By Edna Molewa
In December last year, one of the largest solar energy plants in Africa was connected to the national grid. The Sishen Solar Energy Facility will have the highest level of electricity output of all the operational photovoltaic plants in Africa — an equivalent of 100,000 households’ consumption.
Its significance lies in three “Cs”: construction time, cost and carbon footprint.
Despite its size, it took 16 months to build. The cost of the facility is about R2bn — versus an estimated R91bn for an average-sized coal-fired power station.
Clean energy will be used at the plant. According to Acciona Energia, the technology being used at the facility will avoid about 208,000 tonnes of CO² emissions.
The plant came online as the Council for Scientific and Industrial Research (CSIR) released the results of a study into the increasing financial benefit of renewables in SA. It found that energy from SA’s (first window) wind and solar (photovoltaic) projects created R800m more financial benefits to the country than they cost during 2013. This amounted to a financial benefit of R3.7bn in diesel and coal fuel cost savings.
These figures give pause for thought to naysayers who argue that renewables are light years away from achieving the baseload capacity needed. If one considers that these first projects have generated about 3,922MW of renewable power — with an additional 4,000MW expected to go online by the end of the next window, what has been achieved is impressive.
Developing baseload should and does happen incrementally — and over time. Our achievements are all the more impressive if we take into account that this has taken place over a mere two and a half years.
Renewable energy is becoming cheaper, faster and cleaner.
Bloomberg New Energy Finance forecasts that the growing need for power in Africa will see about 1.8GW of renewable energy capacity being commissioned in the region this year — more than the amount that came online during the past 14 years combined.
With or without subsidies or incentives, renewable energy sources retain a competitive advantage over fossil fuel sources.
Technology costs are also falling.
Over the first three project windows in SA, prices have steadily dropped; with photovoltaic tariffs decreasing by about 68% and wind dropping 42%, in nominal terms. By the fourth window, they are expected to drop even further.
According to the CSIR, the cost per kilowatt hour of renewable energy for new projects is now far less than R1 for solar photovoltaic and 60c-80c for wind projects — thereby “keeping the net financial benefits of renewables positive, even in a future with a less constrained power system”.
Unlike many other countries, there is no policy or regulatory uncertainty. In last year’s state of the nation address, President Jacob Zuma emphasised the importance of a sustainable energy mix.
The Integrated Resource Plan clearly outlines the vision for a sustainable energy mix for SA that includes the use of fossil fuels, renewables, alternative energy and nuclear. It is a vision further supported by the National Development Plan.
In a Guardian Sustainable Business article last year, analysts cited SA as a “good role model on renewables” because of its competitive tendering process that both “align(s) with the long-term goals of government and also creates sustainable jobs locally”.
Although the World Bank has noted that renewable energy projects have resulted in improvement in economic development commitments, particularly as this relates to benefiting rural communities, those responsible in the public sector should ensure that this translates into real benefit for South Africans: both in terms of job creation, as well as localisation. As local renewable energy projects steadily increase their contribution to stabilising the grid, several businesses, among them several JSE-listed firms, are producing their own energy, much of it produced as part of industrial processes, such as sewage processing, sugar refining and paper making.
They are working with us, as the government, as co-generators of energy through the Renewable Energy Independent Power Producers Procurement Programme.
For example, sugar giants Tongaat Hulett and Illovo produce energy from sugar bagasse and trash at their milling plants.
Paper producer Sappi uses pine-tree resin removed before the pulp-and-paper production process to fuel boilers that supply steam to its turbines, enabling the company to meet about 50% of its own energy needs. Companies are able to sell the surplus to Eskom by means of power purchase agreements.
Others are reportedly researching biogas. A local company, Bio2Watt, is already generating energy from methane collected from waste at one of the country’s largest feedlots. These businesses are innovating in response to the collective energy challenges we all face: taking the lead in investing in their own energy in ways that are both cost-effective and green.
Their initiatives should be both welcomed and emulated.
We, as the government, are not far behind. Late last year, Zuma opened Environment House, the Department of Environmental Affairs’s new headquarters.
Not only does the building harness solar energy, it has state-of-the-art water-saving mechanisms, as well as an onsite grey-water treatment works — setting the standard for the type of government buildings that we hope to have in the future.
The Department of Public Works is tasked with the implementation of the government’s Energy Efficiency Programme in all government buildings. This will see, among other things, existing buildings being retrofitted.
Although not all sectors are able to generate their own energy, we are leading by example.
Because, ultimately, energy saving is everyone’s responsibility.
Independent generation using clean energy sources makes business sense. It is cost-effective, reduces uncertainty caused by often unpredictable power cuts, and reduces demand on the national grid.
