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Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the need for South Africa to compile a clear country commitment to net-zero and to find a common vision and action plan around the just transition, as well as about the growth potential for hydrogen and energy storage.

A decline in the extension of short-term credit in South Africa has impacted the economy through loss of sales, fewer jobs and lower tax collections, Altron Fintech's inaugural Altron Fintech Short-term Credit Impact (AFSCI) Index shows.

The AFSCI Index, unpacking the economic impact of short-term lending, found that, between the first quarter of 2020 and the first quarter of 2021, the extension of short-term credit, which is a key financial instrument for low-income households and micro businesses, contracted by 12.3%.

This resulted in an estimated economy-wide decline in sales of R790-million, 1 400 fewer jobs supported and R96-million less in taxes being collected.

The AFSCI Index, which was developed in partnership with independent economic consultant and Gordon Institute of Business Science adjunct faculty member Keith Lockwood, outlined that despite the partial normalisation of the economy, the value of short-term credit extended was down 20% and the number of loans advanced was 25% lower than in the fourth quarter of 2019.

During the first quarter of 2021, R1.97-billion of short-term credit was advanced through 715 000 loans with an average value of R2 758.

Lockwood, in a statement accompanying the report release, attributes the decline in the number of credit-worthy credit applicants to the 1.4-million drop in total employment and the decline in average real incomes in South Africa during the Covid-19 pandemic.

“Just as net additions to credit extension can generate positive economy-wide economic impacts that are a multiple of the value of the credit extended, so does the contraction of net credit extension generate negative multiplier effects throughout the economy. Businesses that were receiving additional sales as a consequence of the credit made available to their customers will experience a decline in sales,” Lockwood explained.

“They will then employ fewer factors of production and place orders of less value with their suppliers. The process will continue with indirect and induced impacts serving to magnify the negative impacts.”

The index shows that a much larger proportion of short-term credit is advanced to people earning less than R15 000 a month, when compared with other types of consumer credit.

“Whereas this group only accessed 11% of total consumer credit in the first quarter of 2021, they obtained 57% of the short-term credit advanced,” he continued.

In an attempt to enhance the affordability of lending, there has been a significant extension of the average repayment period of short-term loans.

“Whereas loans with a term of up to one month accounted for 64% of the value of short-term credit advanced in the fourth quarter of 2019, by the first quarter of 2021, this had dropped to 54%. Over the same period, loans with terms of four to six months increased their share from 26% to 34%,” he said.

“Credit is an important cog in the engine which fuels economic growth. An increase in credit extension injects money that was previously out of circulation back into the economy, and thereby generates a stream of economic activity and incomes,” said Altron Fintech MD Johan Gellatly, noting that, despite the critical role that it plays in the economy, short-term credit is a relatively poorly understood form of credit.

He explained that, while short-term credit makes up a very small share of total consumer credit, it is an important market, as it: provides first-time access to credit to many people that have never had access before; offers lower-income households a proportionately greater share of credit than is advanced to them by other forms of credit; is a source of funding to households with low incomes and limited wealth assets in the event of unforeseen developments and emergencies; finances micro-businesses' working capital and stock and asset purchases; and is a barometer of the financial health of a vulnerable, and often neglected, portion of South Africa’s population.

The ASFCI Index was initiated to assis...

The South African new-vehicle market could reach around 485 000 units this year, says Ford South Africa MD Neale Hill.

This will be a significant increase from the 380 000-unit sales recorded last year.

“However,” warns Hill, “the reason I’m hesitant about this year’s final number, is that we are going to see some challenges with vehicle availability.

“The third wave of Covid-19 is making its presence felt in South East Asia, with Malaysia in particular very hard hit.

“This country happens to be one of the main computer chip sources for the global automotive industry.”

Hill says the computer chip shortage is “really becoming a concern” for the automotive industry worldwide.

“At any point in time we could be managing constraints on over 25 different chips that go into our vehicles.

“All manufacturers are affected, some to a greater extent, some to a lesser extent.

“I think what we are looking at is a fourth quarter that could potentially see supply disruptions in terms of access to vehicles.

