, what we ensure is the provision of cost-competitive cover and the honouring of claims when they arise," says Kutoane. The ECIC's vision and mission is a commitment to sustainable business growth through innovative products, operational excellence, business development and strategic partnerships and, in enabling frontier markets to optimise production, it is motivating a positive socio-economic impact. "We also play a role by offering aid in narrowing the skills gap with a number of initiatives related to education, skills development and volunteerism. Beneficiaries of these projects have included Penreach in Mpumalanga, the Rehoboth Trust in KwaZulu-Natal, the Maths and Science Leadership Academy in the Northern Cape, and DeafSA in Limpopo," says Kutoane. The ECIC is a registered financial services provider: FSB No. 30656

CONTACT INFO Physical address: Block C7 & C8, Eco Origins Office Park, 349 Witch Hazel Avenue, Highveld Ext 79, Centurion, 0157 Postal address: PO Box 7075, Centurion, 0046 Tel: +27 12 471 3800 | Fax: +27 12 471 3850 Email: info@ecic.co.za | Website: www.ecic.co.za

SOUTH AFRICAN BUSINESS 2017

SPECIAL FEATURE

Skills development Detailed national plans are in place to promote skills training.

outh Africa has a skills deficit. Strenuous efforts are being made by government and the private sector to develop the skills base of the country's workforce. The national Department of Higher Education and Training (DHET) has designated 2014-2024 as "The Decade of the Artisan". As things stand, about 13 000 artisans qualify every year: the goal (as defined by the National Development Plan) is to extend that figure to 30 000 by the year 2026. The state has also noted a number of skilled occupations that it has put on a "Occupations in Demand" list in order to be in a position to roll out ambitious infrastructure projects. These include civil engineers, construction project managers and quantity surveyors. The creation of the Labour Market Intelligence Partnership (LMIP) Project in 2012 was a collaboration between the DHET, the Human Sciences Research Council (HSRC) and Wits University. The aim was to develop a forecasting model to find out what skills would be needed by the country in the future. The National Skills Authority (NSA) works with Sector Education and Training Authorities (SETAs) in carrying out the National Skills Development SOUTH AFRICAN BUSINESS 2017

Strategy (NSDS). The Human Resource Development Council of South Africa (HRDCSA) is an over-arching body that aims to give guidance to the many institutions working on skills development and training. It is managed by the DHET. The HRDCSA has identified five key areas where the skills pipeline must be improved: • Access to TVET colleges • Intermediate skills (artisans in particular) and professionals • Production of academics; collaboration between industry and educational institutions in research and development • Worker education • Foundational learning The HRDC's work readiness programme helps graduates learn the skills they need in order to find employment. Absa Bank also runs a "ReadytoWork" campaign that aims to close the gap between education and the world of work. The programme has previously been presented in six other African countries. The strategic goal of the DHET can be summed up as the creation of "a capable and skilled workforce for inclusive growth". There are many

SPECIAL FEATURE institutions supporting this goal, including 29 universities (some of which are universities of technology), 50 Technical and Vocational Education and Training colleges (TVET) and 21 Sector Education and Training Authorities (SETAs). Particular skills have been identified and universities and TVET colleges have been asked to concentrate on 13 trade areas, including bricklayers, millwrights, boilermakers and riggers. R16.5billion has been allocated by national government to skills development and infrastructure over the medium term. SETAs collect dues from companies in a particular industry (wholesale and retail, banking, construction, chemical industries, for example) in order to promote training in that industry. A percentage of this money is returned to the company if that company can show that they have a workplace training plan. The rest of the money is used to offer skills training. TVET colleges exist to impart skills that are relevant to the workplace. Every province has several of these colleges, many of which are the successors to "technical colleges" and they offer many of the courses that were associated with those institutions. Although many bursaries exist for students and enrolment at colleges has risen steeply in recent years, the high cost of some courses means that these colleges are not accessible for unemployed people. The College of Cape Town (CCT) has eight campuses and its selection of courses gives a good illustration of the range of studies available to students at TVET colleges. Courses at CCT range from engineering (electrical, civil and mechanical), through travel and tourism, hospitality, hair care, beauty therapy and art and design, to business studies, information technology and education and training. The college has three residences in different parts of the city. Career guidance is offered and the college has a work placement programme for graduates. Private colleges such as MANCOSA (Management College of Southern Africa) often specialise in particular fields. In this case, a range of certificates, diplomas and degrees in business, commerce and administration is presented at five sites around South Africa, including East London and Polokwane. The MANCOSA Graduate School of Business in Durban

offers executive education and postgraduate management programmes, including the Master of Business Administration (MBA) degree. The Southern African Wildlife College offers even more specialised training. With facilities adjacent to the Kruger National Park and the Timbavati Game Reserve, students studying to be field staff or managers of protected areas have the best possible environment in which to learn. Among the certificates offered are Nature Conservation Implementation and Leadership and Trans-frontier Conservation Management. The new university in Mpumalanga is incorporating existing training institutions in the province to enable it to give theoretical and practical courses in agriculture and biodiversity, food security, resource and wildlife management, nature conservation, plant and animal sciences, and forestry and wood sciences. Mpumalanga is one of the country's most important provinces when it comes to flora and fauna, game tourism and forestry so students will be learning skills relevant to the job market. Skills development is being promoted on a broad front. Some examples include: • The Sasol Inzalo Foundation (Saif), which supports students in science and engineering: 105 black, mostly female students graduated in 2015. • The Square Kilometre Array (SKA) radio telescope project has so far supported 800 people in training from artisan level to post-graduate academic study. • Transnet National Ports Authority (TNPA) is building a marine training centre in Cape Town to supplement the Transnet Academy. Transnet will spend more than R1-billion on bursaries to 2023. • A South African Renewable Technology Centre (SARTEC) has been established by the Department of Higher Education with the support of the German government. • AgriSETA is offering skills programmes and mentorships to unemployed people together with the Department of Rural Development and Land Reform, the SA Sugar Association and Grain SA. • The Association for Skills Development in South Africa (ASDSA) is a body that confers professional "designations" on skills developers.

SOUTH AFRICAN BUSINESS 2017

FOCUS

Building South Africa’s human resources through industry-education partnerships The Human Resource Development Council is assisting in bridging the gap between higher education and the needs of business.

The HRDC is partnering to innovatively develop South Africa's human potential.

Industry-education partnerships are collaborative efforts that bring higher education institutions, businesses and community together to address their mutual interest in higher and further education. While helping to advance the educational development in higher and further education institutions, the partnerships also address skills scarcity needs. They provide stakeholders outside the education and training system, like the private sector, with an opportunity to contribute in the development of educational programmes and related decision-making. The industry and education partnership initiative of the Human Resource Development Council (HRDC) encourages partnerships between education institutions and other stakeholders, primarily, the private sector, SETAs and communities, to enhance the performance of the education sector. The point of departure for the initiative is an acknowledgement that there are generally low levels of human resource development among the majority of the forSOUTH AFRICAN BUSINESS 2017

merly disadvantaged population and high unemployment rates, especially among the youth. The Post School Education and Training (PSET) system holds a key to unlocking the human resource development challenges. This includes unemployment, and ultimately contributes to the broader objective of socioeconomic transformation and a more equal society. There is good reason to believe that education institutions should work proactively with industry to deliver appropriately skilled and capacitated graduates to meet societal and economic needs. One of the main objectives of the White Paper is a stronger and more cooperative relationship between education and training institutions and workplaces. There are currently a number of partnerships that the HRDC is actively driving and working on, to ensure they succeed. Key among these is the recent partnership between the community colleges and Harambee to ensure that learners from these colleges are

FOCUS trained and successfully placed in jobs after completion. A number of private-sector companies and SETAs have responded to this call positively and declared themselves available to partner to ensure that youth unemployment is addressed. Standard Bank South Africa has also embraced the HRDC initiative of fostering partnerships and has developed a partnership initiative called SBSA Value Add Offering. This partnership offers a number of programmes to colleges depending on their needs. The overall purpose is to offer services ranging from expertise and standards to funding, workplace training, networks with other colleges and between lecturers and industry experts and employment opportunities for learners. This initiative was endorsed by the HRDC on 13 September 2016. SBSA Value Add Offering provides T VET colleges with programmes aimed at management, lecturers, students and the entire institution. The HRDC has a programme called “Adopt a TVET college” where industry is encouraged to adopt a TVET college so that the industry is able to make contributions towards what learners are taught practically in order to make the transition from college to the workplace a smooth one. “It is essential therefore that we work together with government, business and other stakeholders to improve the scale, quality and relevance of our TVET college system,” said

the Deputy President of South Africa during the launch of “Adopt a TVET college”. Some of the colleges that have embraced this initiative include the Flavius Mareka College, which states that its partnership with Sasol is a key partnership born out of the HRDC initiative, and the Ekurhuleni West College, which has many partnerships including one with Ford South Africa. The partnership with Ford provides practical experience both at college and workplace to learners who are studying towards a qualification in motor mechanics. The Ekurhuleni East College has, among others, partnered with Samsung Electronics to ensure quality training and placements for Work Integrated Learning for learners who are studying electronics. The complex challenges of poverty, inequality, high levels of unemployment, illiteracy, crime and disease require collective efforts to respond appropriately and effectively. Neither government nor the market can develop the necessary capabilities required to address these challenges on their own. The collaboration between education institutions and industry will enhance capabilities to address South Africa’s complex challenges. The education and training system requires close cooperation with industry, especially in the programmes providing vocational training. This will reduce the mismatch of educational outcomes and workplace requirements. There is increasing need for universities and colleges to contribute towards the economic development of the country through the development of a knowledge economy that is competitive and open to innovation, adding value to the technological capabilities in industry. At the same time, higher education institutions can also benefit from collaboration and partnership agreements with industry, as in the above examples. When industry and higher education institutions work hand in hand to reach new heights of knowledge, they become a powerful engine for innovation and economic growth. The HRDC has prioritized these partnerships. The perceived disconnect between higher education and industry is partly due to the lack of adequately trained graduates for industry, mainly those with measurable skills in science, technology, engineering and mathematics (STEM) subjects. This remains a key concern for business. Business and post-school education have found common cause in recent decades in preparing a skilled workforce to preserve the nation’s competitiveness and economic opportunities in response to rapid technological change and increasing global competition. Where meaningful partnerships exist between business and higher education, the gaps between the supply of graduates and the demand for skills are significantly reduced, and the needs of businesses are more closely associated to the academic curricula. www.hrdc.org.za

SOUTH AFRICAN BUSINESS 2017

FOCUS

Positive change through enterprise development The Masisizane Fund’s new CEO, appointed in mid-2016, has pledged to continue the work of the Fund in contributing to positive change in South Africa.

Zizipho Nyanga, the new CEO of the Masisizane therefore we need to work closely with those that Fund, has 10 years’ experience in business support, have a similar mandate to us in order to make meanentrepreneurship, deal making, financial manage- ingful impact. Maintaining strong and effective partment, auditing, risk advisory and internal control nerships with institutions like SEFA, Productivity SA, improvements in fast-paced organisations. SEDA, SAICA and Department of Rural Development Promoted to the position of CEO in October is very important in ensuring this," Zizipho says. 2016, she initially joined the Masisizane Fund in Zizipho holds a BCom Accounting from the (for2014 as the Head of Post Investment Monitoring mer) University of Transkei and a Higher Diploma in and Business Support. Accounting from Wits University. After graduating During this time she also served as the Alternate she joined Ernst & Young (EY) as a Trainee and later Chairperson of the Executive Committee Credit qualified as CA (SA). Review and a Member of the Enterprise and EY’s global footprint provided her with an interSupplier Development Committee (Mutual & Federal). national opportunity while she was seconded to “Institutions like ours have a very important role to the San Jose office in California. During her time play in creating access to funding for small businesses, there she was exposed to the entrepreneurial culture in small businesses and her passion for rural development and economic transformation was born. “I learnt that the only way to truly bring about economic transformation is to walk a journey with the business and assist them to grow into a thriving enterprise rather than to just give them money, waiting for them to pay back and hoping for the best. Growing and assisting a business successfully can only be done through establishing good and trustworthy partnerships,” Zizipho says. It is evident from her career history that Zizipho has the skills and experience necessary to continue building on the good work of the Masisizane Fund. The Fund is an Old Mutual initiative set up as a non-profit funding company to provide financial and non-financial support to small, medium and micro enterprises.

Zizipho Nyanga SOUTH AFRICAN BUSINESS 2017

MASISIZANE FUND The Masisizane Fund (NPC) is an initiative of Old Mutual South Africa, established in 2007 following the closure of the Unclaimed Shares Trust. The mandate of the Fund is to contribute meaningfully to employment creation, poverty eradication and reduction of inequality, economic growth and the attraction of investment. This is achieved through the promotion of entrepreneurship, enterprise finance and support to small, micro and medium enterprises. The fund’s focus is on enterprises that are 51% or more owned by previously disadvantaged individual(s) giving priority to rural and peri-urban/township areas. Masisizane gives preference to businesses that are owned by youths, people with disabilities or are owned by (51% or more) women and targets productive and labour absorbing sectors. The Fund’s success is driven by a focused approach on high impact industry sectors, coupled with a comprehensive SMME finance solution that includes business support. The Fund provides loan finance in the following sectors: Agribusiness Franchising Supply Chain The Fund supplies non-financial value adding post investment services including capacity development, business management and technical support, financial education, market development and product/service quality standards and compliance. A Business Accelerator Program has been established where potential clients receive targeted skills training and support to grow into a business eligible to receive financial support. Masisizane operates nationally with its head office in Gauteng and regional offices in KwaZulu-Natal, Limpopo, Eastern Cape and Western Cape. Submit the following documents for an initial screening by the relevant provincial office: • Comprehensive business plan with market analysis and projections; • For established businesses – past financials (preferably 3 years) and latest management accounts; • For start-up businesses – financial projections; • Tax clearance certificate; • Off take agreements and/or letters of intent; • Signed consent for a credit check. Contact details: • Gauteng, North West and Free State – 011 217 1746 • Western and Northern Cape – 021 509 5074 • KwaZulu-Natal – 031 335 0400 • Eastern Cape – 043 704 0116 • Limpopo and Mpumalanga – 015 287 4279

For more information and where to find us visit www.masisizane.co.za

An initiative of the

Old Mutual is a Licensed Financial Services Provider

Group

PROFILE

Novus Holdings Leading innovation and progress in printing and manufacturing.

Through operational expansion, diversification and investment in cutting-edge technology, Novus Holdings has become the most comprehensive commercial printing and manufacturing operation in South Africa. Previously known as the Paarl Media Group, Novus Holdings operates a nationwide network of specialised plants with its headquarters based in Cape Town. With a rich heritage built on 100 years of combined experience, the Group services the African continent with print production of short- to long-run magazines, retail inserts, catalogues, books, newspapers, commercial work, wet glue labels, self-adhesive labels, educational materials, as well as digital and securitised printing (ballot papers, examination papers, census forms) and tissue products.

Continued extension and diversification of product offerings Novus Holdings is always committed to pursuing opportunities that are synergistic to its inherent core strengths and has growth potential in line with its diversification strategy and the expanding needs of its customers.

Novus Holdings is committed to making a sustainable difference in the communities in which it operates, as well as driving skills development and transformation within the industry. The Group continuously invests in and implements environmentally responsible practices to reduce, re-use and recycle, while still delivering superior products.

The Group’s diversification process includes a firstclass print-on-packaging and labelling division, as well as a tissue division that produces domestic tissue paper through the effective use of waste paper from the printing operations.

The resilience of Novus Holdings’ business can be attritbuted to its long-standing customer base, diversified product offerings, outstanding service and ability to innovate and offer unique propositions to the market as the landscape changes.

CONTACT INFO Tel: +27 21 550 2500 Physical address: 10 Freedom Way, Milnerton, 7441 Postal address: PO Box 37014, Chempet, 7442 Email: info@novus.holdings Website: www.novus.holdings

Capital expenditure in excess of R3-billion has been spent since 2000 to ensure that the Group’s facilities are equipped with modern global technology, perfectly positioning Novus Holdings as a single source for all printing requirements. SOUTH AFRICAN BUSINESS 2017

LABELS

TISSUE

novus holdings

www.novus.holdings

KEY SECTORS Overviews of the main economic sectors in South Africa Agriculture

Mining

Mineral beneficiation

Oil and gas

Energy

Water

Engineering

Manufacturing

Chemicals and pharmaceuticals

Food and beverages

Automotive

Transport

Information and communications technology

Education and training

Tourism

Banking

102

Development finance and SMME support

104

OVERVIEW

Agriculture Agri-processing is a key focus of future investment.

outh Africa's varied climate and wide range of soils ensure that it is able to produce a very diverse range of agricultural products. The country's agricultural exports earn the country valuable foreign exchange. Fruit, sugar and wine make up about 7% of the country’s total export basket. Avocados and tomatoes are among other important export crops, while the macadamia nut industry is growing exponentially. More than 50% of agricultural export is made up of processed agricultural products, a promising development for the future of agriprocessing. National trade policy strategies are intended to enhance this trend. Several of the Special Economic Zones around South Africa either have or will in the future have agri-processing facilities. Examples include existing tomato paste and dairy facilities at Coega IDZ, as well as plans to develop the Harrismith SEZ into a hub for agri-processing. The National Empowerment Fund (NEF) currently spends six percent of its allocation on agri-processing but intends to increase that. The focus for the spending of R288-million to date has been on small, medium and micro enterprises (SMMEs) and the NEF is just one state entity that has this focus. Several others are similarly engaged, for example, the Free State provincial government is rolling out a plan to create agri-parks to provide trading facilities, access to markets and training. The Free State Department of Agriculture and Rural Development (DARD) has highlighted the fact that only 11% of the province’s SOUTH AFRICAN BUSINESS 2017

SECTOR INSIGHT The NEF intends to increase the proportion of its budget spend on agri-processing projects. primary agricultural production is processed within the province. A severe long-term drought had a big impact on South African agriculture. Good rains only came in July 2016, by which time the country had to import yellow and white maize (8.3-million tons in total) for the first time in more than a decade. The potato price doubled in 2016. The average 10kg pocket cost R28.45 in 2015, R63.30 in March 2016. The Industrial Development Corporation (IDC) put up R400million to allow the Land Bank to

OVERVIEW advance loans to farmers in five provinces in areas that were declared disaster areas. About 850 000 people are employed in the agricultural sector (StatsSA) but many sub-sectors have been laying off workers in recent, dry, times. The exceptions were forestry and aquaculture, both of which increased their labour force. Primary agriculture provides 5% of formal employment in South Africa. A number of former farmers' co-operatives are now substantial agri-businesses. Most have a specific geographic and farming sector focus (BKB is strong in the eastern Free State and Eastern Cape and concentrates on wool and mohair, for example) while some, like the giant grain concern Afgri, have a national presence. Afgri, which is headquartered in Centurion, Gauteng, recently signed a joint venture (GeoAgro Africa) to give its farmers access to satellite technology. Senwes is another company that focusses on grain, and it controls 68 silos. Its operations are run from Klerksdorp in North West Province. Other companies include NTKLA (Limpopo), GWK (Northern Cape), Klein Karoo Agri, VKB (eastern Free State and Limpopo), Kaap Agri (from the Boland to the Eastern Cape and up to Namibia), SSK (Overberg) and TWK (KZN and Mpumalanga).

Crops Global demand for macadamia nuts continues to outstrip production, but South African farmers in

KwaZulu-Natal, Mpumalanga and Limpopo are doing their best to keep up. About one thousand new hectares are being planted every year, according to the Southern African Macadamia Growers' Association (SAMAC), adding to the existing 19 000 hectares already under macadamias. South Africa is currently the number one supplier in the world, with 27% of the market, followed by Australia. Production of nut-in-shell improved by almost 5% in 2015, to 46 950 tons. About 45% of the previous year's crop was exported, mostly to the USA and Europe. About 3 000 new jobs have been created in the last decade, plus another 1 000 in cracking facilities. A total of 70% of South Africa’s grain production is maize, which covers 60% of the cropping area of the country. The North West Province produces one-third of South Africa’s maize and about 15% of its wheat. The Free State is the country’s largest supplier of wheat (37%) and maize (34%). The Western Cape has 350 000 hectares of wheat-producing land. The South African feed industry has an annual turnover of about R50-billion with most of the raw material being soya and maize. Two of the country's big three sugar producers (Illovo Sugar and Tongaat Hulett) each shut down one of their mills temporarily because of the drought but South Africa still crushed 17.7-million tons of sugar cane in the 2014/15 season. Saleable sugar production figures have returned to two-million tons plus since 2013/14, after dropping to 1.8-million tons in 2011/12. The other big sugar company, TSB Sugar, has been acquired by RCL Foods. TSB milled a record 702 000 tons of raw sugar in 2014/15. The Free State Province supplies significant proportions of the nation’s sorghum, sunflower, potatoes, groundnuts, dry beans, and almost all of its cherries. Barley and canola are produced in the Western Cape. Products distinctive to South Africa, such as rooibos tea (Western Cape) and marula berries (Limpopo) hold great potential to capture niche markets internationally.

Fruit South Africa is famous for its fruit. Export volumes, particularly in tropical fruits such as mangoes and avocados, have been growing rapidly in recent years. The sector is highly sophisticated and is skilled at the refrigeration and packing required for European Union standards. Large volumes of exports are achieved in deciduous fruits such as apples, table grapes, pears, peaches, plums and apricots. Avocados thrive in Mpumalanga and Limpopo and production volumes above 110 000 tons per year have been achieved. About 45% of production is exported. Most of South Africa’s citrus and subtropical fruit comes from the eastern part of Limpopo. Some of the world’s biggest farming enterprises operate in Limpopo Province. Westfalia (which is part of the Hans Merensky Group) is an avocado grower of note, while ZZ2 is a

SOUTH AFRICAN BUSINESS 2017

OVERVIEW huge fresh tomato enterprise. Halls has an international reputation for avocados and litchis. Companies such as Capespan and Dole SA move huge quantities of fruit around the world. South Africa exports about 650 000 metric tons to the EU (about 40% of the total). This brings in total earnings of R9-billion, of which R4-billion is from the EU. A new development in the citrus sector is the establishment for small growers of the Growers' Development Corporation. The ban on black spot, which the EU introduced in 2013, was lifted in January 2014. The South African producers always claimed that the spot was not harmful in any way, but just a cosmetic blemish. The Orange River supports the cultivation of citrus and grapes of many kinds. The region is particularly well suited for the cultivation of Valencia oranges, lemons and grapefruit and the dry, hot conditions mean that it is easy to control pests.

Wine Export volumes have been steadily rising for South African wines. There are about 3 500 wine producers in South Africa, with the large majority located in the Western Cape. There are 54 producer cellars. The industry is located, for the most part, in the Western Cape, but Orange River Cellars in the Northern Cape is growing production volumes. Europe remains the main export market but India and the Far East are growing in importance as destinations. The Distell group produces about a third of the country’s natural and sparkling wine and is ranked 12th in the world in global wine volumes sold.

Livestock Livestock farming is the largest agricultural sub-sector in South Africa. The Eastern Cape is the largest livestock province. South Africa has a beef herd of 14-million. Clover, Africa’s largest milk processor, has a turnover of R6-billion and a staff of more than 6 500. The Eastern Cape provides approximately a quarter of South Africa’s milk. Parmalat has two plants in Port Elizabeth.

ONLINE RESOURCES Agricultural Research Council: www.arc.agric.za Forestry South Africa: www.forestry.co.za National Department of Agriculture, Forestry and Fisheries: www.daff.gov.za

SOUTH AFRICAN BUSINESS 2017

There are 6.4-million goats in South Africa. The Kalahari Kid Corporation (KKC) intends to raise the standard of goat meat and expand the export market. South Africa produces about 55% of the world’s mohair, the high-quality speciality fibre taken from Angora goats. Almost all mohair farming is done in the Eastern Cape.

Forestry and paper The forest product export sector in South Africa is made up of paper (45.2%), solid wood (23.3%) and pulp (28.9%). Imports, weighted towards paper products, cost the country R9.8-billion annually, clearly indicating scope for increased domestic production. The sector employs approximately 462 000 people with some two-million dependants. Mondi and Sappi are both large international companies. The pulp and paper sector makes a direct contribution to South Africa’s balance of payments of R4.5-billion, largely due to Sappi’s dissolving wood pulp operations. Mpumalanga has South Africa’s biggest sawmill and its largest panel and board plant, together with the biggest integrated pulp and paper mill in Africa. There are sophisticated plants at several locations around the country: the country’s largest hardboard plant is at Estcourt.

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FOCUS

Mondi Rotatrim – celebrating more than 30 years of excellence The leading office-paper brand is produced at the Durban mill.

ondi Rotatrim, produced by the Mondi Group at our Merebank mill in Durban, is celebrating more than 30 years in the South African market. Mondi Rotatrim is a leader among office paper brands that offers superior multi-functional office paper that runs smoothly through photocopiers, laser and inkjet printers. The brand carries the Forest Stewardship Council Chain-of-Custody certification, an independent international accreditation providing assurance to customers that Mondi Rotatrim is produced from responsibly managed forests. Made from Elemental Chlorine Free (ECF) pulp, Mondi Rotatrim is the only locally manufactured paper with a 160CIE rating for superior whiteness. At the heart of the production process is our 6m-wide Voith Paper Machine – one of the most technologically advanced in the Southern Hemisphere. Equipped with state-of-the-art technology, Paper Machine 31 produces high-quality, uncoated wood-free grades with copy paper forming the bulk of production. This production line is supported by modern converting equipment. To support our high-quality operations, the right skills are essential. We maintain a consistently high level of training in our operations and in 2015 four of our papermakers successfully completed their international Pulp and Paper Craftsman qualifications in Europe, becoming the first on the African continent to hold this qualification. Our unrelenting drive to deliver the highest quality in everything we do has enabled us to make a product that is a household name today and is supplied countrywide and to the rest of Africa. SOUTH AFRICAN BUSINESS 2017

Mondi Group’s consistent and focused long-term strategy has positioned us as a leading international packaging and paper group, with a strong platform for growth. With this backing, it is little wonder Mondi Rotatrim has become a market leader among office paper brands over the past 30 years. www.mondigroup.com

FOCUS

25 years of wetlands conservation Mondi supports water stewardship in South Africa.

Wetland, Mondi Gilboa.

he WWF-Mondi Wetlands Programme (MWP) celebrated its 25th anniversary in 2016. Started in 1991 as a collaboration between WWF-SA and WESSA, it is one of the country’s longest-running privately funded ecological conservation programmes and the first wetland initiative to focus on the protection of wetlands outside of protected areas. Wetlands play a vital role in the environment and society, and in the sustainable provision of water for both. They support people and their economic activities including farming, fishing, tourism and water provision. Healthy wetland ecosystems are the most biologically diverse of all ecosystems, and they also protect coastlines, prevent flooding, filter pollutants and act as giant sponges – soaking up rainwater and releasing it slowly over time. The WWF-Mondi Wetlands Programme initially focused on the rehabilitation of key wetlands in South Africa. It has worked in major water-stressed catchments with industries that have traditionally impacted wetlands and water resources and demonstrated how

water stewardship and good business practices go handin-hand. In 2014, the WWF-MWP broadened its focus from wetlands to water stewardship using a new landscape approach. The focus is on the entire landscape rather than individual landowners or land-use sectors and an effort is made to create a deeper understanding of shared responsibilities and shared risks with everyone involved in a product’s value chain. www.mondigroup.com SOUTH AFRICAN BUSINESS 2017

OVERVIEW

Mining South Africa has vast mineral reserves and excellent infrastructure.

outh Africa has huge reserves of platinum and chrome and produces about 40% of the world’s vanadium and vermiculite. The country has large reserves of ilmenite, palladium, rutile and zirconium and 80% of the world’s known manganese reserves are located in the Northern Cape Province. South Africa no longer enjoys world dominance in gold production – both China and the US produce more ounces – but it does produce 75% of the world’s platinum and 73% of its chrome. Coal and platinum group metals (PGMs) have overtaken gold as the minerals generating the biggest sales volumes. Coal, iron ore, gold and platinum group metals (PGMs) collectively make up 80% of South Africa's mineral sales. South Africa is the second-largest exporter of steam coal in the world and is the number-one producer of andalusite. The Witbank coal fields of Mpumalanga are the most productive in Africa and the province lies at the southern end of the eastern limb of the Bushveld Igneous Complex. With mines in Mpumalanga reaching the end of SOUTH AFRICAN BUSINESS 2017

SECTOR INSIGHT The iconic Anglo American has announced that it will, in future, only focus on three minerals.

their lives, the coal reserves of the Waterberg region in Limpopo are attracting attention. The ferroalloy industry is centred on the town of Middelburg. Nkomati Mine is South Africa's only purenickel operation. After a very tough period for gold producers, the recovery of

OVERVIEW the gold price to above $1 300 per ounce in late 2016 came as a great relief. Various international crises, including Britain's vote to leave the European Union, saw a return to gold by investors seeking a safe haven. Although the general trend in production volumes of gold in South Africa is downwards, there are some very profitable mines and newcomer Sibanye Gold (spun off from Gold Fields Ltd in 2012) has been buying up gold and platinum mines. Mines in Aggeneys in Namaqualand are responsible for approximately 93% of South Africa’s lead production and 12% of all world lead exports. There are 20 chromite mines in North West Province located along a reef running from Brits to Rustenburg and serviced by several ferrochrome smelters. With the Chinese economy slowing down, the demand for the main component of steel has dropped to the point where iron-ore projects in the Northern Cape have had to lay off significant numbers of workers. A new ironore sampling plant at Saldanha in the Western Cape, a joint venture between Kumba and Transnet, allows exporters to certify the quality of their product before the ore is loaded onto ships for export. The Northern Cape produces more than 84% of South Africa’s iron ore. The Kalahari Basin contains 80% of the world’s manganese reserve, but only 15% of global production comes from this area so there is enormous scope for development. Several new blackowned manganese projects are underway.

