South African Business 2014
The year 2014 is the 20th anniversary of democracy in South Africa, and to mark this significant milestone, Global Africa Network has produced this special ‘20 Years of Democracy’ Review Edition of the annual South African Business journal. For this 2014 edition, in order to recognise the successes and achievements at provincial level over the past two decades, South African Business incorporates highlights from Global Africa Network’s nine regional titles: Western Cape Business, Gauteng Companies, Limpopo Business, KwaZulu-Natal Business, Eastern Cape Business, North West Business, Mpumalanga Business, Free State Business and Northern Cape Business.
SOUTH AFRICAN BUSINESS YEA 2014 RS 20 AC INCLUDING HIGHLIGHTS FROM THE NINE PROVINCES Y EBRATING CEL OF DE MOCR WESTERN CAPE BUSINESS KWAZULU-NATAL BUSINESS NORTHERN CAPE BUSINESS GAUTENG COMPANIES LIMPOPO BUSINESS FREE STATE BUSINESS EASTERN CAPE BUSINESS NORTH WEST BUSINESS MPUMALANGA BUSINESS JOIN US ONLINE WWW.SOUTHAFRICANBUSINESS.CO.ZA | WWW.FRONTIERMARKETNETWORK.COM THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA To achieve great e v a h t s u m e n o , s t h ig e h strong roots. y. cant milestone in its historits fi ni sig a s he ac re isa Un This year nings in 1873 to y extends from humble begin rne the continent. The university’s remarkable jou ce learning institution on tan dis en op ier em pr a as current role Government university bills were enacted creating The University of the Cape of Good Hope was established in Cape Town in 1873. The reigning British monarch, Queen Victoria, grants it a royal charter. Unisa opened a campus in Addis Ababa, Ethiopia. 10010722e/2 A technology-driven application and registrations process was developed and implemented. Learn without limits. 2004 2005 An integrated learning management platform, myUnisa, and open distance learning initiatives were launched. 2009 three universities, two teaching universities, the the iver Un sity of Cape Town and and h, osc lenb University of Stel one examining university, Unisa. The first music examinations were conducted. 2005 2007 1918 1884 1877 1873 Unisa’s 10 faculties were collapsed into five colleges. Unisa merged with Technikon Southern Africa and Vista University’s Distance Education Section. 2011 k Professor Mandla Makhanya too Vice and l cipa Prin as ce up offi Chancellor of Unisa. e ry. o its ent. bills g wo d the and nisa. with hern ta ance ion. 1918 The university relocated to Pretoria. ZK Matthews graduates at Fort Hare under the auspices of Unisa. Justice President The Division of External Studies was established. Unisa became the world’s first fully fledged correspondence university. 1994 2001 Bernard Ngoepe became Unisa’s first black ney Chancellor and Professor Bar k blac rst fi isa’s Un e am bec Pityana r. ello anc -Ch Principal and Vice 1968 1959 1946 1923 Until 1994, Unisa was the only way in which many black students could access higher education. The Graduate School of Business Leadership was launched. 1973 1988 The library was opened. Unisa’s Muckleneuk Campus was established. 2013 2011 ed, namely the Two new colleges were establish of Graduate lege Col the College of Education, and ents and stud te dua tgra pos ts por sup Studies, which arch. rese ry lina scip advances inter- and multidi Signature courses, fully online igned modules, were introduced, des ive ract inte to engage students in an . nce erie exp ning lear and enriching 2013/09/12 10:37 AM CONTENTS CONTENTS South African Business 2014 Edition PAGE 307 Introduction South African Business13 A unique business and investment guide to South Africa. South Africa – 20 years on Remarkable strides have been made since South Africa embraced democracy. 14 Special features South Africa - an overview Building infrastructure for growth. 16 Obama tour brings fresh hope Obama’s recent African tour turned the spotlight on strengthening business ties between Africa and the United States. 24 South African companies in global top 100 An international consulting group’s top-100 ranking of five South African companies has sharpened the focus on the outstanding achievements of the country’s business sector. 26 Corridors of trade in Africa South Africa is leading the infrastructure push in Africa, as it seeks to maintain its gateway status. 28 Super projects ‘We are poised to meet our target of turning South Africa into a huge construction site’– South African President Jacob Zuma. Funding Africa’s infrastructure drive Major announcements regarding the funding of African infrastructure came thick and fast in the first months of 2013. SOUTH AFRICAN BUSINESS 2014 2 32 34 MBSA/116/BRA001 A Daimler Brand Not just a great brand, but a great investment. Not content with inventing the automobile in 1886, our founders, Daimler and Benz, invented the world’s ﬁrst two trucks independently in 1896. Since then, Mercedes-Benz has been at the forefront of every aspect of commercial vehicle development in terms of technology, safety and sustainable mobility. Be it trucks, buses or vans, no other company can claim as many technical breakthroughs. COMMERCIAL VEHICLES: TRUCKS • VANS • BUSES. Today, Mercedes-Benz continues to lead the way with cutting-edge solutions like BlueEFFICIENCY, BlueTec, Natural Gas and fuel cell technology, while backing our products with an equally progressive Value Chain offering. It’s no wonder then, that so many who value technical excellence in the business world - past, present and future value the 3-pointed star. www.mercedes-benz.co.za CONTENTS PAGE 350 Renewable energy An independent producers’ programme is attracting international interest. 44 South African wildlife ranching ‘The game game has got some game!’ 54 Overview of the South African economy Key facts and figures on South Africa’s demographics, economy, trade and investment. 56 South Africa at 20 years How the provinces have progressed. 62 Regional overviews Eastern Cape The Eastern Cape’s economy is driven by the manufacturing and business services industries. Free State This centrally located province uses its position to its advantage. 70 116 Gauteng124 Gauteng is the smallest in area but the largest contributor to the national GDP. KwaZulu-Natal168 KwaZulu-Natal hugs the Indian Ocean and the subtropical climate makes the region perfect for cultivating produce. Limpopo176 At the most northern point of South Africa, Limpopo shares international borders with Botswana, Zimbabwe and Mozambique. Mpumalanga186 Mpumalanga has seen considerable growth in the transport and business-services sector, which contributes to making it a varied economy. Northern Cape The largest province in South Africa has the lowesr population at three people per square kilometre. The country’s greatest river, the Orange River, is used for irrigation of prime agricultural land in the largely dry landscape of the province. SOUTH AFRICAN BUSINESS 2014 4 190 Nelson Mandela Bay www.simonsays.co.za Open for business “Over 70% of businesses invested into their properties following the Agency’s upgrades” Having recognized the need to lead our city rejuvenation through proactive public sector investment, the MBDA has set in motion multiple heritage revitalization, tourism and leisure infrastructure projects. Nelson Mandela Bay is ready to welcome the world. Tel: 041 811 8200 email@example.com | www.mbda.co.za CONTENTS North West Known as the platinum province for good reason, the North West has the world’s richest source of platinum group metals (PGMs). 198 Western Cape From the Winelands to the Wilderness, the Western Cape is home to a booming tourism market, diverse manufacturing, world-class infrastructure and Africa’s largest wine exporter. 212 Economic sectors Agriculture246 National government’s budget for rural development has increased by 18%. Mohair254 Niche products thrive in the Eastern Cape. Oil and gas Exploration is increasing, on land and at sea. 258 Mining271 The mining sector is considering structural changes. Mineral beneficiation South Africa has significant capacity for processing minerals. 286 Manufacturing288 Increasing manufacturing capacity is a national priority. Automotive292 Indian, Chinese and Italian companies are investing in the automotive industry. Automotive components Incubation parks are promoting start-ups in the components sector. 300 Food and beverages The sector employs nearly a quarter-of-a-million people. 301 Chemicals and pharmaceuticals Sasol and Aspen are world leaders in their fields. 304 PAGE 258 SOUTH AFRICAN BUSINESS 2014 6 Discover CAPE TOWN & WESTERN CAPE ©capetowntourism ©whitesharkprojects THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA WESTERN CAPE Inspiring new ways www.tourismcapetown.co.za e-mail: firstname.lastname@example.org | website: wesgro.co.za | Tel: +27 21 487 8600 Wesgro Explore Ad 2013 new.indd 1 9/11/13 3:42 PM CONTENTS PAGE 34 Engineering307 Transnet’s R300-billion spending plan is boosting the sector. Water318 South Africa is investing heavily in water infrastructure. Transport328 South Africa is spending heavily on transport infrastructure. Maritime336 The maritime sector holds great promise. Industrial development zones and special economic zones New incentives and variety may be the way forward. 348 Tourism350 India and China are growing markets for South African tourism. Events and conferences Bookings in the years to 2017 promise an injection of R1.6-billion. 364 Information and communications technology Innovations are being encouraged. 368 Banking and financial services The financial and industry sector is South Africa’s biggest economic sector. 381 Development finance and SMME support Entrepreneurs can get help from a variety of sources. 392 Education and training The National Skills Fund is focusing on skills the national economy needs. 401 Business support services Companies in the business support services sector play a vital role in the economy. 422 Government South African National Government An overview of South Africa’s national government departments. Eastern Cape Provincial Government SOUTH AFRICAN BUSINESS 2014 432 72 8 High impact short courses designed for YOU Sales • Marketing • Supply Chain • Leadership Science The IMM School of Business excellence has a proven track-record of ion professional marketing educat in blic and and offers a wide range of pu grammes customized short learning pro ies. to assist individuals and compan High impact short courses on offer include: Sales Sales strategy Doing business in Africa Sales management Sales and service Marketing Competitor intelligence Blue Ocean strategy Direct and digital marketing Business to business marketing Brand management Reputational leadership Supply chain Optimisation of supply chain management in Africa Essentials of export management Leadership Leading a marketing team Financial management for marketers The duration of these courses is 2 to 5 days Registration now OPEN For further information on customised in-house training, kindly contact The IMM School of Business Science on: Tel: +27 (0) 11 628 2037/2009 082 311 9118 www.immsbs.co.za e-mail: email@example.com Offices in Johannesburg, Durban, Cape Town and Harare CONTENTS Free State Provincial Government 118 Gauteng Provincial Government 126 KwaZulu-Natal Provincial Government 170 Limpopo Provincial Government 178 Mpumalanga Provincial Government 188 Northern Cape Provincial Government 192 North West Provincial Government 200 Western Cape Provincial Government 214 PAGE 432 Reference Sector contents 244 Index444 Maps South African map 23 Eastern Cape locator map 71 Free State locator map 117 Gauteng locator map 125 KwaZulu-Natal locator map 169 Limpopo locator map 177 Mpumalanga locator map 187 Northern Cape locator map 191 North West locator map 199 Western Cape locator map 213 SOUTH AFRICAN BUSINESS 2014 10 CREDITS PRODUCTION ADVERTISING ADMINISTRATION Publisher Chris Whales Sales director Mark Leven-Marcon Managing director Clive During Editor Katie Reynolds Regional sales manager Veronica Dean-Boschoff Financial controller Brett Watson Researcher and writer John Young Key accounts manager Loudon Cito Creative director Ian Jamieson Key accounts representatives Amelia Kuhn, Christoff Scholtz, Debbie Bender-Overmeyer, Gabriel Venter, Jeanette Nicholson, Jeremy Petersen, Loudon Cito, Marc Lahoud, Nathalie Horswell, Nigel Williams, Richard Whittingdale, Sam Oliver, Shiko Diala Administration and accounts Charlene Steynberg, Natalie Koopman DTP operator Colin Carter Production assistant Anjé Robberts Editorial assistant Megan Abels Distribution Lizé Fourie Printing CTP DISTRIBUTION South African Business is distributed internationally on outgoing and incoming trade missions, through Trade and investment agencies; to 115 foreign offices in South Africa’s main trading partners around the world; at top international trade fairs; through the offices of foreign representatives in South Africa; as well as nationally and regionally via chambers of commerce, tourism offices, trade and investment agencies, provincial government departments, municipalities, companies, major stores and business-class lounges. S o t Member of the Audit Bureau of Circulations PUBLISHED BY S o t Global Africa Network (Pty) Ltd Company Registration No: 2004/004982/07 Directors: Clive During, Chris Whales, Richard Pembroke Physical address: 3rd Floor, Sunclare Building, 21 Dreyer Street, Claremont 7700, Cape Town, South Africa. Postal address: PO Box 44573, Claremont 7735, South Africa Tel: +27 21 657 6200 | Fax: +27 21 674 6943 | Email: firstname.lastname@example.org | Website: www.gan.co.za Copyright: South African Business is an independent publication published by Global Africa Network (Pty) Ltd. Full copyright to the publication vests with Global Africa Network (Pty) Ltd. No part of the publication may be reproduced in any form without the written permission of Global Africa Network (Pty) Ltd. Disclaimer: While the publisher, Global Africa Network (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, timeliness, or completeness of the information. Global Africa Network will not accept responsibility for any loss or damage suffered as a result of the use of or any reliance placed on such information. Photo credits: CSIR International Convention Centre, Transnet National Ports Authority, Transnet Engineering, Railways Africa, Anthony Bannister, Sun Images, Philip Mostert, SA Tourism,MorgueFile, Rio Tinto, Sasol, Anglo American. Cover photographs: (Table Mountain, Durban harbour) Dreamstime, (baobab) Flicker / T3rminator, (wheat) Veer, (Hole in the Wall, leopard) iStockPhoto, (telescope array) SKA, (Johannesburg skyline) Gauteng Tourism Authority, (mining truck) Anglo American. SOUTH AFRICAN BUSINESS 2014 12 S o t FOREWORD SOUTH AFRICAN BUSINESS HIGHLIGHTS PAGE 14 Highlighting the past 20 years of freedom in South Africa. PAGE 24 US President Barack Obama visited the country in 2013 to strengthen business ties. PAGE 26 Five South African companies were ranked among the top 100 global companies. PAGE 32 Major projects are underway across key sectors of the economy. A unique guide to business, investment and tourism in South Africa. T he year 2014 is the 20th anniversary of democracy in South Africa, and to mark this significant milestone, Global Africa Network has produced this special ‘20 Years of Democracy’ Review Edition of the annual South African Business journal. For this 2014 edition, in order to recognise the successes and achievements at provincial level over the past two decades, South African Business incorporates highlights from Global Africa Network’s nine regional titles: Western Cape Business, Gauteng Companies, Limpopo Business, KwaZuluNatal Business, Eastern Cape Business, North West Business, Mpumalanga Business, Free State Business and Northern Cape Business. These unique journals are now being launched online, providing a live platform to communicate with the business, investment and government community of each province: www.westerncapebusiness.co.za www.gautengcompanies.co.za www.limpopobusiness.co.za www.kwazulunatalbusiness.co.za www.easterncapebusiness.co.za www.northwestbusiness.co.za www.mpumalangabusiness.co.za www.freestatebusiness.co.za www.northerncapebusiness.co.za These portals will be supported by Frontier Market Network (www.frontiermarketnetwork.com) – an online deal-making platform for businesses and investors. Global Africa Network thanks the dedicated sales team and the professional and committed writers, editors and designers who worked so hard to produce this edition of South African Business. Chris Whales Publisher, Global Africa Network Email: email@example.com 13 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE South Africa —20 years on Remarkable strides have been made since South Africa embraced democracy. W hen Nelson Mandela took the oath sion and denial of the most basic services to the of office as the first president of majority of the country’s population. democratic South Africa on 10 May The 2011 Census reveals major gains in 1994, anything seemed possible. delivering essential services to previously President Mandela told the assembled crowd in neglected communities. front of the Union Buildings that day that the occasion conferred ‘glory and hope to newborn liberty’. More moments of glory came South Africa’s Politics way as the world celebrated with the national rugby team when it won the global title on home A key factor in South Africa 20 years on from soil in 1995, and when South Africa successfully 1994 is stability. This could by no means be taken hosted the 2010 FIFA World Cup. South Africa for granted in the run-up to the first democratic has also hosted large and important United Na- elections. Bombings and violent attacks threatened to unleash a civil war, but through negotiations’ conferences. In 2014, 20 years will have passed since the tion and compromise South Africans found a way world’s most inspirational leader set ambitious to start building something new. In the years since 1994, South Africa has had goals for a new nation. The passing of two decades presents the opportunity to reflect. four presidents, and regular elections, run by an Mandela called for healing, for building, and independent body, are regarded as completely for a second front in the liberation struggle. With credible. The country’s founding constitution is the political battle against apartheid won, he widely admired around the world. The Dinokeng pledged to fight against ‘poverty, deprivation, Scenarios brought together 35 leading South suffering, and gender and other discrimination’. Africans to debate how the country was going to Given the enormity of the challenge that faced look in 2020. In reflecting on the achievements South Africa’s first democratic governments, it to date, Dinokeng noted: is clear that enormous progress has been made There have been few countries where sitin tackling the legacy of racially-based oppres- ting Presidents and Deputy Presidents have SOUTH AFRICAN BUSINESS 2014 14 SPECIAL FEATURE appeared before the Con- The 100 biggest companies on South Africa’s stitutional Court, or where stock exchange, the JSE, are doing better than one arm of the administra- the global average for median cash-flow return tion (the National Prosecut- on investment (CFROI). According to Credit ing Authority) has gone to Suisse, South Africa’s top-100 generated in court against another arm the decade to 2012 a CFROI of 10% against a (the South African Police global average of 6%. A fifth of South Africa’s Service) – an indication that companies are generating a startling CFROI of the system of checks and more than 16% (David Holland and Brian Kantor, balances is working. Business Day). It was further noted that The Sunday Times in 2012 published a set the media and civil society of economic indicators that showed a decline is strong, a military coup between 1994 and 2012 in household savings is ‘very unlikely’, and the to disposable income, and a concomitant rise majority party, the African in household debt. Unemployment also grew, to National Congress (ANC), 23.9%. As in other parts of the world, ‘jobless is being exposed to ‘far growth’ has created considerable hardship in less deferential conduct South Africa. Government efforts to grow manufrom its membership’. The facturing, and the support for the small, medium Protection of State Information Bill, adopted and micro enterprise sector, are predicated on by the ANC in parliament after the Dinokeng the creation of more jobs. Scenarios were published, is very controversial and its critics claim that it will stifle Other indicators investigative journalism. Seats in the National Assembly (there is also a Council of Provinces) are determined by pro- About two-million houses have been built by the portional representation, giving parties the exact state, life expectancy is starting to improve again percentage in seats that they won votes in the (60 years in 2011 compared to 56.5 in 2009), election. This promotes stability, but several po- and about four-million jobs have been added litical commentators argue that some form of (JP Landman). Approximately 18-million people constituency element should be introduced in receive grants such as disability or pensions, the future to promote accountability. and anti-retroviral treatment is administered to The ANC has won every national election two-million people (Jonny Steinberg). and controls most of the country’s provinces The South African Institute of Race Relations and municipalities. The Democratic Alliance, the (SAIRR) published in 2012 a comprehensive second-biggest national party, is in charge of the survey showing how South African society has Western Cape Province and the City of Cape changed. The survey is a stark reminder of how Town. Several new parties will take part in the bad things were for the majority of South Africans before democracy. 2014 elections for the first time. Business and economy South African companies are not only making their mark around the world, as outlined in a separate article in this publication, but they have shown an ability to create value that is truly world-class. 15 READ MORE Visit: www.frontiermarketnetwork.com/ article/1137 SOUTH AFRICAN BUSINESS 2014 SOUTH AFRICA BUILDING INFRASTRUCTURE FOR GROWTH South Africa has made enormous progress in many fields since it became a democracy in 1994. A fifth general election will be held in 2014 and the country’s democratic institutions are well established. Building infrastructure and increasing manufacturing capacity are national priorities. By John Young T he World Bank describes South Africa’s macro-economic management as ‘exemplary’ with ‘world-class budgetary and debt outcomes’ (Country Brief, April 2012). Unemployment remains a big problem, and this is one of the chief areas of focus for the National Development Plan (NDP). The NDP was released in 2011 by the National Planning Commission. Some of the plan’s conclusions were quite blunt about shortcomings, but made concrete proposals about what needed to be done to get the country on a winning path. The NDP was accepted by the governing party, the African National Congress (ANC), in the course of its major policy conference, and has since been confirmed as national policy by the cabinet. The World Bank summed up the NDP’s key findings as the need for South Africa to • Invest in infrastructure • Diversify exports • Strengthen links to faster-growing economies • Reduce the cost of doing business • Reduce constraints to growth • Promote efficient and climate-friendly production • Encourage entrepreneurship • Encourage innovation The NDP stresses the need to improve the education and training environment so that skilled South Africans can take up jobs in new sectors. The need for a corruption-free and efficient public service is also stressed. South Africa has the 24th largest economy in the world and contributes 30% of sub-Saharan SPECIAL FEATURE Economy The discovery of diamonds and gold in the 19th century laid the platform for the development of South Africa as an industrialised economy. Wool, wine and SOUTH AFRICAN BUSINESS 2014 The country is investing heavily in transport infrastructure. MUNICIPALITY MAIN TOWNS Polokwane Polokwane GROWTH RATE % 5.5 Tlokwe Potchefstroom 4.9 Madibeng Brits 4.8 Tshwane Pretoria 4.6 Stellenbosch Stellenbosch 4.0 Mafikeng Mafikeng 4.0 Buffalo City East London 4.0 George George 3.9 Cape Town Cape Town 3.6 eThekwini Durban 3.5 Johannesburg Johannesburg 3.4 Msunduzi Pietermaritzburg 3.3 Ekurhuleni Germiston, Boksburg, Benoni 3.0 Lephalale Lephalale (formerly Ellisras) 3.0 Nelson Mandela Bay Port Elizabeth, Uitenhage 2.9 Growth of South African city economies, 2005-2010. SOURCE: SOUTH AFRICAN CITIES NETWORK. 18 PHOTO: TRANSNET NATIONAL PORTS GDP despite having only 6.5% of the population. Sound financial management has seen South Africa’s macro-economic fundamentals become very strong off the shaky base that the apartheid regime created. In particular, prudent controls meant that South Africa was able to withstand the shockwaves sent around the world by the international financial-sector meltdown. South Africa’s mining sector continues to play a pivotal role in the economy and the export of key commodities (platinum group metals, iron ore, coal and manganese) is the spur behind the massive upgrades of the freight railway network and the country’s ports. Huge investments have also been made in the pipeline network. There was industrial unrest in the mining sector in 2012 and 2013, with the worst point coming with the death of dozens of miners at a platinum mine. Production levels in the platinum and gold sectors declined as a result. All of these upheavals led to major interventions in the middle of 2013, with the hope that national government, organised labour and the mining companies would be able to reach some new kind of contract. SPECIAL FEATURE GENERAL GOVERNMENT SERVICES 13.7% PERSONAL SERVICES 5.5% FINANCE, REAL ESTATE & BUSINESS SERVICES 21.2% TRANSPORT, STORAGE & COMMUNICATION 9.1% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 12.5% CONSTRUCTION 3.1% ELECTRICITY, GAS & WATER 1.8% MANUFACTURING 15.1% MINING & QUARRYING 5.1% AGRICULTURE, FORESTRY & FISHING 0.4% Gross domestic product SOURCE: GDP AT CURRENT PRICES, Q1, 2012.RESERVE BANK mohair were the country’s only exports before Cities minerals were discovered. Although mining plays a far smaller role in South Africa is a rapidly urbanising country. the economy than it used to, it still contributes Cities drive economic growth, and the speed significantly to GDP, employment and taxation at which it is happening in South Africa was income. Demand for platinum, iron ore and man- brought home by the results of the national ganese from the new global powerhouses of census in 2011. Two of the country’s most significant metroChina and India is motivating investment in the sector in South Africa. politan economies, Johannesburg and Cape Mining companies account for about a third Town, experienced huge population increases in of the market capitalisation (R1.86-trillion) of the a short space of time. Gauteng Province (where Johannesburg is located) had a million more country’s stock exchange, the JSE. One of South Africa’s fastest-growing manu- people in 2011 than it did in 2001. facturing sectors, catalytic converters, also owes This trend has significant economic and its existence to the minerals that make up the political consequences, not least for the muconverters. nicipalities that are responsible for delivering One of the central planks of the South African the services that make life possible in cities, government’s economic policy is to ensure that and for delivering the infrastructure that makes value is added to the country’s mineral resources. business profitable. South Africa has eight metropolitan municiThe country already has many steel mills and aluminium smelters, but many thousands of tons palities. The latest two to convert to metropolitan of raw materials are exported in their raw state. status are Mangaung (Bloemfontein) and Buffalo South Africa has 50 ferrochrome smelters City in the Eastern Cape. The other metropolitan areas are Johannesburg, Cape Town, eThekand produces 45% of the world’s chrome. The announcement of a plan to build a wini (Durban), Tshwane (Pretoria), Ekurhuleni R2.4-billion manganese plant in the Coega (Germiston, Benoni, Boksburg) and Nelson Industrial Development Zone, one of five such Mandela Bay (Port Elizabeth). zones in South Africa designed to attract investThe South African Cities Network has studied ment, is an indication of this intent. growth rates in South African cities between In pursuit of the goal of beneficiation, South 2005 and 2010. No reasons are given in the Africa is also determined to expand its manu- study for the high rates of growth in the relatively facturing capacity. smaller towns that top the table, but Madibeng 19 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE municipality is in the platinum mining belt. The highest ranking metropolitan municipality is at number nine (Cape Town), but these entities are growing off a far greater base than the other units. Some of the strong growth rates are easy to account for. Lephahale, for example, is the home of a vast building site devoted to creating one of the biggest power stations in the world. Stellenbosch has been attracting high-tech investors for some time, and provincial capitals like Pietermaritzburg and Polokwane attract significant amounts of government investment. In a 2012 study that deliberately excluded metropolitan areas, Finweek published a Top Ten of municipalities ranked for business-friendliness and showing potential for growth. Delivery It is at municipal level (metropolitan, district or local) that citizens get to experience government most directly. Several of South Africa’s smaller municipalities have shown themselves unable to supply many of the basic services that citizens need, but national government and entities such as the Development Bank of Southern Africa (DBSA) have intervention programmes to change this. A number of national grants to municipalities have been put in place, for example, the Interim Water Supply Programme which will support water infrastructure development for 23 district municipalities. The DBSA is sponsoring the Municipal Finance Management Programme and providing highly skilled personnel to assist municipalities to get their books in order. According to Municipal IQ, South Africa’s metropolitan municipalities have done well in coping with the large increases in population. Both Cape Town and Johannesburg provide services to 94% of their residents. Despite a number of protests against perceived lack of service delivery in a number of towns in South Africa, several commentators have pointed out that significant progress has been made overall. JP Landman, of Nedbank SOUTH AFRICAN BUSINESS 2014 Private Wealth, made these points in Business Day in November 2012. Since 1994: • Income per capita (real terms) has doubled • Four million jobs have been added • Access to housing, electricity, water and sanitation has doubled • Enrolment in higher education is up by 400 000. Landman argues that if three million jobs could be added to the economy by 2022; that would be sufficient to ‘advance modernity, broaden the tax base and enhance growth’. In a column in which he is very critical of several aspects of the ability of the ANC government to deliver services – most notably police and education – writer and academic Jonny Steinberg was fulsome in his praise for three programmes where he argues, the South African ‘public sector performs dazzlingly well; better, in fact, than anywhere else on the planet’. Steinberg refers to the administration of antiretroviral treatment to more than two million people, the building and handing over of more than two million houses, and the state grant support 20 RANKING CITY PROVINCE 1 Mossel Bay Western Cape 2 Rustenburg North West 3 Msunduzi KwaZulu-Natal 4 uMhlathuze (Richards Bay) KwaZulu-Natal 5 Emfuleni (Vanderbijlpark) Gauteng 6 George Western Cape 7 Buffalo City Eastern Cape 8 Mbombela (Nelspruit) Mpumalanga 9 Polokwane Limpopo 10 Mangaung (Bloemfontein) Free State Top ten municipalities ranked for businessfriendliness and showing potential for growth. SOURCE: FINWEEK SPECIAL FEATURE INDICATOR 1994 2011 % CHANGE Population 39 million 51 million +30.8% Births to total population 2.9% 2.1% -27.6% system that delivers pensions and other payments to about 18-million people every month. (Business Day, 31 May 2012). Number of child support grant beneficiaries 800 476 10 903 000 +1262% National priorities Households using electricity while cooking 47% 71% +51% Access to flush or chemical lavatories 50% 60% +20% Real GDP per head R28 536 R37 442 +31% Headline inflation (CPI) 9.2% 5% -45.7% Uni v er si t y and 528 135 university of technology enrolment 837 779 +58.6% Proportion of qualified teachers 64% 93.7% +46.4% Revenue to GDP 21.9% 24.7% +12.8% Expenditure to GDP 24.7% 32.5% +31.6% Unemployment number, official 4 244 000 +135% Proportion of black 4% senior managers 26% +550% People on less than $2 a day 2 502 285 -51% Proportion on less 12.1% than $2 a day 5% -58.7% African ownership, JSE retirement funds 15% 28% 86.7% Total domestic vehicle production 255 817 396 292 +54.9% Voter turnout in local elections 6 200 000 13 664 914 +120% 1 988 000 5 111 090 Results of South African Institute of Race Relations Survey South Africa 1994-2011. SOURCE: SOUTH AFRICA SURVEY, SOUTH AFRICAN INSTITUTE OF RACE RELATIONS, VIA CITY PRESS. 21 The South African national government intended spending a total of R1.15-trillion in 2013/14. Fully R682.3-billion of that will go on social services, including health (R133-billion), education (R232-billion) and social protection in the form of grants and pensions (R135-billion). The other great priority is infrastructure development. In his 2013 State of the Nation address, President Zuma expanded on the goals of the programme that has been at the centre of government planning for some time. He said, ‘the massive investment in infrastructure must leave more than just power stations, raillines, dams and roads. It must industrialise the country, generate skills and boost muchneeded job creation.’ Transnet, South Africa’s logistics and transport stateowned-company, has plans to spend R300-billion on transforming the rail networks, pipelines and ports of the country. It expects to create 288 000 jobs in the course of achieving its Market Demand Strategy (MDS). A presidential commission will oversee spending in the region of R3.2-trillion in tackling 43 major projects over a longer time-frame. SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE The infrastructure programme is also storage schemes. South Africa has a sophisbeing pursued through municipalities. They ticated communication network that supports will receive about R37-billion in direct and indi- telephony and Internet connectivity. Several new rect transfers in the 2013/14 financial year for undersea cables such as the West Africa Cable transport and other infrastructure. System (Wacs) have significantly boosted South The country’s power utility, Eskom, has a Africa’s broadband capacity. capacity of 44 193MW, but the country needs more to power a growing economy. Two huge new power stations are being built and collec- Geography tively they will contribute an additional 9 564MW to the national grid. Alternative energy is also South Africa’s location between the Atlantic being explored and independent power pro- and Indian oceans ensures a generally temperducers (IPPs) have started bidding for projects. ate climate. The 2 954km coastline stretches South Africa supplies about 40% of its own from the border with Namibia on the Atlantic fuel needs through a natural-gas plant off the to the border with Mozambique in the east. south coast and a coal-to-fuel plant in the coal- The cold Benguela current sweeps along the rich region of Mpumalanga. western coast while the warm Indian Ocean There is one nuclear power station and a small ensures that the Mozambique/Agulhas current number of hydroelectric and pumped water- is temperate. Investment incentives are available in key sectors. The Industrial Policy Action Plan (IPAP) plans to create 2.5-million direct and indirect jobs over a decade. IPAP is intended to diversify and grow exports, improve the trade balance and build greater industrial capacity. IPAP is driven by the Department of Trade and Industry (dti) which believes that investors in priority sectors should pay no more for financing than they do in countries with which South Africa trades. The sectors to receive targeted support are in three clusters: One (new): metals fabrication, capital and transport equipment, green and energysaving industries and agri-processing. Two (existing): automotives and components, medium and heavy vehicles; plastics, pharmaceuticals and chemicals; clothing, textiles, footwear and leather; bio-fuels; forestry, paper, pulp and furniture; cultural industries and tourism and call centres. Three (long-term): nuclear, advanced materials and aerospace. SOUTH AFRICAN BUSINESS 2014 22 PHOTO: PHILIP MOSTERT INVESTMENT INCENTIVES SPECIAL FEATURE History ZIMBABWE MOZAMBIQUE BOTSWANA One of South Africa’s premier museums and tourist attractions is known as The Cradle Mpumalanga Gauteng of Humankind, pointing to the North West SWAZIfact that what is now South LAND Africa has been home to the KwaZuluFree State human species for thousands Natal LESOTHO of years. Northern Cape Each of the country’s nine provinces presents its official documents in the relevant Eastern EasternCape Cape regional languages so the Western Cape Western Cape, for example, presents material in isiXhosa, Afrikaans and English. The most widely spoken languages South Africa’s coastal plain is separated from are isiZulu (23%) and isiXhosa (16%). Other lanthe interior by several mountain ranges, most no- guages are Afrikaans, Sesotho sa Leboa (also tably the Drakensberg in the east. Smaller ranges known as Northern Sotho which has Sepedi mark the distinction between the fertile coastal as a dialect), English, Setswana, Sesotho, strip and the dry interior known as the Karoo. Xitsonga, siSwati, Tshivenda and isiNdebele The city of Johannesburg is located on the (southafrica.info). Historically, the Nguni-speaking people (Zulu, continental divide and is 1 700 metres above Xhosa, Swazi and Ndebele) settled along South sea level. Most of the country has summer rainfall but Africa’s east coast while Venda and Tsonga the Western Cape, which has a Mediterranean people made their homes south of the Limpopo climate, receives its rain in winter. Droughts are River. The central regions were populated by not uncommon and most of the country receives Sotho and Tswana people. The Cape was colonised by the Dutch, the less than 500mm of rain per year. The Orange and Vaal rivers play important Batavian Republic and the British. Prolonged roles in water schemes and irrigation and the British rule began in 1806. South Africa was Limpopo River defines the country’s northern created in 1910, uniting four territories but boundary. A number of rivers run strongly from ignoring the wishes of the black population. South Africa became a republic in 1960 the Drakensberg to the sea but South Africa has and severed ties with Britain soon afterwards. no navigable rivers. Maize is produced in large quantities in the in- South Africa reentered the Commonwealth terior. The dry interior mostly supports livestock after 1994. In 2011, South Africa became the in the form of sheep and cattle. South Africa is fifth member of BRICS, joining Brazil, Russia, the world leader in mohair production. Wines India and China. and fruit are specialities of the Western Cape while KwaZulu-Natal and the low-lying areas of Mpumalanga are known for sugar cane, tropical and subtropical fruits. Limpopo is a major vegetable producer. Limpopo NAMIBIA 23 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Obama tour brings fresh hope Obama’s recent African tour turned the spotlight on strengthening business ties between Africa and the United States. By Katie Reynolds P resident of the United States Barack is always at the forefront of trends in Africa. I Obama and his family visited South Af- see South Africa as critical to one of my top pririca recently as part of a three-nation orities on this trip – and that is to promote trade tour to Africa that included Senegal and investment that helps unleash economic and Tanzania. While the failing health of former growth here in Africa, and ultimately will benefit president Nelson Mandela cast a shadow over the United States of America.’ the Obamas’ trip, the reasoning behind the tour was decidedly positive, including strengthening democratic ties, reinforcing intercontinental business relations, and promoting trade and During his visit to South Africa, President Obama investment. Over the course of six days in late announced the implementation of several new June and early July 2013, President Obama met projects that will be a combination of public with the presidency of the three countries, key and private endeavours, such as Power Africa, a $7-billion initiative that will double access to business people and aspiring youth leaders. Obama succinctly encapsulated the key pur- power in sub-Saharan Africa. pose of his trip to the country by stating, ‘The President Zuma highlighted the need for the United States views South Africa as a critical extension of the African Growth and Opportunity partner… Africa is on the rise and South Africa Act (AGOA), which allows many products from Key projects announced SOUTH AFRICAN BUSINESS 2014 24 SPECIAL FEATURE President Obama and the First Lady disembark at Cape Town International Airport on 30 June 2013. initiative, a new programme named the Washington Fellowship for Young African Leaders. Africa to enter the US economy duty free, and The programme allows thousands of African which expires in 2015. Zuma stated, ‘Our mu- youths to travel to the US and enroll in studies tual trade has reached the levels preceding the at private tertiary institutions. President Obama global recession largely due to the Act. Arising identified the focal point of the programme as out of this visit, we would like to see increased ‘civic leadership and public administration and investment in the South African economy for business and entrepreneurship, the skills you mutual benefit. We have placed on the table need to serve your communities and start and bankable projects, which range from infrastruc- grow businesses and run effective ministries’. ture development to skills development for the youth, and also across a number of sectors, like information and communication technologies, agriculture and the green economy.’ The As the dust settled after President Obama’s president added that the underpinning of the whirlwind tour, the hope is that the reinforced new these investments should be the drive for business relations between South Africa and regional integration, industrialisation, and locali- the US really do ‘unleash a new era of prossation of supply and manufacture. perity’ so vehemently promised by African and President Obama enthusiastically backed US leaders alike. It was certainly an excellent the proposed extension of AGOA and stated foundation upon which ambitious African youth that open trade ‘can be mutually beneficial’. can draw inspiration. Obama stressed that the intentions of the new programmes are to ensure that Africa become a more active partner in trade, as opREAD MORE posed to a passive recipient of aid. President Obama also announced a signifi- Visit: http://www.frontiermarketnetwork. cant expansion of the Young African Leaders com/article/3871 PHOTOS: KATIE REYNOLDS Going forward 25 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE South African companies in global Top 100 An international consulting group’s top-100 ranking of five South African companies has sharpened the focus on the outstanding achievements of the country’s business sector. T he Boston Consulting Group (BCG) ranked among its top 100 global business challengers in 2013: Aspen, MTN, Naspers, Sasol and Bidvest. BCG is a management-consulting group and an advisor on business strategy. To be considered in the ranking, companies have to have annual revenues of $1-billion and they need to have operations in more than one part of the world. Three of the South African companies received this recognition for the first time: Naspers, Aspen and MTN. Many South African companies have been increasing their investments in foreign assets. The $1.7-billion acquisition of French furniture retailer Conforama in 2011 by Steinhoff International hugely increased the company’s footprint in Europe, adding 241 outlets to the existing 951 stores. The company has 50 factories on four continents. Sappi has manufacturing capacity on three continents and more than 14 000 employees in 20 countries. The company is the world’s largest manufacturer of dissolving wood-pulp. Paperpulp, paper and chemical-cellulose are its other major products. According to a report compiled from Reserve Bank statistics and published by the South African Institute of Race Relations, South African direct SPECIAL FEATURE investment in the rest of Africa, reached a figure of SABMiller is the second-largest brewer of beer R115.7-billion in 2009. With a gross domestic prod- in the world with a presence in Africa, Eastern uct (GDP) of about $1.5-trillion, the continent has Europe, Asia, South America and the United tremendous potential. States through a joint venture with Molson CoRetailers such as Shoprite have been trading ors. SABMiller turned over $17.5-billion in the six north of the Limpopo River since the 1990s and months to September 2012. Like SABMiller, Sasol has operations all over Massmart and Pick n Pay have followed closely behind. Woolworths is targeting 60 stores out- the world. The energy and chemical compaside South Africa. Procter & Gamble is investing ny’s shares are traded on the Johannesburg in production facilities in South Africa and Nigeria and New York bourses, it employs in excess of in order to cope with the rising demand for fast- 30 000 people and has operations in moving consumer goods. 38 countries. Several mining companies have African opOriginally conceived as a state-owned coal erations while one of the continent’s biggest to liquid-fuel enterprise, Sasol was privatised in business success stories was the MTN invest- 1979 and paid R28.2-billion in direct and indiment in Nigeria. What some considered a ‘brave’ rect tax to the South African state in 2012. With investment in 2001 has evolved into a hugely seven chemical companies and four main energy successful operation. divisions (mining, oil, gas, synfuels), Sasol With assets in excess of $160-billion, Stand- generated R169-billion in turnover in 2012. ard Bank Group is the largest company in Africa There are more than 30 South African comand is ranked 177th in the world by Forbes. panies currently operating in China and some of Sanlam has been moving quickly to capitalise them are doing exceptionally well. Media group on its existing businesses in Africa: it currently Naspers bought a stake in Tencent Holdings controls 20% of the insurance market in sub- in 2001 for $32-million, the value of which had Saharan Africa (Merrill Lynch). Old Mutual is grown by 2011, according to the Sunday Times, buying into Nigeria through its purchase of to $14-billion. Oceanic Life. Iron-ore miner Kumba, a big exporter to China, Aspen, one of the BCG top-five, has proved is a recent investor in the expansion of Chinese that South African companies can do well in Aus- port facilities. tralia. SA Aspen expanded into Australia in 2011 Discovery Health has found a Chinese partner, with the purchase of Sigma Pharmaceuticals. Ping An Healthcare, as it attempts to attract the This followed earlier forays into Latin America, growing middle classes to its products. the Asia Pacific region and the United Kingdom. India is another major focus of South African Foreign operations now make up more than 40% business involvement. Altech has sold more than of the company’s operating profit. 900 000 television set-top boxes in India and is Bidvest made its first Australian investment in investigating opening a manufacturing plant in 1995, but began acquiring companies within a the country. First Rand has a licence to operyear of its founding in 1989. Food-service busi- ate in Mumbai. Bidvest and Airports Company nesses in the Czech Republic, Slovakia and South Africa (Acsa) are part of a consortium that Poland were added to the portfolio in 2010 (for was awarded a 30-year contract to upgrade and €250-million), and a South American investment manage the international airport at Mumbai. was made in 2012: Deli Meals in Chile. Adcorp recently acquired Australian company READ MORE Paxus (a recruitment company with IT capabilities) for R545-million. This follows the signing of a deal with Dutch company Randstand to handle Visit: www.frontiermarketnetwork.com/ article/3760 its recruitment activities in Africa. 27 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Corridors of trade in Africa South Africa is leading the infrastructure push in Africa, as it seeks to maintain its gateway status. I ntra-regional trade in Africa is not growing fast It comprises the Dar es Salaam corridor linking enough to cushion against the economic slow- the Port of Dar es Salaam in Tanzania with the down that is affecting important international Copperbelt in Zambia and Democratic Republic trade partners; of the estimated US$1-billion of Congo; and another link via the Copperbelt to in trade earnings generated by the three largest the Port of Durban in South Africa. regional economic communities (RECs) – the When completed, the project is envisaged Economic Community of West African States to improve 8 650km of roads (outside SA) and (ECOWAS), South African Development Com- 600km of rail tracks. There are 157 identified munity (SADC) and Common Market for Eastern projects in various stages of the project life cyand Southern Africa (COMESA), only 7.6% is cle, including 59 road projects, 38 rail projects and six bridge projects. President Zuma, while intra-African. The causes of low trade figures are well updating the African Union on the progress of documented. They include poor regional trans- corridors last year, said that the Trans-African port infrastructure and inefficient cross-border Highway Route 4 would be incorporated to exprocedures, which drive up the cost of trans- tend the NSC from Cape Town to Cairo. This portation. To address these challenges, RECs development increased the number of projects are taking collaborative approaches through to 204: 81 road, 48 rail and six bridges. various initiatives, which include building The NSC is particularly important to South transport infrastructure. Africa, as the country tries to maintain its posiSouth Africa’s President Jacob Zuma champi- tion as the ‘gateway’ to Africa. Consequently, ons one such initiative – the North South Corridor the government is pushing for deeper regional (NSC) Aid for Trade Programme, a brainchild of integration in order to access resources, and the COMESA, SADC and East African Community. investment and trade opportunities in the rest of The NSC comprises interrelated projects that the continent. A well-developed transport netaddress road, rail, port, air transport infrastruc- work (road and rail) and elimination of barriers to ture, border posts and energy interconnectors. trade would help shore up South Africa’s exports SOUTH AFRICAN BUSINESS 2014 28 SPECIAL FEATURE to the rest of Africa, which currently account for We should send our public sector, for instance about 18% of the country’s total exports, and Transnet, and private sector into these countries nearly one-quarter of manufactured exports. to assist with the development of infrastructure as This would also give international investors who opposed to the Chinese. This can be done and use the country as a springboard an established an example hereof is Airports Company South network to reach customers. Africa (ACSA) operating Guarulhos International ‘There are questions about whether South Airport in Brazil,’ says Rian. Africa can sustain its position as the “gateway” to One of the key areas that require urgent atthe rest of Africa, yet its best card in the BRICS tention is aligning customs procedures to allow alliance is this fact. The North South Corridor the movement of people, goods and services could be exactly the competitive advantage across borders. Trade research conducted by that South Africa needs to maintain the gateway the World Bank in 2012 said African countries title,’ says the director of Trade Law Chambers are missing out on billions of dollars in potenRian Geldenhuys. tial trade earnings every year because of high The World Bank’s Africa Infrastructure trade barriers with neighbouring countries. Said Country Diagnostic for the COMESA region the bank: ‘… for all the countries South African estimates that achieving regional integration retailer Shoprite operates in, for example, apfor eastern and southern Africa would require proximately 100 (single entry) import permits are sustained spending of US$5.5-billion a year on applied for every week; this can rise up to 300 infrastructure. To meet this requirement, funding per week in peak periods. As a result of these will have to be sourced not only from govern- and other documentary requirements, there can ments and the donor community but also from be up to 1 600 documents accompanying each the private sector. Private capital for transport truck Shoprite sends with a load that crosses a infrastructure has not been easy to attract due SADC border...’ to unfavourable regulatory environments and low The NSC corridor is the busiest corridor in returns on infrastructure investments. sub-Saharan Africa in terms of value and volume Some NSC countries such as Zimbabwe of freight. Logically, one would expect that cusand Zambia have made notable progress in toms integration should have happened already. establishing a regulatory framework for public- Unfortunately, this is not the case despite the private partnerships. Research analyst at Frost establishment of a SADC free-trade area, which & Sullivan James Milne says the infrastructure allows many goods duty-free status. ‘Ideally, one document should allow a truck to projects would benefit South Africa’s construction industry, which is currently experiencing a travel across several borders. The cherry on the lull at home. icing will be the establishment of a massive single ‘It appears that as the construction market market (almost 550-million people), which would continues to stagnate, more South African com- be very attractive to the local and international panies will attempt to enhance their exposure community of investors considering opportuniin the tripartite area in order to leverage the ties in sub-Saharan Africa,’ says Rian. opportunities in the NSC,’ says James. An example of how reforms at customs can A key pillar of South Africa’s beneficiation strat- reduce delays at borders such as Beit Bridge is egy is a proper local and transregional transport the Chirundu One-Stop Border Post in Zambia. network. The beneficiation entails sourcing raw Launched under the NSC project in 2009, the materials within SADC and transporting them to Chirundu border post has resulted in a oneSouth Africa for beneficiation and consequent third reduction in transit times; delays for freight re-export to SADC and other countries. ‘This transport have been reduced from three days to is a major reason to prioritise and fast-track same-day clearance, and 83% (from three hours the development of rail and road infrastructure. to 30 minutes) for passenger transport. 29 SOUTH AFRICAN BUSINESS 2014 RITANIA MALI NIGER CHAD NIGERIA ETHIOPIA SO M AL CENTRAL AFRICAN REPUBLIC IA SOUTH SUDAN SPECIAL FEATURE CAMEROON EC ON GO to return to competitive levels of reliability. Traffic and income NAIROBI DEMOCRATIC levels would have to increase REPUBLIC OF THE BURUNDI by three to four times if financial CONGO DAR ES SALAAM viability and sustainability are to be achieved. TANZANIA There is a renewed interANGOLA LUANDA est to develop rail by governMALAWI BLANTYRE ZAMBIA ment and other stakeholders. UE BIQ LUSAKA HARARE Investigations are being made AM Z O ZIMBABWE M NAMIBIA to determine how to best revive BULAWAYO the railway systems so that they BOTSWANA WALVIS BAY can be part of a more efficient North-South Maputo MAPUTO PRETORIA multi-modal transport system SWAZILAND Trans-Kalahari JOHANNESBURG Beira N that can take the pressure off Ncala Lobito-Benguela SOUTH LESOTHO DURBAN Northern roads. Dar es Salaam AFRICA Central South Africa’s Transnet EAST LONDON Trans-Cunene CAPE TOWN PORT ELIZABETH Trans-Caprivi Freight Rail (TFR) announced recently that it had started Corridors of trade in Africa. negotiations with railway organisations to create a uniRail network fied railway system on the NSC. The talks with National Railways of Zimbabwe, Zambian Given the relative importance of road transport Railways, Societe Nationale des Chemins de on the NSC, railway systems have somehow Fer du Congo and Beitbridge Bulawayo Railway been relegated to the periphery. Railways are line would establish a joint operating centre that unreliable, with high accident and failure rates would allow for improved rail-time communicadue to poor management and lack of investment. tion and effective and quick deviation manageTo deal with the problem, governments across ment across borders. Then transport minister eastern and southern Africa privatised the sec- Ben Martins said the four organisations would tor through long-term concessioning. However, develop a joint marketing drive, which is intended to encourage exports from South Africa, and experts say the processes are deeply flawed. ‘The privatisation process took too long at identify the return cargo that will optimise the use a time when there was no funding. The agree- of the same wagons for imports into the country. ments were weak and deals were signed with ‘Rail will always be in the centre for trade in unqualified companies,’ says Toyin Dawodu, the SADC regional development corridors. It managing partner at Capital Investment Group, can only increase opportunities that will be spinadding that the sector has not been regulated offs from the unified railway system. Examples and boosted with public investment and subsi- of these are connecting hubs and road transdies to make it competitive like the road sector. port that complete the logistics solution,’ said Only 5% of regional traffic volumes (excluding Martins. South Africa) travel by rail. According to a report by TradeMark SA, rail operating costs are high READ MORE and do not justify the low volumes of goods that are transported. The report also said railways are losing customers and are increasingly un- Visit: www.frontiermarketnetwork.com/ able to attract the necessary funding required article/1594 GABON UGANDA RWANDA MOGADISHU KENYA KAMPALA OF TH Mombasa Ndola MA DA GA SCA R CÔTE D'IVOIRE DJIBOUTI REP . EA RIA ERITREA SUDAN BURKINA FASO Beira SOUTH AFRICAN BUSINESS 2014 30 SPECIAL FEATURE Super projects ‘We are poised to meet our target of turning South Africa into a huge construction site’– South African President Jacob Zuma, Budget Vote of the Presidency in 2012. N ational government has announced 17 noted the Reserve Bank’s statement that gross strategic infrastructure projects, each fixed-capital formation expanded 7% in South with several subsidiary plans, totalling Africa in the fourth quarter of 2012. more than 645 in all. An amount of Several private companies are also engaged R3.2-trillion has been put forward as the notional in super projects. value of future infrastructure expenditure: for the moment, R845-billion has been approved. For every rand spent on infrastructure, R1.40 Chemicals of benefit accrues, but worries about infrastructure keep the chief executive officers of South Sappi is the world’s foremost manufacturer of African companies awake at night (Deloitte chemical cellulose. Its Saiccor plant in Umkomaas Insomnia Index). in KwaZulu-Natal is close to full capacity of Concern has been expressed in more than 800 000 tons per annum. As part of the company’s one quarter that South Africa will not be able to Project GoCell, the Ngodwane Mill in Mpumalanga spend all this money. Professor Gavin Keeton of is being converted to produce cellulose. The the Rhodes University Economics Department $330-million project will see at least 2 000 people wrote in Business Day (11 June 2012) that ‘the employed during the construction phase. Sasol’s wax-plant expansion in Sasolburg in scale of what is envisioned is simply too large for the Free State cost R8.4-billion and forms part the state-owned enterprises’. A report commissioned by the Department of of the global company’s multi-billion-rand exPerformance Monitoring and Evaluation in the pansion project. Sasol Polymers’ investment of South African Presidency, ‘The State of South R1.9-billion in a new plant is a further indication Africa’s Infrastructure Report 2012’ supports of this trend. Omnia’s R1.4-billion nitric acid plant in Keeton’s view that the scale is too ambitious. However, there is no doubt that increased spend- Sasolburg came on line in 2012, immediately ining is already underway. In reporting on the state creasing the group’s capacity in this commodity of infrastructure report, the Mail & Guardian also by 40%. SOUTH AFRICAN BUSINESS 2014 32 SPECIAL FEATURE Power deliver water to the huge power station going up in Lephalale. A total of seven new dams are to be built across the country. State company Eskom is building two huge power stations at Medupi (Limpopo) and Kusile (Mpumalanga). Transport These two coal-fired stations are the state’s first Every unit of Transnet, the state’s rail, ports and response to the fact that pipelines company, is set to super-charge its South Africa is running low activities. National Public Enterprises Minister on electricity supply. Malusi Gigaba told a South Africa-US business Medupi will cost about summit in 2012 that by 2020, South Africa will R120-billion and add have 1 317 new rail locomotives and 25 000 4 764MW to the national new wagons, and will have increased rail-freight grid. Kusile is running be- capacity by 149.7-million tons hind schedule but will supTransnet will spend R300-billion over seven ply 4 800MW, about 11% of years. In 2012 the company raised R14.6-billion South Africa’s total demand. in capital markets: R8.2-billion of this came by Another plank in the gov- way of a 10-year bond in the USA. A three-year ernment’s response is the Renewable Energy R1-billion bond issue in mid-2013 was oversubIndependent Power Producer Programme scribed. Transnet’s Market Demand Strategy (REIPPP). Engineering News estimates that will spend to support services demanded by total investment in this sector could realise the market. Examples include: about R200-billion between 2012 and 2016. • R18-billion to deal with more manganese Investment funds, banks and agencies such • R37-billion on the coal line as the Development Bank of Southern African • R13-billion on the iron-ore line (R9.6-billion) and the Industrial Development Corporation (R5.2-billion) have committed large sums of money in the first two bidding windows. Square Kilometre Array Telescope Nedbank Capital was involved in 40% of the The biggest and most important astronomy prosuccessful bids. ject in history is coming to South Africa. The construction of the Square Kilometre Array (SKA) Water telescope will not only bring enormous benefits to the scientific community, but considerable South Africa is a water-scarce country. Historical amounts of work for manufacturers as well. schemes such as the Orange River Project and Although parts of the project are to be shared the Lesotho Highlands Water Project were with Australia, the bulk of the infrastructure needed for the R15-billion project will be spent in transformative. The Olifants River Water Resources South Africa. Development Project (ORWRDP) includes the construction of the 88-metre-high wall of the De Hoop Dam into which more than one-million READ MORE cubic metres of concrete will be poured. The whole project is expected to cost R20-billion. In Limpopo’s western regions, the Mokolo Visit: www.frontiermarketnetwork.com/ and Crocodile Water Augmentation Project will article/3821 33 SOUTH AFRICAN BUSINESS 2014 Funding Africa’s infrastructure drive Major announcements regarding the funding of African infrastructure came thick and fast in the first months of 2013. T he drive to improve infrastructure is driv- nounced the establishment of a BRICS bank. Final ing investment in Africa. The African De- details were not announced at the conference, velopment Bank announced in March but indications are that the funding of African in2013 that its plans to launch a $22-billion frastructure will be a big priority for the BRICS infrastructure finance bond were well advanced. bank. Part of its brief will be to help countries South Africa’s transport and logistics state com- when exchange-rate volatility puts pressure on pany Transnet entered discussions about a loan currencies. agreement worth R45-billion with the China DevelThe International Finance Corporation (IFC) has opment Bank to help it roll out its long-term plans. put the annual figure for Africa’s infrastructure At about the same time, a Chinese undertaking needs at $93-billion. About 40% of that would be to support the rehabilitation of the Tanzania-Zam- needed for maintenance. bia railway line was given. Africa’s biggest bank, The main infrastructure sectors are power genStandard Bank, gave notice that its partner, the eration, water and logistics, but more than half Industrial and Commercial Bank of China (ICBC), of the IFC’s mining investments are into Africa. It is by no means only government and quasiwould be committing R20-billion of the dividends that it had earned from the South African bank to government institutions that are leading the lending trend. Whereas Africa attracted less than funding renewable-energy projects. Funding for African infrastructure is on a new $100-million in private equity in 2001, that figure had grown to a peak in 2008 of $2.2-billion. growth path. Another announcement regarding developing The figures for 2011 and 2012 were $1.3-billion nations and finance came at the heads-of-state and $1.4-billion, according to a survey by the BRICS summit in Durban, where the leaders of Emerging Markets Private Equity Association Brazil, Russia, India, China and South Africa an- (IMM Institute). SOUTH AFRICAN BUSINESS 2014 34 SPECIAL FEATURE Some significant investments tries’ development agencies participate in the noted by Private Equity Round- $190-million fund, which supports the Alliance up-Africa, a report compiled by for a Green Revolution in Africa. Ernst & Young, include: The Emerging Africa Infrastructure Fund • $750-million into Union (EAIF) is an initiative of a group of European Bank of Nigeria, consortium nations that collectively call themselves the Private Infrastructure Development Group (PIDG). led by Capital Alliance • $210-million into Export Founding members are the UK (Department Trading Group of Tanzania, for International Development), Netherlands, by the Carlyle Group, Switzerland and Sweden. Long-term foreign Standard C h a r t e r e d currency financing is available for sub-Saharan Private Equity and Pembani Africa infrastructure projects. Remgro A new fund appeared on the market in 2012: • $250-million into Saham $800-million has been raised by South African Finances of Morocco, by company Ethos Private Equity. Abraaj Capital Several South African banks have been heavily involved in funding the roll-out of renewable-energy projects. Standard Bank Infrastructure funding committed to R9.4-billion and R6.1-billion in the first two windows of the bidding process, A wide variety of banks and funds are making while Nedbank Capital was involved in 40% of loans available for infrastructure across the con- all projects. tinent. The $320-million African Infrastructure InAn alternative funding vehicle has emerged vestment Fund is a joint venture between the Old in Kenya, where small investment groups of Mutual Investment Group (Omigsa) and Macquire individuals are increasingly being seen as Capital with investments from the IFC, the Neth- possible sources of project funding. Known as ‘chamas’, the estimated 300 000 erlands Development Finance Company and the groups have a combined asset base of at least Development Bank of Southern Africa (DBSA). The DBSA itself is planning to increase its R33-million. The Kenya Association of Investinvestments in energy, transport and bulk water ment Groups says that chamas are showing a in the Southern African region and beyond to willingness to invest together with other groups (Frontier Market Network). about R20-billion. Could this East African trend spread to other The Industrial Development Corporation (IDC) of South Africa approved about R20-billion in parts of Africa? In South Africa these groups are funding to projects in other parts of Africa in known as ‘stokvels’ and are primarily used as the 10 years to 2010. In 2012, 41 projects in 17 a form of insurance for bad times or for funeral countries were operating with the support of expenses. If these small groups became investors, it would give new depth and meaning to R6.2-billion in IDC funds. Africa’s biggest domestic lender is the Afri- the idea of a ‘stakeholder’. can Development Bank (AfDB). Its loan book of $8.5-billion puts it second behind the World Bank as an enabler of African projects. About 60% of funding is devoted to infrastructure and it is looking for new sources for funds. READ MORE The Africa Enterprise Challenge Fund was created in 2006 by two foundations: Rockefel- Visit: www.frontiermarketnetwork.com/ ler and Bill & Melinda Gates. Several coun- article/3783 35 SOUTH AFRICAN BUSINESS 2014 FOCUS Reaching new heights Transnet is achieving its goals through new and flagship projects. Shipping of locomotives and coaches from the Port of Durban. Connecting Africa Transnet is collaborating with Swazirail to build a rail line that will connect the two countries. The Swaziland Rail Link Project is a collaborative effort between Transnet and Swaziland railway to construct a railway line of about 142 kilometres, running from Lothair in Mpumalanga through Swaziland to Richards Bay in KwaZulu-Natal. Transnet is currently undertaking pre-feasibility work on the project, including stakeholder engagement. SOUTH AFRICAN BUSINESS 2014 36 Transnet plans to give back to the broader community over the next year through its corporate social investment (CSI) initiatives. Transnet continues to prioritise CSI as part of its commitment to socioeconomic development. In the financial year to 30 March 2013, Transnet spent R132-million on CSI through the Transnet Foundation, demonstrating the companyâ€™s commitment to the wellbeing of the communities where it operates. The focus was on healthcare, education, sports development, container assistance and employee volunteer programmes. The companyâ€™s flagship CSI project, the Phelophepa Healthcare Train, provides dentistry, optometry, pharmacy services and various counselling to rural communities throughout the year. Owing to its success a second train, Phelophepa II, was launched last year, effectively doubling the scale and reach of the award-winning service to approximately 360 000 beneficiaries per annum. The Rural and Farm Schools Sport Programme provides training and infrastructure to help impoverished rural youth reach PHOTO: TRANSNET CORPORATE Corporate social investment FOCUS their sporting potential, targetwhich now stand at 54 726. Encouragingly, Transnet’s various ing 13- to 17-year-old learners training programmes included in the Free State, KwaZuluNatal, Limpopo, North West, 2 042 apprentices and 433 engiNorthern Cape and Eastern neering bursars in its talent pool. Cape. Since its inception in The capital investment programme 2001, more than 100 000 learn- has been further revised to R307.5-billion ers have benefited and about over the next seven years. Brian Molefe, 3 000 teachers have been Transnet Group trained and accredited as Chief Executive coaches, umpires and referees. During the year, 5 000 learners The benefits of moving freight from participated and 600 teachers road to rail are both environmental and socioeconomic. They include: were trained. • Lowering the cost of doing business by reducing logistics costs. Rail is 75% cheaper than road. • Supporting important social and environmental objectives such as reducing the carbon emissions and saving the roads. Rail transport is globally known to be three to four times more Transnet adopted the Market energy efficient than road transport. It offers cleaner, safer, Demand Strategy (MDS) in cheaper and reliable freight mobility through improved road 2012, committing the comsafety, reduced road congestion and pollution. pany to invest R300.1-billion in infrastructure to support a ramp up in freight volumes, operational efficiencies, jobs and skills while championing Transnet’s Market Demand Strategy (MDS) will expand and modtransformation and delivering ernise the country’s ports, rail and pipelines infrastructure over a period of seven years to promote economic growth in South sustainable economic, social Africa. The main pillar of the MDS is the R307.5-billion investment and environmental outcomes. programme. The MDS will make Transnet one of the biggest rail The first year of MDS exfreight companies in the world. Rail volumes will increase from ecution has resulted in strong around 200-million tons to 350-million tons. About 288 000 jobs financial results with the followwill be created within the South African economy, and R7.7-billion ing achievements: will be spent on training, skills development, bursaries and grants • A 9.4% increase in revenue by 2018/19.Transnet plays a pivotal role in supporting governto R50.2-billion ment’s drive for infrastructure-led economic growth. The MDS • A record R27.5-billion in will enable the company to transport goods in a reliable, efficient capital investment and cost-effective manner. • Growth in rail volumes to 207.7-million tons • Created and sustained 28 493 jobs – this includes 3 804 or a 7.5% READ MORE increase in its permanent employee numbers Visit: www.transnet.net Moving freight from road to rail Transnet’s Market Demand Strategy WHAT IS THE MARKET DEMAND STRATEGY? 