Tag Archive for: Economic Development

Andrew Stegmann

Amanzimtoti Set to Get Substantial Investment Boost in the Next 5 Years

Amanzimtoti on the South Coast of KZN is fast becoming an investor hot spot as it prepares to become the site of a massive new automotive park.

Gavin Parkins, a commercial and industrial agent at Seeff Amanzimtoti, said the town is expected to receive a boost when building commences of the KZN Automotive Supplier Park (ASP) in Illovo. Completion of the project is predicted as early as August 2022, he said.

The ASP model has been used with great success in three previous locations in South Africa, Parkins said. “The Gauteng Provincial Government/AIDC Automotive Suppliers Park in Rosslyn Pretoria North servicing Nissan and BMW, Ford South Africa, National, Provincial and Local Government initiated Tshwane Automotive Special Economic Zone (SEZ) in Pretoria and the Sunnyridge Automotive Supplier Park in East London.

“These initiatives resulted in thousands of personnel being relocated from areas across South Africa to create centralised automotive industrial zones servicing the local motor manufacturers. “These developments have not only created massive employment opportunities, but have also impacted the local economies in a very positive way.”

Parkins said that the R11 billion Dube Trade Port Auto Suppliers Park in Kingsburgh will service Toyota, MAN Trucks and Volvo Automotive – the largest development of its kind in South Africa. Once completed the 1,000 Ha project is anticipated to create more than 25,000 new jobs and also includes the construction of thousands of new affordable homes. Over a five year period it is anticipated that thousands of families will relocate to the area from areas where automotive suppliers are currently situated. As was experienced in East London, there will be a huge surge in demand for residential housing once the Auto Supplier Park commences operations, Parkins said.

Property boost

This sudden demand for thousands of homes will certainly have an effect on local property prices that have lagged behind national performance for the past three to five years, he said. However, he noted that there is limited supply in the local areas and such a sudden spike in demand will further affect pricing.

“On commencement of the project in the latter half of 2020 developers will be more confident in the potential of a rapid upturn in residential demand and it is advisable than savvy investors try to get their hands on vacant land earlier rather than later, before the inevitable price increases.” Parkins said that investors should turn their focus to areas like Kingsburgh, Warner Beach, Doonside, Amanzimtoti, Illovo and Winklespruit that are the residential suburbs closest to the expected ASP development.

“Over the past years prices in the new residential developments of Amanzimtoti have stagnated and retail development has been the primarily property development in the region. “More recently however there have been noted improvements in the residential market with rising prices and improved demand. “Low levels of residential development have however left a supply shortfall, but hopefully this will be corrected soon.”

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann

The Future Of African Oil & Gas

Africa holds around 7% of the world’s proven crude oil and natural gas reserves, yet the continent remains largely under-explored. It’s safe to say that the motherland is far from having exploited its full potential. For this potential to bear fruit and translate into economic development and jobs, several things need to happen. Good thing is, they are slowing taking shape.

The rise of the African continent

For example, it is encouraging to see African oil and gas companies becoming more and more a part of the continent’s economic empowerment story. In this context, 2020 is likely to see a continuation in the rise of the African private sector’s contribution to supporting industry growth and jobs creation.

An emergence of strong African oil companies (AOCs) across the value chain, from field operators to services providers, is a key emerging trend for the sector. Many companies from West Africa particularly are seeking regional expansion across the continent and driving regionalization. As most countries strengthen their local content regulations, the trend is likely to accelerate.

Regional and international cooperation

This year will prove whether African nations have learned how to cooperate on transnational energy deals and infrastructure for the benefit of all involved. It could see the unlocking of multi-billion-dollar opportunities through transnational energy cooperation and projects. This applies to planned and stalled pipeline projects in need of revival such as the East African Crude Oil Pipeline for instance, but also to upstream investments and developments, especially in the Gulf of Guinea. Similarly, the way African Continental Free Trade Area (AfCFTA) impacts intra-continental trade could be a boost to the energy sector if properly utilized.

On the international stage and under the leadership of Secretary General Mohammad Sanusi Barkindo, Opec has welcomed more African producers – Equatorial Guinea (2017) and the Republic of Congo (2018) being the latest ones. As the organisation further expands the Opec/non-Opec outreach across Africa to find consensual solutions to market stability while offering technical assistance to upcoming producers, 2020 might be the year a new addition of an African oil-producing country as Opec member.

