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The hidden wealth of the SME

Digital has become the banking buzzword. The term that defines investment, innovation and system transformation. Digital is as much an economy as the financial transactions that make up the lifeblood of the banking industry, and it allows for legacy systems and platforms to shift deliverables and insights, tangibly.

Digital payment solutions, particularly, have become invaluable to banks, providing data-rich insights that can be leveraged to engage with different industries, sectors and companies.

A recent analysis by Deloitte SME Digital Payments found that digital payments provide small to medium sized enterprises (SMEs) with the opportunity to improve business operations and strategically manage payments and develop value-added services. This is the opportunity for the SME – a landscape suddenly opened up by the versatility of digital payment solutions and the chance to digitise operations and minimise some of the financial challenges that come with running a business. For the banks, digital payments and SME adoption offer up a rich ecosystem into which they can inject their value and further support their engagements with this versatile sector.

Murray Gardiner, MD of Bluecode Africa

It has become critical for financial institutions to have these engagements. As innovation around FinTech continues to evolve and new financial models become increasingly accessible, banks are under pressure to pull on digital to remain relevant. They need to ensure that the customer experience is seamless, that the SME is given the tools needed to thrive, and that their solutions and services are positioned correctly. In this, digital payment solutions offer banks a chance to not only connect with the SME in a space that they need, but to pull on the data that these platforms provide to continue to evolve solutions to match SME demand.

However, the digital payment solution used needs to be one that is integrated with the bank and that is capable of baking both security and value-added services into the inherent functionality. With a digital payment platform, banks can use an account-based payment method that’s directly connected to their individual banking application. This minimises reliance on card-based schemes, cash, or alternative digital transaction tools that offer little insight into customer behaviour patterns. This will then allow for the bank to enhance the customer journey throughout the payment process, using the anonymised insights provided by the system to provide SMEs with the tools they need.

With modern account rail-based payments, anonymous digital tokens represent the customer without having any data associated with them. This not only ensures compliance with data protection regulation – General Data Protection Regulation (GDRP) and Payment Card Industry (PCI) data security standards – but it allows for improved security, and richer data insight manoeuvrability. This has the added benefit of giving the merchants more scope to enhance their own customer engagements, trickling the benefits downwards to pull transactions onwards in an ecosystem that serves everyone. Customer information is secure and private, and data is accessible and usable.

As the payment experience is set to change even more over the next few years, particularly after the global pandemic, it has become incredibly important for banks to invest into SME networks and technical infrastructure that allow for them to develop intelligent solutions and value-added services.

By adding in a rich payment layer that includes loyalty programmes and integrated account-based payments, the banks can make digital payments an integral part of the user journey and value proposition. The move to a digital payment platform allows for the banks to build a more robust business base by pulling on the data and insights from the SME and using this to engage more profitably. It also puts them into the race to preserve their space in the financial race, especially if they invest into digital tools that allow them to expand their digital offerings, payment services, and engage more effectively with the market.

The future lies in leveraging digital payment innovation to balance the banks more securely on the shifting sands of SME and market needs. With the right partner, the banks can embark on a digitisation strategy that can really use the data effectively to create solutions that resonate with the SME and continue to hold their status as trusted service providers for the sector.

By Murray Gardiner, MD of Bluecode Africa

Robotics and Coding are now part of teacher training

Photo supplied by the Sasol Foundation

A group of Mpumalanga teachers has had the opportunity to train as master teachers for Robotics and Coding, courtesy of Sasol. The Sasol Foundation has also donated multimedia resources for teachers and pupils in Science, Technology, Engineering and Mathematics (STEM).

An amount of R40-million was allocated by the Mpumalanga Provincial Government for the 2020/21 financial year in support of the Youth Development Fund, which was seeded the previous year with funding of R10-million.

The Mpumalanga Regional Training Trust (MRTT) is a Section 21 company with several sites in the province, including a Hospitality and Tourism Academy at Karino outside Nelspruit. The trust’s construction-training facility is accredited as a Construction Centre of Excellence. The Southern African Wildlife College is located near the Orpen Gate on the edge of the Kruger National Park.

A public-private partnership, MRTT intends increasing graduate numbers and is aiming for 50 000 young people to be trained in courses such as plumbing, painting, electrical, bricklaying and plastering in the three years to 2023.

