Western Cape Business 2013
The 2013 edition of Western Cape Business is the eighth issue of this highly successful publication that, since its launch in 2005, has established itself as the premier business and investment guide to the Western Cape Province. Western Cape Business is unique as a business journal that focuses exclusively on the Western Cape and that also carries full Audit Bureau of Circulations (ABC) certification, meaning its print run and circulation of 16 000 copies is independently audited and verified. The publication has been endorsed by Wesgro, the official tourism, trade and investment promotion agency for the Western Cape, since inception.
2013 EDITION WESTERN CAPE BUSINESS THE GUIDE TO BUSINESS AND INVESTMENT IN THE WESTERN CAPE PROVINCE THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA www.westerncapebusiness.co.za | www.frontiermarketnetwork.com University of South Africa All the support you need when you need it. Did you know that when you study at Unisa you can achieve a globally recognised education with the support from our regional centers? The Western Capeâ€™s two campuses in Cape Town and George give you access to registration facilities and support, computer labs, learning through video-conferencing and satellite broadcasts, library access, tutorial classes and much more. Learn without limits. 10004122JB Visit or call us today and start your journey to success: Cape Town: 15 Jean Simonis Street, Parow. Tel: +27 21 936 4114 Fax: +27 21 936 4119 E-mail: firstname.lastname@example.org George: Joubert Plaza 1, 100 Meade Street, George. Tel: +27 44 884 1300 Fax: +27 44 884 1303 E-mail: email@example.com university of south africa Petroleum Agency SA encourages investment in the oil and gas sector by assessing South Africa's oil and gas resources, and presenting these opportunities for exploration to oil and gas exploration and production companies. Compliance with all applicable legislation in place to protect the environment is very important, and rights cannot be granted without an approved Environmental Management Plan. Explorers must prove financial and technical ability to meet their commitments in safe-guarding and rehabilitation of the environment. Preparation of Environmental Management Plans requires public consultation and a clear demonstration that valid concerns will be addressed. A AGENCY FOR PR SOU TH N CA ION OT M O I FR OF PETRO L M LO EU N TIO ITA PETROLEUM AGENCY SA TION AND ORA EX PL P EX Petroleum Agency SA, based in Bellville, Cape Town, is responsible for the promotion and regulation of exploration and exploitation of oil and gas (petroleum) resources within the Republic (onshore and offshore) on behalf of government in terms of the Mineral and Petroleum Resources Development Act. Contact us to find out about : Onshore or offshore exploration opportunities for oil and gas in South Africa Permits and rights for reconnaissance, exploration or production Availability of oil and gas related geotechnical data +27 21 938 3500 firstname.lastname@example.org www.petroleumagencysa.com contents contents western cape business 2013 edition Published by Global Africa Network (Pty) Ltd 11 12 20 45 53 62 Introduction Foreword11 Western Cape Business is a unique guide to business, investment and tourism in the province. Foreign direct investments on the rise 12 Premier of the Western Cape Helen Zille shares her enthusiasm for the latest developments in the areas of trade and investment in the Western Cape. Western Cape is top-performing province 16 Wesgro CEO Nils Flaatten highlights the province’s growth. City is a centre of growth 18 Cape Town Mayor Patricia de Lille highlights the city’s strengths and opportunities. Special features Regional overview of the Western Cape 20 The Western Cape’s already strong financial-services sector is growing fast, and the African offshore gas boom is set to boost the province’s ports. Overview of the South African economy 28 Key facts and figures on South Africa’s demographics, economy, trade and investment. George – driving investment in the Garden Route 45 The Garden Route’s leading town has a diverse economy. Oil and gas bonanza fuels interest in West Coast 53 There are plans to develop an industrial development zone at Saldanha. Where history meets technology 59 Innovation under the oaks in Stellenbosch. Hotels holding on in tough times 62 New hotels in Cape Town are bucking a sector trend. The maritime industry 126 The Western Cape is well placed to lead a lucrative South African maritime industry. western cape business 2013 4 contents 64 80 87 89 92 132 106 Destination Western Cape Tourism64 The Western Cape is one of the world’s truly great destinations. Events and conference facilities 72 A golfing indaba is set for the CTICC in 2013. Economic sectors Agriculture80 Former co-ops have transformed themselves into multimillion-rand businesses. Wine87 Harvests and production volumes are on the up. Aquaculture and mariculture 89 A container fish farm could boost poor families’ incomes. Fishing92 Most of South Africa’s big food companies have fishing divisions. Oil and gas 96 Massive gas finds off the African coast could transform the sector. Mining100 Cape Town hosts Africa’s biggest mining conference. Manufacturing103 Experience in boat building is giving the Western Cape an edge in wind-turbine manufacture. Boatbuilding105 Western Cape companies are world leaders in boatbuilding. Food and beverages 106 The Western Cape makes every kind of food and beverage. Engineering107 The Western Cape engineering sector is diverse and well-resourced. Transport119 The Western Cape has excellent transport infrastructure. Construction and property 132 Cape Town’s CBD is a hive of building activity. Water139 The Berg Water Project is one of the country’s biggest. Energy142 The Western Cape is promoting itself as a manufacturing hub for renewable technologies. western cape business 2013 6 Pianist and Composer Tax Expert Unique People. Inspired Results. Billy Joubert: “Writing music involves strict disciplines, but that doesn’t inhibit my creativity in any way.” As a member of our dynamic tax team, pianist and published composer Billy, works exactly to international tax legislation. And his flair allows him to create simple solutions to complex situations. Visit us at www.deloitte.com/za for more about our unique people and inspired results. Audit I Consulting I Corporate Finance I Risk Advisory I Tax © 2012 Deloitte & Touche. All rights reserved. Member of Deloitte Touche Tohmatsu Limited. Chillibush8258Deloitte Billy Joubert contents Media147 147 150 152 174 178 202 23 Many national publishers are based in the Western Cape. Film148 Films and commercials earn the province about R5-billion annually. Advertising149 Creative Week Cape Town hosted two big advertising awards. Design150 Cape Town is the World Design Capital for 2014. Banking and financial services Insurance167 Insurance companies have a big presence in the Western Cape. Development finance and SMME support Education178 Western Cape researchers are world leaders. Call centres and BPO 194 The BPO sector is growing fast. Business support services Sak Government South African National Government Western Cape Provincial Government R 63 en ro Western Cape Local Government Carnarvon Fish oei 214 Hanover N12 R63 R63 s N1 R63 Rie t Three Sisters Fraserburg Le eu w Sutherland ws Gro Bre ede western cape business 2013 Infanta Arniston Struisbaai Leeu-Gamka ka Sou t Klipplaat Bay Gro ot s Olifant R62 ot R62 Montagu R43 Barrydale R62 Franschhoek Robertson Ashton Swellendam Villiersdorp Riversdale Stellenbosch Genadendal t Heidelberg Grabouw N2 N2G Riviersonderend ou don's Bay rit s Caledon e R44 Stillbaai Hermanus einmond Bredasdorp Cape St Sebastian Gansbaai N9 Albert map Western Cape Prince locator Willowmore Western Cape Calitzdorpregional map De Rust Uniondale Oudtshoorn Western Cape municipalities Joubertina Laingsburg Matjiesfontein Touwsrivier ToLadismith u R 43 Su nd R 61 N12 Gam Buffels N1 Graaﬀ-Reinet Aberdeen s ay yka ry R44 R45 Wellington Worcester Paarl Rawsonville R60 Dw N1 R43 Prince Albert Road R 63 Kariega Sout Beaufort West wa nk Ta oorreesburg R 44 Tulbagh R 46 West Ceres Walker Bay ek Sector contents 76 Business organisations 197 Index220 Eastern Cape Maps Western Cape Cederberg R44 Se A guide to the metropolitan, district and local municipalities in the Victoria West Williston Western Cape. Richmond Loxton reference Northern Cape Citrusdal N10 R 63 Calvinia anrhynsdorp Clanwilliam 212 Britstown De Aar A guide to the Western Cape’s provincial government departments. r R 27 202 An overview of South Africa’s national government departments. ge On Nieuwoudtville 7 196 The Western Cape’s varied economy needs multi-skilled support services. G R 27 Loeriesfontein 174 Western Cape entrepreneurs are winning awards. Brandvlei NCE 152 Financial services is a key provincial sector. N12 George R 62 N9 SedgeﬁeldKnysna Herolds Bay Mossel Bay Vleesbaai K o u ga Kareedouw N2 Plettenberg Stormsrivier Bay Cape St Francis INDIAN8OCEAN 0 0 100 km 100 miles 23 23 216 Contact us: email@example.com | +27(0)21 918 4488 credits western cape business 2013 www.westerncapebusiness.co.za Western Cape Business is published by Global Africa Network (Pty) Ltd ISSN 1816-370X Editorial & production Publisher Editor Research and writing Creative director DTP operator Assistant editor Production assistant Chris Whales Karen Kühlcke John Young Ian Jamieson Colin Carter Katie Reynolds Anjé Robberts Advertising National sales manager Loudon Cito Advertising representatives Action