COUNTRY PROFILE

South Africa Alive with possibilityASTABLE, PROSPEROUS DEMOCRACY, SOUTH

AFRICA IS THE AFRICAN CONTINENT’S ECONOMIC

AND MANUFACTURING POWERHOUSE AND A GATE-

WAY TO TRADE AND INVESTMENT OPPORTUNITIES

As South Africa begins itssecond decade of democ-racy, the national moodremains buoyant and pos-itive. There is a continu-ing sense of optimism,with opinion polls show-ing that up to 90 percentof the population believethe country is going in theright direction. Businessand consumer confidence

are reported to be at their highest levelssince the 1980s.

Since the end of apartheid in 1994, SouthAfricans have embraced economic, politi-cal, and social freedom with enthusiasm.After the huge progress made over thepast ten years, the economy is moving to-ward a higher trajectory of growth and de-velopment. Freed from the shackles of apoliticized economy designed to benefitonly a minority of the population, today’sSouth Africa is firmly focused on inclusion,empowerment, and equity.

Macroeconomic stability, increased com-petitiveness, and improved production pro-vide a strong foundation for the future.President Thabo Mbeki, who returned to of-fice in April for his second five-year term af-ter the country’s successful third round ofdemocratic elections, has promised “evengreater advances.” Growth, development,and modernization are at the top of the

African National Congress (ANC) adminis-tration’s agenda, as it works to raise therate of investment in the country and reducethe cost of doing business.

Particular attention is being paid to en-couraging the further growth of small, medi-um and micro enterprises (SMMEs), andto empowering sectors of the communitythat have hitherto been marginalized. Thegovernment is committed to a vigorous im-plementation of policies of urban renewaland rural development through an ex-panded public works program aimed atcreating one million jobs and to the ex-pansion of micro-credit.

“Our aim is to involve more and morepeople in economic activities,” says Ministerof Trade and Industry Mandisi Mpahlwa.“That means giving people skills, enablingthem to start small and medium enterpris-es and solving the problems of access tofinance. We are growing the size of oureconomy, opening up more and more op-portunities, and in that way we will be ableto achieve true empowerment which is in-clusive of large numbers of people.”

South Africa has the biggest and one ofthe most diverse economies on the Africancontinent. GDP is forecast to increase grad-ually over the next few years. In the first halfof this year the economy grew by more than3 percent, with expansion in sectors acrossthe board, from agriculture and manufac-turing to services. The second quarter of the

Growth, development andmodernization are at thetop of the agenda

AREA: 470,462 sq. miles

POPULATION: 42.7 million

MAIN CITIES: Pretoria(administrative center); Cape

Town (legislative center);Bloemfontein (judicial center),

Durban, Johannesburg

GDP: $160 billion (2003).Growth Rate: 1.9 percent

(2003 est.) Per Capita:purchasing power parityUS$10,700 (2003 est.)

NATURAL RESOURCES:gold, chromium, antimony,coal, iron ore, manganese,

nickel, phosphates, tin,uranium, gem diamonds,

platinum, copper, salt, naturalgas

INDUSTRIES: mining,automobile assembly,

metalworking, machinery,textile, iron and steel,

chemicals, fertilizer,foodstuffs

MAIN EXPORTS: gold, otherminerals and metals,

agricultural products, motorvehicles and parts

MAIN DESTINATIONS OFEXPORTS: UK, US, Japan,

Germany, China, Italy

▼ ▼ ▼

HISTORICALLY, South Africa has reliedon primary commodities such as gold, plat-inum, and diamonds as its major earnersof foreign exchange. Today, however, val-ue-added manufactured products are mak-ing an increasingly significant contributionto the country’s export success.

Expanding the base of the economy bygrowing the manufacturing base and de-veloping industry is a key government ob-jective. The sector has grown substantial-ly and now accounts for approximately 28percent of GDP.

Although the resources sector remainsimportant, manufacturing and high tech-

nology manufacturing industries are in-creasingly seen as offering the greatest op-portunities for growth and job creation. Inseveral specialized sectors, such as rail-way rolling stock, synthetic fuels, and min-ing equipment, South Africa is now regardedas a world leader.

The automotive industry in particular hascome a long way in the last decade. As theleading industry in the manufacturing sec-tor, it contributes 6.6 percent to GDP, andat present South Africa is responsible forapproximately 84 percent of Africa’s vehi-cle output. Automotive exports have risento around 15 percent of total exports by val-

ue, from just 4 percent in 1995, and haveovertaken that of South Africa’s exports ofgold.

“Our exports are much more diversethan they were ten years ago,” says MandisiMpahlwa, Minister of Trade and Industry.“Gold now forms a reduced percentage ofthe total because you are seeing more andmore value-added manufactured productsgetting into the export basket.”

The level of exports has risen substan-tially as South Africa has become increas-ingly integrated into global markets afterdecades of isolation under the former

Focus on manufacturing as exports continue to rise

year marked an increase in real gross do-mestic product for the twenty-third con-secutive quarterly period—the longest pe-riod of uninterrupted quarter-to-quartergrowth since the data became availablein 1960.

According to the South African ReserveBank, the country’s central bank, the tra-jectory of growth has steepened noticeablysince the second quarter of 2003, witheach quarter's growth rate being higher thanthe one preceding it.

Higher economic output has been stim-ulated by lower interest rates, the gov-ernment’s prudent fiscal policy, and high-er international prices for commodities.Export volumes have risenconsiderably, with growthin mining exports led byplatinum and coal, and in-creased foreign demandfor the country’s manu-factured products.

Alec Erwin, Minister ofPublic Enterprises, says,“There are not many na-tions around with a trackrecord like South Africa’s for solving prob-lems, building a nation and reforming aneconomy. The economy has performed welland will continue to grow. The important thing,as the President has said, is that we focusboth on the need to be highly competitiveand on the need to eliminate poverty—thatwe do not lose sight of what the job of thegovernment is, which is to improve the livesof its people.”

Foreign investment is virtually unre-stricted in South Africa with all businesssectors open. Investors benefit from acompetitive marketplace, an efficient busi-ness climate, low labor costs, excellent in-frastructure, and low cost electricity.

Incentives include zero rating for valueadded tax (VAT) on exports of goods andservices and relief from various customsand excise duties, and there are specialtax benefits for investors in strategic in-dustrial projects.

South Africa’s infrastructure is modernand efficient and among the best on theAfrican continent, making it an excellentbase for accessing regional and interna-tional markets. The selection of the coun-try by FIFA as the venue for the 2010Soccer World Cup is prompting a new lookat the transport system.

“This opportunity will help us to pumpmoney into infrastructure development

and expand our transportnetworks,” says Ministerof Transport Jeff Radebe.The focus is on upgrad-ing the national logisticalsystem by improving thelinks between rail, road,airports, and seaports.

South Africa has goodrelations with its region-al neighbors and is a key

player in conflict resolution and moves toadvance African socio-economic devel-opment. As President Mbeki says, hiscountry remains committed to “building apeaceful, democratic and prosperousAfrica.”

