Following confirmed reports of violent intimidation and harassment of its members and their employees by mafia-style business forums on construction sites in KwaZulu-Natal and other parts of the country, Master Builders South Africa (MBSA) – the country’s federation of construction companies – has been alerted of new reports of similar incidents by forums that have now organised themselves in Gauteng.
MBSA Executive Director, Roy Mnisi says the federation is gravely concerned about the spread of this trend to other provinces and has called for the country’s law enforcement agencies to assist in bringing sanity to the sector.
He explains that the forums’ modus operandi is to demand 30% of the entire construction contract price while claiming to be fulfilling government’s mantra of radical economic transformation. “This is being done without regard for the fact that main contractors may have already subcontracted a proportion of the work that often far exceeds 30% of the contract to SMMEs and/or black contractors.”
Due to the often-violent nature of these incidents, construction companies have been forced to delay work on affected projects, escalating their cost and rendering workers on such sites redundant for long periods on end, as efforts are made to deal with these forums.
Mnisi adds that the MBSA is committed to transforming the sector and to providing more support to emerging contractors, but emphasises that the violent and criminal nature of these disruptions has no place in a progressive economy. He warns that the use of violence, intimidation and harassment will only reverse the gains made to date in giving a legitimate voice to the call for transforming the industry.
“As a federation of employers in the building industry, we represent over 4000 members – the vast majority of which are small and medium-sized construction companies. They are sub-contracted at various levels in these major construction projects and, despite having scheduled their work accordingly, now often find themselves idle when work on sites is suspended,” says Mnisi.
In 2016, when similar incidents were reported in KwaZulu-Natal, MBSA engaged the local forums. All parties agreed on a roadmap for transformation and committed to continued and non-violent engagement, amongst other concessions. However, Mnisi shares some challenges experienced in managing the forums’ demands: “With the forums being numerous and, in some instances, not formalised, discussions with some of them sometimes achieve very little, if anything at all. Transformation is a very legitimate issue that must be addressed, but as an industry we are now at risk of losing the traction that we have gained if these incidents are allowed to fester and if we allow members of our communities to embark on illegal activities under the guise of pursuing radical economic transformation.”
He urges all genuine built environment-related business forums to engage MBSA and other legitimate voluntary associations in the sector to work together and find sustainable and lawful ways of addressing the imbalances of the past.
“As a federation, we require all MBSA members to comply with all BBBEE-related laws, Procurement Regulations and the Sector Charter Codes. We are working with our members to ensure speedy transformation of the sector. In 2016 a pledge was made in the form of a Transformation Declaration which commits all our members to programmes for sustainable and meaningful socio-economic transformation of the sector through skills development and wider economic participation. Through this Declaration, we have rolled out a Small Builders Development programme that provides support to largely black contractors. We have also been actively engaging relevant parties and secured commitments on behalf of our emerging-contractor members regarding Preferential Procurement Regulations and late/non-payment issues, because we realise the impact of such matters on small/medium sized construction companies,” concludes Mnisi.
The issue of on-site intimidation by business forums, along with others affecting the industry, will be addressed at the MBSA’s upcoming Congress in Port Elizabeth.
Master Builders South Africa is a federation of registered employer associations representing contractors and employers in the South African construction industry. For more information contact Mr Roy Mnisi on 011205900 or visit https://www.masterbuilders.org.za.
In an ever-changing digital world, for everything from new business models and new consumer technologies to new infrastructure, energy and power systems – the digital transformation is inescapable. The fourth industrial revolution, or smart manufacturing, has accelerated the move to digital technologies that offer a competitive advantage to every company and every geographical zone that adopts them.
Augmented reality, IoT, IIoT, machine learning and predictive maintenance are making companies more efficient and innovative, boosting their competitive advantage. Schneider Electric, the global leader in the digital transformation of energy management and automation, recently took to Hannover Messe 2018, the world’s leading trade show or industrial technology, in Germany to showcase its latest innovations for industrial companies.
As energy and automation develop into a more digitally connected environment, these new technologies are capable of ensuring that power-sensitive automation equipment remains operational, boosting power reliability and cost savings by improving the speed and accuracy of the processes they are tasked with.
Bridging the divide between complexity and human capabilities by using control devices and technology for automated operation and control, digitisation allows for better support and faster decision making by providing operational insight, encouraging efficient use of resources to maximise assets and production output, simplifying tasks, and integrating the implementation of plant strategies.
“At Schneider Electric, we believe that integrating power and automation systems through IoT has the potential to bring together the best features of both systems, enhancing processes while introducing safer, more reliable, efficient, sustainable, and connected power,” Marc Ramsay, Vice President for the Industry Business Unit, Schneider Electric South Africa.
