On 1 January 2021 a new era in African trade began. All but one of Africa’s 54 countries have signed on to the African Continental Free Trade Area (AfCFTA) and 34 countries have ratified it. Implementation was postponed for six months because of Covid-19.
Eritrea is the outlier but fully 41 members have already submitted tariff reduction schedules, suggesting that there is an appetite for getting down to detail on this agreement, rather than leaving it in “talking shop” mode.
Tariffs on 90% of items are due to be reduced in the next decade. More time has been allocated to poorer countries to allow them to adapt, 7% of items will take longer and 3% can stay protected.
The African market of 1.3-billion people is expected to grow to 2.5-billion by 2050 but the key statistic targeted by AfCFTA is intra-African trade. If the agreement is to have meaning, then the insipid figure of 16.6% in 2017 must grow. This compares with 69% in Europe and 59% in Asia (United Nations Conference on Trade and Development and Brookings Institution).
Exports to the rest of the world made up between 80% and 90% of Africa’s total trade from 2000 to 2017 (UNCTAD). In 2019 only about 27% of South Africa’s exports were delivered to the rest of the continent.
Just four countries currently account for 41.7% of intra-African trade, South Africa, Namibia, Nigeria and Zambia, according to the Export Credit Insurance Corporation of South Africa (ECIC). The ECIC has invested in the African Export Import Bank in an effort to boost intra-continental trade to $250-billion. The South Africa-Africa Trade and Investment Promotion Programme has the same goal.
Areas with existing regional trade blocs that function well – such as the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) – will likely be the quickest to gain from AfCFTA. These regional groupings are best placed to start thinking beyond tariffs: more efficient customs posts, lower air-freight costs, better-run ports, regulatory alignment and improved rail and road infrastructure.
Railways, roads and ports are not the only kinds of logistics infrastructure that is needed. South African-based investment fund African Rainbow Capital is a participant in a $100-million fund that includes investment in cold-storage facilities in East Africa in its portfolio.
Donald Trump did not pay much attention to Africa when he was president of the US but he was strongly in favour of bilateral, rather than regional agreements so it is surprising that the African Growth and Opportunity Act (AGOA) survived the Trump years. The deal, which gives duty-free access to about 6 500 products from 39 Sub-Saharan countries, is due to expire in 2025.
By then AfCFTA will have been operating for four years and the region’s ability to negotiate as a collective should be stronger. As much as Africa countries’ trade within the continent will grow, exports will remain key to adding value and attracting good prices. Trade between the US and Africa in 2018 was valued at $41.2-billion.
Namibia achieved a breakthrough in 2020 when, after nearly two decades of negotiations, 25 tons of the African country’s beef was shipped duty-free to the US. Under AGOA, Namibia may send the US up to 860 tons of beef but the fact that negotiations took so long points to the fact that the treaty is not a panacea. A possibly even more significant event took place in 2019 when the same producer, MeatCo, a Namibian state-owned entity, exported some meat to China.
Trade finance
In preparation for AfCFTA, development finance institutions and banks have been developing methods of trading in local currencies, rather than hard currencies like the US dollar. The African Virtual Trade-Diplomacy Platform (AVDP) is a private-sector initiative by more than 20 companies (in partnership with the AU Commission) which will support AfCFTA by enabling member states to participate effectively and securely.
Banking groups such as Citi have been investing heavily in digital platforms related to payments infrastructure. Many African traders already do their banking on hand-held devices and so the market is ready for more innovation in taking digital payments further into the world of trade.
Developing reliable cross-border payment platforms will be vital in supporting increased intra-African trade.
ECIC provides export credit and investment guarantees, stepping in where commercial banks might be risk-averse to support private investment.
The European Investment Bank is the investment arm of the European Union and often partners with African institutions.
China has a wide range of financial entities which are active across a range of sectors in Africa. These entities include the China Development Bank (CDB), the China International Trade and Investment Corporation (CITIC), China Export and Credit Insurance Corporation (CECIC), China Export Credit Insurance Corporation (Sinosure) and the China Export-Import Bank.
London: Investing in African Mining Indaba (Mining Indaba), organised by Hyve Group Plc is hosting one of their most popular features online this year. The Investment Battlefield, the platform famed for presenting Africa’s hottest junior mining companies battling against each other begins Tuesday 9th March 2021.
Global investors and financiers are encouraged to tune in to review projects and financial overviews of some of Africa’s most promising mining projects. Providing a way for capital holders to uncover new projects and ideas that were not previously on their radars which takes place weekly, starting with Precious Metals Exploration (9 & 11 March), followed by bulk and base metals (16 & 18 March) and battery and energy materials (23 & 25 March).
