South Africa gets R10 billion from France and Germany for the move away from coal – terms and conditions apply

South Africa gets R10 billion from France and Germany for the move away from coal – terms and conditions apply

Staff Writer - 14 Nov 2022

South Africa, France and Germany have signed loan agreements for the two European nations to each extend €300 million – about R10 billion in total – in concessional financing to South Africa to support the country’s just energy transition.

The loans will be provided by the French and German public development banks, Agence Française de Développement (AFD) and Kreditanstalt für Wiederaufbau (KFW), directly to the National Treasury.

“The loans are highly concessional as their terms are substantially more generous than what the government of South Africa would be able to raise in capital markets,” said Treasury.

The Treasury explained that the estimated cost for the government of South Africa to raise an equivalent loan today in the market would be around 8.9% – considering fair value estimation of South Africa’s foreign currency bonds relative to the risk-free rate, secondary market activity, and historical issue spreads.

“Due to South Africa’s high stock of debt and the currently high-interest rate environment, replacing market lending with much cheaper concessional loans allows South Africa to reduce its cost of funding and overall debt burden.

“By lowering debt service costs, the government of South Africa creates more fiscal space for critical social and other priorities,” said Treasury.

The department added that these loans are already reflected in South Africa’s gross borrowing requirement and are well within South Africa’s risk benchmark of foreign debt as a percentage of total debt.

These loans form part of an international funding package of $8.5 billion (R147 billion), known as the Just Energy Transition Partnership (JETP), pledged to SA by France, Germany, the UK, the US and the EU at COP26 in November 2021.

Although 97% of the R147 billion is expected to be offered in the form of loans, it is still unknown what the terms will be – especially regarding those offered by the UK, the US and the EU.

However, while this funding is welcomed, it is only a small drop in the ocean of what experts estimate South Africa will need to fully realise its transition goals.

President Cyril Ramaphosa, during a speech at the COP27 summit in Egypt this week, said that the country needs close to R1.5 trillion ($86.5 billion) to reach its energy transition goals.

Despite this, the National Treasury said that this funding as part of the JETP is a notable step in attracting further investment – creating new industries and jobs, which will help South Africa to achieve energy security and climate resilience.

“South Africa requires more support for its just energy transition given the large scale of the required transition in the context of the current socio-economic challenges and will therefore continue discussions with various multilateral lenders to pursue this objective,” said Treasury.

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Water crisis in South Africa likely to be worse than the energy mess, warns infrastructure group

Water crisis in South Africa likely to be worse than the energy mess, warns infrastructure group

Staff Writer 14 Nov 2022

The current constraints on power generation in South Africa, which has resulted in extended load shedding by electricity utility Eskom, is overshadowing another potentially more dire crisis: water.

“The energy crisis is confronting us first, or maybe it is the most obvious, but for me, the current water shortage in Gauteng is absolutely a worse crisis. While the fundamental issues are the same, it is going to be a much more difficult situation for people to live with on a day-to-day basis,” said Darrin Green, Africa MD at globally trusted infrastructure firm AECOM.

Despite the issues being faced in the power sector, Green said that the work coming from it remains cyclical and difficult to secure. This is especially true on the high-voltage transmission and distribution side and even in the renewable energy sector, where despite a renewed focus, there is not a consistent flow of work.

AECOM said its involvement here mainly extends to photovoltaic systems for buildings, for example. “Of course, we have the necessary capability globally, but trying to bring that into the African market with all of the procurement issues we are facing is difficult,” said Green.

At a higher government policy level, energy also touches on sustainability, which AECOM embraces with its comprehensive Sustainable Legacies approach.

Climate change and resilience advisory services are an increasingly important part of this strategy globally. However, the approach in South Africa tends to remain reactive, as demonstrated by the recent flooding in KwaZulu-Natal. The question is how to futureproof infrastructure to mitigate the impact of such unforeseen events.