37 SOUTH AFRICAN BUSINESS 2014 INTERVIEW On track for expansion Transnet Engineering’s chief executive Richard Vallihu elaborates on the company’s growth plans for the coming years. Not everyone is aware of the full scope of your activities. Could you briefly introduce the nine business units within TE? Richard Vallihu BIOGRAPHY During Richard’s 17 years with Transnet, he has held various positions in Information Communication Technology, Business Development, as well as General Manager Strategy and Marketing, before taking up his position as the Chief Executive of Transnet Engineering. He is also an Executive Committee member of Transnet. Richard graduated with a BSc Honours Degree from the University of Loughborough in the UK and a Masters in Business Administration (MBA) from the University of Southern Queensland (USQ), Australia. SOUTH AFRICAN BUSINESS 2014 Transnet Engineering has four customer-facing businesses, with five internal support operational businesses: • Locomotive business: does heavy refurbishment, general overhauls, upgrades, manufacturing, maintenance and assembly of various types of locomotives • Wagon business: provides heavy maintenance, general overhauls, modifications, upgrades, maintenance and new builds. TE is an original equipment manufacturer (OEM) of wagons • Coach business: performs heavy maintenance of coaches, general overhauls, modifications and upgrades • Port and terminal business: TE has been maintaining and manufacturing straddle carriers for Transnet Port Terminal (TPT). The ports business is now positioned to maintain all ports and terminal equipment and machinery. The long-term view is to get this business involved in assembly of all new port equipment. While the focus is on South African ports, there are great opportunities in ports beyond our borders. The internal support operational businesses are: • Rotating machines: refurbishes and maintains all the rotating components that you will find in rolling stock, such as traction motors. • Rolling stock equipment: manufactures and maintains all the different components required in the refurbishment activities of TE • Wheel business: the assembly of new wheels as well as the refurbishment and maintenance of the existing fleet of wheels • Foundry: TE has two foundries in Pretoria and Bloemfontein. They manufacture castings to support the refurbishment programme of TE • Auxiliary business: manufacturing and maintenance of tarpaulins, and the maintenance of containers What is the extent of TE’s business in the rest of Africa? The strategy is to continue to grow this market and expand TRE’s footprint in the continent, since we have responded to various 38 INTERVIEW tenders in the SADC region and West Africa. TE has recently been involved in the manufacturing of 200 wagons for Rio Tinto to transport coal in Mozambique. We are currently commencing the production of 160 salt wagons for Botswana. We have conducted work in Namibia, Botswana and Angola over the years, and in many other countries in Africa. TE has stated that it wishes to extend its partnerships with Original Equipment Manufacturers (OEMs). How do you plan to do that? • and technology, from which newly qualified graduates are recruited into the Graduate or Engineers in Training Programme. In cases where there is no ready candidate that can be placed into a specialised engineering role, we recruit externally experienced engineers using structured competency assessments or evaluation techniques. What is the motivation behind the name change of the organisation? The motivation to change the name Transnet Rail Engineering (TRE), by dropping the word ‘rail’ and renaming the division ‘Transnet Engineering’, is as follows: TRE provides maintenance, repair, upgrade, manufacturing and support services to Transnet Freight Rail (TFR) and Passenger Rail Agency of South Africa (PRASA) in South Africa and to other rail and terminal operators both regionally and internationally. The mandate of TE has now been expanded to include, among other things, the capability to How does Transnet ensure that it is able maintain and build ports infrastructure, equipto recruit appropriately trained and skilled ment and technology. Therefore the name TRE people for all of its engineering projects? limited the scope and intended focus of the new • TE has over the years invested in the devel- mandate. opment of key critical skills for the growth and sustainability of the business. The As the leader of TE, what will your key strategy that the business adopted, among focus be over the next two-to-three years? TE has aspirations to be an original rolling stock manufacturer. The strategy is to leverage on the current massive investments in freight and passenger rolling stock. We believe that these investment programmes provide a launching pad to accelerate the development of our capability and bring us closer to our ultimate goal to be an OEM. In some instances, it might mean specific OEM partnerships to advance our OEM objectives. • others, was to create a technical feeder channel by offering full-time bursaries to students studying in the field of engineering. When these graduates qualify, TE provides them with work experience through a structured programme to fast-track their inclusion into a talent pool and ultimately to key positions within the organisation. Currently, we are training and developing 2 500 students in our 18 training centres around the country. TE also has a strategy of growing a collaborative network with institutions of further and higher learning in the fields of science 39 • • • • • • Fulfilling the mandate of the Transnet Corporate Plan in collaboration with government’s National Growth Path Improvement on efficiency and productivity Focusing on the Africa strategy through partnerships, which will broaden TE’s value proposition and market Providing capability and capacity to execute on the Market Demand Strategy (MDS) as well as PRASA programmes Ensuring continuous investment in skills training, technology and infrastructure Ensuring a safe and harmonious working environment SOUTH AFRICAN BUSINESS 2014 INTERVIEW New developments at major ports Karl Socikwa, CEO of Transnet Port Terminals, gives insight into the company’s role in promoting the country as a trade hub. Karl Socikwa BIOGRAPHY Karl Socikwa, a graduate of Rhodes University in South Africa, has been at the helm of Transnet Port Terminals since November 2009. Previously, Karl practiced as an attorney with Deneys Reitz Attorneys. In 1995 he joined Transtel, and in 1999 was appointed joint-deputy Chief Executive Officer, and as Chief Executive Officer in 2001. After successfully leading a restructuring programme for Transnet, Karl was appointed as Transnet Group Executive – Commercial. Karl is also a Governor on the Board of Governors of his alma mater, Rhodes University. SOUTH AFRICAN BUSINESS 2014 How has the recent R30-billion investment in port capacity had an impact on the infrastructure development along South Africa’s coastline? We are only in the second year of a seven-year roll-out plan, so the full impact and benefit of the infrastructure development will only be felt in the future. The R30-billion will be spent across our various terminals, namely: • Richards Bay: R10-billion • Durban: R11.7-billion • Ngqura Container Terminal: R948-million • Port Elizabeth/East London: R694-million • Cape Town Container Terminal: R1.2-billion • Saldanha: R4.9-billion The infrastructure spend is split into: • Infrastructure: 51% (totalling R15-billion) • Equipment: 49% (totalling R14.5-billion) What sort of strategies are in place to promote South Africa as a hub for trade? South Africa plays a strategic role in world trade due to its location on the international shipping routes, as is evident in the country’s recent inclusion in the BRICS partnership. The international trends for shipping lines are to invest in bigger and bigger ships and to consolidate freight across liners in order to benefit from economies of scale. New VLCS (very large container ships) originating from China and South Korea capable of carrying 12 500 containers are looking for transhipment hubs where cargo can be dropped, so that smaller vessels (2 500 to 4 500 TEU) can collect, load and distribute it to Brazil and other ports on the East and West Africa littorals. Because of its strategic location and natural depth,Ngqura was developed as such a hub for distribution up the coast of Africa, as well as to the Americas and Europe. Ngqura is used primarily as a transhipment hub for the South – South (China, India and Brasil) and the Far East – West Coast of Africa trade routes. Durban Container Terminal is used as a gateway to Gauteng, but also serves as a 40 INTERVIEW secondary hub for the East Coast of Africa. The transhipment strategy is paying off as evidenced by the fact that year-on-year Ngqura has twice made Drewry’s list as the fastest-growing port in the world. • How has TPT’s footprint evolved? • Transnet Port Terminals’ focus has mostly been on South Africa. However the board of Transnet has recently indicated that the time is ripe for Transnet to start playing a bigger role in SADC and other countries in Africa. Our sister companies Transnet Freight Rail and Transnet Engineering are ahead of us and are active in 17 countries in Africa. TPT and TFR are working on a joint strategy for regional integration. A great amount of effort has gone into analysing and understanding traffic flows and existing port infrastructure in the ports in Africa. TPT can offer training and advisory services as well as IT systems, and possibly even get involved in terminal operations at hub ports. • • Tell us about the training programmes and facilities you have? • With a vision to becoming Africa’s world champion in transport and logistics solutions, TPT embraces the importance of having the right skills and capabilities. We have a workforce of just over 7 000 permanent employees, adhere to the Skills Development Act and have budgeted to invest over R90-million into training and development. We train on various initiatives as indicated below: • Women in operations: This programme aims to create a pool of women for leadership positions within TPT. It is a formal two-year programme, including theory, operational experience and international exposure. • Learnerships and apprenticeships: TPT invests over R8-million annually on scarce and critical skills to ensure we create skills ahead of demand. We currently have 150 apprentices in the system. We have 60 Technical Diploma interns (P1 and P2) and 12 engineers in training. This programme is supported by Graduate in Training Programmes (GIT) in departments like Finance, IT and Safety, Health, and Quality Fields. 41 People with disabilities: Employment Equity remains a priority at TPT. Employing and training people with disabilities is important. The organisation has a number of learners with disabilities on various programmes like Learnerships and Graduate in Training. Techno-Girl Programme: TPT is committed to the long-term goal of transforming. The Techno-Girl programme aims to expose girls from previously disadvantaged backgrounds to the world of work and future career choices. Training for Lifting Machine Operators: Training is delivered by the Transnet Maritime School of Excellence. The school was established to deliver unique equipment training and ensure licensing requirements are met. Training initiatives: Transnet has created an OBML (outcomes based modular learning) methodology that seeks to upgrade the skills of current artisans and other technical specialists. This is offered through external service providers as well as Transnet Engineering. Maritime School of Excellence: This school was established to meet the skills-development mandate of our business. It will position us to provide skills for the nation as well as provide for the skills development needs of Africa. Is TPT involved in any CSI (corporate social investment) projects? Developing the communities in which we operate is a strategic priority throughout Transnet. Development initiatives focus on maritime education, wellness and rural schools regeneration with a view to: • Developing critical skills in the long term • Exposing communities and learners to the port environment and opportunities • Promoting physical, emotional and spiritual health • Providing sustainable assistance in the form of food gardens www.transnetportterminals.net SOUTH AFRICAN BUSINESS 2014 INTERVIEW Restructuring offers streamlining and efficiencies Siddiq Adam, CEO of KZN Growth Fund, offers insight into the fund’s restructuring and plans for the fund’s expansion going forward. Siddiq Adam BIOGRAPHY Siddiq Adam graduated from the University of Natal (now UKZN) cum laude with a Master of Science in Applied Economics in 1998. The years that lead to Siddiq’s appointment as CEO of the KZN Growth Fund in March 2012 were split between the KZN Treasury, the Provincial Department of Human Settlements, Department of Agriculture and Environmental Affairs, and Department of Economic Development and Tourism. At the KZN Growth Fund, Siddiq’s primary roles are strategic leadership, overall responsibility for investments, operations and finances, stakeholder relationship management and liaison between lenders and government. SOUTH AFRICAN BUSINESS 2014 Can you give an overview of the KZN Growth Fund and its impact on growth and development in the KZN province? In terms of the impact on growth and development, the size of the fund is not significant enough to have a direct impact on growth and development, because we have R1.1-billion. How much of a sizeable impact can this amount have? Anyone can tell you that with that sort of money, a direct, sizeable impact will not be possible. We are using the fund as a catalytic fund, where through a particular investment (we do project finance and debt finance) we can spark large growth in an industry, both upstream and downstream. An example is a tissue paper and pulp project that we will be funding – the project has been set up with vertical integration from the wood right through to the paper. When we finance projects, they have to have a multiplier effect, like this one. They must create jobs, impact industry and grow the economy. Please tell us about the restructuring. The biggest success of the restructuring will be on the governance and legal side (the operational side). We had a multiple reporting structure whereby you had a Board of Trustees that has outsourced the fund-management function to a company called KZN Growth Fund Managers SOC Ltd (KGFM). KGFM is a wholly owned subsidiary of Ithala Finance Corporation Limited. So you had a situation whereby the legal, governance and reporting framework was excessive; where management had to report to the Board of Trustees, Board of Directors of KGFM and all its subcommittees. This multiple governance structure is time consuming and also costs money. So the biggest challenge with regard to the restructuring was to obtain agreement from all the stakeholders from the MEC of the Department of Economic Development and Tourism, right through to the employees. It has taken longer than we would have liked but we are hoping that by 1 July 2013, we 42 INTERVIEW will be functional in the new structure. This more unitary structure system will bring efficiency in terms of processes, procedures and especially in terms of pricing of projects. This will in turn make us far more competitive. a fund that is for the SADC region (Fund 2 or 3). Naturally, competition is a challenge. We are competing against other DFIs and other financial institutions and while pricing isn’t the only issue, it certainly helps make one more competitive. This will largely be addressed with the fund’s restructuring. One of our other major challenges has been our visibility in the market. We haven’t been aggressive enough in our marketing of the brand. Again, with the restructure and relaunch of the fund, we will aim to address this going forward. We may need to address our offering/products and services, or at least (from a government perspective) look to launch an organisation that can assist in turning good concepts into realities. We get a lot of approaches from people with great ideas. There needs to be an assessment and available funding to take concepts to feasibility stage. We’ve had to turn many good ideas away due to this fact, as it is not currently our core business mandate to assist projects in this manner. THE VISION IS TO ESTABLISH A PERPETUAL FUND, ONE THAT DOESN’T CLOSE; ONE THAT OFFERS A NUMBER OF INSTRUMENTS – EQUITY, SENIOR DEBT, MEZZANINE DEBT – IN THE SADC REGION. One of the reasons it has taken so long is that we have over 22 agreements that govern that structure and financial and legal matters, so it takes time to amend all these agreements. The first priority is to get agreement on the restructuring and the form that it is taking, as the fund manager will fall away, and the operations or the staff of the fund manager will move. They will report directly to the Trust and you will have a unitary reporting line and unitary structure as opposed to a multi-structure governance framework. The biggest impact of moving from a multiple structure to a unitary structure system is that it brings efficiency, especially from a cost perspective. Can you tell us about some of your major challenges? To be honest, our biggest challenge is market conditions. Fund 1 is a closed fund, and given the fact that some of the monies are from the KwaZulu-Natal Provincial Government, Fund 1 is reserved for funding projects within the geographical boundaries of the KwaZulu-Natal Province. Eventually, however, the minister wants to make 43 What is the long-term vision of the organisation? Our long-term vision is aligned with that of the MEC for Economic Development and Tourism in KwaZulu-Natal, Michael Mabuyakhulu. The vision is to establish a perpetual fund, one that doesn’t close; one that offers a number of instruments – equity, senior debt, mezzanine debt – in the SADC region. Through the performance of Fund 1, we can attract investors into the new fund. The idea is to attract funders on a global level rather than limiting it to South African investors. SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Renewable energy An independent producers’ programme is attracting international interest. F or South Africans of a certain age, De Aar is a town that lingers in the memory. When most travelling was done by train, many hours of waiting took place in this centrally located Northern Cape town. But if you told these South Africans that De Aar’s main hotel was getting spruced up in 2013, they might look at you a little suspiciously – it’s been a long time since this small town was in the news. The fact that it is a company focused on renewable energy – Solar Capital – that is making the large investment says a lot about the impact the sector is making and it has only just begun. For many years there was uncertainty about national government policy with regard to renewables. But that has all changed and two bidding windows for the Renewable Energy Independent Power Producer Procurement (REIPPP) programme have already been held with 2 560MW of a targeted 3 725MW allocated. The third window (which closed in early August 2013) saw the final 1 165MW assigned to bidders. At the moment, about 94% of South Africa’s electricity is generated by burning coal. The country has one nuclear plant and a few small hydroelectric plants. By 2030, the plan is to have added another 17 000MW of renewable energy to the grid. Bids have been accepted for concentrated solar power (CSP) and photovoltaic (PV), wind power and hydroelectric power. Bids in other sectors (biomass, biogas and landfill-gas) will be dealt with later. The clear winner in the first two bids was PV solar power, with 16 winning bids going to the Northern Cape alone. Ten other PV projects were approved around the country. A large water-based project is underway in the Drakensberg: the Ingula Pumped Storage scheme includes four 333MW pump turbines that will be deployed in times of peak demand. Some of the PV projects, such as Mulilo Renewable Energy’s 9.65MW De Aar project and Acciona and Sishen Solar’s Sishen project (8.9MW) are small, but plans for a solar park outside Upington are spectacularly large. Sixteen square kilometres of land has been identified and Eskom is looking for private partners. The park, which will cost more than R150billion, will generate 1 000MW in its first phase. Eskom has received $250-million for funding this project (and a wind project) from the World Bank. The Eskom-led project is intended to be at the centre of a solar hub. An analysis of 2012 figures released by the Bloomberg New Energy Finance Group by the UK’s Financial Times showed that South Africa had ‘the biggest annual clean-energy invest- SPECIAL FEATURE ment growth rate in the world’, with a figure of $5.5-billion cited. Funding The Industrial Development Corporation (IDC), through the Green Industries’ Strategic Business Unit, helped fund 19 bids in the first two windows, with a total value of R7.5-billion. Twenty eight of the bids garnered support from the Development Bank of Southern Africa (DBSA), representing loan facilities of R9.6-billion. The State Department of the US is running a $20-million US-Africa Clean Energy Finance Initiative to support renewable-energy projects, and an office of the US-based Clean Energy Development and Finance Centre has opened in Johannesburg. The Industrial and Commercial Bank of China (ICBC) has allocated R20-billion of the money that it is receiving from its association with Standard Bank to fund renewable-energy projects. ICBC is a 20% shareholder in Standard Bank. Standard Bank committed about R15-billion in funding during the first two windows. Nedbank Capital funded about 40% of the first window’s successful bids. Companies Absa Capital, which has a power and energy division, is part of a consortium led by another co-operative venture, Mainstream Renewable Power SA. The joint venture is between local company Genesis Eco-Energy and international firm Mainstream Renewable Power. Saudi Arabia’s ACWA Power International is invested in the Bokpoort solar project. In the consulting field, 3E has opened an office in Cape Town. Mulilo Renewable Energy is tackling several projects, as is SunEdison SA. Mulilo is partnering with Gestamp, a Spanish firm. Other Spanish companies that have been associated with successful bids are Acciona and Abengoa Solar. 45 Stellenbosch is home to an office of global energy developer Juwi. One of South Africa’s biggest resource companies, Exxaro, has joined forces with Indian conglomerate Tata to form a renewable-energy company, Cennergi. Wind projects in the Eastern Cape are the focus of Cennergi’s initial investments. Manufacturing SunPower/Tenesol and Solaire Direct are existing solar-panel manufacturers already operating in South Africa. ART Solar is the first South African-owned manufacturer of PV modules. At full production, the factory can produce 250 000 modules per year. SunEdison plans to construct a component plant in the Free State to support its project there, and two projects in Limpopo. OPINIONS • The chairman of the South African Photovoltaic Industry Association (SPVIA), Davin Chown, has told Frontier Market Network, ‘It’s a lot easier for manufacturers to set up solar plants in South Africa than it is for them to set up big capital plants making wind turbines, nacelles and blades.’ • A representative of Schneider Electric told Engineering News that half of all solar photo voltaic power plant equipment and operations could be done within South Africa. • Sun Edison has urged the South African government to support the building of a plant to make polysilicon, the biggest cost factor in solar cell manufacturing (Business Report). A plant capable of producing 250 000 tons per year would cost $1.5-billion to build. READ MORE Visit: www.frontiermarketnetwork.com/ article/3803 SOUTH AFRICAN BUSINESS 2014 OVERVIEW Trade with Africa Improved infrastructure will boost intra-African trade. SECTOR INSIGHT S outh Africa aims to diversify its economy away from an over-reliance on the primary sector (mining and agriculture) towards a more varied economy in which increased capacity in existing manufacturing sectors is coupled to the growth of wholly new areas such as alternative energy, biofuels and digital television. Trade policies and anti-competitive legislation are being aligned with the imperatives of industrial policy, ensuring that tariff agreements with trading partners do not undercut strategic targets. South Africa, with an annual total trade volume of R2.3-trillion, benefits from preferential trade agreements with the US and EU and its membership of the Southern Africa Development Community (SADC). The acceptance of South Africa into the BRICS group of nations (Brazil, Russian, India, China, South Africa) holds great potential for increased exports. Iron ore and coal are among the biggest export items to India and China, while the EU and US are strong markets for agricultural products like fruit. In the seven years before the global economic meltdown of 2008, sub-Saharan exports to the US grew to $86-billion, four ONLINE RESOURCES Department of Trade and Industry: www.thedti.gov.za Frontier Market Network: www.frontiermarketnetwork.com Industrial Development Corporation: www.idc.co.za SOUTH AFRICAN BUSINESS 2014 46 times more than at the beginning of that period (AT Kearney). A key factor in intra-African trade is the development of improved infrastructure. The establishment of regional corridors is intended to boost this trade, with the North-South Corridor the most significant for the Southern African region as it runs through 26 countries and ends in Durban. Ten corridors are being developed to ease trading and improve access to ports. More than half of South Africaâ€™s trade is with other countries in Africa, but the cost of trade in terms of tariffs, permits and delays at border posts can be very high. Shoprite spends about R200 000 a week in permits to keep its shops supplied throughout the continent. The South African Revenue Service (SARS) has initiated an automated custom system which is reducing costs and improving efficiency. It has been introduced at the Port of Durban, the countryâ€™s busiest port. PHOTO: MASSMART New customs protocols at Durban are cutting costs. START EXPLORING INTERNATIONAL TRADE OPTIONS The Department of Trade and Industry (the dti) is mandated to promote South African exports to the international market. the dti is actively involved in funding Trade Missions in the following regions: USA, Europe, South America, Africa, Middle East and Asia. Do you: • Manufacture a product? • Want to establish an international market? • Have the manufacturing capacity to export? • Comply with international standards and regulations? If you answered “YES” to these questions, contact the dti today and make the export promise a reality! the dti Customer Contact Centre: 0861 843 384 the dti Website: www.thedti.gov.za empowering industries and International Trade.indd 2-3 n ns Industrial Development Incentives In an effort to increase industrial competitiveness and broaden the participation of enterprises in the economy, the Department of Trade and Industry (the dti companies in various sectors. Financial support is offered for various economic activities, including manufacturing, business competitiveness, export development and market access, as well as foreign direct investment. the dti offers the following incentives to support and grow the industrial development sector: Name of incentive Description Business Process Services (BPS) Incentive Aims to attract investment and create employment in South Africa via offshoring activities. A base incentive as a tax-exempt grant paid over three years for each offshore job created and maintained. Capital Projects Feasibility Programme (CPFP) A cost-sharing programme that contributes to the cost of feasibility studies likely to lead to projects outside South Africa that would increase local exports and stimulate the market for South African capital goods and services. The size of the grant must fall within R100 000 to R5 million, to a maximum of 55% of the total cost of the feasibility study for projects in Africa and 50% for projects outside Africa. Competitiveness Improvement Programme (CIP) The CIP is creating a group of globally competitive clothing and textile companies, thus ensuring a sustainable environment that will retain and grow employment levels. Ordinary cluster: cost-sharing grant of 75% of the qualifying project cost on cluster projects. National cluster: initial investment Foreign Investment Grant (FIG) Compensate qualifying foreign investors for the costs of moving qualifying new machinery and equipment from abroad to South Africa. A cash grant to a maximum of 7,5% of Manufacturing Value Addition (MVA). Tourism Support Programme (TSP) The TSP is a reimbursable cash grant that aims to support the development of tourism enterprises that will stimulate job creation and increase the geographic spread of tourism investment. Investment grants of 15% to 30% of the investment cost of qualifying assets (furniture, equipment, buildings and tourism vehicles) for new establishments or expansions. Production Incentive (PI) Assist the industry in upgrading its processes, products and people. Assistance Scheme (SSAS) The SSAS is a reimbursable 80:20 cost-sharing grant offering councils, joint action groups and industry associations. year two it becomes a cost-sharing grant of 95% from the incentive programme and 5% from cluster participants; 90:10 in year three; 80:20 in year four; and 70:30 in year companyâ€™s Manufacturing Value Addition (MVA). SSAS has three components: Generic Funding; Project Funding; and Project Funding for Emerging Exporters. For more information on the above incentives, visit www.thedti.gov.za broadening economic participation the dti website: www.thedti.gov.za the dti Customer Contact Centre: 08 1 8 3 38 2013/07/17 12:44 PM SPECIAL FEATURE SA’s National Development Plan The evolution of economic policy perspectives post-1994 in context, by Sello Mabotja. T he advent of a democratic dispensation in South Africa has been accompanied by corresponding various economic policy directions. The main rationale for such developments is precisely because of the urgent need to complement our captivating political miracle with a somewhat parallel fundamental economic transformation that seeks to eliminate the vast and deep-seated inequalities that developed under the separatist apartheid colonial economy over decades. Moreover, it is crucial that the fledging nonracial democracy effectively promotes meaningful participation of all racial groups within the mainstream economy, especially the African majority. Leading political economist Professor Sampie Terreblanche noted in a seminal study titled ‘A SOUTH AFRICAN BUSINESS 2014 50 history of inequality in South Africa: 1652 to 2002’, the most pressing challenge for the country was a need to eradicate the historic racial inequalities inherited from its past prejudicial economic injustices. ‘When in 1994 a democratically elected government came to power, it inherited a contradictory legacy: the most developed economy in Africa on the one hand, and major socioeconomic problems on the other. The most serious of these are high rates of unemployment, abject poverty among more than 50% of the population, sharp inequalities in the distribution of income, property and opportunities, and high levels of crime and violence. What makes these problems so pressing is the fact that it is mostly black – especially Africans – who are at the receiving end,’ says Terreblanche. SPECIAL FEATURE However, eminent jurist and Constitutional seen light of day. These include the RDP, Gear, Court judge Edwin Cameroon, renowned for his ASGISA and the New Growth Path. tireless campaign against Aids denialism, commends the SA constitutional democracy and the ‘political miracle’ for making some admirable The NDP in perspective strides and proving its endurance. ‘We are now nearly 20 years into our consti- The National Development Plan (NDP) is one of tutional democracy. Much has been achieved, the key milestones inaugurated during President perhaps more than those of us who tend to Jacob Zuma’s presidency. This blueprint is a final worry realise. Almost all violent crime is down. product of the National Planning Commission Compared to 1994, the murder rate has almost (NPC) headed by Trevor Manuel, former Finance halved. The government’s housing programme Minister, after a process of broad consultation has put many millions of South Africans in their conducted by a 26-member team including own houses. In 1994, just more than a third of highly regarded economists, scenario planners six-year-old children were in school, now more and academics. Manuel’s deputy is former BEE than 85% are. Most importantly, these mate- luminary and current ANC Deputy-President rial gains have been achieved in a functioning Cyril Ramaphosa. democracy.’ Says Annabel Bishop, chief economist at Since 1994, a panoply of plans aimed at Investec Bank on the plan’s framework and redressing the socioeconomic challenges have paradigm: ‘Consequently, the NDP, the eco- 51 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE nomic framework for SA until 2030, focuses on major stakeholders within our society, notably addressing the challenges, along with unemploy- organised labour. ment, poverty and inequality by professionalisIt also appears the NPC is cognisant that its ing the civil service, improving healthcare and implementation is fraught with challenges. Aceducation, increasing exports and support for cording to Manuel, this will be done on the basis small businesses to promote higher incomes of adaptation to varying circumstances as well as via productivity growth. The need for strong ‘learning-by-doing’. He, however, points out the leadership and effective government is also critical importance of job creation in eliminating clearly recognised in the NDP, which also aims the country’s deep-seated inequalities. Says Manuel: ‘We recognise that one of the to improve investment and innovation levels and infrastructure and achieving a labour market most effective ways of distributing income, reducing inequality and fighting poverty is through more responsive to economic opportunity.’ Zwelinzima Vavi of the Congress of South employment. Employment allows us to harness African Trade Unions (COSATU) says the plan’s the creativity and energy of all our people beyond framework is reminiscent of the antiquated neo- the material benefits. We cannot disregard the Thatcherite Growth, Employment and Redis- importance of the sense of dignity, purpose and tribution economic policy that was introduced personal well-being that being employed proin 1996. vides. It is therefore imperative that we remove ‘This raft of policies generates a de ja vu, all obstacles to employment. This is why the NDP it seems history is going to repeat itself. We sets out the target to create 11-million new jobs.’ Among the most salient interventions of the are being told to wait for economic growth – the trickle-down theory and neo-liberalism at NDP are: • Building a capable state with technical and its best.’ professional skills Duma Qubule, independent economist, author of and CEO of Kio Advisory Services, is • Positioning SA in the global economy to exploit the benefits of globalisation and concerned that the NDP did not fully consider and incorporate other existing economic blueregional trade agreements • Building economic infrastructure and transiprints as its complementary facets. tioning to low carbon economy ‘The NDP appears oblivious to the various provincial Integrated Development Plans (IDPs) • Promoting accountability by building a resilient anti-corruption system and public seras well as other macroeconomic plans’ envisaged outcomes. The little emphasis on industrial vice as well as enhancing the developmental policy, macroeconomic issues and related areas potential of state-owned enterprises is very disconcerting. This could its most glaring • Building an inclusive rural economy through rural expansion. omission. While it is a decisive intervention big • Improving education, innovation and training. on vision, it is also rather too broad.’ Neil Coleman, COSATU’s policy analyst criti- • Promoting health, social protection and developmental welfare services. cises the NDP on three fronts. These are for projecting a bigger role for both the services sector and small business in job creation – thus minimising the role of the state, the plan’s ignorance of the New Growth Path and the Industrial Action Plan as well as its envisaged labour marREAD MORE ket flexibility plans which will reduce the rights of existing workers. For the vision of the plan to come into fruition, Visit: www.frontiermarketnetwork.com/ consensus ought to be achieved among all the article/3874 SOUTH AFRICAN BUSINESS 2014 52 SPECIAL FEATURE South African wildlife ranching ‘The game game has got some game!’ I nvest R5-million in cattle and in five years you these in Limpopo Province (Mail & Guardian). The will earn a return of 4.8% on your money. Invest Northern Cape accounts for another 20%, with the same amount of money in sable antelope, the Eastern Cape home to 12% of the country’s and the value of your investment could go ranches. up by 45.2%. Is it any wonder that the gameRecent conferences have put the spotlight on ranching business is booming? the national importance of the game-ranching These figures are drawn from the 2013 Absa business. Kimberley hosted the 7th International Agriculture Outlook. The wildlife-ranching sector Wildlife Ranching Symposium in 2011 and South in South Africa now encompasses more than 10 Africa’s first national Hunting Indaba was held at 000 farms (from about 3 500 in the year 1992) The Palace, Sun City, in October 2012. and covers more than 20 million hectares. This This brought together leading figures in nameans that in private hands there is about three tional and provincial government, wildlife ranchtimes more conservation land than there is under ers and representatives of the hunting sector. the protection of national and provincial parks. Concerns about conservation ensure that there Twice as many animals are on these private farms is always a debate about the role that hunting should play in the tourist offering. than in the public parks. National Minister of Water and Environmental Commercial wildlife ranches cover 16.8% of the country’s landmass, with about half of Affairs Edna Molewa told the Indaba that the SOUTH AFRICAN BUSINESS 2014 54 SPECIAL FEATURE hunting and game- farming The National Department of Environmental Affairs sectors were important part- calculated that the revenue generated directly by ners in ‘conservation, tourism hunting in 2009 was R650-million. and economic development’. The African Sky website lists a daily price of The Professional Hunters’ $450 for a hunter accompanied by a professional Association of South Africa hunter. Trophy prices range from $35 000 for an has put the overall value of the elephant and $13 500 for a buffalo to $450 for a wildlife industry to the national bush pig. economy at R7.7-billion. The Venison and biltong are the key products deindustry is said to employ 140 rived from game hunting. South Africans are more 000 people. The Confedera- likely to hunt for biltong than for trophies. The Absa tion of Hunting Associations of Agricultural Outlook states that the world supply South Africa says that the sec- of venison is 60 000 tons short of demand. With tor is now bigger than the sugar South Africa exporting less than 2 000 tons annually, there clearly represents a big opportunity and dairy sectors. Speaking at the opening of for investors. Eco-tourism is a broad category encompassthe international conference in the provincial capital, Northern ing leisure tourism, game viewing and the gameCape Premier Hazel Jenkins lodge market. South Africa has many lodges casaid that hunting, and its eco- tering to the high-end of the market, and there is nomic multipliers, contributed scope for the development of more eco-tourism about R1-billion to the provin- venues that are more suited to the budget of the cial economy on an annual ba- local traveller. sis. Employment opportunities Premier Jenkins told the Kimberley symposium, in the sector include tracking, ‘Eco-tourism has become one of the leading and skinning, taxidermy, tour-guid- fastest-growing sectors with an annual growth of ing and professional hunting. approximately 10%.’ She linked the growth of the sector to the fact that only 17% of South Africa’s agricultural land has high production potential Segments and noted that on marginal land, wildlife ranching is one of the few economic activities that can The wildlife-ranching sector comprises four main contribute to economic growth and employment. components: breeding and auctions, hunting, proThe wildlife-ranching sector is attracting a cessing, and eco-tourism. growing number of operators and investors. CoSouth Africa in 2013 has 60% more wildlife than ordination between the various interest groups is it did in 1900 and a total of about 19 million game also growing, as illustrated by the hunting conferanimals now inhabit the land. The value of game ence. The returns on the wildlife-ranching sector will continue to be good as long as growth is has also increased exponentially. Rare animals such as the sable antelope can balanced with responsible management of the bring returns of over 45% on investment, while a environment. As an American hunter might say, ‘The game buffalo with a good pedigree can attract incredible prices at auction. A buffalo cow with an impressive game has got game!’ horn spread and its four-month-old calf were sold in April 2012 for R20-million. The auction brought READ MORE in a total of R146-million. Hunting is a very lucrative market, with the larg- Visit: www.frontiermarketnetwork.com/ est number of trophy-hunters coming from the US. article/1343 55 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Overview of the South African economy Key facts and figures on South Africa’s demographics, economy, trade and investment. SOUTH AFRICA FACT FILE Capital: Pretoria Population: 51.8 million Area: 1 220 813km2 GDP: R2 964-billion (2011) GDP growth: 3.1% (2011) Income per capita: R58 549 (2011) CPI: 6.1% y/y (April 2012) PPI: 6.6% y/y (April 2012) Unemployment: 25.5% (Q3 2012) Gini Index: 57.8 (2009 UN Report) Gross domestic product YEAR Q1 2004 6.2 Q2 Q3 Q4 ANNUAL 5.7 4.3 4.6 6.7 2005 4.1 7.4 5.6 2.7 5.3 2006 6.2 6.7 4.8 6.4 5.6 2007 6.5 3.1 5.0 6.0 5.5 2008 2.9 4.5 1.8 -1.7 3.6 2009 -6.3 -2.8 1.8 3.5 -1.5 2010 4.0 2.8 3.1 4.5 2.9 2011 4.6 1.0 1.7 3.2 3.1 2012 2.7 3.2 1.2 1.2 2.5 Table 1: GDP growth per quarter, 2003–2011. SOURCE: STATISTICS SOUTH AFRICA South Africa’s real gross domestic product (GDP) growth slowed to a 2.7% increase on a quarteron-quarter seasonally adjusted annualised (q/q saa) basis – 2.1% year-on-year (y/y) in the first quarter of 2012 from 3.2% q/q saa (2.9% y/y) – in the fourth quarter of 2011 (Table 1). The largest industries, as measured by their nominal value added in the first quarter 2012, were finance, real estate and business services, making up 19.3% of the economy, and general government services making up 14.6%. The q/q saa changes in value added by the primary, secondary and tertiary sectors were -11.2%, 6.4%, and 3.0% respectively, during the first quarter of 2012. What is noteworthy, however, is that the mining sector – the number-one export industry in the country – declined by 16.8% q/q saa in the first quarter, due in part to a six-week illegal strike at Impala Platinum, the world’s second-largest platinum miner. SOUTH AFRICAN BUSINESS 2014 YEAR GDP (R-M) GDP PER CAPITA (R) 2001 1 020 007 22 899 2002 1 168 699 25 831 2003 1 260 693 27 631 2004 1 415 273 30 297 2005 1 571 082 33 176 2006 1 767 422 36 844 2007 2 016 185 41 525 2008 2 262 502 46 072 2009 2 398 155 48 318 2010 2 661 434 53 088 2011 2 964 261 58 549 Table 2: GDP and GDP per capita at current prices, 1998–2009. SOURCES: W W W.THEDTI.GOV.ZA, W W W.RESERVEBANK.CO.ZA, WORLD BANK, STATISTICS SA 56 SPECIAL FEATURE SECTOR VALUE IN MILLIONS (R) % REAL CHANGE FROM 2010 % OF GDP 63 984 2 260 381 357 756 78 532 120 420 -.04 0.2 2.4 1.3 0.8 2.2 8.8 12.1 2.6 4.1 386 430 4.4 13.0 220 060 3.3 7.4 Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity and water Construction (contractors) Wholesale and retail trade, catering and accommodation Transport, storage and communications Finance and insurance, real estate and business services Personal services General government services Total value added at basic prices Taxes less subsidies on products 565 224 3.5 19.1 183 493 434 224 2 670 504 293 757 2.4 3.9 3.0 4.4 6.2 14.6 90.1 9.9 GDP at market prices 2 964 261 3.1 100 Table 3: Breakdown of South Africa’s GDP at current prices, per sector, 2011. SOURCE: STATISTICS SOUTH AFRICA African Customs Union (non-SACU) trading partners in April 2012, after a deficit of R5.5-billion in March, taking the cumulative trade deficit in April 2011 to R36.5-billion, compared with R7.5-billion in the first four months of 2011. A record R17.4-billion deficit was set in January 2009, but as exports began to improve, so the deficits narrowed in 2009 to become surpluses in 2010. South Africa recorded its first annual trade surplus in seven years in 2010 of R4.8-billion, following a few stronger than expected surpluses on the trade account during the year. In 2012, however, the rise in the oil price in the first few months, coupled with a sharp reduction in platinum exports, saw the non-SACU foreign trade balance firmly in the red. The old myth that a weaker rand leads to more exports is once again disproved by the facts, as import growth was 23.5% in 2011, while export growth was 19.9% when the rand was weaker due to a R15-billion deficit. Prior to November 2011, when the rand had been stronger, export growth had exceeded import growth. In 2010, when the rand was strong because export growth of 14.9% exceeded import growth Trade: imports and exports South Africa’s international trade has risen sharply over the last 10 years (table 4). In 2004, the value of imports rose above that of exports. Tables 5 and 6 show the largest import and export sectors respectively, for April 2012. Important import sectors in April 2012 were machinery (R15.9-billion), mineral products – chiefly crude oil (R13-billion), transport equipment (R10.9-billion) and chemicals (R5.4-billion). On the export side, the most important sectors were mineral products, chiefly coal and iron ore (R14.8-billion), precious metals and diamonds (R10.2-billion), base metals (R7-billion) and transport equipment (R4.6-billion). Most of South Africa’s foreign trade takes place with Asia, the United States and Germany (tables 7 and 8). In 2011, China, the United States and Japan were, in descending order, the country’s top export markets, while top import-source countries were China, Germany and the US. South Africa recorded a trade deficit of R9.9-billion for its trade with non-Southern 57 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE YEAR IMPORTS IN R-M EXPORTS IN R-M SECTOR 1999 147 356 165 555 2000 187 608 210 373 1. Machinery, mechanical and electrical 2001 216 033 251 330 2. Mineral products VALUE IN R-M 15 903 12 991 2002 275 427 314 102 3. Transport equipment 2003 258 839 275 581 4. Chemical products 5 420 296 246 5. Base metals 3 190 331 405 6. Plastics, rubber 2 591 396 529 7. Textiles 1 726 8. Optical, medical, photographic 1 579 2004 306 927 2005 2006 351 665 465 040 2007 561 194 491 253 2008 727 632 663 099 2009 541 173 513 864 2010 585 219 590 207 2011 722 637 707 511 10 880 9. Foodstuffs, beverages 1 433 10.Vegetable products 1 045 Total 62 028 Table 5: South Africa’s top 10 import sectors, April 2012. Table 4: Annual value of South African non-SACU imports and exports, 1998–2011. SOURCE: WWW.SARS.GOV.ZA SOURCE: WWW.SARS.GOV.ZA. of 8.1%, there was a R4.8-billion surplus, the first annual surplus since 2003. In the first four months of 2012, when the rand was substantially weaker than in the same period in 2011, exports only grew by 7.4% y/y, while imports surged by 20.6% y/y. In mid-2009, South Africa ranked 61 out of 121 countries, from 59th out of 118 in 2008 in the World Economic Forum’s Global Enabling Trade Report. But in 2010, it slipped to 72 out of 126 countries. It ranks above Zimbabwe (122), Ivory Coast (123), Kenya (105), Tanzania (97), Argentina (95) and India (84). SECTOR 1. Mineral products 92 269 3. Vehicles, aircraft, vessels 49 938 4.Machinery, mechanical electrical 47 748 5. Chemical products 31 203 6. Vegetable products 21 204 7. Foodstuffs, beverages 19 660 8. Paper, pulp 10 931 9. Plastics, rubber 9 504 Total 5 230 590 207 Table 6: South Africa’s top export sectors, April 2012. South Africa’s privately held business (PHB) owners’ intentions to grow through acquisition seem to align with expectations of BRICS (Brazil, Russia, India and China) countries in the upcoming 12 months, according to Grant Thornton’s 2011 International Business Report (IBR) on M&A activity. SA was invited to join the BRIC grouping in 2011. SOUTH AFRICAN BUSINESS 2014 126 512 2. Base metals 10. Animals, animal products Foreign direct investment and public investment VALUE IN R-M SOURCE: WWW.SARS.GOV.ZA South Africa also fared well in a number of other indices. It was ranked 45th out of 133 on the World Economic Forum’s Global Competitiveness Index for 2009/10, and improved to 54 out of 139 countries in 2010/11. 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GAFFNEY’S BUSINESS & LEGAL DOCUMENTS FOR SA Safeguard and protect your business in a cost-effective way. Join thousands of small, medium and large businesses that have saved money, protected their rights and avoided tax, labour and other business-related problems. Invest in this up-to-date and revised compilation of legal documents. PO Box 812, Northlands 2116 Gauteng, South Africa Tel:+27 (11) 268-5804 • Fax: +27 (11) 268-5806 Email: firstname.lastname@example.org Website: www.gaffney.co.za SPECIAL FEATURE Bank and International Finance Corporation’s Doing Business 2009 report, and 34 out of 183 in 2010. This study measures the time, cost and hassle for businesses to comply with legal and administrative requirements. South Africa was at number 35 in 2008. Public-sector infrastructure investment, the expansion of electricity generation and distribution capacity by electricity supplier Eskom, upgrades to ports and railways by state-owned enterprise Transnet, and major road-construc- COUNTRY VALUE IN R-M 1. China 103 174 2. Germany 77 396 3. USA 56 944 4. Japan 34 377 5. 32 294 Saudi Arabia 6. India 29 220 7. UK 28 965 8. Iran 27 121 9. tion projects remain the major challenges for the economy, but government continues to invest strongly in all areas. The ratio of fixed capital investment to GDP rose consistently over the five years to the end of 2008, to reach 24.6%, just below the government’s target of 25%. A cut-back in both government and private-sector fixed investment saw the ratio drop to 18.9% in the fourth quarter of 2010, before starting a slow recovery. General government fixed investment had the first quarterly increase in the second quarter of 2011 after nine quarters of decline. Total fixed investment has now increased for eight consecutive quarters and should continue to support growth going forward. Consumer spending has been robust, even as households repaired their balance sheets. The last time household expenditure growth exceeded income growth on a q/q saa basis was back in the fourth quarter of 2007. The result of this, as well as a marked reduction in interest rates, was that the household debt to income ratio fell to 74.6% in the fourth quarter of 2011 from 75.6% in the third quarter of 2011 and a peak of 82.7% in the first quarter of 2008. The debt service ratio eased to 6.7% in the fourth quarter from 6.8% in the third quarter, and is now at levels last reached in 2005. Nigeria 10. Italy 22 655 19 574 Table 7: South Africa’s top 10 import source countries in 2011. SOURCE: WWW.SARS.GOV.ZA COUNTRY VALUE IN R-M YEAR Q1 Q2 Q3 Q4 2003 15.70 16.00 15.90 16.00 1. China 90 210 2. 61 044 2004 16.00 16.20 16.20 16.20 3. Japan 55 635 2005 16.50 16.00 17.00 17.10 2006 17.70 18.60 18.90 19.70 United States 4. Germany 42 684 5. UK 29 001 6. India 22 224 7. Switzerland 22 902 8. Netherlands 22 902 2009 23.20 22.40 21.20 20.30 9. Zimbabwe 17 776 2010 20.30 19.88 19.40 18.90 10. Mozambique 17 680 2011 18.80 19.00 18.90 18.90 2007 19.70 21.20 20.40 20.20 2008 21.05 22.44 24.02 24.64 Table 8: South Africa’s top 10 export markets in 2010. Table 9: Ratio of gross fixed-capital formation to GDP. SOURCE: WWW.SARS.GOV.ZA SOURCE: WWW.RESERVEBANK.CO.ZA SOUTH AFRICAN BUSINESS 2014 60 Your African print partner Paarl Media’s extensive track record of printing and distribution across the continent gives them a unique understanding of this market. Through Paarl Media’s ten operations across South Africa, clients have access to extensive production capability and expertise for their speciﬁc requirements. 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This included both mass production for food security as well as commercialisation to boost primary production. Plans are in place for the revitalisation of irrigation schemes at Shiloh, Ncora, Kieskammahoek and Zanyokwe. The Imvaba Fund supports co-operatives in the province: 46 have been established and 16 SOUTH AFRICAN BUSINESS 2014 new entrants have been supported. The number of facilities for the provision of anti-retroviral treatment increased from 85 in 2009 to 780 by the end of the 2012 financial year. The Eastern Capeâ€™s TB cure rate increased from 60.9% in 2009 to 67.9% in 2012. Maternal deaths also declined. The total number of solar water geysers installed in the province through Eskom is 36 578. Several bulk-water schemes are underway. Hostels have been built at rural schools. 20 new schools will be constructed as part of the Accelerated Schools Infrastructure Delivery Initiative of the Department of Basic Education. In the health sector, the under-five mortality 62 SPECIAL FEATURE HIV mother-to-child transmission rate decreased from 7% in 2010 to 3% in 2012. In 2013, more than 5 000 students were receiving tertiary bursaries from the provincial government. A total of 758 students graduated at the end of 2012, including 45 accountants and 14 doctors. The 2011 Census shows that 46.5% of Gauteng residents have access to the Internet, with about 18% accessing it via smart phones. Gauteng Province is responsible for 10% of the GDP of the Southern Africa Development Community (SADC); it is the fourth-biggest African economy; and the 56th-biggest economy in the world. According to the SA Institute of Race Relations 2012 report, Gauteng has the best score in drinking-water-quality index of 98% and the highest number of government-subsidised houses built since 1994 (State of the Province, 2013). Between 2010 and 2013, more than 5 000 provincial bursaries to attend university or college have been provided to the top achievers at the provinceâ€™s no-fee schools. An increased percentage (42.7%) of children younger than four are now part of early childhood development programmes. More than 4 000 homework assistants and sports assistants have been deployed in Gauteng schools. ACCESS TO 1996 2011 There are 26 community health centres with 24-hour access and 100 clinics with extended hours, an improvement on the 82 clinics which operated extended hours in 2010. ACCESS TO 1996 2011 Piped water 54.9% 77.8% Piped water 96.2% 98.2% Electricity (lighting) 32.7% 75.0% Electricity (lighting) 79.4% 87.4% Flush toilet 64.0% 80% Flush toilet 95.2% 96.3% Eastern Cape Gauteng SOURCE: CENSUS 2011 SOURCE: CENSUS 2011 ACCESS TO 1996 2011 ACCESS TO 1996 2011 Piped water 94.4% 97.8% Piped water 65.7% 85.9% Electricity (lighting) 57.5% 89.9% Electricity (lighting) 53.2% 77.9% Flush toilet 70.5% 89.9% Flush toilet 84.0% 88.3% Free State KwaZulu-Natal SOURCE: CENSUS 2011 SOURCE: CENSUS 2011 63 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Several large affordable-housing projects to Medupi, the new power station being built at have been initiated, including the Cornubia pro- Lephalale, and to the coal-mining operations that ject which will ultimately deliver 50 000 units. An- feed it. other 25 000 houses will be built in the Vulindlela The Olifants River Water Resources Developproject. To address the gap market, a further ment Project (ORWRDP) will supply water to more 19 422 units have been made available through than a million people living on the Nebo Plateau the Enhanced Extended Discount Benefit and Mokopane, Polokwane and Lebowakgomo. Scheme. Refurbishment has made 19 422 units The De Hoop Dam is a major component of the available to the gap market. Subsidies have pro- master plan. The total cost of the project is estivided for a further 16 142 units. mated at R20-billion. When fully developed, it will In the course of 2011, a total of 123 000 jobs supply water to 23 platinum mines. were created in KwaZulu-Natal. The provinceâ€™s The provincial government pledged to demoleconomy achieved year-on-year growth to ish single-sex hostel structures and build modern December 2012 of 6.5%. family residential units, and progress has been Regional bulk-infrastructure projects, valued at made in this drive. more than R2-billion, are underway that will create The establishment of two special economic 3 631 direct jobs and supply an improved supply zones (SEZs) in Limpopo has been approved, of potable water within the province. steps which could significantly help in reducing Mother-to-child HIV transmission has been poverty and stimulating employment. The first reduced from 19% in 2007 to 10.3% in 2009 to SEZ will be in Musina and the focus will be on 2.2% in 2013. New TB incidences have been logistics and coal beneficiation. reduced, but campaigns against the disease The second SEZ is planned for the Greater are to be intensified in pursuit of the Millennium Tubatse Municipality and platinum group metals Development Goals. (PGMs) and beneficiation will be at its heart. The There are two big projects underway in the possibility of the creation of a hydrogen-fuel-cell province to augment water supplies by way of industry is being explored. dams and water-transfer schemes. The Mokolo In the 2013 State of Province address, a numCrocodile Augmentation Project will supply water ber of joint initiatives with the National Depart- ACCESS TO 1996 2011 ACCESS TO 1996 2011 Piped water 75.3% 86.0% Piped water 88.9% 97.4% Electricity (lighting) 39.2% 87.3% Electricity (lighting) 64.7% 85.4% Flush toilet 78.2% 90.7% Flush toilet 72.8% 86.4% Limpopo Northern Cape SOURCE: CENSUS 2011 SOURCE: CENSUS 2011 ACCESS TO 1996 2011 ACCESS TO 1996 2011 Piped water 82.8% 87.4% Piped water 81.1% 91.6% Electricity (lighting) 51.8% 86.4% Electricity (lighting) 42.7% 84.0% Flush toilet 86.8% 91.1% Flush toilet 85.6% 91.8% Mpumalanga North West SOURCE: CENSUS 2011 SOURCE: CENSUS 2011 SOUTH AFRICAN BUSINESS 2014 64 SPECIAL FEATURE ment of Water and Environmental Affairs were While the level of households using the bucket highlighted, and a pledge was made to increase system has dropped to 4% (from 10% in 2004), reservoir storage capacity, expand bulk-water the provincial government of the Northern Cape treatment and to increase the capacity of waste- has pledged to eliminate the system altogether. water treatment works. Enrolment for the Early Childhood DevelopIn line with national government policies, ment Programme has trebled in the five years Mpumalanga’s provincial government is rolling to 2013. A total of 14 571 young children attend out a human-settlement policy that aims to pro- 337 public ordinary schools on this programme, vide sustainable housing through the strategy more than 10 000 of whom pay no fees. known as Breaking New Ground. The North West Province became the first On 618 hectares of land in eMalahleni, province to eradicate the form of tuberculosis 11 696 housing units will make up a planned known as Extreme-Drug-Resistant (XDR) TB. community with services and amenities: Treatment outcomes for TB have been improved The Klarinet project is being carried out by in recent times to 69.8%, with the defaulting Absa DevCo with funding coming from Absa patient percentage falling below 8%. Bank, the National Department of Energy, the Skills development is a priority and in the Mpumalanga Department of Human Settle- three years to 2012, 953 artisans were trained ments and the Emalahleni Local Municipality. through the National Skills Fund programme. While overall percentages that relate to the Collaboration with mining companies in the provstandard of living in the Northern Cape have im- ince is the key to continued success in this field. There are 12 hospitals under the control of proved (as above), the achievement of reducing the percentage of households without access the provincial government. to piped water – despite being the country’s The provincial government of the Western most water-scarce province ¬– is perhaps the Cape spends 76% of its budget on services to most notable. poor communities. The population of the province increased by nearly 30% in the decade to 2011 (1.3 million). More than 400 000 school pupils are part of the Department of Education’s feeding scheme. The mother-to-child HIV transmission rate in the province has been reduced to 1.8%. The TB cure Subsidised housing: 5 699 units rate is 82%. The R500-million Mitchells’ Plain Apartments: 2 322 units Hospital was completed in 2012. Bonded housing: 3 948 units Thusong Centres provide a wide range of Amenities: Schools, clinics, community centres services in rural areas, such as access to soBusinesses: Shopping mall, industrial and cial grants, health testing, and the issuing of service sites. ID books. Eighty-three percent of the Western Cape’s citizens live within 25km of a Thusong Centre. KLARINET INTEGRATED HOUSING PROJECT ACCESS TO 1996 2011 Piped water 97.2% 99.1% Electricity (lighting) 85.7% 93.4% Flush toilet 90.8% 91.6% READ MORE Visit: www.frontiermarketnetwork.com/ article/2622 Western Cape SOURCE: CENSUS 2011 65 SOUTH AFRICAN BUSINESS 2014 INTERVIEW Compliance is key CEO of VeriFi BEE Compliance Roger Latchman highlights the importance of redressing past inequalitites through the BBBEE process. Marking the 20th year of democracy, we have seen many changes. How was VeriFi BEE Compliance established and how has the company grown in line with these changes? Roger Latchman The company commenced business in 2006, ahead of the legislation relating to BBBEE. I have been involved in black economic empowerment since 2000, and I strived to be an early player in the BEE arena. In 2007, the Codes of Good Practice on BEE was promulgated, and this forced companies to relook at the way they conducted themselves. In 2012, the public sector procurement process was revised to include BEE legislation. We have strived to keep abreast with all the legislation, as the company participates in many discussion forums relating to BEE and transformation in general. Please highlight the importance of BEE in furthering the aims of democracy in South Africa. BIOGRAPHY Roger Latchman obtained a National Accounting Certificate in 1985 from the ML Sultan Technikon in Durban. Various other qualifications were achieved through the Institute of Directors SA and Kommerskollegium. He is currently studying Political Studies at the Walter Sisulu Leadership Academy. Roger has contributed too many published works, including articles that have appeared in Business Day, Finweek and the Financial Mail. Previously he was an associate director at Ernst & Young and the financial controller of the Southern Sun Hotel group. SOUTH AFRICAN BUSINESS 2014 BEE is an essential policy to redress the past inequalities arising from apartheid policies. After almost a century of highly regulated business and work against black South Africans, a very real attempt to ‘normalise’ this past imbalance needs to happen. What are some of the challenges faced by VeriFi BEE Compliance and what is being done to combat these problems? The greatest challenge is that spend on BBBEE is seen as a ‘grudge purchase’ and clients tend to leave this to the last moment. To combat this practice, we educate our clients that BEE should not be treated as an event, but rather as a process that is evaluated at regular intervals during the year. Plan, plan, plan! Describe your target market. We deal with all clients, giving them the same special care and attention! Our company has an impeccable reputation and we have some big name global clients. However, all clients get the same respect and care (and access to me) – whether they are a giant 66 INTERVIEW global conglomerate or a small entrepreneurial business. What is the difference between small, medium and large enterprises in attaining BBBEE verification? The Codes of Good Practice determine the thresholds for classification as a small, medium and large enterprise, and then a set of elements is used to measure the BEE compliance of the businesses. Criteria for small and medium business is less cumbersome. and usually get caught up by not having the right documentation, or by having spent money on initiatives not recognised in terms of the legislation. Please contact us to get the proper advice early on and to assist in setting up the processes and procedures to enable a smooth transition of BEE into the normal company procedures. Looking forward, do you think the market will change? Yes, definitely. With the revised Codes of Good Practice due to be released in the last quarter of 2013, all companies would have to re-examine What is the most important aspect of the their BBBEE strategy to ensure compliance. It is verification process? almost certain that the revised Codes will incorThe documentary evidence to back up all BEE porate some very drastic changes and penalties. VeriFi BEE Compliance can assist in this procompliance initiatives claimed is very important. Like any audit, without the proper documenta- cess to draft a new strategy or revise the existtion, it is difficult to convince the verifier that the ing ones â€“ to ensure compliance to the revised initiative has taken place. Codes. What do companies find most challenging in the BBBEE verification process? Most companies leave BBBEE to the last moment 67 SOUTH AFRICAN BUSINESS 2014 University of South Africa All Education Systems are Critical to South Africa’s Growth How inferior is an education system that produces a President, a Nobel Laureate, or a Chief Justice?, asked Chancellor of the University of South Africa, Justice Bernard Ngoepe to stakeholders last year. This question left us wondering if, as educators, we were doing enough to extol the benefits of Open Distance Learning (ODL). This question crossed my mind again during the tertiary education registration period early this year. We sadly witnessed the literal playing down of the significant role our institutions of higher learning play in skilling our nation; and thus their vital role in our country’s growth and development. It seems many people aspiring for education still labour under the belief that one should first try and get into contact universities. Unisa and Further Education and Training (FET) colleges are only approached as a last resort. Some scribes experienced this unfortunate belief on various campuses, while carrying out spot quizzes with students. Recently, some colleagues attended an event with Deputy Minister of Higher Education, Mr Mduduzi Manana, and other educators and stakeholders. They were dismayed at the lack of confidence in many of our tertiary institutions by these educators. The FETs bore the brunt of their disdain. Some even want to ban non-matriculants from FETs. Their argument is that current policy lowers the quality and stature of FETs. This is a simplistic view, which amplifies our failure in providing guidance to the young. We live in a country with complex challenges, especially with our history, when many were denied education. As a result, this country is in dire need of skills, especially trade and technical ones, in order to solve unemployment, poverty and inequality. Contact universities cannot be burdened with the sole responsibility for our educational challenges. FETs can provide some skills required, ODL has proved it’s more than capable in providing well-trained human resources. It is prejudicial and unfair to deny education to willing citizens, stopping them from being part of the economy, whether as labourers or entrepreneurs. If we choose exclusivity, history will judge us. Denounce the current FET system, because it opens up learning to a wider group of people, irrespective of their educational standing, goes against one of the pillars of our freedom, the Freedom Charter, which declares that the doors of learning shall be opened to all. Learn without limits. It cannot be that the alma mater of former President Nelson Mandela, retired Chief Justice of the Constitutional Court Judge, Pius Langa, retired archbishop of the Anglican Church Archbishop Desmond Tutu, Governor of the Reserve Bank, Ms Gill Marcus, and many other leaders in civil society, business and public life, has produced such extraordinary national and international icons on the basis of an inferior education. The successes of over half-a-million graduates in all walks of life – in South Africa and the world – confirms we are the most productive university in South Africa. We are also the largest university in Africa, with international accreditation for our vocational and academic programmes. Still, not all is well with our higher education system. There is a need for renewed focus on teaching and learning. Our country is facing a teaching and learning crisis shown in the low throughput and success rates. Teaching and learning must become a priority for all of us. We need to reflect as institutions, teachers and policymakers, on our own work and the impact that it has. Similarly, students must take greater responsibility and not squander the opportunities provided to them if we are to increase quality graduates. In various policy documents on higher education, our government has agreed ODL is integral to the post-school system and Unisa as a leading institution in this regard. As the only dedicated ODL university in the country, with 140 years experience in the field, we are committed to helping our country, our people and government to shape education into a desirable state; and to provide South Africa with well-trained citizenry. I challenge all South Africans to embrace education as the key area to give attention to. I challenge all South Africans to teach the next man and woman the value each and all forms of education add to our nation’s development, including ODL, further education and training as well as indigenous knowledge systems. We must work together to eradicate the illusion that some education systems are more valuable than others. With a proud history that spans fourteen decades in education, we at Unisa can vouch that they all can help in building a better country. Professor Makhanya is the Principal and Vice-Chancellor of Unisa. university of south africa 10010722e/3 By Professor Mandla Makhanya ated at 10 ub loc St Lu Re H nal gio Regions • Eastern Cape • Gauteng • KwaZulu-Natal • Limpopo • Midlands (Free State, Northern Cape and North West Provinces) • Mpumalanga • Western Cape niversity of Sou th A f r i ca ’s Unisa believes all students, no matter where they live, should have access to quality support services. Distance learning students need appropriate academic and administrative support to maintain morale and commitment for their studies. So we ensure all students have access to support services with Regional hubs in seven regions to provide services and maintain standards. These Hubs are supported by smaller service centres and agencies within each region. oa od, East L o nd ernwo uth on o S , d e U Th Delivery structures to ensure access for all ke s R University of South Africa The Eastern Cape Regional Hub is in East London, with a service centre in Mthatha and an agency in Port Elizabeth. As with each region, the hub is mandated to deliver the full bouquet of learner support services. They also participate fully and proactively with community development. This helps ensure every student is covered in the region. Services Academic Literacy Centre Access to Computers Access to Study Space Alumni Counselling, Career & Academic Development Credits & Accreditation Download to CD/USB Computer Labs Financial Aid Services Library Services Multi Purpose Community Centres (Telecentres) Orientation Programmes Pre-registration Workshops Registration Self-help Student Administration Submission of Assignments Tutorial Services & Group Discussion Classes Video Conference Facility Work-integrated Learning (WIL) East London ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Port Elizabeth ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Mthatha ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ 10010722e/1 Services offered by the Eastern Cape Region include: The Eastern Cape Region is committed to: • Creating equitable learning opportunities by providing accessible and relevant services • Providing accurate information and prompt service every time, all the time • Being approachable, responsive and professional at all times • Being respectful of client confidentiality Learn without limits. 