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Made in Africa: Building The Future of Manufacturing

The annual Manufacturing Indaba provides a platform for international and local industry players in manufacturing to discuss challenges and to share examples and solutions. Some of the 2017 Manufacturing Indaba conference discussions focused on supporting local industry and creating a demand for local goods, contributing to the manufacturing value chain, skills improvement, and initiatives that can assist in moving Africa towards a more advanced manufacturing industry.

Topics and insights from the previous event forms the foundation of the critical themes for the upcoming 2018 Manufacturing Indaba, which has the overarching event theme of “Manufacturing our Future”. Some key points on the required factors for success and the challenges to overcome, as highlighted at the 2017 conference, include:

    FACTORS FOR SUCCESS

  • Reinforcing the culture of entrepreneurship and innovation, supported by expertise
  • Ongoing risk assessment, understanding the market and adapting to change
  • Modern infrastructure: internet, access to new markets, advanced machinery and equipment, specialised and skilled employees
  • Progress from a producer of raw materials (the smallest place in the value chain), to include value added activities
  • High-impact, low-cost interventions (e.g. Pareto and fishbone analysis)
  • Safe, environmentally compliant workplace
  • Capable employees with continuously developing skills
  • Incentive programmes and policies tailored to support industrial development
  • Promoting greater inclusivity, more equitably spread and moving away from false empowerment
  • Investing in business with high labour usage to preserve jobs
  • Achieving greater coherence in localisation
  • Becoming more EFFICIENT and more COMPETITIVE

SOME OF THE CHALLENGES IDENTIFIED

  • Global challenges: low demand and investor confidence, lasting impact of 2008 financial crisis, oversupply in some sectors resulting in cut-throat pricing
  • Impending uncertainty of the 4th industrial revolution and what impact this will have for manufacturers
  • High unemployment rate
  • Wages are increasing and productivity is falling
  • Low levels of private sector investment due to the period of slow worldwide economic growth
  • Domestic market not big enough; we need to be a trading economy. Some import opportunities have closed, but unlike China and India we cannot turn to our local markets
  • Electricity costs are increasing above inflation
  • Marginal effective tax rate is among the highest for manufacturing
  • Skills shortages
  • Inefficiencies in roads and infrastructure

Join us at Manufacturing Indaba 2018 to participate in the debate and to learn what
industry specialists say about Manufacturing our Future in Africa.

REGISTER FOR THE 2-DAY CONFERENCE

EXHIBIT AT THE MANUFACTURING INDABA

Visit our new website: www.manufacturingindaba.co.za to learn more about this prestigious event.

Enquiries: info@manufacturingindaba.co.za

The World Bank Will Stop Fossil Fuel Financing Beginning in 2019

In a move sure to be celebrated by opponents of fossil fuel-based energy, the World Bank has just made a huge announcement at the One Planet summit called by French President Emmanuel Macron. The bank, which provides loans to developing countries to foster economic growth, announced on December 12 that it will no longer offer financial support for oil and gas exploration after 2019.

During the summit, the bank released a statement saying it “will no longer finance upstream oil and gas,” citing a need to change in a “rapidly changing world.” In 2015, the bank previously vowed to have 28% of its portfolio dedicated to climate action by 2020. The bank’s latest statement on fossil fuel financing suggests that it is on course to achieve that goal.

This is yet another blow to the fossil fuel energy industry, and a seemingly significant win for environmental advocates. The economics surrounding the energy sector are increasingly making it more attractive for entities to switch to renewable energy. Across the world, it has become cheaper to build new renewable energy installations than to operate and maintain existing coal power plants.

The World Bank’s plan does lay out a caveat for “exceptional circumstances,” saying that they will consider “…financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Agreement commitments.”

The Paris agreement is a major factor in the decision. The One Earth summit was planned on the two-year anniversary of the historic agreement, which was looking uncertain after the President of the United States, one of the major financial and influential member nations, decided to withdraw. Even so, the agreement looks to be thriving, even in the US, which may reach the goals laid out in Paris against all odds.

Source: futurism

Microsoft’s Bill Gates lauds tech innovations by young Kenyans

Microsoft co-founder and philanthropist Bill Gates has lauded innovations by young Africans – some from Kenya – saying they are already changing the world.

