World Cup in 2010 OurWorld · national Business Linkage (SAIBL) program has cre-ated, fostered, and invested in the transformation of South Africa’s entrepre-neurial and agricultural

OurWorldThis supplement to USA TODAY was produced by United World LTD.: 4410 Massachusetts Ave NW, Washington - DC 20016 - Tel: 1-202.347.9022 - Fax: 1-202.347.9025 - www.unitedworld-usa.com

New infrastructuralprojects are underwayin an effort to prepare for the World Cup in 2010

Infrastructure Page 2

Although SouthAfrica’s smallestprovince, Gauteng is acontinental economicpowerhouse

Gauteng Page7

South Africa is asource of inspirationfor water treatmentand distributiontechnology

Water Page4

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A more extensive version of this report is

available at www.unitedworld-usa.com

UNITED WORLD TEAMIN SOUTH AFRICA

Project Management:Federica Scarso

Editorial Director:Alexander de la MareProject and Editorial

Assistants:Louis de Fouchier and

Johan Mlouka

will get a chance to showcase itsaccomplishments to millions ofvisitors in 2010 when it hoststhe Soccer World Cup, the most-watched sports event in theworld.

In the World Bank’s annualDoing Business 2007 report,which measures the ease of do-ing business in 175 countries,South Africa is ranked in the topten economies in the world forits protection of investors andnº29 for the ease of doing busi-ness, the highest ranking in

Africa. No wonder U.S. investorschoose South Africa to begintheir expansion throughout thecontinent.

“There are quite a number ofU.S. companies here, and Pres-ident Mbeki is currently lookingto interact with some of the topbusiness leaders in the UnitedStates,” notes South AfricanMinister in the Presidency Es-sop Goolam Pahad. “With a pop-ulation of 45 million, we are asmall market and that is why weneed to promote Africa as a con-

tinent, one of the most promis-ing potential markets for growth.And we believe South Africa hasa leading role to play to promotenot only our own economy butthe whole continent.”

Two of the keys to the coun-try’s success have been the po-litical and macro-economicstability enjoyed over the pastdecade, says Mr. Pahad. “Nowwe need to deal with the microside or the second economy. Wehave got the macro correct, butit has not necessarily had an im-pact on the second economy.”

Another key factor of successafter decades of apartheid gov-ernment, which caused povertyand suffering by excluding a ma-

SSoouutthhAAffrriiccaa

THURSDAY, JANUARY 11, 2007

Africa’s Rainbow Nation has good reason to celebrate as it enjoys an in-tense economic expansion, political stability, a significant increase in for-eign investment and more opportunities for its citizens than ever before

Building aneconomy by the people, for the people

THERE’S a con-fident moodsweeping over

South Africa these days as moreand more of its citizens are be-ing brought into the mainstreamof the country’s economic lifewith astounding results. Presi-dent Thabo Mbeki’s African Na-tional Congress government hasdelivered the country’s longesteconomic expansion in decades,with GDP growth of 5-6 per-cent. As a result South Africa’srisk is being re-rated by foreignfund managers and direct in-vestors, and the country is re-ceiving a growing respect on theinternational stage. South Africa

� ONE of the pillars of SouthAfrica's economic growthstrategy is the governmentand private sector’s attempt toinclude all South Africans inmeaningful participation inthe country’s economy. Theformer apartheid govern-ment’s systematic exclusionof a majority of the popula-tion threw the nation into eco-nomic turmoil that eventually

led to the fall of the apartheidregime.

When democracy wasachieved in 1994, governmentand business hammered outthe Black Economic Em-powerment (BEE) policy withthe ambition to realize thecountry’s full economic po-tential. According to the De-partment of Trade andIndustry’s BEE strategy doc-

ument, South Africa “requiresan economy that can meet theneeds of all our economic cit-izens - our people and theirenterprises - in a sustainablemanner. This will only be pos-sible if our economy builds onthe full potential of all personsand communities."

Proponents of the policyare quick to point out thatBEE is not merely affirma-

tive action, but a broad-basedprocess through which the na-tion targets inequality. "Noeconomy can grow by ex-cluding any part of its people,and an economy that is notgrowing cannot integrate allof its citizens in a meaning-ful way," the strategy docu-ment says. "Societiescharacterized by entrenchedgender inequality or raciallyor ethnically defined wealthdisparities are not likely to

jority of its citizens from mean-ingful participation in the econ-omy, has been the blackeconomic empowerment (BEE)policy.

The broad-based affirmativeaction policy has brought thepromise of long-term stabilityand has helped push the growthrate to new heights as millionsof South Africans now enjoy dis-posable income and begin tomove into the middle incomebracket. “BEE is not an issue, itis an imperative,” Mr. Pahadstresses. “We are now beginningto change our mindset in an im-portant way so that more cor-

BLACK ECONOMIC EMPOWERMENT (BEE)

Sharing both the power and profit

Thabo Mbeki last met GeorgeBush in December for a meetingat the White House centered ontrade relations, the fight against

AIDS and Africa’s stability.

Continued on page 2

Continued on page 2

The BEE strategy focuses on the historically disadvantaged: blackpeople, women, youth, the disabled and rural communities

‘Stimulatinginnovativebusinesspartnerships’

� Since 1993, the Washing-ton, D.C.-based CorporateCouncil on Africa (CCA) hasserved as the voice of Amer-ican companies in buildingbilateral commercial rela-tions with South Africa. Bystimulating joint venturesand innovative trade and in-vestment partnerships, CCAhas created opportunities andsuccessful models for U.S.businesses in South Africa.

CCA’s South Africa Inter-national Business Linkage(SAIBL) program has cre-ated, fostered, and investedin the transformation ofSouth Africa’s entrepre-neurial and agricultural land-scape. The program hasempowered historically dis-advantaged South Africanenterprises through trade andinvestment partnerships withU.S. and multinational com-panies as well as SouthAfrican corporations.

Most recently, CCA hasexpanded its resourcesthrough its affiliation withthe U.S-South Africa Busi-ness Council (US-SABC).The U.S-SABC will contin-ue to support the entry andsuccess of American com-panies in the South Africanmarket, honing CCA’s lead-ership, guidance, and ex-pertise in this Africannation’s business climate.The U.S-SABC hasstrengthened CCA’s alreadycoordinated approach tocommercial relations be-tween the U.S and SouthAfrica.

STEPHEN HAYESPresident of the CorporateCouncil on Africa

SOUTHAFRICAusat1-4 OK PDFS.qxd 21/12/06 16:54 Página 1

porate executives realize thatthey want to employ blacks,especially women. Not to putup a front, but to truly under-stand them and the require-

ments of this country and thiscontinent.”

A black economic empow-erment consortium recently ac-quired a 14.2 percent interestin one of South Africa’s largestproperty investment holdingcompanies, Growthpoint Prop-erties Limited, which is listedon the JSE stock exchange. Thecompany’s CEO, NorbertSasse, says BEE is truly a win-win policy. “Empowerment isinteresting in the way it hasbeen designed and will entailpressure on our tenants to rentspace from company’s thathave empowerment creden-tials,” Mr. Sasse notes. “Com-panies that want to increasetheir empowerment credentialswill prefer to rent from an em-powered company.”

struction or refurbishing of theten stadiums to be used, accessto them and investment in theenvirons.

A total of R3.5 billion ($483million) has been allocated overthe next few years for public trans-port infrastructure in World Cuphost cities, and a further R241 mil-lion ($33 million) has been ear-marked to improve non-motorizedtransport around stadiums andbusiness districts. Work is also un-derway in urban areas to imple-ment integrated public transportsystems where buses, taxis andtrains operate together.

The Gautrain Rapid Rail Linkis the star transport project of

the Gauteng province, SouthAfrica and Africa as a whole. Itis the first state-of-the-art rapidrail network planned in Gaut-eng. The rail connection com-prises two links: one betweenTshwane (Pretoria) and Johan-nesburg, and another betweenJohannesburg International Air-port and Sandton. Apart fromthe three anchor stations on thesetwo links, seven other stationswill be linked by 50 miles of railalong the proposed route.

South Africa’s Department ofTransport aims to improve railsafety and revive rail transportas a viable transport alternative.The private sector has also beeninvolved in the overhaul, pro-viding investment of aroundR1.6 billion ($220 million) formore than 120 projects on prop-erties adjacent to and surround-ing rail commuter stations.

