PEOPLE CULTURE TRAVEL PROPERTY BUSINESS WINE SPORT ENTERTAINMENT
ISSUE 21 R40.00
boost growth UNLOCKING AFRICA’S
P O T EN T I A L T O
Boutique corporate finance company P PSG SG Capital says growth will come from Africa.
The little bunny that can
Since its launch in April, Playboy South Africa has been through a lot
Technology bearing fruit
Microsoft’s new mobile operating system promises to revolutionise mobile computing
New rolling stock key to unlocking SA’s passenger-rail future
eThekwini mayor James Nxumalo talks to South Africa Magazine
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COP 17: SA hELPS MAkE hiStOry This month, Durban hosted the 17th Conference of the Parties of the UN Convention on Climate Change (COP 17). The climate talks closed with an agreement that the chair said had “saved tomorrow, today”.
There was applause in the main conference hall when South Africa’s International Relations Minister, Maite Nkoana-Mashabane, brought down the long-awaited final gavel.
Writers – Colin Chinery Jane Bordenave John o’Hanlon
“We came here with plan A, and we have concluded this meeting with plan A to save one planet for the future of our children and our grandchildren to come,” she said. “We have made history.” Under the agreed terms, the European Union will place its current emission-cutting pledges inside the legally-binding Kyoto Protocol, a key demand of developing countries.
Editor – Ian Armitage Sub editors – Jahn vannisselroy Janine Kelso Tom Sturrock
Advertising Sales Manager – Andy Ellis researchers – Jon Jaffrey Dave Hodgson Marie Smith Elle Watson Luke Ashford Chris Bolderstone Sandra Parr Sales – Andy Williams Sales administrators – Katherine Ellis Daniel George
Financial Administrator – Suzanne Welsh
Talks on a new legal deal covering all countries will begin next year and end by 2015, coming into effect by 2020.
PrODUCtiON & DESiGN
Management of a fund for climate aid to poor countries has also been agreed, but how to raise the money has not.
DiGitAL & it
This, though, is a significant step forward.
CEO - Kevin Ellis Chairman - Ken Hurst Commercial - David Alstin Publisher - TnT Multimedia Ltd
The holiday season is now upon us and we can now go into 2012 with some optimism. Many companies will continue the tradition of shutting down or working with skeleton staffing levels from December 16 to the first week of January and we hope you have fun.
Magazine design – optic Juice Production manager - Jon Cooke images: Getty, Thinkstock News: nZPA, AAP, SAPA head of digital marketing & development – Syed Ahmad
South Africa Magazine, The Royal, Bank Plain, norwich, norfolk, UK. nR2 4SF TnT Multimedia Limited, 10 Greycoat Place, London, SW1P 1SB tntmagazine.com
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All the latest news from south Africa
CULtUrE Technology bearing fruit
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Microsoft’s new mobile operating system promises to revolutionise mobile computing, moving away from applications and towards people. Managing director of Microsoft south Africa Mteto nyati tells south Africa Magazine why this new technology is so exciting and what it means for the country.
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ENtErtAiNMENt Bringing sexy back - the little bunny that can
since it’s launch in April, Playboy south Africa has been through a lot. Editor-in-chief Charl du Plessis talks Ian Armitage through some recent changes, why south Africans are embracing the brand, and outlines ambitious plans for the future.
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All the latest news from South Africa Euro crisis
Eurozone near the
abyss says OECD The eurozone crisis is now one step away from plunging advanced economies into an abyss of recession and even depression, with waves of bankruptcies and wealth destruction in Europe, the OECD warned. “The euro area crisis remains the key risk to the world economy,” it said. “Concerns about sovereign debt sustainability are becoming increasingly widespread. If not addressed, recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption. Pressures on bank funding and balance sheets increase the risk of a credit crunch.” The eurozone is already in slight recession and the credibility of governments to keep the eurozone balanced on a high wire has been stretched to the limit: one false step now would tip the United States, Japan and advanced economies into a new grim
landscape, OECD said. “Prospects only improve if decisive action is taken quickly,” said OECD Chief Economist Pier Carlo Padoan. “In the euro area, the risk of contagion needs to be stemmed through a substantial increase in the capacity of the European Financial Stability Fund, together with a greater ability to call on the European Central Bank’s balance sheet. Much greater firepower must be accompanied by governance reforms to offset the risk of moral hazard.”
Amplats staff to get free houses Thousands of Anglo Platinum (Amplats) workers will get free houses to be built by the company, according to the human settlements department. In a release, the department said: “Thousands of Amplats mine workers who have been finding it difficult to access houses will soon benefit from the company’s decision to build over 20,000 houses for its employees at the cost of R1.4 billlion.” “Amplats will build 12,000 houses in the North West and 8,000 in Limpopo over the next 10 years,” it added. Amplats’ commitment comes as part of the each-one-settle-one campaign announced by Human Settlements Minister Tokyo Sexwale in September. “This is what we had in mind when we thought of the concept of Each One Settle One, that we need each other – corporates and government – and that it is through these partnerships that we can succeed as a country,” said Sexwale. He said this kind of investment was
good for both employers and employees as companies could no longer afford to earn “huge turnovers” when their workers went home to slums after work. The campaign was aimed at mobilising South African companies, especially JSElisted entities, to help the government address the housing backlog, estimated at more than 2.3 million units. “We don’t want to see our workers living in isolation, but to be part of the integrated communities where our company operates,” said Amplats CEO Neville Nicolau. “Amplats’ housing business model is based on the premise that employees shall own houses and lessen their reliance or dependency on company provided accommodation both on-mine and offmine. The main reason of this approach is to encourage and promote homeownership among its employees at all levels,” he added. Amplats has also helped the Thabazimbi local municipality by providing basic infrastructure such as roads and sanitation.
Controversial info bill passed South African MPs have overwhelmingly approved the controversial protection of state information bill despite widespread opposition and question marks around its constitutionality. Archbishop Desmond Tutu called it “insulting” and warned it could be used to outlaw whistleblowing and investigative journalism. South African journalists wearing black staged several protests against the bill outside
the headquarters of the governing ANC. The African National Congress says the law will safeguard state secrets and national security. It has a two-thirds majority in 400-seat National Assembly - the bill passed by 229 votes to 107, with two MPs choosing not to vote. The bill has still to be passed by the upper house - likely to happen next year - and signed by the president before becoming law. www.southafricamag.com
UN impressed with “vibrant democracy in South Africa” National Anti-Corruption Forum in Johannesburg has heard that continuous questions and criticism by political parties and civil society were a good sign of a balanced nation. “I am impressed with the vibrant democracy in South Africa,” said Mandiaye Niang, a representative of the United Nations Office on Drugs and Crime. He said continuous questions and criticism by political parties and civil society were a good sign of a balanced nation, and noted that checks and balances were the cornerstone of any democracy. “Corruption exists because we don’t want to lose our advantages ... even though they are unduly acquired. Corruption is deeply rooted in the dark side of human nature,” Niang said. The general secretary of the Congress of South African Trade Unions, Zwelinzima
Vavi, had earlier warned the summit that South Africa faced the “nightmare future” of a country up for auction to the highest bidder, where no one will be able to do business with the state without going past corrupt gatekeepers demanding bribes. He said unless state corruption was stopped, South Africa would be “doomed, because once everybody is intimidated to silence, then the powerful, corrupt cliques will be the ones ruling”. “Corruption will just become too powerful for anyone to raise a voice,” Vavi said, and corrupt gatekeepers “may systematically use their power to control large areas of the economy”. South Africa dropped in the corruption rankings of Transparency International this year, and two recent surveys found that citizens were regularly being asked for bribes by government officials in the course of their duties.
Second Beach one of the world’s deadliest South Africa’s Second Beach in the Eastern Cape is among the world’s deadliest for shark attacks – and there have been five fatalities in five years, with three in 2009 alone. So what is causing the surge in attacks? Theories range from the sharkdrawing blood of ceremonial animal sacrifices by traditional healers on the beach, to loud onshore music or a curse on surfers and 8
lifesavers, who have been the only victims so far. Scientists say bull sharks – Zambezis to us locals – are behind the attacks. They can grow to more than two metres long, and are known for shallow water attacks. The Durban-based KwaZulu-Natal Sharks Board is now investigating and plans to catch sharks and fit acoustic tags and receivers.
confidence deal reached
remains low (without UK) According to the latest release from the SA Chamber of Commerce and Industry (Sacci), business confidence in South Africa stabilised in November, but at low levels. Sacci’s business confidence index (BCI) declined marginally to 97.4 in November 2011 from 97.5 in October 2011. The level of 97.4 is the lowest point since May 2010. A Sacci statement said: “The steadying of the BCI in November creates the possibility that the downward momentum in business confidence may have abated although the economic environment remains tentative. “Should the November 2011 Sacci BCI imply that the business mood has stabilised, the stabilisation has unfortunately occurred at less than desirable levels. “The serious decline in the BCI started in April with its fewer trading days. “This was followed by months of serious labour disputes and debates about the country’s policy direction.” This sensitive business environment was then tested further by the uncertainty over the sovereign debt crisis in Europe. Six of the sub-indices making up the BCI were positive in November compared to October - vehicle sales, retail sales, inflation, share price, real private sector borrowing and precious metal prices.
The 17 EU member states that currently use the euro have signed an accord for a deeper fiscal union in which they have agreed to new tax and budget rules in a bid to tackle the eurozone’s debt crisis. Nine other EU members say they intend to sign up, although some need parliamentary approval. However, the UK has opted out of the deal, essentially isolating itself. British PM David Cameron was the white elephant in the room when he objected to the plans, insisting on an exemption for the UK from some financial regulations. Cameron’s move has enraged French President Nicholas Sarkozy who said he would have preferred a treaty among all the members of the EU. The new tougher rules on spending and budgets will now be backed not by an EU treaty but by a treaty between governments. It will be quicker to set up but it may prove less rigorous. Could this be the beginning of a United States of Europe, with Britain sitting on the outside?
Investec, EIB Malema enters
establish green energy fund
Anglo-African bank Investec and the European Investment Bank (EIB) are to establish a 100 million euro renewable energy funding facility that will promote clean energy generation and energyefficiency initiatives in South Africa. The initiative is in line with the South Africa’s recently announced Green Economy Accord, a partnership between the government, business and trade unions that aims to create jobs by promoting the development of the country’s ‘green economy’. The announcement was made in Durban, where the 17th Conference of the Parties (COP 17) to the UN Framework Convention on Climate Change was under way. According to the EIB, the facility will support South African renewable energy projects and energy-efficiency activities; Investec is responsible for selection of projects and subsequent investment. The money will be available for disbursement to selected opportunities over three years from the start of the programme. “Each project will be evaluated by Investec’s sector specialists and credit committee, in accordance with additional investment criteria set by the European Investment Bank, to ensure that projects deliver sound environmental benefits and abide by accepted business, environmental, social and labour practices,” the EIB said in a statement.
African National Congress Youth League leader Julius Malema has submitted an appeal against his five-year suspension from the ruling party. “Yes, he did submit it,” Malema’s lawyer Dali Mpofu said. He added that, “All the others also filed appeals”, referring to other members of the youth league’s national executive committee. Malema was found guilty of bringing the ruling party into disrepute and sowing seeds of division. League spokesman Floyd Shivambu, deputy president Ronald Lamola, treasurergeneral Pule Mabe, secretary general Sindiso Magaqa and deputy secretary-general Kenetswe Mosenogi were also found guilty of various charges and sanctioned by the ANC’s national disciplinary committee. Malema was given a five-year suspension and Shivambu was suspended for three years. Both men were told to vacate their positions.
COP-17 takes SA's GDP place up by
The United Nations climate talks have taken place in Durban, with countries making a last ditch effort to save a dying Kyoto Protocol. Delegates began arriving in South Africa late November for what is formally known as the 17th Conference of Parties (COP-17) to the UN Framework Convention on Climate Change. Over 11,000 delegates from more than 190 countries were expected to come to South Africa for the conference. Opening COP-17, President Jacob Zuma said states and parties needed to look beyond their national interests. “They need to find global solutions,” Zuma said at the summit’s opening ceremony. He added that, “with sound leadership, nothing is impossible here in Durban”. Also speaking at the opening ceremony, UN climate chief Christiana Figueres said COP17 needed to achieve
two things: overcome unresolved political issues and implement decisions made at the COP-16 summit. “The impact of climate change is threatening people’s lives and livelihoods,” she said, adding that most African countries were already experiencing the effects of climate change. “The need for action has never been more compelling or more achievable.” Kyoto, which was adopted in 1997 and entered into force in 2005, commits most developed states to binding emissions targets. The conference is the last chance to set another round of targets before the first commitment period ends in 2012.
South Africa’s real gross domestic product rose by 1.4 percent in the third quarter of 2011 from 1.3 percent in the second quarter, data shows. Stats SA said that the main contributors to the increase in economic activity for the third quarter of 2011 were “finance, real estate and business services (0.9 of a percentage point), the wholesale, retail and motor trade; catering and accommodation industry (0.7 of a percentage point) and general government services (0,5 of a percentage point).” On an unadjusted year-onyear basis, economic growth was at 3.1 percent from an upwardly revised 3.2 percent in the second quarter.
BEAriNG FrUit By Jane McCallion 12
Microsoft’s new mobile operating system promises to revolutionise mobile computing, moving away from applications and towards people. Managing director of Microsoft South Africa Mteto nyati tells South Africa Magazine why this new technology is so exciting and what it means for the country.