Zinc seldom features in reports, but when Vedanta started work in 2015 on its R9.4-billion Gamsberg Zinc project, it was very big news indeed for a sector in need of good news. The new mine is near to Vedanta's existing Black Mountain mine in the Northern Cape Province. Every year Cape Town hosts the Investing in African Mining Indaba, the world’s largest gathering of the most influential stakeholders in the African mining industry. More than 7 000 leading financers, investors, mining professionals and government officials meet at the Indaba to network and broker deals.

Trends One of the most significant changes in the South African mining landscape was announced in early 2016, when the global resources giant Anglo American, whose history is irrevocably linked with the rise of South Africa as an industrial nation, announced that it will focus on only three minerals: copper, platinum and diamonds. This means that a large number of coal, manganese and platinum assets, which for many decades resided in the Anglo American stable, are now on the market. Anglo's 69.7% share of Kumba Iron Ore may be sold as one asset or portioned off to different buyers. The company has announced that it wants to sell all its coal mines. Anglo's selling strategy dovetails nicely with the ambitions of relative newcomer Sibanye Gold. Sibanye Gold was created when four mines in the Free State and West Rand and some service companies were hived off from Gold Fields Ltd. Gold Fields retained the South Deep mine as its only South African asset: it also has mines in South America, West Africa and Australasia.

SOUTH AFRICAN BUSINESS 2017

OVERVIEW Sibanye has been actively acquiring gold and platinum assets since its creation. Among the most significant was the agreement to buy Rustenburg Platinum Mines Limited (including two concentrating plants and on-site chrome recovery plant from Anglo American Platinum). When the deal is concluded, Sibanye will be the world's eighth-largest gold producer, the largest gold producer from South African mines and the fifth-largest global PGM producer. The purchase of Wits Gold in 2013 gave Sibanye access to assets in the Free State and Mpumalanga provinces and the acquisition process continued in 2016 with the purchase of Aquarius Platinum in April. With 800 000 ounces of platinum, uranium as a by-product of its gold production and the possibility that it will also buy coal mines, Sibanye Gold is no longer just a gold company. An issue that mining houses want resolved is the question of empowerment. A figure of 26% has been set for shareholding by black South Africans in terms of the Broad Based BlackEconomic Empowerment (BBBEE) [Mining] Charter. The area where the government and the mining industry are yet to find agreement relates to what happens when black shareholders want to sell. If they sell to white investors, does the company have to sell new shares or does the status quo remain, in other words, is it "once-empowered, always empowered"? The Chamber of Mines says that the value of BBBEE deals since the year 2000 is R205-billion. Although the first two decades of democracy in South Africa saw some fairly robust exchanges in industrial relations, the labour

ONLINE RESOURCES Chamber of Mines of South Africa: www.chamberofmines.org.za Mining Qualifications Authority: www.mqa.org.za National Department of Mineral Resources: www.dmr.gov.za

SOUTH AFRICAN BUSINESS 2017

union movement itself was very stable. Most unions were allied under the banner of COSATU (the Congress of South African Trade Unions), which in turn was a key member of the tripartite alliance with the African National Congress (ANC) and the much smaller South African Communist Party. This no longer applies. One of the catalysts for change was the Platinum Belt strike of 2012 in which a rival to the National Union of Mineworkers (NUM) rose to prominence. The Association of Mineworkers and Construction Union (AMCU) led the strikes that culminated in the tragic shootings at Marikana. There is also some movement in the diamond sector, with one of South Africa's richest men, Christo Wiese, increasing his holdings in Trans Hex and intending to de-list the company. Trans Hex has shares in the Namaqualand concession that De Beers sold in 2014. De Beers' biggest diamond mine in South Africa is in northern Limpopo where an investment of R280-million will expand production near the town of Musina. Venetia Mine is by far the most important part of De Beers' South African operation, accounting for 3.1-million of the 5.4-million carats recovered by the company from its six operations. In the Free State, De Beers’ Voorspoed mine will have a production capacity of 800 000 carats per year when it is fully operational.

OVERVIEW

Mineral beneficiation Industrialisation is to be boosted by adding value to minerals.

outh Africa's mineral reserves need to work harder to create a wider circle of prosperity. That is the fundamental idea behind the drive to increase the number of beneficiation projects in the country. The national departments of Trade and Industry (dti) and Science and Technology (DST) are developing policies and programmes to encourage private investors to do more with the nation's metals. One hi-tech example is the development of hydrogen fuel cells using platinum by Impala Platinum at its Springs refinery. The Nuclear Energy Corporation of SA is investigating turning fluorspar into Xenon Diflouride, a massively valuable product, and the Council for Scientific and Industrial Research (CSIR) has built a plant to convert titanium to a powder, that can be reformed into various applications. The state has indicated that it wants to build a new steel plant (through the Industrial Development Corporation and in partnership with a Chinese steel group), but the decline in iron-ore prices has put pressure on the existing steel producers of South Africa. Steel production is under severe threat as a result of cheap imports and tariffs are now in place. Steelmaking contributes more than 1.1% directly to South Africa’s gross domestic product (GDP), and a further 0.4% indirectly. South Africa’s biggest steel producer is Arcelor Mittal, which has four large plants located at Newcastle in KwaZulu-Natal, Vereeniging in Gauteng (long steel production), Vanderbijlpark in Gauteng (liquid steel) and Saldanha in the Western Cape (flat steel). There is also a coke and chemicals facility in Pretoria. Deposits of chromite, magnetite and vanadium in Mpumalanga are the basis of the ferro-alloy complex in Witbank-Middelburg. The Mineral and Petroleum Resources Development Act has introduced a "pilot commodity value chain" (developed by the National Department of Mineral Resources), which applies to the iron and steel industry. Future value chain strategies will be developed for

ONLINE RESOURCES Aluminium Federation of South Africa: www.afsa.org.za South African Iron and Steel Institute: www.saisi.co.za Southern Africa Stainless Steel Development Association: www.sassda.co.za

SECTOR INSIGHT A commodity value chain is being piloted for iron and steel. energy (coal, uranium), catalytic converters, jewellery and pigment production. South Africa plans to exploit its rare metals and intends to develop a beneficiation complex at the West Coast port of Saldanha. Titanium sands are currently exported at a value of about R2 690 per ton but with beneficiation this could rise to R6 000. On the east coast, Richards Bay Minerals (RBM) mines the minerals sands of the northern KwaZulu-Natal coast for zircon, rutile, titania slag, titanium dioxide feedstock and high-purity iron. Titanium dioxide adds opacity to paints, fibres and plastics and it is also vital to the pigment industry. Hulamin is a leader in the sophisticated aluminium finishedproduct sector. In July 2016, De Beers, the South African government and the South African diamond cutting industry launched a project to encourage diamond beneficiators. Among the first companies involved are Thoko’s Diamonds, African Diamonds, Nungu Diamonds and Kwame Diamonds. SOUTH AFRICAN BUSINESS 2017

OVERVIEW

Oil and gas South Africa is turning to gas.

SECTOR INSIGHT The Gas Industrialisation unit will position South Africa as a hub for the oil and gas sector in Southern Africa.

ew sources of energy are always welcome. South Africa still burns a lot of coal to create power, but gas is increasingly being seen as a viable alternative. In 2016, the Department of Trade and Industry (dti) established a Gas Industrialisation Unit (GIU), which is tasked with creating a strategy to exploit the huge fields of natural gas off the coasts of Mozambique and Angola. The idea is to create a regional hub that will promote industrialisation. The Trade and Industry Minister, Rob Davies, says that Mozambique resource alone is estimated at between 5.7-trillion m³ and 7.1-billion tm³. South Africa's own potential in hydrocarbons will form part of the strategic planning. The idea of exploiting the shale gas reserves of the Karoo has already attracted controversy, but it seems that "fracking" is to go ahead. Companies that have shown an interest in looking for shale gas in the Karoo using hydraulic fracturing or "fracking" include Falcon Oil & Gas, Shell and a consortium comprising Sasol, Statoil ASA (Norway) and Chesapeake Energy (the US). Transnet ports are going to be important parts of the strategy for the GIU: one project already underway shows how this cooperation will SOUTH AFRICAN BUSINESS 2017

operate. Construction has started in Saldanha on the West Coast of an Off-Shore Supply Base (OSSB) to give specialist support to boats and rigs involved in oil and gas operations. In another development, the ports of Saldanha, Ngqura (next to Port Elizabeth) and Richards Bay (on the KwaZulu-Natal north coast) will all receive additional power-generating facilities (powered by gas) in an investment that will total R64-billion. During the course of 2016, a private power producer joint venture delivered its second gas-fired power plant in South Africa. The Avon Peaking Power gas turbine open-cycle power plant near Durban went online in July. The joint venture (Peaker Trust, Japan’s Mitsui & Co, Engie and Legend Power Solutions) is also responsible for the 342MW gas-fired Dedisa Peaking Power Plant in the Coega IDZ. Natural gas plants can be planned and constructed inside

OVERVIEW four years, much faster than coal or nuclear plants. Because gas is easy to switch on and off, it also makes it a good companion for the national renewable energy programme (which is encouraging private investors to build solar, wind and small-hydro facilities). A new addition to South Africa's pipeline network is a pipe to get natural gas from Mozambique to Gauteng. SacOil's R90-billion project aims to deliver gas to Johannesburg and the nearby towns in 2020.

Oil Most of the oil that feeds the country’s four crude-oil refineries is imported, but a good deal of South Africa’s fuel is generated by a natural gas conversion plant on the coast and a coalto-fuel facility near the country’s industrial heartland. In addition to South Africa’s crude-oil refineries, natural gas conversion plant, coal-to-fuel and gas-to-liquid crude-oil refineries, Sasol produces fuel from coal at its Secunda facility and PetroSA has the country’s only gas-to-liquid (GTL) facility at Mossel Bay. Unfortunately, PetroSA suffered a loss in the 2014/15 year of R14.6-billion and feedstock for the Mossel Bay facility has dried up. Alternatives are being explored to supply the plant from other gas fields. The Petroleum Agenc y South Africa (PASA) sup por ts exploration for onshore and offshore oil and

gas resources and regulates exploration and production activities. Companies wanting to exploit resources have to get permits from PASA. The Sasol Group is a diversified resources and energy company. Sasol Oil, Sasol Gas and Sasol Synfuels provide a good proportion of South Africa’s fuel. Sasol converts coal to usable fuel (coal to liquids) and gas to liquids. The group has two major complexes in South Africa: at Secunda in Mpumalanga, nine reactors create solvents, ethylene, propylene and olefins; at Sasolburg in the Free State, natural gas is converted to syngas, which is then made into hydrocarbons and paraffin. Sasol is listed on the JSE in South Africa and on the New York Stock Exchange, operates in 30 countries, and has over 30 000 employees. Sasol New Energy has built a 140MW natural gas power plant to increase the amount of electricity available to the integrated energy and chemical group, allowing Sasol to reduce its carbon emissions by about a million tons per year. Utilising gas for power could allow South Africa to achieve the scale that would enable gas-based industries to emerge. Sapref has started a "clean-fuels" project, aiming to reduce sulphur and benzene levels, among other things, in fuel products. The modifications to the refinery will bring it in line with the tougher legislation about fuel production. The Western Cape region is marketing itself as a support and services hub to Nigeria and the newer oilfields of Angola. Saldanha on the West Coast is the site of the country’s largest oil-storage facility. PetroSA maintains six tanks, each of which has a capacity of 1.19-million cubic metres. A new fuel storage facility is being built in Cape Town with the support of the dti. The R650-million Burgan Cape Terminals falls under Operation Phakisa, an Oceans Economy initiative, which is intended to stimulate the maritime sector. BP has announced it will spend R4.7-billion in the short term in South Africa, with about half of that going into refinery upgrades. Both the Coega IDZ and the Port of Saldanha are to become centres for the recycling and refining of used oil. The investment of R650-million should create between 100 and 150 jobs.

ONLINE RESOURCES National Energy Regulator of South Africa: www.nersa.org.za Petroleum Agency South Africa: www.petroleumagencysa.com Sasol: www.sasol.com

SOUTH AFRICAN BUSINESS 2017

OVERVIEW

Energy Energy efficiency is a win-win.

SECTOR INSIGHT A national strategy for energy efficiency in South Africa is being developed.

nergy costs are on the rise, both in real terms and in terms of pollution and climate change. One solution is to look for cheaper forms of fuel, including gas, biogas and renewable energy in the form of solar, wind or even wave power. But there is a growing trend towards energy efficiency, which saves on both sides of the equation by reducing energy demand, a genuine win-win solution. South Africa is one of the world's biggest emitters of carbon dioxide, with a fleet of ageing coal-fired power stations. The Department of Energy (DoE) has established its own unit to tackle this challenge, the Energy Efficiency Directorate. With the support of Danish Energy Management, an updated national strategy for energy efficiency is being developed for South Africa. Denmark is a world leader in energy efficiency and has found ways to reduce its energy usage despite the country's GDP growing ever stronger. The International Energy Agency’s (IEA) programme for support of emerging economies is also behind the project. One of the best known fields of energy efficiency is Green Buildings, but the energy sector itself is a rich field for savings, as SOUTH AFRICAN BUSINESS 2017

are public services and industries of every sort. A particular target in many countries is the transport sector, where quick and very beneficial savings can be made very quickly. The Green Building move has developed so quickly that a star-rating system for buildings is now in place, run by the Green Building Council of SA (GBCSA). The Department of Environmental Affairs' new head office in Pretoria is fittingly a leader in the field when it comes to public buildings, having achieved a six-star rating with a design conceived by Boogertman & Partners Architects. Some of the features of DEA's building are solar car charging stations for electric cars, solar panels on the roof, making sure (through alignment) that the building takes full advantage of natural light for lighting and heating (and the creation of shaded areas) and rain-water harvesting. Other noteworthy buildings in South Africa include

gasprimepower Cummins Power Generation design and build the solutions that meet prime power needs by providing economical and clean prime power for various applications such as industrial or municipal installations.

Our energy working for you.™ Contact Cummins South Africa (Pty) Ltd Tel: +27 11 321 8700 www.africa.cummins.com © 2009 Cummins Power Generation Inc. All rights reserved. Cummins Power Generation and Cummins are registered trademarks of Cummins Inc. “Our energy working for you.” is a trademark of Cummins Power Generation.

OVERVIEW

The new Department of Environmental Affairs' head office in Pretoria has received a 6-Star Green Star SA Office Design v1 certification from the Green Building Council South Africa (GBCSA).

the Vodafone Site Innovation Centre (Gauteng) and the No.1 Silo at V&A Waterfront in Cape Town. Simple ideas such as having a heat pump instead of a geyser can yield enormous savings. Keeping track of the amount of energy being used is another important (and underutilised) tool. Keeping track of energy use in a household or a company or factory is a vital part of energy efficiency. In this field, it is indisputably true that "If you can't measure it, you can't manage it" and good meters (including "smart" meters) must become part of the solution.

South African Industrial Energy Efficiency Project The South African Industrial Energy Efficiency Project (IEE) has been running for six years and has achieved substantial successes. The National Cleaner Production Centre (NCPC-SA) and the United Nations Industrial Development Organisation (UNIDO) are the joint implementers of the IEE, with the SOUTH AFRICAN BUSINESS 2017

NCPC acting on behalf of South Africa's Department of Trade and Industry (dti). The first five-year phase of the project came to an end in 2015. In that time R1.97-billion in energy costs were saved (equal to 2019 gigawatt hours and 1.9 tons of CO2 emissions). In addition, 435 tons of industrial waste was diverted from landfill sites; this number will rise to 234 000 tons in 2016/17. The sectors focussed on by the IEE were: • agri-processing • automotive • metals and mining • chemicals Since its inception in 2012, the Recycling and Economic Development Initiative of South Africa’s (REDISA) government-backed national Waste Tyre Management Plan has diverted more than 125 000 tons of used tyres from landfill into new supply chains by subsidising the collection and recycling process. The initiative is supporting 190 SMMEs and says it has created 2 505 new jobs across South Africa – mainly for individuals and small entrepreneurs. The e-Waste Association of South Africa (eWASA) was established in 2008 to manage the establishment of a sustainable environmentally sound e-waste management system for the country. E-waste (electronic and electrical waste) includes computers, entertainment electronics, mobile phones, household appliances and less obvious items such as spent fluorescent tubes, batteries and batteryoperated toys that have been discarded by their original users. E-waste makes up to 5% to 8% of municipal solid waste in South Africa.

ONLINE RESOURCES Energy blog: www.energy.org.za Eskom: www.eskom.co.za National Department of Energy: www.energy.gov.za

Environmental sustainability in the workplace Environmental sustainability in the business world involves making decisions that are in the interests of protecting the natural world. It is a prominent topic at the moment as many people are taking notice of the important impact that businesses and individuals can have on the environment. There are a number of benefits that accompany environmental sustainability for businesses. It has become an increasingly effective way for establishments to differentiate themselves in a competitive market. Marketing your business as environmentally friendly and selling environmentally sustainable services can really help you to expand your customer base and capitalise on new opportunities. Additional benefits include a reduction in operational expenses and increased efficiency and fluidity within a balanced business. A company implementing this balance, Brother Earth meets the needs of its customers for quality, innovative print, while being equally committed to protecting the environment. Embodied in the Brother Earth programme, the company’s environmental philosophy is to reduce environmental impact and increase efficiency. Focus areas include reducing CO2 emissions to prevent global warming, helping to build a recyclingorientated society, managing and reducing the use of chemical substances, and working with organisations to conserve and restore forests. Brother focuses on all stages of in the product lifecycle to reduce environmental impact, including design and development; procurement; production; packaging and distribution; use; collection and recycling. There are a number of activities that businesses can do to increase environmental sustainability. These include enhancing eco-conscious design processes and green procurement, maintaining a continuous reduction in environmental impact at manufacturing facilities (such as CO2 emissions and water consumption), and enhancing the reusability, recyclability and collection system. The beauty of many environmentally friendly features is that they also help to deliver a real cost saving

to businesses, whether through lower energy bills, reduced paper usage or increased toner longevity. Implementing energy-saving features during production is also key. A standby power consumption of approximately 0.04W is Brother's new lowenergy standby technology that has fundamentally eclipsed the conventional standard of about 0.2W. This achievement, which will change the future development of power-saving technology, was the product of our engineers changing their way of thinking. With this technology, we limitlessly approach zero watts, the state of being unplugged. In terms of "green" certification there are a number of quality management standards that companies can implement, such as the TCO99 Accreditation, ISO Certification and the International Energy Star Approval. Using Energy Star products can make a huge difference in energy usage, as they are capable of conserving energy through power management and sleep mode, they run cooler and last longer and, on average, are 25% more efficient. For over two decades, Energy Star has been a driving force behind the more widespread use of such technological innovations as efficient fluorescent lighting, power management systems for office equipment, and low standby energy use. At Brother, consumables are manufactured to exacting, environmentally friendly specifications and the company is committed to ISO 9001 and ISO 14001 Standards. Only four Japanese and six international manufacturing facilities have been accredited with the strict environmental ISO 14001 conservation standards. Brother is the only printer manufacturer with the globally recognised benchmark, TCO99 Accreditation for excellence in ecology, energy, emissions and ergonomics. The potential for businesses that are integrating environmental sustainability into the planning and production systems of their enterprises is immense. Good business depends not only on physical and financial capital, but on natural resources. Through the adoption of key strategies, reaching a balance between a financially secure and environmentally sustainable business can be achieved.

OVERVIEW

Water Innovative solutions to water scarcity are being pursued.

outh Africa is a water-scarce country and the recent drought has served to concentrate the minds of government, the private sector and farmers about the need to preserve and protect the country's water sources. Purification, desalination, water-leakage management and wastewater treatment are some of the issues facing South Africans, and experienced international companies are showing an interest in the country. The governments of South Africa and Denmark have a Strategic Sector Co-operation, which was signed at the annual Water Institute of South Africa (WISA) conference in Durban in May 2016. Denmark is a world leader in water management and the themes underpinning the agreement are groundwater management, urban water services and water efficiency in industries. The national Department of Water and Sanitation (DWAS) has said that demand for water will outstrip supply in 2018. It has also put a figure to what needs to be spent on water infrastructure and demand management in the years to 2022 – R573-billion. Water boards are responsible for provision of water services to urban areas. One of the biggest, Rand Water, will have spent more than R17-billion by 2010 in upgrading its infrastructure. The utility reports that demand has been growing at nearly 5% every year. According to Water Wheel magazine, 37% of water delivered to the nation's municipalities is lost. Government plans to arrest this trend (which costs the country R7-billion every year) include a training programme for plumbers and artisans to fix taps in communities. The first group of 3 000 trainees was recruited in 2015. Among the methods used by the firm WSP to improve water usage are water audits and measurers. These strategies have been successfully implemented at a reservoir controlled by the City of Cape Town, a borehole scheme in the Northern Cape and for private clients like Illovo, the large sugar producer in KwaZulu-Natal. Innovative thinking has been required to tackle the problem of acid mine drainage (AMD). Old mines (whose owners have long gone) pollute the water supply, further reducing the amount of available clean water. National government has committed to spend R600-million on an annual basis on a system that will treat this water. In the 1950s, the Orange River Project delivered water from the SOUTH AFRICAN BUSINESS 2017

SECTOR INSIGHT International companies are investigating business opportunities related to South Africa's water-related problems. Orange River to citrus farmers in the far-away Eastern Cape. In a mostly dry country such as South Africa, this kind of transfer scheme is the norm. The country has several good river systems but they are not all ideally situated. So 80% of Gauteng Province’s water is imported, mostly from the Vaal River, which is supplemented by complex transfers from the Thukela River and the Lesotho Highlands Water Project. The Vaal basin, which serves the most populated and industrialised part of the country including Johannesburg, receives water from seven inter-basin transfer schemes. Usage has to be reduced in all sectors. The mining and energy sectors are very thirsty, and individual South Africans themselves are apparently thirstier than the average global citizen (consuming 235 litres per day per person, compared with the global average of 177 l/d per person).

OVERVIEW Existing systems South Africa’s most central province, the Free State, is bound on all sides by water, the Vaal River to the north and west, the Orange River to the south and the mountainous, river-rich kingdom of Lesotho to the east. The Gariep Dam on the southern edge of the province is South Africa’s biggest dam. The agricultural sector benefits through irrigation from the flow of the Vaal River. The VaalHarts irrigation system is one of the most productive in the country, covering about 44 000 hectares with a variety of crops. The Vaal Dam and the Bloemhof Dam are important sources of controlled water from the Vaal River. The Vanderkloof Dam controls water flow and allows for better farming along the banks of the river, and the Gariep Dam has hydroelectric capacity. An inter-basin transfer scheme takes 40-million cubic metres per annum from the Caledon River basin and sends it to the Modder River basin for industrial and domestic use.

New schemes The Lower Tugela Bulk Water Infrastructure Project in Mandini, KwaZulu-Natal, involves a 29km pipeline that will bring water to more than 300 000 people. Other recent transfer projects include the Western Aqueduct project (valued at R864-million) and the associated Northern Aqueduct Augmentation Project (Durban,

Umgeni Water), and the Mokolo Crocodile Augmentation Project, which is designed to supply water to Medupi, the new power station at Lephalale in Limpopo Province. A pump station and a 45km pipeline between the site of the power station and the Mokolo Dam is being built by the TransCaledon Tunnel Authority (TCTA). The TCTA has also overseen progress on the Komati Water Supply Augmentation Project, the raising of the wall of the Clanwilliam Dam and the Groot Letaba River Water Development Project. The Mooi-Mgeni Transfer Scheme has increased water supply to communities in KwaZulu-Natal. The Eastern Cape’s R20-billion Umzimvubu Dam project will provide much-needed water and hydroelectric power. The latest mega-project is the Olifants River Water Resources Development Project (ORWRDP). This includes the recently completed De Hoop Dam.

Improving quality The introduction by the National Department of Water and Sanitation and the Water Institute of South Africa (WISA) of the Blue and Green Drop Awards has been very successful. The nation’s municipalities receive scores reflecting how well they are doing in terms of providing clean water. Many municipalities use water boards such as Umgeni Water, Rand Water or Sedibeng Water. The DWAS has allocated R4.3-billion to helping municipalities deliver water. The Interim Water Supply Programme will concentrate on 23 district municipalities. The Rhodes University Institute for Water Research is one of several institutions in the country that conducts research into water quality. The Water Institute of South Africa has 1 800 members. It does research, keeps its members up-to-date and runs conferences. As in most areas of life in South Africa, environmental standards are set and maintained by the South African Bureau of Standards (SABS). The Water Chemistry Laboratory of the Council for Scientific and Industrial Research (CSIR) tests water samples according to the relevant SANS. Water storage is becoming an increasingly important issue in South Africa, with many private homes and businesses investing in water tanks. The Nedbank Group is investing R9-million in the Water Balance Programme, designed to upgrade the functioning of watercatchment areas.

ONLINE RESOURCES National Department of Water and Sanitation: www.dwa.gov.za South Africa Water Research Commission: www.wrc.org.za Water Institute of Southern Africa: www.wisa.org.za

SOUTH AFRICAN BUSINESS 2017

INTERVIEW

Ambitious growth underpinned by a positive outlook Premium water reservoir supplier, SBS Tanks, is strategic about its intentions to grow its local and international business.

Martin Barnard, Sales and Marketing Manager, SBS Tanks.

Please provide an overview of the company and your main products.

Founded in 1998, SBS Tanks is a manufacturer and supplier of premium water tanks. The company, which operates from a 2 500m2 facility in Pinetown, Durban, supplies both the local and export markets. We introduced Zincalume® tanks to the South African market and manufacture SBS Tanks® – a premium range of liquid storage solutions for multiple applications. Where do you see the company in the next five to seven years?

BIOGRAPHY SBS Tanks Sales and Marketing Manager, Martin Barnard, describes himself as a “homegrown Free State boy” who has enjoyed the privilege of a global career. Martin has an MBA from Oxford Brooks University in the UK and prior to joining SBS Tanks he was, for many years, employed by Shell – most notably as a Marketing Manager for Shell in Africa. SOUTH AFRICAN BUSINESS 2017

As the premium water reservoir supplier, we will continue to entrench ourselves in the South African market in the medium term. Ideally, we would like to expand our product offering through collaborating with other companies in a similar space and through the already strong partnerships we have with service providers. We are open to turnkey solutions or amalgamated offers. While the broader African market is definitely on the radar, we are being intentional about transforming the company into an international player. In support of this, we have opened a branch in the US and our products, as well as our specialist knowledge, is already being shipped there. In recognition of our growth in international trade we have recently been awarded the KwaZulu-Natal Exporter of the Year award in the medium category. We are particularly proud of the achievement considering that two years ago, we won the award in the small business category and previously, we were finalists in the emerging business category. We were deliberate in obtaining ISO 9001 accreditation because it enables our commitment to quality. We want to build on the fact that, in addition to fully complying with national standards, we also meet a number of international standards, which improves our chances of becoming a competitive international player.