10010722e/1 Delivery Structure Print.indd 1 university of south africa 2013/09/12 10:41 AM REGIONAL OVERVIEW OF THE EASTERN CAPE PROVINCE T he Eastern Cape’s economy is driven by the manufacturing and business services industries. This coastal province is rich in natural resources, home to two of South Africa’s industrial development zones (IDZs) and commands a prime location for international trade. By Megan Abels Key sectors Financial services, real estate and banking is the largest contributor to the province’s GDP. Absa, Nedbank, Standard Bank and Capitec Bank are among several big finance groups who have a strong presence in the Eastern Cape. Abacus Asset Management recently announced a R1.7-billion project funded by Nedbank Corporate Property Finance. The new Bay West Mall will be located in Port Elizabeth and will make a large impact on the province’s economy. Construction began in June 2013. The 87 500-square-metre project is a joint venture between Abacus Asset Management and the Billion Group. It is expected to be fully operational by early 2015 and is already generating thousands of jobs in the process. The majority of lettable space in the mall has been secured by the likes of Checkers, Pick n Pay, Woolworths, Edgars, Ster Kinekor, Platinum Group and Game. Although the Eastern Cape Development Corporation (ECDC) has plans to diversify the province’s economy, the automotive industry is still a dominant sector. This industry employs at least 50 000 people and is one of the biggest contributors to the manufacturing sector in South Africa. SPECIAL FEATURE GENERAL GOVERNMENT SERVICES 21.2% PERSONAL SERVICES 10.3% FINANCE, REAL ESTATE & BUSINESS SERVICES 22.4% TRANSPORT, STORAGE & COMMUNICATION 8.9% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 13.8% CONSTRUCTION 2.6% ELECTRICITY, GAS & WATER 1.1% MANUFACTURING 17.5% MINING & QUARRYING 0.1% AGRICULTURE, FORESTRY & FISHING 2.1% Eastern Cape sector contribution. SOURCE: EASTERN CAPE ECONOMIC DEVELOPMENT, ENVIRONMENTAL AFFAIRS AND TOURISM The automotive industry continues to see growth in this province. Ford, General Motors, Economic future Volkswagen and Mercedes-Benz are all industry Renewable-energy projects are flourishing in giants based in the Eastern Cape. Ikhwezi Investment Holdings announced a South Africa. The Eastern Cape has big projects merger with a German-based company to form planned. Transport of wind turbines from the Port of TrelleborgVibracoustic-Ikhwezi. The R40-million joint venture will see the new company sup- Ngqura to the Jeffreys Bay wind farm began in plying specialised aluminium parts for selected July 2013. This will be one of the largest wind Mercedes-Benz SA vehicles. farms in South Africa once completed, and will Coega IDZ is the ideal location for logistics consist of 60 turbines. and trade. It has 11 000 hectares on offer and In the same month, Basil Read Matomo beinvestment sectors besides automotive include gan construction on a R550-million wind farm chemical manufacturing, energy, metals and near Port Elizabeth. The 27MW MetroWind Van Stadens wind farm also transported the turbines agri-processing. Air Products, a gas producer, announced from the Port of Ngqura. Nine wind turbines will a R300-million investment in an air-separation be erected, producing 3MW each. unit. Construction commenced in July 2013 at the Coega IDZ. ZIMBABWE Premier: Noxolo Kiviet Capital: Bisho Provincial website: www.ecprov.gov.za Languages: Afrikaans, isiXhosa, English Population: 6 562 053 (2011) Area: 169 580km2 Limpopo NAMIBIA North West Mpumalanga Gauteng SWAZILAND Free State Northern Cape MOZAMBIQUE FACTS AND FIGURES FOR THE EASTERN CAPE BOTSWANA KwaZuluNatal LESOTHO EASTERN Eastern Cape CAPE Western Cape 71 SOUTH AFRICAN BUSINESS 2014 LISTINGS Eastern Cape Provincial Government A guide to the Eastern Capeâ€™s provincial government departments. Visit www.ecprov.gov.za Office of the Premier Provincial Planning and Finance Premier: Noxolo Kiviet MEC: Phumulo Masualle Physical address: State House, Independence Avenue, Bhisho 5605 Postal address: Private Bag X0045, Bhisho 5605 Tel: +27 40 609 6626 Fax: +27 40 639 1419 Email: firstname.lastname@example.org Website: www.ecprov.gov.za Physical address: Provincial Treasury, Tyamzashe Building, Bhisho 5605 Postal address: Private Bag X0029, Bhisho 5605 Tel: +27 40 609 5755/5014 Fax: +27 40 639 1030 email@example.com Website: www.ectreasury.gov.za Economic Development and Environmental Affairs Health MEC: Mcebisi Jonas MEC: Sicelo Gqobana Physical address: 2nd Floor, Beacon Hill, Hockley Close, King Williams Town 5600 Postal address: Private Bag X0054, Bhisho 5605 Tel: +27 43 605 7183 Fax: +27 43 605 7306 Email: firstname.lastname@example.org Website: www.dedea.gov.za Physical address: Dukumbana Building, Independence Avenue, Bhisho 5605 Postal address: Private Bag X0038, Bhisho 5605 Tel: +27 40 608 1114 Fax: +27 40 608 1118 email@example.com Website: www.ecdoh.gov.za Education Human Settlements MEC: Mandla Makupula MEC: Helen Sauls-August Physical address: Steve Tshwete Education Building, Zwelitsha Zone 6, Zwelitsha Postal address: Private Bag X0032, Bhisho 5605 Tel: +27 40 608 4202 Fax: +27 40 608 4247 Email: firstname.lastname@example.org Website: www.ecdoe.gov.za Physical address: 31-33 Waverley Park, Phillip Frame Road, Chiselhurst, East London Postal address: Private Bag X31008, Cambridge, East London 5206 Tel: +27 43 711 9777 Fax: +27 43 711 9785 Email: email@example.com, firstname.lastname@example.org Website: http://echousing.ecprov.gov.za SOUTH AFRICAN BUSINESS 2014 72 LISTINGS Email: email@example.com Website: www.safety.ecprov.gov.za Local Government and Traditional Affairs Social Development and Special Programmes MEC: Mlibo Qoboshiyane Physical address: Room 2124, Second Floor, Tyamzashe Building, Bhisho 5605 Postal address: Private Bag X0035, Bhisho 5605 Tel: +27 40 609 5231 Fax: +27 40 639 2135 Email: firstname.lastname@example.org Website: www.ecprov.gov.za MEC: Pemmy Majodina Physical address: cnr Hockley and Hargreaves streets, Beacon Hill, King Williams Town 5600 Postal address: Private Bag X0039, Bhisho 5605 Tel: +27 43 605 5010 Fax: +27 43 605 5472 email@example.com Website: www.socdev.ecprov.gov.za Public Works and Roads MEC: Thandiswa Lynette Marawu Sport, Recreation, Arts and Culture Physical address: No 5 Qasana Building, Independence Avenue, Bhisho 5605 Postal address: Private Bag X0022, Bhisho 5605 Tel: +27 40 609 4648 Fax: 086 298 5598 (SA) Email: firstname.lastname@example.org Website: www.dpw.ecprov.gov.za MEC: Xoliswa Tom Physical address: Wilton Zimasile Mkwayi Building, 5 Eales Street, King Williams Town 5600 Postal address: Private Bag X0020, Bhisho 5605 Tel: +27 43 604 4101 Fax: +27 43 642 6759 Email: email@example.com Website: www.ecprov.gov.za Rural Development and Agrarian Reform MEC: Zoleka Capa Physical address: Dukumbana Building, Independence Avenue, Bhisho 5605 Postal address: Private Bag X0040, Bhisho 5605 Tel: +27 40 609 3472 Fax: +27 40 636 3462 firstname.lastname@example.org Website: www.agr.ecprov.gov.za Transport MEC: Thandiswa Lynette Marawu Physical address: Stellenbosch Park, Flemming St, Schornville, King Williams Town 5601 Postal address: Private Bag X0023, Bhisho 5605 Tel: +27 43 604 7414 Fax: 086 298 5598 (SA only) Email: email@example.com Website: www.ectransport.gov.za Safety and Liaison MEC: Helen Sauls-August Physical address: Old Commissioner Building, Independence Avenue, Bhisho 5605 Postal address: Private Bag X0057, Bhisho 5605 Tel: +27 43 711 9777 Fax: +27 43 711 9785 73 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Niche products The Eastern Cape lends itself to niche products such as mohair, aloes and bamboo. T he Eastern Cape is one of the counMohair is a high-quality speciality fibre. The try’s biggest suppliers of dairy prod- Angora goat is shorn twice a year and the ucts, and its livestock herd is impres- national herd comprises about 650 000 goats. sively large. But the variety that the South Africa produces about 50% of the province’s climate and soil conditions offer world’s mohair, most of which comes from the means that a number of niche products can be Eastern Cape. South Africa’s production declined to 2.3-million kilograms in 2010 (off a high successfully farmed. Mohair is one of the oldest and most suc- of 3.6-million in 2005) but stabilised in 2011 on cessful sectors within South Africa’s agricultural the back of good rain and improved production industry, and continues to thrive in the dry hin- conditions. Demand was on the rise in 2013, with terland from Rietbron on the western border of markedly higher prices being fetched on auction the Eastern Cape to parts of the south-eastern than those achieved in 2012. Free State. Mohair’s contribution to South Africa’s export Crops that do well in the province but were basket is in the region of R700-million annually. never seriously considered economically are The Eastern Cape is definitely the ‘Mohair now being explored as possible revenue earn- Capital of the World’, with 80% of the world’s ers; these include berries, bamboo and aloes. mohair (much of it imported) being worked on SPECIAL FEATURE in processing plants and mohair yarn-spinning Bamboo’s versatility is one of the main reafactories in Uitenhage, Port Elizabeth and Berlin, sons it is being mooted as a major new crop for outside East London. the Eastern Cape. Bamboo also has potential as Only two South African groups have compa- feedstock for renewable energy. Pilot projects nies in every aspect of the very extensive mohair are currently being run by SA Bamboo near Port value-chain, Samil and Stucken. Samil’s com- Elizabeth, Stutterheim and Centane. panies include Border Combing, Cape Mohair The Eastern Cape Development CorporaSpinners and Ingubo Weavers, while Stucken’s tion (ECDC), which has already invested more interests include Mohair Spinners South Africa, than R1-million in the projects, held the first Hinterveld (a mill) and processing company Gubb bamboo symposium in 2011 to explore what opportunities the crop holds for farmers and & Inggs in Uitenhage. A number of agricultural companies that manufacturers. The corporation’s website has use to be co-operatives have interests in the 16 submissions that were made to the confermohair industry. Ladybrand-based OVK has a ence, where the hope was expressed that a 34% shareholding in mohair brokerage Cape national bamboo development body of some Mohair Wool (CMW), and BKB (whose headquar- sort would be launched. Until then, it seems ters are in Port Elizabeth) has a mohair division, that the ECDC will continue to be a driver of the which includes auctions and brokering among nascent bamboo industry. its services. The ECDC has launched a fourth pilot project The skills of working with merino wool and at Ngxingxolo, north of East London. Wine and mohair fibres have been handed down from spirit distributor DGB is sponsoring the project generation to generation, and this is where the as part of its corporate social investment, with farmers and farm-workers of the Eastern Cape a focus on green industry enterprises. have a major advantage. EcoPlant Bamboo South Africa has invested in derelict pineapple farms and has planted Bambusa balcooa bamboo – and Aloe ferox. Berries are mostly associated with the WestNew ideas ern Cape, but the investment agency of the Amathole District Municipality, Aspire, intends to Aloes are synonymous with the Eastern Cape, with have more than 500 hectares of organic bluemore than one sports team from the Border region berries planted by 2020. The planned location using the word somewhere in its name. One of the is along the N6 highway in the form of a corridor best-known companies in the sector is Aloe Ferox, development. South African production of berwhich is based in the small town of Albertinia in ries reached 2 000 tons in 2011, still small, but the eastern part of the Western Cape. The idea representing a massive 500% increase over five years previously. Demand within South Africa is of creating plantations is catching on. About 300 tons of aloe bitters (crystals) is expected to grow at 20% per annum, following harvested every year in South Africa but a larger global trends. quantity of leaves is processed for the gel that is used to make aloe health drinks and beauty products. Aloe lump (bitters) is used in bitter tonic drinks and in purgative medicines. The South African aloe industry is valued at approximately R60-million, but there is massive READ MORE scope for expansion. The Aloe Council of South Africa says the international market is worth about Visit: www.frontiermarketnetwork.com/ article/3840 $110-billion. SOUTH AFRICAN BUSINESS 2014 76 PETROLEUM AGENCY SA Promotes and regulates ecologically sustainable exploration for and production of oil and gas in South Africa Description of business Eastern Cape Petroleum Agency SA is a government agency mandated through the Mineral and Petroleum Resources Development Act (Act 28 of 2002) to promote and regulate exploration for and production of oil and gas in South Africa as well as to archive all geological and geophysical data related to such activities. The Agency reports to the ministry of Mineral Resources headed by Minister Susan Shabangu. The coastal province of the Eastern Cape is well placed to benefit from the growing interest in the potential of both conventional and unconventional petroleum resources offshore and onshore respectively. Description of Services Offshore, new exploration opportunities have been opened up with applications for permits by Bayfield Energy, Impact Africa, Silver Wave Energy, Total and New African Global Energy to explore for conventional oil and gas. Through its designation in terms of the Mineral and Petroleum Resources Development Act, Petroleum Agency SA acts on behalf of the South African government. Onshore the exploration targets are coalbed methane (CBM) in the Molteno Coalfield and shale gas to the southwest with a number of local and international explorers showing interest. The Agency's services include the regulation of oil and gas exploration and production through contracting qualified exploration companies and monitoring performance in terms of technical work programmes, adherence to environmental management plans and attention to social and labour issues. The Agency also attempts to attract investment in exploration for oil and gas offshore and onshore South Africa through the evaluation of potential hydrocarbon resources and presentations of technical information and interpretations at national and international exhibitions, direct interaction with potential explorers and advertisements. Development of a successful upstream oil and gas industry in South Africa has the potential to increase both business and employment opportunities in its provinces where exploration is focussed. Further services include the archiving of all geotechnical data and information produced through exploration and production efforts, and the facilitation of further exploration through the provision of this data to current and prospective explorers. The Agency also advises government on any issues relevant to oil and gas exploration and production in the country. Target Markets Domestic and international oil and gas exploration and production companies interested in exploring for conventional and unconventional oil and gas resources. Contact Details: Key contact people: Lindiwe Mekwe, GM: Regulation Ntsiki Van Averbeke, GM: Promotion tel: +27 21 938 3500 Fax: +27 21 938 3520 email: firstname.lastname@example.org physical address: 7 Mispel Road, Bellville, 7530 postal address: P O Box 5111, Tygervalley, 7536 website: www.petroleumagencysa.com SPECIAL FEATURE Research Water and water quality are research priorities at the universities of the Eastern Cape. R esearch is fundamental to progress of emy of Science of South Africa, the Council for every sort. The universities of the East- Scientific and Industrial Research (CSIR) and the ern Cape are working hard in a variety Africa Institute of South Africa. of disciplines to take the province, and The Technology and Human Resources Programme (THRIP) is a major research support the country, forward. The universities’ collaboration with local in- programme run jointly by the National Departdustry is covered in the education and training ment of Trade and Industry (dti) and the NRF. It section of this publication. supports more than 200 programmes every year. The National Department of Science and The Support Programme for Industrial InnovaTechnology (DST) is behind many of the initia- tion (SPII) is a programme of the Industrial Develtives to shift the gears of South Africa’s economy. opment Corporation (IDC) that helps companies Where research and development (R&D) ex- develop technologies to the point where they can penditure made up just less than 1% of GDP in produce and sell a product. 2012, the goal is to take it to 1.5% by 2014 and A schools project that aims to use technologi2% by 2018. This is still below the 2.4% achieved cal innovation to improve education in the town of Cofimvaba has been launched. In an attempt to by similar countries, but clearly it is necessary. The Technology Innovation Agency (TIA) tackle several problems at once, a range of partexists to help companies take ideas to market. ners are involved in providing tablets for teachers, With a budget of R410-million, the TIA is just one improving water supplies and laying on power of the DST’s entities that supports R&D. supply. Partners in the Cofimvaba School DisOther relevant DST agencies include the Hu- trict Technology Project include the CSIR, HSRC, man Sciences Research Council (HSRC), the Sasol Inzalo Foundation, the Water Research National Research Foundation (NRF), the Acad- Commission and the Medical Research Council. SOUTH AFRICAN BUSINESS 2014 78 SPECIAL FEATURE Rhodes University research- ment is president of the Southern African Society ers have a reputation for pro- of Aquatic Scientists and has just completed a stint ducing good work. While the as chair of the South African Water Commission. national average for the perThe focus of research at Walter Sisulu Univercentage of staff who have doc- sity (WSU) is on rural development and urban torates is about 30%, Rhodes’ renewal with an emphasis on science, technology percentage is closer to 85% and development studies. Community partner(Business Day). ships are designed to make the research more The university is particularly responsive to local, regional and national develstrong in the sciences, such as opment priorities. Research by WSU academics radio astronomy (and is very in- shows that a number of plants such as devil’s volved in the Square Kilometre claw and the cancer bush (Sutherlandia fructesArray project), chemistry, bio- cens) contain elements that could help to fight or sciences, nanotechnology and prevent cancer. The University of Fort Hare specialises in remarine biology. The Rhodes University Insti- search in Water Resource Management and Sustute for Water Research con- tainable Agriculture and Land Use Strategies. The ducts research into water qual- NRF is considering allocating to Fort Hare the reity. A lot of the institute’s funding search disciplines of Culture, Heritage and Social comes with project-related Transformation, and Rural Household Economics. grants from the national Water In collaboration with THRIP, Telkom funds a Research Commission, some Centre of Excellence in the Computer Science students receive funding from department. Other big funders of research are the the Carnegie Foundation, and CSIR, ESKOM, the Medical Research Council, the Unilever sponsors the Unilever Mellon Foundation, SANPAD, the Development Centre for Environmental Water Bank of Southern Africa and the Water Research Quality, a unit within the institute. Commission. Grahamstown’s location at Among the centres and institutes at Fort Hare the meeting point of four climatic are the: zones creates a rich environ- • Agricultural and Rural Development ment for Rhodes’ hydrologists, Research Institute (ARDRI) entomologists, zoologists, bota- • Govan Mbeki Research and Development Centre nists, geographers and geologists. Nelson Mandela Metropolitan University • National Heritage Centre (NMMU) has taken delivery of the world’s only • IsiXhosa National Lexicography Unit algae biomass liquefaction reactor. It is housed • Oliver Tambo Chair of Human Rights at the university’s innovation incubator, InnoVen- • Nelson Mandela Foundation Unit for Rural ton: NMMU Institute of Chemical Technology. The Schools process converts carbon dioxide into bio-oil using • Fort Hare Institute for Social an Economic Research (FHISER) micro-algae. Other products, which will be sold by a company called Zalgen, include hydrogen gas and a sugar- and protein-rich water solution. NMMU announced four new research chairs in READ MORE 2013: Microfluidic Biochemical Processing, Shallow Water Ecosystems, Earth Systems Science, and Law of the Sea and Development in Africa. Visit: www.frontiermarketnetwork.com/ Professor Janine Adams of the Botany depart- article/3855 79 SOUTH AFRICAN BUSINESS 2014 FOCUS An anchor for the SMME sector The ECDC found R671-million in new investments in 2012/13. W hile development finance and non-financial support remains at the core of SMME support, investment promotion, through its catalytic nature, provides substantial downstream opportunities for the development of small businesses. In essence, investment attraction and trade, through foreign and domestic direct investment inflows, acts as an anchor for the establishment, growth and development of the SMME sector. ECDC’s role is to facilitate catalytic investment into the key strategic sectors of the provincial economy as outlined in the Provincial Growth and Development Plan (PGDP) and the Department of Trade and Industry’s macroeconomic strategy. The corporation’s investment and trade efforts further provide significant wealth and job creation opportunities for small businesses. Essentially, ECDC’s investment and trade promotion role complements its development finance positioning. Furthermore, the corporation aims to develop and maintain existing investments for long-term sustainability. These investments are also able to leverage from ECDC’s development finance and from investment platforms in the form of the corporation’s expansive investment property portfolio. Consequently, in the year 2012/13, ECDC placed significant focus on leveraging and exploiting investment and trade opportunities in the key sectors identified in the Provincial Industrial Development Strategy (PIDS) and the Industrial Policy Action Plan (IPAP). These include but are not limited to manufacturing, agro-processing, forestry, tourism, film, information and communication technology, mariculture and aquaculture as sectors with the greatest economic potential. Inspired investor attraction Although recovery from the recession is slow, there is an upswing, which is backed by strong investor confidence, as evidenced by the increase in the rand value of investments facilitated. The rapid roll out of the Renewable Energy Independent Power Producer Procurement Programme, jobs stimulus packages, and concerted SOUTH AFRICAN BUSINESS 2014 80 efforts towards supporting the agro-processing, forestry and automotive sectors through various incentives, have made the Eastern Cape quite attractive. As such, ECDC proactively undertook inspired investment attraction and investor servicing activities, which were geared towards the generation and retention of meaningful foreign and domestic investment inflows. This work was further supported by collaboration with the East London and Coega IDZs. As a result, the corporation facilitated investments to the value of R671-million from 22 investments, which is 9% more than amount invested in the previous year. This increase was driven mainly by the automotive, agriprocessing and renewable energy sectors. The automotive sector bounced back strongly from the recession in the review period. This had a direct link to expansion in components manufacturing. A total of 1 285 jobs were facilitated through these investments. A further 149 leads or new prospects were in the pipeline. In addition, 17 entrepreneurs benefitted from specialised international standard training. FOCUS Market access and trade promotion is to attract investment from The corporation has its sights set on improved export and trade China and boost employment activity in the province. ECDC placed great emphasis on ensur- creation in the province. ing that its SMMEs are market-ready and can compete. The end result of these efforts is evident in solid trade performance that has met the objective of increasing the value of trade and the number of exporters in the province, exploring new markets and Carara produces pickled products, such as cherry peppers broadening trade within Africa. To this end, the corporation embarked on various projects, and patty pans, mostly for exwhich provided meaningful support to existing and aspiring ex- port to European markets, such porters. These included conducting export awareness workshops, as Germany and the United supporting the Nelson Mandela Bay-based Trade Point, and Kingdom; smaller quantities participating in various national pavilions with companies. The go to Australia. Opportunities corporation also strengthened its support of the Exportersâ€™ Club offered by the Chinese market in the province, collaborated with the Department of Trade and are significant and Carara inIndustry on the review of the National Export Strategy, and col- tends to grow in the region. At peak production, Carara laborated with international trade bodies to facilitate access by local companies through information and networking sessions is the single largest employer in and registration on the global supply chain database. Grahamstown with a full staff These interventions resulted in the value of trade facilitated by complement approaching the corporation stabilising at R1.5-billion. ECDC facilitated the 1 000. Taken together, Carara establishment of 37 new exporters in the review period com- and its subsidiary facilities have pared with 11 in the previous year. A significant increase was created approximately 2 000 also recorded in the number of existing exporters assisted: 144 factory and 2 500 on-farm seasonal jobs. It is a highly labourcompared with 40 in the previous year. intensive business and, with its latest expansion, it will provide approximately 2 500 seasonal Perhaps the most exciting intervention was the facilitation of factory jobs and up to 3 000 exhibition space for seven Eastern Cape companies at the seasonal on-farm jobs in the Ningbo trade fair in China for a 30-month period. The first South 2013 season. African company to exhibit at the international Ningbo exhibition, Carara has been with ECDC hopes to open opportunities for Eastern Cape companies. ECDC for an extended period; Between January and July 2012, a total of US$500-million worth the corporation mainly plays of imported agri-processed products went through the harbour an advisory role regarding of Ningbo alone. Ningbo citizens alone consumed 5 415 tons of access to land. imported foods during this period. The R2-million investments will help the seven companies participating in the exhibition. They are: East London-based Oceanwise (cob fish), Gaehlercorr Industries (abalone) and Superfecta Berries (blueberries); Port Elizabeth companies, Momentoâ€™s of Africa (mohair products) and Mendabath (bath resurfacing kit); and Grahamstown-based Carara (cherry peppers) and Makana Meadery (honey beer). Ningbo presents immense opportunities for the Eastern Cape as it could serve as a channel for Eastern Cape products to larger markets within China and the rest of the world. The long-term view Home grown Looking to the East 81 SOUTH AFRICAN BUSINESS 2014 P39735 ECDC Group shot 296.indd 1 2013/09/12 4:08 PM INTERVIEW Key programmes and funding for rural development Thozi Gwanya highlights the ECRDA’s efforts to assist rural development in the Eastern Cape despite various challenges. Thozi Gwanya Can you please give an overview of the Eastern Cape Rural Development Agency? Two entities that were operating with a clear focus of promoting rural development in the Eastern Cape were AsgiSA-EC, which focused on commercial agricultural production and optimising the use of land, and the Eastern Cape Rural Finance Corporation, which focused on loan financing to enable the farmers to access inputs, equipment and everything they require for production. The ECRDA is the amalgamation of those two. Please highlight the organisation’s latest strategic projects. BIOGRAPHY Thomas Thozamile Gwanya holds a BCom degree majoring in Development Economics and Business Management, as well as a Diploma in Adult Education, and a post-graduate Diploma in Training and Human Resource Management from the University of Leicester. In 2008, he was appointed director general for the National Department of Land Affairs. In 2010, he became the executive director of ULoyiso Training and Development (UTD) CC, focusing on education, training, human development and socioeconomic development. In 2013, he was appointed as the CEO of the ECRDA. SOUTH AFRICAN BUSINESS 2014 To highlight the key developments of the new organisation, we have captured programmes that we would like to be involved in. We still want to be strong in providing rural finance and enabling people to interact in local economic development. Our focus is agricultural development but we include other areas of local economic development. We have developed a credit policy despite being aware that we are dealing with a community that the conventional banks call the ‘unbankables’ (those people that may not have the collateral). We have seen that if people are given support and opportunities, they are able to repay the loans. The second programme is the cropping programme. We realise that the Eastern Cape has potential, the rainfall is reasonably good even for dry land farming, there are many rivers here where irrigation is possible, so we want to tap into that potential to ensure that we contribute to increase that production. Our focus in the cropping programme is maize production. We are convinced that this year is going to see an increase in agricultural production in the area and we have provided R8-million for the cropping programme for this current financial year and we hope that this is going to grow. The third programme is the livestock programme. The Eastern Cape has the largest number of livestock – cattle, sheep and goats. 84 INTERVIEW The other challenge relates to issues of funding. We receive our funding from the provincial government and our funding is currently around R200-million. We have a strategy that requires R522-million, and we would like to interact with other partners so that we become the agent for new developments. That is why we are talking about the establishment of a rural development fund in which we envisage investors that are interested in investing in rural areas seeing the potential of optimising the use of the assets in the rural areas. Please highlight some of the key projects the ECRDA is involved. We would like to ensure that there is not only an improvement of quality of livestock, but that there is a value-adding process. Sheep farmers should be wool growers and should benefit from wool by improving their livestock. More than R14million has been spent on the procurement of bulls and pregnant heifers of various breeds in order to improve the cattle. In this regard we are trying to ensure that people who have kept livestock are doing so commercially. What are some of the challenges the ECRDA is facing? We have identified a need for economic education, where children are taught about the economics of innovations. When they talk about farming it must not just be subsistence farming, but also about producing for markets. People must have the business training that enables them to understand how to operate in the markets. Skills for production can’t just be limited to traditional ways of doing things; we must use these methods but still be open to improving our practices by taking into account new trends and products that exist in the market, so that we can improve our performance. Another issue is infrastructure development. For example in maize, we have identified that when people have increased production they have issues with storage facilities or the development of infrastructure for silos or milling. 85 We have started what we call the ‘mega farms projects’ where we would like to ensure that all the people in the rural areas who own land come together and establish viable economic units. They pool their land holdings together and assess how much it would cost to revive that economic unit in terms of fencing those farms, getting agricultural inputs and improving the soil. If you improve the soil you can improve production. Our target is that in each district we should have a mega farm that will be a support hub for local economic development in each of the district municipalities. We have been given responsibility to look at subsidiaries. One of them is the Kangela project which is in the Sundays River Valley near Port Elizabeth. It produces citrus and is exporting to Europe and the Asian markets. It is operating on a 244-hectare area and employs quite a number of people – more than 200 jobs have been created in the factory itself. I have indicated that we have partnerships with the IDC around biofuels, and we have partnerships with state departments, such as DAFF as well as Rural Development and Land Reform. We also have partnerships with the private sector. Key to these partnerships are the communities that we are working with. We would like the communities to be organised into co-operatives. We have agreed that the establishment of cooperatives as a strategy is going to be the way we galvanise resources. SOUTH AFRICAN BUSINESS 2014 FOCUS Growth through agrarian reform Vibrant and inspired rural economies. Mpoloyethu Cooperative in Chintsa outside East London. A fter their produce unexpectedly died in 2011, tomatogrowers Mpoloyethu Cooperative in Chintsa outside East London found themselves in a precarious position. With no available funds to rescue their operation, they approached the Eastern Cape Rural Development Agency (ECRDA) for help. After careful consideration, ECRDA advanced a loan of R23 000 to the co-operative to revive its planting and operations. The farm has since seen its fortunes improve, resulting in an exciting harvest. Mpoloyethuâ€™s manager Zolile Mphokeli says the cooperative, which employs five women, has since grown its harvest to about 300 boxes a week. The tomatoes are sold at a market in Wilsonia, East London. SOUTH AFRICAN BUSINESS 2014 86 Just over 200km away from the Mpoloyethu Cooperative in Chintsa, emerging farmer Khanekile Gxididi is taking his cabbage business to new heights. With a R16 000 loan from ECRDA, Khanekile says the family-run project that employs three people is going so well such that he has already managed to repay his loan. Mawabo Maxoki of the Lugangeni area in Mt Frere (former Transkei) is an emerging businessman. He has a brick-making company that he started from scratch. He approached the ECRDA for a loan in 2010, and he says the ECRDA gave him a rare opportunity of accessing finance at a reasonable interest rate. His business has now progressed, he has paid off the loan and now has a staff complement of 16 employees. He has confidence in his business and is applying for sand mining rights, with the assistance of the ECRDA. Silithemba Develoment Trust, a youth group of Kieskamahoek in the Lower Zingcuka area, has invested in a farming project. It has progressed and accessed markets such as Fruit and Veg City in King Williamstown, through the ECRDA. FOCUS Silithemba Development Trust, a youth group in Kieskamahoek, has invested in a farming project. Innovative approach These are just some of the projects that the Eastern Cape Rural Development Agency is investing in to promote entrepreneurship through rural finance and its support programmes in the province. A result of a merger of the Eastern Cape Rural Finance Corporation (ECRFC) and the Accelerated Shared Growth Initiative of South Africa â€“ Eastern Cape (AsgiSA-EC), the ECRDA is expected to craft an inspired and energised approach to rural development in the province. High-impact projects At the heart of the organisation lies a commitment to creating a vibrant rural economy through loan finance instruments, as well as the effective coordination and implementation of high-impact priority pro- grammes. This should result in innovative use of available land for cropping, forestry and livestock programmes. In practice, the ECRDA encourages those who own land not only to produce food for themselves, but also to grow enough in order to sell to others, thereby creating a revenue stream for their families and communities. This approach to rural development has an empowering socioeconomic effect that ripples. It not only allows individual families to make money in order to send their children to school and to meet other social needs, it encourages the optimal use of the land by communities and them to view the land as an asset and a source of wealth creation. For example, in the last financial year, the ECRDA helped rural communities to plant maize and beans on 8 900 hectares (ha) of land. An amount of R81-million was made available by the National Department of Rural Development and Land Reform (DRDLR), its provincial counterpart, as well as the Department of Agriculture, Forestry and Fisheries (DAFF). The cropping programme was implemented in the district municipalities of Amathole, Alfred Nzo, Chris Hani and Joe Gqabi. In addition, the organisation is playing a facilitation role on a number of forestry projects involving DAFF and DRDLR. There exists an opportunity to integrate existing DAFF plantations into new afforestation projects to increase economies of scale and offer the opportunity for immediate implementation during the delays of the forestry-licensing process. The ECRDA is equally proud, with the Eastern Cape Development Corporation (ECDC), to have entered into a R113-million jobs fund agreement with the Development Bank of Southern Africa (DBSA). This fund aims to empower local communities to 87 SOUTH AFRICAN BUSINESS 2014 FOCUS as land, farm machinery and implements through affordable financial products. For example, in the past financial year, more than 550 loans were approved worth R30-million for disbursement to rural enterprises. The disbursement of these funds is supported by a tight credit