Opportunity - Issue 94

Quarterly journal for business and industry in South Africa 

www.opportunityonline.co.za 

AUG/SEPT/OCT 2020 • ISSUE 94 

The evolving 

politics l of oil 

Uncovering the path to oil price recovery 

Wheels 

on rails 

Setting railway 

on the right track 

Exploring SA’s 

many prospects 

Opportunity interviews 

Dr Phindile Masangane 

CEO of Petroleum Agency South Africa 

THE COVID 

EFFECT 

E-commerce 

on top of the 

CEO agenda

Lennings Rail operates from Boksburg in Gauteng 

and is the oldest mechanised track construction and 

maintenance business in Africa with roots dating back 

to 1931. 

Lennings Rail focuses on turnkey mechanised railway 

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maintenance of track work systems. 

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because of its in house engineering capabilities that can 

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Our service offering include: 

• mechanized sleeper replacement, 

• railway construction and rehabilitation, 

• ballast tamping, regulating and screening, 

• overhead maintenance, 

• rail profile rectification, 

• rail flaw detection 

• drain cleaning, 

• rail signaling & OHTE, and 

• smart rail 

Get In Touch 

Tel: +2711 898 6800 | Email: info@lenningsrail.africa

Operating from Kimberley in the Northern Cape, Rail 2 Rail 

has been in the industry for close to a decade. 

Rail 2 Rail manufactures pre-stressed PY and P2 concrete 

railway sleepers in compliance with SABS ISO 9001 2000 

standards. The sleepers are manufactured under technical 

license from Rail One. 

Rail 2 Rail is one of the biggest manufacturers of concrete 

sleepers in South Africa. Rail 2 Rail is the only majority 

black-owned supplier of concrete sleepers in South Africa. 

We have the capacity to produce 400 000 sleepers per 

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Your all-African solution to 

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EDITOR'S NOTE 

usiness 

unusual 

It has been estimated that the economy will take two to three years 

to recover from Covid-19 and the subsequent economic collapse. 

From now to there, the journey will indeed be business as unusual. 

My pledge, as the new editor of Opportunity magazine, is to provide 

cutting-edge content that guides our readers on how to rise above 

the current business trajectory and to circumvent the consequences that 

are now laid before them. 

In this issue, Mike Townshend from Foord Asset Management writes, 

in ‘The evolving politics of oil’ (page 8), that oil has caused wars, 

assassinations, man-made disasters, coups and still affects every person 

in the world today. On page 10, Rebecca Major from leading global law 

firm, Herbert Smith Freehills, shares her insight on how to navigate 

African oil and M&A deals in these volatile times. Both of these writers 

will present more on these topics at Africa Oil Week. 

The transport services sector has been severely affected by the 

pandemic, but help is at hand. Digital transformation is set to disrupt 

the sector – technology has transformed the railway industry globally 

and implementing technological innovations could be a game-changer 

for rail transport in South Africa. Read more on page 17. 

Celebrating Women’s Month in August, Opportunity interviews the 

newly appointed CEO of Petroleum Agency South Africa, Dr Phindile 

Masangane (page 12), as well as founder and owner of Nemesis 

Accounting, Shani Naidoo (page 14). 

The South African Chamber of Commerce and Industry (SACCI) has 

a pivotal role to play in guiding the business of its 22 000 members. 

The Chamber believes that businesses should actively engage in the 

strategic and recovery implementation processes towards inclusive 

growth – read more in the CEO’s message on page 4. 

Let’s work together in building a resilient, risk-savvy and formidable 

nation. 

Alexis Knipe, Editor 

www.opportunityonline.co.za 

Editor: Alexis Knipe 

Publishing director: Chris Whales 

Managing director: Clive During 

Online editor: Christoff Scholtz 

Art director: Brent Meder 

Designer: Simon Lewis 

Production: Linda Tom 

Ad sales: 

Thaakirah Julies 

Tennyson Naidoo 

Tahlia Wyngaard 

Venesia Fowler 

Administration & accounts: 

Charlene Steynberg 

Kathy Wootton 

Printing: FA Print 

PUBLISHED BY 

Global Africa Network Media (Pty) Ltd 

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2004/004982/07 

Directors: Clive During, Chris Whales 

Physical address: 28 Main Road, 

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Email: info@gan.co.za 

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No portion of this book may be reproduced without written consent of 

the copyright owner. The opinions expressed are not necessarily those of 

Opportunity, nor the publisher, none of whom accept liability of any nature 

arising out of, or in connection with, the contents of this book. The publishers 

would like to express thanks to those who support this publication by their 

submission of articles and with their advertising. All rights reserved. 

C 

2 | www.opportunityonline.co.za

ontents 

ISSUE 94 | AUGUST–OCTOBER 2020 

04 

06 

08 

10 

12 

14 

17 

20 

22 

24 

26 

28 

30 

SACCI FOREWORD 

The impact of Covid-19 so far 

NEWS & SNIPPETS 

What has been and what’s to come 

THE EVOLVING POLITICS OF OIL 

Uncovering the uncertain path of oil price recovery 

A PERFECT STORM 

Negotiating African oil and M&A deals 

EXPLORING SOUTH AFRICA’S MANY PROSPECTS 

Interview with Dr Phindile Masangane, CEO of PASA 

GAINING YOUR COMPETITIVE EDGE WITH NEMESIS 

Interview with Nemesis Accounting founder, Shani Naidoo 

TECHNOLOGY: TRANSFORMING RAILWAY TRANSPORT 

The implementation of wheels on rails is changing 

THE ROOT TO THE FUTURE OF AFRICAN MOBILITY 

A profile on rail infrastructure provider, Mathupha Capital 

TOGETHER WE CAN 

Tshepo Kgare, ACEO of Railway Safety Regulator, shares insights on railway safety 

ARE YOU MISSING OUT ON THE TRUE POTENTIAL OF AI? 

Understanding the impact of Artificial Intelligence 

BECOMING RISK-SAVVY 

Post-pandemic procurement 

A NEW ORDER OF MAGNITUDE 

Covid-19 tests supply chain resilience 

COVID-19 AND ITS IMPACT ON E-COMMERCE 

The pandemic has pushed e-commerce and supply 

chain issues to the top of the CEO agenda 

08 

12 

22 

28 

30

FOREWORD 

The impact of 

Covid-19 so far 

Like wildfire, Covid-19 has rapidly mushroomed across the globe, leaving its crippling 

imprint on every continent with noticeable trade disruptions and tensions, both locally 

and internationally – and imposing significant cuts to the global supply chain. 

Since South Africa announced its first case of 

Covid-19 on 5 March 2020, the situation has 

escalated to where we currently have the 

highest recorded case incidences on the African 

continent, with 225 989 confirmed cases on 8 

July 2020, and 3 694 deaths, despite a total lockdown 

which resulted in a devastating impact on every sector 

of the economy. 

Among the most affected sectors, the coronavirus 

has impacted negatively on agriculture, mining, 

manufacturing, retail, construction, transport services, 

real estate and personal services such as the beauty 

industry, causing many businesses (both small and 

large) to close permanently and leaving many South 

Africans without employment, with loss of income and 

food insecurity concerns. 

___ __ ___ __ _ _ 

SACCI’s Business 

Confidence Index (BCI) 

reflected a marked 

decline of 22.9 index 

points between May 

2019 and May 2020, 

emphasising the 

substantial effect the 

lockdown is having on 

real economic activity 

___ __ ___ __ _ _ 

SACCI’s Business Confidence Index (BCI), which is 

a composite index of economic and financial market 

indicators (rated by business as critical indicators of 

the business climate), reflected a marked decline of 

22.9 index points between May 2019 and May 2020, 

emphasising the substantial effect the lockdown is 

having on real economic activity. Notable negative 

annual impacts on the business climate were exerted 

by the weaker rand, depressed new vehicle sales, lower 

merchandise import and export volumes, and weaker 

share prices on the JSE. Financial conditions were 

somewhat easier mainly due to lower inflation and 

monetary relief measures. 

Though our government financial relief transfers 

are helping to substantially support the total income of 

households in the lower half of the income distribution, 

their efforts are still far from eradicating the impact 

of Covid-19 for both households and the business 

sector. This narrows the options for all efforts by both 

government and the private sector to be channelled 

towards recovery strategies for the rapid economic 

upliftment of the economy at large. 

Though the economy is slowly reopening, and 

precautionary measures continue to be implemented to 

flatten the infection epidemic, the negative fear mindset 

will continue to influence the perceptions around 

growing the economy out of this slump. The medical 

experts believe that South Africa is likely to see a peak 

demand for hospital and intensive care unit (ICU) beds 

between August and September. However, based on 

current resource levels, projections indicate that the 

number of available hospital and ICU beds will likely 

be exhausted by the end of July 1 . 

The coronavirus is affecting not only the health, 

daily life and psychological wellbeing of the South 

___ __ 

Since South Africa 

announced its first 

case of Covid-19 

on 5 March 2020, 

the situation has 

escalated to where 

we currently have 

the highest recorded 

case incidences on 

the African continent, 

with 225 989 

confirmed cases 

on 8 July 2020, and 

3 694 deaths, despite 

a total lockdown 

which resulted in a 

devastating impact 

on every sector 

of the economy. 


FOREWORD 

African population, but is also having a significant 

impact on our businesses. In its efforts to cushion the 

business community, SACCI continues to play a pivotal 

role in advocating for the consideration of reasonable 

accommodation for essential services and other key 

sectors of the economy, especially for small and medium 

businesses, and engages with the government in 

strategic mitigation processes to ease lockdown for the 

survival of businesses, from the onset of the lockdown. 

___ ___ __ _ _ 

The coronavirus is 

affecting not only 

the health, daily life 

and psychological 

wellbeing of the 

South African 

population, but 

is also having a 

significant impact 

on our businesses 

___ __ ___ __ _ _ 

Though working remotely, 

SACCI continues to see an influx 

of requests for intervention by 

members for assistance in the 

day-to-day management of their 

business in these unprecedented 

times. The South African Chamber 

of Commerce and Industry has 

reached out to its over 22 000 

members with daily business 

updates on coping, mitigation 

reports, requests for comments 

on policy and regulatory input 

by members, as well as general 

support for business survival and 

return to work preparation and 

compliance plans, and assistance 

with access to financial relief 

platforms for small businesses. 

SACCI believes that businesses should more actively 

engage in strategic and recovery implementation 

processes which include contingency planning, 

financial recovery strategies and legislative compliance 

challenges, as well as communication, especially 

with employees, to manage the psychological impact 

of Covid-19 imposed changes and conduct scenario 

analysis towards inclusive growth. This, we hope, will 

pave the way towards the recovery of our economy. 

Alan Mukoki, 

SACCI CEO 

___ __ 

1 

Publication by 

Modelling and 

Simulation Hub, Africa 

(MASHA), University 

of Cape Town; South 

African DSI-NRF 

Centre of Excellence 

in Epidemiological 

Modelling and Analysis 

(SACEMA), University 

of Stellenbosch; 

Health Economics 

and Epidemiology 

Research Office 

(HE2RO), University of 

the Witwatersrand, 

Johannesburg; Boston 

University School 

of Public Health; 

National Institute 

for Communicable 

Diseases (NICD), 

South Africa. 

www.opportunityonline.co.za | 5

BUSINESS UPDATE 

News & snippets 

Industry insights from the past quarter 

SA HOUSEHOLDS FACING HIGH FINANCIAL STRESS 

A staggering yet understandable 58% of households across South Africa are facing overwhelming 

financial stress as the Covid-19 crisis knocks savings and raises debt levels, according to the latest 

Old Mutual Savings & Investment Monitor (OMSIM). Just over half of those surveyed are earning 

less than they were at the end of February 2020, while 40% of those currently employed only have 

enough funds to survive for one month or less should they lose their jobs. The levels of dependency 

have also grown. In 2015 those with other adult dependents (excluding spouse/partner) was at 

35%. This year it spiked at 52%. Lynette Nicholson, Head of Research and Insights at Old Mutual, 

says: “A very alarming consequence of the financial pressures South African households are 

experiencing is that just over 50% are currently dipping into their savings just to make ends meet, 

37% have fallen behind on paying household bills and 23% have cashed in an investment policy.” 

