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Japan Invests $1.8 Million in Sustainable Plastic Alternatives Project in South Africa

The Government of Japan and the United Nations Industrial Development Organization (UNIDO) have signed a funding agreement for a project to support a transition from conventional plastics to sustainable alternatives in South Africa.

The Government of Japan announced the funding support of US$1.8m for the UNIDO project during the G20 Osaka summit in June when the Prime Minister of Japan, Shinzo Abe, held a summit meeting with the President of the Republic of South Africa, Cyril Ramaphosa. The initiative supports the G20’s Blue Ocean Vision which aims to reduce additional pollution by marine plastic litter to zero by 2050.

There are ongoing efforts to develop a local bioplastic industry in South Africa. The South African Bioplastics Forum was established in 2016 as a result of a joint initiative of the Department of Higher Education, Science and Technology (DHEST), the Council for Scientific and Industrial Research (CSIR) and Plastics SA. The country has large amounts of sugar cane bagasse and other biomass feedstocks suitable for bioplastics; and an emerging bioplastics industry has the potential to create new jobs.

UNIDO will work with the CSIR to develop an action plan to strengthen the capacity of local industry to manufacture alternative materials, and build up capacities for plastic recycling.

Recently, bio-degradable plastics have gained attention as one approach to deal with the scourge of plastic pollution. However, when bringing new materials onto the market, particular attention needs to be paid to ensuring that the overall environmental footprint is not increased and that new types of waste are not created that cannot be recycled and that increase the amount of waste; or hindering efforts to increase circularity. The project will help to assess all possible scenario and choose appropriate material for South African contexts, and will suggest necessary steps needed to set up an enabling environment.

At the project launch ceremony, Japan’s Ambassador to South Africa, Norio Maruyama, said that the signing ceremony marked the concrete achievement of what was discussed at the G20 in June 2019. He emphasized the importance of the collaboration of South African companies in the project.

Deputy Minister Nomalungelo Gina of the Department of Trade and Industry (the dti) referred to the key objectives of South Africa’s National Development Plan, and said “The dti welcomes the support by the Japanese government and the partnership between UNIDO and the CSIR, since biodegradable plastics are just being introduced locally.”

The CSIR representative, Khungeka Njobe, said, “We look forward to partnering with government and industry in addressing the very important issue of waste plastic.”

Khaled El Mekwad, UNIDO Representative, said, “Such an initiative will be a model of good practice which can be disseminated to other countries in the SADC region. The experience acquired by South Africa could be extended to neighbouring countries where the triangular cooperation model with UNIDO and Japan may be replicated and adapted to the local development set-up.”

Trudi Makhaya, Economic Advisor to President Cyril Ramaphosa, welcomed this initiative. She said, “We hope that from this partnership there is agreement that there will be a lot of innovation but also a lot of practical applications of the innovations to new industries and new forms of economic activity that are inclusive, that take communities along, and that ensure that this new economy does not reproduce some of the flaws of the past.”

 

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

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

UK Consultancy Brand Finance Reveals South Africa’s Strongest Brands for 2019

UK consultancy Brand Finance has released their 2019 South Africa 50 report, an annual report on the most valuable and strongest South African brands.

Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Alongside revenue forecasts, brand strength is a crucial driver of brand value.

According to these criteria, Discovery is the world’s second strongest insurance brand, behind China’s Ping An, and the nation’s 5th strongest brand across all sectors, with a Brand Strength Index (BSI) score of 86.0 out of 100 and a corresponding AAA brand strength rating. Despite there being a variety of sectors included in the ranking, tech is a sector that is greatly underrepresented. There is a need to develop brands within this sector if South Africa wants to close the gap with leading economies.

South Africa’s largest sugar producer, Tongaat Hulett, has dropped out of this year’s ranking, following an accounting scandal in which the brand is currently being investigated for overstating its 2018 results. It was recently announced that Tongaat has withdrawn its listing on the stock exchange and 5,000 employees have been sent retrenchment letters. This is not the first time a South African brand has hit the headlines for accounting fraud. In late 2017, it was uncovered that Steinhoff had recorded fictitious and irregular transactions, which substantially inflated the brand’s profits, and resulted in the brand’s market value wiping out and the CEO’s resignation.