Expanding midstream and downstream infrastructure

New refinery and petrochemical complexes are being constructed and existing ones will be expanded in the near and medium term. The continent is likely to see the emergence of regional hubs and markets with the strategic ambition of procuring petroleum products and natural gas. Examples include Equatorial Guinea’s LNG2Africa initiative and the Akinokien import and re-gasification terminal, the Dangote Refinery in Nigeria, and Ghana’s Tema LNG terminal project, among others.

Market access is also increasing on the back of several pipeline projects such as the Lokichar-Lamu Crude Oil Pipeline in Kenya, and the intensifying talks over the 5,660km pipeline that could supply gas to as many as 15 West African countries between Nigeria and Morocco. Niger also signed the Transport Convention on the construction and exploitation of the Niger-Benin Export Pipeline, key to Niger significantly increasing its crude oil production over the next five years to as high as 100,000bpd. In East Africa finally, Ethiopia and Djibouti have reached an agreement on a gas pipeline that will offer an exit route for Ethiopia’s gas fields and help unlock tremendous value in gas export potential.

NJ Ayuk, Chairman of the African Energy Chamber.

Africa is transitioning to gas

There is a promising outlook for the African gas sector. Countries without substantial gas resources will be turning to liquefied natural gas (LNG) imports to power their homes and industries. Ghana, for example, will is installing a new floating re-gasification unit in 2020. Ivory Coast, Morocco and South Africa have also looked at installing these units in the near future. The urgent need for rapid industrialization will create tremendous opportunities for gas to fuel African economies in a more cost effective and environmentally sustainable manner. The race is on.

At the end of the Gas Exporting Countries Forum’s 2019 Summit, Equatorial Guinea launched the Declaration of Malabo – a document affirming the importance of retaining rights of member countries for natural gas resources – which will lead to the securing the energy transition Africa needs and to meeting sustainable development goals and attracting investment into gas infrastructure projects.

Technology

Africa’s potential for innovation and leapfrogging is slowly affecting its hydrocarbons sector – we are finally seeing the adoption of sophisticated software and tools such as artificial intelligence (AI) and machine learning (ML) in oil and gas. New ways to drill wells and handle equipment are being adopted, new seismic data collection techniques and petroleum data management tools are being designed.

The trend is also helping the industrial and manufacturing sectors to save cost and address the logistical and power challenges of operating on the continent.

We definitely see international technology providers investing and collaborating with African companies to drive efficiency and environmentally-friendly production methods in 2020 and beyond.

Security concerns

We are likely to see an increase in African governments and oil companies doing more to protect the security of energy infrastructure and assets on the continent. Oil & gas resources and commodities are prone to security risks – leaving countries victims to energy theft, vandalism, piracy. Such acts cost Africa’s oil & gas sector several billion dollars a year in losses and reparations. With insecurity now spreading to East Africa, the industry has taken as a responsibility to seriously address the issue.

Regulatory reforms

With hundreds of blocks and acreages up for grabs in 2020 and a widening energy infrastructure gap, sub-Saharan African countries are increasingly competing for investments and technology. Countries like Senegal, Benin, Gabon, Algeria and Cameroon have already implemented structural and regulatory reforms in 2018/19 to attract new investment. Several others are still restructuring their energy policies to provide more incentives to develop domestic oil & gas reserves (associated and non-associated), fuel for thermal generation and both expand and diversify their energy infrastructure.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], Markus Spiske [2].

Andrew Stegmann
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Zambian and Ugandan Farmers Grow Yields Three Fold With Drought-Tolerant Maize

Zambia’s vice-president has recently called to reduce maize dominance and increase crop and diet diversification in his country. The reality is that maize is and will remain a very important food crop for many eastern and southern African countries.

Diet preferences and population growth mean that it is imperative to find solutions to increase maize production in these countries, but experts forecast 10 to 30% reduction in maize yields by 2030 in a business-as-usual scenario, with projected temperature increases of up to 2.7 degrees by 2050 and important drought risks.

Knowing the importance of maize for the food security of countries like Zambia, it is crucial to help maize farmers get better and more stable yields under erratic and challenging climate conditions.

To address this, the International Maize and Wheat Improvement Center (CIMMYT) and its partners have been developing hundreds of new maize varieties with good drought tolerance across sub-Saharan Africa. Stakeholders in the public research and African seed sectors have collaborated through the Drought Tolerant Maize for Africa (DTMA) project and the Stress Tolerant Maize for Africa (STMA) initiative to develop drought-tolerant seed that also incorporates other qualities, such as nutritional value and disease resistance.