“It certainly means that inventory levels across the entire industry are significantly lower than what we’d seen before.”

Hill says he expects the situation to continue into 2022.

“We are going to continue to see challenges in that particular space.

“It will be interesting to see how this affects customer behaviour going forward. Previously, as a car-buying public, we were used to walking into a dealership and driving a vehicle off the lot. Now we are going to see people having to wait for their vehicles.”

A South African energy project finance specialist estimates that the country’s near-term battery energy storage project pipeline could grow to about R53-billion over the coming three years, potentially making the country one of the largest adopters of such systems globally.

The estimate includes assumptions not catered for in the country’s Integrated Resource Plan of 2019 (IRP 2019), however, and also assumes large growth in private battery storage investment.

Futuris Advisory founder Bertie Strydom, whose previous 20-year stint at the Industrial Development Corporation included a strong recent focus on the development of a domestic energy storage industry, calculates that the pipeline could grow to about 3 746 MW/14 648 MWh, once Eskom and private projects were aggregated.

“If we take a conservative estimate of saying that these solutions can be deployed at about $250/kWh, we are taking about an investment of R53-billion,” Strydom told participants to a webinar hosted by the South African Institute of Electrical Engineers on Wednesday.

The pipeline outlined by Strydom included:

the 513 MW/2 052 MWh allocation for 2022 in the IRP 2019;

Eskom’s tenders for 197.5 MW/827 MWh of battery energy storage across seven sites; and

the five non-gas projects named as preferred bidders under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPPP), which will have combined battery storage of 640 MW/2 475 MWh.

However, he was also of the view that some battery storage could be added to the 1 000 MW of solar photovoltaic (PV) and 1 600 MW of wind currently being procured under the Renewable Energy Independent Power Producer Procurement Programme, at a RMIPPPP-type ratio of 82.5% storage to contracted capacity.

Should that be the case – a proposition not currently catered for in the IRP 2019 – another 2 145 MW/8 294 MWh could be added to the pipeline.

Likewise, should 10% of the 5 000 MW of new private embedded generation that could be added in the wake of the recent 100 MW reform involve storage a further 250 MW/1 000 MWh of additional batteries could be injected into the pipeline.

“What this tells us is that better storage presents the country with a huge opportunity.

“We have very limited local technology and capacity to deliver on these opportunities in the short- to medium term and unfortunately, therefore, the biggest portion will leave our shores and go to other economies,” Strydom said, while arguing that battery energy storage represented a significant localisation opportunity.

Speaking on the same platform, Bushveld Energy CEO Mikhail Nikomarov expressed optimism about the domestic market outlook, as well as the prospects for localising battery storage systems.

“Last year, the sixth largest battery market for residential batteries was South Africa and on the utility side, Eskom has got a large programme and, in the risk-mitigation round, everything that was not a [power] ship had a large battery tied to it and we will probably see a lot more in future,” Nikomarov highlighted, stressing that “batteries are already here” and the outlook is even more positive.

He also argued that South Africa could not only localise for its domestic needs but could also become an exporter of battery storage solutions in future.

“I know this because we are doing it ourselves with vanadium: yes, we’ve got the vanadium in the ground, but we can also make the electrolyte and we believe we can do the batteries here ourselves.

“And I think that opportunity is not limited to the vanadium version of battery storage, it is also possible with other technologies.”

The 12 special economic zones (SEZs) in South Africa remain relatively attractive destinations owing to the financial and non-financial incentives and support services they offer to specific industrial segments.

However, they are also developing additional services and offerings to meet demand from companies in new industrial segments, including renewable energy and advanced manufacturing.

During a webinar hosted by boutique investment advisory company Cova Advisory on September 15, representatives from three SEZs detailed some of the changes being made to meet growing demand for renewable energy, energy storage and advanced manufacturing facilities, in addition to meeting existing demand from companies in their industrial focus segments.

Saldanha Bay SEZ ease of doing business executive Benedicta Durcan noted the services the SEZ provides and the oil and gas, maritime and related companies it has attracted, stating that about 80% of its first phase precinct is occupied and its newly opened office spaces are more than 50% occupied.

