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Beijing Automobile Intl Corp to invest $800 mil in S.African industrial zone

19 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Chinese state-owned Beijing Automobile International Corporation (BAIC) has signed a deal to invest 11 billion rand ($823.30 million) in an industrial zone in South Africa’s Eastern Cape province, the operator of the zone said on Thursday.

The deal will see BAIC open an automotive manufacturing plant in the Coega Industrial Development Zone near South Africa’s Nelson Mandela Bay, the Coega Development Corporation said in a statement.

($1 = 13.3608 rand)

 

(Reporting by TJ Strydom; Editing by Alexandra Hudson)

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Three-week South African fuel strike ends as union signs new pay offer

17 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

CAPE TOWN (Reuters) – South Africa’s petroleum industry and striking workers agreed to a new two-year wage deal on Wednesday, ending a three-week strike that caused limited supply disruptions, an official representing employers said.

Around 15,000 striking workers affiliated to Chemical, Energy, Paper, Printing, Wood and Allied Workers union (CEPPWAWU) agreed a 7 percent wage increase this year and an April CPI plus 1.5 percent hike in the second year, said Zimisele Majamane, the deputy chairman of the National Petroleum Employer’s Association.

 

(Reporting by Wendell Roelf; Editing by James Macharia)

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South African court sets aside Eskom’s electricity tariff hikes

17 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A South African court on Tuesday struck down some of the tariff increases granted to Eskom this year, saying the power utility had not followed the correct procedure when applying for a special claw-back, local media reported.

National energy regulator (Nersa) in March allowed Eskom a total tariff hike of 9.4 percent, of which part was an interim increase for running expensive diesel generators to keep the lights on in Africa’s most industrialised economy.

A court in Johannesburg on Tuesday granted the application by business organisations to set the regulator’s decision aside.

Had the interim increase not been granted, the tariffs would have risen by 3.5 percent from April 1, Moneyweb reported.

Eskom would not comment on the court’s decision directly, saying in a statement it would await a decision by the regulator.

 

(Reporting by TJ Strydom)

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A report from The South African Property Owners Association’s 2016 Convention

16 August 2016 Comments (0) Africa, Business, Featured

SAPOA Awards

The South African Property Owners Association celebrated its 50th anniversary at its annual convention this year, with a renewed focus on development.

The South African Property Owners Association (SAPOA) is in its 50th year of existence, and its annual convention celebrated this landmark moment. However, while celebration of half a century’s existence was notable, so was a focus on the challenges that investors face in newly emerging markets. South Africa has changed almost immeasurably in the past 50 years, and trying to create an environment that encourages positive investments, both domestically and abroad, was key to most speakers.

Expanding African Investment

A focal point of the SOPOA convention was how to encourage foreign investors to embrace opportunities within Africa, as the body aims to create growth that will reward South Africa’s own developers and investors. The convention was held at the Sandton Convention Centre in Johannesburg, where leading figures in property development, from journalists to construction groups, met to exchange ideas on furthering the expansion of property ventures in Africa.

While much of any planned expansion will be within South Africa, many experts are hoping to encourage their own developers, and those from outside Africa, to see exciting opportunities across the continent. Experts agreed that investors needed to recognize that African property investment was a long-term game, and to treat the markets with the same respect that they would in America or Europe.

Bronwyn Corbett, the head of the pan-African property group Mara Delta, explained that patience was key as she said, “Many South African investors don’t actually know what happens on the ground in Africa and may expect things to happen more quickly.”

Mara Delta holds a property portfolio worth $430 million that spans 6 African nations, from as far north as Morocco to as southerly as Mozambique. Companies like Mara Delta offer South African investors opportunities to invest in these outside markets, and in turn help bolster the growth of property value within the nations where their holdings lie. The evidence suggests that a rising number of investors are seeing prospects in Africa. Ian Anderson, the chief investment officer at Grindrod Asset Management, told SAPOA listeners that a mounting number of companies were asking about openings within African property.

Likewise, South Africa’s largest real estate investment trust, Growthpoint Properties, is already working alongside Investec to find new assets outside of South Africa, and yet still within the continent.

The challenges faced

While a positive approach was extolled, any objective discussion of the continent’s opportunities had to address the difficulties that could be faced. By openly discussing some of the problems and concerns around property investment within Africa, organizers hope to find solutions, and assuage investor concerns.