“Clients are not perceiving this as a priority. It must start with an overall understanding of sustainability and its key drivers. The South African market has not reached a sufficient level of maturity in this regard,” said Green, adding it is being equally hampered by a lack of future planning and modelling.

For example, integrated hydrological models of South Africa’s coastlines are not being maintained or updated. Such modelling is critical not only to map out the available water resources, but to determine the potential runoff. “That determines the input into the design for various types of infrastructure,” noted Green.

If it is known how many cubic metres a second a river discharges into an area, and based on historical rainfall data, changing patterns can be determined and future anticipated runoff predicted
and planned for. However, what tends to happen is small-scale modelling is applied for individual developments, which often relies heavily on the consultant’s experience.

A lack of holistic or integrated planning means that any upstream developments will be affected by concentrated or uncontrolled runoff from elsewhere. Downstream infrastructure and properties
simply cannot cope with that capacity, resulting in a snowball effect.

“It is not so much that there is a lack of development policy or controls, but these are not enforced,” said Green. While integrated planning is critical for stormwater, it applies to all infrastructure.

In terms of electricity, integrated planning is not only essential to understand future supply and demand but also how to maintain the existing supply. Transitioning to renewable energy sources is a means of futureproofing, but it must be bolstered with adequate policy support.

“We have to be at the level where we can design infrastructure with a proper understanding of all of these inputs,” said Green.

“Lifecycle costing optimisation needs to happen as part of this future-proofing. Another issue is that maintenance is not being carried out. Even if you design something the way it should be for resilience and futureproofing, a maintenance regime must be put in place.”

A simple example is ensuring stormwater drains remain clear. If these become blocked, it potentially changes the runoff pattern and can have a major impact on infrastructure elsewhere. “The mantra of ‘maintenance, maintenance, maintenance’ sounds very simple, but it is not being done,” said Green.

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3 big changes coming to Home Affairs

3 big changes coming to Home Affairs

Businesstech - 10 November 2022

The Department of Home Affairs (DHA) says that it is changing the way it does its business in South Africa, with a bigger focus on its mobile unit operations.

Presenting to the portfolio committee on home affairs on Tuesday (8 November), the department said that it is in the process of rolling out more mobile units to serve remote and rural communities in the country.

Over time, it said that this fleet of mobile units will outnumber its static offices and will become the department’s biggest service channel.

Currently, there are 110 mobile units across the provinces. These units focus on rural communities that often have to travel far to get access to DHA services. There are 106 units deployed to these areas, while four units are at head offices for special projects and testing new initiatives, it said.

20 more mobile units will be deployed in the current financial year, with plans to procure even more in the future. The department said that there is a need for 800 service points across the country – although it noted that this does not mean it will have that many units.

The department is also upgrading its fleet with Flat panel VSAT units for better connectivity, as there are areas where there is no 3G connection. This feeds into the department’s other changes around connectivity and network capacity.

The push for more mobile service points in the country comes as part of the DHA’s wider goal of tackling long queues and long periods of downtime at offices.

Back-office of a mobile Home Affairs truck

Tackling network downtime

Over the last few years, the department has been trialling several initiatives to deal with these issues, but they persist. It told the portfolio committee that it had identified key hurdles, primarily revolving around the State Information Technology Agency’s (SITA’s) core infrastructure.

SITA’s core network is under severe stress, and both the DHA and SITA are hampered by ageing infrastructure, the DHA said. In an assessment of the department’s technology, it found that of DHA-owned Wide Area Network infrastructure, 61 of 398 sites are obsolete. Of 450 Local Area Network devices, 398 are obsolete.

Other key issues identified are that data centres are fragmented, increasing latency; back-ends are bloated with software applications; and bandwidth is severely limited, causing bottlenecks.

Bandwidth has become a significant issue, it said. with increased use of video conferencing and growing datasets adding unprecedented demand to the networks. Bandwidth at some sites is below 1Mbps, the DHA said. While the department is busy upgrading to 2Mbps, it wants to go as high as 1Gbps to 10Gbps because the demand for bandwidth is huge.

