South African Business 2018 edition

SOUTH AFRICAN

2018 EDITION

BUSINESS

THE GUIDE TO BUSINESS AND INVESTMENT

IN SOUTH AFRICA

EASTERN CAPE PROVINCE

FREE STATE PROVINCE

GAUTENG PROVINCE

KWAZULU-NATAL PROVINCE

LIMPOPO PROVINCE

MPUMALANGA PROVINCE

NORTHERN CAPE PROVINCE

NORTH WEST PROVINCE

WESTERN CAPE PROVINCE

JOIN US ONLINE WWW.GLOBALAFRICANETWORK.COM | WWW.SOUTHAFRICANBUSINESS.CO.ZA

Commercial

Vehicles

Why Invest

in Space

OUR IMPACT is derived from our national capacity, experience

and expertise in space science and technology through six thematic focus areas:

• Earth Observation - SANSA collects, assimilates and disseminates

Earth observation data to support South Africa’s policy making,

economic growth and sustainable development initiatives. Earth

observation data is used for human settlement growth mapping,

infrastructure monitoring, as well as disaster and water resource

management. Earth observation satellite data contributes to

monitoring environmental variables in the water cycle such as

water quantity, quality, soil erosion and vegetative health which

ensures water safety and security for the country.

• Space Operations - SANSA provides global competitive space

operations and applications, tracking, telemetry and command

services while managing ground stations for international clients.

Space Operations provides world class launch support for space

missions (from Earth into our solar system) and ensures satellites

are continuously monitored when they are travelling over African

skies.

• Space Science - SANSA conducts cutting edge space science

research, development and magnetic technology innovation.

Space science research is vital for gaining a deeper understanding

of our space environment in order to protect essential

infrastructure such as power grids and communication and

navigation systems on Earth and in space. SANSA operates the

Space Weather Regional Warning Centre for Africa, providing

forecasts and warnings on space weather conditions. Extreme

space weather may impact technological systems such as

satellites, power grids, avionics and radio communication.

• Space Engineering – SANSA aims to provide access to state-ofthe-art

satellite assembly, integration and testing services, as well

as satellite systems coordination and development, to ensure

an environment conducive to industrial participation in satellite

programmes.

• Human Capital Development - SANSA aims to advance human

capital development to grow the knowledge economy and

create awareness about opportunities in engineering, science and

technology. This is achieved through scarce skills development,

summer and winter schools, the supervision of MSc and PhD

students, and teaching at partner universities.

• Science Advancement and Public Engagement - SANSA

promotes science advancement and public engagement through

participation in national science awareness events and through

using the fascination of space to drive a greater uptake of studies

in science, maths, engineering and technology.

SANSA

provides stateof-the-art

ground

station facilities and

services including

satellite tracking, launch

support, mission

control and space

navigation.

SANSA monitors

the Earth’s magnetic

field and space weather

storms to assist in

protecting technology

on Earth and in space.

Satellite imagery

helps manage food

and water security as

well as natural disasters

on Earth like floods,

droughts and fires.

In a country faced with numerous challenges in

housing, crime, poverty and the provision of basic

necessities, you may ask why invest in space?

The answer is clear.

Space investment is essential

for economic sustainability

and development!

Without space applications we would not be able to mitigate

disasters or effectively manage our resources such as water, food, land

and housing. Mobile phones, internet, GPS, ATMs, meteorological

forecasting and safe land and sea travel all rely on satellites positioned

in space. Government, industry and academia also rely on space

data to deliver on their priorities through the creation of applied

knowledge, products and services.

SANSA provides value-added products and services that are utilised

in both space and non-space applications. Space information

enables everyday decision making at all levels of society. SANSA has

contributed towards goals within the National Development Plan

(NDP) and the goals of the Department of Science and Technology

(DST) by delivering products and services to its stakeholders and the

public.

South Africa’s next earth observation satellite is an example of one of

these deliverables and is also one of the incredible opportunities to

showcase the importance of investment in space science, engineering

and technology and for South Africa to take its place in the global

space arena.

@SANSA7

South African National Space Agency

Enterprise Building, Mark Shuttleworth Street, Innovtion Hub, Pretoria, 0087

T: 012 844 0500 | F: 012 844 0396 | information@sansa.org.za | www.sansa.org.za

Welcome

to Durban!

A lifestyle of business and pleasure together.

Facilitating sustainable investment in Durban

for the benefit of all

Invest Durban (previously DIPA) is an

entity of the eThekwini Municipality,

recommended by the Durban City Council

and organised private business as the

most appropriate vehicle to promote and

facilitate new investment into the Durban

metropolitan area.

Invest Durban’s primary objective is to

accelerate sustainable investment in

Durban for the benefit of all through the:

• Proactive investment promotion

and marketing of Durban Metro as a

premium investment destination

• Proactive communication and

marketing of the City’s large investment

projects and core strategies

• Identification and development of new

investment opportunities, especially

for previously disadvantaged groups

• Attraction, support and facilitation

for prospective foreign investors

in Durban

• Improvement in the investment and

economic development environment,

in partnership with National, Provincial,

City and Business Authorities.

Invest Durban offers FREE:

• Investment Information and

Facilitation Services

• Immigration, Import and Legal Services

• Business Establishment and Incentives

• Investor Administration Services

Doing business in Durban

Durban has been developed around a

natural ocean port, major industrial base

and scenic tourism assets which play key

roles in the city, plus across Africa.

Strategic location

The port of Durban is modern and wellequipped.

It offers investors a range of

competitive and strategic advantages. The

city has emerged as the de facto coastal

trade ‘gateway’ to Southern Africa. It boasts

the largest port in Africa, as regards value of

cargo, and is South Africa’s premier general

cargo and container port. It is positioned

to access international shipping links to the

Americas, Europe, the Persian Gulf, South

East Asia, the Pacific Rim and Australia/New

Zealand and perfectly located for the transshipment

of cargoes between Eastern,

Middle-Eastern and Western economies.

Infrastructure and business

Durban offers established and advanced

road, rail, sea, air and ICT network

infrastructure. This underpins the second

largest industrial base in SA.

Quality logistics systems include:

• Port operation facilities

• Rail network – cargo and passenger

• International airport with air cargo

facilities

• Extensive road network with national and

regional linkages

• Oil/petroleum pipeline to Gauteng and

Free State Provinces

• Gas pipeline emanating from Sasol, in

Mpumalanga province

• Metro-wide fibre-optic systems.

Durban provides a number of new

opportunity areas for investors, both large

and small.

Investment opportunities may be

categorised into the following fields:

• Agri-processing

• Auto and allied manufacturing

• ICT, BPO and shared service centres

• Medical devices, health services and

pharmaceutical manufacturing

• Logistics and maritime

All of the above driven by world-class

innovation and holistic sustainability

Invest Durban, eThekwini Municipality

11th Floor, 41 Margaret Mncadi Avenue (old Vic. Embankment),

Durban, 4001 South Africa

Tel: +27 31 311 4227 | Email: invest@durban.gov.za

Website: www.durban.gov.za

CONTENTS

South African Business 2018 Edition.

Introduction

Foreword10

A unique guide to business and investment in South Africa.

Special features

An economic overview of South Africa 12

South Africa is a country of great diversity – of its population,

its landscapes and its natural resources.

Business expands into Africa 22

Manufacturing and services are targeted for export growth.

Invest in the Mountain Kingdom 28

The Lesotho National Development Corporation has

attractive projects in several sectors.

Sustainability is a new priority for business 30

The circular economy, renewable energy and energy efficiency

are creating new industries.

Skills development 34

Job-relevant training is key to economic growth.

Realising the promise of the Oceans Economy 46

South Africa’s coastline is to become a catalyst for new

business opportunities, economic growth and job creation.

Economic sectors

Agriculture 60

Agriculture companies are active on the stock exchange.

SOUTH AFRICAN BUSINESS 2018

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ABS, ASR and ESP that ensure a steady ride over even the harshest terrain. You see the one ton

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CONTENTS

Mining 65

The South African mining landscape is changing.

Oil, gas and petrochemicals 69

The sector is alive with activity.

Energy 76

South Africa’s energy mix is becoming more diverse.

Water 84

Water infrastructure is a priority.

Engineering 88

The renewable energy sector holds great promise for

engineering firms.

Manufacturing 94

Large incentives are available to investors in manufacturing.

Automotive 100

Multi-billion-rand investments are boosting vehicle production.

Chemicals and pharmaceuticals 103

Drug research is in the spotlight.

Food and beverages 104

Consumer companies are looking to Africa for growth.

Transport 106

Investments in rail are increasing.

Business services 110

Consulting is a growth industry.

Tourism 116

Ten-million tourists visited South Africa in 2016.

Information and communications technology 126

A rural network is providing free local calls.

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The City of Ekurhuleni is home to OR Tambo International Airport, Africa’s biggest and

busiest airport on the continent. The City is also considered the manufacturing hub

of the country, which boasts a significant logistics corridor along the R21 highway and

an extensive transport network across rail, road and air.

Come invest in Ekurhuleni, the Aerotropolis City.

CONTENTS

Banking and financial services 128

New banks and new stock exchanges are adding to South

Africans’ choices.

Development finance and SMME support 130

South Africa has over two-million SMMEs.

Government

South African National Government 134

Regions

Eastern Cape 140

Free State 142

Gauteng 144

KwaZulu-Natal 148

Limpopo 150

Mpumalanga 152

Northern Cape 154

North West 156

Western Cape 158

Reference

Sector contents 58

Index160

Maps

NAMIBIA

ZIMBABWE

BOTSWANA

Limpopo

Mpumalanga

Gauteng

North West

SWAZI-

LAND

Free State

KwaZulu-

Natal

MOZAMBIQUE

South African provincial map. 15

Northern Cape

LESOTHO

Detailed map of South Africa. 137

Eastern Cape

Western Cape

SOUTH AFRICAN BUSINESS 2018

EPC IN POWER GENERATION

Leaders in execution of turnkey engineering

in South Africa

Home-grown Lesedi Nuclear Services is a leading EPC (Engineering,

Procurement and Construction) company with extensive experience

in the execution of turnkey engineering projects, in both nuclear

and conventional environments. It has operational footprints

throughout the South African power industry.

Having completed numerous projects,

primarily at Eskom’s Koeberg Nuclear

Power Plant, construction of the

14X150MW Open Cycle Gas Turbine

Power Plant in the Western Cape,

and executing EPC contracts for the

balance of plant systems for Eskom’s

Medupi and Kusile Coal Power Plants

- still under construction - Lesedi is

well-placed to play a leading role in

offering competitive EPC proposals

to the country’s power infrastructure

industry.

Lesedi is now a Level Three B-BBEE

(Empowering supplier) company

and has registered *8EP, 9ME,

7SF certification levels with the

Construction Industry Development

Board. The company’s main

shareholder is global nuclear

company, AREVA, with the remaining

shares split between Group Five,

the J&J Group and local Lesedi

management. Since 2001, Lesedi

Nuclear Services has provided a wide

range of services to Koeberg Nuclear

Power Station. Our major involvement

has been in the supply of technical

personnel for plant upgrades (150

modifications), engineering, project

management, procurement and

maintenance.

Lesedi has a number of key

partnerships, one being our

partnership with Exosun. Exosun

is a worldwide leading supplier of

advanced, cost-effective solar tracking

solutions for ground-mounted

photovoltaic (PV) plants.

Since the partnership of Exosun

and Lesedi took place in March

2017, Lesedi has been focusing on

optimising its local supply chain

with a target of cost reduction and

an increase in local content in order

to benefit its clients and prospects.

In parallel to the progress made on

local manufacturing, Lesedi is also

focusing on optimising logistics with

local transporters and installation with

our certified installers. Due to some

uncertainty in the REIPPP in South

Africa, Lesedi is getting more involved

in private projects, and also assessing

a number of opportunities in SADC.

Lesedi’s Competencies Include:

• Project Development

• Project Management

• Construction Management

• Design Engineering

• Engineering Procurement

and Construction (EPC)

• Specialised Shutdown

Maintenance Activities

(Globally)

• Provision of Technical

Personnel

• Heating, Ventilation and

Air–Conditioning

• Power Plant Construction

• Nuclear, Gas Turbine, Coal

Power Stations, Solar Single

Excess Trucking

• Biomass, BioEnergy,

Hydrogen, Hydro, Waste-to-

Energy

LESEDI NUCLEAR SERVICES (PTY) Ltd

GET IN TOUCH

12 Edison Way, Century City, 7441,

Cape Town, South Africa

Tel: +27 21 525 1300

Fax: +27 21 525 1333

Email: lesedi@lesedins.co.za

www.lesedins.co.za / www.areva.com

*8EP Certification expected by

August 2017

FOREWORD

South African Business

A unique guide to business and investment in South Africa.

Welcome to the sixth edition of the South African Business

journal. First published in 2011, the publication has established

itself as the premier business and investment

guide to South Africa, supported by an e-book edition

at www.southafricanbusiness.co.za.

Regular pages cover all the main economic sectors of the South

African economy and give a snapshot of each of the country’s

provincial economies. Feature articles on topical issues such as

sustainability and African trade provide unique insights, together

with an interview with the newly elected chairman of the African

Association of Automotive Manufacturers, Mr Thomas Schaefer.

Another special feature focusses on an exciting project to transform

South Africa’s small harbours and coastal properties.

South African Business is complemented by nine regional publications

covering the business and investment environment in each of

South Africa’s provinces. The e-book editions can be viewed online at

www.globalafricanetwork.com. These unique titles are supported by

a monthly business e-newsletter with a circulation of over 35 000.

Chris Whales

Publisher, Global Africa Network Media

Email: chris@gan.co.za

CREDITS

Publisher: Chris Whales

Publishing director:

Robert Arendse

Editor: John Young

Online editor: Christoff Scholtz

Art director: Brent Meder

Design: Colin Carter

Production: Lizel Olivier

Ad sales: Sydwell Adonis, Nigel

Williams, Gavin van der Merwe,

Sam Oliver, Gabriel Venter,

Siyawamkela Sthunda,

Vanessa Wallace, Jeremy Petersen

and Reginald Motsoahae

Managing director: Clive During

Administration & accounts:

Charlene Steynberg and

Natalie Koopman

Distribution & circulation

manager: Edward MacDonald

Printing: FA Print

DISTRIBUTION

South African Business is distributed internationally on outgoing

and incoming trade missions; to foreign offices in South

Africa’s main trading partners; at top national and international

events; through the offices of foreign representatives in South

Africa; as well as nationally and regionally via chambers of

commerce, tourism offices, trade and investment agencies,

provincial government departments, municipalities, airport

lounges and companies.

PUBLISHED BY

Global Africa Network Media (Pty) Ltd

Company Registration No: 2004/004982/07

Directors: Clive During, Chris Whales

Physical address: 28 Main Road, Rondebosch 7700

Postal address: PO Box 292, Newlands 7701

Tel: +27 21 657 6200 | Fax: +27 21 674 6943

Email: info@gan.co.za | Website: www.gan.co.za

Member of the Audit Bureau

of Circulations ISSN 2221-4194

published by Global Africa Network Media (Pty) Ltd. Full copyright to

the publication vests with Global Africa Network Media (Pty) Ltd. No part

of the publication may be reproduced in any form without the written

permission of Global Africa Network Media (Pty) Ltd.

PHOTO CREDITS | Pictures supplied by flickr.com, Mainstream Power,

Wikimedia Commons, Anglo American, SA Tourism, Bloomberg, Eugene

Armer, RailPictures, Trans Caledon Tunnel Authority, Paul Saad, BM

Jackson, Aveng, Philip Mostert and Shutterstock.

DISCLAIMER | While the publisher, Global Africa Network Media (Pty)

Ltd, has used all reasonable efforts to ensure that the information contained

in South African Business is accurate and up-to-date, the publishers

make no representations as to the accuracy, quality, time-liness,

or completeness of the information. Global Africa Network Media will

not accept responsibility for any loss or damage suffered as a result of

the use of or any reliance placed on such information.

Join us!

Advertise your organisation in this journal to reach

business and government. Contact sales@gan.co.za

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

AN ECONOMIC OVERVIEW OF

SOUTH AFRICA

South Africa is a country of great diversity – of its population, its landscapes and its natural resources.

Great mineral wealth has underpinned the South African economy ever since the first diamond was

stumbled upon in 1867. Gold was found soon afterwards and that industry effectively saw to it that

South Africa became an industrialised nation. Now those gold mines are tapering off production but

iron ore and platinum reserves are impressively large.

Global demand for these resources, however, has

been very variable, dependent to a large extent on

the Chinese market. This is part of the reason why

South Africa’s economic growth in 2015 and 2016

was very modest.

The other reason is policy and political uncertainty.

The national government is run by the African

National Congress and its president, who is also

president of the country, Jacob Zuma. He has repeatedly

changed cabinet ministers and his decision to

fire the respected Finance Minister Pravin Gordhan

led to several ratings agencies downgrading South

Africa’s credit rating. The other historically strong

economic sector, agriculture, brought good cheer to

the overall economic picture in the second quarter

of 2017, boosting GDP growth by 2.5%. This was

because of a tremendous rally off a bad period

caused by a long-term drought. So good was the

recovery that South Africa reported record grain

crops and exports.

The grains of the central regions of the country,

together with the fruits and vegetables of

Mpumalanga and Limpopo, the wines and grapes

of the Western Cape, and the sheep and mohair

of the Eastern Cape, all contribute to a diverse and

vibrant agricultural sector. There are many strong

agricultural companies in the sector. KwaZulu-Natal

is the country’s leading sugar area, and has a strong

suite in forestry and paper production.

The other economic sector that has held up

well is automotive manufacturing and automotive

components.

13 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Trends

There are several areas in which new or revitalised

sectors are providing employment and creating new

opportunities:

• tourists are visiting South Africa in record numbers

• the successful renewable energy private investor

programme is due to be restarted

• companies are trading into Africa with considerable

success

• niche agricultural markets are booming with macadamia

nuts being the most successful. Wine and

grape exports to China also hold great potential.

• several provincial governments and investment

agencies are establishing trade relations and

study programmes with BRICS countries

• private education (at school and tertiary level) is

a boom sector

• new banking licences have been issued and several

more are in the pipeline

• new stock exchanges came on line in 2017 and

more are expected

• investment in infrastructure (especially ICT and

railways) is strong

• national government has committed to the

National Development Plan (NDP), a blueprint

for how to move the country forward. Part of that

plan entails setting up deliverable schemes, such

as the Strategic Integrated Projects.

Strategic Integrated Projects (SIPs)

The National Department of Economic Development

is responsible for economic planning. It has set

out a list of 18 major projects called the Strategic

Integrated Projects (SIPs) which are intended to spur

growth and development in a sector or geographical

area. The focus is spread across seven primary

concerns to be addressed: geographic focus (five

SIPs), spatial (three), energy (three), social infrastructure

(three), knowledge (two), regional integration

(one), water and sanitation (one).

They cover all nine provinces with an emphasis

on areas that need more investment, and focus on

economic and social infrastructure. The 18 projects

themselves contain many smaller plans and

projects, each with budgets and deadlines. These

projects are:

1. Unlocking the Northern Mineral Belt with

Waterberg as the catalyst

2. The Durban-Free State-Gauteng Logistics and

Industrial Corridor

3. South-eastern node and corridor development

4. Unlocking the economic opportunities in North

West Province

5. Saldanha-Northern Cape Development Corridor

6. Integrated Municipal Infrastructure Project

7. Integrated Urban Space and Public Transport

Programme

8. Green energy in support of the South African

economy

9. Electricity generation to support socio-economic

development

10. Electricity transmission and distribution for all

11. Agri-logistics and rural infrastructure

12. Revitalisation of public hospitals and other

health facilities

13. National school build programme

14. Higher education infrastructure

15. Expanding access to communication

technology

16. SKA and MeerKat (international radio astronomy

project)

17. Regional Integration for African cooperation and

development

18. Water and Sanitation Infrastructure Master Plan.

To illustrate how many projects are undertaken

in support of an SIP, there has been a lot of action to

support the overall goal of creating an integrated logistics

corridor between Durban and Johannesburg

(SIP 2). Projects within the SIP include:

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

ZIMBABWE

NAMIBIA

BOTSWANA

Limpopo

0.9% (7.1%)

MOZAMBIQUE

North West

-3.6% (6.5%)

Gauteng

2.1%

(34.3%)

Mpumalanga

2.7%

(7.5%)

SWAZI-

LAND

Northern Cape

2.8% (2.1%)

Free State

1.8%

(5%)

LESOTHO

KwaZulu-

Natal

2.3%

(16.1%)

Western Cape

2.0% (13.6%)

Eastern Cape

1.0% (7.6%)

SA GDP: Percentage of growth per province (2014) and percentage contribution to national GDP (figures

in brackets).

SOURCE: STATS SA WWW.STATSSA.GOV.ZA

• a R2.3-billion container terminal at City Deep,

Johannesburg

• a R3.9-billion project to upgrade Pier 2 at the

Port of Durban

• R14.9-billion of rolling stock for the rail line

• R30.4-billion completion of the New Multi-

Product Pipeline by Transnet Pipelines

• official inauguration in 2017 of the Maluti-A-

Phofung Special Economic Zone (logistics

hub, fuel distribution depot, manufacturing) at

Harrismith in the Free State.

Geography

South Africa’s location between the Atlantic and

Indian oceans ensures a generally temperate climate.

The 2 954km coastline stretches from the border with

Namibia on the Atlantic to the border with Mozambique

in the east. The cold Benguela current sweeps along the

western coast while the warm Indian Ocean ensures

that the Mozambique/Agulhas current is temperate.

South Africa’s coastal plain is separated from the

interior by several mountain ranges, mostly notably the

Drakensberg which runs down the country’s eastern

flank. Smaller ranges in the south and west mark the

distinction between the fertile coastal strip and the dry

interior known as the Karoo.

The city of Johannesburg is located on the continental

divide, whereby water runs south of the city

towards the Atlantic Ocean while waters to the north

drain towards the north and east. Johannesburg is

1 753m above sea level.

Most of the country has summer rainfall but the

Western Cape, which has a Mediterranean climate,

receives its rain in winter. Droughts are not uncommon

and although the national average is 464mm,

most of the country receives less than 500mm of rain

every year. The Western Cape is currently experiencing

a severe drought.

15 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

The Orange and Vaal rivers play important roles in

water schemes and irrigation and the Limpopo River

defines the country’s northern boundary. A number

of rivers run strongly from the Drakensberg to the sea

but South Africa has no navigable rivers.

Maize is produced in large quantities in the interior.

The dry interior mostly supports livestock in the

form of sheep and cattle. South Africa is the world

leader in mohair production. Wines and fruit are specialities

of the Western Cape while KwaZulu-Natal

and the low-lying areas of Mpumalanga are known

for sugar cane and tropical and subtropical fruits.

Limpopo is a major vegetable producer.

History

One of South Africa’s premier museums and tourist

attractions is known as the Cradle of Humankind,

pointing to the fact that what is now South Africa

has been home to the human species for thousands

of years.

Each of the country’s nine provinces presents

its official documents in the relevant regional languages

so the Western Cape, for example, presents

material in Xhosa, Afrikaans and English. The most

widely spoken languages are Zulu and Xhosa. Other

languages, in order of the number of people who

speak the language as a home language, are Pedi,

English, Setswana, Sotho, Tsonga, Swati, Tshivenda

and Ndebele.

Historically, the Nguni-speaking people (Zulu,

Xhosa, Swazi and Ndebele) settled along South

Africa’s east coast (and what is now Swaziland) while

Venda and Tsonga people made their homes south

of the Limpopo River. The Mapungubwe cultural

landscape, a UNESCO World Heritage Site, in northern

Limpopo Province illustrates a highly sophisticated

kingdom that flourished between 900 and

1300AD. The central regions of South Africa (and

Lesotho) were populated by Sotho and Tswana.