As part of its bid to implementintegrated public transport sys-tems throughout the country, thegovernment announced in 2004that it would roll out its so-calledTaxi Recapitalization Program,which aims to replace the cur-rent ageing taxi fleet with newminibus taxis, at a cost of someR7.7 billion ($1.06 billion) overseven years.

� SOUTH AFRICA has noshortage of potential in its dri-ve to position itself as the gate-way to Africa. Backlogs ininfrastructure developmentand investment, however,make the price of movinggoods and conveying serviceshigher than it should be. In or-der to roll back the backlog,public sector investment isplanned to rise to around 8percent of GDP in order to im-prove the availability and re-

liability of infrastructure ser-vices in response to rapidlygrowing demand.

The country is currently un-dergoing its largest ever in-frastructure developmentprogram for which the gov-ernment has budgeted someR375 billion ($52 billion). Themain targets for investmentinclude transport and water.South African transport hasbeen under increasing strainover the years as investmentsfell short in areas such as com-muter trains, port infrastruc-ture and road maintenance.

Thus, the government has be-gun a massive restructuring ofthe whole system, has called forthe creation of public-privatesector partnerships and is wel-coming foreign investment. Acomplete overhaul is targetedfor completion by the year 2010when South Africa becomes thefirst African nation to host theSoccer World Cup. Preparationfor the event is a major chal-lenge as it includes the con-

Thursday, January 11, 2007 2Distributed by USA TODAY Our World


Continued from page 1

� AS South Africa under-goes its largest ever infra-structure developmentprogram, with R375 billion($51 billion) budgeted bythe public sector, many ques-tions arise concerningspending and targeted areas.Provincial and Local Gov-ernment Minister SydneyMufamadi explains the cen-tral government’s role in theprogram.

What is the current stateof South Africa’s infra-structure developmentprogram?

Our infrastructure is slow-ly improving but it doesneed to be brought up to lev-els that cope with the to-day’s new challenges. Weare systematically workingtherefore, at encouragingeach one of our nineprovinces to develop whatwe call Provincial Growthand Development Strate-gies. These will be based onthe economic profiles thatwe will be developing whichwill then help a province tosay, “I am province A, thisis the potential I have andthese are my comparativeadvantages vis-à-vis the oth-er provinces.”

What about improve-ments on the municipallevel. There has been someconcern about the speedat which some projects areimplemented. What re-sources are being allocat-ed to remedy the backlog?

We have set aside R15.6billion ($2.15 billion) whichwe intend to use over athree-year period in order totackle particular munici-pality infrastructure back-logs. There is asocio-economic logic tothis. The social component

of it is that when we buildinfrastructure in areaswhere there is none we aregiven the possibility to ex-tend services such as cleanwater, sanitation, electrici-ty and so on. Economical-ly speaking, when you putup this infrastructure youare creating conditions forthose local areas to attractinvestments. We see a bigchallenge in all theseprovinces and therefore it isa national challenge.

Is there room for pri-vate sector investment inSouth Africa’s infrastruc-ture development?

In order to achieve fulleconomic development wehave to invest in the build-ing of the infrastructure.The outlay that I spokeabout represents a publiccommitment, a commitmentthat is being made by thepublic sector, but as a statewe don’t see the adequateresources to achieve thesepurposes. There is an obvi-ous need for partnershipsbetween the state and theprivate sector, and by pri-vate sector I mean in itsbroadest sense, both do-mestic and international.

INTERVIEW

‘We need public-private partnerships to develop our infrastructures’

Building an economyby the people

be socially and politicallystable.” The government con-siders that black economicempowerment is a key ele-ment in its “broader nation-al empowerment strategyfocusing on historically dis-advantaged people, and par-ticularly blackpeople, women,youth, the disabledand rural commu-nities.”

BEE is backedby legislation,and its regulators keep trackof a company’s progress inseveral areas including di-rect empowerment throughownership and control ofenterprises and assets, man-agement at senior levelsand human resource devel-opment and employmentequity.

All state bodies and publicenterprises must apply BEE’scode of good practices, as mustany private company thatwants to do business with thegovernment, including tenders,applying for licenses and con-cessions, entering into public-private partnerships or buyingstate-owned assets.

Black EconomicEmpowerment hasfueled an econom-ic and social revo-lution in SouthAfrica. Some500,000 black

adults moved into the middle-income bracket last year, andmany more citizens are en-joying disposable income andupward mobility for the firsttime in their lives. The resultsof BEE can be seen in surg-ing sales of consumer goods,financial services, property,cars and tourism.

Continued from page 1

Sharing both thepower and profit

Some 500,000black adults

moved into themiddle-income

bracket last year

Investment pours into newbuilding and transport projects

IInnffrraassttrruuccttuurree

From implementing integrated public transport systems to upgrading water facilities,South Africa is pushing to overhaul thenation’s infrastructure by 2010

JEFF RADEBEMinister of Transport

ESSOP GOOLAM PAHADMinister of the Presidency

SYDNEY MUFAMADIMinister of Provincial and

Local Government

A combination of public-private sector partnerships and massive investment from the government are working to raise South Africa’scompetitiveness by investing heavily in infrastructure.


� TRAFFIC is the bane of ur-ban centers and a headache forcity planners around the world.But when gridlock threatens anentire province, such as the small,densely populated South Africanprovince of Gauteng -- the coun-try’s economic hub and the fourthlargest economy on the Africancontinent – that headache canturn into a migraine. For Gaut-eng, however, relief is on the way.

Gauteng’s political leaders arewell aware that thepublic transport hur-dle must be cleared ifthe province is toevolve into a thrivingregion. Thus, massiveinvestment in infra-structure is beingmade, with special attention be-ing directed to the Gauteng De-partment of Public Transport,Roads and Works, which is cur-rently implementing a R30 bil-lion ($4.14 billion) integratedpublic transport system to keepthe province flowing freely. Thestar of the system is the multi-mil-

lion dollar Gautrain rail projectthat will ease traffic congestionalong major routes, namely be-tween the airport and Johannes-burg and the City of Tshwane,

which includes thecentral business dis-trict Pretoria.

According to Ig-natius Jacobs, the de-partment’s MEC (apost which functionsas a minister at the

provincial level), besides beinga huge boost to public transport,the Gautrain project alone willcreate 90,000 jobs in the con-struction phase and 3,000 jobs inthe operational phase per year.“It will provide a good railwaysystem and a massive amount ofjobs. It is probably the biggest in-

frastructure project in SouthAfrica since 1994,” Mr. Jacobsnotes. “We are very fortunate tobe at the helm of the project.”

In the end, Mr. Jacobs’depart-ment will strive to create a fullyintegrated road and rail transportsystem. Gautrain and the exist-ing Metrorail service will domi-nate rail transport while bussesand taxis will dominate road trans-port.

“We want the services to in-teract. Inter modality is what weencourage,” Mr. Jacobs explains.“We need to get our integratedticket system right so that youdon’t have to buy tickets in eachtransport mode. The integratedticket system allows you tochoose but also allows you to de-cide which mode you want totake and arrive safe at your des-tination. By 2009 we will havethat system fully functional inGauteng. We are working hard tocreate this integrated public trans-port.”

When the system is fully op-erational – well in time for SouthAfrica’s hosting of soccer’s WorldCup in 2010 -- modern bussesand taxis accessible to peoplewith disabilities will feed into theGautrain rail network. “The de-sign will be very people friend-ly, providing access to those inwheelchairs and to people whoare visually impaired or have par-tial hearing,” says Mr. Jacobs.“The existing Metrorail systemwill also feed into Gautrain. Asa province we have visualizedthat we will go more into mono-rail as well as modernizing the ex-isting Metrorail that we have.

“It’s the first time that a rapidrail system is going to be built onthe continent. It’s just going toopen up a whole lot of new op-portunities,” says Mr. Jacobs.

“I meet investors regularly andthey want to know when the nexttenders will be going out for theextension and we haven’t evenstarted. They do their market re-search and they can see the ben-efits and opportunity.”

Distributed by USA TODAY3 Thursday, January 11, 2007 Our World


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Supplying world-class, quality drinking water to an area that represents half ofSouth Africa's GDP is Rand Water's business. Our water engineering capabilitieshave been developed over 100 years with a reputation for consistently pumpingto high levels of elevation in order to supply over long distances. Water is purifiedand pumped up to customers situated approximately 70 kilometres from the rawwater source and 375 metres in altitude. An amazing feat, unique to Rand Water.