One of the main problems discussed was that many investors felt concern over the varied currencies of Africa. Africa uses more than 40 difference currencies, and the process of exchanging these can be time consuming. In addition, many African banks suffer from a slower speed of service that can give investors cold feet.

Corbett and others also discussed concerns over limited debt facilities within some African markets, but she insisted that companies like Mara Delta existed to relieve investors of the need to understand every market’s nuances.

Moreover, despite the issues that came up, the tone from Corbett was one of optimism, as she stated, “Each African country is different. Each is a challenge, and it wouldn’t be worth doing this if it wasn’t a challenge.”

The Convention and its awards

SAPOA celebrated its 50th anniversary with a grand convention, which offered attendees the opportunity to enjoy golf courses and a banquet, alongside the more serious nature of the talks and presentations. As with all of SAPOA’s conventions there was also an awards ceremony to recognize outstanding performers within property.

Some of the most notable awards included the Mall of the South for best retail development, Google Head Office Building for the Overall Green Award, Mitchell’s Plain Hospital for the Overall Transformation Award, and Frank’s Place for the best residential development.

The most prestigious award for the 2016 SAPOA Property Development Awards in Innovative Excellence went to Lion Match Company.

As many financial markets face uncertain times, the experts at SAPOA felt confident that property will provide stable investments for many people, and Africa can offer an exciting and prosperous opportunity for those willing to invest.

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South Africa Looks to Modern Mining for Youth Empowerment

15 August 2016 Comments (0) Africa, Business, Featured

youth in mining summit

South Africa’s mining industry to make use of non-traditional programs to empower youth

Even in 2016, the term “mining” brings to mind images of dust-covered coal miners with pickaxes. South Africa is rolling out a youth empowerment program in urban mining through its state-run mining and metallurgical entity, Mintek, that couldn’t be more different. Contrary to what its name suggests, urban mining does not involve any actual resource extraction. Urban mining is the slightly more glamorous and modern-day version of dumpster diving: this field re-appropriates pre-existing materials, such as recycled glass, into commercially viable semi-luxury goods.

At a recent South African conference, the Youth Mining Summit, government officials spoke about their desire to empower South Africa’s youth to look into the mining sector for jobs. The Youth Mining Summit occurred in mid-June, over the 40th anniversary of the infamous SOWETO Uprisings. To commemorate the historic youth uprising, South Africa dedicates each June to focus on youth development issues. This year, Deputy Director General of Mineral Regulation Joel Raphaela discussed the government’s efforts to encourage more young South Africans to go into the mining industry: “We continue to reach the youth through the department Learner Week Programs, where we create mining awareness by organizing mine visits around the country.” This sort of exposure, Raphaela hopes, will show young people from diverse backgrounds and educational qualifications that there are numerous job opportunities within the mining sector.

One Man’s Waste

Mintek Small Scale Mining & Beneficiation Program

Mintek Small Scale Mining & Beneficiation Program

An important component of this effort is the training and mentorship opportunities available to interested youth. Since 1934, Mintek has been South Africa’s leading mining and metallurgical research and development center. As South Africa begins to put a more visible emphasis upon black empowerment, Mintek is an integral part of a youth development program that looks to train young people in marketable metallurgy. Mintek emphasizes its newly branded urban mining program as the future for sustainable employment. A simple example of urban mining is the creation of glass beads from recycled bottles: Mintek provides training in all of the skills needed to turn glass bottles into beautiful jewelry with everything from different crushing techniques to the variety of ways to melt and re-purpose crushed glass. According to Mintek, “Urban mining presents numerous opportunities for young people to use urban waste to manufacture saleable products, without necessarily having a higher education qualification. The glass bead manufacturing process is a great example of this.”

Last year, Mintek provided 148 youth with practical training in partnership with the Mining Qualifications Authority (MQA), and the Department of Science and Technology. Thirty-six of these graduates have been placed in foundries across the country, where they continue to grow their theoretical and practical skill sets in the metallurgical field. Unemployed graduates from previously disadvantaged groups have the opportunity to receive further training in the field of occupational hygiene, surveying, mining, electrical and mechanical engineering. Not only is Mintek providing hands-on training, but it is working with local governments to set up training centers in the Northern Cape. Two such centers were established in Upington and Prieska, where students can get practical training for making jewelry from locally-mined semi-precious stones.