The Cape was colonised first by the Dutch, by

the Batavian Republic and by the British. Prolonged

British rule began in 1806. By the late 19th century

there were four territories in what is now South Africa:

two British colonies (Cape Colony and Natal) and two

independent Boer republics. The Anglo-Boer War was

fought between 1899 and 1901 and ultimately led

to the creation of the Union of South Africa in 1910,

uniting the four territories but ignoring the wishes of

the black population. South Africa became a republic

in 1960 and severed ties with Britain soon afterwards.

After Nelson Mandela was released and a series of

negotiating conferences were held, South Africa held

its first democratic elections in 1994. South Africa reentered

the Commonwealth after 1994.

PROVINCE CAPITAL PREMIER POPULATION AREA GRP BILLION RAND

Eastern Cape Bhisho

Phumulo

Masualle

6 916 200 168 966km 2 R289.9

Free State Bloemfontein

Elias Sekgobelo

"Ace" Magashule

2 817 900 129 825km 2 R189.1

Gauteng Johannesburg David Makhura 13 400 000 18 178km 2 R1 305.6

KwaZulu-

Natal

Pietermaritzburg Willies Mchunu 11 919 100 94 361km 2 R610.1

Limpopo Polokwane

Stanley

Mathabatha

5 800 000 125 754km 2 R271.5

Mpumalanga Mbombela David Mabuza 4 283 900 76 495km 2 R284.2

North West Mahikeng

Supra

Mahumapelo

3 707 000 104 882km 2 R249.5

Northern Cape Kimberley Sylvia Lucas 1 185 600 372 889km 2 R79.9

Western Cape Cape Town Helen Zille 6 200 100 129 462km ² R518.1

Snapshot of South Africa’s provinces

SOURCE: STATSSA, 2016.

SOUTH AFRICAN BUSINESS 2018

FACT FILE: REPUBLIC OF SOUTH AFRICA

President: Jacob Zuma (African National

Congress)

Capitals: Pretoria/Tshwane (administrative,

seat of government), Cape Town (legislative),

Bloemfontein (judicial).

Provinces and provincial capitals: Western Cape

(Cape Town), Eastern Cape (Bhisho), KwaZulu-

Natal (Pietermaritzburg), Mpumalanga

(Nelspruit), Limpopo (Polokwane), Gauteng

(Johannesburg), North West (Mafikeng),

Northern Cape (Kimberley), Free State

(Bloemfontein).

Time: GMT+2

Population: 55.91-million (2016)

Population under 15 years: 30%

Population over 60 years: 8%

Life expectancy: 65.1 (female); 59.7 (male)

Size: 1 220 813km²

Major languages: South Africa has 11 official

languages but the main language of government

and business is English. Zulu, Xhosa and

Afrikaans are widely spoken.

Religion: There is no state religion. The majority

of the population are Christian but many other

religions are followed such as Islam, Jewish and

Hindu.

Currency: The rand (100 cents). R13.48 = $1

(October 2017)

Political system: South Africa is a republic with

an executive president who is appointed by the

political party that wins the majority of votes in

parliamentary elections. There are three tiers

of government: national, provincial and municipal

but the revenue raising capacity of the

latter two spheres is limited. Allocations for

health and education for example, are made

by national government and then administrated

by provinces. Eight of South Africa’s nine

provinces are run by premiers from the African

National Congress; the Western Cape is administered

by the Democratic Alliance. In 2016,

municipal elections saw the DA come to power

in some of South Africa’s biggest cities, supported

by other parties such as the Congress

of the People and the United Democratic Front.

SPECIAL FEATURE

Legal system: South Africa is a constitutional

state with separation of powers between the

legal and executive authorities. All laws must

pass muster with the Constitutional Court which

is the ultimate court of appeal on legislation.

South Africa’s legal system is based on Roman

Dutch law.

Infrastructure: Ports of Cape Town, Saldanha,

Mossel Bay, Port Elizabeth, Ngqura East London,

Durban and Richards’ Bay. International airports

at Cape Town, Johannesburg and Durban and

domestic airports at all major cities. South

Africa has 34 000km of railway track and half

of the country’s road network is paved. Most of

South Africa’s power is generated by coal-fired

power stations run by the state utility Eskom.

A vigorous programme to encourage private investment

into renewable energy began in 2012.

Resouces: Platinum, gold, iron ore, chromium,

vanadium, manganese, alumino-silicates, coal,

copper, diamonds, uranium, zirconium.

GDP: R3 055-billion (2015)

GDP growth: 0.5% (2016), projected 1.3% (2017)

(SA Treasury)

Exports: Precious and semi-precious stones,

mineral products, base metals, vehicles,

machinery, chemical products, vegetable products,

fruits, foodstuffs and beverages, paper

and pulp.

Main export markets: China, USA, Japan,

Germany, UK, India.

Imports: Machinery, mineral products, vehicles,

chemicals, original equipment, base metals,

plastics and rubber, textiles, optical and medical,

foodstuffs and beverages.

Main import markets: China, Germany, USA,

Japan, Saudi Arabia, Iran, UK, India, France,

Nigeria.

17 SOUTH AFRICAN BUSINESS 2018

MESSAGE

City of Ekurhuleni

Message from the Executive Mayor Councillor Mzwandile Masina.

In May 2016, our council embarked on a journey of social transformation,

to ensure that our residents see improved and impactful service

delivery, with accelerated access to a constant provision of quality

services. This commitment includes a focus on economic development

and increased investment.

A KEY POINT OF CONNECTIVITY

AND INDUSTRY

Councillor Mzwandile Masina

Priorities

Immediate and clear priorities include security of water and energy

supply; completion of transport infrastructure and launch of the much

anticipated bus rapid transit system – Harambee; rollout of Wi-Fi;

unleashing of strategic land parcels for development; and implementation

of our 10-point economic plan. The economic plan is a comprehensive

programme of economic growth and development, intended

to create jobs and attract investment into the city. The Aerotropolis

development is one of the key points in this economic plan.

Our city is named to

reflect the aspirations

of our residents

as a place of peace. In

this spirit, we welcome you to the

City of Ekurhuleni. Ekurhuleni is a

major hub that connects South

Africa to the world, and serves

as a key point of connectivity

and industry for the country and

continent.

Building a pact

This term of office is one in which we will focus on building a humane

pact between the city and its citizens, in which the aspirations of our

people, regardless of their current circumstances, can be given a fair

opportunity for progress. The City of Ekurhuleni can’t attain these

ambitious goals without the support of all of our stakeholders. In turn,

we commit ourselves to deliver on our mandate, efficiently, effectively

and in a way which improves the city and the state of its people.

In conclusion, let me reiterate our commitment to working

with all of our stakeholders, in growing and developing our city,

so that we can ensure increased equality and prosperity for all of

our residents.

SOUTH AFRICAN BUSINESS 2018

City of Ekurhuleni

Africa’s first Aerotroplis holds great promise.

PROFILE

A new identity for the City of Ekurhuleni is being

forged out of the towns and urban nodes surrounding

Africa’s biggest and busiest airport, OR Tambo

International Airport. The airport is the epicentre of

Africa’s first Aerotropolis, which will set it apart from

any other South African city and turbocharge the

regional economy.

The city has prime residential estates, glitzy entertainment

venues, mega shopping malls, lively townships,

historical villages, good schools, recreational

facilities and wide open spaces.

Ekurhuleni is a digital city and is investing in digital

infrastructure that will streamline the way it delivers

services to the community, including smart grids,

payment gateways, e-learning and e-health systems,

and closed-circuit TV to improve safety and security.

Ekurhuleni has long been known as the manufacturing

hub of the country and it is building on this

history to create a smart city that will underpin the

new economic growth trajectory. The city boasts a

world-class transport network, telecommunications

and energy grid, a youthful citizenry and a strong

financial position. Its connectivity across rail, road

and air is significant. The Gillooly’s interchange is the

busiest in the southern hemisphere, and Germiston

railway hub is one of the busiest on the continent.

The city is being developed through a series of

strategic mixed-used urban developments and

transformational projects like the GreenReef Megaproject,

S&J Industrial Estate, Glen Gory, Leeuwpoort

Housing Development, TwentyOne Industrial Park,

Carnival Junction, Lordsview Industrial Park and the

Riverfields R21 development, taking shape along the

R21 Albertina Sisulu Highway which links Ekurhuleni

to Pretoria. And the city has the infrastructure to

support investments like Prasa-Gibela, which will

see the building and maintenance of 600 new trains

for South Africa’s rail commuter network over the

next two decades. Other public-sector strategic

developments which promise to bring economic

development include the Tambo Springs inland port

and the OR Tambo Airport cargo terminal expansion.

Come LIVE PLAY INVEST

in Ekurhuleni, the Aerotropolis City.

The rebirth of Ekurhuleni is not just a dream. Several

companies have taken up residence in their new

premises and a significant logistics corridor has

mushroomed along the R21 highway. Designed

to strengthen the logistics, aviation and transport

sector, key projects are laying the groundwork for

19 SOUTH AFRICAN BUSINESS 2018

PROFILE

a powerful distribution centre and logistics node,

including Blue Sky Logistics, Jonsson Workwear, Fast

Freight, DB Schenker, Würth and DHL Supply Chain.

Additional strategic land for industry is due to be

released for development.

One of the ways in which planners will promote

competitiveness is to create an environment that

will allow disruptive innovation through technology.

One such project is the Alternative and Renewable

Energy strategy which will limit the City’s dependence

on the national grid. Ekurhuleni hopes to derive

about 10% of overall electricity supply from renewable

energy by 2021.

Over and above this there are also six mega housing

projects that are being planned across the

City over the next five years. Mega human settlements

are housing projects of 100,000 units

or more. They offer various types of housing

from fully subsidised, gap housing, social housing

and bonded units. These settlements help

the city to transform its disparate urban special

patterns, increase access to socio economic opportunities

and encourage social cohesion. These

developments offer significant opportunities for

investors across the full value chain including land

acquisition, supply of goods and services, as well

as actual implementation.

SOUTH AFRICAN BUSINESS 2018

Another exciting project is the redevelopment of

Germiston into an administrative headquarters for

the city, with other precincts following a similar

path. The Kempton Park-to-Germiston corridor

aims to develop a new urban core and central

business district for a metro that was formed out

of nine small towns, each with its own business

district. The precinct comprises 10 major projects

which are mostly owned by the city – the court

is owned by national government and one is privately

owned. Projects include a new administration

building, hotel and conference centre, knowledge

centre and magistrates square. Partnership

between the public and private sector will be

important in enabling these developments.

With this initiative and others like it, city planners

are expanding the horizon that will see Ekurhuleni

blossom into a prosperous region for all its citizens.

PROFILE

Investment facilitation

The city has an Investment and Development

Facilitation Strategic Policy Framework, which has

been developed to improve turnaround times in

facilitating and decision-making on investment and

development applications, thus improving the city’s

investment-friendly environment.

The city boasts a business and investment onestop-shop

established within the city’s Aerotropolis

core. The Ekurhuleni Business Facilitation Network is

situated in Kempton Park and houses the business

centre to support local enterprise development and

the investment centre (EIC).

The Ekurhuleni Investment Committee meets twice

a month to appraise and provide technical support

including pre-application support to mega investment

and development applications.

The EIC also provides aftercare to newly established

and existing businesses within the city. The centre

collaborates with various provincial and national

departments to provide unmatched facilitation of

investments and developments within the city and

support to local businesses.

CONTACT INFO

Ekurhuleni Investment Centre

Tel: +27 11 999 3516 / 20

Email: eic@ekurhuleni.gov.za

Website: www.ekurhuleni.gov.za

21 SOUTH AFRICAN BUSINESS 2018

Business expands into Africa

Manufacturing and services are targeted for export growth.

Shoprite is a household name for many South

Africans who buy their weekly groceries at

one of hundreds of outlets across the country,

but that is an experience which many

Africans living in other parts of the continent are sharing

more and more frequently, and in large numbers.

Retailers and bankers from South Africa have been

exploring opportunities north of the Limpopo River

for many years, and they have been followed by engineering

firms, consulting companies and, more

recently, automotive manufacturers. They key attraction

is the size of the market, and the potential of that

market to grow and to grow more sophisticated in its

tastes. Africa has a population of 1.2-billion.

South African and international hotel brands are

investing strongly in Africa. Tsogo Sun has hotels in

Zambia, Tanzania, Kenya, Nigeria and Mozambique.

Sun International operates in six countries outside

South Africa. Marriott International’s acquisition of

Protea Hotels has given it an expanded footprint in

Africa.

Hyatt Hotels & Resorts will double its presence in

Africa by 2020, with new investments in Cameroon,

Senegal and Algeria, to go with its existing hotels

in Morocco and Tanzania. The group is eyeing

East Africa, citing increased infrastructure spending

there as a reason to consider investing.

While South Africa is still seen as a good staging

post for international firms to base their Africa strategies,

some industries have refined that process. In

the automotive industry, for example, head offices

in Europe and the US have mandated their South

African operations to lead the drive into Africa.

According to the CEO of Sanlam Africa

Investments, St John Bungey, the subtleties of investing

in Africa should be respected. The growth

path and the demographics are solid reasons to

invest in Africa but specific strategies are needed.

He notes three key ingredients: respect for local

knowledge, understanding the local environment

and partnering with the right local people

(Sunday Times).

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Fully 30% of South Africa’s

exports are to other countries in

Africa, but a massive 83% of this

volume is into Southern Africa.

This means that the potential

for South Africa to grow its exports

into other parts of Africa is

enormous.

The Export Credit Insurance

Corporation of South Africa

(ECIC) exists to help trade and

investment across borders. ECIC

provides insurance for bank loans

that are taken by investors and

South Africans can get insurance

for investments, and for small and

medium enterprises there is a

product available (performance

bonds) to anyone exporting

capital goods and services.

The South African Department

of Trade and Industry (dti) plays a

key role in promoting trade between

South Africa and the rest

of Africa. South African exporters

can enroll in the dti’s training

programme, Global Export Passport Programme

(GEPP). The dti wants to expand South African exports

in manufacturing (which it wants to double

in 10 years) and services (40% of the export basket

by 2030).

The Integrated National Export Strategy (INES)

is managed by a unit called Trade and Investment

South Africa (Tisa), which is targeting emerging

markets, including the BRIC states (Brazil, Russia,

India and China).

Connecting

Intra-African trade currently stands at 16% of trade

volumes. This is in contrast to the continent of

Europe, where 60% of all trade is conducted among

European nations, and in Asia, where the figure

is 40%.

Border delays, tariffs and infrastructure are the

biggest barriers to expanding this trade. Shoprite

spends about R20 000 per week in permits, and long

waits at border posts are routine. The revamped

Chirundu one-stop border post in Zambia has

reduced transit times by a third.

There are plans to create a Tripartite Free Trade

Area covering three regional groupings across

26 countries. Extending from South Africa in the

south to Uganda and Kenya in the north, the proposed

free trade area would encompass more

than 620-million consumers in three regional

organisations: the Southern African Development

Community (SADC), the Common Market for East

and Southern Africa (Comesa) and the East African

Community (EAC).

The Sustainable Development Investment

Partnership (SDIP) comprises 30 institutions and

aims to fund 16 African infrastructure projects, valued

at more than $20-billion. The founders of the

SDIP were the World Economic Forum (WEF) and

the Organisation for Economic Co-operation and

Development (OECD).

China has pledged to support the rehabilitation

of the railway line between Zambia and Tanzania

while the Industrial and Commercial Bank of China

is to invest R20-billion in renewable energy in Africa.

Railway upgrades will probably reap the quickest

rewards in the push to promote intra-African

trade. Fully 70% of the freight that arrives in South

Africa is delivered by road: this is both a problem

and an opportunity. One of the companies

eyeing that opportunity is South African rail operator

Sheltam Group. It has created a rail track

infrastructure funding vehicle with a dedicated

African mandate.

The Development Bank of Southern Africa and

Transnet have developed a financing scheme for

selected buyers of rail rolling stock and port equipment.

Transnet is already very active in African

countries north of the South African border.

This is part of Transnet’s Market Demand Strategy

(MDS), which aims to sell it products and services

around the world. Transnet Engineering’s Trans-

Africa Locomotive (for branch lines and shunting

yards) is being marketed to other African countries

and mining companies. Transnet Engineering plans

is establishing Maintenance Repair and Operations

centres in four African countries.

23 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Automotive opportunities in Africa

The African Association of Automotive Manufacturers chairperson Thomas Schaefer (CEO

of Volkswagen SA) explains why new African markets are vital for growth.

What are the primary goals of the AAAM?

The AAAM was founded with a strategic view

regarding all South African original equipment

manufacturers (OEMs), namely, that Africa is super

important for our future. We need Africa so that

South Africa can thrive. The AAAM is for the industry

to say how can we work with Nigeria or Kenya for

the good of both countries.

Is the intention to set up full-scale plants

of SA OEMs or to create independent

industries?

In Kenya at the moment there is no passenger car

manufacturing other than what we have started.

There is some truck manufacturing but nothing

else, so you have to start slowly. This entails starting

with semi-knock-down assembly, then medium

knock-down, and finally full-scale construction. It

is dependent on the annual volume you produce.

Indonesia and other countries in the world have

gone through this development phase. To build

up a body shop with welding and all the logistics,

you can only do that beyond production of 20 000

or 30 000 cars per year.

What is current Volkswagen operation in

Kenya?

We are planning on a thousand Polo vehicles per

year for now, but at the moment it is a little slow

because of the political aspects.

Do you have something in Nigeria?

In Nigeria we have had an operation since 2014; however,

it was dormant until recently due to the oil and

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

forex issues. It’s getting invigorated

and we have had good meetings

with the Nigerian and South

African governments. They are

serious about curbing used car

sales – that is the drag that keeps

them off the new car market, the

used cars getting dumped.

What other markets is

Volkswagen targeting?

We are focusing on the East

African market, in countries like

Rwanda and Tanzania. Ethiopia is very promising

but their massive dam for the Nile is where they are

spending all their forex at the moment.

Are all South Africa’s OEMs looking north?

All OEMs operating in South Africa have now received

the guardianship of Africa from head office.

They are probably continuously looking up north

to see opportunities. We are not all looking at the

same countries: Ford is looking at Angola and Nissan

is looking at Nigeria.

Is the Department of Trade and Industry

(dti) encouraging an African focus?

The OEMs’ focus on Africa aligns well with the

dti’s review of the Automotive Production and

Development Programme (APDP) – the new APDP

is about regional trade, and that is the most important

aspect for the South Africa OEM industry.

If we don’t get the regional trade and regional

industry right then it’s going to be difficult in the

future. Labour and logistics costs are high but with

regional trade we could offset most of it. We are

pushing the dti for better incentives to help us to

open those markets.

Is Africa the key?

If production stays far below a million cars production

per year, we will never be profitable or

sustainable, so Africa could be the key? When you

look at the number of cars per thousand inhabitants

in most African countries there is opportunity in

places like Kenya and Nigeria. If you take away the

used car drag, there’s no reason why their market

could not grow. If Kenya came to a level like South

Africa they could achieve a market of five or six

hundred thousand.

So you are positive about the future?

Nobody else can do it better than from Africa for

Africa. Although it is a South African initiative, it

needs to be an African initiative. It must benefit the

other countries as well. We are working to refocus

the AAAM to make this a significant organisation that

will bring the auto industry further in Africa. It takes

determination to create an auto industry. If you focus

on it, it will come – there is a real opportunity.

25 SOUTH AFRICAN BUSINESS 2018

FOCUS

Export Credit Insurance

Corporation of South Africa

Celebratng 15 years of Success

Proudly supporting South African exporters and investors.

The Export Credit Insurance Corporation of South Africa (ECIC)

was established 16 years ago, in July 2001, when it was given

the mandate of filling a market gap through the provision of

medium to long-term export credit and investment guarantees

by underwriting bank loans for political and commercial risk insurance

cover, on behalf of the South African government.

The short-term transaction market was amply catered for, but medium

to long-term export transactions still had a need for a dedicated

export credit agency, hence the formation of the ECIC. Acting as a

catalyst for private investment, the ECIC steps in where commercial

lenders are either unwilling to or unable to accept long-term risks

While the ECIC is part of a broader government policy, it remains

an independent limited liability company, but with the government

as its sole shareholder. The institution is enabled under the amended

Export Credit and Foreign Investments Insurance Act of 1957.

The ECIC has recently developed new products including lines of

credit, lease and return of plant equipment. It also continues to be

a catalyst for increased lending capacity by financial institutions by

entering agreements with other export credit agencies (ECAs). In this

way, it creates a framework for both re- and co-insurance. To this end,

it has adopted a comprehensive plan of action aimed at actualising cooperation

programmes for mutual benefit in conjunction with, among

others, BRICS ECAs, Afreximbank

and African Trade Insurance.

Most African markets are considered

as uncharted territories

with challenging business environments.

Thus, the business

strategies foreign investors apply

elsewhere in the world cannot be

used in the continent.

Access to competitively

priced export credit creates the

ability for local contractors to

bulk up and compete more effectively

in foreign markets.

With the ECIC in support of

such transactions, the South

African export market is enabled

and contractors are becoming

more credible.

This has a far-reaching impact

on fostering a stronger economy

and drives domestic job creation,

contributions to fixed capital formation

and the GDP, as well as

the generation of fiscal revenue.

The ECIC is committed to

sustainable business through

innovative solutions, operational

and service excellence,

business development and strategic

partnerships. In enabling

frontier markets to optimise production,

the ECIC is effectively

motivating a positive socioeconomic

impact.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Invest in the

Kingdom of Lesotho

The Lesotho National Development Corporation has attractive projects in several areas.

Lesotho is richly endowed in mineral resources

such as diamonds and has abundant water

reserves. Lesotho is branded as “The Kingdom

in the Sky” owing to its beautiful sceneries

especially in winter when it has snowed or in spring

when the alpine flora of Lesotho blossom.

Lesotho is a high-altitude country, landlocked by

the Republic of South Africa and criss-crossed by

a network of rivers and mountain ranges. Lesotho

covers an area of 30 355 square kilometres and has a

population of just over two-million. The vast majority

of the population is Basotho (Lesotho natives) with

a small group of Europeans and Asians. The official

languages of Lesotho are English and Sesotho. The

country’s GDP growth rate in 2016 is estimated at 3.1%.

The country is actively seeking new investments

into a wide variety of sectors to boost the economy

and provide employment for its people.

The Lesotho National Development Corporation

(LNDC) is the main parastatal of the Government

of Lesotho charged with the implementation of

the country’s trade and industrial development

policies.

The role of the Corporation is to promote Lesotho

as an attractive investment location for both foreign

and indigenous investors. The LNDC is the first point

of contact for investors who intend to set up projects

in the manufacturing and processing industries

in Lesotho. In 2016, the LNDC received a best

IPA (Investment Promotion Agency) Award from

UNCTAD (United Nations Conference on Trade and

Development) at the 14th UNCTAD Conference.

Lesotho has progressed in moving from a predominantly

subsistence-oriented economy to an economy

exporting natural resources (diamonds and water)

and manufactured goods (excelling in textiles and

apparel). This has been driven by the country’s dutyfree

quota-free market access to major international

markets and an improving investment climate.

Priority sectors for investment include:

• Agriculture and agri-processing

• Manufacturing

• Renewable energy

• Infrastructure and construction

• Services

• Tourism

Selected projects

Agri-processing

Basotho Fruit and Vegetable Canners is a manufacturing

company that processes raw materials to produce

consumer products, canned baked beans, organic

peaches and asparagus, fruit juice and tomatoes. It

was operating as an export-oriented company with

success in exporting its products to South Africa and

other international markets (EU). The existing plant

is currently not in operation. A joint venture investment

partner is sought to operate Basotho Canners

on a management contract basis. The objective is to

resuscitate and expand the current facilities.