Kael O’Sullivan, Director of Investor Relations, Mining Indaba states – “Given the huge success of the Investment Battlefield since it launched in 2017, we wanted to continue this year despite the global pandemic challenges. We believe the format will translate well to the virtual environment of the Investment Programme and once again, prove an integral part of our offering aimed at investors and mining companies. Whether virtually or in-person, we believe it is important for junior mining entrepreneurs to be given the opportunity to gain exposure and build relationships with investors and brokers. It not only allows juniors to receive first-hand feedback from the investors themselves, learn exactly what investors are looking for and how to increase their appeal but also provides an opportunity for juniors to present themselves as leading emerging developers and miners. We are all looking forward to showcasing some of the most promising junior miners in Africa throughout March 2021.”
Next week’s First Stage: Precious Metals Exploration will spotlight companies who are in the exploration stage of their project on Tuesday 9th March at 14:00 (GMT). The junior mining companies include Ingrid Hibbard, President and CEO, Pelangio Exploration, Sean Meadon, Executive Director, Platinum 1 and Christopher Drysdale, Vice President of Operations, Antler Gold. The companies will be presenting to a top panel of judges from OCIM Precious Metals, Elemental Royalties and MJG Capital.
The First Stage: Precious Metals Development will follow on from this on Thursday 11th March at 14:00 (GMT) and pitching companies include Andrew Dinning, Managing Director and CEO, Samara Resources, Shedrack Kombe, CEO, Mcharo-Kombe and Bert Monro, CEO and Director, Cora Gold to Medea Natural Resources, Afena Capital and Triple Flag Precious Metals who form the panel of investor judges.
For the first time, it’s not just the expert panel of judges who will choose the finalists, the audience will be asked to vote on who they think should go through to the next round and go on to be crowned the 2021 champion. Attendance for the first stages is free, click here to register a place in the audience.
The Investment Battlefield will be held in conjunction with the Virtual Investment Programme (launching 30-31 March), a two-day programme of highly targeted and optimised investment meetings for the global mining finance community and junior and mid-tier mining companies. The semi-final and final will be streamed live exclusively to participants of the programme.
For more information on how to join the Virtual Investment Programme, please click here.
The statistics that hover uncertainly around Africa are not ones that should make the continent proud. The World Bank has estimated that Africa could potentially hold 90% of the global poor population by 2030 and has recently cut its economic growth predictions to between -2.1% and -5.1% in 2020 from the 2.4% of 2019.
The situation has been significantly worsened by the global pandemic, as the continent hits its first recession in 25 years. But this is not the picture that defines a continent that has long defied expectation and prediction. In fact, a young population, a growing consumption market, and the rapid movement towards mobile inclusion and connectivity are shifting the conversation. Africa is poised on the cusp of change introduced by mobile and Internet technology.
Africa has undergone a remarkable journey over the past 30 years. It has not only leapfrogged legacy technology and systems into a more relevant future, but it has done so in spite of challenging circumstances. This is particularly relevant when it comes to mobile – the technology, the connectivity, and the financial inclusion.
To date, according to the GSMA 2019 Mobile Money Report, there are more than one-billion mobile money accounts globally that account for 57% of mobile money transaction values. Over the next five years, also according to the GSMA, it’s expected that 84% of Africans will have access to a SIM connection and that mobile payments will play a critical role in empowering individuals, businesses and the economy as a whole.
This is the principle that’s dominating the current approach taken by the World Bank in an effort to provide Africa with much-needed support in the wake of Covid-19. The organisation is focusing on putting women at the centre of digital payment programmes and leveraging digital technologies to improve trade, government and resource management. This underpins the organisation’s focus on national payment systems that are secure, affordable and accessible as these are the tenets that underpin an economy that’s focused on financial inclusion and stability.
Murray Gardiner, Managing Director, Bluecode Africa
African payment solutions are critical to improve the free flow of funds to boost business and economic activity. Payment technology that allows for individuals from all walks of life to manage their money securely is the equivalent of putting a bank into every person’s pocket.
Digital payments equalise engagements while improving transparency and control over finances and business. They also empower small to medium enterprises (SMEs), giving them greater scope for inclusion and access to customers and markets.
This has become particularly true in the current environment. Digital payments are now, more than ever, the key to unlocking business growth on the continent. The rigorous regulations put in place by African countries to minimise the impact of the virus have led to inventive approaches to shopping and living. Digital payment platforms are significantly safer than cash and are increasingly being leveraged by governments and organisations to improve customer access to resources and services.
According to a study released by McKinsey & Company in June 2020, “innovation in payments should be one component of the industry’s response to the crisis”, and this should include promoting awareness of digital payments, partnering with other industries, and introducing new and relevant products.