SME WARRIOR ENTREPRENEUR ACADEMY 

Shani Naidoo, director of SME Warrior (Pty) Ltd, launches the 

SME Warrior Entrepreneur Academy in September 2020, an 

online learning and development platform for entrepreneurs 

and business owners. The academy consists of three schools: 

School of Legal, School of Business, Financial Literacy and 

Entrepreneurship and the School of People Performance and 

Improvement Intervention. 

“Our educational indoctrination system is at the root cause of so 

many business failures and the demise of entrepreneurship as we 

know it. We are being taught using old methods in a new world, 

expecting to succeed with high expectations. Learning material 

designed for the agile and purposeful entrepreneur of the future, 

SME Warrior will change lives and businesses alike forever,” says 

Naidoo. www.nemesisaccounting.co.za 

Perfect, pure energy 

“LPGas is an exceptional energy source, especially in areas 

where there are electricity supply challenges. It’s a portable 

energy solution which can alleviate energy poverty,” says LPGSA 

Acting Managing Director Nirvan Brijlal. This clean-burning and 

efficient fuel is primarily used for cooking, space and water 

heating in South Africa and has over 1000 applications, but 

importantly it also plays a role in helping to reduce indoor and 

outdoor air pollution. “It is extremely important that you make 

use of registered professionals to perform the installation and 

maintenance of LPG appliances and cylinders,” adds Brijlal. 

For more information on LPGas, visit www.lpgas.co.za 

SA FACES A TWO-YEAR JOURNEY TO RECOVERY 

Recovery from the coronavirus-induced economic and financial 

meltdown could take some two years, according to Prescient 

Investment Management’s research and baseline forecast. “The 

world is grappling with the worst plunge in economic output in 

living memory,” says Prescient Head of Asset Allocation, Bastian 

Teichgreeber. “The coronavirus pandemic and the lockdowns to 

contain it affect both supply and demand in the various sectors 

of the economy in unusual and different ways.” 

After making new all-time highs as late as mid-February 2020, 

equity markets around the globe made headlines for the record 

pace at which they fell shortly after as a result of the global 

spread of the Covid-19 pandemic. The price declines have been 

indiscriminate, with equities, listed property, bonds, credit, 

preference shares, inflation-linked bonds (ILBs), income assets and 

the rand selling off in lockstep. Correlations moved to highs 

we have never seen before. During April and early May, however, 

we saw a steep recovery, with markets posting record returns. 

The question everyone is asking is: How long will it take to 

return to the pre-corona GDP peak once the economy has hit 

bottom? Our base case, says Teichgreeber, is a U-shaped recovery 

in which losses incurred in the first two quarters of 2020 would be 

recovered within two years. “This might sound pessimistic to some 

and optimistic to others. The risks to our view are significant on 

the up and the downside.” 


PIC: spotongmag.co.za 

R1-BILLION FOR TOWNSHIP AND RURAL ECONOMY 

The Black Business Council (BBC) and Ubank Limited signed a historic partnership agreement in May 

2020 to establish an R1-billion fund for township and rural economy revitalisation. The fund will be 

made available to BBC members and other SMMEs to the value of R250-million per annum over the next 

five years, targeted at supporting township and rural black business ventures, entrepreneurship and 

start-up companies. The fund will focus mainly on the IT and digitalisation, manufacturing, agriculture 

and agri-processing, retail, infrastructure and tourism sectors. www.blackbusinesscouncil.africa 

DEMAND FOR HOME DELIVERY SET TO INCREASE 

South African consumers are becoming more reliant on home 

delivery services due to social distancing efforts. “Businesses will 

have to gear up to provide home delivery, or beef up existing 

fleets, as it is expected to play a crucial role in the coming months,” 

says Derick de Vries, Head of Fleet Management at Standard Bank 

Group (right). 

“The new normal is digital, the events of the last month have 

proved this. For businesses to remain viable going forward, they 

will need an online extension of their business, where consumers 

can view and purchase products, and a fleet of vehicles to carry 

out deliveries. These systems, which some companies may already 

have in place, should then be adapted for the current environment. 

“The evolution of technology in the industry means that 

fleet managers can access customised, in-depth information 

on a regular, and in certain instances, real-time basis, via online 

platforms,” explains De Vries. “These include daily, weekly and 

monthly reports on fuel cost data, and the ability to use predictive 

modelling for the outcome of variances to 

their fleet and operational data.” 

Standard Bank acquired a 40% stake in 

Payment24 to support fleet owners with 

digital technology solutions that work 

to eliminate risk and inefficiencies. The 

platform aims to eliminate the hassle of 

monitoring and controlling fleet fuelling 

transactions using real-time, cardless RFID, 

mobile and cloud technologies. 

Further to that, Standard Bank offers a 

fleet management card, issued per vehicle 

rather than driver, which offers convenience 

in paying for, monitoring and controlling 

vehicle running costs. This also helps 

facilitate savings on diesel with several oil 

company partnerships to choose from. 

pull to come 

info to come 

pull to come 

info to come 


ENERGY 

The evolving 

politics of 

We built the modern economy on a global logistical supply 

chain that could not function without oil and its downstream 

derivatives. This dependence on oil has enabled the broader 

oil industry to be remarkably profitable. It has been one of 

the world’s more important industrial sectors for much of 

the past 100 years, writes MIKE TOWNSHEND. 

And because of the scale of the oil industry, it 

has always been closely entwined with politics. 

Since its genesis in the late nineteenth century, 

the oil industry has drawn more controversy 

than most others. Oil has caused wars, 

assassinations, man-made disasters, coups and still 

affects every person in the world today. 

A BRIEF HISTORY 

Iraq’s 1990 invasion of Kuwait after an oil production 

dispute dragged the US back into Middle Eastern 

conflict. US efforts to secure its oil supply, principally 

from major producer Saudi Arabia, has embroiled it in 

regional conflict ever since. Ensuring Saudi stability in 

the strife-torn region has demanded costly US political 

and defence support. 

More recently, elevated oil prices made new US oil 

fracking production profitable and the US has doubled 

its oil production over the past decade. The US has once 

again become the largest oil producer in the world, 

surpassing Saudi Arabia and Russia. The US is no 

longer reliant on imports and it is now re-evaluating 

its expensive and divisive Middle Eastern involvement. 

In the meantime, China’s economy burgeoned 

and the oil-dry country is now the world’s largest oil 

importer. Simultaneously, Putin’s Russia is smarting at 

its post-communism loss of geopolitical influence. Putin 

has been cosying up to Chinese President Xi, realising 

Russia and China 

could work together to 

achieve greater global 

geopolitical authority. 

THE CURRENT OIL IMBROGLIO 

In late 2016, Russia and the 

Organisation of the Petroleum 

Exporting Countries (OPEC) worked together 

to support oil prices from the relatively low levels 

of mid-$40 per barrel. Prices recovered and a new, 

extended OPEC oligopoly dubbed OPEC-Plus seemed to 

have become entrenched. 

When oil prices started falling from $65 at the 

beginning of 2020, Putin conceived an opportunity to 

decimate oil prices and thus strike at the booming US 

shale oil industry while cementing Russia’s goodwill 

with oil-importer, China. In early March, he chose not 

to support the OPEC-Plus call for production cuts and 

encouraged Russian oil companies to instead ramp up 

production. The Saudis responded by increasing their 

own production and the supply glut caused a further 

weakening of prices. 

The rapidly spreading Covid-19 pandemic was 

concurrently decimating global oil demand. The 

combination of slumping demand and rising supply saw 

Brent crude prices collapse to $25 per barrel. Investors 

should expect a six- to 18-month period, if not longer, 

___ __ 

Oil demand is 

normally correlated 

with the global 

economic cycle but 

is now fraught with 

uncertainties thrown 

up by an entirely 

new set of factors. 


ENERGY 

where oil prices are volatile and likely to languish close 

to $40 per barrel. 

GEOPOLITICAL RAMIFICATIONS 

The shake-up of the oil sector will have a variety of 

geopolitical ramifications. It is still too early to establish 

how this will play out, but some macro consequences 

are becoming clearer. 

Firstly, OPEC’s influence should wane. As the energy 

transition away from fossil fuels gains momentum and 

the array of economically viable and less price-volatile 

energy sources continues to emerge, oil’s dominant 

position in the energy mix will decline. OPEC’s ability 

to set prices and thus extract geopolitical bargaining 

power will diminish. Conflict in the Middle Eastern 

arena, however, could escalate. New power blocs 

backed by Chinese or Russian interests will replace US 

involvement and look to exploit Arab nations and assert 

power in the region. 

Secondly, Sino-Russian relations should deepen 

on the back of this oil crisis. Their partnership is an 

outcome of their shared dissatisfaction with the US – 

both feel antipathy towards the US and its perceived 

___ __ ___ __ _ _ 

Oil has caused wars, 

assassinations, 

man-made disasters, 

coups and still affects 

every person in 

the world today 

___ __ ___ __ _ _ 

meddling in their sovereignty and interests. Russia has 

already become one of the biggest recipients of Chinese 

investments under the Belt and Road initiative. The oil 

war has complicated Russia’s prospects for economic 

growth, but its alignment with China could deliver early 

benefits as the latter’s economy recovers first from the 

Covid-19 fallout. 

THE UNCERTAIN PATH TO OIL PRICE RECOVERY 

The oil price is a factor of demand and supply. On the 

supply side, there is now significant excess capacity in 

oil and related-product inventories due to the Covid-19 

pandemic. This excess must be absorbed before product 

prices can recover. At prices below $45 per barrel, oil 

supply is largely in the hands of the OPEC-Plus oligopoly. 

At higher prices, higher-cost producers such as the US 

onshore fracking industry can restart production. 

Oil demand is normally correlated with the global 

economic cycle but is now fraught with uncertainties 

thrown up by an entirely new set of factors. These include 

how quickly economies can rebound from lockdowns, 

whether working from home becomes the new normal 

and whether wary office workers avoid public transport 

to favour self-driving. Bigger influences include the 

timing and extent of the recovery in global travel and 

tourism, the accelerating adoption of electric vehicles 

and how the global logistics supply chain is affected 

by de-globalisation, reshoring and the establishment of 

new supply lines. Many of these decisions will be made 

by politicians. 

Uncertainty relating to supply and demand will, 

therefore, result in a volatile period for oil prices and 

oil-related investments. So, while an oil shock of this 

nature offers investors rare buying opportunities, they 

should proceed with caution. 

___ __ 

Mike Townshend, 

Fund Manager, 

Foord Asset 

Management 

Foord Asset 

Management is an 

owner-managed 

boutique built 

on the principles 

of investment 

stewardship. 


ENERGY 

A perfect 

storm 

Negotiating African oil and M&A deals in these times of low oil and gas prices, currency fluctuations, 

Covid-19, increased nationalism and added focus on ESG, is no easy task. Here are some considerations 

from REBECCA MAJOR that may be top of mind in the current circumstances. 