As the leader in powering and digitising industry, Schneider Electric is uniquely positioned to drive the digital transformation of today’s growing industrial automation markets and assist industrial customers in their conversions. Significant changes are fundamentally accelerating this movement in the industrial space.
“With EcoStruxure for Industry, Schneider Electric offers a truly unified engineering approach that can be deployed across multiple industrial segments. Leveraging our unique partnership with AVEVA, we can offer an unmatched set of solutions covering all aspects of digital asset management from process simulation to design, construction and manufacturing operations management and optimisation,” Ramsay said.
Schneider Electric’s EcoStruxure for Industry offers open, interoperable, IoT-enabled system architecture and platform, where users benefit from enhanced value around safety, reliability, efficiency, sustainability, and connectivity.
Leveraging all advancements in IoT, including mobility, sensing, cloud, analytics, and cyber security through connected products – Edge Control, Apps, Analytics and Services, EcoStruxure has been deployed in over 480,000 sites worldwide.
“With the support of 20,000 system integrators and developers, EcoStruxure currently has 1.6 million assets under management, and that figure is expected to grow by 25% year-on-year for the foreseeable future. This figure ties in with Accenture’s recent report, citing that at present, 64% of executives believe that a failure to leverage digital will cause their companies to struggle for survival,” says Marc Ramsay, Vice President for the Industry Business Unit, Schneider Electric South Africa.
Strengthening their commitment to digitising industry, Schneider Electric also unveiled EcoStruxure Machine Advisor during a presentation at Hannover Messe, 2018.
EcoStruxure Machine Advisor now make it possible to track, monitor and fix machines in the field while reducing support costs by 30 to 50%.
“Where managers struggle to track the history of the many machines that fall under their scope of responsibility, or when parts need replacing, production is interrupted, and the downtimes are much too long. Maintenance technicians often spend far too much time attempting to locate different sets of documentation before they can begin productive work on fixing the machine. Schneider Electric’s recent breakthrough with this new technology is now directly addressing these challenges by providing new ways of both gathering, centralising and displaying machine-generated data.”
About Schneider Electric
Schneider Electric is leading the Digital Transformation of Energy Management and Automation in Homes, Buildings, Data Centers, Infrastructure and Industries.
With global presence in over 100 countries, Schneider is the undisputable leader in Power Management – Medium Voltage, Low Voltage and Secure Power, and in Automation Systems. We provide integrated efficiency solutions, combining energy, automation and software.
In our global Ecosystem, we collaborate with the largest Partner, Integrator and Developer Community on our Open Platform to deliver real-time control and operational efficiency.
We believe that great people and partners make Schneider a great company and that our commitment to Innovation, Diversity and Sustainability ensures that Life Is On everywhere, for everyone and at every moment.
For more information, go to www.schneider-electric.co.za.
The launch of Wood on 9 October 2017 represented a significant occasion for all who have been part of the legacy organisations.
Both Wood Group and Amec Foster Wheeler have been evolving for a number of years. For Wood Group, this journey gained momentum in 2015 following the decision to restructure the company around its service offering in July 2016. Amec’s acquisition of Foster Wheeler in November 2014 and subsequent transformation programme were key stages in Amec Foster Wheeler’s development.
The need for the Wood Group’s fundamental change was brought into sharp focus with the deteriorating market conditions within the oil and gas sector that started in 2014. The services industry has been forced to respond to greatly reduced levels of activity in some of the most mature basins, and ways to reduce volatility caused by commodity price fluctuations have come into focus.
In March 2017, the Wood Group approached Amec Foster Wheeler to combine the two world-class organisations. “It was an opportunity to execute a broader strategy by greatly increasing the company’s exposure to non-oil and gas end markets and adding new capabilities,” says Martin Smith, Senior Vice-President: Mining & Minerals, EMEA region and country manager for Wood South Africa.
“For Amec Foster Wheeler, it was the opportunity to increase its size and scale in a tough market. The possibilities of creating something new that is more competitive and compelling than either legacy organisation alone was what led to the decision to form Wood from the combination of both companies.”
In South Africa, the new entity will see the legacy MDM Engineering and Amec GRD, already combined in 2016 under the Amec Foster Wheeler banner, grow from strength to strength with support and access to high value technical expertise – specifically in automation and control and digital solutions which can be applied to mines of the future.
Wood has the capability to deliver projects from concept to closure in a broad range of commodities, to support some of the most logistical and technically challenging mining projects in the world. The business has many global offices with main execution centres in Vancouver, Santiago, Johannesburg and Perth, providing front-end geology, process and environmental design through conceptual and detail design, project management, construction, operations and mine closure.
In the EMEA region, Mining & Minerals are led from the Johannesburg office. Following on from the Husab uranium project in Namibia, the office is now getting ready to start the execution of another uranium project, Berkeley’s Salamanca, in Spain.
