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SOUTH AFRICAN BUSINESS YEA

2014

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20

AC

INCLUDING HIGHLIGHTS FROM THE NINE PROVINCES

Y

EBRATING CEL

OF DE MOCR

WESTERN CAPE BUSINESS

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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.

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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

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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

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Open for business

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Tel: 041 811 8200 info@mbda.co.za | 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

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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

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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: info@gan.co.za | 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: chris@gan.co.za

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.

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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.

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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

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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

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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

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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

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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.

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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.

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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

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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.

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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

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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.

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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

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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

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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.

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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

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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

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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

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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 company’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 company’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?

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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

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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

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• •

• •

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

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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.

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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

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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

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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.

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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

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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 Africa’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 country’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

company’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. It was 32nd out of 181 countries in the World

58

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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

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SPECIAL FEATURE

South Africa at 20 years How the provinces have progressed.

T

he Rural Development Agency, established in terms of the Provincial Government’s Rural Development Strategy, is in place. Through the Siyazondla programme, 25 540 households have been supported in rural and peri-urban areas. Over 8 951 hectares of land were cultivated as part of a drive to revitalise agriculture in rural areas. 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 Cape’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 province’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 province’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

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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

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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 – 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

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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 Cape’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: nokwanela.zakhe@otp.ecprov.gov.za 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 fezeka.nkomonye@treasury.ecprov.gov.za 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: andiswa.mbana@treasury.ecprov.gov.za 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 siyamthanda.heshula@impilo.ecprov.gov.za 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: tanduxolo.davi@edu.ecprov.gov.za 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: nelisal@ecdhs.gov.za, benjaminm@ecdhs.gov.za Website: http://echousing.ecprov.gov.za

SOUTH AFRICAN BUSINESS 2014

72

LISTINGS Email: nelisal@ecdhs.gov.za 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: fezi.mveku@eclgta.gov.za 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 nondumiso.matthews@socdev.ecprov.gov.za 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: dideka.gungu@dpw.ecape.gov.za 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: nolufefe.mdingi@srac.ecprov.gov.za 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 malamlela.ndabankulu@agr.ecprov.gov.za 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: songo.gova@dot.ecprov.gov.za 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: plu@petroleumagencysa.com 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.

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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

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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

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FOCUS

An anchor for the SMME sector The ECDC found R671-million in new investments in 2012/13.

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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

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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.

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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 Exporters’ 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, Momento’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

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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.

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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.

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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

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Growth through agrarian reform Vibrant and inspired rural economies.

Mpoloyethu Cooperative in Chintsa outside East London.

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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. Mpoloyethu’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

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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.

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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 – 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

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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 ‘seed for production’. This should create wealth companies play a crucial supopportunities for rural communities with links to markets. The port role to the organisation’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

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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 pakon@ecrda.co.za

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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

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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

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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

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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.

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Valuable infrastructure In June 2012, the official launch of the R15-million Cumakala Bridge and access road took place at the Amahlathi Local Municipality.

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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

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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.

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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

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Dutywa regeneration •

R500 000 was raised for the improvement of the municipal systems initiative in Dutywa. A

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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

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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

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Top-class performance The Auditor General described Amathole District Municipality as a beacon of hope.

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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

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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

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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.

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Visit: www.amathole.gov.za

SOUTH AFRICAN BUSINESS 2014

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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

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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 Organisation’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 Business’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 jenny@bkcob.co.za 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 members@bkcob.co.za 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: info@bkcob.co.za or throughout the year and assists interested memcommunications@bkcob.co.za 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

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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.

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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 doesn’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.

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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.

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GOVAN MBEKI AVENUE UPGRADE

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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

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he MBDA’s Route 67 consists of 67 Public Art Works symbolising Nelson Mandela’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

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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

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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: kobiep@remaxind.co.za 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.

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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 ed@absa.co.za

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.

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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!

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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 State’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 Telkom’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 Province’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: premier@premier.fs.gov.za 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: motaungat@edtea.fs.gov.za 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: mobum@fs.agric.za 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: mec@edu.fs.gov.za 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: mec@fscogtahs.gov.za 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: mosholiknj@fshealth.gov.za Website: www.fshealth.gov.za

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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: mec@fscogtahs.gov.za 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: liaut@socdev.fs.gov.za 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: komphelab@freetrans.gov.za 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: mec@sacr.fs.gov.za 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: mofokengm@fsworks.co.za 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: mecpa@treasury.fs.gov.za Website: www.treasury.fs.gov.za

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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

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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 Telkom’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 000km² 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

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SOUTH AFRICAN BUSINESS 2014

PROFILE

SAMTI SAMTI’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 CUT’s Faculty of Engineering and Information Technology.

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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

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Key contact person: Cantridge Sibanyoni Tel:
+27 51 507 3592 Fax:
+27 51 507 3483
 Email: cantridges@samti.co.za 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

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LISTINGS

Gauteng Provincial Government A guide to Gauteng’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: sandy.thomas@gauteng.gov.za 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: tebogo.kuhale@gauteng.gov.za 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: jane.hlongwane@gauteng.gov.za 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: anisa.defreitas@gauteng.gov.za 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: smangele.mxumalo@gauteng.gov.za 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: mandla.nkomfe@gauteng.gov.za Website: www.finance.gpg.gov.za

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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: monica.mashela@gauteng.gov.za 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: yusuf.sofia@gauteng.gov.za 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: khanyisa.nkuna@gauteng.gov.za 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: thandeka.dlamini@gauteng.gov.za 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: monica.mashela@gauteng.gov.za Website: www.dlgh.gpg.gov.za

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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.

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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

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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

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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 company’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: seanf@itta.co.za 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

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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

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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.

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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

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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.

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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

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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-

ages and metal products Services (with government making up a significant part) contribute 65% to the city’s economy, with industry (21%) and commerce (12.5%) making up the the remainder

Ekurhuleni Metropolitan Municipality Ekurhuleni includes the towns of Germiston, Boksburg, Benoni, Kempton Park and Springs. Ekurhuleni plays a vital role in the national economy. Firstly, it is the site of OR Tambo International Airport. A major international airports conference was held in the city in 2013. Plans are underway to develop the country’s first aerotropolis in and around Ekurhuleni. Secondly, it is home to a large number of manufacturing enterprises which contribute 19.7% of Gauteng’s gross domestic product. Wadeville-Alrode and Germiston-Daveyton are important industrial corridors. Germiston is home to the Rand Refinery Limited, South Africa’s only gold refinery. A number of railway businesses are located near to South Africa’s biggest rail junction in Germiston. Transnet Engineering has a big plant at the junction and there are rail workshops in Nigel (Union Carriage and Wagon) and Boksburg (DCD Rail and Lennings Rail Services). The lakes at Brakpan and Benoni are popular sites for recreation, and Brakpan has a casino. Several hotels, particularly those near the airport, have conference and event facilities. The World Trade Centre, near OR Tambo International Airport, is one of South Africa’s biggest conference venues. Tourist attractions include an aviation museum in Germiston, the AECI Dynamite Factory Museum in Edenvale and the Ubunye Museum.

READ MORE Visit: www.frontiermarketnetwork.com/ article/3880

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PROFILE

Gauteng Growth and Development Agency The GGDA’s vision is to be the premier catalyst of innovative and sustainable growth and socio-economic development within the Southern African region.

Gauteng is the premier business and trade hub on the African continent.

Introducing the GGDA The Gauteng Growth and Development Agency (GGDA) was established in June 2012, following a merger between Geda and Blue IQ Holdings (Pty) Ltd. Both these organisations had previously provided a unique bouquet of services (see table on page 141). The move to merge the two entities formed part of a broader restructuring operation aimed at enhancing the role of the Gauteng Provincial Government in driving infrastructure development, trade, investment, growth and innovation in the provincial economy. SOUTH AFRICAN BUSINESS 2014

The GGDA’s core mandate is to serve as the implementation arm of the Gauteng Department of Economic Development (GDED) and assist the department in leading, facilitating and managing sustainable job creation and inclusive economic growth and development in the Gauteng City region. In turn, the agency’s vision is to be the premier catalyst of innovative and sustainable growth and socio-economic development within the Southern African region. Aligned to its mandate and vision, the GGDA’s mission is to create an enabling environment for growth, through

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PROFILE targeted investment facilitation, strategic infrastructure development and social transformation – thus positioning Gauteng as a leading global city region (GCR). In order to fulfill its mandate, vision and mission, the GGDA provides the following services to a diverse client base: • Facilitating the development and enhancement of strategic economic infrastructure within the Gauteng province. • Working with development finance partners in a project-appraisal capacity to assess a case for proceeding with specific projects or proposals. • Undertaking the coordination, preplanning and evaluation of sites for clients, and conducting post-investment site visits. • Providing and disseminating market intelligence in the form of sectoral and regional economic data. • Assisting with company registrations and helping businesses to obtain work permits and visas.

The automotive sector is well established.

Gauteng’s manufacturing sector is growing steadily.

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PROFILE porting organisation to provide effective project delivery assistance in line with the province’s industrial policy and other strategic initiatives within the automotive sector in Gauteng. On 1 April 2013, the Supplier Park Development Company, a subsidiary of the GGDA, merged with the AIDC to form one entity. The new entity will continue to operate under the name of the AIDC. Constitution Hill (ConHill) ConHill was established in 2000 to provide the appropriate management arrangement to ensure the delivery of heritage, education and tourism programmes in Gauteng. Gauteng IDZ Development Company (Devco) Constitution Hill Development Company is a GGDA subsidiary.

Established in 2009, the IDZ’s main objective is the management of the Jewellery Manufacturing Precinct (JMP).

Facilitating access to national and local government investment incentives. • Facilitating local and foreign business retention, expansion and after-care services. The Innovation Hub (TIH) • Hosting and coordinating inbound for- TIH was set up in 2001 to foster the development eign and local business delegations and of smart industries (high technology sectors) under taking outbound missions to in Gauteng. promote Gauteng as a premier investment destination. • Providing expor t development and There are many reasons why Gauteng has facilitation assistance. become known as a ‘Gateway to Africa’. The province offers: • Access to African markets Four subsidiary organisations fall under the um- • Functional national institutions protecting brella of the GGDA. These organisations and the rights of investors their respective mandates are outlined below. • Clear and consistent economic policies in line with national policies Automotive Industry Development Centre • Good infrastructure and facilities (AIDC) • World-class road, rail and air networks The AIDC was established in 2000 as a sup- • An investor-friendly environment •

Why invest in Gauteng?

The GGDA’s subsidiaries

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Gauteng outflanks other provinces along a number of key economic metrics.

provincial real annual economic growth rates. In 2011, Gauteng contributed 34.5% to national GDP (up from 33.8%in 2006) – well above the second and third largest contributions from KwaZulu-Natal (15.7%) and the Western Cape (14.2%), respectively. The contributions of the remaining six provinces to national GDP were all below 10 percent. Furthermore, average growth rates in Gauteng have comfortably exceeded the national average in the past decade – the province’s annual average growth rate between 2001 and 2011 was 4.6%, well above the national average of 4%. Gauteng is South Africa’s strongest economic performer!

Gauteng has continuously outperformed South Africa’s other eight provinces when measured in terms of their respective provincial contributions to national GDP and in comparison of

In addition, the province boasts a comparatively wealthy consumer base, with a population that has, on average, both the highest earners and biggest consumers on the continent. According to the 2011

• •

A large pool of young, highly skilled labourers, whose skill sets match the needs of modern manufacturing, finance, and engineering industries; as well as a large pool of unskilled labour for the manufacturing, trade and transport sectors Low land and commercial building costs Electricity among the cheapest in the world

Economic performance

SERVICES PREVIOUSLY PROVIDED BY GEDA

SERVICES PREVIOUSLY PROVIDED BY BLUE IQ

Assist local manufacturers and exporters to establish global trade contacts

Provide project-management services to fasttrack the delivery of infrastructure and institutional arrangements related to the development and finalisation of projects.

Conduct international market and industry research for country profiling and the collection of market data

Serve as an industry support catalyst by playing a role in realising the true potential of industry support initiatives, and creating viable mechanisms for businesses to interact more successfully.

Identify and plan trade shows. • Identify and invite companies to participate in trade shows • Identify and invite potential foreign buyers to the exhibition stand Facilitate access to export incentive projects

Play the role of asset manager/stakeholder focusing on the commercialisation of projects that have reached maturity.

Blue IQ operated in four key focus areas: Infrastructure, Advanced Manufacturing, Business Tourism and Innovation.

Provide advice on export issues Arrange for interpreters Generate and distribute business leads Invite local companies to meetings with inward trade missions

Services previously provided by Geda and Blue IQ Holdings (Pty) Ltd in their individual capacities.

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The transport sector is the focus of major industrial development in the province.

Census, at R156 243, annual average household incomes in Gauteng exceed the national average of R38 734 by a considerable margin.

Investment projects and opportunities

Wadeville Alrode Corridor

A number of major industrial development and infrastructure investment initiatives are currently underway in Gauteng, namely: City Deep Transport Logistics Hub

Opportunities: Investment opportunities in the City Deep Transport Logistics Hub include infrastructure upgrading, especially roads for the use of heavy vehicles, as well as venture capital funds and high-tech enterprises.

The Wadeville Alrode Industrial Corridor project aims to create an integrated platform from which to facilitate the expansion of the tradable goods sector and support exports, with a particular focus on sub-Saharan Africa. The Corridor is strategically located and boasts excellent infrastructure together with competitively priced land, rates and services.

City Deep, located in Greater Johannesburg, is South Africa’s leading container depot and the largest inland port in Africa (as well as the fifth- Opportunities: Within the Corridor there are largest in the world). Despite its obvious potential, promising opportunities for investment in the depot remains under-utilised. Nevertheless, it metal production, containers and packaging, presents a number of advantages for discerning chemicals, machinery, logistics, transport, warehousing and distribution. investors and businesses, including: • An effective transport and logistics platform Tshwane Automotive City for containers • Outstanding export infrastructure to support The concept of the Tshwane Automotive City major export operations was developed by the AIDC with a view to sup• Time-sensitive product manufacturing, porting the automotive industry to become globlogistics, freight and transport services for busi- ally competitive. The strategic approach behind nesses exporting to neighbouring countries the development of the Tshwane Automotive SOUTH AFRICAN BUSINESS 2014

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PROFILE City centres on ensuring that critical mass is achieved in order to reap the potential benefits of subsidised utilities, reduced rental, consolidated logistical flows, bulk infrastructure improvements and dedicated logistics hubs. The presence of the Automotive City will elevate Gauteng’s status as a key candidate for foreign direct investment (FDI) and the province of choice for the automotive manufacturing sector.

stimulating economic growth and job creation in the automotive industry through large-scale investment in strategic economic infrastructure. The ASP is managed by the AIDC located in Rosslyn, north of Tshwane, a region boasting the highest concentration of vehicle manufacturers in the country.

Modelled on leading supplier parks in Europe, Japan and the US, ASP concentrates automoOpportunities: Against the backdrop of a rapidly tive-component manufacturers, suppliers and growing industry, the Tshwane Automotive City service providers in one location to achieve offers interested investors world-class facilities synergies and cost benefits. ASP is an internafor research and development (R&D) and hu- tional benchmark project that has contributed man resource development, and an excellent significantly to the global competitiveness of platform from which to launch cost-effective the South African automotive industry. The deengineering, design and testing projects, tech- velopment enjoys strong support from local and nology and licensing agreements with local provincial government, the automotive industry and service providers. component manufacturers.

GGDA investment project – Automotive Supplier Park: R2-billion expansion plan Aim of the project

Opportunities/services for investors • •

The Automotive Supplier Park (ASP) is a Gauteng Provincial Government initiative aimed at

• •

Customised factories Office space Logistics services ICT services

The Automotive Supplier Park concentrates all aspects of automotive production in one location.

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Conference facilities

Status to date •

be operational in 2013 The zone is part of a priority electricity grid recognised by the City of Tshwane It is within a 30km radius of all major research and educational institutions including the Gerotek test tracks, as well as the South African Bureau of Standards (SABS) and the Council for Scientific and Industrial Research (CSIR)

The ASP houses 17 various automo- • tive component manufacturers already supplying components to BMW, Nissan and Ford to name the OEM’s in close proximity It has the biggest concentration of automotivecomponent suppliers of which Rosslyn is the hub in South Africa, representing +/- The Gauteng Industrial Development Zone Development Company (Devco) 35% of the component suppliers Government is currently investigating The OR Tambo Industrial Development Zone long-term strategic plans to declare the (IDZ) programme plans to develop 725 hectares City of Tshwane as the Automotive City of of land situated around the OR Tambo InternaSouth Africa and the ASP has been identi- tional Airport. It is envisaged that this initiative fied as strategic infrastructure that will be will help to stimulate economic development considered for Special Economic Zone through the use of the IDZ mechanism. The pro(SEZ) status gramme includes a strong focus on support for The ASP is ideally located for OEM’s inter- the development of beneficiation capacity reested to export into the African markets as lated to the precious metals and minerals sector. the Platinum Corridor (N4 Platinum Highway) More specifically, the programme is directed to is the main route into the rest of Africa light, high-margin, export-oriented manufacturThe Wonderboom Airport is in close proxim- ing of South African precious and semi-precious ity to Rosslyn, approximately 13km from the metals. The multi-site development consists of ASP, and it has expansion plans to support several industry-specific areas to be developed cargo flights in phases over a 10- to 15-year period. Various Gauteng Automotive Training Academy will skills development programmes will be imple-

The Jewellery Manufacturing Precinct will have facilities for storage, design, maufacturing and retail.

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PROFILE mented to enhance skills in the sector. In line with the programme’s objectives, Phase 1 of the IDZ programme involves the development of the Jewellery Manufacturing Precinct (JMP). The JMP will be a fully operational programme, set on 6.1-hectares of land with a mixture of facilities for storage, design, manufacturing and retail businesses.

The GGDA supports a variety of skills programmes.

Opportunities: Investment opportunities related to the IDZ programme include information and communication technology (ICT) production and distribution, aerospace, electronics and avionics, and related industries. The JMP further offers investors the opportunity to get involved with the mineral-beneficiation sector in South Africa, while receiving special export conditions and business incentives. Enhancing the economic competitiveness of Special Economic Zones The move to establish Special Economic Zones (SEZs) is designed to promote competitiveness among enterprises through the export of value-added manufactured products within zonebased industries. Moreover, it seeks to encourage domestic and FDI for Township Industrial Hubs. It is expected that the intervention will contribute to job creation while also reducing the cost of doing business in SEZs and industrial hubs.

Gauteng is the site of several logistics hubs.

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Heritage tourism is gaining traction as a key plank in the tourism offering.

Opportunities: Once developed, the SEZs will provide significant opportunities in terms of: • Attracting domestic investment and FDI in manufacturing and tradable services • Providing non-core services, such as transport and distribution to the SEZ • Providing increased export opportunities through export incentives • Green industries, oil and gas services investors, aquaculture projects, as well as a possible mineral-sand-beneficiation investment

Constitution Hill precinct, including: Heritage tourism through the proposed establishment of the Judicial College and a boutique hotel, and a Struggle Hero Visitor’s Centre • The development of a Justice Precinct • Other commercial and housing developments, cultural tourism initiatives, archives and libraries, and recreational facilities •

GGDA investment project – Constitution Hill Redevelopment Aim of the project

Constitution Hill A proposal was submitted to develop the site Constitution Hill is a city precinct anchored by with a Justice Precinct that will include various the South African Constitutional Court. Constitu- offices for the Chief Justice, Chapter 9 Institution Hill is located on the site of Johannesburg’s tions, the Judicial Institute and the Court Maninfamous Old Fort Prison Complex, where many agement Agency and other related activities. An apartheid struggle heroes were persecuted. The agreement has been reached at the highest levsite also houses the Women’s Gaol Museum, els to ensure that the Justice Precinct should be Number Four Museum and the Old Fort Mu- located on the site where the Gauteng Provincial seum. The Constitution Hill Development Com- Government has made a R400-million investpany (ConHill) was established with a view to ment in super basements and foundations. The setting up an appropriate management system development is proposed to be approximately to ensure the delivery of heritage, education 105 000m2 in area. and tourism programmes in Gauteng, while also contributing to the revitalisation of the Johan- This development will become a national icon nesburg inner city. and is directly related to the location of the Constitutional Court. It will also ensure development Opportunities: A number of potential invest- in the inner city of Johannesburg. ment opportunities are available within the SOUTH AFRICAN BUSINESS 2014

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PROFILE The Innovation Hub The Innovation Hub (TIH) is the first international standard science and technology park in Southern Africa. It was established with a view to driving the development of smart industries (high technology sectors) in Gauteng. In this respect, in line with the focus of the Gauteng Employment Growth and Development Strategy (GEGDS), TIH serves as a catalyst for innovation and a key driver of the knowledge economy. More specifically, key focus areas for innovation include ICT, biotechnology, renewThe Innovation Hub is working on a hydroelectric study. able energies and low-carbon economy technologies (green economy). Significant projects innovation by having locally owned Intellectual underway in TIH include the Moringa Oleifera Property (IP) technology from Biomass Gasificaproject, Hartebeesport Dam Rehabilitation Hy- tion, while boosting electricity service coverage droelectric Installation and an Energy Security within Gauteng contributing to clean energy genProject. eration, security and self-efficiency as outlined in the Gauteng Green Economy Strategy. The plant Opportunities: TIH provides investment opportu- should ideally be co-located with a saw-mill, or in nities in the form of an enabling environment for an area that has a lot of alien vegetation, which the stimulation and growth of technology-driven would need to be cleared. businesses as well as for the development of R&D facilities, hi-tech incubators, and corporate GGDA investment project – headquarters for hi-tech companies and venture BioSciences Park Aim of the project capitalists. GGDA investment project – The Innovation Hub: Enterprise Building 2 Aim of the project

A BioSciences-Park will aim to provide a nurturing environment for biotechnology start-ups to develop, thrive, and eventually become important commercial players, contributing to economic growth.

Construction of the Enterprise Building 2 at The Innovation Hub. Potential number of jobs to be created 80 permanent jobs (construction).

CONTACT INFO

GGDA investment project – Biomass Gasification Aim of the project

Tel: +27 11 085 2400 Physical address: 124 Main Street, Marshalltown, Johannesburg Website: www.ggda.co.za

The primary objective of this project is to promote

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Making its mark across Gauteng Seda Gauteng is a key player of South Africa’s SMME development sector. Provincial Manager of Seda Gauteng Nosipho Khonkwane talks about its extensive networks and partnerships. Please give an overview of Seda’s footprint in the province (number of branches, staff etc)

Nosipho Khonkwane

Seda has expanded its footprint in Gauteng to ensure equitable access to SMMEs. Currently, we have nine access points i.e. three fully fledged branches and six co-locations or satellites. We have built a strong team of 16 business advisors who have the responsibility of making measurable differences in the businesses they assist. This team of business advisors works very closely with a team of service providers who possess expert knowledge in different functional areas of business and industry sectors. The theme of South African Business 2014 is ‘celebrating 20 years of democracy’. How has Seda been successful in demonstrating democratic principles in its work in Gauteng?

BIOGRAPHY Nosipho Khonkwane is the Provincial Manager for Seda Gauteng. She holds a National Diploma in Industrial Engineering from Port Elizabeth Technikon (PETECH), a B-Tech in Industrial Engineering from the University of South Africa (UNISA) and a Masters of Business Leadership (MBL) from UNISA. She has 14 years of experience in SMME development. SOUTH AFRICAN BUSINESS 2014

It has been very important for Seda to ensure equitable access to business development services to all entrepreneurs in the province. The adopted roll-out strategy ensured that we have buy-in from other stakeholders in the sector and a partnership approach was implemented. The network of branches was established through partnerships with municipalities, universities and some of the state-owned enterprises. We ensured that we reach out to as many communities as possible through setting up permanent co-location points and through conducting information outreach sessions. The information outreach sessions create awareness about available opportunities for entrepreneurs; how and where to access those opportunities. Besides the frequent outreach sessions, we host one big event annually, bringing together all players in the enterprise development sector and providing an opportunity for entrepreneurs, to experience a one-stop-shop environment. We all know that the SMME sector is central to the South African government’s vision of halving unemployment. Our role as Seda has been to unlock the potential of the small and medium enterprises to create jobs. In the Gauteng Province,

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methods used in training depends on the skills level of the various groups. All these training efforts seek to ensure that we improve entrepreneurial skills of SMMEs so that they are able to grow and sustain their businesses. To give you a taste of our approach, there is one specific training programme called EMPRETEC. To date Seda Gauteng has capacitated 136 small enterprises on entrepreneurship training in Tshwane and Johannesburg, through the EMPRETEC Training Workshop which encourages individuals to focus on their roles as entrepreneurs, and challenge them to critically examine their personal strengths and weaknesses. The workshop familiarises participants with the behavioural competencies of successful entrepreneurs, strengthening and enhancing those behaviours in themselves, and finally to be able to apply the behaviours in their own businesses. We further trained 3 560 entrepreneurs on various business skills training. Great successes have been registered and most entrepreneurs who took part in the training programmes have managed to grow their businesses.

WE HOST ONE BIG EVENT ANNUALLY, BRINGING TOGETHER ALL PLAYERS IN THE ENTERPRISE DEVELOPMENT SECTOR AND PROVIDING AN OPPORTUNITY FOR ENTREPRENEURS TO EXPERIENCE A ONESTOP-SHOP ENVIRONMENT What are the challenges facing Seda in its quest to become a beacon of success in the SMME development sector? What is being done to combat these challenges? South Africa is regarded as a country with a low entrepreneurship rate, ranking in the bottom third of all countries in the category of an efficient, driven economy (GEM, 2010). We experience this first hand in our day-to-day operations and this is evident in the quality of business ideas presented to our business advisors and information officers. Some of the aspirant entrepreneurs choose to start businesses out of necessity and not because they have identified a gap in the market. Due to scarcity in the job market, some people resort to starting their own business’ and they normally do not possess the necessary businessmanagement skills to make it a success Seda has training programmes that starts from creating awareness about starting and managing your own business to intensive training on managing a successful business. The level or

Please give an overview of the four phases of business development, as offered by Seda. Seda’s service offerings are divided in four phases, namely: Business Talk (pre start-up phase) Services focusing on clients who want information on starting a business. Assistance provided: • Business advice and information • Small enterprise training and seminars • Business registration

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INTERVIEW Business Start (start-up phase) Provides tools and techniques for clients who are ready to start a business and want assistance and direction. Assistance provided: • Business planning, counselling and support • Facilitation of access to finance • Business incubation • Basic business skills training • Introduction to co-operatives course Business Build (building phase)

Services focusing on clients who want to grow their business and expand nationally and internationally. Assistance provided: • Export development • Business systems development • Co-operative support • Growth strategies • Technology transfer What is the Cooperatives and Community Public-Private Partnership Programme?

Services focusing on clients who want skills to sus- The mission of the programme is to promote the tain and strengthen their businesses. Assistance establishment of rural and collectively owned provided: enterprises and to ensure their growth and sus• Business technical support tain- ability. It focuses on key sectors, namely: • Networking and business linkages • Agribusiness • Capacity-building systems and mentorship • Cultural tourism • Tender advice/procurement • Mining and mineral beneficiation • Export orientation • Trade and auxiliary enterprises • Technology transfer • Starting and managing a co-operative • Business Grow (growth/maturity phase)

LOCATION

SERVICE POINTS

ADDRESS

City of Tshwane

Seda Tshwane branch

Block C, Old Mutual Building, 536 Schoeman Street, Arcadia

+27 12 400 8880

Mamelodi co-location

Mamelodi Munipality Office. cnr JL Ledwaba and Makhubela streets

+27 61 384 7973

Mabopane co-location

Block B, Mabopane Multipurpose Centre 5086

+27 12 701 5020

Olivenhoutbosch co-location

Entrepreneurial centre, CNR Lehong and Bohlae Street, Ext 13, Olivenhoutbosch

+27 61 3415382

Sekampaneng co-location

Sekampaneng multi-purpose centre, Hammanskraal 6456

+27 61 3842808

Bronkhorstspruit co-location

3 Lanham Street Bronkhorstspruit

+27 61 3831855

Seda Joburg branch

33 Hoofd Street, Braam Park Forum 5, +27 11 408 6500 Braamfontein

Transnet Hub co-location

Carlton Centre

+27 11 308 1427

Seda Emfuleni branch

5 MoshoeshoeStreet, VUT Science and Technology Park Sebokeng

+27 11 930 2700

City of Johannesburg

Emfuleni Local Municipality

TELEPHONE

Potential clients are able to reach Seda by visiting any of the access points listed above. SOUTH AFRICAN BUSINESS 2014

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Driving to success Seda has paved the way for Thanozi General Trading.

Background Established in 2006, Thanozi G e n e r a l Tr ad i n g ( TGT ) was founded by Mrs T Mahlomakhulu and Mr J Khoza. The business headquarters are situated in the Germiston Industrial Area of Gauteng Province. The company is 100% owned by previously disadvantaged individuals with a 50% female ownership. TGT’s core focus is the provision of blasting product transportation. TGT is relatively new in the market and that posed challenges for the owners. The owners struggled to make the company known to intended clients; as a result the company client base was very limited. Furthermore the company operated with limited resources of five trucks which inhibited business growth.

Thanozi General Trading has gone from strength to strength.

Two new trucks have been purchased.

Intervention

A Seda business advisor conducted an assessment of the company and made recommendations to the management of TGT on various interventions required to move the business to the next level of performance. As a result, a marketing intervention was implemented which included the design and development of a new corporate image, to ensure that the company establish a strong brand in the market.

Outcome

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Increase sales by R1-million in the past six months Grow employment from six to nine people Purchase two more trucks to enable the company to meet the new demands

READ MORE

The new corporate image strengthened the TGT brand and the company managed to:

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Success on the horizon Diesel Rebar has seen immense success since its establishment in 2009. Seda has facilitated growth and increased profits for this company by providing marketing strategies and offering business-management advice.

Targeted interventions have led to new jobs at Diesel Rebar.

Background Diesel Rebar and Mesh was established in 2009 by sole owner Rodney Mphyatshirema, a qualified civil engineer by profession. Rodney worked for the Department of Water Affairs and Forestry for two years as a civil designer and later worked for Nkwale Construction for six months as a site agent. On leaving Nkwale construction, Rodney decided to start his own business and called it MR Steel Fixing. Initially the business only assembled and installed reinforcing steel for other suppliers. Two years later in December 2011, he started his own factory in Silverton that was able to bend and cut reinforcing steel. SOUTH AFRICAN BUSINESS 2014

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The company has, as its core business, the supply, cutting, bending, fixing and delivery of concrete reinforcing steel. In addition, the business has managed to maintain short lead times to delivery and has earned a reputation as a preferred supplier in this regard. The business has since been relocated to a new factory in Rosslyn, Pretoria North

FOCUS where it continues to uphold this standard. Despite the progress made in the venture and Rodney’s attempts to continuously improve the company, several challenges were threatening to destabilise the business and included: • The quality of products. • Difficulty in delivering finished goods • Difficulty in taking business decisions • Low to moderate turnover

Intervention

Finished goods are then delivered to clients.

advisor also proceeded to sanction the implementation of a quality management system in the business in May 2012.

The client visited Seda Tshwane in May 2012. A SBAT assessment was conducted and an action plan submitted. The The quality and depth of the training courses attended resulted business advisor found that in Rodney re-evaluating business practices and applying the knowledge obtained in the courses first-hand. He was able to: the business required: • A quality management • Improve the business’s turnover from R1 500 000 to system to ensure quality R6.48-million products and to gain ac- • Improve general business practice and operations Furthermore, the quality management system implemented cess to vendor databases • Business transport to had a direct impact in terms of: deliver finished goods to • Creating 14 more jobs to address the production increase • Relocating the business to bigger premises in Rosslyn, customers • Business management Pretoria North training to ensure that • Acquiring company vehicles sound business decisions • Purchasing new machinery to handle the increase in demand are taken and • A marketing strategy to market the business and ‘The quality management system assists us to manage our busiattract sales The business advisor opted ness and our processes better and the training has given us to first address the issue of insight and direction to grow our business.’ decision making in the business and enrolled Rodney on a Seda training course in READ MORE June 2012 and the Empretec Training Course which ran for 7 days in October 2012. The Visit: www.seda.org.za

Outcome

SMME’s comment

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Joburg – an investment destination of choice Johannesburg is a financial hub with enormous investment potential. The Mayor, Parks Tau, expands on the city’s unique selling points.

Please give an overview of the Corridors of Freedom.

Parks Tau

BIOGRAPHY Mpho Franklyn (Parks) Tau played a leadership role in student politics from a young age. At 25, he was a driving force in the processes that eventually led to a united Johannesburg. As a member of the mayoral committee, Parks helped develop the city’s plans for Spatial Development, Environmental Management and Integrated Transport. In 2004, he was given the responsibility for finance and economic development and in 2011 became the Mayor of Johannesburg. SOUTH AFRICAN BUSINESS 2014

It is the creation of well-planned socioeconomic arteries or ‘Corridors of Freedom’ linked to interchanges where the focus would be on mixed-use development – high-density accommodation supported by office buildings, industrial, retail development and opportunities for leisure and recreation. The aim is to re-stitch the city and create a different future for Joburg’s residents where jobs can be linked to people and people to jobs. Because the developments are along transport corridors, the provision of transport like Rea Vaya will enable fast, safe and affordable mobility along the corridors. The ‘Corridors of Freedom’ will give the city’s residents increased freedom of movement as well as economic freedom – liberating them from apartheid’s spatial legacy of informal settlements, poor schooling and limited recreational spaces. This will give rise to a people-centred city where the needs of communities, their safety, comfort and economic well-being are placed at the core of planning and delivery processes. It will result in reduced poverty for the majority of residents who are currently spending a large percentage of their income on transport. How will the corridors be beneficial for investors? Corridors are economic nodes well serviced with infrastructure to make conditions conducive for investment. These will have sector-specific clusters for sideways, backwards and forward linkages in the economic value chain. What draws investment to this city? Investment is drawn to the city because of the city’s strategic location quotient relative to its markets. Joburg is the second-largest city on the continent with 30% of the world’s mineral reserves. It has access to one-billion people and it is an ideal base for SADC. SA’s free trade agreements with SADC, EU, AGOA, Mercosur, etc positions the city as a strategic location for investment. OR Tambo International is the continent’s biggest and busiest airport.

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INTERVIEW Joburg has sophisticated financial markets Comment on Joburg’s quality of life. with regulation supervision. The Johannesburg Joburg has excellent living standards and mediStock Exchange is the 15th largest in the world. cal services and has world-class living conditions The city has approximately 70 foreign banks with superb recreational and cultural assets. It is and is the country’s largest metropolitan econ- also a beautiful international tourism destination. omy which generates 17% of SA’s wealth and 48% of Gauteng’s economic output. Joburg How do you promote investment possesses the highest number of economically opportunities? active people and has the highest proportion of The city has highly educated and experienced personnel with international background and formal sector employment. experience with strategic international networks. What infrastructure does the city have? The city promotes its investment opportunities There is an advanced road, rail and air net- through 138 embassies and commercial atwork around Joburg. The City Deep Transport tachés as well as targeted strategic local and Logistics Hub is Africa’s largest inland port and international media, including World Economic the Joburg market is the largest container depot and Commonwealth Business Fora. in South Africa, and it is the largest fresh produce market in Africa. The City has world-class ICT Please give an overview of some of the companies investing in it such as Google, SAP, key investment projects happening now. HP, IBM and Nokia. About 85% of the telecommunication sector’s activities are in Joburg. We are the country’s fourth-fastest-growing GSM cellphone market globally (50% per annum) with 34-million active mobile handsets, 70% data capable and twothirds of the country’s top ISPs based in Joburg.

JOHANNESBURG POSSESSES THE HIGHEST NUMBER OF ECONOMICALLY ACTIVE PEOPLE.

• • • •

• •

What other sectors are prominent? Joburg has the richest and biggest agricultural market in the continent and is the major exporter of fruit and vegetables. Joburg is the gold and diamond beneficiation centre of Africa. Our beneficiation focus area is jewellery with Jewel City located in the CBD.

Waterfall: R25-billion Century: R30-billion. This project will create about 20 000 jobs Newtown: R1.5-billion Linbro Precinct °° Triton Express: R190-million. This project will create about 500 jobs °° Gold Leaf: R588-million. This project will create about 700 jobs °° Cold Chain: R225-million °° Escow: R75-million. This project will create about 120 jobs °° Premier Foods: R75-million. This project will create about 700 jobs °° Midas: R250-million. This project will create about 700 jobs Baragwanath: R150-million. This project will create about 300 jobs Red Carpet: R150-million. This project will create about 300 jobs

How will these projects help to achieve the end results or goals set out in the GDS 2040 Strategy? They will assist in job creation and skills development and transfer.

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The Corridors of Freedom The ‘Corridors of Freedom’ will transform settlement patterns that have shunted the majority of residents to the outskirts of the city, away from economic opportunities and access to jobs and growth.

The Nelson Mandela Bay Bridge has unlocked economic potential in downtown Johannesburg.

F

or too long the City of Johannesburg has been shaped by of freedom. They will, however, its apartheid past. It is still divided between rich and poor focus on the following areas: areas, white and black areas, townships and suburbs. Black people in the main continue to live far from their In the medium term – 2016 workplaces and have to travel long distances to reach places of • Soweto to CBD along Perth Empire work, school, leisure and so on. The City of Johannesburg is re-stitching the city to create a • CBD to Alex different future for its residents where it can link jobs to people and • Alex to Sandton people to jobs. It will be embarking on transit-oriented develop- • Turfontein node ment. Because the developments are along transport corridors, • Mining Belt the provision of transport like Rea Vaya will enable fast, safe and In the long term – 2040 affordable mobility along the corridors. These corridors are dubbed ‘Corridors of Freedom’, giving • Sandton/Randburg to Diepsloot residents increased freedom of movement as well as economic freedom – liberating them from apartheid spatial legacy char- • Alex to Ivory Park acterised by informal settlements, poor schooling and limited Apartheid spatial planning has recreational spaces. left the city with sprawling low-density areas without viable public transport systems. The City of Johannesburg will be consulting its residents and The majority of working class stakeholders to finalise the routes and nodes of the corridors and poor citizens are still living

Targeted areas

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FOCUS on the fringes of the city and have to commute over long distances to access work and economic opportunities. Private car use is a significant driver of energy consumption and greenhouse gas emissions in the city. A 10% shift of private car users to public transport for their daily commute will result in an 8% reduction in energy consumption. Future planning must adThe plan envisages efficient use of several modes of transport. dress both the issues of sustainability and inequity. together, stimulating economic activity and creating opporThe most efficient urban tunities for emerging entrepreneurs form is compact, mixed landuse with an extensive public • Rich and poor, black and white living side by side – housing options provided cover a range of types and prices including transport network that includes rental accommodation high-intensity movement corridors and attractive environ- • Limited managed parking to reduce the amount of land devoted to parking and further discourage the use of private ments for walking and cycling. transport Such a compact city is energy efficient, provides residents • Convenient transit stops and stations with greater access, promotes social cohesion and creates a There will be a clean break with apartheid spatial distribution and people living on the periphery will be able to move closer to vibrant urban environment. economic opportunities.

Key features of the Corridors of Freedom •

Safe neighbourhoods designed for cycling and walking with sufficient facilities and attractive street conditions Safe, complete streets with features to calm traffic, control vehicle traffic speeds and discourage the use of private transport Mixed-use developments where residential areas, office parks, shops, schools and other public services are close

The long-term impact The development of dedicated transport corridors holds a number of advantages for Joburg: • The city will focus productive land use and economic activities in areas where transport infrastructure – both rail and road – are already present or being planned • The demand for private motorised transport will be reduced and the average trip length will be shortened • Public transport will become a viable alternative because residents will live in closer proximity to work, shopping and leisure opportunities • High-density housing will stimulate opportunities for the SMME sector and small-scale operators in the informal economy • The environmental impact of public transport in high-density areas will be significantly smaller than in the case of lowdensity urban sprawl reliant on private cars

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FOCUS a train, bus or taxi to a place of work. Gone will be the days of days of returning to your home late in the evening, unable to share a family meal together or spending quality time with your spouse and children. The Corridors of Freedom will usher in a new era of access to opportunity and a choice for residents to work, stay and play within the same space without the inconvenience and high costs of travelling long distances every day. The majority of South Africans have been forced by apartheid social engineering to live on the outskirts of cities and towns. In terms of these policies, they were temporary sojourners, fit only to provide cheap labour to industry and The Maponya Mall in Soweto illustrates the spending power of the commerce, unable to share in rising middle class. the fruit of their production. Although the transition to • Residents will benefit because they will not have to spend democracy in 1994 brought so much time and money on transport fundamental changes in political freedom to the majority of • Learners will benefit because they will be closer to school • Unemployed people will benefit because it will easier to get South Africans, many of the to places to look for work racially based settlement pat• Factories will benefit because workers will come to work terns remained in place. All on time this will change through the • Shopping centres and hawkers will benefit along the cor- development of the Corridors ridors and nodes due to the increased number of people of Freedom based on an effective public transport system and passing their shops • The environment (and our lungs) will benefit with less private high-density neighbourhoods car use and dangerous carbon emissions closer to the places of eco• Construction and other related industries will benefit because nomic opportunity giving rise to of the job opportunities throughout the lifetime of the project sustainable human settlements. The National Household Travel Survey (2003) conducted by Stats SA found that the averFor the average Joburger, the option to live in close proximity to age travel time between home public transport facilities with easy access to the city and to make and work for commuters makuse of an improved transport system will be a life-changing experi- ing use of public transport is 59 ence. Gone will be the days of being forced to rise at dawn to catch minutes. More than 1.3-million

Hearing the voices of people

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Social infratructure like hospitals is being developed to support neighbourhoods.

South Africans spend more than two hours a day travelling to and from their places of residence. To this can be added at least 30 minutes per trip spent on walking to a station and stop and waiting for the bus or train to arrive. For the Joburger living in areas such as Diepsloot, Orange Farm or Ivory Park, this means waking up before dawn every working day to access transport that will take them to working places in the city or the northern suburbs. In the evening, the process is repeated. The survey also showed that 16.4% of Gauteng residents spend more than 20% of their monthly income on transport. The social fabric of families suffer because of absent parents who are already on their way to work when their children prepare for school and arrive back at home late, unable to share a family meal, supervise

homework or spend quality time with their spouse and children. The ‘Corridors of Freedom’ are designed to reverse these trends. Medium- and high-density housing will spring up next to the transport arteries and around the transport hub – linking home and work. Travel time will be significantly reduced because of shorter distances and more effective public transport. The cost of transport will be lowered, leaving households with more money to spend on food, education, shelter and other basic necessities of life. The quality of life enjoyed by families will be improved because parents will be able to spend more time with their families, sharing experiences and supporting their educational and leisure activities. The average Joburger of the future will be able to work, live, stay and play within the same geographical space. Neighbourhoods will be supported by social infrastructure – local shops, local parks, local schools, local clinics and local police stations. Residents will be given a wider range of choices of housing with a strong emphasis on rental accommodation in well-located and managed developments. Cutting down on carbon emissions and exhaust fumes will lead to a cleaner environment and improvements in the health of the population and the quality of life they enjoy. Johannesburg will continue to lead South Africa towards a lowcarbon economy – ensuring a sustainable future for all its citizens.

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Joburg – Africa’s economic flagship Johannesburg, also known as Joburg, Jozi or Egoli (‘Place of Gold’), is the economic engine of the South African economy.

O

ver 55 international airlines link the city to major centres conventions, exhibitions and worldwide, making Johannesburg one of the most incentives. accessible centres on the continent. One of JohanJohannesburg is a versatile nesburg’s major competitive advantages is its inter- business and mega-events national recognition as the business and commercial capital of destination. the African continent. Given its accessibility by air and that 75% Now proudly taking its place of corporate headquarters are based in the city, and being the as Africa’s second-largest city, only city in South Africa that boasts four of the venues capable Joburg is growing at an unof hosting more than 5 000 delegates, Johannesburg’s success precedented rate – constantly and continuously transforming as a tourism destination pivots on business. Joburg is open for business – and it has the capacity to host itself. It’s seen not only as the events across a spectrum of size, scope and price. The conven- economic hub of the continent, tions bureau team is also primed to assist with supplying all the but also as offering a plethora necessary advice and support services relating to meetings, of cultural, leisure, sporting, SOUTH AFRICAN BUSINESS 2014

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Monuments to the struggle against apartheid are part of the city’s heritage tourism offering.

fashion and lifestyle activities that is fast making it the leading destination for both leisure and business tourists. Joburg’s legendary shopping, dining, entertainment and nightlife is complemented by fabulous weather as well as an astonishing array of facilities like spectacular golf courses, gyms, spas and wellness centres. With excellent infrastructure, unique transport features (like the high-speed Gautrain and the Rea Vaya Bus Rapid Transit system), increased hotel inventory, spectacular stadiums and magnificent architecture, it is no wonder that Johannesburg was voted the world’s third-best city in Wallpaper magazine’s Wallpaper Design Awards in early 2011. Its popularity among world travellers is in the ascendancy. The city has shown a 53.6% growth in the number of international visitors between 2009

and 2013, propelling it to a spot in the MasterCard Index’s top 20 fastest-growing cities in the world. With a projected 2.54-million international travellers expected to visit Johannesburg in 2013, the city is set to become the most popular tourist destination in Africa. Johannesburg also comes out tops in Africa in terms of international visitor spending, with $2.7-billion estimated to be injected into the city in 2013. The city is recognised as the financial capital of South Africa and is home to 74% of corporate headquarters. South Africa’s only stock exchange, the Johannesburg Securities Exchange (JSE), rates as one of the top 20 exchanges in the world in terms of market capitalisation. The city’s profusion of trees, approximately six-million, make it the largest, man-made forest in the world. The climate is temperate (neither humid nor too hot for comfort), with year-round sunshine and daily clear blue skies. Winters are short and mild.