South Africa is a fully-fledged memberof the South African Customs Union(SACU) and the Southern AfricanDevelopment Community (SADC), andduring its recent tenure as chair of theAfrican Union, successfully intervened tobring peace in the war-torn DemocraticRepublic of Congo and Burundi. It is a driv-ing force behind the New Partnership forAfrican Development (NEPAD) and the

new permanent seat of the Pan AfricanParliament (PAP).

Wiseman Nkuhlu, Chairman ofNEPAD’s Steering Committee, says thatit is almost inevitable that South Africaplays a leading role in Africa’s socio-eco-nomic development and that investmentby South African companies into neigh-boring countries has a positive effect.

“South Africa stands to benefit fromimproved stability on the continent be-cause it has a private sector that caninvest in African countries,” he says.“South African companies are movinginto Africa and acting as a kind of cat-alyst, showing that you can make mon-ey in countries like Malawi, which en-courages companies from other parts ofthe world to come in.”

Lower interest rates,prudent fiscal policy and

higher internationalprices have pushed theeconomy onto a higher

trajectory of growth

Continued on Page 2

Johannesburg is A f r ica’s most power fu l commercia l center—almost 75 percent o f South A f r ican f i rms have thei r headquarters there

PRESIDENT THABO MBEKI says h is secondterm wi l l br ing even greater advances

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South Africa

WITH a huge diversity of agricultural pro-duction made possible by its wide varietyof climatic zones, South Africa has a well-developed agricultural sector that providesfor most of its domestic food needs and en-ables it to export corn, wool, sugar, peanuts,tobacco, and other farm products.

Land reform—deracialization and re-distribution of wealth in the agricultural sec-tor—is an issue at the heart of South Africa’sprogress toward a more equitable and in-clusive society. The apartheid era left whitefarmers controlling more than 80 percentof the arable land and restricting almost 80percent of the population to the remaining20 percent. The need to broaden land own-ership, and at the same time to increaseoverall agricultural productivity, remainsone of the most important challenges thecountry faces.

The land reform program is run on a fairprice, willing-seller-willing-buyer basis, andthe government has sought to build a con-sensus around its implementation. “That issomething that has been unique to SouthAfrica,” says Angela Thoko Didiza, Ministerfor Agriculture and Land Affairs. “We want-ed to ensure that the majority of SouthAfricans would be behind the government’sprogram.”

The program has three components:land restitution, to restore land to the vic-tims of forced removals between 1913 and1994; land redistribution, to transfer 30 per-cent of agricultural land toblack people; and tenure re-form, to address the insecu-rity of farm workers, labor ten-ants, and people living on stateand communal land.

The government has giv-en its assurance that the freemarket system will remain thebasis of the redistribution pro-gram, and initial deadlines setfor the transfer of 30 percentof white-owned land havebeen extended to 2015. In ad-dition to its social aspects,

land reform is closely con-nected to agricultural devel-opment. “The impact musttranslate into equity and eco-nomic growth in the agricul-tural sector,” says Ms. ThokoDidiza.

New farmers, includingyoung people and women,are being assisted to enter thesector at a commercial lev-el, either as individuals or ascorporate groupings. The gov-ernment has committed R210million ($34.5 million) in the

2004/05 financial year under aComprehensive Agricultural SupportProgram (CASP) aimed at improving andincreasing support for emerging farmers.

Making an important contribution to theland reform process as a provider of fi-nancial services to agriculture and relatedrural sectors is the Land and AgriculturalDevelopment Bank (Land Bank), whoseclients include developing farmers, estab-lished commercial farmers and agribusiness.The bank supports economic growththrough the provision of retail, wholesale,project, and micro-financial services to agri-culture and related rural services. Its loan

Land reform is a key component in thedevelopment of the agricultural sector

South Africa’s climate diversity favors a great variety of quality agricultural products

GEORGE ORICHOA ct ing CEO of

L and Bank

portfolio represents approximately half theagricultural lending of the country.

Land Bank has developed specific prod-ucts to help new entrants into the agricul-tural sector. More than 165,000 clientshave benefited from the bank’s micro-fi-nance program since its inception in April1998.

As a 100 percent state-owned institu-tion answerable to the Minister of Agricultureand Land Affairs, Land Bank’s programsare closely aligned with the government'skey strategic objectives. One of the bank’spriorities is to increase its focus on financ-ing black economic empowerment withinthe sector.

George Oricho, Acting CEO of LandBank, explains that the bank benchmarksits performance against banks in the pri-vate sector. “We generate profits like anyother institution, but then we ring-fence aportion for development purposes. Althoughwe are owned by the government, we donot get budgetary transfers. We raise ourmoney from the money markets like any-body else, and therefore we need to con-tinually give an assurance to the market.”

The bank recently recorded a net prof-it of R247 million ($40.6 million), comparedto a R1.4 billion ($226 million) loss the pre-vious year. The number of loans grantedgrew by 14 percent.

Land Bank’s activities are currently lim-ited to South Africa, however, they are like-ly to be extended in the future. “We havestarted to engage with the NEPAD agenda,”says Mr. Oricho. “We will start looking to fi-nance across the border to make resourcesavailable for the rest of Africa, maybe start-ing within the SADC environment.”

apartheid regime, reaching 28.2 percent ofGDPin 2003, up from 11.5 percent a decadeago.

The European Union is the country’smost important trading partner and its lead-ing source of investment. Europe accountsfor approximately half of South Africa’s to-tal exports, and 90 percent of all trade bar-riers between the EU and South Africa willbe removed over the next decade under atrade, development, and cooperation agree-ment (TDCA). South African exports to theEU have gone up by 46 percent since theprovisional application of the TDCAin 2000.

The United States is another key mar-ket, and trade between the two nations hasincreased steadily in recent years, boost-ed significantly by the Africa Growth andOpportunity Act (AGOA), which allows du-ty-free access of South African exports tothe U.S. market.

South Africa has been one of the lead-ing beneficiaries since AGOA was imple-mented in 2000, both in increased exportsto the United States and inward AGOA-re-lated investment. Its textile, clothing, vehi-cle manufacturing, and agricultural sectorswill also benefit from a free trade agreementcurrently being negotiated between theUnited States and the South Africa CustomsUnion (SACU).

Regional trade has also increased anda trade protocol agreement between SouthAfrica and its SADC partners aims to pro-vide duty-free treatment for 85 percent of

regional trade by 2008, extending to 100percent by 2012. “If you take this regionalone, you are looking at a market of 180million people, compared to the 42 millionSouth Africans,” says Mr. Mpahlwa.“Equally, South Africa provides opportuni-ties for investors looking at the wider con-tinent.”

At present, manufacturing is concen-trated in South Africa’s six major cities,which among them account for more thanhalf of GDP, with Johannesburg and CapeTown continuing to enlargetheir share. However, movesare being made to extendeconomic activity to other partsof the country.

Development has startedon the first of a planned se-ries of industrial developmentzones (IDZs)—purpose-builtindustrial estates specificallydesignated for new invest-ment in export-driven indus-tries. The 30,000-acre CoegaIDZ, South Africa’s largestpublic infrastructure project,will revitalize the Eastern Caperegion.