Despite the current economic, political and sanitary 

climate, we are seeing, and expect to continue 

to see, mergers and acquisitions in Africa’s 

oil and gas industry, including in particular: 

• Deals already agreed before Covid-19/the 

drop in oil and gas prices; 

• Sellers looking to sell to raise money; and 

• Buyers with cash/available credit lines looking to 

leverage opportunities. 

Buyers and sellers have been checking the sale and 

purchase agreements (SPAs) that they have already 

signed and have been very carefully considering the 

SPAs that they are about to sign. 

TERMINATION PROVISIONS 

SPAs often include provisions enabling one or other of 

the parties to terminate the SPA between signing and 

closing if certain circumstances arise. Generally, the 

objective of the seller is to achieve as much certainty as 

possible. Therefore, a seller will only accept very limited 

rights for the buyer to terminate the SPA before closing. 

On the other hand, the buyer will generally not want to 

be bound into a deal that is not as good as was expected 

when the SPA was signed. 

MATERIAL ADVERSE CHANGE 

This enables one or both of the parties to terminate the 

SPA before closing if something significantly affects 

the value of the target asset/company. Discussions 

generally revolve around (i) what kind of event should 

be covered: political crises in the country, significant 

damage to the asset, significant fluctuations in oil and 

gas prices; and (ii) whether there should be some kind 

of materiality threshold: for example, a decrease of 10 

to 25% in the value of the asset. 

These kinds of provisions are generally fiercely 

negotiated and may not be accepted at all. They relate 

to the asset and not the financial position of the buyer 

(or the seller) and will generally not relate to the state 

of the oil and gas industry as a whole (for example a 

decrease in oil and gas prices – although this may be a 

point of negotiation). 

___ __ 

International 

investors may prefer 

to support companies 

financially rather 

than buy them out, 

because it makes 

legal or business 

sense to do so. 


ENERGY 

MATERIAL BREACH OF REPRESENTATIONS AND WARRANTIES 

Representation and warranties generally do not include 

any kind of comfort concerning oil and gas prices, 

availability of reserves, production levels or political 

issues. However, current circumstances might give rise 

to breaches such as: 

• breach of a warranty to ensure that there is no 

event of default under any of the existing financing 

arrangements: low oil prices and/or a suspension of 

production may trigger events of default relating to 

financial covenants; 

• breach of material project contracts (for nonperformance, 

non-payment); and 

• the target is unable to pay debts as they fall due. 

PRICE ADJUSTMENT 

For many deals, the price for the asset/company is fixed 

on a past date (a locked box date or retroactive effective 

date). In this case, there is a risk of value fluctuations 

____ __ ___ __ _ _ 

As African countries are 

feeling economically 

more fragile, some 

will become more 

protectionist in terms 

of foreign investments 

___ __ ___ __ _ _ _ 

between that date and the date of the actual closing 

of the deal. This can be significant where oil and gas 

prices or production have significantly decreased since 

that date. The parties may still have to close at the 

original price in these circumstances. 

If on the other hand the price is calculated based on 

the value at the closing date, then the parties may be 

better protected against any sudden increase or decrease 

in oil and gas prices or production levels. Deferred price 

mechanisms based on future performance might also 

be helpful. Parties may become being more creative 

with pricing mechanisms in future deals, with both 

parties looking to mitigate their risks. 

FOREIGN CURRENCY 

Some countries have found themselves 

short of foreign currency, particularly those 

countries that are dependent on exports of 

goods (Ethiopia is an example) or oil and gas 

revenues (such as Nigeria and Angola). This 

means that African buyers have struggled 

to be able to obtain the foreign currency 

necessary to do deals. It has also meant that 

foreign investors are concerned about their 

investments becoming cash trapped in a 

country. These issues have arisen on top 

of the already existing issues around the 

tightening of regulations in certain regions 

(like the CEMAC region) concerning the 

ability to maintain offshore bank accounts. 

PARTNER RISK 

Many foreign investments in Africa are through 

joint ventures with local partners and/or with other 

international investors either for legal reasons or for 

business reasons, or a combination of both. Many foreign 

companies are also dependent on local contractors 

and suppliers. 

Covid-19, combined with the oil and gas crisis, has not 

only made target companies and projects more fragile 

but has also made certain investors and contractors, 

particularly smaller investors and contractors, more 

fragile. In a company or project where the financial 

stability of each of the stakeholders is important (for 

example, an entity requiring shareholder funding 

or dependent on shareholder services), this can be 

a real issue. Foreign investors are therefore being 

increasingly diligent both with new investments and 

in relation to existing investments. 

These circumstances may provide opportunities for 

larger investors to acquire bigger stakes in companies 

and projects. However, it may also require them to 

acquire additional stakes to protect their investments 

from the financial difficulties of their partners rather 

than because they wanted a larger stake. 

Where local partners or contractors have financial 

difficulties, international investors may prefer to 

support them financially rather than buy them out, 

because it makes legal or business sense to do so. 

___ __ 

Rebecca Major, 

Partner, Herbert 

Smith Freehills LLP 

Herbert Smith 

Freehills is one of the 

world’s leading global 

law firms, with 

27 offices globally. 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES 

Before Covid-19 and the oil price collapse, ESG was the 

key point in the minds of most oil and gas companies 

and should not be forgotten. Sellers looking for a 

clean exit, or buyers looking to avoid having to take 

on past issues, should negotiate pre- and post-closing 

indemnities carefully on this basis. 

NATIONAL SENTIMENT 

As African countries are feeling economically more 

fragile, some will become more protectionist in terms 

of foreign investments (increasing tax rates, etc). 

However, this is not universally the case and many 

countries have realised that they need the support of 

others either regionally or internationally. 

• To hear more from 

Herbert Smith 

Freehills about 

negotiating African 

M&A deals, attend 

the Finance Forum 

at AOW 2020. 


INTERVIEW 

PASA exploring 

South Africa’s 

MANY PROSPECTS 

Dr Phindile Masangane joins Petroleum Agency South Africa (PASA) as Chief Executive Officer at a time 

when the country is developing a domestic gas market anchored on indigenous gas production. This is 

something that she looks forward to and can draw on her experience to contribute towards achieving. 

Please tell us about the history of Petroleum Agency SA. 

Petroleum Agency SA (PASA) has its roots in the Petroleum Licensing 

Unit of the then national oil company, Soekor (the predecessor of 

PetroSA). In 1999, following the Norwegian model, it was decided that 

regulation of the oil and gas upstream industry should be separated 

from the national oil company, and the Agency was formed through a 

ministerial directive. 

The Agency has successfully attracted major explorers to South 

Africa and facilitated the acquisition of many new large seismic surveys 

and some exploratory drilling, through a period affected by legislative 

issues and a major oil price crash. The company has grown from an 

organisation of about 25 staff members to 85 today and is held in very 

high regard by the local and international oil and gas industry that it 

serves. Currently, the Agency is actively involved in shaping the new 

stand-alone upstream legislation and in guiding government with its 

decisions regarding the possible exploration for shale gas. 

What is PASA’s core business function? 

PASA has three main functions, as follows. The first is to attract 

investment to South Africa’s oil and gas upstream industry, in other 

words, investment into exploration and production of oil and gas in South 

Africa. We have a team of geologists and geophysicists who interpret data 

gathered through past exploration activity to determine prospectivity, 

and use this to attract exploration companies to South Africa. 

The second function of PASA is to regulate the upstream industry in terms 

of the Mineral and Petroleum Resources Development Act, its regulations 

and other applicable legislation. The Agency has staff responsible for 

ensuring legal, technical and environmental compliance as organisations 

enter into contracts with the state to explore for oil and gas. 

The third function is to act as the national archive for all data and 

information produced during oil and gas exploration and production 

in South Africa and to curate and maintain this data for use and 

distribution. 

Other functions include advising the government on any issues 

pertaining to oil and gas as well as carrying out any special 

projects, as directed by the government. 

What is PASA’s purpose in South Africa’s energy sector? 

From the above, it is clear that the Agency is the regulator 

for South Africa’s oil and gas upstream industry. However, 

the Agency by no means sees its role as only reactive. On the 

contrary, it is one that is proactive and the Agency’s purpose 

is to facilitate and regulate oil and gas exploration to achieve 

production of indigenous oil and gas. This will ensure energy 

security and bolster economic growth, and play a strong role in 

addressing the eradication of poverty in South Africa. 

South Africa has committed to reducing its carbon footprint 

and natural gas can play a role in this. South Africa is currently 

heavily dependent on coal as a primary energy source and the 

substitution of natural gas for some percentage of electricity 

generation, as envisaged in the National Development Plan, could 

assist with South Africa reaching its goals in terms of carbon 

emissions. The Agency’s main role in this is to attract and 

facilitate the activities of explorers for indigenous gas. 

You have recently taken over the position as CEO of PASA – and you are 

the first formally appointed female CEO. Can you please share with us 

some of your ideas in terms of plans and strategies for growing and 

improving PASA. 

South Africa has a very good petroleum resource potential which 

remains unexplored. Before 1994, we didn’t have international 

oil companies in the country due to political sanctions. So all the 

exploration activities for oil and gas in South Africa were undertaken 

by the then state-owned company, Soekor (pre-cursor of PetroSA). 

Oil and gas exploration is a highly capital intensive 

and high-risk business that cannot be left to a national oil 


INTERVIEW 

company to do alone. In the democratic era, we 

have attracted a number of international oil and gas 

companies including the majors like Shell, Total and 

ExxonMobil and have seen a number of our blocks 

being licensed. Significant exploration activity in terms 

of 2D and 3D seismic data collection has taken place 

since then, mainly by international oil companies. 

We are at the stage where we need to enter the next 

phase in terms of exploration – that of significant 

drilling activities. This is what we need: a move to 

proving the resources we have. That would be the 

game-changer for South Africa’s upstream oil and 

gas industry. The recent discovery by Total and its JV 

partners in Block 11B/12B (Brulpadda) is the first giant 

step in that direction. 

Offshore, there is currently ongoing exploration of 

the prospects close to the Brulpadda discovery. Odfjell’s 

Deepsea Stavanger oil rig is on its way to South Africa 

from Norway, and should arrive around the 12th of 

August. It will drill the Luiperd (more correctly the 

Luiperdpadda) prospect which is the second of five 

prospects in the group. There is an option to retain the 

rig in South Africa for further drilling. The Brulpadda 

well discovered light oil and gas condensate, but the 

phase in the other prospects can only be determined 

through drilling. Future development of the 

discovery is highly dependent on the 

success of this further drilling. Possible 

development could see gas condensate 

being piped to the PetroSA 

facility in Mossel Bay, but these 

decisions are ultimately up to the 

operator, Total, and its partners. 

My role is to work with industry 

and the department to fast-track 

these developments including 

finalising the Upstream Resource 

Development Bill. As we enter this 

phase in our industrial development, 

we want to ensure that it is an inclusive 

and diversified industry in terms of race, 

gender and participation of SMEs. 

What would you consider to be PASA’s biggest 

challenge/s ahead? 

South Africa is playing catch-up 

in terms of upstream oil and 

gas development compared to 

other countries in the region. 

With the correct policies, 

fiscus proposition and 

domestic industry off-take 

opportunities we can win. 

PASA’s challenge is to ensure that both 

international and local energy companies 

see this value proposition with South Africa 

and choose our country. In this low oil and 

gas price environment, companies are 

inclined to cut back on capital investments 

and we need to partner with them to sustain 

the momentum. 