• Project size/cost: US$30-million

• Proposed procurement process: Joint Venture –

Management Contract

• Financing status, amount and structure

required: US$30-million in equity

• Government guarantee or involvement: Policy

sponsorship, land allocation, infrastructure, energy

and water supply, visa facilitation for scarce skills.

Manufacturing and hospitality

Makeka Mollometsi is a multi-pronged business

concern, geared towards the large-scale quality

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

beneficiation of aloe and agave lifestyle products. An

investor is sought to inject capital to develop the world’s

highest altitude eco-distillery for the production of spirits

from agave.

Mollometsi (mollo – fire; metsi – water) is an alcoholic

beverage product. Historical and modern techniques

are used to produce and bottle a range of

premium and entry-level “Firewaters” from the agave

plant. The core business will be a Lesotho-based bottling

and distillation plant and packaging, distribution

and sales of Mollometsi.

The business is also looking to establish a fourstar

boutique hotel at a demonstration farm in Botha

Bothe, which will also have a spa and mud baths;

conferencing facility for groups of up to 100 people;

a restaurant and spirit bar for tasting and sales; a

chapel; staff housing; a library and the potential of a

nine-hole golf course. The tourism success of nearby

AfriSki Mountain Resort provides a basis for good

occupancy rates.

• Project size/cost: US$25-million

• Proposed procurement process: Joint Venture –

Management Contract

• Financing status, amount and structure

required: US$25-million in equity

• Government guarantee or involvement: Policy

sponsorship, land allocation, infrastructure, energy

and water supply, visa facilitation for scarce skills.

ICT services

The establishment of a Lesotho Call Centre: call centre

outsourcing is a big business opportunity for developing

countries with a qualified workforce and high

unemployment rates. A country like India has proven

this point. Hosting call centres for foreign organisations

creates job opportunities and grows the economy.

• Project size/cost: Unknown

• Proposed procurement process: Joint Venture –

Technical Partner

• Financing status, amount and structure

required: Equity

• Government guarantee or involvement: Policy

sponsorship, visa facilitation for scarce skills.

Infrastructure: ICT

National Broadband Network (NBN) Initiative:

for the establishment of the Lesotho Shared

Telecommunications Infrastructure Company, a

telecommunications infrastructure investor – a

strategic partner – is sought to partner with the LNDC

(anchor investor) and the Lesotho Telecommunications

service providers. The scope of the NBN is to consolidate

available telecoms infrastructure, expand

the consolidated base and make it available on an

open-access, non-discriminatory and uniform pricing

basis to a large number of service providers. To

ensure international communication price efficiency,

it is proposed to consolidate multiple international

capacity links into the NBN. The NBN will also deploy

additional ICT infrastructure to stimulate bandwidth

demand in the form of an e-government program,,

inclusive of data centre and call centre infrastructure.

Capital required by the NBN will be raised against

the shareholder balance sheets as well as long term

off-take agreements for use of infrastructure by

existing operators.

• Project size/cost: US$150-million

• Proposed procurement process: Joint Venture –

Technical Partner

• Financing status, amount and structure

required: US$150-million in equity

• Government guarantee or involvement: Policy

sponsorship, visa facilitation for scarce skills.

CONTACT INFO

Lesotho National Development Corporation

Address: Development House, P Bag A96,

Kingsway Road, Maseru 100

Contact person: Marina Bizabani, Foreign

Investment Manager

Tel: +266 22 312012

Email: bizabani@lndc.org.ls or ip@lndc.org.ls

Website: www.lndc.org.ls

29 SOUTH AFRICAN BUSINESS 2018

Sustainability is a

new priority for business

The circular economy, renewable energy and energy efficiency are creating new industries.

In June 2017 the Jeppe Park Primary School in

Johannesburg became the 250th building to receive

a green building certificate from the Green Building

Council South Africa. In the process, it became the first

school building in Africa to receive such a certificate.

The combined effect of the 250 buildings being

built in a sustainable way will lead to annual savings of

450-million kilograms of CO2, 350-million litres of water

and 380-million kilowatt hours of energy.

Awareness of sustainability has grown exponentially

in the last few years and every sector is trying to

become greener, cleaner and more efficient. Buildings

are massive consumers of energy and so it is fitting

that they have been targeted for savings, or energyefficiency

drives.

But paying attention to sustainability in every sector

in the economy makes good sense, both economically

and for the health of the planet and its inhabitants.

The idea of the circular economy is taking hold: rather

than using resources and simply throwing them away,

thought is given to the source of energy (renewable

rather than finite), the efficiency of the production

process (reducing leaks and getting optimal use of

resources) and recycling or reusing materials (rather

than dumping them).

Organisations such as the National Cleaner

Production Centre (NCPC-SA) encourages “Industrial

Symbiosis”, the use of unused or left-over resources

by one company after another company has used

them. The material itself could be material, energy,

water or waste. The last three are at the core of the

sustainability debate.

GreenCape puts the value of South Africa’s waste

economy at R15-billion but suggests that another

R17-billion could be unlocked if all of a specified 13

waste cycles were recycled (Waste Economy Market

Intelligence Report).

Household waste is managed by municipalities or

companies contracted to municipalities. Only 10% of

South Africa’s waste is currently recycled and the waste

industry is dominated by collection and landfilling. A

national goal is to double that percentage by 2019 but

finding alternatives could be an expensive process.

GreenCape suggests that there are several business

opportunities for the private sector in these

sectors: recyclables (plastics), organics, e-waste, and

construction and demolition waste.

The Southern African Energy Efficiency

Confederation (SAEEC) website refers to the areas it

covers, and listing them illustrates the scope of the

field: energy engineering and energy management,

renewable and alternative energy, power generation,

energy services, sustainability, and all related areas.

South Africa’s moves towards sustainability are

happening in a global context that includes the adoption

in 2015 of the United Nation’s 17 Sustainable

Development Goals. The Paris Agreement on climate

change in 2016 is providing further stimulus on the

road to reduced carbon emissions and reduced

reliance on fossil fuels.

These agreements set out to protect the planet

from destruction, but they also represent an opportunity

to create new markets: wind, solar, biogass, fuel

efficiency, improved roofing and window sealant

materials – the list is long.

Practical steps

South Africa embarked on an ambitious programme

to promote renewable energy with its

Renewable Energy Independent Power Producers

Procurement Programme (REIPPPP). Between 2012

and 2016 it generated nearly R20-billion in actual or

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

committed investments into mostly solar and wind

power. The programme stalled when energy utility

Eskom baulked at paying for power it said it didn’t

need but the programme will restart in late 2017.

Nobody does renewable energy more enthusiastically

than Denmark and South Africa has entered

into multiple agreements with the northern European

country. Denmark is the world leader in wind power

and a trend-setter in energy-efficiency building codes.

According to the Danish Energy Association, the

best instruments to achieve energy efficiency are

building standards, equipment standards, obligation

schemes for energy utilities, energy audits and tax

rebates, and taxation. Architects and builders often

get ahead of targets: in 2013, 30% of all new floorspace

in Denmark was built to 2015 standards. In terms of

energy per square metre, if the country continues to

meet its targets, it will soon be at 6% of the norm in the

1970s. When a Danish building is finished, an energy

audit is done before it can be used.

The Energy Efficiency Directorate in the South

African Department of Energy aims to optimise the

energy sector through efficient use, production and

consumption of energy resources. A Draft National

Energy Efficiency Strategy was published in December

2016.

Among the directorate’s collaborations is one with

Danish Energy Management and the International

Energy Agency (IEA). An advisor from the Danish

Energy Association has been seconded to South Africa

as part of an inter-governmental energy partnership.

The Danes have created an export industry out of

their expertise in energy: in 2015 it was worth about

R140-billion and they want to expand it to “at least”

R280-billion by 2030.

GreenCape’s report on South Africa’s waste market

includes some references to broader economic opportunities

in the sustainable economy. Some examples:

Agriculture: solar-powered irrigation (SA market,

R2.9-billion)

Energy services: energy efficiency retrofitting; solar

PV systems; local manufacturing

Utility-scale renewable energy: independent power

production; rest of Africa; local manufacturing

Waste: private-public partnerships, construction

and demolition waste; growing reuse and

recycle market

Secondary materials: growing market for plastics,

metals and e-waste

Water: industrial water reuse; recycling and

resource recovery

Food value retention: better cold chain management

and waste reduction; solar thermal (in agri-processing,

the SA market potential is R3.7-billion); biogas.

TRANSITIONING INDUSTRY TO

A LOW CARBON ECONOMY

The Century City

Conference Centre in Cape

Town was host to more

than 400 delegates from

industry, business and

government who gathered

in September 2017 to discuss how to make

industry and commerce cleaner, greener and

more resource efficient.

The biennial Industrial Efficiency Conference

of the National Cleaner Production Centre

South Africa (NCPC-SA) had as its theme,

“Transitioning industry to a low carbon economy”

and offered workshops, presentations

and panel discussions on a range of resource

efficient and cleaner production (RECP)

methodologies.

The two-day programme offered information

on better use of energy, water, materials and

waste, as well as analysis of legislation and

policy that may affect business operations.

The presentation of successful case studies

formed an integral part of the conference.

The NCPC-SA is a national programme, funded

by the National Department of Trade and

Industry and hosted by the Council for Scientific

and Industrial Research (CSIR). It exists to support

industrial companies to reduce their environmental

impact through the use of RECP.

The biennial conference is offered as one

of these support mechanisms, which is why

there is no cost for attendance. Both days included

a non-commercial exhibition, allowing

delegates to interact with government and

industry programmes that may be of assistance.

SOUTH AFRICAN BUSINESS 2018

Protecting roofs and

stopping leaks

worldwide since 1958

PROFILE

Topps Products delivers sustainable, commercial roof and industrial roof

maintenance solutions.

Our roof coatings and roof sealants have been

protecting and sealing roofs, stopping roof leaks and

extending roof life for decades.

The Topps® company roots in this business – which

date back to 1958 – are based upon a simple concept:

product selection for your roofing needs is as

important as the company that installs it. Our roof

coating systems work together to restore, protect and

enhance the energy efficiency of commercial and

industrial buildings. These systems always include a

versatile group of surface preparation, reinforcement,

roof repair and roof coating products which all work

together to improve the performance of your roof.

Providing effective roofing solutions to contractors,

building owners and facility managers – and supporting

our full line of roof coating and roof repair products

with a dedicated support team – is our top priority.

SUPPORT TEAM

At Topps, our support team works closely with you to

ensure the project goes smoothly. Our support team

is experienced in the roofing industry and can provide

you with what you need to get the job done right.

Our roofing products are second to none, exceeding

industry standards and standing up in the harshest

of climates.

Nothing can be more important to your project’s

success than the confidence that comes

with quality roofing products, combined with the

reliability of both local installers and the manufacturer’s

resources working together.

PolyCore embedded

into Polyprene

around vent.

Fits in and forms

around vent.

At Topps, our production management team oversees

the purchase of all raw materials and the production

for every litre of roofing product produced

for you. Our business development division assists

and helps train roofing contractors with certification

seminars and on-site training worldwide.

We pride ourselves on our attention to customer

service. Strict product production guidelines involving

our own people together with local certified

independent installers helps ensure results.

Because Topps® products are used in virtually every

climate of the world, including Antarctica and others

typically referred to as the graveyard of protective

coatings, Topps® likely has the best option to serve

you. Let our staff and trained independent installers

assist you.

CONTACT INFO

Tel: 087 813 0349

Email: admin@toppsproductssa.co.za

Website: www.toppsproductssa.co.za

SOUTH AFRICAN BUSINESS 2018

Skills development

Job-relevant training is key to economic growth.

Twenty-two South Africans headed to

Abu Dhabi in October 2017 for the

WorldSkills International competition. The

South Africans were selected from 20 skills

areas which forms part of the WorldSkills South

Africa project and The Decade of the Artisan campaign,

both supported by the National Department

of Higher Education and Training (DHET).

Participation in the WorldSkills International

(WSI) competition showcases talented young

South Africans, but also highlights the need to

get young people enthused by the idea of becoming

artisans and technicians. The National

Development Plan (NDP) envisages South Africa

producing 30 000 artisans per year by the year

2030. The current figure is about 13 000 per year.

WSI participants from South Africa included

skilled young people in the fields of water technology,

mechatronics, IT networks, graphic design,

plumbing and heating, welding, bricklaying, cooking,

refrigeration, spray painting, hairdressing and

mobile robotics.

South Africa has one engineer to every 3 166

citizens, compared to Malaysia where the figure is

543 citizens per engineer. The Skills Development

Amendment Act is intended to improve the situation,

and not only in engineering. Several institutions

have been created to help guide policy

in skills and training, and to guide the actions of

training institutions.

Sector Education and Training Authorities (SETAs)

collect dues from companies in a particular industry

(Wholesale and Retail, Banking, Construction,

Chemical Industries, for example) to promote training

in that industry. A percentage of this money is

returned to the company if that company can show

that they have a workplace training plan. The rest of

the money is used by the SETA to offer skills training.

In the Eastern Cape the Manufacturing,

Engineering and Related Services Authority

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

(MerSETA) plays an important

role in supporting skills

development in the automotive

and automotive parts

sector. The authority is involved

in the National Tooling

Initiative and artisan training,

especially with regard to creating

a skilled workforce for the

Coega Industrial Development

Zone. MerSETA helped establish

the Centre of Excellence

for Welding at the Eastcape

Midlands TVET College in

Uitenhage.

A national programme

of the Local Government

SETA (LGSETA) offers learnerships

in auditing to municipal

employees.

The National Skills Authority

(NSA) works with SETAs in

carrying out the National

Skills Development Strategy

(NSDS). The Human Resource

Development Council of South

Africa (HRDCSA) is an over-arching

body that aims to give guidance to the many

institutions working on skills development and

training. It is managed by the DHET.

A key element in delivering skills training are

Technical and Vocational Education and Training

(TVET) colleges, which are tasked with bridging the

skills gap in South Africa. TVET colleges are concentrating

on 13 trade areas, including bricklayers,

millwrights, boilermakers and riggers.

Large amounts of money are spent on basic

education at schools, but there has also been a

big increase in spending on TVET colleges, reflecting

the state’s concern to develop the skills

of the country’s workforce. R16.5-billion has been

allocated by national government to skills development

and infrastructure over the medium term.

The HRDCSA has identified five key areas

where the skills pipeline must be improved: access

to TVET colleges; intermediate skills (artisans

in particular) and professionals; production of

academics; collaboration between industry and

educational institutions in research and development;

worker education; foundational learning.

In KwaZulu-Natal, the Maritime School of

Excellence trains students for the Sharks Board,

Transnet Port Terminals (TPT), Transnet National

Ports Authority (TNPA) and for the wider field of

maritime and logistics employers. More than 250

students graduated in 2016 as cargo coordinators,

marine pilots, tug masters and operators of

lifting equipment.

The South African Maritime Safety Authority

(SAMSA) is investigating the feasibility of establishing

specialist maritime schools in South Africa’s

coastal provinces, including the Eastern Cape and

Western Cape.

Industry

Creative interventions from industry bodies such

as the Engineering Council of South Africa (ECSA)

are also creating new pathways for training. The

ECSA has started a programme whereby trainees

can earn certificates in specific disciplines

from a broader range of institutions. The qualifications

will be in line with the council’s Exit

Level outcomes.

Six of South Africa’s biggest construction companies

have established a R1.25-billion skills fund

which will be deployed to fund programmes that

will teach relevant skills.

The Jobs Fund (run by National Treasury)

supports several initiatives around the country.

Among them is a programme to put 135 unemployed

engineers to work, in partnership with the

Automotive Industry Development Centre Eastern

Cape (AIDC EC) and its members. Among the companies

supporting the programme are Lumotech,

Benteler, G.U.D Holdings and Johnson Contols.

In-house training is a vital component of the

sector. Training at Work is a consultancy that

specialises in offering exactly that: programmes

can be customised to suit the employer’s and the

employees’ needs. DaySeven Training is another

company that offers courses that include Business

Skills, Leadership and Workplace Readiness.

35 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Roof maintenance specialists Topps Group South

Africa has developed a detailed training module

where roofers and waterproofers can attain qualifications

while learning about the characteristics

of the products they will apply to roofing surfaces.

The programme is delivered by the company that

applies the roofing products after their staff have

been trained by Topps.

Volkswagen South Africa has several skills and

training programmes which include the Commercial

Trainee Programme, the Graduate Trainees, Further

Education Training and Wanderjahre programmes.

In the motor manufacturer’s home town of

Uitenhage, Volkswagen has five learning academies.

Open to employees and suppliers, the academies’

programmes are SETA-accredited. and offer a range

of courses available through workshops, exercises,

e-learning or on-the-job-training.

Higher education

With the inauguration of the Sol Plaatje University

(Northern Cape) and the University of Mpumalanga,

every province now has its own university, of which

there are 26 in all. The Sefako Makgatho Health

Sciences University has also opened in Gauteng.

There are three categories of university: universities

offering only degrees and post-graduate

courses with a strong research component, comprehensive

universities offering a mix of degrees

and diplomas and universities of technology, formerly

known as technikons. There are also 87 registered

and 27 provisionally registered private higher

education institutions.

Universities of technology have a specific focus on

educating young people in fields that will enhance

the country’s economic performance.

Some of the courses can be very demanding.

Among the new courses on offer at the Cape

Peninsula University of Technology (CPUT) are diplomas

in geomatics (one of South Africa’s most

sought-after skills to aid surveyors, town planners and

civil engineers), clothing and textile technology, and

horticulture and landscape architecture. CPUT also

offers a range of short courses, allowing employed

people the opportunity to get up to speed in an area

of specialisation or to understand new developments

in a particular field. Sometimes an employer will ask

CPUT to structure a course for a group of employees,

for example, in ICT. These courses do not earn candidates

diplomas, but may be used to gain credits.

Traditional universities are also aware of the need

to align their courses and research programmes with

the needs of the economy.

There are three World Health Organisation (WHO)

Collaborating Centres at UWC and the Centre of

Excellence in Food Security (with Pretoria University)

is funded by the National Research Foundation

and the Department of Science and Technology.

Biotechnology and food security come together

in the Plant Biotechnology Research group at UWC,

which studies ways of developing crops that can

resist drought.

This kind of focus on specific challenges facing

society in South Africa is an example of universities

working to make their research relevant.

The University of Cape Town is offering a course

in Health Innovation that encourages talented young

South Africans to find solutions to the country’s

health problems. Another UCT degree that tackles a

specific challenge faced in the South African economy

is a master’s in Sustainable Mineral Resource

Development.

Private colleges such as MANCOSA (Management

College of Southern Africa) often specialise in particular

fields. In this case, a range of certificates, diplomas

and degrees in business, commerce and

administration is presented at five sites around

South Africa.

SOUTH AFRICAN BUSINESS 2018

INTERVIEW

Empowerment through

training

Marius Alberts, Sales Manager for Topps Products Group

Africa, explains how the company’s training programme is

empowering roofers and waterproofers.

Marius Alberts

Tell us about the training you offer.

We offer training for the coating application in waterproofing.

We developed training which is focused on workmanship and

consumer satisfaction.

What underpins the training programme?

In our Corporate Social Responsibility programme, we understand

that there are challenges in South Africa. If you can understand your

challenges, that knowledge becomes power. It is not always about

the money. If you are completing the value chain and the main focus

is the end consumer, they will get the benefit, and that is a story to tell!

BIOGRAPHY

Marius Alberts received his

Diploma as Coating Inspector

Level 2 from the NACE Corrosion

Institute in 2013 and is

planning to finish Level 3 soon.

He has extensive experience in

the coating industry: Coating

and Waterproofing. For Marius,

you can see him as a life

coach. His core values you can

measure ongoing, which are:

Integrity, not being Complacent,

Honest and Transparent in

all dealings.

What is the focus of the course?

To enhance the surface preparation, workmanship, customer satisfaction

as well as product knowledge. We have done training with 42

companies; these companies offer the training to their staff. We offer

a back-to-back guarantee, which means the company takes responsibility

for the workmanship and we as Topps Products SA give the

product guarantee.

Is the training certified?

Yes, absolutely. The regulation speaks for itself. Now the consumer gets

a pillow to sleep on.

What is the next phase?

Our Corporate Social Responsibility programme is focused on uplifting

the value chain. We will be measuring the growth of every student and

report back, ongoing.

What next for Topps Products SA?

With the green movement in SA, our products fit like a glove. We see the

trend in the market for green products and there is a big appetite out

there. With our proven track record of over two decades we will roll out

in every sector of SA. We are focused on contractors and retail stores.

37 SOUTH AFRICAN BUSINESS 2018

INTERVIEW

Training at Work

Founder and CEO Patricia Chiloane is committed to rural

upliftment through skills training and education.

Patricia Chiloane

BIOGRAPHY

Patricia Malegoba Chiloane

has been involved in skills development

since the inception of

Sector Education and Training

Authorities (SETAs). After founding

her own business, Training

at Work Private College, accreditation

with the Services SETA

was achieved in 2003. Chiloane

founded a Non-Profit Organisation

called Bohlale Foundation

which has engaged in a number

of events and community projects

for women in Bushbuck

Ridge. Chiloane has dedicated

herself to skills development.

Her passion is community

development through education.

Is Training at Work officially accredited?

Training at Work is a 16-year-old accredited and registered organisation

with the Department of Higher Education as a Private College

within the TVET band. We are further accredited by 12 Sector

Education and Training Authorities (SETAs).

Do you have a particular focus on training young

people?

Training at Work has programmes that cover young people, organisations,

government and the private sector. Our focus on youth is

both in qualifications, learnerships and short courses in programmes

like SMME training, life and employability skills, career guidance,

mentorship and coaching. There are also courses in health and

welfare training, OHS training and IT-related programmes.

What do you offer an agency or government department

that needs training?

We offer them customised training based on their request in both

aligned and non-aligned programmes. In a nutshell, we are offering

credit-bearing programmes (Accredited) and workshop-based (Nonaccredited)

learning to government and agencies.

Are rural people able to gain access to the training you

offer?

Training at Work is a mobile training provider meaning we can make

our services available anywhere in the country where there is a

learner. We have also established ourselves in the rural areas of the

Lowveld.

SOUTH AFRICAN BUSINESS 2018

Excellent education

through innovation

VISION

Excellent education through innovation

ABOUT US

Training at Work (also inscribed as Training@Work) is a training

and consulting private company established in 2001. In 2006

the company was converted from a close corporate to a limited

private company. The company is 100% woman owned by

Patricia Chiloane.

Training at Work develops and offers a flexible range of learning

solutions that meet specific needs of individuals, government,

private and non-profit organisations. A range of these solutions

are aimed at developing the competencies of young people, local

communities, the unemployed, corporate agencies, officials in

local government and local development agencies.

Services

• Training

• Development

• Consulting

OUR PROGRAMMES

Specialised fields

• Water and Sanitation

• Traffic Training

• Professional Driving

• Information Technology

• Entrepreneurship

• Artisanal

• Agricultural Training

• Local Government

• OD-ETDP and Services

QUALIFICATIONS FOCUS TARGET

Short courses Unemployed Rural

Learnerships Employed Organisational

Artisan development Youth and young people Unorganised formations

Skills training Work readiness NPOs and CBOs

Mentoring and coaching Entrepreneurs Cooperatives

Industries

Government and state agencies

TRAINING AT WORK (PTY) LTD

Registration Number: 2006/0285516/07 • Date Registered: April 2006 • DHET registration: 2011/FE07/057

Address: 15 Leonie Street Cnr Rifle Range Winchester Hills Johannesburg 2019

Tel: +27 11 433 9318 or +27 11 433 3096 | Fax: +27 86 519 2889

Email: info@trainingatwork.co.za | Website: www.trainingatwork.co.za

The hardest workers

You shouldn’t have a

favourite, but you will.

Get more than you bargained

for, without having to bargain.