A city that boasts many firsts The first African City to host the C40 Climate Summit, a network of cities from around the world committed to sustainable climate-related actions; the first to host the Metropolis, a meeting of the world’s premier mayors dedicated to delivering a high quality of the life in their cities; the first to host One Young World Summit 2013, a forum where young people from across the world formulate solutions for pressing issues; and the first to host both the opening and closing matches of the 2010 FIFA™ World Cup.

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PROFILE

Chamber of Commerce and Industry – Johannesburg The Chamber is an independent, non-political, subscription-based association dedicated to promoting a business-friendly environment and providing members with practical services to help them run their businesses.

Area of operation Members of the Chamber of Commerce and Industry – Johannesburg (JCCI) are drawn from every sector of the economy and range from independent entrepreneurs to large corporates. The head office of the JCCI is in Milpark, Johannesburg, but it also has a branch office in Midrand (Gallagher Estate) to assist members in that area with certification of export documents and also a committee focusing specifically on the Sandton/Midrand region.

• • • •

Mission statement

debt risk by accessing reports compiled by a leading supplier of corporate credit information, at volume discount rates. Assistance with both pre-employment screening and checks of current employees (in conjunction with an external service provider). Pension fund available to member companies. Training opportunities – a variety of workshops and training programmes are on offer. Certification of export documentation. BEE verification services.

Membership fees

We speak for business in our region, honestly, fearlessly, and with authority. We provide members Annual subscription rates are based on the total with meaningful business intelligence, opportuni- number of people in the organisation. ties for growth, and links to local and international partners, suppliers and markets.

Key facts and figures

Year established: 1890 No of staff: 30

Services to members JCCI offers a variety of services to meet the diverse needs of its members. Some of its services are as follows: • Provision of business information (on matters relating to international trade, sourcing of raw materials and products, human resource policies and business legislation, for example). • Advocacy – as an impartial third-party, the chamber lobbies government to promote and protect the interests of business. • Payroll service for smaller companies that provides computerised payslips, IRP5 certificates, leave records and statutory reports. • Credit service – reduces potential bad SOUTH AFRICAN BUSINESS 2014

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CONTACT INFO Key contact people: Joan Warburton-McBride, Chief Executive Officer Nada Reyneke, International Trade Tel: +27 11 726 5300 Fax: +27 11 482 2000 Email: info@jcci.co.za Physical address: 6th Floor, JCC House, 27 Owl Street, Milpark Postal address: Private Bag 34, Auckland Park 2006 Website: www.jcci.co.za

PROFILE

Milestone Connexions (Pty) Ltd Milestone Connexions is a provider of complete multivendor ICT services.

Milestone Connexions provides its clients with complete services and solutions, including onsite services, software development, system designs and deployment, hardware distribution, post-implementation support and sales representation. These services are bound together through premium management and coordination, so the company can act as a single point of contact for its clients, simplifying processes and communication through the introduction of a single project-management team, a single support centre, a single contact for invoicing and clearly outlined escalation procedures.

Key facts and figures Year established: 2008 No of staff: 10 Major clients: Vodacom SA, EPPA, SocDev, Railway Safety Regulator Turnover: R5-million

BEE status % black ownership: 100% % black directors: 100% % black staff: 100%

CONTACT INFO

Description of services The company is a provider of complete multivendor ICT services. Through its unique approach, it exploits the knowledge of both local and international environments to supply its customers with the most effective hardware and software implementations, services, maintenance and additional support.

Key contact people: Stanley Joseph Zengele, Co-founder & MD Lindokuhle Sydney Zwane, Executive Director Samuel Dolamo, Sales & Marketing Director Tel: +27 11 403 2055 Fax: 086 552 6890 (SA only) Email: info@milestonecx.com Website: www.milestonecx.com

RAIL & HEAVY – INDUSTRY

TELECOMS

MINING

PRASA Transnet Freight Rail Global Railway Africa Gautrain

Anglo Vodacom MTN BHP Billiton Cell C GoldFields Telkom Xstrata Seacom Exxaro Neotel Shanduka Altech Autopage Genco Cellular Continental Cell Tel Mobility Keaton Ericsson Ikwezi Siemens Impala Royal Bafokeng

Target markets for Milestone Connexions (Pty) Ltd SOUTH AFRICAN BUSINESS 2014

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AUTOMOTIVE

GOVERNMENT

Hyundai BMW Toyota KIA Audi General Motors Nissan Ford

SAPS Post Office Department of Defence SAA Municipalities The Government Garage SANParks

INTERVIEW

Connecting the business world Linda Zwane, CEO of Milestone Connexions, talks about the new projects that the company is launching in the coming year.

Please give an overview of the aims of Milestone Connexions in South Africa.

Linda Zwane

Cooperation is a very important part of our unique approach. Our aims are: • To build close relationships with our clients • To optimise access to the most advanced portfolio of network support capabilities • To provide the best returns for the money clients invest Will the company be launching any new products or services in the coming year?

BIOGRAPHY Linda Zwane matriculated in 1999 before attending the University of Zululand. He has eight years experience in customer service doing IT technical support, three years experience as an IT consultant (to both the private and public sector) and 10 years experience in business development and marketing. This included establishing business contracts with corporate clients and the public sector, handling revenue yielding tactics, and accounts and relationship management.

Yes, our developers are busy as we speak finalising a new system called FAS, designed for funeral parlours in the South African market specifically. FAS is best-in-class process-management solution that allows funeral parlors and mortuaries to easily offload their resources so they can focus more on their core business matters, such as building relationships with customers, marketing and selling burial cover plans and products. To what do you attribute your success in the consulting, technology, outsourcing, networks and infrastructure sectors? We provide our clients with complete services and solutions, including on-site services, software development, system designs and deployment, hardware distribution, post-implementation support, and sales representation. These services are bound together through premium management and coordination, so we can act as a single point of contact for our clients, simplifying processes and communication through the introduction of a single project-management team, a single support centre and clearly outlined escalation procedures.

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PROFILE

Thebe Ya Bophelo Healthcare Administrator The trusted partner of communities in South Africa for the provision of quality healthcare solutions, for the long-term benefit of the community and all other stakeholders.

Thebe Ya Bophelo Healthcare Administrators (Pty) Ltd (TYB), is the medical aid administration subsidiary of Thebe Investments Ltd, one of the oldest black-owned groups in South Africa.

the projects. These are intended to add value over the long term to the beneficiaries.

Local regions serviced

The projects are all initiated by staff at TYB and are based on identifying the specif- Rohan Laird, ic needs of the com- Chief Executive munities that are ser- Officer viced by ThebeMed medical aid. TYB is the acknowledged leader within the Thebe Group for its CSI initiatives. This fact has been recognised by the group, and TYB has won the Chairman’s CSI Award for two years running.

• • • •

Mpumalanga: Secunda, Standerton, Witbank, Delmas, New Denmark North West: Rustenburg Gauteng: Sasolburg, New Vaal, Westonaria, Carletonville Limpopo: Phalaborwa

Services offered • • • •

Medical aid administration Medical aid Employee wellness programme Value-added benefits

Key facts and figures Year established: 2003 No of staff: 161

Community projects Thebe Ya Bophelo (TYB), the administrator of ThebeMed, took its first tentative steps in the corporate social investment environment a number of years ago. In the early days, the projects were small and largely ad hoc or reactive in nature. As the years have progressed the efforts from TYB became more focused and targeted. As various CSI teams and committees developed their expertise, so the projects developed and extended their scope. A unique feature of the current initiatives is the long-term nature of many of SOUTH AFRICAN BUSINESS 2014

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CONTACT INFO Key contact people: Erick Vischer, General Manager: Business Development Genesis Mokolo, Key Accounts Manager Cynthia Matiase, Business Development Manager Tel: +27 11 544 8000 Fax: 086 632 9484 (SA only) Email: vishere@tybhealth.co.za Website:www.tybhealth.co.za

REGIONAL OVERVIEW OF

KWAZULUNATAL PROVINCE K

waZulu-Natal hugs the Indian Ocean and the subtropical climate makes the region perfect for cultivating produce such as pineapples, bananas and nuts. KwaZuluNatal is also well-known for its sugar cane and cattle. The province has shown considerable growth in the business services, transport and retail sectors. This manufacturing hub makes up almost a third of South Africa’s manufactured exports.

By Megan Abels

Key sectors The varied manufacturing subsector includes automotive, plastics, chemicals and petrochemicals, pulp and paper as well as food and beverages. The automotive industry contributes just over R20billion per year and is led by industry giant Toyota. A major front-runner in steel manufacturing, ArcelorMittal, has four operations in South

Africa. The Newcastle facility in KwaZuluNatal generates 80% of the company’s long steel products. Sappi, a global paper and pulp company, has the world’s largest single site for specialised cellulose manufacturing in KwaZuluNatal, the Saiccor Mill. Food production makes a mark with companies such as Unilever, Illovo Sugar, TongaatHulett Group, Rainbow Chicken and Clover. A multi-million-rand rice-cleaning and packing operation was launched in June 2013, in Pietermaritzburg. This joint venture, labelled Allsome Brands, is the result of a partnership between the Willowton Group and international France-based company Louis Dreyfus. Industrial investment plays a substantial role in the provincial economy with two of the country’s busiest ports situated there, Richards Bay and Durban. The international trade success is to some extent dependent on developed transport and

SPECIAL FEATURE GENERAL GOVERNMENT SERVICES 13% PERSONAL SERVICES 6% FINANCE, REAL ESTATE & BUSINESS SERVICES 20% TRANSPORT, STORAGE & COMMUNICATION 14% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 14% CONSTRUCTION 3% ELECTRICITY, GAS & WATER 2% MANUFACTURING 22% MINING & QUARRYING 2% AGRICULTURE, FORESTRY & FISHING 4% KwaZulu-Natal sector contribution.

SOURCE: STATS SA

logistics infrastructure. Recently, the Dube TradePort has driven economic growth. It is home to the King Shaka International Airport, an agricultural greenhouse, a cargo terminal and various other sections relating to trade, business and transport, all on 3 000 hectares of land just north of Durban. It has attracted a R2-billion foreign direct investment through Indian business conglomerate Action Group and is making a solid contribution to KwaZulu-Natal’s economy.

Economic future The Renewable Energy Development Hub (RED Hub), a partnership between the provincial government along with the eThekwini Municipality, Ilembe District Municipality and private

firms, is leading a renewable energy project in KwaZulu-Natal. The deal was confirmed in March 2013 and will consist of various components including laboratories, a renewable-energy education and training facility (which will involve Durban University of Technology), as well as a technology hub for research and development. It will also host a manufacturing and technical-services sector for the renewable-energy industry. The main component of the project is a renewable-energy power generation of 260MW. The multi-billion-rand project will generate thousands of permanent jobs in the province and the first phase is set to be fully operational by the end of 2014. This projects aim is to promote a greener, sustainable economy.

ZIMBABWE

Premier:

BOTSWANA Limpopo NAMIBIA

Zweli Mkhize

Capital:

Pietermaritzburg

Provincial website:

www.kznonline.gov.za

Languages:

isiZulu, English

Population:

10 267 300 (2011)

North West

Mpumalanga Gauteng SWAZILAND

Free State Northern Cape

LESOTHO

MOZAMBIQUE

FACTS AND FIGURES FOR KWAZULU-NATAL

KwaZulu-

Natal KWAZULUNATAL

Eastern Cape Western Cape

Area:

94 361km2

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KwaZulu-Natal Provincial Government A guide to KwaZulu-Natal’s provincial departments and their MECs. www.kwazulunatal.gov.za

Office of the Premier

Department of Community Safety and Liaison

Acting Premier: Senzo Mchunu MEC: Thembinkosi Willies Mchunu

Physical address: 5th Floor, Telkom Building, 300 Langalibalele Street, Pietermaritzburg 3201 Tel: +27 33 341 3300 Fax: +27 33 342 7368 Email: bhekin@premier.kzntl.gov.za Website: www.kwazulunatal.gov.za

Physical address: 179 Jabu Ndlovu Street, Pietermaritzburg 3201 Tel: +27 33 342 2639 Fax: +27 33 342 8824 Email: ntombelan@kzncomsafety.gov.za Website: www.kzncomsafety.gov.za

Department of Agriculture, Environmental Affairs and Rural Development

Department of Cooperative Governance and Traditional Affairs

MEC: Dr Bonginkosi Meshack Radebe Physical address: 1 Cedara Executive Building, Cedara College, Cedara Road, Pietermaritzburg 3201 Tel: +27 33 343 8240 Fax: +27 33 343 8255 Email: thuleleni.cele@kzndae.gov.za Website: www.kzndae.gov.za

Department of Arts and Culture

MEC: Nomsa Dube Physical address: FNB House, Redlands Estate, Wembley, Pietermaritzburg 3201 Tel: +27 33 264 5500 Fax: +27 33 392 0027 Email: mec.pa@kzncogta.gov.za Website: www.kzncogta.gov.za

Department of Economic Development and Tourism

MEC: Ntombikayise Sibhidla-Saphetla Physical address: 222 Jabu Ndlovu Street, Pietermaritzburg 3201 Tel: +27 33 342 6300 Fax: +27 33 342 3613 Email: ndikandikan@kzndac.gov.za Website: www.kzndac.gov.za

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MEC: Mike Mabuyakhulu Physical address: Marine Building, 22 Gardner Street, Durban 4000 Tel: +27 31 310 5300 Fax: +27 31 310 5416 Email: mecpa@kznded.gov.za Website: www.kznded.gov.za

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LISTINGS Email: mec.sport@kzndsr.gov.za Website: www.kzndsr.gov.za

Department of Education MEC: Senzo Mchunu

Department of Social Development

Physical address: Anton Lembede Building, 247 Burger Street, Pietermaritzburg 3201 Tel: +27 33 355 2450 Fax: +27 33 394 0893 Email: nonopha.maponya@kzndoe.gov.za Website: www.kzneducation.gov.za

MEC: Weziwe Gcotyelwa Thusi Physical address: 208 Hoosen Haffejee Street, Pietermaritzburg 3201 Tel: +27 33 341 9600 Fax: +27 33 342 4157 Email: nokubonga.khoza@kznsocdev.gov.za Website: www.kznsocdev.gov.za

Department of Health MEC: Dr Sibongiseni Maxwell Dhlomo Physical address: 1st Floor, 330 Langalibalele Street, Pietermaritzburg 3201 Tel: +27 33 395 2016 Fax: +27 33 394 0597 Email: zamokuhle.zondi@kznhealth.gov.za Website: www.kznhealth.gov.za

Department of Human Settlements MEC: Ravi Pillay

Department of Transport MEC: Thembinkosi Willies Mchunu Physical address: 4th Floor, Executive Building, 172 Burger Street, Pietermaritzburg 3201 Tel: +27 33 342 2626 Fax: +27 33 342 8824 Email: thobekile.nzimande@kzntransport.gov.za Website: www.kzntransport.gov.za

Physical address: 455A Jan Smuts Highway, Mayville, Durban 4000 Tel: +27 31 261 8997 Fax: +27 31 261 8157 Email: jurie.thaver@kznworks.gov.za Website: www.kznhousing.gov.za

KwaZulu-Natal Legislature Speaker: Neliswa Nkonyeni Physical address: 239 Langalibalele Street, Pietermaritzburg 3201 Tel: +27 33 355 7600 Fax: +27 33 355 7767 Email: nkwanayanad@kznlegislature.gov.za Website: www.kznlegislature.gov.za

Department of Public Works MEC: Ravi Pillay Physical address: 455A Jan Smuts Highway, Mayville, Durban 4001 Tel: +27 31 261 8997 Fax: +27 31 261 8157 Email: jurie.thaver@kznworks.gov.za Website: www.kznworks.gov.za

Provincial Treasury MEC for Finance: Ina CronjĂŠ Physical address: 2nd Floor, Natalia Building, 330 Langalibalele Street, Pietermaritzburg 3201 Tel: +27 33 846 6800 Fax: +27 33 846 6801 Email: esther.naidoo@kzntreasury.gov.za Website: www.kzntreasury.gov.za

Department of Sport and Recreation MEC: Ntombikayise Sibhidla-Saphetla Physical address: 135 Pieter Maritz Street, Pietermaritzburg 3200 Tel: +27 33 342 6300 Fax: +27 33 342 6313

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PROFILE

KZN Growth Fund (the Trust) The Trust is a catalyst for economic growth.

KZN Growth Fund looks to fund projects that lead to job creation and black economic empowerment in the province.

Mandate

Mission

The Trust was established as a dedicated pro- To unlock significant economic development in vincial project finance growth fund in KwaZulu- KwaZulu-Natal by participating in and promoting Natal (KZN) to: direct private and public investments, permanent • Provide support for the creation of an ena- job creation and broad-based black economic bling environment in KZN for economic empowerment while remaining financially sustainactivities that will create jobs, welfare and able. This means the trust will take on inherently higher risk for lower than market-related returns that lead to sustainable industries • Promote black economic empowerment in commercial projects, in order to serve as a initiatives in KZN catalyst for economic growth and development.

Vision

Sector of operation

To be the leading public-private leveraged debt fund that will serve as a catalyst for significant economic development in KZN through funding sustainable projects.

The Trust targets infrastructure-related projects of R30-million and above. It also focuses on traditional infrastructure and economic sectors, such as: • Transport and Logistics • Tourism

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PROFILE • • • • •

Power Bulk Services (Water and Waste) Manufacturing Telecommunications Agri-processing Other sectors, which include but not limited to Mineral Beneficiation

Description of activities

A negotiable equity contribution from the project sponsors in line with the project’s equity needs The project needs to be at an advanced stage of implementation so as to enable disbursement within a period not exceeding six months

Current projects

The Trust is a debt fund service provider, structured as a unique partnership between the The current projects that the fund has financed provincial government, commercial banks and are in the following sectors: development-finance institutions such as the • Transport and logistics Development Bank of Southern Africa. The Trust • Telecommunications was established to finance medium to large-scale sustainable projects throughout the KwaZuluNatal province. The Trust is an innovative initiative aimed at creating sustainable economic Year established: 2009 development, job creation and black economic No of staff: 16 empowerment within the infrastructure sector. Affiliated institutions: K ZN Department of Economic Development and Tourism Fund size: R1.0875-billion

Key facts and figures

Funding limits

The Trust provides project-finance structured debt, as either senior or mezzanine debt, or a combination of both instruments over a loan period ranging between five and 10 years.

BEE status % black directors: 80% % black staff: 94%

The Trust provides minimum funding of R30-million and upwards per project.

Other funding criteria The project should: • Generate new and sustainable job opportunities • Foster broad-based black economic empowerment • Demonstrate the ability to repay the debt funding within the loan period

CONTACT INFO Key contact people: Siddiq Adam, Chief Executive Officer Stella Mpofu, Chief Financial Officer Tel: +27 31 372 3720 Fax: +27 31 306 2547 Email: info@kzngrowthfund.co.za Physical address: 303 Dr Pixley Kaseme Street, 28th Floor, Old Mutual Building, Durban 4001 Postal address: PO Box 1817, Durban 4000 Website: www.kzngrowthfund.co.za

All projects submitted for funding need to satisfy the following broad minimum criteria: • At least a 30% equity share or a minimum BBBEE scorecard of 65 points • A significant part of the BEE shareholding must reside within the KZN province

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PROFILE

Durban Chamber of Commerce and Industry The Durban Chamber of Commerce and Industry aims to create a business environment conducive to investment and growth.

The Durban Chamber of Commerce and Industry (DCCI) contributes towards creating an investment-friendly economic and business environment in eThekwini and provides services relevant to the needs of the business community. Recently launched, the Chamber’s ‘Business Vision for Economic Development of the City’ envisions a business-friendly city which should emerge as a result of the joint efforts of public and private sectors. It reflects views expressed by member companies in various standing committees.

Main objectives

• • • •

to finance and procurement opportunities Lobbying and representation on behalf of chamber members Sourcing of trade leads and local or foreign suppliers or service providers Local and international credit checks Direct promotion via adverts in the Daily Digest, an electronic daily newsletter, free website classifieds, member-to-member discounts, print membership directory, online member directory and overall assistance with HIV and Aids policies

Working with government

The chamber aims to achieve the following: • To provide an investor- and business- The chamber’s relationship with the local and friendly environment provincial governments has proven to be positive • To facilitate economic and business growth and fruitful. The chamber has made significant in• To provide relevant services to maintain and put into the development of the Provincial Growth attract membership and Development Strategy, while maintaining a • To maintain and sustain its membership constant and constructive relationship with the • To promote the development of small leaders of the eThekwini Municipality. In addition, businesses having received contributions from member com• To engage in influential advocacy on behalf panies, the chamber has made submissions on of business many proposed policies that will affect business through legislation.

Services The DCCI provides a broad range of services and opportunities for businesses, especially members of the chamber. These include: • Networking platforms/events such as breakfast and lunch networking functions • Business support, including mentoring, basic human resources advice, HIV and Aids advice and support, and assistance with access SOUTH AFRICAN BUSINESS 2014

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CONTACT INFO Tel: +27 31 335 1000 Fax: +27 31 332 1288 Email: chamber@durbanchamber.co.za Physical address: Chamber House, 190 Stalwart Simelane Street, Durban 4001 Postal address: PO Box 1506, Durban 4000 Website: www.durbanchamber.co.za

Garden Court Polokwane Centrally located in Limpopo Province’s capital city, the Garden Court Polokwane offers guests the perfect base from which to conduct business or discover some of the region’s natural and historic attractions. Rooms are set in an attractive garden setting where you will feel at home. Rooms are spacious and offer all the amenities that you may need to feel comfortable. • Free high-speed WiFi

• Gym

• Lapologa Lounge

• Self Service Workstation

• Pool

• Matsakeng Resataurant

Tel: +27 15 291 2030 • Fax: +27 15 291 3150 • Website: www.southernsun.com

REGIONAL OVERVIEW OF THE

LIMPOPO PROVINCE A

t the most northern point of South Africa, Limpopo shares international borders with Botswana, Zimbabwe and Mozambique. The province enjoys a hot climate with little rain which is favourable for its agricultural exports and makes it a great competitor as the tourist destination of choice in South Africa.

The province hosts three national parks including part of the Kruger National Park which is a world-famous destination. Numerous public and private game and nature reserves offer five-star accommodation and activities, from hunting to safari trips, off-road biking and elephant rides. Limpopo’s national, provincial and private game and nature reserves By Megan Abels stretch across no less than 3.6-million hectares. Limpopo is a key driver of the national economy in terms of its agricultural and tourism outputs. Key sectors Community, social and personal services has shown tremendous growth over the last decade. Cattle, sunflowers, cotton, maize, peanuts, avo- This, in conjunction with general government cados, tea, tomatoes, citrus and macadamias services, has added value to the provincial GDP are among Limpopo’s key agricultural resources. by contributing 25% collectively. Subtropical fruit like mangoes, paw-paws, liIn 2012, the provincial economy outpertchis, bananas and pineapples are in abundance formed the national economy in terms of growth in the province and make up the bulk of export in various sectors. income. Many farms have been converted to Mining is a key industry in Limpopo and private game reserves which are a great asset has also seen considerable growth; mineral resources include platinum, iron ore, coal, copper, to the tourism sector in Limpopo.

SPECIAL FEATURE PERSONAL & GENERAL GOVERNMENT SERVICES 25% FINANCE, REAL ESTATE & BUSINESS SERVICES 17% TRANSPORT, STORAGE & COMMUNICATION 9% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 13% CONSTRUCTION 2% ELECTRICITY, GAS & WATER 3% MANUFACTURING 4% MINING & QUARRYING 24% AGRICULTURE, FORESTRY & FISHING 3% Limpopo sector contribution.

SOURCE: MACRO-ECONOMIC INDICATORS, STATISTICS SOUTH AFRICA.

diamonds, antimony and phosphates. Major players in the industry in Limpopo are Anglo Platinum, Exxaro Resources, De Beers and Palabora Mining Company. The province has more than 135 operating mines and is seen as a catalyst to drive economic growth in South Africa.

Economic future Two special economic zones (SEZs) have been provisionally approved by the department of trade and industry (dti). These two zones, one located within the Sekhukhune region at the Greater Tubatse Municipality and the other in Musina, will attract more business and foreign direct investment (fdi) to the province.

This will bring much-needed growth to Limpopo’s economy. Manufacturing is one of the smallest sectors contributing to the provincial GDP and these zones will drive growth in this sector. Limpopo’s acting head of the Department of Economic Development, Tourism and Environmental Affairs Solly Kgopong said, ‘We will use these to propel manufacturing in the province. We want to leapfrog growth, and deal with poverty, unemployment and inequality.’ More specifically, the two SEZs will host a coal plant and a steam-power-generating company in Musina. Subsectors like fresh produce, agriprocessing, transport and logistics will also be established at Sekhukhune. Kgopong further explained that, ‘Eventually, it will be a gateway into the Southern African Development Community, and an economic hub that will allow the smooth transit of goods and merchandise.’ ZIMBABWE

Premier:

Stanley Mathabatha

Capital:

Polokwane

Provincial website:

www.limpopo.gov.za

Languages:

Sesotho, Tshivenda, Xitsonga

Population:

5 404 868

Area:

123 910km

BOTSWANA Limpopo LIMPOPO NAMIBIA North West

Mpumalanga Gauteng SWAZILAND

Free State Northern Cape

MOZAMBIQUE

FACTS AND FIGURES FOR LIMPOPO

KwaZuluNatal

LESOTHO

Eastern Cape Western Cape

2

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SOUTH AFRICAN BUSINESS 2014

LISTINGS

Limpopo Provincial Government A guide to Limpopo’s provincial government departments. Visit limpopo.gov.za

Office of the Premier

Department of Education

Premier: Stanley Mathabatha

MEC: Mme Dikeledi

Physical address: Mowaneng Building, 40 Hans van Rensburg Street, Polokwane 0700 Postal address: Private Bag X9483, Polokwane 0700 Tel: +27 15 287 6000 Fax: +27 15 291 3911 Email: ngoashengr@premier.limpopo.gov.za Website: www.limpopo.gov.za

Physical address: Department of Education Building, cnr Biccard and Excelsior streets, Polokwane 0699 Postal address: Private Bag X9489, Polokwane 0700 Tel: +27 15 290 7625 Fax: +27 15 297 0885/086 531 0539 Email: myenimb@edu.limpopo.gov.za Website: www.edu.limpopo.gov.za

Department of Agriculture

Department of Health and Social Development

MEC: Rosina Semenya MEC: Dipuo Letsatsi-Duba

Physical address: Temo Towers, 69 Biccard Street, Polokwane 0699 Postal address: Private Bag X9487, Polokwane 0700 Tel: +27 15 294 3000 Fax: +27 15 294 4506 Email: matloumj@agric.limpopo.gov.za Website: www.lda.gov.za

Physical address: 18 College Street, Polokwane 0699 Postal address: Private Bag X9302, Polokwane 0700 Tel: +27 15 293 6000 Fax: +27 15 293 6150 Email: nyambe.matshivha@dhsd.limpopo.gov.za Website: www.dhsd.limpopo.gov.za

Department of Economic Development, Environment and Tourism

Department of Local Government and Housing

MEC: Pinky Kekana

MEC: Ishmael Kgetjepe

Physical address: Evridiki Towers, 20 Hans van Rensburg Street, Polokwane 0699 Postal address: Private Bag X9484, Polokwane 0700 Tel: +27 15 293 8527 Fax: +27 15 293 8317 Email: mabebamd@ledet.gov.za Website: www.ledet.gov.za

Physical address: 20 Rabie Street, Hensa Building, Polokwane 0699 Postal address: Private Bag X9485, Polokwane 0700 Tel: +27 15 284 5557 Fax: +27 15 291 3988/086 576 7847 Email: machatemt@coghsta.limpopo.gov.za Website: www.limpopo.coghsta.gov.za

SOUTH AFRICAN BUSINESS 2014

178

LISTINGS Department of Public Works

Department of Sport, Arts and Culture

MEC: Dickson Masemola

MEC: Merriam Ramadwa

Physical address: 43 Church Street, Polokwane 0699 Postal address: Private Bag X9490, Polokwane 0700 Tel: +27 15 284 7000 Fax: +27 15 284 7040 Email: mothupim@dpw.limpopo.gov.za Website: www.dpw.limpopo.gov.za

Physical address: Olympic Towers, 21 Biccard Street, Polokwane 0699 Postal address: Private Bag X9549, Polokwane 0700 Tel: +27 15 284 4009/8 Fax: +27 15 284 4500 Email: matloum@sac.limpopo.gov.za Website: www.sac.limpopo.gov.za

Department of Roads and Transport Provincial Treasury MEC: Masoga Lehlogonolo Physical address: 39 Church Street, Polokwane 0699 Postal address: Private Bag X9491, Polokwane 0700 Tel: +27 15 295 1000 Fax: +27 15 294 8006 Email: mokgahlaa@drt.limpopo.gov.za Website: www.ldrt.gov.za

Department of Safety, Security and Liaison

MEC: David Masondo Physical address: Ismini Towers, 46 Hans van Rensburg Street, Polokwane 0699 Postal address: Private Bag X9486, Polokwane 0700 Tel: +27 15 298 7000 Fax: +27 15 295 8873/7010 Email: mulamular@treasury.limpopo.gov.za Website: www.limtreasury.gov.za

MEC: Joyce Mashamba Physical address: 32 Schoeman Street, Polokwane 0699 Postal address: Private Bag X9492, Polokwane 0700 Tel: +27 15 290 2900 Fax: +27 15 295 8979 Email: franciss@dssl.limpopo.gov.za Website: www.dssl.limpopo.gov.za

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PROFILE

Seda Limpopo The Small Enterprise Development Agency aims to enhance the competitiveness and sustainability of small enterprises by providing needs-based programmes, products and services.

Description

Mission

Small Enterprise Development Agency (Seda) was established through the enactment of the National Small Business Act of 1996, as amended, and incorporates Ntsika Enterprise Promotion Agency (Ntsika), the National Manufacturing Advice Centre Trust (Namac Trust), and the Community Public Private Partnership Programme (CPPP).

To promote, develop and support small enterprises to ensure their growth and sustainability.

Sector of operations Agriculture

• •

Mandate Implement government’s small-business strategy, design and implement a standard and common national delivery network for smallenterprise development, and integrate government-funded small-enterprise support agencies across all tiers of government. Seda provides business development and support services for small enterprises through its national network, in partnership with other role-players in small-enterprise support. Seda also implements programmes targeted at business development in areas prioritised by government. Seda has an established national network of branches covering every province, district and municipality. In Limpopo, Seda has a branch in each of the five district municipalities and a provincial office.

Manufacturing •

• • •

Training and skills-development support, particularly in areas related to technical skills and product development and costing Support to strengthen relationships with large enterprises, particularly with respect to long-term arrangements and supplier contacts between SMMEs and larger enterprises Information and advice on product development and how to survive global competition Infrastructure support Industry-specific incubation

ICT •

Assistance to access markets

Tourism

Vision

To be a centre of excellence for small enterprise development in South Africa. •

SOUTH AFRICAN BUSINESS 2014

Financial support to purchase production inputs Assistance to meet the requirements stipulated by agricultural and municipalities to access resources (land,water and electricity) required for agricultural activities Technical support and knowledge and skills transfer through mentorship

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Support to lobby government to ringfence procurement opportunities for tourism SMMEs Assistance in understanding and complying

PROFILE

• •

with industry-specific regulatory requirements and processes Support to identify opportunities, access markets and develop tourism products Capacity-building support to develop business skills

Strategic objectives •

• •

Enhance competitiveness and capabilities of small enterprises through coordinated services, programmes and products Ensure equitable access to businesssupport services Strengthen the organisation to deliver on its mission

Key programmes •

Franchise Support Programme promotes franchising business to new and current entrepreneurs by advising them about potential franchisee and franchisor opportunities Export Development Programme develops export-ready small enterprises that are globally competitive and able to grow markets both locally and internationally TradePoint Programme forms part of the wider network to help local small and medium enterprises participate in global trade Seda Technology Programme (Stp) seeks to stimulate economic growth and development through facilitating technological transfer, increasing the accessibility to and utility of technologies, and offering technical support to small enterprises EMPRETEC Programme promotes the use of entrepreneurial competencies

Products and services Seda provides business-related information, advice, consultancy, training and mentoring services in all areas of enterprise development. These aim at providing solutions related to various business functions from: production to human resources, finance, marketing and export development.

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CONTACT INFO Key contact people: Koenie Slabbert, Provincial Manager Tel: + 27 15 297 1139 Fax: +27 15 297 4022 Email:kslabbert@seda.org.za Physical address: 2nd Floor, Maneo Building, 73 Biccard Street, Polokwane Postal address: Postnet Suite 32, Private Bag x 9307, Polokwane 0700 Seda Vhembe Branch Marcus Mukumela, Branch Manager Tel: + 27 15 962 4284 Fax: +27 15 962 4285 Email: mmukumela@seda.org.za Physical address: Old Mutual Building, Old Group Scheme Offices, Mphephu Road, Thohoyandou 7950 Seda Capricorn Branch Peter Maredi, Branch Manager Tel: + 27 290 8720 Fax: +27 290 8736 Email: pmaredi@seda.org.za Physical address: 1st floor Pharmarama Building, 68 Hans van Rensburg Street,Polokwane 0699 Seda Waterberg Branch Steve Botha, Branch Manager Tel: +27 15 491 2168 Fax:+27 15 491 7361 E mail address: sbotha@seda.org.za Physical address: Old Nedbank Building, 40 Retief street, Mokopane Seda Sekhukhune Branch Seshunkoane Mathabathaba, Branch Manager Tel: +27 13 265 1617 Fax: +27 13 265 1617 Email: jmathabatha@seda.org.za Physical address: Lefa Business Centre, Madibong Village, Jane Furse, Sekhukhune Mopani Branch Mmanko Masha Tel: + 27 15 307 1735 Fax: +27 15 307 2233 Email:mmasha@seda.org.za Physical address: 27 Peace Street,1st Floor,Prosperitas Building,Tzaneen 0850 Seda Hotline: 0860 766 372 Website:www.seda.org.za

SOUTH AFRICAN BUSINESS 2014

INTERVIEW

Seda flying high Seda Limpopo has reached new levels of success. Its achievements and challenges are discussed by Provincial Manager Koenie Slabbert.

How has Seda demonstrated democratic principles in its work in Limpopo?

Koenie Slabbert

The cumulative effect of economic marginalisation of the majority of the people over many years and the current economic climate has manifested itself in structural imbalances that have negative effects on the economic growth rates especially in the rural and peri-urban areas. The consequences are: • Low literacy levels • High unemployment rates • Inadequate capacity • Poverty • Unused infrastructure in the former homelands Seda as a national asset has been able to make a difference to the people affected. What are the challenges facing Seda in its quest to become a beacon of success in the SMME development sector?

BIOGRAPHY Koenie Slabbert has a Higher Diploma in Production Management, a BSc Honours Degree and a Master’s Degree in Operations Management. He started his career as an apprentice in tool, jig- and die-making and worked in the field for a number of years after qualifying as a journeyman. In January 2003, he joined LIMAC (a Seda predecessor) as an industrial engineer before becoming Seda provincial manager for Limpopo. SOUTH AFRICAN BUSINESS 2014

Seda provides business development and technical support for expansion of productivity and the supply to markets through partnerships. These are a few of the challenges facing Seda: • Difficulty in business to business linkage • Support caters more appropriately for established businesses rather than start-ups • Time constraints prevent business advisors from adequately assisting their clients • Too much focus on supporting SMMEs in urban areas at the expense of targeted support for SMMEs in rural areas • Use of English as the principal language is problematic • Limited impact in promoting sustainability of SMMEs • A lack of control over the SMMEs finances • Lack of business planning during start-up • Difficulty accessing finance • Difficulty accessing markets or meeting industry requirements or standards • Lack of experience among owners and managers • Inconsistencies in cash flow • Lack of entrepreneurial skills and mindset

182

INTERVIEW • •

Lack of capacity in market research, Skills shortages, particularly with respect to technical skills and business management skills Fragmented and uncoordinated support from entities tasked with providing assistance Lack of innovation and creativity Difficulty accessing land or securing operating premises Red tape and cumbersome regulatory processes and procedures

What are Seda’s key objectives for the next 12 t0 18 months in the province?

Increasing Seda’s incubation footprint. Directing specific interventions to the small • and medium enterprise segment. • Identifying and working with community and collectively owned large-scale projects and • cooperatives. • • Prioritization of growth sectors (services, manufacturing and agriculture including • agro processing) • To maximize impact on the four strategic areas, the following themes will be areas What is being done to combat these of focus: challenges? °° Need for focused communication and Seda faces challenges in addressing pre- and advocacy by Seda regarding SMME sector issues post-market failure constraints in the small business arena. The desired state of businesses °° Taking a medium to long-term view of and development programme is innovation-led SMME development growth and the development of majority of South °° Focusing on demand side issues to enhance the performance of the SMME African businesses as well as the improvement sector and growth of their businesses. Seda has assisted this by ensuring that there • Ensuring that Seda has sufficient funding for key programmes. is an improvement in: • Self-sustainable cooperatives and collec- • Attracting and retaining, as well as tively owned enterprise developing key, skilled staff. • Self-sustainable businesses • Developing focussed programmes for the • Sustainable jobs small and medium size segment. • Facilitation in the creation of new jobs • More private sector involvement, especially • Skills development on procurement opportunities. • Growth in turnover • Co-location between Seda and LEDA (forSeda has integrated activities with relevant mer LIBSA offices) to enhance one-stoppartners to ensure compatibility and synergy shop approach by utilisation of existing resources and compliment delivery of BDS. between government development planning, local development activities and local development • Provincial Government to get involved in resources in order to ensure maximum benefit the Seda’s SDP (Supplier Development to our clients. Programme) Programme. Seda Limpopo has for the past financial year • LEDET to assist the support of the MSP (Manufacturing Support Programme) managed to achieve its targets in relation to the Programme. overall Seda mandate. The main sections reflect Bring all development agencies in the provthe three perspectives to the operations of Seda: clients, internal processes and the learning and ince to play a significant role in the EDP (Export Development Programme. growth perspective. Seda has managed to have an impact on targeted indicators, on outcome as well as output levels. • •

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PROFILE

Garden Court Polokwane Garden Court Polokwane is a hotel owned and operated by Tsogo Sun Hotels. It is the biggest hotel by room and bed nights in Limpopo.

The hotel pool provides an ideal spot for guests to relax.

Garden Court Polokwane offers guests the perfect base from which to conduct business or discover some of the region’s natural and historic attractions, including the Magoebaskloof Rainforest, Bakoni Malapa Cultural Museum, the Ebenezer Dam, which offers excellent boating and angling, Debegeni Falls with its tranquil picnic spots in a forest setting, and Zebediela, one of the largest citrus estates. Visitors en route to the Kruger National Park and game reserves in Botswana also enjoy this hotel as a stopover destination. The Peter Mokaba Stadium is just three kilometres from the hotel. Rooms are set in an attractive garden setting where guests feel at home. Rooms are spacious and offer all the amenities that one may need to feel comfortable.

The hotel was refurbished in November 2007 and improvements were made to the bathrooms, bedrooms, bedroom corridors, hotel lobby, bar and restaurant. All rooms are fitted with Internet connectivity and DStv bouquet. There is an on-site outdoor pool and fitness centre, and the Pietersburg Rugby/Cricket Club offers opportunities to play golf, tennis and squash. The hotel is also close to various swimming pools.

Description of services

Description of facilities

Business services

The Matsakeng Restaurant offers buffet breakfasts, and à la carte and buffet dinners. SOUTH AFRICAN BUSINESS 2014

Guests can spend a relaxed evening in the Lapologa Lounge enjoying a variety of drinks mixed to their individual tastes.

184

Secretarial, facsimile and PC/printer services are available

PROFILE

Garden Court Polokwane caters to all kinds of tourists.

In-room amenities ensure a comfortable stay. • •

Internet connectivity in all hotel, public and rest areas Internet workstation desk

Hotel services • • • • • • • •

Air conditioning in public areas Laundry and valet Safes in all rooms Wake-up calls Doctor and dentist on call Parking facilities Open parking for 120 cars – no charge Pet policy – small pets allowed

Transport services Transport available to and from: • Polokwane International Airport, located 10km from the hotel. Taxi service available at nominal charge. • City centre, located 1km from the hotel. Taxi service available at nominal charge. • Travel services can be arranged through the Guest Assistance Desk.

Key facts and figures Year established: 1973 Number of staff: 90

Room services All rooms have: • Air conditioning • AM/FM radio • Remote-controlled flat-screen colour television with cable/satellite • Modem connection • In-room Internet connectivity • Direct-dial telephone • Coffee/tea-making facilities • Hairdryer • Iron/ironing board (on request) • Private bath • Separate wardrobe • Work desk with lamp • Guest-room voltage: 220V • Room service available for meals from 6:30pm to 10pm

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CONTACT INFO Key contact people: Hopewell Dlomo, General Manager Mkhuseli Nkobo, Reservations Supervisor Tel: +27 15 291 2030 Fax: +27 15 291 3150 Email: gcpolokwane.reservations@ tsogosun.com Physical address: Cnr Thabo Mbeki and Paul Kruger streets, Polokwane 0700 Postal address: PO Box 784, Polokwane 0700 Website: www.tsogosunhotels.com/ garden-court/polokwane

SOUTH AFRICAN BUSINESS 2014

REGIONAL OVERVIEW OF

MPUMALANGA PROVINCE

M

pumalanga takes up only 6.3% of South Africa’s land area, and for its size, contributes a sizeable chunk to the national GDP. The province has a diverse climate and is rich in agricultural and mineral resources. Mpumalanga has also seen considerable growth in the transport and business-services sector, which contributes to making it a varied economy. In fact, the province was ranked first among the nine provinces for the most diversified economy in 2011.

By Megan Abels

Key sectors The agricultural output of the province is based on a wide variety of crops, forestry activities

and animal products. The variety is due to the diverse climate. Fruit farming consists mostly of citrus and subtropical fruits such as mangoes, avocados, litchis, bananas, paw-paws, granadillas and guavas. Fruit, nut and vegetable farming occur mainly in the Lowveld region, while in the Highveld region, maize, wheat, sorghum, sugar cane and soybeans are produced. Mineral resources like coal, platinum, gold, nickel and chrome are found in Mpumalanga. With 11 coal-fired power stations, the province provides the bulk of South Africa’s electricity. The town of eMalahleni (Witbank) is at the centre of the coal industry where more than 80% of the country’s coal is sourced. The Imbawula Group has recently acquired Mpumalanga coal-mining assets from Xstrata Coal. The complex mines 4.4-million tonnes

SPECIAL FEATURE PERSONAL & GENERAL GOVERNMENT SERVICES 16.1% FINANCE, REAL ESTATE & BUSINESS SERVICES 13.4% TRANSPORT, STORAGE & COMMUNICATION 9.6% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 11.2% CONSTRUCTION 2.5% ELECTRICITY, GAS & WATER 4.7% MANUFACTURING 20.6% MINING & QUARRYING 18.5% AGRICULTURE, FORESTRY & FISHING 3.4% Mpumalanga sector contribution.