Mteto Nyati, MD, Microsoft SA
hen you hear the word ‘mango’ you are more likely to start thinking about tropical islands than technology. But in the world of telecommunications, Mango is the codename for the hottest new operating system on the smartphone market – Windows Phone 7.5. The excitement behind the launch of Mango is not just because of the new operating system, but also because of the anticipation around the launch of the Nokia Lumia 800 handset. While Windows Phone has previously been available through other phone manufacturers such as HTC and Samsung, for Mango, Nokia will be Microsoft’s global partner. Nokia’s
Industry experts like Gartner and IDC are predicting that by 2015 Windows Phone will be the second largest mobile phone operating system after Android
CEO Stephen Elop is heralding his product as “the first real Windows Phone” and has called the synergy between Mango and the Lumia 800 “a new dawn.” Managing Director of Microsoft South Africa Mteto Nyati agrees that this is a watershed moment, emphasising that, with
Windows Phone 7.5, the focus is on people. “It is not about applications, it is about putting people at the centre and when you look at how it embraces and combines that with the great design capabilities of Nokia, that to me is a winning combination.” Microsoft believes that Mango is going to “completely change the game when it comes to computing” and it is not alone. “Industry experts like Gartner and IDC are predicting that by 2015 Windows Phone will be the second largest mobile phone operating system after Android,” says Nyati. The concept of making the Windows Phone 7.5 operating system ‘people focused’ gave rise to its most distinctive features; the first is the way that the phone uses social media. “When I say that Mango is putting people at the centre, it means that you are able to group your contacts depending on things like if they are your family, your colleague, or whatever you choose,” says Nyati. “Once you have put them into those groups, you are able to view the activities of those people across Facebook, LinkedIn and other feeds. You can see everything they are doing just by clicking on your phone.” Another exciting feature is seamless connectivity. This function can be used in many different ways, from business to entertainment. “Think about games, for example,” says Nyati,
“Look at how popular Xbox and Xbox Live are. The ability for people to move from the screen at home seamlessly to playing the game on their phone as they proceed with their lives outside of the home. Or I could be on a conference call at work, and then move to my car, which will pick it up, then into my house, all without a break. That is an advantage that is quite unique.” Mango users will also benefit from hands-free texting, which builds on existing Bluetooth technology. “When I leave the office this evening and go to my car, my phone will automatically connect with it via Bluetooth, but this is nothing new – it’s a function that all smartphones have now,” says Nyati. “However, if I get an SMS while I’m driving along, it will tell me that I have received a message and who it is from. Then it will ask what I want to do with the message and I can tell it via voice command whether to read it or save it. If I choose to read it, the device will read the message to me, ask me if I would like to reply and allow me to dictate a response. It is another example of how we are putting people first.” Nyati feels that Windows Phone 7.5 is a very useful tool for South Africans, perhaps even more so than in Europe or North America, particularly because of a feature called ‘internet sharing’. “A real problem in developing countries is that broadband internet access is still a challenge. With Mango, you can use your phone to gain access to the internet not just through the handset, but allow other devices such as laptops and desktops to
connect through it as well. This will allow people not just to communicate between friends, but to connect to the world and in developing countries like our country, we believe this is very valuable.” As well are being people focused, Mango is also future focused. Nyati believes that we are now entering an ‘era of devices’. “We’re at a time where increasingly people have any number of devices,” he explains. “You have the phone, but you may also have a tablet and then in the office you will normally have a desktop or laptop computer and in the future there will be even more of them. We feel that you should not have to waste time putting in the information of business contacts or colleagues into each of these devices manually – you should be able to access it across any of these devices automatically. Closer integration between devices is a key design point of us.” When it comes to the future of telecommunications in South Africa, one of Nyati’s main aspirations is for smartphones to become more accessible. “We would like to see a driving down of costs so that as many people as possible can enjoy the benefits of having a smartphone, particularly in the developing world” he says. “The sooner we are able to see the smartphone at an affordable price for everybody, the better. In South Africa, the price of connectivity is a problem, particularly for data transfer, so that really needs to come down too. Once we have achieved these things, it will help the economy and it will help development as well.”END
This will allow people not just to communicate between friends, but to connect to the world
sexy back: BRInGInG
The little bunny that can
Since its launch in April, Playboy South Africa has been through a lot. Editor-in-chief Charl du Plessis talks Ian Armitage through some recent changes, why South Africans are embracing the brand, and outlines ambitious plans for the future. 16
Playboy SA EnTERTAInMEnT
We are of course the world’s best known men’s magazine brand, which has achieved a lot in 57 years, and we have a strong social voice; we’ve been in the vanguard of the fight for some of the rights people take for granted today
ince its glamorous, headline-grabbing launch in April, Playboy South Africa’s path has been rocky to say the least. Former editor Pieter Piegl’s announced his resignation via Twitter. There was controversy surrounding cover girl Crystal Arnold’s skin-tone. At one point, there were even rumours that the title was about to shut down. However, Playboy South Africa seems to have put all this behind it, and according to new editor-in-chief, Charl du Plessis, the magazine has a bright future.
“I think there is a necessity for a magazine like Playboy locally,” he says. “We offer readers engaging, thoughtful and provocative content. “Opportunities far outweigh the challenges.” Since the inception of Playboy in 1953, editorial content of the highest quality has been an essential part of the magazine’s philosophy. The South African edition continues that tradition, with a strong and predominantly local flavour. But it is challenging. “There are massive misconceptions in South Africa about Playboy. Because Playboy entered the market post-94 at the same time as some
smut magazines, an association stuck. We do not do pornography and draw a very clear distinction between nudity and pornography. But, people need to be informed of that. “We encounter a lot of female decisionmakers in the media and marketing industry who impose their own, rather than their clients’ values and have a lack of understanding of what a massive phenomenon the magazine is for men. www.southafricamag.com 17
“We are of course the world’s best known men’s magazine brand, which has achieved a lot in 57 years, and we have a strong social voice; we’ve been in the vanguard of the fight for some of the rights people take for granted today, including reproductive rights for women, civil rights, freedom of speech and more. “Of course, we are working on these misconceptions and the best way to remedy it is for people to read the magazine and decide for themselves. Playboy 18
The truth is that Playboy is so much more than just a pretty face. It’s a movement; an attitude; and a way to live in the world
Playboy SA EnTERTAInMEnT
is not glorified pornography; we do not publish any pornography and only do very tasteful nudity. “The truth is that Playboy is so much more than just a pretty face. It’s a movement; an attitude; and a way to live in the world. The typical Playboy reader is intelligent and we regularly publish up to 3,000-5,000 word features, despite the fact that other titles seem to be running progressively shorter pieces. “Our content is thought-provoking and encourages debate, and for good measure we’ve even dropped in some fiction by Nobel Prize winners too. Since I took over, I have engaged with some of the sharpest minds and most respected members of our society – people like Zapiro, Andre Brink, Dr Ian Player, and many more. A famous South African cartoon character,
Eve, has graced our cover - she was the ‘Playmaid of the Year’. Also on the cover were Gwen Anderson and Mother Anderson, both household names in South Africa. “We have also dropped the word ‘girl’ from the magazine, replacing it with ‘woman’ or ‘model’ depending on the context. “Reader feedback pointed us, first of all, to the fact that people felt it didn’t have a strong enough local voice. Secondly, it didn’t have enough well known South Africans amongst those voices. We’ve changed that.” Playboy is making great strides in breaking out its stereotypical box and, naturally, du Plessis is optimistic about the future. “We experience daily how, once people really get what this brand is all about, they rally behind us with serious intensity and passion. Our Facebook post views exceeded 870,000 last month, our Twitter reach exceeds 300,000 and our fan base grows every day. Our parties are selling out, our advertising sales are growing, the media is tracking our every move with interest, and we have the best writers on-board. “The passion for this brand out there is incredible. Every person I have sat down with wants to tell me exactly what the mag should look like and what they love about it. “We are only just beginning. Imagine what we will look like a year from now.” Icon is an overused word, but in some cases — as with a certain, famous silhouetted bunny — the term is heartily warranted. “In terms of our future, our approach is 360 engagement of audience not just readers. It includes all the platforms, and we are doing some daring things,” du Plessis concludes. Learn more about Playboy by visiting www.playboy.co.za. END www.playboy.co.za
2012 and beyond
Banking Association of South Africa FEATURE
Cas Coovadia, managing director of the Banking Association of South Africa, talks to South Africa Magazine about the industry’s progress, the eurozone crisis, opportunity in Africa and the future of banking.
By Ian Armitage
he financial problems facing Europe are causing worldwide panic and we are in a dangerous new phase of the debt crisis. If Europe’s troubles spread to the banking sector, the contagion effect would be inevitable and South Africa could be further affected. However, domestic financial institutions’ exposure to European debt is still relatively low. Those are the views of Cas Coovadia, managing director of the Banking Association of South Africa. “South Africa has a developed and wellregulated banking system, comparable to that of any industrialised country,” he says. “Our banks navigated successfully through the worst banking crisis in living memory. This was not luck, but rather a result of
excellent business acumen and sound regulation. As a result of those measures, our financial institutions’ exposure to European debt is relatively low; importantly our banks are well capitalised. “They are not going through the sorts of challenges here that they are in Europe and America. But, having said that, they are working within a fairly constrained environment. The broader economy, or real economy, has been impacted on by what is happening in Europe, which is still our largest trading partner and, as a result, there has been a downturn in South Africa – the demand for credit thus has reduced. “Overall, South African banks have largely escaped the crisis experienced by global financial institutions; the sector’s balance sheet is solid,” Coovadia adds. “South African banks also have a sizeable buffer to absorb liquidity pressure. “I think European leaders, though, probably need to do a lot more to prevent the crisis from spreading and worsening, and to address the concerns of developing countries, which are innocent bystanders, should the contagion affect their economies. “Emerging market economies have been hard hit by Europe’s debt crisis and South Africa’s rand has been rendered extremely volatile by the uncertainty. South Africa is particularly vulnerable to toxic effects of the eurozone debt crisis because, like I said before, it is our major trading partner and also our current account deficit is primarily financed by international capital flows. “Yet, the fact is we are in a very good position, on the whole.” www.southafricamag.com 21
Banking Association of South Africa FEATURE
You might forgive some scepticism. Earlier this month, Moody’s downgraded South Africa’s debt outlook from stable to negative, in the face of low growth prospects, strained public finances and rising poverty and unemployment. So why is Coovadia so confident, and what’s next for our banks? “Everyone’s looking at Africa,” he says. “There has been a steady rise in investment on the continent, which certainly has captured the financial world’s attention.” Africa has been seen as something more than a curio in global investment terms since 2007, he adds, when the Industrial and Commercial Bank of China bought up a 20 percent share in Standard Bank, South Africa’s biggest lender, for $5.5 billion. “Africa is flavour of the day,” Coovadia says. “If you look at Standard Bank, they have cut down on other global activity and are saying that they want to focus on Africa. Barclays is a significant
player in Africa. Citigroup and Standard Charter are two international banks that are significant players in Africa. Nedbank has a partnership with Togo-based Ecobank, which has operations in 31 countries across the continent. I could go on; the banks are obviously viewing Africa as a critical market.” Africa is becoming more and more competitive, and there are broadly two sorts of banks operating in the region. First, the biggish locals, such as Standard Bank, which is active in 16 countries, and Togo-based Ecobank, which operates mainly in west and central Africa. Then you have the Western world giants like Barclays, Citigroup and Société Générale. “Once seen as unpromising and overly risky, subSaharan Africa, and the continent generally, is now one of the world’s fastest growing emerging banking markets and an increasingly sought-after investment destination,” Coovadia continues. “Economies are expanding rapidly, while steadily increasing consumer affluence is creating fresh demand for banking services. “There are challenges, but also undoubted opportunity. As an association, we are doing a lot of work with regulators to try and ensure reform and ‘proper’ coordination across the region. South African businesses are obviously investing heavily in Africa the likes of Pick ‘n’ Pay or Spar, to give examples - and they need banking services for that. So, banks are following in their footstep to provide the services they
Nedbank is committed to supporting green causes and providing green solutions. Over the past two decades Nedbank and its Green Affinity clients have donated almost R115 million to the WWF Nedbank Green Trust to fund water conservation, community gardens, food security, climate change mitigation and adaptation together with other environmental projects. The recently launched Nedbank Water Stewardship Programme helps to improve access to and security of water for South Africans. Nedbank is also the first bank in Africa to achieve carbon-neutral status, the first to open a partially wind-powered branch and is the expert in providing green funding solutions â€“ from carbon solutions and renewable-energy projects to green investment products such as the new Nedbank Green Index. So, join the green bank with green answers for a greener future. For more visit www.nedbankgreen.co.za or contact us on 011 294 4444.
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A greener future needs a green bank with green answers.
Synergy is essential to sustainability at Nedbank
While it enjoys a reputation as South Africa’s green bank, Nedbank Group’s sustainability efforts are focused on more than just environmental considerations. In fact, the group’s vision to become a leader in sustainability hinges on its recognition that true sustainability encompasses a number of interlinked and, in many respects, interdependent priorities.
ccording to Brigitte Burnett, Head of Sustainability for Nedbank Group, this understanding of the integrated nature of sustainability has long driven the bank’s approach to environmental and social sustainability. Both of these are facilitated through a simultaneous focus on its own profitability and economic sustainability, for this is what ensures it can continue to have a positive impact. Burnett cites a number of initiatives that serve to illustrate this approach, and the value it unlocks for individuals, communities and the environment. The group’s ‘social carbon approach’ to gaining the carbon credits needed for its carbon neutrality is a prime example of Nedbank’s integrated sustainability philosophy. The credits were obtained via voluntary investment in the Rukinga Project in Kenya and the Umdoni Gel Fuel Lowincome Housing project in KwaZulu-Natal.
the Rukinga Project is preventing the deforestation of Kenya’s Kasigau Wildlife Corridor, delivering significant economic, social and cultural benefits to local communities, particularly through education, healthcare and job creation,’ explains Burnett. The Umdoni Gel Fuel project has a similar dual sustainability focus. The project aims to reduce carbon emissions by providing 4 000 households in the region with energy-efficient bioethanol gel-burning stoves and gel fuel every month. But just as important as the green value of this project, is the potential it has to ensure the safety of communities by preventing devastating fires and the contribution it makes to the economic upliftment of the people of Umdoni.
‘As the world’s first Reducing Emissions from Deforestation and Forest Degradation (REDD) project to issue carbon credits,
‘It’s essential that businesses and individuals begin to recognise the potential inherent in the successful creation of a green economy, because it really is the only viable means by which we can create a sustainable future for our country and our planet,’ Burnett emphasises, ‘but it requires a fundamental shift in perception from seeing society, the environment and the economy as separate issues to recognising that they are inextricably linked and interdependent.’
For more information on Nedbank’s sustainability initiatives, please visit www. nedbankgreen.co.za and www.nedbankgroup.co.za/ sustainabilityOverview.asp
For enquiries, please contact the Head of Sustainability, Nedbank Group: Brigitte Burnett on: Tel: +27 11 294 3692 Fax: +27 11 295 3692 E-mail: BrigitteBu@nedbank.co.za
Banking Association of South Africa FEATURE
need. The opportunities in Africa are certainly very good.” Coovadia says the banking sector plays a central role in supporting South Africa’s real economy and went on to explain that more probably needs to do more to support it. “We are very concerned that the sector is being overregulated at the moment; we need some sort of coordination and appropriate regulation to enable the banks to continue to grow, to enable them to remain at the cutting-edge of international best practice,” he says. “The sector also has a vital role to play in the ongoing transformation of our society, and our desire to bring a better life to all of our people. That is a big priority. But of course, we have to view it now from within the constrained environment, which makes it more difficult. We are working hard on all fronts.” South Africa’s banks rank 2nd in the world for soundness, according to the Global Competitiveness Report 2011/12. It also ranked 2nd out of 183 countries for good practice in protecting both borrowers and lenders when obtaining credit for business (World Bank Doing Business Report 2011). The future is bright. “It is, but we need to ensure that we maintain the right balance to ensure we maintain, if not improve, our position; we don’t want to fall behind others in the global marketplace,” Coovadia says. “Broadening financial services
to the unbanked is one of the critical challenges going forward and there is going to have to be a balance between an appropriately regulated sector, which is not drowned in regulation, and as a result becomes extremely costly, and broadening financial services to the unbanked, which will have to be properly managed. “Over the next 10 years, I think there will be significant activity in Africa and we will want to work with African governments, regulators and others to see how, on the back of our banks’ expansion into the region, we can
have an association that can facilitate anything that needs to be facilitated in a regulatory and infrastructure environment. “I also think that there are African market conduct and consumer issues that will have to be addressed in the next few years and, again, we need to see sound market conduct – it is an essential component in managing risk. We would encourage that. At the same time, there is a fine balance between market conduct and consumer protection and prudential issues; we would like to see that balance maintained well.