The entrepreneur mentioned innovations by Kenyans several times in his keynote speech during the 14th Nelson Mandela annual lecture series in Pretoria, South Africa, on Sunday.

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“For me, the most important thing about young people is the way their minds work. Young people are better than old people at driving innovation, because they are not locked in by the limits of the past,” he said.

The Nelson Mandela Foundation organised this year’s lecture at the University of Pretoria’s Mamelodi Campus.

Gates said he will meet one of the Kenyan innovators in Durban this week, where he is also attending the International Aids Society conference.

He noted that many of the life-changing innovations across the world have been driven by the youth.

A 21-year-old who founded Kenya’s first software coding school to provide other young people with computer programming skills is lined up for the meeting with the billionaire.

“The real returns will come if we can multiply this talent for innovation by the whole of Africa’s growing youth population. That depends on whether Africa’s young people—all of Africa’s young people—are given the opportunity to thrive,” he said.

Gates also lauded Mpesa mobile money transfer system explaining that it had eased payment and savings opportunities for communities and transformed their lives.

“Countries like Kenya, Tanzania and Nigeria are already investing in the building blocks of this new digital financial platform. And I believe they will see substantial positive returns,” he said.

Gates explained the importance of improved food production and said he had met young crop breeders from Ethiopia, Kenya, Nigeria and Uganda.

“These are examples of the kind of innovators who can drive an agricultural transformation across the continent if they have the support they need. For many decades, agriculture has suffered from dramatic under investment. Many governments didn’t see the link between their farmers and economic growth. Now, however, this misconception is gone,” he said.

The Nelson Mandela Annual Lecture this year was attended by at least 3,000 people including Mandela’s widow Graça Machel, the foundation’s Prof Njabulo Ndebele and the university Vice Chancellor Prof Cheryl de la Rey.

The hour-long lecture also touched on governance, nutrition, education, health and climate change among other topics.

Kenyan Nobel laureate Prof Wangari Maathai delivered the third lecture in 2005.

Other notable figures who have delivered lectures at the event include former US President Bill Clinton, archbishop Desmond Tutu, Chilean President Michelle Bachelet in 2014 and French economist Thomas Piketty last year.

Gates used the lecture to honour former South African President Nelson Mandela and to raise topical issues

affecting the country, Africa and the rest of the world and to lay out his vision of how to create a better world. The theme of his speech was “Living Together”.

Gates said he had admired Mandela, and met him on many occasions. He said: “One topic that Nelson Mandela came back to over and over again was the power of youth,”.

He said while demographically, Africa is the world’s youngest continent, this population must be supported with proper education, nutrition and access to economic activities.

Gates said he was only 19 years old when he co-founded Microsoft in 1975.

“We didn’t feel beholden to old notions about what computers could or should do. We dreamed about the next big thing, and we scoured the world around us for the ideas and the tools that would help us create it,” he said.

“Steve Jobs was 21 when he started Apple while Mark Zuckerberg was only 19 when he created Facebook,” he added.

“African entrepreneurs driving startup booms in the Silicon Savannahs from Johannesburg and Cape Town to Lagos and Nairobi are just as young—in chronological age, but also in outlook. The thousands of businesses they’re creating are already changing daily life across the continent,” he said.

Bill further noted that high HIV infections threaten to roll back the progress the continent has already made among young people.

More than 2,000 young people under the age of 24 are newly infected with HIV every single day, the latest data shows.

The number of young people dying from HIV in Africa has also increased fourfold since 1990.

“If we fail to act, all the hard-earned gains made in HIV in sub-Saharan Africa over the last 15 years could be reversed, particularly given that Africa’s young people are entering the age when they are most at risk of HIV,” he said.

He also expressed his anger that Africa is suffering the worst effects of climate change although Africans have almost nothing to do with its causes.

Gates further encouraged East Africa to invest in hydro and geothermal sources of energy, which are both reliable and renewable.
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Supporting African Jobs, Economic Growth and Sustainable Development Through Aviation

Aviation is vital to the modern, globalised world, supporting millions of jobs and driving economic growth. But the benefits of connectivity must be protected with appropriate support from governments if the air transport sector is to help fulfil its potential as a connector of people, trade and tourism and a driver of sustainable development. These are the conclusions drawn in a new report, Aviation: Benefits Beyond Borders, issued by the Air Transport Action Group (ATAG).