A provincial bursary scheme has assisted more than 3 334 students who are studying in fields such as medicine, veterinary science, information technology, aviation, education and engineering. The artisan development programme in partnership with Hydra Arc is progressing well, with Sasol having committed to taking on all qualified apprentices from the academy in Secunda.

The University of Mpumalanga enrolled 3 220 students in 2019, a marked increase on quiet beginnings in 2014 when the university started life with 167 students. The university has added bachelor’s degrees in arts and commerce to its initial offering of academic courses in education and agriculture and a diploma in hospitality. Geology will soon be offered as part of a BSc. The main campus is at Mbombela with satellites at Siyabuswa (a former education college) and KaNyamazane, which hosts hospitality studies.

Mpumalanga has three Technical and Vocational Education and Training (TVET) Colleges, with an enrolment of over 36 000. UNISA, the Tshwane University of Technology and the Vaal University of Technology also have satellite campuses in the province.

A sixth rural boarding school, Thaba Chweu Boarding School in the Ehlanzeni District, has opened and a further six are due for construction. These schools make access to education easier for rural children who would otherwise have to travel long distances.

Free State agriculture sector plans and developments

Oranjeville, on the southern banks of the Wilge River, is the site of a fisheries project. The river flows into the Vaal River and the town is located in the Metsimaholo Local Municipality (under which Sasolburg also falls) within the Fezile Dabi District Municipality.

Five agri-parks are planned in each of the Free State’s district municipalities. The concept brings together farmers, traders and agro-processors at convenient sites. Support for rural smallholders will be available in terms of equipment hire from a central source, storage facilities, packaging of produce and getting products to market.

As part of the agri-parks programme a warehouse is under construction at Springfontein and the Thaba Nchu abattoir is being upgraded. In Sediba, Farmer Production Support Units supplied a tractor and implements to participants. A goat development project has been launched by the provincial government, intended to create agriculture opportunities for young people and women.

Key to the growth of these small-scale operations is access to finance and the Industrial Development Corporation (IDC) is a key role-player in the Free State. The launch of the Maluti-A-Phofung Special Economic Zone (MAP SEZ) has created another platform to boost the agro-processing and agro-logistics sectors.

Cannabis is a potential new sector. A Cannabis Expo was held in November 2019 at which experts, industry leaders and regulators met to discuss the economic benefits of medicinal cannabis. A provincial strategy will be developed in the course of 2020/21.

Company news

The Agriculture RSA division of chemical group Omnia has bought Oro Agri Opportunities, a producer of agriculture biologicals, for a reported $100-million (Engineering News). The US-based Oro Agri has production facilities in the US, Brazil and South Africa where it makes crop protection products, fertilisers and soil conditioners.

Omnia has a big presence in Sasolburg: its facilities include an ammonium nitrate/calcium nitrate plant, two nitric acid/ammonium nitrate plants, a porous ammonium nitrate plant, granulation plants and a nitrophosphate plant. Research facilities, the Chemtech group of laboratories, 185 specialised ammonia rail tankers and another production facility at Wesselsbron (south of Bothaville) make up the balance of Omnia’s presence in the Free State.

The purchase of a 21% stake in BKB by VKB has given the latter company extended geographical reach and opportunities in new markets. While VKB is strongest in the Free State and Limpopo with a grain focus, BKB is well-established in the Eastern Cape, deals mainly in wool and mohair and runs many auctions.

VKB is already a diverse group, with the capacity to produce soybean meal and soybean cake and flour from its plants, mills and factories. Grain Field Chickens, a large abattoir in Reitz, is one of the company’s biggest facilities in the province.

The Industrial Development Corporation (IDC), which has a 23% stake in the project, aims to help develop the Free State as the poultry hub of South Africa. VKB has six agro-processing companies including VKB Flour Mills and Free State Oil and is active in auctioning, storage, packaging and fuel sales, among other activities. VKB’s headquarters are in Reitz in the eastern part of the province and the group is one of the province’s largest employers.

The Imbani Homsek Group is an integrated dairy-products producer with one of the biggest Ayrshire herds in the world. The head office of Country Bird Holdings is in Bloemfontein: its brands are Supreme Chicken, Nutri Feeds and Ross (breeding). Country Bird Logistics controls 45 chilled and frozen vans.

Clover has three factories in the Free State: Bethlehem (milk powder, whey mixtures and creamers); Frankfort (butter, the largest such factory in the country, where ghee and roller dried milk powder is also made) and in Heilbron (whey, buttermilk, condensed milk
and packaging).