However, the SEZ saw an increase in wind energy equipment and components being imported during the past year for renewable energy projects in the Northern Cape, which resulted in the equipment importers and renewable energy project developers requiring short-term dedicated project facilities.

This drove unexpected demand for space during the pandemic-hit 2020, she said.

The SEZ, in collaboration with the Saldanha Bay municipality, has also established a small, medium-sized and microenterprise (SMME) collaboration centre that will provide small businesses with work spaces, access to laptops and connectivity free of charge to help them when interfacing with investors and clients.

The SEZ has also established an innovation campus, which is operating virtually at the moment.

Further, the SEZ is in talks with the Port of Saldanha Bay and State-owned Transnet about a potential megaproject to develop and enhance its marine infrastructure to provide related services for vessels and to attract investors and companies to the SEZ, said Durcan.

Similarly, the Dube TradePort SEZ, in KwaZulu-Natal, provides specialised services for agroprocessing, dry goods and perishables companies, but is planning to build a 12 000 m2 innovation centre to attract local and international innovative companies, said Dube TradePort SEZ COO Kaya Ngqaka.

"As an SEZ, we aim to focus more on the advanced manufacturing sector, and research and development and innovation are central in terms of driving this sector. We are working jointly with the Moses Kotane Institute, which is the provincial research institute, to develop the innovation centre to attract innovative companies," he added.

The SEZ is also developing its 50 ha Trade Zone 2, which provides fully serviced stands and bulk services and will be available for companies to build top-side structures by early 2022.

This zone presents an opportunity for the Dube TradePort and it is planning to develop a pharmaceutical and medical cluster, as well as an electronics cluster in this zone," he Ngqaka noted.

In addition to the SEZ's Agricultural Zone 1, which has fully developed greenhouses supported by purpose-built packhouses and an agri laboratory, specialising in tissue cultures and which provides services to growers, the Dube TradePort is developing its 90 ha Agricultural Zone 2, which aims to attract more agroprocessing investment over the new few years, he said.

The Dube TradePort also has arrangements with institutions of higher learning and provincial government departments to help companies in terms of labour and to develop skilled personnel that will improve the attractiveness of the SEZ, he said.

Meanwhile, the OR Tambo International SEZ, in Gauteng, leverages the airport to facilitate easy access to global and African markets for its client companies, but the presence of the established industrial companies in Ekurhuleni presents an opportunity in the context of the value...

Hyundai and Mini have walked away with top honours in the 2021 National Automobile Dealers’ Association (NADA) Dealer Satisfaction Index Survey (DSI) for passenger and light commercial vehicles, while Mitsubishi was the most improved brand.

Gold winners in this segment were Suzuki, Toyota, Mercedes-Benz, Mitsubishi, Mazda, Lexus, Volvo, Kia, BMW, Renault and Ford.

Silver winners were Mahindra, Volkswagen, Peugeot-Citroёn and Subaru, with Isuzu, Audi, Nissan, Datsun and Fiat bronze winners.

In the commercial vehicle section of the survey, Hino clinched the platinum award, with MAN, Mercedes-Benz Bus and Mercedes-Benz Trucks all awarded gold.

MAN was also the most improved brand.

Silver went to Isuzu Trucks, Fuso, UD Trucks and FAW. There were no bronze award winners in the 2021 survey.

The 2021 NADA DSI followed the survey’s suspension in 2020 owing to the Covid-19 pandemic.

Thirty-nine independently researched brands formed part of the survey this year.

A total of 1 223 completed responses were received, 1 054 of which were from passenger and light commercial vehicle dealerships, and 169 from commercial vehicle dealerships.

The survey, which marks its silver anniversary this year, is carried out every year to monitor the health of the relationship between dealers and their respective manufacturers.

It also provides the dealer body with a platform to provide manufacturers and importers with the necessary feedback from dealers.

Lightstone, responsible for conducting the research since the introduction of the project in 1996, notes that despite the overall DSI score decreasing by 1% this year to 76.1%, the results remain the second highest score recorded since 2003.