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Worldwide, aviation supports 62.7 million jobs and generates $2.7 trillion in gross domestic product (GDP). Not only does air transport provide significant economic benefits, but it also plays a major role in the social development of people and communities all over the globe, allowing people to travel for educational opportunities and cultural exchange, more broadly. Across Africa, specifically, air transport supports 6.8 million jobs and contributes $72.5 billion to the African continent’s GDP.

In the next 20 years, forecasts suggest that aviation-supported jobs worldwide will increase to over 99 million and GDP to $5.9 trillion. Africa is the second-fastest growing region in the world as far as international air traffic is concerned. However, the overly strict regulatory environment in the region must be simplified if Africa’s true economic potential is to be realised. For decades, industry leaders have been urging governments in Africa to unlock this potential by moving ahead with the policy of open skies in the region, allowing aviation services to flourish and continue to support growth. Industry costs in Africa, including passenger fees, are among the highest in the world. These regulatory arrangements should be improved, according to industry experts in the region.

ATAG executive director, Michael Gill, says that the adoption of the 2030 Agenda for Sustainable Development at the United Nations highlights a number of goals that the international community should strive to achieve by 2030: “We found that air transport in some way supports 14 of the 17 Sustainable Development Goals, from decent work and economic growth to quality education and reduced inequalities. By continuing to grow in a sustainable manner, aviation can strive to be a force for good for many years to come.”

“A significant factor in our work on sustainable development is the industry’s world-leading climate action plan. We need support from governments around the world to agree on a key part of that plan at the upcoming International Civil Aviation Organization Assembly, where we hope an agreement can be reached on a global offsetting scheme for air transport. It is a vital part of our industry’s future role in helping to support development worldwide.”

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Elijah Chingoso, Secretary General of the African Airlines Association (AFRAA): “Sustainable development of air transport in Africa requires that the industry be fully liberalised, industry costs are brought down to global standards through adhering to ICAO stipulations as well as removal of constraints to the development of the industry such as monopolies and visa requirements. Reliable aviation infrastructure, efficient, inexpensive and sustainable transport services are crucial for speedy socio-economic development, regional integration and for the continent’s competitiveness in the global economy.”

Boni Dibate, Director Africa Affairs for the Civil Air Navigation Services Organisation (CANSO): “As the second fastest growing region for international air traffic, Africa needs efficient, cost-effective and safe air traffic management (ATM) infrastructure to fully realise the economic benefits of aviation. CANSO is working hard with its industry partners to improve the safety, efficiency and sustainability of ATM across Africa, by improving safety through its standard of excellence; providing training; disseminating best practice; and promoting opportunities for collaborative decision-making. States have a key role to play by investing in ATM infrastructure; modernising airspace by implementing the ICAO Aviation System Block Upgrades; and liberalising air transport by implementing the Yamoussoukro Declaration.”
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How to globalize the sustainable city

The New Urban Agenda must reinforce three key city assets, says ICLEI secretary general Gino Van Begin: Ambitious leaders, skilled staff, and strong community and stakeholder engagement.

This is life in a sustainable city. You weave through other cyclists each morning on a seamless network of cycle tracks that bring you straight to work at a renewable-energy start-up. The air is fresh and light, filtered by native trees and shrubs that line the streets.

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Your office is adjacent to a public park that replaced a once-vacant plot of land. It has a popular picnic area that is full of different languages and accents when the weather is dry and a rain garden to absorb excess water from storms. When leaving the office after dark, you can see bright constellations of stars in the sky.

Can you picture this happening in your city? Can you picture it in every city around the world?

For some, the notion of living in a sustainable city can feel vague and distant, a dream of the future. But others are already living in this city or are advancing quickly towards it.

For ICLEI, sustainability is indisputably the necessary path for all city life and operations. Sustainable cities reap the benefits of environmental, social and economic innovation, becoming better equipped to respond to pressing urban challenges, shifting demographic and economic trends, and environmental change. They are designed with people and planet in mind.