A Diamond in the Rough

South Africa’s mining stretches beyond metallurgy and re-appropriation of urban waste to the most glittering of all gems: diamonds. After the 2015 launch of the South African Young Diamond Beneficiators Guild, a collective of predominantly black-owned small and emerging diamond manufacturers, young adults were accepted into training programs to learn the cutting and polishing techniques employed to refine rough diamonds. 25 of the young trainees were accepted into a two-year training program based in Italy, but will also travel to Switzerland to learn about the technical art of watchmaking.

A watchmaking teaching curriculum is currently being developed in South Africa. Once it is completed and through the approval process, South Africa would be able to teach the special skill set for the first time in its history.

Digging Deep to Lift Up Youth

All of these initiatives have the same goal: to empower youth with marketable skills that will not only provide them with sustainable income, but will allow them to participate in the global economy. Training programs are blossoming in everything from urban mining to watchmaking, and it seems that this is only the beginning. As Raphaela said, the “economic empowerment of young people is not an option, but a national imperative.”

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Stock Talk: South Africa’s Newest Market

12 August 2016 Comments (0) Africa, Business, Featured

Johannesburg Stock Exchange

South African company Zar X has been given license to open a new stock exchange market, the first new market in more than 100 years.

For many in Africa, the world of stock exchange and brokerage is an elite realm for the wealthy and well educated. The outside fees alone, paid to brokers and investment firms, are enough to deter a huge proportion of the world’s population, not to mention the financial literacy required to make informed trades. In developing countries, where stock exchanges may be inaccessible for all but a small portion of the population, this is particularly true. Many stock exchanges are centuries old. South African company Zar X is changing the scene: as of September 1st, they are expected to launch trading in a low-barrier, low-risk market for the first time in the country’s history. This exciting development is expected to open up the world of stocks to a much wider demographic, enabling less-wealthy South Africans to participate in the global economic market.

Taking Stock

In March of this year, Zar X was granted a stock exchange license by the Financial Service Board, the first company to have received one in more than a century. Founder and CEO Etienne Nel says that Zar X’s “initial focus will be on low-hanging fruit – the companies that the Johannesburg Stock Exchange (JSE) cannot list, like the traditional over-the-counter market and the related shares around this market.” For the last 120 odd years, the Johannesburg Stock Exchange (JSE), South Africa’s first and previously only stock exchange, has offered T+5 and T+3 settlements, or trades that take five or three days, respectively, to clear into an investor’s account.  Zar X will be the only exchange to offer T+0 settlements, or same day settlements.

The more complex trades (T+5 and T+3)  will still be offered on the JSE, but for restricted trades and mid-size company listings (companies worth between US $36million and US $360million), Zar X will be the go-to listing. These companies have different rules for listing shares than larger companies, and are therefore more accessible for individuals without investment experience. Zar X “will offer simple, fast and affordable platforms for corporate listings and share trading, with strong focus on the market in restricted equity offerings, primarily black empowerment securities.”

An Exchange for the Everyman

According to their website, “ZAR X is a platform that lets everyday South Africans transact shares quickly, cheaply and conveniently, even if they have never formally invested money or opened a bank account before.” For the millions of South Africans without bank accounts, this is a potentially life-changing opportunity. Zar X will offer businesses a flexible, transparent and affordable way to list their restricted or limited share offerings through its three sections: a main board for company listings, an “over-the-counter” stock trading business, and an investment products market. Zar X differs from the JSE for a variety of reasons, including that it will allow shareholders to invest without custody fees. Custody fees are one of the barriers to people from lower-income households to enter the stock market: these are fees charged by the individual investor for handling a clients’ money. Since Zar X allows investors to work directly in the market, there will be no broker to collect these fees. This, along with the innovative trading and company listing regulations, is a game-changing move by Zar X. It has the potential to make trading accessible for millions of people who were previously prevented from participating.

Trading for Empowerment

Zar X is expected to have a very positive impact upon South Africans for a variety of reasons. This new opening in the market will allow a greater diversity of tradeable shares, thus increasing competition between companies that were previously without representation. Aside from the numerous economic impacts, Zar X stands to have quite a social impact as well. Nel was inspired to create Zar X out of a desire to open up the stock market to a wider group of people. This project will not only increase financial literacy for South Africans with little to no financial experience, but may also be an important empowerment project for South Africa’s working class. Financial autonomy is a large component of self-confidence, and by increasing the scope of representation within the global market, South Africans will be able to view themselves as financially capable global citizens.