In Africa, digital payments are more than just keys to open the doorways of financial inclusion, they are increasingly the steps that will take the continent out of recession and into a more dynamic and inventive future. This view is echoed by the investments made by the World Bank and organisations such as SWIFT and Bluecode Africa; programmes such as the African Continental Free Trade Area (AfCFTA), and the International Monetary Fund (IMF).
Investments include cross-border payment platforms, increased commerce capacity, cost management, digital innovation, and the empowerment of individual, micro-enterprise and SMEs. It’s time to educate businesses and individuals as to the costs and risks of cash as opposed to digital, to showcase the value of digital payments in not just opening up new markets and opportunities, but in providing tighter cash flow control at a better price point than cash.
Digital payments are a gateway to more valuable financial services and other value-added merchant services. To effectively compete against cash the digital payment must realise positive externalities that provide exponentially greater value than cash replacement alone.
The continent may not be showered in stunning statistics, few continents are at this point in time, but it is hovering on the edge of a future that has the potential to transform poverty, business and its economy.
About Bluecode
Bluecode is a mobile payment solution that combines cashless payments via smartphones with value-added services and enables payments with merchant and banking apps. Founded in Europe, Bluecode has now expanded into Africa.
Bluecode Africa is taking mobile payments into markets where its value as a technology payment service and scheme can make a significant difference for retailers, SMMEs and in the everyday lives of consumers. Bluecode Africa is focused on driving economic growth in the productive economy by unlocking opportunity and business potential with digital transparency.
The continent’s most developed economy, South Africa, is ready for greater ease in transferring money between customers of different banks. Such an enhancement will mean that those who often face barriers within the local financial system could be brought into the fold.
The country is betting on interoperability with the Rapid Payment Project (RPP). The RPP will bring instant clearing and allow banks, and presumably non-bank financial institutions, the ability to ‘push’ payment clearing messages like instant electronic funds transfers (EFTs) to other financial institutions, facilitating a high volume of low-value instant payments.
This will be transformative for the national payment system (NPS) and will allow for instant clearing and instant access to funds for small merchants. This represents a move towards instant digital ‘push’ payments for consumers, and the market will presumably open up to various last-mile payment technologies to enable choice in the market.
What about cards?
Cards are a ‘pull’ payment where consumers provide authorisation for merchants to withdraw money from their accounts by providing card authorisation information.
Murray Gardiner, Managing Director, Bluecode Africa
This subtle difference has a profound effect. With cards, the merchants’ banks authorise merchants to accept card payments and the banks seek settlements on behalf of those merchants. This infers a close and interdependent relationship between banks and merchants and allows the bank to extend risk-based financial products and services.
The downside of cards includes foreign rules, complex compliance and security requirements that have to do with the legacy technology behind transactions, and associated fraud risk. All the costs of plastic (POS terminals, fraud risk, data privacy compliance, and foreign exchange fees on local currency transactions) limit the reach of card acceptance to the established, more affluent segments of the market.
The best of both worlds
South Africa’s payments ecosystem needs a digital account-based alternative to cards: a mobile digital ‘pull’ open-loop merchant payment that provides the benefit of cards without the inherent costs and constraints.
Additionally, this digital, mobile, open payment needs to have general acceptance, like card payments, but not be dependent on a foreign legacy card scheme.
A digital, mobile account-based merchant payment would increase the size of the addressable market for financial services and create opportunities for banks and aggregators to bring the informal sector into the formal economy. This would benefit consumers and, most importantly, small, medium and micro enterprises (SMMEs), including micro traders, small farmers, artisans, and the myriad sellers of goods and services that make up the informal economy.
For digital mobile merchant payments to scale against cash, there must be a strong value proposition for both the consumer and the merchant. The consumer needs to be able to pay in a consistent way anywhere, irrespective of who the consumer or merchant banks with. For the merchant, payments must be simple, convenient. The merchant should also be able to experience the benefits of access to valued and affordable financial services.
About Bluecode:
Bluecode is a mobile payment solution that combines cashless payments via smartphones with value-added services and enables payments with merchant and banking apps. Founded in Europe, Bluecode has now expanded into Africa.
Bluecode Africa is taking mobile payments into markets where its value as a technology payment service and scheme can make a significant difference for retailers, SMMEs and in the everyday lives of consumers. Bluecode Africa is focused on driving economic growth in the productive economy by unlocking opportunity and business potential with digital transparency.
Tanzania-Zambia Railway Authority, popularly known as TAZARA, is a bi-national railway linking the Southern Africa Regional transport network to Eastern Africa.