As lack of access to stable electricity continues to hamper economic growth in Africa, renewable energy holds immense transformative potential.
The climate is ripe for this kind of investment. The number of renewable energy investments SA has attracted in the past three years outstrips those undertaken across the entire continent in the past 20 years.
The International Energy Agency predicts the sub-Saharan African economy as a whole could be boosted by as much as 30% by 2040 under certain conditions, namely greater investment in the power sector, more co-operation on cross-border energy projects, and better resource and energy revenue management.
Addressing this country’s energy challenges that we collectively face requires lateral thinking, innovation and vision.
Falling global oil prices should not delay a transition to cleaner energy, by putting low-carbon projects on the back burner in favour of traditional coal-and diesel-powered electricity.
Working with the private sector, we ultimately aim for such innovative renewable energy initiatives to become mainstream — so that they become the norm, as opposed to the exception.
• Molewa is Minister of Environmental Affairs.
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Eradicating extreme poverty by 2030 will not be achieved by rich countries giving money to poor countries , but will require financing, trade and partnerships from public and private sectors in all countries, say experts from the World Resources Institute.
The question of how the world can end extreme poverty and improve human wellbeing will take on new urgency in 2015, as the Millennium Development Goals (MDGs) expire and a new set of goals – the proposed Sustainable Development Goals (SDGs) – are finalized.
United Nations Secretary General Ban Ki-moon’s “Synthesis Report,” outlining the main elements of the post-2015 agenda, provides strong guidance regarding what sustainable development should look like and what world leaders must do over the next 15 years to achieve it. After two years of crafting the “what” of sustainable development, the year ahead must focus on how to get it done.
The central ambition is bold: the eradication of extreme poverty by 2030. To make that happen, the SDGs will need to shift away from the twentieth-century model of development, in which rich countries gave money to poor countries, mostly to feed the hungry and improve health and education. The MDGs were remarkably successful in several of these areas. But the picture has changed significantly since then. A new set of emerging economies – including China, India, Brazil, and South Africa – is racing to modernize. The private sector is assuming a greater role in economic development. And environmental degradation is threatening the gains of recent decades.
The SDGs will have to transcend the idea of a planet divided starkly between those who give aid and those who receive it. The new goals must account for a world undergoing rapid globalization, in which all countries have assets as well as needs. Today’s challenges go beyond health, food, and education. The SDGs will have to integrate these concerns with the demands of the growing global middle class, the effects of shifting political and economic power, and the challenges of environmental sustainability, including climate change.
Three ingredients will be essential to achieving the goals: financing mechanisms, trade, and partnerships. Forty years after rich countries promised to dedicate 0.7% of GDP to aid, their commitments remain at less than half that level. Though most emerging economies no longer rely on aid, it remains crucially important for low-income countries. That said, even if aid targets were met, the shift to sustainable development will cost much more than what aid alone can cover. We need to look for new sources of funds, ensure that government spending is aligned with the sustainable-development agenda, and target those areas where the money can do the most good.
In much of the developing world, investing in sustainable development is complicated by the fact that tax revenues are too low to pay for what is needed. This is not always a matter of raising tax rates; it is also often a matter of collecting what people and companies owe. Closing loopholes and cracking down on evasion are two ways to ensure that taxes are collected. The OECD estimates that a dollar of aid spent on improving tax collection yields an average of $350 in revenue. A shared commitment that builds on initiatives by the G-8 would make tax evasion that relies on tax havens or money laundering harder to hide.
Governments cannot deliver a sustainable future alone. The private sector also has an important role to play in energy, agriculture, and urban development, including transport and water systems that can drive innovation and economic opportunity. While levels of private finance dwarf international public finance, directing these private funds to programs that reach the poorest and protect the environment requires the right policy incentives, such as a price on carbon, regulatory certainty, and the wise use of public money.
Trade boosts domestic production and generates revenue that can help pay for development. There have been important gains in market access in the past 15 years: 80% of developing countries’ exports to developed countries are now tariff-free, while average tariffs are down overall.
But non-tariff barriers can cost exporting countries more than tariffs do. What is needed is an international partnership that helps low-income countries integrate into the globalized marketplace while improving environmental and labor standards. The SDGs can create political momentum for these efforts, which could then be framed by the World Trade Organization in December 2015.
Making development sustainable will also require accelerated innovation and diffusion of technology between now and 2030. A global partnership could spur investment in research and development and ease the flow of information among scientists, business people, and policymakers.
