Annual Report 2014 Southern African–German Chamber of Commerce and Industry Deutsche Industrie–und Handelskammer für das südliche Afrika

Southern African - German Chamber of Commerce and Industry Deutsche Industrie - und Handelskammer für das südliche Afrika

Chief Executive Officer: M. Boddenberg Advertising: M. van Niekerk Editorial: M. van Niekerk Design: Quba Design and Motion Printing: Bureau Digital Media Southern African – German Chamber of Commerce and Industry NPC. Die Deutsche Industrie- und Handelskammer für das südliche Afrika wird gefördert vom Bundesministerium für Wirtschaft und Technologie aufgrund eines Beschlusses des Deutschen Bundestages Reg. no. 1963/002981/09 Johannesburg Office PO Box 87078, Houghton, 2041 47 Oxford Rd, Forest Town, 2193, Johannesburg Tel: +27(0)11 486-2775 Fax: +27(0)11 486-3625/3675 Email: [email protected] Cape Town Office PO Box 1272, Cape Town, 8000 13th Floor, Triangle House, 22 Riebeek Street, Cape Town 8001 Tel +27 (0)21 418-3311 Fax +27 (0)21 418-5577 Fax 2 Mail: +27 (0)86 677 1225 Email: [email protected] Durban Office P.O. Box 1506, Durban 4000 892 Umgeni Road Lion Match - Chamber Square Durban, South Africa Tel. +27 (0)31 335 1000 Cell. +27 (0) 83 779 0385 Fax (0)86 6790862 [email protected] MAPUTO Office Rua António Simbine (ex- Antonio Bocarro) nº 211 Sommerschield, Maputo, Moçambique Tel: 0258 2149 3260, Fax: 0258 2149 3258 Email: [email protected]

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CONTENTS Message from the President...........................6 Message from the Chief Executive Officer......................................10 How We Work: Chamber organogram.....12 CHAMBER DEPARTMENTS The General Services Department...............14 Corporate Social Responsibility....................16 Mineral Resources................................................18 Sustainable Energy..............................................20 South African-German Training Services...................................................22 The Trade Fairs Department............................24 CHAMBER BRANCH OFFICES Cape Town Office: Western Cape................32 Durban Office: KwaZulu-Natal.....................34 A new office in Maputo....................................36

EVENTS German Weeks 2013..........................................38 Annual Ball 2013..................................................40 Back to Work 2014..............................................41 Ball of Hope 2014................................................42 FEATURE ARTICLES South Africa: The Way Forward...........44 Where is South Africa going?........................45 De-Industrialisation in South Africa: Challenges and opportunities ......................48 South Africa’s National Development Plan...............................................50 South Africa’s Automotive Sector...............51 SADC COUNTRY REPORTS......................57 South Africa............................................................58 Angola........................................................................64

Botswana..................................................................66 Lesotho......................................................................70 Mozambique...........................................................74 Namibia.....................................................................80 Tanzania ...................................................................84 Zambia ......................................................................88 Zimbabwe.................................................................92 Dates to diarise.........................................96 ADVERTORIALS EUREM Southern Africa 2014.......................21 Heimtextil.................................................................26 Ambiente in Frankfurt am Main...................28 Prowein 2014.........................................................30 RHEINZINK-Titanium-Zinc..............................62 Transcend Capital.................................................78

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results since the first democratic elections 20 years ago and has thus implemented cabinet additions and reshuffles to speed up upgrades to infrastructure, create jobs and provide basic services for South Africans. In the speech from last year, it was mentioned that Moody’s Investors Service had downgraded South Africa from A3 to BAA1. Once again, events have repeated themselves; Moody’s, Standard & Poors and Fitch downgraded South Africa once again to BBB on 13 June. The Rand has lost a lot of ground against all major currencies – now at almost 11 Rand to the US Dollar. Last year, we were lamenting 10 Rand to 1 US Dollar. Despite predominantly negative forecasts, trade between South Africa and Germany remains strong. German companies are here in South Africa for the long-term and are economically and socially invested in this country. Bilateral trade between South Africa and Germany reached 13.3 billion EUR in 2013, a figure which is likely to decrease to 13.7 billion EUR by the end of 2014. Germany’s exports to South Africa sank to minus 0.7% in the first few months of 2013 and South Africa’s exports to Germany were at a weak minus 7.2% during the same time period. Despite slow economic growth, South Africa is still at the number 12 spot in Germany’s most important export markets – the same position as Mexico and Canada. Germany is the second largest importer to South Africa after China. Due to a reputation for excellent quality, German machinery and equipment is in high demand. The large infrastructure projects in South Africa and industry’s need to increase energy efficiency are opportunities for German manufacturers. The interest in South Africa and SADC from Germany is ever-present and growing. To that end, our total membership has increased to 615 members in total – an increase from last year of 22. Of these 615 member companies, 514 are South African, 97 from Germany, three from Namibia and one from

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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very warm welcome to you all on this chilly African winter’s day, to the Annual General Meeting of the Southern African – German Chamber of Commerce and Industry. First and foremost, I must mention the late, great Nelson Mandela. December 5, 2013 saw the passing of the father of this nation. South Africans, and people from all over the world mourned the loss of a great man, who secured a free country for all. As I reflected on the year that has passed I glanced over my speech from the AGM in 2013, and I have to say that so many things have repeated themselves. But also South Africa has evolved from this time last year, especially politically. For instance, Marikana and month-long strikes were on my radar back then and this year the damage of the crippling platinum strike is on everyone’s minds. After Marikana in 2012, which shook South Africa to the core, it was hoped that labour relations would improve. It cannot be said that this is the case. It has been our opinion for some time, and now more and more the opinion of business leaders all over South Africa, that government and business need to talk openly about these hard issues. At the point where a strike becomes detrimental to the socio-economic interests of an entire country, it must be possible to achieve and implement a way forward. This time last year, elections were high on the agenda, service delivery protests were ongoing and allegations of corruption were creating widespread animosity. Service delivery protests are still continuing and corruption allegations have reached a new level with the Nkandla scandal. The elections have made interesting changes to South Africa’s political landscape. In 2012, Julius Malema was expelled from the ANC. This year parliament has 25 seats reserved him and his Economic Freedom Fighters, in their red attire. The DA have increased their support across the country – especially in Gauteng. The ANC has had its worst

Message from THE PRESIDENT Switzerland. For that we must thank Mr Boddenberg and the Chamber team for their tireless efforts. The Chamber is branching out into SADC, and I look forward to the new ventures. The Chamber hosted 43 events in the last 12 months, with close to 2,500 participants. Delegations, local trade fairs, press events, seminars and workshops along with the Annual Ball, Back to Work lunch and the Ball of Hope made for a busy year for Chamber members and friends, and employees alike. The Chamber welcomed fantastic guest speakers, from political leaders like Dr Mamphela Ramphele, Helen Zille and Naledi Pandor; to business leaders such as Clem Sunter and Roy Andersen. We cannot forget the German Weeks, where numerous German institutions in South Africa showcased their activities – with the view of “what it is to be German” reinforcing the strong partnerships our two countries share. Events took place all over Gauteng – panel discussions, conferences, trade fairs, and cultural events like the famous Oktoberfest. These events once again showcase how well the Chamber and the German Embassy are working together for Germany and South Africa. I must thank the support from the German Embassy; not only with regards to the German Weeks but throughout my Presidency I have enjoyed the support and initiatives from the Ambassador and his team. The Chamber KZN representative office in Durban is also growing its membership, up by seven new members to total 35. A maritime industry delegation from South Africa, supported by the Durban office visited Bremen recently, with excellent results. The Western Cape representative office of our Chamber has had another incredibly busy year, especially in terms of delegations. 126 Western Cape members rely on Ms Tambusso-Ferraz and her team for their support in the business arena here. The office in Cape Town now also houses the new Competence Centre for Renewable Energies, an exciting new Chamber initiative. There are now three Competence Centres at the Chamber. The Corporate Social Responsibility centre has been active for some years now, ensuring that German companies are as socially active in South Africa as they have always been,

affecting real change. The Competence Centre for Mineral Resources has already concluded a successful delegation to Zambia and Mozambique, bringing together German companies and government and business leaders from these countries. The Competence Centre for Renewable Energies, based in Cape Town, is rolling out the EUREM throughout the SADC region, and especially in South Africa. I am very pleased to be welcoming the two new SADC representative offices of the Chamber. In Maputo, Dr Friedrich Kauffman has taken the reigns and Bernd Doppelfeld with be the representative in Harare. As the Southern African – German Chamber, representatives stationed in the other SADC countries is really going to improve the services we offer to German companies in terms of penetrating the SADC market. Interest by German companies in Mozambique, will mean that Dr Kauffmann will have his hands full, as he will also be assisting SAGTS with their move into the country. SAGTS has expanded its team and also has a branch in the Western Cape. The CATS offices have moved to a new building and BTC has also been fortunate to receive a donation by the Japanese Embassy for building their new training centre. Together with FESTO, we hope to introduce Mechatronics training next year. This training, along with the other important work of the SAGTS aims to address the serious local skills shortages in South Africa. Education and training at a local level is key for creating growth and a sustainable future for this country – something which affects us all. Furthermore, as a Chamber, bilateral trade is also important to us in terms of South African business in Germany, and internationally. To that end the Trade Fairs Department supported 489 corporate exhibitors and 3,889 trade visitors in 2013. The Chamber represents 197 premium international exhibitions, hosted by leading trade fair organisers based in Germany. I must express my gratitude to the German Ministry of Economics and Technology and to the DIHK for their support this year, both organisationally and financially. I want to thank all members of the Senior Council and the Directorate for all your support during my Presidency – this is a time I value. I especially want to thank the past-President, Sven Moeller, for all his advice and unwavering support. I hope I will be as supportive to my successor. 

Congratulations to Mr Clive Kellow, Commerzbank, on his election as the new President of the Southern African – German Chamber of Commerce and Industry. Thank you to Mr Bodo Donauer, Managing Director BMW SA, for his dedication to the Chamber during his tenure as President of the Southern African – German Chamber of Commerce and Industry (2011-2014).

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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Message from THE CHIEF EXECUTIVE OFFICER MATTHIAS BODDENBERG

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hank you for giving me the opportunity to report on the Chamber’s financial situation in 2013 and on the outlook for 2014.

INCOME Total revenue in 2013 was R25.14 million – an increase of around 37%. Surplus was R1.04 million. The BMWi/DIHK (Deutscher Industrie- und Handelskammer) contribution decreased slightly to R5.85 million, from R6.087 million in 2012, because the Chamber repaid part of the allocated amount. The subsidy made up 23% of our total income. The remainder of income is through services. Our Chamber is one of the most active in terms of services and projects for both member and non-member companies. These services are becoming more and more important in generating income. Income was made up as follows: • General Service department – 45% • Trade Fairs Department – 19% • Membership fees – 7% • 6% from other income streams, mostly exchange rate related.

EXPENSES • Salaries and wages – R11.45 million or 48% • General office running costs of all three offices amounted to 10% or R2.5 million • Motor vehicle and travel expenses were 5% of total expenses, with R1.3 million • Chamber functions and events cost almost the same as in 2012, at 6% of total spend –R1.49 million. • Finally, other expenses (trade fair and general services expenses, fluctuations in exchange rate and so on) amounted to 31% at R7.3 million. There are no big surprises in the outlook for 2014, which will remain steady compared to last year. Trade fairs and membership figures are similar to last year’s. Several large projects in the General Services department have not yet been finalised and there are a number of delegations coming up later in the year. The Chamber hosts numerous delegations, from various industry sectors, particularly in the food and renewables industries, from Germany to South Africa, and vice-versa.

International Migration), has arrived in Maputo and will focus on establishing the legal structure for the office, strengthening the Mozambican-German Business Circle, and introducing our training initiatives. Secondly, our CIM integrated expert for the promotion of renewable energy technology, Jens Hauser, took up his position at our Cape Town Office where his focus will be on the Competence Centre: Renewable Energies, which aims to introduce the EUREM into South Africa and across the border into SADC. The Competence Centre: Mineral Resources managed by Lea Heidemann, began operating in November 2013. A Mining Supplies delegation to Zambia and Mozambique in May was a very positive success for the Centre. The Competence Centre: Corporate Social Responsibility, managed by Cordelia Siegert, is gaining independence and proving to be a real asset to the Chamber and CSR stakeholders. All donations to the CSR Competence Centre qualify as socio-economic development contributions in terms of the Broad Based Black Economic Empowerment Act’s codes of best practice and the Sci-Bono project can also provide each company with a Section 18A Tax certificate for time spent on the project, so that the cost of the contribution is tax deductible. Finally, our website is being updated and modernised. The new version will be live on July 1, 2014 and allows a lot more individuality in terms of the new design. It will showcase the Chamber in a more modern light and includes a members only section.

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20.000.000 15.000.000 10.000.000 5.000.000 0 2013 2012

Income

Loss/surplus before financial charges

25.146.736 18.354.634

1.067.808 341.192

I would like to thank all members of the Directorate and Senior Council. A special word of thanks goes to our President, Bodo Donauer. It has been a great pleasure to have you as the Chamber President. I appreciate all your efforts with our Chamber. A big thank you also goes to the German Ambassador, Dr. Horst Freitag and his team. We have worked together extremely well. Our combined efforts are representing Germany in South Africa in the best manner possible. To all our members, for your involvement in and support of the Chamber – I thank you. Last, but certainly not least, I would like to thank all my colleagues at the Chamber for their hard work and dedication to our efforts. Thank you for your attention. 

MATTHIAS BODDENBERG Annual General Meeting of the Southern African – German Chamber of Commerce and Industry 26 June 2014, Johannesburg Country Club, Woodmead

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Net loss/surplus for the year 1.044.162 331.698

Income statement 2013 vs. 2012 12.000.000 10.000.000 8.000.000 6.000.000 4.000.000 2.000.000 0 2013 2012 Jan-May 2014

BWMI Subsidy 5.856.163 6.087.467 3.928.469

Trade Fairs 4.802.173 3.708.702 3.001.979

In conclusion

Important developments in 2014 We established our representative office in Durban, KZN, in 2012, and are planning to extend our footprint in the neighbouring countries. First on our list is Maputo, Mozambique where our office is being set up. German and Mozambican business partnerships are high on our representatives’ agenda. Dr Friedrich Kaufmann, an integrated expert from CIM (Center for

25.000.000

Services 11.297.113 6.720.411 3.607.311

Member Fees 1.782.530 1.513.777 1.802.677

Other 1.408.705 324.277 18.228

Revenue 2013 vs. 2012 12.000.000 11.000.000 10.000.000 9.000.000 8.000.000 7.000.000 6.000.000 5.000.000 4.000.000 3.000.000 2.000.000 1.000.000 0

2013 2012 Jan - May 2014

Personnel related

O ce running costs

Motor vehicle & travel

Chamber functions/ entertainment

Other

11.455.262

2.505.412 2.014.468 921.366

1 300.492 928.344 720.893

1.493.146 1.499.025 259.768

7.348.263 3.406.773 2.261.160

10.174.326 5.061.071

Expenditure 2012 – May 2013

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HOW WE WORK Directorate 2014/2015 President Mr Clive Kellow Senior Representative Commerzbank AG

DEPUTY President Mr Seth Phalatse Chairman Ritz Pumps South Africa (Pty) Ltd Vice President Mr Franz-Peter Falke Geschaeftsfuehrender Gesellschafter der Falke Gruppe, Falke KGaA IMMEDIATE PAST President Mr Bodo Donauer Managing Director BMW South Africa (Pty) Ltd

Additional Director Mr Pfungwa Serima Managing Director SAP Africa (Pty) Ltd

Additional Director Mr Siegmar Proebstl Chief Executive Siemens Ltd

Additional Director Mrs Mardia van der Walt-Korsten Chief Executive Officer T-Systems SA (Pty) Ltd Ex officio Mr Matthias Boddenberg Chief Executive Southern African-German Chamber of Commerce & Industry

SENIOR COUNCIL 2014/2015

CHIEF EXECUTIVE OFFICER

Western Cape office

KwaZulu-Natal office

Mozambique office

Matthias Boddenberg

Anja TambussoFerraz HOD

Yvonne Iyer HOD

Dr Friedrich Kaufmann HOD

Mr Steffen Beuthner Executive Chairman Pathteq QPL Logistics (Pty) Ltd

Mr Claas E Daun DAUN & CIE AG

Dr Klaus Eckstein Chief Executive Officer Bayer (Pty) Ltd

Mr Ralf Franke General Manager Projects Kuehne + Nagel (Pty) Ltd

Dr Karl-Rudolf Gassen Managing Director Lanxess (Pty) Ltd

Ms Christiane Kalle Country Director South Africa/Lesotho GIZ Office Pretoria

Mr Franz Koller Chief Executive Officer Mercedes-Benz Financial Services South Africa

Dr Dieter Kovar Schauenburg Systems (Pty) Ltd / Stratosat Datacom (Pty) Ltd

Mr Gregor Kuepper Managing Director SolarWorld Africa (Pty) Ltd.

Mr Jan Ludolph Managing Director Geodis Wilson South Africa (Pty) Ltd

Dr Michael Martl Bilfinger Berger Power Holdings

Dr Khulu Mbatha Chairman African Sky Innovative Solutions

Deputy CEO/ HOD tba

Lisa Comyn HOD

Jerry Mutloatse HOD

Carryn Todd HOD

Matthias Boddenberg HOD

Mr Sven Moeller Group Representative ThyssenKrupp AG ThyssenKrupp Engineering (Pty) Ltd

Mrs Angela Naumann Director Chatroom

Phumlani Mngomezulu Trainee

Derrick Mncube Messenger

Innocentia Ndimande PA

Susanne Hoffmann IT Manager

Mr Junior John Ngulube Chief Executive Officer Munich Reinsurance Company of Africa Limited

Mr Markus Popken National Sales Manager DAL Agency (Pty) Ltd

Danilla van Jaarsveldt PA to Deputy CEO/ Project Manager

Dr Iordanis Savvopoulos President Sub Saharan Africa & Managing Director Evonik Degussa Africa (Pty) Ltd

Kgotso Kobo Operations

Mr Peter Rohlssen Managing Director Gas Safety International (Pty) Ltd

Amos Hungwane Consultant / Switchboard

Morgana van Niekerk Publications

Mr Ulrich Schäckermann Owner Consultus - Professional Services

Mr Kay Schröder Director WerthSchröder Inc

Sarah Lyttwin Project Manager

Heidel Bekker Marketing and Events

Mr Axel Simon Director Southern Africa Lufthansa German Airlines / Swiss International Airlines

Mr Dieter Sommer Director Rödl & Partner

Thoko Mazibuko Ticket Sales

Trudi Johannsen Events

Mr Richard Teagle Managing Director Festo (Pty) Ltd

Prof André Thomashausen Director Institute of Foreign & Comparative Law (UNISA)

Dr Michael Zipp Managing Director ESA-Meridian

Mr Terry Bowman

Dr Klaus Döring

Mr Fritz Keller

Mr Christoph Köpke

Mr Werner Rhaese

Mr Leo Röhrig

Thomas Kallenbach Project Assistant

PERSONAL ASSISTANT Trudi Johannsen

General Services

Accounts/HR

Administration

Manei Ramatlhape Project Manager

Competence Centre: CSR Cordelia Siegert Project Manager

Competence Centre: Mineral Resources Lea Heidemann Project Manager

HONORARY MEMBERS FOR LIFE OF THE SENIOR COUNCIL

Dr Roland Zimmermann

CHAMBER ORGANOGRAM

Trade Fairs

Operations & Marketing

Competence Centre: Renewable Energy Jens Hauser Manager SADC

Dennis Thiel Project Manager

Boitumelo Raseepe Database

Competence Centre training Lindy Mkhize Consultant

DEPARTMENT REPORT

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The General Services Department

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he General Services Department continued to be one of the first contact points for German and South African companies exploring market opportunities and establishing a business presence in South Africa.

Food Day included a competition amongst young chefs and 11 sector buyers could feel and taste German delicacies. Thanks to the success of this event series, General Services organised a listings event in Frankfurt in cooperation with Massmart.

DE international Through business partner searches and comprehensive target group oriented researches, the General Services department has assisted many German companies in entering the South African market. The colleagues in the department put our customers in touch with competent business partners in Southern Africa, such as sales and trading partners, customers or manufacturers.

South African Business Delegations The Southern African-German Chamber of Commerce and Industry, in cooperation with Rödl & Partner and the BrazilianGerman Chamber of Commerce and Industry, organised a business delegation to Brazil. As part of the delegation the participants had the opportunity to experience the 2014 FIFA World Cup Brazil™ first-hand. Further business delegations focused on the German Port and Maritime Industry as well as the energy industry market.

BMWi-MarkterschlieSSungsprogramms für KMU The German Federal Ministry of Economics and Technology’s export promotion programme, BMWi-Markterschließungsprogramms für KMU, explores market opportunities in certain sectors for German companies. The General Services department organised a waste management and recycling workshop in Johannesburg followed by business trips to Johannesburg and Cape Town. This project was organised in cooperation with German RETech. Another of the department’s project was a fact-finding mission to Mozambique and Zambia in the area of mining equipment and mineral resources organised in cooperation with the Verband Deutscher Maschinen- und Anlagenbau (VDMA) and the German Mineral Resources Agency (DERA).

Export Promotion Food Industry and Agriculture General Services organised a German Food Day at the Pick ‘n’ Pay Good Food Studio in Johannesburg on behalf of the Federal Ministry of Food, Agriculture and Consumer Protection (BMEL). The event was a follow up to a listing event of 55 German food companies in Frankfurt. Products ranging from convenience and canned food, dairy and meat products as well as several kinds of beers were presented to a buyer from Pick ‘n’ Pay. The German

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10 specialized trade shows under one roof

Food inspiration from Germany German Food day

Pick n Pay Good Food Studio on nicol 21 october 2013 BROUGHT TO YOU BY:

Competence Centres: Mineral Resources and Mining, Corporate Social Responsibility, and renewable energy

Cologne, 10. – 14.10. 2015

A Competence Centre for Mining and Resources has been established under instruction from the German Federal Ministry for Economic Affairs and Energy. The Centre, located in the General Services department, is supported by the Ministry and aims to be an information and networking platform for the sector. The Corporate Social Responsibility Centre is also a General Services enterprise, and aims to create social change within South Africa, with the assistance of the chamber’s generous member companies. With energy high on the agenda in South Africa and in other SADC countries, the Competence Centre for Sustainable Energy is supporting efforts to modernise and create efficient renewable and sustainable energy sources. Based in Cape Town, this Competence Centre provides information and acts as an advisory and networking platform. 

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Southern African-German Chamber of Commerce and Industry No. 47, Oxford Road, Forest Town 2193, Johannesburg, P.O. Box 87078, Houghton 2041 Ph: +27 (0) 11 486 2775 or Fax: +27 (0) 86 550 8646, [email protected]

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Corporate Social Responsibility It has been an exciting and eventful year for the Competence Centre: Corporate Social Responsibility. To mention only a few projects is an injustice to all the great projects and good work that our member companies are involved with but since limited space is available, a few highlights will have to do.

Competence Centre: Corporate Social Responsibility Cordelia Siegert Project Manager

Tel. +27 (0)11 486 2775 [email protected]

Trained in GermanY

Nooitgedacht Primary School During 2013, the Centre was introduced to the learners at the Nooitgedacht Primary School. They touched our hearts and it was decided that something had to be done to brighten their futures. A workshop was organised with the teachers to teach learners valuable cognitive techniques, while improving their arts and craft skills. They were taught to make beaded wire animals, an exercise that also helped the teachers and educators appreciate the importance of arts and crafts in mental and physical development. The learners donated the wire animals to the Chamber, who presented these priceless works of art to members at the Annual Gala Dinner as unique corporate gifts. In exchange, books and other learning equipment were given to the school to assist in the further cognitive development of the children.