“Banks are the oil that grease the machine that is the economy. A healthy banking sector is critical for a healthy economy. If the banking sector is not healthy, if there is any uncertainty, then it immediately raises questions about the broader economy because the banking sector is the critical funder of the broader economy. Whether you like it or not, the banking sector is vital. As a result we need to ensure it is properly regulated, appropriately regulated and we don’t actually, in anyway, create or force conditions where banks have to actually do unsustainable business. “Banks are important to the economy and it is absolutely essential to ensure that the sector is sound,” Coovadia concludes.
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P O T EN T I A L T O
Johan Holtzhausen, the Managing Director of boutique corporate finance company PSG Capital, talks to South Africa Magazine. By Ian Armitage
PSG Capital FEATUR
eople often ask what corporate finance is. Its definition varies considerably across the world but it tends to be associated with transactions in which capital is raised in order to create, develop, grow or acquire businesses. PSG Capital is the boutique corporate finance division of PSG Group Limited and it provides a complete suite of corporate finance and advisory services to a broad spectrum of public and private clients. “We have a successful track record in supporting and growing companies,” explains Managing Director Johan Holtzhausen. “We understand the individual nature of advice and work closely with management teams to help them develop and deliver their objectives.” PSG Capital, he says, supports growing companies in all sectors. Each client
requires advice according to their individual needs and the firm works closely with management teams to help them develop and deliver their objectives. It is a trusted advisor and sponsor. “We provide a full range of services, including mergers and acquisitions, initial public offerings (IPOs), fundraisings, debt advisory, market intelligence, BEE transactions, privatisations, management buyouts/buy-ins and restructuring,” Holtzhausen, who with a colleague helped establish PSG Capital some 14 years ago, says. “We started our business of providing value-added corporate finance advisory services in 1998. Today we provide a complete suite of corporate finance and advisory services. “We have a formidable team.” PSG Capital currently has 32 JSE and JSE AltXlisted clients,
We provide a full range of services, including mergers and acquisitions, initial public offerings, fundraisings, debt advisory
A partnership which delivers the best returns Partnering with Deloitte is probably the closest you will get to a sure thing. Our comprehensive solutions help clients maximise shareholder value, at every stage of a transaction. Thatâ€™s something you can count on. www.deloitte.com/za
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PSG Capital FEATURE
including Zeder Investments, Paladin Capital, Pioneer Foods, JD Group, mCubed, Capitec Bank, and DiamondCorp. Rather impressively, it was ranked third in the categories Sponsors Transaction Flow and Deal Flow at the 2010 Deal Makers General Corporate Finance Awards. “We have a broad spectrum of clients including public and private companies, BEE and private equity houses, financial institutions, asset managers and hedge funds and we employ a team of highly skilled professionals,” Holtzhausen says. “The people aspect of our business is very important for us and we focus on attracting, developing and retaining the best talent for our business, challenging our people, demonstrating a “can-do” attitude and fostering a collaborative and mutually supportive environment.” Why focus on people? Because it is they that are the face of the business and they who form lasting relationships: “Relationships matter,” Holtzhausen says. “They
We have a broad spectrum of companies including public and private companies
A key partnership to benefit the Boland and beyond
In order to survive today’s tough business environment, firms offering financial services need to be more agile than in the past. This agility has seen the team at Deloitte greatly enhance its comprehensive Corporate Finance solutions, at every stage of a transaction. According to Michael van Wyk, a Partner at Deloitte, “We foster a culture of agility to ensure that we continuously create value for our clients in this ever changing market.” It is this approach that has helped Deloitte establish a mutually beneficial relationship with PSG Capital (PSG). When working with companies such as PSG, we believe the key philosophy should be around a partnership and the development of a long-term relationship. Deloitte has enjoyed past experiences with PSG and we will continue to invest our time and people into building this relationship. In May this year, Deloitte partnered with PSG Capital on the rights offer for private schools holdings group Curro Holdings, valued at R322-million. Van Wyk says, “The PSG Capital team is made up of people you want to work with. They are an amazing team that gets things done without getting bogged down by the little things.” Lwazi Bam, head of Corporate Finance and CEO designate of Deloitte Southern Africa says developing this type of partnering relationship allows his team to identify and realise greater value for their clients. “For us, this means offering comprehensive solutions in conjunction with other Deloitte services, using global best practice – an approach we are committed to following with PSG.”
Van Wyk believes that Deloitte’s recent decision to open an office in Stellenbosch will allow the firm to better service PSG. “We understand the importance of PSG’s work in the larger Boland market (in which Stellenbosch is situated) and are committed to continuing our drive to create value for their business.” Artist’s impression of the reception area at Deloitte’s Stellenbosch office
“The Boland region in the Western Cape of South Africa has been highlighted as an area expected to realise strong economic growth, with much of the region’s turnover coming from traditional agricultural and consumer business related industries, and now from financial services businesses, too,” says van Wyk. “However, during recent times the region has also attracted many technology companies, and this is an industry in which Deloitte has noteworthy credentials.” According to van Wyk, the mix of traditional (and very successful) organisations with strong, new generation businesses in the region, offers Deloitte a solid foundation for growth. “The opening of a Deloitte office in Stellenbosch (within the first quarter of 2012), will give us the opportunity to work closely with young and innovative companies and great established groups like PSG.”
For more information please contact: Michael van Wyk – Partner Phone: +27 (0) 21 427 5300 Direct +27 (0)21 427 5763 firstname.lastname@example.org www.deloitte.com/za
PSG Capital FEATURE
occur naturally within PSG Capital where clients are assured of unrelenting focus and commitment directed at each of their unique business needs, so as to provide innovative and customised corporate finance solutions. We deliver the results and the solutions. “To give you an example, in July, we, together with the management team of Blackstar SE, conducted road show presentations around South Africa with the aim of raising over R100 million. In less than two weeks, during significant market volatility, that target was achieved from South African investors,
Relationships matter. They occur naturally in PSG Capital Johan Holtzhausen. Managing Director
who were a mixture of institutional and private investors.” Blackstar SE successfully listed on 12th August 2011, he says. “We understand that the essence of a successful corporate finance firm is delivering value-adding, lasting corporate finance solutions to its clients. We relentlessly focus on finding these solutions for our clients’ specific business needs with an aim to consistently
Cliffe Dekker Hofmeyr The greatest partnerships are based on trust and mutual respect and continue to grow from strength to strength through the years. We are proud to have been with PSG Capital since their formation. Our partnership has given us the opportunity to act as legal advisors to PSG Capital on many of the large corporate business transactions involving the PSG group of companies and their clients. We are honoured to stand by the side of this successful South African business.
We feel this is a partnership worth
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Rated South Africa's No. 1 large law firm for 2011 Cliffe Dekker Hofmeyr is a business law firm and a member of DLA Piper Group, an alliance of legal practices.
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PSG Capital FEATURE
deliver value. “We are also dedicated and have the willingness to take on big challenges and see them through. For example, it can be a long, lengthy process just to get through the regulatory environment anyway,” Holtzhausen explains. Where will future opportunities lie for PSG Capital? The incoming chief executive of the JSE Nicky Newton-King said recently that the bourse was in talks with companies on the continent over more potential listings and that mining, telecommunications and financial services were among the key sectors the JSE was targeting in Africa. “We’ve got good conversations going ... particularly on the continent,” Newton-King told Reuters ahead of briefing in parliament. Initial public offerings (IPO) have tumbled globally since the 2008 financial crisis and the subsequent eurozone sovereign debt turmoil. Holtzhausen shares her view. “Mining is one area where I definitely see potential, across Africa,” he says. “I see potential in infrastructure too and obviously agriculture. Our group — PSG Group — reflects that. We, as PSG, 36
psg capital at a glance MANAGING DIRECTOR: Johan Holtzhausen
DESCRIPTION: Boutique corporate finance company
PARENT COMPANY: PSG Group Limited
CLIENTS: (include) Zeder Investments, Paladin Capital, Pioneer Foods, JD Group, mCubed, Capitec Bank, and DiamondCorp
Johan Holtzhausen, Managing Director, and his family
I have to stress that it comes down to dedication. We are selfless and have incredible focus and commitment. We’ve also got the might of PSG Group behind us
see Africa as a strong focus area. Going forward, we will centre on that. There are a lot of companies and investors interested in Africa and we are the gateway to it, given our expertise that we have already built up.” Mr. Holtzhausen knows his stuff. He is a qualified attorney and has been involved in corporate finance since 1995, having implemented various corporate finance transactions and listings since then. “What are PSG Capital’s key strengths?” he concludes. “I have to stress that it comes down to dedication. We are selfless and have incredible focus and commitment. We’ve also got the might of PSG Group behind us. “We are excited by the future. Africa is full of potential and we look forward to helping our clients fulfil it by providing funding, advice and access to markets. “There are lots of opportunities.” END www.southafricamag.com 37
SERvICE DELIvERy LIES In
s U P P lY C H A I n M A nAG EM En T
ethekwini mayor James nxumalo has a lot on his plate. He has promised to deal with corruption in the municipality and to speed up service delivery, amongst other things. The key to achieving that is better supply chain management, he says. By Ian Armitage 38
eThekwini Municipality FEATURE
Thekwini Municipality is described by its peers as Africa’s best run and financially strongest local government. It continues to make strides forward. But it is not without challenges. New eThekwini mayor James Nxumalo promised to deal with corruption in the municipality. Reporting on his first 100 days in office in September, Nxumalo said that the fight was starting to take shape. The council’s executive committee was finalising the anti-corruption and whistleblowing policies, which would be adopted by the full council. In his first speech, Nxumalo vowed to deal strictly with councillors doing business with the municipality and said they should declare their business interests. “Corruption, fraud and maladministration are on top of the agenda,” he tells South Africa Magazine. “We are being very strict this time. We will not allow councillors to do business with the Municipality. Councillors are being trained to understand that the law does not allow them to do business with the Council and those own companies have been urged to resign from those companies as a matter of urgency and declare their business interests. That includes Municipal officials.” Councillors are being trained on the relevant acts and regulations governing the conduct of public servants.
Councillors are being trained to understand that the law does not allow them to do business with the Council and those own companies have been urged to resign from those companies as a matter of urgency
eThekwini Municipality FEATURE
“All Municipal departments should adhere to the supply chain management processes and should not flout those procedures, particularly in the awarding of tenders,” Nxumalo says. To curb corruption, the municipality had hired a compliance officer, a first for eThekwini, who will assess all tender documents and supplychain management processes to ensure there were no shortcuts, non-compliance or irregularities. The anti-corruption policies were formulated before Nxumalo had taken office, but they have been implemented under his administration. Nxumalo says he has met two challenges in his 100 days: shack fires and the increasing number of informal settlements in the city. He said the city was running out of land to build low-cost homes on and this could hamper service delivery. “We have the eThekwini Municipal Supply Chain Management Policy in place and always look to improve the procurement process,” Nxumalo says. “This means the municipality can obtain best value from the contracts it enters into and can minimise the administration costs of buying. Significantly, our Supply Chain Management Unit is also responsible for helping to achieve local economic empowerment. All procurement must comply with the municipality’s rules and policies as well as provincial and national laws. The municipality currently has a budget in excess of R28.6 billion and is committed to service delivery.” 40
Mayor James Nxumalo
eThekwini’s supply regulations are garnered from government’s Municipal Finance Management Act (MFMA). “We are building much stronger relationships [with suppliers] now,” Sandile Ngcobo, Deputy Head of Supply Chain Operations at eThekwini Municipality, tells South Africa Magazine. “The work we have done has had a positive effect on them also: they are becoming more transparent. “We are in a position where we can properly evaluate them and make sure they are the right fit.” Clause 14 of the eThekwini Municipal Supply Chain Management Policy requires that the municipality keeps a list of accredited prospective providers of goods and services that must be used for the procurement requirements through written or verbal quotations and formal price quotations. The municipality is required to - at least once a year - invite prospective providers of goods or services to apply for evaluation and listing as accredited prospective providers. “eThekwini Municipality can only [deal] with suppliers that have been registered and accredited,” Ngcobo says. The only way the municipality will issue orders, he
Contact Us: 209 Umhlanga Rocks Dr Durban North 4051 Tel: 031 563 8180 Fax: 031 563 7912 Email: email@example.com.
eThekwini Municipality FEATURE
stressed, is to suppliers that are registered and accredited. The system works. “We have really improved our procurement competency and received an Institute of Purchasing and Supply South Africa Appreciation Award for its procurement training and skills development work in the public sector,” Ngcobo adds. “We have raised procurement knowledge, in the industry and within eThekwini’s supply chain operations, to an expected level of professional competency. “I feel that we have made real improvements in the skills [of our supply chain personnel] and are on the right track;
This charter will take local government forward
this is in line with our centre of excellence programme. “Of course it is early days, but we will see more benefits in the future as we get better understanding of things through the tools we have in place, the technology we are investing in and the systems we have.” Mayor Nxumalo has been described by many as the perfect man for the job with his experience in local government. He will head the KwaZulu-Natal’s biggest Municipality with a budget of R28.6 billion. “We have done a lot as a Municipality in terms of infrastructure development but we always want to do better,” he continues. “We want to accelerate
our programmes, like the provision of basic services. We all know that there is a housing backlog.” In light of this, the pace of new houses being built each year is being increased and Nxumalo has repeatedly urged councillors, ward committees and the community to work together to fast track service delivery. “Service delivery should be people driven; it should not be top down. That is why public participation will be a priority,” he says. Durban recently hosted the 17th Conference of Parties (COP-17) to the UN Framework Convention on Climate Change and Nxumalo led the signing of the Durban Adaptation Charter for Local Governments, a significant milestone. Mayors and senior city officials from more that 100 cities from around the world, including Nxumalo, committed their cities to intensify action and accelerate their adaptation efforts. Nxumalo says that achieving agreement on the Durban Adaptation Charter was a
“watershed moment” and critical to tackling climate change. “The world’s urban population is growing rapidly and cities need to place adaptation at the core of their future urban development strategies and climate change response plans. Globally, local governments play a strategic role in addressing climate change because of their direct responsibilities in delivering services to communities,” he says. “Cities have also been able to demonstrate leadership and innovation in finding solutions to the impacts of climate change. This charter will take local government forward in a partnership to deal with the many ecological, social and economic impacts that face cities around the world as a result of climate change.” Local governments are blazing a trail for nation states to follow, he says. Durban-born Kumi Naidoo, Executive Director of Greenpeace International, is a fan, agreeing: “It is one of the few practicable things that is going to come out of this entire COP.” END www.southafricamag.com 43
M all o f M auritius , jumps at foreign opportunities
Atterburyâ€™s marketing manager, Zahn Hulme, tells South Africa Magazine about the firmâ€™s success in developing the first regional shopping centre in Mauritius, talks about foreign opportunities, and outlines domestic successes and potential. By Ian Armitage
The Atterbury Group FEATURE
he Atterbury Group is a property investment and development company. It develops and/ or owns upmarket offices, regional shopping centres, residential lifestyle estates, industrial parks and leisure developments. It was founded in 1994 and it head office is based in Pretoria, with an additional office in Bryanston, Johannesburg. “With specialist staff focusing on two key areas, property and investment, ensures that each area is given the best attention,” Atterbury’s marketing manager, Zahn Hulme, tells South Africa Magazine. “We have been active since 1994 and have built up a sound reputation for delivering award-winning real-estate developments across all commercial property sectors. “We take on both Greenfield and Brownfield projects with the objective of developing A-Grade business and commercial nodes. “Property means something different to us; it is not just about bricks and mortar, blueprints or financial transactions.” This unique approach has gained industry recognition and Atterbury has scooped several accolades for the best property developer in South Africa, including the PMR Diamond Award for Best Property Developer overall in 2010 and 2011, the Investment Property Databank (IPD) Direct Property
Investment Award 2011, and more recently the Construction World ‘Ten-year best projects outside of South Africa’ for the company’s latest development in Bagatelle, Mauritius. Atterbury has enjoyed tremendous local success and is well placed for the future, following its first major international venture with the award-winning development of Mauritius’ first regional shopping centre. “That is a fantastic project,” says Hulme. “We are investigating several options within the African continent and we see major opportunities.” Atterbury announced its first major and direct offshore venture in 2009 with the Mauritius regional shopping centre development. The R800 million shopping centre, which is called Bagatelle Mall of Mauritius, is part of a larger mixed-use development undertaken through a joint venture with Mauritian investor ENL Group. “It is a huge development,” Hulme says. “It is located between Port Louis and Cyber City, and the mall recently opened. The 40,000m² development obviously includes the Mall of Mauritius, but it will ultimately feature a motor city, a 100-room business hotel, offices, a light industrial area and a residential area. “The mall is just the first phase. We only used about 35 percent of the total land. The hotel will be completed early in 2012.“ www.southafricamag.com 45
The Atterbury Group FEATURE
Hulme says it emerged in a strong position because The mall is more than 90 percent of the fact that a lot of its developments were at a far let and has attracted significant advanced stage when it hit. interest from South African Confidence in the group was registered by Nedbank businesses as well as other Property finance, which gave it R1.2 billion debt to international retailers that wanted develop first and second phases of the Lynnwood exposure to the Mauritian market, Hulme says. Retail giants like Pick n Pay and Woolworths have taken up space. “There are also popular restaurants such as Ocean Basket, Nando’s and KFC, and much, much more,” Hulme says. The Mauritian development, she says, meets Atterbury’s “strategic criteria” of investing in a stable offshore economy, while partnering with well-established local partners. The entrance to City Lodge hotel “Mauritius is rated among the top 25 global offshore platforms, with a local population of around 1.4 million and a growing number of tourist arrivals. “It is a good investment Zahn Hulme, opportunity and Marketing destination.” Manager, Atterbury Atterbury emerged from the 2009 recession in Properties a relatively healthy state, so it is little surprise that the firm is enjoying Adam&Adams Attorney’s stylish head office at Lynnwood Bridge success.