A large number of presidential and general elections were held and although there were a few instances of leaders wanting to hang on for third terms and by so doing, making enemies of opposition forces and constitutionalists, a significant milestone was achieved when Malawi’s constitutional court threw out the results of the 2019 presidential elections and ordered another election to be held.
That election was held in June 2020 and led to a new president being elected, Lazarus Chakwera winning 58.5% of the vote against the incumbent Peter Mutharika. If this is the harbinger of an increased respect for the rule of law, Africa’s chances of progressing in other fields will be improved.
Another milestone will be achieved in 2021 when Niger’s current president stands down at the end of his term, allowing for a first peaceful transfer of power under a relatively new constitution.
Altogether, African governance has not advanced to the degree that was expected five years ago. The 2020 Ibrahim Index on African Governance (IIAG) reports that progress has slowed in improving governance on the continent, even though fully 60% of Africans live in places which were in better shape in 2019 than they were in 2010. The 2020 report is based on data gathered in 2019.
The 2021 election in Uganda will be watched very carefully. President Yoweri Museveni has been in power since 1986 and shows no signs of wanting to retire but Robert Kyagulanyi, a popular musician who goes by the stage name of Bobi Wine, has been gathering tremendous support in the face of several detentions and restrictions. Eighty percent of Uganda’s population is under the age of 30.
Other serious obstacles to citizens being able to exercise their right to vote were experienced in the Central African Republic, where rebels made the 2020 election a fraught affair, and in Guinea, where violence during and after the elections led to dozens of deaths.
The new president of the Seychelles has been nothing if not persistent. Wavel Ramkalawan’s successful bid for the presidency was his sixth attempt to attain the nation’s highest office. Seychelles is ranked third on the IIAG Index, behind Mauritius and Cape Verde. The rest of the top 10 is made up of Tunisia, Botswana, South Africa, Namibia, Ghana, Senegal and Morocco. Gambia showed the most improvement in 2019 and South Sudan and Somalia are at the bottom of the table.
De Beers’ Jwaneng mine in Botswana produces a quarter of the world’s annual diamond supply by value . Credit: De Beers
Mixed messages
The first day of 2021 brought good news for Africa – that the continent’s first comprehensive free trade agreement had come into operation – but it was sorely needed to balance some of the big events that characterised 2020.
Chief among these was Covid-19 but bad politics and increased violence contributed to a sense that many of the gains of recent years cannot be taken for granted. The two areas that best illustrate the fragility of progress are Ethiopia and Mozambique.
In 2019 the prime minister of Ethiopia, Abiy Ahmed, was awarded the Nobel Peace Prize for restoring relations with neighbouring Eritrea and beginning a series of bold internal reforms. A decision to postpone elections because of Covid-19 sparked anger in the northern region of Tigray and the last months of 2020 were spent with the country engaged in civil war.
The discovery of vast reserves of liquid natural gas off the coast of Mozambique has attracted huge investments from several international energy companies. However, the government’s inability to provide security against insurgents in the Cabo Delgado province has put those investments at risk.
In December, the Export-Import Bank of Korea announced $500-million worth of financing for the Mozambique Offshore Area 1 Project but the same month brought news of towns being evacuated because of insurgent activity. So far, there has been no talk of international or regional peacekeeping forces, but that will surely come up sooner rather than later.
The central Sahel region also had a turbulent 2020. The area along the boundaries that divide Burkino Faso, Mali and Niger has been at the centre of violent attacks by Islamist and ethnic militias which, according to The Economist, displaced 1.7-million people and led to an average of 3 000 people per day having to flee their homes. The UN has peacekeeping forces in the area and both the US and France have troops deployed there to assist local government forces.
The size of Africa’s population (currently estimated at 1.2-billion) represents both opportunity and challenge. The continent by 2030 will increase the number of children in primary school from 189-million to 251-million and by 2050 Africa will record 42% of all global births (UNICEF).
The upside of this is that huge markets for goods will be created but housing, education and healthcare will have to expand. As things stand, about 120-million Africans are unemployed and about 40% of the population live below the poverty line ($1.25).
Urbanisation is already happening at a fast pace. This is another opportunity and a further challenge. The fact that Africa is arriving somewhat later in the digital age is an advantage because there are opportunities to leapfrog technologies. This is happening in mobile banking, where mobile telephones are delivering financial services across the continent.
Integration and trade
Africa has introduced a free trade agreement. In 2018 the African Continental Free Trade Area (AfCFTA) agreement was signed by 49 countries, making it one of the most comprehensive and potentially influential agreements ever signed on the continent. Since then, all but one country has signed the agreement and it officially came into effect on 1 January 2021.