Upstream oil and gas industry is highly 

capital intensive, high risk in the early 

stages and requires highly specialised 

skills. So local small and medium 

companies tend to find it difficult to source 

funding for participating in the industry. 

Our challenge is that as a regulator acting 

on behalf of the government and the people 

of South Africa, we have to find solutions 

to these challenges so that South African 

companies can meaningfully participate in 

this strategic industry. 

What do you predict the company’s biggest 

success will be in the future? 

A vibrant upstream oil and gas industry 

that contributes to the security of 

energy supply of the country 

and the economy having a 

substantially reduced 

dependence on 

imported gas. 

Dr Phindile Masangane, 

CEO of PASA 

DR PHINDILE C MASANGANE 

PHD CHEMISTRY, MBA, BSC. 

(MATHEMATICS & CHEMISTRY) 

Dr Masangane was appointed as the 

CEO of the South African upstream 

oil and gas regulatory authority, 

Petroleum Agency South Africa, in 

May 2020. 

Before then, Dr Masangane was 

an executive at the South African 

state-owned energy company, CEF 

(SOC) Ltd, which is the holding 

company of PASA. Dr Masangane 

was responsible for clean, renewable 

and alternative energy projects. In 

partnership with private companies, 

she led the development of energy 

projects including the deal structuring, 

project economic modelling and 

financing on behalf of the CEF Group 

of Companies. 

Her responsibilities also include 

supporting the national government 

in developing energy policy and 

regulations for diversifying the 

country’s energy mix. 

In 2019, Dr Masangane was Head 

of Strategy for the CEF Group of 

Companies where she led the 

development of the Group’s longterm 

strategic plan, Vision 2040+ 

as well as the Group’s gas strategy. 

From 2010 to 2013, Dr Masangane 

was a partner and director at KPMG, 

responsible for the Energy Advisory 

Division. In this capacity, she successfully 

led the capital raising of 

$2-billion for the Zimbabwe power 

utility, ZESA/ZPC’s hydro and coal 

power plants expansion programmes.

Gain your competitive 

edge with Nemesis 

Nemesis Accounting was born in 2005, with the objective to bring about an holistic approach to business 

operations and business owner integration that ultimately flows into the sustainability of a business. 

Opportunity magazine speaks to the owner of Nemesis Accounting, Shani Naidoo. 

PROFILE 

From 2010 onwards, Nemesis Accounting has grown steadily, 

broadening its client base scope to international markets. Its 

international clients included Ferrero Rocher, Hitachi Power 

Europe (a Madupi Power Station project), Springer Germany 

(publisher) and current KPMG international clients that operate 

in South Africa. Nemesis continuously adapts to market requirements 

so as to better service its clients. 

Please elaborate on the services Nemesis Accounting provides. 

Besides general accounting, tax and financial statement preparation, 

we have a specialised service profile comprising of: 

• Public officer services to international companies operating in SA 

• Strategic Business Advisory Service 

• Lean start-up business approach 

• Financial literacy/management 

• Financial statement reviews 

• Business internal reviews and compliance 

Shani, you are the founder of Nemesis Accounting. Please tell us about your 

journey before you started the company. 

After obtaining my CMA qualification, I started working in the 

insurance and banking industry for the first four years of my journey. 

In 1999, I had the opportunity to enter the accounting, compliance 

and tax fields at an audit firm in Johannesburg. I was exposed to the 

audit environment, tax compliance, SARS, and the execution of these 

services. This was the beginning of a career that was to change so 

much without me realising it at the time. After six years, I had to 

resign for family reasons. It was towards the end of 2005 that I decided 

to branch out and begin my career as a female entrepreneur. 

Since 2005 to date, I have obtained a few more qualifications. Starting 

with my CMA qualification, I moved on to acquire the following 

additional qualifications: a registered FAP (financial accountant 

in practice), CTP (certified tax practitioner), BRP (business rescue 

practitioner), Internal Audit Certification, Master NLP Practitioner 

(neuro linguistic programming) as well as a GCologist – GC Index 

accredited facilitator and trainer (UK). 

From 2005 to 2007, I served on the EXCO at Midrand Chamber of 

Commerce as financial director/treasurer. I also hosted tax workshops 

for small business through the Chamber. 

In 2010, Nemesis Accounting was nominated as Small Business 

Entrepreneur of the Year by the NSBC. I completed the internal 

audit certificate programme at the University of Pretoria in 2014. 

The following year marked a new venture as a director of Business 

Acceleration Specialist (Pty) Ltd, teaching business sustainability 

skills and development strategies for small business. I completed the 

Advanced Business Rescue Practitioner qualification that was offered 

by the Law Society and UNISA in 2018. 

In August of 2018, Nemesis Accounting hosted its first Women’s Day 

event at our offices in Kyalami, Business Woman of the Future. It was 

a very transformational experience and well received. The next month 

marked the birth of a new company, SME Warrior (Pty) Ltd. Geared 

for entrepreneurs and business owners alike, this company’s focus 

is training and development of SMEs using NLP and psycho-social 

methodologies for the application and execution of the workshops and 

training material. Start-ups hold a special place and we have special 

course formulations tailored for them. 

I qualified as an NLP practitioner in 2018 and in 2019, I completed 

my Masters in Neuro Linguistic Programming. Being able to maximise 

the potential of our brain functioning to be our absolute best in what 

we do and how we live, is what brings the magic to the table in our 

training and development. 

In March 2019, together with Y-Connect, we presented the 

interactive and activity-based Ignite Your Sales & What’s Your 

Business Money Game workshop. A very new and different approach 

to business and finance was showcased. NLP-based methodologies 

were applied in the workshop. 

Later that year, I embarked on studies with the GC Index in the UK 

and qualified as a GCologist – facilitator and trainer. The GC Index is 

a methodology and approach to maximising the highest-functioning 

element in one’s composition as a person/worker/manager/CEO. 

The profiling mechanism enables various levels of management to 

transform their existing team and organisation dynamics to that of 

game-changing executioner, ultimately improving the organisation’s 

bottom line and the people involved too. This is an exceptional business 

tool that I am using with my clients and will be using in SME Warrior 

with the training and development workshops and programmes. 

In January 2020, I was appointed as financial director at Safety 

Boot Camp (Pty) Ltd – a company involved with evolved safety 

training execution and implementation based on military and black 

ops methodology. This type of safety training is not applied in South 

African training situations. Safety Boot Camp focuses on mining, 

engineering, coal and energy safety applications, which have a 


of Legal, Business, Finance and Entrepreneurship and of People 

Performance and Development. 

Why should companies choose Nemesis Accounting? 

We are geared for the South African SME. Having been through 

the low end of starting a business to where we are now, puts us in 

a synergistic position with South African businesses. Also, the fact 

that we are using psycho-social methodologies in our problem-solving 

applications with our clients has shown us that this is the way to go to 

achieve impactful results. We serve an international client base and 

have been since 2010. Our international clients are all referrals from 

KPMG. We have intensive experience with the South African Reserve 

Bank and international transacting. The nature of our game is problem 

solving and advancement. 

huge CSI impact in terms of social development and socio-economic 

upliftment and sustainability. SME Warrior and Nemesis Accounting 

are involved from a training and learning perspective for CSI and 

socio-economic execution and development. 

What has been the highlight of your career? 

2010: Nomination for Small Business Entrepreneur of the Year 

2018: Our first Women’s Day Event 

2019: Qualifying as a GCologist – GC Index (UK) accredited facilitator 

and trainer and Masters NLP practitioner 

2020: The launch of SME Warrior Entreprenuer Academy. An online 

platform of learning and development comprising of the Schools 

What should we hope to see from Nemesis Accounting in the near future? 

As we stand now, we are restructuring our service offerings to include 

business advisory service as well. We have been working on this for 

the last year and this will be one of our new features. We will be 

offering this and additional customised offerings to small businesses. 

What is your personal mission for Nemesis Accounting? 

My purpose is to utilise all my qualifications and skills for the 

benefit and upliftment of skills development and enhancement in a 

forever-changing economy. The goal is to bring about life-changing 

sustainability and transformation to businesses, business owners and 

individuals in their personal capacities. 

How has Covid-19 impacted your business? 

At the onset of Covid-19, we already knew the biggest dip would be 

the small business clients. Fortunately, due to our international client 

base, this has cushioned the impact a bit. We are continuing and have 

made slight changes to mitigate further effects. 

PROFILE 

THE COVID-19 NEW BUSINESS WOMAN OF THE FUTURE 

SME Warrior will be hosting a virtual seminar looking at the 

current/post Covid-19 pandemic business woman. The seminar 

sets out to address the challenges that lie ahead for women in 

business current and post-coronavirus pandemic. It will probe 

what lies ahead for her, the new trajectory she will face, a new 

way of thinking, new habits and the grounded intrinsic values 

she will need. 

Founder of SME Warrior and Director 

at Nemesis Accounting, Shani Naidoo 

feels that irrespective of the Covid-19 

pandemic, the gains that have been 

made so far in addressing inequalities 

faced by women in business have 

been quite reserved. 

www.kearney.com 

“Even before the coronavirus pandemic, women have always 

been marginalized when it comes to the business world,” says 

Naidoo. In 2017, Statistics South Africa found that despite 

women making up just over half of the population, they remain 

relatively unrepresented in positions of authority and power. The 

same report by Stats SA found that out of the top 40 JSE-listed 

companies, only one company had a female CEO. 

Join us on 28 August 2020, as we talk about these inequalities 

from the past, the challenges and who women will need 

to become to surpass this now and continuing after the 

Covid-19 pandemic. For any enquiries and to reserve your spot, 

email info@smewarrior.biz or shani@nemesisaccounting.co.za. 

Follow our social media platforms: LinkedIn: SME Warrior Za 

Facebook: SME Warrior 

Twitter: smewarriorza 

Awaken the Warrior Within

The geographical coordinates to the new container terminal on reclaimed land at the Port of Walvis Bay. 

A port on the southwestern part of Africa equipped with infra and super infrastructure 

that gives clients fast, efficient and safe passage of cargo into and out of Africa. 

We are NAMPORT; Africa’s express hub to international markets.

TRANSPORT 

TECHNOLOGY: 

transforming 

railway 

transportation 

Railway transportation has a long history. Although the basic concept of low-friction 

wheels on rails remains the same, the implementation has undergone significant 

changes, buoyed by multiple technological interventions. 

Technological innovations are expanding the 

capabilities of railway systems and helping 

to achieve faster speeds, greater capacity and 

better safety to compete with other forms of 

transportation. Technology has transformed the 

way the industry works globally, fuelled by railway 

operators’ eagerness to reap benefits by making their 

operations more efficient, safe and profitable. 

Technology has the potential to impact five key dimensions 

of rail transportation (see figure below right). 

TRAIN OPERATIONS EFFECTIVENESS 

The effectiveness of train operations is best measured 

through asset reliability, utilisation, and employee productivity. 

Technology can help improve asset reliability 

through sensor-based condition monitoring and datadriven 

predictive maintenance. Decision support systems 

can play a strong role in enhancing asset utilisation and 

employee productivity. 

___ __ 

BELOW 

Technology has the 

power to improve 

five dimensions of 

rail transportation. 

Source: 

Kearney analysis 

SAFETY ENHANCEMENT 

Technology can make train operations safer by detecting 

flaws in the tracks, remote monitoring the tracks, 

digitising and automating maintenance, and improving 

basic processes such as welding and grinding. 

Improvements in signalling and telecommunication, 

crash safety of rolling stock, and surveillance of human 

operations can reduce errors and lessen the impact 

of accidents. 