Mauritius is rated among the top 25 global offshore platforms. It is a good investment opportunity and destination
The Atterbury Group FEATURE
Contemporary architecture defines Atterbury’s Lynnwood Bridge 48
Bridge multi-use development in Lynnwood, Pretoria. “Lynnwood Bridge began as a vision about five years ago,” Hulme explains. “It is a new landmark in a highly visible location on the recently upgraded Lynnwood off-ramp from the N1 highway in Pretoria. “It holds the record for the largest loan amount – R1.2 billion – advanced to a private property developer.” The mixed-use development, that will ultimately measure 73,000m² is mixed-use in every sense, she says. “It was developed in phases and is a combination of lifestyle and office park unlike any other in Pretoria,” Hulme explains. “It began with a City Lodge Hotel, we then progressed onto 15,000m² offices, comprising two buildings housing tenants like Aurecon and Adams & Adams; Atterbury Property’s Head Office is also part of it. Phase 3 included a Shopping Centre of 13,000m² that was completed in May 2011 and includes the likes of MTN, Woolworths, Safari & Outdoor and Café Beyritz. The shopping centre includes basement parking, as well as an area that encompasses 4,500m² of theatre and a gym.” Perhaps Atterbury’s most significant development since its inception in 1994 is the Waterfall Development, which is just minutes from Joburg, the financial hub of Africa. “We have an 80 percent share of the Waterfall project, with rights of 1.4 million m² developable bulk,” says Hulme.
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2011/12/06 09:02:44 AM
“We successfully bought back the Waterfall Development Company shareholding in June this year and are very excited about this one; it will close the gap between Midrand, Woodmead, Sunninghill and Buccluech and will transform this area into a large commercial growth point.” Atterbury Investment Holding, the investment holding company of the Atterbury Group, owns these assets. Atterbury Property Developments is the development leg of the group. Asset management is handled by Atterbury Asset Managers.
To learn more visit www.atterbury.co.za.
REHM- Grinaker Construction Co. Ltd. is a leading multidisciplinary construction ﬁrm operating on the island of Mauritius.
Founded in 1991, REHM- Grinaker operates under the same values as their major shareholding company Aveng Grinaker- LTA who are one of the largest construction companies in South Africa. REHM- Grinaker has grown from modest beginnings to becoming a well recognized leading construction company reputed throughout the island for delivering Quality Work on Time.
In its 20 years existence Rehm- Grinaker which employs a 1,500 strong 100% local workforce has contributed to all sectors of the thriving Mauritian economy through the construction of all types of major infrastructure and building works. This year amongst other projects, REHM- Grinaker has successfully completed the construction of the biggest shopping mall ever to be built in Mauritius, the Bagatelle Mall of Mauritius developed by a partnership between South African group Atterbury and Mauritian group Espitalier-Noël. Contact Person: Mr K. SchwechheimerManaging Director
Address: Royal Road, Arsenal, Terre Rouge, Mauritius
Tel: +230 249 3501 Fax: +230 248 8287 e-mail: firstname.lastname@example.org
VP I f lIsTs
on THE JsE, IS WELL-PLACED FoR
Vunani Property investment Fund (vPIF) CEo Rob Kane tells South Africa Magazine about the firmâ€™s recent JSE-listing and how it is preparing for an eventual office sector recovery. By Ian Armitage 50
Vunani Property investment Fund FEATURE
he demand for office space has shrunk under the weight of global economic concerns, but that has not stopped JSE-listed property funds from spending billions acquiring existing office buildings in recent months. Vukile Property Fund announced plans to acquire a portfolio of 20 properties from Sanlam Life Insurance – at a cost of R1.5 billion. Redefine Properties meanwhile, paid R1 billion for six office buildings in Johannesburg and Cape Town. Vunani Property Investment Fund spent R354.5 million on office properties in Rustenburg, Port Elizabeth and Cape Town. Speaking to South Africa Magazine, Vunani Property Investment Fund CEO Rob Kane says the fund was taking advantage of the dip in demand - and the lower prices that come with it. “Property moves in cycles,” he says. “We think it is a good idea to be buying assets when the market is low and not at the top of the market when assets are fully priced. While it is almost impossible to determine the exact bottom of a market, we think we must be at or near it, and therefore believe now is a good time to buy.” He sees “solid opportunities” in the office market. “In recent months we have bought some very stable assets in Port Elizabeth, Rustenburg
Vunani Property Investment Fund FEATURE
and Cape Town, all the properties are in areas that we believe are strengthening,” says Kane. “We chart 12 months in terms of a pick up in the office sector. We are at the bottom; it is very difficult to forecast and judge exactly where the bottom of the cycle is. “But this is a great time to buy, and provided we manage the properties well, we believe we will retain the tenants in our portfolio for many years to come.” Vunani has an almost exclusive exposure to the office sector. Most property owners offer a mix of retail, industrial and offices. It is this focus that has enabled VPIF to deliver superior returns since 2006. “I must note we don’t manage the buildings directly – we would rather outsource that function to the best possible property managers that we can find and employ them. That leaves us free, hopefully, to do a bit more thinking and to spend time just watching the cycles; knowing when to be brave and knowing when to sit back!” VPIF was originally assembled in 2006 as a BEE initiative together with shopping centre owner Hyprop Investments. The latter still holds a stake in the company. With his colleague Pieter Mackenzie, Kane has over the past five years grown the portfolio to over 22 buildings, worth around R1050 million. “We have built the company up,” says Kane. “It culminated in our listing on the JSE earlier this year. The prelisting take-up exceeded our expectations and enabled us to list the fund with almost zero debt. That allowed us to immediately 52
start looking for value-enhancing acquisition opportunities. “Our focus is on continuing to grow the portfolio, while maintaining the quality of the properties and delivering superior shareholder returns.” Although Vunani decided to bring an office-focused fund to the market while demand for commercial space remains in the doldrums, it has been a hugely successful move. “Yes, the office market is currently more depressed than the retail and industrial sectors, but that means the office sector offers the best rental recovery upside once demand turns – and it will,” Kane stresses. “We actually came to the market at an attractive forward yield of 9.7 percent. This compares well with the market average for listed property of 8.4 percent.
“The fact that few new office buildings have been developed in recent years will create a shortage of supply downstream, which will further support rental growth, and is why I’m so confident. However, we will play only in the middle of the office market — mainly A and B+ grade buildings — in prime locations. “Since listing in August we have acquired over R350 million worth of new property.” Vunani, he says, doesn’t want to be at the top end, which is fully priced with limited
Rob Kane , CEO, VPIF
Since listing in August we have acquired over R350 million worth of new property
growth opportunity. The bottom end of the market is just as risky as these properties tend to be in poor locations, and don’t hold their value. At present the majority of Vunani’s portfolio is spread between Joburg and Pretoria and the balance of buildings are mainly in Cape Town’s central business district (CBD). Flagship properties include Athol Ridge in Sandton, Standard Private Bank’s head office in Hyde Park, Vodacom Park and Linger Longer in Sandton and Wale
Vunani Property investment Fund FEATURE
Street Chambers in Cape Town’s CBD. “Vunani has strong empowerment credentials, so the fund is comfortable to negotiate leases with government as well,” Kane adds, explaining that nearly a quarter of Vunani’s portfolio is already let to government tenants. “Others include Standard Bank, ABSA, Vodacom, Aegis BPO and Telesure Group.” For the period from 2006 to 2010, Vunani recorded a total compounded return of 34.3 percent while income growth was an impressive 18.6 percent per annum. “Since 2006, we have shown a 34.3 percent compounded annual growth,” Kane says. “I don’t think many people have done that, in any industry. Many people look at us and say, ‘it is impossible’, and ask how we achieved it. Well, the way we did it was through the constant reworking and upgrading of the portfolio. We know how to turn a B grade into ENS longRoadVunaniDec2011 12/7/11 8:47 AM Page 1 an A grade, and so on. We have great assets C
we’ve refurbished, and that is very much a feature of the fund. Since we listed we have started two redevelopments in the fund and a rezoning of another two properties. It is a constant process, but it is a lot of fun. “Ours is a remarkable story,” he adds. “What’s the secret? I think there are a few things, but predominantly, Vunani is a very entrepreneurial organisation; there is a cando attitude, which I know sounds cliché, but it really is there. “My long-term plan for the fund is that I would like to, without reducing the quality of the yield, grow so that we can look back in years to come and have a substantial fund that is very well run and is a darling for investors.” Vunani Property Investment Fund is part of Vunani Ltd, a BEE financial services company. To learn more visit www.vpif.co.za.
Giving you the complete picture KPMG’s professionals are dedicated to helping you manage your business challenges and maximise your opportunities. Our experts see through the complexities to give you a complete picture, address tough challenges and provide multi-disciplinary solutions that are clear and practical. For more information, contact Gary Parker (Director) on +27 (0)11 647 6972 or e-mail gary.parker @kpmg.co.za kpmg.co.za
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connected K eepi n g Namibia
Government-owned Telecom Namibia is the Republic of Namibia’s national telecommunications operator. South Africa Magazine looks at the country’s telecommunications revolution, specifically its connection to the WACS network. By Ian Armitage
n this day and age, the role of technology in improving the lives of the people cannot be underestimated. More than ever before, we are buying goods and services online, sending messages across the globe to loved ones, using the web for business, and receiving instant replies. Communications is the cement that knit a country’s industry sectors together and connects them to global markets. This is a fact not wasted on Telecom 56
Namibia, whose aim is to ensure the country has a “dependable, modern and fit-for-purpose communications system”, as it aims to attain ‘developed nation’ status by 2030. Telecom Namibia, the largest ICT provider in Namibia, has proved itself a proactive player since its foundation in 1992, establishing an integrated voice, data and text network throughout the country. The Windhoek-based parastatal now serves almost 160,000 customers in a country of some 2.18 million people, and has a well-educated workforce that is over 1,000 strong.
Telecom Namibia FEATURE
“We work in a uniquely challenging environment. The population is spread across 824,000 square kilometres,” Oiva Angula, senior manager of Corporate Communications and Public Relations at Telecom Namibia told a South Africa Magazine researcher in November. In February, Namibia’s link to the 14,900 km West African Cable System (WACS) undersea telecoms fibre optic cable landed, which will allow for high bandwidth connectivity for the country and its neighbours when commercially commissioned during 2012. The cable will link Africa with Europe is set to significantly improve current broadband capacity. “WACS will provide direct connectivity between Namibia, West Africa, Portugal and the United Kingdom,” said Telecom Namibia’s managing director Frans Ndoroma at the connection ceremony. WACS will enable “seamless connectivity” and the cable enters Namibia
at Swakopmund beach, 350km west of the capital Windhoek. It was developed by Telecom Namibia and other telecommunications investors in partnership with Alcatel-Lucent Submarine Networks, at a cost of around $600 million. WACS is designed to support present and future Internet, e-commerce, data, video and voice services while also making use of dense wavelengths division multiplexing (DWDM) technology, which enables bidirectional communications over one strand of fibre, as well as the multiplication of capacity. The cable will provide an Internet speed of at least 5.12 terabits and will be extended to Botswana, Zambia and Zimbabwe; the practical result will undoubtedly be to bring down prices for Internet and broadband users, Telecom Namibia said. “Telecom Namibia is deploying the country’s first optical DWDM network, increasing its transmission capacity to up to 1.6
Tbps,” the company explained in a recent release. “New 10G and 40G channels will provide low-latency services and improved international connectivity. Nokia Siemens Networks will provide the DWDM equipment and related services, the benefits of which will also be extended to neighbouring Zambia, Zimbabwe and Botswana.” According to the release, the DWDM deployment will take place on Telecom Namibia’s existing national fibre optic network and partially on the optical ground wire (OPGW) routes of NamPower, the state-owned power firm. The aim is to provide an even better and stable long distance transport network for national and international traffic and services. “The network will be connected to WACS to ensure increased bandwidth and higher data speeds, along with improved direct international connectivity,” the statement said. “Nokia Siemens Networks will provide a scalable and cost-effective transport backbone to address the anticipated increase in transmission volumes, especially with WACS expected to launch in the first quarter of 2012. The DWDM network is also completing yet another element in our Next Generation Network as part of our Strategic Blueprint,” said Hein Bader, chief operations officer, Telecom Namibia. www.southafricamag.com 57
Telecom Namibia FEATURE
Nokia Siemens Networks will provide its hiT 7300 DWDM platform, part of its Liquid Transport architecture that makes the optical transport layer more flexible and software-configurable, allowing for more cost-effective traffic transmission. Nokia Siemens Networks will enable Telecom Namibia to add capacity as and when it requires by simply adding a transponder to the DWDM system. “The contract includes delivery of services such as installation, network planning and optimisation and hardware, software and competence development services,” Telecom Namibia said. In addition to that, in May, the parastatal announced it had developed a SkyEdge II Broadband Satellite Network. The network was deployed to 372 locations throughout Namibia. The SkyEdge II VSAT network is meant to support voice and Internet services for consumers and companies throughout Namibia. as well as telephony and broadband internet services to remote communities across the country. The “multi-service platform” is capable of 58
delivering high-quality voice, broadband data and video services for different environments including large companies, rural networks, cellular backhaul and government network applications. It means Telecom Namibia is now uniquely positioned in the market, combining its terrestrial and satellite capabilities with its extensive national coverage of a 100 percent digital network, including IP/MPLS (internet protocol/multiprotocol label switching), CDMA (code division multiple access), WiMAX (worldwide interoperability for microwave access), ADSL (asymmetric digital subscriber line), leased lines and ethernet. “We are pleased to have added SkyEdge II to our portfolio of value-added satellite business solutions. This multi-star technology enables us to operate satellite networks for our customers in a centralised manner increasing the operational efficiency and utilisation of our resources,” said Angula. In the meantime, it was reported that Telecom Namibia has acquired the total share capital of leo™, a company licensed to provide mobile telecommunication services in Namibia. This second cellular operator was launched in 2007 as Cell One, but was rebranded to leo™ when Telenor and other shareholding was bought-out by Telecel Globe in September 2009. To learn more visit www.telecom.na. END
Transtech commenced business in August 1999, operating primarily in the telecommunications industry. Transtech has grown organically and encompasses a wide range of products and services, focussed on adding value in the telecommunications industry. Transtech Group of companies offers complete turn-key projects in the telecommunications, IT and energy market. Core competencies include installations, rigging, commissioning, and maintenance of various equipment. These competencies are further leveraged to add value in the mining industry, IT sector and electric power market.