policy tailored to help clients who have challenges in raising the required collateral when applying for a loan. However, the organisation is engaged in a constant balancing act between the need for empowering development finance which calls for a higher risk appetite and responsible lending practices. The ECRDA oversees the Kangela Citrus Project. participate in and benefit from the local forestry developments as well as agro-processing, thereby creating job opportunities and income streams. Three projects are underway, currently employing 230 people. Two others start in September 2013. The ECRDA is also delighted to Similarly, the organisation is aware that the Eastern Cape oversee three subsidiaries, the possesses significant potential for livestock development. The Kangela Citrus Farm, Agrarian province has the highest number of cattle, sheep, goats, chicken Research and Development and horses in South Africa. The ECRDA has spent more than Agency (ARDA) and North R14.1-million buying bulls and pregnant heifers of various beef Pondoland Sugar. These breeds as a â€˜seed for productionâ€™. This should create wealth companies play a crucial supopportunities for rural communities with links to markets. The port role to the organisationâ€™s organisation has also thrown its weight behind an ostrich project activities in citrus farming, in Peddie some 107km from the economic hub of East London. facilitation and implementaThe project boasts 66 beneficiaries with eight hectares of land tion of a biofuels industry in the Eastern Cape as well for feedlots. as forestry. Kangela is situated in the Sundays River Valley in the Through its rural finance tools, the organisation intends to change Addo area near Port Elizabeth. the perception of rural communities as consumers rather than It is 51% owned by ECRDA producers of food. With the significant land resources often avail- and the rest by 30 land-reform able to them, rural communities have the opportunity to reassert beneficiaries identified in the themselves as active participants in the agricultural value chain. Kangela Empowerment Trust. The ECRDA provides loans and technical assistance to rural en- The trust owns the 454-hectrepreneurs who are serious about changing their material condi- tare Oranjezicht and Oudewtions and those who want to change the course of their futures. esthof farms. About 150ha As such, the ECRDA finances agricultural infrastructure such are covered by citrus, 60ha Empowering subsidiaries Rural development finance SOUTH AFRICAN BUSINESS 2014 88 FOCUS by a processing factory and 244ha for further development. Kangela has helped create 35 permanent jobs, 140 seasonal jobs and 200 pack-house jobs. ARDA, which is 100% owned by the ECRDA, started the Cradock biofuels project. It has been appointed by DRDLR as a strategic partner to support black farmers that have received farms as part of the land redistribution programme. It exists to facilitate, establish and implement a biofuels industry, to support black farmers to ensure their participation in the mainstream supply of feedstock, and to provide agricultural and business Peddie Ostrich Project. advice on sustainable farming. The ARDA estate is made up of 16 103ha of which 2 359ha is Tea (MET) and Majola Tea Estate. This is part of the ‘Masakheni under irrigation. Initiative’ which demonstrates how rural people can help design The North Pondoland Sugar a prosperous economic future for themselves. Company in Mbizana is wholly Magwa Enterprise Tea in Lusikisiki is 100% owned by ECDC owned by DRDLR and is an and is in the process of being transferred to DRDLR to be a ECRDA subsidiary. It is ap- subsidiary under the ECRDA. MET is a state-owned company proximately 10 000ha in extent in terms of sections 8(2)(a) and 34 of the Companies Act, 2008. with about 4 000ha being a for- MET also enjoys the benefit of being a subsidiary of a Schedule estry plantation (gum tree). The 3D provincial government business enterprise, implying it may whole estate was under a land retain surpluses beyond a financial year. Magwa Tea Estate conclaim that was settled through sists of 1 703 hectares of commercial tea plantations and 100 the Land Claims Court process, hectares of smallholders’ tea. Magwa is the biggest tea estate in where the award was made to the southern hemisphere. Magwa Tea Estate employs 1 200 perthree claimant communities in- manent employees and, in peak season, an additional 800 casual volving more than 850 house- workers. More than 10 000 people’s livelihoods are dependent holds. The claimants registered on the estate; the estate also boasts a clinic and a school. The a Communal Property Associa- estate has a potential to produce more than two-million kilograms tion in terms of the CPA Act and of tea per annum, but its current levels are between 1.7-million are now running the forestry pro- and 1.9-million kilograms. ject through a partnership with Majola Tea Estate is run by the Majola Tea Workers Trust as a SAPPI. single shareholder in a Majola Tea (Pty) Ltd – a trading company. The 400ha estate is located in Manzamhlophe and Mvumelwano Administrative Authority area in Port St Johns. Strategic partnerships The ECRDA also helps entities such as the Magwa Enterprise For more information, contact NobaTembu Pako on +27 43 735 1673 or email@example.com 89 SOUTH AFRICAN BUSINESS 2014 INTERVIEW Huge potential in majestic surroundings CEO of the Eastern Cape Parks and Tourism Agency Luxolo Rubushe explains the organisation’s strategy to boost the tourism profile of the Eastern Cape. Luxolo Rubushe BIOGRAPHY Luxolo Rubushe has a Bachelor of Commerce Degree from Walter Sisulu University, an Executive Development Programme from Stellenbosch Business School, and a Programme on Integrating Budgeting, Strategy and Reporting from Wits Business School. He is currently reading for a Master of Science Degree on Strategic Planning from Edinburgh Business School. Luxolo was in the consulting industry with Accenture, and worked for the Eastern Cape Department of Economic Development, Environmental Affairs and Tourism as a COO. Luxolo was also an executive at Coega, responsible for Coega’s Strategic Solutions before becoming the CEO of ECPTA. SOUTH AFRICAN BUSINESS 2014 Please describe some of the successes the Eastern Cape has seen in the tourism sector since South Africa became a democracy. The Eastern Cape was subjected to systemic and structural underinvestment, as it had to carry two homelands of the previous racist regime, namely Transkei and Ciskei. These homelands, by design, were designed neither to be economically viable nor sustainable in a number of critical sectors, including, but not limited, to tourism. Under-investment is evidenced by the state of enabling infrastructure such as roads, sanitation, electricity, water provision, etc. In line with this outlook of the apartheid state, tourism products were a priviledge of the wealthy few, and a few international tourists, and this included all those that were from outside of the homelands, mainly from the white Republic of South Africa. Tourism was not identified and pursued as an priority sector for job creation and economic development. The democratic government has prioritised the tourism sector for investment, job creation and economic development. Massive investment has been made in infrastrucuture. Major roads such as the N2 have been and continue to be improved. The Tsitsikamma area is globally recognised as part of the Garden Route. The potential of the Wild Coast is being exploited as projects are being implemented to improve infrastructure and tourism product development. There is also a focus on heritage and culture tourism through the Home of Legends Programme. The merger of tourism with parks has laid a solid foundation for the progressive exploitation of the Eastern Cape’s natural capital through eco-tourism. What have been some of the challenges faced by Eastern Cape Tourism, and what changes or improvements can be made to attract more visitors to the province? One of the key challenges faced by Eastern Cape tourism is that not only is the Eastern Cape a long-haul destination, there are also no direct flights to the province. This means international tourists coming to the Eastern Cape have to budget and pay for a second flight. This is a deterrent in two ways. Firstly, international travellers 90 INTERVIEW incur an additional financial burden. Secondly, Nelson Mandela and Buffalo City metropoles. and perhaps less pronounced is the additional These will also assist in the promotion and packtime spent in transit. Most international travellers aging of tourism products, including lobbying prefer to get to their intended destination and and supporting meetings, incentives, conferstart their holiday as soon as they land. The ences and events (MICE). Infrastructure, therefore becomes key as frequency, capacity and price of tickets warrant particular attention. We are however encouraged travellers are expected to drive the length and by the fact that there is broader awareness of breadth of our province. The extension of the N2 this issue and it is beginning to receive focused from Port Edward, the Wild Coast Meander and attention. We have also realigned our strategy the upgrade work being done along the N2 from to focus on the inclusion of the Eastern Cape as Peddie in the west to Kokstad on the eastern part of the itinerary of travellers landing in the side is very helpful indeed. three international airports of Gauteng, Western Cape and KwaZulu-Natal. In the past, the packaging of tourist offerings in the province has also been a challenge. Product owners and tour operators have done reasonably well in this space, but there is more potential for growth. For example, tourists visiting the garden route via the Western Cape are encouraged to not only end their visit in Knysna but to extend it to Port Elizabeth where they can visit the unique attractions of the city, including Addo National Elephant Park, whale watching in Port Alfred, culture and heritage in Grahamstown and Steve Biko Centre, and unspoilt natural assets of the beautiful Wild Coast. A similar approach eady persists for international tourare r rge e w a ists from the KwaZulu-Natal ... ost l d side. The entry point is the to h sses an e 2 INTERNATIONAL VENUES r Wild Coast as well as the Maloti cong vents e Drakensburg Transfrontier Park, where our province has a particular focus on the preservation of the vulture population. COME TO THE EASTERN CAPE where business and pleasure combine ... 1 PROVINCE 2 CITIES What new developments are happening in 2014? We are in an advanced stage of forming tourism bureaus in 6 St Marks Road, Southernwood, East London Tel: +27 (0) 43 705 4400 www.visiteasterncape.co.za 91 SOUTH AFRICAN BUSINESS 2014 INTERVIEW Rising above the rest The Amathole District Municipality (ADM) is making great strides in its region and has set an outstanding example for other districts. Which democratic principles govern the workings of the municipality, thus furthering the aim of becoming a beacon of success for other district municipalities in the new South Africa? Nomasikizi Konza BIOGRAPHY Nomasikizi Konza has been involved in local government matters for a number of years. Between 1995 and 2000, she was the deputy mayor of the Cathcart Transitional Local Council (TLC). From 2000 to 2006, she was deployed to the executive committee of Amahlathi Local Municipality, leading local economic development and tourism. After a break from public-sector work, she returned to local government affairs in 2010, when she was appointed as speaker in the Amahlathi Municipality. She is currently the executive mayor of the Amathole District Municipality. SOUTH AFRICAN BUSINESS 2014 We have come up with a lot of strategies to turn our institution around, to democratise it but also to ensure that we strengthen the principles of good and clean government. We believe in the principles of financial management as well. We have attained an unqualified audit for two consecutive years thanks to our values. We must be careful with what we do because we need to ensure that it has an economic spin-off for our community. The Government is continually evolving in social activites; the dynamics of our district and poverty levels are constantly changing and we have a democratic approach to bringing sanitation to the community. Mandela Day was an auspicious occasion, and we didn’t celebrate it like we usually do. The ADM staff spent 67 minutes building 300 ablution facilities for the community of Goshen. For our icon this year we wanted to do something significant for our people. The transformation agenda is an important part of this region because if our workers are not happy then why are we in existence? We came up with very good principles in order to involve workers in deciding how we can turn the institution around. But it was also based on the structure of the institution: are they working? How do they make information more accessible? As a water service authority, we are committed to the 2013 strategy for clean water and sanitation. I am aware of the growing needs to meet water and sanitation backlogs in the region. We are getting support from the Department of Science and Technology as well as Water and Forestry so we are making great strides. The theme of South African Business 2014 is ‘celebrating 20 years of democracy’. How do you feel the Amathole District Municipality is a reflection of the positive economic changes that have occurred in South Africa? The economic growth within the Amatole municipality has largely mirrored that of the Eastern Cape and the rest of South Africa. ADM continues to assist in achieving goals in connection with 92 INTERVIEW over-capitalisation and job creation within our As a nationwide programme that aims to draw region. Our region is one of the poorest but it significant number of unemployed, unskilled has decreased the unemployment rate by more people into productive work, through EPWP, than 3%. This was achieved by providing em- Amathole will strive to increase its communities’ ployment opportunities, especially to the histori- capacity to earn an income. cally disadvantaged communities because most We are gearing up towards the completion of our people are illiterate. Young people are of our second decade of freedom and the fifth unemployed and we have a high dropout rate democratic and non-racial elections; it also especially in the rural areas. A solution for this is becomes very important to uncover how we to ensure that we can transform our institutions plan to respond to government’s Expanded to become more transparent, more accessible, Public Works Programme of using intensive especially the historically disadvantaged com- labour and creating decent employment for all munities. They are brought up in rural areas that South Africans. can’t access electricity at some point. A primary example of our wealth distribu- What are the key challenges facing the tion forum states that in the 2012 financial year ADM, and what is being done to combat end, funds of over R1-million were allocated to these challenges? historically disadvantaged groups and to the We have many challenges. The President of companies that are owned by those people; South Africa has announced that Amathole this is well above the 60% that budgeted for. For is one of the poorest districts in our country. capital projects we achieved a success rate of Ageing infrastructure is one problem. If you look 94%. To us this is very big deal because if you at these towns, most of the infrastructure was measure over a period of about six years, we’ve built for small towns and failed to take population spent about R1.7-billion on historically disadvan- growth into account and this puts strain on our taged groups. So we are more biased towards resources. The infrastructure is unable to handle assisting them. the growing numbers of our people. I am also pleased to announce that of the The most expensive challenge is water infraR485-million awarded to our projects, R40.4- structure. We have to provide water and sanitamillion went to woman-owned companies. We tion to our people. We have a deficit of R1.1-billion pride ourselves that, especially looking at the in order for us to reach our target in 2014. We transformation and development of women in are trying our best to minimise these problems. our society. So I think we are on the right track. We have a high unemployment rate and most of the income comes from government grants. As stated in its mandate, Amathole Dis- That is a problem on its own because we have trict Municipality is dedicated to ensuring high revenue demands to combat the problems access to socioeconomic opportunities we already have. for its residents. What is the municipality We are in the process of revitalising our indoing to further this aim? frastructure and we are trying to circulate our The ADM’s plan and support for job creation is income in order to fight these problems. through the recently launched Expanded Public Works Programme (EPWP) in all of our seven local municipalities. We have applied to the national government for this programme and we received R3.5-million. 93 SOUTH AFRICAN BUSINESS 2014 FOCUS Valuable infrastructure In June 2012, the official launch of the R15-million Cumakala Bridge and access road took place at the Amahlathi Local Municipality. T o date, the Cumakala Bridge is providing Stutterheim residents easy access to either side of the bridge: the Mlungisi Township and the town centre of Stutterheim. The bridge, which was funded by the National Treasury’s Neighbourhood Development Partnership Grant and implemented by the Amathole District Municipality, its development agency Aspire and the Amahlathi Municipality, halves the distance of residents’ journeys between Stutterheim and Mlungisi. Residents of the Mlungisi Township have had to travel four kilometres on treacherous roads or walk The Cumakala Bridge’s official launch. two kilometres through a steep, slippery valley to reach Stutterheim. This inaccessibility was not an accident: town planners during provide a variety of services Apartheid went to great lengths to keep communities physically to Mlungisi residents and surseparate. This legacy meant that rural communities had limited ac- rounding areas. These include a satellite post office and police cess to employment, goods and services. The construction of a bridge linking Mlungisi to Stutterheim’s station, a library, community town centre is a boon to residents and the economic development hall, youth centre and clinic, a of the area. Of the 48 000 people that use Stutterheim’s higher-order pharmacy and entertainment services, it is estimated that almost half live outside the urban area. areas including an amphitheaMore than 86% of households in the area make less than tre, sports fields and gym, retail R1 600 per month. The new route will save residents R3-million in shops plus supermarkets and restaurants are also part of the travel costs every year. The construction of the bridge was originally suggested by the planned projects. community to celebrate the 150th year of Stutterheim’s existence. The project forms part of To maximise community benefit, the bridge was built using the Amathole District Municipality’s most labour-intensive methods available: an arched design built Small Town Regeneration using bricks. Today the bridge is a beautiful feature in town. Street Model, which aims to encourlights have been placed to increase pedestrian safety at night along age local economies along four the road, and a pedestrian walkway leading all the way up to Mlungisi main development corridors. to promote safe walking. The Cumakala Bridge is the first completed intervention realised by the Stutterheim regeneration programme. READ MORE The Cumakala Bridge has also opened up the Mlungisi Township for public and private investments. The construction of a community commercial park at Mlungisi is underway. The facility will Visit:www.amathole.gov.za SOUTH AFRICAN BUSINESS 2014 94 FOCUS Amathole’s growth plans Amathole District Municipality’s developmental agency, Aspire, is using corridor development to stimulate high-potential economic sectors along Amathole’s primary routes, namely the N2, N6, R63 and R72. A housing development project in the town of Alice. I Corporation, bamboo has been identified as an alternative crop for the N2 corridor area. Investigations have been made and a potential site for a trial of 100 hectares of bamboo for intercropping with maize and cattle herding has been identified at the outskirts of the town of Butterworth. n line with the corridor development, the small town regeneration programme is also being implemented to create a vital and vibrant town that is competitive and enhances social cohesion. In pursuit of these goals, various interventions have been implemented over the last five years. Amathole District Municipality (ADM) is spending approximately R54.7-million on the N2 Corridor. Butterworth regeneration • • • For the Gcuwa Dam development, Mnquma Local Municipality made an amount of R3-million available to partner and support the outcomes of the technical studies performed by Aspire. This node is positioned as an entertainment and leisure development node and private-sector interest is to be arranged. Further planning work will be undertaken to strengthen the concept of the Ibika Industrial Park. In cooperation with the Eastern Cape Development SOUTH AFRICAN BUSINESS 2014 96 Dutywa regeneration • R500 000 was raised for the improvement of the municipal systems initiative in Dutywa. A FOCUS • • task team lead by the Mbhashe Municipality has also been established to oversee the implementation of the improvement. The business plan for the proposed CBD upgrade was submitted to the Neighbourhood Development Partnership Grant. Detailed designs are in the process of being finalised, and these will be submitted to Mbhashe Municipality for approval of the identified projects. On the N6 Corridor, ADM is spending about R198.9-million. Stutterheim regeneration • • • The Cumakala Bridge (including the access road, street lighting and a maintenance agreement) was handed over to Amahlathi Local Municipality. The construction of the Mlungisi C ommunit y Commercial Park is almost complete, with 62% of the available tenant space allocated to various businesses. Work is continuing with the local municipality to enable them to produce a viable facilities-management model for the centre. A branding process is underway although the final name of the centre has not been approved. The CBD upgrade has Blueberry production is a key focus in Keiskammahoek. been completed and a launching ceremony was held to officially hand over the upgraded CBD to the local municipality. An urban management document was developed to provide guidance on the roles and responsibilities of the various stakeholders. Keiskammahoek (eQoboqobo) • • A funding proposal for a sports precinct has been submitted to the National Lotto A proposal for the upgrade of the existing dairy-processing plant is being investigated and Aspire is working with various partners to forward the proposal to the dti Co-Op Fund Keiskammahoek blueberry out-growers • • • Additional hectares of blueberries will be planted once the funding from the dti has been received, bringing the total amount to 20 hectares Aspire is facilitating the development of a training manual that can be utilised in blueberry production. This would enable these out-growers to expand their operations in the future The private sector has indicated an interest in the Gxulu Berries concept and they will be approached to ascertain their possible involvement in the future Amabele and Ndakana villages development • • • The final layout plan for the Amabele village development was circulated to relevant stakeholders for comment, and has now been submitted to the municipality for approval The Ndakana agro-ecological co-operative is operational with sales in local shops and a farmers market ADM is spending R45.9-million on the R63 Corridor 97 SOUTH AFRICAN BUSINESS 2014 FOCUS Alice regeneration and key staff have been The construction of the pedestrian bridge is underway appointed • A proposal has been submitted to SASCOC – the South • Business development African Sports Confederation and Olympic Committee for support is being implethe development of social amenities in the town mented to ensure sus• ADM is a process of facilitating the provision of a service tainability of the facility in provider to develop a Local Spatial Development Framework the future for Nxuba Municipality • An amount of R3-million has been raised for an agri- Aspire’s continued goal to conprocessing facility to assist the citrus industry duct the agency with integrity • The envisaged investment is R40-million and in accordance with generally accepted good corporate Essential oils practices has resulted in the • A business and implementation plan has been developed for agency receiving an unqualified upstreaming activities of co-operatives in the industry, and audit for the eighth year. once finalised will enable the co-operatives to have access The new Board of Directors to R500 000 to expand on this concept ended their first year on a high • On the R72 Corridor, ADM is spending nearly R86.6-million note, with the review of the current Aspire strategy document which ends in 2013/14. The finalisation of this new strategy • Final decision on the Environmental Impact Assessment document will provide impor(EIA) was received and work has started on implementing tant insights into the way forward, and establish a path conthe identified interventions • A service provider has been appointed who will shortly begin sistent with Aspire’s mandate. construction of the various facilities. The total investment is Aspire continues to be R17-million ambitious in its endeavours • An amount of about R1.8-million was raised from the National to stimulate rural economies Lotto for the upgrade of the music academy of the ADM. In the new financial year, the plan is to focus on rural communities through agriculture, capacity building, • The Local Spatial Development Framework for Peddie was heritage and tourism as well approved by the council and draft feasibility studies are being as small-town regeneration finalised for identified interventions in the town in an effort to advance integrated rural development. All the areas that are mentioned above are situated in seven lo• The construction of the Hamburg Artists Retreat (R38-million) cal municipalities that are in the was finalised and the launch and naming of the facility was jurisdiction of ADM. attended by many stakeholders • The business and operational model has been implemented • Hamburg regeneration Peddie regeneration Hamburg Artist Retreat READ MORE Visit: www.aspire.org.za SOUTH AFRICAN BUSINESS 2014 98 FOCUS Top-class performance The Auditor General described Amathole District Municipality as a beacon of hope. I n the recent statement released by the Auditor General, Terrence Nombembe applauded Amathole District Municipality (ADM) for its performance as it was announced as one of the top-performing district municipalities in the Eastern Cape during the 2010/11 and 2011/12 financial years. ADM scooped two Vuna Awards for receiving an unqualified audit report consecutively for the past two years. Vox pops conducted with the ADM Executive Mayor, ADM Speaker and Municipal Manager is as follows: Executive Mayor highlights the Batho Pele principles ‘We have set high criteria for ourselves and are abiding by the standards of good governance. We believe in the principles of clean governance with sound financial management controls. The fact that we have maintained an unqualified audit opinion for two consecutive years is by Executive Mayor of virtue of these principles and values. We base what we do Amathole District on the Batho Pele principles of Municipality Councillor transparency, courtesy, open- Nomasikizi Konza ness, consultation and value for money. The recent praise of our books by the Auditor General, describing Amathole District Municipality as a beacon of light when he released the latest municipal audit report, inspires us to strive even further. Government and its people are continually evolving and so should we. Counsellor Janda discusses the council’s structures ‘During the door-to-door campaign of the Auditor General of South Africa, Terrence Nombembe aimed at promoting the 99 ADM Honourable Speaker Councillor Samkelo Janda implementation of the Municipal Finance Management Act (MFMA) and overall compliance of municipalities in the province, we made a commitment that will enhance the oversight by the council and its structures and begin an effort to improve financial, institutional performance and good governance. ‘This audit is testimony that council structures such as the standing committee that advises the Executive Mayor, the budget steering committee and the performance audit committee have assisted in ensuring that the institution delivers on its promises. ‘As a municipality, we have always emphasised that audit is not a matter of budget and treasury office, but rather an institutional SOUTH AFRICAN BUSINESS 2014 FOCUS matter. This audit has been augmented by the improvement in the overall performance of the institution from 71% to 83% in the year under review. The municipality is operating as a system and each component is part of the system and has to make its own contribution towards the achievement of the overall objective of the institution which is to provide services in an efficient, effective economic and appropriate manner to our communities in order to improve the quality of life. On behalf of the council I wish to congratulate all those who have made a contribution towards this achievement, may you draw strength from this and strive to do more. prove its financial management. The administration of the municipality is supported by the council in striving towards clean administration. The municipality focuses on implementing sound internal controls. The municipality develops and implements action plans to address all findings by the Auditor General and items highlighted previously are focused on and measures are in place to resolve such. In addition, the Executive Mayor of the District has a made a commitment towards achieving and maintaining clean audit outcome. ‘Having obtained an unqualified audit opinion for the past two consecutive years, the municipality’s administration and political arms are both committed to achieving and maintaining a clean audit for the current year and future years.These results are an indication that the municipality is on the right track and takes the audit seriously.’ This top-class performance presented by the Amathole District Municipality is upheld by its core values and its undertaking to become the best-performing district municipality in South Africa. Vision Commitment towards selfless, excellent and sustainable service to all our communities. Mission ADM Municipal Manager: Mr Chris Magwangqana The Municipal Manager talks about financial management The Amathole District Municipality, in its developmental mandate, is dedicated to contributing to: • Ensuring equal access to socio-economic opportunities. • Building the capacity of local municipalities within ADM’s area of jurisdiction. • Ascribe to a culture of accountability and clean governance. • Sound financial management. • Political and administrative interface to enhance good service delivery. • Contributing to the betterment of our communities through a participatory development process. Core values Selflessness In all our business activities we commit that corruption and unscrupulous business practices will be dealt with decisively and objectively. ‘The municipality is fortunate Pro-poor to have dedicated staff and is The poorest of the poor will be the main focal point for ADM’s committed to continually im- business and service delivery. SOUTH AFRICAN BUSINESS 2014 100 FOCUS Vuna Awards held at Hemingways Hotel in East London. From left: Eastern Cape MEC for Rural Development and Agrarian Reform Zoleka Capa, ADM Municipal Manager Chris Magwangqana, and ADM Land and Human Settlement Portfolio Head Pendulwa Finca receiving the award on behalf of ADM Executive Mayor Nomasikizi Konza and Eastern Cape MEC for Local Government and Traditional Affairs Mlibo Qoboshiyane. Responsiveness Transparency We will continue to strive for improved turnaround time in the delivery of services and in dealing with our valuable customers. Throughout our business operation we will ensure access to information and fairness to our stakeholders. Transformative We will make considerable strides to ensure that adequate capacity (skills and human capital) equates the mandate and business of ADM. Inclusivity We will include all our stakeholders in our planning, implementation, monitoring, evaluation and reporting in ensuring an integrated effort towards service delivery. Dignity and respect We will ensure that our service delivery restores human dignity and respect. Integrity We will constantly conduct ourselves with utmost integrity as councillors and officials of ADM. Accountability We are committed in being held to account by our stakeholders and primary customers. READ MORE Good work ethics We will be professional in our conduct and ascribe to the Batho Pele principles. 101 Visit: www.amathole.gov.za SOUTH AFRICAN BUSINESS 2014 FREE MEMBERSHIP OF FRONTIER MARKET NETWORK The Frontier Market Network is the largest online business community focused on investment and business generation in fast-growing markets. GET CONNECTED. JOIN TODAY. Membership is FREE and benefits include: • • access to a database of investment and business opportunities access to the latest market intelligence including market updates, country and regional profiles, news and analysis and research reports Register at www.frontiermarketnetwork.com to begin your membership • • connection to a network of over 120 000 people, companies and service providers operating in frontier markets access to a range of services required to complete transactions such as legal, research or due diligence services PROFILE Border-Kei Chamber of Business ‘As the voice of business, to promote an environment for growth and sustainability.’ Founded in 1877, the Border-Kei Chamber of At regional level, the chamber strives to promote Business (BKCOB) is a registered non-profit the socioeconomic advancement of all people organisation and is the recognised ‘voice of living and working in the Border-Kei region via its business’, working to create an enabling envi- 10 strategic working groups. It addresses issues ronment for economic activity and a platform around economic and industrial development, for business to flourish. BKCOB has offices in factory and business regulations, rates and loEast London and Queenstown, which serve the cal taxation, energy, town planning, crime, trafgreater Border-Kei region. fic and parking, regulations for traders, training needs, logistics, import and export, and tourHeadquartered in East London/Buffalo City, this ism. It is also the first chamber in the country member-based business organisation is firmly to be a registered trader of Renewable Energy entrenched in both the local and regional business Certificates through the ‘Green Desk’. sector with over 700 member companies from a wide array of sectors, ranging from industry to sin- The chamber has strong relations with a numgle owner-managed enterprises, ably represented ber of government departments, including the by both the head office and the Queenstown office. leadership of the Buffalo City Metro as well as the Department of Economic Development The driving focus of the chamber is to represent Environmental Affairs and Tourism, the the interests of business by identifying, developing Department of Trade and Industry, the and promoting the major issues that contribute to Department of Roads and Public Works, the economic activity and growth in the region, as well Department of Labour and the Department of as to reduce the barriers that threaten the region’s Local Government and Traditional Affairs to global competitiveness. name a few with which the chamber engages on a regular basis. On a national level, the Border-Kei Chamber of Business is a fully subscribed affiliate of the Membership to the Border-Kei Chamber of South African Chamber of Commerce & Industry Business is voluntary and open to any registered (SACCI) which in turn offers international repre- enterprise running ethically compliant operations, sentation by its own affiliation to the International and ranges from large multinationals to family Chambers of Commerce (ICC). This provides owned businesses. members with access through the chamber to powerful decision-making bodies that impact the business environment, nationally and internationally, on issues such as tax policy, industrial and To be the ‘voice of business’ promoting an enlabour relations and economic controls, including vironment for growth and sustainability through global trade. maintaining strong, proactive relations with Value proposition SOUTH AFRICAN BUSINESS 2014 104 PROFILE both internal and external stakeholders includ- Allan for more information on communications@ ing provincial and local government, member bkcob.co.za or +27 43 743 8438. companies, other business organisations and Employee Wellness organised labour. The Siyakhana Health Trust, an initiative realised in 2006 between the Border-Kei Chamber of Business, Mercedes-Benz South Africa and the Networking Deutsche Investitions und Entwicklungestellscaft The Border-Kei Chamber of Business (BKCOB) (DEG), offers comprehensive assistance in prooffers members a number of networking op- viding health-management support to small and portunities through the year, from engagements medium-sized businesses through innovative specifically tailored for member-to-member public-private partnerships. The project focuses purposes as well as opportunities to network on providing holistic workplace health managewith representatives from various government ment to our partners or member SMEs through departments as well as captains of industry in operationalising the World Health Organisationâ€™s Healthy Workplaces Model in the Border-Kei the region. region. Events Events at BKCOB are coordinated in-house and Corporate social investment Key services to members can be tailored to suit the needs of members. The Border-Kei Chamber of Businessâ€™s CSI Task Further to the annual BKCOB events, members Team focuses on creating awareness within the are able to request events be arranged on an local business sector of the value and imporad hoc basis to address specific issues affect- tance of CSI. As an initiative of the BKCOB, the ing business in the region or to simply create a CSI Task Team works to support business in platform for awareness. For more information actively engaging in social investment. on upcoming events or to sponsor an event, contact Jenny Inglis on firstname.lastname@example.org or The CSI Task Team has a range of tools that it is +27 43 743 8438. developing which will assist corporates in making informed choices geared towards their CSI Business Hi-Lite magazine spend benefitting their business, as well as the The monthly Business Hi-Lite magazine is dis- beneficiary organisation or community. tributed directly to all members of the Border-Kei Chamber of Business, as well as to the vari- Contact the Member Consultant, Marchel Brown ous sector and industry leaders throughout the on +27 43 743 8438 or email@example.com province, and beyond. The Business Hi-Lite magazine is recognised as the official business CONTACT INFO magazine of the Border-Kei region with a dedicated readership in excess of 55 000. Key contact people: Les Holbrook, Executive Director Trade missions Tish Holbrook, Head: Trade & Information The Border-Kei Chamber of Business offers Darryn Allan, Head: Communications members the opportunity to participate in Tel: +27 43 743 8438 Fax: +27 43 743 2249 various local and international trade missions Email: firstname.lastname@example.org or throughout the year and assists interested email@example.com bers in coordinating applications to the dti for Postal address: PO Box 11179, Southernwood 5213 financial assistance in participating in these misWebsite: www.bkcob.co.za sions through the EMIA scheme. Contact Darryn 105 SOUTH AFRICAN BUSINESS 2014 INTERVIEW Tackling diverse issues head on Les Holbrook, Executive Director of the Border Kei Chamber of Business, highlights the chamber’s recent successes. What are some of Chamber’s highlights for the past year? Les Holbrook The Border-Kei Chamber of Business has, as always, been tackling a range of issues simultaneously. In many cases, as one issue is resolved, others present themselves for our attention. These include the Municipal IDP and budgeting process of both the Buffalo City Metropolitan Municipality and Lukhanji Municipality, including opposing the electricity tariff increases. Other highlights of the past year include: • CoGTA’s Adopt-a-Municipality programme • Chamber’s Green Desk and launch of the South African Green Schools Initiative • Developing a revised Border-Kei Chamber of Business Environmental Sustainability Charter • Through engagements, the upgrade of major infrastructure, ranging from electrical, water, sanitation and roads in the Border-Kei region • Buy Eastern Cape – an initiative to support enterprise development in the Eastern Cape in partnership with DEDEAT • A concerted business approach to CSI In your view, what are the most compelling reasons for an international businessperson to invest in the region? BIOGRAPHY Les Holbrook has a National Technical Certificate as well as a Certificate in Management from Rhodes University. Prior to his appointment as the executive director of the Border-Kei Chamber of Business, he was the deputy general manager of Beier Industries of Transkei and executive director of the Transkei Chamber of Industries. SOUTH AFRICAN BUSINESS 2014 There is no other province that has such a diverse and significant advantage as opposed to others. The business environment, social wellbeing, lower crime, exceptional lifestyles including weather, business opportunities, and a large labour pool with various skills, all lead to why the Eastern Cape is a compelling place to invest. The Eastern Cape offers an environment for business to thrive and to be profitable, as well as offering good logistics around import and export by virtue of being the only province in South Africa boasting two industrial development zones: East London IDZ and Coega IDZ. The Eastern Cape is the kind of location that assures a return on investment, and don’t forget the Eastern Cape is the recognised ‘Home of Legends’. East London and its surrounds are all 15-minute cities/towns; this makes doing business much easier and ensures faster response times. 106 FOCUS Green your energy consumption The Border-Kei Chamber of Business encourages renewable energy and sustainability by making it possible to reduce carbon emissions and contribute to a green economy. Does your company want to reduce its carbon The Certificate System emissions, but doesnâ€™t know where to start? Are your customers asking what your carbon footprint National is and how much green energy has gone into your Grid product? Are you an exporter to markets that need you to verify your energy sources in order to avoid harsh duties? Do you have a link to a Coal Consumer Generator multinational that is insisting you start addressing energy sustainability and going green? There is a simple way to achieve this! The Border-Kei Chamber of Business has set up RE Generator BKCOB a Green Desk, where companies are able to Green Desk purchase certified green energy through the Renewable Energy Certificate (REC) system, which reduces your carbon footprint and gives Certificate you access to renewable energy, therefore supplementing and replacing the existing fossil fuelbased electricity supply. You still buy your electricIssuing Body ity as normal and the REC is purchased separately but, by way of your certificate, you have exercised the choice of choosing environmentally friendly ADAPTED FROM GREENXENERGY and sustainable power. The REC system has been endorsed and supported by the Department of Energy and enables you to purchase Commit to a more robust green energy and legitimately claim that you are using certified electricity supply system and renewable energy or electricity. This possibility also allows compa- use green energy certificates! nies to not only derive marketing/advertising options, but it allows them to meet certain green and environmental targets. You will For more information, please now be able to produce goods and services with a lower carbon contact the Border-Kei Chamber footprint, utilising a blend of different energy suppliers. The beauty of Business on greendesk@bkof the system will also allow you to lock your energy costs for the cob.co.za or +27 43 743 8438 RECs for a fixed period, which can give you certainty with energy or visit www.bkcob.co.za/ greendesk or www.zarecs.co.za prices going forward. zaRECs administers the South African voluntary REC market along the lines of the European specifications on behalf of members. 107 SOUTH AFRICAN BUSINESS 2014 INTERVIEW A catalyst for private sector investment Mandela Bay Development Agency CEO Pierre Voges explains how the Eastern Cape’s biggest city is being transformed. What is the origin of the agency? Pierre Voges We needed to do something about the city falling apart, so eight years ago, the city fathers formed an agency that would operate between the city and the private sector. We developed a masterplan with Gapp architects and other consultants, and the city adopted that. Most European cities that went through a bad patch used this model to get them out of it. How is your mandate expanding and being implemented? BIOGRAPHY With a BComm, Master’s degrees and a doctorate in Economics and Urban Planning, Pierre Voges started work as a teacher. After a stint with the South Africa Foreign Service, he was an advisor in the office of former President Nelson Mandela. In 1995, he was appointed as deputy director general of trade and industry in Cape Town, and became CEO of the Western Cape Gambling and Racing Board. A partner at Grant Thornton International Chartered Accountants from 2000, Pierre became the CEO of the Mandela Bay Development Agency in 2004. SOUTH AFRICAN BUSINESS 2014 A key goal is to turn around capital flight and to develop leisure and tourism real estate. If public money is well-spent, with a good design, then investors will respond. We are doing lots of work in townships, with the support of the IDC, the ECDC, and the Lotteries Fund. In Helenvale, we put in a R38-million Thusong Centre and spent R20-million on a precinct upgrade. Every year we do three or four infrastructure projects. Stanley Street in the Richmond Hill area has totally turned around. We have created that feeling where people enjoy being there. The whole area where we are working is an Urban Development Zone. New investors have beautifully renovated the old Grand Hotel, where Churchill and Mark Twain drank. It is something very special. What is the current project? The Tramways Building is being developed at a cost of R40-million. Council has asked us to take this liability and turn it into something profitable, as they have with Telkom Park and the Atheneum building. We hope that the whole Lower Baakens Valley will become something non-industrial, linking the Bridge Street node with a marina and commercial area in the harbour. What is your role in the Nelson Mandela Bay Stadium? This is an important urban-renewal project as it was built in a subeconomic area. We always said ‘Get the stadium to work through rugby and soccer, then restaurants will follow’. We are building a five-a-side soccer pitch to increase foot traffic. 108 GOVAN MBEKI AVENUE UPGRADE T he environmental upgrading of the old Main Street of Port Elizabeth, now known as Govan Mbeki Avenue, was the first capital project undertaken by the Development Agency. Around R100 million rand was used, the street received an extensive and much welcomed facelift and has been reshaped to its original character and given back to pedestrians. ROUTE 67 T he MBDAâ€™s Route 67 consists of 67 Public Art Works symbolising Nelson Mandelaâ€™s 67 years of work dedicated to the Freedom of South Africa and includes 67 steps leading up the second largest flag in Africa. The artworks were designed by local artists from the Eastern Cape. The route is proud celebration of our cities heritage and history. This is a must see stop for the whole family to walk and to enjoy. TRAMWAYS BUILDING UPGRADE T he redevelopment of the Tramways Building has commenced and once completed will be the new corporate headquarters of the MBDA. It will serve as a catalyst for the development of the area over time for non-industrial purposes. The Tramways redevelopment forms part of the envisaged Baaken Valley/ Bridge Street development which will connect with the future waterfront development on the Transnet land cleared for this development by the Transnet National Port Authority to further grow this leisure and recreational precinct. The result of this development will see the area transformed and will attract both national and international tourists and private sector investors, as the MBDA works on the philosophy that investing public sector money in needed areas will be a catalyst for private sector investment. PROFILE RE/MAX Independent Port Elizabeth RE/MAX Independent Properties Port Elizabeth is an award-winning property broker and estate agency operating in the greater Port Elizabeth area. Property is our game Awards’, for the second consecutive year. This is RE/MAX Independent Properties Port Elizabeth awarded for stimulating the economic growth and caters for all income groups in the property mar- development of the Eastern Cape Province in a ket. We have property consultants that specialise 12-month period at the highest level. in particular areas where they become the agent of choice due to their wealth of knowledge. Key facts and figures Description of services RE/MAX assists buyers and sellers with one of the biggest decisions in life – buying and selling of property. RE/MAX prides itself on excellent service delivery. Satisfied RE/MAX clients are vital to the business as they cement the foundation for future business by making personal referrals. The rental division handles the everyday affairs associated with the leasing of property, be it in the residential, commercial or industrial field, on behalf of investors or clients. The commercial and industrial property division handles property that ranges from major shopping centres to the proverbial ‘corner café’. RE/MAX Independent also prides itself as the market leader in new developments. Year established: June 2003 (Walmer 2007) No of staff: 45 agents plus 11 administrative staff Turnover: R446-million for 2012 Recent accolades RE/MAX Independent is the largest RE/MAX office in the Eastern Cape, and its achievements include: Top Single Office for the past nine years and Top Multiple Offices for the past seven years. RE/MAX Eastern Cape has also received the Betterbond Regional Award for being the top office for the last seven years. In June 2013, RE/MAX Independent again won 1st overall position in the ‘PMR Diamond Arrow SOUTH AFRICAN BUSINESS 2014 110 CONTACT INFO Key contact people: Kobie Potgieter, Owner/Broker Xhanti Mtongana, Co-owner (BEE company) Christo Slabbert, Broker/Principal Craig Fensham, Developments Manager Fran Woolford, Rentals Manager Tel: +27 41 368 1100 or +27 82 771 2578 Email: firstname.lastname@example.org Physical address: 2 Centenary Road, Lorraine, Port Elizabeth 6070 Website: www.remaxind.co.za INTERVIEW A leader in the industry Owner Kobie Potgieter talks about RE/MAX Independent Properties’ recent achievements and accolades. Please highlight some recent successes within RE/MAX Independent Properties. Kobie Potgieter In the beginning of 2013, at the RE/MAX National Convention Awards, I won first place for SA Broker/Owner based on Registered Commission for 2012, first place for Betterbond Awards – Volume for 2012 and third as SA Top Producer – Commission in South Africa. Twenty of our agents also won top awards ranging from Millionaire’s Club Awards to Silver Club Awards, including the 2012 Sales Associate of the Year award. In the period January 2012 to November 2012, we recorded 968 sales to the value of R446-million. We achieved a record month in May 2013, with 84 confirmed sales to the value of R74-million. What is the potential for new developments in Port Elizabeth? BIOGRAPHY In 2003, Kobie Potgieter acquired the RE/MAX Independent franchise, which consisted of one office with five agents. This has now grown to two offices with 45 agents and 11 administrative staff members. In 2012, Kobie placed first for Top Performer at the Greyvensteins Property Achievers Awards for commission earned in the Eastern Cape and total units sold in the Eastern Cape. Kobie achieved the SA Hall of Fame Lifetime award in both 2011 and 2012. At the RE/MAX International Convention held in Las Vegas during April 2013, Kobie was placed fifth in the top 10 individuals for International Residential Agents out of 90 000 agents in 53 countries. For the first time since 2008, due to the massive demand for new developments, developers are purchasing land for residential projects to satisfy the demand from new home buyers, investors and retirees alike. The RE/MAX development team is currently marketing over 20 new developments in all areas, ranging from R399 000 up to R2.8-million. This incorporates starter units in Sherwood (Maverick Manor) and Fairview (Willow Creek), to prime apartments blocks in Charlo (Condor Place) and Fairview (Pine Creek Village), as well as upmarket projects in Lovemore Heights (Madison Park Estate), St Georges Park (Echo Edge) and the popular Stanbury Park Retirement Village in South End. The success of these developments is largely due to the fact that they have an excellent location, modern design, top-quality finishes and offer security and lifestyle options. These are important factors in a successful development, as was seen in both Pine Row and Pine Creek Village, which were completely sold out. How do you ensure that RE/MAX is always the first choice for buyers and sellers? We deliver exceptional service, as our agents are well trained and focus on building relationships with clients as well as our strategic partners, because we understand that our clients are the cornerstones of our business. 111 SOUTH AFRICAN BUSINESS 2014 Financial institutions can play a critical role by facilitating access SME assistance is a very complex field as the needs of each SME are different. While funding or finance is important, it is not necessarily the biggest obstacle SMEs face – access to markets is an absolute necessity to any entrepreneur. Unemployment and poverty remain the continent’s key challenges into the foreseeable future, and the solution to global unemployment lies in the development and support of small and medium sized enterprises and the entrepreneurs. Small businesses employ almost 60% of the employable population of South Africa today, and over 12 million South Africans rely directly on small businesses for their livelihood. However, research shows that 60% of SMEs fail in their first year of operation and 22% in the second year. The dependency on small enterprises as a result validates the need to create an environment that sustains and nurtures small enterprises. Myriad of problems face many SMEs today and these range from funding to knowledge and/ or skills. While many believe in considering and identifying SME challenges in their individuality, Absa takes a more communal approach and attribute the problem to a ‘lack of access’. We go beyond traditional banking and find other ways of assisting with nurturing small businesses from their start up phase right through their growth, development and expansion stages. As an engaged South African corporate citizen, Absa provides both financial and non-financial solutions for sustainable growth and development to small and medium-sized enterprises. Our value proposition to SMEs considers business from three different but interconnected perspectives - access to markets, access to funding and access to business support. • Access to markets Contrary to popular belief, the largest obstacle facing SMEs is not funding or a lack thereof – access to markets is. Absa believes that the lack of access to Absa Bank Limited Reg No 1986/004794/06. Authorised Financial Services Provider. Registered Credit Provider. Reg No NCRCP7. • business opportunities is a big challenge for SMEs. The ability to penetrate existing markets or create new markets is not an easy feat when there are established businesses with many years of operations. Essentially a business without a client or a customer is not a business at all, irrespective of how well-funded it is. Among the preferential procurement challenges for corporate buyers is the inability to locate and identify suitable suppliers who meet their targeted profile. For the SMEs, the challenge has been accessing these corporates to secure supplier contracts. The market is there but the linkages do not exist. Absa’s virtual marketplace, called the Procurement Portal, allows suppliers to be visible to corporate buyers. They can search for specific suppliers in a particular region, of a certain profile and with a particular capacity. The Procurement Portal also encourages corporates to buy more services and products from SMEs, facilitates financial independence and offers a range of non-traditional funding solutions. So, find the market and the money will find you. • Access to funding Access to funding is often seen as a major stumbling block by SMEs due to lack of funds. This involves financial services related offerings, for an example, bank accounts, access to finance, access to working capital and so forth. Absa offers procurement finance, which is a cashflow lending solution that provides funding to SMEs who have secured contracts with reputable corporates. Our funding covers the business from the purchase order stage (Vendor Finance) to post-invoice issue stage (Invoice Clearing). • Access to business support The last important challenge facing SMEs is of a more structural nature given the history of our country and the general lack of an entrepreneurial culture in SA. The reasons for failure are not the technical inability of the SME (e.g. a bad plumber) but rather a lack of general business skills. Recent research shows reasons range from a lack of management competence (16%), to poor book keeping and record management (12%), poor financial management (34%), sales and marketing problems (11%). To address this, Absa has nine Enterprise Development Centres (EDCs) located throughout the country with the sole purpose of providing a supportive environment for SMEs. The centres offer equipment and computers as well as knowledgeable staff to assist where necessary. Absa’s view is that you do not need to own a computer but you need to have access to one. The Absa SME Index We have gone a step further by recently launching the Absa SME Index aimed at providing valuable information on the current state of SMEs in the country and the level and challenges of employment in South Africa. By creating an SME Index we aim to provide valuable information that will allow SMEs to make better and informed decisions, will allow policy makers to make relevant policy decisions and inspire those aspiring to become entrepreneurs to make the leap. The reality is that SMEs do not have an economist desk, they do not have a currency expert and they require access to solid and reliable information that will help them grow their businesses. For more information contact Enterprise Business on 0860 04 03 02 or email us on email@example.com INTERVIEW Property sales at St Francis Links are bucking the trend CEO and golf director Jeff Clause believes this Jack Nicklaus-designed links course has what it takes to host major events. Jeff Clause How is St Francis Links doing relative to the broader economy? St Francis Links has become a more attractive destination, both for investment, for lifestyle, and of course, for golf. The most incredible move of late is that we have bucked the odds by surviving the recession. We have had more than 60 properties transferred in the last two years. How does that relate to your total number of properties? There are 540, and 490 were sold right in the beginning, and it was a rush like the canals in St Francis Bay. Then it slowed down, and like in all places, some people speculated and it has been up to us to help them go, and to persuade members to come. So the market is picking up? BIOGRAPHY Jeff Clause is a master professional of the PGA of South Africa and a former PGA of Europe Professional of the Year. He was the first director of golf at Fancourt, a position he held from 1991 to 1997. Jeff is now the CEO and director of golf at St Francis Links. The course won Best New Course in South Africa in 2007, is one of Golf Digest’s top ten, and has won four consecutive awards from Compleat Golfer for the FiveStar Golf Experience. SOUTH AFRICAN BUSINESS 2014 It has certainly been a buyers’ market. St Francis Links is perceived to be a second home, but in many ways we are actually in two other markets besides the holiday home market: we have the family element and the retirement element. We have good safe living here, and good schools. St Francis College has grown from 75 to 150 kids, despite the recession. We are seeing investment from younger people. We offer a variety of lifestyle choices, six different hiking and biking trails, and great birding. And there’s the new gym and leisure centre as well. Then there is a retirement element: many people have been coming here for generations and they don’t want to leave. Do these transfers mean new houses going up? After not building anything for a while, we have seen 10 built in the last two years. Nine will break ground this week, and we have plans for nine more, with another 20 new transfers pending. Still, the estate is still is only 11% developed. 114 INTERVIEW What sorts of houses are being built? There is a move away from 400-500m2 to lockup-and-go places. Bring the kids, bring the family, live outdoors here in St Francis Bay, because everything is outdoors here. We still have big homes – we are building one of about 600m2 – but the trend is towards 200-300m2. We offer a variety of plot sizes too. Two sections have 600-700m2 as the norm, everything else is over 1 000m2, up to 2 000m2. Are more people St Francis? finding out Those pictures of the African Open or SA Open in a great location, they go worldwide. about I think for the majority who have been coming here down the years, this was a best-kept secret. But now, having two golf courses here – and one with the profile of St Francis Links – it is attracting people for more reasons. And the Sunshine Tour is visiting again? Do you have sponsors in mind? I would love to do the Motor City Open, it would be a natural for the Eastern Cape. We have done vehicle launches for General Motors and Volkswagen; it is a natural fit. One of my goals is to host think tanks and company getaways. Whether you come for a meeting of the minds or leisure, the balance here between Mother Nature and what man created is just exceptional, it is just such a gem. It is worth driving beyond Humansdorp for this little gem. What else is on offer? People know that the event will be professionally done. We attract weddings, conferences and business, so that means a clubhouse turnover of about R7.5-million. That’s about R4-million in food and beverage alone, and a total budget in excess of R13-million. Ultimately, that guest who comes to a function could be our next investor, our next member. We are driven by investment. It is nice to have the tour back. We are hosting the Glacier by Sanlam Junior Series finals and then the Vodacom Origins of Golf finals in October. Both will receive TV coverage. My sights are set even higher: national and international tournaments. St Francis Links is that kind of golf course! We have the facilities and infrastructure to host You consistently win awards as a wedding venue… a major event, and we have the space. Our bookings in 2014 are very strong. I must How do you make that happen? give credit to my wife, Liezl. The bride needs for We will work on it, but it also requires the sup- nothing. We can show potential brides pictures port of provincial government. It is happening in of everything that has been done in the past, Tshwane and KwaZulu-Natal. It is an expensive there is now such a strong track record. enterprise but, boy, does it market South Africa! 115 SOUTH AFRICAN BUSINESS 2014 REGIONAL OVERVIEW OF THE FREE STATE PROVINCE T his centrally located province uses its position to its advantage. The varied economy currently has 3.2-million hectares of cultivated land, although the services sector is the biggest economic contributor. By Megan Abels Key sectors The Free Stateâ€™s major agricultural produce consists of maize, wheat, dry beans, wool, dairy and cherries. The province has established various initiatives to develop the Free State as an agricultural hub. A new food-processing park was estab- lished in the Harrismith area in aid of this as well as a modernised chicken abattoir in Reitz. The Free State economy has shifted dominance from primary to secondary and tertiary sectors. The manufacturing sector contributes 14% to the provincial GDP. Fuels, chemicals and minerals make up the manufacturing output of the province. Like the rest of the country, the Free State is experiencing considerable growth in the services sector. BPO and call centres are flourishing in the province. Bloemfontein, the main city for economic activity, is at the core for Telkomâ€™s switching centres. Various call centres are located in the city and have created many employment opportunities in the process. SPECIAL FEATURE PERSONAL & GENERAL GOVERNMENT SERVICES 28% FINANCE, REAL ESTATE & BUSINESS SERVICES 20% TRANSPORT, STORAGE & COMMUNICATION 9% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 11% CONSTRUCTION 2% ELECTRICITY, GAS & WATER 3% MANUFACTURING 14% MINING & QUARRYING 9% AGRICULTURE, FORESTRY & FISHING 4% Free State sector contribution. SOURCE: FREE STATE DEPARTMENT OF CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS. The geographical position of the province chemical factory adjacent to the site, and will makes it a key factor for being a transport and also be fed into the national grid. logistics hub in South Africa. The resources availEskom has a few projects lined up that will able for use in the Free State has led to growth feed the national grid. The Ingula scheme, borin other sectors such as agriculture, manufactur- dering KwaZulu-Natal, has begun construction. ing, mining and tourism. This puts the transport Two dams will be connected via underground turbines just short of five kilometres long. sector in a favourable position. The project will eventually deliver 1 332MW of hydroelectricity. Economic future Eskom has set aside R300-billion for infrastructure development across the country for the International investors are focused on South next years to 2018. Of that amount, Ingula has Africa as a buzz has been created around the used 58% of the allocated R25.9-billion. energy sector. National government’s Renewable Energy Sasolburg, an important petrochemical site Independent Power Producer Programme in the Free State, recently fired up a new power (REIPPP) concluded its first two bidding winplant running solely on gas. This power plant is dows at the end of 2012. Solar photovoltaic (PV) the largest of its kind in Africa. The plant pro- was the biggest winner with 27 projects lined up, duces 140MW of power for the usage of Sasol’s two of which are in the Free State. ZIMBABWE Premier: Elias Magashule Capital: Bloemfontein Provincial website: www.freestateonline. fs.gov.za Languages: Afrikaans, English, Sotho, Tswana Population: 2 745 590 Area: 129 480km2 Limpopo NAMIBIA North West Mpumalanga Gauteng SWAZILAND Free State FREE STATE Northern Cape MOZAMBIQUE FACTS AND FIGURES FOR THE FREE STATE BOTSWANA KwaZuluNatal LESOTHO Eastern Cape Western Cape SOUTH AFRICAN BUSINESS 2014 LISTINGS Free State Provincial Government A guide to the Free State Provinceâ€™s government departments. Visit www.fs.gov.za Office of the Premier Department of Economic Development, Tourism and Environmental Affairs Premier: Sekgobelo Elias Magashule Physical address: Room 400, 4th Floor, Lebohang Building, cnr Markgreef and St Andrew streets, Bloemfontein Postal address: Private Bag X20561, Bloemfontein 9300 Tel: +27 51 405 5799 Fax: +27 51 405 4803 Email: firstname.lastname@example.org Website: www.fs.gov.za MEC: Mosebenzi Zwane Physical address: Bojanala Building, 34 Markgraaf Street, Bloemfontein 9300 Postal address: Private Bag X20801, Bloemfontein 9300 Tel: +27 51 400 4903 Fax: +27 51 400 4709 Email: email@example.com Website: www.edtea.fs.gov.za Department of Agriculture and Rural Development Department of Education MEC: Tate Pule Makgoe MEC: Motlagomang Mamiki Qabathe Physical address: 1st Floor, Absa Building, cnr Aliwal and Elizabeth streets, Bloemfontein 9300 Postal address: Private Bag X02, Bloemfontein 9300 Tel: +27 51 861 8509 Fax: +27 51 861 8451 Email: firstname.lastname@example.org Website: www.ard.fs.gov.za Physical address: Free State Provincial Government Building, 55 Elizabeth Street, Bloemfontein 9300 Postal address: Private Bag X20565, Bloemfontein 9300 Tel: +27 51 404 8411 Fax: +27 51 404 8295 Email: email@example.com Website: www.fsdoe.fs.gov.za or www.mec.secretary.edu.fs.gov.za Department of Cooperative Governance and Traditional Affairs Department of Health MEC: Sarah Mlamleli MEC: Benny Malakoane Physical address: 7th Floor, Lebohang Building, St Andrews Street, Bloemfontein 9300 Postal address: PO Box 211, Bloemfontein 9300 Tel: +27 51 405 5304 Fax: +27 51 405 4193 Email: firstname.lastname@example.org Website: www.fscogtahs.gov.za Physical address: 4th Block, Bophelo House, cnr Maitland Street and Harvey Road, Bloemfontein 9300 Postal address: PO Box 227, Bloemfontein 9300 Tel: +27 51 408 1614 Fax: +27 51 408 1566 Email: email@example.com Website: www.fshealth.gov.za SOUTH AFRICAN BUSINESS 2014 118 LISTINGS Department of Human Settlements Department of Social Development MEC: Sarah Mlamleli MEC: Sefora Sisi Ntombela Physical address: 7th Floor, Lebohang Building, St Andrews Street, Bloemfontein 9300 Postal address: PO Box 211, Bloemfontein 9300 Tel: +27 51 405 5304 Fax: +27 51 405 4193 Email: firstname.lastname@example.org Website: www.fscogtahs.gov.za Physical address: 4th Floor, Old Mutual Building, Maitland Street, Bloemfontein 9300 Postal address: Private Bag X20616, Bloemfontein 9300 Tel: +27 51 400 0303 Fax: +27 51 400 0211 Email: email@example.com Website: www.socdev.fs.gov.za Department of Sport, Arts, Culture and Recreation Department of Police, Roads and Transport MEC: Dan Khothule MEC: Butana Komphela Physical address: 4th Floor, Perm Building, 45 Maitland Street, Bloemfontein 9300 Postal address: PO Box 119, Bloemfontein 9300 Tel: +27 51 409 8851 Fax: 086 538 4282 / +27 51 409 8864 Email: firstname.lastname@example.org Website: www.freetrans.gov.za Physical address: 4th Floor, Business Partners Building, cnr Henry and Eastburger streets, Bloemfontein 9300 Postal address: Private Bag X20606, Bloemfontein 9300 Tel: +27 51 410 4727 Fax: +27 51 410 4789, 086 566 8558 (SA only) Email: email@example.com Website: www.sacr.fs.gov.za Department of Public Works Department of Treasury MEC: Sisi Elisa Mabe Physical address: 3rd Floor, Lebohang Building, St Andrews Street, Bloemfontein 9300 Postal address: PO Box 690, Bloemfontein 9300 Tel: +27 51 405 5712 Fax: 086 766 0221 (SA only) Email: firstname.lastname@example.org Website: www.pwrd.gov.za MEC: Elzabe Rockman Physical address: 55 Elizabeth Street, Bloemfontein 9300 Postal address: Private Bag X20537, Bloemfontein 9300 Tel: +27 51 405 4141 Fax: +27 51 405 4152 Email: email@example.com Website: www.treasury.fs.gov.za 119 SOUTH AFRICAN BUSINESS 2014 FOCUS Free State Province – the heart of South Africa The Free State Development Corporation is actively seeking new investment and driving job creation as a catalyst for diversifying and expanding the province’s economy. T he Free State, one of South Africa’s nine provinces, is centrally situated in the heart of the country. It borders six of South Africa’s other provinces and shares a border with the Kingdom of Lesotho. Three of the country’s major roads traverse the province: the N1 from Limpopo to Cape Town, the N3 from Gauteng to KwaZuluNatal and the N5, which links both roads, making the Free State ideally situated as a transport and logistics hub. Driving investment into the province duction operation for the export of beef products to major markets in Europe and Asia; this entails fodder production, feed mill operations, an abattoir, meat processing and packaging plant, as well as logistics fleet operations. The handling capacity for the abattoir is estimated at 25 000 heads of cattle permonth. The Free State is actively driving new investments and job-creation initiatives into the province through the Free State Development Corporation (FDC). The key sectors targeted include manufacturing, renewable energy, infrastructure development, transport and Harrismith Logistical Hub logistics, business process outsourcing and offshoring as well This project is part of the as bio-medical and pharmaceutical services. Durban-Free State-Gauteng logistics corridor that was announced by the President of the Republic of South Africa. Efforts to develop the Free State into the agro-industry hub of Harrismith’s location on South Africa have resulted in a set of initiatives intended to exploit the N3 highway between and benefit the value-adding capacity of the province. Johannesburg and Durban provides an opportunity to Food Processing Park divert freight traffic and assoOne of these initiatives is the establishment of a food process- ciated economic activities in ing park in Harrismith, in the eastern region of the Free State, to order to establish a logistics host multinational companies in the food production sectors; hub and distribution centre this includes potato crisp manufacturing, grit manufacturing for de-stuffing, break-bulk and cereal manufacturing plants as well as a fresh-produce hub. packaging and consolidaOpportunities also abound in juice processing, deciduous fruit tion of inland bound and outbound cargo. The Free State canning and also for a starch-processing plant. This park will provide facilities for logistics, warehousing, cold Department of Police, Roads and Transport is the project storage and manufacturing to enhance production efficiencies. leader in the establishment of Integrated Beef Project this Harrismith Logistics Hub Another major project in the pipeline is an integrated beef pro- (HLH). Transport and logistics Agriculture and agro-processing SOUTH AFRICAN BUSINESS 2014 120 FOCUS Vehicle Distribution Centre State has the second-best solar-radiation index in South Africa The FDC is at an advanced after Upington in the Northern Cape. This provides an opportunity stage of commissioning a to harness the natural sun power and to generate solar electricity. Vehicle Distribution Centre This positions Xhariep as an ideal location for the deployment of (VDC) that will store and dis- concentrated solar power and photovoltaic solar power generatribute locally manufactured tion technology. and imported vehicles awaitThe FDC is currently facilitating two projects worth R900-million ing orders from dealerships. in the Free State: an automated power generation and distribuThis facility, launched by the tion project in Thabo Mofutsanyana District, and a solar park in Premier of the Free State in the Xhariep District. Opportunities are open for investors to partner with the FDC 2012, is located in the Tshiame industrial estate in Harrismith. in the establishment of the solar park and the manufacturing and The VDC will be comple- assembly of solar panels, solar water geysers and the establishmented at a later stage by a ment of solar energy generation plants (solar farms). The Xhariep parts-and-accessories centre District and Kopanong Local Municipalities have made 1 200 that will, among other things, hectares of land available for the solar project. undertake minor repairs on vehicles damaged in transit. Business process outsourcing and offshoring One sector in the Free State that presents great potential for development and investment is Business Process Outsourcing and Offshoring (BPO&O). South Africa offers a total cost saving of between 30% and 40% over the UK and Europe. Government Another planned development Assistance and Support (GAS) provides separate grants for is the Mangaung Bio-Medical training and for investment to local and international investors. Bloemfontein, capital of the Free State, is the hub of Telkomâ€™s Park. This world-class biomedical facility will be designed switching centres and sits on both national and international to host research laboratories, optical-fibre routes. The province also offers a large pool of export-orientated pharmaceu- trainable personnel at competitive wages. tical companies, biotechnology and medical research compaFREE STATE AT A GLANCE nies, competitive pharmaceuticals product companies and Population 2 840 974 various services and technoloArea 129 480 000kmÂ˛ gies. Capital Bloemfontein The intention of this development is to leverage on existing Provincial GDP 163-billion bio-medical research capability Contribution to national GDP 5,19% based at the University of the Per capita GDP R58 875 Free State, and to ensure that Mangaung Bio-Medical Park patents produced are commercialised locally. Renewable energy The Xhariep District in the southern region of the Free GDP growth rate 1.6% Unemployment rate Q4 33.3 Principal languages English, Afrikaans, Sesotho, Zulu, Xhosa Facts about the Free State. SOURCE: 2012 STATISTICS 121 SOUTH AFRICAN BUSINESS 2014 PROFILE SAMTI SAMTIâ€™s mission is to give innovative entrepreneurial opportunities to ordinary people for the creation and development of enterprises within the tooling sector. SAMTI promotes the development of SMMEs in the production of agricultural and mining tools. Vision The Seda Agricultural and Mining Tooling Incubator (SAMTI) aspires to be a world-class virtual tooling and design centre, focusing on front-end engineering for agricultural and mining tooling needs in the SMME sector. Overview The Seda Agricultural and Mining Tooling Incubator was established in 2008. It is part of a government programme/project initiated by the dti through a partnership between Seda and SOUTH AFRICAN BUSINESS 2014 the Central University of Technology (CUT) in the Free State. SAMTI promotes the development of SMMEs in the manufacturing of tools for agriculture and mining through technology incubation programmes. SAMTI is a Section 21 company that is governed by a board of directors, experts from CUT and the Seda Technology Programme (Stp), and which is based in Bloemfontein on the premises of CUTâ€™s Faculty of Engineering and Information Technology. 