A school’s transport requirements vary as much

as the excuses scholars give for not having done

their homework. Thankfully the Caddy Crew Bus

combines flexibility, versatility and reliability to

deal with any situation. The Caddy Crew Bus is

Volkswagen’s hard-working compact people mover

that exceeds expectations. It seats 5 comfortably

and has an optional 7-seater package if you’re

looking for even more of an overachiever in your

vehicle. Add to that comprehensive standard safety

features such as Automatic Post-Collision Braking,

ESP, EDL, Hill Hold and Traction Control and you’ll

be hard pressed to find a situation on the school

run that the Caddy Crew Bus can’t handle with

ease. All of that and we haven’t even mentioned

the German-engineered technology that results in

a low cost of ownership. It’s the ultimate runabout

school shuttle, a bit of a teacher’s pet really.

With every generation the Transporter Crew Bus

just keeps getting better. Its versatile nature

means it doesn’t just adapt to any situation,

it excels at them. There are two wheelbases

available, short and long, meaning you can have

from five seats all the way up to eleven seats!

With all the extra space for people you’ll be

glad to know it has the full host of enhanced

safety features including ESP, Automatic Post-

Collision Braking and 4MOTION®, our permanent

all-wheel-drive system that delivers power to all

four wheels as required. Not only does it meet

international safety regulations, but parental

safety expectations too. Topping it off, the

Transporter Crew Bus is covered by a 2-year /

unlimited kilometre warranty and a 3-year /

60,000km Genuine AutoMotion Service Plan.

in the faculty.

O&M CAPE TOWN 2382/E

The longest serving

member of the faculty.

Member of the rugby,

netball and chess teams.

For over 70 years the Kombi has been transporting

parents, teachers, kids, teens, kids who think

they’re teens and teens who think they’re kids. It’s

South Africa’s most loved people mover and an

iconic member of our school shuttle fleet. Excellent

fuel efficiency, performance and torque are made

possible thanks to Volkswagen’s TDI engines

paired with the smooth DSG® gearbox. The Kombi

is comfortable, reliable and so spacious that you

won’t even hear the scholars at the back asking,

“Are we there yet?” Its list of safety and driver

assistance systems resembles the impressive mass

of scrolls on a head boy’s blazer: ESC, ESP, ASR,

EDL, MCB, Hill Hold Assist and Traction Control.

And it comes with a 5-year / 60,000km Genuine

AutoMotion Maintenance Plan meaning not only

are your services covered, but so is wear and tear.

The Kombi will very quickly become one of your

most loved staff members.

There is no school shuttle task too large for this

Volkswagen. The Crafter has been crafted to meet all

your scholars’ travel needs and proudly represent

your school. Sold by our network of dedicated

Commercial Vehicles Dealerships, the Crafter

is converted through Dealer partners into the

perfect transport solution for students, teams,

coaches and teachers. Its efficient TDI and BiTDI®

engines welcome out-of-town field trips, while

its up-to 23 seats allow for the entire first team,

reserves and kit to travel comfortably. The 100%

all-new Crafter will be arriving in the second quarter

of 2018, ready to get to work.

Commercial

Vehicles

INTERVIEW

Meeting national

development

imperatives

As the Head of Secretariat: Human Resource Development

Council of South Africa, Brenda Ntombela is

responsible for the overall leadership and

management of the Secretariat.

Brenda Ntombela

BIOGRAPHY

Brenda Ntombela is a graduate

of the University of Limpopo,

has a Master’s Degree in Nursing

from the University of South

Africa and has completed various

management courses. She

has worked in Higher Education

and ICT. She has served as a

Councillor for the Independent

Communications Authority of

South Africa (ICASA), is currently

a Council member at the Durban

University of Technology and on

the transformation Committee

of the South African Council

for Project and Construction

Management Professions.

What are the key goals of the Revised HRD Strategy

Towards 2030?

The HRD Strategy aims to:

• Strengthen basic education and foundation programmes in

Science, Technology, Engineering, Maths, Languages and Life

Orientation/Skills

• Expand access to quality post-schooling education and training

• Improve research and technological innovation outcomes

• Produce appropriately skilled people for the economy

• Promote a developmental/capable state

How does the plan differ from its predecessor?

Various new government priorities and plans have been developed

including the National Development Plan (NDP). Global trends and

developments have also been taken into account, particularly the

impact of the Fourth Industrial Revolution on government, business,

individuals and society. These changes required a review of the

Human Resource Development Strategy of South Africa (HRDSA)

2010 to 2030. This Revised HRD Strategy outlines the human resource

development imperatives that are needed to meet national

development imperatives.

What are the roles of various social partners in the

strategy?

Labour: Focuses on worker education including the training of shop

stewards and negotiators to improve their understanding of labour

law. Supports the analysis of requirements, including the implementation

of skills audit and identifies programmes, general education

as well as technical skills and supports training for the unemployed.

Business: Continue to work on commitments within the Skills Accord.

Implement the Chief Executive Officer initiative to support a Youth

Employment Scheme (YES) which aims to put one-million youth into

SOUTH AFRICAN BUSINESS 2018 42

internships. Provide additional funding for bursaries

as well as other skills priorities (over and above the

skills levy).

Government: Ensure that cross-departmental

blockages can be addressed. In addition, provinces

may also adopt special programmes that are specific

to the province.

Civil Society: Communities act as a direct mechanism

for channelling HRD imperatives through participation.

Community involvement enables citizens

to influence the decisions that affect their lives,

as well providing vital information on community

development issues. Communities will be able to

make decisions on impacts associated with the

implementation of the strategy. These decisions

will be made through their representatives who

participate in the HRD Council structures.

Who are the key beneficiaries?

The key beneficiaries that the revised HRD Strategy

towards 2030 is targeting are Government as key

leaders, Social partners (organised labour, business

and civil society), Women, Youth, Communities,

Vulnerable groups and Small, Medium and Micro

Enterprise (SMMEs).

What are the current projects being

implemented?

The HRD Council is currently coordinating the following

projects: Strengthening of Maths & Science

teachers education, development & implementation

of a funding model for worker education

partnerships between TVET Colleges and Industry.

INTERVIEW

Priority Programmes are:

Programme 1

Foundation Education with Science, Technology,

Engineering, Maths and Languages and Life

Orientation/Skills.

Programme 2

TVET and the Rest of the College System.

Programme 3

Higher Education and Training, Research and

Innovation.

Programme 4

Skills for the transformation of society and the

economy.

Programme 5

Development/capable state.

How does the Strategy tackle youth

unemployment?

It supports various interventions to create employment

and reiterates the need for the involvement

of all stakeholders in the HRD processes. The HRD

Council is strengthening the partnerships between

TVET colleges and industries to help reduce youth

unemployment by calling on industries to open up

doors for workplace experience for youth.

Does the Strategy deal with “radical

economic transformation”?

Yes, the HRD Strategy promotes social and economic

development. It also supports the Government’s

Medium Term Expenditure Framework (MTSF)

which focuses on a competitive economy, creation

of decent work opportunities, encouragement

of investment and promotes inclusive

growth. This allows every individual in South Africa

to access Human Resource Development

facilities and resources.

CONTACT INFO

Physical address: 6th Floor, Ndinaye House,

178 Francis Baard Street, Pretoria

Telephone: +27 12 943 3187

Mobile: +27 82 573 3716

Email: ntombela.b@dhet.gov.za

Website: www.hrdcsa.org.za

SOUTH AFRICAN BUSINESS 2018

PROFILE

College of Cape Town

The forward-looking college has a history dating back to

the early 20th century.

The College is a public Technical and Vocational

Education & Training (TVET) College, under the

Department of Higher Education and Training.

Qualifications offered are accredited, affordable and

quality assured by Umalusi, various SETAs and SAQA.

Description of educational offerings

The College is a leading provider of education and

training in mainly the Technical and Vocational

Education and Training (TVET) band and has much

to offer students and prospective partners as an

alternative to Basic and Higher Education and

Training. Qualifications include skills programmes,

technical, vocational and occupational training that

lead to recognised, accredited qualifications that are

in high demand by commerce and industry.

Description of location of facilities

The College is situated in the central area of the

Peninsula with campuses located in Athlone, Cape

Town city centre, Crawford, Gardens, Guguletu,

Pinelands, Thornton and Wynberg. The central

office is located in Salt River, Cape Town. The College

of Cape Town also has three residences.

Key facts and figures

Year established: The College of Cape Town is

the oldest Technical and Vocational Education and

Training institution in South Africa with a proud

history dating back to the beginning of the 20th

century. As the name suggests, we are based in

Cape Town. Four former technical colleges, Athlone

College, Cape College, Sivuyile College and Western

Province Technical College, were officially merged

on 1 February 2002 to become the College of Cape

Town. This arose from a rationalisation in TVET

colleges in which some 150 colleges around the

country were reduced to 50.

No of staff: 670 (full-time)

No of registered students: 14 379

Faculties offered: Art & Design, Beauty Therapy,

Building & Civil Engineering, Business Studies,

Education & Training, Electrical Engineering,

Haircare, Hospitality, Information & Communication

Technology, Mechanical Engineering, Travel &

Tourism

Qualifications offered: Certificates, Higher

Certificates, Diplomas, UNISA B.Ed Degree

(Foundation Phase), Skills Programmes, Learnerships,

Accredited Trade Test Centre

CONTACT INFO

Key contact people:

Louis van Niekerk, Principal.

Wilfred Jackson, Chief Financial Officer.

Sharon Grobbelaar, Marketing Manager.

Physical address: 334 Albert Road,

Salt River, Cape Town 7945

Postal address: PO Box 1054,

Cape Town 8000

Tel: +27 21 404 6700 / 086 010 3682

Fax: +27 21 404 6701 / 086 615 0582

Email: info@cct.edu.za

Website: www.cct.edu.za

SOUTH AFRICAN BUSINESS 2018

Realising the promise

of the Oceans Economy

Hundreds of state properties along South Africa’s coast are to become sites of new

business opportunities and catalysts for economic growth and job creation.

The Oceans Economy is a new strategic opportunity for South Africa. A broad national strategy to tackle

projects that will reap benefits quickly–Operation Phakisa– has a number of priority streams, one of

which is the Oceans Economy.

SPECIAL FEATURE

47 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

As part of the Oceans Economy strategy

within Operation Phakisa, a unit within the

National Department of Public Works has

been created, the name of which explains

its mandate – the Small Harbours and State Coastal

Property Development unit (SH&SCPD).

The key objectives of the Small Harbours and

State Coastal Property Development unit are to:

• attract investment in state coastal maritime

infrastructure and properties

• grow businesses

• create jobs

• stimulate economic growth

• redistribute wealth.

The new unit has four main tasks: it lets out

state coastal property for economic development;

it manages state coastal properties (including all occupied

and vacant Admiralty Reserve, land parcels,

buildings, estuaries and unproclaimed harbours); it

oversees the maintenance of small harbours and

coastal properties and it is responsible for a special

intervention programme to repair and maintain 12

proclaimed fishing harbours in the Western Cape.

South Africa is bordered by the ocean on three

sides. In 2010 the ocean contributed approximately

R54-billion to South Africa’s GDP and accounted

for approximately 316 000 jobs. Studies suggest

that the ocean has the potential to contribute up

to R177-billion to GDP and between 800 000 and

one-million direct jobs.

A series of investment conferences were

launched in each of South Africa’s coastal provinces

in 2017, introducing the investors community

to “Small Harbours and State Coastal Property

Development”. A wide range of sectors in the

Northern Cape, Western Cape, Eastern Cape and

KwaZulu-Natal are being targeted for investment.

The scheme aims to attract a minimum of R12-

billion in investment proposals, generate over 2 000

job opportunities in the short to medium term and

500 permanent jobs over the long term. The products

generated should be viable and contribute

to growing the economy, small businesses should

have a chance to be part of large-scale manufacturing

and construction initiatives, and the regularisation

of business activities along the coastal

belts will promote increased revenue for local

municipalities through the collection of rates and

municipal services.

The country’s 2 800km of coastline already supports

many communities and businesses but the potential

to increase and improve yields is enormous.

At the moment, there are more than 300 businesses

leasing state-owned land in sectors ranging from

mining, farming and fishing to logistics, leisure and

retail. The SH&SCPD unit wants to increase these opportunities

in partnership with other national government

departments such as National Treasury, the

Department of Agriculture, Forestry and Fisheries

and the Department of Environmental Affairs, provincial

governments, district municipalities and

local municipalities.

Several priority projects have been identified,

but the scope for further smaller projects is huge.

Much will depend on the initiative of local business

people and local municipalities.

The first five priorities identified under the

project are:

1. development of the harbour at Port Nolloth,

Northern Cape

2. development of the harbour at Port St Johns,

Eastern Cape

3. development of a new harbour at Port Edward,

KwaZulu-Natal

4. repair and maintenance of proclaimed fishing

harbours, Western Cape

5. one priority project per coastal municipality (on

Public Works land).

State coastal land and buildings will be available

to private-sector investors to achieve any of the

following objectives: expand an existing business;

create a new business; stimulate the local economy;

create new jobs; generate revenue; deepen economic

transformation.

Investment proposals will be evaluated on a set

of criteria that include:

• scale of investment

• projected growth of business and turn over

• retention and creation of jobs

• degree of empowerment

• project revenue

• appropriateness with regard to zoning

• commitment to support small, medium and

micro-enterprises (SMMEs) and localisation.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Local economic development

Economic sectors that have been identified as suitable

for local economic development through investment

are Education and Training; Renewable

Energy; Farming; Fish Processing and Packaging;

Food and Beverages; Hospitality; Infrastructure

Development; Logistics; Maintenance and Repair

(Vessels and Harbour Infrastructure); Manufacturing

and Engineering Services; Mining; Pipelines and

Pump Houses; Rescue, Safety and Security; Sport

and Recreation; Tourism; Transport (Commercial and

Leisure); Water and Waste Management.

The range of sectors and business opportunities

available to potential investors into the Small

Harbours and State Coastal Property Development

project is wide. They include:

• Water theme parks

• Fishing and fish processing

• Fuel supply

• Special Economic Zones

• Desalination

• Energy production

• Caravan parks/holiday resorts

• Shipwreck museums

• Yacht mole facilities

• Transport (ferries and water taxis)

• Energy production

• Public beaches

• Slipways

• Warehousing

• Breweries and distilleries

• Aquaculture

• Mariculture

• Small ship/boat-building

• Ship maintenance and repairs

• Restaurants

• Retail

• Fish processing factories

• Offices

• Tourism

• Ice-making and supplies

• Education (Maritime and Aquaculture Training

Centres)

• Renewable energy

Small harbours

Small harbours can play a big role in driving new

economic activity. Small harbours are also important

in terms of safety, security and safeguarding the territorial

integrity of the South African state.

As a first step in the small harbours programme,

12 Proclaimed Fishing Harbours in the Western Cape

were identified and work began on a series of projects

to start the revival process: repairing slipways,

towing away sunken vessels and dredging. The repair

and maintenance project should be completed

by March 2019.

Many more creative and value-adding interventions

lie ahead, and are expected to be undertaken

49 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

even in areas that are currently not Proclaimed

Fishing Harbours. South Africa’s four coastal provinces

have as many as 50 potential and existing unproclaimed

harbours. There is a particular emphasis

on developing assets beyond the Western Cape,

traditionally the home of maritime activity.

The key is to use small harbours to stimulate

the local economy. Activities to promote primary

maritime activity could include:

• infrastructure to support fishers: processing, ice

production, cold storage

• infrastructure for boat-building and repair

• additional berthing and launching facilities

• new recreational fishing points

• access to better amenities for fishers.

Business opportunities that might work at a

small harbour include ice-making, desalination,

yacht mole facilities, water taxis and a variety of

tourism ventures.

Tourism could be promoted through relatively

simple interventions such as:

• improved pedestrian access

• cleaning and maintenance

• policing

• stalls or shelters to sell crafts

• partnerships with developers to develop

restaurant, curio shops, retail, maritime/marine

museum or wreck museum and accommodation

options

• infrastructure that allows for water recreation

and sports.

Steps are being taken to include the country’s

small harbours as national assets in terms of the

Government Immovable Assets Management

Act (GIAMA). DPW is the custodian of the state’s

immovable assets.

The unit intends implementing the Spatial and

Economic Development Frameworks (SEDFs) for the

12 proclaimed fishing harbours which were completed

in 2014 and develop SEDFs for the remaining

small harbours along South Africa’s coastline.

An audit of all state coastal reserves needs to

be done, and land for aquaculture projects is to be

made available for these enterprises. Short-term

leases within harbours are also to be converted to

three-to-five-year leases so that business owners

can have better security of tenure, allowing them

to plan and expand.

The 12 existing and Proclaimed Fishing Harbours

are all in the Western Cape. Outside the Western

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Cape, the Small Harbours and State Coastal Property

unit has plans in hand for priority projects at nine

locations in three provinces:

• Northern Cape: Port Nolloth; Hondeklip Bay and

Kleinsee.

• Eastern Cape: Port St Johns; Port Alfred and Gonubie.

• KwaZulu-Natal: Port Edward; Hibberdene and

Port Shepstone.

Operation Phakisa

Operation Phakisa is a national plan that targets

sectors that can best achieve quick returns in terms

of growth and job creation. Operation Phakisa

falls under the National Department of Planning,

Monitoring and Evaluation and is aligned with the

National Development Plan (NDP) 2030.

The plan seeks to get things done quickly.

Phakisa mean “hurry up” in SeSotho and is adopted

from the Malaysian method of delivering economic

transformation, “Big Fast Results”. That operation

addressed Malaysia’s key priorities such as poverty,

crime and unemployment. It involved setting up

clear targets and following up with monitoring process

and making the results public. The Malaysian

government registered impressive results within a

short period.

In the South African plan, there are eight steps.

Various knowledgeable and relevant people from

the public and private sectors, academia as well as

civil society organisations are brought together to

collaborate in “laboratories” so there is, for example,

a Health Lab, an Education Lab and an Oceans

Economy Lab. From these sessions, detailed plans

are developed with timelines and delivery dates.

The Oceans Economy has been chosen as one

of the key sectors for Operation Phakisa because of

the massive opportunity to create value that resides

onshore and offshore. There are five target areas

within the Oceans Economy strategy:

• aquaculture

• offshore oil and gas

• marine protection and governance

• marine transport and manufacturing

• Small Harbours and State Coastal Property.

51 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Northern Cape

The Northern Cape has a coastline of 313km but

the economic value of this asset has barely been

touched, despite a growth in the abalone industry in

recent years and some fishing and lobster operations.

The province has been allocated an increased

quota for landing fish (primarily hake) which makes

Port Nolloth more attractive as a site for investors in

fish processing. A pilot abalone ranching project located

south of Port Nolloth will start operating soon.

Bigger plans are under way to convert Port

Nolloth into a deepwater port capable of receiving

large vessels. Both a pre-feasibility study and

a follow-up Gap Analysis have been done, and the

plans have been registered with the provincial and

national Treasuries. In terms of the Small Harbours

and State Coastal Property Development project,

plans for Port Nolloth include the creation of a waterfront

for retail and tourist activity, expanding fishing

and aquaculture, and developing a boat-building

and maintenance industry.

The Namakwa District Municipality is one of five

district municipalities in the Northern Cape and the

only one with access to the coast. Each of the three

coastal local municipalities within Namakwa DM

will be the focus of a project on Public Works land,

brokered by the Small Harbours and State Coastal

Property Development unit.

Priority projects

Port Nolloth: a new harbour development with

economic activities such as alluvial mining, boatbuilding

and maintenance, fishing and aquaculture

and the development of a waterfront.

Hondeklip Bay: development of coastal property;

with economic activities such as alluvial mining,

aquaculture and fishing.

Kleinsee: development of coastal property; with

economic activities such as aquaculture and the

creation of an economic zone.

Northern Cape Provincial Government

Department of Economic Development and

Tourism: www.economic.ncape.gov.za

Namakwa District Municipality

Website: www.namakwa-dm.gov.za

Coastal local municipalities: Richtersveld LM;

Nama Khoi LM; Kamiesberg LM.

Coastal assets include: Alexander Bay, Port

Nolloth, Hondeklip Bay, Koingaas and Kleinzee.

SOUTH AFRICAN BUSINESS 2018

Western Cape

The Port of Cape Town (general trade), Saldanha

Bay (exportation of iron ore and trawler fleets),

Mossel Bay (gas and trawler fleets) and Simon’s

Town harbour (naval headquarters) are major port

facilities underpinning the maritime sector in the

Western Cape.

The Small Harbours and State Coastal Property

Development project has committed to a programme

of repair and maintenance of the Western

Cape’s 12 Proclaimed Fishing Harbours. In addition,

a capital and maintenance programme valued at

R400-million has been outlined.

Several of the smaller harbours being targeted for

these repair projects and for further development

fall within the metropolitan area of the City of Cape

Town; the others are distributed across four of the

province’s five district municipalities.

Saldanha is a base for deep-sea trawling operators.

The port of Mossel Bay is the region’s fishing

industry base with facilities for fleet maintenance

and for processing catches.

The Harbour Road development at Kleinmond

near Hermanus has seen the area leading to the

sea near the slipway upgraded and transformed:

roadside trees shade coffee shops and traders, and

bookshops and restaurants line the cobbled road

leading to the water’s edge. Several new apartments

are for sale or available for holiday rental. This kind

of upmarket development will not suit every small

harbour, jetty or cove along the coast of South Africa,

but it highlights what can be done with a bit of

imagination and intelligent partnerships between

public landowners and private developers.

Priority projects

The unit will implement the Spatial and Economic

Development Frameworks (SEDFs) for the 12

Proclaimed Fishing Harbours of the Western Cape

which were completed in 2014. Various projects

are at different stages in the development pipeline.

On the West Coast there is Lamberts Bay, Laaiplek,

St Helena and Saldanha Bay. Within the City of Cape

Town lie Hout Bay and Kalk Bay and around False Bay

is Gordons Bay. Further east are Hermanus, Gansbaai,

Struisbaai, Arniston and Stilbaai. Each of these

SPECIAL FEATURE

harbours has economic activity to a greater or lesser

extent, but upgrades and diversification will serve

them (and potential investors) well.

By way of example, budgeted amounts for repairs,

upgrades, dredging and security for Hout Bay

harbour for the period 2015-2018 are set at R14.4-

million. Gordons Bay harbour is to have some of

its access roads rerouted to create separate zones

for operations and tourism/commerce. At Kalk Bay

harbour the focus is on creating a dedicated area

for small-scale fishers which will also create new

cold-storage facilities.

Western Cape Provincial Government

Department of Economic Development and

Tourism: www.westerncape.gov.za/dept/edat

City of Cape Town

Website: www.capetown.gov.za

Proclaimed Fishing Harbours: Hout Bay, Gordons

Bay and Kalk Bay.

West Coast District Municipality

Website: www.westcoastdm.co.za

Coastal local municipalities: Matzikama LM;

Cederberg LM; Bergriver LM; Saldanha Bay LM;

Swartland LM.

Proclaimed Fishing Harbours: Lamberts Bay,

Laaiplek, St Helena, Saldanha Bay.

Other coastal assets include: Doring Bay, Elands

Bay, Ysterfontein.

Overberg District Municipality

Website: www.odm.org.za

Coastal local municipalities: Overstrand LM; Cape

Agulhas LM.

Proclaimed fishing harbours: Hermanus, Ganbsaai,

Struisbaai.

Other coastal assets: Kleinmond, Hawston, Arniston.

Eden District Municipality

Website: www.edendm.co.za

Coastal local municipalities: Hessequa LM; Mossel

Bay LM; Knysna LM; Bitou LM.

Coastal assets include: Port of Mossel Bay,

Plettenberg Bay, Knysna lagoon and jetties, Stillbaai

and Witsand.

53 SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

Eastern Cape

The Eastern Cape is perfectly positioned to take advantage

of the new interest in developing a maritime

economy. The province has 800km of coastline, three

ports, two Industrial Development Zones and an

academic community geared to maritime research.