Such new and creative partnerships can make progress on complex problems that governments, civil society, or the private sector cannot or will not solve alone. For example, the GAVI Alliance (formerly the Global Alliance on Vaccines and Immunization), a partnership comprising international organizations, philanthropies, governments, companies, and research organizations, has immunized 440 million children since 2000 and helped avert more than six million deaths. We must improve and expand these types of partnerships to other challenges, such as infrastructure, agriculture, and energy.
Between now and September 2015, when heads of state will gather for the UN General Assembly, we have a historic chance to set the world on a more sustainable path that will eradicate poverty and enhance prosperity for all. Ambitious goals provide a firm foundation for a brighter future. Over the coming months, however, leaders must work together to set the world on the right course to realize this vision.
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juwi Renewable Energies (Pty) Ltd., the South African subsidiary of the international juwi group, is to build the Mulilo Sonnedix Prieska PV solar park in the Northern Cape Province/South Africa for Independent Power Producer (IPP) Sonnedix.
The PV power plant has a total generation capacity of 86 MegaWatts (MW.) Financial close was achieved on December 11, 2014. The commencement of construction is scheduled for the first quarter of 2015. For the juwi group, the utility-scale project in the Northern Cape is the company’s largest single solar EPC-project in the world. juwi is also providing Operation and Maintenance (O and M) services for the plant.
“We are proud to realize this milestone project and delighted to be playing a key role in adding substantial amounts of clean energy to the South African electricity grid,” says Greg Austin, juwi South Africa managing director. Over the past years, juwi Renewable Energies has realized four utility-scale PV projects in South Africa and has built up a substantial reputation as a specialist for green energies in the country.
The Prieska project was selected by the Department of Energy of South Africa under the third bidding window of the Renewable Energy Independent Power Procurement Programme (REIPPP) in October 2013. “We are also very pleased that our efforts in designing the economic development aspects of the project brought the desired outcome,” Austin continues.
Of all six projects in bidding round three, the Mulilo Sonnedix Prieska PV solar park had the highest economic development score. juwi will also provide O and M services for the plant.
Commenting on the closing, Franck Constant, President of Sonnedix said: “This first closing in South Africa is a considerable milestone for our company. It confirms the growth strategy and added value of Sonnedix in new markets where clean renewable electricity is in high demand and cost effective compared to conventional power.”
Olivier Renon, Sonnedix South Africa Country Manager, adds: “We are happy to be working with juwi, one of the world’s most experienced EPC providers in the field of renewable energies to build our solar park. We feel confident that our project construction is in very good hands.”
Source: Cape Business News
GBJ 10 (2014)
By Alistair Schorn
As South Africa’s capital city, the City of Tshwane has recognised and embraced its responsibility to play a leading role in the transition of the county’s major cities and metropolitan areas to low-carbon, climate- resilient and resource-efficient models of development. This is clearly demonstrated in the development of the City’s Green Economy Strategic Framework, and its alignment with the City of Tshwane Vision 2055.
As with any initiative at the level of local government this framework was developed in alignment with the national economic development context. In this regard, the South African government has for a number of years recognised the green economy as a significant catalyst for employment creation, and socially equitable and environmentally responsible economic development. More specifically, the South African Department of Environmental Affairs states that the green economy refers in particular to two interlinked developmental outcomes for the South African economy, namely:
- Growth in economic activity (leading investment, employment and competitiveness) in identified green industry sectors;
- An overall shift in economic activity towards cleaner industries and sectors that have a low environmental impact compared to their socio-economic impact.
In line with these imperatives, the government has implemented a number of policy measures which aim to promote a transition to a green economy. These include the National Strategy for Sustainable Development, the Industrial Policy Action Plan, the New Growth Path, the Green Economy Accord and most recently, the National Development Plan that was released in 2012.
In the context of these national policy measures, strategies and plans, the implementation of South Africa’s green economy transition has been to the level of a significant degree decentralised to provincial and local government level. As a result, the City of Tshwane has identified a requirement to develop a city-specific Green Economy Strategic Framework, which reinforces national policy and provincial policy in this area.
What is a green economy and how can we get there?
In developing the Green Economy Strategic Framework for Tshwane, the City’s government has adopted the United Nations Environment Programme (UNEP) definition of a green economy, namely “one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities”
From the City’s perspective, therefore, the essence of a green economy lies in the following:
- Improved human well-being;
- Improved social equity;
- Reduced environmental risks and ecological scarcities.
It is therefore imperative that a green economy transition can de-couple economic development from resource consumption and environmental impacts, and enable inclusive growth through a more equal distribution of wealth and access to ecological goods and services such as clean air and water.
It should also enable improved human health and well-being, through enhancing the quality and quantity of these goods and services, as well as the quantity and quality of public infrastructure and services such as transportation, education and civil services.