Gold and diamonds are two other commodities that feature heavily in Wood’s Africa portfolio with the recently completed Petra Diamonds Cullinan project (plant expansion and upgrade) in South Africa and the Tasiast Phase 2 project (EPCM) for Kinross Gold in Mauritania.
Although the commodity market remains under pressure, some signs of recovery are noticeable. Mining & Minerals, under the new Wood brand, intends to increase market share in 2018 onwards and expand its capabilities with global support and skills.
By harnessing the “power of three” – being the inherent strength of the Wood Group, Amec and Foster Wheeler – Wood aims to be the new global leader in technical, engineering and project services, operating in more than 60 countries, with a revenue of over US$11 billion and over 160 years’ experience. In Africa, Mining & Minerals will continue through its unique “fit-for-client” approach to service both larger and smaller clients.
KwaZulu-Natal (KZN) is realising its vision to become a prosperous province and a gateway to Africa and the world. The province already contributes upwards of 16% to South Africa’s overall GDP and boasts the highest export propensity and level of industrialisation in the country.
In line with KwaZulu-Natal’s emergence as a hub of industrial development in sub-Saharan Africa, the 2nd annual KZN Construction Expo opens its doors on 7 February 2018 in Durban – convening thousands of construction professionals, government and investors to support the infrastructure development, service delivery, development partnerships and industry transformation currently underway in the province.
The KZN Construction Expo provides an unprecedented opportunity to access the province’s building and construction value chain, ranging from concrete; construction; digital construction; mechanical, electrical & plumbing; surfaces & finishes; smart buildings/ ecobuild and tools & equipment. This interactive platform not only catalyses new investment into infrastructure but also builds capacity for local architects, construction professionals and small to medium sized contractors through free education and technical skills development during training workshops.
Industry transformation is at the top of the agenda for 2018 and highlighted during the 2nd annual KZN Construction Expo through various interactive presentations and training workshops. Aubrey Tshalata, National President of the National African Federation for the Building Industry will address the audience on the topic of enterprise development. The Durban Chamber of Commerce and Industry – one of the event partners and supporters – will highlight opportunities for small, medium and micro-sized enterprises within KwaZulu-Natal’s construction sector.
Sponsored by Spider Mini-Cranes, Carmix and SA Leak Detection and supported by over 60 exhibiting companies and 20 association partners including the Concrete Society of South Africa, Master Builders KwaZulu-Natal, South African Council for Architectural Professions, The Concrete Institute and the Southern Africa Ready-Mix Association, the 2018 edition of the KZN Construction Expo is an unprecedented opportunity to access KZN’s building and construction value chain in a unique setting allowing for prestigious visibility, interactive networking and on-site demonstrations.
Register for your free expo ticket here.
Ashake-up to the mining code in South Africa could have a far-reaching impact on miners listed in the UK, amid fears the government there will try to impose onerous new requirements around company ownership.
A new version of the mining charter is expected to propose raising the mandatory black ownership of mining assets from 26pc to 30pc under the government’s Black Economic Empowerment (BEE) initiative.
But the mining industry is particularly worried about a second proposal, which would require miners to maintain 30pc black ownership even when the original BEE holders have sold their stake.
Under the original charter, mandated in 2004, miners only need “empower” their assets once.
South Africa’s Chamber of Mines has threatened legal action against the government if it imposes the new conditions, which it says will deter much-needed foreign investment and have been drafted with little consultation from the industry.
The new charter – which is months overdue and has been the subject of disagreement within the ruling ANC party – was approved by the cabinet in draft last week and is expected to be made public in a matter of weeks.
Mining contributed SAR286bn (£17bn) to the South African economy, or 7.1pc of its GDP, in 2015. London-listed companies Anglo American, Lonmin, Glencore and Petra all operate in South Africa.
Anglo boss Mark Cutifani has called on the government to ensure that the charter encourages investment. Earlier this year he told The Telegraph that investors would feel that promises had been broken if the government changed the BEE threshold.
“Anglo American is and remains committed to meeting South Africa’s transformation objectives and has been a longstanding and major contributor to transformation,” he added.
“These proposed changes will send a shudder down the backs of investors,” said Kieron Hodgson, analyst at Panmure Gordon.
Hunter Hilcoat, analyst at Investec, added: “We should be alarmed, not only by the BEE threshold increases but by several potential aspects, including the re-empowerment requirements.”
The growth of Africa’s middle class is to improving investor confidence, financial inclusion and contribution toward the formal economy and is, therefore, of the utmost importance to economic development. The emergence of this middle class has led to rapid urbanisation, with most seeking a better future and job prospects in the developed cities.
Research shows that by 2030, more than 50% of Africa’s population will be living in cities. “This mass migration is already placing strain on the existing infrastructure. Available resources and the present modes of transportation are simply not equipped to accommodate the projected volumes. This is a challenge for most emerging countries including South Africa,” commented Lawrence Kandaswami, managing director, SAP South Africa.