Not many rural landing strips have to deal with 376 aeroplanes and 63 helicopters in a short space of time. That’s what Bothaville had to do when it again hosted the country’s largest agricultural festival, NAMPO Harvest Day, in 2019. Grain SA’s big day had 775 exhibitors catering to 81 345 visitors.

Bothaville is on the western edge of the Free State and the town falls under the North West in the organisational chart of giant agricultural company Senwes, which has its headquarters in Klerksdorp. The rest of the Free State is divided into three regions by Senwes, which deals with about 20% of the country’s oilseeds and grain through its 68 silos.

Credit: Agricultural Research Council

The province supplies significant proportions of the nation’s sorghum (53%), sunflowers (45%), maize (45%), potatoes (33%), wheat (30%), groundnuts (32%), dry beans (26%), wool (24%) and almost all of its cherries (90%). Red meat and dairy are other important products. Game hunting is a significant sector, and several large Free State farms have been converted from stock to game farms. Crop production represents about two-thirds of the province’s gross agricultural income.

The main crops are maize and wheat. Sunflowers, sunflower seeds, sorghum and soy beans are other major crops. The Mangaung Fresh Produce Market plays a vital role in the sector, catering as it does to householders, bulk buyers, informal traders, agents and farmers.

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Antler Gold and Cora Gold take one step closer to the Investment Battlefield champion title

London: Investing in African Mining Indaba (Mining Indaba), part of Hyve Group Plc, announced the winners of the First Stage: Precious Metals rounds of the Investment Battlefield. It reconvenes this week for the First Stage: Battery and Energy Exploration and Development heats, taking place 23 and 25 March at 14:00 (GMT).

The popular feature saw the global finance community tuning in to watch junior mining companies take to the virtual stage and battle for the prestigious title to a panel of expert judges including OCIM Precious Metals, Elemental Royalties, MJG Capital, Afena Capital and Triple Flag Precious Metals.

The First Stage: Precious Metals Exploration heat spotlighted precious metals explorers in Africa, companies included Antler Gold, Platinum 1 and Pelangio Exploration fighting for a spot in the final.

After careful deliberation, Antler Gold was announced the first winner for their next gold discovery within the highly prospective central Damara Mobile Belt in Namibia. The exploration activities provide an almost tenure-wide coverage of the zones by geochemical and geophysical surveys. The feedback was unanimous as Namibia is highlighted as an attractive place to conduct and operate projects, not just in Africa but globally with the recent success stories in the market.

The second heat in the First Stage: Precious Metals Development named Cora Gold the winner, up against Samara Resources and Mcharo-Kombe. It was a very close-run competition, however the emerging West African gold developer with a portfolio of prospective gold assets across Mali and Senegal, located amongst multiple operational mines. The developing Sanankoro gold project in Southern Mali and the continued regional exploration across +1,00 km² of active permits creates the largest single drill programme Cora Gold has undertaken – up to 35,000 metres, doubling the metres from previous years. It was a difficult decision, nonetheless, it has a quicker timeline to production, the ability to produce earlier than the other presenting companies coupled with already strong funding partners that will take it through production.

This week, the Investment Battlefield resumes on Tuesday 23 March for the First Stage: Battery and Energy Materials Exploration, followed by the First Stage: Battery and Energy Materials Development on Thursday 25 March. The junior mining companies include Ironridge Resources, Marenica Energy, Be Metals, Premier African Minerals and Gratomic. The panel of judges consists of Pangea Resources, Terea Africa, AMED, The Noble Group, Standard Chartered Bank and Mergence Corporate Solutions.

To find out who will be joining Antler Gold and Cora Gold in the battery metals vs gold final on 31 March and becoming the 2021 champion, click here to register for 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 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.

‘Bleisure’ tourism provides exciting opportunity for South Africa

South Africa’s already developed infrastructure can provide the perfect spring board for boosting the ‘Bleisure’ industry.

Africa in its entirety was the second-fastest growing region for tourism in 2019, just a couple of percentage points behind Asia Pacific. Whilst this is an incredible achievement, the events of 2020 will likely leave last year’s figures at a little less than impressive. However, the New Year should bring hope for those in the tourism and leisure industries.

A hint of life returning back to normal should sow the seeds for South Africa’s tourism and business sectors to come together to mine an under-explored market; the ‘bleisure’ traveler.