If implemented effectively, a green economy can offer a new economic path to sustainable development, in which the spheres of technology, economy, society and ecology are embedded in each other and are underpinned by systems of good governance.
Sustainable development and the green economy (adapted from the National Strategy for Sustainable Development).
This understanding of a green economy provides the broader context for the development of the City of Tshwane’s Strategic Framework.
The successful implementation of this Framework, and the resulting transition to a green economy, will require that the City makes best use of its inherent competitive advantages, to develop a highly appropriate, resource-efficient, low-carbon and inclusive programme.
The City of Tshwane
Tshwane is of course located in the north of Gauteng, and comprises over one-third of the province’s area. It has a population of 2, 92 million and a population density of 4 634 people per km2.
Tshwane exhibits a diversity of land uses, including residential (rural and urban), agricultural, natural open, industrial and commercial. Much of Tshwane is currently urbanised, although significant potential exists for agricultural production in less urbanised regions. Over the past several decades, Tshwane has experienced rapid economic growth and development, resulting in significant urban sprawl, which presents a growing challenge in terms of basic services, infrastructure and housing.
One of the objectives of the Strategic Framework is of new and existing projects and programmes to be included in the City of Tshwane’s Integrated Development Plan (IDP) in the next planning cycle. The IDP for 2011–2016 has made significant improvements in livelihoods by addressing service backlogs and poverty through improving the availability and universal accessibility of essential public services (such as housing, water, sanitation, education and health care). The next IDP will therefore need to continue with service delivery roll-out, while at the same time focusing on the development of integrated solutions that reduce resource consumption and the generation of pollution and waste, while opening up new opportunities for green jobs and green economic growth.
The Strategic Framework will help to inform the City of Tshwane’s medium to long-term green economy objectives. It also forms part of the Tshwane 2055 initiative, which is a long-term strategy for improving the quality of living across the metropolitan area, revitalising the city, boosting economic development and attracting investment. It aims to articulate the City of Tshwane’s vision, game-changing interventions, indicators and outcomes.
In this regard, Tshwane 2055 has the following six identified outcomes:
- A resilient and resource-efficient city;
- A growing economy that is inclusive, diversified and competitive;
- Quality infrastructure development that supports liveable communities;
- An equitable city that supports happiness, social cohesion, safety and healthy citizens;
- An African capital city that promotes excellence and innovative governance solutions;
- An activist citizenry that is engaging, aware of their rights and present themselves as partners in tackling societal challenges.
The Tshwane Green Economy Strategic Framework is aimed at addressing primarily the first of these objectives, namely the development of a resilient and resource-efficient city. It will also contribute to achievement of the second objective, particularly in the area of economic inclusivity.
The Tshwane Green Economy Strategic Framework
The development process for the Framework included extensive internal consultation with relevant City officials, and significant support and participation were received from local UNEP representatives. Based upon this process, the principal drivers of the green economy were identified as a response to the growing economic and environmental crises that demand a new green economic model for the following:
- Resource efficiency: the efficient use of natural resources to reduce the generation of waste and pollutants;
- Low-carbon development: the use of innovation and increased investment in low-carbon technologies and solutions; and
- Inclusive growth: the creation of green jobs and the greening of service delivery to ensure more equitable and inclusive growth with a focus on the poor.
It was decided that the focus areas or themes of the Strategic Framework should be action-based and aligned with existing green economy initiatives and strategies. These themes were accordingly finalised in March 2013, and were divided into two principal categories or clusters, namely mitigation and adaptation.Within each of these themes, the status quo and challenges were described to give context and perspective. Known challenges and barriers to developing the City’s green economy were used to formulate aspirations, objectives and appropriate actions for each theme.
These were incorporated into an initial draft of the Strategic Framework that was reviewed and finalised by the City of Tshwane’s Sustainability Office.
Thematic action areas
Under each of the mitigation and adaptation clusters, the Framework identifies the following specific thematic action areas, as follows:
1. Transitioning to a low-carbon city (mitigation)
- Pollution and waste management – reduction and effective management of waste streams, including solid waste, wastewater and air pollution;
- Integrated water resource management – coordinated development and management of water, land and related resources;
- Green buildings and built environment – the development of a green built environment in the City, including spatial planning and public service infrastructure, with due consideration of national initiatives in this area;
- Sustainable transport and improved mobility – improved efficiency and sustainability in transport systems and infrastructure, and the creation of an enabling environment for green transport initiatives;
- Sustainable energy – including initiatives, in line with various national policies and programmes in the field.