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Integrated publictransport system fastbecoming a realityWith the high-speedGautrain in the works,the upgrading of theMetrorail service andnew roads being built,Gauteng is looking tohave a five-starsystem by 2009

The Gautrain project is set to create 90,000 jobs during itsconstruction and at least 3,000 jobs each year while in operation.

� PUTCO is one of the oldestbus companies operating inSouth Africa, and the country’slargest with 4,000 employeesand three key areas of operation.

Formed in 1945, Putco facedchallenges such as determiningroutes, overcoming legislationand having to run separate ser-vices for black and white pop-ulations. Putco successfullyovercame these obstacles and es-tablished itself as a major insti-tution in South African transport.

A new management styleand an experienced executiveteam provide the energy andenthusiasm necessary to drivethe business for-ward while ad-dressing theneeds of its 75million annualpassengers. Thecompany de-signed andmanufactured anew generationof buses at itsown manufac-turing plant,saving costswhile settingnew standards.

P u t c o ’ sachievements inits approach toBlack Economic Empower-ment led to its delisting fromthe Johannesburg Stock Ex-change in April this year,paving the way for empower-ment players to come on board.Managing Director Franco Pis-apia stresses, “Putco’s em-powerment model is based on

its staff, black women, youthgroups and people with dis-abilities.” Active in the com-munities it serves, the PutcoFoundation has trained 21medical doctors and 65 StarSchool graduates since 1982.

The company isfocused on di-versificationwithin thetransport indus-try. Plans in-v o l v ecapitalizing onthe DubigeonBody andCoach manu-facturing plantby assistingsmall compa-nies withmaterial refur-bishment. Mr.Pisapia outlineshis philosophy,

“We aim to help small com-panies within the sector be-cause that kind of structure isneeded.” Putco already hasjoint ventures with a numberof small operators, assistingwith safety, driving and man-agement training.

This strategy demonstrates

the company’s national andregional expansion opportu-nities. Several countries haveapproached Putco to set uptransport networks, which inturn has Putco investigatingoptions for future develop-ment. “We are looking at mar-kets like Botswana andMozambique, but there needsto be a strategy with prioritiesduring this diversification,"says Mr. Pisapia. One projectwith great potential is the SouthAfrican government’s plan torevamp public transportthrough the Integrated PublicTransport System, which willcoordinate and integrate ex-isting elements. Putco, recog-nizing the opportunities raisedby this strategy, is heavily in-volved in the process. “We arefinalizing our plans with re-gards to being key players inthe transport infrastructure thatthe country is rolling out aheadof 2010,” Mr. Pisapia affirms.

“Putco would favor jointventures with U.S. compa-nies,” he continues. “We needto establish long-term part-nership and allow investors tohave confidence in the SouthAfrican economy.”

PUTCO

Leadingtransportcompanyevolves,diversifies

FRANCO PISAPIAManaging Director

Putco

In its sixdecades ofexistence,Putco hasgrown to

becomeSouth Africa’s

maintransport

provider, andmuch more.

IGNATIUS JACOBSMEC

Department of PublicTransport, Roads and Works

$4.14 billion isgoing towards

building atransport system

based onintermodality

� THE current focus on SouthAfrica as host of the SoccerWorld Cup in 2010 centers onthe event’s estimated $6 billionboost to the country’s economy.But before the nation can reapthose benefits, the appropriateinfrastructure must be in place.KwaZulu Natal (KZN) is oneSouth African province that isway ahead of the game.

KZN, the largest contributorto national GDP after theprovince of Gauteng, is con-sidered a leader in the countrywhen it comes to training, pro-moting and engaging emergingcontractors in the road con-struction industry. Furthermore,its Department of Transport hasearned much praise for its suc-cess in improving the lives ofKZN’s citizens through its Pros-perity Through Mobility vision.

“The Department of Trans-port’s mandated developmentgoal is to construct and main-tain a balanced road networkthat meets the mobility needs ofall the citizens of KwaZulu-Na-tal and which supports our na-tional and provincial growthand development objectives,”

explains Dr. Kwazi BrianMbanjwa, who heads the de-partment.

That point is echoed by theprovince’s MEC (provincialminister) for Transport, Com-munity Safety and Liaison, Bhe-ki Cele, who says thedepartment has three maingoals. “Our first aim is to main-tain what we have because if wedon’t we will have to be calledback in ten years to start afresh.Secondly, we need to constructwhat has never existed, but con-struct in a big way that will ben-efit the movement of peopleand the movement of the econ-omy. Our third goal is to high-light and create the linkage ofthe people in their day-to-daylives. People need access roadsto school, access roads to clin-ics, to police stations and agri-

cultural facilities.” One of the department’s most

recent accomplishments hasbeen the construction of theP577 road, a R520 million ($71million) project that com-menced in 2003 and is expect-ed to be completed in 2009 intime for the World Cup.

The KZN transport depart-ment is also a national leader innon-motorized initiatives, suchas its construction of a networkof cycling lanes along strategicroutes.

As part of the World Cuppreparations, the department isalso in the very early stages ofan ambitious plan to constructa high-speed rail link betweenthe province’s major seaportDurban and Johannesburg, aproject that would be unique onthe continent if approved.

DEPARTMENT OF TRANSPORT KWAZULU NATAL (KZN)

GAUTENG

KZN province invests to‘construct in a big way’KZN leads the way inSouth Africa in termsof transportinfrastructures and issetting new goals tofurther improve thelives of its citizens

BHEKI CELEMEC

Transport, Community Safetyand Liaison

KWASI BRIAN MBANJWA

Head of Department KZN


demand and are straining thecountry’s freshwater resources.

As a signatory to several in-ternational protocols that are keyto water management,South Africa hasgeared most of its en-vironmental laws to-wards the protectionof its water resources.The most importantare the Water Act of1997, which ensures that peo-ple’s basic needs are met, and theNational Water Act of 1998,which has completely reformedthe country’s water law. It brings

into legislation aspects that are atthe forefront of sustainable re-source use internationally and isbased on the principles of sus-

tainability of use andequity of distribution.

Since these lawsare fairly recent andaddress such a large-scale issue, an accu-rate measurement oftheir effectiveness is

still a ways off. In general, how-ever, improvements to watermanagement, supply and distri-bution are clearly evident.

One case in point has been

Umgeni Water’s steady increaseof water sales and sustainablesupply of clean, safe drinkingwater to nearly five million peo-ple each year, mainly in theKwaZulu Natal province. Todaythe 32-year-old company is oneof the most successful water man-agement organizations on theAfrican continent.

Another important player inSouth Africa’s drive for sustain-able freshwater distribution isRand Water, a leading wholesalerof drinkable water that is alsoheavily involved in educating thepublic on water conservation.

South Africa has respondedresponsibly and has made greatstrides to manage its resources.These include developing andadhering to international ini-tiatives, setting relevant poli-cy through legislation,implementing policy at an op-erational level – institutionalarrangements, enforcementand monitoring – and imple-mentation of special programsto combat problems, all withan eye towards meeting thegoals of the international com-munity to improve the humancondition by 2015.



www.putco.co.za

Forward into the future togetherwith the “Putco family”In these times of change, it's reassuring to know that whoever you are, and whereveryou are, Putco and its dedicated staff will be there for you.

Providing safewater for all:the challenge ofsustainability

WWaatteerr

Water is more in demand than ever before, witha growing population and an increase ineconomic activity, driving South Africa to workhard to provide clean water for its people The progress of a country in stopping AIDS and reducing poverty can be measured in part by assessing that country’s water situation.

� THE United Nations’ eightambitious Millennium Devel-opment Goals for the year 2015range from reducing extremepoverty by half to halting thespread of HIV/AIDS and pro-viding universal primary educa-tion. According to the U.N.,achievement of a large numberof the Millennium DevelopmentGoals is dependent upon accessto safe and sufficient water. In ef-fect, the progress of a countrytowards those goals can partly bemeasured by assessing that coun-try’s water situation.

Through the U.N. the interna-

tional community has pledged,by 2015, to halve the proportionof people who are unable to reach,or to afford, safe drinking water.It also vows to stop the unsus-tainable exploitation of water re-sources by developing watermanagement strategies at the na-tional, regional and local levelsthat promote both equitable ac-cess and adequate supplies.