The zone is being developed by theCoega Development Corporation (CDC),a private company, in which the national andprovincial governments are the only share-holders. Situated 12 miles east of the cityof Port Elizabeth, it is adjacent to a new deep-water port currently under development on

the Coega River, which is forecast to be-come a hub for sea traffic. The zone is al-ready well served by transportation net-works, a skilled labor force, and utility serv-ices, and world-class industrial infrastruc-ture, with inter-modal transportation link-ages and cost-effective bulk services, isbeing provided.

“Industrial zones are a serious attemptto decentralize and a good way to marshalresources, typically bringing together bothforeign and domestic investors and the gov-

ernment,” Mr. Mpahlwa ex-plains. “The three that wehave declared so far will giveconfidence to the private sec-tor and to foreign investorsthat IDZs can work and areworking.”

The Minister urges foreigninvestors to look at SouthAfrica’s consistency of poli-cy and the steady progressit is making as a society. “Wehave institutions that com-pare with the best in the worldand provide a very stable andpredictable environment from

which to access large markets,” he says. “We see this country as having the po-

tential to become a hub in many ways: eco-nomically, culturally, politically, and social-ly. This is a country that, given a little time,is really going places. I really believe that.There is so much more that we can do,”concludes Mr. Mpahlwa.

Focus on manufacturing as exports rise

MANDISI MPAHLWAMinister o f Trade and

Industr y

Continued from Page 1

Sense of national prideunderlies Brand South AfricaPEOPLE who visit SouthAfrica often express theirsurprise at the gap betweenthe preconceptions that theyhad before they came andthe reality that they experi-ence when they arrive. TheSouth African authoritiesare so positive about whatthe country has to offerthat they regard everyonewho lives there and every-one who visits the coun-try—from tourists to busi-ness people— as a po-tential ambassador.

At the same time, recent researchhas shown that ten years after the birthof the Rainbow Nation more than 90percent of South Africans identifystrongly with their country and feelproud and enthusiastic about it.

“We are especially excited by thenew, more forward-looking approachthat South Africans are adopting withwhich to view themselves, the countryand the challenges that we face,” saysYvonne Johnston, CEO of theInternational Marketing Council (IMC),which has the job of spreading a posi-tive and unified image of South Africaacross the world.

Established in 2000 at theinitiative of President ThaboMbeki, the IMC is a private-public partnership dedicated topromoting Brand South Africa.Under the slogan “Alive withPossibility,” its message is thatSouth Africa is a country to in-vest in, to do business with,to trade with, and to visit.

“We have incredibleachievements to showcase,”says Ms. Johnston. “We areboundary breakers, we don'tlet other people set the agen-da for us, and we do it all with

wonderful African soul, spirit, and energy.Above all else, we are a can-do nation, andour tenacity, determination, and hunger tosucceed allows us to take our rightful placein the global village.”

The campaign is clearly working. Onerecent study assesses the value of theSouth African brand as being equal tothose of top international companies suchas Coca-Cola, Microsoft, and IBM.According to research by Roger Sinclair,a professor at the University of theWitwatersrand, 16 percent of the coun-try’s income is derived as a result of thestrength of South Africa as a brand.

Continued on Page 3

YVONNE JOHNSTONCEO of

the IMC

South Africa

Private Bag X84, Pretoria 0001, RSAthe dti Customer Contact Centre, Local: 0861 843 384International: +27 12 394 9500, http://www.thedti.gov.za

BEE’s social and economic goals are closely intertwined.Poverty eradication and the reduction of inequalities are highsocial priorities, the achievement of which would create an environment characterised by the certainty required for high levels of business investment. Policies of job creation and economic inclusion help the building of a better society and also provide business with theopportunity to harness the full potential of South Africa’shuman capital. Likewise, policies of empowerment through,for example, the encouragement of black-owned SMEs, aresocially progressive, and also foster entrepreneurship andinnovation, improving overall competitiveness.

BEE has been designed with investment in mind. the dti has been and will continue to work in partnership with the private sector to design and implement innovative, business-principled schemes, adding value to economic activity andestablishing a path to prosperity for all.

BROAD-BASED BLACK ECONOMIC EMPOWERMENT (BEE) is a result

of the South African government’s commitment to redressing inequities

of the past and the creation of an inclusive society. Such social goals

are not to be achieved at the expense of business investment. In fact,

BEE is an integral part of South Africa’s growth strategy.

addressing social inequitiesin a market economy.

BEE

Department:Trade and IndustryREPUBLIC OF SOUTH AFRICA

Soul , spi r i t and energy : South A f r icans see themselves as a “can do” nat ion and are opt imist ic about thei r countr y ’s future

A crucial part of the campaign hasbeen a drive to encourage SouthAfricans to feel a sense of pride in theirnation and the achievements of its firstdecade of freedom, so that every cit-izen can act as an ambassador fortheir country in their contact with theoutside world.

“Our challenge is not to convert SouthAfricans into brand-loyal supporters butrather to equip them with informationand mobilize them as advocates for thecountry,” says Ms. Johnston. “MarketingSouth Africa is everybody's business, as

every South African stands to benefitfrom a well-marketed South Africa.”

Joel Netshitenzhe, CEO of theGovernment Communication andInformation System (GCIS), says someof the best potential ambassadors forSouth Africa are companies that are al-ready doing business there.

“There are many international com-panies based here that are doing verywell in the areas of bio-technology, au-tomotive sector, business processing,mining, and so on,” he says. “We wantthem to act as ambassadors, not bytalking about things that do not exist but

on the basis of their own concrete ex-periences.”

Hosting major international eventssuch as the Cricket World Cup, theRugby World Cup, and the WorldSummit on Sustainable Developmenthave all added to South Africa’s inter-national profile, and even greater world-wide exposure is to come when thecountry stages the 2010 Soccer WorldCup. The event will focus the attentionof billions of television viewers on SouthAfrica and can be expected to give amajor boost to tourism, exports, andinvestment.

Sense of national pride underlies Brand South AfricaContinued from Page 2

ONE of the leading maritime trading nations, South Africa com-mands 6 percent of the world’s sea trade. Almost half of thecountry's exports and imports are transported by sea, with anaverage of 13,000 vessels carrying 500 million tons of cargopassing through its ports annually.

The seven major harbors feature high on the list of Africa'sbusiest, with Durban, Africa’s premier port, heading the list.Container traffic has been forecast to double and double againby 2020, and billions of rands are being spent upgrading portfacilities to increase handling capacity.

Major shipping lanes pass along the South African coastline inthe south Atlantic and Indian oceans. The government’s vision isto develop a world-class maritime industry, which will grow in size,stimulate economic growth and development, facilitate trade, com-ply with international safety standards, and deliver efficient andquality services. It aims to substantially increase the number ofSA-flagged vessels and develop new globally competitive ship-ping companies.

Central to that vision is the work of the South African MaritimeSafety Authority (SAMSA), whose task is to ensure the safetyof life and property at sea, prevent pollution, and promote SouthAfrica as a maritime nation.