2. Building a resilient and resource-efficient city (adaptation)
- Maintenance and provision of ecosystem goods and services – protection and enhancement of ecosystem goods and services, with due consideration of ecological limits and rates of replenishment;
- Sustainable agriculture and food security – creation of sustainable food supply systems which maintain and enhance the ecological integrity of land and other natural resources;
- Sustainable communities (health and social development) – promotion of a vibrant citizenry and a healthy, skilled workforce that contributes to improved wellbeing and social cohesion.
For each of these themes, a set of overall aspirations, strategic objectives and appropriate actions were developed for the Framework.
Specific mitigation actions include the following: reducing emissions from buildings; improving mobility and providing low-carbon mass transport options; reducing the generation of waste and encouraging product re-use, recycling and material recovery; promoting integrated planning and land use; improving energy efficiency and developing renewable energy supply options; and encouraging the efficient use and management of water and other natural resources.
The adaptation actions include: main- streaming environmental priorities and carrying out biodiversity assessments to inform development plans; supporting and expanding government public works programmes to incorporate payment for an ecosystem services approach, enhancing the skills and knowledge in agro-ecology, enhancing local urban and peri-urban food production for increased food security; and providing services and facilities that enable a safe and healthy environment while enhancing opportunities for improved connectivity and social cohesion and human wellbeing.
A number of specific methods of implementation were identified to promote the establishment of a green economy in the City, including the following:
- Investing strategically in green innovation and technology;
- Defining a new economic base for a green economy; and
- Developing partnerships between government, business, labour and civil society.
In terms of these implementation methods, the Framework identifies the financial constraints under which the City (and in fact all municipalities) operate, as a potential inhibitor of transition to a green economy, and it acknowledges the necessity for effective public-private partnerships to overcome this obstacle.
Furthermore, the Framework refers to the possible use of municipal fiscal policy, in the form of both incentives and disincentives, as an effective method of catalysing the growth of a green economy in the city.
A final element of the Framework, included as an Appendix, outlines the City’s targets for various measures and initiatives for a green economy as derived from national and provincial targets in these areas.
These include areas such as the installation of solar water heaters, the creation of green jobs, public sector investment in green economy sectors such as renewable energy and sustainable transportation, energy efficiency targets, waste reduction targets and the implementation of appropriate sustainability standards such as those for green buildings.
The City of Tshwane’s transition to a green economy will require a fundamental change in the established economic system, from one based on increasing exploitation of natural resources to fulfil the growing demands for material consumption, to one that can ensure sustainable and equitable growth within the ecological limits of Tshwane and the region.
Achieving this shift will require effective integrated planning, robust policy signals, good governance and high levels of accountability on the part of the City’s management. It will also require investment in new skills, research in innovation and green technologies, and a new mindset for doing business.
The Green Economy Strategic Framework provides a means to achieve these objectives, by outlining the suite of strategies and actions that are required to facilitate the City’s transition to a green economy and a sustainable development path.
United World had the pleasure of catching up with the CEO of North West Development Corporation to discuss advancements in the business environment in North West and the province’s plan to industrialise and attract key investors to the province.
There is a lot of regional competition in South Africa and Africa in general to attract investors. What are the sectors that are flourishing here in North West and can you tell us about the opportunities in those sectors?
The biggest sector in the North West province is mining, it occupies a large percentage of the GDP input and is followed by agriculture, tourism and manufacturing to a certain degree and the services industry broadly speaking.
Now, in mining, as far as we are concerned, we are leading as a province but we don’t think we are competitive enough as long as we are still exporting primary goods. We want to move a little bit further to get into the beneficiation of the minerals that we have. If you look at countries like America and other developed countries, we would want to work with these kinds of companies, given their level of development as far as technology is concerned. Beneficiation would require more technology and skill, which are the things we are still lacking in the province, so we need to build the skills base and the utilization of advanced technology to make sure we are competitive as a province.
I must indicate that the Premier’s view is that we must focus on agriculture, culture and tourism. For obvious reasons, as far as tourism is concerned, we have been, as a province, a leading attraction given golf course destinations such as Sun City and the Lost City. It has been one of the most attractive destinations for a number of years. We will be hosting the Nedbank Golf Challenge with a number of key players in the world, both from the US PGA and the European PGA attending. So, most of the people come around this time for that but, generally, Asian markets dominate the visits to Sun City and recently we have been attracting more visitors from Africa.
But beyond that, North West is amongst the leading provinces when it comes to game or safari, as people say; if you want safari you will find it in the North West province. We are second or third to Kruger National Park, we have Pilanesberg, we have the Madikwe Game Resort, but we are developing more and more tourism for that. Also, the world yacht competition is held in the North West Province in an area called Bloemhof Dam. Every year we have the world competition coming down to our shores.