INFRASTRUCTURE UPGRADES 

Mechanised construction can enhance the speed for 

infrastructure upgrades (track laying and electrification) 

while improving cost-effectiveness. 

Organisation 

capability 

enhancement 

Passenger 

experience 

improvement 

Safety 

enhancement 

Technology 

in railways 

Train 

operations 

effectiveness 

Infrastructure 

upgrades 


TRANSPORT 

PASSENGER EXPERIENCE IMPROVEMENT 

The passenger experience is formed at each step of the journey – 

from planning a trip and booking a ticket to travelling to the railway 

station, arriving at the station, and travelling on the train. Technology 

can affect each stage of the experience. Seamless availability of 

information for planning, omnichannel ticket booking, smart railway 

stations, value-added services such as Wi-Fi and infotainment, and 

accurate train tracking based on GPS are just a few examples of ways 

that technology can enhance the passenger experience. 

b) For signalling-related interventions, invest in the European Train 

Control System (ETCS) level 2 for high-density routes to increase 

network capacity and maintain the required safety standards. 

c) For rolling stock, fast-track the switch of passenger rolling stock 

to Linke Hofmann Busch (LHB) coaches to minimise fatalities. 

d) Increase view of personnel with interior and exterior locomotivemounted 

video surveillance to improve monitoring. 

2 | INFRASTRUCTURE UPGRADES 

Three recommendations can lead to faster and more robust infrastructure 

upgrades: 

a) Invest in track-laying machines for mechanisation of construction. 

b) Increase the rate of electrification through machines such as the 

self-propelled overhead electrification laying train (SPOLT). 

c) Proliferate use of prefabrication for construction elements. 

3 | TRAIN OPERATIONS EFFECTIVENESS 

Four recommendations are designed to increase asset availability 

and utilisation: 

a) Invest in technologies such as complete train scanners 

for improved diagnostics and maintenance. 

b) Use operations optimisation tools for better management and 

performance of trains, rakes, locomotives and crews. 

c) Digitise processes to enhance work quality and lower costs, 

thereby reducing reliance on labour-intensive processes. 

d) Use distributed power to improve the efficiency of train operations 

with coordinated acceleration and deceleration. 

ORGANISATIONAL CAPABILITY ENHANCEMENT 

Technology can have a powerful impact on an organisation’s capability 

through effective training and assisting in decision-making. With the 

introduction of virtual reality (VR) and gamification that can simulate 

real-life scenarios, training has been revolutionised. IT dashboards 

and management information systems have been used extensively 

across industries to enable data-driven decision-making. 

In a recent joint report by the Federation of Indian Chambers of 

Commerce and Industry (FICCI) and American global consulting 

firm, Kearney, they aimed to analyse the technology solutions 

and best practices used by global rail systems to understand how 

Indian Railways can improve the effectiveness of its operations. 

These solutions and practices can also be used in a South African 

context. The solutions are structured across the five dimensions 

mentioned above. Following are some of the study’s key insights 

and recommendations across these dimensions: 

4 | PASSENGER EXPERIENCE IMPROVEMENT 

To retain the passengers that the railway carries, enhancing the 

passenger experience will be crucial: 

a) Establish smart railway stations by implementing access control 

at entry points, provide accurate real-time information, and put 

interactive solutions in place. 

b) Upgrade the ticketing experience with seamless integration 

across platforms and open-loop smart cards. 

c) Enhance the train experience with services such as infotainment 

and app-based systems. 

5 | ORGANISATIONAL CAPABILITY ENHANCEMENT 

Two recommendations aim to enhance capability and improve 

management reporting: 

a) Use training simulators and virtual reality training systems 

to improve personnel capabilities. 

b) Enhance decision-making by improving information management 

with management reporting dashboards. 

1 | SAFETY ENHANCEMENT 

Four recommendations focus on achieving zero fatalities: 

a) For track-related interventions, introduce B-scan ultrasonic rail 

flaw detection (both non-stop and stop-and-verify systems) and 

track inspection with automated high-speed test trains. 

Implementing these technology solutions will be essential for rail 

transport in South Africa to get closer to the world-class standard for 

train operations. However, selecting and implementing technology 

as well as obtaining the optimum economic benefits will require 

adopting innovative procurement models. 



SeaRail is a logistics company that operates a 3.6-hectare Dry Port 

facility in Walvis Bay, Namibia, located within the boundaries of 

the Port of Walvis Bay (known as Namport). 

ONE-STOP SHOP | SeaRail offers an integrated portfolio of services 

that position it as a one-stop shop for various logistics needs. 

The aim is to provide clients with total logistics solutions. 

CONNECTIVITY | Corridors leading to and from the port are safe 

and have well-maintained roads. 

OUR VISION | To be the leading provider of transport and logistics 

solutions for importers and exporters globally. 

OUR MISSION | Providing efficient, safe and cost-effective port 

and logistics services to our customers. 

OUR SERVICES 

Project cargo handling & storage | Bonded facilities 

Freight forwarding logistics | Customs brokerage 

Container & breakbulk handling | Cartage & transportation 

Ro-Ro vehicle handling 

| Reefer plug-in points 

General & specialised storage and warehousing 

Value added services 

• De-stuffing & stuffing containers 

• On-site customs/vet inspections 

PROFILE 

ADDRESS Corner 5th Road & 5th Street, 

Lagoon, Walvis Bay, Namibia 

TELEPHONE +264 64 203434 

EMAIL info@searail.com.na 

WEBSITE www.searail.com.na 

FACEBOOK @SeaRailBots

• mechanised sleeper replacement, 

• railway construction and rehabilitation, ballast 

tamping, regulating and screening, 

• overhead maintenance, 

• rail profile rectification, 

• rail flaw detection, 

• drain cleaning, 

The root • rail signaling 

future 

& OHTE, and 

Your all-African solution to upgrading the rail network 

• smart rail. 

in Sub-Saharan Africa 

Operating from Kimberley in the Northern Cape, Rail 

Contact details 

2 Rail has been in the industry for close to a decade. Rail 

Tel: +2711 898 6800; Mail: info@lenningsrail.africa 

2 Rail manufacturers pre-stressed PY and P2 concrete 

railway sleepers in compliance with SABS ISO 9001- 

2000 standards. The sleepers are manufactured under 

technical license from Rail One. Rail 2 Rail is one of the 

biggest manufacturers of concrete sleepers in South 

Africa. With the capacity to produce 400 000 sleepers 

per annum, which are transported via a rail siding all 

of African mobility 

across South Africa, Rail 2 Rail, powered by Mathupha 

Capital, is the only majority black owned supplier of 

concrete sleepers in South Africa. 

Contact details 

Tel: +2787 330 2221; Mail: info@rail2rail.co.za 

Mathupha Capital is a 100% black-owned rail infrastructure solutions provider founded in Johannesburg, 

South Africa. The name Mathupha Capital was derived from the need to stay relevant and represent the market 

we compete in as an investment company, hence the modern take to the African name in the term “Capital”. 

PROFILE 

Mathupha represents our roots. This is our Chairman’s 

family’s clan name and it speaks to our lineage. It 

represents where we come from and who fuelled the drive 

to create such a successful company. We believe that our 

foundation and where we come from propels us to be the 

best that we can be. Honouring our heritage daily clears the path for 

us to reach even greater heights. 

Mathupha Capital’s ultimate vision is to be the leading turnkey 

rail solution provider on the African continent. This is no easy task 

but we are confident in our ability to reach this ultimate goal. We are 

the future of African mobility. 

Mathupha Capital is the holding company and 

100% owner of Rail 2 Rail and Lennings Rail. 

We also believe in not only creating a future that 

benefits us and the industry, but we also believe in 

a future that benefits the country and continent at 

large and its communities, hence the establishment 

of the Mathupha Foundation. 

Rail 2 Rail operates from Kimberley in the 

Northern Cape and has been in the industry for 

close to a decade. 

Rail 2 Rail is the second largest manufacturer 

of concrete sleepers in South Africa and is the 

only majority black-owned supplier of concrete 

sleepers in South Africa with a capacity to produce 

over 400 000 sleepers per annum. Rail 2 Rail 

manufacturers pre-stressed concrete PY and P2 

railway sleepers in compliance with SABS ISO 9001-2000 standards. 

These sleepers are manufactured under technical license from Rail 

One, a leading supplier of innovative track systems for passenger, 

freight, and heavy-haul transport based in Germany. 

Lennings Rail operates from Boksburg in Gauteng and is the 

oldest mechanised track construction and maintenance business 

in Africa with roots dating back to 1931 and focuses on turnkey 

mechanised railway development, construction, rehabilitation and 

maintenance of track infrastructure work systems. 

Lennings Rail is highly differentiated in this industry because 

of its in-house engineering capabilities that can repair and build 

machinery components on-site using mostly local 

suppliers, thereby optimising downtime on occupations. 

Our service offering under this subsidiary includes 

mechanised sleeper replacement, railway construction 

and rehabilitation, ballast tamping, regulating and 

screening, OHTE maintenance, rail profile rectification 

(grinding), rail flaw detection (rail breaks) and drain 

cleaning. 

Lennings Rail also has capabilities in rail signalling 

and OHTE (incl. substations) as well as smart rail. Through 

this subsidiary, we are passionate about migrating 

into the digital environment by offering turnkey rail 

infrastructure automation, rail signalling, metering and 

monitoring, telecoms, theft and vandalism prevention, 

automatic fare collection and maintenance. 

Through Lennings Rail we have projects 

spanning South Africa and other African countries 

such as Mozambique and Namibia, amongst others. 

The Mathupha Foundation is the corporate 

social investment arm of the group and its 

subsidiaries, and its primary goal is to build a truly 

liberated and successful South Africa by providing 

and supporting every member of the family to be 

functional and independent. The foundation is 

founded upon four key pillars; supporting the girl 

child, boy child, entrepreneurs and also focusing 

on rural development. 

As an organisation, we believe that we have to 

be the change we want to see in the world, be it 

through our subsidiaries or the foundation. 


TOGETHER 

WE CAN 

PROFILE 

Tshepo Kgare (Railway Safety Regulator: ACEO) 

shares her first-hand insight into what the RSR 

is doing to keep their teams, clients, suppliers 

and the public safe and on track for a brighter 

South African economic future, while making 

significant strides into empowering women 

and keeping them safe at work. 

South Africa is at a crossroad and need the intervention 

of industry roleplayers, including members of society. 

Since the lockdown, the rate of theft and vandalism of 

infrastructure has escalated exponentially. During the 

same time, there has also been a rise in gender-based 

violence where women cruelly lost their lives. 

While we lament the death of women who are often killed by 

people they know, we should be mindful that female workers, 

particularly female train drivers, are often victims of crime 

while executing their duties. 

The general corporate response to affirmative action in the 

railways has created a highly visible but often vulnerable 

female workforce. However, if we are to attract more female 

train drivers and bright young female engineers to the rail 

sector, we will have to ensure that they are not deterred by the 

prevailing external forces. 

“Let’s ensure 

we protect our 

rail workers.”

South African women have become increasingly 

prominent in sectors that were previously dominated 

by men. However, the representation of female 

engineers in the rail sector is still disproportionate. 

“I am passionate about young women taking up 

careers in science, technology, engineering and 

maths (STEM) sectors,” says Tshepo Kgare, RSR 

ACEO. The railways offer exciting career paths 

such as railway inspectors, human factor specialists 

and Overhead Track Equipment (OHTE) specialists 

among others. 