Some encouraging statistics

In 2018 South Africa welcomed 16.4 million tourists, a figure that has only increased since 2013 and is set to reach close to 20 million by 2023. This boost in tourism numbers could see South Africa surpass Morocco as the most visited African country, in fact, when accounting for travelers from within Africa, they are already the leading country. Already South Africa has asserted itself as a premier long-haul business destination, it’s amongst the top 15 countries globally.

Finally, the World Travel and Tourism Council has shown that the travel and tourism industry in South Africa currently employs more people than the automotive and chemicals manufacturing, mining and communication services industries. All of these statistics point to a sector that is on the verge of enormous success.

The foundations are laid

South Africa is uniquely positioned to make the most of this growing interest in international travel. It boasts more chain and branded hotels than Morocco, with a staggering 430 hotels in South Africa, versus just 153. With much of the tourism infrastructure already built, the expensive work has already largely been done.

The next step is to ensure that these hotels and resorts are running at a profitable capacity, and the way to do that is to explore what travelers to South Africa want. One of the most under-exploited sectors of the international travel market is the ‘bleisure’ traveler. That is, the traveler who is visiting the country primarily for business, but intends to stay on afterwards for leisure. These travelers account for approximately 29% of tourism, no small slice of the pie.

Industries primed to cater for the ‘bleisure’ traveler

The iGaming industry

The iGaming industry has gone from strength to strength in South Africa, with the gambling industry bringing in a total turnover of R390-billion in 2018. This represents around 1% of the entire national GDP, but a much larger slice of the tourism industry of course. South African online casino sites cannot be discounted from these figures, they provide a great deal of the income. However, there is plenty of evidence to show that online casino players are far more likely to visit brick and mortar casinos than those who don’t play online. These industries should work for their mutual benefit.

Tsogo Sun is the largest iGaming company in Africa, boasting revenues of R9.8-billion in the 2019 financial year. If figures allow for stays in their resorts, food purchases and other services then this number is boosted to R11.6-billion. Their flagship enterprise Montecasino in Johannesburg brought in R2.7-billion alone. These figures suggest that the addition of casinos, or other on-site pay-to-play leisure facilities at hotels and resorts, could bring in huge extra income, particularly from the ‘bleisure’ market.

The hotel industry

Of course, the hotel industry benefits from travelers whether they’re staying for business or leisure. However, most ‘bleisure’ travelers are keen to stay on at their current hotel, for convenience’s sake, yet can be easily put off by high prices. 42% of ‘bleisure’ travelers that swap to a different hotel for the leisure part of their trip, do so because of the price.

Hotels that host business travelers should consider offering deals for longer stays, or dropping prices at weekends when occupancy is typically lower anyway. These small concessions can easily make the difference between ‘bleisure’ travelers staying for several weeks, or taking their business somewhere cheaper.

The food & drink industry

Of course, the ‘bleisure’ traveler has to eat and drink on their stay and naturally this will bring business to local restaurants and bars. Another interesting way to really capitalize on the ‘bleisure’ market is to bring the food experience to them.

Joshua Novick, vice president of business development for London & Partners, makes a valid point in saying that often ‘bleisure’ travelers don’t get a moment to get out and explore the town. Their company helped local businesses to generate some income, and ‘bleisure’ travelers to have an authentic London experience by bringing a London bus into the conference center. The visitors to the conference could pay for traditional British food from the London bus, creating a talking point and a nice break from proceedings, not to mention income for a local company.

Finding ways to incorporate the best of South Africa into the conference centre is a direct way to generate both income and excitement at once.

South Africa’s busiest rail province

Credit: Transnet

There is more freight rail traffic in Mpumalanga than in any other province. This is principally because of the transport of coal, but there are also large volumes of chrome, ferrochrome, forestry products, chemicals, liquid fuels and general freight.

The Balfour North to Volksrust section of the Gauteng to Durban mainline carries the largest volumes, most of which is long-haul freight passing through the province. The busiest internal provincial Transnet Freight Rail section is the Maputo Corridor which runs west to east from Pretoria to Maputo.

Despite these high rail volumes, a huge amount of mineral product (mainly coal) is transported by truck around and out of the province. This puts immense pressure on Mpumalanga’s roads network, particularly in the Gert Sibande District and the Nkangala District. Road improvement plans aim to simultaneously fix rural roads and make better connections between rural and urban areas.