INTERVIEW Have you introduced any new technology or innovations recently?

We have improved the liner in our tanks, as this is a very important component of our products. The liner now conforms to the highest relevant standards and is comparable to the best available internationally. The fact that we own our liner manufacturing facility means that we are able to monitor quality closely. Another important innovation means that our premium tanks are now able to withstand cyclonic wind conditions, which is particularly relevant in our export market. What are the key markets for your products?

terms of the target markets or market segments, these vary from country to country, depending on the key industries in each. What are some of the challenges you anticipate in meeting your goals?

It can be difficult to find civil contractors who have the skills required to undertake our work. We prefer to identify up-and-coming contractors and train them to partner with us in tank installation. A number of skilled people have left the employ of municipalities and so we offer project management services to our municipal clients. Instead of just selling them tanks, we manage the entire process and this gives us an opportunity to identify local contractors to assist in tank installation, but they need to be willing to undergo training to ensure they are able to meet our exacting standards.

In South Africa, we target five key markets: the mining sector; tanks for fire protection (these are tanks required for insurance purposes and positioned outside commercial buildings and as we meet ASIB Do you have a message for readers specifications, we are very competitive in this mar- regarding water scarcity in South Africa? ket); municipal (this will be a very important sector The looming water crisis is not the same as the elecfor us going forward as access to clean drinking tricity crisis that South Africans experienced a few water is a basic human right and constituents are years ago. In the case of power interruptions, people demanding this from government); water conserva- have the option of purchasing a generator, but water tion (for example, rainwater harvesting) and the food cannot be generated. As South Africans we need to understand that even if it does rain more, the crisis and beverage processing sector. Internationally, our ambition is to identify local won’t disappear. Large commercial operations need to prepare distributors in the countries in which we operate and to develop local expertise when it comes to the for water shortages and should make contingency installation of our tanks. We have started a distribu- plans. This is particularly important for clients in the tor development programme in specific markets. In food and beverage industry – as an example, it is

SOUTH AFRICAN BUSINESS 2017

INTERVIEW impossible to make beer without water! Customers who had purchased our storage tanks didn’t experience any loss in production during the water shortages that have affected some areas of the country recently. We are very mindful of the problems relating to water scarcity and in early 2016, SBS Tanks donated water tanks valued at R700 000 to two Free State communities badly affected by drought. This demonstrates the company’s overall commitment to drought relief efforts. And a more general sentiment that you would like to convey?

SBS Tanks is a proudly South African company, and by that I mean that we choose not to believe the “naysayers”, preferring to retain faith in the country and its people. I too used to be fairly negative about the prospects for South Africa. In 2000 I emigrated to the UK and, at the time, I was convinced that would be a permanent move. However, after being seconded back to Africa, I realised that I needed to make a difference by contributing to positive change and that is one of the factors that affected my decision to join SBS Tanks. We encourage other small and medium South African companies to remain committed to operating here and to contribute to the economic future of the country.

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FOCUS

Businesses benefit from backup process water SBS Tanks has some timely advice for businesses that require large quantities of water for operational efficiency.

lmost every industry benefits from backup process water for business – whether that business lies in manufacturing, healthcare, education, tourism or retail. Water is used throughout various stages of business, in product use, the supply chain and manufacturing. A lack of access to water can be a major challenge for any business’ growth. Consistent access to water is therefore essential to ensure that operations can continue to run smoothly, but in countries such as South Africa, which frequently face periods of drought, water shortages and other related issues, this is not always as easy as it sounds. Water infrastructure may be damaged or neglected within local municipalities. Water supply in certain areas may be rationed and industries that require large volumes of water at all times may pay the price. As serious as water interruptions are for businesses, the good news is that a contingency plan can go a long way in ensuring that your premises always have access to water – even in the event of a countrywide drought.

How to prepare your business for a water emergency The first step in preparing for a water emergency is to ask the following questions: • How long could your business effectively operate with restricted water, or a complete water shortage? • Do you currently have any plan to reduce disruption to your business if your regular water supply was interrupted? • Is there an emergency shut-down process that applies to water supply emergencies, and are employees trained to act accordingly? • Is there any crisis management team or process in place to deal with stakeholders and make critical decisions in the event of a water disaster? SBS Tanks has compiled a comprehensive guide – “Backup Process Water Supply Planning for Business & Industry”. This guide includes step-by-step recommendations on how to create a backup water plan, and shows you how to put together a water-usage assessment

that will help you prepare for water outages. One of the best ways to ensure that your company will always be prepared for any water interruption is to consider a backup water system for your premises. Backup water tanks for commercial use are designed to provide access to water at all times, even in the event of a water outage. If the municipal water supply is cut off, the backup tank will continue to provide water with no noticeable impact on water flow. Once the water supply resumes, the tank will refill again. In this way, you will have peace of mind in knowing that water interruptions will not cause operational interruptions. Systems can be integrated within existing rainwater harvesting tanks or used for dedicated backup tanks. Ideally, you will need a tank large enough to store two to three days of reserve water. Whatever your industry, taking the time to invest in essential contingency steps is the best way to get full peace of mind. For assistance in doing this visit www.sbstanks.co.za or contact 086 048 2657. SOUTH AFRICAN BUSINESS 2017

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Advantages of commercial rainwater harvesting In a country that is prone to drought and water shortages, SBS Tanks is promoting the value of commercial rainwater harvesting.

ith the rise in green, sustainable building technology, property developers all over the country are turning to solutions that help to save resources. Rainwater tanks are common in the residential sector, but are now becoming popular in commercial developments. Schools, factories, hotels, mining corporations, municipal buildings, office parks, shopping centres and many other industries can benefit from a large-scale tank.

Five reasons to consider commercial rainwater harvesting Much as residential water tanks help homeowners save money and water, commercial rainwater tanks are designed to save water on a large scale. Rainwater is collected and stored in heavy-duty bolted steel tanks that are coated in Zincalume, which ensures that tanks are resistant to corrosion and able to withstand virtually any climate and condition. Tanks for commercial rainwater range in size from 12kl to 3 300kl, and, as they are modular in design, they can be relocated should the need arise. Some of the most significant benefits of commercial rainwater harvesting include the following: • Savings on water costs: From a municipal rates perspective, a water tank can reduce water costs notably. For industries that typically require a large amount of non-potable water for manufacturing or operation, these savings are especially high. • Clean, safe, soft water: Rainwater is free of chemicals, and in some cases, it is safe and clean enough to be used for drinking water. It makes excellent "grey" water to use for fleet washing, toilets and showers. Grounds and gardens also benefit from rainwater. • Reduces run-off: In high-rainfall areas particularly, run-off from gutters and downpipes can wreak havoc on soil, causing erosion and increasing the risk of damp and flooding. Tanks are designed SOUTH AFRICAN BUSINESS 2017

to integrate within the current roofing and gutter structure, but can be relocated as needed. Once drainage paths have been identified, tanks can be placed strategically to capture run-off. • Reduces stress on public water supply: Public water is used for a variety of purposes, including plumbing, drinking water supply, reservoirs for fire control, maintenance for public spaces and numerous other purposes. By collecting and using rainwater, businesses can help lower the risk of water shortages in the event of drought and restrictions. • Increases sustainability: Rainwater is a free commodity that can be utilised in a wide range of applications without putting further strain on diminishing supplies. As a specialist in high-quality Zincalume tanks, SBS Tanks can assist with a wide range of commercial rainwater harvesting tanks. Contact us to discuss your tank requirements. Call us on 086 048 2657 or visit us at www.sbstanks.co.za

OVERVIEW

Engineering Transnet Engineering is targeting international orders.

outh Africa has several vertically integrated engineering and consulting companies that offer a wide range of services and are active internationally. All of the biggest construction companies (including Murray & Roberts, WBHO and Group Five) are multi-disciplinary companies and they are active in several sectors. Concerns about delays in the implementation of national government’s ambitious infrastructure plans have persuaded several companies to load their order books in favour of international projects. Aveng has cut its reliance on South African projects to 37% as opposed to 56% in 2015. Aveng, South Africa's largest construction company, will increase its profile in Asia and Australia. The downturn in the South African mining and manufacturing sectors is another factor that has dampened growth in engineering. However, Murray & Roberts (which now operates in oil and gas, power and water, construction, underground mining and infrastructure) still managed to bring in revenue – from operations on five continents – of R30.6-billion in 2015. At home, the company was involved in the Gautrain project and is delivering the boilers to the power stations at Medupi and Kusile for Hitachi Power Africa. Some elements of the national infrastructure plan are moving faster than others. Renewable energy is a massive new sector for engineers, and construction companies are busy building solar and wind power infrastructure in many parts of the country. Housing (such as Basil Read's R1.8-billion housing project north-west of Johannesburg, Malibongwe Ridge) continues to be a national priority, and several new dams are being built. Transnet Engineering (TE) wants to cut its reliance on other divisions of Transnet. At the moment, just more than 10% of orders come

ONLINE RESOURCES Engineering Council of South Africa: www.ecsa.co.za South African Association of Consulting Engineers: www.saace.co.za Steel and Engineering Industries Federation of South Africa: www.seifsa.co.za Transnet Engineering: www.transnetengineering.net

SECTOR INSIGHT Prominent South African engineer ing and construction companies are increasingly focusing on international projects. from outside the group – the aim is to grow that to 40%. A locally designed and developed locomotive, the Trans-Africa Locomotive, is symbolic of this thinking: some R300-million went into research and development of this unit, which, it is hoped, will sell well in other parts of Africa. TE wants to become an original equipment manufacturer (OEM) of wagons, coaches and locomotives. It also hopes to offer its services in Africa for maintenance, repair and overhaul (MRO). TE’s new business unit, Port Equipment Maintenance, is another signal of the company’s wider focus. There are 13 000 TE employees at 132 depots and six factories around South Africa. SOUTH AFRICAN BUSINESS 2017

OVERVIEW

Manufacturing Several state programmes are promoting manufacturing.

he manufacturing sector accounts for approximately 15% of Gross Domestic Product (GDP). The sector employs the thirdhighest number of people, about 1.7-million, after financial services and retail. Three of South Africa’s most important manufacturing sectors (automotive, food and beverages and chemicals) are dealt with in separate sections of this publication. The Department of Trade and Industry (dti) is the state's lead promoter of the sector, with initiatives such as the Competitiveness Enhancement Programme, which targets medium-sized manufacturers and includes a cost-sharing grant of between 30% and 50% for investments up to R50-million and up to 80% on specific projects. The main vehicle for the dti has been its Industrial Policy Action Plan (IPAP), the seventh version of which was launched in 2016. The most recent focus is science and technology and the promotion of local manufacture for designated products in aspects of the construction sector (pipes and vehicles) and the energy sector (power lines). The Support Programme for Industrial Innovation (SPII), run by the Industrial Development Corporation (IDC) on behalf of the dti, promotes technology development in South African industry. SPII comprises three programmes: the Product Process Development, Matching schemes and Partnership schemes. The type of funding made available depends on the project size. Another IDC initiative has allocated R23-billion over three years to support the Black Industrialist Programme to help existing entrepreneurs grow their businesses to significant scale. Part of the drive to improve South Africa's rail infrastructure involves getting South African companies to manufacture rolling stock. The Passenger Rail Agency of South Africa (PRASA) in 2013 signed local consortium Gibela (including Alstom) to deliver 600 passenger trains. The R51-billion contract will be supported by a new factory in Ekurhuleni and Gibela has pledged to put a lot of business the way of local companies. In sourcing the 1 064 new diesel and electric locomotives that it wants to spruce up its services, Transnet Freight Rail has split the contract across four suppliers, including General Electric South Africa Technologies, CNR Rolling Stock South Africa and Bombardier Transportation South Africa. SOUTH AFRICAN BUSINESS 2017

SECTOR INSIGHT The seventh version of the dti's Industrial Policy Action Plan was launched in 2016.

Growth in the manufacturing sector since 1994 has been led by the automotive sector, followed by resource-based manufacturing (Quantec). The latter sector includes steel, aluminium, petrochemicals, paper and pulp and non-metallic minerals. The forest product export sector in South Africa is made up of paper (45.2%), solid wood (23.3%) and pulp (28.9%). Imports, weighted towards paper products, cost the country R9.8-billion annually, clearly indicating scope for increased domestic production. The pulp and paper sector makes a direct contribution to South Africa’s balance of payments of R4.5-billion. The country’s largest hardboard plant is at Estcourt and South Africa’s only woodchip export plants are located at Richards Bay. Among other important sectors are metals beneficiation (more than 50% of the world’s ferrochrome is produced in South Africa), coke and refined petroleum products and information and

OVERVIEW communication technology. Steel and petroleum collectively make up about 45% of South Africa’s total manufacturing production capacity. April, May and June 2016 were hopeful months in South African manufacturing – production went up in all three. Stable electricity supplies and the relatively weaker rand (which helped to drive exports) helped. Steel has been experiencing a volatile few years, with reduced demand from China severely reducing production volumes in South Africa. Mpumalanga producer Evraz Highveld Steel and Vanadium applied for business rescue in 2015 and independent producer Cisco closed. The country's biggest steel producer, ArcelorMittal SA (AMSA), was fined R1.5-billion in 2016 by the Competition Commission. However, China will no longer enjoy subsidies in selling steel into South Africa and AMSA has well-resourced plants in three provinces so analysts are predicting a recovery, which may include a joint purchase of Evraz Highveld (with the IDC). New technology has been embraced by some innovative manufacturers. Desert Wolf's Skunk Riot Control Chopper is one of the unmanned light aerial vehicles (UAV) that has proved popular in the world market. Drones have been very much in the news because the US military has been using them in its operations in the Middle East. South Africa's Denel makes a drone product that can be adapted for use by conservationists.

Clothing and textiles There has been a recovery in this subsector, greatly helped by an injection of R7-billion from the state in various forms since 2009. There are just over 90 000 workers employed in the sector, which means numbers are increasing very slightly after a big dip several years ago when the sector suffered from cheap imports. Support from the dti has allowed manufacturers to invest in new equipment. Cotton Traders received an injection of capital from the dti that enabled it to buy new equipment and expand. This led to 200 new jobs being created. The Textile and Clothing Unit within the Industrial Development Corporation (IDC) has been very active in supporting companies that need help, either to get over a tough period or to expand or to invest in new equipment in order to make new lines. Canvas and Tent

Manufacturing (Pty) Ltd has more than 400 employees in Ladysmith and won Exporter of the Year in 2014/15. KwaZulu-Natal is home to 219 clothing companies (Coface). Ninian & Lester is one of the larger employers in the textile sector, with 1 500 people making clothing (including the Jockey brand), textiles and polypropylene. The footwear sector is showing good recovery after taking a battering from Chinese imports. Two international safety footwear firms operate out of Pinetown: Bata Industrial and Beier. The latter company joined forces with three other South African safety footwear manufacturers in 2014 to form the BBF Safety Group, making them more competitive. K-Way, which supplies Cape Union Mart, is a very successful outdoor clothing manufacturer with a factory in Cape Town. Gelvenor Textiles specialises in fabric suitable for military uses. Hanes Brands makes underwear in Durban and wants to double its output by 2020. The furniture sector is not growing but there are about 2 200 companies in the country, employing more than 26 400 workers (contributing 1% of manufacturing GDP and 1.1% of manufacturing employment).

ONLINE RESOURCES Industrial Development Corporation: www.idc.co.za Manufacturing Circle: www.manufacturingcircle.co.za Support Programme for Industrial Innovation: www.spii.co.za

SOUTH AFRICAN BUSINESS 2017

OVERVIEW

Chemicals and pharmaceuticals Both sectors are attracting internal and foreign investment.

outh Africa's chemical industry contributes 5% to national gross domestic product (GDP) and about 60% of its earnings are derived from exports. The complexes run by Sasol at Secunda, in Mpumalanga, and Sasolburg, in the Free State, underpin the national manufacturing capacity in chemicals. Sasol makes a range of products for fertilisers, explosives and polymers. Nearly 60% of Sasol's earnings come from chemicals, amounting to a turnover of R105-billion in 2015. Sasol Chemical Industries makes about 60% of South Africa’s polypropylene. Safripol, which is also based in Sasolburg, is South Africa’s only other producer. More than half of Sasol’s production of 625 000 tons is exported. Omnia and Kynoch (fertiliser), Karbochem (rubber and carbochemicals), Safripol (plastics) and Afrox are among the other major companies operating out of Sasolburg. Kynoch makes fertiliser in Middelburg and Schoeman Estates has a plant in Marble Hall. Middelburg-based Solchem Industrial and Mining Chemicals specialises in degreasers for mining and industrial applications. The by-products of the sugar and forestry processing plants of KwaZulu-Natal benefit the chemicals sector. Illovo Sugar manufactures downstream products such as furfural, furfuryl alcohol, diacetyl and ethyl alcohol. AECI is one of South Africa’s biggest groups in the sector. The two principal divisions are AEL Mining Services (with a large factory site at Modderfontein near Johannesburg) and Chemical Services, which have 20 separate companies. Foskor is the country’s only vertically integrated phosphates producer. It has a mining operation in Limpopo Province (at Phalaborwa) from which it sends raw materials to its acids division in Richards Bay in KwaZulu-Natal. Sulphuric acid, phosphoric acid and phosphate-based granular fertilisers are manufactured there. The Chemical and Allied Industries Association (CAIA) has 162 member companies.

ONLINE RESOURCES Chemical and Allied Industries’ Association: www.caia.co.za Chemical industry information portal: www.chemissa.co.za National Association of Pharmaceutical Manufacturers: www.napm.org.za

SOUTH AFRICAN BUSINESS 2017

SECTOR INSIGHT There are more than 200 pharmaceutical companies in South Africa.

Pharmaceuticals Pharmaceuticals are manufactured primarily in Gauteng and the Eastern Cape. Although there are more than 200 pharmaceutical firms in the country, large companies dominate the field. In 2016, Aspen had a market capitalisation of R160-billion and Adcock Ingram, R7.6-billion. Ascendis, which was established in 2008 and now has a market cap of R6.9-billion, has been busily acquiring companies, such as a generic manufacturer based in Cyprus, and building up its portfolio in the sector. Cipla Medpro is another large company. The local industry was valued at R39.7-billion in 2013 and contributed 1.1% to national GDP (dti). The sector employs nearly 10 000 people. South Africa has the world's largest anti-retroviral programme, which provides for more than three-million patients. Aspen SA produces about 10-billion tablets per year at its Port Elizabeth facility. The company has another factory in Gauteng and successful operations in South America and Australia.

OVERVIEW

Food and beverages Food and drink account for a quarter of all manufacturing.

he global trend towards healthier eating habits and being aware of the source of foods has come to South Africa. This means growth in sales of organic produce, but legislation is also part of the new equation. A proposal in 2016 to introduce a sugar tax on beverages has created a lot of debate. Even if a tax is not introduced, there is no doubt that the trend towards healthier food (and better labelling) is here to stay. Starbucks thinks the South African market is worth investing in. When the American coffee giant, in partnership with Taste Holdings, opened its first shop in Johannesburg in April 2016, customers queued through the night. Coffee shops are hugely popular in South Africa. The food and beverage sector is responsible for 24.4% of total manufacturing production and employs 230 000 people. Beverages account for just over 4% of all manufacturing sales while food is responsible for 13.5%. Within the sector, beverages account for 24% of sales. One quarter of the 37% of national GDP that is generated by agri-industries derives from agri-processing. Gauteng, the Western Cape and KwaZulu-Natal are the leading provinces with respect to food and beverages manufacturing. About half of the companies operating in the sector are in Gauteng. Unilever received a tax incentive in 2015 under the Department of Trade and Industry's 12-I Tax Allowance Incentive scheme for its new ice-cream factory in Midrand, Gauteng. This is Unilever's fourth plant in South Africa, following its investment in a savoury foods plant in 2011. RCL Foods, formerly Rainbow Chickens, has lately been on an aggressive run of acquisitions. Despite the large number of extra chickens available to the South African consumer (as above) and the persistent drought, RCL managed to increase revenue in the 12 months to June 2016 by 6.8%, to R25-billion. The groceries and logistics divisions performed best but RCL is reconsidering its busi-

ONLINE RESOURCES

SECTOR INSIGHT Food and beverages account for a significant share of the countr y's manufacturing sector.

ness model with a thought to producing fewer frozen chickens and doing more in the fast-food sector. South Africa has mature fast food and family restaurant franchise sectors, ranging from indigenous brands Spur and Nando’s to international giants such as KFC, McDonald’s and recent arrival Burger King. Nando’s, the Portuguesechicken chain, has done extremely well internationally and is proving to be something of a phenomenon in Britain. Wimpy is the second-largest franchise operation in South Africa (after KFC). Frost & Sullivan values the South African retail chocolate market at R5-billion with an expected growth rate of 10% per year for the next five years. Cadbury, Nestlé and Beacon account for 85% of sales.

FoodBev SETA: www.foodbev.co.za National Chamber of Milling: www.grainmilling.org.za

SOUTH AFRICAN BUSINESS 2017

OVERVIEW

Automotive Car makers exported a record number of cars in 2015.

SECTOR INSIGHT A joint venture between BAIC and the IDC will see Chinese vehicles manufactured at Coega IDZ.

utomotive and automotive components make up one of the most important parts of the South African manufacturing sector: 30.2% of total manufacturing output, about 7% of the nation's Gross Domestic Product (GDP) and they are responsible for a significant proportion of exports. In 2014, South Africa exported 276 404 vehicles and in 2015 a new record was achieved – 338 802. The total value of this (together with automotive parts exported) amounted to R151-billion. Total production in South Africa in 2016 was expected to reach 640 000 units. South Africa’s most important automotive trading partners are the EU, North American and certain African countries. Total South African vehicle and component exports to 148 countries in 2014 were worth R115.7-billion. Automotive manufacturing takes place in three provinces: Gauteng (Nissan-Renault, BMW and Ford); KwaZulu-Natal (Toyota, Bell Equipment) and the Eastern Cape (Volkswagen, Mercedes-Benz, General Motors and Ford engines). In May 2015, Mercedes-Benz SA produced its one-millionth passenger car. The East London plant, which regularly wins awards for quality, is producing the W205 C-Class car. National government (through the Department of Trade and Industry, dti) has had a plan in place since 2013 to encourage investment in the sector, the Automotive Production Development Programme (APDP). It is estimated SOUTH AFRICAN BUSINESS 2017

that the scheme has attracted about R50-billion through incentives. The latest foreign investment, and one of the biggest, will see Beijing Automobile International Corporation (BAIC) take a 65% stake in a multi-billion-rand joint venture with the Industrial Development Corporation at the Coega Industrial Development Zone outside Port Elizabeth. BAIC is a Chinese stateowned enterprise with several brands. The intention is to start production on the 85 000m² site in 2018 and the target is annual production of 100 000 cars, bakkies and sports utility vehicles. About 2 500 jobs are expected to be created in the longer term. This follows the arrival of Chinese automotive manufacturer First Automotive Works (FAW), which has established a R600-million assembly plant in Zone 2 at Coega. The Coega IDZ is run by the Coega Development Corporation. Companies like BAIC and FAW may well be positioning themselves to push into Africa, not only

OVERVIEW for selling vehicles but for sending automotive parts and partlyassembled kits further north. A new pan-African organisation has been established to promote the auto industry on the continent, the African Association of Automotive Manufacturers (AAAM). Recent announcements of increased investments by existing Original Equipment Manufacturers (OEM) in South Africa include: • The Volkswagen Group South Africa, R4.5-billion rand, new lines of production • Ford South Africa, R2.4-billion, Everest sports utility vehicles • BMW, R6-billion, conversion to production of X3 model The industry association, NAAMSA, pegged the total expenditure within the industry in 2015 at R6.6-billion and projected a R1-billion increase for 2016. South Africa produces a small number of cars relative to world production (about 91-million in 2015) but considering that South Africa's share of global GDP is about 0.46%, a figure of 0.68% of cars produced is quite impressive.

Automotive components South Africa has a sophisticated automotive component sector, with the producers of catalytic converters doing particularly well in the international market. From a start-up industry in the mid-1990s, the sector now supplies 14% of the world market and is worth at least R18-billion. Catalytic converters convert bad gases coming out of exhausts into less harmful gas. The

converter uses platinum group metals (PGMs), of which South Africa has about three-quarters of the world's reserves. Tyre and glass manufacturers are clustered around the areas where the automotive industry is active. Sumitomo Rubber South Africa, which includes Dunlop among its brands, is spending R2-billion on expanding production in Ladysmith, KwaZulu-Natal. Bridgestone Tyres has plants in Port Elizabeth and Brits and Continental makes tyres in Port Elizabeth. The large number of vehicle models produced in South Africa is a complicating factor for the components sector: low volumes often mean high prices. Two Port Elizabeth companies export significant portions of their production to overcome this: Schaeffler SA exports to its international parent so that it can achieve higher volumes. Shatterprufe supplies the majority of windscreens to the South African market but there are 12 model ranges to serve. The provincial government of the North West and the Automotive Industry Development Centre (AIDC) combined to help wire harness manufacturer Pasdec Automotive Technologies open a new assembly line in Brits. Other big companies in the North West are Bosch, Bridgestone and Giflo Engineering. In Gauteng, the AIDC teamed up with government agencies, Ford and Nissan to establish incubation parks to encourage more black businesses to enter the sector. Automotive parts made in South Africa are exported to more than 70 countries including Japan, Australia, the United Kingdom, the United States, Algeria, Zimbabwe and Nigeria. The Automotive Incubation Centre based at the Nissan plant in the Tshwane suburb of Rosslyn aims to boost small and medium sized enterprises that can supply components to Nissan South Africa’s production line. Training will also be provided. Only 35% of the components and parts used to make vehicles in South Africa are produced locally; the balance is imported. Gauteng’s car-makers spend nearly R8-billion a year on imports of automotive parts, components and accessories. To tackle this, the first Automotive Incubation Centre was launched in 2011 at Ford Motor Company of Southern Africa’s manufacturing plant in Silverton, as well as in Tshwane. The incubation centre was established by the AIDC, a subsidiary of the Gauteng Growth and Development Agency (GGDA), which is a unit of the Gauteng Department of Economic Development.