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In October, the Centre hosted Trained in GermanY: Johannesburg, on behalf of Alumniportal Deutschland. This job fair was one of the German Weeks 2013 events, where German alumni in their employment-seeking activities, were introduced to German companies and organisations interested in employing skilled candidates with knowledge of Germany or German methods. A panel discussion was also hosted on the German Dual Training System, which focuses on practice-oriented education systems, and how this could improve skills development in South African companies. On 7 February the initiative continued with the Virtual Trained in GermanY – South Africa job fair.

CSR workshop On 27 October 2013 the Centre hosted a workshop at the AAA Conference in Pretoria. Representatives from CSR centres from other chambers across Africa, Asia, Australia and New Zealand and member companies compared their CSR experience and knowledge and discussed how CSR centres could assist member companies better in their CSR activities.

Wissensfabrik Lastly, an initiative based on the German Wissensfabrik concept is set for implementation during the 2014 school year. The aim of the project is to collaborate with companies and other institutions to promote education by addressing the issue of management coaching and the mentoring of school governing bodies. The project will be run in cooperation with the Gauteng Department of Education, Sci-Bono and the Mathew Goniwe School of Leadership, which will offer “mentoring assistance and training” to the mentors. Thanks to the support of our founding members the Centre is able to continue to provide practical support and act as an information-sharing platform to strengthen the social and ecological impact of the CSR activities of participating companies. The focus is on the sustainability of these CSR initiatives and the Centre will continue to act as facilitator in collaborative projects and assist members in the strategic planning of their CSR (including B-BBEE) activities. 

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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MINERAL RESOURCES The Southern African – German Chamber of Commerce and Industry (SAGCC) has established a Competence Centre for Mineral Resources (CCMR), commissioned by the German Federal Ministry for Economic Affairs and Energy.

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he CCMR is aligned with the Resource Strategy of the Federal Republic of Germany. The Centre’s main focus is on southern Africa, more specifically South Africa, Zambia, Zimbabwe and the Democratic Republic of Congo where mining is one of the most important industries. These markets will contribute to the security and diversity of the German resource supply. The Competence Centre aims to be the central point of contact for German companies in southern Africa and serves the following objectives: • Creating market transparency • Promoting cooperation and communication • Providing Services • Marketing/Promoting German technologies

DEMOCRATIC REPUBLIC OF THE Congo

ZAMBIA

ZIMBABWE

SOUTH AFRICA

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Competence Centre: Corporate Social Responsibility Lea Heidemann Project Manager

Tel. +27 (0)11 486 2775 [email protected]

MINERAL RESOURCES OPPORTUNITIES IN AFRICA Vast resource deposits are the drivers behind the thriving mining industry in DR Congo. Several mines are being established or extended. However, security concerns and lack of infrastructure are remaining challenges. Copper, cobalt, tantalum and gold are drivers for growth. Other operations exploit diamonds, manganese, iron ore and lead. Investment opportunities in Zambia, especially in the area of energy supply, are vast. Although the country is striving to diversify the mining sector to decrease its dependency on copper, most growth is expected for this metal. New mining developments can be found especially in the North Western Province. The local infrastructure still needs improvements to meet the industrial demands. Production in Zimbabwe increased in 2013. Platinum production is of particular importance for the country and is seen to be the main driver of growth. High deposits of nickel, chrome, gold and diamonds are expected to see an increase in production in the near future. However, current local regulations create a challenging environment for foreign investment. South Africa needs more effective mining and processing technologies as its operations reach increasingly deeper levels. Although growth will be moderate and challenges include recurring labour unrests, demand for South African coal, iron-ore and steel is increasing. Other main resources include gold, platinum and chrome. 

Sector Opportunities for German Companies

Support from the SAGCC/ CCMR

• Along the entire value chain from exploration to processing • Resource efficiency • Technology development • Education and skills development • Compliance and implementation of standards and norms • Preparation and processing • Supply of material and machinery • Recultivation

• Continuous market monitoring and analysis of information • Providing specific market information • Placement of business partners, such as customers and suppliers • Accompaniment and support for business meetings • Organisation and accompaniment of business trips and delegations • Organisation of thematic workshops and seminars • Creating individual market studies

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

WE MAKE STEAM GENERATION Steinmüller Africa (Pty) Ltd. is part of the international Bilfinger Group and your partner in steam generation. Our presence in the local market, spanning 52 years, is testimony to our unrivalled expertise in the steam generation industry. Services offered range from the design and manufacturing to the construction and maintenance of boiler pressure parts. At our Pretoria based manufacturing facilities, we also specialise in fabrication of high-pressure feedwater heaters, pressure vessels, pipe supports and compensators. On-site maintenance crews provide support to the power generation and petrochemical sectors. www.steinmuller.bilfinger.com

WORK STEINMÜLLER AFRICA

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EUREM Southern Africa 2014 Build Your Capacity for Sustainable Energy Efficiency solutions

SUSTAINABLE ENERGY Supporting the southern African–German private sector in the field of renewable energy and energy efficiency by Jens Hauser

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outh Africa and its neighbouring countries are confronted with rising energy and electricity demand that exceed current energy generation capacity. Access to electricity, security of supply, cost of energy and the environmental effects of conventional power supply, like carbon emissions, are challenges all southern African countries have to deal with and have led to an increased interest in the utilisation of renewable energy and energy efficiency, and are topics of high importance on the political and economic agenda in southern Africa. Germany is supporting the SADC countries – in particular in South Africa – in their efforts to modernise their energy systems and ensure sustainability. Initiatives like Energising Development, the South African-German Energy Programme (SAGEN) and the South African-German Energy Partnership provide policy advice and technical expertise, mainly to the public sector. In addition to these initiatives, the Chamber’s new Competence Centre for Sustainable Energy is dedicated to supporting southern African—German private sector cooperation in the field of renewable energy and energy efficiency. The Competence Centre aims to be an information, networking and advisory platform for the industry that will accelerate technology and know-how transfer, link business partners, and foster trade relations.

Services • Collect, analyse and provide market information • Networking platform: advocacy and joint sustainable energy sector initiatives • Offer advisory services to the sustainable energy industry, including advanced training and skill enhancement • Promote German technology in the southern African markets

An important instrument of the Competence Centre is the Renewable Energy Working Group within the SA-German Chamber. The Renewable Energy Working Group consists of Chamber member companies and South African institutions. Its objective is to represent the renewable energy stakeholders in southern Africa.

Key activities in 2014 The first meeting of the Chamber’s Renewable Energy Working Group in 2014 resulted in a comment paper on the IRP 2010 update. This paper illustrated the negative effects of the prospective reduction in wind energy allocation in the IRP draft update, and was submitted to the Department of Energy at end of February. The Competence Centre Sustainable Energy’s foremost activity in 2014 will be to introduce European Energy Manager Program (EUREM) training in South Africa as a project under the South African-German Energy Partnership. EUREM is additional occupational training over four to five months, and enables industries to react to changes in the energy market and reduce their energy consumption. EUREM intends to train production, facility or energy managers, who will learn to identify, assess and implement industrial energy -saving measures. The EUREM programme will be available in Cape Town and Johannesburg. As one of its activities outside South Africa’s borders, the Competence Centre will support the participation of German solar energy companies in the growing market for PV-DieselHybrid Systems in Mozambique. To this end, a dedicated trade delegation is scheduled for November 2014. The Cape Town based Competence Centre Sustainable Energy is looking forward to supporting private sector activities and to contributing to the sustainability of southern African energy markets. 

Tel: +27 (0)21 418 3311 [email protected]

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course Content

• • • • • •

The EUREM South Africa consists of 160 teaching units in nine different technical and management modules: • Energy Market (3 hours) • Energy Fundamentals, Control Technologies (6 hours) • Energy Management (21 hours) • Economics and Project Management (8 hours) • Electrical Applications (18 hours) • Energy Efficiency in Buildings (14 hours) • Climatisation and Cooling (15 hours) • Energy and Heat Technologies (22 hours) • Solar Energy Technologies (14 hours)

Qualification and training Knowledge and technology transfer Optimisation of energy consumption Cost reduction, improved competitiveness Climate protection Networking

The European Energy Manager – EUREM – is an ambitious, standardised training programme and successful international network for Energy Managers. The EUREM training enhances the skills of technical experts in the field of energy management and energy efficiency improvement. The training covers nearly all energy-relevant issues which can arise in companies. At present the EUREM is offered in 27 countries throughout the world and more than 3,500 Energy Manager have been trained.

EUREM Network Linking international Energy Managers is an important feature of EUREM. Participants worldwide are able to stay in contact and exchange experiences. During and after the training, participants get access to an electronic platform which can be compared to a social community. Via this platform participants have access to the latest developments in energy engineering and can download all training documents and tools. In addition, Energy Managers are regularly invited to specialist forums, workshops and experience exchanges. Moreover, international EUREM conferences are held regularly (e. g. 2014 in Vienna) where Energy Managers from all over the world meet and award the "EUREM Awards" for the best energy concepts of the year.

EUREM training in South Africa 2014 EUREM in South Africa is implemented in the framework of the South African-German Energy Partnership. The Competence Centre Sustainable Energy of the Southern African German Chamber of Commerce and Industry (SAGCC) is responsible for the introduction of EUREM in South Africa.

Locations and timeframe EUREM 2014 training courses will be held in Johannesburg and Cape Town from August till November. From 2015, EUREM training will be offered annually in Johannesburg, Cape Town and Durban.

Competence Centre: SUSTAINABLE ENERGY Jens Hauser Manager SADC

What is EUREM?

Dennis Thiel Project Manager

Tel: +27 (0)21 418 3311 [email protected]

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

The Energy Concept has to be presented at the end of the course, at the beginning of December.

Why participate – your benefits The EUREM leads to tangible results in the participating companies. About 75% of all Energy concepts developed during the training have been implemented. The EUREM training programme has led to average cost savings in the participating companies of 30,000 EUR/year. Amongst others your benefits of EUREM include: • Exposure to latest, state-of-the-art EnEff technology and processes • Development of corporate and individual energy efficiency skills – higher value of human capital, motivation and support to employees • Capacity to cut power costs and optimise your energy consumption – increase your competitiveness • Energy concept: tailor-made energy saving measure for your company developed by your employee, almost ready for implementation – company’s immediate ROI • Expertise to ensure continuous EnEff improvement – ideal preparation for introduction and further development of Energy Management (ISO 50001) • Contacts to technology and service providers and capacity to engage with them • Globally recognised personal certificate • Contribution to climate protection and reduction of carbon footprint

Further information and registration For further information on the EUREM and/or registration for the 2014 training, please contact: Jens Hauser, Manager SADC [email protected]

The EUREM training programme has led to average cost savings in participating companies of 30,000 EUR/year. 21

South African-German Training Services

SAGTS

An interview with Managing Director, Bandile Gwebu

South African-German Training Services

Facilitating Skills Development for South African Business

The South African-German Training Services (SAGTS) provides a vital service to the youth of South Africa. Offering a wide range of services, to so many different industry sectors makes SAGTS both Jack of all trades and master of many. An interview with Bandile Gwebu, Managing Director of SAGTS, was an interesting insight into the activities of the training provider.

What is the mandate of SAGTS? Our mandate is to facilitate skills development for South Africa businesses by implementing our work-integrated learnership programmes. The Builders Training Centre in Soweto, which is non-profit, benefits the community; having a training centre in Soweto means that government can sponsor projects in Soweto without having to build their own training centre.

CATS and BTC have been around for a long time under the driving force that is the SAGTS. Can you give a quick history on how it all began? CATS began in 1985, as an initiative by the SA-German Chamber members, who, during the time of Apartheid wanted to find a way to skill their black workers using the Industry Kaufman programme in Germany, a very good way to train someone while they are at work. Members clubbed together to create an advisory council which became the Commercial Advancement Training Scheme (CATS), under the management of the Chamber. Employees were brought into the programme and underwent exchange programmes where they could go to subsidiaries or to the headquarters in Germany to finish up their CATS training, something which doesn’t happen anymore. The BTC, Builders Training Centre Soweto, was started in conjunction with NICRO and the Chamber. NICRO is the National Institute of Crime Prevention and Reintegration. During Apartheid there was a lot of violence in the country, many people were imprisoned – especially from Soweto. The need to train people with the necessary skills to be employed arose, so the Chamber got together with NICRO. NICRO provided the land – we have a 99-year lease with them – and the Chamber provided the funding for purchasing equipment and the training of the staff. BTC was then put in place to train the locals; it was literally a walk-in service. BTC provides basic construction skills – bricklaying, plastering, carpentry, tiling – skills for trainees to run their own businesses or be employable by a construction company.

In 2008, the Chamber established SAGTS to take over the Chamber’s management responsibilities. SAGTS is responsible for strategic marketing, management and provides leadership for the training centres, to ensure that with the introduction of the SETA’s and Skills Development Act, we as a training provider abide by the SETA’s regulations and that the qualifications are nationally recognised. Our facilitators are trained and registered on a national database and companies that do business with us, get national recognition for their contribution to the training. So, for example, with BTC a lot of training is done by sponsoring companies, like government contractors, who may have it in their contract that a certain percentage of the contract value must be utilised for training either their own staff or the locals of the area in which they are carrying out their projects. In order to ensure that companies are able to comply with this, SAGTS plays the role of liaising with the SETA’s on behalf of our companies, ensuring the programmes are registered with the SETA’s, ensuring that the companies do get their mandatory grants.

You mentioned that CATS students don’t go to Germany anymore, to complete their studies. Why is that? I think there has been a breakdown in the programme. I am the fourth in line to run the programmes so a lot has changed – also with the Chamber. This is something that happened way before my time, but we would be happy to reestablish this and this is also one of the mandates for SAGTS.

CATS and BTC have been running for almost 30 years, how many people have been trained?

Town also has ICB accreditation. The ICB is a quality assurance partner that we deal with here in Johannesburg, and they work in conjunction with FACET. So we will be conducting our CATS training programme in Cape Town from 6 July. We have all eight campuses of the College of Cape Town at our disposal. On the BTC side we are applying for accreditation from the Energy SETA, the Manufacturing SETA and the Chemical SETA – because of a demand from German members companies who need artisan training programmes – for entry-level electrical engineering, level Twos, engineering fabrication, boilermaking, instrumentation and measurement. These are the new skill areas that we want to move into as SAGTS to provide accreditation that matches our German member companies’ requirements.

What is the benefit for companies, if they are part of the programme? The CATS programme is much more effective than graduate training programmes since students immediately enter the workplace on a learnership contract while continuing their theoretical studies. When they start in the company, they are already learning about the value-chain of the company – where they fit in, how the company makes money – so at the end of the programme, the learner is a much more productive than your typical graduate. Secondly, it’s cheaper for a company to develop a student rather than hiring a graduate that still has to trained on the job and will come

with a price tag. Thirdly, the programme offers companies the opportunity for more incentives and more rebates from government. When you’re looking at your BEE scorecard, you’ll be benefitting from the Skills Development aspect of it and your Employment Equity. And then you also have your SETA’s, which will provide mandatory grants and discretionary grants for companies involved with learnerships, both national and international.

In the last 12 months, any highlights? Yes, a lot of highlights. Siemens built the Nelson Mandela School of Science & Technology, the first high school in Mvezo, Nelson Mandela’s birthplace and SAGTS was involved in their business excellence programme. We were brought in to train the locals in basic construction in order to provide basic maintenance of the school. We trained 52 locals, and we are also training 300 more who are sponsored by the Construction SETA.

Does SAGTS have any awareness events? That is something that’s in the works. We have had public awareness presentations at the German School in Johannesburg, but we are just about to finish installations at our new CATS offices and we are planning a launch event at the end of June. At the end of June I will be unveiling the new CATS officially, unveiling the new staff and the new classrooms..

The latest figures we have from last year is 6,500.

You are a success story yourself, what is your next big plan for SAGTS? What do you want as your legacy? As of June (2014) we are establishing SAGTS in the Western Cape. We’ve been in talks with the College of Cape Town to be our delivery partner as we don’t have the facilities or the infrastructure in Cape Town but they do. The College of Cape

22 ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

South African-German Training Services Bandile Gwebu Managing Director, South African-German Training Services Tel: +27 (0)11 486 2775, Cell:+27(0)71 892 2672 [email protected]

Kenneth Malaka Project Manager, South African-German Training Services Tel: +27 (0)11 486 2775 [email protected]

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DEPARTMENT REPORT

The Trade Fairs Department In continuing the Chamber’s dedication to balancing the trade deficit and promoting export from South Africa into Germany, the Trade Fairs department assisted 489 South Africa exhibitors and 3,889 local trade visitors to access the vast commerce channels offered by the premium German exhibitions represented by the Chamber.

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everal German federal states have established close contacts and partnerships with South African provinces and conduct their own development cooperation and economic cooperation projects, e.g. Bavaria with Gauteng and Western Cape, Baden-Württemberg with KwaZulu-Natal, North Rhine-Westphalia with Mpumalanga, Saxony with the Free State and Lower Saxony with Eastern Cape. The Eastern Cape Development Corporation again hosted a Provincial Pavilion at Hannover Messe 2013 in the prestigious Hall 13 dedicated to the global energy sector. South Africa offers substantial opportunities for German companies, particularly in the renewable energy, water and infrastructure sectors. The close collaboration between the Department of Trade and Industry and the SA-German Chamber facilitates valued financial assistance for exhibitors through Trade and Investment South Africa (TISA). TISA participates in selected trade fairs and exhibitions abroad by means of National Pavilions.

African exhibitions, conferences and trade fairs supported by SAGCC in 2013: Ghana: • Offshore West Africa • GEREU – German European Union Engines • West African Clean Energy & Environment Exhibition & Conference • West African Food & Beverage Expo

Malawi International Trade Fair

Angola: • Constroi Angola • FILDA - International Trade Fair in Angola

ProWein 2013 – International trade fair wines and spirits 24-26 March 2013, Düsseldorf, Germany 4,783 exhibitors from 48 countries and more than 44,000 trade visitors from around the world were introduced to three South African pavilions totalling 643 m2 – profiling the very best wine and spirits home grown in beautiful South Africa. Anuga 2013: The most important platform for the international food trade 5-9 October 2013, Cologne, Germany The Department of Trade and Industry funded South African National Pavilions in Hall 11.1 (Fine food Hall) as well as Hall 9.1 (Meat Hall). 155,000 trade visitors from 187 countries were introduced to 40 exhibitors from South Africa – breaking several records for international visitor attendance and South African participation.

Mozambique:

• Annual Coal Conference Mozambique • FACIM - International Trade Fair • Transport Infrastructure Mozambique • Coal Processing and Optimisation Africa

Botswana:

• Botswana Renewable Energy Expo • Coal Botswana • Electra Mining Botswana • Global Expo Botswana

South African National Pavilions in Germany 2013: CeBIT 2013: The world’s leading ICT exhibition 5-9 March 2013, Hannover, Germany According to the dti, the South African electrical engineering, electronics, information technology and telecommunications market is worth more than R184 billion, excluding mobile operators. The dti, SAVANT and the South African Electro-technical Council of SA hosted a 265 m2 National Pavilion in Hall 6. IT services and data analysis companies accessed +230.000 visitors from 120 countries with invitations to attend +2,500 business seminars in Hannover during CeBIT 2013.

Malawi:

The African footprint of the German Chamber … growing annually

South Africa:

• Africa Rail • Mine Site Security Africa Conference • The 2nd Annual Dredging & Port Expansion Africa Conference • Mining Indaba • Africa Energy Indaba • VSAT for Mining, Oil & Gas Conference • PROPAK • Power Electricity World Africa • Nampo Harvest • Railways and Harbours

The number of African cities with a population over three million is expected to grow from 16 in 2012 to 34 in 2030, which will create an unprecedented demand for utilities, infrastructure, and primary, secondary and tertiary services. This tidal wave of urbanisation presents unimaginable possibilities for the diversification of oil-based economies and the local beneficiation of local resources. The exhibition platforms available on the continent offer high calibre interactions with the most senior decision makers and a valuable “snap shot” of the regional status quo.

German Pavilions in South Africa 2013: Africa Health: The largest healthcare exhibition and medical congress in Africa 7-9 May 2013, Johannesburg, South Africa Automechanika Johannesburg: The showcase for automotive aftermarket technology and services 8-11 May 2013, Johannesburg, South Africa 15 German exhibitors participated in a German pavilion hosted by the German Federal Ministry of Economics and Technology (BMWi) in cooperation with the Association of the German Trade Fair Industry (AUMA). The German Garage Equipment Association accompanied the German delegation and provided professional advice. Bauma Africa: The trade Fair for construction machinery, building material machines, mining machines and construction vehicles 18-21 September 2013, Johannesburg, South Africa 70 German exhibitors participated in collaboration with the German Federal Ministry of Economics and Technology (BMWi), the Association of the German Trade Fair Industry (AUMA), and the German Construction Equipment and Building Material Machinery Manufacturers Association (VDMA).

WINE FARMERS &

FRUIT GROWERS

exhibition

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Wine Farmers and Fruit Growers Exhibition: The largest agro/industrial exhibition in the Western Cape 15-17 October 2013, Stellenbosch, South Africa Ten exhibitors participated in the German national pavilion displaying German products and services that comply with the highest international standards in quality and reliability.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Looking ahead to 2015, our team continues to support the commercial growth of South African SMMEs and German Corporations alike using the vast portfolio of exhibitions that have appointed AHK Southern Africa to facilitate smooth and prosperous participation for exhibitors and visitors. Thank you for an exciting year filled with lessons, growth and greater relationships.

ADVERTORIAL

Messe Frankfurt

Well represented at the hotspots of the international textile sector With over 40 events, Messe Frankfurt is the world market leader for B2B fairs for the textile sector.

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he spectrum of fairs covers the entire value chain of the textile industry – from fashion and apparel fabrics, via home and contract textiles, to technical textiles and textile processing and care. Every year, business and contact opportunities coupled with the latest subjects and trends of relevance to the market attract around 17,000 exhibitors and 430,000 visitors from all over the world. Messe Frankfurt is represented by its own events at the hot spots of the international textile sector, e.g., in New York, Paris, Istanbul, Moscow, Mumbai and Shanghai. At the home venue in Frankfurt, trade fairs such as Heimtextil, Techtextil and Texprocess are the leading marketing and order platforms for their individual segments. 2,718 exhibitors from 61 countries presented their latest products for interior textiles at the last Heimtextil. And an outstanding cast of participants also looks very likely for the coming event (14 to 17 January 2015). A top line-up with the leading international manufacturers is once again set to underscore the position of Heimtextil as the world’s foremost trade fair for home and contract textiles. Unrivalled by no other event in the world, Heimtextil can boast a comprehensive spectrum of products distinguished by highlights in terms of design, functionality and quality and, on this basis, continues to expand following four years of uninterrupted exhibitor growth.

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Techtextil is the world’s leading trade fair for technical textiles and nonwovens. In 2013, over 27,400 trade visitors from 97 countries made their way to Frankfurt to see the new products and innovations being shown by 1,330 exhibitors from 48 nations. With an extraordinarily high level of both exhibitor and visitor satisfaction, Techtextil once again confirmed its position as the international focal point of a highly innovative sector. Technical textiles and nonwovens are used in many different branches of industry including building and architecture, medicine technology, automobile manufacturing and functional apparel, and the sector continues to expand throughout the world. Held concurrently with Techtextil, Texprocess is the leading international trade fair for the processing of textile and flexible materials. It, too, is characterised by a large range of products and services for visitors and exhibitors from all parts of the world. The last edition of the fair in 2013 attracted over 12,100 visitors from 98 countries and 330 exhibitors from 38 nations. In addition to innovative solutions for the apparel industry and a broad spectrum of procurement opportunities for fashion companies, Texprocess also presents cutting-edge technologies for processing technical textiles, a segment of the textile market that is expanding worldwide. Messe Frankfurt identified the sector’s growth markets and successfully internationalised the Techtextil and Texprocess brands at an early stage. 