The Eastern Cape’s maritime sector is anchored by

its three large ports in the metropolitan municipalities

of Buffalo City (Port of East London) and Nelson

Mandela Bay (Port Elizabeth and Ngqura). The Nelson

Mandela University has established a campus for

Ocean Sciences.

The ports of East London and Ngqura serve

Industrial Development Zones, the ELIDZ and the

Coega IDZ. Apart from attracting foreign direct investment

and boosting employment, IDZs play a

role in helping to add new sectors or subsectors to

an economy.

Beyond the metropolitan municipalities, three

district municipalities host other coastal properties,

existing small harbours or areas that could become

small harbours.

The tourism potential of the sandy beaches along

the Eastern Cape coastline is already well known.

With investment and targeted projects, some of the

“hidden gems” among the small harbours, bays and

coastal properties may turn out to be providers of

income and improved turnover in unexpected ways.

Priority projects

Port St Johns: development of a new harbour and

development of coastal property, with economic

activities such as a new economic zone, fishing and

aquaculture and the establishment of a waterfront.

Port Alfred: development of coastal property, with

economic activities such as tourism and aquaculture.

Gonubie: development of coastal property, with

economic activities such as a mini-waterfront, leisure

activities and recreation.

Eastern Cape Provincial Government

Department of Economic Development,

Environmental Affairs and Tourism:

www.dedea.gov.za

Nelson Mandela Bay Metropolitan

Municipality

Website: www.nelsonmandebay.gov.za

Assets: Ports of Port Elizabeth, Ngqura.

Sarah Baartman District Municipality

Website: www.sarahbaartman.gov.za

Coastal local municipalities: Greater Kei LM;

Sundays River LM; Kouga LM; Ndlambe LM.

Coastal assets: Jeffreys Bay, Port St Francis,

Port Alfred.

Buffalo City Metropolitan Municipality

Website: www.buffalocity.gov.za

Assets: Port of East London, Gonubie.

OR Tambo District Municipality

Website: www.ortambodm.go.za

Coastal local municipalities: King Sabata

Dalindyebo LM; Nyandeni LM; Port St

Johns LM; Ingquza LM; Mbizana LM.

Coastal assets: Port St Johns, Mcwasa,

Hole in the Wall.

Amathole District Municipality

Website: www.amathole.gov.za

Coastal local municipalities:

Ngqushwa LM; Great Kei LM;

Mnquma LM; Mbashe LM.

Coastal assets: Morgan Bay,

Kei Mouth.

SOUTH AFRICAN BUSINESS 2018

SPECIAL FEATURE

KwaZulu-Natal

With its two important ports, KwaZulu-Natal is very

much a maritime province. Between them, Durban

and Richards Bay handle 78% of South Africa’s

cargo tonnage. Richards Bay, apart from being the

country’s main site for the export of coal, is also a

registered Industrial Development Zone (IDZ) and

consequently attracts a range of investors.

The state owns property adjacent to many of

the province’s fine beaches and these will be used

to further develop tourist infrastructure, primarily

on the South Coast. The great annual Sardine Run

is one of the highlights on the tourism calendar

and generally involves thousands of individuals

plunging into the surf in search of silvery treasure.

Some of planned infrastructure involves fish

processing.

The remote destinations in the northern parts

of KwaZulu-Natal have been mentioned in some

of the preliminary planning for the project, but no

details have yet been announced.

Four district municipalities and the metropolitan

municipality of eThekwini preside over

ports, small harbours and coastal properties in

the province.

Priority projects

Port Edward: development of a new harbour and

coastal property, with economic activities such as

fish and processing, fishing and leisure activities.

Hibberdene: development of coastal property, with

economic activities such as the creation of a waterfront

and a Music City.

Port Shepstone: development of coastal property,

with economic activities such as boat-building and

repairs and the creation of an economic zone.

KwaZulu-Natal Provincial Government

Department of Economic Development,

Tourism and Environmental Affairs:

www.kzndedt.gov.za

eThekwini Metropolitan Municipality

Website: www.durban.gov.za

Coastal assets: Port of Durban, Umkomaas,

Amanzimtoti, Umhlanga.

Ugu District Municipality

Website: www.ugu.gov.za

Coastal local municipalities: Ray Nkonyeni LM;

Umdoni LM.

Coastal assets: Port Shepstone, Port Edward,

Hibberdene, Shelley Beach.

iLembe District Municipality

Website: www.ilembe.gov.za

Coastal local municipalities: Mandeni LM;

KwaDukuza LM.

Coastal assets: Ballito, Zinkwazi beach.

King Cetshwayo District Municipality

Website: www.uthungulu.gov.za

Coastal local municipalities: uMlalazi LM;

uMhlatuze LM; uMfolozi LM.

Coastal assets: Port of Richards Bay, Richards

Bay IDZ.

uMkhanyakude District Municipality

Website: www.ukdm.gov.za

Coastal local municipalities: Mhlabuyalingana LM.

Coastal assets: Kosi Bay, St Lucia.

SOUTH AFRICAN BUSINESS 2018 56

Small Harbours and State

Coastal Property Development

Unlocking the potential of South Africa’s oceans economy.

A unit has been established within the National

Department of Public Works to focus on the enormous

potential that South Africa’s coastline holds for

economic upliftment and job creation.

The key objectives of the Small Harbours and State

Coastal Property Development unit are to:

• attract investment in state coastal maritime

infrastructure and properties

• grow businesses

• create jobs

• stimulate economic growth

• redistribute wealth.

Mandate and functions

• Letting out of state coastal property for economic

development.

• Management of state coastal properties. (This

includes all occupied and vacant Admiralty Reserve,

land parcels, buildings, estuaries and unproclaimed

harbours.)

• Maintenance of state coastal properties and

infrastructure.

• Special intervention programme: repair and

maintenance of 12 proclaimed fishing harbours in

the Western Cape.

“Ensuring inclusive Economic Growth

and Development through the

Empowerment of Local Communities”

Local economic development

Economic sectors that have been identified as suitable

for local economic development through investment

are Education and Training; Renewable

Energy; Farming; Fish Processing and Packaging; Food

and Beverage; Hospitality Industry; Infrastructure

Development; Logistics; Maintenance and Repair

(Vessels and Harbour Infrastructure); Manufacturing

and Engineering Services; Mining; Pipelines and

Pump Houses; Rescue, Safety and Security; Sport

and Recreation; Tourism; Transport (Commercial and

Leisure); Water and Waste Management and others.

National priority projects

DPW intends building three new small harbours in

the Northern Cape, Eastern Cape and KwaZulu-Natal

provinces.

Phase one: The new harbours to be developed under

Phase one are as follows:

• Port Nolloth of Richtersveld Municipality (Northern

Cape)

• Port St Johns of PSJ Municipality (Eastern Cape)

• Port Edward of Ray Nkonyeni Municipality

(KwaZulu-Natal)

Phase two: Phase two projects under consideration for

development of the following areas:

• Northern Cape: Kleinzee and Hondeklip Bay.

• Eastern Cape: Port Alfred, Gonubie, Port Grosvenor

and Coffee Bay.

• KwaZulu-Natal: Port Shepstone, Shelley Beach,

Mthunzini and Richards Bay La Mercy.

Enquiries: shscpd@dpw.gov.za

KEY SECTORS

Overviews of the main economic

sectors in South Africa

Agriculture 60

Mining 65

Oil, gas and petrochemicals 69

Energy 76

Water 84

Engineering 88

Manufacturing 94

Automotive 100

Chemicals and pharmaceuticals 103

Food and beverages 104

Transport 106

Business services 110

Tourism 116

Information and

communications technology 126

Banking 128

Development finance and

SMME support 130

OVERVIEW

Agriculture

Agriculture companies are active on the stock exchange.

When South Africa’s first alternative stock exchange in

South Africa started trading in February 2017, the first

listing was agricultural company Senwes and its holding

company. On the JSE, agricultural companies make up

4.3% of market cap.

Senwes has been described as a “rock solid, conservatively run

agricultural titan” (Anthony Clark) while Kaap-Agri, which listed on the

JSE in June 2017, might be, according to Investors Monthly, “the best

retailing conglomerate in South Africa”. Afgri, biggest of the former

co-operatives that are now multi-dimensional companies, has delisted

from the JSE but in 2017 bought the South African Bank of Athens.

The JSE has also launched a wool futures contract as the sector

strives to add 25-million kilograms to the existing crop of about

44-million kilograms.

Zeder Investments is the agricultural arm of investment holding

company PSG Group (which has become well known through Capitec

Bank and Curro schools). Zeder has been increasing its stake in agricultural

companies, most notably Capespan. Capespan has a turnover of

R7.6-billion across three divisions: farms, logistics and fruit.

Zeder also owns 27.1% of Pioneer Foods which makes and distributes

many big food and drink brands across Southern Africa, including

Weet-Bix, Liqui-Fruit, Ceres, Sasko and White Star. The company has an

SECTOR INSIGHT

A record maize harvest is

boosting exports.

• Land under macadamia

nuts is increasing rapidly.

annual turnover of R20-billion and

it has two Bokomo facilities producing

wheat biscuits, cereal and

muesli in the United Kingdom.

These facts give an indication

of the large influence which the

agricultural sector has in South

Africa. When national agricultural

output surged in mid-2017 on the

back of good rains and harvests,

the country was lifted out of the

technical recession into which it

had fallen in the first quarter.

A maize crop of 16.4-million

tons for 2016/17 means a surplus

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

of about four-million tons, definitive

proof that the long drought

which hit South Africa is over, at

least in the central and northern

regions. The Western Cape

drought continues.

The Land Bank intends to put

aside R1-billion in supporting

black agricultural entrepreneurs.

The hope is that by making the

sector more inclusive, long-term

food security will be ensured.

Fruit, sugar and wine make up

about 7% of the country’s total

export basket. Avocadoes, tomatoes

and macadamias are among

other important export crops.

More than 50% of agricultural

export is made up of processed

agricultural products, a promising

development for the future of agriprocessing.

National trade policy

strategies are intended to enhance

this trend. Primary agriculture

provides 5% of formal employment

in South Africa.

Several of the Special Economic

Zones around South Africa either

have or will in the future have

agri-processing facilities.

Examples include existing tomato

paste and dairy facilities at Coega

IDZ and plans to develop the SEZ

at Harrismith (Maluti-A-Phofung)

into a hub for agri-processing.

Several former farmers’ cooperatives

are now substantial

agri-businesses. Most have a

specific geographic and farming

sector focus (BKB is strong in the

eastern Free State and Eastern

Cape and concentrates on wool

and mohair) while others like Afgri

have a national presence.

Senwes has a strong grain division

and it controls 68 silos. Its operations

are run from Klerksdorp in

the centre of the country in North West Province. Other companies include

NTKLA (Limpopo), GWK (Northern Cape), Klein Karoo Agri, VKB (eastern

Free State and Limpopo), Kaap Agri (from the Boland to the Eastern Cape

and up to Namibia), SSK (Overberg) and TWK (KZN and Mpumalanga).

Crops

A total of 70% of South Africa’s grain production is maize, which

covers 60% of the cropping area of the country. The North West Province

produces one third of South Africa’s maize and about 15% of its wheat.

The Free State is the country’s largest supplier of wheat (37%) and maize

(34%). The Western Cape has 350 000ha of wheat-producing land.

Macadamia nuts is one of the fastest-growing sectors in South Africa.

Almost all of nuts produced are exported and the global market is

expanding every year: nearly 2 000ha are added to the land under

macadamias every year. Mpumalanga and Limpopo provinces are big

nut-growing provinces. Another sector enjoying a boom (mainly because

of Chinese demand) is avocadoes, with almost 1 000ha per year

of new land being planted.

The South Africa feed industry has an annual turnover of about

R50-billion with most of the raw material being soya and maize.

Two of the country’s big three sugar producers (Illovo Sugar and

Tongaat Hulett) each shut down one of their mills because of the extended

drought and the broader trend for sugar production and the

amount of land under sugar cane is downwards. The prospect of a

sugar tax will not help sales. Both of these companies have diversified

portfolios with Tongaat Hulett active in property in KwaZulu-Natal. The

other big sugar company, TSB Sugar, has been acquired by RCL Foods.

The Free State Province supplies significant proportions of the nation’s

sorghum, sunflower, potatoes, groundnuts, dry beans, and almost all of its

cherries. Barley and canola are produced in the Western Cape.

Products distinctive to South Africa, such as rooibos tea (Western

Cape) and marula berries (Limpopo) hold great potential to capture niche

markets internationally.

Fruit

South Africa is famous for its fruit, of which 35% is citrus, 23% subtropical

and nuts, 26% pome fruit, 11% stone fruit and 9% table grapes.

Export volumes, particularly in tropical fruits such as mangoes and

avocadoes, have been growing rapidly in recent years. The sector is

highly sophisticated and is skilled at the refrigeration and packing

required for European Union standards. With clarity now achieved on

refrigeration protocols in China, South Africa intends increasing table

grape exports to that country to R2.5-billion within five years.

61 SOUTH AFRICAN BUSINESS 2018

OVERVIEW

Wine

Large volumes of exports are achieved in deciduous fruits such as

apples, table grapes, pears, peaches, plums and apricots. Avocadoes

thrive in Mpumalanga and Limpopo and production volumes above

110 000 tons per year have been achieved. About 45% of production

is exported.

Most of South Africa’s citrus and subtropical fruit comes from the

eastern part of Limpopo. Some of the world’s biggest farming enterprises

operate in Limpopo Province. Westfalia, part of the Hans

Merensky Group, is an avocado grower of note while ZZ2 is a huge

fresh tomato enterprise. Halls has an international reputation for

avocadoes and litchis.

Companies such as Capespan and DoleSA move huge quantities

of fruit around the world. South Africa exports about 650 000 metric

tons to the EU (about 40% of the total). A new development in the

citrus sector is the establishment for small growers of the Growers’

Development Corporation.

The Orange River supports the cultivation of citrus and grapes of

many kinds. The region is particularly well suited for the cultivation of

Valencia oranges, lemons and grapefruit and the dry, hot conditions

mean that it is easy to control pests.

ONLINE RESOURCES

Agricultural Research Council: www.arc.agric.za

Fresh Produce Exporters’ Forum: www.fpef.co.za

Grain SA: www.grainsa.co.za

Land Bank: www.landbank.co.za

National Department of Agriculture, Forestry and Fisheries:

www.daff.gov.za

SA Table Grape Industry: www.satgi.co.za

Export volumes have been steadily

rising for South African wines.

There are about 3 500 wine

producers in South Africa, with

the large majority located in the

Western Cape. There are 54 producer

cellars. The industry earned

R17.5-billion in exports in 2016.

Europe is the main market but

exports to China and Russia are

growing as South Africa seeks to

exploit its membership of BRICS.

The industry is located for

the most part in the Western

Cape but Orange River Cellars

in the Northern Cape is growing

production volumes. The Distell

group produces about a third of

the country’s natural and sparkling

wine, and is ranked 12th in the

world in global wine volumes sold.

Livestock

Livestock farming is the largest agricultural

subsector in South Africa.

The Eastern Cape is the largest livestock

province. South Africa has a

beef-herd of 14-million. There are

6.4-million goats in South Africa.

The Kalahari Kid Corporation (KKC)

intends to raise the standard of goat

meat and expand the export market.

South Africa produces about

55% of the world’s mohair, the

high-quality speciality fibre taken

from Angora goats. Almost all mohair

farming is done in the Eastern

Cape. Clover is Africa’s largest milk

processor. The Eastern Cape provides

approximately a quarter of

South Africa’s milk. Parmalat has

two plants in Port Elizabeth.

SOUTH AFRICAN BUSINESS 2018

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Mining

The South African mining landscape is changing.

OVERVIEW

When Gold Fields in 2013 spun off some of its older

mines to a new company to be called Sibanye Gold,

most of the attention was focussed on the older

company’s remaining asset in South Africa, the South

Deep mine. The thinking was that South Deep would be a more

attractive investment proposition if it was uncoupled from the less

profitable mines.

What has happened instead is that Sibanye has diversified and

grown to such an extent that it now has a new name, Sibanye Stillwater,

which reflects its R30-billion purchase of mines in the US that produce

platinum and palladium. It also bought several South African platinum

assets including Aquarius Platinum and the Rustenburg mines

of Amplats. Sibanye is now the third-largest producer of palladium

and platinum in the world, and one of the 10 biggest gold producers.

The gold sector has lost thousands of jobs in the last five years.

Part of the reason for Gold Fields wanting to unbundle was political

uncertainty in the mining sector. A new mining charter (Mining

Charter 3) has not gone down well with mining companies. The

level of black ownership and whether or not that percentage must

be “topped up” every time a black shareholder sells, are just two of

the contentious issues. The Chamber of Mines says that the value of

SECTOR INSIGHT

Sibanye Stillwater has become

a global leader in just

three years.

• Operation Mining Phakisa

Lab aims to fast-track

solutions.

BBBEE deals since the year 2000

is R205-billion.

The mining industry itself is

looking at new ways of doing

business. At its 127th annual general

meeting where a new CEO

was appointed in May 2017, the

Chamber of Mines announced

that it would be rebranding.

Guided by the Zambezi Protocol,

the Chamber wants mining to

be more positive and construc-

65 SOUTH AFRICAN BUSINESS 2018

OVERVIEW

tive, working better with the

communities in which it operates.

New CEO, Mxolisi Mgojo,

is simultaneously leading his

company, Exxaro Resources, on

a programme to make mining

sustainable through measures

such as water sharing with local

communities and finding ways

to help communities gain access

to energy.

The national government’s

Phakisa programme is also to be

applied to mining. Intended to

fast-track solutions to development

problems, an Operation

Mining Phakisa Lab has been set

up to create concrete plans.

Another significant change in

the South African mining landscape

was the decision of Anglo

American to focus on three

minerals: copper, platinum and

diamonds. Although Anglo has

not begun a wholesale sell-off of

coal, manganese and platinum

assets (because rising prices have

made some mines very profitable

again), sales have begun. The

first move came in April 2017

with the sale of Anglo’s thermal

coal operations to Seriti, a blackowned

company lead by Mike

Teke, the outgoing president of

the Chamber of Mines.

Seriti paid R2.3-billion for the

New Vaal, New Denmark and Kriel

collieries as well as four closed

collieries. Seriti thus became the

second-largest provider of thermal

coal to Eskom.

The other big supplier to

Eskom is Exxaro, which supplies

about 33-million tons. Exxaro’s

recent purchase of Total Coal

South Africa (TCSA) took to six

the number of mines the company

has in Mpumalanga. Exxaro’s Grootgeluk mine in Limpopo is a

huge operation and gives the company a presence in the Waterberg

area, where an estimated 40% of South Africa’s coal reserves lie. This

amounts to about 75-billion tons of coal, but to get that coal to the

coast for export would mean a rail extension of 464km at a cost of

R37-billion. Transnet Freight Rail (TFR) is conducting a feasibility study.

Assets

South Africa has huge reserves of platinum and chrome and produces

about 40% of the world’s vanadium and vermiculite. The country has

large reserves of ilmenite, palladium, rutile and zirconium and 80% of

the world’s known manganese reserves are located in the Northern

Cape Province. South Africa also produces 75% of the world’s platinum

and 73% of its chrome.

Despite uncertainty on the global market, Northam Platinum has

continued to buy assets. In 2015 it bought Everest South in Limpopo

from Aquarius, a move that will allow it to consolidate operations at

its adjacent property, Booysendal South. Northam, which also has

assets in the North West province, aims to produce 850 000oz of

PMGs from 2022.

A court ruling in February 2017 has opened the way for Ivanhoe to

build its Platreef Project on the northern limb of the Bushveld Igneous

Complex. R70-million has been committed to the first phase. If the

mine achieves the projected production rate of 12 Mtpa with 1.2-million

ounces of PMG, it will rank as the biggest PGM mine in the world.

Amplats and Lonmin are trying to reduce costs. Amplats has sold

its Rustenburg operations to Sibanye and Lonmin has put some shafts

that are expensive to run on care and maintenance.

With a depressed platinum price, platinum miners are hoping that

SOUTH AFRICAN BUSINESS 2018

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OVERVIEW

demand from the fuel cell industry will replace the decline in demand for

catalytic converters. Other areas that are being investigated are jewellery,

where the Platinum Guild International will try to stimulate more demand.

Coal and platinum group metals (PGMs) have overtaken gold as

the minerals generating the biggest sales volumes. Coal, iron ore, gold

and platinum group metals collectively make up 80% of South Africa’s

mineral sales.

South Africa is the second-largest exporter of steam coal in the world

and is the number-one producer of andalusite. Copper mines in Aggeneys

in Namaqualand are responsible for approximately 93% of South Africa’s

lead production and 12% of all world lead exports.

There are 20 chromite mines in the North West Province located

along a reef running from Brits to Rustenburg and serviced by several

ferrochrome smelters.

The Northern Cape produces more than 84% of South Africa’s iron

ore. Kumba Iron Ore is the country’s biggest iron-ore miner. Its two mines

(Sishen and Kolomela) produced 69.8-million tons in 2016. The company’s

Thabazimbi mine was sold to ArcelorMittal South Africa in 2017.

ArcelorMittal also stepped in to keep the structural mill of Evraz Highveld

Steel in Mpumalanga running. Evraz Highveld went into business rescue

in 2015. Assmang (a joint venture between Assore and African Rainbow

Minerals) is the other big iron-ore producer. Analysts at Investorintel.com

expect the South African ferrochrome market to be dominated by two

major players, Samancor and Glencore. This follows the closure of three

operations: Tata (in KwaZulu-Natal), International Ferro Metals and ASA

Metals. Mitsubishi has said that it wants to sell its shareholding in Hernic

Ferrochrome. Afarak and Traxys are smaller operators in the sector. A new

iron-ore sampling plant at Saldanha, a joint venture between Kumba and

Transnet, allows exporters to certify the quality of their product before

the ore is loaded on to ships for export.

The Kalahari Basin contains 80% of the world’s manganese reserve, but

only 15% of global production comes from this area so there is enormous

scope for development. Several new black-owned manganese projects

are under way.

Vedanta started work in 2015 on its R9.4-billion Gamsberg

Zinc project. The new mine is near to Vedanta’s existing Black

Mountain mine in the Northern Cape Province.

ONLINE RESOURCES

Chamber of Mines of South Africa: www.chamberofmines.org.za

Geological Society of South Africa: www.gssa.org.za

Mining Qualifications Authority (MQA): www.mqa.org.za

National Department of Mineral Resources: www.dmr.gov.za

South African Institute of Mining and Metallurgy:

www.saimm.co.za

Anglo American is investing

R2-billion to expand production

at its diamond mine near

the town of Musina in Limpopo.

In the Free State, De Beers’

Voorspoed mine will have a

production capacity of 800 000

carats per year when it is fully

operational.

A new mineral sands project

on the West Coast near Lutzville

and Koekenaap has started sending

product to China. Australian

miner Mineral Commodities

says it will spend R5-billion at its

Tormin mine to 2019 in search of

zircon, rutile, ilmenite and garnet.

Sixteen rare earth minerals

have been identified north of

Vanrhynsdorp, with the most

prevalent being cerium, an

important component of catalytic

converters. South Africa

is a world leader in converters.

Other minerals found at the site

are used in magnets, batteries

and electric-powered cars.

SOUTH AFRICAN BUSINESS 2018

Oil, gas and petrochemicals

The sector is alive with activity.

OVERVIEW

Licences for onshore and offshore exploration for gas, allocation

of sites for liquified national gas power plants, the creation of

new units within national departments, investment in a new

helium plant, testing for shale gas, massive investments by

Sasol – these are some of the things that are putting a spark into the

South African oil, gas and petrochemicals sector.