On the cultural side the idea is to develop what we want to call cultural tourism, to make sure there are cultural products that people can learn more about. When I was growing up the most famous film from Africa was one called The Gods must be crazy. If you watch that film all that you see is the African that is still wearing skins and a really bad stereotype of Africa. It is not our worry that we are showing the international community we are still wearing skins, what is key is the exposure that we are making to the international community about what our heritage is, the cultural heritage of South Africa.
Remember, the pride of South Africa is this diversified culture of Africans and Afrikaners and so on. So you will find a diversity of cultural orientation in South Africa, and North West is a host of a number of these cultures, you will find them in terms of different activities that are happening and this is what we want to promote.
On the agricultural side, we are predominately a rural economy. What I mean by rural economy is that you have vast arable lands that are not utilized the way they are supposed to. Of course, we still have challenges of rain here and there but given the new technologies to bring about irrigation systems and so on we believe that land can be better utilized in our province. We are the leading producers of maize, we are the leading producers of sunflowers and there are quite a number of other fruits that you can find in the North West province. We simply want to enhance this capacity.
But this challenge of vast land is also an opportunity, because gradually there are a lot of economic development activities that are happening, in Johannesburg, for instance, and which will probably expand to other places, but in this province we want to be the home for food security, we want to secure food for people, we want to bring back the importance of agriculture so far as production is concerned.
So these are the key issues you will find in the North West as far as the economy is concerned. We still boast that we have a university with two campuses and is ranked amongst the top five in the country. So we think that there could be a good relationship between the university and the economic activities to make sure that we increase our skills base.
One of the first considerations of an enterprise thinking of coming into South Africa is not only the cost of doing business but also the business environment and infrastructure they are going to find here. How would you rate the infrastructure in the North West?
Comparatively speaking we are up there with the best, but we still have some difficulties. For instance, with regard to roads; the roads in the North West province have deteriorated due to the heavy rains we have experienced and the replacement, resealing and maintenance of roads has been slow. Of course, among other things, it is due to the limited resources we have. We have not as yet had high demand for electricity, for instance, the supply that we have in the North West province we consider to be adequate, for example, when there have been electricity shortages in the country we have never faced outages but by and large we are able to resolve our electricity problems.
We still have challenges in the case of water supply, there are certain parts of the North West where we don’t have adequate water. We are currently working on key economic infrastructure premises, for instance, industrial parks. The special economic zone is one of those but we are trying to establish as many industrial parks as possible. Currently we have premises that we lease out to small and medium firms and as far as costs are concerned we consider ourselves to be the lowest given where we are. And we can still provide more particularly, as the development corporation responsible for the allocation of factory space.
We have an airport at Mafikeng that was supposed to be highly functional by now, but there have been challenges in the past given the demand from the passengers. But we are currently working on this airport to become a cargo airport from where we are going to export.
One of the key issues you deal with here is bringing foreign investment into the North West. Can you tell us a little bit more about the services that your corporation can offer investors?
The first key element is that we as the corporation are promoting the entry model of joint ventures. It becomes easy, for instance, for companies from the outside to work together with companies that are already in South Africa, and such kinds of partnerships are key because you already exploit the experience of local companies, the knowledge of the terrain and the competition in the country. So we think it would be easier for international companies to come through joint ventures and we do facilitate that as a corporation.
If anybody comes and says they are starting from scratch we are going to be very excited. There are generic incentives that you get in South Africa provided by the department of trade and industry, including tax tariffs and so on. In the province, what we ensure is that if there were companies that need startup capital, for instance, or need local people to make a contribution, it becomes our role to make sure that we facilitate the process through our national industrial development corporation for people to be able to access equity funds or funds that are going to contribute to that.
We engage local municipalities, for instance, to make sure that rates and taxes for international companies are competitive. We had a few companies for which we have approached the municipality to negotiate rates and so the taxes are going to be affordable for those companies. And we also provide factory space, but if a company needs land to start we have a good relationship with our local traditional leaders here, in whose hands you will find most of the land, and we negotiate and facilitate the process for them to make land available.
These are the key attractive elements we provide as a province but we really utilize the national incentive schemes that are available.
Can you think of any examples of companies that have come here to invest?
In the main there are companies in the mining sector. Currently we have companies in the automotive sector that are supplying the OEMs, like Nissan, Volkswagen, Bosch and the Malaysian company, Pasdec. These are the companies that have been granted licenses to provide OEMs and they have been in the business for quite some time. We are working on creating a support center for them so that they are able to secure whatever assistance they need, in case of economic hardships they are able to access funding for companies in distress. We are also helping them with challenges like electricity and water in the area where they are operating. In the retail sector we also have some companies. We have a company, Choppies, from Botswana.