ONLINE RESOURCES Automotive Industry Export Council: www.aiec.co.za Automotive Industry Development Centre: www.aidc.co.za National Association of Automotive Component and Allied Manufacturers: www.naacam.co.za National Association of Automobile Manufacturers of South Africa: www.naamsa.co.za

SOUTH AFRICAN BUSINESS 2017

OVERVIEW

Transport South Africa's port and rail infrastructure is being upgraded.

outh Africa has a sophisticated and well regulated transport network, with a mix of state-owned enterprises (SOEs), large private firms and small enterprises providing a range of services. The South African Department of Transport has several agencies and businesses reporting to it: Air Traffic and Navigation Services, Airports Company South Africa (ACSA), National Transport Information System, Road Accident Fund, South African Civil Aviation Authority, South African Maritime Safety Authority (SAMSA), South African National Roads Agency Limited (SANRAL) and the Passenger Rail Agency of South Africa (PRASA). Almost 90% of freight is transported by road and the logistics sector is very reliable. However, these volumes are not good for the condition of the country's roads and SOE Transnet is working hard to attract more business to the rail network. Transnet Freight Rail (TFR) has, for example, put 28 new electric locomotives on the line, supporting steel producer ArcelorMittal in order to improve service. Transnet is also undertaking a very ambitious upgrade of its infrastructure and equipment, which should put it in a better position to pitch for freight business. More than a SOUTH AFRICAN BUSINESS 2017

SECTOR INSIGHT Almost 90% of South Africa's freight is transported by road.

thousand new locomotives have been ordered from four different manufacturers. South Africa has 21 000km of railway lines, 747 000km of roads and 566 airports and airstrips (Made in SA). South Africa has 325 019 heavy-load vehicles and the road freight industry employs 65 000 drivers. Significant investments in improved infrastructure are being made at all of South Africa's

OVERVIEW ports, partly with a view to improving turn-around times for loading and off-loading containers. Special Economic Zones (including Industrial Development Zones (IDZs) are either in place or being developed at several sites alongside harbours from Saldanha on the West Coast to Richards Bay in northern KwaZulu-Natal. Many South African cities are trying to improve public transport and local bus body manufacturers have delivered 740 buses to the City of Cape Town (Busmark 2000 and Volvo SA), 134 new buses to add to Johannesburg's Rea Vaya system (Mercedes-Benz SA) and 80 commuter buses for Great North Transport of Limpopo (MAN). The Maputo Development Corridor is Africa’s most advanced spatial development initiative. Run by the Maputo Development Corridor Logistics Initiative (MCLI), the corridor runs from near Pretoria in Gauteng to Maputo in Mozambique. The Harrismith Logistics Hub (HLH) on the N3 is an inland port that can handle cargo containers and shift cargo from road to rail, reducing congestion and costs.

dominated by the Transnet Group, which is responsible for the railway lines and has most of the country's rolling stock. It has a number of divisions such as Transnet Engineering and Transnet Freight Rail. Transnet is pursuing a Market Demand Strategy (MDS), which aims to create customers outside the group. So instead of Transnet Wagons selling only to Transnet Freight Rail, it wants to create new markets for its wagons elsewhere in Africa and beyond. It intends spending more than R300-billion over five years to realise the MDS. The major rail haulage lines are the manganese line from the Northern Cape to Port Elizabeth; from Sishen in the Northern Cape to the Port of Saldanha (iron ore); and from the coalfields of Mpumalanga to Richards Bay. More than 55-million tons are regularly transported along the former and upwards of 70-million tons can travel annually along the latter. A new line to carry coal from the inland to the coast through Swaziland is being investigated. This has the potential to add 30-million tons to the amount of coal transported to the coast. Grain tonnages carried by Transnet Freight Rail (TFR) will almost double in the years leading up to 2019. The assets of TFR’s new Container and Automotive Business (CAB) unit have been ringfenced. The CAB has been created because of the importance of the Johannesburg-Durban line. Transnet Freight Rail intends to increase the amount of freight it carries from 200-million tons to 300-million tons. The Passenger Rail Agency of South Africa (PRASA) oversees a passenger rail network of 22 300km. The agency is spending R51-billion on upgrading its trains, which provide passenger services through Metrorail. The agency employs 16 500 people and its assets (including bus companies such as TransLux and City to City, along with a property division) are valued at R36-billion. A new factory is under construction in Ekurhuleni that is budgeted to cost R1-billion: the Gibela Rail Transport Consortium is one of the companies contracted to supply PRASA with new trains.

Rail

Airports Company South Africa (ACSA) owns and operates the country’s 10 biggest airports. The company also manages airports in India and Brazil. The company will spend R50-billion on expansion and R20-billion on maintenance up to 2023. Ekurhuleni wants to leverage the location of South Africa's biggest airport, O.R. Tambo International, into a major economic asset. An airport city, or Aerotropolis, is planned, whereby a variety of economic sectors are encouraged to set up business in the vicinity of the airport and, in this way, going beyond the passenger traffic and freight traffic, which an airport naturally attracts.

There are private rail operators in the mining industry (Sheltam and Railroad Logistics Grindrod operate in the gold-producing areas of the Free State and Gauteng) and in the tourism sector (Rovos Rail is a popular luxury rail touring company) but the sector is

Air

SOUTH AFRICAN BUSINESS 2017

OVERVIEW

O.R. Tambo International in Gauteng caters for more than 17-million passengers every year, receives more than 105 000 arriving air-traffic movements and employs 18 000 people. The Cape Town International Airport has been expanded and improved. King Shaka International Airport (KSIA) opened north of Durban in 2010. Emirates is the international carrier to KSIA. Several airports have been mooted as possible regional freight nodes: Wonderboom Airport in Pretoria, Polokwane International Airport in Limpopo and Mahikeng Airport in the North West Province.

Maritime The national government has introduced a maritime policy intended to better exploit the "Oceans Economy". Altogether, the government wants these projects to contribute R20-billion to the South African economy by 2019. Investments in South Africa's port infrastructure will have an impact on the broader transport and logistics sector. In the Western Cape, investment has begun to kick-start this policy: a new fuel-storage facility is going up at the Cape Town docks and the Port of Saldanha will soon have an Offshore Supply Base (OSSB) to support the maritime oil and gas industry (very active off the coast of Africa at the moment). Incentives to boat manufacturers in Durban and Cape Town have been offered, small harbours around the coast of South Africa are to

ONLINE RESOURCES Airports Company South Africa: www.airports.co.za Passenger Rail Agency of South Africa: www.prasa.com South African National Roads Agency Limited: www.sanral.co.za

SOUTH AFRICAN BUSINESS 2017

be rehabilitated and three new harbours are to be launched in KwaZulu-Natal, the Northern Cape and the Eastern Cape. If the Port Nolloth harbour project on the West Coast gets the green light, then accompanying infrastructure will follow. A new rail link between the coast and Upington could be needed. Deputy Minister of Transport, Sindisiwe Chikunga, has said that of all the vessels that carried 300-million tons of cargo through SA's ports annually, not one was registered in South Africa. The result of South Africa not having a merchant fleet is that more than R40-billion is paid to foreign ship operators. The province of KwaZulu-Natal is well-placed to take advantage of the focus on the maritime economy. Between them, the ports of Durban and Richards Bay handle 78% of South Africa’s cargo tonnage. Durban’s annual throughput of containers is about one-million, more than 60% of the country’s total. The Port of Durban is already home to a variety of maritime companies. Southern African Shipyards (SAS) is an experienced manufacturer of ship hulls. To improve their competitiveness, three South African shipbuilders (SAS, Damen Shipyards Cape Town and Nautic Africa) will pool their resources on contracts in other parts of Africa. Different South African ports probably need to specialise to some degree, but cooperation pacts like this one might also be a template for the boat repair and servicing sector.

PROFILE

Airports Company South Africa Airports Company South Africa is expanding its successful local operation into an international one.

small and rural communities within the Republic of South Africa for seamless access/connectivity to the national air transport system. Traffic development works collaboratively with key stakeholders such as airlines, regulators, government and tourism agencies to identify, evaluate and develop potential air service opportunities across the globe. This links Airports Company South Africa’s network of airports with the aim of enabling trade, tourism, and mobility of goods and services within Southern and subSaharan Africa.

Company profile Airports Company South Africa was formed in 1993 as a public company and, although majority owned by the South African Government, is legally and financially autonomous and operates under commercial law. As the largest airport authority in Africa, the company manages a network of nine major airports in South Africa, including the three main international gateways ie O.R. Tambo International, Cape Town International and King Shaka International airports.

Its main focus is on building sustainable relationships and economic development to transform the opportunities the region has to offer into sustainable value for all. Although the introduction of new air services has potential to stimulate demand for air travel, it is equally important to strike a good balance between supply and demand to ensure that the current needs are served without compromising the future air travel needs. Airport Company South Africa's role is to provide route/traffic development services and support to all airlines and air travel stakeholders in line with the Competition Commission Act

Traffic development

The traffic development mandate is to identify, evaluate and develop air service opportunities collaboratively with key stakeholders (ie airlines, regulators, national, provincial, local and tourism) across the Airports Company South Africa network of airports to enable trade, tourism, and mobility of goods and services for sustainable economic growth. Air service is important for connecting the local economies with the rest of the world, thus emphasis is placed on prioritisation of

SOUTH AFRICAN BUSINESS 2017

PROFILE of 2009 of the Republic of South Africa. Its service/ support includes: • Market data analysis and research • Opportunity identification and modelling of a potential air service/opportunity • Development of an air service/route business case with a prospective airline(s) • Operational start-up information support through a central airline account manager • Continuous collaborative review of the route performance and advice as required • International focus

the heart of South Africa’s commercial and industrial hub with excellent road infrastructure linking it to Johannesburg, Pretoria and the national road network. The Gautrain rapid rail system now links the airport with the CBDs of Johannesburg, Sandton and Pretoria. This truly world-class facility now handles about 19-million passengers a year, with a capacity of 28-million, and boasts a total of more than 14 300 parking bays. Cape Town International Airport Cape Town International Airport is Africa’s thirdlargest airport, with an annual passenger throughput of nearly 8.5-million and a capacity of 14-million. It is also Africa’s premier tourist and VIP destination and has established a reputation as Africa’s foremost international award-winning airport, consistently performing among the best in the world in its category for passenger service.

International focus

In 2006, Airports Company South Africa formed part of a consortium that took over the expansion and management of Chhatrapati Shivaji International Airport in Mumbai, India. The success of this venture encouraged the company to seek similar opportunities elsewhere. Such undertakings allow the leveraging of the pool of skills and experience amassed over the years to grow the business and increase shareholder value.

This is the first Airports Company South Africa operated airport to achieve the internationally recognised ISO 14001 accreditation for its environmental management system.

In 2012, Airports Company South Africa, in partnership with the Brazilian company, Invepar, was successful in a bid to manage the development, maintenance and operations of Guarulhos International Airport in São Paulo, Brazil.

King Shaka International Airport King Shaka International Airport is the newest in Airports Company South Africa’s local airport network, and has been in operation since 2010. The site of the previous Durban International Airport was to small to handle the growth in air traffic and this prompted the construction of a new airport 35km north of Durban. The new airport currently handles about 4.5-million passengers annually and has a capacity of 7.5-million, with opportunities for significant expansion as required (up to 45-million passengers by 2060). Its multi-storey parkade caters for 1 500 vehicles, while there are atotal of 4 500 vehicle parking bays at the airport.

Airports Company South Africa’s international growth strategy is centred on strengthening and expanding existing footprints in India and Brazil through upcoming opportunities in these respective countries. The company also intends to focus on developing the African continent’s aeronautical infrastructure landscape.

Our airports at a glance

South Africa: International airports O.R. Tambo International Airport Airports Company South Africa’s flagship airport, O.R. Tambo International, is South Africa’s principal and largest airport, servicing airlines from all five continents and with more than 50% of the country’s air passengers passing through it. Situated in Gauteng, the airport is ideally situated in SOUTH AFRICAN BUSINESS 2017

South Africa: Regional airports East London Airport Each year, East London Airport processes around 665 000 passengers, with just over 31 000 air traffic movements. It has an overall passenger capacity of 1.2-million passengers. The airport provides a cru-

PROFILE Boulevard Precinct Immediately adjacent to the airport, the Boulevard Precinct will include a private hospital, residential, retail, schools and commercial premises. This is an exciting and innovative, 44ha development, which will support the N8 development corridor. It will accommodate a wide range of tenants, ranging from mixed-use offices, a service station and a private hospital. Construction of the first three developments commenced in 2016, acting as a catalyst for the node.

cial link in the local cargo chain, playing an important role in the growing economy of the Eastern Cape. Its flights carry a variety of cargo headed for domestic destinations, as well as countries such as France and Holland. Although the two domestic airlines that operate from the airport (South African Airways and SA Express) only employ A320s, the airport can also accommodate A300 aircraft. George Airport George Airport is located at the heart of the Western Cape’s Garden Route, a much-loved holiday destination for domestic and international tourists alike. With increasing numbers of visitors travelling to the region’s mountains, beaches and forests, George Airport now facilitates over 570 000 passengers each year, with the capacity to handle 900 000. The airport also acts as a national distribution hub for cargo such as flowers, fish, oysters, herbs and ferns. The unwavering commitment to service and efficiency has won it the South African Airport of the Year award six times in total.

The Grasslands Approximately 98ha in extent, this development property represents a diverse range of business opportunities. These include an extended general aviation area, freight, cargo, logistics and housing. Port Elizabeth International Airport Affectionately known as the "10-minute airport", Port Elizabeth International Airport is situated within five minutes of the CBD and the beachfront, and just 10 minutes from all other key city locations. The airport currently handles more than 1.25-million passengers per year and over 800 tons of cargo. The growth in tourist numbers to the region, together with preparations for the 2010 FIFA World Cup, resulted in a number of improvements to the airport including a terminal expansion and it now has the capacity to handle up to two-million passengers every year. The airport boasts a new retail area, together with a fully compliant international arrivals and departures terminal to complement upgraded amenities for domestic traffic.

Kimberley Airport Kimberley Airport is situated in the Northern Cape and facilitates about 10 500 air traffic movements a year. It handles nearly 160 000 passengers annually, of which three-quarters are business travellers, and has a total passenger handling capacity of 200 000, together with 114 public parking bays. It also has a thriving cargo business that dispatches a remarkable range of cargo, ranging from game trophies to industrial equipment. Bram Fischer International Airport Bram Fischer International Airport is the thirdlargest of Airports Company South Africa’s national airports and provides an important gateway to the Free State, which is a land-locked province. The airport processes around 380 000 passengers annually, the majority of whom are business travellers, and 14 000 air traffic movements are facilitated. Bloemfontein also operates a significant cargo business.

Upington International Airport Although Upington International Airport is a small operation with an annual passenger capacity of 100 000, it boasts a number of unique services and facilities that are unmatched on the African continent. The airport has three runways, the primary one measuring 5 900m (the longest civilian runway in the Southern Hemisphere and one of the few able to land a Space Shuttle). Both South African Airways and the South African Air Force use the airport to train pilots in the handling of large aircraft such as Boeing 747s, 707s and the South African presidential jet. The airport also has a cargo business, sending anything from livestock to

The growth and development opportunities at this airport include:

SOUTH AFRICAN BUSINESS 2017

PROFILE cars and mining equipment to Europe, the Middle East and the rest of Africa.

Rest of the world India

As an integral part of its growth strategy, Airports Company South Africa looks to identify and participate in global airport management and operation concession opportunities. Today, the airport handles over 30-million passengers and more than 650 000 tons of cargo. In February 2014 a new, integrated terminal was opened, increasing the airport’s annual capacity to 40-million passengers and with a retail footprint of 18 580m2. Airports Company South Africa’s involvement at Chhatrapati Shivaji International Airport in Mumbai is a flagship demonstration of the growing economic ties between India and South Africa. It is a shining example of coordinating experience and skills for the benefit of two nations. Chhatrapati Shivaji International Airport has received various accolades since 2006. Brazil Airports Company South Africa’s role, through a Technical Services Agreement, is to provide airport operation and management services to Guarulhos International Airport in São Paulo. This was a particularly relevant requirement for the airport, as it had to be prepared for the 2013 FIFA Confederations Cup, the Pope’s visit for World Youth Day in 2013, the 2014 FIFA World Cup and the 2016 Olympic Games. This was the only concession to deliver on time. Ghana

In 2016, Airports Company South Africa entered into a Technical Services Agreement with Ghana Airports Company Limited to provide advisory and technical consultancy services on all airportrelated matters.

Competencies

• Airport technical advisory services • Airport operation and management

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• Transfer of airport operations from one airport to another

• Training and develoment • Investment in airport concessions

Accolades 2011: 3rd Best Airport in Africa of the Airport Service Quality Awards by Airports Council International 2012: 2nd Best Airport in Africa of the Airport Service Quality Awards by Airports Council International 2013: 1st Best Airport in World Handling under 5 Million Passengers of the Skytrax World Airports Awards by Skytrax 2014: 1st Best Regional Airport in Africa of the Skytrax World Airports Awards by Skytrax 2014: 2nd Best Airport in World Handling under 5 Million Passengers of the Skytrax World Airports Awards by Skytrax 2014: 3rd Best Domestic Airport in the World of the Skytrax World Airports Awards by Skytrax 2014: Nkonki SOC Integrated Reporting Award 2014: Chartered Secretaries Integrated Reporting Award 2015: Environmental Award 2015: 1st Best Airport in the World Handling under 5 Million Passengers of the Skytrax World Airports Awards by Skytrax 2015: 1st Best Regional Airport in Africa of the Skytrax World Airports Awards by Skytrax 2015: 3rd Best Domestic Airport in the World of the Skytrax World Airports Awards by Skytrax 2015: 4th Best Regional Airport in the World of the Skytrax World Airports Awards by Skytrax 2011-2015: KZN Top Business Award (5 years in a row)

CONTACT INFO Elsie Rateiwa – Email: Elsie.rateiwa@airports.co.za Charles Shilowa – Email: Charles.Shilowa@airports.co.za Website: www.airports.co.za

OVERVIEW

Information and communications technology Fibre optic networks are growing quickly.

SECTOR INSIGHT Local and provincial government authorities are rolling out Wi-Fi in public areas in selected areas of South Africa.

outh Africa's appetite for fast internet connectivity is growing fast. The state-owned company Telkom controls most of the country's fibre cable but several smaller private companies are winning contracts to lay fibre optic cables around the country. The Mail & Guardian reported in April 2016 that "nimble new entrants" such as Vumatel, Fibrehoods, Link Africa (which runs its network in the sewerage system, obviating the need to dig new trenches), and Dark Fibre Africa are forcing the bigger telecommunications companies to up their game. With faster internet speeds, customers could switch away from subscriber television services. Access in South Africa is improving all the time. As part of its mandate, the Independent Communications Authority of South Africa (ICASA) has seen to it that various private operators have connected more than 623 schools around the country. The Universal Service and Access Agency of SA connectivity project is currently underway in the Vhembe and Gert Sibande Districts. The Western Cape Provincial Government and Neotel will roll out 384 Wi-Fi hotspots in public

areas, and is aiming for complete coverage by 2019. The ICT sector's direct contribution to the gross domestic product (GDP) was R94.7-billion (2.9% of the total) in 2012 (StatsSA). South African households spent R91.6-billion on ICT products in 2012 and R4.60 of every R100 spent by households was spent on ICT products. Of that, R2.90 was spent on telecommunications, broadcasting and information supply services (eg pay-television subscriptions, cellphone airtime and broadband); 80 cents on communication equipment (eg televisions); 50 cents on content and media products (eg newspapers and books); and 30 cents on computing machinery. The remaining 10 cents was spent on other ICT items, according to a StatsSA report. About two-thirds of South Africa’s ICT companies are located SOUTH AFRICAN BUSINESS 2017

OVERVIEW in Gauteng Province. The sector contains a diverse range of hardware manufacturing, software design and various service offerings such as software management, systems programming and technical support. South Africa is highly regarded as a centre of software development and offers attractive inward investment opportunities, especially in: • Au to m oti ve el e c t ro nic systems • Access control and security • Financial sector ICT services • Silicon processing for fibre optics • Integrated circuits and solar cells There are many opportunities for employment in the sector. It is a huge irony that in a country with a very high unemployment rate, the Johannesburg Centre for Software Engineering (JCSE) puts the figure of vacancies in software and application development, cloud computing and information security at 40 000 (Skills & HR Development, Sunday Times, June 2016). Training is available from organisations such as the Quad Digital Academy, a Standard Bank initiative, an ICT Incubator in Port Elizabeth run by the Small Enterprise Development Agency (Seda), from the City of Johannesburg (which runs a digital intern programme called COJEDI) and scarce skills training offered by the City of Cape Town (in partnership with SAP Africa) in software programming; the programme is called "Western Cape Skills for Africa". According to itnewsafrica. com, South Africa accounts for SOUTH AFRICAN BUSINESS 2017

5% of all phishing attacks in the world. This is where a person in a company gives away account information or codes that allow thieves to steal or disrupt operations. When the data that a company holds is the main point of the business, the case for cybersecurity is obvious. Hacking of websites can also have a devastating effect on a business, so operations like penetration testing and technical surveillance countermeasures are offered by security companies. Innovation in the sector is encouraged by mLab, a centre designed to support entrepreneurs in the mobile technology field. The CSIR in Pretoria hosts the facility together with The Innovation Hub. Traditional technologies for broadband connection (dial-up and VSAT) are declining in popularity in South Africa as more sophisticated mobile technology becomes available. This includes WiMax, HSDPA and HSPA+. Growth in the sector is expected to be driven by mobile broadband and services that add value in the data field. Data centres are increasing their capacity at a fast rate as cloud usage grows. Teraco, which runs data centres in Johannesburg, Cape Town and Durban, is considering adding another 10 000m² in Ekurhuleni because of what World Wide Worx's Arthur Goldstuck calls the "unquenchable" thirst of businesses and consumers for data. Teraco is also the host of a joint venture that steers data traffic (a peer point) called NAPAfrica. Public transport systems are moving to cashless ticketing supported by ICT. Digicore and Absa Bank have combined in Cape Town to roll out the system for minibus users driving between the city and the V&A Waterfront. With Vodacom spending in the region of R6-billion per year on its 3G and 4G long-term evolution network (LTE), the capacity of South Africa’s telecommunications network is growing fast. MTN and 8ta are also investing heavily in LTE. New players in the market were announced in September 2016 when two former bankers, Paul Harris and Michael Jordaan, put together a consortium to buy Multisource with the intention of investing billions in an LTE-Advanced (or 4.5G) network. In 2016 Neotel changed hands. Liquid Telecom, a subsidiary of Econet, has teamed up with Royal Bafokeng Holdings to purchase the mobile and data business from Tata Group of India.

ONLINE RESOURCES Independent Communications Authority of SA: www.icasa.org.za National Department of Communications: www.doc.gov.za State Information Technology Agency: www.sita.co.za

A Leader In Solutions Dr Vusi Mncube Executive Chairman Uzulu Business Solutions is a wholly owned B-BBEE company which was initially founded to drive the project of bridging the gap between the University of Zululand Computer Science Students and the marketplace. Uzulu has since evolved as one of the critical players in the financial services, credit management, payment fulfilment systems and other value-adding ICT applications in partnership with various industry leaders. Uzulu's philosophy is to provide high-quality IT solutions and consulting to customers with an emphasis on service by striving to exceed expectations. This rare quality has allowed Uzulu to grow swiftly whilst keeping pace with the rapidly developing IT industry. Our operating model focuses on the basic view that any IT solution is only relevant if it enables and adds value to the business. Through this approach, our clients are guaranteed that the solutions we design and implement give them the maximum return on their investment. Our company also designs, develops and implements the most appropriate costeffective solutions for its clients. The company ensures that the necessary skills are transferred for ease of use and implementation. “If there is no measurable business value for any solution deployment, it is not a solution. Through our world-class partnership model with our clients, we jointly determine the return on investing in a business solution before embarking on the project. Once the solution is deployed, we continuously measure the realisation of ROI as one of our fundamental post-implementation interventions. If our customers realise business value and are therefore successful, so are we successful,” says Dr Vusi Mncube, Executive Chairman, Uzulu Business Solutions.

Key Services and Products are as follows: Outsource Collections and Call Centre We offer a broad range of customer contact services through the fully blended multichannel inbound and outbound contact centre. We work closely with clients to drive their business initiatives. Tailor -made solutions are often born as various businesses have specific needs. Our services include but are not limited to: • • •

Inbound/outbound customer service Debt collection Call centre recruitment and training

• • •

Back-office and fulfillment Collections strategy and credit risk analytics Data processing and cleansing

The proposed model is that of providing a debt collection capability to the municipality. This capability will co-exist with the current billing and credit control activities of the municipality.

Business Advisory and ICT Integration Services • Business process and technology consulting • Information architecture; system/technical architecture • Application development • Online and physical tracing

• • • •

Back office systems, infrastructure and integration IT support and solutions maintenance Project management Forensic audit services

Contact details Address: 4th Floor, West Tower, Nelson Mandela Square, Sandton City, Sandton, Johannesburg Email: info@uzulusolutions.co.za | Tel: +27 11 100 5165 | Fax: +27 86 648 4925

PROFILE

VeriFi VeriFi is the leader in the business of verification and certification for BBBEE recognition.

South Africa requires an economy that can meet the needs of all its economic citizens – its people and their enterprises – in a sustainable manner. Government’s objective is to achieve this vision of an adaptive economy characterised by growth, employment and equity. Achieving authentic BEE has required a reassessment of traditional business models and corporate cultures. The Bill, code and strategy document rely upon two core policy instruments that have been designed to bring about BEE. Both of these instruments are essentially measurement tools that will permit the public and private sectors to evaluate the BEE status of a particular enterprise. Failure to adapt to the new paradigm will have significant consequences. A real commitment to BEE is now an economic imperative.

an annual turnover of below R10-million and over R50-million respectively (including all charter sectors).

Pricing Pricing for BEE consultancy services is based on the client’s requirements and can be structured on an hourly or monthly basis. For BEE Verification and issue of a BEE Compliance Certificate, please contact the office for the current rates.

BBBEE explained Government BBBEE legislation consists of: • The Strategy for Broad-Based Black Economic Empowerment • T he Broad - Base d Black Economic Empowerment Act, No 53 of 2003 • The Codes of Good Practice for Black Economic Empowerment • Various sectoral BEE Charters or Codes

Description of services • • • • •

Assess and certify BBBEE rating Provide insight into BBBEE challenges facing various organisations Provide insight and guidance on the actions required to elevate BBBEE status Verification of supplier BBBEE status To assist small, medium and large enterprises in acquiring a certified BBBEE verification, and to clarify the codes of good practice, BBBEE Act and guide and advise where necessary, thus ensuring a suitable level of recognition

In terms of these Codes of Good Practice, businesses are divided into three categories: • Where turnover is less than R10-million a year, or when in the first year of incorporation, a business is categorised as an Exempt Micro Enterprise (EME). However, it is necessary to confirm this status by providing proof of annual income. • Businesses with a turnover of between R10-million and R50-million a year are categorised as Qualifying Small Enterprises (QSEs).

Target markets Small, medium and large enterprises achieving SOUTH AFRICAN BUSINESS 2017

PROFILE

The criteria for each of these elements are less onerous for QSEs than for companies with turnovers exceeding R50-million per annum.

relations with clients seeking assurance of a company’s BEE compliance Once a verification and certified rating through VeriFi is accomplished, a company can perform business in confidence when engaging with other organisations, as its commitment to equality, nation-building and unique South African business processes will be recognised.

The value of verification With BBBEE recognised as an imperative by companies committed to building an equitable South Africa, verification is an essential requirement that confirms a company’s participation and contribution. Verification is performed in a manner similar to that of a financial audit: it provides an independent assessment of investment, performance and initiatives as a control system. Criteria against which companies are measured are provided by government, and like an audit, verification must be performed annually.

Key facts and figures Year established: 2005 No of staff: 15 Major clients: BP, Scaw Metals, Hertz Car Rental, Public Investment Corporation Limited, IBM South Africa, SAAB, South African Express Airways Soc Ltd.

A BEE certificate from VeriFi is advantageous for: • Proposals for new business with government • The licensing of regulated activities which include mining, liquor sales and the granting of credit • Leasing of premises from government or private businesses • The creation or continuance of business

CONTACT INFO Tel: +27 86 175 3233 Email: info@verifibee.co.za Website: www.verifibee.co.za

SOUTH AFRICAN BUSINESS 2017

PROFILE

Secur

ECUR

Superior risk management services for South African companies.

A CYBER SECURITY CONSULTANT

ECUR

A CYBER SECURITY CONSULTANT

• • • • • • • • • •

Secur provides risk management services and solutions, including technical consulting, to organisations in South Africa. Secur employs digital forensic software engineers, ethical hackers, secure website architects, polygraph examiners and other relevant experts. This expertise enables it to offer clients penetration testing and incident response in addition to consulting services – all of which are designed to strengthen an organisation’s security in cyber space.

ECUR

A CYBER SECURITY CONSULTANT

Services

Secur operatives are widely considered the ‘gold standard’ within the information security industry, due to their unique experience with information security standards and protocol.