“While the Covid-19 pandemic forced us to abandon the survey in 2020, we were extremely happy that we were able to complete the research this year,” says NADA chairperson Mark Dommisse.

“The survey this year included questions about the support that dealers received from their respective brand during the COVID-19 pandemic.

“Our warm congratulations go to all the platinum, gold, silver and bronze award winners and we hope to see more manufacturers moving to the gold and platinum award categories during the next round of evaluations in 2022."

A port that runs efficiently “can bring prosperity all around”, says Grindrod Freight Services CEO Xolani Mbambo.

South Africa’s major ports are, however, currently ranked close to the bottom of the list in terms of global competitiveness.

“Current rankings show that South Africa has been overtaken by some of Africa’s other ports in terms of port capacity and investment, and that some work needs to be done to put South Africa back on the map,” says Mbambo.

“If a port does not run efficiently, it means that we as South Africa lose volumes and vessel traffic to other countries in Africa, as well as any transshipment opportunities that may exist.

“Proposed private-sector participation (PSP) opportunities within Transnet have the possibility, however, to recapture the port calls or traffic we have lost, and, with that, the volumes we have ceded to other countries.

“The proposed PSP projects are a profound step taken by the new management and directorship of Transnet, with the support of government.

“We, as Grindrod, welcome Transnet’s discussion on privatisation and it will indeed be welcomed by South Africa. Where possible we would like to work with Transnet to achieve their goals, as their success will ensure prosperity all around.”

Grindrod is interested in PSP opportunities at the Durban, Ngqura and Richards Bay ports, as well as in rail projects along the corridors where it already operates, explains Mbambo.

“We have the capability to participate, but the extent of our participation is, of course, dependent on how Transnet structures PSP opportunities in the port and rail sectors.”

Transnet has already issued Requests for Information for the first two container terminal projects, namely the Pier Two container terminal at the Port of Durban, as well as the container terminal at the Port of Ngqura, in the Eastern Cape.

Mbambo says Transnet has been “very specific” in stating that it is looking for international terminal operators in these container terminals, with the added requirement of a local empowerment component and/or partner.

“Whilst we are not a global container terminal operator, we have experience in many of the related industries.

“These two opportunities are definitely on our radar and we are working on our strategy for potential involvement.”

Another opportunity in which Grindrod hopes to get involved, is the development and consolidation of the dry-bulk facility in the Port of Richards Bay precinct.

Grindrod, with its empowerment partner RBT, is already active in this space at the port, and has all the necessary experience, notes Mbambo.

“We would like to see if we could meaningfully contribute to consolidating the dry-bulk volumes and hopefully contribute to upgrading the infrastructure so that the port can attract more vessel traffic.”

Another possible PSP which is of interest to Grindrod is the manganese export facility at the Port of Ngqura.

The last area of interest for Grindrod is the proposed introduction of private rail operators to the South African rail network.

Mbambo says it is not yet clear whether this access will be for private operators to operate their rolling stock, or whether it will include concessions, where the private operator also has to look after the infrastructure.

“We await further guidance from Transnet.

“Here Grindrod would specifically like to see how we can assist in unlocking the corridors where we, together with Transnet, already operate, such as Maputo and Richards Bay.

“We will, however, first have to see when and how Transnet comes to market with these PSP opportunities.”

WEC Projects has been selected by the Water Research Commission (WRC), under the South African Sanitation Technology Enterprise Programme (Sastep), to test a new off-grid sanitation system with the intention of commercialising it in South Africa.

The NEWgenerator, which was developed by the University of South Florida (USF), is designed to turn sewage wastewater into clean water, energy and nutrients, providing water for reuse as toilet flushing water, as well as biogas-based energy and nutrient-rich fertiliser.

As an industrial manufacturing partner, WEC Projects aims to commercialise and deploy the technology to rural and informal communities across South Africa.

“This is a particularly exciting system that we predict will help address a number of critical social challenges facing the country including sanitation, access to water, energy independence and improved food production,” said WEC Projects technical director Gunter Rencken.