Cities need to develop and evolve just as rapidly, to accommodate the needs of the new urbanites that trade in the city. Technology has an important role to play, particularly in terms of transporting these urbanites. If the countries in Africa achieve this goal, technological innovation has the potential to bring about sustainable economic advancement with equal opportunity and quality of life for passengers.
What are the driving forces behind the need to transform public transport?
• Rapid urbanisation and changing regulations shifting the risks to industry;
• Pressure on public cost and subsidies, driving the need for innovative approaches to future revenue streams;
• Increased emphasis on supporting and evolving existing platforms;
• Travellers’ need for efficiency and transparency in pricing, including one-stop booking of travel with consistent pricing across various channels;
• Clear understanding of the various options for multi-trip or single trips across various providers.
The use of innovative technology emerges as an ideal solution to help transform the transportation industry, by driving a world class service through real-time collaboration and monitoring and providing insights to improve service delivery and enable cost reductions.
Transformation of transport systems
Recent advances in technology and rapid adoption of smartphones have led to the connected traveler, who has constant access to information via social and other channels. As a result, transport organisations are now able to deliver a personalised engagement, tailored to the needs of the individual passenger.
Kandaswami added that “there is a sense of urgency for transportation authorities and cities to transform their business processes in order to accommodate the needs of citizens for a reliable and accessible transport system. Technology has an important role to play in this transformation process by providing the underlying platform that supports the industry with an integrated system connecting all modes transport around the cities.”
Pioneering technologies such as the integrated SAP industry software for travel and transportation, for instance, provide a comprehensive, end-to-end solution that allows transport organisations to plan, schedule, predict and react with real-time insights to passenger behavior, travel patterns and transportation network conditions.
The benefits of a digitally transformed and integrated public transport system:
• A transport provider network that is inclusive of all modes of transport;
• Transport is integrated therefore accessible, reliable, affordable and efficient;
• Development of new skills with the promise of further job creation;
• Provide the passenger with multi-touch points to create a seamless travel experience;
• A 360-degree view of the passenger to accommodate for varying traveler needs.
Technology is already helping the passenger travel industry across the world to deliver safety and a more integrated travel experience. SAP continues to invest in creating innovative solutions, which will enable sustainable economic growth for the continent’s people.
The storm in the mining sector has been brewing for some time. When commodity prices were booming, most mining houses put off plans to innovate and streamline, enjoying the blue sky opportunities and reaping the rewards of the market peak. Then, when the clouds gathered and prices plunged, innovation was again put on the back burner as keeping the lights on – let alone making a profit – became the number one priority.
The clouds are now growing increasingly darker as government regulations add pressure on mining houses to not only make profit but to ensure job sustainability in the sector and, at a greater level, drive transformation.
But it’s not all doom and gloom, just yet. The current climate highlights that the more constraints the environment presents, the more mining houses need to optimise the remaining variables – and technology is the key to achieving this.
Disrupting the mining industry
We desperately need to see an “Uberisation” of the mining sector in South Africa. This involves a collective drive toward the combination of technological advancements and big data that made ride-sharing company, Uber, so successful and revolutionary.
While Uber and the mining sector may not be immediately comparable in our national conscious yet, there is nothing stopping the latter from taking inspiration from how the former disrupted business as usual in its industry.
Uber’s software changed the way people across the world move, with the power to catch a taxi almost anywhere, at any time and at the touch of a screen. Most importantly, though, it is powered by big data. In just one example, the company’s “surge pricing” approach uses predictive modelling of all drivers and customers at any time to adjust its price structures to meet supply and demand constraints.
In the same way, big data has also made it possible for Uber to efficiently match drivers and clients, reducing waiting time and increasing car utilisation, real-time information can empower decision makers at mines.
The mining sector needs the same technological revolution and it needs it urgently. We’ve already seen advancements to mining equipment in the form of automated machines that test the levels of harmful gasses following a blast and in wearables that monitor the vital statistics of mine employees.
While these types of innovation are crucial, mines need to take the next step and monitor as many variables as possible in order to be able to accurately predict what is coming. For example, a system of monitors across a mine’s fleet would provide enough data for predictive modelling that would indicate when each machine or vehicle would need maintenance, providing enough planning time, avoiding downtimes and ensuring continuous operations.
However, this is not only about the improvement of mining processes. The technological revolution in mining is also about the improving the level of skills. Will there be resistance to technology in the mining sector due to the perception that it will result in job losses? Yes. For centuries there has been a fear that innovation equals job cuts, yet history has taught us time and time again that, in fact, this is not the case. The Luddite fallacy, the economic observation that new technology does not destroy jobs but rather changes the nature of work for the better, comes to mind.