Secur offers a wide array of services such as: • Computer forensics • Penetration testing • Competitive intelligence • Incident response • Managed services • POPI consulting • Employee background screening

Products Secur distributes and resells a range of best-of-breed security solutions including: • Cybereason • Datalocker • Iron Key • Intellinx • Check Point • FLIR • Rapid7 • Acunetix • Barracuda • Palo Alto • AirWatch • Drivelock • Cellopoint • Morphisec SOUTH AFRICAN BUSINESS 2017

Cellebrite Silent Circle Immunity Teramind SecurEnvoy ElcomSoft Passmark Symantec Magnet Forensics Panoscan and many more

CONTACT INFO Physical address: Ground Floor, Southdowns Ridge Office Park, c/o John Vorster Road and Nellmapius Drive, Irene, Centurion 0157 Tel: +27 12 003 3233 Fax: 086 638 9959 Email: info@secur.co.za Website: www.secur.co.za Online shop: shop.secur.co.za

OVERVIEW

Education and training New universities are improving access to higher education but funding is under the microscope.

outh Africa is setting aside ever-increasing amounts of money for education but events on university campuses in 2015 and 2016 suggest that the funding model is going to have to be re-examined. Nearly R300-billion was allocated to various aspects of education in the 2016/17 budget, but protesting students continued to demand free tertiary education. Apart from the very large amount spent on the biggest sector (basic education at schools), there has been a big increase over the last few years on spending on Technical and Vocational Education and Training (TVET) colleges, reflecting the state's concern to develop the skills of the country's workforce. Access to higher education has been steadily on the rise since the country become a democracy for all citizens. For example, in the years since 2009, university enrolment has increased by nearly 16% and at TVET colleges by 67%. Finding ways of paying for this improved access is now providing headaches. Various regulatory bodies fall under the Department of Higher Education and Training: • SETAs (Sector Education and Training Authorities) • SAQA (South African Qualifications Authority) • CHE (Council on Higher Education ) • QCTO (Quality Council for Trade and Occupations) • NSFAS (National Student Financial Aid Scheme) • NSA (National Skills Authority)

Higher education With the inauguration of the Sol Plaatje University (Northern Cape) and

SECTOR INSIGHT Every province in South Africa has at least one university. the University of Mpumalanga, every province now has its own university, of which there are 26 in all. The Sefako Makgatho Health Sciences University was also opened in Gauteng. There are three categories of university: universities offering only degrees and post-graduate courses with a strong research component, comprehensive universities offering a mix of degrees and diplomas and universities of technology, formerly known as technikons. There are also 87 registered and 27 provisionally registered private higher education institutions. The University of Cape Town has 40% of South Africa’s A-rated researchers (32) and a strong international reputation. UCT is SOUTH AFRICAN BUSINESS 2017

OVERVIEW rated as Africa’s top university and Pretoria and the University of the Witwatersrand (Wits) are also highly regarded as research institutions. Wits has been ranked in the top 1% of world institutions in seven fields of research. The university offers studies in more than 40 schools in five faculties. The University of South Africa (UNISA) offers correspondence courses. Its headquarters are in Pretoria but it has sites throughout South Africa. UNISA has a staff of more than 4 000 and 300 000 registered students in South Africa and Africa. Universities of technology have a specific focus on educating young people in fields that will enhance the country’s economic performance. Technology is at the core of the learning experience.

Business schools Gauteng has three of South Africa’s top five business schools: the Wits Business School, the University of South Africa’s Graduate School of Business Leadership and the Gordon Institute of Business Science. The Graduate School of Business (UCT) is accredited by the European Foundation for Management Development while Stellenbosch’s Business School has a specialist unit called the Centre for Project Management Intelligence. The University of KwaZulu-Natal’s Graduate School of Business is a founder member of the Association of BRICS Business Schools. Rhodes University’s Business School has a strong focus on environmental management.

Schools South Africa has 26 000 public schools. Many schools need upgrading. The Department of Basic Education reports that 684 schools have been built between 2009 and 2016 and an additional 343 schools are planned for the period 2017 to 2019. The Mathematics, Science and Technology (MST) Grant, is intended to promote the teaching and learning of these subjects. This Grant, an amalgamation of the Technical Schools Recapitalisation Grant and the Dinaledi Schools Grant, has been allocated a total of R1.1-billion over

ONLINE RESOURCES National Department of Basic Education: www.education.gov.za National Department of Higher Education: www.dhet.gov.za Southern African Regional Universities Association: www:sarua.org

SOUTH AFRICAN BUSINESS 2017

the 2015/16 to 2017/18 MTEF period. The Department’s 2015/2016 budget allocates infrastructure delivery funding through the Education Infrastructure Grant (EIG) at R29.622-billion for the MTEF period; and the Accelerated Schools Infrastructure Delivery Initiative (ASIDI) funded to the tune of R7.042-billion. Through the ASIDI programme, 163 new schools have been built since 2011. Advtech is a JSE-listed company that runs several schools including Abbotts College and Varsity College with an enrolment of some 35 000 students. Curro Holdings is also listed on the JSE. A funding agreement with Old Mutual Investment Group SA (OMIGSA) and the Public Investment Corporation (PIC) will see Curro roll out 11 low-fee independent schools in the period to 2019. These will be called Meridian Independent Schools. The LEAP Science and Maths School model is far from the JSE company model: these schools have low fees and have to raise funds to survive but they offer excellent teaching, particularly in mathematics, science and English. There are six schools in South Africa and they are enabling children from black townships to do well enough at school to go on to study engineering at university.

Discuss. Educate. Innovate.

DURBAN Tel: +27 31 300 7200

JOHANNESBURG Tel: +27 11 853 3000

EAST LONDON Tel: + 27 43 721 1774

CAPE TOWN Tel: +27 21 671 6576

POLOKWANE Tel: +27 15 290 2896/9

MANCOSA is registered with the Department of Higher Education and Training (DHET) as a private higher education institution under the HE Act, 1997. Registration No.2000/HE07/003.

www.mancosa.co.za

PROFILE

College of Cape Town The forward-looking college has a history dating back to the early 20th century.

The College is a public Technical and Vocational Education & Training (TVET) College, under the Department of Higher Education and Training. Qualifications offered are accredited, affordable and quality assured by Umalusi, various SETAs and SAQA.

Description of educational offerings The College is a leading provider of education and training in mainly the Technical and Vocational Education and Training (TVET) band and has much to offer students and prospective partners as an alternative to Basic and Higher Education and Training. Qualifications include skills programmes, technical, vocational and occupational training that lead to recognised, accredited qualifications that are in high demand by commerce and industry.

Town. This arose from a rationalisation in TVET colleges in which some 150 colleges around the country were reduced to 50. No of staff: 670 (full-time) No of registered students: 14 379 Faculties offered: Art & Design, Beauty Therapy, Building & Civil Engineering, Business Studies, Education & Training, Electrical Engineering, Haircare, Hospitality, Information & Communication Technology, Mechanical Engineering, Travel & Tourism Qualifications offered: Certificates, Higher Certificates, Diplomas, UNISA B.Ed Degree (Foundation Phase), Skills Programmes, Learnerships, Accredited Trade Test Centre

Description of location of facilities The College is situated in the central area of the Peninsula with campuses located in Athlone, Cape Town city centre, Crawford, Gardens, Guguletu, Pinelands, Thornton and Wynberg. The central office is located in Salt River, Cape Town. The College of Cape Town also has three residences.

CONTACT INFO Key contact people: Louis van Niekerk, Principal. Wilfred Jackson, Chief Financial Officer. Sharon Grobbelaar, Marketing Manager. Physical address: 334 Albert Road, Salt River, Cape Town 7945 Postal address: PO Box 1054, Cape Town 8000 Tel: +27 21 404 6700 / 086 010 3682 Fax: +27 21 404 6701 / 086 615 0582 Email: info@cct.edu.za Website: www.cct.edu.za

Key facts and figures Year established: The College of Cape Town is the oldest Technical and Vocational Education and Training institution in South Africa with a proud history dating back to the beginning of the 20th century. As the name suggests, we are based in Cape Town. Four former technical colleges, Athlone College, Cape College, Sivuyile College and Western Province Technical College, were officially merged on 1 February 2002 to become the College of Cape

SOUTH AFRICAN BUSINESS 2017

PROFILE

Southern African Wildlife College Through conservation education and skills development the college contributes to the preservation of Africa's natural heritage.

Southern Africa's network of parks and reserves is an important means of safeguarding the region's biological wealth. Whether parks are trans-frontier, state-run or privately owned, if managed well they are focal points for rural development and economic growth. As a result, adequate training and skills development programmes, such as those offered by the Southern African Wildlife College (SAWC), are vital for the conservation of the continent’s rich biological diversity while also enabling the flow of benefits from protected areas to communities as part of the development of the wildlife economy. The cutting-edge, hands-on training offered covers a wide spectrum of skills needed by protected area managers and natural resource managers from Southern Africa. It involves those who are either already in the service of conservation and environmental agencies, as well as individuals starting their careers in the conservation field.

Development Plan and as such will contribute to the goals and objectives of the National Biodiversity Economy Development Strategy and targets of the Department of Envionmental Affairs’ Vision 2024. Projects developed in partnership with, and funded by, the Department of Environmental Affairs and the National Treasury’s Jobs Fund are indicative thereof.

An important facet of the College’s training is its Wildlife Guardian Programme, which is aimed at equipping field rangers with the necessary skills to help ensure the integrity of protected areas and counter the onslaught of poaching in the region. In addition, the College offers a host of certificate programmes, learnerships, skills programme and short courses aimed at up-skilling people and providing employment within the conservation sector. This is done through its four key training units, which include: Wildlife Area Management, Protected Area Integrity, Sustainable Use and Guiding as well as Community Development and Youth Access.

Since its inception, the College has trained more than 14 000 students from 26 countries in Africa, mostly from countries in the SADC region. Approximately 80% of the learners who have received training at the SAWC are still in wildlife management and many of its graduates have been promoted to more senior management positions.

CONTACT INFO Tel: +27 15 793 7300 Email: info@sawc.org.za Website: www.wildlifecollege.org.za.

The College’s business plan has also been developed in line with key elements of the National SOUTH AFRICAN BUSINESS 2017

INTERVIEW

Improving skills in sustainable development

Theresa Sowry

Describe any changes that the College has experienced in recent years.

Given that we are a non-profit training institution that does not receive any government subsidies, the College has become a lot more business focused in order to survive in a sector which traditionally has not been well funded. In line with the College’s new business plan, and with the introduction of our conservation-focused business units, I believe that the SAWC is playing a pivotal role in improving the skills and knowledge needed for sustainable development.

BIOGRAPHY CEO of the Southern African Wildlife College Theresa Sowry holds a Master of Science Degree in Botany from the University of the Witswatersrand. She gained experience in the conservation field while working for SANParks on a rare antelope programme in the Kruger National Park. She went into conservation education when she joined the Southern African Wildlife College as Training Manager and Lecturer in Natural Resource Management. She was later promoted to Executive Manager: Training and was appointed as the college’s CEO in January 2011.

Tell us about some of the highlights experienced. The major highlight is working with an amazing group of people, all dedicated and committed to conservation education, and having excellent relationships with our donors who play such a crucial role in the College's development. With the support of our partners, WWF-SA, Peace Parks Foundation and the Southern African Wildlife College Trust (SAWCT), the College has made great strides over the past few years. A personal highlight was long-term donor, the Tusk Trust, inviting me to Windsor Castle to celebrate their 25th anniversary. I was personally able to introduce the field-ranger training programme, which the Tusk Trust supports, to Prince William! A subsequent visit by Prince Harry to the College and his announcement of a partnership between the SAWC and United for Wildlife, via the Royal Foundation, definitely made it onto the 2016 highlights list! Are internship/job placements readily available for graduates of the College?

Many of our learners are already employed in the field of conservation. However other SAWC training projects such as the National Treasury’s Jobs Fund project are aimed at training unemployed people from local communities and integrating them into the conservation sector by ensuring job placement after completion of their studies, which includes work-integrated learning.

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Tourism Tourism is a growth industry that quickly creates jobs.

s one of the sectors in which growth is directly (and quite quickly) translated into new jobs, the tourism industry is a particularly important part of the South African economy. The global tourism industry is fairly resilient to economic downturns. International tourist arrivals have increased steadily, even in the years following the 2008 global economic downturn. South Africa hosted the FIFA Football World Cup in 2010, which helped to boost arrival figures and market the country across the globe. StatsSA reported that 11% more tourists arrived in May 2016 (760 000) than in the same month in 2015. Total tourist arrivals for January to May 2016 rose to more than 4.2-million, a 15.7% increase and more than three times the average annual global growth rate in global tourism. Spending by foreign visitors to South Africa in 2015 amounted to R68.2-billion. Tourism accounts for 3% of South Africa's gross domestic product and there are about 655 609 jobs in the sector (Treasury). A lot of effort has gone into increasing the number of South Africans who take trips within the country. In the 2016/17 financial year, South African Tourism has committed R100-million to promote domestic tourism. Domestic tourism generated R8.8-billion in the first quarter SOUTH AFRICAN BUSINESS 2017

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SECTOR INSIGHT Marriott International and Protea Hotels have signed a deal. of 2016, an improvement on the same period in the year before. The Tourism Incentive Programme (TIP) has been launched by the Department of Tourism, recognising how important the sector is in creating growth and jobs. Tourism has been earmarked as one of the six key growth sectors in national government's New Growth Path. An Enterprise Development Project Management Unit (PMU)

OVERVIEW has been established within the Department of Tourism. Among the PMU's tasks will be to manage an Enterprise Development Online Information Portal for small, medium and micro enterprises (SMMEs). Two tourism incubator hubs are also to be established in the Pilanesberg (North West Province) and Manyeleti (Mpumalanga Province). One of the reasons for the success of South Africa's tourism sector is its diversity. Superb natural beauty, excellent beaches (45 have Blue Flag status), incomparable wildlife, vibrant cities and cultural and heritage attractions that represent a heterogeneous population and a dramatic history, South Africa really does have it all. Culture and heritage accounts for fully 40% of world tourism and is one of the fastest-growing subsectors. Halaal tourism is a growth industry and South Africa is well placed to benefit from this trend. In the five years to 2021, South Africa will be the venue for more than 200 conferences that will add R1.6-billion to the economy and attract about 300 000 participants. South Africa has 19 national parks and each province has its own as well. There are a great number of private game farms and nature reserves, many of which cater to the luxury market. There are eight UNESCO World Heritage Sites in South Africa: Robben Island, Cradle of Humankind, Mapungubwe Cultural Landscape, iSimangaliso Wetland Park, uKhahlamba Drakensberg (newly named Maloti Drakensberg Transfrontier Park), Richtersveld, Cape Floral Kingdom and Vredefort Dome.

Other popular history or cultural sites include the Nelson Mandela Museum, Mandela House (Soweto), Hector Petersen Memorial (Soweto), Apartheid Museum, Freedom Park, Voortrekker Monument, Constitution Hill, District Six Museum, Bo-Kaap Museum and many others are popular tourist attractions. There are a number of opportunities to further develop the full potential of tourism in heritage sites. The Department of Arts and Culture is responsible for the promotion of Heritage Month, including Heritage Day.

Structure The South African tourism industry is well segmented. The distribution channel is dominated by four major groups, each of which runs several companies in different parts of the value chain. According to Wesgro, the Western Cape’s investment promotion agency, the biggest groups are: Imperial Holdings: companies include Europcar and Tempest Car Hire, Springbok Atlas and Grosvenor Tours Bidvest Travel and Aviation: Rennies Foreign Exchange, BidTravel, Harvey World Travel, Budget Car Rental, HRG Rennies Travel and BidAir Services Cullinan Holdings: Thompsons, Hylton Ross Tours, Pentravel Tourvest: The group has companies dealing with many aspects of the tourist experience: tour operators and conference organisers, foreign exchange, retail (gift shops and duty-free shops) and hotels (African Hotels and Adventures) The principal airline operators in South Africa are SAA, the alliance of British Airways, Comair, and Kulula, a low-cost airline. SAA has ties with SA Express and owns low-cost carrier Mango. Fly Safair's inaugural flight took place in late 2014. SA Express and SA Airlink fly to smaller destinations in South Africa and Southern Africa.

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OVERVIEW Casinos are a popular part of many entertainment and accommodation complexes around the country, although relatively few licences are in operation. Private game reserves and golf resorts has been one of the fastestgrowing markets in recent years. The Garden Route and the KwaZulu-Natal coastline are areas rich in golfing venues. St Francis Links is located between Plettenberg Bay and Port Elizabeth. With a spectacular course designed by Jack Nicklaus and wonderful views over the bay and nearby mountains, St Francis Links is routinely featured among Compleat Golfer magazine's Five Star Experience Golf Awards. The International Association of Golf Tour Operators (IAGTO) has on occasion selected South Africa as its Golf Destination of the Year. Wine tourism is said to contribute indirectly more than R4.5-billion to the South African tourism sector (South African Wine Industry Information and Systems, SAWIS). According to Wine Tourism South Africa, a website and publishing concern that provides information about the wine industry, 43% of visitors to South Africa visit the Cape Winelands. The Industrial Development Corporation has committed to investing R2-billion in local resorts (and in the African hotel market). There are a number of unused or under-used facilities in South Africa that could be fixed up to cater to the many South Africans who currently don’t take holidays. An audit of possible properties is underway. One suggestion is that former military bases could be converted into low-fee resorts. Other niche areas that are being explored include astrology and adventure tourism. The cruise-ship market has massive potential. Both Durban and Cape Town are considering building dedicated cruiseship terminals in order to capture somewhat more than 0.5% of the world market that South Africa currently does. More than 15-million passengers travel on cruise ships globally every year.

Hotels Large hotel groups such as Tsogo Sun and City Lodge Hotels run several brands. Marriott International and Protea Hotels have concluded a deal which gives the multinational brand (with about 4 000 hotels either owned or franchised worldwide) the additional title of biggest hotel operator in Africa. Some hotels in South Africa have been renamed Protea Hotels by Marriott but the deal was not a straightforward sale. The former owners of the Protea brand retain possession of the properties (as a property company) and a mixture of lease, franchise and management agreements was entered into by these two companies. Over the next five years, the company expects the Marriott International brands, including the Protea brand, to expand from 10 SOUTH AFRICAN BUSINESS 2017

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African countries to 18, involving the development of an additional 38 properties across seven brands. The existing Protea brand has about 10 000 rooms. The Marriott International brand itself will soon have a presence in South Africa: a 150room hotel and a set of executive apartments at Melrose Arch in Johannesburg will open in 2018. Radisson Blu and Hilton are among the international companies to have invested inSouth Africa recently. A new brand is set to launch in 2016: Radisson Red, aimed at the millennial market. The Rezidor Hotel Group, which currently operates five hotels in Cape Town, opened the The Radisson Red Hotel V&A Waterfront Cape Town in late 2016. Hilton International has recently acquired the Coral Hotel in Cape Town’s CBD. It also runs the Double Tree by Hilton in the same city and has hotels in Johannesburg and Durban.

OVERVIEW Southern Sun has relaunched itself as Tsogo Sun, the result of a merger with Gold Reef Resorts. Southern Sun remains as a brand for premier hotels in the group, which has a total 95 hotels and 15 casinos across Africa, the Middle East and the Seychelles. The new Southern Sun Elangeni & Maharani complex will boast 734 rooms and nine restaurants when Tsogo Sun completes the R220-million project to amalgamate two previously separate hotels on Durban’s Golden Mile. The new group’s latest acquisition is The Grace in Rosebank, Johannesburg, renamed "54 on Bath". The Beverly Hills in KwaZuluNatal is the group’s other ultraluxury hotel property. Other Tsogo Sun hotel brands include Sun Square, Garden Court and StayEasy. Several local companies have partnerships with international brands. Sun International’s Table Bay Hotel and Lost City at Sun City are also members of the Leading Hotels of the World group. Sun International runs 17 hotels and 20 casinos throughout Southern Africa. Locations include Botswana, Namibia, Swaziland and Zimbabwe. Orient-Express Hotels has two five-star hotels: The Westcliff in Johannesburg and the iconic Mount Nelson Hotel in Cape Town. Within the luxury segment, companies like The Mantis Collection aim to cater to clients anywhere in the country; for instance, it has a small hotel in Port Elizabeth where clients stay before transferring to the game lodge at Shamwari.

Relais & Châteaux has 10 properties in South Africa including Londolozi Private Game Reserve, within Sabi Sands, and the Gorah Elephant Camp inside the Addo Elephant Park. Forever Resorts offers a range of accommodation options for every pocket. The group has 12 hotels and lodges together with many selfcatering, camping and caravanning destinations, mostly located in the north of the country but also located at Gariep Dam and Plettenberg Bay in the Western Cape.

Nature South Africa has a great reputation for beaches, landscapes, superb wildlife and a rich cultural history. South African National Parks and the South African National Biodiversity Institute (SANBI) are outstanding national organisations that oversee a range of important, but easily accessible sites. The Kruger National Park is about the size of Belgium and attracts almost a million visitors every year. Kruger covers nearly 20 000 square kilometres, it has six ecosystems, 1 982 species of plants, 517 species of birds and 147 species of mammals – including the "Big Five": lion, leopard, African elephant, African buffalo and rhinoceros. The area adjacent to Kruger is rich in private game reserves, some of which are regarded as among the finest luxury tourist offerings in the world. The Sabi Sands Game Reserve has several accommodation options within its 65 000 hectares, ranging from the luxurious to the ultra-luxurious. The Addo Elephant National Park in the Eastern Cape is a 164 000-hectare facility that attracts more visitors than East Africa’s Serengeti National Park. Addo Park uniquely offers the Big Seven: with more than 450 elephants and significant numbers of the rest of the Big Five, the park includes a marine section where great white sharks and whales can be sighted. The brief of the South African National Biodiversity Institute is to run nine national botanical gardens. The 7 500 hectares of conserved gardens represent an astonishing biodiversity, ranging from the fynbos of Harold Porter to the harsh beauty of the Karoo Desert garden.

ONLINE RESOURCES National Department of Tourism: www.tourism.gov.za South African National Parks: www.sanparks.co.za South African Tourism: www.southafrica.net Tourism Grading Council of South Africa: www.tourismgrading.co.za

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Banking and financial services Despite general economic concerns, South African banks have increased operating income.

SECTOR INSIGHT ZAR X is South Africa's newest stock exchange.

he South African banking and financial-services sector has a good international reputation because of a strong regulatory and legal framework. The sector provides a full range of services including commercial, retail and merchant banking, mortgage lending, insurance, auditing and investment. The South African Reserve Bank (SARB) is the central bank and falls under the National Department of Finance. It sets monetary policy and decides on domestic interest rates. The SARB oversees the bankingservices sector, while the Financial Services Board (FSB) governs the non-banking financial-services industry. The Banking Association of South Africa represents all registered banks, local and international. Major subcommittees oversee capital supervision, credit risk, consumer affairs and the SA Securities Lending Association. The national stock exchange, the JSE Ltd, is the largest stock exchange in Africa and consistently ranks in the world’s top 20 derivatives exchanges by number of contracts traded. Listed total market values of the companies on the JSE amount to R14.7-trillion. The AltX is a division of the JSE and attracts a range of small and medium-sized high-growth companies, but the JSE will face competition after the ZAR X launched in October 2016. The new exchange is looking to attract trading in black empowerment shares in particular. SOUTH AFRICAN BUSINESS 2017

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In the retail banking sector, despite really tough economic conditions in recent months and years, South Africa's Big Four (Standard Bank, Absa, First National Bank (FNB) and Nedbank) increased headline earnings by 5.7% in the second six months of 2015, to R34.6-billion. Profits across the Big Four totalled R73.8-billion in the year, according to a survey done by PWC (Major Banks Analysis). Relative newcomer Capitec Bank has shown remarkable growth with its low-cost offerings: a cheque account, a savings account and an unsecured loan. Capitec was established in 2001 and listed on the JSE in 2002. As of August 2015, Capitec had 691 branches, a rapid increase over the benchmark figure of 500 that was achieved in January 2012. Capitec customers can also draw cash in retail stores such as Pick n Pay, Boxer and Shoprite. In early 2016 the bank had 6.7-million customers (as opposed to "clients", people for whom Capitec is their primary

OVERVIEW bank). Capitec had 3.3-million clients at the same time and 11 000 employees. The banking sector could soon be welcoming another newcomer: the Discovery group has indicated that it will be applying for a licence. Discovery is already a giant on the JSE (market value of R83-billion) with a wide range of products and services (health insurance, credit cards, investment portfolios) that gives it access to millions of customers. Further change in the sector relates to Absa's British investor, Barclays, which has indicated its intention to sell its stake in African operations. Financial services group Old Mutual (54% stakeholder in Nedbank) has announced its plan to create four stand-alone businesses out of the Old Mutual Group. This would allow the UK-based wealth management business and the New York-based asset managers to be free of linkages to the rand, while the South African businesses, Nedbank and Old Mutual Emerging Markets, could focus on their specialities. In its six-month report for the period ending 30 June 2016, Old Mutual Emerging Markets reported that it had 11-million customers and had paid out R9.2-billion in retirement benefits and matured savings policies in that period. Standard, which operates as Standard Bank or Stanbic in 17 African countries outside South Africa, is Africa’s largest corporation. Banks such as the Development Bank of Southern Africa and the Land and Agricultural Development Bank

of South Africa focus their loans on support for infrastructure and developmental projects.

Access South Africa is an ideal stepping stone into Africa and several international concerns have set up head offices, primarily in Johannesburg. These include Bank of China, Bank of Taiwan, Citibank, Deutsche Bank AG and HSBC Bank. A small number of firms handle most of the country’s biggest auditing accounts. The big four are Deloitte, Ernst & Young, PwC and KPMG, with SekelaXabiso also in the running thanks to the award by Transnet of a R1.3-billion account. With the renewable energy sector being actively pursued in South Africa, a whole new sector in need of funding has opened up. One example in the province of KwaZulu-Natal is the creation by Investec and the European Investment Bank of a renewable-energy fund of €100-million, which will create many options for investors. Despite the incredible strides that have been made in providing banking services to the previously unbanked, there is still a long way to go. MasterCard has pointed out that only 2% of retail transactions on the continent of Africa are conducted electronically. The consulting firm McKinsey puts the figure for Africa's population not connected to formal banking at close to 80%: this presents an opportunity for South African banks in Africa. South Africa has the highest connection rate in Africa. Finscope's 2014 survey of South African banking and financial surveys shows that between 2004 and 2014 a remarkable eight-million people were connected to the financial system in some way. Overall, the "financially included" reached 31.4 million (up from 17.7-million in 2004). In a category called "formally served" which includes services other than formal banks with branch networks, the percentage of South Africans so served grew from 50% to 80%; in the "banked" category (more traditional but including new devices), the percentage grew from 46% to 75%. The stokvel (savings clubs) market is estimated at R44-billion and developing products for this market could be a lucrative outlet for South African financial services companies.

ONLINE RESOURCES Banking Association South Africa: www.banking.org.za Financial Services Board: www.fsb.co.za JSE Limited: www.jse.co.za

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Development finance and SMME support Studies are showing that township markets are much bigger than previously thought.

measure of the South African government's awareness of the importance of small, medium and micro enterprises to the nation's economy is the creation of a new ministry to cater for and promote SMMEs, the Department of Small Business Development. President Jacob Zuma announced in his State of the Nation address in 2016 that 30% of the state's budget for buying goods and services would be allocated to SMMEs, co-operatives, rural and township businesses. A Black Business Supplier Development Programme (BBSDP) has been launched and the Department of Small Business Development will supply business training, grants and co-funding together with municipalities to create business infrastructure for small businesses. National Treasury has allocated R3-billion to the Department of Small Business Development for mentoring and training and a tax exemption for small businesses with an annual turnover below R335 000 has been introduced. A key agency in the promotion and improvement of SMMEs is the Small Enterprise Development Agency (Seda), which reports to the DSBD. In a recent publication, Seda reported that the number of SMMEs in South Africa increased in the last seven years by only 3%, from 2.18-million in 2008 to 2.25-million in 2015. The national GDP grew by 14% in the same period. Of the 2.2-million SMMEs in South Africa, most (nearly a million) are active in the wholesale and retail sector and the accommodation sector. Recent studies have shown that South Africa's townships represent a market that is far more substantial than was previously believed. The CEO of Minanawe Marketing, GG Alcock, told the FMCG Insights Conference in May 2016 that what he called the "invisible market" was worth R10-billion. Alcock was quoted in the Sunday Times saying that a particular fast-food operator made R50 000 per day from three outlets in a Johannesburg township. A survey by the Sustainable Living Foundation showed that the number of informal businesses in a township in the Western Cape grew from 879 in 2010 to 1 798 in 2015. SOUTH AFRICAN BUSINESS 2017

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SECTOR INSIGHT Government departments will increase procurement from SMMEs.