Cities, towns and regions across the world join ICLEI to push the boundaries of sustainability and multiply the positive impacts they have on the world. At ICLEI, we envision no less than a world of sustainable cities that go beyond zero waste, are free from fossil fuels, and drive continual innovation in order to protect and enhance life equitably and for all.

A sustainable city goes beyond zero waste to become a productive system, upending the idea that economic growth relies on resource extraction and depletion of finite energy and materials. This city makes the most of existing resources through reuse, sharing, and exchange rather than relying on a continuous path of production and consumption.

In this way, the city restores and enhances natural systems. It also decreases dependence on international resource chains while creating a thriving sharing economy that changes consumption patterns among residents. Imagine a city where organic waste feeds thriving green space and urban gardens and where residents share rather than buy electric cars.

A sustainable city is on the fast track to becoming free from fossil fuels, proving that such dependence is a relic of the past. These cities diversify and modernize mobility and transport, commit to 100 percent renewable energy, and divest from fossil fuels.

Together, these strategies shift the balance of power away from industry. They also open up space for residents and small businesses to decide upon, participate in, and even profit from new energy systems. This is a city where residents sell excess solar power to the grid and can choose to ride biofuel buses or cycle to work.

A sustainable city is also a hub of economic, social and environmental innovation. These innovations, driven by local governments and residents, have the potential to transform nearly every aspect of urban life and city operations.

Innovation in a sustainable city means building a local economy that is brimming with green jobs. That process is supported by skills development and training, encouraging entrepreneurship, and employing smart ways of collecting data and translating it into innovative policy and action.

An innovative city also maps vulnerabilities and risks with data generated by residents. And it provides incubator space for start-up businesses of all kinds.

A sustainable city is on the fast track to becoming free from fossil fuels, proving that such dependence is a relic of the past.

Unique assets

The net effect is that sustainable cities ultimately protect and enhance daily life for all residents.

It is not easy for cities to achieve this vision. It takes myriad small steps to achieve big goals. Yet cities are already making progress and committing to bold action.

The world is past the point of questioning whether sustainable urban development is essential. It is clear that we need sustainable cities, and we are increasingly aware of the figures that support this vision: Cities represent more than two-thirds of the global economy and 70 percent of global greenhouse-gas emissions. Over half the global population lives in cities, a figure that will rise to two-thirds by 2050.

We are quickly approaching the Habitat III conference in Quito, where nations will define the course of urbanization for the coming decades. Now is the time to ensure the New Urban Agenda — the conference’s outcome strategy — equips the world to create truly sustainable cities that meet our ambitious vision.

At ICLEI, we are well aware that cities have unique assets, with the potential to shift the trajectory of global development. The New Urban Agenda must therefore reinforce these assets to globalize the sustainable city and its concomitant benefits, with a particular focus on the following three areas.

Ambitious leaders: Sustainable cities have ambitious leaders who push the envelope of sustainability. They communicate a clear vision for their city and ensure that sustainability becomes the norm in daily life and discourse.

Curitiba, Brazil, stands out with a widely recognized tradition of sustainability and transport innovation brought about by visionary planning by Mayor Jaime Lerner in the 1960s. This legacy has continued under the leadership of Mayor Gustavo Fruet, who is advancing transport innovation as part of his own vision to continuously improve quality of life in the city.

The City of Seoul, South Korea, also is widely recognized as a pioneer in urban sustainability. Mayor Park Won Soon, who is also president of ICLEI, envisions a “new urbanization” that fights climate change, achieves energy self-reliance, and allows people and nature to coexist.

Under his leadership, Seoul is creating a thriving sharing city. It is also avoiding 10 million tonnes of greenhouse-gas emissions by 2020 through its “One Less Nuclear Power Plant” programme. The initiative sought to reduce energy consumption equivalent to one nuclear power plant — a goal that was reached before the project moved into a second phase.

Through the New Urban Agenda, nations must make room for ambitious leaders to be visible and engaged, advocating and shaping policies and mechanisms that enable cities to act on their ambitions.

Skilled staff: Sustainable cities can exist only with skilled government staff members who know precisely how to achieve the ambitions of city leaders. They understand the technical, natural and social systems that underlie everyday life in their cities, and can deliver interventions that will change the course of development.