The Port of Durban handles containers, automotive imports and exports, break-bulk and agricultural commodities (Credit: TNPA)
Although no-one expects that the agreement will immediately lead to borderless trade with no tariffs, there is great symbolic importance in the implementation of the agreement. Problems remain with the movement of people and certificates of origin, and the more likely trend will be for regional economic communities (RECs) and large countries within RECs to accelerate steps towards integration. Large infrastructure projects such as rail and energy corridors that traverse the continent could be game-changers.
Regional corridors are intended to boost intra-African trade. The North-South Corridor in the Southern African region runs through 26 countries and ends at the Port of Durban. Ten corridors are being developed across the continent to make the movement of goods easier and to improve access to ports.
Central to future of the AfCFTA is the degree to which African states and regions can integrate. A first Africa Regional Integration Index was published in 2016 and a second (ARII 2019) was published by the Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Union Commission (AUC).
The report’s conclusion is that a great deal still needs to be done to integrate regional economies, with the average country score being recorded as 0.327 out of 1. Even the most integrated country, South Africa, scored just 0.625 out of 1.
Scores are allocated across five areas: trade, productive capacity, macroeconomic policy, infrastructure, and free movement of people. The index also covers intellectual property, competition policy, investment and digital trade which are critical to the successful negotiations of Phase II and III of AfCFTA. By allocating scores, the index allows progress to be plotted.
In early 2020, the Development Bank of Central African States (BDEAC) made progress on integration by signing off on projects worth $213-million for Cameroon, Congo, Gabon and Equatorial Guinea. The linking of the electrical grids of Equatorial Guinea and Gabon are the two most obvious integration-themed projects but others in the fields of agro-industry and microfinance are also relevant.
Tanzania-Zambia Railway Authority, popularly known as TAZARA, is a bi-national railway linking the Southern Africa Regional transport network to Eastern Africa. The Southern African Development Community (SADC) has been active with multimodal projects such as the development corridors of Nacala, Maputo and Lobito (Zambia to Angola).
There are many infrastructure investment opportunities that can boost trade. Among the initiatives of the Programme for Infrastructure Development in Africa (PIDA) is the West Africa Hub Port and Rail Programme, a regional hub-port, rail-linkage and port-expansion plan. Kenya’s $68-million Naivasha Dry Port project supports this plan.
Investing in infrastructure
The African Union’s Agenda 2063 lays out ambitious goals for the continent. The flagship projects designed to achieve these goals cover infrastructure, education, freedom of trade and movement of people, arts, culture and technology. The projects are:
Integrated high-speed train network
Formulation of an African commodities strategy
Establishment of the African continental free trade area (AfCFTA)
The African passport and free movement of people
Silencing the guns by 2020
Implementation of the Grand Inga Dam (hydropower) Project
Establishment of a single African air-transport market (SAATM)
Establishment of an annual African economic forum
Establishment of African financial institutions
The pan-African e-network
Africa outer space strategy
An African virtual and e-university
Cybersecurity
An African virtual and e-university
Great African museum
Encyclopaedia Africana
The African Development Bank Group comprises the African Development Bank, the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). The AfDB is a key funder of infrastructure projects and has set itself a set of goals known as the High Five: light up and power Africa; feed Africa; industrialise Africa; integrate Africa; and improve the quality of life for the people of Africa.
The bank’s African Economic Outlook 2019 highlights energy and infrastructure as key areas for investment. If Africa is to prosper, infrastructure has to be improved and built.
Namdock’s repair facility at Walvis Bay. Credit: Namdock
The Emerging Africa Infrastructure Fund (EAIF), which forms part of the Private Infrastructure Development Group (PIDG) and is managed by Ninety One, encourages and mobilises private investment in infrastructure. PIDG is funded by donors from seven countries (UK, Switzerland, Australia, Norway, Sweden, Netherlands, Germany) and the World Bank Group.
Power plants in Togo, Ivory Coast and Uganda are typical examples of the types of projects supported by the EAIF. Having been involved in the establishment of a first fertiliser plant for Indorama Eleme at Port Harcourt in Nigeria, the fund is now also a participant in a $1.1-billion expansion project which will double the company’s annual output to 2.8-million tons.
South African firm Futuregrowth Asset Management manages the largest debt fund of its kind in Sub-Saharan Africa, the Futuregrowth Infrastructure and Development Bond Fund, which has a market value of more than R15-billion.
On the energy front, one of the AfDB’s projects, the Desert to Power Initiative in the Sahel region, will bring power to 250-million people who were previously unconnected.
One way of fast-tracking the provision of energy to remote regions is through mini-grids. Recognising that raising funds for mini-grids can be tricky, the AfDB has approved a $7-million grant from the Sustainable Energy Fund for Africa (SEFA) to create a funding infrastructure for a sector that is in growing despite the challenges. The Africa Minigrid Developers Association (AMDA) comprises 29 private companies that are active in rolling out minigrids in 12 countries.