ElI T E SPECIALISTS In
Elite Fibre manufactures insulated truck and trailer bodies and says it is South Africa’s leading manufacturer of GRP, insulated and semiinsulated truck and trailer bodies and GRP trailers. By Ian Armitage
n 1999 Mark Watters and Shawn Mulder started a small company in Montague Gardens, Cape Town, doing repairs of GRP vehicle bodies. They called the company Elite Fibre. Today, it is one of the leading brands of GRP vehicle bodies to the food chain distribution sector. “Very few of the major chains have not used us,” Watters tells South Africa Magazine. Elite Fibre is one of the industry’s leading brands and manufactures high quality GRP, insulated and semi-insulated truck and trailer bodies and GRP trailers, while also offering a repairs service to all truck and trailer load bodies, including steel repairs and spray painting. “We are proud to say that we are the largest manufacturer of GRP, insulated, and semi-
Elite Fibre FEATURE
fIBRE TRUCK & TRAILER AnD REPAIR
insulated load bodies in South Africa,” the company’s website says. “We have a reputation for delivering the best quality and service. We are also based in Johannesburg and Durban,” it continues. Elite Fibre has proven to be a top quality refrigeration body manufacturer in South Africa. Its approach to manufacture, in both the use of quality components and strict control over the manufacturing process, is what impresses customers, Watters says. The client base has — as you would expect — expanded over the years to include many that operate large national fleets: Parmalat, Clover, Blue Ribbon, Pick ‘n Pay, Shoprite Checkers, Sasko and HFR Transport, for example. “The list of Elite Fibre customers has expanded
to include a wide cross section of the food industry, supermarket chain groups, transport companies, most of South Africa’s transporters of hanging meat carcasses and freight companies,” Watters says. “Many of our customers are national operators and deserve to have a quality back-up service.” Although the core business of Elite Fibre is the manufacture of rigid GRP vehicle bodies, it has a number of strings to its bow. In 2004, Elite Fibre bought Stargate Bodies in Johannesburg, a company with a reputation for service and quality of product in GRP vehicle bodies. In 2005 www.southafricamag.com 61
Elite Fibre FEATURE
Elite Fibre Gauteng moved to larger premises to accommodate the increase in the volume of business. “Instead of opening a new branch from scratch in Gauteng, it was decided to join forces with Rediwaan Khan of Stargate Bodies, who has an established reputation for quality workmanship and a reliable service,” Watters says. “Having three branches that maintain the same quality standards, has proved beneficial in meeting the delivery demands of our national clients, as an example for a recent order of RTT, we manufactured the rigids in Johannesburg and the trailers in staff, a number of which have been with Cape Town.” us since day one and are well known to Repairs to GRP all our clients,” Watters, who has been bodies remain a in the GRP vehicle body business for the priority at Elite Fibre. past 17 years, told Cape Business News. “Service and In 2010, Frans van Vianen joined quality of product is Elite Fibre as a Director, being in the of prime importance Refrigerated Transport business for and is very evident in 30 years. the lasting strength “We are very excited to have a person and performance Mark Watters, with Frans’ experience and capabilities, of our bodies. In Elite Fibre being part of the company,” says Watters. particular our trailers Earlier this year, Elite Fibre have shown excellent announced a new partnership with Afrit, performance and one of the most respected and innovative are largely due trailer manufacturers in Africa. to there being no In the past Afrit made use of very compromise on the expensive materials in the manufacturing amount of materials of refrigerated bodies and therefore were used, quality of not price competitive. materials and workmanship. There In a release, Afrit said, thanks to the new business are no short cuts or skimping on agreement, it is able to offer “refrigerated trailers at a materials as this will only result in much more competitive price”. comebacks and product failures. “Afrit recently engaged in a new business Our quality of workmanship stems agreement with Elite Fibre that will provide mutual from our reliable and committed
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parties,” a release said. “Afrit purchase insulated bodies from Elite Fibre and in return Elite Fibre will make use of Afrit chassis. The new venture will lead to improved prices, which benefit our clients. “Elite Fibre is one of the largest manufacturers of GRP insulated and semi-insulated load bodies in South Africa,” it added. “The company is well renowned for delivering quality products and services. They have been in business for quite a few years with branches in Cape Town, Durban and Gauteng.” Afrit has sold more than 30 refrigerated trailers with Elite Fibre bodies since the new agreement. “We are looking forward to the road ahead and the new heights that both companies will be looking to achieve,” Afrit said.
transport-sa @ geagroup.com www.gearefrigeration.co.za
benefits for both SouthAfricaMag 2011 Half Page Transport.indd 1
To learn more about Elite Fibre, visit www.elitefibre.co.za. END
2011/12/08 04:20:54 PM
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new rolling stock key to unlocking SA’s passengerrail future, says Passenger rail Agency of South Africa (Prasa) CEo Tshepo Lucky Montana. By Ian Armitage
he priority for passenger rail in South Africa today is securing new rolling stock for commuter rail operator Metrorail and longdistance passenger carrier Shosholoza Meyl. Both are Prasa companies. The business plan for the R97 billion, 18-year project to recapitalise Prasa’s rolling stock fleet has been approved by the Intergovernmental Steering Committee, Prasa Group EXCO and Board. According to Prasa spokeswoman Nana Zenani, Cabinet has given approval for the investment and the funding proposal for the programme has been submitted to the National Treasury. “Proposals for new rolling stock have already gone out, with the first train to hit the tracks in 2014/15,” says Zenani. “Procurement of new rolling stock is vital,” she adds. Prasa is at the forefront of Government efforts to transform public transport in South Africa and to support its socio-economic and transport objectives. Prasa CEO Lucky Montana says Prasa is “all about mobility and accessibility – the movement of people – and providing access to real opportunities that will help all South Africans to improve their lives”. He tells South Africa Magazine: “Prasa is focusing its energy to create a railway service that forms an integral part of the renewal of the www.southafricamag.com 65
Rail services form the backbone of public transport systems in the major metropolises in South Africa
Tshepo Lucky Montana Group CEO Lucky Montana is the Group Chief Executive Officer (Group CEO) of the Passenger Rail Agency of South Africa (PRASA), formerly the South African Rail Commuter Corporation (SARCC). Montana, a former Deputy Director-General responsible for Public Transport (bus, taxi and rail operations) in the Department of Transport, was seconded to the SARCC as CEO in July 2006, and his permanent appointment was approved by Cabinet in October 2007.
transport system to provide effective and efficient public transport to all South Africans. “Rail services form the backbone of public transport systems in the major metropolises in South Africa and by acknowledging South Africa’s strong railway tradition, Prasa’s key objective is to promote rail as the preferred mode of transport for the majority of the people. “The reality is that the poor condition of the existing rolling stock is the single largest obstacle in the way of Prasa achieving its strategic objectives to be the backbone of public transport by 2015,” he adds. “The majority of the current rolling stock is around 33 years and threatens the reliability and safety of rail commuter services throughout South Africa. There is growing consensus that things can no longer be done in the old way. There is a need for rapid change and Prasa must lead the way to modernise the public transport system and transform South Africa’s mindset towards using it.” According to Montana, the rejuvenation of the public transport system
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comes against the backdrop of major changes in the world that present opportunities for the railway industry to play a positive and leading role in global development. “The renaissance to position public transport as the mode of choice for all South Africans will only become a reality through adequate investment in our neglected system,” he says. “The reward for this investment is immeasurable and would change the lives of ordinary South Africans for the better.” The overall investment in rail by Prasa spans several aspects of the commuter rail services including infrastructure and rolling stock. “The rolling stock underpins everything,” Montana stresses.
“We have therefore committed to embark on a programme to invest significantly in new rolling stock over the next 20 years.” He pledges to make “the delivery of the first batch of modern trains a reality” by 2015. A signalling upgrade project it is already rolling out is progressing satisfactorily. The first tender has already been awarded in Gauteng. KwaZulu-Natal and the Western Cape province have recently been published for bidders. “The signalling project will see the delivery of a modern, state-of-the-art signalling system for South Africa in key high passenger volume rail corridors with the first phase to be completed over the next five years,” Montana says. “This signal technology upgrade started with the appointment of Siemens SA in December 2010, on a contract valued at R1 billion for the re-signalling of key commuter rail corridors and the construction of a single Central Nerve Centre (CNC) for the Gauteng commuter rail network. Construction is already underway in the
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Lenz-Midway area as part of the first phase. The introduction of a new electronic interlocking signalling system is key to any modern railway operation. The total cost of the signalling for the entire commuter network would be R17 billion over the next 10 years.” Montana notes that only a small percentage of Prasa’s current 162 signalling installations have not yet exceeded their design life. He adds that he is aware Metrorail is not providing the services the commuters of South Africa are currently demanding. “I have realised we have not met the demands of customers wanting better services.” Montana stresses that Prasa’s recent hard-won gains of growing income, 70
upgraded coaches, reduced crime and improved station facilities are all negated by rolling stock’s average age of 33 years, already at the end of their design life and with a high likelyhood for general unreliability and the inability to deliver on commuter demands. “Prasa has 406 train sets, or 4,660 coaches. A third of them are due for retirement in the next three years. Anything short of a major recapitalisation effort will have grave consequences for the passenger rail system in South Africa.” Montana concludes that the costs of running the current system “ are huge”. “It is not sustainable. We have reached the end of the design life of a 40-year-old passenger rail system.” END
Our multi-disciplinary teams have deep expertise on Africa’s contrasts and opportunities and boast a blend of global connectivity and local knowledge to service multinational, regional and local clients. This allows us to deliver informed perspectives and clear, valueadding solutions. PRASA has made a significant contribution to the basic transport challenges in South Africa. KPMG led the feasibility study on PRASA’s R120 billion metro ﬂeet replacement programme and was appointed as PRASA’s lead Financial and Commercial and Joint Localisation Advisor for the procurement phase of this programme. KPMG is proud of our association with PRASA and we look forward to working with them in future.
DeBuys Scott, Head of Global Infrastructure – South Africa DeBuys.Scott@kpmg.co.za
© 2011 KPMG Services (Proprietary) Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in South Africa MC7273. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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HELPInG THE RAInBoW nATIon
South Africa has a modern and well-developed transport infrastructure. The roads are world-class. The country’s aviation infrastructure is the best in Africa. Rail is fast improving. It is all helping the rainbow nation shine.
By Ian Armitage
ood quality infrastructure is a key ingredient for sustainable development and all countries need efficient transportation systems if they are to prosper. South Africa has world-class infrastructure, including a modern transport system: I think we proved just how good our networks actually are during the World Cup. We hosted a fine tournament, a tournament that is set to have a lasting legacy. According to FIFA, the 2010 World Cup attracted a total of 3.1 million spectators. This figure excludes the millions of people who travelled to the fan fests, public viewing areas and other entertainment centres to watch the matches. Many of them relied on public transport to get around.
“In just one month, in addition to daily normal commuting services, millions of fans criss-crossed the country, with the majority of them using public transport, mainly taxis, buses and trains,” says Sibusiso Ndebele, Minister of Transport. “With regards to transport, there were not any reports of major accidents or incidents.” Given decades of under-investment in public transport, access and mobility was a major challenge in hosting the tournament, he says. “South Africa rose to the challenge and transport moved smoothly. The government identified public transport as the key legacy project for this World Cup and over the past few years a major capital injection into transport-related infrastructure and operations has begun to produce some important results.
South African Department of Transport FEATURE
“Government invested billions of rand to ensure a safe, efficient and reliable public transportation system for the World Cup. This investment included customerfocused and world class airports, upgraded train stations and refurbished coaches to luxury buses and integrated rapid public transport networks such as the bus rapid transit system.” These investments will be enjoyed by generations of South Africans for many decades, Ndebele says.
GAUTENG TOLL ROADS South Africa is well on its way to overhauling its public transport system and the investment has been widespread. Gauteng drivers are among the many to benefit, namely through SANRAL’s R20 billion Gauteng Freeway Improvement Project (GFIP). The scheme will see freeways opened up to at least four lanes
and in some cases, six in each direction. Other measures include improved interchange access, better lighting, traffic management strategies such as high occupancy lanes, intelligent transport management systems including live cameras and electronic signs that supply up-todate information, and electronic toll collection. “Gauteng is the economic hub of South Africa,” GFIP project manager Alex van Niekerk tells South Africa Magazine. “The province has developed beyond its infrastructural capabilities, with roads unable to keep abreast of increasing traffic demands.” The GFIP comprises numerous different phases to upgrade and implement new highways of an ultimate 560km highway network. The first phase, comprising the upgrading of 185km of the highways, is currently under www.southafricamag.com 73
South African Department of Transport FEATURE
construction and close to completion. “The GFIP concentrates on the N1 between Tshwane and Johannesburg,” says van Niekerk. “It also includes other major arteries such as the N3, N12, N17 and the R21 route from Tshwane to OR Tambo International Airport. “Bottlenecks at interchanges will be significantly reduced,” he adds. The relief is already evident, as motorists are enjoying much freer flowing traffic through the recently completed intersections such as Malibongwe, William Nicol, Rivonia and Gillooly’s. A total of 34 Interchanges will be upgraded in phase one. “What makes the project unique is that SANRAL is set to implement an openroad tolling system,” van Niekerk says. “A number of overhead toll gantries will be erected along the GFIP route in order to collect the toll fees. This ultimately means that the road users will only pay for the kilometres travelled -- calculated by the number of gantries passed -- and not for the entire stretch of freeway that is tolled.” This will be Africa’s first open road tolling system and the biggest implementation of its kind in the world. It will help ease congestion and delays in travel time, Van Niekerk says.