Support Every state institution has some programmes devoted to promoting small business, and most financial institutions have special desks devoted to SMMEs. One of the most influential institutions is the Industrial Development Corporation, which controls billions of rands that it makes available through seven funds. This can take the form of loans (in targeted sectors or to groups such as youth or women) but the IDC often takes a stake in businesses as well. Many of the support agencies, such as Seda, offer non-financial help only as well as providing advice in the drafting of business plans, marketing strategies and in skills training, although that help may include informing small business owners how to apply for financing and where to go for it. Provincial governments and municipalities are obliged to promote procurement policies

OVERVIEW that support small businesses. Regional bodies such as the Eastern Cape Development Corporation also play a major role in this regard. The Northern Cape D ep ar tm ent o f Finan ce, Economic Development and Tourism (DEDT) has a unit devoted to product development and it channels funds into promising small enterprises, particularly in the manufacturing sector. The Development Bank of Southern Africa (DBSA) set aside R170-million for 734 SMMEs in 2015. The DBSA is responsible for administering the national Jobs Fund. As at the end of March 2016, the Jobs Fund had disbursed R3.2billion in grant funding to implementing projects, which had leveraged a further R6.4-billion from project partners. The national government has created a financial agency devoted to the development of SMMEs. The Small Enterprise Finance Agency (Sefa) is now doing the work previously done by three separate bodies and aims to get loans out to small businesses as quickly as possible. In 2014/15, Sefa achieved its highest-yet level of funding at R446-million. Sefa's loan book shows 41% of funding going to construction projects with manufacturing in second place at 14%. A private-public joint initiative, which holds promise for the financing of the SMME sector, is an SMME Fund, which will receive equal inputs from private-sector investors and government of R1.6billion. The fund hopes to attract investors so that a big fund can

be created, which will give the sector stability. The fund will incentivise investments in companies that are owned by black entrepreneurs. Seda has 42 incubation centres in South Africa under its Seda Technology Programme (STP). An example is the Zenzele Technology Demonstration Centre, a project that helps small-scale miners and mineral processors to create viable businesses. Anglo America’s Zimele fund has hub managers, who support small business in the downstream sectors relevant to the resource mined by the Anglo subsidiary. The Thermal Coal Hub and the Platinum Hub are two examples. The Mondi Zimele Hub in Piet Retief supports businesses in the supply chain and forestry. Another company supporting SMMEs through their buying chain is Woolworths, which is funding the NGO TechnoServe to ensure that small tomato growers can grow produce that will meet the demanding standards of the retailer, and to help them expand production. A regular supplier to Woolworths – Qutom – assists with the project. Business Partners' Franchise Fund amounts to R107.03-million and consists of R48.65-million from National Treasury’s Jobs Fund (R38.92million for financing and R9.73-million for technical assistance), as well as R58.38-million from Business Partners Limited. All of the major banks have SMME offerings. Absa Bank’s SME Fund is driven by its Small Business Division and the Enterprise Development unit. Absa's SME Fund is available to fund projects from R5 000 to R3million, and it can be given to start-ups or existing businesses. The Absa Development Credit Fund, a partnership with the United States Development Credit Authority, is another avenue for entrepreneurs. Standard Bank’s Community Investment Fund (CIF) initiative extends loans to informal businesses. The CIF has distributed more than R7-million to more than 630 businesses through its six funds in three provinces. The Masisizane Fund makes loan financing available in sectors such as agriculture and agri-processing, commercial, supply chain and manufacturing. It also offers training and technical support as well as funding to help businesses to comply with legislation. The Vumela Enterprise Development Fund of First National Bank is available to small businesses. FirstRand has put R186-million into the fund and, to date, it has invested R50-million in small businesses that have shown potential for growth.

ONLINE RESOURCES Development Bank of Southern Africa: www.dbsa.org National Department of Small Business Development: www.dsbd.gov.za Small Enterprise Development Agency: www.seda.org.za Small Enterprise Finance Agency: www.sefa.org.za

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South African National Government An overview of South Africa’s national government departments. www.gov.za

President

Department of Basic Education

Address: Union Buildings, Government Avenue, Arcadia, Pretoria 0001 Postal address: Private Bag X1000, Pretoria 0001 Tel: +27 12 300 5200 Fax: +27 12 323 8246 Website: www.thepresidency.gov.za Website: www.economic.gov.za

Address: Sol Plaatje House, 222 Struben Street, Pretoria 0001 Postal address: Private Bag X9034, 8000 Tel: +27 12 357 3000 Fax: +27 12 323 5989 Website: www.education.gov.za

Deputy President

Address: Tshedimosetso House, 1035 Frances Baard (Cnr Festival Street), Hatfield, Pretoria 0001 Postal address: Private Bag X745, Pretoria 0001 Tel: +27 12 473 0000 Fax: +27 12 462 1646 Website: www.doc.gov.za

Address: Union Buildings, Government Avenue, East Wing, 1st Floor, Arcadia, Pretoria 0001 Postal address: Private Bag X1000, Pretoria 0001 Tel: +27 12 300 5200 Fax: +27 12 323 8246 Website: www.thepresidency.gov.za Minister in the Presidency

Department of Communications

Department of Cooperative Governance and Traditional Affairs

Address: Union Buildings, Government Avenue, East Wing, 1st Floor, Arcadia, Pretoria 0001 Postal address: Private Bag X1000, Pretoria 0001 Tel: +27 12 300 5200 Fax: +27 12 300 5795 Website: www.thepresidency.gov.za

Address: 87 Hamilton Street, Arcadia, Pretoria 0083 Postal address: Private Bag X802, Pretoria 0001 Tel: +27 12 334 0705 Fax: +27 12 326 4478 Website: www.cogta.gov.za

Dept of Agriculture, Forestry and Fisheries

Address: 123 Poyntons Building, West Block, cnr Schubart and Church streets, Pretoria 0001 Postal address: Private Bag X136, Pretoria 0001 Tel: +27 12 307 2934/2884 Fax: +27 12 323 4111 Website: www.dcs.gov.za

Address: No 20, Agriculture Place, Block DA, 1st Floor, cnr Beatrix Street and Soutpansberg Road, Arcadia, Pretoria Postal address: Private Bag X250, Pretoria Tel: +27 12 319 7319 Fax: +27 12 319 6681 Website: www.daff.gov.za Department of Arts and Culture Address: 10th Floor, Kingsley Centre, 481 corner Steve Biko & Stanza Bopape streets, Arcadia, Pretoria 0001 Postal address: Private Bag X899, Pretoria 0001 Tel: +27 12 441 3000 | Fax: +27 12 440 4485 Website: www.dac.gov.za SOUTH AFRICAN BUSINESS 2017

Department of Correctional Services

Department of Economic Development Address: Block A, 3rd Floor, 77 the dti Campus, cnr Meintjies & Esselen streets, Sunnyside, Pretoria 0001 Postal address: Private Bag X149, Pretoria 0001 Tel: +27 12 394 1006 Fax: +27 12 394 0255 Website: www.economic.gov.za

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LISTING Department of Defence

Department of Human Settlements

Address: cnr Delmas Avenue & Nossob St, Erasmuskloof, Pretoria 0001 Postal address: Private Bag X427, Pretoria 0001 Tel: +27 12 355 6101 | F ax: +27 12 347 0118 Website: www.dod.mil.za

Address: Govan Mbeki House, 240 Justice Mahomed, Sunnyside, Pretoria 0001 Postal address: Private Bag X644, Pretoria 0001 Tel: +27 12 421 1310 | Fax: +27 12 341 8513 Website: www.dhs.gov.za

Department of Energy

Department of International Relations and Cooperation

Address: 192 cnr Visagie and Paul Kruger St, Pretoria 0001 Postal address: Private Bag X96, Pretoria 0001 Tel: +27 12 406 8000 Fax: +27 12 319 6681 Website: www.energy.gov.za Department of Environmental Affairs Address: Environment House, 473 Steve Biko and Soutpansberg Road, Arcadia, 0083 Postal address: Private Bag X447, Pretoria 0001 Tel: +27 12 310 3537 | Fax: +27 086 593 6526 Website: www.environment.gov.za Department of Finance (National Treasury) Address: 40 WF Nkomo Street, Old Reserve Bank Building, 2nd Floor, Pretoria Postal address: Private Bag X115, Pretoria 0001 Tel: +27 12 323 8911 | Fax: +27 12 323 3262 Website: www.treasury.gov.za Department of Health Address: 20th Floor, Civitas Building, cnr Struben and Andries Streets, Pretoria 0001 Postal address: Private Bag X399, Pretoria 0001 Tel: +27 12 395 8086/80 | Fax: +27 12 395 9165 Website: www.doh.gov.za Department of Higher Education and Training Address: 123 Francis Baard Street, Pretoria 0001 Postal address: Private Bag X893, Pretoria 0001 Tel: +27 12 312 5555 Fax: +27 12 323 5618 Website: www.dhet.gov.za

Address: OR Tambo Building, 460 Soutpansberg Road, Rietondale, Pretoria 0001 Postal address: Private Bag X152, Pretoria 0001 Tel: +27 12 351 1000 | Fax: +27 12 329 1000 Website: www.dirco.gov.za Department of Justice and Constitutional Development Address: Salu Building, 316 cnr Thabo Sehume and Francis Baard Streets, Pretoria 0001 Postal address: Private Bag X276, Pretoria 0001 Tel: +27 12 406 4669 | Fax: +27 12 406 4680 Website: www.doj.gov.za Department of Labour Address: 215 Laboria House, cnr Francis Baard and Paul Kruger Streets, Pretoria 0001 Postal address: Private Bag X499, Pretoria 0001 Tel: +27 12 392 9620 | Fax: +27 12 320 1942 Website: www.labour.gov.za Department of Military Veterans Address: 328 Festival Street, Hatfield, Pretoria 0001 Postal address: Private Bag X943, Pretoria 0001 Tel: 080 232 3244 (SA only) Website: www.dmv.gov.za Department of Mineral Resources Address: 70 Meintje Street, Trevenna Campus, Sunnyside 0007 Postal address: Private Bag X59, Pretoria 0001 Tel: +27 12 444 3000 | Fax: +27 86 624 5509 Website: www.dmr.gov.za

Department of Home Affairs

Department of Police (Civilian Secretariat for Police Service)

Address: 909 Arcadia Street, Hatfield 0083 Postal address: Private Bag X114, Pretoria 0001 Tel: +27 12 432 6648 | Fax: +27 12 432 6675 Website: www.dha.gov.za

Address: Wachthuis Building, 7th Floor, 231 Pretorius Street, Pretoria 0001 Postal address: Private Bag X463, Pretoria 0001 Tel: +27 12 393 2800 | Fax: +27 12 393 2812 Website: www.saps.gov.za

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LISTING Department of Public Enterprises

Department of Social Development

Address: Infotech Building, 1090 Arcadia Street, Hatfield, Pretoria 0001 Postal address: Private Bag X15, Hatfield 0028 Tel: +27 12 431 1000 Fax: +27 12 431 1039 Website: www.dpe.gov.za

Address: HSRC Building, North Wing, 134 Pretorius Street, Pretoria 0001 Postal address: Private Bag X904, Pretoria 0001 Tel: +27 12 312 7479 | Fax: +27 086 715 0829 Website: www.dsd.gov.za

Department of Public Service and Administration

Address: Bogare Building, 2 Atterbury Road, Menlyn, Pretoria 0001 Postal address: PO Box 1037, Menlyn 0077 Tel: +27 12 367 0700 | Fax: +27 12 367 0749 Website: www.ssa.gov.za

Department of State Security

Address: Batho Pele House, 116 Johannes Ramakhoase Street, Pretoria Postal address: Private Bag X884, Pretoria 0001 Tel: +27 12 336 1700 Fax: +27 12 336 1809 Website: www.dpsa.gov.za

Department of Sport and Recreation South Africa Address: Regent Place, 66 cnr Madiba and Florence Ribeiro Street, Pretoria 0001 Postal address: Private Bag X896, Pretoria 0001 Tel: +27 12 304 5000 | Fax: +27 12 323 7196 / 086 644 9583 Website: www.srsa.gov.za

Department of Public Works Address: 7th Floor, CGO Building, cnr Bosman and Madiba Streets, Pretoria Central Postal address: Private Bag X65, Pretoria 0001 Tel: +27 12 406 21978 Fax: +27 086 276 8757 Website: www.publicworks.gov.za

Department of Tourism Address: 17 Trevena Street, Tourism House, Sunnyside, Pretoria 0001 Postal address: Private Bag X424, Pretoria 0001 Tel: +27 12 444 6780 | Fax: +27 12 444 7027 Website: www.tourism.gov.za

Department of Rural Development and Land Reform Address: 184 Old Building, cnr Jeff Masemola and Paul Kruger Streets, Pretoria 0001 Postal address: Private Bag X833, Pretoria 0001 Tel: +27 12 312 9300 Fax: +27 12 323 3306 Website: www.ruraldevelopment.gov.za

Department of Trade and Industry Address: The dti, 77 Meintjie Street, Block A, Floor 3, Sunnyside, Pretoria 0001 Postal address: Private Bag X274, Pretoria 0001 Tel: +27 12 394 1568 | Fax: +27 12 394 0337 Website: www.thedti.gov.za

Department of Science and Technology Address: DST Building, Building No 53, CSIR South Gate Entrance, Meiring Naude Road, Brummeria, Pretoria 0001 Postal address: Private Bag X727, Pretoria 0001 Tel: +27 12 843 6300 Fax: +27 12 349 1041/8 Website: www.dst.gov.za

Department of Transport

Department of Small Business Development

Telecommunications and Postal Services

Address: The dti, Block A, 3rd Floor, 77 Meintjies Street, Sunnyside, Pretoria 0001 Postal address: Private Bag X84, Pretoria 0001 Tel: +27 12 394 1006 Fax: +27 12 394 1006 Website: www.dsbd.gov.za

Address: Iparioli Office Park, 399 Jan Shoba Street, Hatfield, Pretoria 0001 Postal address: Private Bag X860, Pretoria 0001 Tel: +27 12 427 8000 Fax: +27 12 427 8016 Website: www.dtps.gov.za

SOUTH AFRICAN BUSINESS 2017

Physical address: Forum Building, 159 Struben Street, Room 4111, Pretoria 0001 Postal address: Private Bag X193, Pretoria 0001 Tel: +27 12 309 3131 | Fax: +27 12 328 3194 Website: www.transport.gov.za

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LISTING Department of Water and Sanitation Address: Sedibang Building, 185 Frances Baard Street, Pretoria 0001 Postal address: Private Bag X313, Pretoria 0001 Tel: +27 12 336 8733 Fax: +27 12 336 8850 Website: www.dwa.gov.za Department of Women Address: 36 Hamilton Street, Arcadia Pretoria 0001 Postal address: Private Bag X931, Pretoria 0001 Tel: +27 12 359 0000 Fax: 086 765 3365 Website: www.women.gov.za

National coat of arms

The national coat of arms was adopted on 27 April 2000. It is constructed in two circles, which are described as the circle of foundation and the circle of ascendance.

Circle of foundation Shield – The two Khoisan figures on the shield are taken from a Bushman rock painting known as the Linton stone, and represent the common humanity and heritage of South Africans. Depicted in an attitude of greeting, the figures symbolise unity. Spear and knobkierie – Together, these objects symbolise defence and authority, but the flat angle at which they lie symbolises peace. Wheat – The ears of wheat, as emblems of fertility, represent germination, growth and the development of potential, as well as nourishment and agriculture. Elephant tusks – Elephants symbolise wisdom, strength, power, authority, moderation and eternity, and the use of tusks is a tribute to the world’s largest land mammal, Loxodonta Africana, which is found in South Africa. Motto – Taken from the language of the now extinct /Xam Bushmen, the motto translated means ‘people who are different come together’ or ‘diverse people unite’. Circle of ascendance Protea – Protea cynaroides is the national flower of South Africa and is symbolic of the beauty of the country and flowering of the nation’s potential. Secretary bird – Characterised in flight, the secretary bird represents growth and speed, and is a symbol of divine majesty and protection. Rising sun – The sun is an emblem of energy and rebirth, a source of light and life appropriate for a country characterised by sunshine and warmth.

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SOUTH AFRICAN BUSINESS 2017

A REGIONAL OVERVIEW OF THE

EASTERN CAPE OVERVIEW

Key sectors

he Eastern Cape's long coastline of pristine beaches and rocky coves has long been one of South Africa's prime tourism spots. The same coastline is increasingly being seen as an asset in the Oceans Economy strategy that the country is rolling out. With three major ports, two of which house industrial development zones (IDZs), the province is well placed to leverage the advantages that will come with the promotion of several maritime sectors: trade, shipping repairs, training, logistics, oil and gas (and servicing of rigs and vessels) and aquaculture. National government aims for the Oceans Economy to contribute R29-billion to the national gross domestic product (GDP) by 2019 and a possible R177-billion by 2033. This is part of the broader National Development Plan (NDP). The potential the province offers is significantly bolstered by the shipping traffic that operates between Europe and Asia and the Far East. Logistically, the Eastern Cape is well served, with two major airports in Port Elizabeth and East London, and several facilities serving smaller towns such as Mthatha and Bhisho. Many farms and private game reserves also have airstrips. Another key logistics factor is the large new port at Ngqura, within the Coega IDZ, bringing to three the number of effective ports operating in the Eastern Cape. SOUTH AFRICAN BUSINESS 2017

Financial services, real estate and banking are the largest contributors to the province’s GDP. Absa, Nedbank, Standard Bank and Capitec Bank are among several big finance groups which have a strong presence in the Eastern Cape. The automotive industry provides 30% of the jobs in the province’s manufacturing sector and accounts for 32% of gross added value. Half of South Africa’s passenger vehicles are made in the Eastern Cape and 51% of the country’s motor exports originate here. The two biggest manufacturers are Volkswagen (Uitenhage) and Mercedes-Benz SA (East London). Ford makes engines in Port Elizabeth. General Motors South Africa (GMSA) no longer confines itself to manufacturing and assembling motor cars: GMSA is also a leader in producing catalytic converters. The Eastern Cape supplies 14% of the world market in catalytic converters. Among the other products exported by GMSA to Mexico, the US, Europe and Australia are seat belts and aluminium heat shields. The Industrial Development Corporation (IDC) has identified the automotive-parts sector as a specialist field in which South Africa may have a competitive advantage. The IDC has a 45% stake in Port Elizabeth-based Umicore Autocat South Africa.

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REGION The balance of the equity is held by Belgian concern, Umicore Group. The Coega IDZ outside Port Elizabeth has recently attracted massive investments from Chinese car manufacturers and has also attracted food and beverage manufacturers. The East London IDZ, located near the Mercedes-Benz SA factory, has an automotive focus.

Park (near Cradock) and the Garden Route Park, a marine reserve. The Eastern Cape Provincial Government is responsible for 21 nature reserves and is planning to commercialise the administration of many of these facilities. The province also intends to target the improvement of roads to remoter parts of the province such as Baviaanskloof, Hole-in-the-Wall, Dwesa-Cwebe and Coffee Bay.

Tourism

Economic future

The five-star Boardwalk Hotel and Casino (Sun International) is a new offering. The large meeting hall that can host up to 1 700 delegates attracted the Democratic Alliance for its elective conference in 2015. Nelson Mandela Bay Metropolitan Municipality has established a conference bureau to assist in conference booking and planning. Smaller venues are situated in the city, surrounding game reserves, seaside resorts or luxury hotels. The Feather Market Convention Centre is a successful adaptation of a Victorian building for modern use. It is used to host gala dinners, exhibitions, product launches and concerts. The Eastern Cape has some unique natural advantages as a tourist destination. For example, the province covers seven different biomes (communities of plants and animals coexisting in a particular place), of which the grassland, Nama Karoo, thicket and savanna biomes are the most extensive. The Eastern Cape has three areas of endemism: Albany, the Drakensberg and Pondoland. Port Elizabeth has become synonymous with the Iron Man event and various sporting events and festivals are a strong aspects of Eastern Cape tourism. The National Arts Festival in Grahamstown is a key national festival. The Addo Elephant National Park is the jewel in The Eastern Cape's crown. It is a 164 000-hectare facility that attracts more visitors than East Africa’s Serengeti National Park. Plans to expand Addo Park from the sea to the Karoo are well advanced, and ultimately the intention is for it to become a megapark. Other national parks in the province are the Camdeboo National Park (around Graaff-Reinet and now home to some lions), the Mountain Zebra SOUTH AFRICAN BUSINESS 2017

Renewable energy projects are flourishing throughout South Africa, and the Eastern Cape has become one of the hotspots for this burgeoning industry, particularly with regard to wind power. Of the 17 projects approved in the province in terms of the national independent producers' programme, fully 16 are on-shore wind projects with large numbers of turbines dotting the landscape around the Tsitsikamma and Jeffrey's Bay and further north near the town of Bedford. More than 1 500MW has so far been procured within the borders of the province, and there is potential for much more. Nationally, the programme has attracted about R200-billion in investment. The implementation of the Strategic Integrated Projects in the province is progressing well. The upgrades of the Mthatha Airport runway and apron are complete, with work nearing completion on the Mthatha Airport terminal building. The Mzimvubu Multipurpose Development Project is another development which comprises a multi-purpose dam to supply water for new irrigation development, hydropower generation and domestic water requirements in the Mzimvubu River Catchment.

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Capital

Bhisho

Population

6 916 200 (2015)

Area

168 966km2

Premier

Phumulo Masualle (ANC)

Languages

Afrikaans, English, Xhosa

VISION

"Well-governed, connected, green and innovative."

MISSION

• Promotes a culture of good governance; • Provides effective and efficient municipal services; • Invests in the development and retention of human capital to service the City and its community; • Promotes social and equitable economic development; • Ensures municipal sustainability and financial viability; Creates a safe and healthy environment; and • Places Batho Pele at the Centre of Service Delivery.

www.buffalocitymetro.gov.za

FOCUS

Improved infrastructure in Buffalo City An overview of three key infrastructure projects in Buffalo City.

Cllr Xola Pakati, Executive Mayor of Buffalo City Metropolitan Municipality

n line with its vision to promote social and equitable economic development, Buff alo City Metropolitan Municipality (BCMM) has completed (and is currently busy with) a number of key projects in the metro. Three of these projects are detailed below.

Flow (ADWF) capacity of the existing Quinera Wastewater Treatment Works from 6ML/d to 18ML/d. The second phase of the project comprised the installation and commissioning of various mechanical equipment supplied under Phase 1. It also included the construction of a new substation building and alterations to the existing buildings. The works undertaken during this contract included: • Construction of a new substation building • Construction of a paved access road • Construction of a water reticulation network • Concrete demolition and repairs to existing aerator basin • Installation and commissioning of mechanical equipment (supplied under Phase 1) • Process commissioning of the plant • Electrical and electronic works Employment opportunities / beneficiaries The project maximised the use of local labour from the nearby Mzamomhle and greater Gonubie area. About 88 000 of the approximately 122 000 man-hours invested in Phase 2 of the project

Upgrading of the Quinera Wastewater Treatment Works (Phase 2) The objective of this project was to provide additional treatment capacity in the Quinera Wastewater Treatment Works to cater for future development in the Quinera and Beacon Bay areas. This was achieved by increasing the Average Dry Weather SOUTH AFRICAN BUSINESS 2017

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www.buffalocity.gov.za

FOCUS comprised local labour. Operator training was also conducted where necessary for new equipment. Furthermore, construction of the new fully enclosed inlet works with an odour control system has minimised odour pollution in nearby Mzamomhle and Eastward-Ho residential areas.

•

• • •

Diversion of existing Telkom cables/ducts, electricity cables, water mains and other services to align with BCMM’s Water and Sanitation Masterplan and LSDFP. Installation of sleeves under the proposed road for future services. Installation of street lights. Upgrading the intersection of Gullsway/Estuary Road.

Employment opportunities During the three-year lifespan of this project 308 job opportunities were created.

Enlargement and upgrading of the Gonubie Main Road Basil Read was contracted to do the following: • Widen the existing three lanes of Gonubie Main Road to four lanes from the Gulls Way intersection in the east to approximately 400m from the intersection with the N2 in the west. The entire four lanes will consist of a Continuous Reinforced Concrete Pavement (CRCP). • Construct four new junctions on this portion of road, consisting of three new roundabouts and one free-flow T-junction. • Create a new roundabout at the junction of Gonubie Main Road and the R102 (Meisies Halt) on the Western Side of the N2. • Develop footpaths (or cycle paths) with grassed edges to the shoulder breakpoint where specified. • Construct concrete V drains as required. • Ensure six lanes for approximately 150m west of Junction 5 to allow for future merge and a left turning by-pass. • Installation of Telkom ducts along the full length of the road. www.buffalocity.gov.za

Provision of Internal Services and the Construction of Top Structures – Reeston This project forms part of the broader Duncan Village Redevelopment Initiative. Upon completion of the project, beneficiaries will be relocated from Duncan Informal Settlement to Reeston. The intention is to de-densify the Duncan village by moving some people out and later develop in the space available after relocation has taken place. Work started on 29 April 2014, with the completion dates revised to 19 October 2015 for Portion 1, and 20 November 2016 for Portion 2. Portion 1 comprised 460 units while Portion 2 comprised 536 units, giving a project total of 996 units. The completed work involved: cutting of platforms, completed foundation slabs, brickwork, roof structure, houses plastered (internal and external), glazing and doors, ceilings, internal plumbing and external plumbing, painting internal and external, and a Certificate of Completion.

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SOUTH AFRICAN BUSINESS 2017

A REGIONAL OVERVIEW OF THE

FREE STATE

he centrally located Free State province shares borders with most of the other provinces and it has an international boundary with Lesotho. The provincial capital is only 150km from Maseru, the capital of the Mountain kingdom, and a good deal of trade happens along this corridor. The N8 highway also extends westwards to the Northern Cape capital of Kimberley, and a number of projects are planned to leverage the advantages of this busy route. The Orange and Vaal rivers define the southern, western and northern borders of the Free State. This centrally located province uses its position to its advantage. The Maluti-A-Phofung Special Economic Zone takes advantage of the strategic position Harrismith holds in the Free State's northeastern corner. The N3 highway carries huge volumes of cargo between Gauteng and the ports of KwaZulu-Natal so it is logical that the first focus of this SEZ is logistics. Over and above the GautengKwaZulu-Natal route, another logistics axis extends between Harrismith and Bloemfontein for the delivery of products by rail and road. Special rules apply within an SEZ, including more liberal taxation for companies that invest in SOUTH AFRICAN BUSINESS 2017

the zone (15% corporate tax applies, as opposed to 28%). Other benefits include a building allowance, employment incentives and the fact that an SEZ is a customs-controlled area. Within the Maluti-A-Phofung SEZ, the Tshiame Food Processing Park has 60 000m² available for investors in food production, storage and distribution. To entice investors, services such as logistics will be provided as will warehousing, cold storage and manufacturing facilities. A strong focus is to try to get more local produce turned into products that can be exported. Two Chinese companies have undertaken to invest in the SEZ. Mediquip SA, a joint Chinese-South Africa venture, will make advanced medical equipment such as X-ray, ultra-sound and ECG machines at three manufacturing plants. A smart meter company, Shanghai-Xielin SA, has also booked space in the zone to make its devices. The varied provincial economy currently has 3.2-million hectares of cultivated land, although the services sector is the biggest economic contributor. The Free State is experiencing considerable growth in the services sector. BPO and call centres are flour-

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REGION ishing in the province. Bloemfontein, the main city for economic activity, is at the core for Telkom’s switching centres. Various call centres are located in the city and have created many employment opportunities in the process. Two of the biggest projects in the manufacturing sector of the Free State have been in Sasolburg where Sasol's Wax plant expansion project and Omnia's new nitrate plant have, between them, made a significant impact on economic output. Altogether, Sasol's project will see R13.6-billion invested. Omnia put R1.4-billion into building a new nitrate facility in Sasolburg.

area used to be famous for the gold that lay under the surface of the soil. Afrox is a subsidiary of the Linde Group of Germany and has signed a deal with renewable energy company Renergen. A R200-million helium extraction plant will be built, to be ready in 2019. Sasolburg, an important petrochemical site in the Free State, recently fired up a new power plant running solely on gas. This power plant is the largest of its kind in Africa. The plant produces 140MW of power for the usage of Sasol’s chemical factory adjacent to the site, and feeds into the national grid. Eskom has a few projects lined up that will feed the national grid. The Ingula pumped storage project scheme, bordering KwaZulu-Natal, has started delivering power. Two dams are connected via underground turbines just short of 5km long, and water is pumped to the top of the mountain for use when power is urgently needed. Of the five projects that have been approved in the Free State so far in terms of the country's Renewable Energy Independent Power Producers Procurement Programme (REIPPP), two are small hydro projects. H1 Holdings and Building Energy are the drivers behind the 4.7MW Kruisvallei Project on the Orange River, which uses the flows from the Vanderkloof Dam to generate power. Solar projects include the 60MW Boshoff Solar PhotoVoltaic (PV) park (Sun Edison) and the 64MW Letsatsi Solar PV (Solar Reserve, Kensani Group and Intikon Energy). A solar park is planned for the Xhariep region, and the provincial government sees this as a driver of economic growth along the banks of the powerful Orange River.