Africa, Colleen La Gorge, Debbie Bender-Overmeyer, Jeremy Petersen, Karen Nimmo, Nathalie Horswell, Rashaad Essop and Sam Oliver. Sales support manager Zenobie Knox Sales support assistant Nadia Dicks Administration Managing director Clive During Financial controller Brett Watson Administration and accounts Charlene Steynberg, Natalie Koopman Distribution Lizé Fourie Printing CTP Distribution Western Cape Business is distributed internationally on outgoing and incoming trade missions, through Wesgro and the Cape Chamber of Commerce, 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. Member of the Audit Bureau of Circulations Published by 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 Disclaimer Western Cape 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. While the publisher, Global Africa Network (Pty) Ltd, has used all reasonable efforts to ensure that the information contained in Western Cape 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. western cape business 2013 Photo credits 10 Photographs: Flickr, Morguefile, AGCO MediaPlace, Anglo American, StockXchng, MediaclubSouthAfrica.com, Wikimedia, Professor Gavin Younge, Geof Kirby, Create Design, Damen Shipyard Cape Town, Asara Wine Estate and Hotel, Tsogo Sun Hotels, Dockside Hotel, and Andre Wessels. Cover photographs: (V&A Waterfront) Tim Wecke, (foundry, wind turbines, shipping container) iStockPhoto, (grapes, vintner, penguin) Veer, (sculpture) Gavin Young. foreword Western Cape Business A unique guide to business, investment and tourism in the Western Cape. T 2013 EDITION he 2013 edition of promoting or supporting deal WESTERN CAPE transactions in rapidly develWestern Cape Business is oping economies. the eighth issue of this BUSINESS The 2013 edition of Western highly successful publication THE GUIDE TO BUSINESS AND INVESTMENT IN THE WESTERN CAPE PROVINCE Cape Business includes an upthat, since its launch in 2005, to-date economic overview has established itself as the of the province (see p20) and premier business and investdetailed overviews of the ment guide to the Western region’s major sectors (see Cape Province. Western Cape Business is unique as a business sector index on p76). journal that focuses exclusively The 2013 edition is introon the Western Cape and that duced with messages from the also carries full Audit Bureau Premier of the Western Cape of Circulations (ABC) certificaHelen Zille (p12), the CEO of tion, meaning its print run and Wesgro Nils Flaatten (p16) and circulation of 16 000 copies the Mayor of the City of Cape Town Patricia de Lille (p18), with is independently audited and verified. The publication has been endorsed by input on the economy and development of the Wesgro, the official tourism, trade and invest- region provided by MEC for Finance, Economic ment promotion agency for the Western Cape, Development and Tourism Alan Winde (p26). since inception. Global Africa Network (www.gan.co.za), the Western Cape Business was originally launched publisher of Western Cape Business, specialises as a print journal to meet the need for a com- in business-to-business print and electronic prehensive and well-researched business guide publications, producing a series of officially to the province. A number of complementary endorsed, region-specific, annual print journals. electronic features have subsequently been Every province in South Africa is now covered introduced to give participants in and readers by this unique range of journals and websites. of the journal a wider range of communication A national business guidebook, South African options. These include the website, www.west- Business, was added to the stable in 2011. erncapebusiness.co.za, an e-book version availGlobal Africa Network thanks the dedicated able through a hyperlink on the website’s home sales team and the professional and committed page, as well as a news feed and press-release writers, editors and designers who worked so service for business, event and investment news hard to produce this edition of Western Cape on the province. Business. We thank the Office of the Premier, New in 2012 was the launch of the Wesgro and the companies, parastatals and other online platform Frontier Market Network organisations that provided us with information (www.frontiermarketnetwork.com), a business and supported this undertaking. network for fast-growing ‘frontier’ markets, Chris Whales which builds on the offering of our popular Publisher, Global Africa Network TradeInvest websites. The community comprises Email: email@example.com companies, government organisations and indi- www.westerncapebusiness.co.za viduals involved in doing business, investing, www.gan.co.za THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA www.westerncapebusiness.co.za | www.frontiermarketnetwork.com 11 western cape business 2013 message Foreign direct investments on the rise Premier of the Western Cape Helen Zille shares her enthusiasm for the latest developments in the areas of trade and investment in the Western Cape. to start. Inside you’ll find the latest insights into the economy of the Western Cape, detailed information about sectors and resources, and what gives us the edge when it comes to trade and investment. The 2013 edition comes at a vibrant and exciting time for our province, with the Western Cape developing tourism’s contribution to the local economy and driving forward our Green Economy agenda with promising new energy projects and infrastructure investment – and that is just to start. Keep reading to learn about the companies, projects and policies that are driving the Western Cape’s economy and helping our province lead South Africa. Investment Helen Zille Despite a lacklustre recovery in the US, uncertainty in Europe and slowing growth in China, the Western Cape remains a competitive investment destination – locally and internationally. Between June 2009 and June 2012, the Western Cape attracted 80 foreign direct investment (FDI) projects with a total value of R30.1-billion – a 27% increase on FDI investment between 2005 and 2008. This substantial growth in FDI, in spite of global economic turmoil, has helped highlight the province’s strength elcome to the 2013 as a global investment destination and its growing reputation Western Cape Busi- as a gateway to Africa. The Western Cape is also exercising its investment muscle in ness journal – the only provincial publication Africa, however, helping South Africa gain a foothold in markets with the endorsement of which have traditionally been dominated by Chinese and US the Western Cape’s official investment. Western Cape FDI into Africa grew by 73.3% yearinvestment and trade promo- on-year in 2011, compared to combined national FDI growth into tion agency, Wesgro, and full Africa of 19.8%. The Western Cape also has by far the largest accreditation from the Audit share of FDI in Africa, with 74% of the national total coming Bureau of Circulations of from the province. South Africa. It is clear that the Western Cape has become an investment If you want to invest, trade or hub for the wider African continent. Companies headquartered in network in Cape Town and the Cape Town and the wider province are making substantial African Western Cape, this is the place investments in property development projects and financial W western cape business 2013 12 photo: thomas sly/flickr message natural scenery and attractions, it is no wonder Cape Town was on CNN’s list. This accolade serves to reinforce the Western Cape’s goal of growing tourism’s share of regional GDP from 10% to 15% by 2014. And we’re on the right track. Over the 2011 December holiday, Cape Town International Airport received 86 910 international arrivals – over 17% more than the year before. Regional arrivals also grew by double digits, seeing an incredible The Western Cape has three ports: Saldanha, Mossel Bay and 26% increase. Cape Town. Cape Town International Airport even beat its World services, among others. This is exactly the kind of investment Cup record, seeing 4.21 million that is going to bear fruit for the Western Cape, as many African arrivals in 2011 – over 4% more economies continue to grow faster than their American and than in 2010. European counterparts. Major accolades from TripAdvisor, Lonely Planet, and The New York Times – as well Trade as being named World Design The past year has brought no shortage of good news for the Capital for 2014 – have all Western Cape’s trade prospects. China gave South Africa an boosted Cape Town’s interexclusive platform to showcase its wares to the Chinese market national reputation and are with the SA Exhibition in Beijing and Shanghai. The exhibition helping us in our aim of prowas exclusive to 59 South African exhibitors – 23 of which were moting the city as a destination from the Western Cape. for businessmen and tourists The province’s strongest showing came from the wine sector, from Africa, the Middle East and for which China could prove a valuable export destination. Due the BRICS countries. to its expanding economy, growing middle class and taste for Another sector that has wine, Chinese wine consumption grew by 36% between 2009 seen strong growth is business and 2012 alone. process outsourcing. Already With a cloud still hanging over the US and Europe, two of South a favourite destination for UK Africa’s largest export markets, Africa is proving to be increas- companies, the latest figures ingly fertile ground. According to predictions by the International show that the number of offMonetary Fund, GDP growth for sub-Saharan African countries shore call-centre agents operis expected to be a robust 5%, which is good news for the ating in the Western Cape has province’s exporters and investors. leapt almost 60% between 2007/08 and 2011/12, as overseas companies sought to cut Sectors costs and take advantage of the In June 2012, CNN listed Cape Town as one of the 10 most- Cape’s infrastructure and large loved cities in the world – right alongside the likes of New talent pool of English-speaking York, Paris and Tokyo. With our sought-after climate, beautiful operators. 