RAIL IMPROVEMENTS As well as improvements to our roads, we are also witnessing huge improvements on our rail systems: South Africa has targeted investments on road and rail networks to stimulate its public transport operations. In recent years huge strides have been taken to revive train travel as a viable public transport option, including the launch of the Passenger Rail Agency of SA (PRASA), which was heralded as “a new era in passenger rail travel”. PRASA was tasked with effectively developing and managing “rail and related transport infrastructure, to provide efficient rail and road based passenger transport services within, to and from urban and rural areas.” Today, the likes of Metrorail and Shosholoza Meyl, formerly under South African Rail Commuter Corporation (SARCC), are all part of PRASA. “Between 2007and 2010, Government invested over R25 billion into PRASA,” says Lucky Montana, Group CEO for PRASA. “Our vision is to become the number one public transport operators in high-volume corridors in terms of market share… We are implementing a radical turnaround plan to ensure that the financial position of the Group is strengthened in order to fulfil our government mandate of being the backbone of public transportation.”
NATIONAL AIRSPACE MASTER PLAN 2011–2025 The Department of Transport has also been working to improve air travel and recently announced the approval of the National Airspace Master Plan (NAMP), 2011-2015. The NAMP provides a strategic view and direction of airspace organisation and management within South Africa, as well as the notion of performance-based transition planning at a global, regional and locallevel. It has been compiled in accordance with the National Civil Aviation Policy. 74
Ebamina Trading (Pty) Ltd t/a Inkanyiso Consulting Reg No: 2002/027398/07 Tel: +27(0)31 312 3044 Email: firstname.lastname@example.org Web: www.inkc.co.za
BALANCING DELIVERY AND DEVELOPMENT Technical Design and Programme-Level Support to Public Infrastructure Clients featuring: · Development-focused Construction Programme/ Project Management; · Labour Intensive and other Employment Creation and Black Empowerment Methodologies; · Expanded Public Works Programme (EPWP) compliance and National Treasury Incentive Facilitation/Management; · Skills Training and Development Facilitation for local Community participants. Project / Business Mentorship and Support to BBBEE/Emerging Contractors/other SMME’s featuring: · Pricing, Planning and Powered by: Production Management Systems support; · Health and Safety and other Statutory Compliance support; · Working Capital Finance / Credit facilitation for the Enterprise; · Further Skills Training and Development for the SMME’s key personnel.
The objectives of the Master Plan are “to service the airspace in accordance with International Civil Aviation Organisation (ICAO) Standards and Recommended Practices (SARPS) in such a way that it meets the requirements of all users and particularly, the international community”; “rationalise all managed airspace in accordance with ICAO SARPS in such a way that it meets the requirements of all users by a consultative process, strategically and tactically”; and “minimise all Permanent Prohibited, Restricted and Danger areas in accordance with ICAO SARPS and to facilitate the flexible use of airspace to the benefit of all users.” The Master Plan will, the Department of Transport says, “guide the National Airspace Committee (NASCOM), which has been established through the Civil Aviation Regulations, 1997, in the execution of its mandate, by providing measurable Key
Performance Areas (KPAs), performance objectives, indicators and targets in contemplating amendments to airspace, procedures and infrastructure.” It is a well-timed measure and builds on what has been a successful period for South African air travel. Airports Company South Africa’s (ACSA) R20 billion airports development programme was completed on time for the World Cup and we are set to see further improvement in 2012 and beyond. “Through the National Transport Master Plan (NATMAP) 2050, we are working towards a dynamic; long term; and sustainable Land Use/Multi-Modal Transport Systems Framework for the development of networks infrastructure facilities; interchange termini facilities and service delivery,” the Department of Transport says. Tackling deaths on South Africa’s roads is also another major focus for the Department of Transport. END
EskoM REPoRTs sTRonG
PERfoRMAnCE, oUTlInEs fUTURE PlAns
Green power, keeping the lights on, securing major funding… these are just some of the things keeping the guys over at Eskom busy, says spokesperson Hilary Joffe. By Ian Armitage
skom recently released its interim results, which show a continued strong financial performance. It is a remarkable turnaround for the state-owned power utility, which slumped to its worst ever loss of R9.7 billion in its 2008/9 financial year. “We’ve performed very well,” says Eskom spokesperson Hilary Joffe. “We showed continued financial performance, with a surplus that will be reinvested in the business to ensure financial sustainability and that we can repay the debt raised to fund the new build programme.” The results for the six months to end September 2011 showed increased net profit of R12.8 billion (2010: R9.5 billion), on revenue which increased to R63.9 billion (2010: 51.1 billion). “The revenue growth was driven mainly by higher electricity tariffs, which Nersa allowed from April 1,” Joffe says. “We have now had two and a half years of strong financial performance, which is very pleasing. “It is essential for us in terms of raising the funds we needs to invest in South Africa’s future.” Eskom’s return on assets remained low at 3.7 percent, while group debt had risen to R179 billion and would rise to over R300 billion over the
coming five years as Eskom rolled out its R450 billion capital programme to add 17,000 MW of new capacity by 2017. “We are committed to facilitating the entry of IPPs into South Africa’s electricity market and we look forward to welcoming more new players into the market in the next few years,” Joffe added. Long-term underinvestment in the South African electricity industry for new generation capacity, further compounded by an aging fleet and the need for upgrades in transmission and distribution, have resulted in significant project bottlenecks - and headaches for Eskom. Significantly, it is making good progress on its new build programme and recently secured yet more development finance for ambitious wind and solar projects, with the latest tranche coming in October in the form of an additional $250 million in World Bank funding. “That was for the approved 100 MW Sere wind farm, to be located 300 km north of Cape Town, and the 100 MW Uppington concentrating solar power (CSP) project,” says Joffe. “It increased the amount of development finance available to us for the roll-out of our flagship renewable energy projects. In total now, we have raised around $761 million of low-cost finance for the renewables roll-out.” She says the latest loan is sourced from the Clean Technology Fund and complements the $260 million from the World Bank’s own resources provided to Eskom for the Upington and Sere projects as part of a $3.75 billion loan
approved in April 2010. Clauses attached to the loans secured last year insisted on new generation from cleaner energy sources. “The World Bank approval raised the total we have received from the Clean Technology Fund to $350 million, with the other $100 million facilitated through the African Development Bank (AfDB),” Joffe continues. “Over-and-above that funding, we have also secured further development-finance support of $265 million directly from the AfDB for our green-energy projects, as well as $151 million from Agence France Development. “Those loan packages mean the funding phase for Sere is complete. “These projects have obviously been described as transformational, and could lead Hilary Joffe, Eskom spokesperson
Eskom is actively involved in the renewable energy sector
the way in securing a clean energy future for Africa and improve energy supply,” she adds. “It will accelerate the development of a clean technology industry.” Eskom is under significant pressure to boost generation capacity and provide a stable supply of power. Demand is again reaching 2007 levels, and the system is running very tightly, Joffe says. Eskom’s total capacity is just over 41,000 MW, and it has a 16 percent reserve margin, but that is not sufficient, if it wants to keep an operating reserve of at least 2,000MW at all times to protect the system if units trip unexpectedly. “The system is very constrained,” she explains. “Our continual challenge is to meet demand and keep the lights on, but also take units out of service on a planned basis to do the maintenance they need. To be honest we are struggling to find the space to keep
up with our maintenance schedule. Our fleet is in mid-life, with the many of our power stations more than 30 years old, and they need looking after. Ideally, we would like something like ten percent planned maintenance of our fleet per year, but we are not in a position to do that at the moment – this year so far we have achieved only six percent.” She acknowledges that the decision to build additional power under the current new build programme was taken too late.
These projects have obviously been described as transformational, and could lead the way in securing a clean energy future
“By the time Eskom was given the go ahead by government to build new power stations and new power lines in 2004, it was already too late,” Joffe says. “Eskom began its new build programme in 2005. We have actually put quite a lot of new generation capacity on the grid since then – we have put more than 5,000 megawatts on the grid; that certainly has helped. But the real big capacity that we need will come on line only from 2013, when Medupi, the first of our large new coal-fired stations, starts to deliver
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power to the grid. At least until then, and probably beyond that, the system will be tight and it will be a daily challenge to match supply and demand. That it will continue to be an issue certainly until Medupi and Kusile come on line. “Eskom has, however, become a real expert in running a tight system.” The first unit of Medupi is expected to deliver first power to the grid in 2013, with subsequent units coming online at six to eight month intervals after that. Kusile is expected to come online from the end of 2014. Each of the new plants has a capacity of 4800 MW, so together they will boost the capacity of South Africa’s national grid by more than a quarter, providing the supply needed to meet demand and support economic growth. “We also expect some independent power producers to come on line,” Joffe says. Eskom has over the past year signed power purchase agreements for more than 800 MW of generation with private and municipal producers. It is set to sign further agreements with new independent producers of renewable energy after the Department of Energy announced a list of successful bidders on 7
Kusile is the last stage of our new build expansion profile
Medupi power station, North western view Unit 6, Lift Shaft, Water wall Panel & Air C
November in terms of South Africa’s new renewable energy programme. Eskom is also pushing ahead with its demand-side management levers to reduce the gap, subsidising investment in energy efficient technologies by industrial and mining customers as well as in solar water heaters and low-energy lighting for residential customers. And it is partnering with government and the private sector in a colourful campaign to get South Africans to adopt more energy efficient habits. “If you’re not using it, switch it off,” is a slogan of the campaign. “It is a constant battle,” Joffe says. The completion of the Kusile coalfired power station is expected late 2017/ early 2018 and will constitute the last stage of Eskom’s committed capacity expansion programme.
There has been no approval of or commitment to any new generation after that, Joffe says. “Kusile is the last stage of our new build expansion programme. We aren’t committed to any more after that. “As a country we do need to make decisions on what to do next. Those will be made within the framework of the Policy-Adjusted IRP, which the government put in place earlier this year; the next step is to start implementing that plan and from Eskom’s side we believe decisions must be made soon so that provisions can be made for the period beyond Kusile.” She says in order to meet future obligations, Eskom must continue its sound financial performance, raising capital to build new capacity and improve and refurbish its current operations.
“The IRP sets out a 20-year electricity plan — to 2030 — for South Africa to increase capacity and change the nation’s energy mix and competitive landscape within the context of global warming and globalisation,” Joffe explains. “As a country, we need to provide a secure and affordable supply of power and extend access to electricity for the 20 percent of the population who still do not have it – while at the same time addressing the challenge of climate change. ”We are committed to diversifying our energy mix, to moving towards a cleaner future. And we are looking not only to cutting carbon emissions at our new and existing stations but also to more efficient use of South Africa’s scarce water resources.” With 85 percent of its generation capacity from coal, South Africa is one of the top global polluters and the14th highest emitter of greenhouse gases. At the moment, a few hydro plants, pumped storage, gas turbines, and nuclear power, as well as a few very small wind turbines and solar projects supplement coal use. “Eskom is committed to diversifying its energy mix and moving towards a lower carbon future,” Joffe says. Eskom is responsible for a massive 95 percent of South Africa’s power generation. It is the largest power producer in Africa, providing more than 40 percent of the electricity used across the continent, and the tenth largest utility in the world by generation capacity. The utility owns and operates the country’s national transmission system and provides electricity directly to the country’s largest industrial and mining customers, as well as to about 40 percent of all residential end users in South Africa. Redistributors, including municipalities, supply the other 60 percent of residential users. To learn more visit www.eskom.co.za.
Amalgamated Beverage industries FEATURE
ABI South Africa Magazine profiles Amalgamated Beverage industries (ABI), Coca-Cola’s largest bottler in South Africa, and the soft drinks division of SAB Ltd. By Ian Armitage
oca-Cola is the most recognised brand on the planet. 125 years in the making, it is a billion-dollar product, sold in 206 countries. It has been in Africa since the late 1920s and in South Africa since the 1930s, when the first bottling plant and distribution centre were opened in Johannesburg. Today, Coca-Cola has a presence in nearly all of Africa’s countries; the CocaCola system is one of the continent’s largest employers, with approximately 68,000 employees and 160 plants. Its impressive position is made possible by the hard work and commitment of its dedicated employees, as well as the strength of its local partnerships: bottlers, suppliers and retailers. Its main vision is to “benefit and refresh” the people of Africa. But what many people don’t realise is that the Coca-Cola business is actually a local business. No matter where in the world it operates, its brands are produced, packed and distributed by 82
bottlers that are deeply rooted in the communities in which it operates. South Africa is no different and a key contributor to Coca-Cola’s success here is its network of four bottlers: Amalgamated Beverage Industries (ABI), Coca-Cola Fortune (part of Coca-Cola SABCO), Peninsula Beverages and CocaCola Shanduka Beverages SA (Pty). Each bottler is responsible for a specific geographic territory and they’re significant creators of opportunity in their communities, driving economic development through employment, procurement and other commercial activity. But these are more than bottlers: they are Coca-Cola’s partners in the true sense, sharing the same vision and mission. Significantly, the bottlers do something The Coca-Cola Company doesn’t do in most instances, which is produce the beverages and deliver them to customers around the world. They also execute Coca-Cola’s in-trade marketing strategy. For The Coca-Cola Company, Africa is still something of an untold story, and could be the big story, of the next decade. John Ustas, the Managing Director of ABI, Coca-Cola’s largest bottler in South Africa, and the soft drinks division of SAB Ltd, believes that there is opportunity for the “embedded” annual growth rate for Coca-Cola in South Africa to be pushed to as much as six percent. It is currently two percent. That opportunity lies in the townships, he said. ABI accounts for just under 60 percent of the Coca-Cola products sold in South Africa, with the rest shared by the other three bottlers. “We are servicing just under 70,000 customers; we believe there’s potential
Amalgamated Beverage industries FEATURE
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for 200,000,” Ustas explained. He said that with customer service at the core of its strategy, ABI is making a number of improvements to its operations across the value chain that will enable the company to service its increased number of customers, and to do so faster. Key among these, he said, is: The introduction of Market Logistics Partners (MLPs); satellite ABI depots that are owned and run by respected members of communities and which service smaller customers with customised vehicles at a higher frequency. Improvements to ABI’s ﬂeet with the introduction of Hackney trucks (with lock-up compartments) and rear-loading tail-lift trucks that increase productivity as they are quick to ofﬂoad. Layer-pickers that enable one operator to pick 12,000 cases of ABI products in a shift. Further productivity initiatives are also intended to increase sustainability by reducing ABI’s carbon emissions: Adapting the production lines to use less resin to produce ABI’s PET bottles means that the company has reduced its carbon emissions and customers have not had to take a price increase, due to the increase in resin costs this year. The conversion from crates to shrink-wrap for the 500ml and 1L PET pack sizes has meant a 33 percent increase in pallet density for the 500ml PET pack and a 37 percent increase for the 1L pack. ABI products not only take up less space in storerooms, but the company now uses less fuel to deliver the same number of products.
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ABI has a strong link to the communities it touches and the regions in which it operates
ABI is countering their increased investment in cold drinks fridges by installing Energy Management Devices in all coolers, ensuring that customers use (and pay) 30% less for energy.