The Association of South African Women in 

Science and Engineering, under the helm of the 

University of Cape Town states that South Africa 

has a critical shortage of trained technological 

professionals to the degree that there was only 49 

scientist and engineers involved in research 40 

years back. 

The RSR views the empowerment of women in 

science and engineering as a business imperative 

to build an inclusive community. The Regulator 

follows equitable employment and skills development 

practices, nevertheless have to acknowledge that the 

sector is still miles from levelling the playing field. 

____ __ ___ __ _ _ 

“I am passionate about 

young women taking 

up careers in science, 

technology, engineering 

and maths (STEM) 

sectors.” – Tshepo Kgare 

_____ __ ___ __ _ _ 

According to the ACEO, Tshepo Kgare, we have to be 

the change we want to see. 

“We need to encourage girls to push the boundaries 

and to reach fearlessly for what they want. Together we 

can disrupt the collective barriers that impede women 

from entering the rail sector,” said Kgare. 

LET US CONTINUE TO PROTECT OUR RAIL ICONS 

Covid-19 has proven to be a disruption not only to the 

economy and health system, but to all facets of life. To 

this effect, rail is no exception. The nationwide lockdown 

resulted in most rail operators suspending their 

operations, while those who remained to operate did so 

under strict regulations and restrictions. 

As the country moved to Alert Level 4 of the lockdown 

in May, the Minister of Transport, Honourable 

Fikile Mbalula issued directives to address, prevent and 

combat the spread of Covid-19 in the rail operations. 

As custodians of rail safety, the RSR played a central 

role in ensuring that rail operators comprehend and 

comply with the directives. 

At the heart of the directives was an entreaty to operators 

to demonstrate the health and safety measures 

put in place to ensure that their operations are compliant 

to the prescribed regulations. This encompassed, 

inter alia, the protection of rail workers. 

To accentuate on the clarion call to protect rail 

workers, the RSR launched the Siyabavikela Campaign 

at the beginning of June. The campaign which focusses 

on protecting rail workers aims to heighten awareness 

and reinforce the compliance that is required from 

operators as far as social distancing and personal protective 

equipment is concerned. 

The campaign has been received very well by rail 

operators who responded by sharing photos of rail 

employees wearing masks, maintaining social distancing 

and sanitizing their hands among other things. 

These responses, coupled with the Covid-19 response 

plans received from operators, as well as Covid-19 

reports and updates, gives the Regulator comfort 

that the industry is on the right track. In the words of 

President Cyril Ramaphosa, “The task of dealing with 

the coronavirus pandemic is like running a marathon 

and not a sprint.” 

The World Health Organisation has also cautioned 

that the coronavirus pandemic will be with us for quite 

some time. In light of this, the ball is in the court of 

all rail stakeholders to ensure that we fight with the 

pandemic and continue to protect our rail icons! 

___ __ 

The RSR is a 

government agency 

established in terms 

of the National 

Railway Safety 

Regulator Act, 

No 16 of 2002 (as 

amended) to oversee 

and enforce safety 

compliance by all 

railway operators 

in South Africa, 

including those 

of neighbouring 

states whose 

rail operations enter 

South Africa. 

PROFILE

TECHNOLOGY 

Are you missing out 

on the TRUE 

AI? 

potential of 

Artificial Intelligence is top of mind, but is its impact understood? 

Research suggests that the short-term impacts are vastly 

overstated and the longer-term implications remain unexplored. 

We see this same misapplied focus in enterprises where efforts either target 

micro-sized use cases with disproportionate expectations of returns or 

oversized, abstract dystopian concepts like replacing large chunks of 

the workforce. The structural implications are often unexplored. For 

example, with the adoption of smartphones and mobile broadband, the 

effect on the quality of phone voice connections is insignificant compared with 

the effect of Artificial Intelligence (AI) on industry value chains and the creation 

of new ones like the sharing economy, with disruptors such as Uber and Airbnb. 

A similar wave of structural change is likely with the widespread adoption of 

AI – embedded AI. Embedded AI refers to the deep intertwining and widespread 

adoption of AI in every step of the value chain (think Internet). Here’s what 

organisations can expect from a world of embedded AI. 

would be continually tested against claims, which 

could reimagine the “actuarial” model upon which 

DISRUPTING INDUSTRY VALUE CHAINS 

the insurance industry is based. Insurance premiums 

Embedding AI in the organisation has the potential to disrupt entire business measured in cents, anyone? 

models, much the way Amazon is using digital technology to upend retail. 

For example, consider the impact these changes could have on the insurance RECONFIGURING CURRENT OPERATIONS 

industry. Dynamically mining consumer preference and behaviour data could The multitude of micro use cases of AI being considered 

lead to faster, more accurate and personalised risk profiles. These profiles today is premised on wildly unrealistic expectations of 


4 FACTS 

EVERY MANAGER 

SHOULD KNOW 

ABOUT AI 

FACT 1: THE AI BOOM IS SUSTAINABLE AND SHOULD NOT BE IGNORED 

For the first time, machine-learning algorithms are beating humans in tasks such as image 

recognition and voice-to-text translation, and complex games such as Go. This AI boom is 

fuelled by a convergence of three factors: a breakthrough in deep-learning algorithms, the 

proliferation of big data (structured data) to train these algorithms and an exponential 

speedup in processing power for machine-learning hardware, such as the graphics processing 

unit (GPU) chipsets that cut down a machine’s training time from months to days and hours. 


TECHNOLOGY 

impact. The true value of embedding AI in current 

operations is reconfiguration, not optimisation. 

For example, leveraging chatbots for customer service 

is a limited and narrow use case – still useful, but not 

game-changing. Embedding a suite of AI capabilities 

in the customer journey: behaviour analysis to predict 

issues/calls, dynamically routing queries based on 

customer context and mood, instantaneous solutions 

and “rebates”, and, yes, traditional chatbots, can upend 

customer service as we know it. Can you imagine a call 

centre without any employees, a call routing 

system without any prompts, or 

perhaps proactive information sent 

to the customer before they make 

a call? When you think about it, 

the answer is, of course, yes. 

AI: EVERYWHERE, 

EVERYONE, EVERY TIME 

AI has the potential to improve 

the lives and efficiencies 

of the workers in this new 

organisational structure. It would 

require companies to treat and 

train AI as a fundamental aspect 

of the business, available beyond 

isolated pockets of expertise. When 

companies enable every employee to 

utilise a suite of AI tools, those employees will 

be empowered to make the best possible decisions 

with the latest information. Embedded AI systems 

deliver data and information, freeing workers up to 

look at the bigger picture. This enterprise AI suite 

could transform knowledge workers’ jobs in the 

same way that Microsoft Office transformed the 

way we communicate. 

LAYING THE GROUNDWORK 

AI’s capabilities will surge in the future as we continue 

to develop exponential technologies, including 

augmented reality, virtual reality, nanotechnology and 

digital biology. To reach this stage of innovation, we 

must start with a solid foundation. 

So go ahead and build your micro-solutions that improve operations and enhance 

your operations now – they will provide good lessons, but perhaps not billions of 

rands, in efficiency. But as you invest in near-term efficiencies, spare a thought 

or two about the bigger picture: How do I embed AI in my business to deliver 

structural change? 

Consider the following when deciding where to use AI for enterprise automation: 

•One-time costs. Assess the initial capital outlay for a new AI solution, such 

as developing an algorithm and acquiring training data. Open-source access to 

algorithms and pay-as-you-go “AI as a service” platforms can lower the fixed-cost 

hurdles, but access to training data can be either an expensive bottleneck or a 

powerful source of differentiation. 

• Switching costs. Evaluate the costs associated with displacing the existing 

solution with an AI solution, including technical hurdles such as the ability to open 

the AI algorithm’s black box to trace and explain decisions and human obstacles 

such as political and cultural resistance to change. 

• Ecosystem requirements. Determine if an integrated solution will require any 

complementary technologies. For example, an AI solution that must be integrated 

with innovative IoT sensors and emerging robotics technology will be more 

complex to adopt. 

• System externality hurdles. Consider the extent to which the AI solution 

could negatively affect third parties that did not choose to use the new technology, 

bearing in mind that the value of the solution will increase as more users adopt it. 

AI automation is rapidly becoming a reality across organisations and value 

chains. Now is the time for forward-thinking business leaders to adopt a 

disciplined, portfolio-based approach to develop machine-learning capabilities, 

data and partnerships to remain relevant. 

FACT 4: ADOPTING AI IS ABOUT MORE THAN TECHNICAL FEASIBILITY 

Some AI applications will be adopted faster than others, even though the technical 

requirements are comparable. Broader solutions can ensure that a company’s portfolio 

of AI initiatives can unlock value in the near term while also paving the 

way for long-term aspirations. 

FACT 3: AI IS READY FOR DEPLOYMENT ON SELECT ACTIVITIES 

The Japanese insurer Fukoko plans to use AI to replace more than two dozen 

human agents who process claims, and Goldman Sachs used machine learning 

to transform its 600-person trader unit into a much leaner 200-person team 

between 2000 and 2016. However, not all organisational activities are suitable 

for AI automation under today’s narrow paradigm. 

FACT 2: AI IS BEING USED ACROSS ORGANISATIONS BUT WITH A LIMITED SCOPE 

So what will AI be able to do for enterprise automation in the next five to seven years? Most experts 

say companies will adopt narrow AI, or supervised machine learning that is focused on one task. AI 

algorithms will be able to use training data to learn how to automate a task, but once the task is 

mastered, the solution will be narrow, and in most cases, the machine will not be able to generalise 

that learning to perform other tasks. Widespread use of broad, human-like general intelligence, in 

other words, unsupervised and context-aware, could be decades away. 

The true value of 

embedding AI in 

current operations 

is reconfiguration, 

not optimisation 


PROCUREMENT 

Becoming 

risk-savvy 

POST-PANDEMIC PROCUREMENT 

POST-PANDEMIC PROCUREMENT 

Procurement is at the heart of Covid-19 crisis management and has taken an active 

role in mitigating the immediate impact of the pandemic. Now, as companies brace 

for the crisis’ long-term impact, a clear shift in mindset is needed. 

Since the Covid-19 pandemic began battering 

the world, procurement professionals of almost 

every company have been rethinking their 

supply risk management capabilities. Most are 

grappling with little else today, as they try to 

figure out how best to cope with the current and lasting 

effects of the crisis. 

How, and what, are they doing? 

To find out, international management consultancy, 

Kearney, recently conducted a global procurement 

survey on the impact of the pandemic. In the survey, 

Kearney asked procurement professionals how well 

prepared they were for the pandemic at its onslaught, 

procurement’s reactions to the immediate crisis, the role 

procurement has played in bracing their companies for 

the crisis’ longer-term impact, and how their mindset 

about broader risk management strategies has changed. 

Here’s what was learned: 

___ __ ____ _ _ 

The pandemic crisis 

has put a dramatic 

emphasis on the 

need for a balanced 

scorecard approach to 

measure the full impact 

of procurement 

___ __ ___ _ 

PLAYING AN ACTIVE ROLE 

Procurement is at the heart of most global companies’ 

crisis management efforts and plays an active role for 

more than 70% of respondents. In these companies, 

procurement is regarded as a peer with the other 

organisational functions. It has a seat at the table and a 

substantial voice in managing the Covid-19 crisis. 

As the interface between the company and its 

suppliers, procurement is in a unique position to 

understand who the most vulnerable partners in 

the supply chain are and take the right measures to 

protect those most at risk. In about 30% of the companies 

– especially those in smaller revenue brackets – 

procurement has taken on a primary leadership role 

and coordinates the cross-functional teams in day-today 

crisis management and operations. 