Media release by David Maynier, Western Cape Misister of Finance and Economic Opportunities
On 25 February 2021, I met with representatives from De Beers Marine to hear how our Red Tape Reduction Unit had assisted a major maintenance project for the Gariep mining vessel that created jobs and brought investment into the economy in the Western Cape.
Thanks to the interventions of our Red Tape Reduction Unit, the completion of this project has also paved the way for two more ship repair projects which are already booked for this year at the Port of Cape Town.
In early July 2020, the Department of Economic Development and Tourism (DEDAT) was approached by De Beers Marine to assist with approval for the Gariep mining vessel to be sent to the Port of Cape Town dry dock for 112 days of maintenance and refitting. As a result of the Covid-19 pandemic and the lockdown restrictions, there was some concern that the project would not be able to proceed.
Following engagements with the Port of Cape Town, and assistance from the DEDAT workplace safety team to ensure all necessary Covid-19 health protocols were implemented, the Gariep mining vessel arrived in Cape Town on 1 August 2020.
However, as a result of the complex international crew change procedures and immigration challenges at the time, the 44-person foreign crew were then not allowed to disembark from the vessel. As the crew could not stay on board while the maintenance was being done but were needed on-site to sign off the maintenance upgrades, this caused further delays to the project and risked a cancellation of the project entirely.
The Red Tape Reduction Unit again assisted by convincing the National Joint Committee on Immigration of the importance of the economic value of the project and reassuring them that all workplace safety precautions had been implemented. The Committee issued a special clearance for the crew to disembark and the project was able to continue to completion on the 24 November 2020.
This work done by our Red Tape Reduction Unit is an excellent example of how we are working hard to improve the ease of doing business and create an enabling environment for businesses to grow and create jobs in the Western Cape.
Since its launch in 2011, our Red Tape Reduction Unit has helped thousands of businesses tackle obsolete or unnecessary bureaucracy that restricts their growth. In this financial year alone, they have dealt with over 1 270 cases and have maintained an overall resolution rate of 80%.
Tackling red tape and improving the ease of doing business in the Western Cape requires partnerships across all levels of government, together with the private sector and industry bodies, working together to create an enabling environment in which businesses can thrive and jobs are created.
And so, I would like to thank all stakeholders involved in the success of the Gariep mining vessel maintenance project, especially during a very challenging time.
Going forward we will be dramatically scaling up our efforts to address systematic red tape issues at their core and improve the ease of doing business, so that the Western Cape continues to be an attractive destination for investment and job creation.
Any businesses in the Western Cape, or any new potential investors battling with red tape can contact our Red Tape Reduction Unit for free assistance.
EThekwini Municipality is working hard to ensure that the Durban Central Business District (CBD) area suits the needs of all those who work, study, live and play in it and has invested R245-million in the Point Watermains project.
This has provided a much-needed upgrade and greater security of water supply for the inner city and future planned growth. It is estimated that the CBD will grow from 70 000 to 450 000 people, and from 100 000 jobs to 250 000 work opportunities by the year 2040. Coupled with this bold programme of infrastructure supply, the City is improving the public realm.
This will result in parts of Anton Lembede Street and Mahatma Gandhi Road being upgraded inclusive of new streetlights, traffic signals, paving, pedestrian friendly crossings, parking and public transport offset areas. The upgrade also includes new litter bins and bus shelters complemented with some green infrastructure. The project certainly supports the vision for the inner city to be Africa’s leading, most vibrant, liveable, walkable city centre providing economic, residential, sporting and leisure opportunities for all by 2040. This is in line with the Inner-City Local Area Plan and regeneration strategy, approved by Council.
The Municipality is implementing these upgrades, and others to follow, to ensure that the inner city is adaptive, relevant and a resilient city that plans for current and future growth. Envisioned are mixed use and mixed income residential developments, niche precincts with quality and attractive offerings from pedestrian friendly streets, new public transport facilities and systems, diverse tourism to education, public art, parks, work spaces for small, medium and micro enterprises and infrastructure and support for the informal economy and more.
The inner city and the Point precinct in particular, are showing consistent progress as it undergoes regeneration and transformation. These upgrades form part of the Inner City Regeneration Strategy that aims to improve business confidence and stimulate investment in the retail, education, residential and commercial sectors. The Durban inner city is seen as one of the most important economic areas within eThekwini and remains an important revenue generator for the Municipality.
The public realm upgrade on Anton Lembede Street is located between Dorothy Nyembe Street and Yusuf Dadoo Street on the southern (left) side only. The appointed main contractor overseeing this aspect of the project is WK Construction. The public realm upgrade will be appointed to sub-contractors, as part of the Contractor Participation Goal for the project and Council’s commitment to Radical Economic Transformation.