“We have recognized the possibilities for growth,” says SiphoMsikinya, SAMSA’s Chief Executive Officer. “Sitting where weare at the southern tip of Africa, we get lots of maritime activity.It may not all call into our ports, but it is always passing round

us. Our objective is to see how we can encourage that traf-fic into our ports and create business opportunities for growth.”

SAMSA’s duties also fall under international jurisdiction, interms of the International Maritime Organization and other in-ternational statutory bodies. The organization is meant to beself-financing from charges raised from the services it pro-vides and through levies raised on all vessels calling at SouthAfrica’s ports.

“Safety does not come cheap,” says Mr. Msikinya. “It’s a costlyendeavor to undertake, but South Africa has no option but to ex-cel in terms of maritime safety, particularly in the winter, when wehave some very tough seas. We are also aware that as a devel-oping nation we have to make sure it is effective and facilitates eco-nomic growth and development.”

The Port of Durban is the first African port to have implementedthe Container Security Initiative (CSI)—a U.S. anti-terrorism ini-tiative designed to prevent the smuggling of terrorists or terroristweapons into the United States in ocean-transported cargo con-tainers. Around 6 percent of Durban’s export container traffic ismade up of U.S.-bound containers—approximately 33,000 con-tainers a year.

Safe ships and clean seas a priority for growth of maritime industry

Fast and ef f ic ient t ransport has won an enthusiast ic responsefrom commuters

Creating a business environment in whichopportunity flourishesWith the most highly sophisticated, well regulated, and techno-logically advanced financial market on the continent, South Africais on the way to becoming the financial capital of Africa. Alongwith other sectors of the economy, financial services are gradu-ally undergoing a transformation that will both make them morerepresentative of the modern South African economy and openup their potential even more fully.

Nearly half of South Africa's bigger asset management com-panies already comply with a voluntary financial services em-powerment charter, which sets a target of 25 per-cent black ownership by 2010—of which at least 10percent has to be direct ownership.

Paolo Cavalieri, Group CEO of Hollard Insurance,South Africa’s largest independent insurance and in-vestment group, says the charter is part of an ongo-ing process that will result in a stronger South Africaand greater opportunities for all. “What we have to doin South Africa and in our industry, and what we aredoing in our company, is a combination of the natu-ral evolution of business and trying to bridge the gapand heal the wrongs of the past. In addressing thewrongs of the past we are creating a future for our-selves, a future we all want to be part of and a futurethat spells opportunity ultimately.”

Twenty-five years in the business, Hollard Insuranceinsures around five million South Africans. It sees itself as one ofthe companies that are starting to change the service ethic of in-surance in South Africa. Says Mr. Cavalieri, “Standards are rising,there is a higher level of transparency and a strong focus on theinterest of the consumer. The financial services sector in South Africais comparable to some of the best in the world. This is a fantasticmarket for people to come and test new ideas.”

The group is expanding to select markets across the globe, with

businesses in Australia, Mozambique, and Namibia, and has plansto add India and New Zealand this year. Mr. Cavalieri elaborates,“We want to develop our business internationally from a South Africanbase. We believe that the South African flavor that we have andthe intellectual capital that we have developed in this country hasexport potential. Our objective is to export our know-how to othermarkets where we feel it can work for us.”

Mr. Cavalieri says there has not been a higher level of confi-dence in the economy for 40 years. “This is the market that the

multinationals should be looking at. The dramaticchanges we have seen in the last ten to 14 years issignificant and spells real opportunity from an eco-nomic growth perspective and therefore from an in-vestment perspective.”

A prime example of a South African success sto-ry is Suzanne Ravenall, who came to South Africaas a 27-year-old immigrant from the United Kingdomand went on to found the operational outsourcing com-pany IDCS Holdings. “There are a lot of things in thiscountry that are far ahead of what is happening inEurope,” says Ms. Ravenall. “People here are opento new ideas, and there’s an incredible desire to dobetter, to get on and make things work. You can doanything you want to in this country, if you put yourmind to it.”

IDCS has grown dramatically since commencing operations in1997, increasing its turnover by 515 percent and currently with as-sets exceeding R20 million ($3 million). The company, which hasglobal ambitions, is proudly South African.

“Within the next six months we want to open up in New Yorkand the UK and then Asia Pacific and Tokyo thereafter,” says Ms.Ravenall. “The product we have created is a South African prod-uct and it is going to be sold as a South African product.”

PAOLO CAVALIERIGroup CEO of Hol lard

Insurance

South Africa (Part two) Alive with possibilityGAUTENG: The economicpowerhouse decides to get smart

IN THE PAST three years, Gauteng hasearned half a billion rand ($80.5 million)in revenue from film production. The in-dustry is seen as potentially a majorcontributor to economic growth, and theprovincial government is giving it its fullbacking with moves to turn Gauteng in-to the location of choice for both localand international filmmakers.

Film production costs in South Africaare considerably cheaper than in theUnited States, Australia, or New Zealand,and Gauteng offers a range of diverseand spectacular locations such as theAfrican bush, industrial scenery, andAmerican andEuropean-style set-tings.

Other attractionsfor filmmakers in-clude a highly skilledlabor force, includ-ing technicians;world-class facilities,including well-es-tablished andequipped post-pro-duction digital facil-ities, audio, graph-ics, and animationhouses; state-of-the-art rental equip-ment; a highly de-veloped infrastructure; a compatibletime zone with Europe; and all-year-round sunshine.

Gauteng has taken note of the ben-efits that New Zealand has reaped sincethe three Lord of the Rings films weremade there. “What that did for NewZealand’s tourism industry was huge,”says Themba Sibeko, CEO of theGauteng Film Office (GFO). “That’s whatfilm can do, and that’s what we are aim-ing toward doing, bringing tourism andfilm together.”

Launched by the Gauteng EconomicDevelopment Agency in 2000, the GFO

is a non-profit company that exists tofacilitate, promote and market new filmedproductions. It assists both local andforeign film productions, and seeks tocontribute to the development of thefilm and television sector through strate-gic partnerships and linkages.

Around 75 percent of the film and tel-evision industry in South Africa is basedin Gauteng, mainly in Johannesburg,which is also the base for all of SouthAfrica's television broadcasters for filmmaking in South Africa.

“The film sector can create jobs moreinstantaneously than any other,” ob-

serves Mr. Sibeko. “They may be short-term jobs, but they are jobs neverthe-less.”

One of the most recent internationalproductions filmed in Gauteng was HotelRwanda, a tri-partite production be-tween South Africa, Italy, and the UnitedKingdom, starring Nick Nolte, Don Chito,Sophia Lokendo and a South Africancast, which won the audience award atthe Toronto International Film Festival.More than R60 million (US$10 million)of the production costs were spent inthe province, and filming provided workfor more than 10,000 local people over

three months, from extras to workers inconstruction, hotels, transportation,telecommunications, security, catering,and dry cleaning.

Plans are being made to develop aFilm City complex in Johannesburg,equipped with Hollywood-class soundstages. The project will be a public-pri-vate partnership, designed to cater to lo-cal and international film producers,providing stage, production, and train-ing facilities.