An agreement has been signed between PetroSA and Russia’s

geological exploration company, Rosgeo, which will see $400-million

invested. The agreement relates to offshore exploration blocks which,

it is hoped, will deliver four-million cubic metres of gas every day to

the gas-to-liquids refinery at Mossel Bay (Mossgas). The refinery has

been struggling to find new feedstock for some time, and a great deal

of money was spent on a project called Ikhwesi, which was supposed

to find gas.

The South African oil industry generates annual sales of about R365-

billion. Companies in the oil sector include global giants such as Engen,

BP, Shell, Total and Caltex. In 2016 Chevron began the process of exiting

South Africa. Sinopec of China has bought a 75% share in Chevron

SECTOR INSIGHT

A Russian exploration company

will supply gas to

Mossgas.

• A R200-million helium

plant is under construction.

South Africa for R12.6-billion.

Assets include a lubricants plant

in Durban, an oil refinery in Cape

Town and 820 petrol stations

across South Africa and Botswana.

South Africa’s own global giant,

Sasol, is a major player in the oil

sector and the only player in the

petrochemicals sector.

69 SOUTH AFRICAN BUSINESS 2018

OVERVIEW

Assets

Most of the oil that feeds the country’s four crude-oil refineries is imported.

In addition to South Africa’s crude-oil refineries, natural-gas conversion

plant, coal-to-fuel and gas-to-liquid crude-oil refineries, Sasol produces

fuel from coal at its Secunda facility and PetroSA has the country’s only

gas-to-liquid (GTL) facility at Mossel Bay.

The Chevref oil refinery in the Cape Town suburb of Milnerton produces

about 110 000 barrels a day of South Africa’s total production of 703 000

barrels a day. The Natref refinery is strategically placed at Sasolburg near

to the industrial hub of southern Gauteng. The petrochemical complex

at Sasolburg is a major national asset. One of Sasol’s many companies,

Sasol New Energy, has been working on moving the group away from

reliance on fossil fuels. The Natref refinery is a joint venture between Sasol

Oil (63.6%) and Total SA (36.3%). It is a technologically advanced facility,

which refines heavy crude oil into petrol, diesel, commercial propane, jet

fuel and bitumen. The capacity is 92 000 barrels per day.

KwaZulu-Natal hosts two oil refineries which jointly account for more

than 300 000 barrels of refined crude oil that South Africa produces. South

Africa’s biggest refinery is Sapref in Durban. Owned jointly by Shell SA

Refining (25%), Thebe Investments (25%) and BP Southern Africa (50%), it

has a capacity to produce 180 000 barrels per day. The refinery also makes

propylene feedstock, solvents, sulphur, asphalt, industrial processing oils

and liquefied petroleum gas.

The Enref refinery owned by Engen can produce 135 000 barrels per

day. This sophisticated refinery can convert light and heavy crude oil into

high-value products that include jet and diesel fuel, solvents, bitumen,

sulphur, bunker oil and aviation gasoline.

Safor is a base-oil production facility (jointly owned by Engen,

Caltex and Total but operated by Engen) that produces 45% of

Southern Africa’s base oils. Engen also owns the adjoining Lube Oil

Blend Plant, which produces more than 72-million litres of finished

lubricants annually.

A new facility has been added to the oil and gas sector in Cape Town,

a 118 000m³ fuel storage unit. The Bergan terminal comprises 12 tanks

located on the Eastern Mole of the Port of Cape Town.

New gas policies and fields

The Liquefied Natural Gas Independent Power Producer Procurement

Programme (LNG IPPPP) is part of the broader programme of the

Department of Energy which encourages private investment in renewable

energy, namely the Renewable Energy Independent Power

Producer Procurement Programme (REIPPPP). The total allocated

to gas-to-power in the national power plan is 3 726MW, of which

3 000MW is for LNG.

The first two sites identified

by the DoE for LNG plants are

Richards Bay (2 000MW) and the

Coega IDZ (1 000MW). To produce

its allocation of 2 000MW, the

KwaZulu-Natal plant would have

to use a million tons a year of liquid

natural gas (LNG).

In 2016 the Department of

Trade and Industry (dti) established

a Gas Industrialisation Unit

(GIU) which will make plans to exploit

the huge fields of natural gas

off the coasts of Mozambique and

Angola and boost industrialisation

in South Africa.

At Coega, it is estimated

that the new plant will inject

R25-billion into the Eastern Cape

economy. Large commercial gas

companies such as Afrox and

Air Products have plants within

the Coega IDZ. First Automobile

Works has established its motor

assembly plant next door to Air

Products’ air separation unit, allowing

it ready access to the industrial

gas that it needs. Liquid

oxygen and nitrogen play important

roles in the metals processing

sector for cutting and laser

applications.

Companies like Hydra Arc are

big gas users in welding operations

as well as the construction

and refinery maintenance that

they undertake in the petrochemical,

construction, mining

and power generation industries.

The Coega IDZ is also home to

the country first gas-fired plant to

be run by a private consortium.

The Dedisa power plant is controlled

by a consortium including

Engie, Legend Power Solutions,

Mitsui (Japan) and the Peaker

Trust. A new gas turbine open

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

cycle power plant near Durban

has been commissioned by Avon

Peaking Power.

The regulator and promoter of

oil and gas exploration in South

Africa, Petroleum Agency South

Africa, has awarded coalbedmethane-gas

exploration rights

in KwaZulu-Natal and natural

gas exploration permits in the

Free State. Early data suggests

that the Free State has 23-billion

cubic feet of gas underground. If

this is confirmed, then four new

power stations could be built in

the province.

A major investment by Afrox

will see a R200-million plant built

to extract helium in the Free State.

Afrox will operate the plant and sell

the helium and compressed gas.

Tests have begun in the Karoo

in search of shale gas. Estimates

vary greatly and detailed testing

still needs to be done to

determine whether there are

viable quantities available.

Environmental concerns must

also be addressed.

A new addition to South

Africa’s pipeline network is a

pipe to get natural gas from

Mozambique to Gauteng.

SacOil’s R90-billion project aims

to deliver gas to Johannesburg

and the nearby towns in 2020.

The Port of Saldanha in the

Western Cape launched a new

open-access liquefied petroleum

gas (LPG) plant in 2017. It will be

run by Sunrise Energy.

The major economic sectors

using gas are the metals

sector and the chemical, pulp

and paper sector. Brick and

glass manufacturers are also big

consumers.

GOING BIG, GOING LOCAL

A large new tandem horizontal boring mill installed in Mpumalanga

has given the local steel fabrication sector a welcome boost. The

sophisticated boring mill not only gives Hydra Arc the capacity

to do work that previously could only be done overseas but the

company’s machine shop expansion allows it to take on apprentice

machinists, providing much-needed training in valuable skills.

Installed at the Sky Hill fabrication facility in Secunda, the mill’s

two rotary platforms can manage loads of 60 tons and 40 tons.

The machine can also handle more delicate work and can automatically

change tools inside the milling head.

A great deal of research and development went into the project,

with the result that the mill’s two machines can work together

or individually, giving great flexibility to managers.

The mill was made by TOS Varnsdorf of the Czech Republic, who

sent mechanical and installation engineers to South Africa to

assist Machine Tool Promotions, who oversaw the installation

process.

Hydra Arc is now able to do big projects which previously had to

be contracted to companies outside of South Africa. This will

have a positive effect on the local economy and on employment.

ONLINE RESOURCES

Independent Power Producers Programme: www.ipp-projects.co.za

National Department of Trade and Industry: www.thedti.gov.za

National Energy Regulator of South Africa: www.nersa.org.za

Petroleum Agency SA: www.petroleumagencysa.com

South African National Energy Association: www.sanea.org.za

South African Petroleum Industry Association: www.sapia.co.za

Transnet Pipelines: www.transnetpipelines.net

SOUTH AFRICAN BUSINESS 2018

Service that

delivers the

Difference

Air Products South Africa (Pty) Limited manufactures, supplies and distributes a diverse portfolio of

atmospheric gases, specialty gases, performance materials, equipment and services to the

Southern African region.

Air Products touches the lives of consumers in positive ways every day, and serves customers across

a wide range of industries from food and beverage, mining and petrochemicals, primary metal and

steel manufacturers, chemical applications, welding and cutting applications to laboratory

applications.

Founded in 1969, Air Products South Africa has built a reputation for its innovative culture,

operational excellence and commitment to safety, quality and the environment. In addition the

company aims to continue its growth and market leadership position in the Southern African

region.

www.airproducts.co.za

TRANSNET PIPELINES MULTI-PRODUCT

PIPELINE: Enabling South Africa's Future

Transnet Pipelines owns, operates and maintains a 3 800km network of high pressure underground petroleum

and gas pipelines. Established in 1965, the company plays a strategic role in the supply of petroleum products to

South Africa's economic hub in Gouteng. To ensure security of supply, a new 24-inch Multi-Product Pipeline (MPP)

was constructed and commissioned in 2012. Lennie Moodley, Chief Executive ofTransnet Pipelines, discusses the

latest milestone in the MPP project.

Is the Multi-Product Pipeline working to

expectations? Yes, since it was brought into operation

in January 2012 it has transported over 18 billion litres

of diesel. We have now successfully brought it into

multi-product operation. In addition to transporting

two grades of diesel (D50 and D500) we are now

transporting 93 and 95 unleaded petrol as well as

jet fuel.

Can you put a figure on the number of road trips (or

number of tankers) that have been reduced because

of the introduction of the Multi-Product Pipeline?

Not directly as all modes of transport are required

to service the market, pipelines are ideal for large

volumes and long distance, whilst road and rail service

other areas. We can however say that if we did not have

the Multi-Product Pipeline you would need an

additional 1 ODO road tankers per day between Durban

and Gauteng.

What are current volumes of throughput in the

various categories? The capacity of the line is 1 080

cubic metres per hour and the average throughput is

approximately 115 million litres per week. The volume

split per product depends on weekly market demand

and varies from week to week.

Is TPL on target with regard to these volumes? The

volumes are slightly behind target, but this is reflective

of the lower demand in the market due to the slowdown

of the economy. From a capacity and operational point

of view TPL is able to meet the demand required by its

customers.

And the balance sheet? Pipelines is currently forecast

to exceed financial targets in the 2017 /18 year:

• Revenue of R4.2bn

• EBITDA margin of 74%

• Return on assets of 6.7%

• Asset base of R36bn excluding capital work in

progress

• Cash generated from operations of R3.l bn

Please tell us about your journey to the CEO's desk?

What was your first job at TPL? Was there a moment/

event where you thought, "Yes, pipelines is where I

want to be"? My journey started in Transnet Pipelines

in 2002 as an Executive Business Manager in charge

of operations and has evolved through various roles

since then. From the onset I knew this is where I want

to be and approached each day with enthusiasm and

determination. Pipelines is a fascinating. complex and

challenging environment. In 2002, Transnet Pipelines,

then known as Petronet, transmitted 334 million m 3

of gas and 13.8 billion litres of fuel and our revenue

was R719 million. In comparison to the previous year.

we have transported 17 billion litres of fuel and our

revenue was R4 285 million. I have aspirations of

growing the company even further, with specific focus

on diversification into the liquefied natural gas (LNG)

market and expanding our footprint into Africa.

Do you feel that your stint in Operations gives you

an especially good perspective on the complexities

of the business? Yes, it provides good insight into

the operational and technical aspects of

the business. It also provided great

understanding into the various roleplayers

in the market segment and

the number of challenges faced

by the industry. Furthermore, it

empowers me to challenge views

and make informed decisions.

How much success is TPL

having in terms of applying

the relatively new policy

of diversifying revenue

streams? Please expand on

which are working best, and give

examples (eg, training

in Africa). Our initiatives to

diversify our revenue streams

are at an infancy. However

we are confident that we will

achieve our aspirations in

the medium term. In addition

to becoming a key player in

the LNG market, Pipelines is

also committed to operate and

maintain pipelines, operate and

maintain terminals in other

African countries and provide

pipeline-specific training to the

oil and gas Industry.

How do you ensure security of supply? Our biggest

challenge is to stay ahead of market demand and

ensure efficient operations. We meet regularly with our

customers to understand their market and needs and

execute our plan accordingly, thus ensuring that their

market demands are met and facilitating security of

supply. We have pertinent KPls that we track to ensure

our performance is in line with what the market

requires. In addition to just the pipeline as a mode of

transport, we also use rail, our Transnet Value CC

initiative, whereby areas not serviced by pipelines are

still serviced by rail; one such example is the supply

of jet fuel to ORTIA, whereby both rail and pipeline

is used.

How do you protect pipes from corrosion? In addition

to the pipeline being coated, we have an extensive

cathodic protection programme in place that monitors

and deals with stray currents thus preventing

corrosion. We also do periodic "intelligent pig"

investigations to check the integrity of the pipeline.

What risk is involved for the environment through

which pipelines pass? Pipelines by their nature are a

safe, environmentally friendly mode of transport. The

biggest threat is unauthorised third party activities,

encroachments and attempted pilferage. In saying this,

incidents do happen, however our track record to date

is exemplary and we have an emergency response plan

to react to any incident together with all stakeholders.

Are you getting the rates you want from the National

Energy Regulator of South Africa {NERSA}? Yes, the

Regulator has an approved tariff methodology which

we comply with that allows us a fair return on assets

managed.

Please outline TPL's skills development programmes?

Most of our programmes are focussed on pipeline

specific requirements both technical and operational.

But we also have specific courses such as the "Women

in Pipelines" course which we are now going to expand

to all employees in Pipelines to equip them with skills

that will allow them to grow personally and in their

careers, with specific focus on diversity, finance

management, self-esteem and leadership skills.

Constructed according to international standards and best practices, the pipeline

runs underground over 555km from Durban to Heidelberg. Developed to ensure

security of fuel supply for the industrial heartland of our country, both now and

into the future, the pipeline is currently transporting four types of fuel: Diesel 50,

Diesel 500, ULP 93, and ULP 95. It can transport 1 million litres of fuel per hour,

and with future investments this can increase to 3 million litres per hour.

We're committed to fueling our country's economic hub for many decades to come.

1RANSNEr

...

pipelines

www.transnetpipelines.net

OVERVIEW

Energy

South Africa’s energy mix is becoming more diverse.

Between November 2011 and July 2016, South Africa received

commitments of investments to the value of nearly R200-

billion through an innovative and efficient programme

which encouraged private investment into the South

African power generation sector. The Renewable Energy Independent

SECTOR INSIGHT

Private investors have put

nearly R200-billion into

renewable energy.

SOUTH AFRICA: INSTALLED CAPACITY

Eskom: legacy coal

plants

Eskom: peaking

power

Decommissioning from

2020

Gas, pumped storage, hydro

37 754MW

5 819MW

Eskom: new coal Medupi and Kusile 9 564MW

Nuclear Koeberg, Cape Town 1 940MW

Eskom: RE

100MW

IPP, renewable

energy

REIPPPP

3 314MW

Other IPPs

1 713MW

Total

60 204MW

SOURCE: ESKOM INTEGRATED ENERGY REPORT, 2017

Private Producers Procurement

Programme (REIPPPP) came

about in a hurry because the

lights went out in South Africa –

literally – in 2008. Officials within

Treasury were mandated to set up

a programme to attract private

investors.

According to figures released

by the Department of Energy,

the REIPPPP by 2016 had not only

delivered multiple millions in investments,

but also created more

than 30 000 jobs and benefited

local community development to

the tune of R256-million.

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

Whereas national utility

Eskom’s supply of power was insufficient

for a booming South

African economy in 2008, the

global economic slowdown that

kicked in later that year meant

that by the time independent

producers were selling to the

grid (also controlled by Eskom),

electricity demand was much

reduced. Eskom itself had been

adding power to the grid and

improving the maintenance of

its existing fleet.

Eskom is investing heavily in

two new coal-fired power stations.

Medupi and Kusile power

stations will jointly generate

9 564MW. These factors resulted

in Eskom refusing to sign any more

power purchase agreements with

independent producers.

Although Eskom’s shareholder,

the Minister of Energy, said that

the REIPPPP was still government

policy, it was not until the third

quarter of 2017 that the process

was started again, but this time

with a limit imposed by the state

on how much could be charged

for energy in new contracts. Many

in the renewable energy sector

believe that the price cap of 77

cents per kilowatt-hour (kWh) will

deter many possible investors and

make small-scale renewable energy

projects (such as small-hydro)

impossible.

One of the consequences of

the policy uncertainty of 2016-

2017 was that DCD Group sold

its share in the Coega IDZ-based

DCD Wind Towers joint venture

for R1.

South Africa’s electricity comes

mainly from Eskom’s coal-fired

power stations. The Koeberg

WATERPROOFING PROMOTES ENERGY

EFFICIENCY

With energy efficiency being a vital part of all new building codes,

having a cool roof coating pays off in a number of ways. With the

surface and the interior of the building being cooler, air-conditioning

costs are reduced, the environment is better off, the building

is code compliant and incentives and tax breaks could come into

play. Roof coatings available from Topps make all of this possible.

A cool roof acts like a sunshade in the windshield of a car. The

white coating deflects the sun’s rays away from the building. An

industrial grade cool roof maintenance coating like Topps Seal®

brings the additional benefit of extending the life of the roof.

In Knoxville, Tennessee, a retail store recorded 24.5% energy

reduction after the application of Topps Seal®. Topps Seal® is

triple-certified, by Miami-Dade County (US), CRRC and Energy

Star. Energy Star-qualified products can reduce the amount of

air conditioning needed in buildings and can reduce peak demand

by 10%-15%. A cool roof reduces greenhouse gases and keeps the

building cooler inside by deflecting the sun’s rays.

Some government and local utilities offer incentives and tax

breaks for roofs that qualify as a “cool roof” along with tax

deductions for performing roof maintenance.

Topps Seal® won’t freeze and it won’t wash off, saving unwanted

expenses and mess.

Use of the world’s leading repair product, Topps Polyprene®, ensures

that what is sealed remains sealed. With roofing materials

expanding and contracting at different rates, stresses develop on

seams and the areas around penetrations – vents, signs, flashings,

pitch pockets, joints and rooftop equipment.

Heavily fibred Polyprene won’t crack when it gets cold. It stays pliable

permanently and stops leaks from recurring. It has been voted

the #1 repair compound among professional roofers. Creating a

reliable seal promotes building efficiency by keeping the building’s

heat within the envelope, reducing costs by avoiding heating loss.

The same is true for cooling systems. A long-lasting seal also

contributes to reducing maintenance costs.

77 SOUTH AFRICAN BUSINESS 2018

OVERVIEW

nuclear power station supplies about 5% of the nation’s needs and has

been operating since 1984.

South Africa’s long-term energy plan is underpinned by the Integrated

Energy Plan of which the electricity-specific Integrated Resource Plan

(IRP) forms a part.

There is considerable debate about the methodologies and scenarios

which underpin the Draft 2016 Integrated Resource Plan Base Case.

The South African Renewable Energy Council represents four industry

associations, one of which is the South African Photovoltaic Industry

Association (SAPVIA). The CEO of SAPVIA, Mike Levington, had this response

to the new plan: “The biggest issue with the draft IRP2016 is that

it artificially limits the amount of renewable energy that can be added

to the grid over the next 20 years with no rationale for imposing them.

Under this constrained scenario there will be greater allocations given to

nuclear and coal in the IRP at significantly more expensive cost than new

solar and wind energy.”

Proponents of coal and nuclear argue that there are some hidden costs

that renewable energy advocates don’t reveal. They also argue that coal

and nuclear are necessary to provide stable supply. There are also questions

about the ability of the grid to cope with multiple sources of energy.

Two recent reports (a “Flexibility Study” and a CSIR study) have concluded

that South Africa’s grid could be flexible enough and renewables supported

by gas could provide base load.

ONLINE RESOURCES

IPP Projects: www.ipp-projects.co.za

National Energy Regulator: www.nersa.org.za

National Department of Energy: www.dme.gov.za

South African National Energy Association: www.sanea.org.za

South African Nuclear Energy Corporation: www.necsa.co.za

South African Photovoltaic Industry Association: www.sapvia.co.za

South African Renewable Energy Council: www.sarec.org.za

South African Wind Energy Association: www.sawea.org.za

Strengths

The Northern Cape is South Africa’s

hotspot for solar power and the

Eastern Cape has attracted most of

the approved wind power projects.

Although KwaZulu-Natal

received few REIPPPP bids,

the Richards Bay Industrial

Development Zone is positioning

itself to be a hub for renewable

energy, with the proximity

of the rich gas fields off the shores

of Mozambique a major selling

point. The huge forestry, timber,

paper and pulp industries of the

province can provide feedstock for

the renewable energy sector.

KwaZulu-Natal’s most widely

grown crops, sugar cane and sugar

beet, are among the most efficient

and cost-effective feedstock for the

creation of biofuel.

The Provincial Government

of the Western Cape is another

entity prioritising energy and this

includes generation (gas, biogas

and renewables), distribution and

energy-saving. In the REIPPPP, the

Western Cape has so far been allocated

11 projects, six wind projects

and five photo-voltaic solar power

projects.

Western Cape Minister of

Economic Opportunities Alan

Winde says that Cape Town alone

has 2 000 private producers. These

range from a solar panel on the

roof of a single household to major

installations in the Waterfront.

Winde is lobbying for the allocation

of a gas-to-power plant to

Saldanha Bay where there are already

bulk power consumers like

ArcelorMittal Steel. This could be a

catalyst for the use of gas in many

other sectors.

SOUTH AFRICAN BUSINESS 2018

Pele Natural Energy

INTERVIEW

Managing Director Obakeng Moloabi explains how his

company is expanding into other African countries.

Obakeng Moloabi

What is the core mandate of Pele Natural Energy?

To develop, own and operate traditional fuel power assets in the drive

for inclusive growth.

How do you go about identifying possible projects?

Establishing customer demand is the cornerstone of every project.

Availability of feedstock and project viability from a technical and

financial perspective is the next element to consider. Social impact

becomes the final and most important consideration as this will speak

to the sustainability of the project.

Please tell us about your first plant being developed

beyond South Africa’s borders?

We are almost at commercial operations for a gas-to-power 40MW

project located in Mozambique.

BIOGRAPHY

Obakeng Moloabi is a founding

member of the Pele Energy

Group and the Managing Director

of the conventional power

subsidiary, Pele Natural Energy.

Obakeng holds an undergraduate

degree in Investment

Management from the University

of Johannesburg. Under

Obakeng’s leadership, Pele

Natural Energy has developed

its presence across Southern

Africa with an asset portfolio

of 340MW, 40MW in Mozambique

(commercial operations)

and 300MW (financial closed

asset) in South Africa.

How much generating capacity is under development,

and what are your goals in this regard?

We have 40MW under construction, 300MW expected to reach

financial close in the next few months and 1 000MW in development.

79 SOUTH AFRICAN BUSINESS 2018

INTERVIEW

Knowledge Pele

Knowledge Pele Managing Director Fumani Mthembi

shares her company’s commitment to using

knowledge for economic transformation.

Fumani Mthembi

BIOGRAPHY

Fumani Mthembi is a founding

member of the Pele Energy

Group and the Managing Director

of its research and development

subsidiary, Knowledge

Pele. She holds an undergraduate

degree in Politics, Philosophy

and Economics from UCT

and an MA Science, Society

and Development from Sussex

University. Under Fumani’s

leadership, Knowledge Pele

has grown into a reputable firm,

leading development thought

and practice, particularly in the

renewable energy sector and

related host communities.

Please explain the concept of linking power and knowledge.

The philosophical premise of our company is that it is our duty to make

a material contribution to the imperative of structural transformation.

We understand that power and knowledge are the bedrock of the

modern social structure. Therefore, through our research division, we

focus on surfacing the knowledge of those who have been historically

silenced to ensure that they can reclaim their power by reassuming

their rightful place as architects of social progress.

Please explain the concept of “community industrialisation”.

Community Industrialisation is one of Knowledge Pele’s instruments

for undoing the historical construct that is the poverty of the majority.