Aside from these sustainability initiatives, ABI actively invests in community partnerships. In August, ABI committed a total of R12.5 million over three years as part of, what it called “its commitment to developing the communities in which the company operates”. ABI pledged its support to four projects: The Youth Zone, Ikamva, ECD and Growth Link. “ABI has a strong link to the communities it touches and the regions in which it operates,” a statement said. “We believe in ‘performance excellence’, and we cannot just be driven by business
performance alone,” explained Tshidi Ramogase, Corporate Affairs Director, ABI in that recent release. “We know that we cannot be sustainable as a business if we don’t contribute to the upliftment of the communities in which we operate.” The objectives of ABI’s corporate social investments are to bring attention to programmes that focus on youth development; sustainability initiatives aimed at reducing the impact on the environment; early childhood development, and entrepreneurial development training. “Our three-year commitment to all these projects, is indicative of our deep commitment to the sustainable development of the communities that we operate in,” concluded Ramogase. To learn more visit www.abi.co.za. END
FAW To InvEST $100M In THE
FAW South Africa MD Richard Leiter talks South Africa Magazine through a decision to invest $100 million in a new truck and car plant in the Eastern Cape. By Ian Armitage
ommercial truck company FAW South Africa (FAW SA) has customers across the length and breadth of Southern Africa. Its head office, factory and main branch is in Isando and it has branches in Cape Town and Pinetown, as well as a footprint of dealers and service dealers across Southern Africa, with more than R100 million worth of spare parts at any given time. “We have been in South Africa for 18 years now and are what I consider to be a leading player in the local commercial truck market,” says MD Richard Leiter. “We plan for significant expansion in 2012 and beyond and are in the process of establishing a new assembly plant in the Eastern Cape, and also increasing the number of dealerships, while introducing new models.” 86
FAW South Africa FEATURE
PICS: © (Xinhua/Li Qihua)
FAW South Africa FEATURE
FAW SA will start construction of a $100 million truck and passenger car plant in the Eastern Cape in the first quarter of next year, he says. It is a significant boost for South Africa and in Africa in terms of investment. “It will strengthen our position considerably,” he explains. “Funding from the venture comes from China FAW ($55 million) and the China-Africa Development Fund ($45 million) and it will have positive ramifications for South Africa and the region.” FAW SA is a joint venture between a local company and the Chinese vehicle manufacturer, FAW, which owns the majority share in the local operations. FAW is on the Fortune 500 list and last year recorded $44 billion in turnover, Leiter says. “FAW last year produced more than two million trucks and cars, and manufactures vehicles in China in joint venture with companies such as Volkswagen, Toyota and Mazda,” he says. “The Eastern Cape plant will have an annual capacity of 5,000 trucks a year, ranging from smaller trucks right up to very large trucks. “The plant will also produce light commercial vehicles and passenger cars, something FAW does not yet sell in South Africa.” www.southafricamag.com
Annual light commercial vehicle and passenger car plant capacity will be 30,000 units a year, and the product range will include single and double half-ton bakkies as well as sedans and hatchbacks, Leiter says. FAW SA currently has 18 truck dealerships in South Africa, he adds, but wants to “grow this footprint significantly”. “We have been selling trucks in South Africa since 1993, with current assembly taking place in Ekurhuleni. “The aim of the new plant is to service the local market, but also the African market. “South Africa and the rest of Africa are our number one priority. It is a widely held belief in Africa that South Africa has high standards and that it produces reliable, quality goods, which is why we chose South Africa as our export base. We believe Africa will be the world’s next growth engine; it has a huge potential market for motor vehicles.” Africa is an important market for FAW SA, and it, for example, delivered 80 buses to Zimbabwe earlier this year. “Zimbabwe is an important market and we are looking at setting up a dealership in Harare,” Leiter says. The company already has dealerships in some African countries, he adds.
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The first vehicle is expected to roll off the assembly line at the Eastern Cape plant in 2015. The FAW SA Ekurhuleni facility will then become a parts distribution centre. “We start construction of the new plant in the first quarter of 2012,” Leiter says. FAW SA has become a leading market player, with a focus on excellent new product and good customer service. In spite of challenging trading conditions over the past couple of years, its sales grew by 24 percent year-on-year between 2006 and 2010 and this will increase as it expands its product range and penetrates new markets, Leiter says. “We are a unique proposition,” he explains. “We offer competitive pricing without compromising quality and we pride ourselves on our customer service, which is first-class. This, combined with world-class product, has made us one of this country’s leading players in the truck industry. “Okay, we have ambitious plans; we are optimistic for the future. As a long-term story it is
definitely going to go well, there is no doubt about it. I’m sure it’ll be far better than in Europe!” China FAW Group Corporation, along with its subsidiaries, designs, develops, manufactures, markets, and sells passenger cars, trucks, and buses. It offers light, medium, and heavy-duty trucks; automobiles; municipal buses and luxury tourist coaches; bus chassis; minivehicles; SUVs and pickups; limousines; and components and parts. China FAW Group Corporation was formerly known as First Automotive Works. The company was founded in 1953 and is headquartered in Changchun, China. It has locations in Cameroon, Tanzania, South Africa, Kenya, Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Jordan, Syria, Germany, the Russian Federation, Kazakhstan, Outer Mongolia, China, the US, Korea, Japan, Vietnam, Myanmar, and Pakistan. To learn more visit www.faw.co.za. END
dAIRing ing To do BETTER
Cape Town based dairy producer Fair Cape Dairies produces Fair Cape Eco-Freshâ„˘ Milk in an environmentally friendly manner with animal wellbeing and the environment, being paramount. By Ian Armitage
Fair Cape Dairies FEATURE
hile there are as many types of entrepreneur as there are businesses, most entrepreneurs share some common traits. They tend to be visionaries. Melt Loubser, CEO of Fair Cape Dairies, started his working life as a civil engineer but in 1995 spotted an opportunity to turn the family farm into a modern business. At the time South Africa’s agriculture was being deregulated, and the rural economy quickly shifted its emphasis and became more consumer-focused, he says. The time was right to “add value to the raw milk we were producing” and selling, and the subsequent success of the company proved him correct. Taking up the story, the Fair Cape Dairies website says: “In the past, milk was supplied to the larger dairy manufacturers who monopolised the industry with low prices to the producer and high prices to the consumer. “As a result of this, the Loubser family was faced with a decision to either close their Dairy business, or alternatively to identify ways to add value to Dairy – which is what we did. “One thing led to another but out in the market place we were unable to find a partner with whom the Fair Cape business could fulfil their dream – namely to innovate the market with
products that flow from one of our strategic values – passion for quality. At the time the general market had yet to grasp the idea that value for money does not necessarily mean cheap products of inferior quality. “A relationship with one of South Africa’s premier retail chains, Woolworths, soon afterwards developed and has subsequently grown into a strategic partnership. A dedicated production facility called The Dairy Connection was built in 1997 to exclusively supply Woolworths with their dairy range on a national basis. This partnership was critical to our business, as Fair Cape had finally identified a customer that understands the buying needs of the public, as well as the ability to recognise and exceed the expectations of their customers.” Today, with his brothers – Eduard Junior, Villiers, Louis and Johannes – father Eduard Senior and Operations Director Johan Boshoff, Melt continues to drive the various business units that make up the Fair Cape Dairies group forward. Significantly, though, the family farm to the north of Cape Town remains the company’s bedrock, providing something like 50 percent of the milk used in the dairy processing operations. Melt has vertically integrated the dairy value chain and grown a world-class downstream business.
“Fair Cape Dairies have, until now, produced Fair Cape Free Range™ Milk in an environmentally friendly manner with animal wellbeing, being paramount,” says information the company sent a South Africa Magazine researcher. “The Friesland cows are fed only natural products with no animal by-products or added hormones, ensuring that the milk is 100 percent natural, the best possible milk for consumers. To ensure that the milk they produce is of the very best quality, the cows are kept in large enclosures, allowing free movement, thereby subscribing to the Fair Cape Free Range™ ethos. The Fair Cape range of dairy products consists of milk, yoghurts, desserts and a variety of fruit juices.” Louis Loubser, Marketing Director of Fair Cape Dairies, adds: “This is the crux of what we believe at Fair Cape. Our entire brand is based on the principal of sustainability in food production and the respectful treatment of the sources of our food.”
Fair Cape Dairies FEATURE
AND THE ACCOLADES ROLL IN… South Africa’s dairy industry shone at the recent International Dairy Federation’s 2011 Innovation Awards in Parma, Italy, producing both finalists and winners. Fair Cape was named a finalist in the Best New Dairy Drink category and also contested the Best New Functional Dairy Product title. It was recognised for its innovative Rooiboost Shots, a drinking yogurt flavoured with rooibos tea, and for its rooibos yogurt. The International Dairy Innovation Awards 2011, winners
our entire brand is based on the principal of sustainability in food production and the respectful treatment of the sources of our food Louis Loubser, Marketing Director, Fair Cape Dairies
and finalists were announced on October 18 in Italy. This year’s awards attracted over 125 entries from 25 countries in 14 categories, including products, packaging, marketing as well as environmental sustainability. The judging panel was made up of 10 industry experts and was chaired by American Bill Bruce, editorial director of the FoodBev Media group. Both Rooiboost Drinking yoghurt shots and the Rooibos yoghurt are highly regarded for their health benefits, with Rooiboost combining the recommended intake of six cups of Rooibos Tea per day to aid and help fight cancer and these, as a result are the only yogurt products in the world to be endorsed by the Cancer Association of South Africa. “We are thrilled at this phenomenal achievement. We have always believed in these products, however, to have them recognised as some of the best new dairy products in the world this year eclipsed our greatest expectations,” says Loubser. “We have always believed in our products,” he adds.
BREAKING NEW GROUND Fair Cape Dairies, which is the current Guinness World Record holder for the World’s biggest cup of yogurt, exclusively revealed to South Africa Magazine that it is about to introduce its “all new, environmentally friendly”, Eco-Fresh milk range. “Being no stranger to displaying dairy excellence, Fair Cape is currently the first and only dairy in South Africa to print and reveal their ‘green status’ on their labels,” the company said. “The new Fair Cape Eco-Fresh milk is produced in an ecologically friendly manner, resulting in a prominently lower carbon footprint. “The transition from the ‘Free Range’ Trademark to Eco-Fresh hinges mainly on the fact that Free Range focused solely on Cow Comfort whereas with Eco-Fresh Fair Cape has evolved the concept; the focus has now shifted to the whole environment, taking into consideration four pillars upon which Fair Cape Eco-Fresh milk is based,” it added. “These four pillars include putting specific focus on pollution, eco-friendly farming practices, animal welfare as well as the Carbon footprint. This, along with the publishing of the carbon footprint on the labels is a clear indication of dedication and transparency of business practices displayed by Fair Cape Dairies. Critically, Fair Cape will be the first dairy in Africa to print its carbon footprint on its bottle.”
Aside from adhering to an environmentally friendly production process, Fair Cape is well aware that the quality of the milk is dependent on the comfort of the cows. This is why Fair Cape Dairies took the initiative and launched the first ever Cow Comfort Index in South Africa in March 2011. The Index allows for the overall wellbeing of the cows to be carefully monitored, ensuring their health and comfort at all times. “It is a significant move for us,” says Loubser. Being the leaders of Eco-friendly dairy farming, the concept of helping and supporting the environment is fully embraced by Fair Cape Dairies. Since being carbon assessed, it has taken an integral approach to carbon management in its pursuit of a ‘greener’ and more environmentally approach to milk production. “The new Fair Cape Eco-Fresh milk range is a prime example of sustainable dairy and will be available nationwide in your supermarkets from January 2012,” Loubser says.
Fair Cape Dairies FEATURE
the best examples of this are our Rooibos yogurt and our Rooiboost drinking yogurt shot, which I’ve mentioned. “Innovation is important as Dairy is a difficult industry,” he continues. “You are dealing with a commodity with high input costs and low margins - there are also limited channels for distribution in South Africa which make it doubly tricky. That said, Fair Cape has performed remarkably well given the economic climate. We have seen sustained growth and our footprint has grown to now be a serious player, not only in the Western Cape market, but in the Gauteng Market too. “The launch of the new Fair Cape Eco-Fresh brand also signals the next evolution in the Fair Cape milk range. “What do you think is the secret to our success? The secret to success is simply the passion of the Directors, management and staff and the communal buy-in to the Fair Cape Eco-Fresh concept,” Loubser concludes. “This is not something one can simply slap on a bottle, this needs to be lived throughout the company. “Everything we do needs to reflect the Fair Cape Eco-Fresh concept; for example, you can’t sell Eco-Fresh milk, yet litter on your way home. All the staff are really excited to be associated with such a successful company whose point of difference revolves around a better, cleaner environment and a better way of living for the cows. When staff have a cause like this to rally around, passion becomes par for the course.”
We have always believed in our products
CONTINUED SUCCESS What does he think is the secret to Fair Cape’s continuing success? The answer, Loubser says, is simple: Innovation. “Innovation is a core pillar of this company,” he explains. “We dedicate large resources to innovation. This innovation covers all aspects of the company from logistics, to operations, to sales and marketing. However, the core of this is the New Product Development team whose role it is to continually innovate to introduce new and exciting offerings to the market. “Innovation has won Fair Cape the reputation of the most exciting player in the market who consistently launches new and exciting products different from the ‘metoo’ range currently on shelf and has given the retailers the confidence to back us and increase our footprint nationally. Two of
To learn more visit www.faircape.com or visit them on facebook @ www.facebook.com/faircapel END
PACMAR: TAPPInG InTo AFRICAâ€™S GRoWInG DEMAnD FoR
fruit Pacmar is seeking capable distributors in Africa for its own brands of fruit juice. The South African-based firm is also a hugely successful contract packager, providing solutions to clients across the continent, as South Africa Magazine discovers. By Ian Armitage 96
ackaging is important for a number Situated conveniently close to Cape Town harbour, Pacmar brands get sent across of reasons. Perhaps, most significantly, it represents a company’s the globe. Pretorius says the company currently brand; it is the customer’s first has a strong focus on expanding its experience with a product and plays a big part in brands on the African continent. “Africa the purchasing decision. is growing steadily and we believe there Nobody understands that better than Pacmar. is a lot of future growth and business The firm, located on the outskirts of Wellington, opportunities in Africa.” is currently packaging house brands in local and Pacmar’s brands are international markets, as well as its currently being distributed own private label brands in South to Africa, Asia, Australia Africa and neighbouring countries. and Canada. “We specialise in liquids, “At present, we are packaging things like wine, fruit specialise in three facets of juice and other beverages, in both supply: contract packaging, aseptic (sterile) and preserved forms which constitutes the bulk and we offer Elopak, Tetra Pak, bag of our local business, in a box, PET and bulk packaging,” own brands and exports,” says Pacmar Sales & Marketing Pretorius adds. “We Manager Barry Pretorius. “We therefore ensure that currently do contract packaging for all parts of the equation some of the biggest retail brands in remain soundly intact and South Africa. We can also provide managed as effectively and complete solutions for companies efficiently as possible. It in the rest of Africa, from product goes without saying that we development to the sourcing of raw are on a serious mission materials, to the final packaging. to increase our footprint Everything can be done to the and standing within the client’s own specifications and local market as well as specific requirements.” overseas markets. Product Pacmar also has its own development is therefore brands of fruit juice; part of the critical to the sustainability business that Pretorius says is “eyeing expansion”. “Our of any “player” in any own brands include the Wilde market. Directly associated Barry Pressed fruit juice range, the and linked to this is the vital Pretorius, Wilde 100% fruit juice range ingredient of availability Sales & and Zing fruit nectars. We and visibility. Ultimately, Marketing also have our health juice in optimising the point-ofManager purchase is where the Crystal Falls,” he explains. “Anybody wanting to learn “game” is won or lost. more about them and also When we have done that understand the differences between effectively, we plan to cross Pressed, 100% fruit juice, Nectars and our borders into Africa. It’ll Fruit drinks should visit our website, probably take a while before www.pacmar.co.za,” he adds. we truly embed ourselves
We currently do contract packaging for some of the biggest retail brands in South Africa
in Africa, certainly within two to three years. “Our main aim would be to pursue market development, which is in essence entering new markets with our existing range of products,” he explains. Pacmar prides itself on offering the “best available” quality. For packaging, that means the materials used on the lines are not only checked by the suppliers’ quality control—who are governed by the printing association of South Africa—but are also checked by the company’s own incoming inspection and quality control department before any packaging can begin. “We are proud to announce that we are in the process of implementing the first stages of ISO 22000. It is the world’s largest developer and publisher of International Standards. We are also HACCP approved as well as Organic Certified,” Pretorius says. “We do not and will never compromise on quality, irrespective of where it fits in the supply chain,” he adds. “We also pride ourselves in always conducting business in the most ethical way possible.” As for Pacmar’s own juice products, the company offers only premium beverages. “Our Pressed juices are simply the best, albeit that they demand a slight premium. Our 100% juices are second to none and our Nectars are certainly on par, if not better than most. “Our attention to detail and quality is almost certainly what sets us apart. This is underscored 98
by our philosophy statement that reads, ‘not the biggest, but the best,’ and which is supported by our four pillar approach of quality + service + relationship + cost.” In a market that is indispensible to businesses and customers alike, the packaging industry finds itself in the fortunate position of expecting continued success well into the future. With its quality-first approach and years of expertise and passion, Pacmar is looking to expand into new areas. “We are performing well, considering the state of the global markets, oil prices and our currency exchange rate,” Pretorius says. “It is a difficult environment because of a decrease in the amount of disposable income shoppers have. We are dealing with people that have no option but to down trade. It is indicative of the climate in the country at the moment.