We have already seen how advanced sensors provide live information and rather than replacing operators, this technology is actually training and empowering them to make better decisions.
To overcome the mindset that technology will endanger jobs, there needs to be a shift in this perception by government, mining houses, labour and the public in general through the use of data and studies to show that technology can actually lead to more jobs, greater skills transfer and more importantly upskilling of people with portable skills.
It is technology, not subsidies, that will add value to the mining sector in South Africa. This industry needs to compete globally and subsidies are not a sustainable method to encourage healthy competition. An increase in productivity is what can make a real difference to boosting our activities in the global market, but we need the technology in order to be ready to do so.
The time for the revolution is now. What the mining sector needs is enlightened companies that recognise that technology and innovation are the best ways of surviving the stormy situation they are facing, which will only entrench their positions as market leaders when the commodity cycle turns.
It must be emphasised that if sustainable development and real transformation are to be achieved, infrastructure development and the approaches chosen to finance it must serve the people, bring education, health and clean energy to the poor and marginalised.
Agenda 2063, the African Union’s long-term vision and blueprint for transformation, identifies infrastructure development as one among a few key pillars for Africa’s economic prosperity and sustainable development.
Along with good governance, sustained peace and a people-driven and socially just dispensation, the African Union aims to have the necessary infrastructure to support accelerated regional integration and growth, technological transformation, intra-African trade, and expanded investment by 2063. Through infrastructure development, for instance, Agenda 2063 foresees intra-African trade growing from less than 12 percent in 2013 to approaching 50 percent by 2045 and the African share of global trade rising from two percent to 12 percent in that time.
However, despite recent economic gains, Africa still suffers from a crippling infrastructure gap particularly in sectors with a high social return. Analysis by the African Union Commission and the African Development Bank (AfDB) shows that whereas road access rates average 50 percent in other parts of the developing world, in Africa it is only 34 percent, and transport costs are twice as high. Only 30 percent of Africa’s population has access to electricity, compared to 70-90 percent in other parts of the developing world. Water resources are woefully underused with only five percent of agriculture under irrigation. In addition, the Internet penetration rate is a mere six percent compared to an average of 40 percent elsewhere in the developing world. The AfDB has estimated that the poor state of infrastructure in Sub-Saharan Africa undercuts national economic growth by two percentage points annually.
In dollar terms, the World Bank estimated in 2010 that Africa’s infrastructure needs would cost a whopping US$93 billion – some 15 percent of Africa’s GDP – annually for the period up to 2020. Of this, roughly half is being provided by African governments, external sources and infrastructure users, leaving a financing gap of close to US$50 billion per year. The bulk of this deficit is felt in power (US$29.2 billion), and water and sanitation (US$14.3 billion).
It comes as no surprise therefore that through initiatives such as the Programme for Infrastructure Development in Africa (PIDA), and other sectoral mega initiatives, the African Union and its partners have embarked on an aggressive drive to bridge the massive infrastructure deficit on the continent. While these efforts are commendable, the existing and emerging approaches and trends to financing infrastructure are threatening to derail the goal of enabling true, people-centred, development and socio-economic transformation on the continent.
To start with, key economic and social development drivers and inequality busting investments in areas such as education and health, as well as essential physical infrastructure, have traditionally been funded by meagre domestic public budgets supplemented by foreign aid. African countries characteristically have low tax bases, limiting their ability to adequately fund provision of these basic services. In addition, countries already saddled with debt have begun to experience rising debt levels, further eroding their ability to fund much needed social and basic services infrastructure. To add to Africa’s woes, against a rising global average, overseas development assistance (ODA) which still enables many African countries to meet their financing needs for health, education and civil service salaries, is in decline.
Against the background of constrained domestic and international public financing, funding for future essential services infrastructure is increasingly being earmarked for delivery via private sector models. Yet the track record of existing projects is mixed, with the worst performing often prioritising profit over delivering public goods to all, regardless of ability to pay. In many cases this has seen public funds blended with private-sector money to fund high-end hospitals and institutions for basic service delivery that charge user fees beyond the reach of many, thereby perpetuating a model that is extremely unlikely to deliver better health outcomes for poor people. This flies against other efforts to end poverty and rein in growing inequality on the continent.
Increasingly ODA is being used to ‘leverage’ private sector money as donors try to encourage more investment from business in infrastructure development.
The private sector is one of the main beneficiaries of improved infrastructure, and it is only right that means be found to help increase private sector investment in infrastructure. This is especially so where such investment translates to more sustainable, well-paying and decent jobs for local communities. However, there is often a thin and muddied line between choosing to deploy public funds to support private sector-led models due to the latter’s efficiency and ability to serve all, and choosing such schemes solely based on their commercial potential, in other words profit. The greatest danger is that the predominant focus on achieving commercial returns on projects financed by the private sector will detract from the developmental imperatives of aid.