122 PROFILE not. If the client does not comply, a report will be written and the client must be referred to a relevant institution. Development stage Following the acceptance of the business idea, the enterprise then becomes a project of SAMTI. During this period, business development services, support, coaching and mentorship is given to establish and run the business. SAMTI’s operations are based at the Central University of Technology. Funded by Seda and supported by CUT, SAMTI strives to develop the SMME market in the Free State and as such has positioned itself as a major role-player in the global economy, in pursuit of the enhancement of knowledge in society and the development of regional communities through research and technology. Services SAMTI provides the following services: Design and development of tools • Training in tool-making • Assistance with licensing and compliance • Facilitation and assistance with the management of intellectual property • Post incubation Businesses are expected to graduate from the centre after three years. As they grow and make a profit, SAMTI is confident that the enterprise will become well established and sustainable. The development and support of the SMME sector results in: • Improved enterprise performance and productivity • Reduced failure rates • Improved profitability and growth, which will result in job creation • Globally competitive SMMEs that contribute towards the accelerated growth of the economy CONTACT INFO Business incubation process Pre-incubation After an application has been submitted, an interview will be set for a brief presentation to the panel. A non-disclosure agreement contract between the client and SAMTI will be signed. This will assist to protect the client’s intellectual property. The client will be rated, which will determine whether the client qualifies to be incubated or 123 Key contact person: Cantridge Sibanyoni Tel: +27 51 507 3592 Fax: +27 51 507 3483 Email: firstname.lastname@example.org Physical address: 20 President Brand Street, Bloemfontein 9301 Postal address: Private Bag X20539, Bloemfontein, 9301, South Africa Website: www.seda.org.za SOUTH AFRICAN BUSINESS 2014 REGIONAL OVERVIEW OF GAUTENG PROVINCE G auteng is the smallest in area but the largest contributor to the national GDP. As the leader of South Africa’s economy, it is the core of South African business and continues to perform in various other sectors. Manufacturing, wholesale, retail and trade, finance and business services and transport are the main economic sectors responsible for Gauteng’s wealth. By Megan Abels Key sectors 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. Most of the major banks are positioned around Johannesburg and it is home to Africa’s largest stock exchange, the JSE. 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. SPECIAL FEATURE GENERAL GOVERNMENT SERVICES 19.3% PERSONAL SERVICES 4.4% FINANCE, REAL ESTATE & BUSINESS SERVICES 24.7% TRANSPORT, STORAGE & COMMUNICATION 8.2% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 15% CONSTRUCTION 4.9% ELECTRICITY, GAS & WATER 2.8% MANUFACTURING 17.1% MINING & QUARRYING 3.2% AGRICULTURE, FORESTRY & FISHING 0.4% Gauteng sector contribution. SOURCE: GAUTENG GROWTH AND DEVELOPMENT AGENCY Key food and beverage brands are in op- and transport has always been a focus. In line eration around Gauteng. Nestlé and Pioneer with ‘Gauteng Vision 2055’, there are big plans Foods have spent millions on new develop- for infrastructure. ments and improvements. Rainbow, one the By the end of the 2012/13 financial year, country’s leaders in poultry production, has Gauteng would have spent R8.7-billion on 18 farms and two feed mills in the province. infrastructure (96% of its budget). Projects South African Breweries (SAB) has recently include upgrading existing and constructing constructed a new plant producing malted new schools and hospitals. The Tambo Springs inland port is expected to barley in Alrode to the value of R700-million. Companies such as Kimberly-Clark, Proctor be the biggest in Africa by the time it is complet& Gamble, ArcelorMittal, Transnet Engineering ed in 2017. The new inland port will be located and Aspen all have manufacturing facilities in along the N3 in close proximity to Heidelberg. This freight hub will link all major logistic and Gauteng Province. transport corridors. City Deep, the current inland port, is underEconomic future going a multi-billion-rand expansion through a partnership with Transnet, SANRAL and the City Gauteng is the heart of South Africa – all major of Johannesburg. roads and highways lead to it. Its infrastructure ZIMBABWE Premier: Nomvula Mokonyane Capital: Johannesburg Provincial website: www.gautengonline.gov.za Languages: Afrikaans, isiZulu, English, Sesotho Population: 12 272 263 (2011) Area: 17 010km2 Limpopo NAMIBIA Mpumalanga North West GAUTENG Free State Northern Cape MOZAMBIQUE FACTS AND FIGURES FOR GAUTENG BOTSWANA SWAZILAND KwaZuluNatal LESOTHO Eastern Cape Western Cape 125 SOUTH AFRICAN BUSINESS 2014 LISTINGS Gauteng Provincial Government A guide to Gautengâ€™s provincial government departments. Visit www.gautengonline.gov.za Office of the Premier Department of Economic Development Premier: Nomvula Mokonyane Physical address: East Wing, 13th Floor, Gauteng Provincial Government Building, 30 Simmonds Street, Johannesburg 2001 Postal address: Private Bag X61, Marshalltown 2107 Tel: +27 11 355 6000 Fax: +27 11 836 9334 Email: email@example.com Website: www.gautengonline.gov.za MEC: Nkosiphendule Kolisile Physical address: Matlotlo House, 94 Main Street, Johannesburg 2001 Postal address: Private Bag X091, Marshalltown 2107 Tel: +27 11 355 8000 Fax: +27 11 834 1972 Email: firstname.lastname@example.org Website: www.ecodev.gpg.gov.za Department of Agriculture and Rural Development Department of Education MEC: Nandi Mayathula-Khoza MEC: Barbara Creecy Physical address: Diamond Corner Building, 68 Eloff Street, Johannesburg 2001 Postal address: PO Box 8769, Johannesburg 2000 Tel: +27 11 355 1432 Fax: +27 11 333 0620 Email: email@example.com Website: www.gdard.gpg.gov.za Physical address: Arcadia Building, 10th Floor, 111 Commissioner Street, Johannesburg 2001 Postal address: PO Box 7710, Johannesburg 2000 Tel: +27 11 355 0909 Fax: +27 11 355 0542 Email: firstname.lastname@example.org Website: www.education.gpg.gov.za Department of Community Safety Department of Finance MEC: Nonhlanhla Mazibuko MEC: Mandla Gladstone Nkomfe Physical address: 27th Floor, Standard Bank Building, 78 Fox Street, Johannesburg 2001 Postal address: Private Bag X23, Marshalltown 2107 Tel: +27 11 689 3600 Fax: +27 11 689 3850 Email: email@example.com Website: www.gautsafety.gpg.gov.za Physical address: Imbumba House, 75 Fox Street, Johannesburg 2001 Postal address: Private Bag X112, Marshalltown 2107 Tel: +27 11 689 6000 Fax: +27 11 355 2481 Email: firstname.lastname@example.org Website: www.finance.gpg.gov.za SOUTH AFRICAN BUSINESS 2014 126 LISTINGS Department of Health and Social Development Department of Roads and Transport MEC: Ismail Vadi MEC: Anthony Hope Mankwana Papo Physical address: 22nd Floor, Bank of Lisbon Building, 37 Sauer Street, Johannesburg 2001 Postal address: Private Bag X085, Marshalltown 2107 Tel: +27 11 355 3235 Fax: +27 11 355 3259 Email: email@example.com Website: www.healthandsocdev.gpg.gov.za Department of Infrastructure Development Physical address: 13th Floor, Sage Life Building, 41 Simmonds Street, Johannesburg 2001 Postal address: Private Bag X88, Marshalltown 2107 Tel: +27 11 355 7507 Fax: +27 11 355 7509 Email: firstname.lastname@example.org Website: www.roadsandtransport.gpg.gov.za Department of Sport, Arts, Culture and Recreation MEC: Qedani Mahlangu Physical address: 63 Fox Street, Johannesburg 2001 Postal address: Private Bag X83, Marshalltown 2107 Tel: +27 11 355 5010 Fax: 086 599 1621 (SA only) Email: email@example.com Website: www.did.gpg.gov.za MEC: Lebogang Maile Physical address: 7th Floor, NBS Building, 38 Rissik Street, Johannesburg 2001 Postal address: Private Bag X33, Johannesburg 2000 Tel: +27 11 355 2504 Fax: +27 11 355 2640 Email: firstname.lastname@example.org Website: www.srac.gpg.gov.za Department of Local Government and Housing MEC: Ntombi Mekgwe Physical address: Bank of Lisbon Building, 37 Sauer Street, Johannesburg 2001 Postal address: Private Bag X879, Marshalltown 2107 Tel: +27 11 355 4016 Fax: +27 11 838 2116 Email: email@example.com Website: www.dlgh.gpg.gov.za 127 SOUTH AFRICAN BUSINESS 2014 MESSAGE Supporting childrens’ health MEC for Agriculture, Rural and Social Development Nandi Mayathula-Khoza highlights the programmes and initiatives that are improving the lives of Gauteng citizens. he department’s ongoing mandate is to improve Early Childhood Development (ECD) by providing access to ECD services to children aged 0-5 years. Early Childhood Development is contributing to quality basic education and the achievment of the Millennium Development Goals. It is important to note that Census 2011 reveals a 38,6% increase in the number of children in this age group living in Gauteng compared with the 2007 figures. This is as a result of the rapid urbanisation that our province is experiencing as a large number of South Africans, and our brothers and sisters from the rest of Africa, make their way to the continent’s economic powerhouse in pursuit of work and economic opportunities. This calls for a decisive response and implementation of critical interventions from us as a provincial government to give our children a head start in life. That is why the expansion of Early Childhood Development services in partnership with local government structures, the National Development Agency (NDA), and through Corporate Social Investment (CSI) programmes in disadvantaged communities and priority wards is intensified. This will be achieved through capacity building and incubation programmes of identified and prioritised ECDs that comply with minimum norms and standards, and the legal requirements of the Children’s Act and the Public Finance Management Act. SOUTH AFRICAN BUSINESS 2014 128 T Nutrition In an effort to eradicate child poverty and respond to the issue of nutrition, which is critical within the first 1 000 days of every child’s development, the per capita subsidy per child has been increased from R13 to R15 per child per attendance in the 2013-14 financial year. Early Childhood Development services not only support children’s health, wellbeing and early learning, they are increasingly recognised as a sound economic investment and a key strategy in reducing inequality (South Africa: Child Gauge, 2012). To this end, the department has embarked on an intensive programme to invest in children and their educators. The following are being addressed in a phased approach: • Educational toys have been purchased for crèches in the poverty pockets • A standardised nutritional menu will be implemented in some of the crèches • Occupational health and safety training has started in 250 crèches throughout the province MESSAGE Fireballs, fire extinguish- Over and above that, the able children do not run the risk ers, smoke detectors, fire department is heightening of becoming the next generablankets and evacuation awareness of the importance tion of the poor. In order to turn plans will be provided to of operating legal ECD centres. this vicious cycle into a virtuous further ensure the safety This will be achieved by target- cycle, poverty reduction must ing parents and practitioners start with children. Clearly, of our children • We have partnered with the through structured ward-based giving children access to an Independent Development intervention programmes. This integrated package of quality Trust (IDT) to undertake mi- measure will assist to identify basic social services is one of nor renovations at some of the mushrooming of illegal ECD the most effective and efficient the crèches centres that could endanger steps we can take to combat the safety, growth and devel- the scourge of child poverty. The department will work with opment of our children, in this the Provincial Department of financial year. By the end of DeEducation to improve the qual- cember 2012, we had funded ity of education at all ECD cen- a total of 1 089 ECD centres More than 150 000 dignity tres through curriculum devel- managed by funded non-profit packs provided to girl learners opment. In complementing and organisations (NPOs). We will by our department in 2012 have strengthening the curriculum increase the number of funded dramatically changed their lives. within ECD service delivery, the ECD centres to 1 221, which A cursory survey conducted by department has embarked on will provide access to about 73 the department late last year ina project to supply the centres 508 children of 0-5 years of age. dicates that the majority of the beneficiaries have regained their with child-friendly standardised computer programmes. The provision of social infra- confidence, and are no longer In line with this initiative and structure in ECD centres is a missing school. This means that: the national Department of critical component of improving • The rights of the Girl-Child to school and the dignity Communications’ strategy to access to the ECD Programme. have been restored; implement information technol- In the 2013-2014 financial year, ogy and communication (ITC) the department plans to build • The rate of school attendance has improved; and programmes at ECD centres, four additional ECD centres in the department plans to distrib- prioritised townships and poor • The health and reproductive rights of Girl-Children ute about 1 000 child-friendly wards. The initiative provides a are upheld. computers before the end of safe and secure learning environment for children in terms of the current financial year. stimulation and cognitive devel- The project does not only help to This will enable the children to opment, among others. keep many girl learners in school learn new concepts on their but it also provides two womown. Technology creates sev- We are increasing our invest- en-owned cooperatives that eral pathways that allow them ment in this programme be- produce and package sanitary to learn and interact in a manner cause we know that when packs with sustainable business that enhances their cognitive, poverty strikes a family, it is the opportunities. This initiative has affective and psycho-motor children who bear the biggest created about 100 permanent skills. To a large extent, this brunt. Biological and intellec- jobs for women receiving the means that ECD practitioners tual growth cannot wait until child support grant. We have will be able to provide learning a family has escaped poverty. to celebrate the number of environments that enrich learn- We have a responsibility as a women we have conferred digers holistically. government that these vulner- nity on by proving them with an • Dignity packs 129 SOUTH AFRICAN BUSINESS 2014 MESSAGE opportunity to live ‘by the sweat of their brow’. Through this project, we are also catering for the needs of girl learners with albinism. Every month, we provide 434 girl learners with albinism with customised packs containing a sun screen, sanitary pads, lip balm, hat, lotion and Vaseline. Working together with an organisation for people with albinism, we will expand our services to all the schools in the province. To this end, the department will in the 2013-2014 financial year, increase the beneficiation of dignity packs to 200 000 children. We are particularly pleased at the improved performance of the children and the impact this programme has had, especially the fact that it enhances the dignity of our girls and reduces absenteeism among them. School uniforms Learners receiving their dignity packs. • • • Children attended school poor communities to find emmore regularly, performed ployment. The department has better and actively par- also facilitated the sharing of ticipated in class and extra skills among women in these cooperatives. It has further mural activities Economic stigmatisation created a spirit of knowledgeamong learners had been sharing, social networking and reduced mutual support between coParents experienced re- operatives, as well as among duced financial pressure as women in various communities. they were able to finance From April 2009 to March 2012, other necessities, such as our government provided groceries, school fees and school uniform packs to more transport than 263 000 learners. Unemployed women had the opportunity to develop In the coming year, it plans to their sewing skills and earn expand the provision of school a living in the cooperatives uniform packs to a total of and working with the depart- 110 000 vulnerable ment on the project deserving learners. The school uniform programme benefits children in quintiles one and two schools, as well • as those located in previously disadvantaged communities. Each school uniform package consists of a pair of shoes, a shirt, jersey, a pair of trousers or a tunic and a pair of socks. An independent research study The study has further indicated conducted among school- that the school uniforms prochildren, parents, teachers, duced by the two cooperatives schools and cooperatives in have enabled many women in 2012 to determine the impact of the school uniform project READ MORE has revealed that: Visit: www.gautengonline.gov.za SOUTH AFRICAN BUSINESS 2014 130 PROFILE Imperial Technical Training Academy The IMPERIAL Technical Training Academy Network provides cutting-edge, innovative and industry leading training in five trades in the motor sector, and is regarded to be the largest provider of technical training in Africa. training centre environment. The employed apprentice will return to their place of work where he/she will receive onthe-job practical experience on the workshop floor aligned to their levels of competence achieved through the CBMT block release training method. Target markets Description of business The companyâ€™s target market is any individual interested in entering into a trade within the motor industry with mechanical aptitude and relevant qualifications. Imperial Technical Training Academy provides relevant, practical, job-related training for apprentices and artisans in the automotive industry. Key facts and figures Year established: 2008/09 No of facilities: Germiston, Wadeville, Cape Town, Bloemfontein (in 2014) The training centres offer the merSETA (manu- Current enrolment: 860 apprentices facturing, engineering and related industries) Network capacity: 1 200 apprentices accredited competency-based modular training (CBMT) courses in light vehicle (petrol and CONTACT INFO diesel) apprentice training, heavy vehicle (diesel) Key contact people: apprentice training, auto electrical and autotronSean Fenn, General Manager ics apprentice training, forklift apprentice training, Tel: +27 11 255 4000 Fax: +27 86 512 3054 and motorcycle and scooter apprentice training. Email: firstname.lastname@example.org All centres are fully accredited decentralised Physical address: cnr Osborn and trade test centres. The learners receive theoDekema roads, Wadeville retical classroom-based education as well as Website: www.itta.co.za comprehensive practical exposure within the Description of services 131 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE An African leader Johannesburg and Gauteng are the portals for foreign companies wanting to invest in Africa. A nyone wanting to know anything about retail trends in South Africa would do well to spend some time in Sandton. This is the home of shopping, especially high-end shopping. Every global brand is present, from Gucci to Levi Strauss, from Cartier to Cotton On. US brand Gap made its presence felt in Sandton in 2012, and it was closely followed by Zara of Spain and Britain’s Thomas Pink. And it’s not just South African shoppers that these brands want to attract. Many international brands are looking to Johannesburg and Gauteng as a launchpad into Africa. According to information put together by SOUTH AFRICAN BUSINESS 2014 Investec Securities (and reported on by the Sunday Times in November 2012), about half of South Africa’s retail sector is foreign-owned. This is a big increase from the 24% reported in 2007. SA retailers have the biggest presence in Africa, and this is what makes South African companies attractive to international brands. There have been mutters to the effect that South Africa has lost some of its shine as a destination for foreign direct investment (fdi). But Ernst & Young’s Africa Attractiveness Report (2013) put those claims firmly to bed. Between 2007 and 2011, projects grew at a compound annual rate of 28.7% and foreign capital earned returns of 24.7%. With a gross domestic product (GDP) of about $1.5-trillion, the continent has tremendous 132 SPECIAL FEATURE potential. Frost & Sullivan Retailers such as Shoprite have been tradexpects Southern Africa (ex- ing north of the Limpopo River since the 1990s. cluding South Africa) to grow Shoprite is Africa’s biggest retailer, with 243 corat better than 6% per annum porate or franchise stores in 16 countries outside every year to 2020. The most South Africa. This experience gave the company likely sectors to grow as iden- valuable experience and resilience. Woolworths tified by the researchers are is targeting 60 stores outside South Africa. food processing, beverages, Massmart’s significant presence in Africa is cement, steel, paper and what attracted American super-store Walmart, pulp and mining. All of these which paid R16-billion for 51% of the South sectors are strong in Gauteng. African group. Ernst & Young’s Rapid Tiger Brands has interests in Ethiopia and Growth Market report con- Nigeria, with the recent purchase of Dangote cludes that sub-Saharan Flour Mills in Nigeria among its larger purchases. Africa will be the world’s Procter & Gamble is investing in production second-fastest growth area facilities in South Africa and Nigeria in order to in the next decade. cope with rising demand for fast-moving conIn 2012, the JSE started sumer goods. It is revealing that the compatrading in Zambian grain con- ny’s only manufacturing plants in Africa are in tracts and listed government Johannesburg’s Kempton Park (very near the bonds of the government of region’s biggest airport) and in the most built-up Namibia for the first time. parts of Nigeria – Ibadan and Lagos. The site of Both of these moves were in Procter & Gamble’s newest R1.6-billion facility line with the Johannesburg- has not been announced, but it is almost certain based exchange’s goal of to be in Gauteng. becoming a continental Several mining companies have African exchange, especially in the operations while one of the continent’s biggest corporate, infrastructure, business success stories was the MTN investgovernment and state-owned-enterprise sectors. ment in Nigeria. What some considered a ‘brave’ As part of its Africa Strategy, the JSE is to investment in 2001 has evolved into a hugely move companies on the Africa Board to the JSE successful operation. Sanlam has been moving quickly to capitalise Main Board. Smaller African companies will also be encouraged to list on the AltX, something that on its existing businesses in Africa: it currently wasn’t possible before. The JSE currently offers controls 20% of the insurance market in subSaharan Africa (Merrill Lynch). Old Mutual is buying 12 African companies. Many South African funds and agencies into Nigeria through its purchase of Oceanic Life. With assets in excess of $160-billion, Standard are looking to Africa for growth. The Public Investment Corporation (PIC) will put 5% of its Bank Group is the largest company in Africa and government employees’ pension funds into Africa: is ranked 177th in the world by Forbes. this amounts to about R50-billion in funding. The SA Institute of Race Relations has found that South African investment into Africa has increased four times faster since 1994 than the READ MORE country’s overall rate of foreign investment. South African direct investment in the rest of Africa reached a figure of R115.7-billion in 2009, accord- Visit: www.frontiermarketnetwork.com/ article/3875 ing to the SA Institute of Race Relations. 133 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Manufacturers are building new capacity in Gauteng Retailers are eyeing new markets in Africa. A surge in new factory construction is a Diageo, is targeting 4.5 million hectolitres. sure sign that manufacturers are exSouth African Breweries (SAB) has a malting panding into new markets. Gauteng, as plant at Alrode but it announced in 2013 that the leader in South African manufactur- R700-million will be spent on a new one on the ing, has seen several new plants built in a variety same site. The plant will produce 130 000 tons of fields in recent times, especially the automo- of malted barley every year. tive and food and beverage sectors. Procter & Gamble’s nappy facility at Kempton The link with new markets in Africa is explored Park in the Ekurhuleni Municipality started production in 2009. This is the company’s first South in detail elsewhere in this book. Beer, motorcars and homecare products are African plant although the Pampers brand has among the goods to be manufactured at these been active in South Africa for 15 years. A second production line was added to the new facilities, all of which are equipped with the R350-million plant in 2010, immediately doubling very latest in technology. Increased sales of armed vehicles to new production capacity. This new investment was markets like Turkey have persuaded DCD supported by an investment incentive from the Protected Mobility to invest R100-million in a national Department of Trade and Industry (dti). In 2013 the company announced another new factory at Isando. Heineken’s first South African brewery R1.6-billion investment. The site of the new mulkicked into operation in Sedibeng south of ti-product factory will be announced later, but Johannesburg in 2009. The 80-hectare facility the amount set aside signals a huge commitquickly went beyond original production pro- ment to the South African and African markets. jections of three million hectolitres per annum. The other big player in the Fast Moving Heineken, which runs the operation jointly with Consumer Goods (FMCG) market, Unilever, SOUTH AFRICAN BUSINESS 2014 134 SPECIAL FEATURE has two large manufactur- flavours foods, achieved revenues in 2012 of ing plants in KwaZulu-Natal, $1.46-billion. and a factory and a distribuTata Group, opened its first South African tion centre in Boksburg. The vehicle assembly plant in Pretoria in August 2011. Boksburg facility will receive The size of the investment is R110-million and the an R800-million boost so plant is able to assemble 3 650 trucks of various that Unilever can increase sizes in the Tata range in the course of a year. its production of home care Tata’s facility is in the Rosslyn area of Pretoria, products such as Handy Andy where BMW have been making motor cars and Sunlight soap. The new since 1975. In 2009, BMW invested a further factory will also ensure that R2.2-billion in its Rosslyn plant, bringing it up products sold in this line in to date with the latest technology and helping it South Africa will also be 100% win the 3-Series contract again. locally made. The plant’s capacity has been increased from Local company Bowler 50 000 to 87 000 units per year, with about 80% Metcalf has made a signifi- of production being exported. cant investment in Boksburg. Nissan has also announced plans to double By spending R36.3-million on its capacity at its Rosslyn plant to 100 000 units a bottling plant, the Western per year. Ford Motor Company of South Africa Cape-based company hopes has an assembly plant in Silverton, Pretoria, with to tap into Gauteng’s lucrative plans for the assembly of 110 000 Ford Ranger soft-drink market with its Jive pickup trucks at Silverton per year. Ford intends brand. doubling production volumes every year from American company Sensient 2012 to 2016. Technologies Corporation has come to South Africa in the form of a factory in Kya Sands READ MORE in Randburg that will also have research capabilities. Sensient, Visit: www.frontiermarketnetwork.com/ which operates in 30 countries, colours and article/3879 SECTOR MAKING COMPANY LOCATION Food & beverages Colours and flavourants Sensient Technologies Corporation (US) Kya Sands, Randburg, Johannesburg VALUE Not given Food & beverages Jive cooldrinks Bowler Metcalf Boksburg R36.3-million Food & beverages Malted barley South African Breweries Alrode R700-million FMCG; consumer products Soaps, cleaning products. Unilever Anderbolt, Boksburg R800-million FMCG; consumer products Multi-product Procter & Gamble To be announced. Nappy plant at Kempton Park R1.6-billion New plants relevant to FMCG sector in Gauteng. 135 SOUTH AFRICAN BUSINESS 2014 SPECIAL FEATURE Gauteng’s metropoles Three of South Africa’s biggest cities help to drive the Gauteng economy. City of Johannesburg for the city and are in the process of greatly expanding available retail and office space. The The City of Johannesburg is the capital city of Gautrain project has strengthened this trend. the Gauteng Province. It is also South Africa’s The city’s population of over three million unofficial financial capital. Many international has a wide choice of sports to play and watch companies looking for a first presence in Africa at superb stadiums. Despite its built-up nature, have set up offices in Johannesburg. Johannesburg has excellent parks and places. Gold mining was the first economic activity Frequent music concerts are held in public open that brought large numbers of people to the area areas and the city has more than 300 heritage and the city grew quickly after 1886. sites and about 30 major galleries and museums. Today the city does most of its business in These include the Apartheid Museum at Gold financial services (banking, investment and in- Reef City and Museum Africa in Newtown. surance), commerce, trade and manufacturing. Media, advertising and IT are other strong sectors. Most major banks are headquartered in the The City of Tshwane city, as is Africa’s largest stock exchange, the JSE. Mining stocks still predominate on the JSE. Pretoria is South Africa’s administrative capiCreative initiatives to reinvigorate the inner tal and seat of government. The city of more city of Johannesburg are paying off. City agen- than two million citizens falls under the City of cies such as the Johannesburg Development Tshwane Metropolitan Municipality and has a Agency are investing in infrastructure. The central varied economy. business district is South Africa’s largest urPlans are underway to revitalise the central ban development zone at 18 square kilometres; business district of Pretoria, which has a high businesses investing there attract generous tax proportion of government department buildings. concessions. The West Capital Precinct aims to make the CBD The Mabobeng Precinct in the eastern part pedestrian-friendly and attract new business. of central Johannesburg is another attempt to There are also big plans to develop Centurion revitalise the inner city. into a major business node. Sandton and Rosebank have firmly estabIn 2011, the District Municipality of Metsweding lished themselves as the new commercial hubs was added to Tshwane, thus bringing the SOUTH AFRICAN BUSINESS 2014 136 SPECIAL FEATURE • • • • • towns of Bronkhorstspruit and Cullinan under the metro. This north-eastern part of the province has an economically varied profile that includes mining and flower cultivation. Services make up the biggest economic sector (27%) with manufacturing, finances and trade following in importance. The Nan Hua Buddhist Temple in Bronkhorstspruit is the largest Buddhist temple in South Africa. The Jacaranda City could be known as any number of other nicknames; among them Diplomatic City and Research City. Pretoria has: • The embassies of every foreign country represented in South Africa • The University of Pretoria, the University of South and the Tshwane University of Technology • The Council for Scientific and Industrial Research (CSIR), the Nuclear Energy Corporation (Necsa), the South African Bureau of Standards (SABS) and the Human Sciences Research Council (HSRC) The National Research Foundation, South African Biodiversity Institute, Sports High Performance Institute, Africa Institute of South Africa, Forestry and Agricultural Biotechnology Institute, Institute for African Renaissance Studies The Innovation Hub (CSIR, the University of Pretoria and Gauteng provincial government) Automotive Supplier Park, Rosslyn BMW, Tata truck assembly plant and Renault-Nissan at Rosslyn and Ford at Silverton Other industries include food and bever- •