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Above and

beyond 14 – 17. 1. 2015 heimtextil.messefrankfurt.com

ADVERTORIAL

Ambiente in Frankfurt am Main

The consumer-goods fair of superlatives The unrivalled Number One for the whole sector: the next Ambiente in Frankfurt am Main will once again be the product launching pad and business platform for the entire consumer-goods sector when it opens its doors from 13 to 17 February 2015.

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hanks to the breadth and depth of its unchallenged portfolio of products in three main sections – Dining, Giving and Living – Ambiente is ‘The Show’ for the whole consumer-goods sector.

Covering the entire eastern section of Frankfurt Fair and Exhibition Centre, the Dining sector brings together over 2,200 exhibitors with the world’s biggest selection of modern kitchen accessories, household aids and tableware. The Giving and Living sections occupy the whole of the western section of the Exhibition Centre. At Giving, manufacturers and suppliers of gift articles, jewellery, watches, stationery, personal accessories and arts & crafts present their new collections. Living is the lifestyle platform for avant-garde design, furnishing accessories, home concepts and indoor and outdoor decorations.

For five days at the beginning of the 2014 business year, over 4,700 exhibitors from 89 countries showed their new products and innovations for the coming season. Six of them came from South Africa. 144,000 trade visitors from over 160 countries attended the mega event in Frankfurt, 542 of them from South Africa. The world’s leading consumer-goods fair is also distinguished by a large variety of events, programmes for young designers, trend shows and awards ceremonies. Year in, year out, Ambiente reveals the most important trends for the table, kitchen, living and giving segments. To discover tomorrow’s trends, the experts of trend bureau bora.herke. palmisano keep track of the latest developments around the world. On the basis of the many different tendencies, the experts develop four trend worlds and present them in a highly regarded and comprehensive show. For many young designers, the ‘Talents’ and ‘Next’ programmes represent an important rung on the careers ladder. Up-and-coming designers from the tableware, jewellery, interior design and gift articles segments can show their ideas, drafts and prototypes and make contact with potential manufacturers and an international audience of trade visitors. At the ‘Solutions’ special exhibition, the focus is on clever ideas in the form of new products from Ambiente exhibitors, which offer creative solutions for the table, kitchen and household segments. As part of the exhibition, designer and curator Sebastian Bergne illustrates the special features of each of the selected products in a brief video clip. Next year’s Ambiente will also provide the setting for numerous awards ceremonies. For example, consumer goods representing a skilful blend of aesthetics and utility are honoured with the Design Plus Award and the winning products exhibited in the Galleria. The German Design Award is presented on the first day of the fair and the winners presented in an exhibition. Other awards include the Kitchen Innovation Award and ‘Plagiarius’, a negative award for brazen design theft. 

Further information: www.ambiente.messefrankfurt.com

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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ADVERTORIAL

To Another Great Year

PROWEIN 2014

Best Mood at Anniversary On its 20th anniversary, ProWein 2014 transformed not only the exhibition centre but the entire city of Düsseldorf into the international wine and spirits capital of the world. From 23 to 25 March 4,830 exhibitors from 47 countries and more than 48,000 international trade visitors met in the metropolis on the Rhine. Top notch activities and events accompanying the fair also contributed to spreading the exciting mood across the city.

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very year in March Düsseldorf becomes the centre and hub of the international wine and spirits sector – a fact impressively proven by ProWein 2014. 4,830 exhibitors from all relevant wine-producing nations and regions of the world made an impressive appearance. The event also presented “newcomers” to the international wine business – like two Japanese wine estates showcasing their white wines made from the traditional Koshu grape variety in Düsseldorf for the first time. The unique international range once again attracted more trade visitors from both Germany and abroad to ProWein: with more than 48,000 visitors the trade fair posted a plus of 7% over last year (2013: 45,168). Their response to the fair was overwhelming: some 97% of the visitors polled said they had achieved their aims and were satisfied with the event. Commenting on this, Hans Werner Reinhard, Deputy Managing Director at Messe Düsseldorf GmbH, said: “This year’s anniversary event adds one more chapter to ProWein’s success story. The mood in the exhibition halls was the best and the number of international trade visitors from retail and gastronomy has risen once again. ProWein is the worldwide leading trade fair in the sector – a trend show and order platform with international appeal.” About a third of visitors came to ProWein for the very first time. Therewith, ProWein 2014 was not only the central

“In terms of the quality and professionalism of the trade audience, once again this year ProWein proved itself to be the most important wine fair in the world.” platform for fostering and deepening existing business links but also a hub for making new ones. Once again international wholesale, retail and specialist retail made up the largest group of visitors followed by experts from the restaurant and hotel industry. Over 70% of visitors are in managerial positions.

Satisfied Exhibitors Visitors showed especially great interest in wines from Germany, Italy and France – also the countries with the largest country participations amongst exhibitors. Voicing suitably positive feedback was Monika Reule, Managing Director at the German Wine Institute (Deutsches Weininstitut – DWI), at the conclusion of this year’s ProWein: “The mood among exhibitors in the German hall this year was very good. Their wines were in great demand from the many trade visitors from home and abroad. In terms of the quality and professionalism of the trade audience, once again this year ProWein proved itself to be the most important wine fair in the world. In the 2013 vintage – whose white wines formed a particular focus in presentations – German producers showcased fresh, fruity and lean wines, as demanded by the market at present.”

15.-17.03.2015 Düsseldorf, Germany International Trade Fair Wines and Spirits www.prowein.com

UNIQUE !

See you Soon in Düsseldorf and Shanghai Not just the organizer, but in fact the entire city of Düsseldorf is looking forward to the next edition of ProWein from 15 to 17 March 2015. Still this year – from 12 to 14 November 2014 – Messe Düsseldorf organizes ProWine China in Shanghai, in partnership with China International Exhibitions Ltd., a member of the Allworld Exhibitions network. And to give the international wine and spirits sector the ability to plan long term the dates for ProWein 2016 have also already been announced – to be held in Düsseldorf from 13 to 15 March 2016. 

Further information: www.prowein.com

This is what to expect from the world’s largest wine trade fair:

47 countries meet 49,000 trade visitors. 82% of the exhibitors and 45% of the visitors come from outside

exhibitors from

Germany. No other wine show can compare. The strict trade visitor only concept also ensures that professionals engage purely with fellow professionals.

Join us in Asia too! 12. - 14.11.2014 SHANGHAI www.prowinechina.com

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

4,830

Southern African – German Chamber of Commerce and Industry NPC 47 Oxford Road _ Forest Town, Johannesburg P.O. Box 87078 _ Houghton 2041 Tel. +27 (11)486 27 75 _ Fax +27 (11)86 639 56 77 [email protected]

www.germanchamber.co.za

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F A L K E • P.O.BOX 11 09 - D-57376 SCHMALLENBERG / GERMANY

BRANCH REPORT

Cape Town OFFICE: Western cape Once again, the Cape Town Regional Chamber of Commerce had an eventful year. Below are a few highlights.

February: Business delegation on Renewable Energy with focus on Solar Photovoltaic was hosted by our Cape Town office.

Durban office March: A delegation from Bavaria, headed by the President of the Bavarian Parliament, Mrs. Barbara Stamm (CSU), met for discussion with SA-German Chamber member companies in Cape Town. The Chamber’s Senior Council Meeting was held at the Winchester Mansions Hotel. April: A seminar – BEE: The Where, What and How – with guest speaker Adam Ismail, Director at ENS, was organised by the French-SA Chamber in co-operation with the Cape Town Office. On the occasion of the visit of the German Federal Minister of Foreign Affairs, Dr Guido Westerwelle, the Chamber hosted a networking lunch with the business delegation that accompanied the Minister to South Africa. May: The Chamber hosted a dual-city business delegation from the German Federal State of Brandenburg. We organised a briefing in Stellenbosch; a technology forum at STIAS (Stellenbosch Institute for Advanced Study) with the topics energy, biomedical, polymers, agro technology, individual company visits; as well as presentations and B2B meetings. July: The French-SA Chamber, in collaboration with the German Chamber, hosted a renewable energy seminar. September: Minister of Home Affairs, Naledi Pandor, was guest speaker at a members’ luncheon. We organised a press conference for the Nuremberg Toy Fair. October: The Chamber arranged information seminars and matchmaking appointments. for a business delegation from Germany Trade & Invest (gtai). Representatives from the German Federal Ministry for Food, Agriculture and Consumer Protection (BMELV) held a fact-finding mission to Cape Town to get an impression of opportunities for German Food producers and exporters. The Chamber of Commerce Regensburg visited Cape Town for discussions with the Cape Chamber of Commerce and other local business representatives.

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November: The President and CEO of Messe Duesseldorf, and the President of the interpack trade fair visited Cape Town and hosted a press conference on interpack 2014. We started 2014 with the ever-popular Back to Work Lunch on 4 February at Greenways Hotel in Claremont, where members and partners had the opportunity to network and enjoy the beautiful ambience, combined with delicious German food and beer. The Chamber’s Deputy CEO highlighted 2013 events and projects 2013, and previewed Chamber activities in 2014. He spoke about the chamber’s Competence Centre: Sustainable Energy, which is based in Cape Town will introduce and implement the EUREM Training Program – The European Energy Manager, countrywide. The programme’s aim is to help companies structure their operations and work in a more energy efficient way. The Cape Town Regional Chamber of Commerce hosted an event in co-operation with the German Consulate General in honour of Pieter Dirk Uys, and a business seminar on renewable energy was hosted on behalf of the Bavarian Ministry of Economic Affairs and Media, Energy and Technology. The Cape Town office also hosted a delegation from the German Federal State of Brandenburg. As always, the Ball of HOPE was a highlight. The Cape Town Regional Chamber of Commerce office is very proud to be part of this event each year. Our staff complement has increased in the past few months, and we have moved to new offices in Triangle House. We have become increasingly busy as interest from Germany in the province is growing. The Cape Town Regional Chamber of Commerce is proud to represent Germany in the Western Cape! 

Anja Tambusso-Ferraz Regional Representative for the Western and Eastern Cape Tel +27 (0)21 418-3311 [email protected]

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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of Beauty.

BRANCH REPORT

Durban OFFICE: KWAZULU-NATAL

As a specialist in ingredients and concepts for effective skin, hair and body care products, Evonik offers sustainable and innovative solutions by combining scientific expertise with passion. With foresight, deep responsibility to the environment and dedication to the realization of your projects, we deliver real support for your future success. We call our approach: The Soul & Science of Beauty.

The Durban office has been in operation for two years since its launch in June 2012. Since its inception, the membership base in KwaZulu-Natal has significantly increased, and we continue to encourage firms to be a part of the German Chamber and take advantage of our offerings.

Various individual Durban business partner searches were successfully completed during 2013, and German companies office seeking contact with appropriate local Durban-based

2013 Highlights

companies were able to create viable business connections. The Durban office also managed a number of inbound business delegations, including a large delegation from Brandenburg, a water and sanitation delegation and, of course, the Sweets delegation. The Durban office also hosted two successful member luncheons, in June and November 2013, where members shared a networking opportunity over a delicious meal. A highlight of the Members’ Lunch was the signing of a Memorandum Of Understanding with Ithala Development Bank.

skills development is seriously lacking in this industry. With this in mind, the SAGCC is focusing its resources on aiding with the rejuvenation of the industry. An outbound mission to Bremen in Germany for key players in the South African maritime industry has been planned for June 2014, and aims to add value and create important knowledgesharing platforms for all participating maritime industry stakeholders. In 2014, another two member luncheons, in July and in November, have been planned and we look forward to welcoming you and creating an enjoyable and positive experience for all attendees. The Durban office continues to provide an array of services for its members and stakeholders, while executing projects initiated from our head office in Johannesburg. 

The Soul & Science of Beauty.

As a specialist in ingredients and concepts for effective skin, hair and body care products, Evonik offers sustainable and innovative solutions by combining scientific expertise with passion. With foresight, deep responsibility to the environment and dedication to the realization of your projects, we deliver real support for your future success. We call our approach: The Soul & Science of Beauty.

The Year Ahead The Durban office has moved to new office premises situated at the Lion Match Office Park on Umgeni Road. The new location is centrally located, has ample parking for members and we welcome you. In reviewing the KwaZulu-Natal maritime landscape, it has become evident that investment in education and

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Yvonne Iyer KZN Regional Representative Tel. +27 (0)31 335 1000 Cell. +27 (0) 83 779 0385 Fax (0)86 6790862 Email: [email protected]

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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BRANCH REPORT

A New office in Maputo After 62 years in South Africa, AHK Southern Africa has responded to the growing momentum in Mozambique by launching an office in Maputo. The official opening took place on 14 April 2014, at the Cardoso Hotel. Gabinete para o Fomento Económico Moçambique-Alemanha Southern African – German Chamber of Commerce and Industry

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atthias Boddenberg, CEO of the SAGC has anticipated the importance of the Mozambican market for some time, and is delighted to announce dedicated representation in Maputo for German interest in the burgeoning Mozambican economy. The need for a dedicated Mozambican presence has become more and more apparent, with the undeniable interest from German companies in the emerging African economy, which has grown consistently at a minimum rate of 7,2% per annum, and is listed in the top ten fastest growing economies worldwide. Dr Friedrich Kaufmann who heads the office has a Master’s Degree in Business Administration, a Ph.D in Economics, and comes with experience as Advisor to the Mozambican Ministry of Industry and Commerce (MIC). One could not wish for a more experienced and enthusiastic candidate. Dr Kaufmann is tasked with strengthening ties between Germany and Mozambique, and Mozambique and South Africa, while supporting and encouraging economic collaborative efforts between the three nations. Germany and Mozambique have maintained close relations since 1976. Germany has allocated around EUR 1 billion in bilateral development cooperation since the 1980s with a focus on education, rural development and sustainable economic development throughout the region. Germany and Mozambique have had close ties from a cultural aspect as well; some 20,000 Mozambicans have studied and worked in Germany. Although trade between Germany and Mozambique is considered modest, Germany imported approximately EUR 128 million from Mozambique in 2012, with imports and exports totalling EUR 177 million in the same year. Main imports from Mozambique to Germany include tobacco,

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aluminium, precious metals and precious stones. German exports to Mozambique include machinery, grains and garments. There are currently 125 AHK Chambers of Commerce offices in 85 locations worldwide, and the much-anticipated German–Mozambican Chamber is the 126th. The AHK Chambers of Commerce are dedicated to their members and provide services which foster business links between German companies and those outside of Germany’s borders. Services such as market entry, business partner searches, market Information, legal and tax information, delegations, and translation services, allow companies who do not have experience in the southern African market, the opportunity to flourish. The SAGC has been an active participant in the SADC market for over 60 years. With humble beginnings in Johannesburg, Chamber membership has grown over the years to such an extent that regional offices have become a necessity. The Cape Town office was opened in the year 2000, due to the growing demand for a German commerce and industry partner in the Western Cape. In 2012, the Durban office was opened thanks to the increased German interest in KwaZulu-Natal, and interest from the province in doing business with German partners. As another vital link in the growing chain between southern African and German business, the Chamber welcomes the Maputo office with much enthusiasm.  Dr. Friedrich Kaufmann Mozambique Regional Representative Tel: 0258 2149 3260 Fax: 0258 2149 3258 Email: [email protected]

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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EVENTS

German Weeks 2013

ETIHAD AND AIRBERLIN

German Weeks 2013 took place from mid-September to the end of October 2013, and featured 25 events and activities highlighting modern, multi-faceted Germany and its rich, vibrant and comprehensive relationship with South Africa. Furthermore, German Weeks 2013 wanted to introduce and highlight its presence within South Africa to new audiences, markets and relevant target groups.

A partnership designed to connect you better.

THE Success of German Weeks

Event Highlights The official slogan of the German Weeks was “Meet Germany in South Africa today”, the German Weeks 2013 showcased lifestyle, and politics, business and technology, and most events were hosted primarily in Johannesburg and Pretoria. The six-week event, highlighted various German institutions in South Africa showcasing their activities through a wide range of events catering to many tastes – panel discussions, conferences, trade fairs, and cultural events like the famous Oktoberfest. The main highlights of the German Weeks 2013 programme for the Chamber included: • Opening Event of the Oktoberfest (12 September), Deutsche Schule Pretoria • SA-German Chamber Gala Dinner (4 October) • East Germany Investor forum in Johannesburg and Cape Town (October 14 and 17) • The closing event, Innovation and Job Fair at the Deutsche Internationale Schule Johannesburg • Media Presence – Business Day, Jacaranda FM, Business Day TV, Highveld Radio, Press Releases, Beeld Newspaper, Morning Live

German Weeks 2013 took place mainly in Gauteng and attracted audiences from diverse backgrounds. The Oktoberfest gave the event momentum and was a great build up that culminated in many people looking forward to the events ahead. The Job Fair and the Innovation Fair were also a great success, featuring leading German technology companies, such as Festo, Siemens, Bosch, Evonik and Solarworld, who displayed their product innovations and service technologies. In addition, the German Weeks gave the participating companies the opportunity to share their knowledge with the participants in an informal and creative way. Most events were open to the public and offered a platform to experience German culture, technology, and innovation as well as providing unique networking opportunities. The German Weeks also offered visitors the opportunity to learn more about future markets, next generation partnerships, networks, shared expertise and tools to drive knowledge mobilisation towards the commercialisation of innovation. The events could have not been a success without the help of our sponsors. We look forward to another series of German Weeks. 

SPONSORS of german weeks

Kgotso Kobo Southern African – German Chamber of Commerce and Industry NPC Tel. +27 (0)11 486 2775 [email protected]

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Wirtschaftsdaten kompakt: Angola Stand: Mai 2012

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRYFläche 2013-2014

Einwohner Bevölkerungsdichte Bevölkerungswachstum

1,2 Mio. qkm 18,1 Mio. (Schätzung Juli 2012) 15,1 Einw./qkm 2,8% (Schätzung 2012)

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A

EVENTS

EVENTS

Annual Ball 2013

Back to Work 2014

The Business of Doing Business was the theme of the Chamber’s Annual Ball in 2013, held on the 4th of October. Some 250 members and friends of the Chamber, dressed in their finest, gathered at the Marula Room at the Sandton Sun Hotel ready to celebrate the year in style.

The ever-popular Back to Work Lunch took place on the 31st of January at the Chamber offices in Forest Town. A heavy downpour that morning could not discourage 140 Chamber members and friends and the press from being a part of this networking event.

s one of the final events of German Weeks, the Annual Ball celebrates the vibrant and comprehensive relationship between Germany and South Africa. The two nations share a mutually beneficial partnership as well as sharing a friendship. Although such a positive relationship is evident, the Chamber President, Mr Bodo Donauer, did comment on the political and economic situation of South Africa, saying that while South Africa is among the strongest economies in Africa, it is also one of the slowest growing. A number of factors are contributing to this – unemployment, slow infrastructure development, and the under-performance in the minerals sector. Policy uncertainty, electricity shortages, infrastructure bottlenecks, water scarcity and skills shortages need to be addressed.

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Once again, the Chamber Platinum Sponsors, BMW and Mercedes displayed their magnificent cars in the reception area. Siemens sponsored a delicious cheese and wine table and for desert, Worldnet Logistics sponsored a veritable feast to satisfy any sweet tooth. The guest speaker for the evening was Clem Sunter, who, as always, delivered an incredible and poignant speech. The SA-German Chamber, as part of its Corporate Social Responsibility projects, supports the Nooitgedacht Primary School, who made the corporate gifts for each and every guest by hand – a unique gift, supporting a good cause. With a live band, dancing, good food and enjoying an evening with friends, the Chamber Annual Ball 2013 can only described as a success! 

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

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hamber CEO, Matthias Boddenberg, spoke about landmark events and topics with which the Chamber was involved in 2013. It was a year of many delegations, with a focus on the Renewable Energy sector. The Chamber’s Durban office had a successful 2013 with 35 new members and the SA-German Training Services (SAGTS) and Builders Training Centre (BTC) both took up new projects and trained more than 500 trainees. In 2014, SAGTS and BTC will be expanding their training footprint into the Western Cape and KwaZulu-Natal, a very exciting development as the Chamber is passionate about the importance that training has on the South African employment landscape. Mr Boddenberg also focused on the legal challenges facing our members and other international companies looking to invest and conduct business in South Africa. The Promotion and Protection of Investments Bill and the

revised B-BBEE codes, will negatively influence the attractiveness of South Africa as an investment destination. Looking to 2014, Boddenberg discussed the expansion strategy of the Chamber into southern Africa not only in a trade fairs capacity, but also with the establishment of the new branch office in Maputo, Mozambique. Exciting developments such as two new Competence Centres, for Renewable Energy and Mineral Resources, will ensure dedicated Chamber personnel safeguarding the strategic importance of these sectors for our member companies, and will remain a strong focus area for the Chamber. The Chamber plans to implement initiatives which will further support German business in southern Africa which, together with its members and partner institutions, will have a positive impact on commerce and industry in this region. And with these words, the buffet, laden with German “braai’d” delicacies was opened. 

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Ball of Hope 2014

LEFT TO RIGHT: Christian and Maren Brendel; Carole Armstrong Hooper and Dr. Michael Zipp; Deputy Consul General Klaus Stross, Tita Stross, Jan Stross

LEFT TO RIGHT: Charles and Claudia Scheltema; Dieter and Lara Sommer; Sabine Ehrmann and Marcel Hoogebeen Above left: Anja Tambusso-Ferraz, the Chamber’s Regional Representative for the Western and Eastern Cape and Rev. Fr. Stefan Hippler, founding member of HOPE Cape Town and Chairperson of the board of trustees of the HOPE Cape Town Trust. Above right: Award-winning vocalist, nine-year-old Chelsea from Switzerland. Left: Our Master of Ceremonies for the evening, Katlego Maboe, host of the SABC3 Espresso Morning Show, with Anja and Stefan. LEFT TO RIGHT: Manuela Siegel and Philipp von Bodenhausen; Friedrich and Lorraine Schaefer; Karin and Gregor Küpper

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OPE Cape Town, and the Cape Town branch of the Southern African–German Chamber of Commerce, hosted the annual Ball of HOPE on the 10th of May, 2014 to raise awareness and funding for efforts to address the HIV/ AIDS and TB pandemics affecting South Africa. The event, held at the Westin Hotel in Cape Town, is always very well attended and, true to form, was sold out a month in advance. Rev. Fr. Stefan Hippler, founding member of HOPE Cape Town and Chairperson of the board of trustees of the HOPE Cape Town Trust, thanked the Southern African–German Chamber of Commerce for their ongoing support and commitment to the work of HOPE Cape Town. The Master of Ceremonies, Katlego Maboe, young Chelsea from Switzerland, and the talented choir from the Brooklyn Holy Cross Primary School entertained the guests with beautiful singing and a joyful atmosphere. Guests enjoyed an evening full of fun while doing a good deed for those less fortunate. All proceeds went to HOPE Cape Town, a non-profit, public benefit organisation that provides outreach, education and counselling at community level, and focuses on HIV/AIDS and TB in the Western Cape province. HOPE Cape Town is co-located and associated with the Ithemba (Hope) Infectious Paediatric Ward at Tygerberg Hospital in Cape Town and is linked to the University of Stellenbosch. HOPE Cape Town cooperates with “KID-CRU”, the Tygerberg Hospital research unit for paediatric infectious diseases. HOPE Cape Town is located at the Medical School of the University of Stellenbosch Tygerberg Campus near the Tygerberg Hospital. 