13 western cape business 2013 message western cape business 2013 Cape Town was rated as one of the world’s favourite cities. plant that will produce 200MW from solar, 100MW from wind and additional electricity from clean-burning natural gas. Each new Green Economy project not only helps us reduce pollution and our dependence on fossil fuels – it improves the energy security and stability of the Western Cape. Conclusion The Western Cape has been taking big strides forward, and we want the steps in 2013 to be even bigger – but we cannot do it unless we make the province a great place to do business. That’s why the Western Cape Government remains committed to helping the private sector stay competitive locally and at an international level – as well providing an attractive investment environment for other countries. Trade, investment, tourism, manufacturing, agriculture and the Green Economy are all areas where we intend to help local and international companies become more competitive – because we firmly believe that economic growth, employment and prosperity is driven by business. The Western Cape is also poised to grow tremendously as an African hub and the gateway for international companies to do business in Africa, and the government is already playing its part in making this a reality. We have got the infrastructure, skills and local talent to do all this and more – turning our economic vision into reality. 14 photo: derek keats/flickr Overall, the call-centre industry in the province has expanded at more than 10% per year for the last four years – a trend that brings substantial investment to the province and one we hope to see continue. Ensuring the province’s energy supply is essential to our continued growth, and the Green Economy is an area where we are determined to lead South Africa. Cape Town has already set itself the target of getting 10% of the city’s energy needs from clean energy sources by 2020 – and with growing investment in the sector, employment in the green economy is expected to grow by more than 500%, from 3 000 in 2010 to 16 000 in 2020. The Western Cape is also fortunate to have business thinktanks like Accelerate Cape Town and international corporations like KPMG cooperating to bring together experts from business, academia and government to grasp the opportunities South Africa’s Green Economy has to offer. But it’s not all talk. Dutch company AEG Power Solutions has constructed a new manufacturing facility just outside Cape Town for its utility-scale solar inverters, that will ultimately produce 200MW every year in clean, solar energy. In addition to Cape Town, the port town of Saldanha may be branching out from oil, shipping and fisheries into clean energy. Pending approval of a new industrial development zone, one of the projects put forward for the West Coast town comprises a renewable energy Western Cape WESTERN CAPE Inspiring new ways About 56% of visitors to the Western Cape were from overseas and 42.1% were domestic visitors in 2011 www.tourismcapetown.co.za AN INSPIRED PLACE TO DO BUSINESS e-mail: firstname.lastname@example.org | website: wesgro.co.za AGROPROCESSING I CREATIVE INDUSTRIES I ENERGY I MIDDLE & BACK OFFICE PROCESSING THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY â€“ SOUTH AFRICA NICHE ENGINEERING & MANUFACTURING I SUPPLY CHAIN MANAGEMENT & LOGISTICS I DESTINATION MARKETING T he Western Cape has consistently outperformed the other eight provinces in terms of average annual growth from 2003 to 2010. The Western Cape economy averaged 4.2% growth during this period, outperforming the national economy, which averaged 3.6%. The tertiary sector is the largest contributor of all sectors to the Western Cape economy, with financial, real estate and business services contributing 29.17% to the regional economy in 2010. Primary industries contributed R10.09 bn (3.68%) to the regional GDP in 2010, with R9.6 bn of this value coming from agriculture, forestry and fishing, which is one of the largest export contributing sectors in the regional economy. Secondary industries contributed R56.92 bn, which accounts for 20.8% of the regional GDP. Over the past financial year, we hosted several CEO Dinners and Investor Luncheons which addressed the State of the Global Economy, Growing the National Economy and Generating New Employment Opportunities. These gatherings were attended by our state leaders and decision makers. Wesgroâ€™s Investment Promotion Unit participated in numerous outward missions and hosted a number of inward delegations, apart from attracting and facilitating foreign direct investment into the regional economy. Renewable energy attraction and facilitation activities included an outward mission to Munich, Germany, which included the first Joint Working Group session. The Agribusiness Investment Unit exceeded its investment target for 2011/12, committing four projects to the value of R82 m against a target of R50 m, and recording 198 jobs for the financial year. The Unit, through its drive to target potential investors, recruited nine quality investment projects into the pipeline, proving that the proactive approach of recruiting investments can achieve ongoing success. Six outward missions were conducted during the financial year, providing the AIU with a platform to present value propositions to multinational corporations who would look to secure a foothold in Africa. We hosted Mr Zong Jianxin, the Director and Deputy Chief Executive of the Industrial and Commercial Bank of China (ICBC) at a Hong Kong business finance dinner in Cape Town. The ICBC and Standard Bank Group Limited announced an equity deal, which included strategic cooperation. As agreed, the ICBC will be the single largest shareholder of Standard Bank after paying R36.67 bn (USD 5.46 bn) for a 20% stake. The ICBC is committed to improving the trade deficit between SA and China and it will look to financing Chinese importers of South African products. The Trade Promotion Unit has established a working relationship with ICBC in this regard. Over the last year our Trade team assisted 750 companies with export development and led sixteen foreign buying missions. In addition, the unit hosted a buyers dinner linking international buyers with local exporters for Design Indaba. Trade Promotion facilitated the inward mission of the Senegal Investment Promotion and Major Projects Agency (which reports directly to the Senegalese Presidency). The Agency undertook a fact-finding mission to look at tourism, and medical tourism in particular. They mentioned that South Africa came up as a worldwide reference in this regard. The Trade Promotion Unit and the Department of the Premier arranged meetings for the delegation at numerous health-care facilities and medical establishments. Nils Flaatten: Chief Executive Officer The Wesgro IQ Unit developed 117 publications, targeted at investors, exporters, government and Western Cape business and are also available to the public through the Wesgro website. The publications developed focus on economic, trade and investment information across various countries and sectors. Destination publications have also been developed specifically to provide information on the Western Cape and various districts. In addition to these publications, the Unit also held two seminars during the financial year under review; the first was entitled Investment Trends and Economic Prospects and the second Eye on Africa: Economic Outlook, Trends and Opportunities. AN INSPIRED PLACE TO DO BUSINESS e-mail: email@example.com | website: wesgro.co.za | Tel: +27 21 487 8600 Nils Flaatten Chief Executive Officer message City is a centre of growth Cape Town Mayor Patricia de Lille highlights the city’s strengths and opportunities. our sophisticated market experience, Cape Town has indeed proved itself as a world-class tourist destination. Partnerships Patricia de Lille C The City of Cape Town has long recognised the enormous potential that Cape Town holds, and the role it plays both in the provincial and national economy. We have also recognised that economic growth and development cannot exist in isolation, and have thus encouraged partnerships and liaisons with commerce and industry in order to facilitate economic growth both in the city and the province. During my campaign to become Mayor of Cape Town, I committed to – if elected – engage with provincial government and the business sector to form a Western Cape Economic Development Agency. And while time has reshaped the name and stakeholders of this partnership, both the need and the will to unite in order to find a consolidated solution to economic stagnation have not. The City of Cape Town acknowledges the need for a consolidated approach on the part of both business and government, which is necessary to facilitate much needed economic growth. An example of this is the newly launched Economic Development Partnership or EDP: a partnership between commerce and industry in the Western Cape, the City of Cape Town and the Western Cape Provincial Government. This initiative is expected to serve as a