The global economic impact has finally made its way around to our part of the world. The fuel price is a prime example. We always feel it three to four months down the line. Electricity has gone up 50 percent in two years, which has been another major factor. It has a huge knock on effect, and somewhere down the line, you have to look at your finances as they get tighter and think, ‘what do I really need to buy with this money?’” Pacmar, though, has set itself apart amongst the competition as a company that will rise to the top and bring its customers and consumers along for the ride – so the future for the company is bright. “We have a really good product and we offer a fantastic service on the contract packaging side,” Pretorius says. “Then, of course, we have been methodical in our expansion. Obviously you can invest millions of rand immediately or you can do it in a strategic, systematic way. We want to grow, but we aren’t going crazy in terms of flooding the market and spending buckets and buckets of money. There are some serious market players at the moment and they have a fair share of the market and to expect us to just knock them off their pedestal is unrealistic. That won’t happen that easily; so we have a more cautious, but assertive approach as opposed to being aggressive. Being slow and deliberate is key in our efforts and approach and what will ultimately make us prevail as a major player in the juice arena.” Pacmar has been in operation since 1997 and its growth story is impressive.
Pretorius says the secret to its success is the firm’s simplicity and its people. “Quality does not end in production, but flows over into everything we strive for and do. “We are a medium-sized business, going through the transition from a ‘family’ business to a corporate entity, which in its own right provides its fair share of challenges: We are very prudent in our decision-making and certainly do not do things for the sake of it, but more so always remain focused on the “bigger picture”. “Right now we are optimistic about the future; we just have to stay positive. There is no alternative, regardless of what is happening locally and globally. We will stick to our strategy and plans and if need be, amend them accordingly as time marches on. I have no doubt that we are and will continue to build a really great and sustainable business.” To learn more visit www.pacmar.co.za.
T: (+27) 021 860 1240 | F: (+27) 021 860 1241 www.vdspuy.co.za | www.phﬁrms.co.za 36 Thom Street, Paarl, 7646, South Africa | PO Box 218, Paarl, 7620 | Docex 2, Paarl 603 Constitution House, Adderley Street, Cape Town, 8000 | Docex 174, Cape Town
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A complete South Africa Magazine profiles electronic consumer goods and electrical accessories manufacturer and distributor Amalgamated Appliance holdings (Amap), which has completely turned its fortunes around. By Ian Armitage
malgamated Appliance Holdings (Amap) is an electronic consumer goods and electrical accessories manufacturer and distributor. Specialising in the sale and marketing of branded household durable goods, the South Africanbased company is involved
We do things a lot smarter
in manufacturing, importing, exporting and distributing small domestic appliances, sewing and embroidery equipment, television sets, audio and video products, electrical accessories, cell phones, and power inverter products. It distributes its products all over South Africa and its brands
Amalgamated Appliance holdings FEATURE
enjoy status, cater to numerous markets, and offer superb value. Reuven-headquartered Amap has spent most of the year assessing possible acquisitions, and has made a couple – introducing new brands into its portfolio. It is a remarkable story: This is a company brought back from the brink of disaster by a textbook execution of a
turnaround strategy. Its 2011 Annual Report shows its market share grew despite the recessionary environment and Amap enjoyed ten percent growth in the product categories in which it operates. Revenue was R826 million. At the heart of SA’s largest consumer appliance supplier’s woes was a business model that gave way under the pressure of a slump in consumer demand.
The impact on Amap’s consumer electronics operations was particularly devastating. Central to the problem was Tedelex, Amap’s TV manufacturing unit. Amap’s two TV brands, Tedelex and Sansui, became less desirable to consumers seeking more glamorous global brand names. The result was dwindling volumes in Amap’s Tedelex factory in Atlantis, leaving a business unit that once produced a R100 million annual profit deep in the red. Radical restructuring was the only solution. Amap exited non-core businesses such as TV manufacturing and focused on introducing new product categories and brands to meet customers’ needs. The first sweeping change was in a business model based on importing electronic goods, holding them in stock and then selling them to retailers. With restructuring came closure of the Tedelex factory and central to the new strategy was building on Amap’s strength as a sales and marketing company with powerful brands and a dominant market share. The group now owns and distributes 27 brands with more than 1,000 products in its portfolio. It is a remarkable turnaround for Amap; the firm saw that its costs were overstated and it needed to take collective action. “We do things a lot smarter,” Murray Crow, Executive Director of Amalgamated Appliance Holdings Limited since December 1, 2008, told a South Africa Magazine researcher. “We have a new spectrum: good, better, best.” 102 www.southafricamag.com
Amap’s strength is its brand and it has top names like Pineware, Hoover, Remington, Pioneer, Russell Hobbs, Brother, Salton, Behringer, and George Foreman, to name a few. It is a vastly different company to what it was and has a new management team in place and a new business model. The turnaround is impressive and Amap today has a large amount of cash on the balance sheet. According to Crow, it is using that cash to make acquisitions. “We have some lined up. “We continue to look for strategic opportunities and believe our strong cash position means we can actively pursue acquisition opportunities.” Amap recently brought Wiltshire into the portfolio, a new brand of household products, and a lot is expected of that over the next few years. “Following the restructuring, Amap is a learner, more efficient organisation: it is a company transformed,” Crow says. Its strategy is to remain a sales and marketing
Amalgamated Appliance Holdings FEATURE
company although it continues to manufacture about 30 percent of its small appliance products locally in ranges that remain competitive. Having established a solid foundation for future growth, Amap is looking to make increased inroads into new product categories. One potential problem, as well as opportunity, is Wal-Mart. It remains to be seen what effect Wal-Mart might have on Amap, even though the international giant has the potential to take it into Africa. At present, Massmart is about 30 percent of Amap’s business and there is a risk that it’s products may be replaced by an in-house Wal-Mart brand. That risk is low, however. Amap’s brands have been in South Africa a long time, generations in fact, and they are brands we have grown up around and respect. Wal-Mart, though, might help Amap, so it could be good. It remains to be seen. What is clear is that Amap is a business widely misunderstood by the market; and it has a lot to gain. Yes, there are concerns about Wal-Mart, worries that consumer demand doesn’t pick up, and there will be an impact from things like the consumer protection act, but the future is bright. Having solidified its position locally, it is looking to identify African markets where it can establish a foothold, Crow says. The rand is currently very strong, and shows no sign of weakening soon. A strong rand
is good for a business like Amap; it means product it brings in will be cheaper for longer, and savings can be passed onto the consumer. “We are cautiously optimistic,” Crow says. “We’ve acquired a number of new brands and are looking for more. “We see that SA consumers will remain under pressure and will look for value and quality in brands they trust. We believe Amap is well-placed.” Murray Crow, 43, is Executive Director of Amap, and has been since 2008. He completed an MBA in the UK and has over 10 years of experience in the domestic appliance industry. He joined Amap from Whirlpool South Africa. Prior to joining Whirlpool, he spent seven years in the FMCG industry at Cadbury, Colman Foods and Tongaat Foods. To learn more visit www.amap.co.za.
Phone: +27 (011) 866 4124 Fax: +27 (011) 866 4124 Cell: 083 309 2183 firstname.lastname@example.org
Nu-Map specialise in the following: ● Blister forming and packing ● Flow wrapping ● Shrink packing ● Hand packing ● Small Assemblies ● Corrugated box manufacturing ● Barcode design and printing
Our partnership with Amalgamated Appliances means we meet all their packaging and warehouse requirements, including: ● Receiving of stock ● Picking and packing of orders ● Stock take ● Day to day requirements to ensure clients are satissed and orders are despatched on time.
All kinds of
fruit FruitOne GM Louis Mentis talks exclusively to South Africa Magazine. By Ian Armitage
ruitOne is a pioneer in the South African citrus market. From its Tzaneen base, it oversees and manages the production of Lemons, Star Ruby Grapefruit, Naval and Valencia Oranges and more than 1,500 hectares, on four estates in Limpopo. Fair Trade accreditation with the European Union means that its products have access to international markets. “FruitOne is a family-owned business and it was started in the 1970s with the purchase of a 160 hectare production unit in Letsitele,” says FruitOne GM Louis Mentis. “It has grown
over the years to include a number of other production units totalling 1500 hectares under irrigation, making us one of the larger single citrus growers in South Africa. “Coupled with this, we have slowly integrated into the chain and set up separate business activities that allow us to get value out of the chain, and more importantly reduce our cost,” he adds. “We have moved from being just a producer to being a fully integrated agricultural company.”
FruitOneâ€™s business activities, says Mentis, include companies that are responsible for production (it has five individual production units operating as separate companies, including two units that are land restitution projects), procurement, packaging (it has four packaging facilities, two of which have cold storage facilities), logistics
We have moved from being just a producer to being a fully integrated agricultural company
(FruitOne moves over 2000 truck loads per year), cold storage, marketing and export, and financial market trading. “Do I enjoy life in the sector? Yes!” Mentis proudly admits. “It’s not all plain sailing and there are always frustrations, challenges, and setbacks that present themselves. However, the positives certainly out weight the negatives; I think it’s a sector of the economy that is vital in the South African context. Besides food security, it’s a major contributor of foreign exchange earnings, which helps offset some of South Africa’s trade deficit. Agriculture also requires a lot of labour, and thus this sector has a massive potential to employ the unemployed in the economy, which is such a critical factor for South Africa. Its good to know that we are contributing to the economy in a meaningful way.” Mr Mentis joined FruitOne in January 2003 after the Group’s owner, John Boyes, asked him to start off an export arm. 106 www.southafricamag.com
It was an interesting business opportunity, he says, with a number of exciting prospects. “I decided it was an opportunity that was too good to refuse and I took on the challenge. Its certainly has been a very interesting and rewarding journey seeing FruitOne grow in to its present form.” Today, Mentis is responsible for the general management function within FruitOne. He says that as the company has grown, it has brought in new expertise to fill positions that required specific skills. “We have quite a dynamic team at FruitOne and we try to get our staff to take ownership of their jobs and positions,” Mentis says. “We give them the tools and environment to make their own decisions, so from a management point of view I don’t spend a lot of time managing people, but rather the broader operational processes of the business. “FruitOne (Pty) Limited was first established as the marketing and distribution arm of our broader agricultural activities in South Africa and over the years the company has evolved into a agricultural organisation that has an number of business activities,” he adds. “The Group is referred to as FruitOne by the
use. An example of this would be like the commercial citrus nursery we have just started. This will supply us with the trees we require to do all our expansions, plus offer the open market these citrus trees. The same model will be applied to all our inputs such as packaging, chemicals, fertilizers, etc. In the immediate future, we are looking to develop further our logistics division to include its own fleet of trucks, plus have our own clearing and forwarding division. Other future goals include the possibility of sourcing citrus from southern and northern hemisphere countries, supplying the FruitOne brand 365 days a year, and expanding our production to include countries outside of South Africa.” Mentis is a passionate man, and extremely optimistic about the future. We wish him and FruitOne every success. To learn more visit www.fruitone.com. industry, but in reality FruitOne is actually the export company for the Organisation, with a number of companies making up the rest of our Group. Our future goals are to double the size of our organisation within the next five years. We have plans to increase our production base to include the planting of additional hectares on our current production units, plus investing and developing additional production units in Limpopo and in other provinces in South Africa, such as the Eastern and Western Cape.” Mentis says the aim is to ensure the business “spreads risks”, both from a geographical and cultivar perspective. “We anticipate that we will be exporting between five and six million boxes of citrus within five years,” he explains. “We certainly have plans to integrate further into the chain by setting up business that will provide us with the services and products we currently
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Touch Africa is a non-profit organisation whose mission it is to “make school a better place” for previously disadvantaged children in South Africa. We have offices in both the UK and South Africa and have been operating since 2007. The focus of our energies is on children between the ages of 2 and 18 and the scope of our work includes but is not limited to the:
rehabilitation of schools and provision of basic education equipment electrification and provision of ablution facilities provision of self-sustaining economic activity school feeding sporting facilities installation of IT and Science Laboratories Our Vision: Touch Africa’s vision is to improve education facilities particularly in rural areas. We strive to uplift and enrich the learning experience, help to develop a passion for learning and therefore help to make previously disadvantaged children valuable citizens of the future. Background: Vast areas of South Africa are rural where access to water, electricity and transport and access to information is either non-existent or limited. Children therefore are not getting equal opportunity to education. Government: Deputy President Kgalema Motlanthe has commented that backlogs in infrastructure are hugely problematic and that partnership between the government, the private sector and funding partners is crucial.
You can help us by adopting a school in South Africa Contact Richard Cook on 019 204 85333 or email email@example.com or Elise Fish on 027 (0) 76 170 6449 or email firstname.lastname@example.org
School Aid 4Afria t/a Touch Africa, UK Office Arnel House, Peerglow Centre, Marsh Lane, Ware, Herts SG12 9QL, Tel: 01920485333, Fax: 01920484477, Cell: 07773844444 Email:email@example.com, Website http://www.touchafrica.eu, Registration Number 1137365, Touch Africa, South African Office, 161 Heugh Road, Walmer, Port Elizabeth, 6001, Tel: +27 (0) 41 581 5335, Fax: +27 (0) 41 581 5334, Cell: +27 (0) 76 170 449 Email: firstname.lastname@example.org Website: http://www.touchafrica.info Section 21 Company Registration Number 2007/024885/08 NPO. Reg. No: 75773