Local filmmakers will be helped tocompete in the international film andtelevision market. “The initiatives we

are taking, and thedevelopment of theFilm City, are notjust to benefit theinternational pro-ducers but also ourlocal filmmakersand the immediatecommunity,” Mr.Sibeko explains.

“We are brand-ing Johannesburgthe home of inde-pendent film mak-ing. As much as wewant foreign-basedproductions tocome to South

Africa, what we are trying to encour-age is an environment where we cancreate a sustainable film industry—much like Brazil, Venezuela, Argentinaand Chile— where we are able to makeour own films and are not totally relianton foreign-based productions.”

Ultimately, the objective is to makeGauteng a hub of film making, with 15to 20 films coming out of the provinceannually and traveling the world. “Wehave seen what South American cin-ema has done internationally,” saysMr. Sibeko. “That’s where we want tosee South African cinema go.”

A RECENT South African tourism reportshowed that more than half of the 5.6 mil-lion visitors to the country in 2003 pre-ferred Gauteng as their destination.Gauteng also experienced the highestspending. Of the R53.9 billion (US$8.7billion) spent by tourists, R18.7 billionwas spent in the province.

Gauteng boasts by far the largest con-centration of tourism-related enterprises inSouth Africa and has been successfully po-sitioning itself as a destination catering to avariety of tourism niche markets. It has builta reputation as a shopping and entertain-ment hub, a business tourism center, a lo-cation of huge cultural and historical signif-icance, and the home of competitive sport.

“Visitors to our province are alwayspleasantly surprised by what they find,even more so when realizing how inex-pensive, by international standards, SouthAfrica as a destination is,” says TerryTselane, CEO of Gauteng Tourism Authority.“The high rate of return of travelers is veryencouraging. First time visitors clearly can’tget enough, hence our positioning ofGauteng as the Waya Waya province—the proverbial place that never sleeps. Youcan’t help but want to come back.”

Gauteng attracts a mix of vacation andbusiness visitors, but receives by far thegreatest proportion of business interna-tional travelers of all the provinces. The au-thorities regard business tourism—includ-ing meetings, conferences, and exhibi-tions—as a key area for development.

The province is firmly established as ashopping hub. According to Mr. Tselane, “Inrecent years, tourism has been boosted bycross-border shopping from regional Africa,which is indeed the single largest genera-tor of revenue for Gauteng, and has un-doubtedly benefited from a buoyant do-mestic economy.”

Gauteng is expecting major benefits toflow from international coverage of SouthAfrica’s hosting of the 2010 Soccer WorldCup in which Johannesburg will play a

prominent part. Mr. Tselane says the wholeof Africa stands to gain from the event. “Itputs Africa center stage in a global sport-ing event that rivals the Olympic Gamesin scale, scope, and sheer spectacle,” hesays. “It will present the world with the im-age of a modern, progressive Africa—with all her aspirations.”

High on the list of things to see in Gautengis the Cradle of Humankind, a World Heritagesite in the northwest of the province, whichincludes the Sterkfontein Caves where ev-idence of the earliest human ancestors hasbeen found. The site has the potential to be-come a major international tourism attrac-tion and plans have been made to promotepublic-private sector partnerships. Up to500,000 visitors annually are expected oncethe new interactive museum that has beenbuilt there is fully operational.

Trish Hanekom, Head of Gauteng’sDepartment of Agriculture, Conservation,Environment, and Land Affairs (DACEL),says, “The building is on the peripheryof the site because the cave system it-

self is quite sensitive. Throughput of thecaves can’t really be more than 500 peo-ple a day, which means there need tobe other attractions in the area. For aninvestor, it’s a good place to make mon-ey in tourism.”

Alonger term tourism development proj-ect but another potentially major attractionis Dinokeng, ‘the place of rivers,’ an un-spoiled area in northeastern Gauteng, whichis to be developed for game viewing of rhi-no, elephant, lion, buffalo, and leopard.

For many visitors to South Africa, the firststop will be Johannesburg InternationalAirport, the busiest airport in Southern Africa,which receives 11 million travelers a year.“All tourists, whether they are vacationtourists or business tourists, will comethrough Johannesburg at some stage orother,” says Neil Devenaux, of GautengEconomic Development Agency. He con-tinues, “Even if they are going to CapeTown, they will come through Johannesburg,and it is a magnet for business people trav-eling to Southern Africa.”

Lights, camera, action! Province seeks lucrative role as the location of choice for movie making

Gauteng attracts tourists and business travelers withshopping, sport and the Cradle of Humankind

Film product ion could br ing s igni f icant benef i ts to Gauteng, including job creat ion

Caves contain ing ev idence of ear ly human ancestors are a major v is i tor at t ract ion

Extending over less than 2 percent ofSouth Africa’s surface area, GautengProvince is the smallest of the coun-try’s nine provinces. What Gautenglacks in size, however, it more thanmakes up for in economic dynamism.Indeed, it is South Africa’s econom-ic engine, accounting for 40 percentof the national GDP, and 9 percentof Africa’s entire GDP. The financialand industrial sectors are concen-trated in the province and around 27

percent of total manufacturing takes place there.The population enjoys the highest per capita in-

come level in South Africa. Gauteng is the wealth-iest and most urbanized province, and the coun-try’s premier consumer market. Collective purchasingpower is 64 percent above the national average.Seventy percent of SouthAfrica’s labor force residein Gauteng, which hasthe most cosmopolitanpopulation in the coun-try, with people from allover the world. By theend of this year, the num-ber of people living thereis expected to exceednine million.

In addition to being themost technologically ad-vanced province,Gauteng is a transporthub, well positioned foraccess to the countries inthe Southern AfricanDevelopment Community (SADC). Over the nextthree years, there are plans to spend R15 billion($2.4 billion) on comprehensive development of theprovinces’s infrastructure, including housing, schools,healthcare facilities, sports and recreation facilities,and roads.

Urban regeneration projects have already trig-gered a boom in the property market inJohannesburg, Gauteng’s capital city. The FNBStadium, popularly called Soccer City, will be oneof the key venues when South Africa hosts the 2010Soccer World Cup and is being upgraded to makeit the biggest and most modern football stadium inAfrica. Crime, which once damaged Johannesburg’s

reputation, is now far less of a problem, thanks towidespread use of camera surveillance and moreeffective policing.

“We have seen a resurgence of investments backinto the city in a big way,” says Paul Mashatile, theMember of the Executive Council for Finance andEconomic Affairs in Gauteng’s Provincial govern-ment. “People are queuing to buy properties herebecause it is safe, and we are encouraging residentialdevelopment and renovation. We want Johannesburgto be not just a city of office blocks but a place wherepeople live.

“I am confident that in the next three or four yearsJohannesburg is going to be one of the most impor-tant cities, not only in Africa but in the world,” headds. “Everybody is going to be doing business here.”

Mr. Mashatile took up his post, and the runningof Gauteng’s R30 billion (US$4.8) budget, in May

promising to “consolidatewhat exists and breaknew ground” in the de-velopment of theprovince’s economy.