driving force of shared economic growth, an agency that ape Town has often been described as the machine that drives Western Cape business, and rightfully so. Boasting sustainable and expanding finance and business Diverse in culture and heritage, sectors, Cape Town continues to provide the perfect environment Cape Town boasts a rich and for other sectors that are accelerating at a rapid rate vibrant metropolis as dynamic — Patricia de Lille and varied in its people as it is in its environment. Boasting sustainable and consolidates various development strategies to ensure ecoexpanding finance and business nomic growth through best practice that will benefit all in the sectors, Cape Town continues Western Cape. to provide the perfect enviWhile global trends indicate that cities are the centres of ronment for other sectors that growth, we cannot do it alone. The buy-in and support of the are accelerating at a rapid rate. private sector is essential to economic development. Business Between our natural beauty and in the Western Cape and specifically in Cape Town is therefore western cape business 2013 18 message offered the prime environment in which to succeed and expand. Various campaigns, such as ‘From red tape to red carpet’ (an agreement between the city and provincial government), seek to nullify unnecessary extension of the processes required to establish and increase commercial development, both with provincial and local government, and within the borders of the city and the province. As we encourage economic development in nodal areas in the city, we also continue to work towards building our broadband infrastructure, so as to increase the data capacity in the city, further adding to our competitive advantage. And in terms of long-term City of Cape Town growth, we are in the final As a means of continuing to acknowledge the enormous role stages of our City Development played by the financial and business sectors in the city’s eco- Strategy, a project in partnership nomic development, the City of Cape Town has made several with the Provincial Government efforts to ensure that we maintain amicable relations between of the Western Cape that seeks to map our development over local government and these sectors. Our R5-billion capital budget will go a long way to providing the next 30 years. Significantly, basic infrastructure that allows for much-needed investment. this project has included the Further, our Integrated Development Plan (IDP) for the next five input of the private sector. years ensures that various directorates of local government are geared towards the common goal of realising our five pillars: Conclusion • An inclusive city • A city of opportunities Cape Town continues to lead • A safe city the region in providing the • A caring city perfect setting for economic • A well-run city growth and development. Cape Town continues to exert itself as the financial, business and tourism destination of the The City of Cape Town acknowledges the need for a consoli- Western Cape, boasting the dated approach on the part of both business and government, best of both worlds: a beauwhich is necessary to facilitate much-needed economic growth tiful, aesthetically rich environment and a commercially — Patricia de Lille sound, metropolitan experience ideal for investment and This strategic policy document ensures a sustained commitment innovation. We thus remain to service delivery. Aligned to the budget, the IDP maintains a committed to working hard to ensure sustainable economic dedication to both economic and social development. Other projects such as the Mayoral Urban Regeneration development and growth, not Programme seek to identify and reinvigorate development only as a city, but as part of nodes in the city. Specialised task teams identify and work in the Western Cape. areas where business districts can be revitalised, social issues need to be addressed and general decay is avoided. Areas such as the Voortrekker Road Corridor, Athlone and Mitchells Plain Town Centre, Manenberg, Hanover Park, Lotus Park, Bishop Lavis, Valhalla Park, Bonteheuwel, Kuyasa, Nyanga and Ocean View are all areas that are currently benefiting from and will continue to benefit from this regeneration programme, the objective of which is to maintain existing commercial activity and attract even more business life. 19 western cape business 2013 a regional overview of the western cape province The Western Capeâ€™s already strong financial-services sector is growing fast, and the African offshore gas boom is set to boost the provinceâ€™s ports. The province has several top universities, and the commercial agriculture and agri-processing sectors are world-class. by John Young T he major contributors to the Western Capeâ€™s gross domestic product (GDP) are finance, insurance, real estate and business services (23.5%), manufacturing (17.1%), general government services (15.3%), wholesale and retail, catering and accommodation (13.3%) and transport and communication (10.2%) (Quantec, 2010) There are four tertiary education institutions in the greater Cape Town area and many further education and training (FET) colleges. George, the leading city of the Garden Route, also has university facilities. The province stretches from the dry northwestern coast to the heavily forested Garden Route regions of the southern Cape via the rugged mountains of the Cederberg, the rolling winelands of the Boland and the Overberg, the fertile valleys of the Klein Karoo and the wide plains of the Great Karoo. The province and the region are most commonly associated with Table Mountain, which watches over the city of Cape Town and forms a national park of its own. The province is well served with infrastructure. Three ports at Saldanha, Cape Town and special feature Mossel Bay serve different markets, and Cape Town International Airport and George Airport see to air travel needs. The Cape Town International Convention Centre is the province’s leading facility in the events and conference sector, an area of substantial growth for the province. The high-growth sectors in the Western Cape are finance and insurance (where Cape Town is the headquarters for several national concerns), construction, communication, furniture and transport equipment, and boat building. The proportion of GDP that the finance sector contributes has grown from 18.7% in 2000 to 23.5% in 2010. Other sectors that are doing well are film, call centres, design and software in the ICT sector, and various marine sectors, including the servicing of the African oil and gas exploration industry. There is renewed interest in the mining sector because of finds of rare earths, and Saldanha on the West Coast is the focus of investments in several fields. Plans are underway for the creation of an industrial development zone (IDZ) at Saldanha, with a feasibility study for a minerals-processing plant being among the most ambitious of schemes for the proposed zone. The province’s export bouquet is dominated by the food value chain (agriculture, fishing and food and beverages) with outstanding fruit and wine contributing to the province’s international reputation. Seven of the province’s top-10 high-value exports are foodstuffs, and several large companies in agri-processing and the food and beverage Top-five growth sectors % contribution to growth Communications 7.6% Finance and insurance 6% Radio, TV, instruments, watches and clocks 5.9% Construction 5.3% Petroleum products, chemicals, rubber and plastic 4.7% Projections of average annual growth 2011-2015. SOURCE: Provincial economic review and outlook (PERO), 2012 western cape business 2013 sector are located in the Western Cape. This includes major grain companies such as Bokomo and Sasko, and Ceres fruit juices, all of which are part of Pioneer Foods. Several former cooperatives have turned themselves into very successful agricultural enterprises. In 2011, the Western Cape attracted R8.7-billion in foreign direct investment (FDI). This came by way of 22 projects. In the period 20092011, the best-performing sectors in attracting FDI were software and IT (13 projects), business services (eight), financial services (seven) and communications (six). The highest levels of capital value tended to be in communications, renewable energy and tourism. Prospects The business process outsourcing sector is poised for even more significant growth, after taking big strides in the 2010-2012 period. The local agency promoting the sector and the provincial government are very upbeat about its prospects. Environment and Tourism MEC Alan Winde believes that the ‘Next Big Thing’ is the servicing of the oil and gas sector. He puts the value on the servicing of the oil industry around the continent of Africa in the years to 2017 at $220-billion. Alan wants South African ports to make a concerted bid for the business: this would include Saldanha, Cape Town and Mossel Bay, all of which have capacity and experience in oil-rig repair and maintenance. Alan is also enthusiastic about the potential of medical companies. ‘There are more Western Cape companies making prosthetics than anywhere else in Africa,’ says Alan. The provincial government has established a Health Park near Vincent Palotti Hospital. BioVac is a major manufacturer of vaccines. Two provincial initiatives to promote growth are: • The Red Tape Unit – part of the provincial government’s drive to make doing business easier. It claimed an 80% resolution rate in the first 300 cases that it handled. • The establishment of the Economic Development Partnership. The board is led by former