Some companies, though, are slower in getting their 

herd over water than their competitors as the Covid-19 

pandemic has exposed major weaknesses in their 

supply chains – in particular around S&OP processes, 

inventory control, and stock keeping unit (SKU) 

complexity – which are compounding day-to-day crisis 

management efforts. 

Nevertheless, about 60% of companies have moved 

beyond survival mode and started to look beyond the 

crisis’ immediate impact. 

They are operating in the current environment and 

starting to plan and adapt for the post-recovery new 

normal by assessing the impact of the crisis on their 

broader risk management approach and adapting 

category strategies based on scenario analysis for 

the new normal. Procurement has a significant role to 

play here. 

___ __ 

Today, only 34% of 

companies have a 

well-defined supply 

risk management 

strategy explicitly 

linked to their 

core procurement 

activities and 

dynamically 

refreshed based on 

external situation 

and internal 

demand changes 

(see figure, right). 



PROCUREMENT 

BRACING FOR THE LONG TERM 

A clear call to action is resounding throughout most 

companies – a call urging procurement to do much 

more to improve risk management strategies and 

capabilities in the next 12 months. Almost 90% of survey 

respondents believe the C-suite is fully expecting – and 

is committed – to fundamental improvements in supply 

risk management capabilities. They are convinced that 

much needs to be done in the coming year – and that 

they must start now. 

DEVELOPING A BETTER SUPPLY RISK MANAGEMENT STRATEGY 

Most companies today have a supply risk management 

strategy. But for many, the strategy is basic at best and 

far from robust, and the current crisis dramatically 

surfaced many pain points. They recognise that the 

strategy needs to become much more comprehensive, 

explicit and dynamic. 

It must, for example, be explicitly linked to what’s 

happening externally in the market and internally 

within the company, so it can be dynamically adjusted 

to address these changes. It must be comprehensive in 

measuring the impact on total value at risk, including 

other value dimensions such as cash, growth, innovation 

and enterprise agility. And it must be implemented and 

dynamically refreshed – not just developed and then 

disregarded. These are difficult tasks. 

Today, only 34% of companies have a well-defined 

supply risk management strategy explicitly linked 

to their core procurement activities and dynamically 

refreshed based on external situation and internal 

demand changes (see figure below). With Covid-19 

battering their operations, though, other companies 

are looking closely at reworking their strategies. A 

year from now, another 22% expect to have a robust 

supply risk management strategy in place, giving more 

than half of all companies a sound footing on which to 

prepare for what’s ahead. 

A company’s industry, of course, can affect which 

supply risk management approaches it chooses to 

use, which it uses on an ad hoc basis, and which 

it uses systematically. All finance institutions in 

the survey, as would be expected, apply financial 

risk management. But today 57% of respondents 

regardless of industry apply this approach to 

managing their supply risk. More and more 

companies now realise that to defend against a 

catastrophe such as Covid-19, they must use the full 

array of risk management approaches – and they 

must apply these approaches systematically, not on 

an as-needed basis. 

CHANGING THE MINDSET TO SUCCEED 

AFTER THE PANDEMIC 

Many companies view cost reduction as the key 

– and, often, the only – value delivered by the 

procurement function. They operate with a strict 

cost competitiveness mindset. The pandemic crisis 

has put a dramatic emphasis on the need for a 

balanced scorecard approach to measure the full 

impact of procurement. 

So, in addition to applying the full array of supply 

risk management approaches available, companies 

that see procurement’s potential benefits also 

measure the impact of these approaches across 

all the dimensions in value creation. This does 

not mean that the pressure on competitive costs 

is going away, and many organisations are taking 

steps today to update their category management 

strategies (for example, in commodities in light 

of the recent oil price movements, or in indirects 

where consolidation and demand management 

opportunities exist in some areas). But as the survey 

shows, a large percentage of companies today give 

a high amount of consideration to each of the 

following value-creation dimensions: 

86% | CASH (working capital and terms 

of payment ) 

86% | RELIABILITY (service levels, quality, etc) 

79% | TOTAL COST 

76% | GROWTH (speed to market, innovation) 

72% | AGILITY (end-to-end cycle time and 

reaction to emerging customer needs) 

These companies know that to successfully 

look beyond cost savings and to the 

additional benefits procurement can 

create, they cannot operate with the same 

mindset focused on “cost competitiveness” 

and are starting to shift their mindset to 

“risk competitiveness”. In essence, they 

are becoming risk savvy. 

PROCUREMENT 

CHECKLIST 

• What stage are you 

in today? 

1. Survive 

(focus is on ensuring 

business continuity) 

2. Operate 

(operating in the period 

of high uncertainty) 

3. Adapt 

(preparing for what 

is coming next) 

• What are the key 

weaknesses the 

pandemic crisis has 

exposed about your 

supply chain? 

• What specific actions 

are you taking today 

to take care of the 

most vulnerable of 

your suppliers? 

• How robust are your 

supply risk management 

strategies 

and capabilities? 

• Is the mindset in your 

organisation focused 

on “cost competitiveness” 

or “risk competitiveness”? 

• What actions are 

you taking today 

to be prepared for 

post-recovery? 


SUPPLY CHAIN 

NEW ORDER 

of magnitude 

COVID-19 TEST OF SUPPLY CHAIN 

RESILIENCE 

2019 saw US companies actively adapting to what then felt like a major disruption – the US-China 

trade war. Specifically, US companies sharply reduced imports of manufactured goods from China. 

The shift was sizable, but there was still a sense that manufacturing imports might revert to old 

patterns once the trade war ends. Then everything changed. 

2020 dawned with the disruption of a new order 

of magnitude: Covid-19. At time of writing, the 

full extent of the societal and economic trauma 

the coronavirus pandemic may cause is still 

unknown. But it will be historic. In multiple 

countries, social and economic activity is essentially 

frozen. Governments as dissimilar as the US, Russia 

and Italy are currently scrambling (and struggling) to 

construct a coherent and effective response. The outlook 

is daunting. 

The lessons we must learn from Covid-19 are 

as momentous as they are harsh. While the trade 

war triggered some notable tinkering, the massive 

operational disruption wrought by the coronavirus 

pandemic will compel companies to fundamentally 

rethink their sourcing strategies. 

DOMESTIC OUTLOOK 

Might such a strategic redistribution spur a dynamic 

resurgence of US domestic manufacturing? It seems 

unlikely. The limitations that held US manufacturing 

to flat growth in 2019, even as the trade war put Chinese 

manufacturing at a decided disadvantage, will continue 

to work against a US manufacturing revival. There is 

still a pronounced shortage of skilled manufacturing 

labour, and the long-promised productivity boom via 

automation has yet to be realised. Yes, companies will 

be more inclined to look at new sourcing options, but 

they will still want to place most of their eggs in costcompetitive 

baskets. 

The more likely outcome will be an accelerated 

scattering. Companies that began distributing their 

import supply risk in response to the stresses of the 

trade war will double down on that strategy in response 

to the much more severe disruptions caused by Covid-19. 

In that sense, the trade war may have been a blessing 

in disguise. Unanticipated shifts in US trade policy and 

the resulting retaliatory exchange with China prompted 

companies that had long relied on Chinese suppliers to 

start rethinking old assumptions about where and how 

to source. 

More broadly, by confronting US companies with 

costly disruptions that were largely beyond their 

control, the trade war triggered at least a partial 

awakening to the intrinsic vulnerabilities of modern 

global supply chains. 

Events in 2020 cast the trade war as a mere precursor 

to the far greater economic and operational 

disruptions being wrought by the coronavirus. What 

we are experiencing now demands a more profound 

reckoning. Covid-19 should cause companies to fundamentally 

rethink the criteria they use to shape their 

supply chains. 

COST, RISK AND RESILIENCE 

Three decades ago, many US producers began 

manufacturing and sourcing in China for one 

reason: cost. The US-China trade war brought a 

second dimension more fully into the equation – risk 

– as tariffs and the threat of disrupted China imports 

prompted companies to weigh surety of supply more 

fully alongside costs. Covid-19 brings the third 

dimension more fully into the mix, and arguably to the 

fore – resilience. 

___ __ 

Recent events 

illustrate, with 

distressing clarity, 

that events frequently 

unfold in ways that 

were impossible for 

anyone to foresee, 

shattering the 

assumptions that 

shaped supply 

chain strategies. 


SUPPLY CHAIN 


The current crisis is exposing vulnerabilities that 

cannot be addressed with short-term fixes and minor 

tinkering. Many companies quickly ran out of any 

inventory they were able to stockpile ahead of the 

Covid-19 outbreak. Some with heavy dependence on 

China found they had few alternatives that could help 

see them through the drought. 

We have subsequently learned that the disruption of 

supply from core manufacturing regions of China was 

just the beginning of the havoc to be wrought by the 

coronavirus. Recent events illustrate, with distressing 

clarity, that events frequently unfold in ways that 

were impossible for anyone to foresee, shattering the 

assumptions that shaped supply chain strategies. 

The answer? Companies need to place more value on 

resilience by building supply chains that can nimbly 

sense and pivot in response to unexpected demands 

and disruptions. This is the key to operating profitably 

in the face of ongoing disruptions. 

___ __ ___ __ _ _ 

The current crisis is 

exposing vulnerabilities 

that cannot be 

addressed with 

short-term fixes 

and minor tinkering 

___ __ ___ __ _ _ 

Many supply chain leaders have transitioned from 

the uncertainty by adopting new ways of working to 

stabilise their business. Now it’s time to begin thinking 

strategically about how to position operational networks 

for life beyond the pandemic by designing a supply 

chain that is both resilient and agile, can withstand 

risks to both demand and supply, and can quickly 

respond to shocks. 

The first step is to conduct a rigorous review of the 

impact Covid-19 is having on demand and the corresponding 

performance of the supply chain. This will 

require drilling down to the specifics of how the 

pandemic has already affected demand and how 

demand might change in the future. 

To build a framework for a post-pandemic review, 

considering these impacts of the coronavirus outbreak 

is a good start: 

• Demand has shifted 

The demand for many products saw a rapid increase; 

others saw a rapid decline. Some are no longer a 

priority and may be gone for good. 

• Customer behaviours have changed 

Internet purchasing is skyrocketing in 

some industries, and brick-and-mortar 

retail may never be the same. 

• There are new customers 

People have reprioritised their wants 

versus their needs, and it has affected 

what they buy and who they buy it from. 

• Portfolios are back to the drawing board 

Certain stock keeping units (SKUs) are 

no longer important, and in other cases, 

product needs in a post-Covid world are 

being rapidly redesigned. 

Similarly, the impacts on supply will 

also require a post-pandemic review: 

• Supply chains were disrupted during the pandemic 

The Covid-19 outbreak caused major shifts – from 

transitioning supply planners so they can work from 

home and finding alternative sources for suppliers 

that are under lockdown to keeping employees safe 

and manufacturing capacity available. 

• Some supply areas performed well, others struggled 

New best practices were learned and will be capitalised 

on, and risky practices will be eliminated. 

• Structural elements exacerbated supply issues 

Global supply chains will be questioned as geographies 

experienced the pandemic in phases and 

suppliers, manufacturers and distributors were cut 

off from one another. 

• Technology is essential 

Responding during a crisis requires real-time data 

about where materials and products are as well as the 

status, location and health of employees in plants and 

warehouses. It also requires control towers that can 

orchestrate operations from end to end. 