Capitec is the nation’s strongest brand

Capitec (up 15% to R7.8 billion) defends its position as South Africa’s strongest brand with a BSI score of 88.7 out of 100 and a corresponding AAA brand strength rating. Since the bank’s inception nearly two decades ago, Capitec has disrupted the country’s financial services sector and traditional banks, through removing barriers to entry for everyday customers. This approach has led to the brand boasting a vast customer base, with 44% of South Africans banking with them. This number is growing exponentially as more people turn to the brand for its reliability, transparency and reduced fees.

Brand strength explained

Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating. Analysing the three brand strength measures helps inform managers of a brand’s potential for future success.

South Africa’s 10 strongest brands

  1. Capitec (Banking)
  2. Castle Lager (Alcohol)
  3. First National Bank (Banking)
  4. Black Label (Alcohol)
  5. Discovery (Insurance)
  6. Vodacom (Telecoms)
  7. Sasol (Oil)
  8. Outsurance (Insurance)
  9. Telkom (Telecoms)
  10. MTN (Telecoms)

To read the full report, click here.

 

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

Sources: [1], [2], [3]. Image sources: Jacques Nel [1], [2].

Highlights From South Africa’s Second 2019 State of the Nation Address

South African President Cyril Ramaphosa delivered the country’s second State of the Nation Address yesterday evening, keying South Africans into his plans going forward, now that the country’s new Parliament is settling in, after the recent general election.

Below are 10 highlights from his speech.

  1. A special appropriation bill is to be tabled to allocate a significant portion of the R230 billion that Eskom needs to pay its debtors and keep the lights on.
  2. The president reaffirmed the constitutional mandate of the Reserve Bank “to protect the value of our currency in the interest of balanced and sustainable growth”.
  3. The Minister of Communications has been instructed to issue policy direction to the Independent Communications Authority of SA (ICASA) to begin licensing spectrum that will significantly reduce data costs.
  4. To return public money that has been looted, civil claims arising from investigations conducted by the Special Investigative Unit (SIU), estimated to be around R14.7 billion, will be fast-tracked.
  5. The Presidency plans to drive the implementation a comprehensive plan to create two million jobs for young people over the next 10 years.
  6. Government intends to double international tourist arrivals to 21 million by 2030, by introducing a “world-class visa regime”, and focusing on tourists from China, India and the rest of Africa.
  7. Government plans to accelerate efforts to identify and release public land that is suitable for smart, urban settlements, as well as for farming.
  8. Government plans to establish a gender-based violence and femicide council to guide the former’s efforts to eradicate gender-based violence in South Africa.
  9. Ramaphosa announced plans to train foundation and intermediate phase teachers to teach reading in English and African languages, and to deploy experienced coaches to provide on-site support to teachers.
  10. The President said he envisions the first new city built in the democratic era, with skyscrapers, schools, universities, hospitals, and factories, to ease the pressure on the congested cities of Pretoria, Johannesburg, Durban, and Cape Town. This includes the construction of a cross-country high-speed train.

To watch the full Address, click here.

South African President Cyril Ramaphosa delivers the country’s second State of the Nation Address on Thursday, 20 June 2019.

 

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

Sources: [1], [2], [3], [4]. Image sources: [1], [2].

Naspers, One of South Africa’s Largest Corporations, Is Restructuring and Listing in Amsterdam

Naspers announced that it will list NewCo, a new global consumer Internet group, on Euronext Amsterdam.

“NewCo will also have a secondary, inward listing on the Johannesburg Stock Exchange in South Africa,” said Naspers.

NewCo will be made up of Naspers’ “Internet interests outside of South Africa”. This includes its companies and investments in the online classifieds, food delivery, payments, etail, travel, education, and social and Internet platforms segments.

Companies included in these segments are Tencent, mail.ru, OLX, Avito, letgo, PayU, iFood, Swiggy, DeliveryHero, Udemy, eMAG, and MakeMyTrip.

“NewCo is expected to be approximately 75% owned by Naspers and have a free float of approximately 25%. As Europe’s largest listed consumer Internet company by asset value, NewCo will give global Internet investors direct access to Naspers’ unique and attractive portfolio of international Internet assets.”