For semi-arid South Africa,freshwater is a limited naturalresource. Population growth, in-creased economic activity andincreased land use have all con-tributed to a large rise in water

� SERVING an area extendingacross 7,000 square miles andfive provinces, including SouthAfrica’s industrial heartland ofGauteng, Rand Water is one ofthe world’s largest bulkproviders of potable water.

In an operation as efficientand reliable as it is awesome inscale, the company pumps anaverage of three billion liters ofwater per day through almost2,000 miles of pipelines. Usingstate-of-the-art purificationtechnology, it supplies morethan 11 million people and 60percent of the country’s indus-try. Its client base includes SouthAfrica’s largest city, Johannes-burg, the capital Tshwane (for-merly Pretoria), and 14 othermunicipalities.

Almost all the water is sourcedfrom the relatively unpollutedVaal River system and extract-ed from the Vaal Dam, 35 miles

south of Johannesburg. There itis drawn to the company’s pu-rification plants by gravity.

That, however, is the easy part.The water then has to be pumpedup to Johannesburg some 1,250feet above the extraction point.

“It’s a challenge not faced by

many other water supply com-panies,” says Chief ExecutiveThemba Nkabinde, with someunderstatement. “We use an ex-tensive system with very highflows and high pressures. Ourabstraction pipes are up to 3.5meters in diameter and deliverypiping is up to 3 meters.”

The company operates twowater treatment plants, one witha capacity of 1,500 megaliters aday and the other 3,500 mega-liters a day. To get some idea ofthe scale, it’s worth noting thatthe largest water treatment plantin China is 1,500 megaliters.

Rand Water is responsible forthe water from the start of the pu-rification process to its deliveryto the retailer’s supply points.From there the local authorities

The majority ofenvironmental

laws are gearedtowards

protecting waterresources

RAND WATER

Three billion liters of potable water per dayand 11 million customers

Rand expands its activities RAND Water has beensuccessfully deliveringwater for more than 100years. Initially establishedas the Rand WaterServices Board, itspurpose was to supply thegrowing gold miningindustry. Demand for itsservices increased asmining towns developedand it came to serve thewhole Witwatersrandregion. Its activities haveundergone rapid growthsince the 1940s as thepopulation and industrialactivity of the area haveincreased. Demand forwater in South Africa isestimated to be growing at30 percent per annum.

Investing $4.2billion inupgradinginfrastructure PIPELINES comprisealmost 80 percent of RandWater’s infrastructure. Thecompany undertakes anongoing program ofmaintenance, repair, andreplacement based onforecasts of future needs.The rate of expenditure willincrease over the next fiveyears as it spends almostR3 billion ($4.2 billion) onupgrading the distributioninfrastructure to ensuresecurity of supply. Projectsinclude construction of aR510 million ($72.9million) pipeline betweenVlakfontein and Mamelodiin Pretoria.

Providingpremium qualitybottled water EMPLOYING its state-of-the-art technology,world-class facilities, andinternational qualitystandards, Rand Water isventuring into the rapidlyexpanding bottled watermarket, currently valuedat R600 million ($85million). It is producingits own premium qualitybottled brand which isbeing promoted ashealthy, safe andrefreshing. Studies arebeing conducted intodistributing the productnationwide.

As the major player responsible forproviding drinking water throughout SouthAfrica, Rand Water is diversifying andventuring into infrastructure, sanitation andengineering services

take over responsibility for theinfrastructure that delivers thewater to the consumer.

The municipalities accountfor 92 percent of the demand.The company has sufficient ca-pacity to meet demand growthuntil at least 2015.

Projects currently in train in-clude a new reservoir in Rusten-burg, a pipeline from Midrand toHartebeespoort Dam and a new3.5 diameter raw water pipelinefrom the Vaal Dam to Vereenign-ing. Most of the projects the com-pany undertakescomprise refurbish-ment work, althoughfrom time to time itextends its networkto adjacent areas withinsufficient localsources of water.

A public utility run on ethi-cal business principles, RandWater has diversified into oth-er areas beyond its core task ofsupplying potable water. It hasestablished the Rand WaterFoundation to carry out water-related community schemes,such as the improvement of thequality and quantity of raw wa-ter sources and the installationof water borne toilets.

“We work with the municipalauthorities to improve their in-frastructure in terms of leaks,and also in terms of education-al programs that we do jointlyin the communities, ” Mr. Nk-abinde explains. “These explainhow to save water and why it is

important to conserve water.”Sanitation is currently a very

small area of the business, con-tributing less than 1 or 2 percentof turnover, but it is an area ofactivity the company is testingas it already has the legal rightto supply bulk sanitation to theareas it services.

Engineering services, offeredthrough the subsidiary RandWater Services, are still in theirinfancy but show considerablepotential for growth based onthe firm’s proven non-invasive

condition monitoringtechniques and repairtechniques. “We seethat part of the busi-ness growing rapidlyboth within SouthAfrica and broader,

within Southern Africa,” saysMr. Nkabinde.

Currently, there is a jointventure with the Dutch firmVittens to supply water to Ac-cra, the capital of Ghana. Theproject is financed by theWorld Bank. “Our coming to-gether brings together skillsin a complementary way andthat is the kind of joint ven-ture that we are looking for,”says Mr. Nkabinde.

Partners are being sought forother projects outside SouthAfrica, in Mozambique and An-gola for example. “We hopethat we can find people of likeminds so that we can make theshortage of water in Africa partof the past,” he says.

THEMBA NKABINDEChief Executive

Rand Water

Rand Water operates two treatment plants with daily capacities of 1,500 and 3,500 megaliters respectively.

IN BRIEF

The company isone of the

world’s largestbulk providers of

potable water


� KWAZULU-Natal is SouthAfrica’s third smallest province,but 21 percent of the populationlive there and it makes a significantcontribution to the economy—about 17 percent of GDP. The economic importance of thearea is reflected in the fact that theutility Umgeni Water supplies bulkpotable water to the municipalitiesunder its area of operation - a totalof 21,155 square kilometers - at a99 percent level of assurance, high-er than the norm of 98 percent andexceeded only by strategic instal-lations such as power stations.

Umgeni supplies an area in ex-cess of 9,000 square miles, witharound 4.8 million people in the sixmunicipalities covered by the com-pany relying on it for clean drink-ing water.

Established in 1974, the compa-ny is state-owned and operates un-der mandate from the nationalgovernment, through the Depart-ment of Water Affairs and Forestry,although it receives no financial sup-port. It is currently enjoying a peri-od of consolidation and growth afterachieving profitability two yearsago for the first time in five years.In 2004/05 it had a profit of R33 mil-lion ($4.7 million), in 2005/06 itwas R154 million ($22 million).

Umgeni Water has continued toenhance its relationship with themajor water service authorities,signing 20-year agreements to sup-ply the area. It operates in five dis-trict municipalities and theeThekwini Metropolitan area; itschief customers are the munici-palities incorporating the cities ofDurban and Pietermaritzburg,

which together account for 94 per-cent of its water.

CEO Mzimkulu Msiwa admitsthat extending the company’s in-frastructure to rural areas is a bigfinancial challenge that has requiredsome creative financing models.“We don’t get any funding from thenational revenue, and anything thatwe do relies on the strength of ourbalance sheet,” he says.

Umgeni Water receives about 80percent of its revenue from sup-plying water and 10 percent fromits sanitation business. The re-maining 10 percent relates to theexpertise that the company sells,such as laboratory services. “We doa lot of water related research be-cause we’ve got a nationally andinternationally accredited laboratorythat focuses on water treatment,”Mr. Msiwa explains. “It’s the bestin Africa and we train people from

all over the continent.” The utility is also a close partner

of the government in rolling out itsrural sanitation programs. “Thegovernment employs us to imple-ment their programs because of ourcapacity and from that we chargea very nominal fee to cover our di-rect costs. We are also running a riv-er health program that monitors thequality of water in the rivers to

warn communities when the qual-ity is deteriorating and when theyneed prevention in terms of pre-treating water before they use it.”

Umgeni Water prides itself ontaking a holistic and integrated ap-proach to water and environmentalmanagement. Its wholly-owned sub-sidiary, Msinsi Holdings, was formedto look after the land around thedams and to introduce biodiversitythrough wildlife management.

“It is wildlife and land manage-ment surrounding our dams thathas kept the quality of our wateroptimal,” says Mr. Msiwa. “Thisreduces our treatment costs and re-duces the chemicals that we’ve gotto use, which is a great contribu-tion in terms of sustainability of re-sources.” Aspin-off is eco-tourism,which is of benefit to local com-munities.