It is common knowledge that the majority live in communities that are

best described as labour reserves, spaces of consumption with limited

production capabilities. Knowledge Pele’s community industrialisation

division is focused on recreating these township, peri-urban and

rural communities into thriving, knowledge-based economies. We do

this by researching the economic development possibilities of these

communities, understanding the types of industries that can emerge

and the related knowledge and skills necessary to sustain them. This

work, along with an articulation of the type of future that communities

seek for themselves, forms what we then identify as the community

industrialisation strategy. We then work with our clients to invest aggressively

in training programmes at the community level, for which

we are SETA-accredited. We structure co-investment vehicles between

industry and communities to build local industries that are both run

and owned by local community members. In the long run our intention

is to build sovereign wealth funds for communities on the basis

of the portfolio of industrial assets that they will own.

Please tell us about your partnership with UCT?

We recognise that our work has policy relevance and therefore our

partnership with UCT is vital for ensuring that we remain in constant

dialogue with academics and policy-makers who share our concerns.

SOUTH AFRICAN BUSINESS 2018

Pele Green Energy

INTERVIEW

Renewable energy has enormous potential, according to

the Managing Director of Pele Green Energy, Gqi Raoleka.

Gqi Raoleka

BIOGRAPHY

Gqi Raoleka is a founding member

of the Pele Energy Group

and the Managing Director of

the renewable energy subsidiary,

Pele Green Energy, which

was founded in 2009. He has

a degree in Economics and

Econometrics and an Honours

degree in International and

Monetary Finance from the Johannesburg

University. Under

Gqi’s leadership, Pele Green

Energy has developed into

one of the largest Independent

Power Producers in South

Africa with a portfolio of over

850MW.

What are the key principles that underlie your business?

An unending commitment to excellence, value creation and effecting

structural change in the communities we provide power to.

Please explain the concept of new value creation?

The ability to build one’s own enterprise in contrast to only seeking

to acquire that which has already been created and is in circulation.

How important is research in community projects?

In the absence of research, there is limited to no knowledge. Without

knowledge there can be no development. Research is one of the key

tools towards the attainment of knowledge and the only tangible

answer to a community’s blueprint towards sustainable development.

Research forms the base upon which community projects will bring

about structural and meaningful change.

The patterns and propensity towards certain types of physical

and mental work styles that a specific community may have is best

uncovered through detailed and targeted research. This enables

industries to map their location based on the geographical spread of

the workforce they may require and fosters more effective involvement

and participation of the local community.

What are the proportions of RE in your portfolio?

Our renewable portfolio consists of 291MW of solar PV projects and

613MW of wind farms.

Where do you see the greatest growth potential?

The growth prospects across the wind and solar technologies is immense.

The reduction in prices of solar PV modules continues to fall

at a rapid rate; the economies of scale, optimisations and efficiencies

being reached are helping to keep the price reduction momentum.

Decentralised power generation represents the largest growth

prospect in the South African market. The decreasing costs of storage

together with the falling prices in PV modules are allowing large,

medium and small users of power the ability to consider alternate

independent power sources for their domestic consumption.

81 SOUTH AFRICAN BUSINESS 2018

PELE BRINGS POWER TO THE PEOPLE

Together, THE PELE GROUP of companies complement each other in driving structural change

and delivering essential services. The building of sustainable and reliable electrical infrastructure,

to light up and brighten our continent, confirms that they understand that power is about people.

With their huge investment in infrastructure and development programmes they are deeply

invested in the sustainable growth of African communities.

Through Knowledge And Power – Rea Ko Pele

PELE ENERGY GROUP

PELE ENERGY GROUP (PEG) is a wholly

black-owned company, comprising of three

subsidiaries. PEG was founded in 2009 by

five young black South Africans with the

dream to contribute to the structural reform of

the African continent. An objective they

contribute to is making freedom tangible,

through their operating subsidiaries:

Pele Green Energy, Knowledge Pele

and Pele Natural Energy.

PELE GREEN ENERGY

PELE GREEN ENERGY (PGE) is an independent

power producer that develops, owns and operates

renewable-energy power-generation plants and

solutions. Through PGE, the group aims to deliver

electrical power that is clean and safe to

households and industries. It is also invested in

creating off-grid solutions that can be delivered to

geographically remote communities at affordable

prices. PGE owns and operates 895MW of

renewable-energy power plants, including wind,

solar PV and concentrated solar power technology.

PELE BRINGS POWER TO THE PEOPLE

KNOWLEDGE PELE

KNOWLEDGE PELE (KP) is a research and development

company through which the group works to transform township,

peri-urban and rural communities into thriving economic hubs.

KP gives a voice to the needs and assets of thousands of

historically excluded community members, and leverages its

position to implement development programmes on behalf of

public and corporate social investors. It delivers socio-economic

and accredited enterprise-development programmes across the

country and currently they are working in the Western Cape.

PELE NATURAL ENERGY

PELE NATURAL ENERGY (PNE) develops, owns and operates

base load power stations. The latter is defined as power that

can be generated at all hours of the day; as well as easily

dispatched to match demand. Through PNE, the group is

contributing to the continent-wide need for stable,

grid-connected power. PNE is part of the consortium that owns

the Kuvaninga project, a 40.29MW natural gas-fired powered

plant in Mozambique. It was also announced as the preferred

bidder for the 300MW Khanyisa coal-fired power plant to be

located in Mpumalanga.

3 Centex Close, Brooklyn Place, Eastgate

Kramerville, Sandton

+ 27 11 262 0515

info@peleenergygroup.com

www.peleenergygroup.com

OVERVIEW

Water

Water infrastructure is a priority.

In 2017/18 the National Department of Water and Sanitation will

spend R12.5-billion on dams, water transfer schemes and bulk

distribution. Improving and expanding water infrastructure are

key elements to ensuring water security in a water-scarce country.

The completion of the De Hoop Dam in eastern Limpopo means

that people living in small municipalities can now expect bulk water

delivery. The Trans Caldeon Tunnel Authority (TCTA) is responsible

for seeing that bulk water supplies are laid on, but making the local

connections and physically delivering the water is up to municipalities

and water boards.

The De Hoop Dam is the centrepiece in the large Olifants River

Water Resource Development Project which is transforming the water

environment for industrial, commercial and private users. The Olifants

River System feeds the region that is South Africa’s greatest producer

of citrus and subtropical fruits, and supplies many platinum mines

with vital water.

A long drought was finally broken in most of the country in late

2016, but the Western Cape continues to experience severe shortages.

Tenders for desalination in various guises (including barges in Cape

Town harbour) have been issued.

According to Water Wheel magazine, 37% of water delivered to

the nation’s municipalities is lost, at a cost of R7-billion per year. This

presents an opportunity for companies to provide better pipes and

SECTOR INSIGHT

The De Hoop Dam has been

completed.

smart meters. Government plans

to arrest this trend include a training

programme for plumbers

and artisans.

Many small municipalities

and water boards have not been

able to properly manage their

water facilities. In response, a

new national strategy gives a

bigger role to well-resourced

water boards such as Umgeni

Water and Sedibeng Water. Rand

Water has expanded its original

footprint and now serves an area

which includes Gauteng, and

parts of Limpopo, North West,

Mpumalanga and the Free State.

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

The national Minister of Water

and Sanitation is the shareholder,

representing the government of

South Africa.

In terms of the National Water

Resource Strategy, catchment

area management agencies

have been established to oversee

water resource management on

a regional basis. The Imkomati-

Usuthu Catchment Management

Agency covers Mpumalanga,

parts of Limpopo and part of the

Kingdom of Swaziland. Another

example of a CMA is the Breede-

Gouritz Catchment Management

Agency in the Western Cape.

Among the responsibilities of

a CMA are checking that water

is being used lawfully, allocating

resources to parties along a

river (farmers, municipalities or

businesses), long-term planning,

dam safety and checking on the

quality of water.

In the 1950s, the Orange River

Project delivered water from the

Orange River to citrus farmers

in the far-away Eastern Cape.

In a mostly dry country such as

South Africa, this kind of transfer

scheme is the norm.

South Africa’s river systems

are mostly not where its people

are, so 80% of Gauteng Province’s

water is imported, mostly from

the Vaal River, which is supplemented

by complex transfers

from the Thukela River and the

Lesotho Highlands Water Project,

an ongoing project that is behind

schedule. The Vaal basin, which

serves the most populated and

industrialised part of the country

including Johannesburg, receives

water from seven inter-basin

transfer schemes.

SBS TANKS

SBS® Water Systems (Pty) Ltd, the visionary company that pioneered Zincalume

tanks to the South African marketplace in 1998 and the proud manufacturer of

SBS Tanks®, will be celebrating its 20th year of unparalleled service excellence as

the premium liquid storage solution for multiple applications.

SBS Tanks® are the preferred liquid storage solution in the South African mining,

municipal, fixed fire protection, water conservation and food and beverage industries.

What sets the company apart is the ability to go beyond supplying a liquid

storage solution. It engages on all levels of a project from brief and design through

to completion, ensuring not only a world-class installation, but a positive client

experience. This proficiency is key to the company’s high level of return business.

The SBS® range of tanks has been engineered, designed and developed from

years of practical experience in the water storage industry and continues to improve

from strength to strength. SBS® Water Systems (Pty) Ltd is ISO 9001:2015

accredited. The company is also proudly affiliated to various professional bodies

and organisations.

The company operates from a 5 000m² manufacturing facility in Pinetown, Durban.

The City of Durban also boasts the largest and busiest port on the African continent

and the company’s proximity to this facility is extremely advantageous in terms of

export logistics. SBS® services South Africa and the African continent and has a large

network of approved distributors worldwide. SBS® Water Systems was the proud

recipient of the 2016 Durban Chamber of Commerce Exporter of the Year Award.

SBS® Water Systems (Pty) Ltd employs 60 highly skilled staff members. The

company prides itself on continual improvement and staff training ranks high on

the company’s corporate objectives.

SBS® strives to manufacture and supply a comprehensive range of world-class

liquid storage solutions to a diverse market. The company endeavours to optimise

services by delivering the right product and service on time and within budget.

SBS® undertakes to provide technical assistance and after-sales service. The

company maintains an ethical and honest business practice.

ONLINE RESOURCES

National Department of Water and Sanitation: www.dwa.gov.za

South African Water Research Commission: www.wrc.org.za

Trans Caledon Tunnel Authority: www.tcta.co.za

Water Institute of South Africa: www.wisa.org.za

85 SOUTH AFRICAN BUSINESS 2018

Grundfos

A global leader in efficient pump solutions

Grundfos is a global leader in advanced pump

solutions and a trendsetter in water technology.

We contribute to global sustainability with focus

on clean water, sanitation and climate change

by pioneering technologies that improve the

quality of life for people and show concern for

the planet. It is our commitment to being

responsible, thinking ahead and innovating that

enables us to meet all our clients’ needs on all

levels.

Water gives life to people, animals and plants

and is a necessity for industry to maintain

production. Water is essential when heating and

cooling buildings, and is also used to drain off

waste products. Therefore, anywhere where

water is a coveted resource, or needs to be

drained away, Grundfos plays a central role. We

specialise in circulator pumps for heating and

air-conditioning as well as other centrifugal

pumps for industrial applications, water supply,

sewage, dosing and disinfection and fire

protection.

In addition to pumps and pump systems,

Grundfos develops, manufactures and sells

energy-efficient standard and submersible

motors and state-of-the-art electronics for

monitoring and controlling pumps. With

electronic built into the pumps, they become

“intelligent”, i.e. capable of assessing the

current demand for water and adapting their

performance accordingly – all of which results

in a significant reduction in energy

consumption.

Grundfos has developed a number of

groundbreaking technologies within a

sustainable perspective; for example Grundfos

BioBooster which effectively cleans industrial

wastewater at source; and Grundfos LIFELINK,

AQtap water dispenser unit and AQpure a

solar-powered water treatment unit for

drinking water in the poorest areas of the

world.

Fast Facts

• Grundfos developed and produced the first

solar power driven borehole pump range.

• Grundfos is a global leader in advanced pump

solutions and a trendsetter in water

technology.

• Grundfos produces more than 16 million

pump units annually

• Grundfos is a full systems solution provider –

Water Supply, Wastewater & Water Treatment

• Grundfos introduced the first integrated drive

technology onto pump motors

GRUNDFOS (PTY) LTD

Physical address: 16 Lascelles Road,

ZA-1609 Germiston

South Africa

Postal address: P O Box 1456

Bedfordview

South Africa

Tel: (+27) 10 248 6000

Email: info_za@grundfos.com

Website: www.za.grundfos.com

OPTIMISED

SOLUTIONS

FOR THE ENTIRE

WATER CYCLE

OUR OPTIMISED SOLUTIONS AND SERVICES COMPLEMENT AN UNRIVALLED FOCUS ON

RESOURCE EFFICIENCY, DESIGN VERIFICATION AND PROJECT CONSULTANCY AND EXECUTION.

THAT IS WHAT YOU GET FROM GRUNDFOS, A FULL-LINE SUPPLIER OF PRODUCTS AND

SOLUTIONS FOR ALL WATER UTILITY APPLICATIONS.

OVERVIEW

Engineering

The renewable energy sector holds great promise for engineering firms.

Several South African engineering firms are restructuring,

aiming to become more flexible and better able to pursue

projects in other countries in Africa and overseas.

South Africa has many vertically integrated engineering

and consulting companies that offer a wide range of services. South

African companies have a presence in South American and Australian

mining, African energy and infrastructure and Middle Eastern construction

and project management. All of the biggest construction

companies (including Aveng, Aurecon, Raubex and WBHO) are multidisciplinary

companies. WorleyParsons has a minerals, metals and

chemicals project cluster (and a presence in 17 cities) in Southern

Africa. Its other major divisions are hydrocarbons and infrastructure.

Group Five, which relies on its engineering and construction division

for 80% of turnover, announced in 2017 that it was to split the

division. The group has more than 8 500 employees in Africa and is

active in Europe.

As part of its plan to become a diversified project engineering, procurement

and construction group in specific natural resource sectors,

Murray & Roberts sold Murray & Roberts Infrastructure and Building

Platform to Firefly Investments for R314-million in 2016. Investors in

Firefly include the Government Employees Pension Fund. The sale does

SECTOR INSIGHT

South African engineering

companies are restructuring.

• The WorleyParsons

Mining Centre of

Excellence is based in

Johannesburg.

not include a share in the consortium

which runs the Gautrain.

Whereas Murray & Roberts had a

focus on construction and mining

in South Africa, the drive is

now more international and focussed

on four sectors: power,

oil and gas, metals and minerals,

and water.

While there are many large

projects to occupy engineers

in South Africa, the level of

SOUTH AFRICAN BUSINESS 2018

iX Engineers

INTERVIEW

CEO Lebo Leshabane reflects on prospects for growth in a

number of engineering sectors in South Africa.

Lebo Leshabane

How and when did iX Engineers come into existence?

iX Engineers is a product of a merger between WorleyParsons

Infrastructure business and Black Jill’s Engineers Consulting business.

The merger took place in 2016. I was the founder and Managing Director

of Black Jill’s Engineers, which I started 10 years ago.

What is the role of women in the business?

Women play a role in all levels of management and operations from

the board, Exco and other management positions. Black women own

36% of the company and overall, we are sitting at 37.5%.

BIOGRAPHY

Lebo Leshabane is a Civil Engineer

with 15 years’ experience

in infrastructure delivery,

project management and

business management. With

a BSc. Eng. Civil (Hons) from

Wits University and diplomas

in business management and

engineering (GDE), she worked

for a consulting engineering

firm, Transnet Freight Rail and

South African Airways before

becoming founder and Managing

Director of Black Jill’s Engineers.

She sat on the Board of

Spectrum Asset Management

Company and the Gauteng

Partnership Fund (GPF) and is

an ECSA council member.

What is the focus of your business?

We are a multi-disciplinary engineering company, and we participate

in all sectors: water, roads, sanitation, buildings, power and asset management

and HSE. We are also broadening our focus to turkey projects

due to clients requests and preferences, therefore we’re partnering

with construction companies to offer turnkey solutions.

What are the prospects for the infrastructure sector?

In the short term the market is under some pressure. We see good

prospects in the water, and waste-water treatment sectors. We’re

also working on some desalination projects to address the current

water shortages.

Any other sectors showing potential?

Integrated human settlement development where you don’t only

provide housing but all the supporting services. Shopping centres,

clinics, office space and light industrial, all within the same developments

are becoming more and more popular.

Describe some of your other key projects.

We have worked on the Kusile Power Station and a new airport, which

was built from scratch at St Helena Island. Also the Mokolo Crocodile

Water Augmentation Scheme in Limpopo, Gautrain Phase 1 and the

Vale Rail Line in Mozambique.

89 SOUTH AFRICAN BUSINESS 2018

OVERVIEW

investment in infrastructure by

the state has not been at levels

that were expected in the

years since South Africa hosted

the 2010 World Cup. With slow

growth, national freight and logistics

company Transnet has not

been able to pursue its R300-

billion infrastructure programme

at the speed that it wanted to.

Aspects of the programme,

such as the acquisition of locomotives,

are going ahead and the expansion

programmes of Gautrain

and the Passenger Rail Agency

of South Africa (PRASA) are also

keeping engineers busy. Transnet

Engineering’s mechanical workshop

complex at Koedoespoort in

eastern Pretoria has been tasked

with making 90 locomotives.

The high-level specifications of

the modern locomotive are engaging

the intense focus of the

facility’s 3 692 employees. There

are seven business units located

at Koedoespoort, including a

foundry.

Transnet Pipelines recently

completed a sophisticated new

multi-product pipeline between

the coast and Gauteng. It operates

a 3 800km network of underground,

high-pressure petroleum

and gas pipelines throughout the

eastern parts of South Africa, as

well as the infrastructure and

property associated with them.

The Renewable Energy

Independent Power Producers

Procurement Programme has

created an entirely new industry

in less than seven years, with investment

of about R200-billion in

solar parks and wind farms. This

has created huge opportunities

for engineers of every sort. The

programme stalled in 2016 but is set to begin again in the fourth

quarter of 2017.

Two of the world’s largest coal-fired power stations are still under

construction in Limpopo (Medupi) and Mpumalanga (Kusile) and there

are several coal and platinum projects in both of those provinces that

are also sources of work for engineering companies.

The South African National Roads Agency Limited (Sanral) has a

good credit rating and it continues to pursue projects in all parts of

South Africa.

South Africa has one engineer to every 3 166 citizens, compared

to Malaysia where the figure is 543 citizens per engineer. The Skills

Development Amendment Act is intended to improve the situation.

Universities, universities of technology and companies are increasing

their focus on the training of engineers.

The Engineering Council of South Africa (ECSA) has started a programme

whereby trainees can earn certificates in specific disciplines

from a broader range of institutions. The qualifications will be in line

with the council’s Exit Level outcomes.

Gauteng’s long history in mining has given its engineers decades

of experience in that field and they have developed over the years

into highly competent all-rounders. In its early days, the University of

the Witwatersrand (Wits) was called the South African School of Mines

and Technology. According to Mining Weekly, Wits and the University

of Pretoria enrol more first-year mining engineering students than the

combined enrolment of Canada, the USA, Australia and New Zealand.

The University of Pretoria’s Graduate School of Technology

Management (GSTM) offers a range of degrees and short courses,

including Masters in Engineering Management, Project Management

and Technology Management. At a national level, the National Skills

Authority (NSA) works with SETAs in carrying out the National Skills

Development Strategy (NSDS). The Human Resource Development

Council of South Africa (HRDCSA) is an over-arching body that aims to

give guidance to the many institutions working on skills development

and training. It is managed by the DHET.

Six of South Africa’s biggest construction companies have

established a R1.25-billion skills fund.

ONLINE RESOURCES

Consulting Engineers South Africa: www.cesa.co.za

Engineering Council of South Africa: www.ecsa.co.za

National Department of Public Works: www.publicworks.gov.za

South African Consulting Engineering Firms: www.consultsa.co.za

Southern African Institution of Civil Engineering: www.civils.org.za

Transnet Engineering: www.transnet.net

SOUTH AFRICAN BUSINESS 2018

Transforming South Africa’s engineering sector

Building on the success of its Enterprise Development

programme, which saw a combined turnover growth

of the initial ED partner companies by 204% and the

creation of over 100 permanent and temporary jobs

in South Africa, WorleyParsons is collaborating with

small- and medium-sized black-owned enterprises to

jointly deliver services in the mining, water, energy

and infrastructure sectors, says WorleyParsons’ CEO

Denver Dreyer.

“As part of our unwavering commitment to

transformation, we are leading this agenda in

engineering across all sectors in South Africa and are

partnering with sustainable, empowered businesses

that are capable of growing with us,” says Dreyer.

“We do not consider transformation a ‘numbers

game’ in terms of BEE points. It is imperative for

long-term success as our traditional markets are

changing. Service providers have to adjust their

business models to reflect the transformation

agenda or else be at risk of becoming obsolete.

“The partnerships that we are creating are mutually

beneficial. We will evaluate the strengths that each

party brings to the table and identify where we can

help each other. These enterprises will benefit from

skills transfer and gain an understanding of how to

successfully deliver bigger projects with our support,

while we do our part to transform the engineering

sector in South Africa,” says Dreyer.

WorleyParsons RSA to their own client base, enabling

a mutually beneficial relationship of growth.

“We are entering into agreements with suitable

companies as equals for the benefit of both parties.

Transformation is the right thing to do for our

country, but on an enterprise level, it will also secure

a better future for all the people engaged in our

organisation, regardless of who they are. Through our

transformation partnerships, we will be able to land

bigger projects alongside those partners, which will

benefit everyone in our employ,” adds Dreyer.

Denver Dreyer

Chief Executive Officer of WorleyParsons RSA

Denver Dreyer is a vibrant executive with 20 years

of strategic business development and operational

experience in the chemicals, infrastructure, power

and hydrocarbons sectors in sub-Saharan Africa.

Denver is the CEO of WorleyParsons RSA, part of

the global WorleyParsons Group, and is responsible

for the company’s mining, hydrocarbons and

power operations based in Johannesburg, South

Africa. He is passionate about the meaningful

and sustainable transformation of engineering in

South Africa.

Referred to as the Enterprise and Supplier

Development (ESD) programme, WorleyParsons RSA

is also assisting the ESD partner companies with

branding, marketing collateral, legal compliance,

market positioning, financial compliance and

introducing potential clients that WorleyParsons

RSA is already servicing to ESD partner companies.

Conversely, these SMEs have introduced

Helping our customers meet the world’s

changing resources and energy needs

WorleyParsons delivers projects, provides

expertise in engineering, procurement and

construction, and offers a wide range of

consulting and advisory services. We cover

the full lifecycle, from creating new assets

to sustaining and enhancing operating

assets, in the hydrocarbons, minerals, metals

and chemicals, and infrastructure sectors.

Our resources and energy are focused on

responding to and meeting the changing

needs of our customers over the long term and

thereby creating value for our shareholders.

The WorleyParsons global operations is

headquartered in Australia and listed on the

Australian Stock Exchange. In operation since

the 1970s, WorleyParsons is one of the world’s

largest project-delivery organisations. Our

comprehensive geographic presence enables

us to provide our customers with a unique

combination of extensive global resources,

world-recognised technical expertise and deep

local knowledge to deliver small studies through

to mega-projects.

To better meet our customers’ needs, and

leverage our global skills, WorleyParsons’

operating model has been reorganised across

four business lines: Advisian provides

management and strategic advisory services,

coupled with technical consulting and deep

domain expertise, to address our clients’

business and asset challenges. Our dedicated

Major Projects business line is focused on

successfully delivering projects that pose a

higher level of commercial risk due to their size,

complexity and scope. Our Services business

line delivers projects of all sizes across a

range of industry sectors, bringing the best of

global thinking, technology and experience to

local challenges. The Integrated Solutions

usiness line focuses on EPC engineering

activities in the brownfield space and offers our

customers a single point of responsibility in the

management of their existing assets.