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

LEFT TO RIGHT: Martin and Alexis Damon-Zloch; Danica Helfrich, Eleanor Fulker, Martina Popkiss; Viola and Hermjo Klein, Saxonia AG, organisers of the HOPE Gala Dresden

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SPECIAL REPORT

Where is South Africa going?

South Africa: The Way Forward

The only way to answer this question is to ask where South Africa comes from and where it stands today. In his analysis of the status of South Africa’s economic situation, Moeletsi Mbeki, deputy chairman of the South African Institute of International Affairs, provides us with some valuable insights into South Africa’s economic past, present and future. Where South Africa comes from South Africa is one of a number of modern countries that were founded outside Europe by European powers during the 16th and 17th centuries. These countries had a number of common features: • They were founded on the export of Western European population and technology of the time. • They were founded on genocide against the indigenous peoples. • They imported slaves from Africa and or Asia. • They exploited the natural resources and labour of the new territories. • Their politico-economic systems were designed by the colonising powers for their own benefit. • They were established through destruction of the technical skills of the indigenous peoples where the latter survived. The countries that met the above description were mostly in the Americas. Most of South America became a colony of Spain and Portugal while North America and some of the Caribbean Islands became British colonies. In Africa only two countries fell under this classification – South Africa and Mauritius. South Africa had a great deal in common with the former slave-owning countries of the Caribbean; but especially with the United States of America. Both South Africa and the US were British colonies; their economies provided the backbone to the growth of Britain. The US provided cotton, which formed the backbone of the English Industrial Revolution. Since the discovery of diamonds and gold 150 years ago, South Africa has been a source of enormous profits flowing into the British economy via the City of London. In the US there was almost complete destruction of the indigenous population. Those that survived were herded into reservations where they became completely marginalised – politically and economically. South Africa is different from the US in that a large part of the indigenous population survived. However, they lost all their assets – land and livestock, and most importantly, their traditional technical skills. Defeated militarily, they were

“The deskilling of South Africa’s population, both black and white, from the end of the 17th century had hugely adverse consequences on the country’s future economic development.”

forced through various taxes to became labourers. Two things are therefore very important about South Africa. The first is that for the last 150 years the indigenous population was effectively prohibited from acquiring Western technical and managerial skills to replace the traditional technical skills they had lost. They were also denied the ability to acquire modern business and industrial assets. The second is that the population brought from Europe by the Dutch East India Company in the 17th and 18th centuries gradually became more and more isolated from modern Europe and did not have the skills that European populations developed during the two critical centuries that culminated in the Industrial Revolution in England and other parts of Europe. In the slave-owning Cape, most manual work was done by slaves, which further contributed to the loss of skills amongst whites. The deskilling of South Africa’s population, both black and white, from the end of the 17th century had hugely adverse consequences on the country’s future economic development. When minerals were discovered in the last quarter of the 19th century, South Africans did not have the scientific, technical, financial, and managerial wherewithal to start or develop the all-important mining industry. The development of mining in South Africa was undertaken by foreign immigrants who flooded into South Africa from the 1860s to the end of the 19th century. This immigration wave brought people from the United Kingdom, Europe, US and Australia. They brought mining technical skills as well as managerial systems that created the migrant labour systems for exploiting black labour which survives to this day. They also brought new industries to sustain the new population and supply their more refined lifestyles. Leaders of the companies that eventually controlled the mining industry were representatives of the City of London investors. These mining magnates, in cahoots with the British government, eventually seized military control of South Africa in 1901. Between 1902 and 1910, when they handed power to Afrikaner nationalists, the British reorganised South African society and state so that the country would continue to supply minerals and profits to the United Kingdom long after they had ceased having direct political control. This explains how mining and finance – South Africa’s Minerals Energy Complex – came to be controlled by the British.

Lessons from the United States We have seen that modern South Africa started off on the same foundation as the US. So how did the United States

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SPECIAL REPORT

Where is South Africa going? “To achieve the levels of domestic production of mining equipment South Africa will have to revolutionise its education system and finance sector.”

become one of the richest and most productive countries in the world while South Africa was mired at the bottom of the middleincome trap with half of its adult population – according to the National Planning Commission – locked outside a productive role in the formal economy? A large part of the US – the Northern region – spent most of its 80 years after the end of the American War of Independence in 1783 in a struggle with Britain to achieve economic independence for the US. The central objective of America’s economic independence was to enable American entrepreneurs to gain access to British industrial and scientific knowledge so that they could establish new enterprises – especially the modern cotton textile factories that were the foundation of the English Industrial Revolution. The British government would have none of this – the role of the United States was to be a supplier of raw cotton lint to British textile factories and remain a protected market for British manufactured goods. The British went to great lengths to frustrate American entrepreneurs from acquiring British technology expertise. The British government went as far as prohibiting artisans and technicians trained in the textile industries from emigrating to the United States. In its efforts to halt the industrialisation of the United States, the British had the backing of the slave owners of the southern states who grew cotton for export and did not want to upset the British and jeopardise their market for raw cotton by stealing British textile manufacturing technology. The tussle between Northern States, Southern States, and Britain culminated in the American Civil War of 1860-65. The defeat of the cotton-growing south in 1865 finally destroyed the political and economic hold Britain had over US development. Not surprisingly, the industrialisation of America took off after the American Civil War with US entrepreneurs building their country’s iron and steel, engineering, oil and gas, finance, electric, textile and eventually motor vehicle industries. This hugely abbreviated story of American economic development helps us to answer the question posed earlier – why did the United States, coming from the same roots as South Africa, become the richest country on earth while South Africa floundered with most of its people unemployed and living in poverty? The short answer is that the Americans overcame the obstacles put in their way by their history especially their history as a former British colony. They succeeded in creating a genuine capitalist society. South Africa, on the other hand, has so far only partially met the

challenges of creating a capitalist society. Today South Africa is a stunted capitalist society. We have seen that the manufacture of cotton textiles was the key driver of both the English and American industrial revolutions. In the case of South Africa it should be clear that the key driver of our Industrial Revolution should be the mining industry and the metals it produces. What has happened instead is that South Africa’s political elites – whether Afrikaner nationalists between 1910 and 1994 or African nationalists since 1994 – have connived to do what the slave owners in the southern US tried to do by perpetuating the export of raw cotton to Britain. In our case, for the past 100 years nationalist elites have collaborated with British financiers to perpetuate South Africa’s role as an exporter of raw minerals and metals. The lesson from the US is that South Africa must use its mining industry to drive a Industrial Revolution rather than a Consumption Revolution. Plant and mining equipment must be made in South Africa. As a first step the South African government must freeze the issuing of new mining licenses until the mining industry can demonstrate that at least 75% of the plant and equipment it is using is made in South Africa. This is the only way South Africa will be able to develop a serious capitalist economy able to absorb its entire labour force. The mining industry will need to be relieved of some of the costs it is carrying to contribute to the Industrial Revolution. One of these is housing its labour force. Housing of mine workers must become the responsibility of the municipalities where the mines are located, in partnership with private formal sector property developers. Provincial governments must however stipulate minimum standards and quality of town planning – hopefully an improvement on the ANC government’s RDP housing standards. This model should also be extended to housing for farm workers. Finally, there are several other costs that will need to be reviewed. These are transport, electricity and taxation. The notion that the mining industry must fund the bloated and already fattened state bureaucracy through royalty taxes etc. belongs in a museum. To be able to achieve the levels of domestic production of mining equipment South Africa will have to revolutionise its education system and its finance sector. The shortcomings of South Africa’s education system are all too well known to be repeated here. What is not so well known are the shortcomings of South Africa’s finance sector. There are many myths about how wonderfully South Africa’s British-created banking system operates. The reality is that our banking system is one of the major obstacles to the development of entrepreneurship in this country. 

Moeletsi Mbeki is deputy chairman of the South African Institute of International Affairs, an independent think tank based at the University of the Witwatersrand. He is author of Architects of Poverty: Why African Capitalism Needs Changing.

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To ensure long term economic growth we need to build businesses and create jobs for South Africans. Our local manufacturing facilities are already a big step in the right direction. We’re producing quality products and efficient technology to meet the country’s ever-growing infrastructure and energy needs.

At our modern manufacturing and service facilities in Mzansi, we’ve created more opportunities for localisation, skills development and more jobs. When it comes to moving the economy forward, we’re working with our customers today to build the answers that will continue to power the nation for generations to come.

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

De-Industrialisation in South Africa challenges and opportunities Despite its reputation as Africa’s most industrialised nation, South Africa is facing factory closures, decreasing exports, and increasing imports, which all negatively affect employment levels in the manufacturing sector in a country where unemployment is very high. Government needs to institute policies to stem this tide and use the opportunity to rejuvenate and expand the industrial potential in this country. South Africa’s industrial history It could be argued that industrialisation began in South Africa with the discovery of diamond deposits in Kimberley in 1867, followed by the discovery of gold on the Witwatersrand in 1886. During this period, South Africa began to transform from an agrarian to an industrial economy. During World War I, South African industrialisation was given a boost. Competitive imports were eliminated as international suppliers, embroiled in the war, gave local manufacturers the opportunity to develop. After 1924, industrial protection policies were introduced to safeguard the local manufacturing industry. During the 1930s, despite global depression and drought, South Africa remained relatively prosperous because of the expansion of the local gold mining industry. Organisations such as Eskom, Sasol and Armscor paved the way for an industrial present and future. Post-apartheid the economy grew, a positive atmosphere about the country and its future brought local and foreign investment. Foreign imports increased as international brands flocked to South Africa. To promote private household consumption, the South African government slashed tariff protection for local industries to decrease prices on consumer goods in the domestic market. As a result, local manufacturers, unable to compete with imported products closed their doors and jobs were lost.

WHERE WE ARE NOW The current South African economy is not reaching growth targets, the trade deficit is widening and the manufacturing sector has seen closures and retrenchments in all sectors. An example of this is the footwear industry. In 1995, half of South Africa’s demand was met through locally manufactured footwear; 11 years later the country produces only 17% of demand. Over13,000 jobs in this sector have been lost. The closing of each manufacturing plant is more than the loss of thousands of jobs – skills and know-how are lost as well. Even South Africa’s historically strong mining sector is shrinking, due in large part to unpredictable mining policies, labour disputes and infrastructure shortcomings.

“South Africa faces the danger of deindustrialisation amid job losses and factory closures in the manufacturing sector, along with rising imports and declining exports of some manufactured products.” Rob Davies, Minister of Trade and Industry

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“We need bold, visionary leadership to understand that, despite the country opening up its markets to the world and entering new markets in 1994, we are still not globally competitive.” Bonang Mohale, President, Black Management Forum what needs to change?

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Reliance on exporting raw mineral resources alone is unlikely to promote economic growth or address labour disputes. The industrial sector cannot be held solely responsible for addressing the plight of workers in the country. Labour costs in South Africa are among the highest in the world, creating unprofitable businesses that shut down or move to countries where productivity is higher and policies are investor-friendly. Opportunities for progress will only be available when the manufacturing industry, the backbone of any thriving economy, is revitalised. South Africa’s policy-makers need to focus on creating an economic framework that is sustainable and inclusive, by completing the industrialisation process which has already begun, but has been, to a large extent, neglected. South Africa needs to add value to mineral resources by improving and strengthening its engineering industry. The educational shortcomings of South Africa need to be addressed urgently, especially in terms of mathematics and science, to equip young people with the skills to move South Africa forward. South Africa is the only country in the world where there are more students in universities than in technical colleges. On the other hand, there is a shortage of skilled artisans in South Africa – electrical engineers, boiler makers, measurement and instrumentation specialists. An artisan will create jobs for unskilled labour, an average of ten people can be employed to assist an artisan. To attract much needed foreign investment, the skills shortages must be addressed and macroeconomic policies that encourage investment must be implemented. The National Development Plan hopes to address these issues with clear, achievable strategies to eliminate poverty, and to reduce inequality by 2030. South Africa can realise these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society. 

Sources: 1. 2. 3. 4. 5.

http://dspace.nwu.ac.za http://www.southafrica.info/africa/industrialisation http://www.ft.com https://www.ids.ac.uk/files/Wp88.pdf http://rabelanidagada.co.za/?p=231

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

RUN BETTER.

South Africa’s national development plan

NATIONAL DEVELOPMENT PLAN

2030

Our future make it work EXECUTIVE SUMMARY

S

outh Africa’s National Development Plan, released in June 2011, acts as a broad strategic framework for development and sets out a coherent and holistic approach to confronting poverty and inequality. The NDP also highlights South Africa’s achievements and shortcomings; a failure to implement policies and an absence of broad partnerships are seen as the main reasons for slow progress. Some of the important issues are high levels of corruption, a low rate of employment, poor school education in many areas, inadequate infrastructure, over-reliance on resources, and a public health system that cannot meet demand, is not maintained, and is often of a poor quality. Priorities for national development include uniting all South Africans to achieve prosperity and equity, promoting each citizen’s responsibility to development, democracy and accountability, economic growth, labour absorption and encouraging strong leadership throughout society with a strong focus on the youth. 

BUILDING A FUTURE FOR SOUTH AFRICA’S YOUTH

South Africa has an urbanising, youthful population. This presents an opportunity to boost economic growth, increase employment and reduce poverty. The Commission, recognising that young people bear the brunt of unemployment, adopted a “youth lens” in preparing its proposals, which include:

SOUTH AFRICA’S AUTOMOTIVE SECTOR

• A nutrition intervention for pregnant women and young children. • Universal access to two years of early childhood development. • Improve the school system, including increasing the number of students achieving above 50 percent in literacy and mathematics, increasing learner retention rates to 90 percent and bolstering teacher training. • Strengthen youth service programmes and introduce new, community-based programmes to offer young people lifeskills training, entrepreneurship training and opportunities to participate in community development programmes. • Strengthen and expand the number of FET colleges to increase the participation rate to 25 percent. • Increase the graduation rate of FET colleges to 75 percent. • Provide full funding assistance covering tuition, books, accommodation and living allowance to students from poor families. • Develop community safety centres to prevent crime and include youth in these initiatives. • A tax incentive to employers to reduce the initial cost of hiring young labour-market entrants. • A subsidy to the placement sector to identify, prepare and place matric graduates into work. The subsidy will be paid upon successful placement.

T

N E

O

TI

CO

D E V E L O P M

ACTIVE CITIZENRY

EFFECTIVE GOVERNMENT

O

O F

R T U N IT IE S PPO

STRONG LEADERSHIP

GROW TH

IT

E

IE

Y

C A PA B IL

L

OY T

S

EN

C

SOCIAL COHESION

E

PL

Source: National Development Plan

NS

M

• Expand the role of state-owned enterprises in training artisans and technical professionals.

N

R IS IN G L IV S T A N D A R IN G DS RTY V E T IO N PODUC RE

• A formalised graduate recruitment scheme for the public service to attract highly skilled people.

DI

M

• Expand learnerships and make training vouchers directly available to job seekers.

C 50



ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

51

South Africa’s AUTOMOTIVE SECTOR Keeping the wheels turning If we regard the health of South Africa’s automotive sector as an indicator of the country’s general fiscal well-being, then 2013 was a particularly challenging year. Industrial action in the vehicle manufacturing and associated industries resulted in substantial declines in domestic and export vehicle production and sales, and a weak Rand meant significant cost pressures in respect of imported content and vehicles.

T

he National Association of Automobile Manufacturers of South Africa (NAAMSA) projected a reduction in output of 9.5% to about 552,000 vehicles for 2013, from original projections of 610,000 units. A major contributor was a reduction in export vehicles from the previously projected 336,000 units to a revised forecast of 281,000 units – a decline of about 20.1%. Even so, 2013 third quarter aggregate industry new car sales at 125,189 units recorded an improvement of 7,512 units or 6.4% compared to the 117,677 new cars sold during the corresponding quarter of 2012. Aggregate Industry commercial vehicle sales during the third quarter of 2013 at 50,750 units recorded an increase of 2,988 units or a gain of 6.3% compared to the 47,762 units sold during the third quarter of 2012. South Africa has a long and colourful history in the automotive industry. This sector is one of South Africa’s most important manufacturing sectors, contributing over 6% to the country’s annual GDP and accounting for over 12% of South Africa’s manufacturing exports. More than 28,000 people are employed in automotive manufacturing and 65,000 are employed in the component manufacturing industry. Related industries, such as the retail industry and the tyre manufacturing industry, employ 200,000 and 6,600 people respectively. The industry is based in the Eastern Cape and in Gauteng, with international brands such as BMW, Ford/Mazda,

ANNUAL

JANUARY TO JUNE 2014

JANUARY TO JUNE 2013

AT A GLANCE • The automobile sector contributed 7% of the country’s GDP and 12% to manufacturing exports in 2012. • Right and left hand drive vehicles, both commercial and passenger, have been exported to 87 countries. • The largest export markets are Australia, USA, Japan and the UK. In 2010, 271,000 units were exported. • 28,000 people are directly employed in automotive manufacturing. • The component manufacturing industry employs 65,000 people, about 200,000 are employed in retail and after sales activities, and 6,600 in the tyre-manufacturing industry. • Automobile manufacturers in South Africa include BMW, Ford (incorporating Mazda), General Motors, Mercedes Benz, Nissan, Toyota, Volkswagen, and Renault. • Component manufacturers such as Arvin Exhaust, Bloxwitch, Corning and Senior Flexonics have established production facilities in South Africa.

DIFFERENCE IN VOLUME % CHANGE

FULL YEAR 2013

FULL YEAR 2012

DIFFERENCE IN VOLUME % CHANGE

PAS

208,695

224,016

-15,321

-6.8

450,296

442,048

8,248

1.9

LCV

84,387

87,002

-2,615

-3.0

167,996

160,653

7,343

4.6

MCV

5,287

5,645

-358

-6.3

11,584

10,104

1,480

14.6

HCV

2,492

2,522

-30

-1.2

5,474

4,982

492

9.9

XHV

6,832

6,198

634

10.2

12,819

11,621

1,198

10.3

BUS

568

491

77

15.7

1,046

1,134

-88

-7.8

TOTALS

308,261

325,874

-17,613

-5.4

649,215

630,542

18,673

3.0

Source: NAAMSA

52



V I VA V I VO

OGILVY CAPE TOWN 67854/E

SPECIAL REPORT

Polo Vivo. The overall 2014 People’s Choice. The people have spoken. With over 100 000 votes the Polo Vivo was voted the overall 2014 People’s Choice at the Standard Bank People’s Wheels Awards. It’s South Africa’s most loved car and once again, remains South Africa’s top selling passenger car* – an accolade it has retained since its launch in 2010. To discover it for yourself, test drive the Polo Vivo at your nearest Dealership or go to vw.co.za. Prices start from only R135 500. Polo Vivo. The People’s Choice.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

53 * Source: NAAMSA 2010 to 2013.

TIMELINE: THE AUTOMOTIVE INDUSTRY IN SOUTH AFRICA

LIMPOPO

Pretoria

NORTHWEST

MPUMALANGA

GAUTENG

The first Datsuns are assembled in Durban

1960

Local production increases to 87 000 cars and South Africa becomes the leading developing nation in the automotive sector

1965

Fiat and Datsun open factories in Rosslyn

1966

Toyota assembles the first domestic Corona

1968

First BMW production plant in Rosslyn is established. MAN – which in 2014 has 393 employees and produces 2500 heavy vehicles, opens its doors.

1972

VW establishes its Operator Training Centre to convey know-how, from basic education to apprenticeship as master craftsman, to its employees.

1981 4 January 1897 First motor car in South Africa, a two-seater Benz Velo, is driven by John Percy Hess at Berea Park in Pretoria.

MBSA opens a Technical Training Centre in East London as an equal platform for all races and trains 10,000 artisans.

1986

VW introduces its Mission Statement which declares that employees will be employed and qualified regardless of race

1913

General Motors South Africa is established and begins distributing Chevrolet vehicles.

1990

1923

A Ford Model T is assembled in an old wool-packaging barn in Port Elizabeth, the 16th production plant outside North America. It is the first car assembled in Africa.

1926

General Motors South Africa is founded in Port Elizabeth, producing brands such as Chevrolet, Oakland, GMC trucks, Buick, Pontiac, Oldsmobile and Vauxhall

To celebrate Nelson Mandela’s release from prison, MBSA workers at the East London plant produce a top-of-the-range 500SE S-class. Parts are donated by Mercedes Benz and workers build the vehicle after hours for the South African hero. The workers are members of the first black labour union in South Africa; the ever-progressive Mercedes Benz is the first local automotive company to recognise a union.

1937

Chrysler establishes its first production plant in Johannesburg

1939

Peugeot joins National Motor Assemblers

1946

Arrival of the first Mercedes in South Africa South Africa Motor Assemblers and Distributors (SAMAD) is established and manufactures Studebakers and Austins in Uitenhage. SAMAD later became Volkswagen SA.

1950

An automotive assembly facility is built at Gately Industrial Township in East London. It later became the Mercedes-Benz South Africa production plant.

1951

Volkswagen establishes its first production plant in Uitenhage and the first South African Beetle is built.

1952

The first BMW – the 501 – arrives in South Africa

SWAZILAND

KWAZULU-NATAL

FREE STATE

1959

Richards Bay

LESOTHO

NORTHERN CAPE

Durban

EASTERN CAPE East London

WESTERN CAPE Port Elizabeth

General Motors, Mercedes Benz, Nissan, Renault, Toyota and Volkswagen producing locally. International component manufacturers have also established manufacturing plants in South Africa. South Africa’s largest export destination in 2013 for components was Germany, which accounted for R12bn of South Africa’s total exports, with catalytic converters making up half of this export value. Historically, South Africa’s most important exports have always been raw materials such as gold and platinum, however, since the late 2000s, the automotive exports have overtaken gold exports, creating value-added exports and increasing skilled labour offerings. Year

Gold exports (R Billion)

Automotive exports (R Billion)

Ratio (gold : auto)

1995

21,484

4,218

5.1 : 1

2000

7,838

23,358

1.2 : 1

2007

39,898

67,600

0.6 : 1

Source: BMW SA

The South African government sees the automotive industry as a vital driver for economic growth and job creation, and implemented the Automotive Production and Development Programme in 2013, which aims to expand the local production industry by 1.2 million vehicles a year by the year 2020, and increase the use of locally-sourced content at the same time. Unfortunately, just 14 months into this programme, production was already 30% off pace, due in large part to a seven-week long strike in the automotive industry, from mid-August to the first week in October 2013. According to the automotive division at PricewaterhouseCoopers, the

54



“… the world exists on profit and I think we need to start working together. These disruptions that we have to our supply chain in the form of strikes and stayaways or whatever the excuse might be are really hindering the growth of our business.” KPMG Africa Automotive sector leader, Gavin Maile.

target of 1.2 million vehicles by 2020 is not realistic. Foreign investment is urgently needed, but competing with countries such as China or India in terms of productivity and cost, is becoming increasingly difficult. South Africa’s unstable labour environment, low volumes and volatile currency are also undermining foreign investment and putting a strain on exports. Decisions to strike need to be tempered with realistic goals for the future of the manufacturing industry, and the South African economy as a whole. Although local buying power has been weakened because of an increase in the price of fuel, a volatile Rand, and interest rate hikes, the emerging middle-class is nevertheless an excellent driver for the new car market. Furthermore, it is expected that some international manufacturers, particularly from China, will invest in a local manufacturing base in the coming years. In order to safeguard a manufacturing future and ensure the success of South Africa’s vital automotive industry, thought must be given to education and training, labour issues and policy changes at a governmental level. 