cabinet minister Barbara 22 special feature ZIMBABWE MOZAMBIQUE BOTSWANA Limpopo NAMIBIA Mpumalanga Gauteng North West SWAZILAND Free State Northern Cape KwaZuluNatal LESOTHO Eastern Cape Western Cape Britstown Brandvlei Garies ro G R 27 WESTERN CAPE PROVINCE Groen Carnarvon Loeriesfontein t Sout So u Malmesbury Melkbosstrand Robben Island (World Heritage Site) TableDurbanville Bay R44 N1 R43 R45 Wellington Worcester Paarl Rawsonville R60 Le eu w ws R43 R62 Groot Barrydale Bre ede Motorway Main Road Railway Walker Bay Infanta R 43 Arniston Gansbaai Quoin Point Struisbaai Struisbaai Eastern Cape Leeu-Gamka Sou t Bay Klipplaat Prince Albert Willowmore Gro ot s Olifant Calitzdorp De Rust R62 Oudtshoorn Franschhoek Robertson Ashton Swellendam Villiersdorp CAPE TOWN Riversdale Stellenbosch Genadendal Somerset Heidelberg Grabouw Fish Hoek West N2 N2G Riviersonderend ou Gordon's Bay rit Simon's Town s Caledon False R44 Stillbaai Hermanus Cape Bay Kleinmond Point Bredasdorp Cape St Sebastian R62 Su nd N9 Gam Laingsburg Matjiesfontein Touwsrivier ToLadismith u Montagu Aberdeen R 61 N12 ka Buffels yka Dassen Island N1 Graaﬀ-Reinet s ay Dw Moorreesburg R 44 Tulbagh R 46 Riebeek West Ceres Darling R45 Prince Albert Road R 63 Kariega Sutherland Western Cape R44 N7 Richmond Three Sisters Fraserburg wa nk Ta Piketberg R27 Langebaan r Fish Rie Velddrif R45 N1 R63 Beaufort West Citrusdal R79 Victoria Wests Loxton Northern Cape Cederberg R27 St Helena Bay N Williston R 63 Clanwilliam ATLANTIC OCEAN oei Calvinia Vredendal R27 Lambert's Bay ek ge On R 27 Vanrhynsdorp R27 Saldanha Bay R63 Nieuwoudtville Se Hanover N12 R63 t R27 Paternoster Vredenburg Saldanha N10 R 63 Sak N7 De Aar en Kliprand N12 George Uniondale R 62 N9 SedgeﬁeldKnysna Herolds Bay Mossel Bay Vleesbaai K o u ga Joubertina Kareedouw N2 Plettenberg Stormsrivier Bay Cape St Francis INDIAN OCEAN 0 0 100 km 100 miles Cape Agulhas 23 western cape business 2013 special feature Hogan, but differs from similar bodies in not being representative of organisations. Rather, individuals volunteer to drive the economic growth plan of the city. The former Cape Town city manager and current chief executive of the Cape Town Partnership is convinced that ‘partnership’ is the best model for such a body. Economic growth is expected to average 4.2% for the five years from 2011 to 2015, according to the provincial government’s Provincial Economic Review and Outlook (Pero). At municipal level, there are Integrated Development Plans, and various levels of government are expected to cooperate in planning. The Western Cape has a Provincial Spatial Development Framework. Regions The boundaries of the district municipalities of the Western Cape coincide with the regions’ tourism areas. The Port of Cape Town is ideally situated at the crossroads of some of the world’s most important trade routes, making the transport, maritime and logistics sectors very important. Bunkering and ship repair, and the boat-repair and boat-building industries are on the rise. The port plays a major role in exporting the province’s fruit, wine and other agricultural products to international markets. West Coast District Municipality Towns: Saldanha, Malmesbury, Clanwilliam, Vredenburg, Moorreesburg. The economy of this region is quite diverse: manufacturing in Saldanha, Atlantis and Malmesbury, agriculture and forestry centred on inland towns like Moorreesburg (wheat) and Cedarberg (forestry), citrus farming (Citrusdal), cement-making in Riebeeck West and Piketberg, and marine activity and fishing all along the coast. The rooibos tea sector is a feature of Clanwilliam’s economy, while shoe manufacturers are also present. The remote mission station of Wupperthal is famous for its veldskoene. Mining is becoming an increasingly important sector, with titanium, zirconium, phosphate and limestone being among the most important finds. A feasibility study has given a positive answer on the issue of transforming Saldanha into an IDZ. City of Cape Town Metropolitan Municipality Cape Town is the engine of the regional economy, with most of the Western Cape’s industry located within the metropolitan area of Cape Town. It is a culturally diverse and dynamic metropolis set among beautiful beaches and winelands with a backdrop of iconic Table Mountain. Cape Winelands District The largest sector in the city’s economy is Municipality the financial and business services industry. The city has a population of 3.2 million and Towns: Stellenbosch, Paarl, Worcester, contributes 76% of the regional gross domestic Robertson, Wellington, Franschhoek. product. The Cape Town CBD has: Nearly 70% of South Africa’s wine comes • More than 1 200 shops from this area. A good percentage of this wine • More than 500 law offices is exported, and the wine estates themselves • 47% of Cape Town’s visitor accommodation attract tourists with wine-tasting and restauThe City of Cape Town is home to the nation’s rants. Tourism in the Winelands has matured parliament and is the site of two World Heritage beyond day-trips from Cape Town, to incorSites: the Cape Floral Region (including Table porate wellness spas, adventure tourism Mountain) and Robben Island. and even game farms boasting the Big Five. The city shares with Cairo the title of most- Worcester has a casino and new regional visited African destination; the Soccer World shopping complex. Manufacturing is concenCup boosted this status to such an extent that trated on processing grapes and fruit into British Airways put on an extra daily flight to wine, juice, brandy, and dried and tinned fruit products. Dairy manufacturer Parmalat has the city from London. western cape business 2013 24 special feature an award-winning cheese-making facility in Bonnievale. Robertson is known for roses and thoroughbred horses. Overberg District Municipality Towns: Caledon, Bredasdorp, Hermanus, Swellendam, Cape Agulhas. The Overberg contains the southernmost tip of Africa (Cape Agulhas), the oldest mission station in South Africa (Genadendal), a large casino resort (in Caledon) and some of the best whale viewing in the world (Whale Coast). It also hosts some high-quality fruit farms in the Ceres Valley, and rural villages that are popular with tourists, such as Barrydale and Greyton. Agriculture is the principal economic activity of the region, with wheat, dairy, deciduous fruit and onions being among the main products. Barley, hops and flower cultivation are growing sectors. Eden District Municipality Towns: George, Oudtshoorn, Knysna, Mossel Bay, Plettenberg Bay. The area is known as the Cape Garden Route and Klein Karoo for tourism purposes – and tourism is a major economic activity for the region (making up 15% of gross geographical product). Community services, financial, property and business services, manufacturing and agriculture are the other main sectors. Mossel Bay is home to South Africa’s main gas-processing plant, while George is a node of manufacturing, trade and administration and education. Golfers are well catered for in George, as they are all along the Garden Route. Knysna and Plettenberg Bay are favourite tourist destinations. Central Karoo District Municipality Towns: Beaufort West, Laingsburg, Prince Albert. The largest district in the province has the smallest population, a reflection of the semidesert conditions that prevail in the area named ‘thirstland’ by its original inhabitants. Sheep farming predominates in the region. Beaufort West is strategically positioned on the N1 highway, which links Cape Town with the interior of South Africa. The nearby Karoo National Park is a national asset that aims to reclaim the original flora of the Karoo. Prince Albert is a quaint town situated in the shadow of the Swartberg Mountain. Dramatic portals link the Karoo to the Klein Karoo: the Swartberg Pass (connecting Oudtshoorn to Prince Albert), Seweweekspoort and Meiringspoort. Product Value Oils, petroleum, bituminous, (except crude) R5.8-billion % growth, 2010-2011 12% Grape wine R5.3-billion -4% Citrus fruit R5.1-billion 3% Apples, pears, quinces (all fresh) R3-billion 13% Grapes, fresh or dried R2.8-billion -6% Liquid gas centrifuges, filtering, purifying machines R2.2-billion 34% Maize R1.6-billion 125% Fruit, nuts, edible plant parts (prepared/unprepared) R1.2-billion -12% Fruit and vegetable juices R0.99-billion 20% Diodes, transistors, semi-conductors R0.93-billion -22% Top-ten exports from the Western Cape. SOURCE: Quantec, 2011, via Wesgro. 