Deborah Roberts of eThekwini municipality in Durban, South Africa, is one such example. As head of environmental planning and climate protection and Durban’s first chief resilience officer, she has invigorated biodiversity and community-based adaptation as a central part of urban planning. Ultimately, the aim is to bring together people and ecosystems in a way that creates jobs and alleviates poverty.

In 2011, Roberts helped rally more than 100 local governments around urban adaptation by bringing the Durban Adaptation Charter for local governments to the international climate talks that year. Most recently, in 2015, she was elected as co-chair of the Intergovernmental Panel on Climate Change (IPCC) Working Group II on Adaptation, as the first scientist with an urban practice background to take on this global role.

The New Urban Agenda must ensure that cities receive adequate funds to hire skilled staff and build their capacity to shape and carry out ambitious programmes and projects.

Strong community and stakeholder engagement: Civil society holds collective knowledge that is full of potential for outside-the-box thinking based on intimate knowledge of daily life in city neighbourhoods. Residents and community-based organizations are sources of ideas, data and feedback, and if leveraged properly, they can become powerful agents of change.

The City of Reykjavík, Iceland, has opened up unused urban space for residents to experiment with potential sustainable uses that support plans to liven public space, enhance creativity and engage residents in designing their own surroundings. Residents receive grants from the city to experiment temporarily with their space to spark discussions around more-permanent use.

At Habitat III, nations must encourage open processes for engaging members of civil society, and empower cities to respond to the demands, ideas and needs they present.

These are the key assets that differentiate cities and make them stand out from the crowd. When all three of these factors are strong, cities can transform themselves — and consequently the rest of the world. Now is the time to globalize the sustainable city and empower cities to lead this change.
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Africa: The role of infrastructure in shaping our future

The numbers are looking good. Investment by value of mega-projects under construction grew by 46.2% in 2014, and Africa is expected to host nearly a quarter of the global urban population by 2050 – proof that the continent continues to present foreign investors and development companies with many inviting opportunities.

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However, converting these into sustainable solutions that meet Africa’s needs will require a different philosophy and a new long-term approach from many players, according to Darryll Castle, chief executive of PPC.

He was speaking at a Gordon Institute of Business Science Forum event. In order to deliver on the continent’s vision of “sustainable success”, companies cannot simply adopt a “final frontier” philosophy and expand into the continent accordingly. They have to take both a macro and micro view – redefining return on investment such that it affects all stakeholder communities positively, he said.

As rising income and increasing levels of urbanisation continue to support economic growth across large portions of Africa, construction companies in emerging markets look set to grow well into the medium term.

“Investment by value of mega-projects under construction alone tripled from $103 billion (about R1.6 billion) to $326 billion in 2014 [according to Deloitte’s African Construction Trends Report 2014],” noted Castle.

“The latest Mo Ibrahim Foundation Report additionally forecasts that the next 35 years will see the continent accommodate 900 million new urban dwellers. Both of these paint an enticing picture for foreign investors, developers and construction firms – one which many have already started gearing to respond to.”

Expanding into Africa brings its own unique set of opportunities and challenges. It also moves continental “newcomers” into a development space – where a business as usual approach cannot meet non-negotiable growth and sustainability imperatives.

“Dumping building products cheaply, extracting resources without local beneficiation or any other form of business that is purely profit-oriented cannot be construed as ‘good for Africa’, especially against the back of the continent’s critical needs: reducing the cost of energy and mobility, job creation for youth and women as a priority, and growing manufacturing capabilities and intra-Africa trade, among others,” said Castle.

“As such, a far more long-term and legacy view of return on investment has to be taken – with the starting point for this exercise being to map out an inclusive list of project stakeholders.”

Government and local investors usually fall comfortably into the stakeholder category, but Castle said that many African-expansion exercises often excluded local communities and employees as key shareholders in the business.

“This typically manifests through imported labour [which does not unionise] and a lack of local succession planning – where the more ‘valuable’ skilled jobs remain reserved for foreign nationals ostensibly because the skills are not locally available. This effectively erodes and inhibits progress and development, exacerbating the cycles of poverty and economic exclusion that many local communities already find themselves in.”

He added that the alternative – an inclusive and participatory form of partnership – can, however, have the complete opposite effect.