“A large number of South Africa’s rural and informal communities lack proper infrastructure for water, sanitation and other critical services, relying instead on outdated and unsuitable solutions such as pit or portable toilets.”

According to the company, the system is a compact, portable and modular sewage treatment technology incorporating an anaerobic digester that uses microbes to break down human waste while producing biogas.

Clean water is filtered out, with bacteria, viruses and any remaining solid particles removed, and then disinfected through a chlorination system, while 99% of the water can be recycled for reuse in the sanitation platform, reducing its reliance on the local water supply.

The nutrient-rich treated water can be used as crop fertiliser by local small-scale and informal farmers and the biogas produced can be used for domestic purposes, such as cooking and heating.

“A unique feature of NEWgenerator is that it can run independently of the power grid, using solar power to operate or it can be hooked up to a generator. This makes it particularly suitable for use in South Africa, where the country’s unreliable power grid, prone to load-shedding and unscheduled outages, has had an adverse effect on existing infrastructure and equipment, often leaving even developed urban areas without power or access to water for prolonged periods,” Rencken said.

NEWgenerator was developed by USF civil and environmental engineering Professor Daniel Yeh and his research team with a $2-million grant from the Bill and Melinda Gates Foundation through its Reinvent the Toilet Challenge.

Development and testing was initiated in India, following which, the team worked alongside the University of KwaZulu-Natal to test its effectiveness on a pilot scale in the eThekwini area.

Rencken explained that WEC Projects was approached by the WRC to help commercialise the system using funds from the WRC’s Sastep programme, owing to WEC Projects’ experience in the area of sewage and water treatment solutions.

A licence agreement with USF for NEWgenerator is now in place.

“The ability to scale up the manufacture and roll out of NEWgenerator locally will not only ensure the country’s ability to deploy it rapidly to where it is most needed but also grow an export market into the Southern Africa Development Community region.”

With a modular and portable design, the system can be installed in a standard shipping container, moved to site and brought on-line with minimal effort, easing logistical problems and ensuring a quick setup.

The system’s first major roll out will be in a large informal settlement on the outskirts of Soweto, in Gauteng, where the community relies mainly on portable toilets which lack the capacity to operate effectively with a large number of users.

The NEWgenerator demonstration plant has been designed to cope with up to 100 users a day with the potential for capacity expansion to meet local requirements.

WEC Projects will continuously monitor and test the system during its use, sampling output ...

Karooooo has acquired 70.1% of Picup Technologies (Picup) in a deal valued at R70-million.

Karooooo owns 100% of Cartrack, a mobility software-as-a-service (Saas) platform that maximises the value of automotive and workflow data by providing real-time data analytics solutions for smart transportation.

Cartrack’s offering now reaches beyond connected vehicles, as it assists enterprise customers in digitalising the mobility aspects of their businesses, including the administration of their fleets, management of field workers, operational logistics and last-mile deliveries.

Picup is a founder-led, logistics cloud-based disruptive technology company based in South Africa. The company is a system integration partner of Cartrack and is positioned in the online delivery operational management software industry.

Given that Cartrack’s mobility open-ecosystem platform allows for integration into third-party systems, Picup has been working with Cartrack to address the challenges of last-mile delivery through an integrated offering.

“Picup simplifies transport operations and helps mitigate the risks associated with logistics, specifically in relation to meeting tight delivery timeframes,” says Karooooo in a statement.

“Cartrack customers are now able to manage their own fleets and workflows, interact with specialist courier companies, as well as a network of vetted crowd-sourced drivers, thus enabling them to efficiently scale their e-commerce business, deliveries and general logistics needs.

“The platform allows enterprises and transporters to plan and allocate their loads, access real-time tracking and proof of delivery with automated payments.”

The logistics industry has historically been very inefficient, with many enterprises not optimising their fleets and often having an inflated fleet-size to balance customer demand, notes Karooooo.

“As e-commerce booms, retailers and wholesalers require more efficient, flexible and cost-effective ways to optimise delivery capacity using a cloud solution.

“Picup facilitates an elastic fleet of third-party delivery drivers to handle overflow volumes, allowing clients to plan optimally, without having to factor surge periods into their base operating capacity.”