25 western cape business 2013 interview Success through collaboration MEC for Finance, Economic Development and Tourism Alan Winde outlines plans to promote and grow economic development in the Western Cape. Alan Winde Alan Winde became MEC for Finance, Economic Development and Tourism in May 2009, shortly after the DA won the Western Cape Province. Alan has been a member of the Western Cape Provincial Legislature since 1999. During his first term, he served as Western Cape provincial finance chairman and executive committee member with the Democratic Party. He has also served as the chief whip of the official opposition in the Western Cape, as DA spokesperson on Environment and Planning and as deputy DA spokesperson on Economic Development and Tourism. western cape business 2013 Please give an overview of the rationale behind the formation of the Economic Development Partnership, what it hopes to achieve and the role of the Western Cape Provincial Government in the Partnership. When we came into office in 2009, we found the Western Cape lacking a common economic agenda and strategy, and with a disjointed regional economic delivery system. It is with this understanding that two years ago, the idea came about of an institution that would bring together all actors in the economy in order to build effective partnerships between citizens, business and government for inclusive growth. Thus, the Western Cape Economic Development Partnership (EDP) was born, launched on 26 April 2012 as an independent, nonpartisan membership-based not-for-profit company that will lead, coordinate and drive the Western Cape economic delivery system, and mobilise and organise partners across all sectors, spheres and regions to establish a common agenda and align mandates and resources. Therefore, partners can collectively and more creatively address the multiple and persistent challenges of unemployment, poverty and inequality facing our region. The EDP will focus on co-creating an economic vision and strategy for the region, coordinating efforts across silos, spheres of government, institutions, sectors and boundaries, and facilitating local implementation partnerships. The EDP can be characterised as an â€˜intermediaryâ€™ organisation that facilitates collaborative activities between members, and supports the establishment of local economic partnerships. The Western Cape Province has a strategic advantage when it comes to the business process outsourcing and offshoring (BPO&O) sector. How do you see the outlook for this sector in the Western Cape and what is the provincial government doing to drive its growth? Since 2003, the BPO&O/call-centre industry has grown significantly, and now has an estimated 33 500 employees (agents, support staff and management). In total, the industry generates approximately R7.9-billion per annum, making it a key contributor to the GDP of the Western Cape. 26 interview The value of foreign investment into BPO ser- come armed with the skills and experience to vices in the Western Cape exceeded R1-billion. actively lead the EDP in its vital task of building The expansion of the BPO sector is strategi- partnerships that will strengthen and streamcally important to the Western Cape, as it pri- line the way that we conduct business within marily creates jobs for youth, the demographic our region and internationally. We are in full with the highest rates of unemployment. It support of her appointment. has become an important avenue for youth to become work ready and gain skills. The How do you see the outlook for the tourism average entry-level salary for agents working industry, in the light of factors such as SAA’s in a captive environment is R6 500+ per month. decision to cut flights to London from Cape Town, the downturn in the world economy and talk of a dedicated dock for cruise liners in Cape Town? The expansion of the BPO sector is strategically Tourism arrivals statistics show that the Western important to the Western Cape, as it primarily Cape had a 14.5% increase in international creates jobs for youth, the demographic with the arrivals year-on-year at the end of 2011. We highest rates of unemployment. are focusing our resources on increasing this. Our tourism destination, investment and trade – Alan Winde promotion agency will continue to market the Western Cape as a desirable tourism destinaThe Western Cape Provincial Government, tion to both local and international markets. the City of Cape Town, the Department of Trade and Industry, BPeSA Western Cape and What is being done to stimulate the renewthe private sector have come together to make able energy industry in the Western Cape? the Western Cape an outsourcing destination The Western Cape government established of choice through various programmes. These Green Cape in November 2010, a governinclude incentive schemes that have sig- ment-funded, industry-led agency tasked with nificantly reduced operating costs and have unlocking the manufacturing and employment attracted various international brands and potential of the Green Economy. Green Cape has outsourcers to Cape Town. already made some significant progress in this It is noteworthy that the sector will create regard to date. Information about its projects is 4 200 new call-centre seats over the coming available at http://green-cape.co.za/projects/ The Western Cape government also recently year. The value of foreign investment into BPO services in the Western Cape exceeded launched the 110% Green campaign, a cataR1-billion. lyst to build a critical mass of activity that puts These successes are a result of more the Western Cape well on the road towards focused marketing of the value proposition of becoming Africa’s green economic hub – a key the region, increased cost drivers in traditional economic goal of the province. BPO regions and issues around quality of other Your views on the Western Cape as a business traditional BPO destinations. To maintain the accelerated growth in and investment destination? the region, greater focus will be required on The Western Cape is a great business destinasupply-side issues, particularly around the tion. The figures speak for themselves – from development of a broad skills pipeline for 2009 to June 2012, the Western Cape attracted the industry. 80 international foreign direct investment projects with a total value of R30.1-billion, creating How do you see the appointment of Barbara 6 906 jobs. This is an R8-billion (27%) increase Hogan as chairman of the board of the EDP? in the foreign direct investment recorded in the The Wesgro board, and its chair Barbara Hogan, Western Cape between 2005 and 2008. 27 western cape business 2013 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 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 secondlargest platinum miner. Year Q1 Q2 Q3 Q4 Annual 2004 6.2 5.7 6.7 4.3 4.6 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 Table 1: GDP growth per quarter, 2003–2012 Q1, constant prices, q/q seasonally adjusted annualised. Source: Statistics South Africa 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 Year 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. Sources: www.thedti.gov.za, www.reservebank.co.za, World Bank, Statistics SA western cape business 2013 28 special feature Sector Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity and water Value in millions (R) % Real change from 2010 % of GDP 63 984 -.04 2.2 2 260 381 0.2 8.8 357 756 2.4 12.1 78 532 1.3 2.6 Construction (contractors) 120 420 0.8 4.1 Wholesale and retail trade, catering and accommodation 386 430 4.4 13.0 Transport, storage and communications 220 060 3.3 7.4 Finance and insurance, real estate and business services 565 224 3.5 19.1 Personal services 183 493 2.4 6.2 General government services Total value added at basic prices Taxes less subsidies on products GDP at market prices 434 224 3.9 14.6 2 670 504 3.0 90.1 293 757 4.4 9.9 2 964 261 3.1 100 Table 3: Breakdown of South Africa’s GDP at current prices, per sector, 2011. Source: Statistics South Africa partners in April 2012, after a deficit of R5.5billion in March, taking the cumulative trade South Africa’s international trade has risen deficit in April 2011 to R36.5-billion, compared sharply over the last 10 years (Table 4). In with R7.5-billion in the first four months of 2011. 2004, the value of imports rose above that of A record R17.4-billion deficit was set in exports. Tables 5 and 6 show the largest import January 2009, but as exports began to improve, and export sectors respectively, for April 2012. so the deficits narrowed in 2009 to become Important import sectors in April 2012 were surpluses in 2010. South Africa recorded its first machinery (R15.9-billion), mineral products – annual trade surplus in seven years in 2010 of chiefly crude oil (R13-billion), transport equip- R4.8-billion, following a few stronger than ment (R10.9-billion) and chemicals (R5.4-billion). expected surpluses on the trade account during On the export side, the most important sectors the year. In 2012, however, the rise in the oil were mineral products, chiefly coal and iron ore price in the first few months, coupled with a (R14.8-billion), precious metals and diamonds sharp reduction in platinum exports, saw the (R10.2-billion), base metals (R7-billion) and non-SACU foreign trade balance firmly in the red. transport equipment (R4.6-billion). The old myth that a weaker rand leads to more Most of South Africa’s foreign trade takes place exports is once again disproved by the facts, as with Asia, the United States and Germany (Tables import growth was 23.5% in 2011, while export 7 and 8). In 2011, China, the United States and growth was 19.9% when the rand was weaker Japan were, in descending order, the country’s due to a R15-billion deficit. Prior to November top export markets, while top import-source 2011, when the rand had been stronger, export countries were China, Germany and the US. growth had exceeded import growth. In 2010, South Africa recorded a trade deficit of when the rand was strong because export growth R9.9-billion for its trade with non-Southern of 14.9% exceeded import growth of 8.1%, there African Customs Union (non-SACU) trading was a R4.8-billion surplus, the first annual surplus Trade: imports and exports 29 western cape business 2013 special feature Year Imports in R-m Exports in R-m 1999 147 356 165 555 2000 187 608 210 373 2001 216 033 251 330 2002 275 427 314 102 2003 258 839 275 581 2004 306 927 296 246 2005 351 665 331 405 2006 465 040 396 529 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 Sector Value in R-m 1. Machinery, mechanical and electrical 15 903 2. Mineral products 12 991 3. Transport equipment 10 880 4. Chemical products 5 420 5. Base metals 3 190 6. Plastics, rubber 2 591 7. Textiles 1 726 8. Optical, medical, photographic 1 579 9. Foodstuffs, beverages 1 433 10. Vegetable products Total 1 045 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: Source: www.sars.gov.za Source: www.sars.gov.za. 