“This is something we’ve seen ourselves through PPC’s expansion into Rwanda at our Cimerwa facility [in Bugarama in south-western Rwanda]. In this instance, we set a greater context for the partnership – notably that of ‘sustainable modernisation’.”

This enabled committed collaboration between all stakeholders: PPC and the Rwandan government, the Bank of Kigali, KCB Bank of Rwanda, the Eastern and Southern African Trade Development Bank, the local community, and up and downstream partners (including logistics providers) in the greater value chain.

“By setting critical milestones together and taking a purpose-driven approach, we have been able to roll the project out in a way that ultimately speaks to our collective legacy objectives,” said Castle.

These include extending Cimerwa’s production capacity from its previous 100 000 tons a year to 600 000 tons to meet the capacity needs of the Rwandan market and greater region, and implementing an extensive skills transfer programme that will ensure that over 95% of the total workforce employed at the new facility will ultimately be local.

“Investing in Africa requires ‘building’ Africa,” said Castle.

“To truly ‘build’ Africa, companies have to move beyond simply growing their asset base to creating meaningful capacity around them that will ensure communities remain self-sufficient well into the future. This is critical if we’re to realise the continent’s economic potential and uplift local communities so as to stimulate greater collaboration, growth and sustainable development for all of Africa’s peoples,” he concluded.

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China pulls emergency stop on coal power construction

China’s energy sector is lumbering under the weight of a coal power glut prompting the central government to step in, writes Feng Hao.

China’s central government has ordered local authorities to delay or cancel construction of new coal-fired power plants, as regulators attempt to reduce a glut in capacity, just one year after decisions were delegated to the provinces.

The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) have ordered a halt to construction of coal-fired plants in 13 provinces where capacity is already in surplus, including major coal producers such as Inner Mongolia, Shanxi and Shaanxi. A further 15 provinces will be required to delay construction of already-approved plants.

Harsh punishments have been threatened for construction that goes ahead in breach of the new regulations. Operating licenses will be denied, connection to the power grid blocked, and financial institutions will halt lending to transgressors.

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The curbs come as Chinese government departments are asked to make rapid policy adjustments in response to slowing electricity demand, as the country shifts towards a less wasteful and less energy-intensive economy, and aims to reduce the amount of coal power generation.

China’s central government decided early last year to decentralise the authority to approve environmental impact assessments on coal projects starting from March 2015 onwards.

But the problem goes back further, say analysts, pointing to the Chinese economy’s addiction to debt-fuelled capital spending.

“The document shows the government has realised how serious the overcapacity issue is, and that decisive measures need to be taken to solve it,” Song Ranping, developing country climate action manager at the World Resources Institute (WRI), toldchinadialogue.

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“The government now needs to make sure this is implemented and evaluate how successful the measures are, so that controls can be further tightened if necessary,” he added.

Central and local governments need to address issues such as oversupply at an earlier stage, Song said. He pointed to the need for an ‘early warning mechanism’ that flags up local decisions that exacerbate the surplus.

A clear price signal that a surplus of coal-fired power is uneconomic is lacking in China, because the country’s power tariffs are state controlled. That means energy producers still receive a good price despite the oversupply.

The communique issued last week by the NDRC and the NEA comes in the wake of announcements made at China’s twin legislative sessions in March and in the country’s 13th Five-Year Plan, which placed a strong emphasis on greener, smarter economic growth.

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Building a Capable State – Hellen Zille, Premier of Western Cape

Building a Capable State – Hellen Zille, Premier of Western Cape

Interview with Helen Zille, Premier of Western Cape

“The Western Cape is number one on every single indicator, including economic growth, and including employment… and it’s because we’ve put an enormous effort into building a capable state.”

 

Minister outlines SA’s energy mix plans

Davos – Nuclear power is just one part of a much larger, integrated South African strategy focused on a mix of energy sources that seeks to improve local, regional and pan-African stability and economic growth.

Energy Minister Tina Joemat-Pettersson said her short- to medium-term focus would be on renewable energy, reducing South Africa’s emissions and dependency on fossil fuels.

Currently coal accounts for more than 90 percent of the country’s energy output.

Joemat-Pettersson told Independent Media that gas featured strongly in the short term and that it was definitely a “game changer”.