To address this, DHA and SITA have contracted Broadband Infraco to upgrade infrastructure to assist with network downtime. SITA has embarked on a R400 million project to overhaul its core network over five years – R159 million has been spent so far.

Dealing with network downtime will not only reduce queues and frustrations at Home Affairs branches but will also satisfy banks, allowing the department to expand its services to more bank branches in the country.

Appointment booking system

The department is also rolling out its Branch Appointment and Booking System (BABS) to more sites in the country.

The system is currently active at 162 front offices in South Africa – up significantly from the 24 pilot offices that were running it earlier – but is limited to Smart ID and passport applications only, so the department is operating on a hybrid model.

Customers using the system have reported great success and ease of use, with wait times reduced significantly and services being rendered in under 30 minutes. Over 200,000 people have used the system since June 2022.

The department said that 34 more offices are currently in process of implementing the system, with these sites going live by the end of November 2022.

Further developments for the BABS include expanding the system beyond applications to also include collections and providing tablets to sites that use the system so that South Africans with no access to a computer to make the bookings online can also make use of the system,

The DHA said it is also investigating zero-rating access to Home Affairs websites so that users aren’t charged for making use of the systems.

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MPs rip into Motsoaledi over department’s ‘sins’ – long queues, offline systems and shambolic immigration services

MPs rip into Motsoaledi over department’s ‘sins’ – long queues, offline systems and shambolic immigration services

Daily Maverick – 10 November 2022

Details of how Home Affairs planned to reduce queues were laid out by Minister Aaron Motsoaledi in his budget vote speech, but he largely dodged South Africa’s immigration fiasco, simply saying a complete overhaul was in the offing as the main opposition parties gave him short shrift over our poorly managed, porous borders.

In his budget vote speech on Tuesday, Home Affairs Minister Aaron Motsoaledi outlined a 12-point plan to increase efficiency and reduce the long queues outside the department’s offices – but chronic staff shortages will remain.

Long queues were one of two “elephants in the room”, said Motsoaledi, the other being immigration. But he dealt with immigration in just two short paragraphs, although it received the most heated criticism from the main opposition parties.

A lack of staff at the civic services branch contributes to the excessively long queues. In 2021, Home Affairs director-general Tommy Makhode told Parliament only 37% of civic services posts at Home Affairs were filled, with no budget available to fill 9,025 vacant posts in the branch that provides identity documents, passports, birth and death certificates and marriage licences to citizens.

Daily Maverick has been highlighting how citizens across the country struggle to obtain the documents they need to work and travel, revealing day-long queues in Johannesburg, Stellenbosch and Cape Town.

On Tuesday, Motsoaledi revised the current percentage of filled posts to 39%, saying an additional allocation of R266-million within the R9,4-billion budget for the 2022/23 financial year to deal with the staffing crisis would allow the staff complement to be increased to 42% of what is required to serve the 412 Home Affairs offices nationwide.

He said that over the past five years Treasury had “slapped a ceiling” on the budget for staff salaries, which resulted in people who left the department’s employ not being replaced. Added to this were severe budget cuts over the past two years as money had to be moved to health facilities to fight Covid-19.

But now Treasury “came to the party”, he said, enabling the department to hire 764 new employees. Of these, 517 will be front-office staff processing applications for documents such as ID cards and passports, and 288 will be new immigration officers. 

Banking on help

But no number of staff could reduce the queues if the “original sin” of the department’s systems being offline was not addressed. 

To this end, the State Information Technology Agency (SITA) was spending R400-million to revamp the entire network. The procurement process had just been completed and the work would be concluded towards the end of 2022.

SITA was also increasing the department’s bandwidth, had doubled its internet capacity and introduced three failovers (back-up systems) in Tshwane, Cape Town and eThekwini.