SOURCE: STATISTICS SOUTH AFRICA.

of coal annually and consists of Spitzkop and Tselentis Collieries. Of the coal produced at Economic future Spitzkop, 80% is exported to Europe for power generation. The coal at Tselentis is mainly used The Khanyisa power project will be the first of its kind using circulating fluidised-bed (CFB) for the export market as well. Manufacturing is the largest contributor to the technology. This innovation takes place durprovincial GDP. Adequate infrastructure and an ing the combustion process where a turbulent abundance of raw materials benefit the industry. mixing of gasses and solids provides more The province is at the forefront of wood effective chemical reactions and heat transfer. related areas of manufacturing. Forestry, log- Anglo American Thermal Coal chose Kleinkopje ging and sawmilling are prevalent and lead to colliery as the site for the power plant. The project manager Julian Eslait explained sawn timber, particleboard and furniture as part of the manufacturing capacity in Mpumalanga. the challenges of choosing a site for the plant: One of the country’s largest paper mills is ‘Identifying a non-undermined stable site big located at Ngodwana, in the eastern part of the enough for the power station and close enough province. This Sappi mill produces pulp, news- to fuel and water sources was a challenge.’ print and containerboard as well as specialised The plant will generate 450MW of power cellulose (dissolving wood pulp). and is set to be fully operational by 2015. ZIMBABWE

Premier:

David Mabuza

Capital:

Mbombela (Nelspruit)

Provincial website:

www.mpumalanga.gov.za

Limpopo NAMIBIA Gauteng

Languages:

isiNdebele, siSwati, isiZulu

Population:

4 039 939

Area:

79 490km2

North West

SWAZILAND

Free State Northern Cape

MPUMALANGA

MOZAMBIQUE

FACTS AND FIGURES FOR MPUMALANGA

BOTSWANA

LESOTHO

KwaZuluKwaZuluNatal Natal

Eastern Cape Western Cape

SOUTH AFRICAN BUSINESS 2014

LISTINGS

Mpumalanga Provincial Government A guide to Mpumalanga Province’s government departments. Visit www.mpumalanga.gov.za

Office of the Premier Premier: David Dabede Mabuza Physical address: 2nd Floor, Building 2, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11291, Nelspruit 1200 Tel: +27 13 766 2027 Fax: +27 13 766 2494 Email: premier@prem.mpu.gov.za Website: www.mpumalanga.gov.za

Department of Agriculture, Rural Development and Land Administration MEC: Violet Sizani Sinela Physical address: 2nd Floor, Building 6, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11219, Nelspruit 1200 Tel: +27 13 766 6074 Fax: +27 13 766 8437 Email: zaneles@mpg.gov.za Website: http://dardla.mpg.gov.za/

Department of Community Safety, Security and Liaison MEC: Vusi Shongwe Physical address: 2nd Floor, Building 4, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 SOUTH AFRICAN BUSINESS 2014

Postal address: Private Bag X11269, Nelspruit 1200 Tel: +27 13 766 4091 Fax: +27 13 766 4616 Email: uismail@mpg.gov.za Website: www.mpumalanga.gov.za/safety_ and_security/home.asp

Department of Cooperative Governance and Traditional Affairs MEC: SBD Sikhosana Physical address: Upper Ground Floor, Building 6, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11304, Nelspruit 1200 Tel: +27 13 766 6321 Fax: +27 13 766 8438 Email: lefemsenkosi@mpg.gov.za Website: http://cgta.mpg.gov.za

Department of Culture, Sport and Recreation MEC: Sibongile Manana Physical address: 2nd Floor, Building 5, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11316, Nelspruit 1200 Tel: +27 13 766 5078 Fax: +27 13 766 5588 Email: plsimelane@mpg.gov.za Website: www.mpumalanga.gov.za/dcsr/

188

LISTINGS Department of Economic Development, Environment and Tourism

Department of Health and Social Development

MEC: Yvonne Phosa

MEC: Candith Mashego-Dlamini

Physical address: 1st Floor, Building 4, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11215, Nelspruit 1200 Tel: +27 13 766 4554 Fax: +27 13 766 4617 Email: cdias@mpg.gov.za Website: www.mpumalanga.gov.za/dedet/

Physical address: 2nd Floor, Building 3, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11285, Nelspruit 1200 Tel: +27 13 766 3098 Fax: +27 13 766 3475 Email: julian@social.mpu.gov.za Website: www.mpumalanga.gov.za/dept/ health_social_development.htm

Department of Education Department of Human Settlements MEC: Reginah Mhaule Physical address: Building 5, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11341, Nelspruit 1200 Tel: +27 13 766 5385 Fax: +27 13 766 5590 Email: l.siwela@education.mpu.gov.za Website: www.mpumalanga.gov.za/education/

Department of Finance

MEC: Andries Gamede Physical address: Building 7, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11328, Nelspruit 1200 Tel: +27 13 766 6607 Fax: +27 13 766 8461 Email: nndlanya@mpg.gov.za Website: http://dhs.mpg.gov.za/

Department of Public Works, Roads and Transport

MEC: Mdala Masuko Physical address: Upper Ground Floor, Building 4, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11205, Nelspruit 1200 Tel: +27 13 766 4597 Fax: +27 13 766 4625 Email: sishongwe@mpg.gov.za Website: http://finance.mpu.gov.za/

MEC: Dikeledi Mahlangu Physical address: 1st Floor, Building 7, 7 Government Boulevard, Riverside Park Extension 2, Nelspruit 1201 Postal address: Private Bag X11310, Nelspruit 1200 Tel: +27 13 766 6811 Fax: +27 13 766 8462 Email: prettyd@mpg.gov.za Website: http://dpwrt.mpg.gov.za/

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REGIONAL OVERVIEW OF THE

NORTHERN CAPE PROVINCE T

he largest province in South Africa has the lowest 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. With extensive stock and vegetable farming land, agriculture is central to the Northern Cape economy, but cutting-edge renewable-energy projects are revitalising this arid land.

By Megan Abels

Key sectors Major exports include fruit, especially table grapes and meat from the widespread sheep and goat farming in the province. Agri-processing is centred on products such as dates, olives, various vegetables and vine by-products. Crop farming is also ripe in the

province and takes place along the banks of the Orange River, or the Vaalharts region where the land is more fertile. Mining and quarrying is the biggest contributor at 27%. The Northern Cape has vast reserves of manganese and iron ore. According to Mining Weekly, companies like Kumba and Assmang believe that when rail and port capacity is sufficient in South Africa, and enough water and energy is available, iron ore is expected to reach a combined total output of 100-million tons per annum in the upcoming years. The capital of the province, Kimberley, has historical significance as it was central to the diamond-mining industry of South Africa. The province’s mineral wealth also consists of copper, lead, zinc, limestone and semi-precious stones such as tiger’s eye, topaz and amethyst. The province’s first university, Sol Plaatje, will open its doors in 2014 and will be located close to Kimberley.

SPECIAL FEATURE PERSONAL & GENERAL GOVERNMENT SERVICES 23% FINANCE, REAL ESTATE & BUSINESS SERVICES 14% TRANSPORT, STORAGE & COMMUNICATION 8% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 12% CONSTRUCTION 3% ELECTRICITY, GAS & WATER 4% MANUFACTURING 3% MINING & QUARRYING 27% AGRICULTURE, FORESTRY & FISHING 7% Northern Cape sector contribution.

SOURCE: NORTHERN CAPE PROVINCIAL SPATIAL DEVELOPMENT FRAMEWORK.

The university will offer disciplines such as en- Jasper power project, where the total value of the gineering, information technology and computer project is R2.3-billion. science, and agriculture. Management courses The photovoltaic plant will produce 96MW will be available in hospitality studies and courses and has a 20-year purchase agreement with in the nursing and education field will also have Eskom. The Jasper project will create huna presence. The university is merging technikon dreds of jobs, both operational and in construccourses with traditional university degrees in tion. This is substantiated by Daniel Zinman one department. from Rand Merchant Bank: ‘The Jasper Project Sol Plaatje University will add value to the will not only produce clean, renewable energy, Northern Cape’s economy and will make a but will also bring hundreds of quality jobs to considerable contribution to the government- the region.’ services sector. Rand Merchant Bank, the Public Investment Corporation, Kensani Capital Investments, SolarReserve, Intikon, and the Development Economic future Bank of Southern Africa are all conglomerates involved providing funding and investment for One of the biggest renewable-energy projects the project. in South Africa is happening in the Northern Cape. Google has invested R103-million in the ZIMBABWE

Premier:

Sylvia Lucas

Capital:

Kimberley

Provincial website:

www.northern-cape.gov.za

BOTSWANA Limpopo NAMIBIA North West

Languages:

Afrikaans, Setswana

Population:

1 145 861

Area:

361 830km

Mpumalanga Gauteng SWAZILAND

Free State

NORTHERN CAPE

MOZAMBIQUE

FACTS AND FIGURES FOR THE NORTHERN CAPE

KwaZuluNatal

LESOTHO

Eastern Cape Western Cape

2

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LISTINGS

Northern Cape Provincial Government A guide to the Northern Cape Province’s government departments. Visit www.northern-cape.gov.za

Office of the Premier

Fax: +27 53 831 4832 or 086 205 9798 Email: ammoiemang@ncpg.gov.za

Premier: Sylvia Lucas Physical address: JW Sauer Building, 6th Floor, cnr Roper and Quinn streets, Kimberley 8301 Postal address: Private Bag X5016, Kimberley 8300 Tel: +27 53 838 2600/2900 Fax: +27 53 838 2690 or 086 543 3636 (SA) Email: premierspa@ncpg.gov.za Website: www.northern-cape.gov.za

Department of Agriculture, Land Reform and Rural Development

Department of Economic Development and Tourism MEC: John Block Physical address: Room 1419, 14th Floor, Metlife Towers, cnr Knight and Stead streets, Kimberley 8301 Postal address: Private Bag X5054, Kimberley 8300 Tel: +27 53 830 8404/1 Fax: +27 53 830 8464 or +27 53 832 2672 Email: jwilson@ncpg.gov.za

MEC: Desbo Mohono Physical address: 162 George Street, Kimberley 8301 Postal address: Private Bag X5018, Kimberley 8300 Tel: +27 53 838 9100 Fax: +27 53 832 4328 Email: aditene@ncpg.gov.za Website: www.agricnc.gov.za

Department of Cooperative Governance, Human Settlements and Traditional Affairs MEC: Mosimanegape Kenneth Mmoiemang Physical address: JS du Plooy Building, 9 Cecil Sussman Road, Kimberley 8301 Postal address: Private Bag X5005, Kimberley 8300 Tel: +27 53 830 9422 SOUTH AFRICAN BUSINESS 2014

Department of Education MEC: Grizelda Cjiekella Physical address: 156 Barkley Road, Homestead, Kimberley 8301 Postal address: Private Bag X5023, Kimberley 8300 Tel: + 27 53 830 7160 Fax: +27 53 830 7177 Email: mletsoso@ncpg.gov.za Website: www.ncedu.ncape.gov.za

Department of Environment and Nature Conservation MEC: Patrick Mabilo Physical address: 4th Floor, Metlife Towers, cnr Market Square and Stead Street,

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LISTINGS Kimberley 8301 Postal address: Private Bag X6010, Kimberley 8300 Tel: +27 53 832 1022 Fax: +27 53 832 1026 Email: pmathakgane@ncpg.gov.za

Department of Health MEC: Mxolisi Sokatsha Physical address: 36 Memorial Road, Belgravia, Kimberley 8301 Postal address: Private Bag X5049, Kimberley 8300 Tel: +27 53 830 2000 Fax: +27 53 833 1925 Email: btyhaliti@ncpg.gov.za

Department of Roads and Public Works MEC: Dawid Rooi Physical address: 9-11 Stockroos Road, Square Hill Park, Kimberley 8301 Postal address: Private Bag X5065, Kimberley 8300 Tel: +27 53 839 2100 Fax: +27 53 839 2289 Email: rsass@ncpg.gov.za

Department of Social Services and Population Development MEC: Cukelwa Chotelo

Department of Sport, Arts and Culture MEC: Pauline Williams Physical address: New Park, 1 Albertyn Street, Kimberley 8301 Postal address: Private Bag X6091, Kimberley 8300 Tel: +27 53 831 4152 Fax: +27 53 833 1454 Email: askermand@ncpg.gov.za

Department of Transport, Safety and Liaison MEC: Patrick Mabilo Physical address: 1st Floor, Southey Chambers, Southey Street, Kimberley 8301 Postal address: Private Bag X1368, Kimberley 8300 Tel: +27 53 839 1719 Fax: +27 53 832 4249 Email: mmogorosi@ncpg.gov.za

Provincial Treasury MEC: John Block Physical address: 14th Floor, Metlife Towers, cnr Knight and Stead streets, Kimberley 8301 Postal address: Private Bag X5054, Kimberley 8300 Tel: +27 53 830 8401 Fax: +27 53 832 2672 Email: jwilson@ncpg.gov.za

Physical address: Mimosa Complex, Barkley Road, Homestead, Kimberley 8301 Postal address: Private Bag X6110, Kimberley 8300 Tel: +27 53 807 5600 Fax: +27 53 807 5603 Email: ptiger@ncpg.gov.za

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PROFILE

Emthanjeni Local Municipality Emthanjeni Local Municipality is a local municipality in the Pixley ka Seme District Municipality district of the Northern Cape province of South Africa.

stock-farming area with the emphasis on sheep, mutton and wool farming, especially of merinos. According to Gaffney’s, the guide to local government in South Africa, recent studies suggest that there might be uranium deposits in the region near Hanover and further studies will be conducted to ascertain this. De Aar has the largest abattoir in the southern hemisphere and supplies all the major centres with the famous Karoo lamb and mutton. Apart from meat production, the sheep farms in the area are also A humane and caring society living in a healthy major suppliers of wool. and secure environment, conducive to sustain- De Aar is a potential industrial growth point with able economic development. ample industrial sites, reasonable prices, affordable labour and infrastructure. De Aar has a synoptic weather station that gathers climatic data. The Smartt Syndicate Irrigation Scheme The primary towns of the municipality – De Aar, situated west of Britstown provides water to Britstown and Hanover – lie in an extensive lucerne and wheat farmers. Emthanjeni is a Xhosa name meaning a ‘vein’, symbolising the importance of an underground water supply system to the area. It is also a translation of the name of the municipality’s seat, De Aar. The Local Municipality is renowned for its central location on the main railway line between Johannesburg, Cape Town, Port Elizabeth and Namibia.

Vision

Strengths

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PROFILE The tourism sector has promise, and the municipality has plans to develop a tourism strategy to further boost the sector. The area has a semi-arid climate, with rainfall occurring mainly in the late summer months. Summers are hot and the winters are very cold.

Health services Review HIV and Aids plan; train communities in first aid; extend hours at clinics; roll out mobile clinics to rural areas. Environmental health: Introduce an environmental awareness campaign; regulate noise pollution.

Key development objectives and strategies

Social services

Water and sanitation

Upgrade swimming pools; refurbish and maintain sports grounds.

Ensure that all residents have access to the provision of water and sewerage; develop sewerage disposal site; replace sewerage pumps in De Aar.

Local economic development

Electricity Provide electricity to all communities; provide street lighting in newly developed housing schemes.

Tourism Commission study on tourism possibilities; develop a tourism strategy.

Housing Reduce housing backlog by building more houses; provide housing subsidies for rural labourers. Transport Develop integrated transport plan; establish routes for cyclists and pedestrians. Roads and storm water Improve storm water drainage. Refuse

Develop shopping mall and fuel station in De Aar and Britstown; promote construction of craft centres along along the N1 and N12 routes.

Historical and other places of interest Hanover

Interesting Karoo architecture and wind pumps. De Aar The annual Central Karoo Show, which takes place in January/February; the synoptic weather station, ancient Khiosan rock engravings on the Nooitgedacht and Brandfontein farms.

Draft waste-management plan; acquire rubbish bins for all business centres. Safety and protection services Develop a disaster-management policy. Emergency services, fire and ambulance

CONTACT INFO

Upgrade fire station and equipment; obtain more vehicles for traffic services.

Key contact people: Vuyelwa Diamane Tel: +27 53 631 9100 Email: vuyelwad@emthanjeni.co.za Website: www.emthanjeni.co.za

Education: Allocate bursary fund; implement skills development programme for young people.

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FOCUS

Lighting the way forward Seda Northern Cape has played a big part assisting Andrew Peers Megawatt CC to become a leader in the electrical-services industry.

Business profile

Due to Seda interventions, the company: • Experienced significant growth • Increased turnover and profits by 63% within six months • Became a well-known brand among businesses Isak Andrew opened his electrical services contracting and conand communities in the sultancy business, Andrew Peers Mega Watt cc, in November area 2011. A dynamic, qualified and proactive entrepreneur, he is • Increased its visibility and client base passionate about electricity. ‘I started this business when Eskom gave me an opportunity to become an Eskom Contractor after • Secured contracts with I passed their evaluations.’ major organisations such as Eskom and some municipalities • Created employment for The close corporation required registration and a marketing drive six additional people to sell its products and services. ‘Seda does not merely promise, they deliver, whatever it takes. Their clients, of whom Seda used its Assessment of Company Operations (ACO) quali- I am one, received the best tative diagnostic tool to evaluate the business functions. The service and assistance. company needed a comprehensive marketing drive and funding to I am deeply impressed and purchase equipment. As a successful SMME, the company could pleased with the way in which also help alleviate socioeconomic challenges. Funding from the they have supported me.’ Seda Technology Programme (R600 000) enabled the company – Isak Andrew, entrepreneur to acquire new equipment, Seda also assisted with marketing and business owner. material, including sign boards and a website to increase visibility and awareness raising (the website has since been upgraded to include social media). Electrical services, from minor and major reticulation (electrification, street and area lighting, substations, solar power systems and solar geysers) to bulk supply of electrical equipment, tools and materials, as well as electrical maintenance (transmission lines) and consultancy services.

About the business

Challenges

Seda interventions and support

READ MORE

Visit: www.seda.org.za SOUTH AFRICAN BUSINESS 2014

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REGIONAL OVERVIEW OF

NORTH WEST PROVINCE

K

nown as the platinum province, for good reason, the North West has the world’s richest source of platinum group metals (PGMs). The mining sector is the biggest contributor to the provincial GDP and this province is also the biggest contributor on a national level. Not to be outshone, other sectors like manufacturing and finance have also seen steady growth.

more platinum than any other area in the world. Granite, marble and diamonds are also mined in the province. The Bushveld Igneous Complex is found in the region and is rich in PGMs as well as minerals like iron, tin, chromium, titanium and vanadium. South Africa produces 70% of the world’s chrome, and most of it is sourced in the North West where there are 20 chromite mines. The manufacturing sector comprises mostly By Megan Abels fabricated metals, food and beverages and nonmetallic minerals such as cement and stone. Food and beverages is the biggest subsecKey sectors tor contributing to the manufacturing industry. Major companies with manufacturing capacity The North West is responsible for 64% of plati- in the North West like Nestlé, Rainbow Chickens, num, 46% of the granite and 25% of the gold Tydstroom and Clover have all taken advantage produced in the country. Platinum is found in the of the province’s strategic location adjacent to Rustenburg and Brits regions, which produce the business hub of Gauteng.

SPECIAL FEATURE PERSONAL & GENERAL GOVERNMENT SERVICES 20% FINANCE, REAL ESTATE & BUSINESS SERVICES 13% TRANSPORT, STORAGE & COMMUNICATION 7% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 11% CONSTRUCTION 2% ELECTRICITY, GAS & WATER 1% MANUFACTURING 5% MINING & QUARRYING 39% AGRICULTURE, FORESTRY & FISHING 2% North West sector contribution.

SOURCE: INVEST NORTH WEST.

Potchefstroom, Klerksdorp, and Hartbeespoort are manufacturing hubs in the province and the growth of this sector this links in with the stable agriculture sector. Grain, cattle and crops are the main outputs and large companies are present in the North West such as Senwes, Suidwes, the MGK Group and NWK, all of which are involved in agri-processing. Brits and Rustenburg, located in the eastern region of the province, are geared towards heavy industry manufacturing.

November, it will supply 7MW of power to the national grid. Momentous Energy was awarded the project (located in Rustenburg), which was funded by Nedbank and the Industrial Development Corporation (IDC). The steady growth in the finance and wholesale sectors has encouraged a new mall in the town of Moruleng. The project has generated thousands of jobs in the province and will be opened in October 2013. Key players in the retail industry such as Game, Clicks, the Foschini Group (including Markhams, Totalsports and Sportscene), Ackermans and Mr Economic future Price have already secured commercial space. The R300-million project by New Africa DevelopNorth West secured one renewable-energy pro- ments (NAD) has also secured Shoprite and Pick ject through the REIPPP. The province’s first solar n Pay as tenants. The Moruleng Mall will give the photovoltaic (PV) energy farm was launched in town a facelift and will have a great impact on the May 2013 and once it becomes fully operational in provincial economy. ZIMBABWE

Premier:

Thandi Modise

Capital:

Mahikeng

Provincial website:

www.nwpg.gov.za

Languages:

Afrikaans, isiXhosa, Setswana

Population:

3 509 953

Area:

116 320km2

Limpopo NAMIBIA North West NORTH WEST

Mpumalanga Gauteng SWAZILAND

Free State Northern Cape

MOZAMBIQUE

FACTS AND FIGURES FOR NORTH WEST

BOTSWANA

KwaZuluNatal

LESOTHO

Eastern Cape Western Cape

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SOUTH AFRICAN BUSINESS 2014

LISTINGS

North West Provincial Government A guide to North West Province’s government departments. Visit www.nwpg.gov.za

Office of the Premier

Education and Training

Premier: Thandi Modise

MEC: Wendy Matsemela

Physical address: 3rd Floor, Garona Building, Dr James Moroka Drive, Mmabatho 2735 Postal address: Private Bag X129, Mmabatho 2735 Tel: +27 18 388 2456 Fax: +27 18 388 3008 Email: omoate@nwpg.gov.za Website: www.nwpg.gov.za

Physical address: 2nd Floor, Garon Executive Building, Mmabatho 2735 Postal address: Private Bag X2044, Mmabatho 2735 Tel: +27 18 388 2563 Fax: 086 620 1117 (SA only) Email: fmahlophe@nwpg.gov.za Website: www.nwpg.gov.za/education

Agriculture and Rural Development Health MEC: Desbo Mohono MEC: Dr Magome Masike

Physical address: Ground Floor, Agricentre Building, cnr Dr James Moroka Drive and Stadium Road, Mmabatho 2735 Postal address: Private Bag X2039, Mmabatho 2735 Tel: +27 18 389 5056 Fax: +27 18 384 2679 Email: gmodibedi@nwpg.gov.za Website: www.nwpg.gov.za/agriculture

Physical address: 2nd Floor, Tirelo Building, 2054 Dr Albert Luthuli Drive, Mahikeng 2745 Postal address: Private Bag X2068, Mmabatho 2735 Tel: +27 18 388 3784 Fax: 086 692 9553 (SA only) Email: achabedi@nwpg.gov.za Website: www.nwhealth.gov.za/dohsoc

Economic Development, Environment, Conservation and Tourism

Human Settlements, Public Safety and Liaison

MEC: Motlalepula Rosho Physical address: Development House, NWDC Building, cnr Provident Street and University Drive, Mmabatho 2735 Postal address: Private Bag 15, Mmabatho 2735 Tel: +27 18 387 7700 Fax: +27 18 392 5660 Email: moikabin@nwpg.gov.za Website: www.nwpg.gov.za SOUTH AFRICAN BUSINESS 2014

MEC: Nono Maloyi Physical address: Telkom Building, Industrial Site, 3366 Bessemer Street, Mahikeng 2745 Postal address: Private Bag X3145, Mmabatho 2735 Tel: +27 18 387 6002 Fax: +27 18 381 0328

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LISTINGS Email: tmokhatlha@nwpg.gov.za Website: www.nwpg.gov.za

Local Government and Traditional Affairs MEC: Manketse Tlhape Physical address: Garona Building, cnr President and University Drive, Mmabatho 2735 Postal address: Private Bag X2099, Mmabatho 2735 Tel: +27 18 388 1672 Fax: 086 586 9597 (SA only) Email: mmljali@nwpg.gov.za Website: www.nwpg.gov.za/ddlg&ta

Provincial Treasury MEC: Paul Sebegoe Physical address: 2nd Floor, Garona Building, University Drive, Mmabatho 2735 Postal address: Private Bag X2060, Mmabatho 2735 Tel: +27 18 388 3446 Fax: +27 18 388 1873 Email: mwilliams@nwpg.gov.za Website: www.nwpg.gov.za

Social Development, Women, Children & People with Disabilities MEC: Collen Maine Physical address: Provident House Building, University Drive, Mmabatho 2735 Postal address: Private Bag X06, Mmabatho 2735 Tel: +27 18 388 2041 Fax: +27 18 384 5521 Email: baikgakin@nwpg.gov.za Website: www.nwpg.gov.za/socdev

Sport, Arts and Culture MEC: Tebogo Modise Physical address: 2nd Floor, Gabomotho Building, James Maroka Drive, Mmabatho 2735 Postal address: Private Bag X90, Mmabatho 2735 Tel: +27 18 388 2804 Fax: +27 18 388 1913 Email: jmodungwa@nwpg.gov.za Website: www.nwpg.gov.za/dsac

Public Works, Roads and Transport MEC: Boikanyo Elisha Physical address: Ngaka Modiri Molema Road, Provincial Head Office, Old Parliament Complex, Mmabatho 2735 Postal address: Private Bag X2080, Mmabatho 2735 Tel: +27 18 388 1454 Fax: +27 18 388 1819 Email: matshidisod@nwpg.gov.za Website: www.nwpg.gov.za/publicworks

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PROFILE

Invest North West Invest North West is the heartbeat of trade and investment in North West Province.

Profile Invest North West, the official trade and investment promotion agency for the North West Province, invites you to invest in one of South Africa’s fastestgrowing provinces. Join other international and local major corporations by choosing the North West Province as the preferred destination for your new business venture or to invest in many of the rewarding investment opportunities available in various sectors of the economy. The passionate and dedicated staff at Invest North West provide vision and direction to key growth sectors within the North West by focusing on trade and investment facilitation, and the provision of proactive business retention and expansion services to established local and international businesses.

• • • •

Services

Committed to providing the highest standard of service, the following services are provided to new and existing investors in the province: • Identifying and packaging viable investment opportunities • Facilitating joint-venture and equity partnerships • Providing information on financing options and investment incentives • Providing advice on feasibility studies and business plans • Assisting investors to obtain work and business permits SOUTH AFRICAN BUSINESS 2014

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Providing assistance in obtaining suitable land or factory space Assisting existing firms to expand and reinvest Assisting companies to find export markets for their products Promote products from the North West Province to increase exports Advocate investment conditions and an environment conducive to growth

CONTACT INFO Key contact person Sam Mudramuthoo, Marketing Specialist Tel: +27 14 594 2570 Physical address: 171 Beyers Naudé Drive, Rustenburg 0300 Website: www.inw.org.za

INVEST NORTH WEST

SOUTH AFRICA

INTERVIEW

Linking SMEs to markets Sisa Ntshona, head of Enterprise Development at Absa Group, highlights the potential of SMEs and entrepreneurship.

What is the importance of SMEs for economic growth?

Sisa Ntshona

As a country, we are sitting at about a 25% unemployment rate, but in the North West specifically, the unemployment rate is closer to 35-40%. If we want to find a solution and create jobs in that economy, we should focus on SMEs and entrepreneurship, as this sector consistently creates opportunities. What assistance/services does Absa Enterprise Development offer to small business owners?

BIOGRAPHY Sisa Ntshona is the head of Enterprise Development at Absa, focusing on the development and fostering of SMEs through innovation and product development. Sisa is a seasoned executive who has worked extensively in the rest of Africa and the Middle East fulfilling business and operational roles. An accountant by training, Sisa also holds an MBA from GIBS and has completed the International Executive Programme from INSEAD in France and Singapore.

SOUTH AFRICAN BUSINESS 2014

‘Going beyond banking’ is a philosophy that drives our focus and what we do at Absa Enterprise Development. From this standpoint, we base our approach on three different but interconnected perspectives. The first premise is around ‘how do we assist budding entrepreneurs to get access to markets?’ We actively link up big corporate buyers with emerging SME suppliers. Secondly, the funding becomes a focus. We believe that money alone cannot solve the problem. So when you do find the market to land that big contract, we are able to forward funding to you. The third and last tool is what we call ‘access to business support’. We tend to see a very high failure rate for start-ups, around 60% in the first two years, thereafter around 20-30%. This is due to poor business skills, so we start to inculcate and impart skills around understanding financial management, etc. We do this through our Enterprise Development Centres. Someone will assist the SME owner to run a profitable, sustainable business. Please tell us about the procurement portal. The procurement portal is our flagship solution for creating access to markets. It is an electronic marketplace that links corporate South Africa to SMEs. The SMEs register their businesses on the portal. This allows corporates to search for SMEs by geographic location, industry, profile, BEE certificate, etc. For more information, visit www.absa.co.za, email ed@absa.co.za or contact the call centre on 0860 040 302.

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Business Banking Enterprise Development

Making your business idea a reality Bring your business ambitions to life with Enterprise Development. Think of us as your entrepreneurial partner – transforming business ideas into reality.

Absa Bank Limited Reg No 1986/004794/06. Authorised Financial Services Provider. Registered Credit Provider. Reg No NCRCP7

• Guarantee schemes – unique and relevant funding solutions. • Procurement portal – a marketplace for both SMEs and Corporates. • Enterprise Development Centres – to support SMEs with advice and resources.

Partner with us as we share your belief that every idea is possible. For more information, contact Enterprise Development at ed@absa.co.za

INTERVIEW

A master plan unfolding Kgosi Nyalala Pilane explains the huge regeneration projects unfolding in the Bakgatla-Ba-Kgafela region, and what these will mean for the Bakgatla people in the various communities.

Please give us a brief background of the Bakgatla-BaKgafela community, and explain your role as leader.

Kgosi Nyalala Pilane

BIOGRAPHY Since his installation as Kgosi (traditional leader) of the BBK in 1996, Kgosi Pilane’s drive, determination and manifest business acumen has attracted several key development opportunities to the Moruleng region of the North West Province. He totally revamped the BBKTA along business principles, thereby revealing a clear mandate to promote socioeconomic development projects for the upliftment of the 350 000 citizens within the administration. SOUTH AFRICAN BUSINESS 2014

Bakgatla-Ba-Kgafela is a community situated in the Pilanesberg area and it is spread over a vast land within that region of the North West Province. I became Kgosi – the traditional head of the community – officially in 1996. Upon assuming my position, I realised that that there was a challenge that faced us regarding the upliftment of the lives of Bakgatla people and this was the biggest challenge that needed serious attention. I developed an understanding that land could be a valuable resource if used properly. The traditional leadership in itself was never explored as a resource nor as a catalyst for development, as well as for social cohesion. We also saw our people, our community, as a resource. What was left for us was to see how these three institutions, the leadership, the land and the community, could be turned into integrated assets. Once properly used, these assets could create economic activity, eventually translating into wealth creation. These would then address our socioeconomic problems especially unemployment, poverty, lack of infrastructure and service delivery in our community. Fortunately, these plans enjoy community support. We have so far managed to harness the potential of these three resources, explored all the available opportunities, and discovered that there is potential for four main economic pillars in our land: mining, tourism, manufacturing and agriculture. The first pillar is mining due to the presence of mineral deposits. The second is tourism because the region is already an established tourist destination. The third is agriculture, although our communities have not explored agriculture properly because they were only doing subsistence farming. There is a need that they be developed into commercial farmers in order to be competitive and productive without compromising quality. The fourth pillar is the possibility of manufacturing, because there are existing factories in our industrial areas. Unfortunately, the buildings have not been maintained, and have been vandalised. With our commitment of reducing unemployment in our area, we have managed to resuscitate about eight factories.

206

INTERVIEW How are the developments underpinned by the four pillars? We spoke to our mining partners and came up with a sustainable plan that will reflect the four pillars. We eventually started with our mining, and brought in some investors from Canada in 2003 to assist with our exploration, which culminated in a bankable feasibility study. We then had an asset that we could use to leverage the other plans. We started with our mining, and used it as a catalyst. With that, we came up with our master plan with the decision that we were not going to allow the issues of greed and isolated mining power, because minerals get exploited, and eventually depleted. We identified areas within the community where we could begin development. We know that mining executives would prefer to stay in an area where there are bulk infrastructure services, and we thought that this would then help to improve our community. We started with roads, bulk water provision, sewerage, electricity, built a soccer stadium and phase one of administration offices to culminate in what we call a post-apartheid city – the first of its kind within the community. As a pilot project, we have tried to centre these in one area so that we could create a CBD with the intention of replicating this model in other areas within the various communities. We have started building a huge shopping mall that will host about 76 retail outlets, with major anchor tenants like Pick n Pay, Shoprite and the Edgars Group. The mall will create around 1 500 permanent jobs as well as temporary jobs that will be created during the construction phase. With this concept, we have addressed a number of our problems, such as lack of infrastructure, provision of services, creation of jobs as well as business opportunities for small businesses. Our area is also attractive because of tourism. One of these housing developments will be in the Big Five area within the Pilanesberg Park and this is good for investors. The Pilanesberg Nature Reserve is the main attraction of tourism in the area. It has attracted the likes of Sun International Group, Legacy Hotels and Lodges, Ivory Tree,

Construction on a large mall is underway.

Golden Leopards Resorts, etc. All these tourist destinations bring hundreds of visitors who bring vibrancy to the economy of the region. This will translate into our people seeing the value in their land, which has not always been the case. The land must come to be seen as a resource that can change people’s lives. As indicated earlier, by combining all the economic pillars, we came up with a concept of building a city. We started with the Moruleng CBD, which is made up of: two estates – a golf estate and an eco-estate, a five-star hotel, the management academy, a hotel school, an upmarket residential area, administration offices, commercial office park, cultural museum precinct, library, shopping mall, medium-density residential flats, privatepublic hospital, and multi-purpose sports complex. With the closure of George Stegman Hospital and the subsequent relocation of the newly built Moses Kotane Hospital to about 40km away, there is a need to bring health services closer to the BBK communities. Therefore, there is a need for a public-private hospital, for which we are awaiting the licence. We also need some private schools so that we attract these upmarket business people, and retain them in our area. In order to kick-start with the above, we needed to have bulk infrastructure in place. We therefore had to have roads, water, electricity, sewerage, and telecommunications (ICT) in order to attract investors while providing to our people as well. We did all these in one area to understand the dynamics before spreading into all other villages. We are now ready to spread into the outlying villages. We shall also be embarking on improving

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INTERVIEW our education system so that we will be able to capture the level of management in our entities. Are you actively looking for investors? Yes, part of delivering on our mandate of socioeconomic development involves partnering with investors. For instance, in the mining project, we have international governments such as the Dutch government and Singapore investing their pension funds in our projects. Our government followed and invested through the Industrial Development Corporation (IDC), which bought about 16% shareholding to the value of R3.24-billion to facilitate the expansion. This is unprecedented, especially in the platinum sector. Anglo American Platinum recently announced that it would lay off 14 000 workers, but based on our partnership, it is possible that our mining project which will create 8 000 to 9 000 jobs which will go a long way towards saving some of these jobs.

for more electricity and we therefore had to come up with a solution. The new substation is flexible in that capacity can be increased as and when our projects come on stream. We have not been able to spread this kind of development over all our areas as this was treated as a pilot. This will provide a good case study as we start to roll it out to other areas. Plans are at an advanced stage to complete a modernised 24-hour health facility that will have a trauma unit, an X-ray unit and an ambulance service. It will be like a mini hospital. Over and above this facility, we will still build the hospital mentioned earlier. This will service both the community and the operations because the Mineral Resources Act states that each mining operation must have its own health facility. There are many more projects that we are working on in the master plan. There will always be problems in terms of funding, but we will overcome these challenges.

What is the population size of the BakgatlaBa-Kgafela community? What is your vision for the region?

We estimate the number to be between The longer-term vision is to have our own institu300 000 and 350 000. Our people have, in the tions that can serve the needs of our people. past, migrated to the bigger cities in search of betWe always want to do things that are sustainter job opportunities and that makes quantifying able within the area. Institutions must be sustained our population size difficult. However, the current by our demand, our consumption and our ability to trends suggest that since we embarked on our fund them. We have had discussions with further development projects, our people are returning education and training (FET) institutions, resulting home. If we underestimate our population size, in the Mogwase Campus establishing a presence we will be faced with problems such as lack of in the area. We are now at the stage where we can infrastructure, so we would rather overestimate. design programmes that will make people more employable. We have already produced about 80 Please tell us about the completed projects mining-academy students there. We also offered We have built roads, bulk-water pipes, sewerage, jewellery design and manufacturing training to administration offices, a cultural museum, soccer about 27 students. Some of these students are stadium, a 15-megalitre water reservoir in partner- employed and some went on to study further. ship with Bojanala Platinum District Municipality), As said earlier, we have developed a master plan renovated a portion of factories for manufacturing that provides a long-term basis for the developand we are currently busy with the construction ment of our Bakgatla people. This master plan has of a regional mall as mentioned earlier. Eskom outlined all the economic sectors that BBK will fohas constructed a substation for us to support cus on in our socioeconomic development journey. the master plan. The new substation is flexible in Holding hands with our 32 villages, partners and that capacity can be increased as and when our investors will ensure that the development agenda projects come on stream. We knew that our vision, envisaged in the master plan will touch the lives of all once completed, was going to create a demand our communities. SOUTH AFRICAN BUSINESS 2014

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PROFILE

Protea Hotel Mafikeng Protea Hotel Mafikeng in North West Province is ideally located in an area rich in culture, history and wildlife. It is close to a nature reserve, bird sanctuary and the Mmabatho Stadium.

Facilities The hotel offers 99 luxuriously comfortable en-suite bedrooms. The rooms are air-conditioned and this can be individually controlled to ensure optimum convenience for the guest. Room facilities include a satellite TV, electronic safe, tea- and coffeemaking facilities, telephone and an executive desk for business travellers. Wireless Internet hotspots are available in all public areas. The Protea Hotel Mafikeng has an in-house restaurant seating 70 people and offers a buffet breakfast and à la carte lunch and dinner, to the discerning diners’ delight.

The conference facilities offered by Protea Hotel Mafikeng accommodate 100 delegates in seminar style and give access to state-of-the-art conferencing equipment.

• •

Activities in the area • • •

• •

The Mafikeng Museum has a comprehensive collection of Anglo-Boer War exhibits. Casino Resort is located 3km from the hotel. The surrounding area boasts superb golf courses, soccer and rugby fields, and an off-road motor club. Paintball and go-karting are available. Credo Mutwa Cultural Village at Lotlamoreng is a living museum showcasing traditional African villages and cultures.

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The Mafikeng Game Reserve is considered the home of white rhino and buffalo. Disaneng Dam is popular for fishing and watersports. Wondergat is an inland diving venue, situated approximately 40km from Mahikeng.

CONTACT INFO Key contact people: Keletso Nxumalo, General Manager Neo Moremi, Reservations Manager Tel: +27 18 381 0400 Fax: +27 18 381 4206 Email: res3@phmafikeng.co.za Physical address: 80 Nelson Mandela Drive, Mahikeng 2745 Postal address: PO Box 891, Mahikeng 2745 Website: www.proteahotels.com/mafikeng

SOUTH AFRICAN BUSINESS 2014

PROFILE

Ngaka Modiri Molema District Municipality The Ngaka Modiri Molema District Municipality’s main offices are located in the capital of the North West – Mahikeng.

Vision Leaders in integrated municipal governance.

Mission To provide a developmental municipal governance system for a better life for all. Cllr Phaladi Saku, Executive Mayor

Ngaka Modiri Molema District Municipality in context

Mokgele Mojaki, Municipal Manager

The Ngaka Modiri Molema District • Improve road infrastructure Municipality (NMMDM) is one of the four • Provide municipal health and services district municipalities of the North West Province of South Africa. The other three Target perspective are: Bojanala-Platinum, Dr Ruth Segomotsi • To ensure sound district development planning Mompati and Dr Kenneth Kaunda districts. The NMMDM covers an area of 31 039 • To promote district growth and economic development square kilometres and shares an international border with the Republic of Botswana. It comprises five local municipalities, name- The administrative heartbeat of the Ngaka Modiri ly: Mafikeng, Ratlou, Ramotshere Moiloa, Molema District Municipality is situated in the capital city of the North West, Mahikeng. To date, the Ditsobotla and Tswaing • Section 84 of the Municipal Structures Act municipality employs 479 employees – both on (1998) regulates the functions and pow- contract and full-time basis. ers of district and local municipalities. The five local municipalities are subdivided The core services that the district municipality into wards as follows: Mafikeng Local offers to the various diverse communities in the Municipality – 28 wards, Ditsobotla LM – 19 area include bulk water infrastructure, sanitation, wards, Ramotshere Moiloa LM – 17 wards, economic development and municipal health serTswaing LM – 13 wards, Ratlou LM – 12 vices and safety. The latter include fire and rescue services, disaster management and compliance wards. with regard to municipal health services. As a Priorities district municipality, Ngaka Modiri Molema extends its responsibility and intervenes where the • Provision of water and sanitation •

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PROFILE

Places for leisure and tourism

local municipalities fall short. The Council and administrative team of the Ngaka Modiri Molema District Municipality remain focused in providing much-needed leadership and support to all the local municipalities in the area of its jurisdiction. The area of the Ngaka Modiri Molema District Municipality is primarily water distressed. This further highlights and places emphasis on the municipality’s function of providing drinking water to communities that reside within the district. Though there is a lack of bulk infrastructure in the tribal authorities, the municipality is fostering needed relations with the local chiefs in ensuring that further development and provision of basic services is undertaken in the affected communities. After all, due to the nature of its cosmetic character, Ngaka Modiri Molema District Municipality is predominantly rural. The government’s commitment for total clean audit results in 2014 further encourages proper adherence and accountable delivery of services to the NMMDM’s local communities. In further addressing the above, the Ngaka Modiri Molema District Municipality is currently involved in numerous programmes in providing rare and other skills to its workforce to increase its capacity and speed in service delivery.

Ngaka Modiri Molema District Municipality has ample places of interests in its tourism sector. The following are just a handful of examples: • Wondergat in Molopo-Oog: The world’s deepest pit where legendary divers have disappeared. The pit has been measured at 175m deep but the deepest point has not been established. • Bird sanctuary in Tswaing: It has over 350 species of birds that are found at the sanctuary, especially in summer. • Kanon Kopjie-Mafikeng: It is the highest point of Mafikeng where Baden Powell soldiers used to observe oncoming enemies and it has 6km of underground tunnels that they used to hide in. The Ngaka Modiri Molema District Municipality has funded the cleaning and revitalisation project of the tunnel. • Lotlamoreng Dam: A Heroes Acre where soldiers of the Anglo Boer War were buried. • Sol Plaatje Monument, where the first secretary-general of the ANC worked on the newspaper Koranta ea Bechuana after eliciting funding from Ngaka Modiri Silas Molema. • Mahikeng Game Reserve: Home to some of the Big Five, is a great place to enjoy a bush braai.

Ngaka Modiri Molema IDP Programme 2012/13 •

• • •

CONTACT INFO

Water scarcity has been identified as a general need within the district, therefore the district is planning a new strategy of overcoming this challenge by building water tanks that will be placed for community access Local economic development projects to provide community employment Access to water and sanitation Upgrading of reservoirs for bulk water services

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Key personnel: Cllr Phaladi Audrey Saku, Executive Mayor Mokgele Mojaki, Municipal Manager Key contact person: Mokgele Mojaki, Municipal Manager Tel: +27 18 381 9400 Fax: +27 18 381 4300 Email: municipalmanager@nmmdm.gov.za Physical address: Cnr Carrington Street and 1st Avenue, Mahikeng Industrial, Mahikeng 2745 Postal address: Private Bag x2167, Mahikeng 2745 Website: www.nmmdm.gov.za

SOUTH AFRICAN BUSINESS 2014

REGIONAL OVERVIEW OF THE

WESTERN CAPE PROVINCE

F

rom the Winelands to Wilderness, the Western Cape is home to a booming tourism market, diverse manufacturing, world-class infrastructure and Africa’s largest wine exporter.

Fishing, after fruit and wine, is also a large income generator in the province. Aquaculture occurs mainly along the West Coast and accounts for a significant percentage of employment. Manufacturing is a large contributor to the local economy. By Megan Abels Hisense, a Chinese high-tech electronics company, opened a 25 200-square-metre manufacturing facility at Atlantis, situated on the Key sectors outskirts of Cape Town in June 2013. The first phase alone saw a R350-million addition to the As a result of the Western Cape’s physical geog- local economy. raphy, its agricultural resources differ to the rest Having taken a knock by the economic downof South Africa. They include grain, fruit, ostrich turn in recent years, boat-building is on track by-products, wine and table grapes as well as again according to Minister of Finance for Ecopoultry. Agri-processing as well as the produc- nomic Development and Tourism Alan Winde. tion of food and beverages makes up a big part The boat-building industry in the Western Cape of the Western Cape economy as it accounts for is valued at R1.2-billion and accounts for 60% the bulk of exports. of South Africa’s boat-builders.

SPECIAL FEATURE GENERAL GOVERNMENT SERVICES 10.8% PERSONAL SERVICES 6% FINANCE, REAL ESTATE & BUSINESS SERVICES 31% TRANSPORT, STORAGE & COMMUNICATION 9.1% WHOLESALE, RETAIL, MOTOR TRADE, CATERING & ACCOMMODATION 17% CONSTRUCTION 5% ELECTRICITY, GAS & WATER 2% MANUFACTURING 15% MINING & QUARRYING .1% AGRICULTURE, FORESTRY & FISHING 4% Western Cape sector contribution. SOURCE: STATS SA

The business, real estate and financial ser- Economic future vices sector is Western Cape’s largest contributor. The call centre and BPO sector has shown The province prides itself on ‘green living’. The considerable growth over recent years and con- provincial government marked the one-year tributes R8-billion for the provincial economy. anniversary of the ‘110% Green’ initiative in June In 2013 an investment of R800-million by 2013. Premier Helen Zille described the camCapita was announced to support the growth paign as making a paradigm shift to connect enof the call-centre industry in the Western Cape. vironmental preservation and economic growth. A trend that has arisen in the real-estate sec- Projects include installing solar-panel heating tor is luxury golf-estate property. Fancourt in systems, recycling and promoting carbonGeorge and the Arabella Country Estate between neutral manufacturing. Kleinmond and Hermanus are well established Companies that are on board with this and are the holiday hotspots of choice for golfers. initiative include Eskom, Juwi, Nedbank Group, The newest estate, Pearl Valley near Paarl, has Vineyard Hotel and Woolworths. A 90MW wind farm near Wolseley was recently shown that an increased amount of families have chosen to live on the golf estate with homes cost- given the go-ahead. This joins a demonstrative ing between R4-million and R15-million. wind farm in Darling (5MW) and the Sere Wind The Western Cape hosts five of the top Farm still under construction, which will produce a 10 rated golf estates in South Africa. proposed 100MW, both in the Western Cape. ZIMBABWE

Premier:

Helen Zille

Capital:

Cape Town

Provincial website:

www.westerncape.gov.za

Languages:

Afrikaans, isiXhosa, English

Population:

5 822 734 (2011)

Area:

129 370km2

BOTSWANA Limpopo NAMIBIA North West

Mpumalanga Gauteng SWAZILAND

Free State Northern Cape Northern Cape

LESOTHO

MOZAMBIQUE

FACTS AND FIGURES FOR THE WESTERN CAPE

KwaZuluNatal

Eastern Cape

WESTERN CAPE

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SOUTH AFRICAN BUSINESS 2014

LISTINGS

Western Cape Provincial Government A guide to the Western Cape’s provincial government departments. Visit www.capegateway.gov.za.