Economy Mining and agriculture were for many decades the bedrock of the Free State economy. The northwestern part of the province sits on top of a rich gold-bearing reef more than 400km long, known as the goldfields region. South Africa is one of the world’s largest gold producers. Although gold mining volumes are down (and some towns are having to adjust to changed economic profiles), some mining companies such as Sibanye Gold are very active. Diamonds are also found in the south of the province. Large percentages of South Africa’s agricultural production, particularly grains, originate in the Free State. More than half the nation’s sorghum, nearly half the sunflower and more than 30% of all wheat, maize, potatoes and groundnuts come from the fertile plains of the western and northern Free State, while the valleys of the east produce almost all of South Africa’s cherries and asparagus. Livestock and flowers are other important agricultural products.

Economic future Newly discovered natural gas and helium fields are said to have proven reserves of 25-billion-feet³ and Afrox has become the first of may soon be a string of investors in exploiting this resource near the towns of towns of Virginia, Welkom and Theunissen. This

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Capital

Bloemfontein

Population

2 817 900 (2015)

Area

129 825km2

Premier

Elias Sekgobelo "Ace" Magashule (ANC)

Languages

Afrikaans, English, Sotho, Tswana

SOUTH AFRICAN BUSINESS 2017

A REGIONAL OVERVIEW OF

GAUTENG

he smallest province of South Africa in area is also the most significant economically. An estimated 40.6% of South Africa’s manufacturing is done here, a third of its electricity, gas and water output, 41.9% of the country’s construction, 39.7% of its finance, real estate and business activity, 34.8% of its wholesale, retail, motor trade and accommodation, 32% of transport, storage and communication, and 38.8% of general government services. Gauteng comprises three large metropolitan municipalities in Tshwane (the administrative capital of South Africa and home to the diplomatic corps and many institutions of higher learning and research); Johannesburg (the capital of Gauteng Province, headquarters to many companies in a wide range of sectors, including the financial sector symbolised by the location of the JSE) and Ekurhuleni (the manufacturing hub of South Africa and host of the country's biggest airport, O.R. Tambo International). Plans are being investigated for the creation of an "aerotropolis" around the busy O.R. Tambo International Airport. The City of Ekurhuleni wants to leverage the benefits of being in an area where freight, logistics and every kind of transport intersect. SOUTH AFRICAN BUSINESS 2017

The province has several outstanding universities, and the majority of South Africa’s research takes place at well-regarded institutions such as the Council for Scientific and Industrial Research (CSIR), the South African Bureau of Standards (SABS), Mintek, the South African Nuclear Energy Corporation (NECSA), the Human Sciences Research Council (HSRC) and a number of sites where the work of the Agricultural Research Council is done. In 2016 there were interesting developments in the political field in that two of the province's three metropoles (Tshwane and Johannesburg) came under the control of a coalition of political parties opposed to the ANC, the party that has formed the national government ever since 1994 (the first democratic election) and had control of most provinces and cities across the country. Most commentators were impressed with the manner in which power switched from the party of liberation to the opposition, a reflection on the strength of the country's democratic institutions. The province's gross domestic product (GDP) is R811-billion, which is nearly 34% of South Africa's and about 10% of the GDP of Africa.

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REGION are found in the western and southern parts of the province. Other products produced in large volumes are vegetables, fruit, dairy, poultry and eggs.

Key sectors The leading economic sectors, as defined by the Gauteng Growth and Development Agency (GGDA), are finance (21% of provincial GDP), manufacturing (19.7%), government services (15.7%) and trade (12.8%). Most of the major banks are positioned around Johannesburg (which is home to Africa’s largest stock exchange, the JSE), and the finance and business services sector is a key focus in the provincial economy. Many international corporates such as Citibank, Microsoft and McDonald’s are headquartered in the province, as it is seen as the commerce capital and the gateway to Africa. Media services in Gauteng are extensive. South Africa’s national broadcaster is based there, as are many popular radio stations and large publishing houses. Gauteng has a highly competitive newspaper market which includes local and national publications such as the Sunday Times, the Sowetan, The Star, Rapport and also the Mail & Guardian. Gauteng has a varied manufacturing sector, from heavy-steel, automotive assembly to the food and beverages industry as well as light commercial and industrial activity. Key food and beverage brands are in operation around Gauteng. Nestlé and Pioneer Foods have spent millions on new developments and improvements. RCL, one the country’s leaders in poultry production, has 18 farms and two feed mills in the province. Companies such as Kimberly-Clark, Proctor & Gamble, ArcelorMittal, Transnet Engineering and Aspen all have manufacturing facilities in Gauteng Province. The manufacturing sector in Gauteng employs 600 000 people in more than 9 000 enterprises. Gauteng’s contribution to the country’s gold and diamond production is still significant, and the province’s mines account for about 21% of employment in the sector nationally. The other primary sector, agriculture, contributes little to the provincial GDP but there are important districts such as Delmas, Cullinan, Krugersdorp, Bronkhorstspruit and Heidelberg where a variety of crops are cultivated. Large maize- and grain-farming enterprises

Economic future Gauteng's infrastructure and transport are vital to its economic health. The multi-year Gauteng Freeway Improvement Project has widened roads and improved the connections between parts of the province but there is still controversy over the method of payment, ie tolling. The Gautrain has been an enormous success: based on the connection to O.R. International Airport, the high-speed train also links Pretoria and Johannesburg. User numbers have been so good that a contract went out in 2016 to supply 48 additional coaches for the service, which is also set to be expanded by a further 200km. Property prices near to Gautrain stations have shown steady increases, and whole new property developments have been based on proximity to the rail line. Apart from the "aerotropolis" concept, development at Gauteng’s other airports is also taking place. These include a mixed-use development (Lanseria) and an upgrade intended to make Wonderboom a suitable site for freight movements. The Top 20 Priority Township programme aims to uplift the economies of targeted townships. Social assistance and the provision of improved services are among the first steps in this programme. A green economic development strategy has been developed for the province, intended to turn the challenge of climate change into an opportunity. Projects include energy from waste, food security, waste sorting in informal settlements and creating incentives in the solar industry.

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Capital

Johannesburg

Population

13 200 300 (2015)

Area

18 178km2

Premier

David Makhura (ANC)

Languages

Afrikaans, English, Sesotho, Zulu

SOUTH AFRICAN BUSINESS 2017

PROFILE

City of Ekurhuleni Ekurhuleni, home to Africa's manufacturing hub, makes a significant contribution to the economy of Gauteng Province.

Economic overview The City of Ekurhuleni is located within a province that has a fast-growing population – Gauteng Province. The province is one of the four largest economies in Africa, contributing over 35% to South Africa’s gross domestic product. Ekurhuleni’s economy contributes 18% to Gauteng’s GDP and 6.5% to SA’s GDP. The city’s manufacturing sector alone contributes gross value add of R143-3billion and R351-billion to the provincial and national economies respectively. The manufacturing sector is a major contributor to the city’s economy at 22%. The sector contributes 17% to the national economy.

Investment destination of choice The city has defined an inclusive and broad-based Growth and Development Strategy (GDS 2055), anchored on five pillars: 1. Re-urbanise – achieve sustainable urban integration 2. Re-industrialise – achieve job-creating economic growth SOUTH AFRICAN BUSINESS 2017

3. Re-generate – achieve environmental well-being 4. Re-mobilise – achieve social empowerment 5. Re-govern – achieve effective cooperative governance The City of Ekurhuleni has received the highest investment grade rating from Moody’s Investors Services, affirming the prudent management of the city’s finances. Moody’s placed Ekurhuleni at Aaa.za/Prime-1 national scale rating, a four-notch upgrade from a previous rating of A1.za/Prime-1. The city also received a global scale rating of Baa2/Prime-2. The good credit profile, in terms of Moody’s, means that Ekurhuleni has an “extremely strong” capacity to meet its financial commitments. This allows Ekurhuleni to raise debt at favourable rates, putting less onerous debt repayment costs on residents. This rating makes it easier for the city to compete in the international bond markets as well as other project finance and investment opportunities to address infrastructure funding. The rating reflects the city’s prudent financial management, which

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PROFILE

Executive Mayor, Cllr Mzwandile Masina

also saw it awarded two consecutive clean audits. Ekurhuleni is rated at the high end of the range of South African municipalities. The municipal debt and debit service levels are relatively lower than the median of rated metropolitan municipalities. It notes the city’s diverse and resilient industrial base stretching from Springs to Wadeville and Isando, and hosting world-class manufacturers of glass, consumer goods and steel.

Manufacturing sector Ekurhuleni’s manufacturing sector remains one of the important sectors for employment alongside trade, finance and community services. The sector contributed 18% to total employment in Ekurhuleni by 2012 but has seen a decline in recent years. The Revitalisation of the Manufacturing Sector flagship project is aimed at re-industrialising the city’s economy to become a more sustainable economy by 2055. The PRASA/Gibela rolling stock manufacturing project in Dunnottar, which will see the local production of some 3 600 locomotives, is one of the Strategic Urban Developments in the city. The City of Ekurhuleni has already approved the leasing of 288 hectares of land for the project.

been developed to improve turnaround times in facilitating and decision-making on investment and development applications, thus improving the city’s investment-friendly environment. The city boasts a business and investment onestop shop established within the city’s aerotropolis core. The Ekurhuleni Business Facilitation Network is situated in Kempton Park and houses the business centre to support local enterprise development and the investment centre (EIC). The Ekurhuleni Investment Committee meets twice a month to appraise and provide technical support including pre-application support to mega investment and development applications. The EIC also provides aftercare to newly established and existing businesses within the city. The centre collaborates with various provincial and national departments to provide unmatched facilitation of investments and developments within the city and support to local businesses.

Investment facilitation The city has an Investment and Development Facilitation Strategic Policy Framework, which has

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CONTACT INFO Ekurhuleni Investment Centre Tel: +27 11 999 3516 / 20 Email: eic@ekurhuleni.gov.za Website: ekurhuleni.gov.za

SOUTH AFRICAN BUSINESS 2017

FOCUS

Building Africa's first aerotropolis The City of Ekurhuleni, home to O.R. Tambo International Airport, Africa’s largest and busiest airport, is all set to become the continent’s first aerotropolis.

s a flagship project of Ekurhuleni, development of the aerotropolis (first announced in 2011) leverages public and private sector investment at the airport and in its surrounds. The aerotropolis is cleared to become a high-activity node within the Gauteng province, of similar scale to the inner cities of Johannesburg and Tshwane, positioning Ekurhuleni as having a true airport city economy. Ekurhuleni is already considered the aviation, logistics and manufacturing hub of Africa, with O.R. Tambo International Airport as Africa’s most strategic airport and the unrivalled gateway to the continent. Formation of the aerotropolis will enable Ekurhuleni to become a genuine terminal city, with air, rail and road networks aiding its economic development. That development is outlined in the city’s 30-year Ekurhuleni Aerotropolis Master Plan (EAMP), a wide-ranging economic development strategy. A strategic roadmap, the EAMP has already produced a five-year plan outlining immediate deliverables and 109 key projects. The EAMP has identified a range of opportunities to accelerate upstream and downstream economic activities that rely on just-in-time airport connectivity. Each of the targeted industries has a function within the aerotropolis and varying levels of interaction and reliance on airport connectivity. SOUTH AFRICAN BUSINESS 2017

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To date, the Ekurhuleni Investment Centre has registered and facilitated over 12 large-scale projects that are valued at billions of rands, and which have the potential to create approximately 287 000 jobs over the next 15 years. To enable development in the City, there will also be a release of significant number of strategic land parcels. Furthermore, Ekurhuleni is working with the Gauteng Provincial Government to leverage its two Special Economic Zone licences. Key industries for the aerotropolis development are: • Aerospace manufacturing and aviation • Logistics and distribution • Manufacturing and high tech • Health and life sciences • Agri-business and food processing • Natural resources and energy • Education and skills training • Tourism and culture • Retail • Prolessiona I services, banking and public administration For more information visit our website or email the investment centre.

Come invest Ekurhuleni Aerotropolis

PROFILE

Qhawe Quantity Surveyors No stranger to the construction and management consultancy field in South Africa, Qhawe Quantity Surveyors hardly needs an introduction.

An artist's impression of the Esicabazini Youth Development Academy.

Qhawe, which means hero in isiZulu, is recognised for the value and innovation it brings to every project undertaken. Founded in 2006, Qhawe is primarily a quantity surveying and project management firm although it offers a broad range of other built environment-related services. Managing Director Nomaqhawe Christel Mpala established the company when she realised there was a gap for a business offering proactive services in the South African built environment.

access to quality nutrition and basic healthcare. Quality social services are key to giving people living in rural areas opportunities to find employment.

Qhawe strives to meet the expectations of clients through provision of full turnkey solutions in the built environment and economically viable project engineering and construction consultancy services. Its services are offered to primarily the public and private sector, implementing agencies and NGO clients.

People must have access to high-quality basic services, and rural economies must be supported by agriculture, mining, tourism, agro-processing and fisheries. Integration through land reform will be an important consideration, as will infrastructure development, job creation and poverty alleviation. People living in rural areas should have access to social and infrastructure services.

An integrated and inclusive rural economy Qhawe has embarked on an initiative to aid in solving the scourge facing the country, that of rural communities that have struggled with limited SOUTH AFRICAN BUSINESS 2017

By 2030 the National Development Plan (NDP) aims to ensure that rural communities enjoy better opportunities to participate fully in the economic, social and political life of the country and that those citizens who work and live in these areas are included in South Africa’s future development.

It is in this light that Qhawe has partnered with different municipalities with the aim of establishing rural development and eradication of poverty. Two such rural developments that will attract investors into South Africa are:

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PROFILE • A proposal for local eco-

•

nomic initiatives to eradicate poverty in the Hala area and the Engcobo Local Munincipality at large. The Komalume Sustainable Village Mnini Development on the South Coast of Durban under eThekwini Metropolitan Municipality.

Successfully completed projects

Before and after renovations for Johannesburg Social Housing Company.

Esicabazini Youth Development Academy: Qhawe worked as project manager and quantity surveyor for Esicabazini Youth Development Academy – a Department of Social Development project implemented under Umkhanyakude District Municipality. PRASA's National Station Improvement Programme: Qhawe provided quantity surveying services for the improvement of 10 stations. Renovations were done to Stanger, Burlington, Fynnland, Pinetown, Hammersdale, Verulam and four other stations. The project was completed on time and within budget. Johannesburg Social Housing Company (JOSHCO): In a project valued at R54-million, Qhawe changed the facade and interiors of dilapidated buildings as part of their conversion to social housing.

Intermediary School, Inyamazwe High School and an Early Childhood Development (ECD) programme, which saw the construction of 10 ECD centres in the uThukela region of KwaZulu-Natal. Qhawe has extended its services to property development and has started serving private clients and mixed-use developments. Kambo Business Square: The development valued at over R500-million will comprise a shopping centre, hotel, conference facilities, petrol station and truck stop as well as residential houses in Manguzi on the border of Mozambique. Mnini Development: This project on the South Coast of KwaZulu-Natal is still in its infancy stages. The intention is to revamp the historical tourist hub by constructing a variety of buildings for use by locals and visitors.

Independent Development Trust: This is a longterm client and Qhawe has completed more than R500-million worth of projects for the organisation since 2009. These projects range from schools and clinics to service stations. Coega Development Corporation: Coega acts as an implementation agent for various government contracts related to infrastructure projects in the Eastern Cape and KwaZulu-Natal. Qhawe has participated in several Department of Education programmes as part of a R300-million portfolio. This include Mpumelelo Senior School, Bhevu

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CONTACT INFO Head office: 78 Jupiter Road, Westville North, 3629 Branch telephone numbers: Johannesburg: +27 11 791 6362 Durban: +27 31 266 6619 Nelspruit: +27 13 755 3292 Email: noma@qhaweqs.co.za Web: www.qhaweqs.co.za

SOUTH AFRICAN BUSINESS 2017

A REGIONAL OVERVIEW OF

KWAZULU-NATAL

waZulu-Natal is famous for its tourism offering that ranges from the majestic Drakensberg mountains to the beautiful beaches along the Indian Ocean, but the province is also home to thousands of manufacturing concerns that play a major role in South Africa's economy. With two of the country’s busiest ports, Richards Bay and Durban, the province also plays a vital role in national logistics and international trade. Success in international trade relies on a developed transport and logistics infrastructure. The Dube TradePort (DTP) helps to drive economic growth. It is home to the King Shaka International Airport, an agricultural greenhouse, a cargo terminal and various other sections relating to trade, business and transport, all on 3 000 hectares of land just north of Durban. The airport itself has announced new international direct flights: 4.5-million passengers passed through the airport in 2014/15, almost 300 000 of whom were foreign visitors or tourists (Acsa). DTP has attracted a R2-billion foreign direct investment through Indian business conglomerate Action Group and is making a solid contribution to KwaZulu-Natal’s economy. The province has shown considerable growth in the business services, transport and retail sectors. SOUTH AFRICAN BUSINESS 2017

Manufacturing in KwaZulu-Natal makes up almost a third of South Africa’s capacity.

Key sectors Manufacturers such as Unilever, RCL and Clover have a big presence in KwaZulu-Natal. Illovo Sugar and the Tongaat-Hulett Group are international companies with substantial sugarcane holdings, manufacturing plants and downstream beneficiation. Tongaat is also a significant property developer in the province and is active in a number of large projects. The estimated export value of KwaZulu-Natal business in 2014 was R112.4-billion. Steel, iron and aluminium account for nearly a third of exports followed by metal products. The third sector making a big contribution is the automotive and automotive components sector, with about 18%. Chemicals is the other major export-driver. In the base-metals and metal products sectors, giant companies such as BHP Billitan, Hulamin, Arcelor Mittal and Assmang have a big presence in the province. Toyota and Bell Equipment are important companies in the automotive sector while the Engen Oil Refinery and dissolving pulp

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REGION manufacturer Sappi are among other strategically important entities in the provincial economy. Manufacturing contributes 21.5% of the gross regional product (GRP). In recent months Samsung Electrics has chosen the province as the site of a $20-million television factory, a Chinese company intends establishing a multi-billion-rand steel plant at Richards Bay and a pipe-manufacturing concern has put R300-million into a new plant. KwaZulu-Natal is a national leader in the forestry and paper sector. The forest-product export sector in South Africa is made up of paper (45.2%), solid wood (23.3%) and pulp (28.9%). Mondi and Sappi are both large international companies and the pulp and paper sector makes a direct contribution to South Africa’s balance of payments of R4.5-billion. Mpact, the paper manufacturing and plastics packager that was spun out of Mondi, invested a further R200-million in its waste paper and recycling operation at Empangeni. The company collects more than 450 000 tons every year. Tourism plays a vital role in the economy of the region, with the conference and events sector supported by excellent facilities. The jewel in the crown is the huge Albert Luthuli International Convention Centre Complex which hosts the annual tourism Indaba. The province's excellent climate lends itself to every kind of outdoor pursuit and its excellent beaches are always popular. Big sports events are regularly hosted in KwaZulu-Natal which has become something of a home to mass participation events such as the Comrades Marathon and Dusi Canoe race. The province has excellent game and nature reserves. Isimangaliso Wetland Park is a World Heritage Site and helps to fund 80 small businesses associated with its business as a tourist site.

RBIDZ to the gas fields of Mozambique makes this a potentially giant project. An area of anticipated growth – and a focus of policy interventions – is in the marine manufacturing sector. Sectors such as oil and gas, ship-building and rig repair are being targeted. Strategies to grow the so-called Oceans Economy will dovetail with all of the plans to boost the capacity of the harbours at Durban and Richards Bay and to explore for gas and oil in the Indian Ocean. Ship-building and ship repairs is an existing industry but it is currently not very big. If oil rigs were to start visiting the KZN coastline on a regular basis, this industry would grow exponentially. The decision to build a cruise-ship terminal at the Port of Durban is a good example of the kind of decision that is nicely in line with an "Oceans Economy" approach. A bill was put before the provincial legislature in 2016 to bring into existence the KwaZulu-Natal Maritime Institute. This will be run out of the restructured Sharks Board and training programmes will be coordinated with Transnet to make sure that relevant courses are offered. Since 2012, 800 students have been studying maritime-related courses. In 2015 the Richards Bay Industrial Development Zone (RBIDZ) welcomed SPS Manufacturing (Pty) Ltd, a pipe manufacturer which will invest R300million in uMhlathuze, creating 87 permanent jobs. The R1.5-billion Inkululeko Development Project, piloted within the Ndumo community, is an integrated multi-purpose and multi-sectoral initiative that includes constructing high-quality education centres, health services, modern roads and libraries, clean running water, sustainable livelihoods, job creation and community centres for vulnerable children and orphans.

Economic future Energy is the focus of several initiatives in KwaZuluNatal. With the announcement by national government of its support for major gas-to-power projects, the Richards Bay Industrial Development Zone is in line to host a large facility. The proximity of the

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Capital

Pietermaritzburg

Population

10 919 100 (2015)

Area

94 361km2

Premier

Willies Mchunu (ANC)

Languages

English, Zulu

SOUTH AFRICAN BUSINESS 2017

A REGIONAL OVERVIEW OF

LIMPOPO

impopo is a huge province that ranges across the north of South Africa and shares borders with Mozambique, Botswana and Zimbabwe. The Great North Road passes through the middle of the province, so places like Polokwane (the provincial capital) and Musina (on the northern border) are natural bases for logistics companies. The strategic value of these locations is being exploited through the creation of Special Economic Zones (SEZs). The province has wonderful natural resources, from coal, platinum and chrome to avocados, tomatoes and macadamia nuts. Wonderful vistas in very varied landscapes, golf estates and adventure tourism underpin the tourism industry. Limpopo’s national parks are among the country’s places to visit for international visitors and are among the most popular family holiday destinations for domestic tourists.

Key sectors Subtropical fruit like mangoes, paw-paws, litchis, bananas and pineapples are in abundance in the province and make up the bulk of export income. Cattle, sunflowers, cotton, maize, peanuts, avocados, tea, tomatoes, citrus and macadamias are SOUTH AFRICAN BUSINESS 2017

among Limpopo’s key agricultural resources. Mining is a key sector of the provincial economy. Limpopo has a very rich and varied mineral asset base. Platinum occurs on both limbs of the Bushveld Igneous Complex (BIC), and the Waterberg district is seen as the answer to South Africa's coal needs for the next several decades. The provincial government reports that the mining sector constituted 26% of Limpopo gross domestic product (GDP) in 2013. In 2015, a Mining Roundtable was held under the title "Limpopo's Minerals for a Broad-Based Industrialisation Agenda" and attended by 250 delegates from the mining sector, universities, NGOs and government. A key focus area is to try to ensure that 20% of procurement in the mining sector goes to small businesses and co-operatives. De Beers has approved a mining infrastructure expansion project at its diamond mine in Musina worth R163-billion. In August 2016, Unit 6 of the Medupi power station came on stream. The Medupi power station project is one of the biggest engineering projects undertaken in South Africa. Medupi is located in Lephalale in the far west of Limpopo, and next to an existing power station where coal is abundant. Unit 5 is expected to come on stream in the first half of 2017. The De Hoop Dam across the Steelpoort River in the east of Limpopo has started supplying water

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REGION to rural communities who previously had to walk to rivers to fetch water. These communities in the Waterberg, Capricorn and Sekhukhune districts are beneficiaries of a vast project that will also deliver water to towns and mining operations in the area. More than a million people will get water from the dam, which cost approximately R3.4-billion to build.

Economic zones In 2016 the national cabinet approved the MusinaMakhado Special Economic Zone (SEZ) located in the far north of Limpopo in the Vhembe region. The location of the Musina SEZ, with links to Zimbabwe, Botswana and Mozambique, promotes the TransLimpopo Spatial Development Initiative. Logistics will be one of the key focus areas of the SEZ. Other sectors will include agri-processing, energy and mineral beneficiation. De Beers' giant Venetia diamond mine is nearby. The national Department of Trade and Industry (dti) is the lead agent in SEZ creation, which in turn feeds into the national Industrial Policy Action Plan (IPAP). SEZs are designed to attract investment, create jobs and boost exports. The dti says that a consortium of Chinese investors, Sino, has agreed to put R40-billion into the Musina SEZ where they will operate the mineral beneficiation operations. A second application for an SEZ at Tubatse is pending. Tubatse is in the Sekhukhune District Municipality and hosts a number of mining operations. The SEZ in Tubatse will focus on the beneficiation of platinum group metals and miningrelated manufacturing.

by its golf courses, and Limpopo's offering has been extended and improved in recent years. At the highend of the luxury offering are the Zebula Golf Estate and Spa (west of Bela Bela) and the Legend Golf and Safari Resort. The growth of the Marula Festival, held annually in February in Phalaborwa, caters more to the local market. At least 13 000 litres of marula beer were brewed by the 13 co-operatives that participated and more than 14 000 people turned up for the outdoor music concerts that were a feature of the festivities. Limpopo Province has very varied tourism assets that include the bare bushveld of the north, misty mountains in the central highlands, hot springs, a unique cycad forest, great golf courses and the northern part of the Kruger National Park. The provincial government is committed to enhancing the value of Limpopo's two World Heritage Sites, Mapungubwe Heritage Site and Makapans Valley. Adventurous visitors can choose from off-road biking, hunting, elephant rides and tough 4x4 trails. A vast array of different cultures extend from the Rain Queen and her people in the central districts, to the myth-inspired art of the Venda in the north, to the bright geometric house designs of the Ndebele people in the Sekhukhune district. Although most of the province’s resorts and lodges are in private hands, the province has three national parks, and the provincial government runs 54 nature reserves of different types. The combined land area of Limpopo's national, provincial and private game and nature reserves is 3.6 million hectares. The tourism sector in the province employs about 22 414 people.

Tourism Limpopo has two transfrontier conservation parks, two World Heritage Sites, three biospheres, three national parks, 53 provincial nature reserves and more than 6 000 privately owned game farms. The Limpopo Environmental Management Act was drawn up to address specific provincial issues. The South African Golf Tourism Association says that up to 10% of visitors to the country are attracted SOUTH AFRICAN BUSINESS 2017

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Capital

Polokwane

Population

5 726 800 (2015)

Area

125 754km2

Premier

Stanley Mathabatha (ANC)

Languages

Sesotho, Tshivenda, Xitsonga

PROFILE

Polokwane Chamber of Business The Chamber seeks to support and develop local businesses and encourage investment in the city.

Vision To be the home that advocates the voice of business.

Mission

• To create value for members. • To unlock business opportunities for members.

• To facilitate a platform for best business practice.