The original corner-stone of the economywas the mining indus-try—Gauteng meansPlace of Gold— but to-day the predominantsectors are manufac-turing, trade, and finan-cial services. Economicactivity is now spear-headed by a burgeoningcall center industry, a

The v iew f rom the spectacular Nelson Mandela Br idge in Johannesburg, which was of f ic ia l ly opened by the former President h imsel f in July

ATTRACTING foreign direct investmentis a priority for Gauteng, which is trans-forming its prospects for economic andsocial development through a series ofmajor strategic infrastructure projects.

The provincial government’s multi-bil-lion rand Blue IQ initiative is aimed to at-tract R100 billion ($16 billion) of inwardinvestment over ten years. Eleven megadevelopment projects have been de-signed to promote strategic private sec-tor investment in key growth sectors ofthe economy, such as smart industries,high value-added manufacturing, tourism,and transport.

The Gauteng Economic DevelopmentAgency (GEDA) has been working toboost new investments to R1.8 billion($300 million) this year. Last year, Gautengattracted approximately R1.6 billion of in-ward investment, resulting in the creationof more than 2,500 jobs.

Charles Jonker, GEDA’s CEO, saysthe province is the obvious choice for theinvestor. “In terms of South Africa, and

Africa as a whole, Gauteng has no realcompetition. There is a definite criticalmass in terms of purchasing power, knowl-edge and decision making in Gauteng,and it gives the initial foreign investor thefirst step into the African market.”

Neil Devereaux, GEDA’s ManagingDirector, highlights the scale of the econ-omy, the well-developedinfrastructure and cheapelectricity. ”Gauteng’seconomic base is self-sustaining. It is thebiggest in Africa. Hereyou can come and op-erate in a very well-es-tablished financial andmanufacturing system,”he says.

At present, foreign direct investmentin Gauteng is dominated by China, whichaccounted for 87 percent of the total gen-erated in the first six months of this year.GEDA has set itself the target of gener-ating 20 percent of foreign direct invest-

ment from the United States and 10 per-cent from Europe.

Gauteng’s gross geographical product(GGP) is expected to receive a significantboost from a major Blue IQ project tobuild a rapid rail link connectingJohannesburg, Pretoria, JohannesburgInternational Airport and the corridors be-

tween them. TheGautrain project is oneof the largest and mostambitious transportationprojects in Africa. Workis scheduled to start ear-ly next year and the trainis due to become oper-ational in 2009, in timefor the 2010 Soccer

World Cup. Most of the other Blue IQ projects are

expected to be completed by the end ofthis year.

Akey initiative is the creation of SouthAfrica's first science and technology park.The Innovation Hub will act as a catalyst

for the growth of knowledge-based busi-nesses and attract leading internationalhigh-tech players and start-up compa-nies. “Our vision is to make this provincethe knowledge hub of the continent,” saysMr. Jonker. “Hopefully, one day we willbe the Singapore of Africa.”

The motor vehicle industry is beingboosted by the Gauteng AutomotiveCluster, another Blue IQ project. Thiscomprises a new Automotive IndustryDevelopment Center (AIDC), offeringworld-class services for automotive de-sign and testing, and an AutomotiveSupplier Park that provides a location forsmall component manufacturers supply-ing the Gauteng plants for the four mainautomotive manufacturers—BMW, Fiat,Ford, and Nissan.

Industrial regeneration is under way inthe Wadeville-Alrode Industrial Corridor,which has the greatest density of manu-facturers in the province. Existing indus-tries are being revitalized and new onesattracted to the corridor, which is strate-

gically located between JohannesburgInternational Airport and the City DeepContainer Depot, an inland port throughwhich around 40 percent of all cargo ex-ported via the Port of Durban originates.

An important contribution to the re-generation process is being made by theGauteng Manufacturing Advisory Center(GAUMAC), whose mission is to helpsmall, medium, and micro enterprises(SMMEs) to improve their productivityand enhance their competitiveness. Thecenter focuses on SMMEs in the man-ufacturing sector employing not morethan 200 people. “The manufacturingsector is the engine of South Africa'seconomy and the development ofSMMEs is crucial for the country's wealthcreation, economic growth, and foreignexchange earnings,” says GAUMAC’sCEO, Philip Phore.

Other Blue IQ projects include the cre-ation of industrial development zones atJohannesburg International Airport andat the City Deep Container Depot.

Multi-billion randinitiative is designed totransform the face of the

province and boostgrowth and jobs

Mega development projects will promote growth and create jobs in key economic sectors

This Sponsored Section is produced by InterCom Ltd and did not involve the reporting oreditorial staff of the International Herald Tribune.

Intercom UK Ltd12, St James Square, London SW1Y 4RB, United Kingdom

Tel: +44 20 7629 5870 - Fax: +44 20 7629 5337 www.intercom-ltd.com

DIGITAL VERSION:www.nytimes.com/global/southafrica

Commercial Management: Virginia CortavitarteEditorial Content: Olav Adami

PAUL MASHATILEMEC for F inance andEconomic A f fa i rs in

Gauteng’s Prov incia lGovernment

BONGI KUNENEHead of Department ofF inance and EconomicA f fa i rs in Gauteng’s

Prov incia l Government

flourishing film sector, and ever-increasing ex-ports that range from automotive componentsto processed foods.

The areas of activity Gauteng is developingfor the future are smart industries, high value-added manufacturing, business services, andbusiness tourism.

Stimulating growth and creating jobs are at thetop of the agenda for Gauteng’s premier, Mbhazima

Shilowa. “Our economy continues to show goodsigns of growth through smart industries, and ourpeople are benefiting from new employment op-portunities, while those already employed aregaining better skills,” he says.

The promotion of broad based black economicempowerment, local economic development, andthe development of small, medium, and micro en-terprises (SMMEs), including cooperatives, will all

contribute toward achieving the priority objectiveof creating long-term employment.

Mr. Mashatile says, “We are refocusing oureconomy into the service sector. We are brand-ing Gauteng as ‘the Smart Province’ because ofour concentration on high-tech industries, telecom-munications, and information technology. Overthe next few years we will be looking at invest-ments mainly in these areas.”

economic engine

of South Africa

GAUTENG DEPARTMENT OF FINANCE AND ECONOMIC AFFAIRSTe l : + 2 7 1 1 3 5 5 8 0 0 0 F a x : + 2 7 1 1 3 5 5 8 5 3 0 E - m a i l : f i n a n c e @ g p g . g o v . z a w w w . f i n a n c e . g p g . g o v . z a

Geographically the smallest province in South Africa -Gauteng, is the economic powerhouse of the SouthernAfrican region and home to some of Africa's greatest cities. From the vibrant city of Soweto, through dynamicJohannesburg, the City of Gold, to the tree-lined diplomacyof Pretoria, Gauteng is a cosmopolitan, multicultural mix ofpeople from all walks of life. Gauteng is the only province inthe world that has produced two noble-prize laureates,Nelson Mandela and Archbishop Desmond Tutu living on thesame street - Vilakazi Street in Soweto.

The complexity of Gauteng’s history and heritage is unavoid-able. It is home to the Cradle of Humankind and the placewhere the Freedom Charter, the cornerstone of our country’sConstitution, was drafted. Now recognised as the world'sfinest, our Constitution is a blueprint for the liberty of allhumankind.