Office of the Premier

Department of Cultural Affairs and Sport

Premier: Helen Zille MEC: Ivan Meyer

Physical address: 1st Floor, Provincial Legislature Building, 7 Wale Street, Cape Town 8001 Postal address: Private Bag X9043, Cape Town 8000 Tel: +27 21 483 4705 Fax: +27 21 483 3921/3421 Email: premier.westerncape@pgwc.gov.za Website: www.westerncape.gov.za

Physical address: 8th Floor, Protea Assurance Building, Greenmarket Square, Cape Town 8001 Postal address: PO Box 16385, Vlaeberg 8018 Tel: +27 21 483 9800 Fax: +27 21 483 9801 Email: charmaine.devos@westerncape.gov.za Website: www.westerncape.gov.za

Department of Agriculture

Department of Education

MEC: Gerrit van Rensburg

MEC: Donald Grant

Physical address: 2nd Floor, Protea Assurance Building, Greenmarket Square, Cape Town 8001 Postal address: Private Bag X9179, Cape Town 8000 Tel: +27 21 483 4700 Fax: +27 21 483 3890 Email: johan.coetzee@westerncape.gov.za Website: www.elsenburg.com

Physical address: 23rd Floor, Golden Acre Building, Adderley Street, Cape Town 8001 Postal address: Private Bag X9161, Cape Town 8000 Tel: +27 21 467 2523 Fax: +27 21 425 5689 Email: edumin@pgwc.gov.za Website: www.westerncape.gov.za

Department of Community Safety

Department of Economic Development and Tourism

MEC: Daniel Plato Physical address: 11th Floor, Waldorf Building, St Georges Mall, Cape Town 8001 Postal address: PO Box 5346, Cape Town 8000 Tel: +27 21 483 3871/3 Fax: +27 21 483 3874 Email: daniel.plato@pgwc.gov.za Website: www.westerncape.gov.za SOUTH AFRICAN BUSINESS 2014

MEC: Alan Winde Physical address: 80 St Georges Mall, Waldorf Building, Cape Town Postal address: PO Box 979, Cape Town 8000 Tel: +27 21 483 9000 Email: ecohead@pgwc.gov.za Website: www.westerncape.gov.za

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LISTINGS Department of Health

Department of Social Development

MEC: Theuns Botha

MEC: Albert Fritz

Physical address: 21st Floor, Provincial Administration Building, 4 Dorp Street, Cape Town 8001 Postal address: PO Box 2060, Cape Town 8000 Tel: +27 21 483 5417 Fax: +27 21 483 4143 Email: j.bouwer@westerncape.gov.za Website: www.westerncape.gov.za

Physical address: 7th Floor, Union House, 14 Queen Victoria Street, Cape Town 8001 Postal address: Private Bag X9180, Cape Town 8000 Tel: +27 21 483 3858 Fax: +27 21 483 5077 Email: alexandra.abrahams@westerncape.gov.za Website: www.westerncape.gov.za

Department of Human Settlements MEC: Bonginkosi Madikizela Physical address: 4th Floor, ISM Building, 27 Wale Street, Cape Town 8001 Postal address: Private Bag X9083, Cape Town 8000 Tel: +27 21 483 4466 Fax: +27 21 483 3888 Email: elizabeth.cloete@westerncape.gov.za Website: www. westerncape.gov.za

Department of Local Government, Environmental Affairs and Development Planning

Department of Transport and Public Works MEC: Robin Carlisle Physical address: 8th Floor, Provincial Administration Building, 9 Dorp Street, Cape Town 8001 Postal address: PO Box 2603, Cape Town 8000 Tel: +27 21 483 2200 Fax: +27 21 483 2217 Email: dedlesse.smit@westerncape.gov.za Website: www.westerncape.gov.za

Provincial Treasury

MEC: Anton Bredell

MEC: Alan Winde

Physical address: 9th Floor, Utilitas Building, 1 Dorp Street, Cape Town 8000 Postal address: Private Bag X9186, Cape Town 8000 Tel: +27 21 483 3915 Fax: +27 21 483 6081 Email: magdelenagriesel@westerncape.gov.za Website: www.westerncape.gov.za

Physical address: Room 327, 3rd Floor, 7 Wale Street, Cape Town 8000 Postal address: Private Bag X9165, Cape Town 8000 Tel: +27 21 483 3531 Fax: +27 21 483 3892 Email: finmin@westerncape.gov.za Website: www.westerncape.gov.za

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THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA

he Western Cape has consistently outperformed the other eight provinces in terms of average annual growth from 2001 to 2011. . The Western Cape economy, measure in Gross Domestic Product, averaged 4.1% growth during this 10-year period, outper-forming the national economy, which averaged 4.0%. The 2012/13 financial year marked the coming together of two agencies into one, with dedicated and passionate individuals working together with the objective of growing the economy of the Western Cape in their respective fields. On 1 April 2012, Wesgro became the Western Cape’s Tourism, Trade and Investment Promotion Agency, a moment to be proud of. This was a transitional year for Wesgro as an agency where tourism, trade and investment were thrown into one melting pot of unknown possibilities, requiring us to rise to the occasion. Not only has the Agency risen to the challenge but we exceeded expectation. This can only be attributed to the passion of the committed individuals of our Agency. Despite challenging global financial conditions, the past financial year has seen several investment highlights and positive signs of growth which keep the Wesgro team committed to leading the creation and

Nils foreword 2013 new.indd 1

promotion of a compelling global destination for tourism, trade and investment. The South African economy grew by 2.5% and was estimated to reach R3 trillion in 2012. Economic growth was supported by financial, real estate and business services industries that grew by R51 billion. We also witnessed a marked growth in the wholesale, retail and motor trade industries as well as the accommodation industry. The Western Cape economy grew by 3.6% in 2011 reaching R282-billion. The tertiary sector is still the largest contributor to the Western Cape economy, with financial, real estate and business services contributing 26.6% to the regional economy in 2011, growing by 3.9%. The Western Cape’s agriculture sector contributed 3.5% to the regional economy at R9.7-billion but contributed 22.6% to the national agriculture sector and is one of the largest export contributing sectors of the regional economy. Secondary industries contributed R58.5-billion, which accounts for 18.1% of the regional GDP. The manufacturing industry, which suffered major setbacks during the financial crisis was back on its feet and growing by R15 billion. This meant that the recovery predicted was finally well on its way and it was business as usual.

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Africa has been a headline on everyone’s agenda and South Africa, at US$384bn is the leader of the pack being the largest economy on the continent, leaving Nigeria and Egypt trailing behind by US$115bn. South Africa alone contributed to 19% of the African economy in 2012. However, the story doesn’t end there because over the past 5 years South Africa has been one of the top investing countries into the rest of Africa. Local businesses are seeing the opportunities for business in Africa and harnessing those opportunities at this time when Africa is a hot destination. The Western Cape economy’s official average 10year growth rate was 4.1%, exceeding South Africa’s growth of 4.0%.

province as international tourists and when the season closes for international tourists, then the domestic tourists pick up where they left off, continuing to drive the tourism economy. These snapshots of the economy are an indication of the exciting space that Wesgro is in. Although it is impossible to highlight everything that is done on a day to day basis, I am filled with excitement, hope and believe that the Western Cape and South Africa as a whole can only grow from strength to strength as we pave the way for the development of Tourism, Trade and Investment on the African continent.

The many infrastructural investments in the province have given rise to strong growth from general government services which had a positive contribution to the provincial economy. Finance, real estate and business services as well as manufacturing played a crucial role to making sure that the provincial economy continues its growth trajectory. The Western Cape received approximately 966 000 visitors from international markets between January and September 2012. Most of the visitors to our shores were from the United Kingdom, Germany, the Netherlands and the United States. Newer visitors were Denmark, China and Switzerland who are showing an increased interest in visiting the Western Cape with growing arrival figures for these countries. It also appears that domestic tourists (including those of the Western Cape) have just as much fun in our Nils Flaatten: Chief Executive Officer

AN INSPIRED PLACE TO DO BUSINESS e-mail: info@wesgro.co.za | website: wesgro.co.za | Tel: +27 21 487 8600

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THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA

Explore, Discover, Invest in the Western Cape esgro, the official Tourism, Trade and Investment Promotion Agency for the Western Cape, offers an array of leisure, business and export opportunities to those eager to take advantage of the region’s unlimited potential. Tourism Cape Town and the Western Cape, as a global destination city for tourism has grown in popularity over the past decade. Home of the majestic Table Mountain, which was awarded the status as one of Nature’s 7 Wonders in 2012, Cape Town also looks forward to holding the title of 2014 Design Capital of the World. The Western Cape is defined as the main leisure destination in South Africa and is home to the majority of the top tourist attractions in South Africa. These tourist attractions range from natural attractions such as Table Mountain and Cape Point to historical and cultural attractions such as Robben Island and The Castle of Good Hope. The Western Cape has good institutional and physical infrastructure along with a range of hotels and other accommodation establishments in the City and surrounds.

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The region offers a moderate Mediterranean climate, which makes it a popular tourist and meeting destination all year round. Our diverse and colourful heritage is on display for all visitors to immerse themselves in and we have the capabilities, infrastructure and friendly hospitality to be noted as a world class destination. Cape Town Convention Bureau The Convention Bureau provides destination expertise and support to professional conference organisers, destination management companies, organisers, associations and corporates. The destination itself is a visionary place that unlocks unlimited possibilities for out-of-the-ordinary conventions, meetings, incentives and exhibitions. Scenic, natural and cultural diversity combine with sophisticated infrastructure and excellent service to make the destination perfect for business events. Investment The Western Cape’s strength in innovation, creativity and passion is the foundation for the development of businesses and also the implementation of investment. From 1999 to date, the Western Cape economy has been growing steadily. Cape Town and the Western Cape needs to showcase this growth potential and will continue to highlight the benefits of

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its developing sectors and cities, while educating the global arena of our voluminous business offerings. Wesgro is driven to market the Western Cape as the preferred global destination for companies expanding into Africa. The Western Cape is full of life and growth and it is because of this optimism that the Western Cape business leaders believe that this Province is the Gateway into Africa. The investment potential for the Western Cape will ultimately be driven by strategic companies that are committed to ensuring business growth and entrepreneurship. Trade Exporting has its challenges but the return on the investment has greater rewards. These advantages include: • 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 and processes and thereby facilitating your own creative innovations. In addition it exposes you to international best practices and alternative ways of doing things. 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.

Western Cape SMME’s have many offerings and are encouraged to become export ready. Wesgro offers SME development support, access to crucial market information and empowers entrants through training focused on becoming export ready. New entrants and established companies are able to participate in group Outward Selling and Inward Buying Initiatives organised by Wesgro.

WESTERN CAPE

Inspiring new ways

www.tourismcapetown.co.za

AN INSPIRED PLACE TO DO BUSINESS e-mail: info@wesgro.co.za | website: wesgro.co.za | Tel: +27 21 487 8600

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THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA

Investment Promotion 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.

AN INSPIRED PLACE TO DO BUSINESS e-mail: info@wesgro.co.za | website: wesgro.co.za | Tel: +27 21 487 8600

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THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA

100 000

Gearing toward cycling tourists to Cape Town and the Western Cape over the next ten years.

WESTERN CAPE

Inspiring new ways

www.tourismcapetown.co.za

AN INSPIRED PLACE TO DO BUSINESS e-mail: info@wesgro.co.za | website: wesgro.co.za | Tel: +27 21 487 8600

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CONVENTION BUREAU AN INSPIRED PLACE TO MEET Cape Town and the Western Cape is a destination that will transform everything you know about your association, corporate and professional travel. A visionary place that unlocks unlimited possibilities for out-of-the-ordinary conventions, meetings, incentives and exhibitions. A place that promises scenic, natural and cultural diversity combined with sophisticated infrastructure and excellent service. THE PERFECT BUSINESS EVENTS DESTINATION Apart from the obvious natural beauty and tourism appeal, Cape Town and the Western Cape also offers a number of reasons why the destination is perfect

for any number of business events such as World Congresses, Incentive Programmes, Corporate Meetings and Tradeshows. Some of these are: • Number 1 conference destination in Africa • World-class infrastructure • Award winning Convention Centre • Over 20 000 hotel bedrooms in Cape Town • Easy air access to major global hubs • Centre of Knowledge • Climate • Variety of touring options • Global appeal that guarantees delegate attendance • Safe and secure destination • Efficient local governance • Member of the BestCities Global Alliance

THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA

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SERVICES OFFERED The Cape Town and Western Cape Convention Bureau provides destination expertise and support to professional conference organisers, destination management companies, event organisers, associations and corporates. Our spectrum of services include the following: Pre and post bid assistance •  Bid production and presentation •  Bid promotion support material •  Bid site inspection (flight arrangements excluded) Convention planning support •  Site inspection •  Introduction to service suppliers •  Communications support •  Building attendance •  Destination web links to conference websites •  Marketing the destination at the prior conference On-site event services •  Visitor information •  Welcome banners •  Welcome packs and mementos •  Hosting VIP delegates •  Post-event servicing •  Post-event evaluation •  BestCities Global Alliance introduction 

In addition we are able to assist with accomodation options, destination information, facilitation of stakeholder engagement, marketing intelligence, incentives, corporate meetings and exhibitions. AN INSPIRED PLACE TO DO MEET e-mail: conventionbureau@wesgro.co.za | website: capetownconventionbureau.org | Tel: +27 21 487 8600

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THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA

W

Why Export from the Western Cape?

estern Cape exports grew by 18.5% to reach ZAR64.6bn – exceeding prefinancial crisis exports.

Outward Selling Initiatives

Exporting Advantage • •

Along with this, the programme aims to empower entrants by offering training facilitated by relevant industry mentors.

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.

Overseas exhibitions and outward selling missions 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 market is unique and foreign buyers often engage in visiting markets to meet with potential suppliers in order to get insights of product 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 understanding with these counties, shaping 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. AN INSPIRED PLACE TO DO BUSINESS e-mail: info@wesgro.co.za | website: wesgro.co.za | Tel: +27 21 487 8600

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THE WESTERN CAPE DESTINATION MARKETING, INVESTMENT AND TRADE PROMOTION AGENCY – SOUTH AFRICA

Approximately

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of arrivals to the Western Cape in 2012 were international visitors*

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WESTERN CAPE

Inspiring new ways

www.tourismcapetown.co.za

AN INSPIRED PLACE TO DO BUSINESS e-mail: info@wesgro.co.za | website: wesgro.co.za | Tel: +27 21 487 8600

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PROFILE

George Municipality George is widely considered one of the top performing municipalities in South Africa. With high levels of awareness around the need for environmentally friendly service delivery in this sensitive natural area, a forward thinking leadership is focused on long term sustainability.

Location

over the same period. It should be pointed out George falls within the Eden District, the third- that with economic conditions internationally unlargest district economy in the Western Cape, after der strain since 2008, George has also recorded the City of Cape Town and the Cape Winelands a slowdown – growth between 2008 and 2010 District. The Eden District is also geographically only averaged 1.8% per annum, negative growth the third-largest district within the Western Cape of -0.45% was recorded in 2009, but this picked Province. This district is informally known as up to 0.75% positive growth again in 2010. The the Garden Route, with George, its hub, nes- recovery seems to be ongoing, with increases in tled among the slopes of the majestic Outeniqua building-plan submissions and approvals conMountains and flanked by the Indian Ocean. tinuing to rise in 2011 and 2012. These are good Because of the proximity to the ocean, the area indicators of growth. enjoys a pleasant, temperate climate. George also enjoys the strategic advantage of being situated on The main contributors to the economy of George the major transport routes between Cape Town in are finance, insurance and real estate, and the south and Port Elizabeth in the east. This cre- business services. Manufacturing, construcates investment opportunities, particularly with re- tion, transport and related services are also gard to manufacturing, logistics and warehousing. strong contributors to the local economy. The area, however, has a well-diversified economy, The municipal area is 5 190.43km2 in extent and with no over-reliance on a single sector. This includes the following: acts as a buffer to shocks and declines in • City of George specific sectors. • Villages of Wilderness and Herold’s Bay • Various coastal resorts such as Kleinkrantz and Victoria Bay • Rural areas such as the area around Ron- The George Municipality produced an extensivedevlei (east of Wilderness), Geelhoutboom, ly researched and widely consulted Economic Herold, Hansmoeskraal and Waboomskraal Development Strategy in mid 2012. This Strategy • Uniondale and Haarlem highlights seven very narrow areas which are deemed key future high growth areas, these are: • Call Centres and supporting ICT • Berries When considering economic data, George has • Vegetables shown excellent average annual growth rates at • Dairy Production 4.06% over the period 2000 to 2010. This is in • Education line with the Western Cape growth rate of 4.1% • Timber and exceeds the national growth rate of 3.52% • Hops Usage

Future growth areas

Economy

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PROFILE Agro-processing In George this remains an attractive area for investment, with the need to ensure more value added locally in the processing of locally grown and produced agricultural products. The district is an ideal location for various agricultural and niche activities because of its topographical and climatic diversity. Agricultural activities include dairy, fruit, vegetable and sheep products, as well as unique products such as those derived from forestry, hops and berry farming. Long famous for its magnificent forests, timber harvesting and processing form a large part of the manufacturing base of the George area. Tourism This could play a significant future role in the rural areas around Uniondale. Agri- and nature based tourism are possible key niche markets in this area. Approximately 320 000 overseas visitors and 1.2 million domestic visitors visit the Garden Route each year.

Municipal infrastructure The water supply of any city is of course of critical importance. That is why George Municipality implemented a water and sanitation design and management information system for the George area. Analysing and planning are critical aspects of a comprehensive water plan, which was why George saw fit to introduce the programme. It is part of its philosophy of looking ahead and planning accordingly. George was, however, not the only role-player and the provincial government was actively involved as well. George Municipality is confident that, with this analysis, it is fully prepared for the challenges of future demands, and that within its ambit, it will be able to provide the city with an adequate supply of water, now and in the foreseeable future. One of the challenges placed on a burgeoning city such as George is how to manage its waste. It stands to reason that in this beautiful garden city, ‘green’ should be the watchword and re-

George is ideally situated on the major transport routes between Cape Town and Port Elizabeth.

cycling the philosophy that governs the way the city does business. The city removes most of the green waste to a private recycling plant to save space at the refuse site. Approximately 1 000 cubic metres of green waste is removed monthly and recycling is done by means of a bluebag system whereby a private contractor collects blue bags containing recyclables from households on a weekly basis. George has launched several innovative wastemanagement initiatives that manage hazardous oil, batteries, used tyres, fluorescent tubes, etc. E-waste such as computers, hi-fis, radios, microwave ovens, etc is managed in a different manner. In addition to the above, communities will be educated on ‘green’ living and recycling through competitions. Through these initiatives, George is not only coping with the present-day problems posed by waste, but also looking towards the future, educating its people about the hazards of waste and helping them manage them. Master plans are in place for the long-term provision of electricity. There is a solid supply of electricity available from Eskom and with increased demand, HV and MV networks are simulated on Power Tools load-flow software to determine where and when the network will need to be strengthened. Following these results, infrastructure is installed (as is allowed by the master plans and budget constraints) and as a result, the supply of electricity is keeping abreast of demand. Major electricity-supply projects have recently been completed or are in progress. Currently

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PROFILE electricity distribution capacity far exceeds demand and the network can easily carry new large scale developments.

sic services and spending on capital infrastructure). George was named Most Productive Municipality in 2010 and third-most productive in 2011.

The existing road network requires constant The municipality, in October 2011, was yet again upgrading in the realm of traffic-systems man- named the Cleanest Town in the Western Cape. agement in order to provide additional capacity In the wider Greenest Town competition, George at intersections, to reduce delays and cost-of- placed second overall in the Western Cape. travel and to improve safety. Putting in place a world-class road and transport system was and During this year, the Green Drop status was not remains a priority for George Municipality. As assessed, but George maintained its Blue Drop part of its plan to create an integrated transport status and was ranked seventh overall in South system for George, the municipality has under- Africa. Performance improved from 96.26% to taken a project to create a scheduled, reliable 98.12%, and the team was named the best Blue public transport system. Central to the George Drop Team in South Africa. The George system Integrated Public Transport Network (GIPTN) ini- further secured a nomination as the best water tiative is the introduction of an integrated modern system in the country. bus system. Such a system will comprise local services within the built urban and the surround- The electro-technical department received an ing areas of George. It will also introduce a shut- award from Africa Skills Village for its participation tle link with the George Airport, and inter-town in skills development in George, and it received an services to better link George with Oudtshoorn, award from the South African Institute of Electrical Mossel Bay and Knysna. For the inter-town Engineers (SAIEE) for its support of the institute. services, a terminus facility is required. During an April issue of the reputable publication George Municipality has enlisted the support of Finweek, George placed sixth in South Africa’s top the George taxi industry in this regard. The pro- 10 places to do business in. Finally, as probably the cess of formalising the existing taxi industry into single best indicator of good governance and seran operator company is well underway. George vice delivery, George Municipality secured a clean is partnering with the National and Western Cape audit report from the South African Auditor General Departments of Transport, which will be providing for the year 2011/2012 (announced in August 2013). the support required to implement the project Clean audit opinions are achieved when the finanthrough financial assistance and capacity-building cial statements are unqualified and there are no reported audit findings. This places George in the over a number of years. top 5% of municipality in terms of financial governance and performance in South Africa.

Awards

Municipal IQ, a specialised local government data and intelligence service, annually measures municipal performance in its Municipal Productivity Index (MPI). The MPI combines financial and nonfinancial data to assess the ability of individuals and economic agents to operate productively in their municipalities. For instance: residents’ access to the local economy, the vibrancy of the economy and what support exists for the individual and local economy by a municipality (through access to baSOUTH AFRICAN BUSINESS 2014

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CONTACT INFO Key personnel: Charles Standers, Executive Mayor Daniel Maritz, Executive Deputy Mayor Tel: +27 44 801 9111 Fax: +27 44 801 9105 Email: post@george.org.za Postal address: PO Box 19, George 6530 Physical address: 69 York Street, George 6530 Website: www.george.org.za

FOCUS

A golden opportunity for investors George Municipality has identified numerous Garden Route opportunities for investors, many of which are unique to the area.

The attraction of George lies in its scenic beauty, safe living environment with a temperate climate, and excellent infrastructure.

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eorge Municipality believes that actions speak facilitate new business as well louder than words. This is why it is determined as the expansion of existing to help revitalise the local economy through con- businesses in George. crete actions. It is also committed to accelerating the pace of growth in the city of which it has stewardship. And the municipality has every reason to be brimming with optimism – the city of George offers great opportunities The aim of the incentive scheme to the investor and entrepreneur, which make it a preferred is to lower the start-up costs and initial utility expenses of a new investment destination. The advantages of George not only include investment op- investment to improve cash flow portunities, but also the lifestyle and attractions of the Garden and survival rate. That means Route. Scenic beauty, a safe living environment with a temper- less risk, more profit, and an exate climate, and excellent infrastructure, including an airport, cellent chance of survival during those critical early years. all add up to offer residents a high quality of life. The municipality wishes to attract investors to George and The incentive scheme is believes that with a proper incentive scheme, it will be able to based on the key economic

The incentive scheme

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FOCUS development potential, could qualify for up to a 25% discount on the market value of these properties. There is a further opportunity to qualify for discounts on municipal taxes and service charges, to a maximum of 80% in year one. Another available incentive is the phased payment of capital contributions, over a maximum period of five years.

Urban Development Nodes George Airport is located at the heart of the Western Cape’s Garden Route.

nodes as identified in the Draft George Spatial Development Framework (GSDF). There are five incentive nodes, namely the: • Three Urban Development Nodes • Industrial Development Node • Special Development Node Each node is unique in terms of its location in George, type of development earmarked, scope of supporting developments and assigned development rights. The Special Development Node is currently in the planning phase and will be a science and technologyfocused space in a prime location along the coast.

Industrial Development Node Concentrating specifically on the Industrial Development Node, the municipality has a number of serviced industrial areas available for sale or longterm rental. Suitable developers, measured against investment, job creation and skills SOUTH AFRICAN BUSINESS 2014

The purpose of the Urban Development Nodes are to revive the George inner city, and also support emerging retail corridors into Thembalethu and Pacaltsdorp. In addition to job creation and economic contribution, developments should meet requirements in terms of urban renewal objectives. Mixed-use developments which will encourage both economic activity and residential opportunities for residents will be ideal. When considering the George CBD, it reflects a number of unique characteristics that will interest investors and developers: • Good quality financial and medical services are available in George and these services are provided to people living in a wide area, including the Klein and Groot Karoo • A large automotive sector that draws buyers from nearby towns • The various services rendered in the CBD already form distinctive precincts that give it a character and differentiate it from its competitors • A safe pedestrian area, compared to other similar places with high levels of accessibility • The municipality and province are also currently investing in a public transport system for George, of which the CBD is a focus point. Access to and from the CBD will thus increase once the system is rolled out One of the key considerations for any potential developer should be the relatively compact and relaxed CBD environment (eg less rush-hour traffic). The relaxed environment is conducive to quality business trade and working conditions. The CBD is accessible from all directions. The wide street reserves give opportunity for widening sidewalks and other needs along the streets. Large blocks give opportunity for redevelopment, open spaces and parking inside the blocks, and finally the compact nature of the CBD enables mobility within the area (movement from one business or service to another is relatively quick).

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A new BPO hotspot George is rapidly developing into a competitive contact centre destination that aims to service both the local and international business process outsourcing market.

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cost-competitive. From a skills perspective, George also has an excellent offering, which is complemented by strong technical support and IT knowledge. This, together with generally lower absenteeism and attrition rates, firstworld infrastructure and connectivity, a large talent pool coming through the local schools system and sector-specific programmes for BPO skills, makes George a highly competitive contact-centre destination. When looking at plans for the industry going forward, the shortterm goal is to create another 500 jobs in the next 18 months; thereafter the local authorities can reassess the goals and look at larger rollouts. Importantly, George is not interested in quick wins, but is looking for companies that are willing to make long-term investments in the area that will create sustainable jobs for the region for many years to come. SOUTH AFRICAN BUSINESS 2014

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aving been identified as a key growth sector in the 2012 George Economic Development Strategy, the business process outsourcing (BPO) and contact centre industry is receiving support from both local and provincial government. Minister of Finance, Economic Development and Tourism in the Western Cape, Alan Winde, has given his full backing to the region. Together with his provincial team and industry body BPeSA Western Cape, he has visited the region on a number of occasions. He stated that, ‘Contact centres are excellent job creators and play a vital role in our employment strategy, aimed at creating sustainable jobs across the province.’ ‘The BPO/contact-centre industry is just the tip of the iceberg, as part of a broader economic programme. We are currently in the process of rolling out an IT incubator programme,’ says Carli BundingVenter, manager for economic development in the George Municipality. ‘The IT incubator is important to the growth of George and its surrounding areas, and is set to play a critical role in attracting more ICT-related industries to the region. This, in turn, will create a supportive environment for BPO operators and will ensure that all technical needs can be met locally. It is further envisaged that the incubator will foster a spirit of innovation in the region, which will allow the more adventurous BPO operators to create new services and product offerings out of George,’ says Imel Rautenbach, CEO of the Garden Route ICT Incubator. Although not many people are aware, George has a number of contact-centre operations, with the biggest, Oakhurst Insurance (part of the Badger Group), employing about 500 people. In terms of plans to grow the industry, the focus is on building the local market by servicing South African companies. The medium- to long-term focus, however, will move to foreign investment as George looks to better package its value proposition to compete with other BPO destinations around the world. When considering the benefits of the region, two of the standout factors would be the low salary and property costs. These are generally a lot lower than other cities in South Africa. Add to the mix the Department of Trade and Industry’s national incentive, together with the regional telecoms incentive, and George becomes very

PROFILE

Cape Chamber of Commerce and Industry Established in 1804, the Cape Chamber of Commerce and Industry is the oldest memberbased business organisation in Africa.

The Cape Chamber of Commerce is mandated to serve, enable and lead business in the Western Cape. This is achieved through a plethora of services and networking opportunities, as well as robust advocacy on behalf of business.

Roughly two thirds of the chamber’s members are made up of small, medium and micro enterprises. While just over half of the members have turnovers under R5-million per annum, a substantial 14% have annual turnovers of over R50-million per annum. Although the chamber is attracting start-up members, the majority (60%) of organisations have been operating for more than 10 years, which speaks to the sustainable nature of businesses in the region.

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Key target markets

Products and services

The Cape Chamber of Commerce is constantly reviewing its service offering to ensure it remains relevant. Many of its services are aligned to international chambers of commerce, but it is mindful to keep its offering relevant to the local market, and to augment its offering to help companies reach export potential where appropriate.

The following services are available to members as a baseline offering: • Seminars/symposia and workshops • Networking and building business contacts • Conferences and major events • Chapter and branch support • International trade development and facilitation • International trade desk – ‘bringing business to you’ SOUTH AFRICAN BUSINESS 2014

International contacts Document certification/certificates of origin Carnet de Commerce Business support department African Commercial Dispute Settlement Centre Business advice Human resources Enterprise Development Fund OCSACare – Occupational healthcare plan Pension fund Advocacy and legislative overview Meeting rooms for hire Advertising opportunities Portfolio committees

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Business (small, medium and corporate) Government

CONTACT INFO Key contact people: Bronwen Kausch, Executive Communication and Technology Manager Monique Johnstone, PR and Online Marketing Coordinator Joy Kennedy, Digital Administrator Tel: +27 21 402 4300 Fax: +27 21 402 4304 Email: monique@capechamber.co.za / bronwen@capechamber.co.za Physical address: Cape Chamber House, 19 Louis Gradner Street, Foreshore, Cape Town 8001 Website: www.capechamber.co.za

Western Cape Business Dispute Settlement Ad 2013_Layout 1 9/4/2013 12:19 PM Page 1

The Cape Chamber of Commerce African Commercial Dispute Settlement Centre The new Court Rules on Mediation make mediation a compulsory step for all civil and commercial litigation. The King III Report on corporate governance places a fiduciary duty on management to consider the use of ADR, in particular mediation, before deciding to litigate. In addition, the Medium Term Strategy of the Department of Justice gives a clear indication that government intends applying mediation to reduce the backlogs in courts. In response to this, as well as a growing call from business to reduce the operational and financial risks of litigation, the Cape Chamber of Commerce opened the African Commercial Dispute Settlement Centre. The Centre will give organisations across the Continent the chance to make use of alternative forms of dispute resolution (primarily mediation and arbitration) to resolve disputes quickly and cost-effectively making use of a professional, efficient service and circumventing the burden of litigation.

How to refer a dispute: Any party to a dispute can refer the dispute to the African Commercial Dispute Settlement Centre (ACDSC). A referral can be submitted in any of the following 4 ways:

Complete the electronic referral form on the Dispute Settlement page and click on “submit”

Download the referral form and fax the completed form to 0862317492, or email it to disputesettlement@capechamber.co.za

Call the ACDSC helpline on 021 402 4334. You will be assisted in submitting a referral

For more information visit www.capechamber.co.za and click on the dispute settlement page

PROFILE

Business Western Cape The core focus of Business Western Cape is to be the unified voice for businesses in the metropolitan and Platteland regions of the Western Cape.

Business Western Cape (BWC) is committed to renewing itself as a major unified chamber of commerce – with a large and wide-reaching membership. It aims to provide meaningful services and communication geared at substantially unifying business chambers into a representative voice of business, in order to: • Engage relevant legislative structures in policy advocacy on behalf of the whole business community • Improve ser vices by utilising the pockets of excellence of member organisations • Facilitate networking between businesses • Facilitate networking between corporates and SMMEs • Promote black economic empowerment and economic growth for the benefit of the whole South African business community

Vision Business Western Cape’s vision is to create a growing, developing and inclusive economy for the Western Cape and ultimately South Africa, supported by a unified provincial, non-racial business chamber organisation. This will result in a better business climate in the Western Cape, Southern Africa and throughout the African continent. SOUTH AFRICAN BUSINESS 2014

Mission •

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To be a unified, non-racial, multi-sectoral organisation facing the economic and other challenges of business at national, regional and local level To promote business and economic growth and development through business/enterprise development in every community throughout the Western Cape and the country To contribute to black economic empowerment by linking big and small businesses through the chamber network To contribute to SMME growth and development To transform the economy so that all

PROFILE can share in the benefits that growth will bring, and also to create and sustain an environment in which businesses can grow and prosper

FA BC OS (Fo u n d ati o n for African Business and Consumer Services) AHI (Afrikaanse Handels Instituut)

Values Business Western Cape, in all its dealings and among its members, will seek to promote: • Transparency and honesty in business dealings • Self-respect and respect for others • Responsible and accountable conduct • Broad-based empowerment • Enterprise development, capacity-building and skills transfer • Principles of private enterprise and entrepreneurship • A proactive approach to business and social challenges • Non-racism and gender equality • An awareness of and adherence to sound business ethics and good corporate governance • Non-alignment to any political party • To develop and propagate a strong code of business conduct, and sustained by a sense of social responsibility • To contribute to sustainable job creation, poverty eradication, socioeconomic and human resource development • To incorporate environmental awareness and development

CCCI (Cape Chamber of Commerce and Industry) WECBOF (Western Cape Business Opportunities Forum)

Strategic objectives • •

To be the representative voice of business chambers in the Western Cape To ensure business and economic growth through business/enterprise development in every community, town, city and metro in the province by supporting chamber delivery of needed services To transform the economy so that all can share in the benefits that growth will bring through a process of deracialisation and integration

Members The constituent members of Business Western Cape are:

CONTACT INFO Key contact person: René Hermanus, Business Support Administrator Fax: 086 292 0857 (SA only) Cell: 082 200 6884 Email: office@businesswesterncape.co.za

SACCI (South African Chamber of Commerce and Industry) NAFCOC (National African Chamber of Commerce and Industry)

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PROFILE

College of Cape Town As a leading provider in the further education and training (FET) band, the College of Cape Town has much to offer students and prospective partners.

The courses lead to recognised qualifications that are demanded by commerce and industry. The college has eight campuses situated in the central area of the peninsula, and serves the greater Cape Town area, including the traditionally disadvantaged areas and townships. The college offers various full-time and part-time courses, practical trade tests, short courses and skills programmes in: engineering, business and general studies. The National Certificate (Vocational) that provides Grade 9 learners with a vocational alternative to an academic Grade 10-12 is based on industry-focused training on the NQF levels 2-4. It has various other options available for post-school learners.

Why the College of Cape Town? The college is registered with the Department of Higher Education and Training and its programmes are quality assured by Umalusi, SETAs and professional institutions. The College of Cape Town was successful in obtaining Institution for Sectoral or Occupational Excellence (ISOE) status with the following SETAs: • Manufacturing, Engineering and Related Services SETA (merSETA) • Education, Training and Development Practices SETA (ETDP-SETA) • Mining Qualifications Authority (MQA) • Insurance SETA (Inseta)

Training campuses The college has eight campuses spread across the city and surrounding areas: • Athlone • City • Crawford • Gardens • Guguletu • Pinelands • Thornton • Wynberg The campuses have well-equipped workshops, lecture rooms, computer rooms and studios for practical work and offer a wide range of academic and practical courses. The College of Cape Town also has three residences – at the City, Crawford and Thornton campuses.

Key facts and figures Year established: February 2002 No of staff: 560 No of registered students: 10 896 (2012)

Its quality management system complies with ISO9001 standards and it is accredited by the SABS.

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CONTACT INFO Key contact people: Louis van Niekerk, CEO (Acting) Sharon Grobbelaar, Corporate Communications and Marketing Manager Email: info@cct.edu.za Tel: +27 21 404 6700 Info centre: 086 010 3682 (SA only) Fax: +27 21 404 6701/086 615 0582 Physical address: 334 Albert Road, Salt River, Cape Town Postal address: PO Box 1054, Cape Town 8000 Website: www.cct.edu.za

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INTERVIEW

Equipping students for the workforce College of Cape Town acting CEO Louis van Niekerk discusses how the FET prepares graduates for the workforce.

How does the College of Cape Town provide for the practical aspects of some courses?

Louis van Niekerk

Skilling all students in the practical aspects of their chosen vocation is critical to prepare them for the workplace. All campuses are well-equipped with workshops, salons, studios, kitchens or simulated business environments to provide practical training relevant to the specific study fields offered. Equipment and practical training is provided in consultation with industry to ensure that practical experience is relevant and in line with industry requirements. All students are also required to work in industry for a set period of time during the academic year, to allow them to gain practical experience in the workplace. Do you feel the current tertiary education system adequately addresses the Western Cape’s employment needs?

BIOGRAPHY Louis van Niekerk gained experience through a wide range of positions held in the educational realm. Previously he was the superintendent of education at the Department of Education and Culture Ex Administration. He was vice-rector and became the rector of the Western Province Technical College before being appointed as the CFO of the College of Cape Town. His qualifications include various teaching diplomas, a B Ed and a Bachelor of Business Management (with Honours) as well as a Master’s in Business Management Administration. SOUTH AFRICAN BUSINESS 2014

Yes, but saying that, there is always place for improvement that must be addressed by cooperation between the training providers and all relevant stakeholders. We believe that the further education and training and higher education sectors are providing skilled graduates to meet the employment needs of the Western Cape, and indeed the country. However, the challenge caused by the shortage of employment opportunities and the prevailing notion that industry and businesses are generally not absorbing skilled graduates into their workforce remains a critical concern. What student support services does the college offer? The College of Cape Town has a dedicated Student Support Services unit, with a Student Support Officer based at each of its eight campuses. Services offered include: • Counselling (individual or groups) • Academic support • Career guidance and placement assessment • Health and wellness programmes • Sport, recreation and cultural activities • Student governance (SRC)

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How does the college assist in job placement for graduates? Please give relevant examples. The placement of students in work places is one of the strategic goals of the College of Cape Town. This means that each student will be exposed to industry and business during their study for periods of between five and 15 days per year. Further to that, the College has established a Work Placement Unit consisting of 10 staff members who facilitate this industry exposure and assist graduates to find employment. This unit identifies potential employers for our various placement programmes. Through relationships with industry, large numbers of students are placed in internships with retail and wholesale partners, engineering companies, etc. each year. Employers are encouraged to contact this unit should they be able to provide work-placement opportunities on a full-time, part-time or internship basis.

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FOCUS

College of Cape Town offers workplace-based experience for students On a daily basis South African employers are confronted with a shortage of adequately qualified and experienced staff.

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tudents at further education and training colleges are a good future source of qualified staff. These students can be tried out at no cost to companies and at the same time develop the students’ skills by offering them a short period of work experience. The college’s work placement officers are assigned to place students who are registered for National Certificate (Vocational), National Diploma and other college programmes with employers for periods of workplace-based experience (WBE) and in-service training. The goal is to place students for between five and 10 consecutive days in each year of study for WBE and 18 months for in-service training. During these placements, employers are asked to orientate students to their companies and allow them to work alongside employees doing jobs related to the students’ field of study.

National Diploma students are scheduled for November/ December. These experiential training sessions are aligned with the Depar tment of Higher Education and Training requirements. No financial contribution is expected from the host employer for workplace-based experience. However, a nominal stipend to students completing their 18 months in-service training would assist them in satisfying financial commitments incurred during Benefits the in-service training period. For many young people, obtaining this kind of work experi- The only other cost to the host ence has been life-transforming. They have developed a better employer is the notional one of understanding of their chosen career and how it is practised supervising the students durin the workplace. This has motivated them to work harder and ing their time in the company. The college hopes that succeed. Many students have forged relationships with employers that led to immediate offers of employment after graduation. more companies will join it Employers benefit too. Students are a source of future em- in this important exercise. ployees that employers can get to know before hiring. By Companies are invited to hosting students, employers get a chance to influence the contact the college to explore training that the college provides and slant it more towards the how placing its students can needs of the industry. Employers can also get points on their help grow their business and bottom line. company’s BEE scorecard. Should a company be willing to host two or more of its students, the college would gladly assist by facilitating the READ MORE placement process. WBE placement for National Certificate (Vocational) occurs during vacation periods: April, June/ July and September/October. In-service work placement for Visit: www.cct.edu.za SOUTH AFRICAN BUSINESS 2014

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Absa Bank Ltd. Reg No 1986/004794/06. Authorised Financial Services Provider. Registered Credit Provider. Reg No NCRCP7.

Supporting Absa Business Bank development understands business in the inWestern KZN Cape The Absa Group (“Absa”) is listed on the JSE Limited and is one of South Africa’s largest financial services groups, offering a complete range of banking, bancassurance and wealth management products and services. Absa’s business is conducted primarily in South Africa and on the African continent, where it has equity holdings in banks in Mozambique and Tanzania. Absa is a member of Barclays Bank PLC, which holds a stake of 56,6% in the Group. Barclays is an international financial services group, engaged in retail and commercial banking, credit card issuing, investment banking, wealth management and investment management services. Absa Business Bank The South African economy and the sustained prosperity of its people depend on the creation of new wealth and the growth of sustainable businesses in the commercial sector. Absa Business Bank is well positioned to deliver superior products and services to this important sector of the market. The combined strengths of Absa and Barclays allow Absa Business Bank to offer depth of expertise and skills as well as best-of-breed products

and global solutions required to meet our clients’ specific business needs. In addition to providing industry-specific banking solutions, Absa Business Bank has a range of specialised financial products such as working capital solutions and sector-specific privateequity funding products designed around the needs of business clients, looking to expand their businesses. The Bank has an extensive regional network, servicing clients through a Relationship Executive, supported by a team of Industry Specialists, Operational Bankers and Client Service Consultants. Absa Business Bank believes in being more than just a financial partner. Being a true partner is about adding value, it is about industry support by providing a collaborative platform for networking and growth across all sectors and industries in the South African economy. Absa is not only ideally positioned as a financial partner in the corporate and business space, but actively supports industry events and initiatives.

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A wealth of opportunities exists for the creation and development of businesses and Absa Business Bank has been involved in a range of regional initiatives. Absa has long-standing relationships with the public and private sector in the Western Cape. Given our skills and expertise, we are able customise financial solutions to meet specific requirements, be it local business banking or specialised financial requirements across the African continent or with the rest of the world. In addition to supporting existing and established businesses, Absa also partners the Cape Regional Chamber of Commerce and Industry in major projects like the Western Cape Exporter of the Year Awards as well as the networking opportunity where business leader engage with the Executive team of the City of Cape Town. In addition to efforts undertaken to promote entrepreneurship and assist businesses of all types, the Group also has an extensive social investment programme focusing primarily on job creation for marginalised communities, primary and secondary school education and initiatives around HIV/AIDS. Some of these include: Keep Cape Town Warm Campaign in association with Good Hope FM Absa and Good Hope FM have partnered for the fourth consecutive year, offering their support and resources to the Keep Cape Town Warm Campaign which seeks to encourage Capetonians to help those who are left destitute and to restore some dignity to the families who benefit from this initiative. The campaign kicked off at the beginning of June and ran until the end of August. Generous donations were received from Absa employees, clients and listeners of the radio station. This year the campaign exceeded the previous year with the receipt of 4000 blankets, 5000 clothing items and R8000 in cash donations. Make a Difference Week Campaign Absa Citizenship has adopted the Barclays Make a Difference Day Campaign as one of its key employee volunteering campaigns annually. Its aim is to encourage people to make a positive impact on their local community. This year’s campaign saw employees pledging their support

to an initiative of their choice at every level of the business. Employees in the Western Cape volunteered their time to Stop Hunger Now SA. The aim was to pack 37 000 meals along with other volunteers from all walks of life. The meals will be used to feed children in crèches that are not yet registered with the Department of Social Development. Absa also donated R12 000 towards this initiative. Absa Spaces for Sports In 2006, Barclays proposed to develop an area of land in Gansbaai under the auspices of the Barclays Spaces for Sport umbrella as part of an Absa/Barclays Corporate Social Investment initiative. The Gansbaai Sport Centre was established in collaboration with the Football Foundation South Africa, Overstrand Municipality, Western Cape dept of Cultural Affairs and Sport, Absa and Barclays. The centre was recently privileged to host international guests not only visit the site but take time out to play a game of soccer and rugby with the children and coaches at the centre and to see the fruits of our labour. This activity formed part of the Barclays Beyond Sport Summit which saw appearances from the likes of Tony Blair, Lord Paddy Ashdown, Olympic legend Michael Johnson, South African Paralympics champion Oscar Pistorius, soccer legend Lucas Radebe and actress and activist Vanessa Haywood who is also a member of Team Absa for the 2013 Absa cape Epic. Interaction with customers happens through business centres which are geographically located in the Regional Centre for Absa Business Bank. Absa Business Bank Western Cape Mid-Corporate and Commercial divisions Tijger Park 4 Willie van Schoor Avenue Bellville 7530 Tel 021 915 5300 Absa Enterprise Banking 8th Floor Absa Provincial Head Office 31 Lower Long Street Cape Town 80001 Tel 021 440 4911

CONTENTS

KEY SECTORS Overview of the main economic sectors of South Africa.