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

1950 - early 1980s South African vehicle production booms. Sales multiply tenfold. 1956

Between 1995 and 2012, the Motor Industry Development Programme (MIDP) helped the motor industry adjust to South Africa’s reintegration into the global economy and increase its competitiveness in the new post-apartheid trade policy environment. 2000

The CSIR and the government of Gauteng establish the Automotive Industry Development Centre (AIDC), to provide appropriate infrastructure, including consultation, research and development services, to the South African automotive industry. The AIDC is supported by the Frauenhofer society.

2010

The South African automobile industry grows by 24.7%

1 Jan 2013

The Automotive Production Development Programme (APDP) is implemented to increase vehicle production to 1.2 million vehicles until 2020, and increase the global market share to more than 1%.

2013

The Japanese Nissan Leaf becomes the first electric car to be imported into South Africa.

VW buys a large interest in SAMAD

55

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SADC

A Daimler Brand

COUNTRY REPORTS

South Africa

ANGOLA ZAMBIA zimbabwe NAMIBIA

mozambique

Johannesburg (gtai) – South Africa’s GDP growth in 2013 shrunk to a mere 1.9%. Fortunately, growth is predicted at +3% for 2014. However, if strike frequency continues at its present rate, then this growth will not be realised and it will be pertinent for government to implement structural changes in order to safeguard the economy. To ensure economic growth, proposed infrastructure projects must be expedited. Opportunities continue in the demand for imported goods.

BOTSWANA

SWAZILAND lesotho

SOUTH AFRICA

Area

1,219,912 km²

Inhabitants

52.9 million

Population Growth

1.2%

Official Languages

isiZulu, isiXhosa, Afrikaans, Sepedi, Setswana, English, Sesotho, Xitsonga, Siswati, Tshivenda and isiNdebele

Capital City

Pretoria

Gross Domestic Profit Growth

1.9%

President

Jacob Zuma

Ease of doing Business

41/189

Currency

South African Rand: 1 US$ = R10.57 (April 2014)

SWOT ANALYSIS Strengths

Source: data.worldbank.org; gtai; doingbusiness.org

Economic growth Economic growth for South Africa in 2013 was disappointing at a mere 1.9%. Initial predictions of economic growth of more than 3% were overly optimistic, as were predictions in 2012. The question of whether South Africa will achieve the predicted economic growth of 2.8–3.3% in 2014 remains. Growth of over 5% is needed to alleviate South Africa’s problems of high unemployment, poverty and social inequality. Sharp wage increases, coupled with ever-decreasing productivity, steep electricity hikes and ongoing strike action, have severely influenced local businesses and negatively affect investor confidence. The extreme delay in building large power stations, ongoing strikes especially in the platinum sector, and political uncertainty are putting pressure on the investment climate. The ANC still has a strong majority of 63% but opposition parties are gaining popularity. Whether general election results in May 2014 will change the economic climate remains to be seen.

Large population of 53 million Good infrastructure Wide industrial base means a good entry point into the African market Good access to the SADC region Relative political stability

Weaknesses Lack of skilled labour Energy shortages High crime

Opportunities

Threats

Large infrastructure programmes Demand for imported goods especially technology and machinery Increased consumption due to growing middle class Rising energy demands offer opportunities in renewable energies

Rising energy costs Social inequality and strikes threaten long-term stability High wage increases with poor productivity Strikes have negatively impacted investment climate Conflicts over the economic way forward (nationalisation)

Investment GDP growth in South Africa is currently moderate. Many private sector local investors have put their investment plans on hold until after the elections, when it is hoped that there will be renewed enthusiasm for investing in South African business. The public sector will investing heavily in infrastructure projects in the coming years. In order to bolster the economic growth it is important that the 18 integrated projects, which will total 4 billion Rand and should be completed by 2030, begin soon.

Consumption

Key Economic Data Indicator

2012

2013

Comparative data, Germany 2012

Comparative data, Germany 2013

GNP (nominal, billions of US$)

384.2

353.9

3,350

3,635

GNP per Head (nominal, US$)

7,525.4

6,847.4

32,280

-

Population (millions)

52 .4

52 .9

81 .8

82

As the most important driver of the economy, at about 60% of GDP, buying power amongst the South African population is slowing noticeably. Living costs are rising sharply due to increased power and petrol prices, and the weaker Rand. Household debt currently stands at 76%, a very high figure that should be curtailed by South Africa’s new credit acts. The retail sector is beginning to feel the pinch and experienced slower growth of 2.5% in 2013, down from 4.7% in 2012. The inflation rate for 2013 was 5.2% and is expected to rise to 5.6% in 2014. Unemployment is at 25%.

Source: IMF; EIU; Stats SA; Statistisches Bundesamt

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Foreign Trade

ICT

One of South African’s structural deficiencies is the trade deficit, which has risen over the last years. A future risk from probable curbing of loans from the US Federal Reserve Bank, will make financing the deficit more difficult. Furthermore, in 2013, while imports grew by 16.8%, exports grew by only 12.7%. The upward swing in the global economy, especially in Europe, South Africa’s key export market, along with the weaker Rand, should improve the weak export figures. In 2013 alone, the Rand lost 29% of its value against the Euro. Bilateral trade reached 13.9 billion EUR in 2012, a figure likely to decrease to 13.7 billion EUR in 2014. Germany’s exports to South Africa sank to -0.7% in the first few months of 2013; South Africa’s exports to Germany were at a weak -7.2% during the same time period. Despite slow economic growth, South Africa is still at the number 12 spot of Germany’s most important export markets, the same position as Mexico and Canada. Germany is the second largest importer to South Africa after China followed after a substantial gap by Saudi Arabia, USA, India and Japan. German machinery and equipment is in high demand because of its reputation for excellent quality. Large infrastructure projects and a need to increase energy efficiency in industry are opportunities for German manufacturers.

The South African ICT market is likely to reach 240 billion Rand, with 160 billion for the telecommunications sector and 80 billion for the IT industry. The industry is expected to grow by 3.6% in 2014. Many service providers are investing extensively in their networks, building new and upgrading existing networks throughout the country. Mobile data usage has been increasing by 61% annually, and it is expected that by 2017 total internet usage will have risen by 31%.

Mining The investment climate in South Africa’s mining industry is again suffering from regulatory uncertainties and ongoing strikes. Although there are no nationalisation discussions at present, various regulations to strengthen processing of raw materials locally will see intense involvement from the state rather than providing incentives for companies. Proposals include export quotas and price fixing for the local market. Strikes in the platinum sector are continuous. By May 2014 one fifth of annual platinum production had been lost, costing the country upwards of 13 billion Rand. Increasing wages and electricity prices have seen production costs increase from 16% to 23%. Mine shafts are becoming deeper and new and efficient solutions are required.

Machine and Equipment

Export figures in US$: comparison of 2011 and 2011 2011

2012

Imports

101,116

102,028

Exports

98,773

87,659

Trade Balance

-2.342

-14.363

*Source: SARS

Construction Industry The construction industry is still recovering after the 2009 global economic crisis. However, the first three quarters of 2013 saw a positive increase in investment in new projects with planning permissions increasing by 12.6%. Industry experts predict that the construction industry will continue to grow in 2014 and 2015 by between three and four per cent with assistance from the state’s Infrastructure Development Plan which totals 827 billion Rand.

Automotive industry The seven-week long strike in 2013 severely affected production figures; around 60,000 vehicles were not produced and at 500,000, annual production was 11% less than predicted. It is hoped that in 2014 production will increase again to 611,000 vehicles, although current production figures, and further strikes in the sector, do not support this. The Automotive Production Development Programme (APDP) will see investment of 13.8 billion Rand in production plants and in the component supplier sector. However, the outlook for 2014 is not positive as sales remain relatively stagnant at 3.2% (2012: 9.2%; 2011: 16%).

In 2012, demand for machinery in South Africa totalled 19 billion EUR; approximately 86% of this was for the private sector. In relation to other African nations, South Africa has a large and diverse manufacturing industry. Demand increased a further 4.5% in 2013 and it is expected to continue to rise by 5.2% in 2014 and 5.6% in 2015. Around 25% of imports are machinery and equipment. The rising electricity prices (8% annually till 2017) have increased demand in the private sector for energy-efficient machinery and equipment, a trend which will continue.

Energy By 2030, energy demand in South Africa is expected to increase from the current 37,000 MW to 61,200 MW, rather than the previously anticipated 67,800 MW. The decrease in the predicted consumption will see revisions laid out in the Integrated Resource Plan (IRP) come into effect. One revision may be to the nuclear programme, intended to produce 9.600 MW and be operational by 2023. Coal power stations were intended to produce 2.500 MW but could be reduced to 1.500 MW. In 2014, tenders for renewable energy from private electricity providers have been planned.

Transport Billions will be invested in transport networks in the coming years. Projects will be carried out by state-owned enterprises logistics provider Transnet, the Passenger Rail Agency of South Africa (PRASA) and the South African National Roads Agency Limited (SANRAL). Transnet’s programme is worth 308 billion

59

South Africa Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

Venetia Underground Diamond mine

1.9 billion

Planning stage, completion by 2021

Conversion of open cast to an underground mine

PRASA Commuter Rail

13.27 billion

Completion 2030. A portion of the contract went to Alstom - commuter trains, construction of a local manufacturing facility in Dunnottar. The overall value of this contract is worth 4bn EUR.

Upgrading and modernisation of the rolling stock and railway lines

Transnet Rail, Ports and Harbours

29.19 billion

Completion 2020

Construction and upgrading of ports and harbours as well as rolling stock and railway lines

Clean Fuels 2 programme

3.79 billion

Planning stage

Clean Fuels 2 specifications aim to reduce the aromatic and benzene content of petrol to be in line with Euro 4 emission standards by 2017. Sasol and Shell are also involved

Swazilink Railway

1.61 billion

Planning stage

Rail connection between Mpumalanga and the port in Richards Bay and in Maputo, through Swaziland

Eskom Energy

33.17 billion

Completion 2018

Upgrading of energy infrastructure

Vodacom

900 million

Completion 2014/2015

Upgrading broadband network

Automotive industry

1.33 billion

Completion, 2014/2015

Constructing new and upgrading manufacturing plants for automotive manufacturers and component suppliers

Square Kilometre Array (SKA)

1.42 billion

Completion 2023

Largest radio telescope word-wide. International joint project

Lesotho Highlands Water Project

920 million

Planning stage, completion 2021

Phase 2, construction of a new storage dam

Umzimvubu Water Scheme

1.9 billion

Planning stage, completion 2018

Construction of storage dams, irrigation networks and hydro power plant at the Umzimvubu river in the Eastern Cape

Source: gtai

Rand, of which 200 billion Rand is allocated to rail and 80 billion Rand to ports and harbours. A new port in Durban is planned, for 50 billion Rand. SANRAL is planning to spend 38 billion Rand on road upgrades. In the large cities the construction of Bus Rapid Transport systems is underway and high-speed passenger trains are planned.

Chemical South Africa’s chemical industry is in a positive state. With a turnover of 376.5 billion Rand in 2012 (excluding mineral products at 218.4 billion Rand), the industry grew by 12.3% in the first three quarters of 2013 (mineral products at 8.7%). Planned investment in facilities for the petro-chemical sector, with the introduction of the Euro V Standard, will total at least 25 billion Rand. A feasibility study for the Mthombo Refinery (80 billion Rand) should be finalised in 2014 and an investment decision will be taken by 2017.

Electronics Demand for home and entertainment electronics is developing very well. The Chinese manufacturer Hisense is investing in a manufacturing plant for televisions, washing

machines and refrigerators in Cape Town. Approximately 8 billion Rand is going towards digitalisation of the broadcasting network, with SABC and eTV planning their investments. South Africa’s high crime rate means demand for security technology is high, in both the public and the private sector. The construction of the South African portion of the Square Kilometre Array (SKA) project (1.5 billion EUR) is also an important business opportunity.

Environment After protracted legal hurdles, the recycling plan for used tyres will be implemented; over 60 million used tyres need to be disposed of. Rubbish dump sites are full and space for new sites are in short supply, which means new recycling and rubbish collection regulations urgently need to be implemented. Water management is also in need of upgrading and around 670 billion Rand must be invested in the infrastructure. Distribution networks are dilapidated and in parts of the country unsanitary, and new water treatment plants are needed. Various sewage treatment plants are being built and others upgraded. Acid Mine Drainage (AMD) is a massive problem in the country’s mining regions. Translated by M van Niekerk

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

61

ADVERTORIAL

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I

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Currently the RHEINZINK sales programme includes more than ten different systems for facades and external walls alone. In particular, this involves modern facade versions such as reveal, shiplap and horizontal panels as well as corrugated and trapezoidal profiles. In addition, there are small and large format tiles, angled standing seams, roll caps and various special seam forms, still so popular in modern buildings. Thus it can be seen that RHEINZINK facade systems can be used for virtually any construction need, allowing all design preferences to be satisfied. The material and resulting systems meet all the newest requirements for environmental sustainability, safety, product quality and reusability.

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62



ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

63

Angola

ANGOLA ZAMBIA zimbabwe NAMIBIA

mozambique

BOTSWANA

Johannesburg (gtai) – Angola is currently experiencing a second wave of GDP growth. The government is focusing on “de-dollarisation” and will spend upwards of 5 billion US $ on large infrastructure projects.

SWAZILAND lesotho

SOUTH AFRICA

Area

1,246,700 km²

Inhabitants

20 million (estimated 2013)

Population growth

3.1%

Official languages

Portuguese

Capital city

Luanda (estimated 6 million inhabitants)

Gross domestic profit growth

8.3%

President

José Eduardo dos Santos

Ease of doing business

179/189 (2013)*

Currency

Kwanza: 1 US$ = 98Kw (April 2014)

*Source: data.worldbank.org, gtai

Overall Economic Prospects Angola is still strongly reliant on oil exports, which in 2013 amounted to 97% of total exports. Oil exports total 70% of inland revenue, and 45% of GDP. Angola produces 1.8 million barrels per day, which makes it the world’s 16th largest oilproducing country. Angola is Germany’s third most important trading partner in the sub-Saharan region, after South Africa and Nigeria. The Angolan government, headed by the much-admired president José Eduardo dos Santos, is determined to diversify the economy by supporting local businesses and entrepreneurs. In 2013, Angola’s Central Bank proposed new regulations aimed at “de-dollarising” the Angolan economy. Business should favour the local Kwanza over the US Dollar, a strategy also adopted by the oil industry and which provided for greater liquidity in the local finance industry. To protect local industry, a new import tax – Nova Pauta Aduaneira – and VAT, were introduced on all imported products, which affected the inflation rate, now at 7.8%. Approximately 90% of all consumable products in Angola are imported, adding to the already exorbitant cost of living in Luanda – the most expensive city in Africa. A priority for the Angolan government is the rehabilitation and expansion of its devastated infrastructure. A state fund dedicated to the revitalisation of infrastructure has been created, and will make use of surplus resources from the oil industry to fund water and sanitation, transportation networks and energy projects. By 2017, 1.500 bridges and 15,000 kilometres of roads will be built, important additions to rebuilding a diversified economy.

64



SWOT ANALYSIS Strengths

Weaknesses

Oil and Minerals Politically stable Growing and stable relationship with foreign partners

Destroyed infrastructure which requires high investment Lack of skilled labour Weaknesses in administration and legal systems Extreme bureaucracy Corruption

Opportunities

Threats

Windfall profits from oil-price boom Increasing Foreign interests Diversification of mining ventures Improved relationship with South Africa

Economy too reliant on oil and diamonds Economic boom does not directly affect the population Growing poverty

Key Economic Data

Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

Oil Refinery

6 – 8 billion

Under construction: Phase 1

Sonangol

Hydro Electric Power Station

tba

Planning

Kwanza Sul Province 520 MW

Laúca Hydro Electric Power Station

3.7 billion

Under construction: 5 – 8 years

Kwanza Norte Province 2000 MW

Hydro Electric Power Station with Namibia

7 billion

Planning

Joint Venture, Border 400 MW

Power Station

tba

Planning

Energy Minister 400 MW

Bio-Energy Facility

220 million

Under construction

Joint Venture with Brazil

Country-wide Electrification

12.6 million

Under construction

By 2016, will provide electricity for 8 million inhabitants

Benguela Industrial Centre

2 billion

Under construction

Joint Venture with Portugal

Malanje Industrial Park

600 million

Under construction

With Oderbrecht, Brazil

Source: gtai

2012

2013

Comparative data, Germany 2012

GNP (nominal, 115.3 billions of US$)

121.7

3,350

3,635

on the increase. Whether the government’s increased focus on alleviating poverty will create positive change remains to be seen. Despite this, private consumption is increasing in line with GDP growth, as a growing middle-class, residing in Luanda, is able to afford luxury goods and services.

GNP per Head 5,706 (nominal, US$)

5,846

32,280

-

Foreign Trade

Population (millions)

20.82

81 .8

82

Indicator

20.17

Comparative data, Germany 2013

*Source: IMF, Country Economy, gtai

Portugal, China, USA and Brazil. Germany is currently a minor trading partner but export volumes show a steady upward trajectory, with exports to Angola totalling 348 million US$.

Angolan Export Volumes (US $ million)

Oil is Angola’s largest export product, and with the increasing oil prices, Angola’s trade balance sheet is very positive. Exports grew by 8.3% over the 2011/2012 period to 71 billion US$, while imports also grew substantially by 22%, totalling 22 billion US$. Angola’s most important trading partners are

2011

2012

Change

Imports

19,750

22,318

13.0%

Exports

65,801

71,283

8.3%

Source: gtai

Investment Much of the local investment comes from Angola’s extremely well-organised and profitable oil industry. Infrastructure must be rebuilt, transport systems, harbours, water and sanitation and health facilities are all in dire need of intense investment, both from a monetary as well as a skills point of view. Although this is an opportunity for international firms, Chinese firms are entrenched in Angola, especially in the realm of oil, construction and agriculture. Approximately 200 Angolan visas are granted to Chinese nationals on a daily basis; a point which potential investors must take note of.

Consumption

Ricardo Gerigk  Delegate for the German Economy in Angola Delegado da Economia Alemã em Angola

 

Rua Engenheiro Armindo de Andrade, Nr.80 Miramar - Luanda - Angola Tel./ Fax: +244 – 222442831 Tel .   +244 - 946267525 Mobil: +244 - 926231095 Email. [email protected] Internet : http://www.angola.ahk.de 

The effects of the oil industry boom in Angola have not yet trickled down to the population as a whole, and poverty is

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

65

Botswana

ZAMBIA

ANGOLA

zimbabwe

mozambique

BOTSWANA

NAMIBIA

Johannesburg (gtai) – Botswana’s economy is experiencing strong and steady growth and is expected to grow by 4.3% in 2014. Projects around the large coal deposits, from mines, to supporting infrastructure such as the Trans-Kalahari Railway, are being planned or are underway, providing opportunities for exporting capital goods to Botswana.

SWAZILAND

lesotho

SOUTH AFRICA

Area

600,370 km²

Inhabitants

2.04 million

Population Growth

0.9%

Official Languages

English

Capital City

Gabarone

Gross Domestic Profit Growth

4.3%

President

Ian Khama

Ease of doing Business

56/189

Currency

Pula: 1 US$ = 8.79 BWP (July 2014)

Source: EIU, gtai, doingbusiness.org

Overall Economic Prospects Although Botswana’s economy is experiencing steady growth, GDP growth has been slower than expected, largely due to a decrease of 7% in the mining sector. Demand for diamonds has dropped; Botswana is reliant on the diamond industry for 80% of exports. Debswana, Botswana’s largest diamond producer, reported production of 20.22 million carats in 2012, well below capacity of around 30 million carats. The large diamond mines in Jwaneng and Orapa are open-cast mines, with a high production capacity. However, by 2025, they will reach a depth that will transform them into underground mines, which will result in a decline in productivity. Botswana Diamonds is confident that with the latest technologies and further exploration, new diamond deposits will be found. Government is trying to diversify the economy, so that Botswana is not so reliant on the diamond industry. The strategy is already proving successful; mining contributes only 15% to total GDP while the service sector contributes 35%. The De Beers group signed a deal with the Botswana government in 2011 to move its sites and sales operation including professionals, skills, equipment and technology from London to Gabarone, which gave the local service sector yet another boost. Processing of diamonds, such as manufacturing jewellery, may also be centred in Botswana in the future.

66



SWOT ANALYSIS Strengths

Weaknesses

Investor friendly government and frameworks Politically stable Growing and stable relationship Minimal corruption Close to the industry hub Gauteng

Closest port is 1,000 km away Lack of skilled labour Small market with 2.1 million population Being land-locked affects the exploitation of commodities such as coal

Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

Morupule B block 5 & 6

tba

Tenders issued. Beginning in 2016/17

Construction and operation of 2x 150 MW blocks for the Morupule coal power station

Greenfield power station

tba

Tenders issued. Beginning in 2017

Construction of a few 300 MW power station for coal, gas, etc

Solar Thermal power station

tba

Planning stage. Beginning in 2018

Construction of a 100 MW solar thermal power station in Jwaneng. Either as a PPP or through a tender

Jindal power station

2 billion

Planning stage. Beginning in 2018

Construction of a 3,600 MW coal power station in Mmamabula. Phase 1: 600 MW

Trans-Kalahari Railway

11 billion

Planning stage. Construction estimated to take 5-7 years.

Construction of a 15,000 km railway line to Walvis Bay, Namibia, specifically for coal exports. Construction and operating through a private investor

Ponta Techobanine railway

7-9 billion

Planning stage

Construction of a 1,100 km railway line to accommodate oversize loads of coal to Ponta Techobanine in Mozambique

Morupule South coal project

100 million

Planning stage

New coal mine through Hodges Resources with an annual production of 1.5 to 3 million tons, with the possibility to develop to 20 million tons

Mmamantswe coal project

300 million

Planning stage

New coal mine through Africa Energy with an annual production of up to 10 million tons

Mmamabula coal mine

700 million

Planning stage

New coal mine through Jindal Africa with an annual production of over 17 million tons

Sese coal project

tba

Planning stage

New coal mine through Africa Energy with an annual production of up to 20 million tons

Threats

Opportunities Commodities Investment opportunities (energy, water, transport, ICT) Diversification of the industry Solar opportunities Population has buying power

Economy too reliant on diamonds Water shortages affect mining and agriculture

Source: Statistisches Bundesamt

Key Economic Data Indicator

2011

2012

Comparative data, Germany 2012

Comparative data, Germany 2013

GNP (nominal, billions of US$)

17.7

17.6

3,350

3,635

GNP per Head (nominal, US$)

9,537

9,398

32,280

-

Population (millions)

2

2.1

81.8

82

Source:IMF, Statistisches Bundesamt, Deutsch Bundesbank, gtai

Investment The investment climate in Botswana is very good thanks to the exchange rate and efficient and effective legal and administrative frameworks. Corruption in Botswana is minimal; according to Transparency International’s Corruption Perception Index report Botswana is the most transparent country in Africa. According to the United Nations Conference on Trade and Development (UNCTAD), foreign investment in Botswana in 2012 was 293 million US$, a decrease of 29% from 2011 (414 million US$), mainly due to the conclusion of various mining projects. State spend is growing slowly; Botswana has conservative fiscal policies in place and infrastructure spend is controlled. Around 1.3 billion US$ will be spent in 2013/2014 on constructing new and upgrading existing infrastructure.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Consumption With a per capita income of 9,398 US$ in 2012 Botswana has strong buying power relative to other African nations. Consistent economic growth is ensuring the steady growth of per capita spend while wage increases are very moderate, especially when compared to neighbouring South Africa. With a population of only 2.1 million people, opportunities for retail could be viewed as minor. However, according to the Global Retail Development Index (2013) from AT Kearney which investigates new markets for retail, Botswana is the most important market in Africa and 25th worldwide. In Gabarone, there are many shopping centres, almost exclusively featuring South African chain stores. Inflation in 2012 was at 7.5%, higher than initially anticipated. Unemployment stands at 17.5%.