Zero Harm is our corporate vision for health,

safety and the environment (HSE). We are

committed to our vision and apply it to all

operations, at all times, in all locations, and at all

levels of responsibility. EcoNomics provides

our customers with the systems, technologies

and expertise to optimise and balance financial,

social and environmental outcomes, improving

sustainability performance while enhancing

profit and long-term viability.

Hydrocarbons

WorleyParsons has been delivering engineering

and project management services to the global

hydrocarbons industry for over 60 years. Our

full-scope global project services span the

entire asset lifecycle from the initial conceptual

phase of major greenfield developments

to ongoing asset services and brownfield

modifications projects. Our capability and

experience spans all oil and gas extraction and

processing facility types.

Minerals, Metals & Chemicals

WorleyParsons has over 50 years’ experience,

gained through the delivery of some of the

most complex and challenging minerals and

metals projects across the world. We specialise

in new project developments and existing

facility upgrades or expansions, across a whole

range of commodities, including base metals,

precious metals, coal, chemicals, ferrous metals,

alumina, aluminium and iron ore. WorleyParsons’

Mining Centre of Excellence in Johannesburg

has niche expertise in underground mining,

particularly in hard rock and precious minerals

and metals. This local capability, coupled with

WorleyParsons’ global expertise, enables us to

deliver successful pit-to-port infrastructure

projects across the whole customer value chain.

Infrastructure

WorleyParsons’ infrastructure business

supports our resource and energy sector

projects and offers complete infrastructure

solutions for urban markets. Our service offering

covers environmental and restoration services,

development of water gathering and processing

facilities, rail and port assets, power generation

(across coal, gas, renewables and nuclear)

and transmission.

Supported by the global business, WorleyParsons

RSA prides itself on understanding and

committing to its customers’ goals in the sectors

that we operate.

Website: www.worleyparsons.com

Email: wprsainfo@worleyparsons.com

OVERVIEW

Manufacturing

Large incentives are available to investors in manufacturing.

SECTOR INSIGHT

The Manufacturing Circle

aims to create one-million

jobs.

• The structural mill at

Evraz Highveld is working

again.

The Manufacturing and Competitiveness Enhancement

Programme (MCEP) of the National Department of Trade and

Industry (dti) announced in 2017 that it had disbursed a total

of 1 552 grants to the value of R5.8-billion which had resulted

in 230 000 jobs being “sustained”. Plastics, pharmaceuticals and

chemicals received 31% of the money, metal fabrication, capital and

real transport equipment 28% and agri-processing 21%.

Italian forged wheel manufacturer Lucchini received tax and

training allowances from the dti which helped it decide to invest

R200-million in a new forged wheel-making facility. Blank railway

wheels imported from Italy will be completed at the Germiston plant.

Industry support from the state is necessary because the manufacturing

sector’s contribution to the national economy has slipped

to below 13% from a high of 24% in the 1980s. This is according to the

chairperson of the Manufacturing Circle, as reported in Engineering

News. Andre de Ruyter added that if the percentage could be

brought to 30%, the sector could contribute up to one-million

more jobs. The Manufacturing Circle is in talks with government

about how to improve policy to bring this about.

The sector that has done best since 1994 in terms of growth is

the automotive sector, followed by resource-based manufacturing.

The latter sector includes steel, aluminium, petrochemicals, paper

and pulp, and non-metallic minerals.

Among other important sectors

are metals beneficiation

(more than 50% of the world’s

ferrochrome is produced in South

Africa), coke and refined petroleum

products, and information

and communication technology.

Steel and petroleum collectively

make up about 45% of South

Africa’s total manufacturing

production capacity.

Steel has been experiencing

a volatile few years, with

reduced demand from China

severely reducing production

volumes in South Africa. The

Steel and Engineering Industries

Federation of Southern Africa

(Seifsa) reported that 19 000

jobs were lost in the metals and

engineering sector in the nine

months to September 2016. This

sector makes up 28% of manufacturing.

Cheap imports have

been at the heart of problems for

the steel sector, as they have for

textiles, but other issues include

energy prices and labour costs.

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

The National Department of

Trade and Industry has moved

to try to protect the local steel

industry by regulating the use

in the construction sector of

locally produced and manufactured

steel and steel products.

Another possible intervention is

related to energy prices. Silicon

Smelters, which has plants in

Mpumalanga and Limpopo, has

asked for a two-year negotiated

price agreement (NPA) on electricity,

which would allow it to

resume production. The National

Energy Regulator of South Africa

(Nersa) has the power to grant

such exemptions where the industry

is regarded as strategic.

The structural mill of Evraz

Highveld Steel in Witbank was

officially relaunched in June 2017

after ArcelorMittal South Africa

signed a contract to supply

blooms and slabs for the mill to

make into heavy structural steel.

Evraz Highveld went into business

rescue in 2015. The contract is for

two years with an option to renew

for another year. Alternately,

ArcelorMittal may buy the mill

after the two years.

Elsewhere in Mpumalanga,

the presence of Ferrometals

means that Mpumalanga is still

an important place for metals

and machinery manufacturing,

but the turbulence in the steel

sector has reminded everyone of

the need to diversify. Samancor

Chrome (which runs Ferrometals)

is the second-largest ferrochrome

producer in the world with

three plants.

Middelburg-based Columbus

Stainless is a major supplier of

stainless-steel products to the

SOLUTIONS FOR AFRICA

Modern manufacturers are coming up with ways to improve

efficiency. In Africa, water saving and conservation is becoming

a vital part of doing business.

Marley Pipe Systems has released a revolutionary new hot and

cold water supply solution called Pro-fit. Not only is Pro-fit

made from the highest grade PE-RT (Polyethylene with Raised

Temperature Resistance), which reduces loss through punctures

and tears, but it also reduces installation costs by 50% and is

resistant to corrosion and impact. Water passing through the

system is healthier and by avoiding the use of metal any scrap

value is eliminated, thus making the product more secure.

The recent extended drought has reminded all South Africans

of how fragile water supply can be. The Marley Vynadeep®

Rainwater System efficiently channels roofwater into tanks,

reducing demand on ground water and supplying vital back-up

for individual private or corporate premises.

Marley Pipe Systems is active in several parts of Africa and

with an increased uptake in the use of gas, Marley’s presence

is growing. As big retailers expand their footprints in Namibia,

Mozambique and Malawi, so Marley distributes larger volumes

through those channels. With the mining sectors of countries

such as Zambia, Tanzania and the DRC showing signs of recovery,

so the gas market is growing further still.

domestic and international market. The Manganese Metal Company

in Nelspruit is the largest producer of pure electrolytic manganese

metal in the world. Delta EMD, in the same town, is one of the biggest

producers of electrolytic manganese dioxide.

Iron production at Saldanha in the Western Cape includes hot-rolled

coil produced by ArcelorMittal and cold-rolled and galvanised steel

by DSP, a joint venture between South Africa’s Industrial Development

Corporation (IDC) and a Belgian company, Duferco.

Local production

The manufacturing sector employs the third most people, about

1.7-million, after financial services and retail. Three of South Africa’s

SOUTH AFRICAN BUSINESS 2018

OVERVIEW

most important manufacturing sectors (automotive, food and beverages,

and pharmaceuticals and chemicals) are dealt with in separate

sections of this book.

The Department of Trade and Industry (dti) is the state’s lead promoter

of the sector, as seen in the MCEP example above. The main vehicle

for the dti is the Industrial Policy Action Plan (IPAP), the seventh version

of which was launched in 2016. The Support Programme for Industrial

Innovation (SPII), run by the Industrial Development Corporation (IDC)

on behalf of the dti, promotes technology development.

New technology has been embraced by some innovative manufacturers.

Desert Wolf’s Skunk Riot Control Chopper is an unmanned light

aerial vehicles (UAV) that has proved popular in the world market. Denel

makes a drone product that can be adapted for use by conservationists.

Another IDC initiative has allocated R23-billion over three years to support

the Black Industrialist Programme to help existing entrepreneurs grow.

Part of the drive to improve South Africa’s rail infrastructure involves

getting local companies to manufacture rolling stock. The Passenger Rail

ONLINE RESOURCES

Aluminium Federation of South Africa: www.afsa.org.za

Centre for Advanced Manufacturing: www.cfam.co.za

Manufacturing Circle: www.manufacturingcircle.co.za

National Department of Trade and Industry: www.thedti.gov.za

South African Textile Federation: www.texfed.co.za

Steel and Engineering Industries Federation of Southern Africa:

www.seifsa.co.za

Agency of South Africa (PRASA)

has signed local consortium

Gibela to deliver 600 passenger

trains. Transnet Freight Rail

has contracted four suppliers to

build 1 064 new diesel and electric

locomotives.

There has been a recovery in

the textiles sector, greatly helped

by an injection of R7-billion

from the state in various forms

since 2009. There are about

90 000 workers employed in the

sector, which means numbers

are increasing after a big dip

when the sector suffered from

cheap imports.

KwaZulu-Natal is home

to 219 clothing companies

(Coface). Ninian & Lester is one

of the larger employers in the

textile sector, with 1 500 people

making clothing (including

the Jockey brand), textiles and

polypropylene.

The footwear sector is also

showing a good recovery. Two

international safety footwear

firms operate out of Pinetown:

Bata Industrial and Beier. The

latter company joined forces

with three other South African

safety footwear manufacturers

in 2014 to form the BBF Safety

Group, making them more

competitive. K-Way is a very

successful outdoor clothing

manufacturer with a factory in

Cape Town which supplies Cape

Union Mart.

The furniture sector is not

growing but there are about

2 200 companies in the country,

employing more than 26 400

workers (1% of manufacturing

GDP and 1.1% of manufacturing

employment).

SOUTH AFRICAN BUSINESS 2018

INTERVIEW

Marley Pipe Systems

Managing Director Brett Kimber explains how quality is at

the heart of this expanding company.

Brett Kimber

Has the decision to create two divisions paid dividends?

It has created the understanding that mining and industrial is really

focused on projects. Our PVC plumbing business in Nigel is mainly

focused on replenishment of stocks at retail outlets.

Do you have partnerships with multiple retailers?

We have relationships with all the major retailers but also with smaller

hardware stores, so we supply across the board.

BIOGRAPHY

Brett Kimber studied at the

universities of KwaZulu-Natal,

Cape Town and Johannesburg

for degrees in Chemistry, Geology

and Mineral Economics.

He worked as a senior geologist

for Anglo American before

working for Afrox (South Africa)

and parent group Linde in the

US and the Far East. He was

CEO and Managing Director

of Afrox and has been nonexecutive

Chairman of renewable

energy resources company

Renergen since 2015. In May

2016, Kimber was appointed

Managing Director of Marley

Pipe Systems.

Please tell us about being part of Aliaxis.

They are focussing on the professional market. The focus is on key major

megatrends such as high-rise developments and irrigation for farming

and food production. We also cater for both markets.

What does Marley stand for?

There has been a deterioration in standards in the country, with SABS

struggling to meet its mandates and shortcuts being taken. Importantly,

what Marley stands for is quality and has done so for fifty years.

What is your key offering?

We have a full range of products and we have more than enough capacity

to meet customer demands. We have a large footprint throughout

the SADC countries. We have the quality, the range, the capacity

and the service levels so that’s the key commitment that Marley offers

our customers.

Are there any popular new products?

Marley Pipe Systems has recently relaunched their revolutionary

hot and cold water supply solution called Pro-fit. Not only is Pro-fit

made from the highest PE-RT (Polyethylene with Raised Temperature

Resistance), which reduces loss through punctures and tears but it also

reduces installation costs by up to 50% and is resistant to corrosion

and impact.

97 SOUTH AFRICAN BUSINESS 2018

OVERVIEW

Automotive

Multi-billion-rand investments are boosting vehicle production.

SECTOR INSIGHT

Auto manufacturers and

government are setting

ambitious targets.

• General Motors has sold

to Isuzu.

South Africa’s automotive industry is on course to produce

a record number of cars in 2017, a remarkable achievement

in the face of the wider economy’s modest performance.

In September 2017, the National Association of Automobile

Manufacturers of South Africa (NAAMSA) was projecting a figure of

622 000, which would beat the volume produced in 2015 by about

5 000. Long-term state support of the industry through the Automotive

Production and Development Programme (APDP) is a major reason

for the continuing health of this vital sector.

The decision in 2017 of General Motors to disinvest from South

Africa does not seem to have had any kind of knock-on effect. The

company’s selling of its plant in Port Elizabeth was just one sale of

many around the world; Isuzu has bought the factory.

Many analysts believe that a figure of one-million vehicles must be

achieved for the industry to become truly sustainable. In the context of

policy uncertainty in some areas of the South African economy it was

significant that a South African Auto Master Plan was announced in July

2017, soon after the policy congress of the African National Congress.

The Department of Trade and Industry, working together with

NAAMSA, set targets for 2035 to increase production to 1% of world

volumes (which would mean 1.4-million vehicles made in SA), to

increase local content and to double employment and black-owned

businesses in the sector.

Automotive and automotive

components make up 30.2% of

total manufacturing output and

about 7% of the nation’s Gross

Domestic Product (GDP).

Automotive manufacturing

takes place in three provinces:

Gauteng (Nissan-Renault, BMW

and Ford); KwaZulu-Natal (Toyota,

Bell Equipment); and the Eastern

Cape (Volkswagen, Mercedes-

Benz, General Motors and Ford

engines). Armoured cars are

also produced in Gauteng. DCD

Protected Mobility makes armoured

cars in Boksburg, which

are branded as Vehicle Mounted

Mine Detectors. In Benoni, BAE

Systems OMC designs and manufactures

protected vehicles.

Volkswagen and Ford are the

country’s only engine manufacturers.

Policy certainty is allowing

for major domestic investments

and it is attracting foreign direct

investment. Some recent milestones

include:

SOUTH AFRICAN BUSINESS 2018

100

O&M CAPE TOWN 2382/E

Volkswagen

Economy Parts

www.vwcommercial.co.za

Your vehicle is not merely a means of transport to fulfill your clients’ needs. It forms a

critical part of your business success. Volkswagen Commercial Vehicles understands that

your vehicle is your Business Partner.

In order to keep your out-of-warranty Volkswagen Commercial Vehicle a 100% pure

Volkswagen, we’ve developed a cost-effective range of genuine parts that we hold to the

highest standards: Volkswagen Economy Parts.

Economy Parts are manufactured to Volkswagen’s Global Quality Standards and, when

fitted by trained technicians in our Dealer network, will ensure the critically important

service and repair history of your vehicle.

Volkswagen Economy Parts, along with our Dealers’ technical experts will ensure you

have the support and peace of mind to keep your Business Partner on the road for many

more kilometres. And because we uphold the highest international standards, there is no

compromise on safety, performance, or durability in these parts.

Now you might be wondering: How do we keep the price of Volkswagen Economy Parts

down? That’s simple, we manufacture each part so it can be fitted to multiple out-ofwarranty

vehicle models.

Critical to understand, is that Volkswagen will never compromise on quality. The materials

used, manufacturing and quality assurance processes of Economy Parts are similar to that

of Volkswagen Genuine Parts, and both Volkswagen Economy and Genuine Parts carry

the same warranty.

Ask your Volkswagen Commercial Dealership about the range of Economy Parts available

for your commercial vehicle.

Commercial

Vehicles

OVERVIEW

• Volkswagen SA exported 20%

more Polos in 2015 than the

year before, and kept up the

momentum into 2016 and

2017. In 2018, the Uitenhage

plant will introduce three

shifts, increasing export

volumes even further.

• National export volumes

reached a record 344 822 in

2016, earning R118.1-billion.

• Mercedes-Benz exported

more than 10 000 vehicles out

of the Port of East London in

one month in April 2016.

• BMW will invest R6-billion to

start producing the X3 sportutility

vehicle.

• Nissan will double local production

from 2018.

• Ford will hire 1 200 new staff as

it ramps up production of the

Ford Ranger and introduces

the Ford Everest.

• In 2016, Toyota invested

R6.1-billion into a large plant

at Prospecton, Durban. The

company regularly sells about

a quarter of the vehicles sold

in South Africa, and accounts

for the same proportion

of exports.

The latest foreign investment,

and one of the biggest, will see

Beijing Automobile Corporation

(BAIC) take a 65% stake in a

multi-billion-rand joint venture

with the Industrial Development

Corporation at the Coega

Industrial Development Zone

outside Port Elizabeth. BAIC is a

Chinese state-owned enterprise

with several brands. The intention

is to start production on the

85 000m² site in 2018 and the

target is annual production of

100 000 cars, bakkies and sport-

utility vehicles. About 2 500 jobs are expected to be created. This follows

the earlier investment of Chinese manufacturer First Automotive

Works (FAW), which has established a R600-million assembly plant in

Zone 2 at Coega.

Companies like BAIC and FAW may well be positioning themselves

to push into Africa, not only for selling vehicles but for sending automotive

parts and partly-assembled kits further north. A new pan-African

organisation has been established to promote the auto industry on the

continent, the African Association of Automotive Manufacturers (AAAM).

Automotive components

South Africa has a sophisticated automotive component sector. The

catalytic converter sector experienced incredible growth for a number

of years but some volatility in the platinum mining sector, together

with increased interest in electric vehicles and hybrids, means that

exporters (largely based in Port Elizabeth) have had to work harder.

A catalytic converter changes bad gasses coming out of exhausts

into less harmful gas. The converter uses platinum group metals (PGMs),

of which South Africa has about three-quarters of the world’s reserves.

Tyre and glass manufacturers are clustered around the areas where

the automotive industry is active. Sumitomo Rubber South Africa,

which includes Dunlop among its brands, is spending R2-billion on

expanding production in Ladysmith, KwaZulu-Natal. Bridgestone Tyres

has plants in Port Elizabeth and Brits and Continental makes tyres in

Port Elizabeth.

The large number of vehicle models produced in South Africa is

a complicating factor for the components sector: low volumes often

mean high prices. Two Port Elizabeth companies export significant portions

of their production to overcome this: Schaeffler SA exports to its

international parent so that it can achieve higher volumes. Shatterprufe

supplies the majority of windscreens to the South African market but

there are 12 model ranges to serve.

ONLINE RESOURCES

Automotive Industry Development Centre: www.aidc.co.za

Automotive Industry Export Council: www.aiec.co.za

Automotive Supplier Park: www.supplierpark.co.za

National Association of Automobile Manufacturers of South

Africa: www.naamsa.co.za

National Association of Automotive Component and Allied

Manufacturers: www.naacam.co.za

SOUTH AFRICAN BUSINESS 2018

102

Chemicals and pharmaceuticals

Drug research is in the spotlight.

OVERVIEW

The Drug Discovery and Development Centre (H3D) at the University

of Cape Town wants to become the African continent’s first drug

discovery entity. Companies such as Merck, Novartis and Janssen and

non-profits like the Bill and Melinda Gates Foundation are working

with the centre.

Pharmaceuticals are manufactured primarily in Gauteng and the

Eastern Cape. Although there are more than 200 pharmaceutical firms

in the country, large companies dominate the field. In 2016 Aspen had

a market capitalisation of R160-billion and Adcock-Ingram R7.6-billion.

Ascendis, which was established in 2008 and now has a market cap of

R6.9-billion, has been acquiring companies such as a genetic manufacturer

based in Cyprus. Cipla Medpro is another big company.

Aspen SA produces about 10-billion tablets per year at its Port Elizabeth

facility. The company has another factory in Gauteng and successful

operations in South America and Australia.

South Africa’s chemical industry contributes 5% to national gross domestic

product (GDP) and about 60% of earnings are derived from exports.

The complexes run by Sasol at Secunda (Mpumalanga) and Sasolburg

(Free State) underpin the national manufacturing capacity in chemicals.

Sasol Chemical Industries makes about 60% of South Africa’s polypropylene.

Safripol is South Africa’s only other producer. More than half of Sasol’s

production of 625 000 tons is exported.

Omnia and Kynoch (fertiliser), Karbochem (rubber and carbo-chemical),

Safripol (plastics) and Afrox are among the other major companies

operating out of Sasolburg.

The by-products of the sugar and forestry processing plants of

KwaZulu-Natal benefit the chemicals sector. Illovo Sugar manufactures

downstream products such furfural, furfuryl, alcohol, diacetyl and

ethyl alcohol.

ONLINE RESOURCES

Chemical and Allied Industries’ Association: www.caia.co.za

National Association of Pharmaceutical Manufacturers:

www.napm.org.za

Plastics SA: www.plasticsinfo.co.za

SECTOR INSIGHT

Sappi makes 17% of the

world’s dissolving wood pulp.

Sappi makes 17% of the world’s

dissolving wood pulp. Two of the

company’s three mills are in South

Africa, Ngodwana (Mpumalanga)

and Saiccor (KwaZulu-Natal).

The latter mill has a capacity of

800 000 tons per annum of sulphite

dissolving wood pulp, making it the

world’s single largest manufacturing

site.

Two large oil refineries and a

sophisticated sugar milling and

refining industry underpin chemical

manufacturing in KwaZulu-

Natal. German chemicals group

Lanxess has built a carbon dioxide

concentration unit at its existing

plant in Newcastle where the steel

works of ArcelorMittal produce

by-products such as ammonium

sulphate. Large companies such as

Karbochem, Bayer, African Amines

and SA Calcium Carbide also operate

in the area.

AECI is one of South Africa’s

biggest groups. The two principal

divisions are AEL Mining Services

and Chemical Services .

Foskor is the country’s only

vertically integrated phosphates

producer.

103 SOUTH AFRICAN BUSINESS 2018

OVERVIEW

Food and beverages

Consumer companies are looking to Africa for growth.

Global consumer goods company Unilever has invested

nearly R4-billion in recent years, including R600-million in

a Gauteng ice-cream factory that will boost the company’s

drive into Africa.

This highlights a trend across the food and beverage sector. In 2016

Nestlé South Africa invested R1.2-billion in adding instant coffee to

the products it makes in South Africa. Heineken’s fairly new brewery

in Gauteng is already undergoing expansion, with cider production

set to increase.

The food and beverage sector experienced 18% growth from 1996

to 2013. A very serious drought and higher input costs led to tough

conditions for companies in the sector in the six months to June 2017.

An Ernst & Young analysis of consumer products companies with collective

annual revenues of R180-billion stated that the period had been

“one of the weakest” because of a combination of political, economic

and climate conditions.

Some of the biggest companies in the sector are Tiger Brands, RCL

Foods, Pioneer Foods, Clover, AVI and Astral. According to the EY report,

the industry’s revenue comes mostly from agri-business (25.8% of total

industry revenue), diversified companies (23%), food producers (13.6%),

beverage producers (12.5%) and sugar producers (8.9%).

The food and beverage sector is responsible for 24.4% of total

manufacturing production and employs 230 000 people. Beverages

account for just over 4% of all manufacturing sales while food is responsible

for 13.5%. Within the sector, beverages accounts for 24%

of sales. One quarter of the 37% of national GDP that is generated by

agri-industries derives from agri-processing.

Gauteng, the Western Cape and KwaZulu-Natal are the leading

provinces, with about half of the companies in the sector located

in Gauteng.

ONLINE RESOURCES

Agricultural Research Council: www.arc.agric.za

FoodBev SETA: www.foodbev.co.za

National Agricultural Marketing Council: www.namc.co.za

SECTOR INSIGHT

Agri-business contributes

a quarter of revenue in the

sector.

The South African beer market

is growing by 1.5% per year.

Key players in the industry in

South Africa include South

Africa Breweries (SAB) (malt

beer), United National Breweries

(sorghum beer), Distell (spirits and

flavoured alcoholic beverages, or

FABs) and Brandhouse (malt beer,

spirits and FABs). SAB became part

of Anheuser-Busch in 2016.

RCL Foods, formerly Rainbow

Chickens, has been on an aggressive

run of acquisitions. RCL is reconsidering

its business model

with a thought to producing

fewer frozen chickens and doing