Agriculture246 Mohair254 Oil and gas

258

Mining271 Mineral beneficiation

286

Manufacturing288 Automotive292 Automotive components

300

Food and beverages

301

Chemicals and pharmaceuticals

304

Engineering307 Water318 Transport328 Maritime336 Industrial development zones and special economic zones

348

Tourism350 Events and conferences Information and communications technology

364

ICT368 Banking and financial services

381

Development finance and SMME support

392

Education and training

401

Business support services

422

SOUTH AFRICAN BUSINESS 2014

OVERVIEW

Agriculture National government’s budget for rural development has increased by 18%.

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246

smaller negative balance with regard to secondary agricultural products, R3.9-billion. Overall, the balance was positive (Business Day).

SECTOR INSIGHT A record volume of South African grapes were exported in 2012. • South African fruit producers have launched an ethical trading programme. • More than half of South Af r i c a’s ag r i c ul t ur al exports are processed products. • Smaller mills will bring processing closer to emerging farmers.

PHOTO:SABMILLER

A

griculture contributed 5.8% to the nation’s gross domestic product (GDP) in 2010/11 and about 7% to employment. The GDP figure has risen markedly since 2002 when it was at 2%. Part of the reason for the rise in employment is the implementation of a Comprehensive Agricultural Support Programme (CASP). This is a national effort and every provincial government is obliged to have such a local plan. The gross value of agricultural production in South Africa in 2009 was R129-billion: field crops accounted for R34.4-billion, horticulture R31.7-billion and animal production R62.8-billion. Exports continue to grow fast. Fruit, sugar and wine are the products that have performed best in the modern era. These commodities have helped ensure that agricultural products make up about 7% of the country’s total export basket. Within that total, more than 50% of agricultural export is made up of processed agricultural products, a promising development for the future of agri-processing. National trade policy strategies are intended to enhance this development. In 2010, South Africa had a positive primary-products trading balance of R15.4-billion in agriculture, and a somewhat

OVERVIEW Avocados and tomatoes are among other important export crops, while the macadamianut industry has grown exponentially in recent years. There are about 32 000 commercial farmers in South Africa, a figure that has dropped by 13 000 over the last two decades. A number of large agricultural companies have evolved from being farmers’ co-operatives. The largest such company is Afgri, which recorded turnover of R7.6-billion in 2012. Most of them are regionally based (and focused on one sector of the market such as wool or mohair), but they generally offer a wide range of services such as trading, financing and mechanisation (tractors and the like). Some of these companies also run logistics divisions.

Transport and logistics South Africa has about 200 silos, mostly concentrated in the central grain-growing areas. Getting agricultural produce from these silos to market accounts for nearly 40% of the price that the end-user pays. If a plan of the National Department of Trade and Industry comes off, many more silos will have to be built. The plan, in conjunction with African Micro Mills and Kuvusa Mills, is to develop small-scale mills in rural areas all around South Africa. The first such mill was launched in River Horse Valley near Durban in 2012. In this context, Transnet’s commitment to resuscitating branch lines to get produce and products to market takes on even greater significance. Transnet is trying to get South Africa’s freight to shift from road to rail. At a grain symposium in 2012, a Transnet executive responsible for agricultural freight claimed that turnaround times had changed from 40 days in May 2010 to 20 days in November 2011. Where nine-million tons of agricultural produce had been carried by rail in 1992, the 2010 figure was just three-million tons. Logistics planners are hoping that the former statistic can help change the latter. Albert Swart told the symposium that grain tonnages carried by Transnet Freight Rail will almost double in the years to 2019.

PROVINCE

TOWN

INSTITUTE

RESEARCH AREA

North West

Rustenburg

Institute for Industrial Crops

Cotton, tobacco, hemp, flax, sisal, kenaf

Potchefstroom

Grain Crops Institute

Maize, sunflower, dry beans, sorghum, groundnuts, soybeans and cowpeas

Free State

Bethlehem

Small Grain Institute

Small grains

Mpumalanga

Nelspruit

Institute for Tropical and Tropical and subtropical crops Subtropical Crops

Gauteng

Pretoria

Vegetable and Ornamental Plant Institute

Onions, tomatoes, cassava, indigenous crops

Pretoria

Onderstepoort Veterinary Institute

Animals

Irene

Animal production

Livestock

Stellenbosch

Infruitech-Nietvoorbij

Deciduous fruit, vines, wines

Western Cape

Agricultural research centres in South Africa.

247

SOUTH AFRICAN BUSINESS 2014

OVERVIEW A first step in this strategy was unveiled in December 2012 when the Orkney-Vierfontein rail line was reopened. The reopened line will mean that more than 150 000 tons of cargo per year (more than double the current amount) will be freighted. Transnet’s expansion plan is based on a Market Demand Strategy: markets are demanding the grain of the North West and Free State. A branch-line concession process offers opportunities for private operators such as large agricultural companies.

Fisheries was R9.5-billion. The entire value chain of agriculture is under scrutiny with the aim to help smallscale farmers by improving infrastructure, creating new markets and assisting them to gain access to the big buyers such as supermarkets. In many areas, private companies such as South African Rural development Breweries, Woolworths and Pick n Pay are already onA wide range of issues relating to rural development are increas- board. Massmart is commitingly coming into focus at all levels of government. National ted to creating opportunities for Minister of Rural Development and Land Reform Gugile Nkwinti emerging farmers through its announced in 2012 that a rural bank is being considered. Direct Farm Programme. Pick The Land and Agricultural Development Bank of South Africa n Pay has contracted to buying (Land Bank) and the African Development Bank have committed more than 200 tons of organic to a R1-billion fund to help emerging farmers get access to finance. vegetables from a co-operative The development of small-scale farming and co-operatives is in Tzaneen in Limpopo. also being promoted at the level of provincial government and Woolworth’s organic-food district municipality. sales are on course to go In KwaZulu-Natal, partnerships with the private sector are past R1-billion annually. Also boosting the provincial government’s One Village, One Product in Limpopo, Woolworths has campaign: agreed to buy 700 tons of to• Beer producer SABMiller sources 5 000 tons of yellow maize matoes from three emerging farmers. The farmers are being from the subsistence farmers of Bergville • The small-scale farmers of Weenen supply chicory to the assisted by NGO TechnoServe Estcourt factory of Nestlé and food-supply company National government’s allocation for rural development in- Qutom. The Woolwor ths creased by 18% to R1.2-billion in the 2012/13 budget. The total Foundation made a loan of budget for the National Department of Agriculture, Forestry and R1.25-million that is being used to prepare 10 hectares. DAFF aims to increase the number of smallholder producers in the country exponentially. As the DAFF strategic plan says, The Agricultural Research Council (ARC) has facilities in five ‘There is a need to coordinate provinces covering every aspect of research. and integrate all the support The Agricultural Research Council has a further four units opprovided to smallholder and erating out of its Natural Resources and Engineering Division subsistence producers.’ which is based in Pretoria: Soil, Climate and Water, Agricultural Dams are being built, a naEngineering, Plant Protection Research Institute and Biometry. tional fencing scheme is being The Council for Scientific and Industrial Research (CSIR) has rolled out and produce markets several units dedicated to research in specialised agricultural fields. are being established in small One such is the Forestry and Forest Products Research Centre. rural towns.

AGRICULTURAL RESEARCH COUNCIL

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OVERVIEW Crops South Africa produces a full range of crops, from subtropical fruits, nuts, grapes and sugar to maize, wheat and sunflower seeds. The Orange River supports the cultivation of citrus and grapes of many kinds. The region is particularly well suited for the cultivation of Valencia oranges, lemons and grapefruit and the dry, hot conditions mean that it is easy to control pests. Fruit

Maize and wheat

PHOTO: JOHN DEERE

Seventy percent of South South Africa is famous for its fruit. Export volumes, particularly in Africa’s grain production is tropical fruits such as mangoes and avocados, have been growmaize, which covers 60% of ing rapidly in recent years. The sector is highly sophisticated and the cropping area of the coun- is skilled at the refrigeration and packing required for European try. The North West Province Union standards. produces one third of South Large volumes of exports are achieved in deciduous fruits such Africa’s maize and about 15% as apples, table grapes, pears, peaches, plums and apricots. of its wheat. Avocadoes thrive in Mpumalanga and Limpopo and production The Free State is the coun- volumes above 110 000 tons per year have been achieved. About try’s largest supplier of wheat 45% of production is exported. (37%) and maize (34%). The Most of South Africa’s citrus and subtropical fruit comes from Western Cape has 350 000 hec- the eastern part of Limpopo. Some of the world’s biggest farming enterprises operate in Limpopo Province. Westfalia, part of tares of wheat-producing land. Big farms characterise the the Hans Merensky Group, is an avocado grower of note while sector: Afgri told the Mail & ZZ2 is a huge fresh tomato enterprise. Halls has an international Guardian in 2012 that 17% of reputation for avocados and litchis. the country’s commercial farmCompanies such as Capespan and DoleSA move huge ers produce 80% of South quantities of fruit around the world. Africa’s maize. South African fruit producers have initiated an ethical trading programme called the Sustainability Initiative of South Africa (Siza). Fruit South Africa has set up the system to replace several other YEAR TONS PRODUCED standards and audits that were previously used (Farmer’s Weekly). IN SOUTH AFRICA 2008/09 2009/10 2010/11 2011/12

2 260 244 2 178 543 1 909 236 1 822 488

Saleable sugar production. SOURCE: SA CANE GROWERS’ ASSOCIATION.

Sugar Annual sugar-production volumes are on the upsurge again, after several years of decline because of drought and rising costs. Analysts suggest that the 2012/13 crop will be close to two-million tons, a figure that would have been even higher had it not been for unseasonal rain and a truck-drivers’ strike.

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OVERVIEW The wine industry contributes indirectly more than R4.5-billion to the national tourism industry, according to a 2012 Sawis report. Concern was raised by analysts about the relatively higher percentage of bulk exports (they grew by 26%) compared to bottled exports (down by 9.2%, Sawis). Business Times reported in 2012 that First Other crops Cape, a consortium of farmers The Free State Province supplies significant proportions of the and wine producers from the nation’s sorghum, sunflower, potatoes, groundnuts, dry beans, Breede River Valley that supply and almost all of its cherries. large amounts of wine to the Barley and canola are produced in the Western Cape. UK, had closed down its botMost of South Africa’s tobacco crop is produced on the tling plant. The fear is that this Highveld, with about a quarter coming from Mpumalanga. British trend will work against goodAmerican Tobacco South Africa (BATSA) has about 86% of the quality wines. The industry is located for legal domestic cigarette market. Macadamia and pecan nuts are cultivated in the north-eastern the most part in the Western Cape but Orange River Cellars regions and are proving a popular export commodity. Products distinctive to South Africa, such as rooibos tea in the Northern Cape is grow(Western Cape) and marula berries (Limpopo) hold great poten- ing production volumes. tial to capture niche markets internationally. Europe remains the main export market but India and Wine the Far East are growing in Export volumes have been steadily rising for South African wines. importance as destinations. In the year to April 2013, exports reached a record level of 469- Distell reported in 2011 that its million litres, up from 370.9ml (2010) and 409ml (2011). Two Oceans brand was doing There are about 3 500 wine producers in South Africa, with particularly well in India. the large majority located in the Western Cape. There are 54 South Africa’s new membership of the BRICS group of producer cellars. nations (Brazil, Russia, India, China, South Africa), will open doors to new markets for wine-makers. The Distell group produces • 2011/12 produced a record crop of 54.6-million equivalent 4.5kg about a third of the country’s cartons natural and sparkling wine, and • White seedless is the number one export variety (18.9-million), is ranked 12th in the world in followed by red seedless (13.5-million) global wine volumes sold. In • Northern Europe is the number one destination (29.8-million), 2011, the listed company’s turnfollowed by the UK (11.3-million) over was nearly R8-billion and • Northern Europe imported 4.3-million more equivalent 4.5kg it contributed 22.4% of South cartons in 2011/12 than the year before Africa’s bottled wine exports. …Continued on pg 252 The sugar sector contributes about R8-billion in direct income to the national economy. This is according to the South Africa Sugar Association, which further estimates that the industry employs about 79 000 people directly. In the six months to September 2012, both of the country’s sugar giants, Tongaat Hulett and Illovo, reported massive increases in headline earnings. Tongaat Hulett increased 30% to R654-million and Illovo earned R377-million over the same time period, an increase of 29%. Mpumalanga-based company Tsb Sugar has sugar-milling capacity of about 700 000 tons per year.

TABLE GRAPE NUMBERS

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PROFILE

Tongaat Hulett Tongaat Hulett is an agricultural and agri-processing business that includes integrated components of land management and property development.

A leading agri-processing business

BEE status: Level Three Contributor

Through its sugar and starch operations, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. Renewable energy, in the form of biofuel production and electricity generation, is of increasing importance to the business. The water-foodenergy nexus is an evolving dynamic as the world contends with the growing impact of climate change. Tongaat Hulett balances the operational requirement for sugarcane supplies to its cane processing operations, with other priority uses of agricultural land and its transition to higher value uses at the appropriate times. The current focus prioritises the business leveraging its asset base in six SADC countries.

More about Tongaat Hulett • • • • •

South Africa’s leading supplier of refined carbohydrates A world leader in sugar-milling technology Its Huletts brand is the second-most-admired food brand in South Africa The major producer of starch and glucose on the African continent Tongaat Hulett optimises land conversion and development at the appropriate times, mainly in the KwaZulu-Natal coastal corridor north of Durban

Key facts and figures Date established: 1892 No of employees: some 40 000 during the peak milling season Operations: Tongaat Hulett Developments, Tongaat Hulett Starch and Tongaat Hulett Sugar

251

CONTACT INFO Key contact people: Peter Staude, Chief Executive Officer Murray Munro, Chief Financial Officer Nico Kruger, Renewable Energy Executive Martin Mohale, South African Sugar Operations Executive Garth MacPherson, Starch Operations Executive Mike Deighton, Property Development Operations Executive Charlotte Mokoena, Human Resources Executive Maditshaba Mahlari, Company Secretary Michelle Jean-Louis, Investor Relations & Communication Executive Tel: +27 32 439 4000 Fax: +27 32 945 3333 Email: info@tongaat.com Physical address: Amanzimnyama Hill Road, Tongaat Postal address: PO Box 3, Tongaat 4400 Website: www.tongaat.com

SOUTH AFRICAN BUSINESS 2014

OVERVIEW Livestock

meat that is pre-heated does not fall under the EU ban. Before the ban, South Africa produced about 165 000 birds that were slaughtered for meat every year.

Livestock farming is the largest agricultural subsector in South Africa. The Eastern Cape is Forestry and paper the largest livestock province. South Africa has a beef-herd of The forest-product export sector in South Africa is made up of 14-million. paper (45.2%), solid wood (23.3%) and pulp (28.9%). Imports, Clover, Africa’s largest milk weighted towards paper products, cost the country R9.8processor, has a turnover of R6- billion annually, clearly indicating scope for increased domestic billion and a staff of more than production. The sector employs approximately 462 000 people with some 6 500. The Eastern Cape provides approximately a quarter two-million dependents. of South Africa’s milk. Parmalat The sector is dominated by international giants Mondi and has two plants in Port Elizabeth. Sappi, both of which have extensive plantations in addition to There are 6.4-million goats in their timber production and paper and pulp capacity. South Africa. The Kalahari Kid The export of pulp and paper sector contributed about Corporation (KKC) intends to R2-billion to the nation’s balance of payments in 2009. Pulp raise the standard of goat meat production figures have been on the rise since 2007. Mpumalanga has South Africa’s biggest sawmill and its largest and expand the export market. South Africa produces about panel and board plant, together with the biggest integrated pulp 55% of the world’s mohair, the and paper mill in Africa. There are sophisticated plants at several locations around the high-quality speciality fibre taken from Angora goats. Almost country: the country’s largest hardboard plant is at Estcourt. all mohair farming is done in the Eastern Cape. About half the national herd ONLINE RESOURCES of 24.5-million sheep are merinos and the Eastern Cape has Agricultural Research Council: www.arc.agric.za the highest number of sheep. Agrimark Trends: www.agrimark.co.za Upington in the Northern Cape Citrus Growers Association: www.cga.co.za is the main centre for karakul Deciduous Fruit Producers Trust: www.dfpt.co.za Dry Beans Producers’ Organisation: www.beans.co.za sheep farming. Forestry South Africa: www.forestry.co.za South Africa produces about Fresh Produce Exporters’ Forum: www.fpef.co.za 15-million tons of wool annually, Grain SA: www.grainsa.co.za with a quarter of that producMilk Producers Organisation: www.mpo.co.za tion emanating from the Eastern Mohair SA: www.mohair.co.za Cape. The Free State, Western National Department of Agriculture, Forestry and Fisheries: Cape and Northern Cape are www.daff.gov.za the other major producers. SA Grain Information Service: www.sagis.org.za The ostrich industry has been SA Wine Industry Information & Systems: www.sawis.co.za stressed in recent times. A birdSouth African Meat Industry Company: www.samic.co.za flu outbreak led to an EU ban on South African Subtropical Growers’ Association: www.subtrop.net the popular meat in 2011. The South African Sugar Association: www.sugar.org.za saving grace for the sector is Thoroughbred Breeders’ Association: www.tba.co.za the pre-cooked market; ostrich SOUTH AFRICAN BUSINESS 2014

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Making its Mark in Maritime STC-SA (Pty) Ltd.

STC-SA, leaders in Maritime Studies, Transport Logistics and Training Simulators for the entire Transport Logistics supply chain in Southern Africa, is now expanding steadily northwards. From its humble beginnings on South African soil in 2001, STC-SA has slowly and steadily entrenched itself as a leading local supplier to the needs of the transport and logistics sector in the Southern African region. Particularly in the Maritime transport sector, STC-SA has proven that its preferred technique of structured transfer of knowledge and skills through a programme of knowledge migration from Europe to Africa has strengthened not only the capacity of its local resources but also ensured that it has access to the most cutting-edge technology and training facilities to further enhance its services to clients and customers. Affiliated to the STC-Group in the Netherlands, STC-SA is able to offer a multi-faceted service, ranging from education and training to consultancy services, research and technical assistance.

With the backing support of our holding and sister companies across the globe, STC-SA offers tailor-made solutions and services, which encompasses all aspects of Human Resources Development, Consultancy, Technical Assistance and Research for the entire Transport and Logistics supply chain. Although accessing its European counterparts, STC-SA has custom-made its services to suit the needs of the African market whilst still maintaining excellence in both standard, customized training and consultancy.

T

Whilst STC-SA has strong European history with access to a vast network of global resources, it’s roots are firmly embedded in Africa. This allows it to provide an Africanised approach for the unique needs of the continent. Focusing on various activities in the transport and logistics chain, STC-SA’s range of services can be compartmentalized as:

S

Simulator supply and training •

Training in Maritime, Transport & Logistics • Consulting and Project-based Activities • Simulator Supply and Training STC-Group has developed Simulators for the Shipping, Port Operations, Transport and Logistics sectors e.g. Transport Chain & , Crisis Center • Transport Dredging • Rolling Equipment • Full Mission Bridge • Radar Navigation • Machine Room, Vessel Traffic Systems etc • These enable STC-SA to provide training which is cuttingedge, relevant, practical and applicable.

Training includes our well-renowned courses: • Marine Pilot Training • ISPS Training • Rolling Equipment Training • STC-W ’95-related training

C

• SAMSA’s legislated-related

• SAQA’s Unit standard-based training

• Advanced Post Graduate Studies etc Consulting includes

• Port Database Development for all the Ports of South Africa and Mozambique • Port Feasibility Studies

• Design and Layout of Ports

• HRD Strategy & Planning for several Parastatals • Benchmarking Studies • Technical Research, Market Surveys and • Process Re-engineering Design

Giving back: The STC-Group South African Development Trust provides financial resources that are used to improve the learning conditions in previously disadvantaged schools and other worthy causes. 21 Polo Crescent │ Woodmead │ Sandton │ RSA Telephone: +27 11 656 6338 │ Fax: +27 11 656 1699 6 Duncan Road │ Oswald Pirow Entrance │ Port of Cape Town │ RSA Telephone: +27 21 418 5062 │ +27 87 351 8308 E-mail: info@stc-sa.co.za │www.stc-sa.co.za

OVERVIEW

Mohair leads the way Mohair is one of the niche products produced in the Eastern Cape.

T

he Eastern Cape is a leader in niche products. Mohair is one of the country’s most successful agricultural sectors, and continues to thrive in the dry hinterland. But several new crops are also being tried as possible revenue earners: aloes, bamboo and berries. Aloes are synonymous with the Eastern Cape and the idea of creating plantations is catching on. The South African aloe industry is valued at approximately R60million but there is massive scope for expansion. About 300 tons of aloe bitters (crystals) is harvested every year but a larger quantity of leaves is processed for the gel in health drinks and beauty products. Bamboo is very versatile and has potential as a feedstock for renewable energy. Pilot projects are being run by SA Bamboo near Port Elizabeth, Stutterheim and Centane. The Eastern Cape Development Corporation (ECDC), which has invested more than R1-million in the projects, held the first bamboo symposium in 2011. The investment agency of the Amathole District Municipality, Aspire, intends to plant more than 500 hectares of organic blueSOUTH AFRICAN BUSINESS 2014

254

berries by 2020. South African production of berries reached 2 000 tons in 2011, still small, but a 500% increase over five years previously. Demand is expected to grow at 20% per annum.

Mohair Mohair is a high-quality speciality fibre. The Angora goat is shorn twice a year and the national herd comprises 650 000 goats. South Africa produces about 50% of the world’s mohair, most of which comes from the Eastern Cape. Production …Continued on pg 256

P39682E pineapple Mag ad.indd 1

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OVERVIEW

of more than two-million kilograms per annum is trending upwards, and with rising demand, could again match the 2005 figure of 3.6-million kilograms. Mohair’s contribution to South Africa’s export basket is in the region of R700-million annually. In 2013, Jansenville hosted the second International Mohair Summit. About 80% of the world’s mohair (some imported) is worked on in processing plants and mohair yarn-spinning factories in Uitenhage, Port Elizabeth and Berlin, outside East London. Two South African groups have a presence in every part of the mohair value-chain. Samil’s companies include Border Combing, Cape Mohair Spinners and Ingubo Weavers, while Stucken’s interests include Mohair Spinners South Africa, Hinterveld (a mill) and processing company Gubb & Inggs in Uitenhage.

ONLINE RESOURCES Eastern Cape Development Corporation: www.ecdc.co.za Mohair SA: www.mohair.co.za South African Mohair Growers Association:www.angoras.co.za

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Ladybrand-based OVK has a 34% shareholding in mohair brokerage Cape Mohair Wool (CMW) and BKB in Port Elizabeth has a Mohair Division.

Mohair Twist advert (repro) 148mmx210mm - REPRO.indd 2

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OVERVIEW

Oil and gas Exploration is increasing, on land and at sea.

Sasol’s Secunda plant is among the largest synthetic-fuels plants in the world.

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SECTOR INSIGHT South Africa has decided to use its shale-gas resources. • BP has a R4.7-billion spending plan. • Natural gas will feed a new Sasol New Energy power plant. • Sapref refinery has started a clean-fuels project. extend the life of the refinery by sourcing gas from new fields from 2013 onwards. The Petroleum Agency South Africa (PASA) supports exploration for onshore and …Continued on pg 260

PHOTO: SASOL

M

ost of the oil that feeds the country’s four crude-oil refineries is imported, but a good deal of South Africa’s fuel is generated by a natural-gas conversion plant on the coast and a coal-to-fuel facility near the country’s industrial heartland. In addition, Sasol produces fuel from coal at its Secunda facility and PetroSA has the country’s only gas-to-liquid (GTL) facility at Mossel Bay. The South African government’s decision to allow fracturing (‘fracking’) to go ahead in the country’s interior has caused a great deal of controversy. Environmentalists want the process stopped. Full-scale studies of the extent of the resource have not yet been done, but a US Energy Information Administration document sets it at 485-trillion cubic feet of gas. South Africa’s national oil company is the Petroleum Oil and Gas Corporation of South Africa, PetroSA. The company sells petrochemical products and runs the gas-to-liquid refinery at Mossel Bay, the third-largest in the world. Project Ikhwezi will

OVERVIEW offshore oil and gas resources Sasol New Energy is building a new power plant to increase and regulates exploration and the amount of electricity available to the integrated energy production activities. Com- and chemical group. Natural gas will be the feedstock for the panies wanting to exploit re- 140-megawatt facility and it will allow Sasol to reduce its carbon sources have to get permits emissions by about a million tons per year. Sapref has started a ‘clean-fuels’ project, aiming to reduce from PASA. The Sasol Group is a diver- sulphur and benzene levels, among other things, in fuel products. sified resources and energy The modifications to the refinery will bring it into line with the company. Sasol Oil, Sasol Gas tougher legislation about fuel production that is in the pipeline. and Sasol Synfuels provide a good proportion of South Africa’s fuel. The Fischer-Tropsch process of converting coal to usable fuel (coal to liquids) has been refined and perfected by Sasol over several decades. Sasol also converts gas to liquids. The group has two major complexes in South Africa: at Secunda in Mpumalanga, nine reactors create solvents, ethylene, propylene and olefins; at Sasolburg in the Free State, natural gas is converted to syngas which is then made into hydrocarbons and paraffins. Sasol is listed on the JSE in South Africa and on the New York Stock Exchange. The group has operations in 30 countries, employs about 34 000 people and generated R169-billion in turnover in 2012.

CRUDE OIL REFINERY

OWNED BY

Chevref, Cape Town

Chevron South Africa

CAPACITY: BARRELS PER DAY 100 000

Enref, Durban

Engen Petroleum

125 000

Sapref, Durban

Shell South Africa 50%, BP Southern Africa 50%

180 000

Natref, Sasolburg

Sasol 64%, Total South Africa 36%

92 000

Refining in South Africa. SOURCE: SOUTH AFRICAN PETROLEUM INDUSTRY ASSOCIATION.

…Continued on pg 262 SOUTH AFRICAN BUSINESS 2014

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Senior Partners Dr Duncan Clarke: duncan@glopac.com Babette van Gessel: babette@glopac.com

Sponsor / Exhibition / ShowCase Enquiries Amanda Wellbeloved: amanda@glopac-partners.com Sonika Greyvenstein: sonika@glopac-partners.com

Pre-Registration Jodee Lourensz: jodee@glopac-partners.com

Marketing Contact Jerry van Gessel: jerry@glopac-partners.com

Bronze Sponsor

OVERVIEW The Western Cape region is marketing itself as a support and services hub to Nigeria and the newer oilfields of Angola. Significant amounts of oil are transported around the Cape of Good Hope every year: 32.2% of West Africa’s and 23.7% of oil emanating from the Middle East. Saldanha on the West Coast is the site of the country’s largest oil-storage facility. PetroSA maintains six tanks, each of which has a capacity of 1.19-million cubic metres. PetroSA has indicated an intention to build a crude oil refinery in the Coega Industrial Development Zone just outside Port Elizabeth, but this mega-project will probably have to wait for the economic climate to improve. BP has announced it will spend R4.7-billion in the short-term, with about half of that going into refinery upgrades.

Gas Sasol is the country’s major supplier of gas. The company’s two major synthetic-fuel plants in Mpumalanga have been modified so that they are no longer entirely dependent on coal. Companies to have shown an interest in looking for shale gas in the Karoo using hydraulic fracturing or ‘fracking’ include Falcon Oil & Gas, Shell and a consortium comprising Sasol, Statoil ASA (Norway) and Chesapeake (the US).

The major economic sectors using gas are the metals sector (48% of volume, with the steel industry the most prominent), and the chemical, pulp and paper sector (about 20%). Brick and glass manufacturers are also big consumers. Pipeline gas supplied from Sasolburg amounts to 27.3-million gigajoules, with customers mostly in the greater Johannesburg area, the industrial complex east of Johannesburg, and Durban. Gas company Afrox is set to spend R1.5-billion on a threeyear infrastructure upgrade. Major building operations in KwaZulu-Natal (a new campus), the Eastern Cape and Pretoria (airseparation units) are underway. Rough estimates of the size of a new gas field (F-O Field) in the eastern Bredasdorp Basin

…Continued on pg 264 SOUTH AFRICAN BUSINESS 2014

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OVERVIEW The exploration rights to a large expanse of water off the KwaZulu-Natal coast, Tugela South, has been acquired by Impact Oil & Gas, which has signed an agreement with Exxon Mobil Exploration and Production SA Ltd (EMEPSAL). The right covers approximately 11 000m². PASA has awarded coalbed-methane-gas exploration rights in KwaZulu-Natal to NT Energy Africa, which has a partnership with the Central Energy Fund. These awards are for onshore exploration. At Beatrix gold mine in the Free State, Sibanye has registered a methane-gas capture project with the United Nations Framework Convention on Climate Change (UNFCCC).

Pipelines

off the south coast suggest that it contains one-trillion cubic feet of gas. Supplies of gas from this new source would ensure the sustainability of the Mossel Bay facility. Any gas found on the West Coast could be used to service the metropolitan area of Cape Town. The West Coast Ibhubesi gas field has great potential. Block 2A is said to have reserves of 850-billion cubic feet of gas. African International Energy, a Frankfurt-listed company, has bought the production rights of Forest Exploration SA and Anschutz SA. PetroSA holds the balance of the right to exploit the gas field, 24%. To the north is the Kudu gas field. The 4 567km² licence is held by a consortium that includes Namcor (54%) and Tullow Kudu Ltd (31%). SOUTH AFRICAN BUSINESS 2014

South Africa has four major pipeline networks: crude oil, gas, jet-fuel and multi-product. The National Energy Regulator of South Africa (Nersa) is the regulatory authority over pipelines. Transnet Pipelines is the only operator in the field, handling an average of 16-billion litres of liquid-fuel and more than 450-million cubic metres of gases every year. The liquid products are leaded and unleaded petrol, aviation turbine fuels, diesel and crude oil. In line with Transnet’s broader Market Demand Strategy, Transnet Pipelines is looking for new income streams; these could include managing depots and transfer stations on behalf of other entities. Transnet Pipelines employs 600 staff and its clients include all of South Africa’s major fuel companies, namely BP, Caltex, Engen, Exel, Sasol Oil, Sasol Gas, Tepco, Shell and Total. The first litres of diesel fuel ran along Transnet Pipelines new multiproduct pipeline (NMPP) in January 2012. The NMPP will be able to carry about 26-billion litres of fuel every year. Refined products such as jet-fuel, sulphur diesel and both kinds of octane petrol will be carried.

ONLINE RESOURCES National Energy Regulator of South Africa: www.nersa.org.za Petroleum Agency South Africa: www.petroleumagencysa.com PetroSA: www.petrosa.co.za Sasol: www.sasol.com South African National Energy Association: www.sanea.org.za South African Oil and Gas Alliance: www.offshoreafrica.co.za South African Petroleum Industry Association: www.sapia.co.za Transnet Pipelines: www.transnetpipelines.net

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PROFILE

Egoli Gas Egoli Gas is positioned to dominate the natural gas market in Gauteng.

Egoli Gas is positioned to play a leading role in promoting the adoption and use of natural gas in the entire society. It is the clean and eco-friendly renewable energy of the future. Growth drivers in the market are gas-fired power producers to mitigate electricity shortage, coal replacement in hospital boiler systems and use by industrial businesses as an energy source.

Description of business Marketing, sales and reticulation of natural gas through underground pipeline network in Greater Johannesburg Metropolitan area.

Target markets Households, restaurants, central water heating Bakeries, Epic Oil, Charlotte Maxeke Hospital facilities, multi-dwelling facilities, industrial busi- Turnover: Sales exceed three million gigajoules nesses, hospitals and power generating plants. per annum.

Future prospects

BEE status

With our new aggressive growth strategy we % black ownership: 100% will be expanding our pipeline network to ac- % black directors: 90% cess the growth nodes in Johannesburg such % black staff: 90% as Sandton, western commercial and residential areas and the new all-inclusive lifestyle estates. Accordingly, the next few years will see north CONTACT INFO bound growth of our gas supply footprint from Key contact people: the southern sections of Johannesburg. Shepherd Shonhiwa Managing Director Tel: +27 11 356 5000 Email: cservice@egoligas.co.za Physical address: 1 Annet road, Cottesloe, Year established: Started in 1892 as City of Johannesburg 2092 Johannesburg gas utility and became privately Postal address: Private Bag X10, owned in 2000. Auckland Park 2006 No of staff: 120 Website: www.egoligas.co.za Major clients: MTN, Absa, Standard bank, Sasko

Key facts and figures

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INTERVIEW

Leading by example Sharla Pillay, Chief Executive Officer of Transnet Pipelines, describes the future of the company, and highlights some new developments.

What was your goal when leaving school? I wanted to study medicine, but my elder brother who was studying towards a medical degree convinced me otherwise. He said I had a flair for accounting.

Sharla Pillay

How was the environment for you as a woman in the accounting field? During my article years and years post articles, there were limited opportunities for women. Even when I joined Deloitte there was a lack of female partners. I only started seeing a significant change in commerce and industry in the last three years. Was it useful to work for a private firm while gaining your articles? The learning and development I underwent at Deloitte was incredible. I got international exposure by working in the Houston office. Some of the major clients I was exposed to in Houston were in the oil and gas industry. That experience was invaluable.

BIOGRAPHY Sharla Pillay is the Chief Executive Officer of Transnet Pipelines. She attended the University of KwaZulu-Natal in Pietermaritzburg for her undergraduate and honours degrees in Accounting. She served her articles with Deloitte in Durban and this experience included a stint in the Houston office of the firm in the US. Sharla joined Transnet in 2003 in the corporate finance office of Transnet Port Terminals as an accountant. Since then she has held several senior positions within the two large Transnet divisions that operate in Durban. SOUTH AFRICAN BUSINESS 2014

Are there advantages for a CEO in being a Chartered Accountant? Definitely. Everything I do today is underpinned by my CA background. It has provided me with the foundation or building blocks to think strategically, demonstrate effective leadership and ensure the division is well governed and geared for growth. What is in the future for Transnet Pipelines (TPL)? Our new strategic direction is to diversify revenue streams. This will include exploring opportunities such as transfer of technical skills in Africa and even operating and maintaining pipelines in Africa. In addition, Transnet Pipelines will be looking at the end-to-end supply chain and not just the pipeline components to improve supply-chain effectiveness and ultimately get more volumes in the pipeline. This will ultimately reduce the cost of doing business in South Africa. We will be working in an integrated manner with our sister division Transnet Freight Rail to deliver freight reliably. We are also exploring opportunities to operate depots that are not owned by Transnet.

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INTERVIEW So maintaining the country’s pipelines is not your only business?

Tell us about progress on the New MultiProduct Pipeline (NMPP)?

The more product we get into the pipe, the lower the cost of doing business in the country. First preference is pipe, then rail, then road. We need to maximise the use of our assets. The pipeline is logistically the cheaper and more reliable option and is also environmentally friendly.

To date we have spent R16-billion on the pipeline. The trunkline came into operation in January 2012 and only transports diesel until the completion of the terminals. Thereafter, the trunkline will operate as a multi-product line. In 2013, we will spend R2.5-billion. The first phase ends in December 2013 with completion of the two terIt seems that there is something of an minals, provided the weather delays don’t imentrepreneurial spirit in Transnet at the pact us significantly. These terminals (inland and moment? coastal) will have three days of stock, allowing for Yes, I think everyone is excited about the Market flexibility in the system. Our main goal as TPL is Demand Strategy (MDS) and just knowing that ensure that we maximise the use of the NMPP you contribute towards the economy of the coun- by shifting product from road to pipe, which will try makes people perform their job as if it were result in lower tariffs and provide a safe, efficient their own business. Transnet’s MDS supports and environmentally friendly service. significant volume growth, infrastructure development of rail, ports and pipelines, and regional I have heard that you use pigs to maintain the pipeline. Please tell us more! integration beyond the normal operations. The Pipeline Inspection Gauge commonly reYou are not waiting for head office to make ferred to as a ‘pig’ is used to inspect, monitor all the decisions? and evaluate activities in the pipelines. There No, but I have their support. Each division has are different types of ‘pigs’ used by TPL. The an opportunity to craft their corporate plan that ‘Intelligent Pig’ is one component of pipeline inconsolidates into a Transnet Corporate Plan. This tegrity monitoring that forms part of TPL’s stratecorporate plan covers the strategic direction of gic maintenance plan. The Intelligent Pig is able each division aligned to the Transnet Strategy. to detect internal and external corrosion and has The plan is approved by our shareholder, the the technology to detect defects and anomalies Department of Public Enterprises, and has the in the wall of the pipeline. These imperfections full support of the Transnet Board and Transnet in the pipeline are then repaired to return the pipelines to their original standards. Executive Committee. Have your senior managers bought into the Market Demand Strategy?

Have lessons been learnt on the cost overruns that occurred with the NMPP?

Yes, everybody is excited about it. They are also a bit nervous because of the economic downturn. Transnet’s MDS will provide infrastructure ahead of demand to reduce the cost of doing business in South Africa and will also contribute to the objectives of the country’s developmental and transformation agenda. The economic downturn has impacted Transnet’s volumes negatively but we will still plough ahead with our capital investment programme as we are confident that investing through this economic cycle will benefit the company and the country in the longer term.

Lessons have definitely been learnt in terms of our contracting strategies and our governance rules. Transnet did not have the in-house skills for engineering, procurement and construction management (EPCM), which is predominately outsourced for major projects. Transnet Capital Projects has now taken over the EPCM role for the NMPP, and we will continue to grow our skills in this area. There is increased oversight on the project to ensure completion of the pipeline on schedule and within budget.

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Petroleum Agency SA Petroleum Agency SA promotes and regulates exploration for and production of oil and gas in South Africa.

Description of business 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 archive all geological and geophysical data related to such activities. The Agency reports to the ministry of Mineral Resources, headed by Minister Susan Shabangu.

Description of services Through its designation in terms of the Mineral and Petroleum Resources Development Act, Petroleum Agency SA acts on behalf of the South African government.

production in the country, and may also carry out other projects at the minister’s request – a recent example is the preparation and submission of South Africa’s extended shelf claim to the United Nations.

Target markets Domestic and international oil and gas exploration and production companies interested in exploring for conventional oil and gas resources, coal-bed methane and unconventional gas.

Key facts and figures Year established: 1999 No of staff: 67 Major clients: PetroSA, BHP Billiton, Shell International E and P, Sasol, Canadian Natural Resources, Anadarko

The Agency’s services include regulation of oil and gas exploration and production through contracting qualified exploration companies and monitoring performance in terms of technical work programmes, adherence to environmentalmanagement plans and attention to social and % black ownership: government-owned labour issues. The Agency also attempts to at- % black directors: 100% tract investment in exploration for oil and gas in % black staff: 87.5% South Africa, through presentation of technical information and interpretations at national and CONTACT INFO international exhibitions, direct interaction with potential explorers and advertisements. Key contact people: Lindiwe Mekwe, GM: Regulation Further services include the archiving of all geoNtsiki van Averbeke, GM: Promotion technical data and information produced through Tel: +27 21 938 3500 exploration and production efforts, and the faciliFax: +27 21 938 3520 tation of further exploration through the provision Email: plu@petroleumagencysa.com of this data to current and prospective explorers. Physical address: 7 Mispel Road, Bellville 7530 Postal address: PO Box 5111,Tygervalley 7536 The Agency also advises government on any Website: www.petroleumagencysa.com issues relevant to oil and gas exploration and

BEE status

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OVERVIEW

Mining The mining sector is considering structural changes.

SECTOR INSIGHT

PHOTO: ANGLO AMERICAN

The first fuel-cell-powered locomotive has run underground. • The IDC plans to invest R22-billion in mining. • Finds of rare earthelements hold great potential. • A new technology is raising hopes for cheaper extraction costs for copper. • DiamondCorp is ready to spend on its Lace Mine near Kroonstad. • In 2011, South Africa earned R282-billion from mining exports. • Sibanye Gold is a new company formed out of Gold Fields.

W

hen the Investing in African Mining Indaba was held in Cape Town in February 2013, it was a time for reflection for everyone involved in the South African mining sector. The year 2012 was a traumatic one for those in the mining sector. More than 30 people died after several days of violent strikes at Marikana platinum mine in August, when police opened fire

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on a crowd at the mine located between Rustenburg and Brits. Mining company Lonmin subsequently agreed to pay increases that added 14% to the company’s wage bill. Unrest spread to other mining sectors and the conflict between the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (Amcu) has been violent. In the context of rising input costs (steel and electricity for example), these developments have caused a great deal of reflection. Several speakers SOUTH AFRICAN BUSINESS 2014

OVERVIEW at the Mining Indaba spoke are the single biggest shareholder (32.98%) of Platmin, a JSEof the need to restructure the listed company created in 2009. Kgosi Nyalala Pilane, the leader way that mines do business in of Bakgatla, has ensured that the mine employs people from local South Africa. communities. Construction of the mine created 2 500 jobs, with KPMG’s head of mining, a further 3 000 permanent jobs on the mine itself. Jacques Erasmus, in reflectRoyal Bafokeng Holdings has a 13.4% stake in Implats. In ing on the Indaba, argued that November 2010, Royal Bafokeng Platinum (RBP) listed on the there was a ‘new normal’ in JSE and achieved a market cap of R10.6-billion. the sector. This involved higher operating costs and ‘increased pressure to secure and maintain a social licence to operate’. Key aspects to consider in More and more mining companies are generating their own power. the future include cost saving, This is partly in response to the rising cost of electricity, but also a productivity, restructuring of form of insurance against possible breaks in supply. portfolios, social impact and Power Alt, in which Jubilee Platinum has a majority stake, sold sustainability. 5.1MW to Eskom in 2012. This is one of the first power purchase One of the issues that minagreements (PPAs) in South Africa. ing companies must tackle is Some companies are looking at alternative technologies such as housing. Two of the country’s solar power but, as Dave Walker, a specialist in mining and energy biggest mining companies law at Werksmans Attorneys notes, for mines with ‘furnaces or have pledged their support for smelters, heat-conversion projects could make good business sense’. national government’s Each Anglo American has plans to build a 450MW power station One Settle One campaign. near Witbank to supply its platinum mines. New technologies Impala Platinum is putting will allow for the use of lower-grade coal from the Kleinkopje coalR2-billion into the Sunrise View mining operation. housing estate in Rustenburg. Ferroalloy producer Assmang intends building a 20MW plant to The National Housing Finance serve its smelter at Machadodorp. Platinum holds exciting possibilities in energy applications. Corporation (NHFC) gives In May 2012, Anglo Platinum launched its first underground workers a mortgage of up to mining locomotive to be powered by a fuel cell. Platinum coating R190 000 and Impala provides greatly enhances the hydrogen absorption capacity of fuel cells. The an interest-free loan of up to locomotive was developed together with Vehicle Projects, Trident R75 000. More than 1 300 South Africa and Battery Electric (Reuters). workers have been settled in Anglo Coal’s operations at Lephalale produce a huge amount of this way since 2008. methane gas. A third of this gas is now being used to power fuel Anglo Platinum has plans cells. Anglo Platinum is a 17.5% shareholder in Johnson Matthew for 12 000 housing units in the Fuel Cells. North West. Sibanye Gold’s Beatrix mine has been capturing methane from In parts of the North West, its mines for several years; in 2013 this will be converted to 2MW local communities have a diof useable power, with potential to double this output. rect stake in mining companies. Mining group Exxaro is sponsoring the roll-out of alternaThe Bakgatla-Ba-Kgafela Traditive energy near its remote Tshikondeni mine east of Musina in tional Administration (BBKTA) is Limpopo. The Alternative Energy Development Corporation (AEDC) responsible for the governance has installed zinc air fuel cells in homes and in street lights. With of the 350 000-strong commuthis technology, oxygen and zinc combine in fuel cells to generate nity of the same name in the renewable energy. Moruleng district. The Bakgatla

POWERING MINING OPERATIONS

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OVERVIEW

Kumba has massive iron-ore operations in the Northern Cape.

The role of gold Financial advisor and commentator David Shapiro wrote in his column in The Times in April 2013 that gold’s declining price, and the fact that it no longer seemed to playing the role of a safe haven in times of global crisis, is an indicator that the time is soon coming when, ‘For the JSE, our once mighty mining sector will give way to the services sector.’ As things stand, about one-third of the market capitalisation on the JSE, the country’s stock exchange, is in the resources sector. Despite the problems, mining’s contribution to GDP is 8.3% and South Africa has reserves in every category: energy minerals, non-ferrous and ferrous, industrial and precious metals. Many of South Africa’s large mining companies have evolved into highly sophisticated global entities, Anglo American and De Beers being the best known.