Foreign Trade Despite large commodity exports, Botswana experienced a trade deficient in 2011 and 2012. This is due to the fact that almost all goods are imported, particularly from South Africa. Capital equipment for mining or for construction are imported, almost exclusively via South Africa. This explains low trade volumes between Germany and Botswana (2012: 46.6 million EUR; 2011: 24.8 million EUR).

Export figures in US$ 2011

2012

Change (%)

Imports

7,338

8,137

10.8

Exports

5,879

5,992

1.9

Trade Balance

-1.459

-2.145

47.0

Medicine As one of Africa’s wealthiest nations, in terms of per-capita income, the latest medical technologies can be found in Botswana’s hospitals and clinics. The health network in Botswana is very well developed, with more than 1.500 facilities. Manufacturing generic pharmaceuticals locally is an opportunity worth investigating; local hospitals are a small but reliable market since locally manufactured products are preferred.

ICT The three mobile telephone service providers cover 150% of the population; over 3 million users. Mascom has 55% of the market, Orange 35% and beMobile 11%. Mascom is currently investing in the upgrading of their LTE network, and Orange is planning to do the same. The landline operator, Botswana Telecommunication Corporation (BTC), services around 160,000 clients, only 8% of the population. Internet usage is still very small – around 19,000 connections to broadband

67

BOTSWANA

internet and minimal mobile internet usage. Government is planning to provide licenses for new internet service providers to accelerate the development of the broadband sector. By 2015, television and radio will have been converted to the digital ISDB-T standard.

Mining The diversification strategy of Botswana aims to exploit commodities other than diamonds, coal in particular. With up to 200 billion tons, Botswana has one of the largest coal reserves worldwide. Various international firms such as Jindal, African Energy and Hodges Resources are active in this industry. Tsodilo Resources is involved in the discovery of 1 billion tons of iron ore in the north of the country. Deposits of copper, silver and uranium will also ensure diversification in this sector.

Machinery and Equipment

Although there is groundwater, the government is trying to protect this and prefers to use surface water, which requires water transport systems. The North-South Carrier (NSC) is already delivering water from storage dams in the north-east to Gabarone and other areas such as Kanye will be added to this water network. The second phase of the NSC, with an additional connection from the new Dikgathlong storage dam to Palapye is underway. A feasibility study is currently being conducted on the Zambezi-Chobe Transfer Scheme, a scheme of 500 km costing 1.4 billion US$, that will bring 495 million cubic metres from the Zambezi river via the NSC. Furthermore, a connection between Gabarone and the Lesotho Highlands Water Project is being considered. There is also investment in upgrading and construction of purification plants for brackish groundwater.

Energy

In 2012, Botswana invested 14.2 billion US$ in machinery and equipment for mining and for the construction industry which grew in 2011 and 2012 by 23.3% and 14.4% respectively, and contributes 9% to GDP. The manufacturing industry grew by 1.8% in 2012, contributes 7% to GDP and is concentrated on the textile, leather and food and beverage industries.

Botswana will no longer be reliant on importing electricity from South African, thanks to the Morupule B power station which has a capacity of 600 MW. Botswana is even planning to become an electricity exporter, with the construction of two new 300 MW base load power plants and a 100 MW solar thermal energy power plant. Private enterprises such as Jindal (3,600 MW) and African Resources (300 MW) are planning new coal power plants.

Transport

Tourism

Large transport infrastructure projects are linked to the local coal industry. The railway lines through Zimbabwe to Mozambique, and through South Africa to the port in Durban, have a very small capacity. Construction of the Trans-Kalahari Railway line to Namibia’s Walvis Bay will cost approximately 11 billion US$ and both nations want private investors to construct and run the line. The same is true for the line to Ponta Techobanine in Mozambique, which is expected to cost between 7 and 9 billion US$. South Africa’s Transnet is planning the Waterberg Line, from Botswana to the coal terminal in Richards Bay.

Botswana follows the more expensive eco-tourism strategy; approximately 45% of the country is protected. The World Travel & Tourism Council predicts that the tourism industry should grow by 5% till 2023. In 2013, 3.7 million tourist were expected, with a turnover of 970 million US$.

Environment and water Botswana is the second driest country in southern Africa, after Namibia, with an annual rainfall of just 416 mm.

Agriculture Due to its dry climate and the sandy soil, Botswana’s agriculture consists mainly of livestock and maize. Around 290,000 hectares are being used for agriculture; 27,000 hectares of this for commercial farming. The Integrated Support Programme for Arable Agriculture Development (ISPAAD) is working towards developing agricultural land and mechanising agricultural operations. Agriculture contributes 2.2% to GDP. Translated by M van Niekerk

Tel. (national) 086 999 0662

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www.werthschroeder.com

Tel. (internat.) 0027 11 476 1776

69

Lesotho

ZAMBIA

ANGOLA

zimbabwe

mozambique

BOTSWANA

NAMIBIA

Johannesburg (gtai) - Lesotho’s GDP is growing at a steady annual rate of 5%. The important growth sectors include the construction of a dam as well as hydro power facilities. The textile industry is also experiencing extremely positive growth, with exports to the USA on the increase again.

SWAZILAND lesotho

SOUTH AFRICA

SWOT ANALYSIS

Area

30,355 km²

Inhabitants

2,052 million

Population growth

5%

Official languages

English, Sesotho

Capital city

Maseru

Gross Domestic Profit growth

4%

King

Letsie III

Prime Minister

Tom Thabane

Ease of doing business

138/189

Currency

Loti: 1 US$ = 10.2 Lesotho Loti – Maloti (plural) (April 2014)

Source: data.worldbank.org, gtai

Overall Economic Prospects 2014 will be the first year of a total of four years where Lesotho’s GDP growth of 5% or more is expected. Lesotho’s GDP is extremely dependent on external factors, which influence industry pricing and easily affect the entire GDP. One example is the textile industry, which amounts to approximately 60% of Lesotho’s production industry. The textile industry has been greatly boosted by the African Growth and Opportunity Act (AGOA), an act which allows tax-free imports into the United States. This act has proved extremely positive for the Lesotho textile industry, however, this act is due to expire at the end of 2015 and whether Lesotho will still be able to compete in the global textile industry, with price and quality, remains to be seen. Lesotho has rich diamond mines, but again, the profitability of these mines is strongly reliant on international diamond prices. Profitability is also affected by poor infrastructure, especially in the transport and energy sectors, where high costs make large in-roads into profits.

Key Economic Data 2011

2012

Comparative Comparative data, Germany data, Germany 2011 2012

GNP (nominal, 2,526 billions of US$)

2,461

3,609

3,350

GNP per Head 1,332 (nominal, US$)

1,294

32,280

41,820

Population (millions)

2.052

81.8

82

Indicator

1.95

Strengths

Weaknesses

Local Maloti is 1:1 with the South African Rand Advantageous geographical position within South Africa Relatively good educational background

Very small market – 2.1 million inhabitants Small buying power Lack of skilled labour Inefficient administrative system

Opportunities

Threats

Foreign Investment Higher investment in infrastructure (energy, water, transport network) Large hydro power projects ensure large contracts Large potential in tourism and agriculture

Reliant on power from South Africa and Mozambique Reliant on external factors, such as diamond pricing Agriculture easily affected by weather

Investment An important boost for Lesotho’s GDP growth in the next few years is the construction of Phase 2 of the Lesotho Highlands Water Project. The Polihali Dam will be 165m high, its saddle dam will be 50m high and the reservoir will have a capacity of 2.3 million cubic metres, which will feed two smaller storage dams (Katse and Mohale) through 38 kilometres of tunnel already constructed in Phase 1. South Africa is the financier for the project, which will provide water to the Gauteng province; construction costs for this project are at 10.46 million US$. Furthermore, Phase 2 of the project will see the Kobong Hydro Power Storage Station, which will have the capacity of 1,200MW, which Lesotho hopes to sell to Eskom, as Lesotho’s current electricity requirements are only at 200MW.

Consumption With a per-capita income of 1,300 US$ per month, where 40% of the population still survives on 1.25 US$ per day, the average Lesotho resident does not have a large buying power. Unemployment, especially among the youth is high and on the increase. A National Strategic Development is in place, and aims to provide up to 50,000 new jobs by 2017. However, the steady economic growth in Lesotho has led to a growing middle class, who exercise their buying power, at the new Pioneer- and Maseru Malls, and keep the country’s buying power within the borders, whereas in the past shopping opportunities were traditionally centred on South Africa.

Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

Lesotho Highlands Water Project

Phase 2: 1.61 billion US$

Planning phase

Construction of a dam

Metolong Dam

1.6 million US$

Under construction – due 2014/2015

73m higher dam, for Maseru

Letsend La Terae Wind farm

76.05 million US$

Planning phase

Wind farm, 35 MW capacity

Lesotho Highlands Power Project

10.46 billion US$

Planning phase

Wind farm, first stage 150 MW, with the potential for 6,000 MW wind power and 4,000 MW hydro power

Liqhobong Diamond Mine

168.5 million US$

Under construction – due 2016

Production capacity of 1 million carats per annum

Letseng Diamond Mine Project Kholo

280 million US$

Under construction – due 2015

Increase production capacity from 100,000 – 200,000 carats per annum

Kao Diamond Mine: Phase 2

150 million US$

Planning phase

Increase the life-span of the mine till 2040

Source: gtai

Foreign Trade

Construction Industry

Lesotho remains a gross importer. Over 70% of all foodstuffs are imported from South Africa, as well as vehicles. Also, all machinery and equipment needed for the large construction projects currently active have been imported. Bilateral trade with Germany is, with 2.2 million EUR in 2012, still small. However, since much of the German imports are done over South Africa, the actual figures can be considerably larger.

The last two years in the Lesotho construction industry have seen excellent growth (7.6% in 2011 and 9.2% in 2012) and the future remains positive. Road infrastructure as well as the hydro power projects have ensured steady growth, and along with this come more roads, electricity connections, housing, hotels, office parks and shopping centres.

Export figures in US$ (and the comparison between 2012 and 2013) 2012

2013

Change (%)

Imports

2,148

-4.1

Exports

941

-3.2

Trade Balance

-1,267

-1,207

*Source: gtai

Tourism Lesotho is famous for its beautiful, mountainous landscape which has massive tourist potential. This potential is currently not being utilised, and only 422,597 tourists entered Lesotho in 2012. The tourist infrastructure in Lesotho is lacking, especially in the highlands where tourist potential is at its highest. However, there are initiatives in place to improve the infrastructure, and besides the AfriSki Resort, other areas have been identified as excellent locations for further winter sport activities such as hiking, mountain biking and skiing.

ICT The ICT industry is the largest growing industry in Lesotho. Mobile telephone use has increased to 84% in 2013 (from 70% in 2012), with Vodacom and Econet being the two service providers, who are also investing in technical infrastructure in the country – where terrain can be difficult. Internet access also has huge potential as currently only 13% of the population are currently accessing the internet.

Medical The health industry in Lesotho relies on 22 hospitals and 192 medical centres, which are funded and run by government, the Christian Health Organisation of Lesotho (CHAL) and by the Red Cross. The new Queen Mamohato Memorial Hospital in Maseru is a success story, where the medical aid provider Netcare has taken part in a Public Private Partnership and has ensured that the most modern medical equipment is available. The biggest problem, health-wise, for the people of Lesotho is the high HIV rate, which stands at 23%.

*Source: IMF, EIU, Statistisches Bundesamt

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

71

LESOTHO

Water

Agriculture

Lesotho’s abundance of fresh water allows the export of water to South Africa. Despite the abundance of water, the capital Maseru does suffer from water shortages. To remedy this, 1.3 billion M have been invested for 2013/2014 to build the Metolong storage dam and to improve the water and sanitation networks. In Maseru, the Water & Sanitation Master Plan 2035 will create numerous new jobs and guarantee reliable access to clean water and sanitation.

Currently, the majority of agriculture in Lesotho is strictly subsistence farming, with only 10 registered commercial farmers. Topsoil erosion, drought, floods and over-grazing have led to a sharp decline in the agriculture industry in Lesotho. Government initiatives, such as communal cooperatives, aim to strengthen the industry once more.

Mining Diamond mining has seen strong growth in the last decade, in 2004 diamond mining added up to 0.9% of the GDP in 2004, to 6.6% in 2012. This figure is likely to increase due to new projects; the Liqhobong Mine alone will produce 1 million carats by 2016 and Paragon Diamonds aims to produce 500,000 carats annually. There are over 24 known diamond deposit sites in Lesotho; however, many are in areas which are difficult to access.

Transport The main mode of transport in Lesotho is road transport; over 7,400 kilometres of road and approximately 16% is tarred. In the years 2013/2014, 892 million M has been allocated to the extension and upgrading of the road network; and modernising the Maseru Container Terminals is also planned. Feasibility studies on the upgrading of the King Moshoeshoe the Ist airport are currently underway.

Risk credibility

Capital credibility

Translated by M van Niekerk

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

NOT IF, BUT HOW

73

Mozambique

ANGOLA ZAMBIA zimbabwe

mozambique

BOTSWANA

NAMIBIA

Johannesburg (gtai) – The Mozambican economy continues to grow at a strong and steady pace, with 8% growth expected. Investments in the mining and gas sectors, is ensuring the development of transport and energy infrastructure.

SWAZILAND lesotho

SOUTH AFRICA

Area

801,590 km²

Inhabitants

25.8 million

Population growth

2.5%

Official languages

Portuguese

Capital city

Maputo

Gross Domestic Profit growth

8.5%

President

Armando Guebuza

Ease of doing business

139/189 (2014)

Currency

Metical: 1 US$ = 31.2500 MZN

Source: data.worldbank.org; gtai

Gross Domestic Product Growth Despite a real GDP growth of 7% for 2013 according to the International Monetary Fund, lower than the anticipated 8.4%, GDP growth to 2018 is still predicted at 8.2%, which makes Mozambique one of the fastest growing and most dynamic global emerging markets. Boosting this rapid growth are billion dollar investments in gas, mining and infrastructure. Numerous coal mining projects, as well as offshore gas fields will bring construction and expansion of transportation networks and much-needed energy infrastructure. The offshore gas fields in the RovumaBasin will alone see an investment of 50 billion US$. Although the stable political situation in Mozambique has aided this investment boom, in 2013, conflict between the previous civil war parties, FRELIMO and RENAMO, flared up briefly. These conflicts are confined to Sofala province; although RENAMO does not have the power to create further unrest, the investment climate has been affected and threatens economic growth. Much rests on the outcome of the presidential and parliamentary elections in October 2014.

74



Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

Coal to Liquids Plant: 65,000 bpd in Tete

9.5-11.8 billion

Feasibility study, beginning in 2016/2017

German investment

Ncondezi Coal Power Plant in Tete

Up to 2.2 billion

Beginning in 2015

1st phase: 300 MW, 5 additional phases planned, maximum 1,800 MW

Moatize Coal Power Plant in Tete

800 million

Planning stage

Maxmum output will be 1,600 MW.

Mphanda Nkuwa Hydro Power

2.4-2.9 billion (estimate)

Planning stage

1,500 MW

Cahora Bassa North Bank Hydro Power

700 million

Planning stage

Expansion to total 1,245 MW

Cesul (Centre-South) National Power Grid

Phase 1: 2.1 billion

Planning stage

Overhead power line to cover 1,300 km from the Tete province to Maputo

Tete-Macuse Railway and Coal Terminal

5 billion

Planning stage, contract has been awarded to Italthai Engineering from Thailand

525 km railway line and cargo terminal with the capacity of 20 million tons per year

Vale Tete-Nacala Railway and Coal Terminal

4 billion

Under construction – due 2014

900 km railway line, new coal terminal with the capacity of 25 million tons per year. Coal from the Vale mine.

Baobab Resources Pig Iron Plant

Approximately 2 billion

Planning stage

Production of up to 2 million tons of pig-iron per year

Zambezi Coal Mine

3.3 billion

Planning stage

Production of approximately 12 million tons of coal per year, through Rio Tinto

SWOT ANALYSIS Strengths

Weaknesses

Large GDP growth Relatively politically stable Numerous ports and harbours provide easy access to sea freight Good road access to South Africa and the industrial centre of Gauteng High foreign direct investment

Market of 25 million with limited buying power Lack of skilled labour Portuguese is necessary High logistics costs Economy is not diversified and relies on commodities

Opportunities

Threats

Commodities (gas, coal) Need for investment in infrastructure (road networks, energy, water) High import of capital goods Increasing consumption from the growing middle class

Inefficient administration Poor road networks Infrastructure is damaged by flooding regularly Recent flare-up of conflicts between ex-civil war parties Increasing crime levels (kidnapping in Maputo)

Source: gtai

Key Economic Data 2012

2013

Comparative Comparative data, Germany data, Germany 2012 2013

GNP (nominal, 14.2 billions of US$)

14.7

3,350

3,635

GNP per Head 634 (nominal, US$)

640

32,280

-

Population (millions)

25.8

81.8

82

Indicator

25.2

Source: IMF, EIU, Statistisches Bundesamt

Investment Mining conglomerates continue to invest heavily in Mozambique; one firm alone, Brazil’s Vale, is investing 8 billion US$ in their Moatize Mine and the railway line to Nacala. In the first three quarters of 2013, Mozambique saw direct foreign investment of 4.5 billion US$, 20% more than the previous year. In 2014, the Mozambican government is expecting 4.1 billion US$ in foreign investment, and 10 billion US$ over the next three years for approved projects which are under construction. One possible pitfall is that transport and energy infrastructure may not improve and grow enough for these projects to be served effectively. There is evidence that some coal mines are unable to increase production at the desired rate because coal cannot be transported away fast enough.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Consumption Despite high investment figures, private consumption has not been influenced and the large projects in the country are creating few work opportunities. Since a large percentage of the population are subsistence farmers, it is difficult to measure the unemployment rate, but it is clear that there is a very high rate of youth unemployment and that 50% of the population lives below the poverty line. However, there is a new, urban middle-class resident mainly in Maputo and Matola. The smaller towns, around which the new projects are centred, will eventually also show increased consumption as has been seen in Tete, which has experienced a boom in its small economy. The Tete Mall is planned and will see major South African chain stores coming into the town. Inflation is predicted at 5.6% in 2014, an increase from 3.5% in 2013.

Foreign Trade Due to the large projects in commodities and infrastructure, imports into Mozambique are on the increase, in particular capital goods. These imports, coupled with the need for technical services which are not available locally, have created a negative trade balance sheet. However, mining

production is growing and in a few years, these exports will reduce the trade balance deficit. It is expected that by 2015, coal will overtake aluminium as Mozambique’s most important export.

Export figures in US$ (and the comparison between 2012 and 2013) 2012

2013

Change %

Imports

7,898

8,054

2.0

Exports

3,856

3,939

2.1

Trade Balance

-4,042

-4,115

1.8

Source: EIU

Tourism The latest figures show that 2.2 million tourists visited Mozambique in 2012, an increase of 9.3% from the previous year. However, this figure is inflated since it includes migrant Mozambican workers in South Africa, who visit Mozambique. The majority of tourists are South Africans, visiting the southern tip of Mozambique, to vacation spots owned and

75

MOZAMBIQUE run by South Africans. There is huge potential for tourist destination along the 2,000 km long coast line as well as the great potential for wildlife tourism. Unfortunately, this tourism is not a viable option at this stage due to the intense poaching of wildlife. Should the political conflicts reignite, tourism of any kind will be severely curbed.

Construction Industry It is expected that the Mozambican construction industry will grow by 9.6% in 2014. Numerous contracts have been awarded for the building of roads; currently 21% of roads are tarred and additional 400 km are tarred annually. A transportation network, including a bus- and tram-system is planned in Maputo; a city that is experiencing a massive housing boom, where apartmentand office building rents have sky-rocketed. Newly built accommodation for the young middle-class can be found on the outskirts of Maputo.

Water Investment into the Mozambican water industry is imperative at this stage. In the cities, approximately 85% of residents have access to drinking water; only about 38% of rural inhabitants have access to water. Access to sanitation is only available to 23.8% of Mozambicans – those living in the cities. The National Program for Rural Water Supply and Sanitation (PRONASAR) plans to build 1.200 new water supply wells in rural Mozambique in 2014. The Greater Maputo Water Supply Expansion Project will be upgrading the water systems in the capital, using a credit from the World Bank of 178 million US$. The Moamba Mayor Dam in Maputo will cost a further 500 million US$.

Mining Government is expecting coal production to reach 14.4 million tons in 2014; this figure is very high considering that the output for 2013 was at 4.4 million tons. A further hurdle to reaching the desired 14.4 million tons is that there is already a backlog of coal which cannot be transported away timeously, and upgrades to rail and harbour infrastructure is urgent. It is expected that mid-2014 further exploration licenses will be awarded for Tete and the Niassa Province.

Machinery and Equipment Imports of machinery and equipment for 2014 are expected to increase by 17% from 2013, with the majority of imports destined for the commodities sector. The food industry also shows great potential and an increase of about 9% for machinery and equipment used in newly established rice, soya, sugar and grain processing plants and mills.

Agriculture Mozambique has great potential in the agricultural industry, with over 36 million hectares of arable land, of which only six million hectares are currently being utilised. Currently, there are few commercial farms and most farmers are subsistence farmers. To increase potential, various agricultural projects are being implemented; the largest is the planned ProSAVANA Project, which will

76



develop 14 million hectares of land in the north, funded by Brazil and Japan.

Energy Mozambique’s energy requirements are expected to increase by 8% annually, from the current maximum figure of 800 MW. Although Mozambique produces over 2,400 MW, there is an energy shortage, as much of the electricity produced by the Cahora Bassa storage dam (2,075 MW) is exported to South Africa. In order to avoid major energy shortages, capacity needs to be doubled by 2025, to 5,000 MW. The first step towards this goal is the construction by Ncondezi of a coal station in Tete, which will produce 300 MW by 2015 and eventually 1,800 MW. Also the mining companies Vale, Rio Tinto and Jindal are planning coal power stations; and Japan plans to finance a gas power station with 110 MW capacity in Maputo. Further hydro power stations are planned at Cahora Bassa (1,245 MW) and Mphanda Nkuwe (1,500 MW).

Transport The weak transport system is the main factor influencing the slow expansion of output of the mining industry. There is one existing railway line, which is being upgraded and will be able to transport 20 million tons of coal by 2015. The contract for a 525 km railway line from Tete to Macuse with an export terminal, to the value of 5 billion US$ in total was awarded to the Thai company Italthai Engineering and is expected to begin in 2016. Vale has been constructing a 912 km stretch of rail to Nacala, a project which is likely to end in 2014 and which will have a capacity of 22 million tons per year. Maputo’s harbour is expanding rapidly and is expected to grow from 17 million tons in 2013 to 40 million tons in 2014.

The world’s second largesT reTailer of

home furnishing

operating from 36 counTries

employs 80 000 people

and owns a network of more than

2 000 reTail sTores globally

Gas and Petrochemical The off-shore gas fields in the Rovuma Basin will provide an incredible boost for the Mozambican economy. It is estimated that over 150 trillion cubic feet of gas have already been found off the shores of Mozambique.1 Any additional licenses will only be awarded after the new gas regulations have been issued. The South African Sasol is currently active in the Pande and Temane gas fields, and is planning to invest 2.4 billion US$ in Mozambique by 2018. Current plans for petrochemical plants provide opportunities to German suppliers. In Tete, an 11.8 billion US$ coal-to-liquids plant is underway, producing 65,000 bpd. PetroSA is planning a gas-toliquids plant with the capacity of 40,000 bpd for 4 billion US$ and Oilmoz is planning an oil refinery to produce 350,000 bpd to the cost of 12 billion US$. In Nampula, the Saudi Arabian Radyolla Group is also planning a refinery with a 300,000 bpd capacity. Andarko and ENI’s planned gas-to-liquids joint venture will have a capacity of 25 million tons per year. 2

1 http://oilprice.com/Energy/Natural-Gas/Game-Heats-Up-In-Mozambique.html



www.steinhoffinternational.com Steinhoff International has proud roots in Germany. Bruno Steinhoff founded Bruno Steinhoff GmBH in 1964 which formed the back-bone of what would become Steinhoff International. Globally, the group is an integrated retailer that manufactures, sources and retails furniture and household goods in Europe, Africa and Australasia. In addition, the group owns diversified industrial businesses in southern Africa through supply chain solutions, passenger services, timber products and manufacturing operations across diverse industries.