 

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Steinhoff raises Poundland offer after hedge fund increases stake

11 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – South Africa’s Steinhoff has improved the terms of its agreed takeover of British discount retailer Poundland, saying its 610.4 million pound ($794.6 million) offer is final.

The increased offer follows a recent move by U.S. hedge fund Elliott to up its stake in Poundland to 17.5 percent, making it the firm’s second largest investor after Steinhoff.

Elliott has a track record of getting bidders to increase their offers. It was among activist investors that last month helped secure an improved offer from Anheuser-Busch InBev for rival brewer SABMiller.

Steinhoff said it is now offering 227 pence in cash for each Poundland share, comprising an offer price of 225 pence and a final dividend of 2 pence.

The revised offer price represents an increase of 5 pence per share over the 220 pence offer announced on July 13, which together with the dividend valued the British firm at 597 million pounds.

“The 5 pence rise in the Steinhoff bid for Poundland is a pretty modest victory for shareholder activism,” said independent retail analyst Nick Bubb.

All other terms and conditions of Steinhoff’s offer remain unchanged from last month’s deal.

Steinhoff said its revised offer is final and will not be increased.

“By offering Poundland shareholders an improved cash offer we aim to bring certainty to the transaction recognising the strength and value of the business and its management team,” Steinhoff Chief Executive Markus Jooste said.

Steinhoff owns the Bensons Beds and Harvey’s furniture chains in Britain. The Poundland deal should be third time lucky after it failed to secure Britain’s Home Retail, which owns Argos, and was also unsuccessful in a bid for Darty in France.

Poundland shares were down 1.5 percent at 221 pence at 07.21 GMT.

($1 = 0.7689 pounds)

 

(Reporting by James Davey; editing by Paul Sandle and Jason Neely)

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South Africa’s business confidence rises to 96.0 in July

8 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s business confidence index rose to 96.0 points in July from 95.1 in June, lifted by a firmer rand and improvements in export volumes and retails sales, a South African Chamber of Commerce and Industry (SACCI) survey showed on Monday.

“South Africa experienced stronger merchandise export trade in June and July 2016, while the rand gained a healthy plus 10 percent on a weighted rand exchange rate against the U.S. dollar, British pound and the euro,” SACCI said in a statement.

SACCI, however, said it was concerned that the International Monetary Fund (IMF) and the South African Reserve Bank had lowered economic growth projections for Africa’s most industrialised country.

“A concerted effort will be necessary to avoid even tighter economic conditions in 2017 as such lower economic growth holds additional repercussions for public finance, unemployment and the real cost of borrowing,” SACCI said.

The IMF expects South Africa’s economy to grow by 0.1 percent this year, while the central bank cut its 2016 growth forecast to zero.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia)

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“Spinach king” turns healthy eating into a business

7 August 2016 Comments (0) Africa, Featured, Leaders

Spinach King

A young South African entrepreneur sources local gardens to produce popular, nutritious baked goods.

A young South African entrepreneur has built a business in healthy baked goods that has earned him the nickname of “Spinach King.”

Lufefe Nomjana, 28, produces spinach-based products including bread, muffins and sandwiches for retail outlets around Cape Town. Nomjana also offers delivery service via bicycle to local offices and consumers who want healthy meals.

He launched the business in 2012 with only 40 Rand (less than $3) in his pocket. Fast forward to 2016 and he operates Espinaca Innovations, which includes a bakery in a renovated shipping container, a café and bakery, and plans for a large-scale bread factory to open in August.

Recognized by the South Africa Breweries Social Innovation Awards in 2014, Nomjana used about $6,000 in prize money to expand his business.

A lesson in entrepreneurship

But the young businessman insists that entrepreneurial thinking has been more important than money on his path to success.

“You’ve got brains and intellectual capital. That will actually open many doors for you,” he said.

Nomjana was just out of school and in his early 20s when he embarked on a business career. He was selling clothes door-to-door but realized he needed to learn more about business and finance if he was going to start a successful business.

“Although I had the ambition and discipline to be self-employed, things weren’t going well,” he said. “I didn’t know enough about stock control and cash flow.”

A five-month course in entrepreneurship taught him that he could build a business while helping people in his community, providing them with access to healthy food.

Spinach king in action

Spinach readily available

That is when he started thinking about spinach, which was growing in abundance at a community garden where he volunteered in Cape Town’s Khayelitsha Township, where he lives. “Spinach grows easily almost everywhere. It’s one of the most nutrient-rich vegetables with many healthy side effects.”