PHOTO: PHILIP MOSTERT

MINING IN 2011 • 89% of the mining industry’s expenditure of R437-billion was spent in South Africa • Paid R25.8-billion in tax • Paid out R16.2-billion in dividends • About 30% of SA petrol, diesel and chemicals are made from local coal • 13% of the world’s catalytic converters are made in SA, using SA platinum SOURCE: MAIL & GUARDIAN, FEBRUARY 2013

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In 2011, South Africa earned R282-billion from mining exports, 38% of the country’s export basket. South Africa’s major exports are unwrought platinum, coal, iron ore, ferroalloys, rolled stainless steel and aluminium. South Africa is the world’s number one producer of platinum and chrome, and produces about 40% of the world’s vanadium and vermiculite. The country has large reserves of ilmenite, palladium, rutile and zirconium and 80% of the world’s known manganese reserves are located in the Northern Cape Province. Coal and platinum group metals (PGMs) have overtaken gold as the minerals generating the biggest sales volumes. South Africa is the secondlargest exporter of steam coal in the world. South Africa is the number one producer of andalusite in the world. The Industrial Development Corporation (IDC), an agency of SOUTH AFRICAN BUSINESS 2014

OVERVIEW the National Department of EcoSasol’s R3.5-billion expenditure on a new shaft at Thubelisha nomic Development, has set up is part of an eight-year plan to invest R14-billion in replacing or a mining war chest of R22-billion extending the life of old mines. for the five years to 2018. The state mining company AEMFC inaugurated its first active The IDC wants to promote mine in Mpumalanga in 2011 and produced its first coal in 2012. mineral projects that support With mines in Mpumalanga reaching the end of their lives, the the country’s strategic interests. coal reserves of the Waterberg region in Limpopo are attracting atSo, energy-related investments tention. Among the companies either actively mining or prospecting (coal and uranium), and invest- are Sasol, Exxaro Resources, Coal of Africa, Eskom and Anglo Coal. ments that support the country’s need for steel will take priority. Other areas include gold Copper and diamonds, platinum group metals and rare earth minerals. Cuperex announced a new plant to be constructed near Springbok An executive of the IDC, Abel in October 2012. The company’s patented hydrometallurgical Malinga, cites a Citibank report technology cuts the cost of producing copper at remote sites by to the effect that South Africa’s more than half. Mines in Aggeneys in Namaqualand are responsible for apmineral deposits are worth about $2-trillion, and goes on proximately 93% of South Africa’s lead production and 12% of all to say on the IDC website that world lead exports. In December 2012, Rio Tinto and Anglo American announced this ‘includes massive deposits of rare earth elements (REE) that they had found a buyer for their 74.5% share of Palabora which are critical to many mod- Mining Company (Palamin), which owns a mine and a refinery. ern and high-tech applications The deal with the Industrial Development Corporation and three – from telecommunications Chinese companies values the company at R5.3-billion (Reuters). and green industry technologies, to utilisation in the defence Chrome industry’. Namaqualand in the Northern Cape and the Western There are 20 chromite mines in North West Province. The mines Cape are being investigated by are located along a reef running from Brits to Rustenburg and Western Minerals and Frontier. they are serviced by several ferrochrome smelters. South Africa produces about 70% of the world’s chrome. Most chromite is processed into ferrochrome, a vital component Coal in the making of steel. South Africa produces 40% of the world’s ferrochrome. In 2009, national production was 2.2-million tons. In November 2012, Anglo American Thermal Coal and Eskom agreed that the miner would provide the massive new Kusile power station with coal • In 2004, SA had 993 mines; in 2013 there are 1 600. for 40 years. • Revenue in nominal terms in 2004 was R98-billion; in 2011 it Mpumalanga accounts for was R370-billion. 83% of the country’s coal pro- • About 449 000 were employed in 2004; more than 530 000 duction and is the third-largest were employed in June 2012. coal-exporting region in the SOURCE: MINERAL RESOURCES MINISTER SUSAN SHABANGU, FEBRUARY 2013. world. …Continued on pg 276

MINING IN NUMBERS

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SA Business - A5 ad:Layout 1

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The Southern African Institute of Mining and Metallurgy Founded in 1894

F

or the past 120 years, The Southern African Institute of Mining and Metallurgy, has promoted technical excellence in the minerals industry. We strive to continuously stay at the cutting edge of new developments in the mining and metallurgy industry. The SAIMM acts as the professional and technical voice for the mining and metallurgy industry in the South African economy. We actively encourage contact and networking between members and the strengthening of ties. The SAIMM offers a variety of conferences that are designed to bring you technical knowledge and information of interest for the good of the industry.

Website: www.saimm.co.za

SAIMM, Fifth Foor, Chamber of Mines Building, 5 Hollard Street Johannesburg 2001, P O Box 61127, Marshalltown 2107 Tel: +27 (011) 834-1273/7 路 Fax: +27 (011) 833-8156 or +27 (011) 838-5923 路 E-mail: sam@saimm.co.za

OVERVIEW The major ferrochrome operations are run by Xstrata Alloys, Samancor, Hernic Ferrochrome, ASA Metals and a joint venture between Merafe Resources and Xstrata. Chrome chemicals supplier Lanxess has mining operations in the Rustenburg area.

Diamonds

production for many years. AngloGold Ashanti has 21 operations on four continents and controls a resource base of 71.4-million ounces. Gold Fields has nine mines in South Africa and three other countries. Harmony’s assets include mines in Papua New Guinea and Australia.

De Beers’ Voorspoed mine north-east of Kroonstad was opened in 2008 and will have a production capacity of 800 000 carats per year when it is fully operational in 2014. During the building phase, about R70-million was generated in the region, and the company intends spending R400-million per year on developing its capacity. Iron ore It is the first De Beers mine to be opened in South Africa since the company entered into a broad-based black economic With the Chinese economy empowerment transaction with Ponahalo in 2006. Voorspoed, continuing to grow, the demand an open-cast kimberlite mine, is also De Beers’ largest project in for the main component of steel South Africa since the Venetia Mine in Limpopo was commissioned is likely to continue for years in the 1980s. De Beers has earmarked R15-billion for upgrades to come. There are a number of to its Venetia mine, near Musina. Venetia accounts for 80% of the company’s South African production and some 40% of South iron-ore expansion projects underway, most significantly Africa’s production of diamonds. De Beers has been selling off its South African diamond mine the multi-billion-rand schemes at Kolomela (Kumba) and asset, mostly to Petra Diamonds, which now owns eight mines. In February 2009, DiamondCorp was granted a 21-year licence Khumani (Assmang). A new iron-ore sampling to develop the Lace Mine near Kroonstad, and in 2010 mining began on the project. The company remains upbeat about prospects plant at Saldanha, a joint and in April 2013, Lace secured the final tranche of the funding it venture between Kumba and needed to advance production. Transnet, allows exporters to Another active purchaser of mines is Rockwell Diamonds, which certify the quality of their product before the ore is loaded on is listed on the TSX and JSE. to ships for export.

Gold Manganese The decision by Gold Fields to hive off a new company called Sibanye Gold, which launched on the JSE in February 2013, was generally welcomed by commentators, if not the market in the first days of trading. Sibanye Gold is responsible for Beatrix, a Free State mine, and three others in Gauteng. Gold Fields has retained for itself the highly mechanised South Deep mine and it has assets in Australia, Ghana and Peru. The idea of ring-fencing South African operations is one that other mining companies are considering, but none has yet acted on. Some analysts believe that Sibanye’s entry into the market could shake up the Free State goldfields, which have been declining in SOUTH AFRICAN BUSINESS 2014

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The giant companies in this sector are Assmang and Samancor. Assmang is spending R5.5-billion on ramping up production of iron ore at Khumani to 16-million tons per year. Assmang is a joint venture comprising African Rainbow Minerals and Assore. Samancor (Anglo American and BHP Billiton) has control …Continued on pg 278

INTERVIEW

A partnership of equals Pallinghurst Resources Limited CEO Arne Frandsen describes how the mining partnership with the BakgatlaBa-Kgafela community is a win-win for both parties.

Please give a brief overview of the relationship between Pallinghurst Resources and the Bakgatla-Ba-Kgafela Traditional Administration.

Arne Frandsen

The partnership goes back almost seven years and is founded on the premise of equal partnership, where each partner is contributing valuable elements such as mining experience, capital, assets and skills. It is a true partnership of equals, and is based around the intention of creating a new major platinum mining company that is sustainable and has a long life, and will unlock a lot of wealth for all stakeholders. What do you believe the potential of the Bakgatla-BaKgafela area to be, in terms of its platinum group metals?

BIOGRAPHY In addition to Arne Frandsen’s many qualifications (BA, LLB, Master in Law from University of Copenhagen, postgraduate research and studies in Japan and South Africa), he has over 10 years of investment banking experience with Goldman Sachs and JPMorgan Chase. From 2004, Arne acted as client executive for JPMorgan Chase in South Africa, followed by a year as chief executive officer of Incwala Resources (Proprietary) Limited. Arne joined Pallinghurst Advisors LLP in 2006 and is a partner of the limited-liability partnership and the investment manager.

It has the potential to create a large and sustainable mining operation. We are currently employing about 700 people from the Bakgatla tribal community, which is more than 50% of the workforce. In our future operations, we are looking at employing around 4 000 members of the Bakgatla community in skilled, permanent jobs. In the region, one formal earner can support around 10 people. Have you projected PGM volumes and the life of the mine? We have a body of around 60-million ounces of platinum group metals (PGMs) that we hope to be able to mine over the next 40 years. The advantage of our operation is that we are on the surface of a shallow deposit. It is much safer, and has cross-advantages such as being a more sustainable operation. What effects will the mining operation have on the community? The partnership that we have is a mutually beneficial one. We are currently working on a big water project, where we have fresh water coming in on a pipeline from the Magalies Water Board. This will greatly benefit the community, and will create jobs, not just directly, but for many subcontractors in the fields of catering, cleaning, etc. Our operation will support small businesses in the area, and will lead to improved infrastructure, such as roads.

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OVERVIEW

Platinum South Africa has 80% of the world’s platinum reserves and it is the number-one producer and exporter. It is also number one in rhodium, and only Russia produces more palladium. Despite headlines such as ‘On the Brink’ (Engineering News) and ‘Still no end to platinum sector’s pain’ (Business Times), there were also some positive signs for the long-term future of the mineral. These include: • A decline in global production of 10% that will push up prices • The growth of the motorvehicle market in China • Growing demand from the jewellery sector SOUTH AFRICAN BUSINESS 2014

One of Palabora Mining’s copper draw points.

A growing awareness that a new dispensation is needed in the sector as a whole Chinese investors are also putting money into the Wesizwe Platinum project in the North West Province. Production will begin in 2018, after which annual production of 350 000 ounces is expected. More good news came in the stellar performance of Styldrift 1, a Royal Bafokeng Platinum project. Engineering News editor Martin Creamer reported in October 2012 on the ‘technical excellence of upcoming black South Africans’ in rolling out this R11.8-billion project. A community training project is ensuring that skills transference takes place. Most of the country’s platinum resources are concentrated in the Limpopo and North West provinces on the two limbs of the Bushveld Igneous Complex.

ONLINE RESOURCES Chamber of Mines of South Africa: www.bullion.org.za Council for Geoscience: www.geoscience.org.za Mining Qualifications Authority: www.mqa.org.za National Department of Mineral Resources: www.dmr.gov.za South African Institute of Mining and Metallurgy: www.saimm.co.za South African Minerals to Metals Research Institute: www.sammri.co.za South African Mining Development Association: www.samda.co.za

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of large deposits in the Kalahari Basin in the Northern Cape. Hotazel Manganese Mines, which comprises two mines (Wessels and Mamatwan) and a sinter plant, is one of the world’s biggest single producers of manganese ore. The Northern Cape produces more than 84% of South Africa’s iron ore. China is spending billions of dollars every year on importing the major component of steel production. The Kalahari Basin contains 80% of the world’s manganese reserve, but only 15% of global production comes from this area so there is enormous scope for development. Several new black-owned manganese projects are underway.

PROFILE

Richards Bay Minerals Richards Bay Minerals (RBM) is a world leader in sand mining and mineral-processing operations, producing titanium minerals, high purity iron, rutile and zircon.

production process allows the company to reduce its GHG emissions

Leading the way • • • •

Key facts and figures • •

• •

PHOTO: RIO TINTO

• • •

Largest mineral sands producer and beneficiation company in South Africa Directly and indirectly contributed R5.8-billion to government revenue over the past five years Major employer and largest single tax payer in KwaZulu-Natal, representing 3.5% of KwaZulu-Natal’s gross geographic product Capable of producing up to two million tons of product annually One of the world’s lowest-cost titanium feedstock producers, supplying 14% of the world market Supplier of 25% of the world’s high purity iron, and the second-largest zircon producer worldwide Best-practice dune forest rehabilitation Improved water-treatment capabilities allow us to re-use water up to 21 times Implemented real-time emissions monitoring technology Re-use of waste gas (CO) from the smelter plant as an energy source in the

Progressive leadership and cultural development programme Historically disadvantaged South Africans represent 68% of the workforce Women occupy 34% of management and 10% of core mining positions Bursaries, study grants and apprenticeships available to previously disadvantaged individuals

Shareholder structure In February 2012, Rio Tinto exercised an option to acquire BHP Billiton’s 37% shareholding in RBM, which resulted in Rio Tinto increasing its shareholding to 74%. Blue Horison is a consortium consisting of lead investors and its four host communities. As the black economic empowerment equity partner, they own 24% and 2% belongs to its Employee Share Participation Trust.

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CONTACT INFO Key contact people: Mpho Mothoa, Managing Director Fundi Dlamini, General Manager: Communities and Corporate Relations Tel: +27 35 901 3111 Fax: +27 35 901 3442 Email: communication@rbm.co.za Postal address: PO Box 401, 3900, Richards Bay, South Africa Website: www.rbm.co.za

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FOCUS

A global leader gears up The world’s second-largest platinum producer, Implats, is in the business of mining and marketing platinum group metals (PGMs), primarily platinum, palladium and rhodium, and associated base metals.

I

mplats employs more than 63 000 people, including 23 000 The company believes that concontractors across its operations, and in the 2012 financial year, tinuing investment is essential to produced approximately 1.5-million ounces of refined platinum enable the company to exploit future market opportunities that and around three-million ounces of PGMs. The group’s operations are located on the Bushveld Complex in will inevitably come with rising South Africa and the Great Dyke in Zimbabwe, giving it an attribut- demand. able mineral resource inventory (inclusive of mineral reserves) of Implats has a primary listing 230-million ounces of platinum. In addition, through Impala Refining on the JSE (IMP) and is also Services (IRS), the group uses its excess smelting and refining traded in the United States capacity to process the concentrate and matte produced by its through a sponsored Level 1 operations as well as material purchased from third-party compa- ADR programme (IMPUY). nies. Toll-refining is also undertaken on behalf of other operators. The company works actively The company’s primary business unit, Impala, mines the Impala to increase its share liquidity to lease area which is located on the western limb of the Bushveld satisfy an international shareComplex, near Rustenburg in the North West Province. This opera- holder base. As at the end of the tion comprises 15 shafts, five of which have underground decline 2012 financial year, 60% of the systems. Three new shafts (20, 16 and 17 Shafts), which at full shareholding was held in South production will contribute 500 000 ounces of platinum per annum, Africa, with the remaining 40% are currently under development to replace shafts that are nearing being held offshore. the end of their lives. Implats invested in excess of R8-billion on capital projects in the 2012 financial year. The majority of this was spent on the three major replacement shafts in Rustenburg and the Phase 2 expanREAD MORE sion project at Zimplats. The latter expansion project has a total cost in the region of US$460-million and will increase production to 270 000 ounces of platinum in matte in the 2015 financial year. Visit: www.implats.co.za SOUTH AFRICAN BUSINESS 2014

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PROFILE

Ingwenya Mineral Processing (Pty) Ltd Ingwenya Mineral Processing (Pty) Ltd is a South African company based in Mpumalanga Province, with head offices in Witbank.

Ingwenya Mineral Processing was contracted to build a 200tph modular coal plant in 2010.

Ingwenya Mineral Processing (Pty) Ltd (IMP) sioning of a number of successful operational was incorporated in the latter half of 2006, and coal-washing plants in the industry. From was formed to service the mining industry in modest beginnings processing coal in South the field of contract mineral processing and Africa, the mid-tier coal-minerals-processing consulting services, with specific focus on the specialist is growing its portfolio beyond local coal industry. The company takes advantage of borders – as far afield as Russia, and is further specialised industry requirements in providing involved in technological advancements that will mineral-processing expertise to various clients see the industry develop. for the benefit of its own shareholders. The company recognises the requirements of the Mining The modular plants, in which IMP specialises, Charter and has a BEE shareholding component are gaining popularity in the coal industry. They of 45% as well as board representation. are ideally suited to its remaining Witbank coal reserves, which are mostly widespread small Having started only six years ago, Ingwenya pockets. A modular plant can be designed to Mineral Processing (Pty) Ltd has today com- process small or large amounts, and is easy to pleted the design, construction and commis- relocate as well. SOUTH AFRICAN BUSINESS 2014

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PROFILE It is important to note that IMP uses traditional original equipment manufacturers (OEMs) for its major equipment items. The management of IMP has one main growth objective – to build two new modular plants every year, and take on two new operation and maintenance contracts every year. Thanks to its 4 000m² Bomax workshop facilities, IMP is able to build easy-to-operate, tailor-made, modular plants with very short lead times. IMP can also erect and commission (depending on the size of the plant) in about three or four months.

Vision The company’s vision is to become an ‘operation and maintenance contractor of choice’ to the coal-mining industry.

Mission

and commissioning of the plant. IMP was also awarded the operation and maintenance contract for the plant, which it managed successfully until February 2011, after which Petmin took over. IMP was largely involved with local community training programmes that empowered people with no skills to develop plant operational skills and successfully work the plant. This project will always remain close to IMP’s heart. Nkomati anthracite – Sentula Mining In 2007, IMP helped recommission Sentula Mining’s Nkomati 50 000tpm (ROM) anthracite operation, and was also contracted to operate the plant. Although the plant is currently on care and maintenance, IMP has people based on site to look after the plant. The company will continue with the operations contract once the plant is brought back on line.

IMP will at all times endeavour to generate sustainable growth in the interest of all its stakeholders by: Umlalazi coal mine – Anglo American • Seeking new opportunities and partners in Thermal Coal (AATC) the minerals industry In April 2008, AATC awarded IMP with the contract • Participating in the mining industry at board, to design, build, operate and maintain a 200tph management and employee levels (ROM) modular coal plant for its Umlalazi coal • Competing in the industry by leveraging its operation in Mpumalanga. The plant was commisdepth of experience and knowledge sioned in October 2008, and is operated by IMP. • Conducting its business with integrity and complying with accepted business principles Kiepersol – Jindal Steel and practices In 2010, IMP was contracted to build and commission a 200tph modular coal plant for a Piet Retief-based coal operation belonging to Jindal Steel. The company has since then also added an IMP’s portfolio list comprises blue-chip clients, in- additional 100 000tpm discard re-wash module cluding Petmin, Sentula Mining, Anglo American to the plant, which IMP runs. Thermal Coal (AATC) and Jindal Steel. On behalf of minerals processing equipment supSomkhele – Petmin plier Malvern Engineering, IMP has installed a new IMP’s very first project, which was commissioned belt press at the mine. Sourced from the US, this is less than a year after IMP was established, was the first of its kind in South Africa, and is designed the Phase I, 120 000tpm (ROM) plant for Petmin’s to recover water in a closed circuit. Somkhele anthracite mine in KZN. IMP worked in conjunction with EPCM contractor SENET, and Phalanndwa – Umthombo Resources was responsible for managing the construction Umthombo Resources acquired the mine in 2009.

Project portfolio

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PROFILE In July 2013, Ingwenya contracted its first trainee from Tshwane University of Technology in the metallurgy field. The student needs to complete a 12-month experiential training in order to graduate with a National Diploma. This marks the beginning of a mentorship programme to empower youth in the communities in which Ingwenya operates. Mining operations at Phalanndwa Colliery.

Target markets Mining commenced at Schoongezicht in October 2010. Umthombo produces No 2 upper and main as well as lower seams in this operation. Upper and main seams are suitable to wash for RB1 quality coal. No 2 lower seam is for local power-plant consumption quality. It has a total monthly ROM coal of 150 000 tons per month.

• • • •

Partnering with existing coal plants Blue-chip companies Empowering junior mining companies Steel manufacturing companies

Key facts and figures

Year established: August 2006 No of staff: 183 Major clients: Anglo American, Jindal Africa, Cost-effective supply, operations and main- Umthombo Resources, Sentula Mining tenance of modular coal-processing plants Turnover: About R150-million per annum (washing plants) that meet its clients’ throughput, quality and safety allocations Design and build of coal-processing plants. Professional services in the metallurgical % black ownership: 45% consulting field, in terms of due diligence, % black directors: 45% pre-feasibility, bankable feasibility, and % black staff: 73% metallurgical troubleshooting studies Engineering design and fabrication CONTACT INFO

Main activities •

• •

Bee status

Skills development In this industry, it is essential for staff to keep up to date with new trends and innovations. Ingwenya Mineral Processing offers skills development to its works. People living in the surrounding communities get preference as most employees acquired from these communities previously lacked skills and were appointed as general workers, and then trained on the job to move up the company ranks as skilled employees. SOUTH AFRICAN BUSINESS 2014

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Key contact people: Mr Mpho Mothoa, Director Mr Neville Matodes, Director Tel: +27 13 656 2440/4758 Fax: +27 13 656 2401 Email: mmothoa@telkomsa.net or nmatodes@telkomsa.net Physical address: Unit 12 Smokey Mountain Office, Route N4 Office Park, Benfleur Ext 11, Emalahleni (Witbank) 1034 Postal address: PO Box 966, Hendrina 1095 Website: wwww.ingwenyamp.co.za

INTERVIEW

A commitment to safety Mpho Mothoa, Managing Director of Ingwenya Mineral Processing, highlights the company’s expansion plans for the coming years.

Please give an overview of Ingwenya Mineral Processing. How many mines do you operate?

Mpho Mothoa

We are currently operating four coal mines in the following areas: Komatipoort (Nkomati), Clewer (Umlalazi), Piet Retief (Kiepersol) and Delmas (Phalanndwa), plus our 4 000-square-metre engineering workshop in Hendrina (Bomax). We are in discussion with various clients for the design, build and operation of three new coal-processing facilities. Congratulations on achieving 1 000 injury-free days. To what do you attribute this excellent safety record? Commitment plus communication from all employees, from the general worker to the plant manager. Weekly briefings on developments on site by the safety officers, and documentation of lessons learned from previous incidents, serve as a reminder to all employees about the importance of following safety regulations and immediate reaction to negligence that could lead to injuries and loss of life.

BIOGRAPHY Mpho Mothoa is a metallurgist by profession. He obtained a BTech from Tshwane University of Technology, a GDE in Mineral Economics from the University of the Witwatersrand, as well as First and Middle Management certificates from the University of South Africa. He is currently a founding member of Ingwenya Mineral Processing (Pty) Ltd, where he is responsible for operations at director level. He holds a 45% share in the company.

Are there any plans for the company to expand? Please identify key strategies for the near future. Our main goal is to expand our operations from four to eight plants in the next three years. Our key strategies are: • Cyclone Module Plant that we build and modify to suit the requirements from the client when needed. This helps us to shorten the lead time tremendously (from 12 months to six months). • Malvern Engineering, which is a shareholder in the company, supplies most of the coal-beneficiation equipment. This gives us another competitive advantage in acquiring this equipment in a shorter lead time. • The involvement of Anglo American SEFA Mining Fund will boost our profile, especially with the empowerment of junior mining companies. • Keeping it simple – emphasis on fundamentals and backto-basics approach.

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OVERVIEW

Mineral beneficiation South Africa has significant capacity for processing minerals.

SECTOR INSIGHT

beneficiation sector, which it is believed, will increase employment levels and stimulate economic growth. The first ‘pilot commodity value chain’ has been developed by the National Department of Mineral Resources and applies to the iron and steel industry. Future value chain strategies will be developed for energy (coal, uranium), catalytic converters, jewellery and pigment production. BHP Billiton opened its M14 furnace at its Metalloys manganese smelter in March 2013. The expansion project will cost the company R1-billion and make provision for an additional rimary processing plants include refineries for zinc and production capacity of 120 000 plants for making carbon steel, stainless steel and alu- kilo-tons of high carbon-ferro minium and for the processing of chromite, platinum, manganese per year. gold and uranium. Kalagadi Manganese, the In terms of new mining legislation working its way through the company that is developing a national parliament, new mining licences will include a provision major manganese mining operwhereby some of the resources mined must be made avail- ation in the Northern Cape at a able to local manufacturers. The idea behind the Mineral and total cost of R6.5-billion, is also Petroleum Resources Development Act is to boost the minerals building the world’s biggest

P

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BHP Billiton is spending R1-billion on a new furnace. • Harmony Gold has increased its share in the Rand Refinery. • Columbus Steel supplies 80% of South African demand.

OVERVIEW manganese sinter plant. The A Turkish company has bought Cape Town Iron and Steel plant will produce 2.4 million Works (from Murray & Roberts), the Industrial Development tons of sinter-product. Of this, Corporation (IDC) has taken a 74% share in Scaw Metals (in line 700 000 tons will make its way with its strategy of securing strategic assets) and Ervaz has anto the Coega IDZ in the Eastern nounced the sale of its share in Highveld Steel and Vanadium to Cape where a new smelter is a BEE group. A new producer (Agni Steels from India) will use scrap metal to make steel billets at Coega Industrial Development to be built. South Africa has plans to ex- Zone outside Port Elizabeth. ploit its rare metals and plans Samancor Chrome is the second-largest ferrochrome producer to develop a beneficiation com- in the world with three plants, two of which are in Mpumalanga: plex at the West Coast port of eMalahleni (Witbank) and Middelburg. Saldanha. Titanium sands are Middelburg-based Columbus Stainless supplies stainless-steel currently exported at a value of products to the domestic and international markets. about R2 690 per ton but with Xstrata Alloys’ Lydenburg plant produces granulated and lumpy beneficiation this could rise to ferrochrome. Assmang has a ferrochrome smelter in eNtokozweni R6 000. (Machadadorp) in Mpumalanga. Harmony Gold has increased South Africa’s biggest steel producer is Arcelor Mittal which its stake in the ownership of has four large plants located at: Newcastle in KwaZulu-Natal, Rand Refinery. In 2013, the Vereeniging in Gauteng (long steel production), Vanderbijlpark company paid R33-million to in Gauteng and Saldanha in the Western Cape (flat steel). raise its ownership percentage Vanderbijlpark makes about four-million tons of liquid steel, serfrom 1.8% to 9%. Other gold vicing about 78% of South Africa’s demand. There is also a coke miners with shares in the refin- and chemicals facility in Pretoria. ery are AngloGold Ashanti (44%), BHP Billiton has two large aluminium smelters, Bayside and Sibanye Gold (33%), DRDGold Hillside, with the former apparently being considered for closure. (11%) and Gold Fields (3%). Tata Steel is the anchor client of the Richards Bay Industrial Jeweller y manufacturer Development Zone (RBIDZ), with installed capacity to produce OroAfrica is in a joint venture 150 000 tons of ferrochrome, mainly for markets in Europe with the Rand Refinery. It has and Japan. Safa Steel’s new R1-billion metal coating factory at Cato Manor manufacturing facilities in Cape Town but is moving its wedding was formally opened in March 2012. Hulamin is a leader in the sophisticated aluminium finishedring facility to Johannesburg in response to an initiative of the product sector. The company makes rolled products at Edendale, Rand Refinery to produce a new Pietermaritzburg and at Camps Drift while its Pietermaritzburg product, RandPure. This name facility for making extrusions is one of the three in the country. will signify to buyers that the The company’s R970-million rolled products expansion project gold has been sourced purely is now complete. from mines. Steel production is down from historical highs (to about ONLINE RESOURCES six-million tons per annum, Aluminium Federation of South Africa: www.afsa.org.za from nine-million) and there Mintek: www.mintek.co.za have been significant sales Mpumalanga Stainless Initiative: www.mpstainless.co.za and acquisitions in recent times. South African Iron and Steel Institute: www.saisi.co.za Nearly one-million tons of steel Southern Africa Stainless Steel Development Association: was imported into South Africa www.sassda.co.za in 2012.

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OVERVIEW

Manufacturing Increasing manufacturing capacity is a national priority.

SECTOR INSIGHT

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outh Africa has a sophisticated and varied manufacturing sector. Growth since 1994 has been led by the automotive sector, followed by resource-based manufacturing (Quantec). The latter sector includes steel, aluminium, petrochemicals, paper and pulp and non-metallic minerals. Among other important sectors are metals beneficiation (more than 50% of the world’s ferrochrome is produced in South Africa), coke and refined petroleum products, paper and paper products, and information and communication technology. Steel and petroleum collectively make up about 45% of South Africa’s total manufacturing production capacity. The manufacturing sector accounted for 15.4% of GDP in 2012 (Stats SA), an increase from the previous year’s figure of 14.6%. The sector employs the thirdmost people, about 1.7-million, after financial services and retail. Production in the manufacturing sector staged a comeback in the month of April 2013, rising 7% on the previous year’s monthly figure. SOUTH AFRICAN BUSINESS 2014

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South Africa’s economic planners want more value to be added to the country’s raw materials. This will greatly boost employment and opportunities for small businesses further down the value chain. Three of South Africa’s most important manufacturing sectors (automotive, food and beverages and chemicals) are dealt with in separate sections of this book. The latest component of national government’s masterplan to attract investors to South Africa was unveiled in 2012 when the Department of Trade and Industry (dti) launched the Competitiveness Enhancement Programme. This programme targets medium-sized manufacturers and includes a cost-sharing grant of between 30% and 50% for investments up to R50-million and up to 80% on specific projects.

PHOTO: KALAGADI MANGANESE

The Support Programme for Industrial Innovation backs technology that helps manufacturers. • Hisense is going to make fridges and TVs in Atlantis. • Footwear is leading a textile-sector recovery. • Union Carriage and Wagon has a new owner.

OVERVIEW The 2010/11 – 2012/13 Industrial Policy Action Plan (IPAP 2) is expected to create nearly 2.5 million direct and indirect jobs over a decade. Minister of Trade and Industry Rob Davies has said that IPAP 2 will ‘diversify and grow exports, improve the trade balance, build longterm industrial capability, grow our domestic technology and catalyse skills development’. South Africa aims to diversify its economy away from an overreliance on the primary sector the provincial government, Wesgro, helped the foreign company (mining and agriculture) towards with permits and land acquisition. Some South African manufacturers are making an international a more varied economy in which increased capacity in existing impact. Steinhoff’s R1.6-billion purchase in 2011 of French commanufacturing sectors is cou- pany Conforama has made it the second-biggest furniture group pled to the growth of wholly new in the world. areas such as alternative energy, The share of manufactured products in South Africa’s export biofuels and digital television. basket has risen markedly in recent years: in 1990 they accounted The Support Programme for for just 36% of merchandise exports while in 2008 they were at Industrial Innovation (SPII), run 58%. The biggest part of this is the iron and steel subsector (15.5%), by the Industrial Development followed by vehicles and automotive parts (15.4%), and machinery Corporation (IDC) on behalf of and equipment (9.8%). the dti, promotes technology The main destinations for South Africa’s manufactured goods development in South African are Europe, Japan and the US. industry. SPII comprises three programmes: the Product Pro- Textile industry cess Development, Matching schemes and Partnership After years of being under pressure, the clothing, textiles, leather schemes. The type of funding and footwear subsector is showing signs of recovery. The Financial Mail linked the improvement to the realisation made available depends on the that Chinese goods are starting to become more expensive project size. The investment by Chinese and because of a new trend to reduce the lead time between electronics consumer goods orders and delivery (April 2012). Foschini Group’s purchase of giant Hisense in the Western Cape clothing manufacturer Prestige Clothing is intended to Cape in 2013 was an example achieve just this. Something like 2.5 jobs are created downstream for every of incentive-led investment. The company will invest R350-million job that exists in the textile sector (IDC). Credit provider Coface in the first phase of developing estimates that 194 828 were working in textiles, clothing and capacity to make refrigerators footwear in 2011, a similar figure to the year 2003, but markedly and television screens. On top of higher than the 2006 number (153 640). The recovery has been led by footwear, which grew by 6% national government incentives, the trade promotion agency of between 2005 and 2012.

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OVERVIEW The National Treasury has instructed all government departments Commuter Transport Engineerand state-owned-enterprises (SOEs) to purchase their uniforms and ing (CTE). CTE has facilities in Touws River and Durban. shoes from local manufacturers. Vanderbijlpark and VereenigThe KwaZulu-Natal Clothing and Textile Cluster is upbeat about the sector in the province, with the dti’s Competitive Improvement ing in southern Gauteng are synProgramme (CTCIP) cited as a reason. The Textile and Clothing onymous with steel production. Unit within the IDC has been active in the province, with interven- Flat iron is made at the plants tions at the Imraan Textile Mills just one of a range of successful of ArcelorMittal. There are 35 aluminium-processing compaprojects undertaken. Pietermaritzburg-based Eddels Shoes has made a come- nies in Gauteng. ArcelorMittal’s other plant is back of note. According to a Business Times profile in 2012, the purchase of 39% of the company by management and staff has at Newcastle in KwaZulu-Natal, paid off, with 385 staff now employed in making 2 700 leather which also has significant aluminium milling capacity. Downshoes every day. stream activities arising from the mining, sugar and forestry inLarge concerns dustries enhance the province’s manufacturing capacity. There Gauteng Province has a strong manufacturing sector, with almost are several chemical and plas10 000 firms employing about 600 000 people. Almost 60% of the tics concerns in the province country’s manufacturing takes place in the province. and KwaZulu-Natal has several The greatest concentration of manufacturing concerns is found textile concerns. Ferrochrome and stainless in the east of Gauteng, in the Ekurhuleni Metropolitan Municipality. Sectors such as metal products, machine-making and appliances steel are two of the most imare particularly strong. Household products manufacturer Unilever portant products of Mpumarepresents an example of the lighter industrial capacity of the East langa and Limpopo, and they Rand. Others include Procter & Gamble and Kimberly-Clark, which are both made in large quantities by a range of companies has a mill in Springs and another factory in Cape Town. Germiston has the country’s largest rail junction and many rail that are leaders in their fields. industries have developed in Ekurhuleni. Transnet Engineering’s These include Samancor, the complex in Germiston has received hundreds of millions of rands second-largest ferrochrome worth of investments in new machinery which has enabled it to producer in the world, Ervaz start meeting orders for complicated technical products such as Highveld, Columbus Steel and Thos Begbie Holdings. Xstrata’ ammonium wagons for chemical company Omnia. The nearby towns of Nigel and Boksburg host the workshops Alloys produces granulated and of Union Carriage and Wagon (UCW), DCD Rail and Lennings Rail lumpy ferrochrome. The Manganese Metal ComServices, a company in the manufacturing division of Aveng. UCW makes and repairs locomotives, trains and coaches. It was sold pany in Nelspruit is the largest by Murray & Roberts in 2013 to the CTE Consortium, including producer of pure electrolytic manganese metal in the world. Assmang has a ferrochrome ONLINE RESOURCES smelter and Sasol runs huge synthetic fuels and chemicals Industrial Development Corporation: www.idc.co.za processing plants. Sasol’s other Manufacturing Circle: www.manufacturingcircle.co.za manufacturing complex is in the National Department of Trade and Industry: www.dti.gov.za northern Free State Province. Support Programme for Industrial Innovation: www.spii.co.za

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OVERVIEW

Automotive Indian, Chinese and Italian companies are investing in the automotive industry.

Nissan’s Tidia assembly line in Rosslyn, Pretoria.

2007 Production 534 000 Sales Exports

676 000 171 000

2008

2009

2010

2011

563 000 374 000 472 000 532 000 533 000 395 000 492 000 532 000 284 000

175 000 239 000

All vehicle statistics. SOURCE: NAAMSA, FIGURES ROUNDED OFF.

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271 000

SECTOR INSIGHT Mercedes-Benz SA sold more than R4-billion in bonds in 2012. • FAW of China is to assemble trucks at the Coega IDZ. • Volkswagen’s new press shop is its greenest building yet. • The Joule electric car project has been abandoned. • Mercedes-Benz’s East London plant has won four quality awards in four years.

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ost of South Africa’s big Original Equipment Manufacturers (OEMs) have won contracts to produce new lines from their international parent companies. South Africa has the capacity to produce more than 500 000 vehicles per year but aims to increase this figure substantially within the next few years. The National Association of Automobile Manufacturers (NAAM) has set a target of more than a million vehicles by the year 2020.

OVERVIEW The automotive and automotive-parts industry is the single-biggest component of South Africa’s manufacturing sector, comprising 7% of GDP and 12% of exports. The automotive industry (including components) is responsible for significant proportions of GDP (7%) and exports (12%) (Financial Mail). Automotive exports in 2010 earned R69.5-billion. In the same year, 28 000 people were employed in the automotive sector with a further 71 600 working in the parts and tyre sectors. The automotive trade sector has an estimated 200 000 employees. Each of the OEMs also imports and sells other brands within its range. There are more than 1 700 models and varieties of cars, light commercial vehicles and trucks available from 57 brands in South Africa. Companies such as Associated Motor Holdings (AMH) and Amalgamated Automobile Distributors (AAD) import and sell a wide range of vehicles into the South African market. The fastest-growing segment of the new vehicles sales market is entry-level vehicles, and it is in this category that the imported cars have done particularly well. Import duties on new cars have been drastically reduced over the last two decades, with the result that where about 9% of cars on South African roads were imports in 1995, that figure is now closer to 70%.

Companies Volkswagen’s investment of R500-million in a new press shop forms part of a five-year R5-billion investment programme that the Uitenhage-based manufacturer has embarked on. Fifty new construction jobs will be created by the press shop project, which promises to be the company’s greenest-ever building. Electricity use at the Uitenhage plant was reduced by 42% between 2009 and 2010, with a further reduction of 13% in the next year. Water usage at the factory was also drastically reduced as part of the company’s Blue Factory drive Volkswagen won the award in 2011 as the Eastern Cape’s Exporter of the Year. In 2010, the company created 1 000 jobs and a further 600 were created by its supplier partners. The Uitenhage plant manufactures right-hand-drive Polos for the international market (a R30-billion contract valid for six years), CrossPolo and Polo Vivo (for the domestic market). The company has spent R100-million on training in the last three years.

ENTRIES AND EXITS • Italian company Iveco will start assembling trucks in 2014, in a joint venture with South African company Larimar. The foreign company is targeting sales of 5 000 by 2016 and intends assembling about 5 500 trucks per year in the first phase. • Nissan will be reintroducing the Datsun brand to South Africa. The first cars will be sold in 2014. • Chinese truck manufacturer First Automobile Works (FAW) will invest a total of R600-million in a truck-assembly plant at the Coega IDZ. The company hopes to use the plant, on which construction has begun, as a springboard for sales into the rest of Africa: a passenger vehicle-assembly line will start in 2015. • The largest foreign investor in South Africa, Tata Group, opened its first South African vehicle assembly plant in Pretoria in August 2011. The size of the investment is R110-million and the plant is able to assemble 3 650 trucks of various sizes in the Tata range in the course of a year. • The Chana brand has been discontinued in South Africa, after the sale of about 10 000 units. The company responsible for importing the vehicle was liquidated in 2012. • After the expenditure of R300-million on the development of an electric car, the Joule, the project was canned in 2012. The amount of money necessary to take the car to production was said to be too high. The car had tested well. • When Chevrolet’s first Spark drove onto the tarmac in March 2012, it marked the first passenger vehicle to be locally produced for 21 years by General Motors South Africa’s (GMSA).

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OVERVIEW BMW has been making motor cars in the Rosslyn area of due in 2015. Mercedes-Benz Pretoria since 1975. This was the first production facility for the SA sold more than R4-billion luxury marque outside of Germany and it has since gone on to in bonds in total in 2012, and make more than 300 000 of the BMW 3 Series. bids were received for more In 2009, BMW invested a further R2.2-billion in its Rosslyn plant, than twice the amount offered. bringing it up to date with the latest technology and allowing it to The most important export compete with every other BMW plant in the world for orders. model from the East London The plant’s capacity has been increased from 50 000 plant is the C-Class in the rightto 87 000 units per year, with about 80% of production hand drive for the local marbeing exported. ket and left-hand drive for the A key component of the drive to incentivise the automotive in- US market. dustry relates to local content. The National Department of Trade The East London plant had and Industry (dti) has set up an Automotive Investment Scheme a record year in 2012, turning to encourage investment. over more than R33-billion. Volkswagen is aiming for 72% local content on its new cars, Amazingly, the plant’s workbut the South African average is closer to 37%. Mercedes Benz ers managed to achieve a is trying to persuade foreign component manufacturers to set up fourth successive JD Power production facilities in East London to support its production of and Associates Initial Quality Study award. This award tracks the new C-Class model. OEMs were active in the bond market in 2012, with Daimler complaints among thousands South Africa securing a sale of R1.5-billion of debt, which will be of customers in the USA. Green considerations are now making an impact in the COMPANY LOCATION VEHICLES MADE manufacture of trucks. The Mercedes-Benz Actros 1851 BMW Rosslyn, Pretoria BMW 3 Series (E90) was named ‘Green Truck 2013’ Ford Motor Silverton, Pretoria Ford Ranger pick-up by two German magazines. Company SA Struandale, Port Puma diesel engine Three trucks in the Actros Elizabeth. stable made the top 10. General Port Elizabeth Corsa Utility. Isuzu KB. MAN Truck & Bus has an Motors SA Chevy Spark assembly plant in Pinetown MercedesEast London Mercedes C-Clas (KwaZulu-Natal) and a bus and Benz SA Mercedes commercial coach-manufacturing facility vehicles and buses. in Gauteng, while Bell EquipMitsubishi Triton pick-up. ment, with plants in Richards FUSO trucks. Assembly Bay (KwaZulu-Natal) and in the of Freightliner trucks US and Germany, is a world Nissan/ Rosslyn, Pretoria Tida/Livina leader in articulated dump Renault Nissan light commercial trucks, front-end loaders and vehicle other heavy equipment. Renault Sandero Bell Equipment is a Richards Bay company that makes Toyota SA Prospecton, Durban Corolla, Hilux and earth-moving equipment of Fortuner every sort and has grown into Volkswagen Uitenhage, Nelson Polo Vivo, New Polo and a respected global competitor. SA Mandela Metropole Cross Polo Powerstar trucks are now Original equipment manufacturers. being assembled in PietermaSOUTH AFRICAN BUSINESS 2014

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OVERVIEW ritzburg on a site formerly used by Super Group. Armoured car and tacticallight-vehicle manufacturer BAE Systems Land Systems OMC has plants in three Gauteng locations. It supplies Finland’s Defence Force with patrol vehicles. In 2012, Toyota exported 5 315 vehicles from its plant in Durban, more than one-quarter of the total exported by South Africa. The sale of 121 276 vehicles in the year kept Toyota top of the national table, a position it has held for more than three decades. A R70-million investment announced by Toyota in 2012 will see 90 new jobs created to work on a new production for the Quantum Ses’fikile minibus taxi. The Corolla car, the Hilux truck and the Fortuner SUV are manufactured at the company’s large Prospecton plant south of Durban. Toyota and Transnet Freight Rail (TFR) have signed an agreement that will keep new vehicles off the road – until new users on the Highveld need them. In a deal that will replace about 60 trucks on the N3, TFR has increased the number of cars it is transporting to Gauteng from 100 to 500 per week. Special rail wagons have been built. The Automotive Industry Development Centre (AIDC) is situated in Pretoria where it conducts research into key aspects of the industry. It assists the automotive sector in being

Chinese automotive giant FAW is currently constructing a truckassembly plant in the Eastern Cape.

more competitive globally through skills development and training, supplier development and improved supply chain management. Several companies offer training. An initiative in Boksburg by the Mercedes-Benz group sees school-leavers take on technical courses at St Anthony’s Education Centre. The course is certified by the relevant sector training authority, MerSETA.

ONLINE RESOURCES Automotive Industry Export Council: www.aiec.co.za Automotive Industry Development Centre: www.aidc.co.za Coega Industrial Development Zone: www.coega.co.za East London Industrial Development Zone: www.elidz.co.za National Association of Automobile Manufacturers of South Africa: www.naamsa.co.za National Association of Automotive Component and Allied Manufacturers: www.naacam.co.za Uitenhage Despatch Development Initiative: www.uddi.co.za

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INTERVIEW

Education available 24/7 People development is assigned a high level of focus at Volkswagen Group South Africa and forms an integral part of the company’s strategy, as Dr Lesley Lee explains.

What is the VWSA Learning Academy, and is it open to non-VW people?

Dr Lesley Lee

The Learning Academy is made up of five different academies Technical, National Sales, Leadership, Commercial and Production – and was established to provide the employees with the necessary skills. We also work very closely with merSETA in offering training programmes to businesses in the surrounding area as well as unemployed learners. What training methodology do you use at the Learning Academies? The academy uses various approaches to train employees, called blended learning. This includes instructor-led, online learning, onthe-job training, coaching and mentoring, and simulated exercises. Do you have relationships with educational institutions?

BIOGRAPHY Dr Lesley Lee is the Head of Training at Volkswagen Group South Africa. Having earned a diploma in education from Unisa, she took two more degrees (with Industrial Psychology as a major) at the University of KwaZulu-Natal. The title of her 2009 doctoral thesis was ‘Why change is so difficult to implement’. She has been involved in training in the automotive sector since 2000. Dr Lee won South Africa’s Most Influential Women in Business and Government Award in the Automotive Category in 2012. SOUTH AFRICAN BUSINESS 2014

VWSA supports the International Chair in Automotive Engineering at Nelson Mandela Bay University as well as train many learners from the Eastcape Midlands College in various fields, for example auto-electronics. Do you have any programmes that offer students employment? We have a highly successful graduate programme, which offers the graduates an opportunity of permanent employment at VWSA. We also offer students at universities of technology work experience so that they can complete their logbooks. What sets your learning apart of other OEMs (Original Equipment Manufacturers) In 2009, the Learning Academy created a Learner Management System (e-learning) with the use of technology which has made learning more accessible to all VWSA employees. As the initiative is geared towards self-improvement, the name ‘iCan’ emphasises the result of the process – an individual gaining a skill and knowledge. Employees can work at their own pace and monitor their own learning, thereby creating more of a pull-process than a pushprocess.