The statistics relating to coal haulage in Mpumalanga are stupendous. In one 12-hour period, 34 198 tons of general freight were recorded for the section of the N4 highway between Nelspruit and Komatipoort. On the R50, Leandra to Standerton, the volume was 25 615 tons (Mpumalanga Department of Public Works, Roads and Transport).

Mactransco’s website states that its trucks serving Tshikondeni Coal Mine travel 3.7-million kilometres per year, working all day for six days a week.

The fleet of ABF Legend Logistics, a Super Group company, contains more than 200 super-link coal haulage trucks while another company in the group, SG Coal, claims to have one of the biggest fleets of coal haulage trucks in Africa. Coal Tipper Resources operates out of Bethal.

The South African National Roads Agency (Sanral) has presented its long-term vision, Horizon 2030, as part of its contribution to the National Development Plan 2030. Road improvements which have boosted the transport infrastructure of Mpumalanga include the upgrades to the R570 (linking Malelane on the N4 to Swaziland), the N11 (Hendrina-Middelburg) and part of the vital R573 Moloto Road, which carries huge volumes of traffic to Gauteng and Limpopo. Sanral’s three-year plan for the R573 allocates R1-billion to
the project.

A clause in Sanral’s contract ensures that small companies are involved. Raubex Construction has formed a joint venture with Biz Afrika, Khuluphala Tradings and Themolo Business Enterprise.

Transport Corridors

The R573 forms part of the Moloto Corridor, which connects the province with Gauteng Province. The long term aim is to create a coordinated road and rail corridor including rapid rail facilities. With about 50 000 motor vehicles using the route every day, it is one of the busiest parts of South Africa’s road network. The plan to upgrade the corridor is one of 18 national Strategic Infrastructure Projects (SIPs).

The first phase of the Moloto Corridor Development Programme, which involves the upgrading of road infrastructure is nearly complete. Accidents have been reduced as a result of the R3.7-billion first phase.

The Maputo Development Corridor is Africa’s most advanced spatial development initiative (SDI) comprising road and rail infrastructure, border posts, and port and terminal facilities.

Run by the Maputo Development Corridor Logistics Initiative (MCLI), the corridor runs from just outside Pretoria in Gauteng, through Witbank, Middelburg and Nelspruit in Mpumalanga, and on to Maputo in Mozambique.

Rail

An infrastructural development that should boost trade is Transnet’s planned Swaziland Rail Link (SwaziLink) project. A 146 km railway line between Lothair in Mpumalanga and Sidvokodvo in Swaziland will allow for better movement of freight between the countries and provide an alternative route for freight to Richards Bay.

Transnet Freight Rail is the main operator and the chief freight movements are coal, fuel, chemicals, timber, iron and chrome ore, fruit, maize, animal feed, wholesale and retail goods, steel, building supplies, fertiliser and consumer goods. The port of Maputo in Mozambique is an attractive option for freight. The coal terminal at Richards Bay in KwaZulu-Natal receives the majority of the coal that is mined in the province.

Private rail operators Sheltam service the coal mining and ferrochrome-metal industries from regional headquarters in Witbank. The company runs systems, hauls raw materials and rebuilds and refurbishes locomotives.

Airports

A new flight has been added to SA Airlink’s connections between Limpopo and Cape Town. In addition to the regular early-morning flights out of Nelspruit Kruger Mpumalanga International Airport (KMIA) with a late-afternoon return flight, an early morning Saturday flight has been added. This leaves Nelspruit KMIA at 7h40 and arrives in Cape Town at 10h05 and is targeted at the leisure traveller.

Nelspruit KMIA is the province’s main airport, serving both the capital and being a convenient entry point to the southern part of Kruger National Park. Airlink has direct flights to and from Johannesburg, Cape Town, Durban and Livingstone in Zimbabwe.

Hoedspruit Eastgate Airport is a popular destination for travellers on their way to private game lodges and is also near the Orpen Gate of Kruger Park. Middelburg Airfield is one of the larger alternate airports in the province, boasting a 1.9 km runway that can accommodate a 737. The annual Middelburg Air Show is held in June. Many game lodges have airstrips and helipads. SA Red Cross Air Mercy Service operates out of the old Nelspruit airport just south of the city.

Experience hand made perfection

Our company was started in 1988. We buy all our raw material from local suppliers and our products are 100% manufactured in South Africa. Our work force is also employed from the local community and are further trained in house. We take pride in our products and our aim is to supply quality shoes that last at a competitive price.