Historically, operations strategy focused on balancing 

cost reduction and investments to improve availability 

performance and lead times. The business risk was 

important, but it was typically addressed with relatively 

simple approaches, such as maintaining safety stock at 

distribution centres or establishing one-off secondary 

supplier relationships. Responding to a global crisis was 

rarely part of the picture. 

As the world advances towards recovery, a supply 

chain strategy will need to evolve to incorporate the 

lessons learned during this pandemic. That means 

moving away from a narrow focus on cost and 

availability to a more comprehensive perspective that 

incorporates risk and resilience factors. Supply chain 

organisations that are designed to manage the right 

risks in the right way will ultimately beat out the 

competition when the next crisis inevitably strikes. 

___ __ 

Now it’s time to begin 

thinking strategically 

about how to position 

operational networks 

for life beyond 

the pandemic by 

designing a supply 

chain that is both 

resilient and agile, 

can withstand risks 

to both demand 

and supply, and can 

quickly respond 

to shocks. 


E-COMMERCE 

ovid-19 

nd its impact on 

-commerce 

The pandemic has pushed e-commerce and supply chain issues to the top of the CEO agenda – opening 

a window of opportunity for businesses to capitalise on the rapidly expanding online market. 

Covid-19 has triggered exponential growth 

in e-commerce and spurred many smaller 

retailers to get in the game by establishing 

their online offerings. If this shift becomes the 

new normal, now is the time to rapidly define 

omnichannel and supply chain strategies and ensure 

the right structures are in place to support it. 

As consumers become accustomed to the luxuries 

of online shopping, this channel is likely to become 

their preferred way of shopping once the pandemic is 

over. To win in this new normal, retailers will need to 

consider both the immediate and long-term implications 

of consumers’ changing behaviours. 

SHORT TERM 

Establish a competitive e-commerce offering by 

focusing on three areas: 

Business planning and response 

The Covid-19 outbreak has highlighted the importance 

of being adaptable and responsive. During this 

time, traditional demand triggers are not as relevant, 

so new behaviour signals will need to be monitored by 

tracking leading indicators. This will require a twofold 

approach: qualitatively assessing government 

and media messaging and quantitively tracking 

customer data. Also, leading businesses have a welldocumented 

response plan to triggers so they can act 

quickly and decisively. 

E-commerce channel strategy 

Consumers of all ages have been forced to rapidly adapt 

their purchasing behaviours. In the short term, focus 

on establishing or streamlining your online offerings, 

either through an existing website or a business-toconsumer 

marketplace. To drive efficiency, limit the 

initial offering to core products to maximise profits by 

minimising the effort required to establish a product 

range. Effectively managing inventories and narrowing 

the window of time from purchase to shipping will also 

keep customers happy. 

Delivery services 

Forward-thinking businesses understand the capacity 

of their delivery partners and manage costs and 

customer expectations accordingly. To improve delivery 

speed and service quality, examine your delivery 

service agreements and consider whether alternate 

or additional delivery partners are needed. To create 

___ __ 

Effectively managing 

inventories and 

narrowing the 

window of time 

from purchase to 

shipping will keep 

customers happy. 



E-COMMERCE 

a customer-centric and economically sustainable 

delivery service, consider two aspects: consumers’ price 

sensitivity and delivery options such as same day, next 

day, or a specific delivery window. 

LONG TERM 

In the mid to long term, focus on two areas: 

Refine the omnichannel strategy 

The online competition will continue to grow as 

consumers are now accustomed to buying online 

and more businesses are embracing e-commerce. In 

light of these shifts, consider the best way to manage 

your omnichannel strategy. Most businesses either 

sell their products solely on their websites or they 

use a combination of brick-and-mortar marketplaces 

and websites. The most effective approach is to adopt 

a tailored product-range strategy, which can be 

implemented in one of two ways: 

•Offer a differentiated range of products 

Because consumers typically buy different types 

of products online than they do in stores, develop 

an online offering that focuses on the products 

that people tend to buy online. For example, online 

shoppers often buy bulky items that they can easily 

review online, such as kitchen aids and gaming 

consoles, rather than items they want to hold before 

they buy, such as a tennis racket. 

• Sell different products on different sites 

To ensure a clear distinction between product 

quality and to maintain profit margins on premium 

products, consider selling different product ranges 

on different sites. For example, sell premium 

products on your website, and sell standard products 

on marketplaces such as Amazon. 

Optimise last-mile delivery 

Recent events have strained supply chains and revealed 

that businesses with resilient and agile supply chains 

are best suited to adapt to unpredictability. In light of 

the events of the past 12 months and the acceleration 

of e-commerce, consider the level of outsourcing 

versus the strategic investment required to build lastmile 

capabilities. Most companies rely on third-party 

logistics providers. However, a self-managed supply 

chain allows businesses to control services, quickly 

switch or onboard suppliers, and increase security. 

The grocery category is moving toward ultra-fast 

delivery, defined as less than two hours from click to 

delivery. Consumers continue to signal that they prefer 

ultra-fast over in-store shopping or slower deliveries, 

and the Covid-19 e-commerce surge presents shippers 

and logistics providers with significant headwinds. 

There’s a non-linear relationship between cost and 

lead time for last-mile delivery. Lastmile 

costs now play an elevated role in 

ensuring future financial viability and 

sustainable growth. 

As a shipper or logistics provider, if 

you want to play in the last-mile space, 

you will need to tackle the complex 

balance between needs and cost. The 

good news is that your customers, your 

products and your needs – not the 

prescribed chase of the giants – are 

what will truly determine how much 

you should spend on your last mile. 

The needs-based segmentation can appear overwhelming, 

but it can be centred around some important 

dimensions. Three such dimensions are consumer 

centricity and sustainability; reliability and control; and 

flexibility and resilience. 

___ __ ___ __ _ _ 

During this time, 

traditional demand 

triggers are not as 

relevant, so new 

behaviour signals 

will need to be 

monitored by tracking 

leading indicators 

___ __ ___ __ _ _ 

Consumer centricity and sustainability 

As e-commerce accelerates and large players increase 

their influence, you must start obsessing over how 

you are going to provide consumers with unparalleled 

service. Two areas are crucial: 

• Seamless experience 

New e-commerce consumers expect a seamless 

experience across channels. You must design and 

implement a continuous experience across all digital 

(website, mobile application, alerts, etc) and physical 

touchpoints throughout the customer journey. 

• End-to-end visibility 

It’s not merely about delivering at hyper-speed 

and on time. Consumers today want end-to-end 

visibility into the delivery process through nearreal-time 

notifications and pictures upon delivery. 

This visibility is essential to best-in-class customer 

experience. You must develop the technological 

capabilities to provide it. 

___ __ 

As a shipper or 

logistics provider, if 

you want to play in 

the last-mile space, 

you will need to 

tackle the complex 

balance between 

needs and cost. 

The needs-based 

segmentation can 

appear overwhelming, 

but it can be 

centred around 

some important 

dimensions. Three 

such dimensions are 

consumer centricity 

and sustainability; 

reliability and 

control; and flexibility 

and resilience. 


E-COMMERCE 

Reliability and control 

The Covid-19 pandemic emphasised the value of 

meeting service-level key performance indicators 

(KPIs) such as on-time deliveries and first-time 

delivery success. Covid-19 represented a reliability 

test for delivery networks: could their capacity and 

cost structures withstand such peaks? 

• On-time delivery 

You can no longer talk vaguely about “shipping 

in three to five business days”. As you design 

your last-mile delivery strategy, you need to 

align your network design with achievable 

on-time delivery targets. That’s the only way 

to consistently meet customer expectations. 

• First-time delivery success 

The faster you move into e-commerce, the 

more important it is for you to minimise your 

delivery quality defects – customer-reported 

damages, missing packages, incorrect items, or 

incorrect delivery locations. Such defects not only 

disappoint customers but are also exceptionally 

costly. They typically result in customer service 

contacts, promotions, reverse logistics, or loss of 

future business. To meet rising expectations and 

minimise your cost-to-serve, you must succeed in 

first-time delivery. 

• Experimentation to flex 

During the Covid-19 crisis, large players 

experimented with ways to flex their capacity, 

expanded their ability to deliver a wide variety 

of products at hyper-speed, and learned how to 

reprioritise deliveries. Most of their solutions used 

crowdsourcing, some existing in-house and others 

coming from third-party transportation providers. 

• Diversification to reduce risk 

However, when you depend solely on a crowdsourced 

last-mile delivery solution, you increase operational 

risk; you should also seek to diversify your volumes 

across third-party transportation providers. 

It all boils down to cost per package 

Large players keep pursuing faster delivery options, 

which makes it tempting to assume that all categories 

and product segments must be delivered within two 

days, or faster. But if you use this as a blanket strategy, 

your costs will soar. Stop chasing this prescribed 

strategy; instead, perform a needs-based segmentation 

across your products (eg groceries, apparel, furniture) 

and customers (eg metro/rural, subscriber). 

___ __ 

During the Covid-19 

crisis, large players 

experimented with 

ways to flex their 

capacity, expanded 

their ability to deliver 

a wide variety of 

products at hyperspeed, 

and learned 

how to reprioritise 

deliveries. Most of 

their solutions used 

crowdsourcing, some 

existing in-house 

and others coming 

from third-party 

transportation 

providers. 

Flexibility and resilience 

If you have to respond to an unpredicted large-scale 

event by retroactively remodelling your last-mile 

network, that’s costly. Instead, you can ask upfront 

about how network flexibility and resilience could 

control unexpected costs. 

• Large and responsive supply base 

The biggest benefit of crowdsourced delivery 

solutions is that a large and responsive supply base 

can flexibly respond to spikes in demand while 

minimising costs during lulls. 

Different segments of your product-customer 

portfolio have different delivery needs (eg one-two 

hours for urban groceries, same-day for urban apparel, 

five days for rural furniture). Pay particular attention to 

the segments requiring two-day, same-day or ultra-fast 

delivery speeds, because the implications of increasing 

your delivery footprint vary. A well-executed needsbased 

segmentation can reduce last-mile costs by 

20-30% while improving service where it counts by 

10-20% and identifying the right carrier and technology 

partners for execution. 


A BETTER B-BBEE 

SOLUTION FOR ALL 

IT’S A BALANCING ACT OF MAXIMISING THE OUTCOMES OF 

B-BBEE REQUIREMENTS WHILE REDUCING THE COST IMPACT 

AND PROVIDING INCREASED VALUE TO STAKEHOLDERS. 

Over the past decade, we have perfected a sustainable and compliant solution. 

Increased B-BBEE levels 

Through Preferential Procurement, Skills Development and 

Socio-Economic Development 

Reduced financial impact 

Through savings on skills development spend 

No additional administration 

A 51% black-owned, Level 2 B-BBEE and SAQA Accredited organisation, 

Atvance Academy is creating a better South Africa, one learner at a time. 

Partner with us to reduce youth unemployment while gaining business growth. 

Contact us today to be a part of the change. 

+27 (0)10 786 0223 academy@atvance.co.za www.atvance-academy.co.za

Smart logistics 

Fiercely 

precise 

FLANDERS, 

WHERE LOGISTICS 

ENABLES SMART CONNECTIONS. 

In times of globalisation, increasing competition and rapid technological 

development, Flanders is the smart logistics choice. Located at the heart of the 

EU, we offer a perfectly integrated logistics system, which makes distribution 

effortless. Our leading position in different clusters fits your organisation’s 

specialised transportation needs perfectly, no matter what your preferred 

modes. Our experience and skills allow us to master the latest digital 

logistics solutions and to develop streamlined distribution methods. 

Flandersinvestmentandtrade.com 

johannesburg@fitagency.com

Opportunity - Issue 94

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