The dams are owned and man-aged by both the National Depart-ment of Water Affairs and UmgeniWater, with five dams owned by thecompany itself and a further fivemanaged by them on behalf of thedepartment.

Looking to the future, UmgeniWater is eager to use its experienceto diversify and to move into com-mercial activities outside its tradi-tional area of responsibility andoutside South Africa.

One area it is examining is wa-ter recycling, particularly waste-water. “We need to look at how wecan convert water for other indus-tries, or even to the level where wecan get it to be used as drinking wa-ter,” says Mr. Msiwa.

The company has experience ofconsultancy and skills transfer inMalawi, Mauritius and Mozam-bique, and is positioning itself forinvolvement in developing mar-kets in Africa.

It is eager to form partnershipswith U.S. firms prepared to sharetheir experience in water treatmentand technology. “We are very re-ceptive towards opportunities andcollaboration efforts,” says Mr. Msi-wa. “Partnerships would be in termsof technology transfer, skills trans-fer, and management skills trans-fer. We are definitely keen to workalong those lines.”



The KwaZulu-Natal (KZN) Department of Transport is responsible for thetransportation system in KwaZulu-Natal, which includes:

� The construction, upgrading, maintenance and control of the provincial road network;

� The regulation, management and overall control of public and freight transport operations;

� The registration and licensing of vehicles and drivers;

� The regulation of traffic;

� The implementation of road safety campaigns and awareness programs;

� The management of the provincial government vehicle fleet.

Regarded as one of the best government departments in South Africa, it is committed to utilizing all sectors of

the transportation market to maximize economic development and create jobs and opportunities for the people

of KwaZulu-Natal.Telephone: +27 (0) 33 355 8600 Fax: +27 (0) 33 355 8021

Umgeni Water has a proud track record of delivering on its promises while adhering to its own strict environmental guidelines.

UMGENI WATER

A thirst for supplying the nation with water

� MORE than 700,000 house-holds lack access to safe drink-ing water and sanitation inKwaZulu-Natal Province. Nowa new approach is being triedto speed up the rate at which ba-sic services are provided.

Traditionally, the solution tobacklogs in water supply hasbeen sought in stand-aloneschemes by the local water ser-vice authorities. However, thesehave proved unsustainable with-out ongoing technical, admin-istrative, and financial support.

The new KwaZulu-NatalBulk Water Services Strategy isaimed at taking a large-scale

approach on a regional basis.The idea is to get all the au-thorities and organizations in-volved in the delivery of waterservices to work together in anintegrated fashion.

The result shouldbe to accelerate theprovision of servicesby streamlining theactivities of bulksuppliers, local,provincial and na-tional authorities, and otherstakeholders, especially in ac-cessing finance and prioritizingand driving delivery. The ad-vantages to be gained include

economies of scale, sharing ofskills and resources, and im-provement of water quality andlevels of service.

Another important goal is toensure that water resources are

exploited sustainably. The plan, formu-

lated by UmgeniWater, comprises 15regional bulk supplyschemes. Some arealready in place in

the form of existing bulk wa-ter supply infrastructure, butthe majority are yet to be com-missioned.

“We have looked at the ex-

isting infrastructure to find thebest areas for investment,” saysMzimkulu Msiwa, Umgeni’sCEO. “We aim to optimize theuse of the existing infrastruc-ture before adding to it.”

Taken together, the schemeswill have the capacity to pro-vide good quality water inbulk, and in a sustainablemanner, to in excess of 1.7million households—morethan 7 million people.

Both of the other major wa-ter companies in the province,Mhlathuze Water anduThukela Water, have joinedforces with Umgeni Water to

promote the strategy, and con-sultations have taken placewith the national, provincial,and local authorities.

The plan is even being adopt-ed by other provinces. “It is start-ing to become a national model,”says Umgeni Water’s chief.

Various means of funding arebeing explored. According toMr. Msiwa, investment of R11billion to R12 billion will beneeded. “That’s where the chal-lenge comes, both in terms ofour balance sheet and of theneed for partners. That’s wherethe developed world can behelpful,” he says.

KZN WATER STRATEGY

Divining for an integrated solution to water shortages

MZIMKULU MSIWACEO of Umgeni Water

One of the largest catchment-based waterentities in Southern Africa, state-ownedUmgeni Water delivers more than 361 millionkiloliters of treated potable water annually

‘Our plan for theregion is

starting tobecome a

national model’

An extensivenetwork THE second-largest bulkwater supply utility inSouth Africa, UmgeniWater has a total assetvalue of R4 billion($568 million). It manages ten storagedams, 13 waterworks,and four wastewaterworks. The waterworksrange in capacity from100 kiloliters to 720,000 kiloliters ofwater per day, while the wastewaterworks discharge anaverage of 65 megalitersof treated effluent perday. The company’sinfrastructure includesan extensive network ofpipelines, inter-basintransfer tunnels, majorpump stations, andreservoirs.

Managing theenvironmentUMGENI Water’sLaboratory ServicesBusiness Unit boaststhree internationallyaccredited laboratories,specializing inchemistry, microbiology,and hydrobiology. There is also a researchand developmentlaboratory, and an airquality monitoringlaboratory. An ISO 9001 certifiedsampling facilityprovides a professionalsampling service. Some300,000 laboratoryanalyses are conductedannually on water,wastewater, sludges,effluents, and soilsamples.

A cycle for lifeUMGENI Water’s sitesare monitored as part ofan energy conservationprogram aimed atreducing electricityconsumption. Pumps arerun at off-peak hours,and alternative energysources used wherepossible, as at theDarvill WastewaterWorks, where 60 percentof methane produced isburned to heat hot watergenerators. Operationalsites are encouraged toconserve naturalresources and minimizewaste. Water used in thetreatment process isreused or recycled.

IN BRIEF




� Demand for property of allkinds in South Africa, from res-idential to commercial, has beenrising and outstripping supply. After an extended slump in the1980s and 1990s, the construc-tion industry is booming—evenbefore the government’s plannedmega infrastructure developmentprogram gets under way. Newhousing estates are being built,shopping centers have mush-roomed, and office blocks are ris-ing wherever there is spaceavailable.

The residential property mar-ket has been performing strong-ly, with nominal house pricesrising by an average of about 20

� THEboom in commercial prop-erty rentals in recent years has pro-duced some remarkable returnsfor investors in the listed proper-ty market. Retail property hasproved the best performer and,with a shortage of available zonedland and rising construction costsboosting market rentals, the in-dustrial and office sectors are al-so looking very promising.

Leading the field is Growth-point, which over the last fiveyears has expanded its portfolioof rental generating investmentsfrom just nine properties to 350.Valued at more than R15 billion($2.14 billion), and ranging fromshopping centers to office blocks,industrial estates, and hotels, theymake the company the largest list-ed South African property firm onthe Johannesburg Stock Exchange(JSE).

Growthpoint boasts a marketcapitalization in excess of R10billion ($1.42 billion) and, ac-cording to CEO Norbert Sasse, isgetting close to achieving its vi-sion of becoming the first prop-erty company to be included in theJSE’s top 40 index. He attributesGrowthpoint’s emergence at theforefront of a rapidly expandingmarket to a “very aggressive” strat-egy of building bulk and size andgetting liquidity.

“Listed property inSouth Africa has al-ways been very illiq-uid, in fact the wholesector has been verysmall, and property asan asset class has never been par-ticularly attractive in the SouthAfrican context,” he says. “As ofthe last three to four years, how-ever, the sector has grown fromR5 billion to a peak of around R70billion.”

Retail properties comprise 40percent of the value of Growth-point’s portfolio, with office andother properties making up 37 per-cent, and industrial properties 23percent. Mr. Sasse says demand

percent a year between 2000 and2005. As their standard of livingrises, South Africans are able toafford better homes, and the dri-ving factor behind the growth ofthe residential market has been theemergence of a new property-owning class from theblack population.

Increasing numbersof black SouthAfricans are movingout of the townshipsand into the suburbs;ownership of homes by black res-idents in the northern suburbs ofJohannesburg has increased by700 percent in the last five years.At the upper end of the market,

Building on a nationaleconomic upturn

CCoonnssttrruuccttiioonn

The real estate and construction sectors havebeen enjoying strong growth in recent years,driven by the expanding economy, low interestrates and an emerging black middle class

The rocketing cost of construction is benefitingthe commercial, retail and industrial propertymarket. At the forefront of developments isGrowthpoint Ltd.

luxury homes in Johannesburg’schoicer suburbs and along theCape peninsula have been sell-ing for record sums.