A groundbreaking impact study six years ago demonstrated that drought-tolerant maize significantly reduced poverty and food insecurity, particularly in drought years. A new study from CIMMYT and the Center for Development Research (ZEF) in the main maize growing areas of Zambia confirms that adopting drought-tolerant maize can increase yields by 38% and reduce the risks of crop failure by 36%.

Over three quarters of the rain-fed farmers in the study experienced drought during the survey. These farming families of 6 or 7 people were cultivating 4 hectares of farmland on average, half planted with maize.

Another study on drought-tolerant maize adoption in Uganda estimated also good yield increases and lower crop failure risks by 26 to 35%. Drought-tolerant maize has a transformational effect. With maize farming becoming less risky, farmers are willing to invest more in fertilizer and other inputs and plant more maize.

However, taking the decision of adopting new farm technologies in a climate risky environment could be a daunting task. Farmers may potentially gain a lot but, at the same time, they must consider downside risks. As Gertrude Banda, a lead farmer in eastern Zambia, put it, hybrid seeds have a cost and when you do not know whether rains will be enough “this is a gamble.” In addition to climate uncertainty, farmers worry about many other woes, like putting money aside for urgent healthcare, school fees, or cooking nutritious meals for the family.

An additional hurdle to adoption is that farmers may not know all the options available to cope with climate risks. While 77% of Zambia households interviewed said they experienced drought in 2015, only 44% knew about drought-tolerant maize. This unequal access to knowledge and better seeds, observed also in Uganda, slows adoption of drought-tolerant maize. There, 14% of farmers have adopted drought-tolerant maize varieties. If all farmers were aware of this technology, 8% more farmers would have adopted it.

Because farmers are used to paying for cheap open-pollinated varieties, they are only willing to pay half of the hybrid market price, even though new hybrids are performing very well. Awareness campaigns on the benefits of drought-tolerant maize could boost adoption among farmers. According to the same study, the potential for scaling drought-tolerant maize could raise up to 47% if drought-tolerant varieties were made available at affordable prices at all agro-dealers. Several approaches could be tested to increase access, such as input credit or subsidy schemes.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], Jen Theodore [2].

Andrew Stegmann

Report: The Cape Town International Convention Centre is Bolstering the Western Cape Economy

The Cape Town International Convention Centre generated more than 130 465 jobs since its inception in 2003, according to its economic impact report.

At its recent annual general meeting, shareholders heard that the CTICC created or sustained 14 620 jobs in the past financial year alone. It is estimated that the CTICC contributed R1.2bn to indirect household income in South Africa during the 2018/19 financial year.

Despite the tough economic trading environment, revenues for the last financial year came to R277m, compared to R172m reported in 2013/14. The centre achieved an operating profit (EBITDA) of R57.5m in the year under review, which was R49.57m above the target of R8m. Compared to the 2013/14 figure of R35.4m, this is a 62% increase.

The convention centre was able to increase its revenue through hosting 417 070 delegates over its 560 events. Furthermore, estimates show delegates attending events at the CTICC likely made a significant contribution to the tourism industry in Cape Town and even the rest of the country.

It is estimated that the CTICC’s events in 2018/19 generated an additional 566 057 room nights in the Western Cape and 575 898 in South Africa. While total foreign exchange spend as a result of the tourism generated by these events is estimated at R677m.

It is estimated that the CTICC effectively contributed a total of R4.5bn to the Western Cape’s gross geographical product (GGP) also known as the value of goods and services produced in the region – and R6.5bn to South Africa’s gross domestic product (GDP). To date, the centre has made a cumulative contribution to the Western Cape’s GGP of R39.6bn and R47.3bn to South Africa’s GDP.

In addition, the centre procured R331m worth of goods and services from local Western Cape suppliers. This equates to 87% of its overall net spend. In respect to Broad-Based Black Economic Empowerment suppliers, R328m was spent – which was 86% of the centre’s net spend. Almost 40% of the total procurement spend was on women-owned enterprises.

This year, the CTICC invested R1.6m in corporate social responsibility initiatives, including venue sponsorships. As for the environment, shareholders were told at the AGM that globally, consumers and event organisers are demanding that companies follow sustainable business practices and processes. Due to the centre’s focus on waste management, energy consumption, local sourcing and water conservation, it therefore regards itself as well-placed to respond to such demands.

The CTICC was awarded the 2019 Delegate Choice Award for Innovation at the International Association of Convention Centres (AIPC) Annual Congress in Antwerp, Belgium. The accolade recognised the CTICC’s efforts in reducing its water usage. Over 100 international conferences are expected to bring over 127 000 delegates to the CTICC up until 2026.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Dewet [1], [2].