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adding value To your lifesTyle

Translated by M van Niekerk

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

77

ADVERTORIAL

Transcend Capital

Multinationals take note: BBBEE is back in focus By Anton Baumann, Principal, Transcend Capital

W

ith the introduction of the revised Broad-Based Black Economic Empowerment Codes of Good Practice (“the revised Codes”), the Department of Trade and Industry (dti) has introduced some fundamental changes to the existing legal framework. The revised Codes, which will come into effect on 1 May 2015, could result in a company’s BEE Scorecard measurement dropping significantly. There are many changes to the existing framework, but three key changes are highlighted: 1. Higher compliance targets across all elements of the Scorecard, which will lead to a drop in points earned; 2. A new sliding scale, which will make it more onerous to maintain existing contributor status; and 3. The introduction of priority elements, which require a minimum performance level to avoid stiff penalties. Ownership is one of the new priority elements. Many companies have concentrated on elements of the BEE Scorecard other than Ownership. With the proposed changes it will be difficult to achieve a level of BEE compliance without introducing at least 10% black ownership. The DTI has focused on the Ownership sub-minimum target in the Net Equity portion of the BEE Ownership Scorecard to ensure that real economic value is driven to black shareholders. This ensures that a certain minimum net worth is created for the BEE participant. This is measured by the value of the equity held by black investors in the enterprise, less the related outstanding acquisition debt against net value targets, which escalate over time by a certain portion. There are numerous options available to multinationals to address the Ownership element including: • The DTI equity equivalent programme, which was created to assist wholly-owned subsidiaries of multinationals, which have a policy of not giving up shares in subsidiaries. The DTI is revising this policy to assist companies that have not qualified in the past. The success of an application will depend on the development of a policy that meets the country’s developmental needs, often through the creation of black-owned businesses or industry development.

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• The introduction of a black shareholder, which could include a strategic partner, Employee Ownership Schemes, or the involvement of charitable foundations and trusts, with the objective of improving Socio Economic Development, Enterprise Development or job creation. A sustainable transaction should drive value for the business by improving its customer relationships, increasing productivity through involving its workforce and providing opportunities in its supply chain for developing small, blackowned, local businesses.

Gegenseitiges Vertrauen kennzeichnet die langjährigen, partnerschaftlichen Beziehungen, die Transcend Capital mit zahlreichen, weltweit führenden Unternehmen aus allen Industriezweigen unterhält.

The new legislation should help drive the DTI’s stated objective of creating black industrialists, new black-owned businesses, and improving job creation and stability in the South African economy.

Gemeinsam mit unseren Kunden entwickeln wir maßgeschneiderte, kreative Konzepte und Lösungen im Rahmen der südafrikanischen Black Economic Empowerment (‘BEE’) Gesetzgebung.

Any intervention on the BEE Ownership Scorecard should be robust enough to stand the tests of BEE verification Agencies and the DTI, flexible enough to accommodate changes in legislation, BEE funding requirements or company strategy and, most importantly, meaningful. Only a meaningful participation in the transformation efforts of South Africa will ensure the long term success the BEE transaction and have positive effects on the reputation of the initiating entity.

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Unsere Lösungen sind effektif, robust, nachhaltig, flexibel und effizient. So schaffen wir echten Mehrwert für unsere Kunden. Für mehr Informationen wenden Sie sich bitte an: Anton Baumann +27 (0)84 880 8000 [email protected]

First Floor, Grapnel House 3 Glenhove Road, Melrose Estate Johannesburg www.transcendcapital.co.za

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

79

Namibia

ANGOLA

ZAMBIA mozambique

zimbabwe BOTSWANA

NAMIBIA

SWAZILAND lesotho

SOUTH AFRICA

Johannesburg (gtai) – Namibia’s economy is expected to grow steadily over the coming years. GDP growth for 2014 is estimated at around 6.1%. Important projects include upgrading the Walvis Bay Harbour, the Trans-Kalahari Railway, the Husab uranium mine, the Kudu gas-fired power station and current offshore oil exploration.

Area

825,418 km²

Inhabitants

2.3 million

Official Languages

English

Capital City

Windhoek

Gross Domestic Profit Growth

4.2% (2013)

President

Hifikepunye Pohamba

Ease of doing Business

98/189

Currency

Namibian Dollar: 1 US$ = 10.56 NAD (April 2014)

Source: data.worldbank.org; gtai

Gross Domestic Profit Namibia’s GDP grew by 4.2% in 2013 and is expected to grow by 6.1% in 2014. The future continues to look bright for Namibia; the Economist Intelligence Unit (EIU) predicts an average growth of 6.4% till 2016. The International Monetary Fund predicts a smaller, but still stable, growth of 4.2%. The 2014 general elections in Namibia will see a new president, since Hifikepunye Pohamba cannot run for president for another term. It is expected that Dr Hage Geingob, as the South West Africa’s People’s Organisation’s (SWAPO) candidate, will take over the presidency. With this, the new National Development Plan 4 (NDP4) will be implemented. The NDP4 plans to develop economic growth to a steady 6% per year by focusing on logistics, agriculture, tourism and industry. To industrialise the nation, food processing and the further processing of raw commodities will be a focus topic. The NDP4 is a focused and concrete plan that will see an investment of 23 billion US$, together with Public Private Partnership. A threat to the planned growth is the ongoing drought in Namibia. There was very little rain in the 2012/2013 rainy season, which severely affected the agriculture industry. Beef production was curbed and it is unlikely to recover in 2014. If the drought continues, mining endeavours will also be negatively affected.

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SWOT ANALYSIS Strengths

Weaknesses

Own deep sea harbour in Walvis Bay, logistically well connected Politically stable Good infrastructure Good road connection with Gauteng (1,900 km)

Small market with only 2.2 million inhabitants Lack of skilled labour

Opportunities

Threats

Need for investment in infrastructure Commodities (diamonds, uranium, copper, gold, zinc, led) High sunshine environment, ideal for solar energy Government wants to diversify the economy Oil finds off the coast

Economy too reliant on international commodity prices Reliant on importing electricity until the completion of the Kudu gas-fired power plant Water scarcity can influence agriculture and mining

Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

Kudu gas-fired power plant

1.1 – 1.3 billion

Calls for tenders. Project to be completed by 2018

800 MW gas-fired power station by Oranjemund

Kudu gas-field

1.1 million

Calls for tenders for Front End Engineering Design. Project to be completed by 2018

Development of the Kudu gas fields and construction of a pipeline

Husab uranium mine

2 billion

Under construction, operational by 2015

Uranium mine to produce 15 million pounds of Uranium oxide per year

Etango uranium mine

870 million

Planning stage

Uranium mine to produce 7-9 million pounds per year through B2 Gold

Otjikoto gold mine

244 million

In construction since 2013, operational by 2014/2015

Gold mine to produce 140,000 ounces per year, through B2 Gold

Shiyela iron-ore mine

470 million

Planning stage

Iron-ore mine with estimated 79 million tons per year

Walvis Bay harbour expansion

300 million

Construction begins in 2014, completed by 2017

Additional 650,000 twenty-foot equivalent units (TEUs) a year capacity to the current 350,000 TEUs a year capacity

SADC Gateway Harbour

3 billion

Planning stage. Construction of Phase 1 begins with oil tanker terminals in 2014

Construction of a new port at Walvis Bay and container terminals and coal terminals with the capacity of 100 million tons per year

Trans-Kalahari Railway

11 billion

Calls for tenders

Construction of a 1,500 km long railway line from coal fields in Botswana to Walvis Bay. Construction and operation through private investors

Trans-Kalahari Highway

130 million

Construction begins 2014, 4-5 years

300 km long highway from Gobabis to Grootfontein

Source: gtai; Namport

Indicator

2012

Comparative data, Germany 2012

Comparative data, Germany 2013

GNP (nominal, billions of US$)

-

3,350

3,635

GNP per Head (nominal, US$)

5,984

32,280

-

Population (millions)

2.16

81.8

82

Source: IMF; Oanda; Statistisches Bundesamt

Investment The driver for the Namibian economy in the coming years will be the intense investment into larger projects, especially those in the mining industry. Approximately 2 billion US$ is invested in the Husab uranium mine, which, on completion by 2015, will be the second largest uranium mine in the world. The Namibian Energy ministry has made it a priority that the Kudu gas fields will be operational by 2018, providing 800 MW. The project will cost 2.2 billion US$. Foreign investment is on the rise, and totalled 357 million US$ in 2012 alone.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Consumption A per capita income of 6,000 NAD defines Namibians as a lower-middle income population. Due to the growth of the economy, private consumption is also on the rise with an annual increase of 5%. With a population of 2.2 million, Namibia is a small market for retailers but is rated as the 26th most important new market for retailers, the second most important in Africa after Botswana, according to the Global Retail Development Index 2013, by AT Kearney. Along with the local Woermann supermarket chain, many South African retailers can be found in Namibia. The Grove Mall of Namibia, with 54,000 m2, is Namibia’s largest shopping venue. The official unemployment rate of Namibia is 27.4%, and inflation is likely to sink to 4.5% in 2014 from 5.5% in 2013.

Although many German imports to Namibia are done through South Africa, direct exports to Namibia from Germany in the first months of 2013 came 129.9 million EUR. Total trade figures between Germany and Namibia for 2012 came to 237.3 million EUR.

Export figures in US$ (and the comparison between 2011 and 2011) 2011

2012

Change

Imports

5,586

6,192

10.8

Exports

4,373

4,883

11.7

Trade Balance

-1,213

-1,309

7.9

Foreign Trade

ICT

Namibia experiences a trade deficit; vehicles, oil and machinery and equipment make up the largest portion of imported goods and with new projects in the mining and infrastructure sectors, import of capital goods is likely to increase. The most import export products for Namibia include diamonds, uranium, zinc and copper concentrate.

With 2.35 million active sim-cards, the market is covered by 110%. MTC Namibia is the leading service provider, with 90% of the market. Telecom Namibia bought out the other service provider, Leo, and plans to capture 35-40% of the market by 2017. Both companies are investing heavily in LTE network upgrades.. An increase of 13% sees about 55,000 internet

81

NAMIBIA

users in Namibia, and although a very small market there is great opportunity for the broad-band market.

Water With a rainfall of 270mm per year, Namibia is considered the driest country in the SADC region. Water security is the most important project to safeguard the future. Although 85% of the population has access to drinking water (not more than a 2.5 km distance); only 35% have access to sewerage systems. The biggest project is the 2.8 billion NAD Neckartal dam at the Fish River, which will provide water to 5,000 hectares of land. The Erongo region, including Walvis Bay and the Uranium mines, are already experiencing water shortages and to this end a second desalination plant with the capacity of 25 million cubic metres per year, to the value of 2 billion US$, will be constructed.

Mining Namibia’s mining industry reached a turnover of 18.5 billion NAD in 2012, contributing 11.5% to GDP; 8.5% of this from diamond mining. Diamond production will continue to increase by between 6 and 12% to between 1.8 and 2.9 million carats. Uranium mining saw a growth of 5% in the first half of 2013. The Husab Uranium mine alone will see Namibia’s uranium production double. With the Etango mine, Valencia and the Namibplaas Project; one can expect even more uranium output in the future. Africa Practice has predicted that Namibia’s mining industry will grow to 37.8 billion NAD by 2017.

Construction Industry Construction has been one of the most important drivers of this growing economy; in 2011 and in 2012 the industry grew by 12.1% and 19.3% respectively. EIU predicts a further growth of 20% in 2013; while the BMI predicts 15.8% for 2013 and 14.1% for 2014. Regardless of the percentage, massive growth in the sector is guaranteed. The majority of new builds can be found in Windhoek; where residential building permits have increased by 25% compared to the previous year. New builds will also be focused on the Walvis Bay and Swakopmund area. Currently Walvis Bay has a population of 77,000, a figure which is expected to rise to 170,000 by 2030, by which time Government is planning to have invested 45 billion NAD in social housing.

Machinery Besides the mining industry, machinery and equipment is imported into Namibia for the food production and food processing industry. Large investments in an aluminium smelter in Tsumeb and a smelter for the Tschudi mine, show that opportunities in this sector abound.

Exploring Life

Fulfilling Dreams

Agriculture Although figures in the agriculture industry rose by 45.3% and 42.3% in the first two-quarters of 2013, this high increase is due to the emergency sale and slaughter of livestock due to the drought, rather than rising production. It is estimated that it will take up to 3 years for the livestock population to recover. The Benguela current ensures a steady income for fisheries, which make up 3% of GDP.

Energy The current 508 MW capacity is not adequate and therefore Namibia must import up to 60% of its electricity in order to satisfy electricity demand, which peaks at 534 MW. Demand is set to increase by 4% per annum, to reach 700 MW in 2020. In order to avoid power shortages, the Kudu Gas-fired power plant is planned, which will provide 800 MW at the cost of 1.3 billion US$. A 300 MW coal-fired power station has been put on hold, but the 600 MW Baynes Hydro power plant, in partnership with Angola, is set to be operational by 2023. A 50 MW solar power plant is also in the pipeline.

Transport The most important transport infrastructure projects in Namibia are focused on Walvis Bay. The 1,500 km long Trans-Kalahari Railway line which will transport coal from Botswana and will cost around 11 billion US$; is a partnership between the two countries and is finally being put to tender. The running of the line will be done through private investors. As part of the SADC Gateway port, a coal shipping terminal with a capacity of 100 million tons per year will be built north of Walvis Bay, for 30 billion NAD. Further investment on railway lines is also underway, so that the current load capacity of 18.5 million tons can be doubled by 2017.

Gas and Petrochemical

Seven billion people already live on our planet, and the number is growing by 220,000 every day.

About 300 companies are currently searching for oil and gas along the 1,500 km Namibian coast. Initial studies estimated availability of more than 12 billion barrels; however, the only currently active deposit is that of the Kudu gas fields with 1.3 billion cubic feet which will be utilised by the Kudu gas-fired power plant. Other sites which have been tested, such as the Brazilian HRT Oil and the British Chariot & Gas, have not yet resulted in any positive results. HRT did strike oil, but not in an economically viable environment. More exploration has been set for 2014, with the Spanish Respsol coming on board. Inflation is expected to rise to 5.6% in 2014 from 3.5% in 2013.

How can we provide food for more and more

Translated by M van Niekerk

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people without damaging the environment? How can we improve everyone’s health and prevent diseases? How can we develop new materials to help us conserve resources? To provide better answers to these questions, research is under way in Bayer's three subgroups: HealthCare, CropScience and MaterialScience. Fields in which Bayer is already a global leader – and whose importance to the future of humankind grows by the day.

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

83

TANZANIA

Tanzania

ANGOLA ZAMBIA zimbabwe

mozambique

Dar-es-Salaam (gtai) – Tanzania’s economy is growing steadily. The greatest economic potential for Tanzania lies largely in gas exploration; however growth will be curbed if political and infrastructural changes are not implemented timeously.

BOTSWANA

NAMIBIA

SWAZILAND

lesotho

SOUTH AFRICA

SWOT ANALYSIS

Area

947,300 km²

Inhabitants

49.3 million

Official Languages

Swahili, English

Capital City

Dar es Salaam

GDP Growth

7.6%

President

Jakaya Kikwete

Ease of doing Business

145/180

Currency

Tanzanian Shilling: 1 US$ = 1.645.47 TSh (April)

Strengths

Source: doingbusiness.org/data/exploreeconomies/tanzania/, IMF, gtai

Gross Domestic Profit growth Tanzanian GDP is expected to grow by as much as 8% per annum until 2015. Growth sectors include service providers (telecommunication, finance, logistics) and industry. The gas industry is making a large contribution to the economy, drastically improving the spending power of some stakeholders. Most Tanzanians work in the agricultural industry, which has not seen much growth and is dependent on rainfall because water systems have not been invested in. Although basic products are manufactured locally, a lack of skilled labour inhibits the manufacture of labour intensive products. The construction industry cannot keep up with the demand for housing and could benefit hugely from the planned investment in the gas sector. According to development experts, expansion of the agricultural sector is vital to create prosperity. Current expansion of 4.6% (2013) can only be increased by commercialisation and infrastructure such as storage dams and watering systems. Tanzania may be a small economy but offers massive opportunities in commodities and agriculture, and the rapidly growing population make it an investment destination to be considered.

Key Economic Data 2013

GNP (nominal, billions of US$)

32.3

GNP per Head (nominal, US$)

1,673 43,618

Population (millions)

49.3

Source: EIU, gtai, Stastisches Bundesamt

84



Comparative data, Germany 2013 3,599

Indicator

82

High, stable economic growth Commodities High tourist potential Politically stable 17/52 for “Good Governance in Africa”

Weaknesses Poor infrastructure High production and transport costs Skilled labour shortages Corruption Low per capita income

Opportunities Development of commodities sector Upgrading of infrastructure Commercialisation of agriculture

Threats Highly dependent on export market’s fluctuating prices Drought and poor harvests Social tensions Medium terrorist threat (Maplecroft Index)

Investment Investment growth in Tanzania for 2013 is estimated to have been around 10%. The EIU is predicting a growth of over 9% for 2014 and 2015 – its gas fields are attracting much interest. Norwegian Statoil and British BP are planning a 10 billion US$ gas liquefaction and purification plant – a vast investment in the Tanzanian economy. It is however vital that the Tanzanian government deals with other crucial issues currently impeding economic growth. Serious power shortages, the poor state of water and sanitation in the country and corruption, all seriously affect the economy and discourage investors.

Consumption Consumption has risen by 7.4% and should increase by 6.9% in 2014. Inflation was at 20% at the end of 2011, but stabilised at 6.7% by August 2013. The majority of Tanzanians have very small buying power and cannot afford consumer goods; a small but ever-growing upper- and middle-class are clients of the Milamani City Mall and other small shopping venues, mostly situated in Dar-es-Salaam.

Foreign Trade Tanzania’s export figures are steadily rising from about 9.1% in 2013. Mining production is the largest export from Tanzania, which imports approximately twice as much as it exports. Germany is not one of Tanzania’s important trading partners at this stage. Exports to Tanzania were 176.1 million EUR, and imports from Tanzania138.9 million EUR in 2013.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

85

www.insignio.de

TANZANIA Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

Bagamoyo Port and Economic hub

11 billion

Planning stage

Chinese partner

Gas liquefaction and purification facility

10 – 14 billion

Investment decision 2016/2017

Statoil and BG Group

Various rail projects: new railway lines and upgrading of existing lines

To be confirmed

Planning stage

Timeline unclear

Mchuchuma mine, coal power station, Lilanga steelworks

3 billion

In progress

Investor: Sichuan Hongo, China

Gas pipeline: Mtwara – Dar es Salaam

1.2 billion

In progress

Credit from China

Mkuje River Uranium mine

1 billion

Planning stage

Contentious: licensing still outstanding

Housing project – National Housing Corporation

700 million

Planning stage

Two Chinese firms as main contractors

400kV overhead line

693 million

Planning stage

Tebian Electric Apparatus Stock Co (China) is main contractor

Dangote cement factory

535 million

In progress

Nigerian project

International Insurance Programs

Source: gtai

Construction Industry

Machine and Equipment

As with other countries in the region, Tanzania’s construction industry is profiting from large foreign investments; although some builds are not always high in quality, there is a lot of construction taking place, in all sectors. Tanzania’s most important construction partner at the moment is China. The China Railway Jianchang Engineering Company and the China Poly Corp are spending 700 million US$ on new apartments and shopping venues for the National Housing Corporation; while China Merchants Holdings is spending 11 billion US$ on a new port and Business Zone. Chinese corporations are also interested and involved in constructing pipelines, mining infrastructure, railways and water and sanitation.

As a non-industrialised nation, Tanzania is not a large market for machinery and equipment. Imports are mostly from China, India and South Africa. However, the need for imported machinery and equipment is on the rise and will be especially high when the gas fields are producing at their full potential. Germany exported 23 million EUR worth of equipment and machinery to Tanzania in 2012, largely for the mining and agricultural sectors.

ICT The ICT sector in Tanzania is growing well. At the end of June 2013, there were 26.7 million telephone users (only 169,000 of these were landline users). Vodacom currently has 36% of the market with AirTel (32%) and Tigo (24%) following closely behind. Internet connections are also on the rise, with 100 internet service providers and data operators active in the market.

Mining Tanzania is very rich in terms of commodities. Its largest export currently is gold. Uranium, steel and coal mining are on the rise but still relatively minor. The gas fields are estimated to contain 43 trillion cubic feet of gas, valued at approximately 430 billion US$. However, mining costs are high because of the lack of infrastructure, and profits will depend on upgrading it.

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Infrastructure Upgrading and extending infrastructure is a priority for the government. Extreme power shortages, insufficient water and sanitation facilities and poor transport infrastructure have been hampering economic growth. China has become an indispensable partner to Tanzania, with low-interest loans and complete building packages where Tanzania can rely on China to finish a project from start to finish, with no intervention necessary. Quality and compliance are however not common themes in this partnership.

Global solutions The world is continuing to grow together. For comprehensive protection abroad, HDI-Gerling suits you with network partners in over 130 countries. We offer companies individual customer care, professional risk management as well as integrated insurance solutions, inclusive of all required local policies.

Industry

Tourism Tanzania is a popular tourist destination, thanks to beautiful landscapes, wildlife parks, beaches and Kilimanjaro – the highest mountain in Africa. Tanzania is dedicated to preserving its wildlife parks, especially the Ngorogoro Crater and the Serengeti, and is doing this with very positive outcomes. The quality of Tanzanian wildlife parks surpasses that of its neighbouring countries. Translated by M van Niekerk

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

HDI Gerling Insurance of South Africa Limited, 3rd Floor, 20 Baker Street, Rosebank 2197 Tel: 011 340 0100 Fax 011 447 4981 Contact: Kees Goedhart [email protected]

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ANGOLA

Zambia

ZAMBIA zimbabwe

mozambique

BOTSWANA

NAMIBIA

Johannesburg (gtai) – 2013 was once again a year of rapid growth for the Zambian GDP, with 6.6%. Despite large Chinese interests, Zambia is becoming an important market for German companies and products. Opportunities abound in the mining, energy, water, retail, agriculture and ICT industries.

SWAZILAND lesotho

SOUTH AFRICA

Area

752,618 km²

Inhabitants

14.08 million

Population Growth

2.89%

Official Languages

English

Capital City

Lusaka

Gross Domestic Profit Growth

6.6%

President

Michael Sata

Ease of doing Business

83/189

Currency

Kwacha: 1 US$ = 6,150 ZMK (April 2014)

*CIA Factbook, worldbank, doingbusiness.org

Development of the Gross Domestic Profit Zambia’s GDP growth was 6.6% in 2013 and is expected to be over 8% in 2014, making it one of the fastest growing economies in Africa. An important economic driver is the mining sector which grew 13.2% in 2012; the sector does not have reliable statistics in terms of import and export figures but it is estimated that mining represents 11% of GDP. The manufacturing industry grew by 12% in 2012 – 8.6% to GDP. Zambia aims to attract manufacturing enterprises with Multi-Facility Economic Zones (MFEZ), which offer significant tax- and tariff benefits. The Zambian government is implementing an expansive fiscal policy, and high investment in infrastructure will support economic growth. Subsidies for maize and fuel are no longer available in Zambia; the government is prepared to make unpopular decisions to ensure optimum development. The current government, the Patriotic Front (PF), has a pragmatic leadership style. Since it came into power in 2011 there have been concerns about government intervening too much in business. However, foreign investors are very trusting of Zambia as an investment destination as evidenced by the 750 million Eurobond it received in 2012.