• To promote sound governance principles by maintaining high Polokwane Chamber of Business 2016 Exco. business ethics. • To encourage socially respon• Reposition the Chamber as a respected consible corporate citizens in business. • To provide a platform for dialogue and partnertributor to the Limpopo economy through active engagement of key stakeholders for the promoship within business and public sector. tion of Chamber interests and benefits for its members. • Enhance value-add to its members through The policy of the chamber is to, without reference effective networking opportunities. • Engage on pertinent business issues within the to colour of skin, race, gender, culture or religious province. conviction: • Attend to the interests of its members as an • Enhance closer working relations between the a-political, non-racial organisation Chamber and its members and stakeholders. • Effect, maintain and promote an optimum free market system in a predominantly capitalist system CONTACT INFO • Promote and protect free enterprise and protect the interests of its members as business persons Physical address: No 47, 19th Industria and to act as a representative for its members Street, Polokwane

Policy

Tel: +27 15 297 8057 Fax: 086 513 2644 / 015 297 8058 Email: admin@pcob.co.za Website: www.pcob.co.za

Strategy The overall strategy for 2016 is to:

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Smart City

City of Polokwane vision is alive "The city has achieved consensus with the business community to find a way to unlock job opportunities, find smart ways to unlock economic growth using the land that the city owns, and effectively deal with illegal land use." - Executive Mayor Cllr Thembi Nkadimeng

he City of Polokwane is one of the fastest growing in the north and is bustling with economic and business opportunities that have made it become the centre for regional economic development in the area. According to the Executive Mayor Cllr Thembi Nkadimeng, the municipal Council has successfully put in place measures to transform the institution into viable machinery to tackle ageing infrastructure, water and sanitation backlog, rural electrification and develop a solid maintenance programme for its infrastructure. She says there is significant progress underway to improve the total road network in the city. "Our commitment to development is unquestionable in this regard," she says, adding that the city continues to consistently invest in our people and service offerings in order to improve how we service our clients. The Integrated Rapid Transport System, aptly called "Leeto la Polokwane" is progressing very well. It is intended to provide transport infrastructure, increase utilization of public transport services and improve the image and acceptability of public transport. The

extension of the Nl bypass also brings with it potential for investment opportunities. The city is hard at work to ensure that smart connectivity in the city is created to have access to broadband and Wi-Fi. The municipality will continuously implement the Smart City Concept in the other service delivery fields to create an encouraging environment for investment growth. "We have achieved consensus with the business community to find ways to unlock job opportunities, find smart ways to unlock economic growth using the land that the city owns and effectively deal with illegal land use," she says. The mayor says there is great potential for investment in central city property management and the entertainment sector. The arts theatre project also brings with it massive investment opportunities in the entertainment sector. The city centre requires revitalization and remodelling of business operations. "I invite potential investors to check out Polokwane for our offering and value proposition in line with our position on various investment opportunities that exist in the area."

FOCUS

Open for business The City of Polokwane welcomes enquiries from investors potentially interested in exploring opportunities in the vicinity.

olokwane is the largest city in and regional capital of Limpopo Province. The city has all the infrastructure and facilities required for the successful operation of a business and is considered by many to be “the vibrant capital of the North”. Although the city is growing rapidly, vast tracts of industrial land and commercial spaces are still available for development. Some of the investment opportunities that are ripe for exploitation include:

to the city to benefit from work opportunities and infrastructure. In turn, this presents numerous commercial and retail opportunities including extended banking services, the provision of office and related services, the sale of fast foods, telecommunication services, medical, transport and courier services to name a few.

Services to the mining sector

Keen entrepreneurs will be eager to investigate opportunities related to food-franchise services, the distribution of cosmetics, the distribution of educational aids, cleaning services, the supply of motor spares and franchised transport services.

Polokwane is well-positioned as an operational base for suppliers to mining companies throughout the Province and in the wider region. A broad range of minerals and precious stones are mined in the Province and the commissioning of a new power station means that there are additional opportunities for alert suppliers.

Agricultural services and agro-processing activities From the earliest days, agriculture has been a key pillar of the economy of the region and it still represents an important component of likely future developments for Polokwane-based food and beverage manufacturers and service providers. Related opportunities include milling of grains, packaging of fresh fruit, fruit and vegetable canning, processing of tomatoes, oil extraction from sunflower seeds and peanuts, meat processing and the production of marula and sorghum beer.

Franchise opportunities

Tourism and adventure sports With its physical beauty, variety of wildlife and its proximity to Gauteng, Botswana, Mozambique and Zimbabwe, Limpopo has much to offer tourists. Polokwane would make a good base for any company interested in exploring tourism and travelrelated investment opportunities in the Province. Some of the opportunities that could be explored are: camping facilities, a quad-biking trail within easy proximity of the city, a cycle race or marathon, conferencing facilities and services aimed at business tourists. For information on these and other investment opportunities in Polokwane contact the City of Polokwane (the local municipality). More detail can be found at www.polokwane.gov.za.

Commercial possibilities Economic growth in Polokwane has contributed to population growth as more and more people move

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SOUTH AFRICAN BUSINESS 2017

A REGIONAL OVERVIEW OF

MPUMALANGA

pumalanga means “the place where the sun rises” and the province lies north of KwaZulu-Natal and shares borders with Swaziland and Mozambique. It constitutes 6.5% of South Africa’s land area. In the north it borders on Limpopo, to the west Gauteng, to the south-west the Free State and to the south KwaZulu-Natal. The former capital Nelspruit has been renamed Mbombela. An ambitious plan to develop a Strategic Economic Zone (SEZ) at Nkomazi is under way. The area is close to both Mozambique and Swaziland and lies on the Maputo Development Corridor that links the economic powerhouse of South Africa (Gauteng) with the ports and gas supplies of Mozambique. The Nkomazi Local Municipality has earmarked land for the SEZ which will focus on logistics, beneficiation and agri-processing. There are tax advantages for investors in the SEZ and proximity to the Mozambican port of Matola would be a large benefit to anyone wanting to create a dry port or logistics base. SOUTH AFRICAN BUSINESS 2017

Key sectors The climatic contrasts between the drier Highveld region, with its cold winters, and the hot, humid Lowveld allow for a variety of agricultural activities. More than 68% of Mpumalanga is used for agriculture. Crops include maize, wheat, sorghum, barley, sunflower seed, soya beans, groundnuts, sugar cane, vegetables, coffee, tea, cotton, tobacco, citrus, subtropical and deciduous fruit. A large proportion of South Africa's grain, citrus, sugar and soft fruits come from Mpumalanga. The province is one of the key exporters of macadamia nuts, a subsector that is growing at a remarkably fast pace. Forestry is extensive around Sabie. It is the site of one of South Africa’s largest paper mills, the Ngodwana mill owned by Sappi. Natural grazing covers approximately 14% of Mpumalanga. The main products are beef, mutton, wool, poultry and dairy. Extensive mining is done and minerals include gold, platinum group metals, silica, chromite, mag-

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REGION netite, zinc, antimony, cobalt, copper, iron, manganese, tin and many more. Gold was first discovered in Mpumalanga province in 1883 in the mountains surrounding what is now Barberton. Mpumalanga accounts for 83% of South Africa’s coal production; 90% of South Africa’s coal consumption is used for electricity generation and the synthetic fuel industry. Coal power stations are located close to the coal deposits. Sasol's coal liquefaction plant in Secunda creates petroleumfrom-coal. South Africa produces 75% of the world’s platinum, 80% of its manganese, 73% of its chrome and 45% of its vanadium. Mpumalanga has significant resources of each of these minerals, and several others. The Witbank coalfields are the most productive in Africa and the province lies at the southern end of the eastern limb of the Bushveld Igneous Complex. Chromite, magnetite and vanadium are found in significant quantities in the province. The ferroalloy industry is centred on the town of Middelburg Deposits of chromite, magnetite and vanadium in this area are the basis of the ferro-alloy complex in Witbank-Middelburg (in the Nkangala District Municipality) and Lydenburg (Mashishing). Nkomati Mine is South Africa's only pure-nickel operation. The province's coalfields are in the south and west of the province. Mining contributes 21.8% to provincial Gross Domestic Product (GDP).

Economic future Mpumalanga aims to provide at least 2 000MW as part of the national Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). The Boschejskop Hydro Dam project would achieve two goals – alleviate the water shortage in the provincial capital of Mbombela and provide 300MW of power. A private investor would be asked to do the feasibility study and then finance and construct the facilities with two future revenue streams in prospect: a water off-take agreement with Mbombela and the sale of electricity to the national power utility Eskom.

Other projects suitable for public-private partnership include the construction of a solar park to power the Nkomazi Special Economic Zone and a wind power plant to be built at Sabie and Lydenburg. Investors are sought for the development of the Blyde River Tourism Cluster. More than a million visitors every year look into this awe-inspiring canyon, but they seldom stay for long. This project aims to give the visitor something to do and a closer look at the canyon via a cable-car trip to Blyde Lake. A related hotel and restaurant development (and a skywalk for another, adventurous, way of looking) are all part of the proposal, which could be parcelled out to a number of investors depending on their interest or speciality. Land is available for developers in the province's capital city of Mbombela to create an International Convention Centre. Conference delegates always like to be in nice places, and the selling point here would be to link the centre to the province's greatest tourism assets like the Kruger National Park, the Blyde River Canyon and God's Window. Space is also available for the construction of a related hotel and multi-purpose recreational facilities. There is relatively little agri-processing that takes place in the province, with most of the products being exported in their raw state. The Fresh Produce Market in Mbombela has been planned to accommodate investors who want to start factories to manufacture products such as juice, or packaging firms. Land has been bought and registered for the required use in Mbombela as the Mpumalanga International Fresh Produce Market. Investors in fresh produce are invited to be take advantage of Mpumalanga's superior fruit, vegetables and nuts. The 248ha site is near rail and road links and private investors are sought to be partners in building the top structure; services are being laid on by the province.

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Capital

Mbombela

Population

4 283 900 (2015)

Area

76 495km2

Premier

David Mabuza (ANC)

Languages

Ndebele, Swati, Zulu

SOUTH AFRICAN BUSINESS 2017

REGION

A REGIONAL OVERVIEW OF THE

NORTHERN CAPE

he Northern Cape is the largest of South Africa’s provinces but has the smallest population. The Orange River is a great green lung that runs through the province, providing water for grape-growers and other irrigation projects, power through hydro-power and great opportunities for tourism activities like river rafting. Despite the vast distances, the province enjoys good infrastructure, a major positive factor in persuading investors in renewable energy to choose the province. Within the first four bidding periods of the national Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), 92 projects were approved – and 48 of these projects were in the Northern Cape. The province has many major attractions, including its vast, open spaces, unique vegetation – notably the beautiful spring flower spectacle that transforms a semi-desert landscape into one of striking colour and beauty – and the Kgalagadi Transfrontier Park, which is famous for its lions. The small eastern portion of the Northern Cape Province bordering the Free State is known as the SOUTH AFRICAN BUSINESS 2017

Diamond Fields. Kimberley, which is also the capital of the Northern Cape and the location of the Kimberley Big Hole, is at the heart of the province’s diamond fields. There are several diamond-mining and historical attractions in Kimberley itself, including the Big Hole and Kimberley Mine Museum. These attractions make the Northern Cape an attractive destination for visitors. The province’s first university, Sol Plaatje, opened its doors in 2014 and is located close to Kimberley. The university is merging technikon courses with traditional university degrees in one department. It will add value to the Northern Cape economy and make a considerable contribution to the government-services sector. With extensive stock and vegetable farming land, agriculture is central to the Northern Cape economy, and mining remains very important. Livestock including sheep and goats form an important part of the economy, as does horse breeding. Major exports include fruit, especially table grapes, and meat from the sheep and goat farming in the province. Agriculture contributes more than

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REGION its fair share to the economy, especially in terms of employment creation. For this reason, the revitalisation of the agriculture and agri-processing value chain is critically important. Initiatives like the Vaalharts Irrigation Scheme are being prioritised to meet the needs of irrigation across a large swathe of the province.

Economic future Renewable energy has the potential to provide a major boost to the economy of the province, which has previously been mainly about agriculture, and historically, diamonds. The REIPPPP aims to add 6 000MW to the national grid by 2020 (and 13 225MW by 2025). The majority of the projects in the Northern Cape (28) are using the solar photovoltaic method, with seven employing concentrated solar power (CSP) technology. The Northern Cape is the natural home for the generation of solar power. Long-term annual direct normal irradiance (DNI) at Upington is 2 816kWh/m2, according to a survey done for Stellenbosch University by Slovakian company GeoModal Solar. CSP Today reports a national average that is among the best in the world. Stellenbosch University’s Solar Thermal Energy Research Group has six sites monitoring irradiation levels. The biggest solar farm so far in South Africa was launched in March 2016 when Solar Capital presented its 175MW farm at De Aar. Formerly famous as the railway junction that combined the countries two rail systems, De Aar is becoming better known as a renewable energy hub. The Northern Cape is also home to 12 approved wind farms and one small (10MW) hydro-electric project on the Orange River. The Northern Cape Province is connected to Namibia via the Kalahari and the Orange River Basin Corridors, strengthening trade and transport linkages between the two countries. The Northern Cape has been earmarked as a manufacturing zone for solar components. Currently solar panels are imported. A good opportunity exists to increase local content and the creation of the Upington Special Economic Zone will promote this

goal. With a large number of solar projects already underway in the province, stated interest from several investors, and sufficiently high solar radiation intensity to support such investment, the prospects are good. In the budget speech of the South African Department of Energy in May 2016, Minister Tina Joemat-Pettersson officially announced the procurement of the Northern Cape Solar Parks Programme. Some planning has already been done but the cabinet go-ahead is significant. The planned Upington Solar Park is the sort of infrastructure that should reduce the cost of solar power due to economies of scale and create an opportunity for localisation. Private-sector investors will be persuaded to operate IPP plants within the park. Feasibility plans are being drawn up by Eskom to investigate the potential of building a massive solar park that will generate an eighth of the county’s electricity needs – 5 000MW – near Upington. Sixteen square kilometres of land has been identified and Eskom is looking for private partners. The park, which will cost more than R150-billion, will generate 1 000MW in its first phase. Some work has also been done on creating harbours along the west coast of the Northern Cape. Port Nolloth itself is today a small fishing harbour and studies have shown that better potential exists at nearby Boegoe Baai to develop deep-sea facilities. The plan would incorporate both areas. Preliminary research indicates that the project could generate income of R2.1-billion annually by handling bulk cargo and minerals such as manganese and iron ore. There would be possibilities for linking the port to the gas fields and developing ship-repair facilities. The intention is to find a private investor or a consortium to take the project forward.

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Capital

Kimberley

Population

1 185 600 (2015)

Area

372 889km2

Premier

Sylvia Lucas (ANC)

Languages

Afrikaans, Setswana, Xhosa

SOUTH AFRICAN BUSINESS 2017

PROFILE

Sol Plaatje Local Municipality Sol Plaatje is a key municipality in South Africa’s largest province.

Sol Plaatje Local Municipality is located in the Frances Baard District Municipality in the Northern Cape Province. It includes the diamond mining city of Kimberley and the town of Ritchie.

Flagship projects/initiatives in the municipality and the surrounds • •

Sol Plaatje Municipality is named after Solomon Tshekisho Plaatje, who was a South African intellectual, journalist, linguist, politician, translator and writer. Solomon Plaatje was born just outside Boshof, formerly the Orange Free State (now Free State province).

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In terms of population size, Sol Plaatje is the largest local municipality in the Frances Baard District Municipality.

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Key demographics

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Population: 248 041 Population growth rate: 2.04% pa Percentage of population with matric: 29.2% Unemployment: 31.90% (official rate)

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Main economic sectors • • • •

CONTACT INFO

Community services (33%) Finance (24%) Trade (14%) Mining (8%)

Key personnel: Mayor: Honourable Octavious Mangaliso Matika Municipal Manager: Mr G Akharwaray ED – SEDP: Mrs N Tyabashe - Kesiamang Key contact person: Lesley van Gensen, Area Based Manager Email: lvangensen@solplaatje.org.za Tel: +27 53 830 6911/6100 Fax: +27 53 833 1005 Physical address: Sol Plaatje Drive, Kimberley Website: www.solplaatje.org.za

The flamingos of Kamfers Dam nearby Kimberley are a popular tourist attraction.

SOUTH AFRICAN BUSINESS 2017

Infrastructure upgrading and development New Sol Plaatje University Game farming/tourism Fresh Produce Market Transformation Initiative Office space N12 upgrade Mittah Seperepere International Convention Centre Renewable energy projects Rough diamond training Cluster of produce Transport infrastructure improvements Lenmed Royal Hospital and Heart Centre Mediclinic Gariep Careline Clinic - private psychiatry hospital Life Kimberley Hospital Droogfontein Phase 1 and Droogfontein Phase 2 solar PV energy plants

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Sol Plaatje

the place to grow your investments The Sol Plaatje Local Municipality seeks to attract and grow investments by steering investment into industries in which our City has a competitive advantage. The investment strategy is therefore aimed at gaining the optimal return on investments. The Municipality – through its cooperation with the dti and Treasury – facilitates the provision of various investment incentives to potential new investors into our city. We are pleased that we have greatly enhanced our service delivery capabilities. These include the additional electricity capacity from Eskom that will be used for development, the refurbishment of the old water purification plant at Riverton and Homevale Wastewater Treatment Plant, which will provide more capacity. Our future together can only strengthen through our mutual cooperation. Several multi-million rand projects have also been approved for development or have recently been developed. These will result in

Photo: Soraya Crowie

a huge capital injection in infrastructure over the coming years.

The investment environment of the Municipality is sound and meets the highest standards.

www.solplaatje.org.za

A REGIONAL OVERVIEW OF THE

NORTH WEST

orth West is on the Botswana border and fringed by the Kalahari desert in the west, Gauteng province to the east and the Free State to the south. It is known as the Platinum Province for the wealth of the metal it has underground. The capital is Mahikeng (previously Mafeking), a town that achieved a degree of fame for the famous siege during the Anglo-Boer War. South Africa's nuclear-research centre is located at Pelindaba near Hartbeespoort Dam, and is run by the South African Nuclear Energy Corporation. The Nuclear Engineering Department at North-West University is the only one of its kind in the country and the National Department of Science and Technology granted a chair in Nuclear Engineering to NWU. Researchers are working with Korean, US and Italian scientists on subjects such as gas centrifuge uranium-enrichment cascade models. Bioethanol, biodiesel and methane gas from waste and renewable resources are among the types of biofuels being investigated. As a major grain-producing area, North West Province is well suited to supplying feed stock for biofuel projects, but a new set of national government guidelines has seen the emphasis in this SOUTH AFRICAN BUSINESS 2017

nascent industry shift towards finding fuel stock from crops that are less likely to affect food security.

Key sectors The Western Limb of the Bushveld Igneous Complex is a geological phenomenon astonishingly rich in minerals. The North West lies directly over most of this formation. Gold and uranium are found along the border of the province with the Gauteng and Free State (Klerksdorp and Orkney). Diamonds are mined at Christiana, Bloemhof and Lichtenburg. Lichtenburg is also the centre of the cement industry. Chromite is the other major mineral mined throughout the province, and there are several ferrochrome smelters and other processing plants. Other minerals found in the North West include fluorspar, vanadium, rhodium, uranium, copper, limestone, slate, phosphate, manganese, coal and nickel. The province produces 64% of South Africa's platinum, 46% of its dimension stone and granite, 32% of its chromite and 25% of its gold. Mining contributes 23.3% to the North West economy.

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REGION Platinum is found in the Rustenburg and Brits regions, which produce more platinum than any other area in the world. Employment along the Platinum Corridor, from Pretoria to eastern Botswana, accounts for over a third of total employment in North West, but the depressed platinum price in global markets has led to a reduction in production volumes, and many workers being laid off. The North West Province has a strong agricultural sector with several very large companies involved in grain. Cattle and crops such as sunflower seeds are among the other subsectors that generate significant income and feed large numbers of South Africans. North West produces about one third of the country's maize. The manufacturing sector comprises mostly fabricated metals, food and beverages and non-metallic minerals such as cement and stone. Food and beverages is the biggest subsector contributing to the manufacturing industry. The town of Brits has a number of companies in the automotive components sector. Major companies with manufacturing capacity in the North West like Nestlé, RCL, Tydstroom and Clover have all taken advantage of the province’s strategic location adjacent to the business hub of Gauteng.

Agriculture North West's distinct climatic regions are home to three very different types of agriculture. The dry western region is home to large beef-cattle herds, and this is where the growing game-ranching and hunting industry has its base. An Absa Agribusiness study shows that a R5-million investment in cattle over six years makes a 4.8% return, against 27.7% for buffalo and 45.2% for sable. North West is sometimes referred to as the Texas of South Africa, with some of the largest cattle herds in the world found at Stellaland near Vryburg. North West has approximately 1.7-million beef cattle, representing 13% of South Africa's herd. Major breeds include Simmentaller, Brahman, Bonsmara and Simbra, a cross between the Brahman and Simmentaller breeds.

The Marico region is also cattle country, while the areas around Rustenburg and Brits are fertile, mixed crop farming land. Maize and sunflowers are the most important crops and the North West is the major producer of white maize in the country. The eastern and north-eastern parts of the province receive relatively good rainfall and are suitable for the cultivation of crops. The central and southern sections of the province are dominated by maize and wheat farming. One of South Africa's biggest agricultural companies is Senwes. The company specialises in the storage and handling of grains and oilseeds. Its extensive silo infrastructure extends across the interior. Senwes sells John Deere tractors. Suidwes is based south of Klerksdorp in Leeudoringstad. More than 90% of the shares in the company are held by farmers. Grain handling is the main business and there are divisions for retail (17 outlets and one animal feed depot), mechanisation, finance and research and agricultural economics (Terratek). Brits is the location of the headquarters of the MGK Group, formerly Magaliesburg Graan Kooperasie. MGK runs a plant that makes fullfat soy, a component in animal feed. NWK is another company with manufacturing capacity. The Lichtenburg-based enterprise makes liquid fertiliser (up to 10 tons per month), animal feed (Opti Feeds), processes sunflower seeds (Epko), and runs three grain mills. Another subsidiary, Opti Chicks, has a capacity of 600 000 chicks per week. NWK also deals in grain, runs several retail outlets and has a financial arm, Univision Financial Services. There are several milling operations in North West Province. Masilo Mills is located in Hanneman (where Papa Super Maize is ground) and Tau Roller Mills is in Wolmeranstad.

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Capital

Mahikeng

Population

3 707 000 (2015)

Area

104 882km2

Premier

Supra Mahumapelo (ANC)

Languages

Afrikaans, Sotho, Tsonga, Tswana, Xhosa

SOUTH AFRICAN BUSINESS 2017

REGION

A AREGIONAL REGIONALOVERVIEW OVERVIEWOFOFTHE

WESTERN CAPE WESTERN CAPE

he Western Cape stretches from the dry northwestern coast to the heavily-forested Garden Route regions of the southern Cape via the rugged mountains of the Cedarberg, the rolling winelands of the Boland and the Overberg, the fertile valleys of the Klein Karoo and the wide plains of the Great Karoo. The province and the region are most commonly associated with Table Mountain, which watches over the city of Cape Town and forms a national park of its own. The Western Cape is very well served with infrastructure. Three ports at Saldanha, Cape Town and Mossel Bay serve different markets and Cape Town International Airport and George Airport see to air travel needs. The Cape Town International Convention Centre is the province’s leading facility in the events and conference field, which is an area of growth for the province. The major contributors to the Western Cape’s gross domestic product (GDP) are services (58.2%), agriculture and agri-processing (8.1%) and manufacturing (6.9%). A traditional strength of the Cape, financial services, makes up 10.9% of the services basket. Saldanha on the West Coast is one of South Africa’s busiest ports. Apart from being home to SOUTH AFRICAN BUSINESS 2017

several trawler fleets, it is the principal iron-ore export port and is gearing itself to service the continent’s oil and gas industry and to be a steel manufacturing hub. Mining is becoming an increasingly important sector, with titanium, zirconium, phosphate and limestone being among the most important finds in the region. A country that is gaining investment momentum in the Western Cape is China, with Hisense being one of the most important investors. This Chinese manufacturer of consumer electronics and household appliances opened a 25 200m2 factory in Atlantis – an area some 40km outside of Cape Town, on the West Coast. For many years, Cape Town was known as the home of financial services industry with insurers in particular choosing to house their head offices in the city. Many of South Africa’s and Africa’s largest retailers have their offices in and around Cape Town, including Pick n Pay, Shoprite, Clicks and Woolworths. The trend is now continuing with a new generation of companies such as Takealot and Yuppiechef. Nearly 70% of South Africa’s wine comes from the Winelands District area (Stellenbosch, Paarl,

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REGION Robertson). A good percentage of this wine is exported but the wine estates themselves attract tourists which in turn boosts the leisure industry. Tourism in the Winelands has matured beyond day-trips from Cape Town to incorporate wellness spas, adventure tourism and even game farms boasting the Big Five. Manufacturing is concentrated on processing grapes and fruit into wine, juice, brandy, dried and tinned fruit products. Dairy manufacturer Parmalat has an award-winning cheese-making facility in Bonnievale. Robertson is known for roses and thoroughbred horses. Stellenbosch is home to its eponymous university and houses the headquarters of several large companies, such as British American Tobacco. Mossel Bay is home to South Africa’s main gas-processing plant while George is a node of manufacturing, trade and administration. The Nelson Mandela Metropolitan Municipality has facilities in George. Knysna and Plettenberg Bay are favoured tourist destinations. The Klein Karoo has its own wine route, and contains the country’s Port Capital in Calitzdorp, which hosts an annual festival to celebrate its main product. Fruit, vegetables and ostriches are other main products of the Klein Karoo.

Oil and gas With the number of oil rigs passing around the Cape on their way either to the rich fields on both sides of Africa, this is a sector that can grow exponentially. It has already created 35 000 formal jobs, and there are many opportunities for trained artisans in rig repair and other boat-related jobs. National government has identified Saldanha Bay as a hub for rig repair.

Tourism The sector already contributes R17-billion to the provincial economy and jobs are created quite quickly in this sector. There is a belief that this sector can still contribute much more. One example is the successful bid for the World Rugby Sevens tournament, which Cape Town hosted for the first time in 2015. With international visitors spending up to R10 000 each, the weekend tournament added to the city's GDP by R539-million. Cape Town will host the event until 2018. Plans to further boost the sector include marketing the province as an all-year destination, focussing on cultural and heritage tourism and promoting more local business tourism.

Agri-processing Economic future According to the provincial treasury, the fastgrowing sectors to 2020 will be construction, financial services (and real estate and business services) and transport, storage and communication. Financial services is expected to make the biggest contribution overall. However, the provincial government of the Western Cape and the private sector are putting their heads together to find out what projects will best boost economic growth and create jobs: it is called Project Khulisa and it is due to run to 2019. Three sectors have been targeted in the first phase: tourism and agri-processing are perhaps predictable areas of focus, but a new – and potentially very exciting – sector is oil and gas.

By playing to the Western Cape's strengths, which include an excellent reputation for fruit and wine in the international market, the province wants to take the agri-processing sector beyond the R12billion that the sector already contributes to the local economy. Investment in infrastructure and support for exporters together with an improved regulatory environment are strategies that are going to be adopted.

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Capital

Cape Town

Population

6 200 100 (2015

Area

129 462km2

Premier

Helen Zille (DA)

Languages

Afrikaans, English, Xhosa

SOUTH AFRICAN BUSINESS 2017

LISTING

INDEX Airports Company South Africa ........................................................................................ 81 - 84 Brother .................................................................................................................................... 5, 63 Buffalo City Metropolitan Municipality........................................................................... 113 - 115 Capricorn District Municipality ................................................................................................. 129 City of Ekurhuleni.............................................................................................................. 120 - 123 City of Polokwane .................................................................................................................... 132 College of Cape Town ............................................................................................................... 94 Cummins South Africa ............................................................................................................... 61 DRA Projects .............................................................................................................................. 20 Durban Investment Promotion (DIP) ........................................................................................... 2 Eastern Cape Development Corporation (ECDC) .................................................................. 111 Export Credit Insurance Corporation (ECIC) ................................................................. 36, OBC Future Home Energy Services .................................................................................................. 25 Human Resource Development Council of South Africa (HRDC) ........................................... 40 Kemtek .......................................................................................................................................... 7 Lesedi Nuclear Services ............................................................................................................ 27 Mancosa ..................................................................................................................................... 93 Masisizane Fund ........................................................................................................................ 42 Mondi Group South Africa ........................................................................................................ 52 Novus Holdings .......................................................................................................................... 44 Qhawe Quantity Surveyors ............................................................................................. 124, IBC REDISA ........................................................................................................................ IFC, 28 - 33 SBS Tanks ............................................................................................................................ 66 - 70 Secur ........................................................................................................................................ 9, 90 Sol Plaatje Local Municipality ................................................................................................. 138 Southern African Wildlife College .............................................................................................. 96 Uzulu Business Solutions .......................................................................................................... 87 Verifi ............................................................................................................................................. 88 SOUTH AFRICAN BUSINESS 2017

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