Buy-to-let investments are apopular feature of the residentialmarket, with approximately 20-25 percent of all property boughtin the past two years intended forbuy-to-let investment.

There is also a strong expatri-ate market. Buyers from over-seas have been drawn by South

Africa’s beautifulscenery, unspoiledbeaches, pleasing cli-mate, vibrant culturallife, and lower cost ofliving compared to Eu-rope. Demand for sec-

ond homes and touristaccommodation has been rising,and is likely to be given a furtherboost by the publicity surround-ing South Africa’s hosting of the2010 FIFA World Cup.

With the economy enjoying itslongest upswing in 50 years, de-mand for commercial propertyhas been rising fast, but risingprices and escalating rentals tes-tify to a deficit of available space.

This imbalance is being causedby a shortage of zoned land andbuilding cost inflation, due to askills shortage in the construc-tion industry and the high cost ofbuilding materials. The develop-ment boom has put pressure onbuilding suppliers for cement,bricks, partitioning and steel,prompting some to import mate-rials from abroad. Annual de-mand for cement has risen almost50 percent since 2002, and theprice has soared.

According to the University ofSouth Africa’s Bureau of Eco-

The only way is up: an unprecedented leap in the number of youngmiddle-class buyers is fuelling the current property boom.

Johannesburg is expanding upwards and outwards as a new waveof first-time buyers flood the property market.

nomic Research, the cost of new-ly completed buildings has in-creased by 85 percent over the lastsix years. Meanwhile the short-age of new development sites,particularly in the more popularareas, has inevitably driven upland prices.

The commercial space that isavailable is being snapped up. Asvacancy levels have plunged, sorental levels have escalated. Re-tail property has been in great de-mand to cater to a population withmore money to spend, and in-dustrial and office space is in-

creasingly sought after as theeconomy accelerates towards thegovernment target of 6 percent perannum from 2010.

In the short term, recent risesin inflation and interest rates haveslowed the pace of growth in theproperty market, and the days of40 percent annual returns gainson residential real estate are reck-oned to be over. However, withinflation expected to peak in 2007,and interest rates to come down,analysts remain confident aboutthe future as long as GDPgrowthstays around 4 percent.

With thestrongest

economy in 50years, propertydemand is high

GROWTHPOINT PROPERTIES LIMITED

A point of referencefor national growth

for retail space has never beenstronger, but that the company isalso “very bullish” about prospectsfor industrial and office propertyover the next few years.

“In the last two years, and in par-ticular right now, we have seen the

fundamentals in the industrial sec-tor become stronger. Demand hasdramatically outstripped supply,which is leading to very goodrental growth coming off a lowbase,” he says.

The office sector has also im-proved dramatically, with the over-supply disappearing as vacancylevels come down across the coun-try. “Similar dynamics are occur-

ring and we can seeoffice space lagging be-hind industrial space bymaybe 12 to 18months.” Growthpointincreased its exposureto the industrial sector

significantly in 2006 with the ac-quisition of its sister company,Metboard, a move that added in-dustrial properties worth R2 bil-lion ($286 million) to its portfolio.Before the acquisition, the rand val-ue of Growthpoint’s industrialproperties was only around 9 per-cent of its total assets.

“We saw it as a huge opportu-nity, considering market values inthe industrial sector,” says Mr.Sasse. Other recent major acqui-

sitions have included more than70 properties, with a total valueof R2.5 billion ($357 million),purchased from the Tresso prop-erty company in 2005 and 2006.

Investors are clearly impressedby Growthpoint’s record, and aR5 billion ($713 million) com-mercial mortgage backed securi-tization program, launched to fundnew acquisitions and pay off olddebt, has attracted strong interest.AR1.5 billion ($214 million) bondissue in November was the largestof its kind in South Africa, andbrought the total value of the notesissued by the company to R4.3billion ($614 million) in a year.

Growthpoint is also embark-ing on corporate social invest-ment initiatives driven by thevoluntary property charter, whichis designed to promote black eco-nomic empowerment in the prop-erty sector. Acquisition of a 14.2percent interest in the companylast year by a black economicempowerment consortium hasmade Growthpoint one of themost empowered of the largerlisted property funds.

‘In the last threeto four years thesector has grownfrom R5 billionto R70 billion’

A cascade ofdevelopment SYMBOLIZING the realestate boom is the hugeWaterfall Citydevelopment, whose firstphase of construction isabout to get under way onthe northern outskirts ofJohannesburg. The largestproperty development inSouth Africa’s history, theR11 billion ($1.5 billion)project will comprise amini-city of high-riseoffices, shops, industrialsites, luxury apartments,affordable housing, aschool, two golf coursesand an equestrian estate,the total extending over asite of 2,200 hectares.

Investment for cup poolsresources FURTHER upward pressureon building costs is set tooccur due to increasedgovernment expenditure oninfrastructure. Public sectorinvestment has doubledsince 2001, and over thenext few years around R400billion ($57 billion) will bespent on major projects suchas roads, airports, powerstations, the Gautrain rapidrail link, and stadiums forthe 2010 World Cup. Giventhe shortage of skills andbuilding materials, someanalysts are talking ofpublic sector projects“crowding out” privatesector developments.

A foot in the doorDUE for completion in2007, the R2 billion ($286million) Cosmo Cityhousing estate, south ofJohannesburg, is thebiggest in South Africawith some 12,500 homes.The first, fully integrateddevelopment scheme in thecity, it caters for peopleacross a range of incomes,particularly first-timebuyers, mixing low costand subsidized housingwith high-end property.The estate will includeschools, clinics, churches,shopping centers and anindustrial estate.

IN BRIEF

As part of its BEE policy, Growthpoint recently closed a R280million deal with the black-controlled holding Phatsima Properties.


� STANDING out as one of themost significant black economicempowerment success stories inSouth Africa’s mining industry,Eyesizwe Coal is now the fourthlargest coal-producing companyin the country. It was establishedin 1998 as an initiative betweenIngwe Coal and Anglo Americanwhich sought to create a black-em-powered company aimed at ex-tracting maximum benefit fromthe nation’s rich coal reserves.It has since developed a strongleadership, managerial and oper-ational track record in the miningindustry.

Eyesizwe Coal currently hasfour fully operational coal mines– the Arnot, Glisa, Matla and NewClydesdale collieries – and hasrecently added a fifth as part of itsplans for expansion. The compa-ny’s key objectives are to build onits achievements and strategical-ly position Eyesizwe to take ad-vantage of opportunities openingup in energy and power genera-tion in both domestic and inter-national markets. “Besides these

collieries, we have a number of un-committed resources located allover South Africa,” says SiphoNkosi, CEO of Eyesizwe Coal.“These resources are earmarkedfor the future growth of Eyesizwe.”

The business is well on track tomeet its target of producing in ex-cess of 40 million tons per annum(mtpa) and exporting five mtpaby 2010. “We still operate the four

original mines we started with,”states Mr. Nkosi, “but we havetaken them from producing 18.5mtpa at the beginning to 29 mtpatoday.” The company set its am-bitious targets in 2000, when itformulated its vision for the fol-lowing ten years. “At the time, wewere producing lessthan 20 mtpa and ex-porting 800,000 tonsof coal. To achievesuch targets, we real-ized we had to look fornew markets outsideSouth Africa, bigger markets,”comments the CEO. “We lookedat ways we could achieve suchgrowth and felt that joint ventureswere the best way forward.” As aresult, the organization started upa new mine a year and a half agounder a 50/50 joint venture withAnglo American. “We have alsojust done a deal with Sasol and arelooking into their twist drier op-eration,” adds Mr. Nkosi.

South Africa’s biggest iron oreproducer, Kumba Resources, re-cently announced its split into twoseparate companies: Kumba IronOre, which will be dedicated to theiron ore market, and Exxaro Re-sources, a coal, heavy mineralsand base metals joint venture be-tween Kumba and Eyesizwe Coal.This new partnership is set to pro-duce the country’s biggest black-owned firm. The primary rationalebehind the unbundling of Kumbawas to create a new generationSouth African company and broad-en the spread of shareholders toinclude people from previouslydisadvantaged backgrounds, em-ployees and communities in prox-imity to the company's operations.