Picup, a start-up currently completing more than 200 000 monthly deliveries, services large blue-chip enterprises such as Dischem and Pick n Pay.

The company’s scalable business model has gained in relevance post the emergence of Covid-19, offering a meaningful opportunity for expansion, says Karooooo.

“This transaction supports the growth aspirations of Cartrack and Picup as the demand for last-mile delivery escalates at a rapid rate.”

“As we think beyond connected vehicles, it is imperative that our cloud platform is a comprehensive mobility solution that addresses the needs of both our existing and future enterprise customers,” says Zak Calisto, CEO and founder of Karooooo and Cartrack.

“E-commerce transactions across the globe are increasing dramatically and we need to ensure that we are well positioned to assist our enterprise customers in fully digitalising the mobility aspects of their businesses.”

Antonio Bruni, founder and CEO of Picup, and the management team, will remain invested with a 29.9% interest in Picup.

Karooooo has the option to increase its shareholding to 83.5%.

A just transition towards net-zero carbon emissions by 2050 offers significant opportunities for a new growth path built on green industrialisation and could provide the anchor for a new “shared vision that binds us”, former Deputy Finance Minister and State Capture whistle-blower Mcebisi Jonas contends.

Delivering a keynote address during a virtual meeting of the Presidential Climate Commission (PCC), Jonas argued that the just transition was not merely about reducing carbon emissions but also about placing the country on a new green industrialisation path to simultaneously address growth, jobs and transformation.

“Green industrialisation through a renewable-energy transition offers possibilities to break with our path-dependent growth model,” Jonas, who is MTN chairperson and one of President Cyril Ramaphosa's four investment envoys, said.

South Africa, he added, had outlived its historic growth model centred around its minerals and energy complex and commodity exports.

“A build programme of 5 GW per annum, which is not inconceivable, could see the creation of tens of thousands of direct jobs per year, and would create an approximately R30-billion market for renewable local content.”

The transition could also provide the conditions required to stimulate the creation of “dynamic and innovative black-owned enterprises” and enable South African enterprises to become “front-runners in green industrialisation”.

It would, thus, be an “historic mistake” not to prioritise the just transition, even while the country was grappling with the immediate crisis points of joblessness, rising crime and political unrest.

“Failure to realise net-zero targets will see South Africa lose investment and face mounting trade and export barriers,” Jonas warned, noting that noncompliance with net-zero targets would become the new barrier to international trade and investment.

South Africa is currently finalising its updated Nationally Determined Contribution (NDC), which will be deposited with the United Nations Framework Convention on Climate Change ahead of the COP26 climate negotiations scheduled for Glasgow, Scotland, in November.

The country’s draft NDC update, which was the subject of public consultation earlier this year, does not place South Africa on a path to becoming net-zero by 2050.

The document is currently being revised, however, to accommodate for the public inputs, including one from the PCC which called for greater ambition to 2030, as well as a clearer net-zero-by-2050 commitment.

Jonas told the virtual PCC meeting that the just transition also offered South Africa a chance to redeem its global standing in a manner similar to the way President Nelson Mandela’s administration had made South Africa “the poster child of democracy”.

“If done well – transparently and corruption free – the country could regain its poster child status, this time of the just transition,” Jonas averred.

However, the fact that no resolution had yet been found to Eskom’s R401-billion unsustainable debt burden could present difficulties for the transition as it was “accelerating its terminal death spiral” and precluding the State-owned utility from accessing finance for new renewable-energy assets.

“None of the options would be our first choice – debt write offs, Public Investment Corporation buy-outs, debt swaps for future generative assets – but they need to be considered based on a well thought out and transparent cost-benefit analysis.”

The importance of political will, social consensus and inclusion was also underlined on the same PCC platform by Trade & Industrial Policy Strategies senior economist for sustainable growth Gaylor Montmasson-Clair.

He described political will and the alignment of vested interests as the main driving forces for the just transition, as “opposition from only one group could derail the process”.

“While the end goal is paramount, the prevailing dichotomy between the existing present and the aspired future means that the journe...