The economic development zone is a key project, how far advanced is it and what kind of availability is there?
We now have 147 hectares of land available with infrastructure, water and electricity already available. We have combined this zone with a factory space, which is about 47 hectares of land. These are factories that are already available for anybody who wants to start manufacturing. We have started now marketing the zone, on the 26th of this month we will be in Japan and on the 27th some Canadian companies will be arriving and we will talk to them about investment. There is a key company that has already showed interest, just like Fuji, which is a Chinese company. There is also a German company that has shown interest in manufacturing mining equipment in the area.
The zone is going to be dual in nature: heavy manufacturing as far as fuel cells are concerned, but on the other hand there will be mining suppliers. The zone is sitting within a radius of 18 kilometers in a reachable distance of about 4 mines that are leading producers, and that is why we are situated there. It is almost within a reachable distance to Pretoria and about 200 kilometers to O. R. Tambo International Airport.
Our view is that any company that is ready now, we will be ready to accept them. The DTI has worked out special incentives for economic zones that are different from the generic incentives in the rest of the country, especially incentives for the zones to be issued in due course by the Department of Trade and Industry. So we are ready to move, we have a project executive structure in place that can begin discussions with whoever. For instance, one of the leading companies that are helping us is Anglo American; in fact they spearheaded the installment of a project were fuel cells were used as energy supply for a village. And we are working on piloting another village in the North West province where we are going to demonstrate that fuel cells can actually become alternative sources of energy.
So the special economic zone project is going to move with momentum and immediately take off. Hopefully after our international marketing trips we will have secured a few of those people that will be interested to come and manufacture here different types of products that use fuel cells, be they portable or highly mechanized programs. And we will be happy to host them.
When you do talk to international investors what are the common misperceptions about Africa?
Often there are questions about labor issues. There are companies that believe the South African labor market is rigid and that the rigidity of the market is such that it poses high risks for them to be able to operate. Our answer all along has been that the issue of conflict in the economy between labor and market is not unique to South Africa, in fact, this conflict between employer and employees goes way back. What we see in South Africa is just a situation where the desire to strike a balance between making profits and sharing in the profit has not reached levels where the workers who are the contributors of profit, and the owners as contributors of capital, are reaching an equitable share.
The good thing is that this whole discussion is not happening outside the framework of government. The South African government has provided bargaining councils, it has provided a platform where workers and owners are able to negotiate issues of salaries. The concern is when sometimes these discussions get out of hand and there is violence and people abuse the system that has been put in place to ensure that these issues of salaries must be quickly resolved without having to cost the economy or costing businesses to lose money. So such platforms are within the framework of the South African government’s policies, so there is nothing unique about it as far as we are concerned.
Secondly, you come across people talking about crime and you come across certain reports that appear in the media and on TV and so on and our response is, as it would be in Mexico or elsewhere: we are a country that is not immune to having individuals with criminal minds. Criminal minds are all over the world, in South Africa you still find people who believe they can make a living through criminal activity. Of course on our side, we get solace from the fact that the type of police system we have put in place is supposed to help us make sure we bring the level of crime down. Recent statistics have shown that we were able to deal with violent crimes and it has also shown that crimes such as murder have gone down. So as much as it is a concern of investors, all we are saying is you can still find this elsewhere, but find comfort in the fact that we don’t leave it to be. I believe as a country we still have the most effective judicial system that is able to make sure that whoever is offended in the country finds justice.
Recently we have been seeing public reports from rating companies, the most notorious one is Moody’s that continuously rates South Africa down and down. So I started trying to look deeper and find why we are rated in this way, and one of the things I discovered is that we are rated against developed countries, so if we are rated against the United States or the United Kingdom we are obviously going to come out at the bottom. But if we were rated with other developing countries we believe we would be somewhere at the top. But South Africa doesn’t take these ratings for granted; they are an important indicator that shows certain things we must deal with.
We see much enthusiasm and excitement from those who happen to understand South Africa for the first time, when we introduce them and they would want to know more, they would want to come. Given the trend of the global economy now, Africa is beginning to become the promising economy and people want to exploit the advantages and they want to come first. And, as South Africa, we provide that base. If any country wants to register their brand now, let them come now, let the people get used to that brand, because when more and more people start coming down to Africa at that time they will be those that have already occupied the center stage and will be more competitive than the newcomers. So we are getting more and more interest coming forward.
If you were to describe the North West as a brand, what would be the characteristics you would associate the North West brand with?
We always say we are a trade and tourism destination. The people in the North West province are still conservative in terms of taste movement. If you go to Johannesburg or any other developed metropolitan area you will find that your product wouldn’t last for three days because there would be more products coming in, so the taste movement is very frequent, but in North West if you have established yourself, you have established yourself.