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Mercedes-Benz achieves great fuel efficiency with new hypoid axles Two Mercedes-Benz Actros 6x4 truck-tractors, fitted with the latest Mercedes-Benz RT440 hypoid rear axles as standard, have achieved significant fuel savings of more than 5% in test runs in the Eastern Cape.

efficient Mercedes-Benz 6x4 truck-tractors of all time. In fact, the fuel saving achieved on the 2644LS/33 was 5.67%, and 5.37% on the 2654LS/33.’ It is an ongoing quest in which Mercedes-Benz trucks, the first manufacturer to complete the launch of a full range of Euro VI-compliant trucks in Europe, continues to reduce fuel consumption and emissions in South Africa. However, technological advances by the MercedesBenz SA holding company Daimler AG in Europe cannot The hypoid rear axle, newly developed by Mercedes-Benz. always be implemented locally – a prime example being South uel economy in vehicles can be improved in many ways, Africa’s inadequate availability including increasing engine efficiency, reducing aerody- of cleaner fuel which prohibits namic drag, rolling friction and improving the fuel quality, the introduction of ‘greener’ and among other things. more fuel-efficient commercial Mercedes-Benz engineers have developed a new hypoid rear vehicles. axle for the current Actros 2644LS/33 and Actros 2654LS/33 6x4 Kobus van Zyl, vice-presitruck-tractors that were tested under everyday conditions along dent of MBSA commercial vehiMercedes-Benz South Africa’s (MBSA’s) well-known trial routes cles, expresses this frustration: ‘In the absence of the cleaner in the Eastern Cape. Mercedes-Benz trucks combined the OM 502LA engine with fuel that is required by our ad540 horsepower with the RT440 hypoid rear axle in the Actros vanced commercial vehicle 2654LS/33, which replaces the other air-suspended 2650LS/33. models already available elsewhere in the world, we can only It now has a 3.583 rear axle ratio. Christo Kleynhans, Mercedes-Benz trucks product manager, try to improve the performance says: ‘The new RT440 hypoid rear axles make for the most fuel- and total cost of ownership of

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FOCUS the current range of vehicles.’ Clinton Savage, divisional manager for Mercedes-Benz trucks, says: ‘Light, economical and reliable – the range of hypoid rear axles on these trucks offer not just reliable power transmission, but also allows the most economical driveline for any operation.’ Christo points out that South Africa is well known for its unique operating conditions A Mercedes-Benz Actros truck fitted with the hypoid rear axles. and its trucking environment, which is spread across fleets Clinton explains: ‘The consumption figures of the two new Actros ranging from first to third world, makes for a testing ground truck-tractors are even more impressive in view of the guidelines for suitable for a wide spectrum of the test. Unlike normal fuel-consumption tests, the comparative run applications. ‘Due to the out- was not carried out on a test circuit but under everyday conditions standing track record of the on busy roads and, at times, under adverse weather conditions.’ the Mercedes-Benz testing Kleynhans says that each vehicle completed 9 920 kilometres department, it was an obvious under some of the most extreme conditions on Eastern Cape roads. choice to call on their expertise The test route of 620 kilometres started in East London and then folto perform the comparative test lowed the N2 over the Kei River back onto the N6 and over Penhoek between the new hypoid axles Pass (1 884 metres above sea level and maximum gradient of and the existing hub reduction 10%) before returning to East London. The accumulated climbing height for the total route of 620km is an impressive 9 389 metres. rear axles,’ elaborates Christo. During the comparative drive, the test engineers monitored During the fuel-consumption testing in the Eastern every fuelling of diesel as well as the swapping of the drivers and Cape region, the vehicles not semitrailers. The aim of the latter was to rule out differences in only achieved the targeted driving styles and the rolling resistance of the semitrailers which fuel saving in comparison with might distort the fuel-consumption measurements. the predecessor models, but ‘As in normal long-distance operations, the drivers were allowed already surpassed all expec- to travel at a max speed of 80km/h and overrun to 87km/h on the tations early into the trial by downhills. All four vehicles were closely monitored on FleetBoard proving to be even more frugal to ensure the drivers followed the testing guidelines at all times. than anticipated. Physical fuel measurements and kilometre readings were also According to Christo, the verified against the FleetBoard results,’ Kobus concludes. drivers at the wheel of the trucks, with standard interlink trailers and gross combination weights CONTACT INFO of 49 000kg (Actros 2644LS/33) and 56 000kg (2654LS/33) reKey contact person: spectively, were not MercedesZamani Mbatha Benz driver trainers, but normal Tel: +27 12 673 6042 Cell: +27 71 424 2218 Fax: +27 12 677 1714 fleet drivers. Email: zamani.mbatha@daimler.com

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OVERVIEW

Automotive components Incubation parks are promoting start-ups in the components sector.

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everal provinces are making an effort to support exSECTOR INSIGHT isting businesses and promote new ventures in the automotive-components sector. Pasdec Automotive TechThe provincial government of North West and the nologies is adding capacity. Automotive Industry Development Cluster (AIDC) combined to • Schaeffler SA is a big help wire-harness manufacturer Pasdec Automotive Technologies exporter. open a new assembly line in Brits. Other big companies in the North West are Bosch, Bridgestone Toyota, 2.4-million) and General and Giflo Engineering. In Gauteng, the AIDC teamed up with government agencies Motors South Africa. US comand Ford and Nissan to establish incubation parks to encourage pany Corning makes substrate in Port Elizabeth. more black businesses to enter the sector. Johnson Matthey, Degussa Automotive parts made in South Africa are exported to more than 70 countries including Japan, Australia, the UK, the US, Huls, BASF Catalysts and Umicore Autocat SA are other Algeria, Zimbabwe and Nigeria. The large number of vehicle models produced is a complicat- companies. ing factor for the components sector: low volumes often mean Other export products inhigh prices, as an article in Financial Mail in 2012 pointed out. clude engines, silencers, exTwo Port Elizabeth companies were highlighted. Schaeffler SA hausts, radiators, wheels and exports much of its production to its international parent so that tyres, stitched leather car-seat it can achieve higher volumes. Shatterprufe supplies the major- covers, car radios and axles, ity of windscreens to the South African market (it made 349 000 especially for heavy trucks. windscreens in 2012), but there are 12 model ranges to serve. International company The success of South African catalytic converters has been GUD Filters has a big presspectacular. From a start-up industry in the mid-1990s, the ence in KwaZulu-Natal. The sector now supplies 14% of the world market and is worth at Behr Group has a factory and least R18-billion. its headquarters in Durban. Some of the major companies are Peugot, which makes Ramsay Engineering is supplythree-million converters per year and employs 350 people in ing cross-car beams for BMW Port Elizabeth, Ford (1.8-million), Cataler (a joint venture with and Ford. Apollo runs two large factories and makes about 50 000 Dunlop tyres every year. ONLINE RESOURCES Goodyear is based in UitenAutomotive Industry Development Centre: www.aidc.co.za hage and Firestone and ConAutomotive Industry Export Council: www.aiec.co.za tinental Tyre SA are both in Catalytic Converter Interest Group: www.sassda.co.za Port Elizabeth. Durban Automotive Cluster: www.dbnautocluster.org.za Gauteng Automotive Supplier Park: www.supplierpark.co.za National Association of Automotive Component and Allied Manufacturers: www.naacam.co.za

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OVERVIEW

Food and beverages The sector employs nearly a quarter-of-a-million people.

SECTOR INSIGHT The three biggest food companies had double-digit turnover increases from 2011 to 2012. • Steers is to be launched in Britain. • Distell has bought a Scottish distiller y for about R2.2-billion.

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he food and beverages sector is one of the most important components of South Africa’s manufacturing sector. Beverages account for just over 4% of all manufacturing sales while food is responsible for 13.5%. Within the sector, beverages accounts for 24% of sales. According to the FoodBev SETA, the sector was responsible for 17% of gross value added in the manufacturing sector in 2009 and employed 230 000 people. South Africa’s production of food and beverages has been rising steadily since 1990. The Centre of Excellence in Advanced Manufacturing at North West University strongly believes that extrusion technology (in which it is an expert) holds the answer to the establishment of small to medium-sized processing plants on farms or in rural ar-

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eas. One quarter of the 37% of national GDP that is generated by agri-industries derives from agri-processing. Gauteng, the Western Cape and KwaZulu-Natal are the leading provinces with respect to food and beverages manufacturing. About half of the companies operating in the sector are in Gauteng. Capespan and DoleSA are among the biggest exporters of fruit from the Cape. In KwaZulu-Natal, the food subsector makes up the biggest part of the manufacturing sector (84%). Tongaat Hulett makes treacles, caramels and related products for the food, baking and confectionary trade. In 2012, Illovo Sugar made 5 873 tons of its famous syrup at its Umzimkulu and Lower Illovo mills. Granor Passi processes 220 000 tons of fruit, one of Limpopo’s biggest food and SOUTH AFRICAN BUSINESS 2014

OVERVIEW beverages enterprises. Limpopo is also home to giant producer, Westfalia, which runs three large processing plants. Enterprise Foods has an emulsions and canning plant in Polokwane. The central and eastern parts of Limpopo, especially around Tzaneen, are well-suited to tea cultivation. Demand for rooibos is on the increase. Packaging company Joekels doubled its capacity recently, and consequently reported an increased turnover of R230-million in 2012/13. The marula fruit and the mopani worm are synonymous with Limpopo. Some South African brands have achieved global recognition. SABMiller is the world’s second-biggest brewer, with 200 brands in 75 countries. South African Breweries produces 25-million hectolitres per annum. The Distell group has an annual production capacity of 180-million litres and controls about 40% of South Africa’s premium and super-premium wine markets (Business Monitor International, BMI, 2012). Distell paid about R2.2billion for Burn Stewart Distillers Ltd, a Scottish company that has three single-malt distilleries among its assets. Whisky consumption is on the way up around the world and Distell expects to increase turnover, which reached R14-billion in 2012. Distell is ranked second in the world in terms of the production of ciders. It is also number six in brandy production. SOUTH AFRICAN BUSINESS 2014

Frost & Sullivan values the South African retail chocolate market at R5-billion with an expected growth rate of 10% per year for the next five years. Cadbury, Nestlé and Beacon account for 85% of sales.

Food franchises South Africa has mature fast-food and family-restaurant franchise sectors. Indigenous brand Spur is one of the best-loved family restaurants, and KFC is well-established with about 700 outlets. The Spur group has four brands and reached revenue of R503million in 2012. The McDonald’s master franchise was acquired by Shanduka in 2011 and the brand wants to have 235 shops in South Africa by 2016. Grand Parade Investments introduced Burger King to South Africa in 2013 and is expecting to do well by rolling out sites linked to its gaming venues. While hamburgers are popular in South Africa, chicken is a tremendously competitive sector, with brands such as Chicken Licken and Nando’s contesting different ends of the market. Nando’s, the Portuguese-chicken chain, has done very well internationally, and is a phenomenon in Britain. There are more than 250 stores in the UK, including 65 in London alone! The chain exhibits 3 000 pieces of South African art in its UK stores. Famous Brands has more than 1 700 shops in South Africa across many brands covering coffee shops, bakeries, pizza, Wimpy (the second largest-franchise operation in SA after KFC), and Fishaways (a joint venture with Ocean Basket). In 2013, Famous Brands announced that it intended entering the UK market with Steers (which has more than 500 outlets in South Africa). The group already has a small exposure to British consumers through Wimpy. Several South African companies are securing their own supply chains. Famous Brands, for example, now have a Famous Brands Coffee Company, a cheese factory at Coega in the Eastern Cape, and The Bread Basket.

Diverse companies A large number of food and beverage brands are owned and controlled by three big companies. All reported turnover increases of more than 10% in their 2012 annual reports. Tiger Brands is the industry leader with a 2012 turnover of R22.6-billion (R20.4-billion in 2011). In 2012, the group spent almost $200-million on the purchase of Dangote Flour Mills in

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OVERVIEW Nigeria. The company also bought one of South Africa’s faClover launched five new vourite brands, Mrs Ball’s Chutney, for R475-million. Libstar products in the second half subsidiary Dickon Hall will continue to make the product. of 2012, the result of a major Pioneer Foods (2012 turnover, R18.6-billion) is strong in restructuring project called grain (Sasko), cereals (Bokomo) and beverages (Ceres, Liq- Cielo Blu. Several factory uifruit, Pepsi). operations have been moved AVI (2012 turnover: R8.2-billion) has brands such as Five closer to the farms that proRoses in its Beverage division, Willards chips and Bakers and duce milk. Clover has also Pyotts biscuits in its Biscuits and Snacks division, as well as teamed up with Nestlé in a well-known fish company I&J. Unlike the other two groups, AVI bottled-water venture called also has a Fashion Brands division, although food and drink Clover Waters. Parmalat has a large account for about 75% of revenue. Food Corp has six subdivisions in its Consumer Brands cheese factory in the Western Cape while Dairybelle has two division: Grocery, Milling, Baking, Beverage, Pie and Fishing. South Africa’s four top poultry producers control 70% of cheese factories in the Eastthe market. The biggest companies are Astral (Country Fair, ern Cape. Nestlé and Unilever have Earlybird Farm) and Rainbow (Rainbow, Farmer Brown, Rainbow Food Solutions) with Country Bird and Sovereign Foods production facilities all over accounting for about 20% of the market between them. In 2013, the country and both are inlocal producers and meat importers became involved in heated vesting heavily in new capacity. Nestlé is spending R505debates about the impact and value of imported chicken. Nearly 60% of South Africa’s processed potatoes (435 000 million on increasing its South tons per annum) get made into chips. There are 650 commercial African production capacity, with most of this occurring in potato farmers in South Africa. Soft drinks and dairy are strong subsectors. Datamonitor Gauteng. Unilever intended spending reports that in 2009 these markets generated $1.5-billion and R1-billion on its South African $2.6-billion respectively. Dairy company Clover listed on the JSE in 2011, with the operations in 2013. This inintention of moving more strongly into higher-value items in the cluded a new home-care plant in Boksburg, following the fast-moving consumer goods industry. completion of a new savoury dry food plant near Durban. ONLINE RESOURCES Kraft Foods employs 2 400 Agricultural Research Council: www.arc.agric.za people at two plants in South Association for Food Scientists, Technologists: www.saafost.org.za Africa (Johannesburg and Port Centre of Excellence in Advanced Manufacturing, NWU: Elizabeth) and in three neighwww.cfam.co.za bouring countries. Brands Consumer Goods Council of South Africa: www.cgcsa.co.za include Chappies, Cadbury FoodBev SETA: www.foodbev.co.za and Halls. National Agricultural Marketing Council: www.namc.co.za South Africans buy their National Chamber of Milling: www.grainmilling.org.za food and beverages from a South African Meat Industry Company: www.samic.co.za small number of large retail Potatoes South Africa: www.potatoes.co.za chains which compete agRed Meat Producers’ Organisation: www.rpo.co.za gressively across most market South African National Consumers’ Union: www.sancu.co.za segments. South African Wine Industry Information and Systems: www.sawis.co.za

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OVERVIEW

Chemicals and pharmaceuticals Sasol and Aspen are world leaders in their fields.

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SECTOR INSIGHT Aspen’s revenue rose 20% to R9-billion in 2012 • Omnia’s R1.4-billion nitric acid plant came on stream in 2012. • Sasol Polymers’ new ethylene purification plant will produce 48 000 tons per year. • Aspen make about 10 billion tablets every year. ChemCity is a 100% owned subsidiary of Sasol Chemical Industries. The focus is on fine and specialised-chemical and

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he coal-to-oil plant at Sasol in the northern Free State was established in the 1960s and its success led to the development of many related chemical and fertiliser production facilities. Sasol One, the Sasolburg plant, now produces chemicals while Sasol’s two other plants in Mpumalanga make fuel. The chemical industry as a whole contributes 5% to national gross domestic product. About 60% of earnings are derived from exports. The newest investment by Sasol in the Free State town will be a new ethylene purification unit at Sasol Polymers plant at a cost of R1.9-billion. At full capacity (which is expected to be achieved in 2015), the plant will produce 48 000 tons per year. Omnia and Kynoch (fertiliser), Karbochem (rubber and carbochemical), Safripol (plastics) and Afrox are among the other major companies operating out of Sasolburg. Omnia’s R1.4-billion nitric acid plant was inaugurated in May 2012, increasing the group’s capacity in this commodity by 40%.

PHOTO: SASOL

OVERVIEW related sectors of the chemical industry. It acts as an incubator for black empowerment and small business development. Access is provided to infrastructure, utilities and a broad range of professional services. At the Sasol complex in Secunda (Mpumalanga), a range of products for fertilisers, explosives and polymers is manufactured. Sasol Solvents operates 12 plants. Sasol Nitro opened a new limestone ammonium nitrate (LAN) plant in Secunda in October 2012. The investment by Sasol Nitro, a division of Sasol Chemical Industries, forms part of the SA Calcium Carbide used to be Sentrachem but now is group’s capital expenditure of R18.8-billion in South Africa in controlled by Argentine group Andina. Bayer and Karbochem jointly run a chrome chemical plant in Newcastle. the 2012 financial year. German chemicals group Lanxess has built a R400-million Kynoch makes fertiliser in Middelburg. The Fluor Training carbon-dioxide concentration unit at its existing plant in NewCentre in Secunda is accred- castle. The main plant needs carbon dioxide to produce soited by the Chemical Indus- dium dichromate. The company makes tanning raw materials tries Education and Training at Merebank in Durban and rubber chemicals in Isithebe north Authority (CHIETA). of Durban. South Africa has the largThe by-products of the sugar and forestry processing plants est reserves of fluorspar in of KwaZulu-Natal benefit the chemicals sector. the world. A new company, Illovo Sugar manufactures downstream products such furSepFluor, announced in 2012 fural, furfuryl, alcohol, diacetyl and ethyl alcohol. AECI is one of South Africa’s biggest groups in the sector. that it would be mining the mineral and making hydrogen The two principal divisions are AEL Mining Services (with a large fluoride, an important ele- factory site at Modderfontein near Johannesburg) and Chemiment in the manufacture of cal Services, which has 20 separate companies. Senmin is the group’s mining chemicals company. fluoro-chemicals. Newcastle is a chemical Chemical Services has several companies operating plants manufacturing hub. The big around South Africa. Among them are: steelworks of Arcelor Mittal • Plastimid, Cape Town, the country’s largest producer of compounder and engineering polymers produce by-products such as ammonium sulphate and large • Chemical Initiatives, KwaZulu-Natal, elemental-nutrient sulphur companies such as Karbochem, Bayer, African Amines • SA Paper Chemicals, KwaZulu-Natal and SA Calcium Carbide also Sasol Chemical Industries makes about 60% of South Africa’s operate in the area. polypropylene. Safripol, which is also based in Sasolburg, is

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OVERVIEW South Africa’s only other producer. More than half of Sasol’s production of 625 000 tons is exported. Foskor is the country’s only vertically integrated phosphates producer. It has a mining operation in Limpopo province (at Phalaborwa) from which it sends raw materials to its acids division in Richards Bay in KwaZulu-Natal. Sulphuric acid, phosphoric acid and phosphate-based granular fertilisers are manufactured there. The Chemical and Allied Industries Association (CAIA) has 162 member companies. CAIA works to improve efficiency, productivity and competitiveness in the chemical sector. This includes looking at how South Africa can start producing higher-value chemicals and how the country can improve its export profile. Another area of research is how to turn mineral feedstock into useful inorganic chemicals.

Pharmaceuticals Pharmaceuticals are manufactured primarily in Gauteng and the Eastern Cape. Although there are more than 200 pharmaceutical firms in the country, large companies tend to dominate the field. Aspen Pharmacare (with about 34% of the market), Adcock Ingram (25%) and Cipla Medpro are among the biggest companies. Aspen SA, Africa’s biggest manufacturer of generic drugs, has manufacturing capacity in the Eastern Cape and Gauteng. The Port Elizabeth facility produces about 10 billion tablets per year. The company has a market capitalisation of R80-billion and successful operations in South America and Australia. British firm GlaxoSmithKline is a 19% shareholder in Aspen. The group headquarters of Aspen are located in La Lucia Ridge, north of Durban. In 2012, Aspen’s revenue rose 20% to R9-billion. Aspen made a hostile bid for Adcock Ingram in 2013 but this was rebuffed. The large manufacturing facility of Cipla Medpro South Africa in Durban will see volumes rise markedly on the awarding of a

ONLINE RESOURCES Sasol: www.sasol.com Chemical and Allied Industries’ Association: www.caia.co.za Chemical industries’ information: www.chemissa.co.za ChemCity: www.chemcity.co.za National Association of Pharmaceutical Manufacturers: www.napm.co.za Pharmacy Industry Association of South Africa: www.piasa.co.za Plastics SA: www.plasticsinfo.co.za South African Chemical Institute: www.saci.co.za South African Institution of Chemical Engineers: www.saiche.co.za

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R1.4-billion government drug contract. This contract has also attracted the attention of Indiabased Cipla, which in February 2013 offered R4.6-billion for the South African company. Two other big international names active in Gauteng are Merck, which has a 55 000-square-metre plant at Modderfontein (Johannesburg), and Pfizer SA, which has a laboratory in Sandton. The private sector accounts for 80% of pharmaceuticalindustry sales by value and 20% by volume, while the public sector accounts for 80% by volume and 20% by value. According to legislation, pharmaceutical manufacturers are compelled to introduce singleexit pricing for all drugs, while pharmacists must charge a fixed dispensing fee. Bodene, a subsidiary of large European company Fresenius Kabi, employs 450 staff at its Port Elizabeth plant manufacturing medicines that are administered intravenously. Johnson & Johnson manufactures pharmaceuticals in Cape Town. German group Schwabe Pharmaceuticals has signed an agreement with the Rharhabe Kingdom to share the benefits of a pelargonium root that is to be used as a cough remedy. The Rharhabe is a Xhosaspeaking community in the Eastern Cape.

OVERVIEW

Engineering Transnet’s R300-billion spending plan is boosting the sector.

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outh Africa has several companies that offer a wide range of engineering disciplines and are active internationally. National government’s ambitious infrastructure plans are sure to provide a lot of work in the sector, despite concerns about delays. Transnet is set to spend R300-billion across its several divisions, all of which will call on the skills of Transnet Engineering (TE). By way of example, TE is building 90 new locomotives at its Koedoespoort facility in Pretoria. TE’s new business unit, Port Equipment Maintenance, is a signal of the company’s wider focus. There are 13 000 TE employees at 132 depots and six factories around South Africa. There has been considerable interest in the South African engineering sector from foreign companies. In 2011, major company Bateman Engineering was sold to Italian group Tenova for R1.2-billion. Aecom South Africa was created with the acquisition of BKS by New York-listed Aecom in 2012. BKS was active in building stadiums and water projects. WorleyParsons is one of the biggest international engineering companies. In 2013, the Australian-listed company paid R900-million for parts of a Basil Read subsidiary that specialises in projects, TWP Holdings. Another Australian company, SMEC, merged with Vela VKE in 2012. Local firm SSI Engineers & Environmental Consultants

ONLINE RESOURCES Consulting Engineers South Africa: www.cesa.co.za Engineering Council of South Africa: www.ecsa.co.za South African Association of Consulting Engineers: www.saace.co.za South African Federation of Civil Engineering Contractors: www.safcec.org.za South African Institute for Industrial Engineering: www.saiie.co.za Southern African Institution of Civil Engineering: www.civils.org.za Southern African Institution of Chemical Engineers: www.saiche.co.za Steel and Engineering Industries Federation of South Africa: www.seifsa.co.a

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SECTOR INSIGHT Power stations and dams are generating multi-billion-rand contracts. • Aecom’s recent investment is an example of international interest in South Africa. became Royal HaskoningDHV when those two international companies merged in 2012. The largest vertically integrated companies are able to cope with large and complex projects. These include Murray & Roberts, WBHO, WSP Group Africa, Group Five, Grinaker-LTA, Basil Read and Stefanutti Stocks. WBHO and Murray & Roberts are among local companies pursuing foreign projects. Aveng’s work in Australia helped it achieve a two-year order book of R42-billion in May 2013. Growth sectors include energy (with two massive new power plants under construction), water (large dams and supply infrastructure) and public housing. Basil Read is building a R1.8-billion housing project north-west of Johannesburg, Malibongwe Ridge. South Africa has one engineer to every 3 166 citizens. SOUTH AFRICAN BUSINESS 2014

PROFILE

Engineering Council of South Africa The organisation aims to fulfil its mandate of regulating the engineering profession in South Africa.

The Engineering Council of South Africa (ECSA) is a statutory body established in terms of the Engineering Profession Act (EPA), 46 of 2000. ECSA’s primary role is the regulation of the engineering profession in terms of this Act. Its core functions are the accreditation of engineering programmes, registration of persons as professionals in specified categories and the regulation of the practice of registered persons. Consequently, ECSA is the only body in South Africa that can register engineering professionals or bestow the use of engineering titles, such as Pr Eng, Pr Tech Eng, Pr Techni Eng, Pr Cert Eng, on persons who have met the requisite professional registration criteria. out the necessary functions for the socioeconomic growth in the country. ECSA achieves its mission through: • Setting and monitoring of standards to international norms • Certifying and ensuring the competence of individuals through registration ECSA’s vision is to ensure that South Africa • Ensuring quality of engineering education through accreditation enjoys all the benefits of a strong, competent, growing, sustainable and representative engi- • Regulating professional conduct neering profession, able to provide all the exper- • Growing the profession in quantity and quality in partnership with stakeholders tise necessary for the socio-economic needs of the country and to exert a positive influence in South Africa.

ECSA is under the leadership of Cyril Gamede, Pr Eng, President and Adrian Peters, Pr Eng, Vice President.

Vision

CONTACT INFO

Mission ECSA’s mission is to create circumstances where society is confident that the South African engineering profession is able to carry SOUTH AFRICAN BUSINESS 2014

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Tel: +27 11 607 9500 Fax: +27 11 607 9556 Email: engineer@ecsa.co.za Website: www.ecsa.co.za

PROFILE

Transnet Engineering Transnet Engineering, (formerly known as Transnet Rail Engineering) an operating division of Transnet SOC Limited, is the backbone of South Africa’s railway industry.

Transnet Engineering (TE) has nine productfocused businesses, 132 depots, six factories and about 13 000 employees countrywide. The organisation is dedicated to inservice maintenance, repair, upgrade, conversion and manufacture of freight wagons, mainline and suburban coaches, diesel and electric locomotives as well as wheels, rotating machines, rolling stock equipment, port maintenance, castings, auxiliary equipment and services.

An African focus While the focus of TE’s activities is mainly on the South African market, investment in research and development to service the specific requirements of Africa and the rest of the world has led to an ever-expanding range of rolling stock products and a comprehensive list of satisfied customers. The proximity of the coastal plants to major ports facilitates the movement of products to and from overseas markets. The organisation’s competency is based on its sound knowledge of the technologies embedded in its products, supported by ongoing research and development and exceptional product application experience.

TE’s business units Transnet Engineering has four customer-facing businesses, with five internal-support operational businesses:

 Locomotive business: does heavy refurbishment, general overhauls, upgrades, manufacSOUTH AFRICAN BUSINESS 2014

turing, maintenance and assembly of various types of locomotives. Dedicated staff operating from depots and factories close to the main rail freight corridors maintain a fleet of 2 200 locomotives per annum, ensuring high levels of reliability and availability. During upgrades, tractive effort is increased through the addition of microprocessor-wheel-slip control – enhancing fleet-revenue-generation potential. Wagon business: provides heavy maintenance, general overhauls, modifications, upgrades, maintenance and new builds. TE is an original equipment manufacturer (OEM) of wagons. The wagon business is a major supplier of new wagons to the heavy-haul coal and iron-ore fleets with tare ratios as high as 5:1. Other wagon types supplied are cement, car carriers, intermodal and fuel tankers.

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PROFILE Coach business: performs heavy maintenance of coaches, general overhauls, modifications and upgrades. Modernisation of South Africa’s large DC suburban fleet is one of the business’ main markets, and its modular upgrade designs extend the economic lifespan of the sets. During upgrades, passenger and driver ergonomics are enhanced wherever possible, while safety and operating performance are increased. Designs include dining, lounge and kitchen cars, sleeper and sitter coaches and power units. Ports business: the ports business is not new, as TE has been maintaining and manufacturing straddle carriers for Transnet Port Terminals (TPT) for years. 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.

comprise wheel re-profiling, machining of axles, centres and tyres, fitting of wheel bearings, driving gears and motor suspension tubes, as well as centre re-tyreing, journal burnishing and crack detection through ultra-sonic testing from factories and depots on the main cargo routes. Foundry: TE has two foundries in Pretoria and Bloemfontein. They manufacture castings to support the refurbishment programme of TE. Auxiliary business: offers both products and services for rail cargo as well as ISO container refurbishing and wagon cleaning. It supplies newly manufactured, repaired and washed tarpaulins and accessories, product diversity extends to cargo canopies, scotches, lashing chains, road trailer tarpaulins, boat covers, tents and other PVC material products, trimming and cargo protection equipment.

The internal support operational businesses are:

Committed to the future

Rotating machines: refurbishes and maintains all the rotating components that are found in rolling With its greatest assets being its people and stock, such as traction motors. This business their skills, Transnet Engineering is committed to is now involved in the assembly of new traction many initiatives, such as the talent management motors for the 43 class locomotives. All traction programme, relationship building, performance motors are qualified and load-tested to full capac- management, transformation, a comprehensive ity on back-to-back motor test facilities. Electrical lifestyle well-being programme, as well as engiwork includes repair and manufacture of motor neering bursaries and apprenticeship training field coils, complete rebuilding, rewinding and to name but a few. repair of armatures and the repair and calibration The organisation takes seriously its moral and of instrumentation. legal duty to ensure the health and safety of Rolling stock equipment: manufactures parts and all employees. This obligation also extends to sub-assemblies for locomotives, coaches and clients, the communities in which it operates and wagons. Processes involve laser cutting, bend- to the protection of the environment. ing, welding, forging and fabrication of carbon and stainless steels. It also repairs and upgrades components to extend the lifespan of rolling stock. This includes refurbishing of brake valves and cylCONTACT INFO inders, couplers, pantographs and the overhaul of diesel engines, turbo-chargers and compressors. Tel: +27 12 391 1304 Fax: +27 12 391 1371 Wheel business: the assembly of new wheels Email: sales@transnet.net as well as the refurbishment and maintenance Website: www.transnet.net of the existing fleet of wheels. The main activities

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Transnet Engineering New name builds on established track record

Transnet Rail Engineering has changed its name to Transnet Engineering to better reflect the increased scope of its activities. Previously a division that focused on engineering and maintenance work relating to rail transport, the organisation is now equipped to also handle the assembly and maintenance of ports equipment following the expansion of the division’s businesses. Transnet Engineering currently has nine businesses. The future of Transnet Engineering is built on its proud history of servicing the engineering needs of the transport industry both within and beyond the borders of South Africa.

www.transnet.net

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Coach Business

Locomotive Business

Wagons Business

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Wheels Business

Ports Business

Rotating Machines Business

Foundry Business

Rolling Stock Business

Auxiliary Business

INTERVIEW

A passion for people and performance Centre Manager Sugen Govender outlines the factors behind the success of the Durban plant of Transnet Engineering.

When did you start with Transnet? I started in 1990, some 23 years ago, in this very plant as an apprentice welder.

Sugen Govender

And has it helped you in your current position to have started from the floor? Having worked your way up allows you to understand the operation, the people and the culture. You can bridge the gap between management and labour much better. I believe the workman respects you more if you came from the ranks than if you come from outside. It allows you to have more of a rapport with people. When last did you wield a welding torch? Last week! I went to one of the technical colleges. We are sponsoring some welding machines there so we were just messing around, but it was nice.

BIOGRAPHY Sugen Govender was a tutor at the School of Engineering, a training manager, and human resources manager for Durban. Promotion followed to the position of national manager of the School of Engineering. Sugen led the Koedoespoort Coach Business before being appointed as general manager of the same business. Soon after, the post of centre manager of Durban became his. Sugen then left coaches to become general manager of Business and Product Development, as well as centre manager. SOUTH AFRICAN BUSINESS 2014

Did Transnet support you in your studies? Mostly I was supported by Transnet. I did Industrial Psychology through UNISA. During my six years as an artisan on ship and crane repair, I studied human resources. Then I came back here to Transnet Engineering on promotion as technical tutor in the School of Engineering in about 1997. Soon after I was appointed as training manager of the Durban Centre. From training manager, I was promoted to in be charge of the School of Engineering nationally. After Unisa I did a BBA through the University of Wales. We were making sure the centre had accreditation, that it was ISO 9001 registered, we upgraded, and we managed that transition and drove all the changes to align with the new Skills Development Act. How did you come to work on the operations side? The chief executive said I should consider a career in operations; I could probably be adding more value, as opposed to staying in Support Services. I was given the opportunity to move to the Coach Business at Koedoespoort as the local business manager. So I chose – for the learning – to move from a national to a local position.

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INTERVIEW to do what I have done over the years. What work is being done by Business and Product Development?

Sugen Govender with head librarian Zanele Makhatini in Transnet Engineering’s library.

What motivates you? Passion for people and passion for performance. What are some of the achievements of Transnet Engineering’s Durban plant? We made the most new wagons last year for several clients, including Sasol, Botswana, and Omnia. Are Transnet workers aware of the Market Demand Strategy that is so much a part of the company’s future plans? The workers are enthusiastic. We pick it up in information sessions. People say, ‘Why is this not happening? We need it to happen in terms of the MDS, we won’t be able to deliver unless this is in place.’ What information sessions are these? Every business has one information session per month. Also, four times per year we get everyone from the region into a tent. Anyone can ask the CEO or anyone else on the executive committee any question they like. How do you feel about Transnet?

In Business Development, the focus is on business expansion, integration, innovation, processing and systems. In Product Development, there are principal engineers in charge of each of the nine business divisions, and with them we are looking to improve and introduce new products. We also need to look out for products that have reached their sell-by dates.

What resources are devoted to research? There is a new Research, Development and Innovation unit. I spend three days per week in Pretoria. We have signed a memorandum of understanding with the Council for Scientific and Industrial Research (CSIR). Transnet will employ 250 researchers and lease 5 000m² at the CSIR. Transnet has also signed an MOU with the Innovation Hub. What is the next big thing? In the past you competed on price, then on product, then on technology. The next big thing is that we have to be competitive in all three. We need people who can be innovative; we can’t have the ‘staatsamptenaar’ mentality. Specifically, we are developing an African locomotive. Designed and built locally, the first one will be in Durban. It is a flagship project for Durban. The design in is progress, and we hope to have it rolling off the production line in December 2013. The TransAfrica Locomotive has been given the name Mzansi by the Minister of Public Enterprises Malusi Gigaba.

I am extremely loyal, because I grew up in this company. It took me from school; it has given me the skills, the knowledge, the competencies

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FOCUS

Enabling the economy through training Improvement and training are part of the DNA of the Durban plant of Transnet Engineering.

Trainee Balindile Makonya is hard at work at Transnet’s School of Engineering in Durban.

M

en in blue overalls playing outdoor chess is not what most people would associate with Transnet, and certainly not with the old ‘Railways and Harbours’. Nor a man with a bright yellow and red safety vest swot-

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ting up in the company library during lunch break, but these are among the strongest images that I took away from a recent visit to the Durban plant of Transnet Engineering, writes South African Business senior writer John Young. The chess that I saw being played next to the canteen, and the diligent book reading, told me that this was a place where improvement is part of the DNA of the place, where study is promoted and rewarded. The gleaming new machinery was impressive, and the highly skilled staff working on the machines also made a big impression, but for me the signs of educational improvement were even more noteworthy. The plant’s School of Engineering is training a new generation of artisans. If my day had started with an interview with Centre Manager Sugen Govender, I wouldn’t have been so surprised because he is very obviously a man who believes in life-long learning. Sugen worked his way from artisan to national manager of several divisions of Transnet, and he is now at the head of the company’s vital Business

FOCUS

An example of the ‘Adopt-aSpot’ initiative.

and Product Development unit. Says Sugen, ‘I have a passion for people from a spiritual point of view; to help people realise their full potential. You mustn’t become selfish because you are sitting somewhere of significance... you must be a catalyst for them to move up.’ Amanda Khumalo, communications officer for the region, is a typical example of staff moving upwards. After a spell as a secretary elsewhere and armed with a marketing diploma from Varsity College, Amanda worked as personal assistant to the centre manager for two years before starting work in communications. ‘It is rewarding being able to meet people and communicate company strategy to people and back to head office,’ says Amanda. ‘I am doing my honours in marketing now, and Transnet is supporting me,’ she contin-

ues. She believes there are a lot of opportunities for women in the company. Workshop meeting areas (Letsemas) are used across the company for detailed report-backs and planning sessions every day on issues such as safety, targets and housekeeping. These teams are given scores in a range of categories, and they are rewarded accordingly. Each team is asked to Adopt-a-Spot that they then beautify. Sugen goes on regular walkabouts and it’s not always about positive reinforcement. ‘We also take pictures and fine businesses if it’s dirty. Just this morning, we went around the plant looking for attention to detail, where the grass is not cut. If someone visits, they will soon get an idea: Are they going south, or are they on top of their game?’ Safety is always a big concern in a large industrial enterprise with dangerous machinery. Sugen doesn’t believe that there is such a thing as a ‘good’ safety record. He prefers ‘satisfactory’. ‘What you want,’ he says, ‘is no injuries, no near misses. You want to strive for zero. We do have that in some areas, but I want a much better safety culture among the workmen of this plant. The guys on the floor sometimes don’t understand, because they do it all the time. It becomes a routine, and then you drop your guard and you get hurt.’ But over and above the targets and the safety concerns, there is a palpable sense that workers at this plant are treated as much more than wage units. Sugen is rightly proud of a smart gym and the canteen that stands in an attractive and shady garden in the middle of the complex. The library is free (‘But if you lose a book you pay for it’) and the gym members’ fees make it self-sustainable. Sugen sees these things as ‘integral parts of a big industrial facility such as this’. Free Internet is offered to workers to study or do research. ‘We need to create a culture of learning,’ says the man who himself did two degrees part-time. The emphasis on learning at Transnet Engineering Durban is part of a broader philosophy. As Sugen puts it, ‘There is a great shortage of skills in the country. Everything relates to how we relate to the individual. And then we need to relate as a team that is enabling the organisation. And in that way we are ultimately enabling the economy.’

READ MORE Visit: www.transnet.net 317

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OVERVIEW

Water South Africa is investing heavily in water infrastructure.

SECTOR INSIGHT The Sustainable Utilisation of Water Resources in Developing Countries Conference was held in Cape Town in 2013. • In 2012, 153 municipalities were audited in the Blue Drop Awards. • The De Hoop Dam wall will be 85 metres high. • National government has a R4.3-billion fund to help municipalities deliver water. South Africa water companies aim to provide clean water for all.

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n the 1950s, the Orange River Project delivered water from the Orange River to citrus farmers in the far-away Eastern Cape. In a water-scarce country such as South Africa, this kind of transfer scheme is the norm. The country has several good river systems but they are not in exactly the right places. So 80% of Gauteng Province’s water is imported, mostly from the Vaal River, which is supplemented by complex transfers from the Thukela River and the Lesotho Highlands Water Project. The Vaal basin, which serves the most populated and industrialised part of the country including Johannesburg, receives water from seven inter-basin transfer schemes. The second phase of the giant Lesotho Highlands Water Project is scheduled to start delivering water in 2019. Purification, desalination, water-leakage management and waste-water treatment are some of the issues facing South Africans, and experienced international companies are showing an interest in the country. American companies with a presence in South Africa are the Hach Corporation, Harvard Corporation, Nalco and the Adel Wiggins Group. The National Department of Water Affairs says South Africa needs to spend R573-billion on water infrastructure and SOUTH AFRICAN BUSINESS 2014

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demand management in the years to 2022.

Existing systems South Africa’s most central province, the Free State, is bound on all sides by water, the Vaal River to the north and west, the Orange River to the south and the mountainous, river-rich kingdom of Lesotho to the east. The Gariep Dam on the southern edge of the province is South Africa’s biggest dam. The agricultural sector benefits through irrigation from the flow of the Vaal River. The VaalHarts irrigation system is one of the most productive in the country, covering about 44 000 hectares with a variety of crops.

OVERVIEW The Vaal Dam and the Bloemhof Dam are important sources of controlled water AGRICULTURE, 62% from the Vaal River. In the south DOMESTIC, URBAN 23% of the province, the WelbeDOMESTIC, RURAL 4% dacht Dam delivers water to the MINING, 2.5% main metropolitan area of Mangaung, including Bloemfontein, INDUSTRY, 10% while a system of canals connects the Vanderkloof Dam on the Orange River with the Riet and Modder river systems. The Water use in South Africa. Vanderkloof Dam controls wa- SOURCE: DEPARTMENT OF WATER AFFAIRS ter flow and allows for better The TCTA has also overseen progress on the Komati Water farming along the banks of the river, and the Gariep Dam has Supply Augmentation Project, the raising of the wall of the Clanwilliam Dam and the Groot Letaba River Water Development Project. hydroelectric capacity. An inter-basin transfer The Mooi-Mgeni Transfer Scheme will provide an extra 60-million scheme takes 40-million cu- m³ per year in KwaZulu-Natal. The Eastern Cape’s R20-billion bic metres per annum from the Uzimvubu Dam project will provide much-needed water and hydro Caledon River basin and sends electric power. The country has recently invested in two major water projects. it to the Modder River basin for The Berg River Water Project supplies water to the Cape metroindustrial and domestic use. pole. Inaugurated in March 2009, the project took 14 years from conception to completion. New schemes The latest mega-project is the Olifants River Water Resources Development Project (ORWRDP) which will supply water to more Recent transfer projects include than a million people living on the Nebo Plateau and Mokopane, the Western Aqueduct project Polokwane and Lebowakgomo. The construction of the De Hoop (valued at R864-million) and the Dam is a major component of the masterplan. The total cost of the associated Northern Aqueduct project is estimated at R20-billion. Augmentation Project, (Durban, The De Hoop Dam wall will be 85 metres high and contain around Umgeni Water) and the Mokolo 1.1-million m³ of concrete that will be compacted down to 700 000m³. Crocodile Augme ntation Cement for the project is being supplied by PPC from its facilities Project, which is designed to in Limpopo (Dwaalboom) and Pretoria. supply water to Medupi, the new power station at Lephalale in Limpopo Province. A pump Improving quality station and a 45km pipeline between the site of the power The introduction by the National Department of Water Affairs and station and the Mokolo Dam the Water Institute of South Africa (WISA) of the Blue and Green is being built by the Trans- Drop Awards has been very successful. Now it is possible to track Caledon Tunnel Authority, the how well the nation’s municipalities are doing in terms of clean body mandated by the National water provision. In order to win a Drop Award (Blue for water quality, Green for Department of Water Affairs to fund and implement bulk water waste treatment), water systems have to score 95% or higher. Many municipalities use water boards such as Umgeni Water, Rand Water infrastructure.

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OVERVIEW The Water Institute of South Africa has 1 800 members from a variety of types of organisations active in the water environment. WISA does research and keeps its members up-to-date on the latest developments in water technology. It also runs conferences such as the Sustainable Utilization of Water Resources in Developing Countries Conference, held in 2013 in Investing in water infrastructure is key for a water-scarce country. Cape Town. As in most areas of life in or Sedibeng Water. In 2012, a total of 931 water systems in 153 South Africa, environmental municipalities were audited. Standards are improving every year. standards are set and mainThe DWA has allocated R4.3-billion to helping municipalities tained by the South African deliver water. The Interim Water Supply Programme will concentrate Bureau of Standards (SABS). The SABS develops and proon 23 district municipalities. The awards are run by WISA with the help of consulting engineer- motes South African National ing group Aecom SA. Aecom, which was previously BKS Group, Standards (SANS) which can assists municipalities in preparing for the audit and has a wide range be downloaded from the of capabilities within the water-treatment sector, including bulk and SABS website. reticulation water and sewage pipelines. The Water Chemistry LaboraAecom SA is also involved in another major issue that is affecting tory of the Council for Scientific South African water quality – acid mine drainage. Old mines around and Industrial Research (CSIR) Johannesburg and in Mpumalanga are leaking acidic water and tests water samples according to the relevant SANS. engineers are working on solutions. Water storage is becoming The Rhodes University Institute for Water Research is one of several institutions in the country that conducts research into water an increasingly important issue quality. A lot of the institute’s funding comes with project-related in the country, with many private grants from the national Water Research Commission, some stu- homes and businesses investdents receive funding from the Carnegie Foundation and Unilever ing in tanks, such as those prosponsors the Unilever Centre for Environmental Water Quality, a vided by SBS Water Systems. The Nedbank Group is unit within the institute. investing R9-million in the Water Balance Programme, ONLINE RESOURCES designed to improve the ability of water-catchment Council for Scientific and Industrial Research: www.csir.co.za areas to provide water. National Department of Water Affairs: www.dwa.gov.za Some 3.3-million kilolitres South African Association of Water Utilities: www.saawu.co.za of water is trapped by alien South African Bureau of Standards: www.sabs.co.za species in the country, which South African Water Research Commission: www.wrc.org.za is the equivalent of 7% of the Trans-Caledon Tunnel Authority: www.tcta.co.za country’s water run-off. The Water Institute of Southern Africa: www.wisa.org.za programme is an initiative of the WWF South Africa: www.wwf.org.za World Wildlife Foundation SA. SOUTH AFRICAN BUSINESS 2014

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PROFILE

Sedibeng Water Sedibeng Water is one of the largest water utilities in South Africa.