Thus leveraging will work at cross purposes with the aim for transformation if it only serves to divert international public funds away from development of social infrastructure and supporting governments to enhance state capacity to deliver quality public services towards greater investment in ‘profitable’ infrastructure projects. Besides, there is not much evidence showing that using aid to leverage private investment delivers significant pro-poor development outcomes.
Public Private Partnerships (PPPs) have increasingly become a key infrastructure financing model across all sectors from agriculture to health and beyond. Cases abound where – driven by the profit potential – PPPs have been implemented leading to some of the continent’s most vulnerable people being forced from their homes and losing their livelihoods to make way for large-scale agriculture, transport and water infrastructure projects. There is also the well-documented case of a health PPP project in Lesotho that has resulted in new health delivery infrastructure that is beyond the reach of many and is exacerbating inequality through user fees and diversion of government funds from investment in several rural primary health facilities to one urban hospital. This case is by no means isolated as other research has shown.
PPPs are also often characterised by inequitable risk sharing, putting a disproportionate financial burden from failed investments on governments rather than private sector partners, and often leaving the poorest communities – rather than the project partners – bearing the brunt of the social and environmental risks. Where aid has been used, recent changes in ODA rules by the OECD Development Assistance Committee will now allow donors to count public guarantees – the money public entities agree to pay private investors in the event of a failed investment – as ODA, thus putting aid at the mercy of risky private sector-led initiatives.
Recognising these risks, over 30 civil society groups meeting at the margins of the just ended 2016 Annual Meetings of the African Development Group called on the AfDB to ensure public funds should only be used to leverage non-exploitative private sector funds that have clear social returns and equitable risk sharing. In addition, the CSOs encouraged the Bank and governments to only harness global corporate players’ role in development where it maximises domestic benefits – creating local jobs, raising domestic tax revenues and contributing to the growth of domestic private sector – rather than based on enhancing global profits.
Further, communities risk being by passed by the current infrastructure development drive if deliberate efforts are not made to ensure that they benefit from the various ongoing and future mega infrastructure development projects on the continent.
In the energy sector, for instance, while investment through PIDA and other programmes runs into billions of US dollars, projects being financed are primarily aimed at increased generation and grid expansion.
However, for a continent that accounts for 16 percent of the world’s population and yet has 53 percent of all the total population without electricity in the world, investments will do more to address energy poverty through ambitious distribution of energy services to poor people than added generation. Expansion in centralised power generation serves industry, the services sector and already-connected households, before it serves the poor. What Africans need most urgently is more investment in beyond-the-grid energy infrastructure as the majority of the energy poor who currently reside in rural areas will not benefit from on-grid increased capacity or extension interventions.
In addition the approach to infrastructure development which links major cities, mining towns and sea ports, for example, is likely to soak up vast amounts of financial resources, only to exacerbate long entrenched patterns of extraction and global inequality. It is important that such projects, for example in transport, directly benefit citizens within countries rather than simply focusing on the needs of corporations for large-scale movement of import and export commodities.
There should be a strong bias towards supporting public means of transport and increasing access of communities to markets and trading centres particularly in rural communities.
Thus, given Africa’s infrastructure deficit the efforts to bridge this gap that being driven by the African Union and its organs, African and international development financing institutions, and other development partners on the continent are laudable. However, it must be emphasised that if sustainable development and real transformation are to be achieved, infrastructure development and the approaches chosen to finance it must serve the people, bring education, health and clean energy to the poor and marginalised.
New transport infrastructure must enable farmers and small scale entrepreneurs to get their produce and wares to local markets as well as move daily commuters between their homes and workplaces at non-extortionate rates. Planning must ensure that communities are able to meaningfully participate in infrastructure decisions that affect their lives.
Adequate safeguards and mechanisms for transparency and accountability must be put in place to protect against human rights violations and environmental degradation.
These, among other necessary conditions, will ensure that Africa’s emphasis on infrastructure development and investment will really benefit the people of Africa, particularly the poorest and marginalised among them, towards attainment of the vision set by Agenda 2063.
The global mining industry is struggling right now amid drop in global metal prices. What is the commission doing to support sector players on the continent?
African Union has designed a new strategy that is expected to bolster the mining sector. The Africa Mining Vision and other initiatives are currently being domesticated by member states because they realise that supportive legal regimes, regulatory frameworks and policies are essential to build strong private sector and ensure growth across sectors, including the mining industry. Besides, public-private partnerships are some of the strategies that will help drive socio-economic transformation on the continent.
As Africa enters a new paradigm in her development, with industrialisation and structural transformation at the centre, public-private sector partnerships will play a critical role to create more jobs for the growing population and spur growth.