The province is not necessarily crime free but compared to other areas we still feel we have low levels of crime. And there is very good quality of life. You have heritage and a very rich culture. There is still a lot of open space and fresh air.
On a personal level what motivates you and drives you to work towards attracting investment for the province?
We have about 3.5 million people in the North West province. We have high levels of unemployment and a desire to develop young people, in terms of them going to school but at the same time to start making a living at early ages. Broadly speaking, development is the key and I measure development in three ways: there must be good life, people must have longer life expectancy and people must have good health to achieve that; and for them to be able to have income generating activities the literacy level must go up. These issues are the ones that makes you wake up early in the morning and come to work and say to investors: “Come down to the North West, because with you being here people are going to enjoy the benefit of trade.
And benefit of trade does not only come in money and returns, it also comes in terms of technology transfer and in terms of developing infrastructure. And once you have improving capital formation in the country, for me, I see the potential for savings to increase. Now, North West is limited in terms of this, but it will become a future hub: after London has saturated, after Moscow has saturated, Tokyo, Beijing, Johannesburg, where else do you go? North West is supposed the next destination for you to build cities, to bring about more industrial development and so on and so forth. When all of this happens I think our cost of developing people will be met.
Source: The World Folio
The Industrial Development Corporation (IDC) has over the past year facilitated the creation and saving of 160 000 jobs.
This is according to its annual report, which documents its funding activities for the financial year ending March 2014.
The development finance institution has also disbursed billions of rands over the past five years as it reviewed its business operations to align them to government’s mandate to bolster economic participation.
In a foreword of the IDC’s annual report for the 2013/14 financial year, Economic Development Minister Ebrahim Patel said when he assumed office five years ago, his department initiated a process of transforming the IDC to play a role of empowering small, medium and big corporations in order to create jobs and respond to economic and social imperatives.
“The IDC heeded our call, realigning its focus areas and strategies with industrialisation priorities.
“These included the broadening and deepening of productive value chains, both domestically and regionally, the beneficiation of our country’s resource wealth and the green economy.
“The Corporation geared itself for a more proactive and catalytic role in the expansion and diversification of South Africa’s industrial base, with a special focus on labour- absorbing investment activities. It thus joined forces with other public sector entities in signalling to the marketplace the desired orientation, inclusivity and pace of economic development in the years ahead,” Minister Ebrahim said.
Of the 160 000 jobs that were saved or created, 11 500 were in income-generating informal economy activities related to recycling of waste materials. Industrialisation is crucial for the sustainability of economic growth, the balance of payments, job creation and poverty alleviation, the IDC said.
“Nevertheless, perseverance and proactivity in seeking opportunities for the expansion of industrial capacity translated into R13.8 billion in financing approvals for 2014, a 5.8% increase compared to the previous year.”
IDC mainly funds major projects in the production sectors of the economy, like manufacturing, mining and agriculture, among others, as the plan is to use empowerment policies to create an enabling environment for entrepreneurs to get into the productive sectors of the economy.
What has the corporation done over the past five years?
When the recession was on the verge of devastating local and foreign markets, South Africa’s economy shed just over one million jobs when the meltdown peaked in 2009.
During that period, the IDC stepped up its funding support and played an important role in creating and saving almost 130 000 jobs.
Sefa has since approved R1.5 billion in direct and indirect lending to about 74 000 small and micro enterprises.
In response to alarming youth unemployment figures, IDC and Sefa jointly set aside R2.7 billion to launch the youth fund in partnership with the National Youth Development Agency in 2013 to support youth entrepreneurship.
According to the report, the IDC has approved R105.3 million for 11 businesses with significant youth ownership during financial year 2014.
Sefa disbursed R157 million to more than 10 200 youth owned enterprises.
One of the businesses that Sefa has supported recently is Kolourful Empowerments (Pty) Ltd, an 18-month-old goods transport company based in Durbanville, Cape Town.
The business, which is owned by four university graduates who have equal shareholding, was awarded funding of R1 250 000 to buy a truck to enable them to fulfil the requirements of a contract that the company won.
Jason Trout, the company’s managing director, said the funding has been a stepping stone for the infant company, which transports goods such as granite, containers, machinery, equipment and sometimes foodstuff to nationwide.
“Through the loan facility SEFA has provided my company, it has allowed us to grow to the next level of growth as well as many subsequent opportunities and more impactful networking sessions.
“Kolourful Empowerments has two heavy duty commercial vehicles. The intention is to grow and diversify the fleet as far as is organically possible,” he said.