He looked up recipes on the internet, persuaded a neighbor to let him use her oven and his healthy, low-carb spinach bread was born.

He was unable to find investors for his idea. But he went ahead, using the neighbor’s oven at nighttime in exchange for paying for electricity and giving her a supply of bread.

Nomjana baked four loaves a night, then eight and then 16, the most he could produce in his neighbor’s oven.

Building a brand

Profits were small. But while he wasn’t making a lot of money at first, he was building a reputation. Soon, he found he could not keep up with demand.

In the beginning, “it was not about profits. I was building a brand, and educating people” about good nutrition, he said.

A breakthrough came in 2013, when he asked Spar, a local retail chain, if he could use their ovens in exchange for supplying their stores with his baked goods. His production increased dramatically to 200 loaves a day. In addition to Spar, he could supply oven-baked spinach products to local offices.

He soon hired a small sales staff and – eager to speed up deliveries – launched a crowdsourcing campaign to raise money for five delivery bicycles.

By the end of 2013, Nomjana had saved nearly $3,000. With that money and his prize from the SAB Social Innovation competition, he bought his own baking equipment and renovated a shipping container as a bakery.

In 2016, Nomjana produces about 500 loaves daily of his popular low-carbohydrate “banting bread” along with other baked goods. He buys organic spinach from local farmers.

Plans to increase production four-fold

He believes he can increase production to 2,000 loaves once he opens a factory later this summer in nearby Stellenbosch.

At his new café, which also contains a bakery, customers can buy healthy, affordable meals such as gluten-free spinach bread and fresh butternut soup for about $1.

His experience has prompted Nomjana to advise other entrepreneurs to first identify resources they have – in his case locally grown spinach and a neighbor with an oven – before looking for investment.

It may make more sense to just get started with the resources available, the way he did.

“The first capital that you need, more than money, is intellectual capital.”

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South Africa’s growth outlook dilemma for central bank, treasury

29 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s central bank could resume its rate hiking cycle despite a poor growth outlook, its head said on Friday, while its treasury reined in state companies to avoid ratings downgrades and a long economic slowdown.

Africa’s most industrialised country is on the brink of its first recession after contracting 1.2 percent in the first quarter as key sectors shrunk due to severe drought and falling commodity prices.

Governor Lesetja Kganyago said the central bank’s monetary policy committee (MPC) would raise rates if inflation, fuelled in part by a weaker rand, remained elevated.

The rand has weakened nearly 20 percent against the dollar in past 12 months as looming rate hikes in the United States, the threat of a downgrades to “junk” status and diminished business and consumer activity locally weighed on its value.

“Although the MPC remains ready to respond to renewed inflation pressures, it remains mindful of the weak state of the economy,” Kganyago said.

Headline inflation has been higher than the Reserve Bank’s (SARB) upper target of 6 percent since January, prompting it to lift lending rates by 200 basis points from early 2014 despite poor growth.

The bank sees growth averaging zero percent in 2016.

“The rand exchange rate has been sensitive to these developments, with elevated levels of volatility,” said Kganyago said, adding the next round of rating reviews in December were key.

South Africa is also in a fiscal bind, with government’s plan to boost growth to an annual 4 percent to tame widespread unemployment, poverty and the growing cost of borrowing facing a number of obstacles.

Finance Minister Pravin Gordhan on Friday warned state firms that they would have to live without state bailouts of around $35 billion as treasury focused on achieving the deep spending cuts it promised in the February budget.

“The key concern that ratings agencies and others would have is that as a result of levels of mismanagement, those guarantees shouldn’t be called out at any stage,” he said.

On Monday, Fitch announced it had downgraded South Africa’s local currency debt. Fitch and S&P Global Ratings now both have South Africa’s local and foreign currency debt ratings a step away from subinvestment.

Maya Senussi of Roubini Global Economics said local government elections on Aug. 3, where the ruling African National Congress is expected to face a stern test, could worsen the dilemma for government before the general election in 2019.

“The big danger is that fears about the 2019 general election will prompt populist measures from the ANC, exerting more pressure on the stretched Treasury and further delaying much-needed reforms,” the economist said.

($1 = 14.1600 rand)

 

(By Mfuneko Toyana. Additional reporting by Stella Mapenzauswa; Editing by James Macharia and Tom Heneghan)

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