With the public and private sectors working together, everyone is a winner. So, the AU promotes such initiatives in the mining sector, too, to ensure it is not hard-hit by the turmoil in the global arena.
Besides, the Africa Mining Vision seeks to strengthen the licensing regime to ensure investors operate in a friendly environment.
The pact is primarily targeting mining, and oil and gas companies, as well as chambers of mines and mining associations.
The treaty comes at a time when the extractive industry is under extreme pressure from depressed commodity prices because of the continuing slowdown in the world economy, and especially in China, a key metal buyer.
The new strategy will, therefore, provide a platform of cooperation where by private sector leaders, chambers of mines, and regional mining associations can benefit from multi-stakeholder engagements in domesticating the Africa mining vision to regional and national mining visions to drive the sector’s development.
Can you specify how this strategy will benefit the mining industry?
The private sector stands to gain from reduced operational costs, and interventions that will boost productivity. For example, the mining vision seeks to build a skilled and motivated workforce which is instrumental in enhancing the sector’s productivity, competitiveness and sustainability, challenging market conditions notwithstanding.
Expenses associated with delays that result from community relations or labour issues, as well as timely and cost-effective provision of goods and services, can be realised through the vision’s compliant mineral policy and regulatory frameworks at country level.
What are some of the highlights of the pact?What should Africa do to ensure sustainable utilisation of its natural resources, such as minerals?
Under the treaty, companies commit to pay all mineral rents and royalties, and make their payments public to promote accountability. Governments are also expected to publish all legal agreements with companies and actively ensure that all commitments from government agencies, including tax refunds and granting of permits, are honoured in a timely and transparent manner. Companies subscribe to the principles of national, regional and international resource monitoring and oversight bodies and commit to fight corruption and transfer pricing.
States should adopt zero tolerance to bribery and corruption and prosecute those that promote such practices in the sector.
Sector players are also pledging to support national geological surveys with geological data, while states commit to funding of the geological surveys and relevant ministries to avail knowledge infrastructure incorporating this data to the public to allow firms make informed investment decisions.
Companies will also invest in human capacity development and support national and regional institutional capacities beyond payment of mineral taxes and royalties. Countries should support science, technology, and engineering, and mathematics (STEM) education to world standards to meet the demands for trained staff within government bodies and the sector.
What should Africa do to ensure sustainable utilisation of its natural resources, such as minerals?
Africa cannot afford to get it wrong this time round, there is no room for error… she must have it right. This can only be achieved through broadening partnerships and bringing on board the private sector to participate in policy formulation and implementation.
Without proper engagement with the African private sector and all the stakeholders, a vacuum can be creates, resulting in making of wrong choices. The scars inflicted by some of the extreme policies, such as post-colonial government protectionist import substitution industrialisation and market driven liberalisation structural adjustment policies have had lasting negative impact in many areas of the economy of the continent. so, Africa cannot afford to make more mistakes. It is important that these policies are drafted by Africans to ensure ownership and successful implementation .
So we need to learn from our past failures, and develop, and apply our own researched and tested prescriptions.
That’s why in the African Union Commission’s “call to action” Agenda 2963, the role of the private sector is paramount because it is the engine of growth.
Traditionally, partnership building has been skewed towards development partners because they fund our national budgets. However, Africa has been losing over $50 billion a year, more than official development aid flows to Africa, through illicit financial flows.
To end this resource hemorrhage, Africa requires high level private sector engagement and commitment because both governments and the private sector work for the common good.
The mining sector is not playing its transformative role yet and the “mineral curse” paradox still haunts the continent.
Besides, there are issues of transparency and accountability on the continent which affects the sector.
As energy investors eagerly await announcements of the preferred bidders in the latest round of South Africa’s renewable IPP programme – the so-called expedited bid window – it is worth reflecting on the successes of the country’s Renewable Energy Power Producer’s Procurement Programme (REIPPPP) and why it has achieved what many commentators believed was an unachievable feat.
“The REIPPPP has been a resounding success, spurring not only investment into South Africa’s energy sector, but in the broader region,” says Scott Brodsky, Partner and energy lawyer at international law firm Macfarlanes, who are advising clients across Sub-Saharan Africa on all aspects of renewable and other energy projects, including project financing and bankable power purchase agreements. “The effect of load shedding on life, on businesses and the wider economies is devastating. Although South Africa is having temporary respite from load shedding, some countries in the region are experiencing 12 to 16 hours per day with no electricity. The good news is that IPPs are helping tremendously and the need for new generation has translated into significant new opportunities,” says Brodsky.
The successes of the REIPPPP have been notable; Brodsky and the Sub-Saharan Africa team of Macfarlanes have power and energy specialists based in their offices in Johannesburg and London.. They are currently advising on energy projects throughout the region, including in South Africa, Namibia, Zambia, and Mozambique.