Visit SSK Footwear online: https://www.sskfootwear.com/

Framework in place for public and private investment in Durban Aerotropolis

Durban Aerotropolis Master Plan (Source: www.durbanaerotropolis.com)
The Durban Aerotropolis is destined to become a premier business and trade hub in Sub-Saharan Africa, on the doorstep of KwaZulu-Natal’s largest city and primary manufacturing centre, Durban.

The city of Durban is also home to Africa’s busiest seaport and the Southern Hemisphere’s biggest and best equipped container terminal, and is strategically positioned on the world’s shipping lanes.

The KwaZulu-Natal Provincial Government drives the planning of the Durban Aerotropolis in conjunction with local land owners, municipalities and other state entities.

Dube TradePort Corporation is involved in the formulation of the integrated regional spatial planning and development of the Durban Aerotropolis, which will take advantage of Dube TradePort’s prime location as home to the state-of-the-art King Shaka International Airport, the heart of the aerotropolis and a major trade and business centre for Southern Africa.

Artist’s impression (Supplied)
The following components clearly set the Durban Aerotropolis apart, affording it a distinct competitive advantage over other destinations:
  • A freight-orientated development with, at its heart, a world-class cargo facility managed by a single handler, Dube TradePort Corporation;
  • Purpose-built; and
  • One of few developments world-wide which incorporate a ‘greenfield’ site with additional surrounding land available for carefully planned and controlled expansion. The coastal situation of the Durban Aerotropolis makes logistics a cost-effective proposition.

The development, in conjunction with the airport city component, Dube TradePort SEZ, together with burgeoning seaport infrastructure, direct access to numerous global destinations and linkages to SADC countries, combine to position KwaZulu-Natal as a key business point in South and Southern Africa.

Its potential for growth into the future brings together a plethora of like-minded stakeholders whose objectives align with a shared goal: the creation of an investment climate conducive for the expansion and growth of KwaZulu-Natal’s economy through the establishment of new opportunities for the broad business environment as a result of structured and planned development.

QUICK FACTS:
  • 32 000 hectares
  • 42-million square metres of development
  • 750 000 permanent jobs
  • 1.5-million residents
  • Approximately R1-trillion potential investment
  • 10 000 hectares of green space

Ports upgrade and expand to support manufacturing and exports

The Port of Durban handles containers, automotive imports and exports, break-bulk and agricultural commodities (Credit: TNPA)

Almost a third of South Africa’s manufactured exports are produced in KwaZulu-Natal. A number of domestic and international manufacturers are either buying into the province or building new facilities in order to export finished goods.

The Mara Group’s R1-billion investment in a smartphone factory at the Dube TradePort is the latest in a string of inward investments that KwaZulu-Natal has received. This includes expenditure of more than R1.2-billion by Arçelik, the Turkish owner of Defy, at the company’s three South African plants (two of which are in the province) and R4.5-billion by Nyanza Light Metal in a titanium dioxide pigment plant at Richards Bay.

The Special Economic Zones (SEZs) at Richards Bay and King Shaka International Airport (the Dube TradePort) are key components of the strategy of attracting investors to the province. Dube TradePort attracted R7-billion between 2012 and 2019 and the same amount is expected to accompany the development of Phase 1A and Phase 1F of the Richards Bay Industrial Development Zone (RBIDZ).

Two investors in 2019 were edible oils manufacturer Wilmar Processing SA, which is investing more than R1-billion in a plant, and Elegant Afro Line, which will spend about R900-million on its chemicals plant.

There are plans to establish a clothing and textiles SEZ in the province to build on the province’s established strength in the sector and an automotive supplier park will be in operation by 2021. Toyota and Bell Equipment play a big role in the automotive sector while the Engen Oil Refinery is a strategic asset.

A solid base for future growth

The province’s existing infrastructure, good soils and fine weather provide a solid base for future growth. KwaZulu-Natal already has significant capacity in heavy and light manufacturing, agri-processing and mineral beneficiation, all of which is supported by South Africa’s two busiest ports (Richards Bay and Durban), the country’s busiest highway (the N3), a modern international airport and pipelines that carry liquids of all types to and from the economic powerhouse of the country around Johannesburg in the interior.