2011

2012

Comparative data, Germany 2012

GNP (nominal, billions of US$)

19.2

20.5

3,397

GNP per Head (nominal, US$)

1,141

1,474

41,475

Population (millions)

13.6

13.9

81.8

Source: IMF; Statistisches Bundesamt; Deutsche Bundesbank

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Strengths Above average GDP growth Relatively politically stable Good road network

Weaknesses Land-locked country, far from a harbour Lack of skilled labour Weaknesses in Administration and Legal systems Small market at a population of 14 million

Opportunities Commodities Infrastructure investments Rising consumption through a growing middle class Subsidies from donor organisations

Threats Economy too reliant on copper Energy shortages Rising energy costs (26%) Endangering of democratic stability due to obstructing the opposition

Investment Foreign Direct Investment reached 1.066 billion US$ in 2012 – a decrease of 4% from the previous year – but it is likely that foreign investment will rise in coming years. The Zambian Development Agency (ZDA) has an economic development plan which has seen confirmation of investment projects totalling 10.1 billion US$. The realisation of these projects will span several years, with approximately 4 billion US$ in the mining sector, 700 million US$ for the manufacturing industry and 600 million US$ for the energy sector. State infrastructure plans are also underway and fuelling the economy. Transport infrastructure and the energy sector are the focus with 800 million US$ and 260 million US$ being spent, respectively. Investment in 2013 made up 28.2% of GDP.

Consumption

KEY ECONOMIC DATA Indicator

SWOT ANALYSIS

Strong economic growth in past years has had positive effects on the private buying power of Zambians. In Zambia’s cities, modern shopping centres populated with South African chain stores can be found. The Copperbelt City Mall is under construction in the city of Kitwe, at a cost of 200 million US$, and will be the largest shopping centre in the country. The last few years have seen per capita income increase significantly, to 1.474 US$ in 2012. Zambia has become a lower-middle income country and high wage increases for public servants in 2013 have increased individual buying power even more.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Selected Major Projects Project

Investment amounåt (US$)

Project Status

Comment

Batoka Gorge Hydro power station

2.8 – 5 billion

Planning stage

Construction of a hydro power station at the Zambezi river with a capacity of 1,600 MW. Joint project with Zimbabwe

Kafue Lower Hydro power station

2 billion

Planning stage

Construction of a hydro power station at the Kafue river with a capacity of 750 MW

Link 8000 project

5.9 billion

Completed by 2017/2018

Upgrade and further construction of road network, 8,000 km

Zambian Railway Programme

1.5 billion

Completed by 2017

Upgrade and further construction of rail network

Indeni Refinery rehabilitation

450 million

Planning stage

Upgrade of the Indeni oil refinery in Ndola

Angola-Zambia Refined Petroleum Multi Product Pipleline

2.5 billion

Planning stage

Construction of a 1,400 km pipeline from the Lobito refinery in Angola to Lusaka

Serenje Manganese smelter

60 million

Planning stage

Construction of a smelter for the production of 60,000 tons ferromanganese and 9,600 tons silicomanganese, through Zamaco

Sentinel Copper project

2.4 billion

Completed by 2014

New copper mine, through First Quantum, with annual production of 300,000 tons

Mwekera Copper mine

5 billion

Planning stage

New copper mine near Ndola, through Macrolink Resources

Kansanshi Copper mine extension

1.4 billion

Completed by 2015

Increasing copper production to 400,000 tons, through First Quantum

*Source: gtai

On the other hand, government is no longer subsidising fuel and maize; fuel prices increased by 21% in May 2013 which has affected all consumers. Inflation is currently at 7.5 - 8%.

Foreign Trade Due to Zambia’s high copper export volumes, there is a surplus trade balance. Machinery and equipment, in the mining or construction industries for example, have to be imported. Trade volumes between Germany and Zambia are growing, with an increase of 49% from 2011 to 2012, totalling 123.3 Million EUR. German exports to Zambia are at 90.4 million EUR. Actual figures are however considerably higher, as many exports go through South Africa’s port in Durban and are then transported by South African firms. Export volumes from Germany to Zambia experienced huge increases – by 98.4% in 2012.

Zambian Export Volumes (US $ million)

example is the planned 3,500 apartment block with a value of 500 million US$. Demand for construction materials is massive; the Zambia Development Agency expects an increase in demand for steel from 200,000 tons in 2011 to 300,000 tons by 2016. Chinese construction firms who bring their own machinery, are very active in Zambia.

ICT Zambia’s mobile telephone market grew by 29% in 2012. The three mobile service providers, Airtel (44.9% market share), MTN (38.8% market share) and Zamtel (16.4% market share) service around 10.5 million people, a network coverage of 78% of the population. Unfortunately, networks have not been upgraded to keep up with the rapid increase in users. Government has taken legal action against the service providers to ensure adherence to minimum standards. Only 17% of the Zambian population accesses the internet but there are opportunities in this growing sector.

2011

2012

Change

Mining

Imports

6,454

7,361

14.1%

Exports

8,672

8,590

-1%

The Zambian mining industry remains strong, with copper mining showing the greatest growth. Copper output was predicted to be 900.00 tons in 2013, a figure expected to rise to 1.1 million tons in 2015 and 1.5 million tons in 2016, thanks to the development of the Sentinel Mine and First Quantum’s Kansanshi Mine. Commodities besides copper are boosting the mining industry. African Energy is exploring the south of Zambia for coal, around the already existing Maamba colliery in Sinazongwe. Kaboko Mining has found manganese deposits

Source: EIU

Construction Industry The construction industry in Zambia is booming: it grew by 15.8% in 2012, contributing 27.5% to GDP. Construction for the mining industry, infrastructure development, shopping centres, offices and residential buildings are ongoing. An

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You make the choice

ZAMBIA in the northern Luapula province. Furthermore, it is estimated that around 900 million tons of iron ore are to be found in Zambia.

Machine and Construction of manufacturing plants The mining industry, with its high investment volumes and numerous projects, has the highest demand for machinery, and construction of processing plants such as smelters. With growing private consumption, manufacturing and processing of fast-moving consumer goods, especially in the food and beverage industry, is becoming an important industry in Zambia (+11.8% in 2012). Businesses such as breweries (Zambian Breweries) and slaughterhouses (Zambeef) are equipped in part with German technology and this growing industry presents interesting possibilities for German products in the future. In fact, according to the German Engineering Association (VDMA), food processing and packaging machinery exported to Zambia from Germany increased by 66% in 2012.

Environment More than 40% of the fresh water in southern Africa is situated in Zambia but water infrastructure is desperately needed to provide water to Zambians – only around 60% have access to fresh water. Water and sanitation infrastructure is especially urgent in Lusaka and in the Copperbelt region, where population density is high. The Lusaka Water and Sewerage Company’s 25-year plan, which amounts to an investment of 1.9 billion US$, will upgrade and develop existing urban infrastructure, semiurban settlements, and establish 2,500 water-supply wells for rural communities.

Medicine State expenditure for the health sector rose by 40% in 2013. Hospitals are to be upgraded and provided with new equipment. The three initial projects are the University Teaching Hospital in Lusaka and the Central Hospitals in Ndola and Kitwe, with funds of 40 million US$ being made available. The General Hospital in Livingstone and the Chainama Hills Hospital in Lusaka will also be upgraded to international standards. Tenders for new district hospitals have also been issued by the Ministry of Health, catering for over 70% of the population. In Zambia’s private healthcare sector, non-profit organisations and missions play an important role.

and we tailor our services

Transport Zambia has a wide-reaching road network, of more than 68,700 km. By 2018, 7,000 km of this network is to be upgraded and developed to the value of 5.9 billion US$, in particular the transformation of the Lusaka/Copperbelt highway to a dial-carriage highway. Rail is also a focus for the state, with Zambian Railways planning 2,500 km of rail connections with neighbouring countries.

Energy Despite hydro-electric potential of around 6,000 MW, there are energy shortages in Zambia. With a current capacity of 1.985 MW, Zambia can experience an energy deficit of 70–250 MW. To combat these shortages, capacity from the Kariba North hydroelectric power station has been increased by 360 MW. Construction of the Itezhi-tezhi storage dam will secure another 120 MW. Large projects such as the hydroelectric power stations of Batoka Gorge (1,600 MW) and the Kafue Gorge Lower (750 MW), smaller projects from ZESCO, and the construction of coal power stations, will all ensure energy capacity for the future.

Tourism The Zambian tourism sector welcomed 906,000 tourists, growing by 12% to around 200 million US$ in 2012. Even so, the Zambian tourism sector is not yet operating at full potential; experts estimate the market value at 700 million US$. Challenges facing the industry are higher prices and less tourist infrastructure in place than neighbouring countries such as Botswana and South Africa.

Agriculture Zambia has huge agricultural potential; only 15% of the 60 million hectares of arable land is being utilised. With around 600,000 small farmers and 650 commercial farmers currently active, government is trying to develop small farmers and is welcoming investors into the sector. The most important agricultural product is maize, at approximately 998,000 hectares producing 2.85 million tons in 2012. The German agricultural company Amatheron Agri, is already active in Zambia, developing 32,000 hectares of land. The German Federal Ministry of Food and Agriculture (BMELV) is planning a training farm in Lusaka, where German agricultural engineering will be adopted.  Translated by M van Niekerk

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Aproma offers integrated project management solutions and is your partner in any aspects of your project requirements. Shaping and configuration Planning and implementation

APROMA GERMANY

You find us in Germany and South Africa.

Commissioning and ramp-up Review and auditing Resilience and recovery

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A

APROMA AFRICA

APROMA GERMANY Phone: Fax: E-Mail: Web:

+27-79-8809814 +27-12-3498165 [email protected] www.aproma.biz

c/o apid Pirolring 36 45472 Mülheim a.d. Ruhr Germany

proma (Pty) Ltd. offers integrated project management and consultancy services for organisations and projects in the built environment across the whole project life cycle. It combines technical and managerial aspects through its longstanding experience in the construction industry, in technical and engineering fields as well as in managerial, organisational and institutional matters. Aproma was initially established 2009 as permanent representation of the German Angermeier & Partner International Development (apid) in South Africa. apid has independent consulting engineers who have developed a reputation for innovative multi-disciplinary services in the construction and international development sector. In early 2012, as a testament to the focus on Africa, the partners of Aproma, Mr Marco Angermeier and Mr Anton-Josef Angermeier decided to register Aproma as independent South African consulting firm in Pretoria, South Africa. Since then, Aproma has steadily increased its client base through reliable professional services, commitment to quality, and completion of the services to their clients’ complete satisfaction. Aproma is specialised in the fields of infrastructure, water, hydropower as well as resource management and strategic institutional development. Its core competence lies in the development, implementation and alignment of

Phone: Fax: E-Mail: Web:

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project and programme structures, processes, procedures and communication to meet the overall project objectives and needs of the clients. But it also provides oversight management of project activities to include procurement; project accounting and finance; documentation and reporting; risk management; the management of environmental and social dimensions; project controlling as well as the monitoring and evaluation of project results against the plans and deliverables. Aproma’s speciality though is in the design, setting-up and implementation of the project delivery frameworks relating to the following: • Project shaping and configuration • Project planning and implementation • Project commissioning and ramp-up • Project review and auditing • Project resilience and recovery Aproma has vast experience in project and programme evaluation and the elaboration of good practise documents for all levels of the project delivery hierarchy from development consulting to actual project management. Its combined experience and professional background provide a unique blend embracing high-level strategy advisory services, programme development and institutional support with operational and technical expertise in the building and infrastructure sectors.

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ANGOLA

Zimbabwe

ZAMBIA zimbabwe

mozambique

The Zimbabwean government predicts GDP growth of 6.1% in 2014, increasing to 9.9% by 2018. However, independent economists and analysts are not as optimistic and see an average growth of 3.5%. The introduction of the US$ in 2009 has stabilised the economy. Economic recovery is, for the most part, due to increased output in the mining and tobacco industries.

BOTSWANA

NAMIBIA

SWAZILAND lesotho

SOUTH AFRICA

Area

390,757 km²

Inhabitants

13.7 million

Population Growth

2.7%

Official Languages

English

Capital City

Harare

Gross Domestic Profit Growth

5% (2012)

President

Robert Mugabe

Ease of doing Business

170/185

Currency

US $

SWOT ANALYSIS Strengths Well educated population Frameworks of the once strong industry still existing

KEY ECONOMIC DATA 2012

Comparative data, Germany 2012

Comparative data, Germany 2013

GNP (nominal, billions of US$)

10.8

3,350

3,635

GNP per Head (nominal, US$)

858

32,280

-

Population (millions)

12.6

81.8

82

*Sources: International Monetary Fund (IMF), EIU, Statistisches Bundesamt

Investment To reach its desired GDP growth rate, the Zimbabwean government needs to double its current foreign investment. However, the Indigenisation policies, where foreign companies are expected to hand over 51% of their company to Zimbabweans, stand in the way of reaching this growth target. These policies are especially difficult for mining corporations. In other industry sectors, foreign companies can request fair prices for their shares but in the mining sector, the mined products are seen as acceptable reimbursement. This means that foreign investors in the mining industry are expected to cover 100% of all costs and risks, but are only entitled to 49% of the share. In 2013, the Zimbabwe Investment Authority gave the green light to projects totalling 686 million US$, however the commencement of these projects is uncertain.

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Negative investment climate due to Indigenisation and policy uncertainties Landlocked country – no ports Lack of skilled labour due to emigration Inefficient administration

Opportunities

Source: data.worldbank.org; gtai

Indicator

Weaknesses

Commodities (platinum, gold, chrome, iron ore, diamonds, coal) Investment opportunities in infrastructure Agricultural potential High demand for imported products

Threats Poor infrastructure Political instability Food security threats Reliant on mining and tobacco Liquidation crisis in the banking sector

Selected Major Projects Project

Investment amount (US$)

Project Status

Comment

NewZim Minerals (80% belongs to Essar)

4 billion

Planning stage, project has been delayed

Iron ore plant in Mwanesi

NewZim Steel (54% belongs to Essar)

436 million

Project delayed

Investment in the previous Ziscosteel

Batoka Gorge Hydro Power station

4-6 billion

Planning stage

Planned capacity of 1,600 MW. Joint project between Zimbabwe and Zambia

Kariba South Hydro Power station

355 million

Project carried out by Sino Hydro – till 2018

Upgrading capacity from 300 MW to 1,050 MW

Hwange Thermal Power station

1.3 billion

Project carried out by China National Machinery Corporation, delays due to lack of finance

Upgrading capacity from 600 MW to 1,520 MW

China Africa Sunlight

2.1 billion

Planning stage

Coal mine in Gwayi and a coal power station with capacity of 300 – 2,100 MW

3 Solar Power plants

540 million

Planning stage

Construction of 3 solar stations of 100 MW each

Zimplats Ngezi Platinum mine: Phase 2 and 3

Phase 2: 500 million Phase 3: 1.5 billion

Phase 2: construction Phase 3: planning

Phase 2: construction on a new mine and processing plant with a capacity of 2 million tons.

Upgrade of the Beit-bridge Harare highway

930 million

Planning stage

580 km stretch of road funded by private investors

PPC Cement Plant

200 million

Planning stage, construction begins mid-2014

Pretoria Portland Cement: cement plant producing 1.2 million tons per year

Source: gtai

Consumption The difficult economic situation in Zimbabwe can be clearly seen in consumer figures. Approximately two thirds of the population lives below the poverty line. The unemployment rate is difficult to determine; the Zimbabwean government puts the unemployment rate at 11% while economists believe it to be closer to 70%. About 900,000 Zimbabweans are formally employed, with 250,000 employed by the state. The remainder of the population are subsistence farmers or in the informal sector. Per capita income has dropped from 535 US$ in 2000 to 370 US$ in 2013. Zimbabwe is however an interesting opportunity for retailers. The South African supermarket chain Pick ‘n’ Pay has a local partner in TM, and many South African chain stores can be found in the Mall of Zimbabwe, a massive shopping centre in Harare where the elite can purchase luxuries. The smart suburb of Burrowdale is experiencing a housing boom; although the income source cannot be determined there appears to be a connection to international diamond prices.

Foreign Trade Despite exporting commodities, Zimbabwe has a large trade balance deficit – approximately 37% of GDP. Zimbabwe is extremely reliant on imports; 60% of consumer products are imported mostly from South Africa and its chain stores import entire product ranges.

ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

Traditional export products for Zimbabwe include platinum, gold and tobacco. Diamonds could be an important income source; 11 million carats were expected to have been produced in 2012 with a value of 685 million US$. However, the diamond industry is not completely transparent and official channels are not necessarily used.

ICT Zimbabwe’s mobile network is growing steadily, with over 13.5 million users in 2013. Market leaders are Econet (8.5 million users), Telecel (2.54 million users) and Netone (2.45 million users). Internet use has also experienced a boom, with 5.2 million users in 2013, an increase of 37% from 2012. Approximately 98% of internet users access the internet through their mobile telephones, prompting service providers to invest in their networks. Econet alone is spending 1 billion US$ on a modern 4G network. The landline provider Telone is planning to enter the broadband arena and will invest around 90 million US$ by 2015.

Mining The mining industry continues to see growth, and grew by 6.5% in 2013. The platinum sector is especially significant, and reached approximately 430,000 oz. Currently, because raw platinum concentrate is exported to South Africa, government is trying to force mining operations like Zimplats, Anglo and Aquarius to construct a platinum smelter in Zimbabwe. If by the end of 2014 there are no concrete plans to build a smelter, platinum exports will be banned altogether. The construction of the smelter should cost 3 billion US$ and will be economically viable from 500,00 oz., a figure which will be easily achieved especially with the second shaft at the Mimosa mine. However, any investment of this kind is severely hampered by Indigenisation policies.

Machine and Equipment Zimbabwe was once industrially very strong, but is no longer able to purchase new equipment and machinery. Current machinery is outdated and results in high production costs, meaning that imported goods are cheaper than locally manufactured products. In the industrial hub of Bulawayo,

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ZIMBABWE THE NAME BEHIND THE POWER many firms have had to shut their doors. It is estimated that 5 billion US$ is needed as investment in upgrading and modernising machinery. Credit is scarce due to the liquidation crisis Zimbabwe experienced.

Energy It is likely that Zimbabwe will need several years to rectify its energy crisis. Demand is at 2,200 MW and Zimbabwe can only provide 1,100 MW so industry must deal with constant electricity cuts and rely heavily on generators. The upgrading by Sinohydro on the Kariba South Hydro Power station by 300 MW should begin in 2014, while the upgrading of the Hwange coal power station by 600 MW has no financing as yet. Namibian power supplier Nampower, plans to invest 250 million US$ in three coal power stations in Harare, Munyati and Bulawayo. Various private projects are also underway, increasingly through Chinese enterprises.

Water Zimbabwe’s water and sanitation infrastructure is in a poor condition and poses a health risk to the population. In Harare, where the population has increased from 600,000 to 4 million, water and sanitation infrastructure has not been upgraded since the 1980s. Since the cholera outbreak in 2008, various programmes have been put in place, such as the GermanAustralian Urban Water Supply and Sanitation Programme and the Zim-Fund from the African Development Bank, and provide around 50 million US$ for the water sector per year. The Zim-Fund has begun a two-phase programme – the Urgent Water Supply and Sanitation Rehabilitation Project which will cost 36 million US$. If there is sufficient funding, the government is also planning the Matabeleland Zambezi Water Project at a cost of 1.4 billion US$.

Transport Zimbabwe has a good road network, with about 80,000 km of road. However, with most freight restricted to road, and lack of investment in maintenance, these roads are in a poor state. It is estimated that 4.2 billion US$ is needed to upgrade the road network. Because these funds are not available to the government, private investors are needed.

Agriculture Although Zimbabwe is still suffering the effects of land reform, the tobacco farming industry is developing positively, with about 90,000 small farmers active. These farmers produced 167 million kilograms in 2013, slowly reaching the 236 million kilograms produced in 2000 by the 2,000 white farmers farming then. Because of the boom in tobacco, more and more farmers favour tobacco- over food-farming. Zimbabwe imports all foods; according to the UN more than 3 million people receive food assistance. Zimbabwe was once known as the “bread basket of Africa” but now even the small neighbouring country Malawi produces more maize. Furthermore, deforestation is a massive problem in Zimbabwe, as tobacco farmers burn wood to dry tobacco.

Tourism Zimbabwe has great tourism potential, with nature reserves, a beautiful landscape and the Victoria Falls. Tourist figures have dropped dramatically due to political instability, but the figures are on the increase again, with 1.8 million visitors in 2012 and 2.1 million in 2013. There is hope that at the United Nations World Tourism Organisation (UNWTO) meeting with Zambia steps will be taken for the future of the tourism industry and effective protection from poaching in national parks.  Translated by M van Niekerk

ENGINEERING | PLANNING | CONSTRUCTION | COMMISSIONING

PA R T N E R S I N T H E F I R S T R E N E W A B L E E N E R G Y P R O J E C T S I N S O U T H A F R I C A .

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B R A N D E N G I N E E R I N G S A ( P T Y ) LT D CAPE TOWN SOUTH AFRICA I N F O @ B R A N D S A .C O M

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014

TEL:+27 021 550 9100 BRANDSA.COM

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DATES TO DIARISE SEPTEMBER 2014 1-5 15 17-19 17-19 17-21

Waste management delegation A delegation from Germany, focusing on water, waste and recycling will be in South Africa to meet potential business partners and create sustainable partnerships.

Golf Day The Golf Day is a highlight, with fantastic sponsored prizes and the Randpark Golf course is a new venue for the event.

International Infrastructure and Invest Conference Taking place alongside Africa’s biggest mining event, Electra Mining, the International Infrastructure and Invest Conference (IIIC) features world-leading speakers in the sectors of transport, energy and water.

SA-German Business Forum The 4th SA-German Business Forum brings together high-level representatives of the German and South African business and political environment, the discussions evolve around the most important market developments in both countries.

Germany Food dayS German food is becoming increasingly popular and can be found in most supermarkets these days – the German Food Days continue this trend through facilitating networking and partnerships opportunities.

OCTOBER 2014 10 13

Annual Ball The black-tie event for the SA-German business community – delicious food, excellent wine and fantastic entertainment is on the menu.

Member’s Lunch with Pieter Dirk Uys One of South Africa’s best-loved comedians is the guest speaker, sharing his insights on doing business in South Africa.

January 2015 29

Back to Work Lunch Kicking off the new work year with an introduction into the Chamber’s plans for 2015, thoughts on doing business in South Africa, followed by a traditional German braai.

March 2015 15-17

South African pavilion ProWein The world’s most important wine trade fair, featuring the best South African wines on beautiful pavilions – showing off one of South Africa’s most tasty exports on a grand scale.

may 2015 16

Ball of HOPE The HOPE charity and the SA-German Chamber’s annual fundraising event is an absolute highlight in Cape Town – a wonderful way to support a fantastic cause.

OCTOBER 2015 10

South African pavilion Anuga – 10-14.10.2015 The biggest food trade fair in the world, featuring pavilions from hundreds of nations also welcomes back South African food – showing the world the delicacies from the southern tip of Africa.

FOR MORE INFORMATION ON THESE AND OTHER EVENTS: Heidel Bekker Southern African – German Chamber of Commerce and Industry NPC Tel. +27 (0)11 486 2775 [email protected]

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ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014