The success story of South Africa’s renewable energy programme is impressive when one views the figures. Sandra Coetzee, Head of Strategy at the Department of Energy’s IPP Office, recently shared the Department of Energy’s latest figures at the third annual IPP conference held in Sandton.
“Launched in 2011, the REIPPP Programme is bringing about a tangible transformation to our country’s power sector and economic and physical landscape. The competitive bidding approach clearly demonstrates that renewable energy options, and specifically onshore wind and solar PV power, can already be delivered at lower costs in energy terms, than new build fossil fuel solutions,” said Coetzee.
Here are some of the facts and figures:
• The AfDB estimates that nearly 654 million Africans still have no access to energy. This signals enormous potential for energy investment on the continent.
• In 2010, the South African government adopted a plan to grow the share of renewable energy in the electricity mix from 0% to 21% over the 20-year planning horizon to 2030, simultaneously reducing the capacity share of fossil fuels in the electricity mix from 86.5% to 57%.
• The REIPPP Programme has attracted vibrant investor interest both locally and abroad. Commitments to the value of 194 billion rand have been raised, contributing to South Africa being rated by the Climate Scope Index as 3rd and 4th most attractive renewable energy investment destination among emerging markets (in 2014 and 2015 respectively).
• The annual competitive bidding process effectively leveraged rapid global renewable energy technologies and price strengths, buying cleaner and cleaner rates with every bid cycle. Consequently South African citizens are getting the benefit of renewable energy at some of the lowest tariffs in the world.
• At the end of 2015, 6376 MW of power was successfully procured from 102 IPPs in four bid rounds of the Renewable Energy Independent Power Producer’s Procurement Programme.
• This 6376 MW of power procured represents an extraordinary 92.1% of the target 6925 MW renewable energy to be operational by 2020.
• Of the 6376 MW of renewable energy procured, just over 2GW of electrical generation capacity has been connected to the national grid. This is equivalent to half of the capacity of an additional coal powered station, delivered in only a third of the time.
• This renewable energy capacity is contributed by 40 operational renewable energy plants that will be producing approximately 5.12 terawatt hours of clean energy per year, enough to supply 1.5 million average South African households with power for a year.
• South Africa’s renewable energy share of installed capacity has grown from 0% to in 5% in five short years, making it one of the fastest growing renewable energy programmes in the world.
• Onshore wind has contributed 3308 gigawatt hours to the national grid, making it the biggest wind energy producer in Africa, followed by Morocco, whose installed capacity stood at 787 MW in 2015.
• South Africa was recognised among the top 10 countries with the largest installed utility scale solar photovoltaic capacity in the world, having reached 3300 gigawatt hours by December 2015. Concentrated solar power’s contribution to the grid was 181 gigawatt hours, whilst small hydro technologies made 40 gigawatt hours.
• A study by the Council for Scientific and Industrial Research (CSIR) found that the wind and solar power capacity operational during 2015 showed an R800 million net benefit to the economy achieved during that year, followed by a further marked increase in the first 6 months of 2015, helping to save more than an additional 4 billion rand in costs to the economy.
• From programme inception to date, 7 million tons of CO2 equivalent reductions have been realised, of which 4.7 million tons alone were realised in 2014/2015. The procured renewable energy portfolio is projected to produce well over 19 terawatt hours per annum of clean energy, reducing the need for conventional fossil fuel based power supply.
• The environmental benefit of the renewable energy portfolio at full operation will displace 45 million tons of CO2 emissions per annum. Over 20 years this will amount to a total of 902 million tons, in other words, the equivalent of four full years of South Africa’s current electricity emissions at the reported 2014/2015 levels.
• The environmental significance and benefits of the renewable energy portfolio extend beyond the reduction of the country’s carbon footprint. Our current power system requires 1.4 litres of water for every kWh of energy produced. In comparison, wind and solar PV technologies require and consume hardly any water, offering a means to supply our energy needs without further burdening our scarce water resources. Beyond diversifying the supply and nature of SA’s electrical energy production, the programme is also providing a vehicle for delivering the country’s social and economic development objectives:
• The renewable energy IPPs have committed 19.2 billion rand towards social economic development initiatives in the country, with 15.2 billion thereof specifically allocated to local communities.
• Over 23 000 job year opportunities have been created to date for South African citizens; which continue to grow beyond the original expectations of project developers.
• At least 12 new industrial facilities that have been established in the country in direct response to the REIPPPP to date.
• The Programme has been called a flagship public private partnership model for South Africa and the rest of Africa by the WWF and is considered a blueprint to inform programme design in other African countries.
• The country has benefitted from an influx of foreign direct investment. The REIPPPP has attracted 53.4 billion rand in foreign investment and financing to date. Foreign equity in the REIPPPP is 35 billion rand, equivalent to 56.9 percent of the inward FDI attracted by SA during 2014.