“Kumba has bases in SouthAfrica, Australia, Namibia andalso China that form part of thisnew venture,” says Mr. Nkosi.“We are now going to be in con-trol of Exxaro as Eyesizwe, whichenhances our position as a di-versified enterprise. We are go-ing to be spending more time onenergy and developing our coalassets as well. Theoretically, wehave already achieved our 40 mt-pa target if you combine the Kum-ba and Eyesizwe assets.”

Eyesizwe Coal has grown into one of thelargest and most diversified energy companiesin South Africa during the last decade. Thenext step is expansion on the global stage

EYESIZWE COAL

Eyeing up record outputs andinternational partnerships



www.gauteng.net

South Africa's Golden Province

Gauteng is South Africa's golden province. It is a gastronomic tribute to AFRICA, incorporating the rich cultural heritage of all ourpeople -vibrant, colorful and always in motion. Sophisticated infra-structure combined with rich cultural heritage. Gauteng boastsbeautiful architecture, stunning landscapes and exotic wildlife to create a truly unique and unforgettable experience.Eyesizwe Coal is well on track to reach its production targets of 40

million tons per annum by 2010.

Gauteng is home to both Johannesburg, the previous first city,and Tshwane - previously Pretoria - the new capital.

� FOR more than a century,the mining industry has beenthe engine for growth of theSouth African economy - rais-ing capital, enhancing tech-nology, paying substantialtaxes and earning more for-eign exchange than any oth-er sector. Furthermore, energyis central in achieving the na-tion’s interrelated economic,social and environmentalaims of sustainable develop-ment. “We see the potentialof the energy sector as a trig-ger or stimulus for broadereconomic growth,” saysBuyelwa Patience Sonjica,Minister of Minerals and En-ergy.

The government is refiningits energy policy and strate-gies to develop a more pro-ductive and efficient energyindustry, envisaging a fullyliberalized petroleum sectorand more competitive mar-ket structure. It also seeks toimprove social equity by ad-dressing the energy require-ments of the poor. Following

� SOUTH AFRICA’S smallestprovince, Gauteng, is also itsmost important. Home to 8.8million people, the name Gaut-eng literally means “place ofgold”, a reference to the dis-covery of gold in 1886. Today itcontinues to be an extremelyvaluable region, but for otherreasons. Gauteng is a veritable“economic powerhouse” thatcontributes significantly to thenational financial, transport, man-ufacturing, technology andtelecommunications sectors. Itis also home to the greatest num-ber of corporate headquarters ofmultinational corporations onthe continent, a critical regionalair transportation hub linkingcontinental and international airtraffic and a key player in roadand rail transportation and lo-gistical support.

While it occupies just 1.4 per-cent of the entire country, Gaut-eng contributes more than 38percent of its GDP, 60 percent ofits fiscal revenue and 9 percent ofthe GDPfor the entire continent.The region, which is home to Jo-hannesburg and Pretoria (todaycalled Tshwane), is growing rapid-ly, and it is estimated that by 2015the polycentric urban region willboast a population of 14.6 millionpeople.

As a result, Gauteng is work-ing hard to keep up with its ex-ponential growth and is expectedto have continuous infrastruc-tural development and estate de-velopment until at least 2013.The provincial government con-tinues to work to re-align its eco-nomic sectors with sophisticated

industries such as finance, busi-ness and information and com-munications technology (ICT).Many new projects are also inthe pipeline, such as the GautrainRapid Rail Link which will pro-vide high-speed rail transportbetween Pretoria, Sandton andJohannesburg and the OR Tam-bo International Airport, both setto be completed by 2010.

To absorb and expand on thisgrowth, the provincial govern-ment is looking to create an en-vironment that will fosterdevelopment and attract in-vestors. To this end the GautengEconomic Development Agency(GEDA) was created in 1996. Inaddition to attracting foreign in-vestment, GEDAencourages lo-cal industry to invest, reinvest and

careful negotiations, thebroad-based socio-economicempowerment charter for theSouth African Mining Indus-try of 2004 calls for histori-cally disadvantaged SouthAfricans to control 15 per-cent of mines within fiveyears, rising to 26 percentwithin 10 years. The goal isto create an indus-try that will proud-ly reflect themodern, inter-racial South Africa.

New policies aimto provide low-cost, high-qualityenergy for industrial, miningand other sectors. Alternativeand renewable energy sourcesare being explored, such ashydropower, wind, solar andwave technology, to meet ris-ing energy requirements, with

A rich vein of experience drives growthEEnneerrggyy && mmiinneess

A little goes along way in thegolden province

GGaauutteennggWith more than acentury of miningexperience, SouthAfrica’s maineconomic driver isstreamlining exisitingoperations andlooking to expandinternationally

Gauteng may be South Africa’s smallestprovince but its contribution to the nationaleconomy, and to the continent as a whole,transcends its diminutive dimensions

a view toward a long-termtransition to renewablesources of energy with min-imum negative environmen-tal impact.

Minerals will, however,continue to play a critical rolein South Africa’s economy.The Ministry of Minerals andEnergy is coordinating the in-

troduction of pri-vate investors intothe electricity sec-tor. The Departmentof Public Enterpris-es (DPE) overseesseven of the largeststate-owned enter-

prises (SOEs). “We are see-ing a greater propensity bySOEs to partner the privatesector,” says Portia Molefe,Director General of the DPE.“Our nuclear generation ini-tiative, the Pebble Bed Mod-

BUYELWA PATIENCESONJICA, Minister

of Minerals and Energy

IAN COCKERILLCEO of

Gold Fields

SIPHO NKOSICEO of Eyesizwe Coal

Exxaro Resources will be a sig-nificant participant in the marketand provides a unique JSE-list-ed investment opportunity intocoal and mineral sands com-modities. As South Africa’slargest black-controlled, diversi-fied mining company, it is well

positioned to grow do-mestically. Its existingoperational interestsoverseas and strongproject pipeline pro-vide a sound base forgrowth in internation-

al markets. Mr. Nkosi adds, “Atthe same time as growing, wehave had to remain profitable.Additionally, one thing we want-ed to maintain along the way wasour focus on training people anddeveloping an organization whereevery South African feels theyhave a place.”

ular Reactor, is an expensiveprogram, but if we crack it,everybody will want to bepart of it. South Africa has ahistory of successfully de-veloping and commercializ-ing frontier technologies.”

This year ’s global com-modity boom has pushed upprices of oil, platinum groupmetals, gold copper and oth-er minerals to levels not seenin the last two decades. SouthAfrica remains the world’sbiggest producer of gold, andits companies have built up awealth of mining knowledgeand expertise that is much indemand. NYSE-listed GoldFields made huge investmentsin new mines in South Amer-ica last year. Chief ExecutiveIan Cockerill comments, “Wenow have a foothold in areasof future growth.”

‘South Africa hasa history of

developing andcommercializing

frontiertechnologies’

PORTIA MOLEFEDirector

General of DPE

KEITH KHOZACEO Geda

‘We feel thatjoint ventures

are the best wayforward for

achieving growth’

Continued on page 8

GAUTENG


� FOUNDED in 1855, the cap-ital of South Africa was namedPretoria in honor of the Afrikan-er hero Andries Pretorius, whodefeated the Zulu kingdom dur-ing the famous Blood River bat-tle in 1838. More than 15 yearsafter the end of apartheid, theRainbow Nation's capital has cho-sen to rename itself Tshwane,meaning "We are the same",which was the original name giv-en to this area by the first African

inhabitants. The City of TshwaneMetropolitan Municipality (CT-MM) includes 13 municipal ar-eas, and the name of Pretoria hasbeen kept only for the central dis-trict of the city.

Spanning more than 3,200 km2and with a population of ap-proximately 2.2 million people,Tshwane is one of the country’smost prosperous and fastest-growing cities thanks to its strate-gic location, industrial

infrastructures, research and ed-ucational facilities and extensivelabor market. “Tshwane’s growthrate has been higher than any oth-er city in the country. We havemore small, medium and micro-sized enterprises (SMMEs) andthe emerging entrepreneurs ofsmall companies are contributingup to 25 percent to the city'sturnover", explains Dr. GwenRamokgopa, the city’s executivemayor. "This is an importantleverage to accelerate economicgrowth, create jobs and ensurethat there is greater participationin the economy. We have alreadyincluded in our budget an addi-tional R50 million ($7 million)to further support SMMEs."