“In the next 18 months we must bring gas on board, with shale gas being a long-term intervention. Negotiations with Mozambique to increase the gas supply to South Africa are at an advanced stage,” she said during an interview at the World Economic Forum in Davos on Friday.

“If we don’t bring gas on board, we will be overtaken by our neighbours.”

Pushing gas

Part of the gas plan is to build power hubs under Operation Phakisa, which is a results-driven initiative setting out clear plans and targets driven by the Presidency.

This approach, among other aspects of the energy plan, has been favourably received by financial institutions and potential investors.

“We discussed the energy mix with our banks so they could see that we are not obsessed with nuclear power,” she said, keeping coy about which financial institutions and companies she had held talks with.

Independent Media understands that she held meetings with Ericsson, Siemens and Standard Bank.

She will also be going to the US shortly to meet with large gas players to assess their levels of interest.

So key is gas to the energy mix that it is also expected that President Jacob Zuma could well use the State of the Nation Address to provide more details on the plans.

Joemat-Pettersson said nuclear was cheaper and had the country accepted and implemented a nuclear energy plan earlier, much of the electricity crisis could have been averted.

Gas, she said, was more expensive than nuclear.

Joemat-Pettersson said nuclear energy was projected to generate 9 000 megawatts.

But nuclear was still “a couple of years away”.

She said the main reason for looking at nuclear energy was due to South Africa being a “dry country” and going ahead with the plan would increase the country’s water stability.

She cited the high volumes of clean water used at the Medupi power plant in Limpopo and the current drought as clear examples of how nuclear energy would be a more sustainable proposition in terms of energy generation.

“We are getting water from Lesotho and we are providing them with electricity. Regional stability is vital to the energy plan.”

Regional capacity

Joemat-Pettersson said the plan included looking at helping to build energy capacity in neighbouring countries and further across Africa.

In this regard, South Africa will be pursuing interconnection with the Southern African Developmental Community countries including Botswana, Lesotho, Zambia, Mozambique, Namibia and the Democratic Republic of the Congo.

For South Africa, her focus for the short-term would be looking at unlocking the potential of an energy mix that includes coal, nuclear, gas, hydro and other renewable energies such as solar and wind.

“By 2020 we will be decommissioning 12 coal-fired plants and for that we must have something in place.”

The minister said South Africa was committed to honouring the decisions that were made at COP15.

These include that the emission profile of South Africa’s energy mix peaks around 2020 and falls around 2030; and that. energy efficiency improvements in electricity end-usage play a big role in reducing dependency on fossil fuels.

The renewable energy programme was getting an overwhelming response from foreign investors, she said.

“Renewable energy costs are high and the initial investment (around infrastructure) is high, but will greatly assist the economy. We will have to build towns around these plants and would, for example, need cement and steel.”

In terms of the processes involved, particularly with regards to the nuclear plan, the minister said the plan had been agreed on in 2010 as part of the Integrated Resource Plan and approved was by cabinet.

She is also part of a cabinet energy sub-committee which includes Public Enterprises Minister Lynne Brown, Trade and Industry Minister Rob Davies, Economic Development Minister Ebrahim Patel, State Security Minister David Mahlobo, Mineral Resources Minister Mosebenzi Zwane, and Defence Minister Nosiviwe Mapisa-Nqakula.

Nuclear plan

She said the nuclear plan had been subjected to intergovernmental processes in which other ministries were involved, and for which she was not solely responsible.

The nuclear plan, therefore was underpinned by transparent processes and affordability, Joemat-Pettersson said.

“The first step is intergovernmental agreements. The second is requesting information and the third is request for proposals,” she said.

These proposals are then sent to the Independent Power Purchase office which “has credibility and a requisite range of skills” and which has to “test the proposals”.

These experts are from the Treasury, the Department of Energy and the Development Bank of South Africa.

“Because there is no interference, business interest is oversubscribed. There is nothing shrouded in secrecy. I am not starting the process, I’m implementing what’s already there,” she stressed.

Joemat-Pettersson said the energy plan was crucial for the next 100 years. “If we get this wrong, the country will suffer a legacy of compromise.”

Source: iol


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SADC economies set for a comeback in 2016

The World Bank says firmer commodity prices in 2016 could boost the economic growth prospects of most countries in the Sub Saharan Africa region..