The Gauteng economy is on a sustainable growth and develop-ment path. It grew by an average of 3.3% per annum between 1995 and 2003, well above the national average.Gauteng has the highest per capita income level with collective consumer purchasing power that is higher thanthe national average. It is the most urbanised province inSouth Africa and has a highly developed transport, financialand communication infrastructure.

Gauteng’s clear and consistent economic policies give it aninvestor friendly climate. It has all the facilities and services tosuit modern businesses’ requirements. Furthermore, Gauteng

offers the third cheapest electricity in the world while officerentals per square metre are among the lowest in the world.The province has the highest adult literacy rate in thecountry and is home to 70% of the South African high-techwork force. Another groundbreaking initiative, preparing thecitizens of Gauteng for the global economy and digital age,is its plan to give every schoolchild in Gauteng access to theinternet by 2005.

After thorough research, Gauteng’s Trade and IndustryStrategy was reshaped to take into account emerging globaltrends and turn Gauteng into a smart province with theemphasis on information technology, telecommunication, film andmedia, research and development and biomedical industries.

This gave rise to a multi-billion rand initiative called Blue IQ, the purpose of which was to invest in economicinfrastructure in sectors such as tourism, technology, transport and high value-added manufacturing. TheInnovation Hub, Gautrain Rapid Rail Link, Cradle ofHumankind Interpretation Centre are some of the projectsthat make Gauteng unique.

Gauteng is where the creative spirit of a nation converges in a dense cultural heartland. It is also the intersection of African and global trade. With the favourable climate in Gauteng, it is only natural that you can enjoy the best of both worlds. You can go from doing business in a five star hotel to seeing Africa’s ‘big five’ just a few hours away from Gauteng’s major cities.

GAUTENG – BREATHING POSSIBILITIES!

Gauteng Tourism AuthorityGAUTENG ECONOMICDEVELOPMENT AGENCY

South Africa (Part three)

Drive to bridge the digital gap and bringbenefits of ICT to the whole community

Rejuvenated Post Office delivers profits turnaroundONE of South Africa’s most remarkablesuccess stories of recent years has beenthe astonishing turnaround of the PostOffice, which in just three years movedfrom being a loss maker hemorrhagingbusiness to a profit maker, investing innew technology and confident of its rolein the country’s future.

The most recently declared results forthe organization show a profit of R27 mil-lion ($4.3 million) for the 2003/04 finan-cial year, with significant increases inturnover and operating profits. By theend of the current financial year, it is es-timated the profit level could rise to R100million ($16 million). In November, thePost Office was voted the most pro-gressive ICT company in South Africa atthe African ICT Achievers Awards.

Yet just three years ago, things werevery different. The company was in direstraits, losing hundreds of millions of randa year and with staff morale very low.

The catalyst for change was the ap-pointment in 2000 of Maanda Manyatsheas CEO. Under the banner 'We will de-liver, whatever it takes,’ Mr. Manyatsherefocused the organization on profitabil-ity, controlling operational expenses andimproving customer service.

"The biggest thing we did was to changethe culture of the organization," he says,

"to become business oriented, to have per-formance management and clear goalsdefined for everybody, and for everybodyto understand what we wanted to do."

The decline in mail was arrested, andnew technologies and new products in-troduced. "We also started attractingyounger people to join the organization andin general to get rid of the negative imagethat the Post Office had."

The company was divid-ed into separate areas deal-ing with the mail business,the retail business, financialservices and the courierbusiness to enhance serv-ice delivery. The brief for allof them was to meet and ex-ceed customer expectations.

The profile of the PostOffice management itself hasaltered noticeably. "When Iarrived, the Post Office man-agement was 100 percentwhite male Afrikaans," Mr.Manyatshe recalls. "Now it is 60 percentmale and 40 percent female, and I thinkwe have got only two Afrikaans in the man-agement of the company at present. Thesame thing has happened with the Board.It was 100 percent male. Now it is about60 percent women and 40 per cent men."

There is a strong focus on using tech-nology to improve the core business. "Mostof our capital investment in the comingyears will be focused on technology to re-ally take this organization forward," saysMr. Manyatshe.

He believes that IT provides an oppor-tunity rather than a threat. "There will al-ways be room for mail and I really believe

that the Post Office will notbe threatened by the devel-opment of IT. The Post Officemust find its niche in that de-velopment and position it-self appropriately, and I thinkwe have done that," he says.

With more than 2,700 out-lets and 5,500 service points,the Post Office is one of thecountry’s largest business-es. Eight million items are de-livered to 6.5 million ad-dresses every day. There areplans to establish new out-lets bringing the total to 2,940

by March 2008. The organization is contributing to the

development of rural communities andserving as an interface between govern-ment and the community by establishingCitizens' Post Offices and setting up pub-lic Internet terminals.

MA ANDA MANYATSHECEO of the Post Of f ice

Already the telecommunica-tions hub of Africa, SouthAfrica has moved a stepcloser to having a fully com-petitive market with the re-cent granting of a license toa second fixed-line opera-tor. The country has ap-proximately 5 million fixed-line subscribers and the

fourth-fastest growing mobile phone mar-ket in the world.

Minister of Communications Ivy Matsepe-Casaburri granted the license to a consor-tium consisting of black empowerment groupNexus Connexion, Transtel, Esitel, WIPInvestments Nine (trading as Communitel),and Two Telecom Consortium in September.The move creates direct competition forTelkom, South Africa’s second largest pub-lic company, which has held a monopolyover fixed-line services, but Sizwe Nxasana,Telkom’s CEO, declares that the companyis well prepared for an increasingly morecompetitive environment.

"Over the last couple of years we haveimproved the company’s efficiency andproductivity, and are now well positionedto offer customers flexibility as well as af-fordable products," says Mr. Nxasana. "Welook at how we package our products, howwe sell, where we sell, and what kind ofquality and level of service we deliver toour customers."

Telkom has expanded its range of ac-tivities. Traditionally, the company provid-ed basic connectivity, but it has been mov-ing up the value chain. "We are no longerjust a traditional telecommunications com-pany, we are also a communications com-pany," says Mr. Nxasana. "We are movinginto areas traditionally served by IT com-panies and competing in every aspect ofcommunications."

Extending access to information andcommunications technology (ICT) to ordi-nary South Africans is a vital component in

the government’s drive toward economicgrowth and social development. Many peo-ple living in rural areas have no access toa telephone.

Access to telephones, computers, andthe Internet for underserviced areas and dis-advantaged communities is promoted bythe Universal Service Agency, which is partof the Ministry of Communications. "ICTwill play a major role in empowering the nextgeneration and improving the quality of lifein South Africa," says Sam Gulube, theagency’s CEO.

The agency is focusing partic-ularly on the Internet as the chiefmeans of bridging the digital divide,and is building community accesspoints, known as telecenters,equipped with computers, Internetaccess, telephones, fax, and pho-tocopying facilities.