� CONVENTIONALNAME:Republic of South Africa� AREA: 1,219,912 square kilometers� POPULATION:44,187,637 (July 2006 est.)� LANGUAGES: Isiulu 23.8%, IsiXhosa17.6%, Afrikaans 13.3%,Sepedi 9.4%, English 8.2%,Setswana 8.2%, Sesotho7.9%, Xitsonga 4.4%, other7.2% (2001 census)� INDUSTRIES:Mining (world's largestproducer of platinum, gold,chromium), automobileassembly, metalworking,machinery, textiles, iron andsteel, chemicals, fertilizer,foodstuffs, commercial shiprepair� CURRENCY:South African rand (ZAR) � EXCHANGE RATE:rand per US dollar - 6.3593(2005)� GDP purchasing powerparity:$540.8 billion (2005 est.)� GDP real growth rate:4.9% (2005 est.) � GDP per capita (PPP):$12,200 (2005 est.)� EXPORTS:$50.91 billion f.o.b. (2005 est.)� EXPORT PARTNERS:UK 11.1%, US 9.1%, Japan8.3%, Germany 6.3%, China5.2%, Italy 4.5% (2005)� PROVEN OILRESERVES:7.84 million bbl (1 January 2002)� NATURAL GASPROVEN RESERVES:28.32 million cu m (1 January 2002)

THE COUNTRYIN FIGURES

Source: CIA World Factbook

build competitive advantage. Kei-th Khoza, its CEO says, “Whatwe are trying to do is achieve abalance between economicgrowth and development.” Since

its foundation GEDA has facili-tated more than R2.5 billion worthof investments within theprovince.

According to the agency, a ma-jority of investment has gone to-wards the call center industry,

infrastructure and ICT, and pos-sibilities exist in the bio-chem-istry sector and the automotiveindustry, Gauteng being home tothe Tshwane Automotive Hub.Other priorities include the topend manufacturing sectors, thesmart industry, telecommunica-tions and financial markets. Therehas been piqued interest on behalfof American investors towardsreal estate and the developmentof commercial centers. The

agency is also working to find away to sell the region as a brandto investment and trade markets.

GEDAis likewise focusing onincreasing employment. Mr.Khoza says, “We are putting lotsof emphasis on job creating sec-tors where there can be sustain-able growth. The estate industryalso has the capacity to createjobs and through the Departmentof Education we are coming upwith a skills development pro-

gram.” Furthermore there is amove to develop more sustainablesmall, medium and micro-sizedenterprises (SMMEs), consid-ered a catalyst for economic de-velopment, and the GautengEnterprise Propeller was specif-ically created to encourage theirgrowth. Public works is also look-ing to create five new highwaysin Gauteng in an effort to elimi-nate traffic congestion, whichwould in turn create jobs.

A little goes a long wayin the golden provinceContinued from page 7

Tshwane is one of the fastest growing and mostprosperous cities in the land, a testament to theinnovation and application of its people,culminating in the award of the 2010 World Cup

CITY OF TSHWANE

A capital rebrand in the image of national identity

UNITED WORLD WISHESTO THANK THE

FOLLOWING PERSONSFOR THEIR HELP IN THEPREPARATION OF THIS

PUBLICATION:

Hopewell Radebe,Deputy Political Editor,

Business Day;

Don Ncube, Chairman ofthe Nkululeko Trust,

Director of Badimo Gas,Octo Mining and

Goldfields;

Paseka Howard Rakosa,Manager: City Investmentand Tourism marketing,

City of Tshwane;

Vuyo Jack, ExecutiveChairman, Empowerdex;

Zodumo Mbuli, MediaLiaison officer,Department of

Communications;

And The Government of South Africa

� AS a cosmopolitan, multi-cultural region, tourism is tru-ly taking off in Gauteng. Oneforce behind this boom is theGauteng Tourism Authority(GTA). According to Advo-cate Cawe Mahlati, GTA’sCEO, “Gauteng is unique be-cause we can give the full ex-perience. This is a destinationthat is ground-breaking, inno-vative and dynamic.”

For one, business tourism isgrowing as trade shows, inter-national summits and conven-tions increase, complementedby Gauteng’s communicationsnetworks and state-of-the-arttechnology. There is also noshortage of entertainment op-tions, while a rich cultural her-itage has given rise to countlessmuseums, galleries and theatres.Sports possibilities includeeverything from sand boarding,golf and hang-gliding to sky-diving, fly-fishing and rappelling.

The Lion and Rhino Park andthe De Wildt Cheetah ResourceStation give visitors an up-closewildlife experience, while or-ganized tours showcase the re-gion’s exotic landscapes, suchas the Magaliesberg mountains,home to breathtaking rock for-mations and waterfalls. Gauteng

also boasts exceptional geolog-ical, palaeontological and ar-chaeological sites. The Cradleof Humankind, a World Her-itage Site, is made up ofdolomitic limestone caves con-taining fossils from hundredsof plants and animals and theTswaing Meteorite ImpactCrater is where a meteor crashedto earth with a force equal to 65atomic bombs.

It’s clear that tourism is keyfor the future. Ms. Mahlati,who maintains that the in-dustry is growing twice as fastas in the rest of the world, says“tourism is the new gold, andby increasing tourist arrivalsand the yield of tourism, wewill be in an optimal positionto create jobs, alleviate pover-ty and increase GDP. This isan important time, there aremany opportunities, and com-ing here to invest would bean excellent decision.”

GAUTENG TOURISM AUTHORITY

Packaging the best of Africa in a one-stop-shop for tourists

As the capital of the countryand the emblem of the RainbowNation, Tswhane is ambitiouslyworking to become "The Inter-national African City of Excel-lence", a model of urbandevelopment with a knowledge-based economy. It is already in-creasingly recognized as one ofthe world’s “smart cities” thanksto its focus on new technologies,development programs and largeconcentration of stellar tertiaryand quaternary higher educationinstitutions. The city is also hometo the nation’s automotive in-dustry and is the manufacturingplatform for some of the mosthighly regarded automobilemakes and models in the world.Furthermore, Tshwane boasts afunctional fiber optics networkwhich is in the process of beingupgraded, and a global digitalhub which, according to Dr.Ramokgopa, “aims to bridge thedigital divide between the de-veloped and the developingworlds through a joint programwith the provincial government.”The goal is to convert Tshwaneinto the top destination for allICT-based businessin South Africa.

Coordinated effortsare being made to pro-mote infrastructure in-vestment with thetransport system tostep up logistics efficiency and op-timize productivity. Both sectorsare extremely important in termsof creating investment opportu-nities. The Ring Rail develop-ment project, a commuter railsystem and the Mabopane-Cen-turion Development Corridor(MCDC) are just two of manyventures in the pipeline.

With these objectives in mind,Tshwane has defined a Five-YearStrategic Program to further ac-celerate economic growth andimprove living standards. Dr.Ramokgopa recognizes the im-portance of getting the city’s youthto actively participate in the econ-

omy, saying “Our plan and visionfocus on skills development tohelp young people leverage on ex-isting opportunities”. Further-more, the city is thoroughlycommitted to ensuring that morepeople make poverty historythrough the Broad-Based Eco-nomic Empowerment Program(BEE). In fact, Tshwane is a keycity in terms of promoting BEE,spearheading the initiative andactively participating in its im-plementation.

The 2010 FIFAWorld Cup will boostthe city’s economyand officials are busylooking for investors,in particular in theservices to business-

es and hospitality sectors. Dr.Ramokgopa stresses the im-portance of meeting potentialinvestors “halfway to ensurethat we grow together.” Al-though mainly known as a busi-ness destination, Tswhane hasalso plenty to offer to tourists:no less than 100 parks, excel-lent shopping, hundreds ofrestaurants and some of Africa'sbest Jazz bars and live musichangouts. Indeed, Tswhane islooking to establish itself as oneof the world’s premiere desti-nations for music lovers andartists of the quintessentiallyAfrican genre.

CAWE MAHLATICEO of Gauteng Tourism

Authority

GWEN RAMOKGOPAExecutive Mayor

of Tshwane

‘Tshwane’sgrowth rate hasbeen higher thanany other city in

the country’


Documents

World Cup in 2010 OurWorld · national Business Linkage (SAIBL) program has cre-ated, fostered, and invested in the transformation of South Africa’s entrepre-neurial and agricultural