According to the World Bank’s Global Economic Prospects, the region is expected to grow 4,2 percent this year, from 3,4 percent in 2014.

With the current electricity constraints being experienced in most countries expected to persist as well as the drought in Southern Africa, the region is likely to record a somewhat weaker recovery in 2016 than previously anticipated.

However, an easing of the power constraints, better fiscal policy measures and continued stability in commodity prices are likely to impact positively on growth.

“Commodity prices are expected to stabilise but remain low through 2017. Although governments are taking steps to resolve power issues, electricity supply bottlenecks are expected to persist. There are, however, considerable variations within the region. The fiscal policy stance in commodity exporters is expected to ease gradually as commodity prices stabilise,” the report said.

According to Global Forecasting Services, the commodity market is poised for some recovery.

“Although we expect commodity prices to remain well below their 2011 peak in years to come, 2016 will be a year of stabilisation, with our aggregate commodity price index registering a modest 2.6 percent rebound. This will be driven by a mild increase in oil prices, which will feed into the price of other commodities.”

Besides the fall in commodity prices, African countries have had to contend with depreciation of local currencies against the US dollar which led to most countries allowing their exchange rate to adjust, especially among oil exporters.

The region’s pattern of exports makes it particularly vulnerable to commodity price shocks. Fuels, ores, and metals accounted for more than 60 percent of the region’s total exports between 2010 and 2014 compared with 16 percent for manufactured goods. Lower commodity prices obliged a fiscal tightening in several commodity exporters, which caused a sharp slowdown.

Since October last year, Angola, Nigeria, Ghana, South Africa, Tanzania, Uganda and Zambia’s currencies have experienced depreciations of significant magnitude, reflecting existing or rising domestic vulnerabilities.

The report noted that activity is expected to remain subdued in the region’s three largest economies although for Nigeria, power and fuel shortages and fiscal consolidation which weighed on activity in 2015, are expected to diminish gradually.

“Growth is expected to remain weak in South Africa, as inadequate power supply, weak business confidence, difficult labour relations, and policy tightening slow activity. In Angola, government spending remains constrained, and elevated inflation has weakened consumer spending,” said the World Bank.

South Africa is expected to grow 1,4 percent this year from 1,3 percent in the previous year. Angola on the other hand will grow by 3,3 percent from 3 percent.

Global forecasting services says although copper prices in September last year bounced back from a six-year low on the announcement of large mine closures, sluggish Chinese demand will delay a recovery in prices until 2017.

This is expected to have an impact on Zambia which will record about 3,8 percent growth in 2016.

In 2015, Botswana was also affected by lower diamond prices as well as insufficient power supply due to drought. The World Bank said the Southern African country’s attention to drought and its effects on hydropower is expected to help the economy grow by 4 percent this year from 3 percent in the previous year.

Zimbabwe, which has also been significantly affected by low commodity prices, power shortages and drought, is expected to grow by 2,8 percent from the 1 percent estimated for 2015.

In Southern Africa, DRC, Tanzania, Mozambique, Namibia and Malawi are expected to record the highest growth rates of 8,6 percent, 7,2 percent, 6,5 percent, 5,5 percent and 5 percent respectively.

Lesotho and Mauritius are expected to grow GDP by 2,8 percent and 3,7 percent respectively.

Swaziland is the only country in the SADC region expected to record a slump in GDP growth to 0,8 percent from 1,3 percent last year.

The World Bank called for policy makers to find ways to broaden their tax bases as a short term solution.

In the medium term, countries were urged to design strategies to bring small enterprises into the tax net and boost administrative capacity while working on instruments such as urban property taxes to help generate revenues from a more balanced tax mix over the long run.

It also said structural reforms are needed to alleviate domestic impediments to growth and to accelerate economic diversification.

“An increasing share of the world’s poor resides in Sub-Saharan Africa (World Bank 2015j). Reviving growth and reducing vulnerabilities will be important for progress toward eradicating extreme poverty, and achieving the recently adopted Sustainable Development Goals. Policies to enhance domestic revenue mobilisation, increase the efficiency of public spending, and boost growth and economic diversification will play a critical role in these efforts,” the report said.

Source: southernafrican


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