"We don’t see these facilities asan end in themselves," Dr. Gulubesays. "They are to be used by thecommunity to deliver whateverservice they need, such as edu-cation and health. "We are look-

ing beyond simply deploying these tech-nologies to the ways that communities canmake the most of using them to benefit interms of social and economic develop-ment."

The agency is currently limited tofunding raised from a compulsory levyon all telecommunications companies inSouth Africa, but hopes to form part-nerships with the private sector and in-ternational funding and donor organi-zations in the future.

Telkom has expanded i ts act iv i t ies to compete in ever y aspect o f communicat ions

IVY MATSEPE- CASABURRIMinister o f

Communicat ions

SAM GULUBECEO of the Universal

Ser v ice Agency

Alive with possibility

THE ECONOMIC empowerment of pre-viously disadvantaged communities andindividuals is an integral part of SouthAfrica’s ongoing progress towards a moreequal society. It is also seen as having acrucial role to play in the country’s economicdevelopment, utilizing the vast amount oftalent and ability that was suppressed dur-ing the apartheid years.

Progress has been gradual but steady.Black Economic Empowerment (BEE)companies have shown tremendousgrowth over the past decade, and are in-creasingly being sought for joint ventureswith local and foreign companies. Thenumbers of black personnel in top andsenior management positions are rising,as is black equity in public companies.

One of the prime examples of black em-powerment in the private sector is TsogoSun Holdings, the largest hotel and gam-ing group in the country, in which blackSouth Africans hold a 51 percent stake.

Formed in April 2003 as a result of adeal between global brewing giantSABMiller and empowerment group TsogoInvestments, the company incorporatesSouthern Sun Hotels, South Africa’s sin-gle largest hotel business, Tsogo SunGaming, the second largest casino oper-ator, and the Sandton Convention Centerin Johannesburg, the most technically ad-vanced conference facility in SouthernAfrica.

Ron Stringfellow, CEO of Tsogo SunHoldings, says that being the largest em-powered company in the leisure indus-try has proved highly beneficial. “Therehas been a good response as far as ourcustomers are concerned, and it standsus in good stead in other parts of Africa.We are very proud of what we haveachieved.”

Jabu Mabuza, Managing Director ofTsogo Sun Casinos, agrees that empow-erment makes sense from a business pointof view. “Business has to operate in a sus-tainable way. Empowerment opportunitieshave to be about making an impact on thecommunities and the environment in which

EIGHTEEN million South African adultstune in every day to the three free-to-air tel-evision channels run by the South AfricanBroadcasting Corporation, the country’s na-tional public service broadcaster. Almost 19million adults listen to the corporation’s 18radio stations.

It’s quite a challenge in a multi-culturalnation with eleven official languages. "Youneed to prioritize in order to try to havesomething that runs in a logical, sustainable,and systematic way," says Peter Matlare,Group Chief Executive.

Mr. Matlare is strongly aware of the in-fluence the corporation has within SouthAfrican society and the responsibility it bears."Every single day, we go into people’s homesand we influence what they think, what theytalk about, and how they prioritize. We reachmore than 90 percent of the population.With that influence comes enormous re-

sponsibility."We have to give people a range of con-

tent that is—in the classic phrase—educa-tional and informative as well as entertain-ing. We have to give them a window on whathappens in the world, but also a panoram-

ic view of what happens within their ownsociety."

The corporation is Africa’s leading providerof innovative and interactive educationalbroadcast content and has won numerousawards for programming, both locally andinternationally.

Under regulations laid down by theIndependent Communications Authority ofSouth Africa, the SABC is required to car-ry a minimum of 55 percent local content.At least 60 percent of educational pro-gramming must be South African, 55 per-cent of children's programming, and 50 per-cent of knowledge-building programming.

Planning for coverage of South Africa’shosting of the 2010 World Soccer Cup isalready well under way. "We are preparingfor that now, not in six years’ time, and havecommitted to investing significantly in ourtechnology planning," says Mr. Matlare. "We

delivered the Cricket World Cup last yearand it was broadcast everywhere in theworld. As big as 2010 is going to be, we havelearned some lessons along the way."

Although state-owned, the SABC de-pends on advertising for most of its fund-ing. In the financial year 2003/04 it posteda net profit of R3.4 million ($24.2 million), aturnaround from a loss of R148 million ($557million) the previous year.

Looking to the wider world and the suc-cess achieved by global brands in the in-dustry such as CNN and the BBC, Mr.Matlare comments, "We try to create bestpractice here so that we can compete withanybody in the world. If we are able to pro-duce a quality product that is of interest toaudiences in Europe, Latin America, NorthAmerica or Asia, it is absolutely right thatwe aim for those markets."

At the same time, Mr. Matlare acknowl-

edges the importance of presenting a pos-itive image of South Africa. "In the imagesthat we beam to South Africans, and be-yond our borders, we have got to give peo-ple a better and a truer reflection of whatwe are and what we do."

we are doing business.”According to Mr. Stringfellow, the

group has reached a crossroadswhere it is considering strategies forexpanding its hotel and casino busi-nesses either in South Africa or in-ternationally. “We see a number of ex-citing possibilities,” he says.

Earlier this year Southern Sun

Hotels expanded into Central Africa.Recently, it launched a new ventureto create deluxe properties in pristinelocations in South Africa and beyondfor elite travelers. Helder Pereira, thecompany’s Managing Director, saysSouth Africa is attracting an increas-ingly affluent class of tourists. “Thisis a five-star deluxe product that will

appeal to high-end tourists lookingfor spa, golf, etc. vacations in top-quality destinations.”

Meanwhile, as South Africa'spotential as a business tourist des-tination is increasingly recognizedby the global business community,Sandton Convention Center hasgained a reputation as a world classfacility. Major events it has hostedinclude the 2002 World Summit onSustainable Development, and itwill be the headquarters for FIFAwhen South Africa hosts the 2010World Soccer Cup.

“The World Summit onSustainable Development stampedSouth Africa, Johannesburg, andSandton Convention Center as be-ing amongst the top global venuesproviding value for money,” saysNomaxabiso Majokweni, the cen-ter’s Executive Director. “And we willcontinue to do so for internationalevents and all our national events.”

JABU MABUZAManaging Di rector o f

Tsogo Sun Gaming

RON STRINGFELLOWChief Execut ive Of f icer

of Tsogo Sun Group

HELDER PEREIRA Managing Di rector o fSouthern Sun Hotels

The Palazzo Intercontinental Hotel in Johannesburg, one of the more than 80 hotels in the Southern Sun chain

SABC’s radio stations and television channelsreach millions of South Africans ever y day

Black empowerment is proving a winner forgiant hotels and casino group Tsogo Sun

Public service broadcaster SABC educates, informs, and entertains in 11 languages

This Sponsored Section is produced by InterCom Ltd and did not involve the reporting oreditorial staff of the International Herald Tribune.

Intercom UK Ltd12, St James Square, London SW1Y 4RB, United Kingdom

Tel: +44 20 7629 5870 - Fax: +44 20 7629 5337 www.intercom-ltd.com

DIGITAL VERSION:www.nytimes.com/global/southafrica

Commercial Management: Virginia CortavitarteEditorial Content: Olav Adam