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). Foreign direct investment and public investment South Africa’s privately held business (PHB) owners’ intentions to grow through acquisition seem to align with expectations of BRIC (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 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 western cape business 2013 30 Sector Value in R-m 1. Mineral products 14 841 2. Precious metals and diamonds 10 239 3. Base metals 6 968 4. Transport equipment 4 613 5. Machinery, mechanical, electrical 4 460 6. Chemicals 3 350 7. Vegetable products 1 738 8. Foodstuffs, beverages 1 497 9. Plastics, rubber products 1 126 10. Pulp and paper 779 11. Animals, animal products 378 Total 52 154 Table 6: South Africa’s top export sectors, April 2012. Source: www.sars.gov.za special feature Index for 2009/10, and improved to 54 out of 139 countries in 2010/11. It was 32nd out of 181 countries in the World 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-construction 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. Country 1. China 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. Value in R-m Year Q1 Q2 Q3 Q4 2003 15.70 16.00 15.90 16.00 2004 16.00 16.20 16.20 16.20 2005 16.50 16.00 17.00 17.10 2006 17.70 18.60 18.90 19.70 2007 19.70 21.20 20.40 20.20 2008 21.05 22.44 24.02 24.64 2009 23.20 22.40 21.20 20.30 2010 20.30 19.88 19.40 18.90 2011 18.80 19.00 18.90 18.90 Table 9: Ratio of gross fixed-capital formation to GDP. Source: www.reservebank.co.za Country 103 174 1. China Value in R-m 90 210 2. Germany 77 396 2. United States 61 044 3. USA 56 944 3. Japan 55 635 4. Japan 34 377 4. Germany 42 684 5. Saudi Arabia 32 294 5. UK 29 001 6. India 29 220 6. India 22 224 7. UK 28 965 7. Switzerland 22 902 8. Iran 27 121 8. Netherlands 22 902 9. Nigeria 22 655 9. Zimbabwe 17 776 10. Italy 19 574 10. Mozambique 17 680 Table 7: South Africa’s top 10 import source countries in 2011. Table 8: South Africa’s top 10 export markets, in 2011. Source: www.sars.gov.za Source: www.sars.gov.za 31 western cape business 2013 THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA S WHY EXPORT FROM THE WESTERN CAPE? outh African wine exports to China have been growing 50% annually, for the past three years, making China one of South Africa’s top 10 export destinations. Exporting Advantage • • • • INCREASED SALES – Exports support your sales drives by allowing you to find more clients INCREASED PROFIT MARGINS – Exporting can allow you to increase your production and through economies of scale increase your profit margins INCREASED COMPETITIVENESS – Exporting could accelerate your business growth through exposing you to different technologies, best practices and processes and thereby facilitating your own creative innovations. REDUCED RISK – Exporting reduces your risk and reliance on fluctuations in your local market and when properly planned and executed allows you to take advantage of fluctuations in other markets. The Wesgro Export Development Programme (EDP) The Export Development Programme is an opportunity for established Western Cape based SME’s to improve their international trade management knowledge and expertise. The EDP offers developmental support, access and crucial market information into foreign markets. Along with this, the programme aims to empower entrants though training focused on export readiness and is aligned with relevant industry mentors. Outward Selling Initiatives Overseas exhibitions and outward selling mission allow the Western Cape exporter access to major buyers, governments and supply chains in overseas markets as well as advice on forming international joint ventures and partnerships. Inward Buying Initiatives Each business and each market is unique. Foreign buyers often engage in visiting markets to meet with potential suppliers of products and services. Forthcoming Markets Wesgro has been actively promoting the Western African Trade Corridor since 2004. Promoting intra-African trade is an important and on-going project that is not only conducive to business; it also promotes the strengthening of political ties and stability. Wesgro has also identified the following crucial developing markets; Brazil, Russia, India and China for their trade potential. These countries have expressed a keen interest in our business offerings and the agency is committed to building relationships with these rapidly growing markets. Sustained Markets Our relationships with established traditional markets namely Europe and the USA are still a priority. We have built a reputable name and relationship with these counties, shaping out our niche positioning in their market. It is Wesgro’s undertaking to continue our reach into these markets by growing our market share and expanding our reach. T: +27 21 487 8600 E: firstname.lastname@example.org THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY â€“ SOUTH AFRICA 50% South African wine exports to China have been growing by 50% annually for the past three years Wesgro is the official Destination Marketing, Investment and Trade Promotion Agency for the Western Cape, located in Cape Town, South Africa. We are the first point of contact for foreign buyers, local exporters and investors wishing to take advantage of the unlimited business potential in Cape Town and the Western Cape. AN INSPIRED PLACE TO DO BUSINESS e-mail: email@example.com | website: wesgro.co.za THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA Wesgro Services Accessing Finance This involves the facilitation of meetings with potential funders, private individuals, banks, private equity firms and public funds amongst others, to suit your individual financial requirements. well as Wesgro IQ (research unit). Wesgro offers up-to-date information on economic profiles, sector intelligence, and trade conditions in various regions and countries, as well as trade and investment intelligence and business opportunities for Western Cape businesses. Advocacy Wesgro aims to identify constraints to investors and alert decision makers to the negative effects that certain policies may have on the business environment. Immigration Wesgro has established sound relationships with external immigration consultants. As part of our service offering we assist clients in obtaining work permits, visa’s and letters of support, amongst others. Marketing Support This includes promotional support for new and existing investors. Wesgro utilises its core mediums of communication and relationships with the media to profile new and existing investors Strategic Partnerships Wesgro’s strategic relationship with industry players, government authorities and the business community within the Western Cape enables it to provide a unique matchmaking service. Financial Incentives Wesgro is adept at sourcing incentives for foreign and local investors. Location Benchmarking This is a process that entails the provision of information based on the Financial Times tool, which highlights competing locations and compares the costs and quality of a specific location. Wesgro can benchmark the operating cost of Cape Town against more than 40 other global locations in both developed and emerging markets. Marketing Intelligence The Agency provides sector and market specific intelligence collated by investment specialists, as Retention & Expansion Wesgro provides an aftercare programme to existing clients. It aims to ensure that investors are satisfied and assists clients with challenges that may arise. Site Location Wesgro assists in identifying specific site requirements derived from the needs and operations of the enterprise in question. Once the list of requirements has been established Wesgro utilizes its extensive database and networks across the private and public sector in order to short list potential sites. Website: wesgro.co.za | Tel: +27 21 487 8600 THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY â€“ SOUTH AFRICA ZAR2.56bn Inward FDI in the WC Software & IT Services sector amounted to ZAR2.56bn in 2012 Wesgro is the official Destination Marketing, Investment and Trade Promotion Agency for the Western Cape, located in Cape Town, South Africa. We are the first point of contact for foreign buyers, local exporters and investors wishing to take advantage of the unlimited business potential in Cape Town and the Western Cape. AN INSPIRED PLACE TO DO BUSINESS e-mail: firstname.lastname@example.org | website: wesgro.co.za focus Islamic Forward Exchange Contracts Absa Islamic Banking offers a new Shari’ah-compliant trade product for businesses or individuals involved in international trade. T his innovative product is approved by the independent Shari’ah Supervisory Board of Absa Islamic Banking. The Islamic Forward Exchange Contract is yet another way of offering customers flexibility and choice and reflects the innovative approach the business is taking. When trading across borders, either as an individual or as a business, customers can now mitigate their currency exposure with the new Absa Islamic Forward Exchange Contract, thus eliminating the risk associated with sudden currency movements beyond the agreed forward rate. The main differences between conventional and Shari’ah-compliant Forward Exchange Contracts are that: • Conventionally, the contract is concluded on the dealing date, whereas