The scope of work entails:
New paving (either on the existing sidewalk or the new extended sidewalk (this is dependent on approval from eThekwini Traffic Authority to extend the sidewalk),
New informal trader’s kiosks,
New bus stops,
New seating areas,
Public ablutions and storerooms,
Metro Police satellite office,
Parks Department facilities,
New landscaping and street furniture and,
Relocation of traffic lights, road markings and signage.
The appointed main contractor for Mahatma Gandhi Road is Icon Construction. The scope of works for the public realm upgrade at Mahatma Gandhi Road involves:
Sidewalk widening,
Replacement of existing paving,
Realignment of stormwater drainage,
Relocation/repainting of streetlight poles,
Road markings and associated infrastructure and,
Provision and maintenance of vehicular access to adjacent properties and parkade areas.
The City would like to apologise to the public for any inconvenience caused during the period of the construction. The new and improved public realm will have a positive impact in beautifying this urban zone of Anton Lembede Street and Mahatma Gandhi Road. This project is expected to be completed towards the end of 2021.
The biggest driver of the industry’s fortunes would, however, still be the gold price.
Next month Investing in African Mining Indaba will be hosting Nedbank CIB’s gold roundtable during the Virtual Investment Programme.
Ahead of the roundtable, Mining Indaba caught up with Arnold Van Graan, Analyst at Nedbank CIB to start the conversation on what he predicts for gold in the future, how the landscape has changed and what fundamentals are likely to shape the gold sector within the next five years.
2020 was a record-breaking year for gold; how do you expect it to perform in 2021?
The gold price was boosted by an abundance of bad news and uncertainty in 2020. Although 2021 is off to a shaky start, we expect the risk outlook to improve in a quarter or two, which could see the safe-haven support for gold wane. An improving global economic and geopolitical outlook and stability could see some of the uncertainty ease over the coming months, pulling gold down.
However, we do not expect a total collapse in the gold price, but possibly a bit more weakness from current levels, as most of the support (lower real rates/inflation and uncertainty) has been priced in. We, therefore, have a muted view on the gold price outlook for 2021e.
How do you think the gold landscape will change in 2021? Will we see more M&A and consolidation?
With the current gold rally potentially having reached a peak, we expect the focus of management teams to change slightly, and see growth coming back into focus. And often, with growth comes M&A. Although gold companies are currently focusing on smaller, lower-risk projects, we believe we could see companies start to embark on larger projects. We, therefore, expect more capital to be allocated to growth projects and see further industry consolidation. We would not be surprised to see a large M&A deal in the SA mining sector in the coming year.
Bitcoin has had a resurgence over the past few months. Do you see Bitcoin and other cryptocurrencies challenging gold’s relevance? Is “gold old” in the minds of younger generations?
Bitcoin is gaining a lot of attention, with many investors now finding it a viable investment. Younger generations, in particular favour Bitcoin, as it gives them more freedom from institutional control, more flexibility and perceived higher returns. Tesla’s foray into Bitcoin could see Bitcoin grab even more attention from investors.
However, Bitcoin as an investment option is extremely volatile and is more suited to short-term and medium-term trades rather than long-term investors, in our view. It appears as though many retail investors see Bitcoin as a means of making a quick profit. Gold remains a good asset class through which investors can diversify their portfolios. Gold has long been and remains the go-to traditional safe-haven asset. Bitcoin could be a good way to diversify your portfolio, but it will not replace gold, in our view.
Investors and analysts now talk of an “ESG premium” for stocks boasting strong environmental, social, and governance credentials. Which gold companies do you believe warrant an ESG premium?
We do not believe ESG matters have truly started to impact valuations yet. It appears as though the operational and financial performance of gold companies is still the major driver of valuations. The increased focus on ESG in recent years has seen mining companies moving from talk to action, in our view. We expect further pressure related to ESG matters on mining companies, which would see even more resources and spending on ESG-related matters over the coming years, and this could start impacting capital allocation decisions.
The link between ESG credentials and financial performance is becoming increasingly pertinent to the mining industry’s success. ESG has become more than just a company’s social licence to operate; it has become a non-negotiable criterion on many more fronts. We, therefore, believe companies with solid ESG credentials could start to attract an ESG premium, but even more so, we expect a lack of ESG compliance to weigh on valuations.
What are the fundamentals likely to shape the gold sector in the next 5 years?