The transaction will be subject to regulatory and shareholder approvals, and is expected to be implemented in 2019.

Bob van Dijk, Naspers CEO, said that forming this new company will allow them to attract investor capital.

“The listing aims to reduce our weighting on the JSE, which we believe will help us maximise shareholder value over time,” said van Dijk.

He said that the company’s “outsized weighting on the JSE exceeds most South African institutional investors’ single stock limits” – and as a result, many have been forced to sell as Naspers grows.

Naspers said it will retain its primary listing on the JSE and will continue to directly hold its South African assets – Takealot and Media24 – alongside its majority stake in NewCo.

“NewCo’s free float is expected to be created by Naspers through a capitalisation issue of NewCo shares to Naspers shareholders.”

Naspers N shareholders will be issued with newly-created Naspers M Ordinary Shares, which can be exchanged for NewCo shares once the latter is listed. Alternatively, these shareholders can choose to be issued with additional Naspers N Ordinary Shares.

NewCo is set to be discussed with shareholders on 28 June in Cape Town.

 

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

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

Key Facts to Know About the SA Reserve Bank, and Its Potential Nationalization

Public debate about the Reserve Bank is never too far away, and went up a notch higher in the run-up to the recent South Africa’s May 2019 national elections.

The ruling African National Congress said it intends to nationalize the central bank. “There is no hidden agenda, there is no manga-manga business,” President Cyril Ramaphosa told a parliamentary question and answer session in March 2019.

The ANC’s push for nationalization is supported by the Economic Freedom Fighters, the second largest opposition party. In August 2018, the EFF tabled the South African Reserve Bank Amendment Bill, which seeks to make the state the sole owner of the bank. It is still under consideration by the National Assembly.

Nationalization is opposed by the Democratic Alliance, the official opposition. And several economists, including Reserve Bank governor Lesetja Kganyago, say the bank should remain independent.

Yet others have argued nationalization will not make much difference.

But what does it all mean? Below is some key info that is worth knowing about the Reserve Bank, and its possible nationalization.

1. What is the South African Reserve Bank?

The Reserve Bank is the central bank of South Africa.

It was established in 1921 to protect South Africa’s commercial banks after a rise in the gold price following World War I put them at risk. It took over responsibility for holding gold and issuing bank notes.

The bank has since taken on a number of other duties and its mandate is protected by the South African constitution.

2. What does the Reserve Bank do?

Its main function is to protect the value of the rand, South Africa’s currency. The bank says a stable currency reduces uncertainty in the economy.

One way to protect a currency’s value is by controlling inflation – an overall increase in the price of goods and services.

Inflation is measured by defining a basket of goods and services that a typical person would buy. The increase or decrease in the cost of that basket over time gives you the inflation rate. A positive inflation rate means people have to pay more for the basket, even though no extra items have been added. It also leads to other “distortions” in an economy.

The Reserve Bank tries to control inflation by setting a target for price increases from one year to the next. Currently, the inflation rate should range between 3% and 6%. The bank tries to meet this target using policies such as setting the rate at which commercial banks can borrow money or requiring them to keep a cash reserve.

But why is a stable currency important?

“It ensures that what I can load in my supermarket trolley this month can also be afforded next month or in six months from now without me having to adjust my budget,” Charles Wait, professor emeritus in the economics department at Nelson Mandela University, told Africa Check.

This is particularly important for people who can’t increase their income when prices rise. “Think of pensioners or those relying on social grants from the state.”

A stable currency also helps businesses plan for the future with greater certainty. “There are less concerns about… the prices of inputs and outputs or the cost of expanding activities,” Wait said. The same is true for the government when it draws up its medium-term budget of costs for the next three financial years.

“One complication in estimating costs in year three is the degree of inflation that is likely to occur between year one and two… for example, the budget presented to parliament in February 2019 was planned during 2018 but has to forecast until [the] end of March 2022.” An unstable currency would complicate this further, Wait explained.

3. How does the bank function on a day to day basis?

The bank also provides some banking services to the central government and oversees the movement of currency between countries.

It is also the banker for commercial banks. It provides banks with cash when there are cash shortages, holds some of their cash reserves and supervises the South African banking system in general.