Sappi’s dissolving pulp mill at Umkomaas south of Durban (below) is one of the province’s most significant industrial sites as it produces huge quantities of a material that is used in viscose staple fibre, which in turn is used in clothing and textiles. Together with production volumes from Sappi’s mill in neighbouring Mpumalanga province, the company is the world’s largest manufacturer of dissolving pulp. Sugar, tourism and forestry and paper are other important sectors driving growth and employment in KwaZulu-Natal.

In his 2020 State of the Province address, Premier Sihle Zikalala listed the sectors which are to be targeted for investment in the future. These are:

  • Aloe processing
  • Bio-ethanol
  • Renewable energy
  • Fish processing
  • Innovation hubs
  • Oceans Economy

KwaZulu-Natal has a long coastline that stretches from Port Edward in the south to the iSimangaliso Wetland Park in the north. The province’s contact with the sea has brought obvious benefits: fishing, fine beaches enjoyed by millions of tourists and two great ports.

These ports export vast quantities of minerals (mostly through Richards Bay) and manufactured goods (Durban) and serve as an important conduit for imports of all sorts. The Richards Bay Coal Terminal exports massive quantities of coal while the Port of Durban is the busiest port in Africa.

Credit: TNPA

Oceans Economy

However, planners want to massively increase the economic benefits that the ocean can bring. An Oceans Economy Review Workshop has come up with a range of sub-sectors that can help grow the provincial economy and invite foreign direct investment:

  • Marine transport and manufacturing
  • Offshore oil and gas exploration
  • Aquaculture
  • Marine protection and ocean governance
  • Small harbours
  • Coastal and marine tourism

Strategies to grow the Oceans Economy dovetail with ongoing projects to boost the capacity of the province’s ports and to explore for gas and oil in the Indian Ocean. If oil rigs were to start visiting the KZN coastline on a regular basis, the ship-repair industry would grow exponentially.

The Oceans Economy is one of the focus areas that has been chosen by national government to be part of Operation Phakisa, a focused, goal-driven attempt to jump-start a specific economic sector. Overall, Phakisa intends creating a million jobs by 2033 and injecting R177-billion into national GDP.

The decision to build a cruise-ship terminal at the Port of Durban is a good example of the kind of decision that is in line with an “Oceans Economy” approach.

Photo credit: Viking Ocean Cruises, Photo by Philip Wilson

Geography

The mixed topography of the province allows for varied agriculture, animal husbandry and horticulture. The lowland area along the Indian Ocean coastline is made up of subtropical thickets and Afromontane forest. High humidity is experienced, especially in the far north, and this is a summer rainfall area. The centrally-located Midlands is on a grassland plateau among rolling hills. Temperatures generally get colder in the far west and northern reaches of the province.

The mountainous area in the west – the Drakensberg – comprises solid walls of basalt and is the source of the region’s many strongly running rivers. Regular and heavy winter snowfalls support tourist enterprises. The Lubombo mountains in the north are granite formations that run in parallel.

Regions

KwaZulu-Natal has 10 district municipalities and a metropolitan municipality, the most of any province in South Africa. In economic terms, the province offers diverse opportunities.

Southern region

This area is the province’s most populous. The city of Durban has experienced booms in sectors such as automotive, ICT, film and call centres. The promenade now reaches all the way to the harbour and the Point development will benefit. Major investments are taking place at the Port of Durban with the current centrepiece being the Durban Cruise Terminal. The Container Terminal is also undergoing an extensive overhaul.

Durban’s conference facilities are well utilised, but many opportunities still exist in chemicals and industrial chemicals, food and beverages, infrastructure development and tourism. Further south, plans are in place to upgrade Margate’s airport and Port Shepstone’s beachfront.

Western region

Also known as the Midlands, this is a fertile agricultural region which hosts the popular annual Royal Show. It produces sugar cane, fruit, animal products, forestry and dairy products. Pietermaritzburg is the provincial capital and home to a major aluminium producer along with several manufacturing concerns, including textiles, furniture, leather goods and food. The city has good transport links along the N3 national highway, excellent schools and a lively arts scene. The Midlands Meander is a popular tourist destination.

Eastern region

Although most of this area is very rural, Richards Bay is one of the country’s industrial hotspots because of its coal terminal, port and aluminium smelters. The Richards Bay Industrial Development Zone (RBIDZ) is a major economic node in itself and with the possibility of a power plant being built, the RBIDZ could become an energy hub. Mining is an important sector in this region.

The other major urban centre is Empangeni which has several educational institutions. The King Shaka International Airport is adjacent to the Dube TradePort, a Special Economic Zone (SEZ) which is attracting investors.