Declining reserves remain a major challenge for the sector and could be one of the biggest factors shaping the industry over the next few years. We expect gold producers to embark on growth initiatives in order to replace reserves. Companies that lack organic growth or exploration potential in their portfolios would turn to M&A. We, therefore, expect M&A activity to remain high, with many of the smaller miners merging to retain scale and relevance. The focus on ESG and the global transition to clear energy could also impact the gold sector, with gold companies potentially using this to diversify into copper, while exiting certain jurisdictions that carry ESG risk.
We expect cost pressure to be a key challenge facing the sector, with the transition to renewable and sustainable energy sources adding to it. The biggest driver of the industry’s fortunes would, however, still be the gold price. A flat or rising gold price should see the sector continue to prosper and attract interest from a wide array of investors. However, in time, we expect the typical cycle of rising costs and capital expenditure to repeat itself, which could see the sector underperform the gold price.
Join Mining Indaba and Nedbank CIB on Wednesday 31st March at 13:00 (GMT) for the roundtable to discuss the points raised in the interview further. For more information, please click here.
The gold roundtable is open exclusively to approved investors and analysts of the Virtual investment Programme. To find out how to get involved with the Virtual Investment Programme, please click here.
Despite Africa’s plenteous energy resources, energy poverty is prevalent across the continent, with approximately 600 million people without access to electricity. This not only delays nations in realising energy access goals, but hampers industry progress, and reduces the continent’s economic growth by 2 to 4 percent every year.
However, energy access has improved in recent years as the number of people without access in sub-Saharan Africa has declined for the first time in absolute terms and countries such as Ethiopia, Kenya and Rwanda pave the way for their African counterparts. Africa is ahead of the curve with distributed energy systems that can rapidly increase energy access in rural areas. This proves more cost effective than conventional grid extension solutions, driven by innovative business models and rapidly diminishing technology costs. Renewables are on the rise across the continent with considerable renewable generation capacities being added in countries such as Egypt, Morocco and South Africa.
While the escalating investments in renewables remain promising, the rate of energy access falls short of achieving the universal energy access target by 2030. This being said, bridging the gap between Africa’s energy constraints presents substantial opportunities for investors focused on engaging with the continent, particularly in terms of supporting Africa to meet the energy deficit and to achieve universal energy access goals.
Evidently, these financing stipulations are of such magnitude that no solitary entity is capable of meeting them in isolation. Development finance institutions are required to proactively modify how they conduct business coupled with leveraging scarce public resources to raise private sector financing at scale.
Various barriers hamper investments and private sector engagement which could potentially accelerate energy access. Challenges include inadequate policy conditions for investors and other systemic impasses that retard transactions and increase project costs. Transforming the African energy landscape necessitates a versatile approach to unlock private sector capital by addressing these barriers in order to create an enabling environment for continental investments and calling on African policymakers to move promptly and enable investors to reach financial close in a timely manner.
In close collaboration with other development partners, The African Development Bank is geared towards building a marketplace that delivers sustainable energy transformation fundamental to Africa’s progression. The organisation is committed to not only minimising, but ultimately removing barriers for investors, predominantly through financial instruments to de-risk transactions, share knowledge and market data, as well as promote learning and networking amongst peers. Further to this, private sector participation is escalating, stimulated by multiple partnerships such as the New Deal on Energy for Africa.
Influential stakeholders have the power to profoundly impact the continent’s energy sector through collaborative discussions, thereby establishing the necessary foundation for expediting private sector investment in Africa’s energy realm. This will ultimately place the continent on a solid path towards socio-economic development and sustainable growth.
The upcoming Africa Energy Indaba Business Networking event represents the ideal platform to meet and engage with relevant stakeholders in the energy realm. These focussed discussion will foster important business liaisons, forge gateways for energy stakeholders into new markets and explore challenges, solutions and opportunities to promote innovation in energy operations. The nature of these discussions has made Africa Energy Indaba the continent’s most prestigious energy event.
Attending this conference is a unique opportunity, providing participants with a better understanding, knowledge sharing and insight into the latest global trends. All this intends to encourage attendees to enter new markets as well as establish advanced solutions and business models to grow competitive and sustainable businesses, ultimately contributing to the growth of the economy within which they operate.
About Africa Energy Indaba
Virtual Event – 1-5 March 2021
The business meeting of choice for the African energy sector
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In early July 2020, the Department of Economic Development and Tourism (DEDAT) was approached by De Beers Marine to assist with approval for the Gariep mining vessel to be sent to the Port of Cape Town dry dock for 112 days of maintenance and refitting. As a result of the Covid-19 pandemic and the lockdown restrictions, there was some concern that the project would not be able to proceed.
This work done by our Red Tape Reduction Unit is an excellent example of how we are working hard to improve the ease of doing business and create an enabling environment for businesses to grow and create jobs in the Western Cape.