Since its founding in 1979, Sedibeng Water progressively earned its reputation as a capacitated and reliable supplier of water and sanitation services to two-million people in its operational area, namely the Free State, North West and Northern Cape provinces. The organisation currently services an operational area spanning more than 86 000 square kilometres, making Sedibeng Water one of the largest water utilities in the country in terms of the geographical area that is being served. on the plants at Balkfontein, Virginia, Welkom, Sedibeng Water’s corporate head office is lo- Hennenman, Allanridge, Virginia and Ventersdorp. cated at Balkfontein, just outside Bothaville in the Free State. The organisation employs nearly Through the years, the Professional Management 500 people in three regions. Infrastructure in- Review (PMR) awarded Sedibeng Water the cludes 10 plants, 62 pump stations, 337 res- Diamond Arrow Award in the Northern Cape (2011) ervoirs and a pipeline network of more than and Free State (2012 and 2013) provinces. The 2 000 kilometres. organisation has also received the Silver Arrow Award during 2011 in both the North West and During the 2011/12 financial year, Sedibeng Free State provinces. Furthermore, the Golden Water’s annual turnover has increased to Arrow Award was presented to Sedibeng Water R570.5-million, while assets have grown to in 2012 and 2013 for its significant contribution to R771.6-million. Capital expenditure on refurbish- economic growth in the Northern Cape Province. ment and maintenance amounted to R111.5million, which constitutes an increase of 159% In conclusion, Sedibeng Water is one of the when compared to the previous financial year. fastest-growing water utilities in South Africa, This financial performance and sound corporate playing an increasingly important role in the wagovernance confirm that Sedibeng Water is a ter services sector in the country. The organisaviable and sustainable organisation, well posi- tion is focused on adding value from source to end usage. In doing so, Sedibeng Water is driven tioned for future growth and self-sustainment. its commitment to quality water services through A SANAS-accredited central laboratory is also sit- quality processes. uated at Balkfontein, where about 123 000 chemical and bacteriological analyses are performed CONTACT INFO annually. In the Free State region, Sedibeng Water and the Matjhabeng Local Municipality jointly reTel: +27 56 515 0200 Fax: +27 56 515 0369 ceived the Provincial Top Performer and Blue Drop Email: ceosec@sedibengwater.co.za Status Awards at the WISA Conference in May Website: www.sedibengwater.co.za 2012 in Cape Town. This honour was bestowed

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PROFILE

Trans-Caledon Tunnel Authority (TCTA) TCTA’s future direction is guided by the vision to be the leader in the sustainable supply of water in the Southern African region.

VRESAP pump station is an emergency water transfer scheme to abstract water from the Vaal Dam.

Values

Trans-Caledon Tunnel Authority (TCTA) is a stateowned entity, established in terms of Government Trans-Caledon Tunnel Authority’s corporate values Notice No 2631 in Government Gazette No underscore excellence, integrity and respect for one another, while promoting unity of purpose and 10545. growth of the collective.

Mission TCTA is a specialised liability management body. Its mission is to finance and implement bulk raw water infrastructure: • Within an acceptable risk framework • In the most cost-effective manner • In order to benefit water consumers

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TCTA conducts its business with professionalism, uncompromising integrity and diligence. It is committed to comply with internationally recognised standards of managerial and technical excellence. It cherishes transparent and consultative relationships with all its stakeholders. TCTA proactively aligns itself to meet the challenges of a dynamic environment. It pledges

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PROFILE itself to uphold the principles of accountability and sound governance in executing all duties.

Strengths •

• •

Established track record in preparation, funding and project management of major water infrastructure projects. Demonstrated ability to optimise development impact (sustainable job creation, social responsibility initiatives, skills development in construction and tourism, BBBEE initiatives). Recognition of exceptional TCTA contributes to job creation. bulk water management implementation through receipt of five merit awards for engineering • Komati Water Scheme Augmentation Project (Mpumalanga) and environmental excellence. Excellent risk governance and risk manage- • Acid Mine Drainage Project (Gauteng) • Metsi Bophelo Borehole Project (across six ment philosophy. Funding philosophy with focus on tariffing provinces) principles that ensure affordability to water users and payment of debt within agreed TCTA is also expected to play a key role in the repayment period of 20 years. funding of the Lesotho Highlands Water Project Risk allocation on internationally accepted Phase 2, the implementation of which was anproject finance principles throughout legal nounced in a joint statement issued in August agreements. 2011 by the governments of Lesotho and the Implicit government guarantees which en- Republic of South Africa. sure recourse and optimal security funders.

From an initial single project, TCTA now manages a portfolio of nine. These are: • Lesotho Highlands Water Project Phase 1 • Berg Water Project (Western Cape) • Vaal River Eastern Subsystem Augmentation Project (Mpumalanga) • Mooi-Mgeni Transfer Scheme Phase 2 (KZN Midlands) • Olifants River Water Resource Development Project Phase 2 (Limpopo) • Mokolo-Crocodile (West) Water Augmentation Project (Limpopo)

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CONTACT INFO Physical address: Ground Floor, Stinkhout Wing, Tuinhof Building, 265 West Street, Centurion Postal address: PO Box 10335, Centurion 0046 Tel: +27 12 683 1200 Fax: +27 12 683 1361 Email: info@tcta.co.za Website: tcta.coz.za

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5174 - South African Business Publication - 2013

PROFILE

Water Institute of Southern Africa Promoting professional excellence in the water sector.

Opportunities

The Water Institute of Southern Africa (WISA) is a voluntary non-profit association comprising Individuals that are active in the water sector over 3 400 water-sector professionals, com- are invited to become part of this dynamic aspanies, government departments, educational sociation by applying for WISA membership. and research institutions, other associations, Application forms can be downloaded from municipalities and water utilities as members. the WISA website or by contacting the WISA office on +27 11 805 3537 for more information. WISA’s vision is to promote professional excel- WISA has two websites to assist in promoting its lence in the water sector through building exper- aims in the water sector: www.wisa.org.za and tise, sharing knowledge and improving quality of www.ewisa.co.za. life by providing platforms for the promotion, integration and application of scientific, engineering Advertising opportunities exist in the WISA and management knowledge in the water-cycle websites and publications as follows: through its newsletters, magazines, events and websites. WISA has one international and seven • WISA Website and Newsletter: Melissa Wheal at WISA on +27 11 805 3537 or email regional branches as well as 14 technical divisions. WISA is well known in the water sector admin@wisa.org.za for convening some of the largest and most • eWISA website Wilma Grebe at eWISA on +27 21 887 7161 or email wgrebe@wamsys. important conferences for the sector such as the co.za WISA Conferences that are held every two years. • Water & Sanitation Africa magazine: Ave Delport at 3SMedia on +27 11 467 6224 or +27 83 302 1342 WISA members enjoy many benefits centred on capacity-building and knowledge-sharing, CONTACT INFO including: Key contact people: • Attendance at WISA events at discounted Melissa Wheal, Admin and Systems Manager rates Evelyn Ramphomane, Membership and • Networking opportunities at events Exhibitions Officer • Opportunity to earn CPD points at the Tel: +27 11 805 3537 Fax: +27 11 315 1258 majority of the WISA events Email: admin@wisa.org.za • Free copies of the Water & Sanitation Africa Physical address: 1st Floor, 5 Constantia Park, magazine as well as access to other WISA 546 16th Road, Midrand publications Postal address: PO Box 6011, Halfway • Opportunities to contribute to the developHouse 1685 ment of guidelines, regulations and laws Website: www.wisa.org.za

Benefits

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You SET a record with our cement. That’s hard to break. P P C w o u l d l i ke t o c o n g r a t u l a t e Co n s t r u c t i o n W e s t o n t h e i r i n s p i r i n g a n d r e c o r d - b r e a k i n g w o r k o n t h e n e a r- c o m p l e t i o n o f t h e D e H o o p D a m . Their vision and our strength has cemented yet another par tner ship.

OVERVIEW

Transport South Africa is spending heavily on transport infrastructure.

SECTOR INSIGHT The Harrismith Logistics Hub will become an inland port. • Acsa is operating in India and Brazil.

TRANSPORTING MINERALS Transnet Freight Rail is beefing up the commodity corridors that ferry raw materials. Amounts include: • R26-billion on improving the manganese line to Port Elizabeth from the Northern Cape. Transnet aims to deliver 11.7-million tons of manganese by 2018, substantially increased from the 4.8-million tons delivered in 2011. • R29-billion to upgrade the iron-ore line that links Sishen (also in the Northern Cape) with the Port of Saldanha in the Western Cape. • As much as R50-billion could be spent on the connection between existing coal fields in Mpumalanga (and new ones in western Limpopo) with the Richards Bay Coal Terminal.

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Rail At a grain symposium in 2012, Transnet’s agricultural freight executive claimed that turnaround times had improved from 40 days in May 2010 to 20 days in November 2011. Where eight-million tons of agricultural

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conomic Development Minister Ebrahim Patel has announced 17 major infrastructure projects in a variety of sectors. Transport is among the most important of these. Transnet is the state-owned transport and logistics company responsible for most of South Africa’s rail network, rail freight, ports, port terminals and South Africa’s fuel and gas pipelines. It will spend R300-billion across its five divisions in the period to 2019. In terms of the national Public Transport Strategy, priority rail corridors and bus rapid transit (BRT) systems are being introduced in all of the country’s major cities.

The Maputo Development Corridor is Africa’s most advanced spatial development initiative. Run by the Maputo Development Corridor Logistics Initiative (MCLI), the corridor runs from just outside Pretoria in Gauteng, to Maputo in Mozambique. The Harrismith Logistics Hub (HLH) on the N3 is intended as an inland port that can handle cargo containers and shift cargo from road to rail, reducing congestion and costs. The volume of cargo passing through Harrismith is expected to increase by 25% per annum for the next seven years. South Africa’s ports are covered in the maritime section of this publication.

OVERVIEW product were carried by rail in on passenger rail transport. The Gautrain speed-train project 1992, the 2010 figure was just cost about R25-billion. three million tons. Grain tonnages carried by Transnet Freight Rail (TFR) will almost double in Road the years to 2019. The assets of TFR’s new National government has spent ever-increasing amounts of money Container and Automotive on road allocations over the last five years, increasing at a rate Business (CAB) unit have been of 16% every year. The South African National Roads Agency Limited (Sanral) has ring-fenced. The CAB has been created because of the impor- successfully raised billions of rands through bonds and capital tance of the Johannesburg- markets in order to finance, manage and maintain the national road Durban line. network of 16 750km. Plans to pay for the Gauteng Freeway ImTFR has a 20 953km net- provement Project through tolling have run into political obstacles. work – about 80% of African South Africa has 325 019 heavy-load vehicles and the road infrastructure – with the poten- freight industry employs 65 000 drivers. tial to transport huge volumes. Transnet Freight Rail intends to increase the amount of freight Air it carries from 200-million tons Airports Company South Africa (Acsa) owns and operates the to 300-million tons. A new line to carry coal from country’s 10 biggest airports. The company also manages airports the inland to the coast through in India and Brazil. A 10-year spending plan announced in 2013 Swaziland is being investigated. allocated R50-billion to expansion and R20-billion to maintenance. OR Tambo International in Johannesburg caters for more than Some private companies such as Rail Road Logistics 17-million passengers every year, receives more than 105 000 arGrindrod and Sheltam oper- riving air-traffic movements and employs 18 000 people. ate rail systems in the goldThe Cape Town International Airport has been expanded and producing areas of the Free improved. King Shaka International Airport (KSIA) opened north of Durban State and Gauteng. In the period 2005-2010 in 2010. Emirates is the international carrier to KSIA. South Africa spent R40-billion Several airports have been mooted as possible regional freight nodes: Wonderboom Airport in Pretoria, Polokwane Airport in The South African Ministry of Limpopo and Mafikeng Airport in North West Province. Transport has several agencies and businesses reporting to ONLINE RESOURCES it: Air Traffic and Navigation Services Company, Airports Airports Company South Africa: www.acsa.co.za Company of South Africa Air Traffic and Navigation Services: www.atns.co.za (Acsa), National Transport Civil Aviation Authority: www.caa.co.za Information System, Road Gautrain Rapid Rail Link: www.gautrain.co.za Accident Fund, South African Maputo Corridor Logistics Initiative: www.mcli.co.za Civil Aviation Authority, South Passenger Rail Agency of South Africa: www.prasa.com African Maritime Safety Railroad Association of South Africa: www.rra.co.za Authority (SAMSA) and the South African National Roads Agency Limited: www.sanral.co.za South African National Roads South African Rail Commuter Corporation Ltd: www.sarcc.co.za Agency Limited (Sanral). Transnet: www.transnet.net

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PROVIDING TRAVEL AND BUSINESS HUBS

Airports Company South Africa was formed in 1993 as a public company and, although majority owned by the South African Government, is legally and financially autonomous and operates under commercial law. As well as providing world-class, secure infrastructure for airlines to transport people and goods, Airports Company South Africa extends its responsibilities to include the promotion of tourism, the facilitation of economic growth and job creation, as well as protection of the environment. Over the years, the company has transformed a fragmented, infrastructural parastatal into a focused, customer driven, efficient and commercially successful business, whose airports have become critical success factors to Brand South Africa. The company currently manages a network of nine airport in South Africa, including the three main international gateways of O.R. Tambo International, Cape Town International and King Shaka International Airports. In 2012, nearly 35 million passengers and more than 550 000 air traffic movements were facilitated. This incorporates a broad spread of airport volumes, ranging from 18 million passengers at O.R. Tambo International, to 1,311 million at Port Elizabeth International and 55 000 at Upington International Airport. A major, R17 billion infrastructure programme was completed in 2010, in time for South Africa’s hosting of the 2010 FIFA World Cup. Airports Company South Africa achieved international recognition for its ability to provide and manage world-class facilities, proudly showcased at the World Cup. One of the major projects in the expansion programme was the construction and commissioning of a greenfield, seven million passengers per annum airport in Durban, proudly named King Shaka International Airport. The airport currently processes just under five million passengers per annum.

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Experience gained through managing airports of different capacities has resulted in the development of a broad pool of skills, prompting the company to seek business opportunities outside South Africa. This has led to Airports Company South Africa successfully partnering in two consortiums to manage and operate Mumbai International Airport in India (from 2006) and Guarulhos International in São Paulo, Brazil, the largest international airport in Latin America (from 2012). Each of these airports processes approximately 30 million passengers per annum. The company’s nine airports possess unrivalled connectivity for organisations wishing to do business in South Africa, the SADC region, sub-Saharan Africa and the BRICS nations. They provide the best network of linkages and ports in the SADC region and is positioned at the forefront of developing an economic union that has such enormous potential. Economic growth, job creation and business opportunities are increasingly dependent on the success of today’s ‘aerotropolis’ and ‘aero city’ concepts: development nodes based around airports. Consequently, the substantial development property available at the airport’s precincts present increasingly attractive investment options, whether for general or for specialised requirements. www.airports.co.za

FOCUS

Milestones in our history Airports Company South Africa celebrates its 20th year and reflects on past achievements.

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irports Company South Africa’s history has seen a number of key events over the years that have helped to shape the progressive, award-winning company we know today. Here are just a few of those key milestones: 1993 - Airports Company South Africa is formed as a public company. 1998 - Airports Company South Africa is partially privatised when a 25.4 percent shareholding is sold to private sector shareholders. The transaction values Airports Company South Africa at around R4 billion. 2003 - Airports Company South Africa’s Cape Town International Airport celebrates the official opening of its new R120 million international departures terminal. 2005 - Airports Company South Africa’s 20 percent foreign shareholding is sold to the Public Investment Corporation, a local asset management company. 2006 - Airports Company South Africa and a consortium comprising the Indian company GVK and South African listed company Bidvest, win a concession to manage Chhatrapati Shivaji International Airport in Mumbai, India. 2007 - Airports Company South Africa signs a R6.8 billion contract with the Ilembe Consortium to design and construct a new airport at La Mercy, north of Durban. 2009 - Airports Company South Africa announces the opening of the R500 million multi-storey parking facilities at O.R. Tambo International Airport. 2010 - Airports Company South Africa’s O.R. Tambo International Airport welcomes the world’s largest civil passenger aircraft, Air France-KLM’s A380. ºº Airports Company South Africa celebrates the opening of King Shaka International Airport in Durban. ºº Airports Company South Africa contributes to the successful delivery of the 2010 FIFA World Cup, handling thousands of international and domestic fans through its airport network. 2011 - Airports Company South Africa welcomes the largest Boeing 747-8 Freighter jet aircraft at O.R. Tambo International

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Airport: its first landing in Africa. ºº A irpor ts Company South Africa’s O.R. Tambo International Airport welcomes Lufthansa as it names one of its A380s ‘Johannesburg’. 2012 - Airports Company South Africa signs a landmark 20-year concession agreement in Brazil to manage Guarulhos International Airport. ºº A irpor ts Company South Africa wins a record number of awards for its operations and facilities, including Best Airport in Africa by Airports Council International. ºº A irpor ts Company South Africa wins National Disability Champion Award at the National Disability Awards. 2013 – Airports Company South Africa celebrates its 20th anniversary on 23 July 2013.

READ MORE Visit: www.airports.co.za

FROM STATE TO STATE-OF-THE-ART

A proud history has already become a part of Airports Company South Africa’s heritage, driven by the many challenges that have been met since it started its journey in July 1993. Twenty years later, the company has clearly demonstrated how a fragmented organisation can be successfully transformed into the world-class airport business it is today. The aviation industry is complex and has to continually react and adapt to the ever-changing global market place. To succeed within this challenging environment, Airports Company South Africa has proved how the combination of progressive planning, remarkable leadership and passionate people can deliver excellence. Managing and operating airports to comply with the multiplicity of standards and requirements set by local and international regulatory bodies is not a simple undertaking. It requires close collaboration, support, perseverance and passion between every stakeholder involved. Together with airlines, ground handlers, government agencies, retailers and employees, Airports Company South Africa remains committed to ensuring that travellers enjoy a safe and secure travel experience. Through benchmarking and continually seeking ways to improve service delivery, the numerous awards and accolades presented to Airports Company South Africa are an undisputed testament to its successful delivery of service excellence. Furthermore, complacency does not exist in the company’s vocabulary; rather, the business builds on its experience by keeping its momentum to consistently improve and excel. After all, the expectation is to deliver world-class service. The passion with which the business is run fuels Airports Company South Africa to strive for continued improvement. The company has been pressing on boldly for twenty years, thinking ahead and exploring ways through which it may continue its evolution into a globally recognised airport business. It is this desire that spurs it on to deliver another decade as a leader in airport management and operation. Airports Company South Africa: Forward thinking, embracing change

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PROFILE

TD Shipping & Clearing cc TD Shipping & Clearing in Cape Town is a family-run business that was established in 1996.

The business was established by Tony Moodley, been able to establish a network of local and who started his career in Durban more than international agents, allowing it to provide its 35 years ago with Watson Shipping. He then clients with a more personalised and efficient moved to Cape Town in 1973 to open an of- level of service delivery. fice for Schenker & Co. SA. After this company closed offices in Cape Town, Tony continued TD Shipping is committed to maintaining its high working in the forwarding business for another levels of customer service, while also being ininternational company until he decided to start volved in aiding social-upliftment programmes his own company. TD Shipping currently has a in disadvantaged communities in and around Cape Town. Among the most recent highlights staff contingency of five. was the clearing of equipment from the USA for The main focus of the business is the import and Groote Schuur Hospital’s oncology unit. This export of non-perishable cargo via its worldwide highly specialised equipment formed part of a ‘breakthrough therapy’ in the treatment of cancer. network. Among the larger exporters handled by TD Shipping is a manufacturer of exclusive outdoor furniture which exports to the USA, Europe, South America, Australia and the Middle East. TD Shipping also exports wines internationally for many of the well-known estates in the Western Cape.

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Regular importers include one of the largest international beverage companies, a lighting company specialising in supplying light fittings to the ever-growing South African wholesale and retail industry, as well as one of the largest manufacturers and suppliers of packaging services to the food industry in South Africa. Almost all of TD Shipping’s clients have been with the company since it started, which is a clear indication of the loyalty and trust that the company’s customers place in it. It is also interesting to note that many new clients result from referrals from existing clients. TD Shipping has

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Air-, sea- and road-freight (imports and exports) Customs clearing and forwarding Customs registration Bond store and warehousing Freight insurance

CONTACT INFO Key contact people Tony Moodley, Managing Director Joy Moodley, Operations Director Tel: +27 21 421 3606/7/9 Fax: +27 21 421 3608 Email: tony@tdshipping.co.za Email: joy@tdshipping.co.za Physical address: Suite 1060, 10th Floor, Picbel Parkade, 58 Strand Street, Cape Town 8000 Postal address: PO Box 6719, Roggebaai 8012

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OVERVIEW

Maritime The maritime sector holds great promise.

SECTOR INSIGHT A first national maritime conference was held in 2012. • The African offshore oil industry will spend $220billion on servicing to 2017. • Transnet Engineering has a new port equipment maintenance division. With oil and gas finds growing in volume exponentially off the west coast of Africa and off Mozambique, there is a huge opportunity for South Africans to grow big businesses in the rig-repair and service industry. But South African operators will have to coordinate their actions if they are to be successEast London has the only river port in South Africa. ful. As Western Cape MEC for Economic Development and he front cover of the May/June 2012 issue of the maga- Tourism Alan Winde says, ‘In zine Maritime Review Africa asked the question, ‘Should the next five years the oil inSouth Africa be moving towards establishing a dedicated dustry around Africa will spend, just on servicing, about $220Maritime Ministry?’ The answer provided by the South African Maritime Industry billion’. He argues that all of the Conference in July was a clear yes. Put together by the South ports of South Africa should African Maritime Safety Authority (SAMSA), the event had sev- cooperate in trying to attract eral sub-conferences. Their titles provide an insight into the vast the business of the 130 rigs that potential of this under-developed sector: pass the country’s ports. • Shipping, ports and logistics The chief executive of the • Marine manufacturing South African Oil and Gas Alli• Fishing and aquaculture ance (SAOGA), Warwick Blyth, • Marine tourism and leisure told Reuters that South Africa • Oil and gas. is starting to realise its potenThe simple fact is that South Africa is not gaining as much as it tial in this market. Cape Town should from the maritime sector. One example is the absence of and Saldanha’s facilities were a merchant fleet and another is the scarcity of ship-repair facilities. ‘exceptionally busy’, according SOUTH AFRICAN BUSINESS 2014

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OVERVIEW to Blyth, who noted that each Bay, Ngqura and East London are in Industrial of the three or four repair jobs Development Zones (IDZs) which are dealt with in a being done simultaneously was separate article. What used to be Transnet (Rail) Engineering has become worth about R200-million. The same article estimated Transnet Engineering because of the addition of a new business, that the ship and oil-rig repair Port Equipment Maintenance. The other commercial ports are Durban, Port Elizabeth, Mossel industry could triple its annual revenue to R3-billion by 2015 Bay, Cape Town and Saldanha. Transnet Port Terminals owns and operates 16 cargo terminals and create 3 000 jobs. Boatbuilding is a small industry, including bulk, container, automotive and multi-purpose terminals. Huge amounts of money are being spent on ports and termialthough the Western Cape makes the second-most cata- nals. Container terminals alone will receive R9.8-billion in addimarans in the world. tional funding in the period to 2019 and all of the country’s ports DCD Marine operates Cape are receiving upgrades that are increasing their capacity. Town’s rig-repair facility, the Durban’s container terminal has a combined capacity of largest ship-repair yard in Af- 3.6- million TEUs (twenty-foot equivalent unit) and the port also rica. There are supplementary deals with vehicles (mostly from Toyota), agricultural products yards in Simon’s Town and and break-bulk. It is the busiest port in Africa. Saldanha. Port Elizabeth has automotive-handling capacity, a container Large logistics operators terminal and a break-bulk terminal. The port currently handles like Bertling already run so- large quantities of manganese but this is due to move to Ngqura. phisticated operations at South Cape Town is receiving R5.4-billion in upgrades which will alAfrica’s major ports. JSE-list- low for a container capacity of 1.4-million TEU. Nearly two-million ed Grindrod runs prominent tons of agricultural produce is handled every year. The Port of Saldanha is the deepest natural port in Southern businesses such as Unicorn Shipping and Grindrod Freight Africa and can accommodate vessels up to a draft of 21.5 metres. Services. Saldanha exports most of South Africa’s iron ore. Training for the maritime The Port of Mossel Bay services the fishing and petroleum sector is provided by five ma- industries. The port is the only one in South Africa to operate two rine academies in KwaZulu- offshore mooring terminals, and is an oil-rig supply boat base. Natal and the Western Cape. Simon’s Town’s Lawhill Maritime Centre has won awards. Transnet runs a School of Port ONLINE RESOURCES Operations. Lawhill Maritime Centre: www.lawhillmaritimecentre.co.za SAMSA says there are Marine Industry Association South Africa: www.miasa.co.za 341 maritime careers, rangNational Department of Transport: www.transport.gov.za ing from marine surveyor to National Sea Rescue Institute: www.nsri.org.za oceanographer. Ports and Ships: www.ports.co.za South African Boatbuilders Export Council: www.sabbex.co.za South African Maritime Safety Authority: www.samsa.org.za Ports and terminals South African Oil and Gas Alliance: www.saoga.org.za Transnet National Ports Authority: www.transnet.net South Africa’s port system Transnet Port Equipment Maintenance: www.transnet.net/ is controlled by Transnet Divisions/RailEngg.aspx National Por ts Authority. Transnet Port Terminals: www.transnet.net The por ts of Richards

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INTERVIEW

Full speed ahead National Business Manager of Transnet’s Ports Business Bongani Madonsela explains the various functions of Ports Equipment Maintenance, and his role in its operations.

Where were you educated?

Bongani Madonsela

I did my final school studies in Ponego Secondary School in the East Rand Township called Katlehong. Upon matriculating, I started my tertiary education with Port Elizabeth Technikon (Nelson Mandela Metropolitan University) in 1993 where I studied for a National Diploma in Mechanical Engineering and proceeded to pursue B-Tech Degree in the same field of study. I later registered with Unisa and studied the Fundamental Management Development Programme, and recently completed my Master’s in Business Administration. When and where did your journey with Transnet begin? Trace your career to the present moment.

BIOGRAPHY Bongani Madonsela began working for Transnet in 2005, when he was employed as a product development manager at the Uitenhage plant. Various promotions followed, as he took up the roles of operations manager, local business manager, regional operations manager and the leader of national business: ports. Bongani is now the National Business Manager of Transnet’s Ports Business. SOUTH AFRICAN BUSINESS 2014

My journey with Transnet commenced at the Uitenhage plant in 2005, when I was employed as the product development manager responsible for the bill of material, design office and prototype build section. This was followed by acting as an operations manager responsible for the bogie repair and maintenance line, paint shop and sand-blasting section. In 2006, I was selected to join and take part in the Vulindlela task team that comprised McKenzie consultants and various stakeholders from operations in the coal line (Richards Bay). The Vulindlela project was initiated by Maria Ramos to optimise and streamline operations through the application of lean manufacturing and other related processes and practices. In November 2006, I was appointed as a local business manager for the coal line within the Eastern Region, responsible for the maintenance of both coal and general freight bulk wagons and the inspection and preparation of all in-service trains. My area of responsibility was between Richards Bay, Golela and Ermelo. I was promoted to the regional operations manager position in January 2010, and was responsible for the entire Eastern Region, which handles 57% of Transnet Freight Rail’s traffic. In 2012, I was promoted to lead and run the National Business: Ports, which was in existence under the Coach Business. I assumed national business manager responsibilities with the objective of growing the business and providing engineering services to Transnet Port Terminals and Transnet National Ports Authority.

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INTERVIEW What gives you the most satisfaction in your work? I get the most satisfaction in my work when I have managed to make my clients happy through our service provided or the product we have delivered. Despite this, I am in a management position and the core of my business activities is largely within my mechanical engineering field Bays 25 and 26 are the hubs of Transnet Engineering’s Ports and there is no greater pleasEquipment Maintenance operations. ure than to continue expanding my engineering knowledge Do you also have any national responsi- as we (the Ports Business) face new challenges bilities within Transnet Engineering? and victories. Job creation is another element Yes, as a national business manager I have that provides satisfaction and the thought of dual national responsibilities, with half being realising that you have changed someone’s life inward looking and the other being outward for the better is appealing. looking. My inward-looking responsibilities include: to provide engineering services to our What is the core business of Ports Equipinternal operating divisions in both Capex and ment Maintenence? Opex programmes, to improve and promote in- The core business of Ports Business is the sourcing objectives by identifying core mainte- provision of: nance activities and requirements and aligning the • Engineering services, which include: °° Fabrication business to deliver quality and reliable services. °° Mechanical and electrical repairs To achieve this, Transnet Engineering is geared up to provide capital to facilitate infrastructure °° Maintenance °° Refurbishment development, procure required resources, support training and development of existing and • New build productions: °° Design and testing new employees through skill enhancement and enrichment, and so on. °° Finite element analysis My outward-looking responsibilities include: °° Manufacturing to support the Market Demand Strategy by ensuring that jobs are created through various Where does PEM operate? channels that are either directly or indirectly The Ports Business is currently operating in linked with TE. This includes the expansion Transnet Durban centre where new build proof the Ports Business operations within the grammes are running. A small team was esnational ports and harbours, and provision of tablished in Richards Bay TPT where repair of services and products to other African coun- various equipment is performed. The refurbishtries. We also aim to increase the use of local ment of straddle carriers was carried out in the content by partnering with original equipment Durban Container Terminal due to the size and manufacturers in support of skills transfer and available facilities within the ports. cross pollination.

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INTERVIEW

Engineering a plan for success National Engineering Manager Collin Moopanar gives insights into operations at Transnet Engineering’s Port Maintenance business. Where were you educated?

Collin Moopanar

I completed a BSc and MSc at the University of KwaZulu-Natal in 1997 and 2001 respectively. I completed my Master of Business Leadership (MBL) at Unisa’s School of Business Leadership in 2009. When and where did your journey with Transnet begin? Trace your career to the present moment.

BIOGRAPHY Collin Moopanar joined Transnet in 2003 on the coal line as the engineer at the AC traction depot. Collin was promoted to Centre Engineering Manager at the Transwerk Durban workshop in 2006. After a stint in the private sector, he returned to Transnet Engineering in 2009 as the National Engineering Manager for Coaches. The position eventually evolved to incorporate Port Engineering which required key focus in order to grow and support the Port Maintenance business. SOUTH AFRICAN BUSINESS 2014

I started my career on the coal line as a depot engineer at the Insezi Richards Bay AC Locomotive Depot in 2003. After three years, I was promoted to Transnet Rail Engineering’s Durban main centre in Bayhead as the centre engineering manager until 2008. I ventured into the private sector for approximately one year as the engineering manager for National Brands Limited. I returned to Transnet Engineering as the national engineering manager in 2009 for the Coach Business. The focus within the division turned to port equipment development and maintenance to support Transnet Port Terminals (TPT) and Transnet National Ports Authority (TNPA), following which I was appointed as the principal engineer: Ports. What are your responsibilities at Ports Equipment Maintenance (PEM)? I provide a supporting role to the Ports Business for engineering and technical expertise. My team and I are responsible for executing design and development of port handling equipment from conceptual stage. I’m also responsible for providing maintenance advice and expertise on specific port equipment. What gives you the most satisfaction in your work? Working with a great team of people that deliberates and finds solutions for most problems or needs that are often complex in nature. What is the core business of Ports Equipment Maintenence? To design, develop and supply port handling equipment for our clients, which include 60-ton bath tub trailers, 75-ton and 90- ton

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INTERVIEW

Workers in action in bays 25 and 26 of Transnet Engineering’s Ports Equipment Maintenance business in Durban.

multi-purpose trailers, 20-ton and 25-ton skips, commodity containers; mid-life refurbishment of straddle carriers and refurbishment of Sisu diesel engines. Also, onsite structural repairs to a range of port handling equipment. Why has it been created as a separate business unit?

suited for this environment. The trades that are presently employed are millwrights, coded welders, boilermakers, sheet metal workers, diesel mechanics, electrical fitters, etc. On the engineering side, the requirements are higher in that we are looking for engineers (senior and junior) and mechanical designers.

With the extensive engineering expertise and Are there enough workers with appropriskills that reside within Transnet Engineering, ate training coming through the system to the intent was to provide a more supportive role accommodate expansion plans? across the other divisions within Transnet and not There are enough in the pipeline but not enough just solely on the rail sector. The Ports Business to support the immediate requirement. A recently was created within Transnet Engineering to trade-tested artisan still has to go through the create focus on ports. learning curve to gain the minimum experience to enable him to function effectively in this enviHave staff been redeployed from within ronment. We have to find a balance between the Transnet Engineering? experienced and the recently qualified artisans. To an extent, some staff has been redeployed, PEM is an extremely challenging environment but the majority of the staff were recruited both but it provides an individual with tremendous internally and externally to enable it to focus on exposure and knowledge of plants and equipment that very few people are exposed to. The supporting TPT and TNPA. knowledge that one gains in this environment Is there a particular skills set PEM seeks? would provide one with skills that are highly A person with a specific trade would be ideally sought after.

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SAMSA The South African Maritime Safety Authority SAMSA delivers four main outputs: Safety and environment protection standards for responsible maritime transport operations An infrastructure for monitoring and enforcing compliance with safety and environment protection standards The capability to respond to marine pollution incidents and other maritime emergencies The capability to detect, locate and rescue people in maritime distress situations

www.samsa.org.za Tel: +27 12 366 2600

PROFILE

SAMSA The South African Maritime Safety Authority is championing South Africa’s global maritime ambitions.

About

Mission

Accountable to the Minister of Transport, the South African Maritime Safety Authority (SAMSA) was established on 1 April 1998 in terms of the South African Maritime Safety Authority Act 5 of 1998 (View Acts).

To promote South Africa’s maritime interests and development and position the country as an international Maritime Centre while ensuring maritime safety, health and enviromental protection.

In line with its objectives, as stated in Section 3 of the SAMSA Act, the organisation’s primary areas of responsibility include: • Participating in the development and implementation of national and international maritime safety and marine environment The organisation’s objective is to lead and champion South Africa’s maritime interests as custoprotection standards; dians and stewards of maritime policy, vigorous • Enforcing technical and operational standards for all shipping operations in South promoters of the maritime sector and giving full and complete effect to our obligations for the African waters and for South African ships anywhere, to promote responsible operabenefit of all stakeholders. SAMSA is governed by a Board made up of the CEO and six non-executive members, including the Chair and Deputy Chair, as appointed by the Minister.

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PROFILE

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tions in terms of seaworthiness, safety and pollution prevention; Enforcing training standards and competency of seafarers; Managing the national capability to respond to marine pollution incidents and other maritime emergencies; Operating the Maritime Rescue Coordination Centre to coordinate maritime assistance services and to detect, and coordinate the location and rescue of people in maritime distress situations throughout the internationally agreed South African Search and Rescue Region; Overseeing the provision of maritime distress and safety communications services to discharge South Africa’s responsibilities under the Global Maritime Distress and Safety System; Administering South Africa’s voluntary ship reporting system (SAFREP) for identifying and tracking ships at sea for safety purposes and to provide a ships’ database for responding to marine emergencies; Investigating maritime casualties; and Delivering related services including: °° Public awareness and education in marine safety and pollution prevention;

°° Administration of South Africa’s ship registration system; and °° Publication of, and access to, ship safety and environmental standards. SAMSA delivers four main outputs consistent with its mandate and responsibilities: • Safety and environment protection standards for responsible maritime transport operations; • An infrastructure for monitoring and enforcing compliance with safety and environment protection standards; • The capability to respond to marine pollution incidents and other maritime emergencies; and • The capability to detect, locate and rescue people in maritime distress situations.

Services Services on behalf of Government: Advice to the Minister of Transport on maritime issues affecting South Africa • Maintenance and proposals on legislation and policy • Liaison with other governments and international institutions on behalf of Government •

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Liaison with other state departments and South African institutions on behalf of the Minister of Transport Flag State Implementation Providing a maritime Search and Rescue (SAR) capability in the South African area of responsibility through the management, on behalf of the DOT, of the Maritime Rescue C o o rd i n ati o n C e ntre (MRCC) Port State control Accident investigations and Emergency Casualty Response Administration of government maritime contracts Management of the DOT contracted pollution prevention and response capability Representation at international forums

Technical services to the maritime industry, locally and abroad: • Statutory surveys and safety certification of ships • Certification of seafarers • Assistance and advice on maritime legislation • Advice and approval for the construction and refitting of vessels • Evaluation and approval of fittings and equipment used in the construction and fitting out of vessels • Consultancy to industry on technical matters, safety and qualifications Services to stakeholders: Safety equipment approval • Port State Control Inspections • Inspections of ships and cargoes of timber, grain and hazardous goods • Accreditation of maritime training institutions and maritime training programmes •

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Examination of seafarers Monitoring of South African seafarers’ welfare and conditions of service Registration of ships Provision of maritime safety information to shipping Ensuring a reliable radio service to shipping in respect of maritime safety information Casualty investigation and management Oil pollution incident response and investigations Ensuring that navigational aids are in place around the South African coastline Maintenance of a maritime Search and Rescue organisation in cooperation with the Department of Transport Promoting seafarer training in South Africa Collection and maintenance of shipping information and statistics Proactive development and promotion of maritime safety in South Africa’s territorial waters

Industry and excellence The Centre for Maritime Industry Development is responsible for the advancement (development) of the maritime economy, including the socio-economic interests of maritime, which include the creation of the Maritime Industry

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PROFILE Cluster that is to be used as a key vehicle in attaining the goal of positioning South Africa as an International Maritime Centre. Some of the Centre’s areas of business include, but are not limited to: cluster development, SMME/BEE development, research and economic analysis.

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South African Maritime Transport and Services Industry (MT&SI) Seafarers International MT&SI International Maritime Organisation (IMO) International Labour Organisation (ILO) Pretoria (Headquarters)

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Department of Transport (DOT) Departments of Environmental Affairs and Tourism

CONTACT INFO Pretoria (Headquarters) Physical address: 161 Lynnwood Rd cnr Duncan Street, Brooklyn 0181 Postal address: PO Box 13186, Hatfield 0028 Tel: +27 12 366 2600 Fax: +27 12 366 2601

Saldanha Bay (Atlantic Ocean Port) Physical address: Old Salcon Building, Harbour Area, Fishing Harbour, Saldanha 7395 Postal address: PO Box 33, Saldanha 7395 Tel: +27 22 714 1612 Fax: +27 22 714 3635

Cape Town (Atlantic Ocean Port) Physical address: 19th Floor, 2 Long Street, Cape Town 8001 Postal address: Private Bag X 7025, Rogge Bay 8012 Tel: +27 21 421 6170 Fax: +27 21 419 0730

Port Elizabeth (Indian Ocean Port) Physical address: SAMSA Building, Carnavon Place, Humerail 6000 Postal address: PO Box 3914, North End, Port Elizabeth 3914 Tel: +27 41 585 0051/3 Fax: +27 41 582 1213

Durban (Indian Ocean Port) Physical address: 14th Floor, 30 Field Street, Durban 4001 Postal address: Private Bag X 54309, Durban 4000 Tel: +27 31 307 1501 Fax: +27 31 306 4983

Mossel Bay (Indian Ocean Port) Physical address: Plaza Aquda, Room 109, Marsh Street, Mossel Bay 6500 Postal address: PO Box 4, Mossel Bay 6500 Tel: +27 44 690 4201 Fax: +27 44 691 1206

East London (Indian Ocean Port) Physical address: Room 247, Law Court Building, Buffalo Street, East London 5201 Postal address: PO Box 18171, Quigney, East London 5211 Tel: +27 43 722 4120 Fax: +27 43 722 2264 Richards Bay (Indian Ocean Port) Physical address: Gazi Centre, Small Craft Harbour, Newark Road, Richards Bay 3900 Postal address: PO Box 9561, Tuzi Gazi, Richards Bay 3900 Tel: +27 35 788 0068 Fax: +27 35 788 00

Port Nolloth (Atlantic Ocean Port) Physical address: Old Post Office Building, Kus Road, Port Nolloth 8280 Postal address: PO Box 232, Port Nolloth 8280 Tel: +27 27 851 7695 Fax: +27 27 851 7699 MRCC (Cape Town) Physical address: 3rd Floor, Didata Building, 163 H Verwoed, Tygerberg Park, Plattekloof, Parow 7500 Postal address: PO Box 532, Parow 7499 Tel: +27 21 938 3310 Fax: +27 21 938 3319 Website: www.samsa.org.za

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Industrial development zones and special economic zones New incentives and variety may be the way forward.

SECTOR INSIGHT South Africa’s industrial development zones (IDZ) have received R7-billion in funding. • Port of Ngqura has grown export volumes by 165%. • Tata Steel is the anchor tenant of the Richards Bay IDZ.

The head office of the Coega industrial development zone.

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and other inducements may be put in place. Investors in IDZs get access to excellent port facilities, dedicated customs support services, duty-free importation concessions for raw materials, zero VAT rating for locally sourced materials and various tax and incentive schemes. A corporate tax rate of 15% applies, as opposed to the normal rate of 28%.

ational government has a number of trans-provincial corridor developments as the focal points of its huge infrastructure spending programme. These include the Durban-Free State-Gauteng corridor and the South Eastern Node. Industrial development zones (IDZs) at Richards Bay (at the end of the former) and Coega and East London (in the south-east) anchor these corridors. Three industrial development zones are operational and a fourth (at OR Tambo International Airport) is planned. About R7-billion has been invested in infrastructure at Coega IDZ (near Port Elizabeth), East London IDZ and Richards Bay IDZ. Although the existing IDZs have had some success in attract- Coega IDZ ing investments, there is clearly an appetite to find new ways to attract new manufacturers. The National Department of Trade The Port of Ngqura (in the and Industry (dti) has conducted a review of the IDZ system Coega IDZ) achieved record volumes in 2012, and Transnet and concluded that it needs to be beefed up. An option being explored is the creation of regional special intends to continue investing economic zones (SEZs) that will focus on particular manu- heavily in the facility. The goal is facturing spheres. Another is the possibility of creating more for Ngqura to eventually handle incentives for companies starting up in the zones. South Africa’s two-million twenty-foot equivlabour unions are unlikely to allow any of the zones to operate alent (TEU) container units outside the country’s legislative framework, but tax incentives per year. SOUTH AFRICAN BUSINESS 2014

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OVERVIEW Transnet’s plans to increase manganese rail-freight volumes to the Eastern Cape will help the Coega IDZ expand. A planned smelter, to be built by Kgalagadi Manganese, will give the IDZ significant heavy manufacturing capacity. AfriSam’s decision to locate a 74 000 tons-per-year cement-production plant in the IDZ is another boost, as is the opening of the First Automotive Works (FAW ) truck-assembly plant. The Chinese company will spend R200-million on building its plant and a further R400million on running it. The zone lends itself to investment in the automotive-supply sector (with Volkswagen nearby), but it has also attracted investments in renewable energy, manufacturing and agri-processing. Investors include Famous Brands, Kuehne & Nagel, Cape Concentrates, Discovery (national call centre), Benteler and Electrawinds.

East London harbour is to be widened and deepened as part of a R2.3-billion upgrade. The Buffalo River Bridge will be reopened and the existing grain elevator brought back to full service. The port’s car terminal was recently upgraded.

Richards Bay IDZ South Africa’s newest operating industrial development zone is boosting Richards Bay’s already robust economy. The Tata Steel ferrochrome smelter was the first investment in the RBIDZ with input of more than R700-million, which has created 320 permanent jobs. The provincial government has budgeted R57-million to make the RBIDZ a preferred investment destination. The RBIDZ has: • A strategic location near rail links to Johannesburg • Proximity to the Dube TradePort • Access to Richards Bay Port, the largest port in South Africa • Access to minerals such as titanium ore and granite blocks • Access to forestry products Downstream beneficiation is a key focus of South African national and provincial industrial policy, so investors in that field are being actively encouraged. The RBIDZ has set a goal of attracting R5-billion in investment and creating 5 000 jobs in the period up to 2016, and there has been interest shown by Chinese and Indian companies. The export of coal from Mpumalanga is the sole function of the Richards Bay Coal Terminal (RBCT), the single biggest coal export terminal in the world. Delivery by Transnet Freight Rail averaged 63.3-million tons (mt) per year for five years to 2011 but hit a record high of 68.5mt in 2012 (www.platts.com). The aim is to reach the full 91mt capacity of the RBCT.

East London IDZ The ELIDZ had 30 investors as of May 2012. The main sectors being targeted are automotive and components, aquaculture, agri-processing, pharmaceuticals, ICT and electronics. Companies include Sunningdale Dairy, Matla Solar Heaters, Feltex Automotive Trim, Mediterranean Shipping Company and Espadon Marine.

ONLINE RESOURCES Coega Industrial Development Zone: www.coega.co.za Eastern Cape Development Corporation: www.ecdc.co.za East London Industrial Development Zone: www.elidz.co.za Industrial Development Corporation: www.idc.co.za National Department of Economic Development: www.economic.gov.za National Department of Trade and Industry: www.thedti.gov.za Richards Bay Industrial Development Zone: www. richardsbayidz.za Trade and Investment KwaZulu-Natal: www.tikzn.co.za Transnet: www.transnet.net

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Tourism India and