Islamic Forward Exchange Contracts will only conclude on the maturity date, while a unilateral undertaking is given on the initial deal date. • Conventional agreements are binding and enforceable on both parties, while Islamic Forward Exchange undertakings are binding on the customer. • Delivery in conventional contracts is made on the maturity date, while Islamic Forward Exchange Contracts require the contract and spot delivery to occur on the maturity date, or at any time between the initial undertaking date and maturity date. A Shari’ah-compliant Forward Exchange Contract is initially a legally binding undertaking by a customer to buy or sell currency for an agreed price (exchange rate). On the maturity date of the Forward Exchange Contract, the WESTERN CAPE BUSINESS 2013 36 relevant currency amounts are exchanged between the customer and the bank. The following Shari’ah-compliant Forward Exchange Contracts are available: Fixed Forward Exchange Contract: The client undertakes to purchase or sell currency on a specific maturity date. Partially optional Forward Exchange Contract: The client undertakes to purchase or sell currency during a specified period occurring between the undertaking date and the maturity date. Fully optional Forward Exchange Contract: The client undertakes to purchase or sell currency at any time between the undertaking date and the maturity date. The advantage of the Islamic Forward Exchange Contract is that customers can budget and cost their business transactions with more certainty since the risk of sudden unfavourable currency movements is eliminated. In addition, customers can conclude their complex trade deals without compromising Shari’ah economic principles. Acting Head of Islamic Banking, Yusuf Suliman emphasised that ‘Islamic Forward Exchange Contracts are not only for Muslim customers, but available to anyone wishing to adopt an alternative approach to their banking services’. www.absa.co.za interview Adjusting to a changing economy Andrew Boraine, chief executive at the Cape Town Partnership, talks about the Economic Development Partnership, and the role of the city as a global player in the fields of events and design. Andrew Boraine How did the Economic Development Partnership come into being? The EDP was launched in April 2012. It took 18 months of discussions and research to put it together. It is a cross-sector partnership; in other words, it’s a little bit wider than a publicprivate partnership. In fact, there are six categories of members, and they range from the three tiers of government, to business associations, community-based associations, trade unions and non-governmental organisations, etc. Its current membership base is 128 organisations that between them make up the core of the regional economic delivery system. The EDP is what we call an intermediary organisation, deliberately in-between the various sectors. Often, when people engage in partnerships, it is on an ad hoc basis, so the EDP creates a permanent platform for working together. Andrew Boraine is chief What do you hope to achieve with this structure? executive of the Cape Town We want to create a common, shared vision for the economy, Partnership, a public-pri- because there is a lot of pulling in different directions between vate partnership focusing government, business and communities. To the outside world, on the regeneration of the that doesn’t present a united message. With a shared vision and Cape Town Central City, and a common agenda, we can find ways to deal with the issues that convenor of the recently the Western Cape is faced with. To do that, we’ve been running formed Western Cape something called One Cape 2040, which aims to put forward a Economic Deveopment vision of where we need to go over the next two to three decades. There are a number of transitions that we will need to get through. Partnership.Andrew has been involved in South For instance, we have identified the education/skills transition, Africa’s local government people just aren’t skilled enough to deal with the ways in which the and urban development economy is changing to a knowledge-based economy. More and processes for the past 30 more people are being excluded. Even if they get through matric, years. He is a board member they just can’t get a job. The green transition is also of utmost imporof the Development Bank tance. How do we transition from a high-carbon economy to a lowof Southern Africa (DBSA) carbon economy? If we don’t adjust our policies, it will affect our and is the past chair of the exports to Europe, as they will impose carbon taxes on us. So these board of the Cape Town are just some of the issues that are emerging from the One Cape International Convention 2040 project. We need to not only get people on the same hymn Centre (CTICC). sheet, but singing the same tune. western cape business 2013 38 interview If Cape Town is to become a permanent events city, what needs to happen? Cape Town is already an ‘events city’ – but now it’s about maximising its local, national and international potential to be a global events city. However, irrespective of whether you are developing the infrastructure in a city to host global events, or attract international tourism, or to service the needs of Capetonians, it’s actually the last of these, developing infrastructure for Capetonians, that will indeed be the most important step to attract all the rest! If you don’t have viable public transport and public spaces that locals use and enjoy, how can you hope to develop infrastructure to attract or maximise events? The rollout of the integrated rapid transit system (IRT) has been a great success; the challenge is to educate those Capetonians who traditionally use cars that it is a safe, secure, efficient and costeffective system of transport. We went some way to demonstrating the new system during the World Cup and Capetonians loved it. Now we have to convince them to keep on using it. Mpahlwa (winner, Curry Stone Design Prize for his 10x10 low-cost housing solution) and Carin Smuts (winner, 2008 Global Award for Sustainable Architecture); and the team of industrial designer Philip Goodwin, electronics designer Stefan Zwahlen and project leader John Hutchinson (winners, Index Design Award for the Freeplay Fetal Heart Rate Monitor). The city has a compelling story to tell, particularly in how it is using design to overcome the huge challenges caused by apartheid. Recognition as a World Design Capital places us securely on the international map of design – the benefits are potentially vast, from raising the profile of the country to securing investment to implementing more successful development projects. What is the long-term vision for your organisation? We need to strengthen investors’ perception of the advantages the Western Cape offers, and build on these differentiating characteristics. The reality is that we are far from larger markets, costs are going up, and more produce is being grown in northerly South African markets. So connecting Cape Town to South Africa and Connecting Cape Town to South Africa and the rest of the world is paramount. We need to the rest of the world is paramount. We need to provide certainty for investors if we want our provide certainty for investors if we want our region to flourish. region to flourish. We need to radically increase fibre-optic networks, we need more plane trips to be – Andrew Boraine scheduled to Cape Town, and we need to take advantage of opportunities that often pass us by. For instance, of the 400 rigs that passed What benefits are there to becoming World through the region’s harbours, only three Design Capital 2014? were serviced. The Port of Saldanha is absoThe year 2014 marks two decades of democ- lutely vital, as there is much room for growth racy in South Africa. Apartheid was designed and opportunity. to divide. Since 1994, Cape Town has been learning to reconnect. Employing thinking Do you have a message for government? and design processes in addressing Cape Deliver on your mandates. Get the basics in Town’s challenges are critical to creating a place first. Be consistent with the rules. And sustainable city for the future. keep the lights on! Many Cape Town designers have already been honoured globally: architects Luyanda www.capetownpartnership.co.za 39 western cape business 2013 interview At the forefront of Cape business Viola Manuel, executive director at the Cape Chamber of Commerce, talks about the key projects that her organisation has undertaken. Viola Manuel Viola Manuel started her career at South African Airways, working her way up to head of department for Training: Inflight Services. After leaving SAA to get her MBA, she started a human resources company focusing on learnerships, training and organisational development, before returning to Cape Town to head up the Cape IT Initiative. Viola was appointed executive director at the Chamber of Commerce in 2011. western cape business 2013 You have been at the chamber for over a year now. What changes have you initiated since you were appointed? One of the first undertakings was cleaning house and figuring out who the paid-up members are. What is fantastic about that is, when we say that we are the voice of 3 000 businesses, it is credible. That is an audited figure. We will always be membership-based, that is the backbone of our business. We have established relationships with government, labour and civil society. We relooked at our membership and how we structure it. The chamber gives its members a much larger network of access. We’ve always focused on established