The Reserve Bank also issues banknotes and coins. Commercial banks then make these available to the public.

4. Is the Reserve Bank independent?

The bank enjoys a “considerable degree of autonomy”, it says on its website. Its mandate and independence are guaranteed by the constitution, which says the bank “must perform its functions independently and without fear, favor or prejudice”.

The constitution is the highest law of South Africa. Any changes to the constitution require support from two-thirds of the National Assembly and six out of nine delegations from the National Council of Provinces.

So changing the founding structure of the Reserve Bank would not be easy. Some people, including the reserve bank governor, believe this is rightly so.

“A central bank has normally got a monopoly in producing the country’s banknotes and coins,” Wait said. “It holds the key to the printing press. That key must be kept under a safe lock because if too much money is printed and put into circulation, we can get a situation where too much money chases too few goods.”

This could result in hyperinflation, seen in Zimbabwe and, more recently, Venezuela.

This could especially be the case where a government, not understanding the risks of inflation and overspending, sees a country’s central bank as a source of funding for its budget deficit.

A budget deficit is when a government expects to spend more money than it collects, according to a guide to South African government budgets.

“The SARB is legally restricted in its ability to bailout the government in cases of the latter’s budget deficits. When [Tito] Mboweni was the president of the SARB he spoke about the need to tighten these screws,” said Wait.

“At times of undesirably high levels of inflation, this independence is essential for the bank to be able to carry out its constitutional mandate of protecting the value of the currency.”

5. Who owns the Reserve Bank?

The bank is owned by about 750 private shareholders who together hold 2 million shares. Most shareholders are individuals but some shares belong to companies, trusts, provident funds and unions.

For example, Anglo American, a multinational mining company, and Discovery, a South African financial services group, own 10,000 shares each. The National Library of South Africa owns 200 and the Nelson Mandela Children’s Fund owns 100.

During the March 2019 parliamentary question and answer session, Ramaphosa expressed concern about the bank’s “external shareholders who live in various countries in the world”. The bank’s latest Shareholder Index report shows that about 11% of its 2 million shares are foreign-owned.

6. Who can buy shares?

Anyone can buy shares over the counter. The bank regularly publishes the price of its shares and the number of shares available.

As at 7 May 2019, shares were trading at R8 each. There are currently 3,786 shares on offer to sell.

Investors may not buy more than 10,000 shares each. And a prescribed maximum yearly dividend has been set at 10 cents per share. This means that even if an investor owns 10,000 shares, the most they can make in a year is R1,000.

7. What powers do shareholders have?

Shareholders have the power to:

  • Elect seven of 15 board members
  • Attend the annual “ordinary meeting of shareholders” at the bank
  • Approve the annual report on the state of the economy
  • Appoint external auditors

Shareholders do not have the power to:

  • Influence monetary policy
  • Instruct the day to day management of the bank
  • Appoint executive board members.

These last three functions are carried out by the Monetary Policy Committee, the bank’s governors, and the South African President respectively.

8. What other assets does the Reserve Bank have?

The bank is almost 100 years old. In that time it has built up a portfolio of assets that include shares, gold and foreign exchange reserves.

As at March 2019 these assets totaled R793 billion.

9. What would ‘nationalizing’ the Reserve Bank mean?

Nationalizing the bank would make the government its sole owner. According to Ramaphosa, this would “confirm” South Africa’s sovereignty.

Prof Jannie Rossouw, head of the school of economic and business sciences at Wits University, wrote in August 2018 that a change of ownership would not necessarily be a bad thing.

“A large number of central banks have been nationalized since 1945,” he told Africa Check. “So the world trend is in favor of nationalization with shareholding becoming a rare exception.”

(Disclosure: Jannie Rossouw was previously employed by the Reserve Bank and owns shares in the bank.)

There is a misconception that ownership would give the government control over the bank’s monetary policy. “The shareholding structure and whether we nationalize or not will have no impact whatsoever on the constitutional mandate of the bank,” Rossouw said.

Prof Andrè Roux, head of the Futures Studies programs at the University of Stellenbosch Business School, agreed.

“Shareholders actually have very limited rights,” he said. “So nationalizing the reserve bank won’t make much difference unless the Constitution is changed, which I think is very unlikely.”

 

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

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