Northern region

The economic powerhouse is Newcastle in the north-west: coal mining, steel processing and manufacturing are major activities. Some old coal mines are being reopened by new coal companies to cater for the country’s power stations’ demand for the fuel.

Game farms, trout fishing and hiking are part of an attractive package for tourists, and Zululand is a popular destination for cultural experiences. The region is rich in Anglo-Boer War history which includes battle sites such as Islandlwana and Rorke’s Drift.

South African oil and gas is ready to compete

Image Credit: Anton Swanepoel

Significant discoveries have been made off South Africa’s south-eastern coastline by Total and its investment partners. Drilling activity such as this could be the kickstart that makes South Africa’s oil and gas sector a major player in the African market.

In successive years, Total and its partners had great news: gas condensate was found in 2019 at a site called Brulpadda off the coast of Mossel Bay and in 2020, the nearby Luiperd prospect in Block 11B/12B delivered more good results.

The block, in the Outeniqua Basin 175 km off the southern coast, covers an area of about 19 000 km² in water depths of 200 to 1800 metres. The exploration was done by the semi-submersible rig Deepsea Stavanger, which journeyed twice from Norway to lead the exploration projects.

The two finds raise the odds of Total investing in what it calls a “world-class” offshore gas site. The drilling campaign employed 195 South Africans with specialist skills but the potential spinoff is enormous if the find leads to drilling and commercialisation.

The new CEO of Petroleum Agency SA, Dr Phindile Masangane, describes the prospect of regular drilling operations off the South African coast as, “A game-changer for South Africa’s upstream oil and gas industry.”

Natural gas lies also lies offshore to the west of South Africa in the Atlantic Ocean (Ibhubesi). Block 2A of the Ibhubesi gas field north-west of Saldanha is estimated to have reserves of 850-billion cubic feet of gas.

If Total goes ahead with further investments, the PetroSA GTL refinery at Mossel Bay (Mossgas) could be revived and the idea of creating a gas market in South Africa would get a massive boost and the country’s four Special Economic Zones (SEZs) at ports would become critical to its utilisation.

Image Credit: Anton Swanepoel

A Gas Utilisation Master Plan (GUMP) is being developed as a part of national energy policy and private companies are responding to this changing environment. The major economic sectors currently using gas are the metals sector and the chemical, pulp and paper sector.

Large quantities of oil are transported around the Cape of Good Hope every year: 32.2% of West Africa’s oil and 23.7% of oil emanating from the Middle East. The long-term prospects for shipping and oil and gas have persuaded national government to pursue Operation Phakisa (with a strong maritime focus) and for Transnet National Ports Authority to spend R2.5-billion on new equipment at South Africa’s eight ports in 2019/20.

At the Richards Bay Special Economic Zone (RBSEZ) a feasibility study is being done on a gas-to-power plant and a large liquid petroleum gas import and storage terminal was recently built for Petredec by Bidvest Tank Terminals.

Petroleum Agency SA: promoting and regulating exploration and production

Petroleum Agency SA evaluates, promotes and regulates oil and gas exploration and production activities in South Africa and archives all relevant geotechnical data. The Agency acts as an advisor to the government and carries out special projects at the request of the Minister of Mineral Resources and Energy.

South Africa’s energy mix is changing to include more gas through importing liquefied natural gas (LNG), using shale gas if reserves prove commercial, and developing infrastructure for the import of LNG. Petroleum Agency SA plays an important role in developing South Africa’s gas market by attracting qualified and competent companies to explore for gas. Another major focus is increasing the inclusion of historically disadvantaged South African-owned entities in the upstream industry.

Currently, natural gas supplies just 3% of South Africa’s primary energy. A significant challenge facing the development of a major gas market is the dominance of coal. Opportunities for gas lie in the realisation of South Africa’s National Development Plan (NDP) and the Integrated Resource Plan (IRP).

As custodian, Petroleum Agency SA ensures that companies applying for gas rights are vetted to make sure they are financially qualified and technically capable, as well having a good environmental track record. Oil and gas exploration requires enormous capital outlay and can represent a risk to workers, communities and the environment. Applicants are therefore required to prove their capabilities and safety record and must carry insurance for environmental rehabilitation.

Contact details

Tel: +27 21 938 3500
Email: plu@petroleumagencysa.com
Website: www.petroleumagencysa.com

 

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