Nevertheless, SITA’s efforts did not seem to be sufficient. Motsoaledi said the department “stood in awe” of the banks who never seemed to suffer from system downtime, and was bringing eight IT engineers from “a leading bank” to help stabilise the Home Affairs network and install some key IT infrastructure. These specialists had been vetted and would soon start working with the department.

Home Affairs was already partnering with major banks, establishing a Home Affairs desk at 28 branches. However, the relationship was fraught, since capturing client details and biometrics at the branches relied on the Home Affairs system being online. With so much downtime, it affected the banks’ reputations.

“We believe that as soon as their own engineers have helped us to increase system uptime, the banks will cheerfully open their doors for Home Affairs services,” said Motsoaledi.

Load shedding also added to the department’s connectivity woes, and generators had been installed in 197 Home Affairs offices. But 215 offices remained at Eskom’s mercy.

The online booking system, piloted at 24 offices, was also aimed at reducing queues. It allowed citizens to make an appointment online and then arrive at the office at the appointed time, avoiding the need to queue. Since it was initiated in December 2021, 33,463 had used it as of 13 May.

Borders blasted

However, GOOD MP Brett Herron warned that the appointment booking system discriminated against the poor who could not afford data to book online, while efficient front offices remained a priority.

Almost all opposition MPs remarked on the long queues and people being turned away after waiting a whole day to apply for documents securing their ability to work, study, obtain social grants or travel. But the strongest criticism was levelled at Home Affairs’ immigration branch and porous borders which are attractive to criminal networks.

Both African Transformation Movement MP Vuyolwethu Zungula and IFP MP Liezl van der Merwe mentioned reports that South Africa’s shambolic border management allowed the Islamic State group to obtain funding from businesses run by illegal migrants.

“We do not have borders, the current manual asylum seeker system has collapsed and has been abused by economic migrants,” said Van der Merwe.

She shot down Motsoaledi’s announcement that the establishment of the Border Management Authority (BMA) was “well under way”, with recruitment of the first cohorts of border guards completed. In April 2022 it would become a standalone schedule 3A public entity responsible for our borders.

“The BMA is not the panacea to our problems,” said Van der Merwe. “It will take millions of rands we don’t have, and many more years to become fully operational.”

According to the budget summary, immigration affairs was allocated R1,5-billion, compared with R2,6-billion for citizen affairs and R2,3-billion for administration.

Motsoaledi had little to say about immigration. Beyond the announcement of the BMA, he said it was a crisis “we are all well aware of” and it would need its own budget speech if he were to start to outline it.

“For today, it will suffice to say we have decided on a complete overhaul of the immigration system of the country,” he said, adding that this work was well under way and would soon be unveiled. 

EFF MP Lorato Tito and DA MP Adrian Roos tore into the immigration debacle, with Roos saying the “ineffective” BMA was simply creating “millionaire managers” with “Land Cruisers and uniforms” who could not find people illegally crossing the border yet a Carte Blanche camera crew could. Further, the BMA was simply replacing senior managers in immigration who were supposed to be doing that job but remained employed.

Roos said the Stockpoort border post between South Africa and Botswana remained closed because Port Health was not able to implement Covid-19 protocols, resulting in businesses in Stockpoort closing and the bureau de change retrenching staff.

Tito said xenophobic sentiment resulting in the killing of foreigners such as Zimbabwean Elvis Nyathi, was stoked by Home Affairs failing to provide services on South Africa’s borders.

Not all bad

One successful achievement, however, which opposition MPs generally seemed to agree on, was Home Affairs’ deployment of mobile offices. With about 100 in operation and 15 more being procured this financial year, they had been successfully deployed to flood-ravaged areas in KwaZulu-Natal and the Eastern Cape, enabling people who had lost their identity documents to obtain new ones with the usual costs waived. 

Deputy Home Affairs Minister Njabulo Nzuza said the mobile units had serviced 131,164 citizens in the last financial year. They were particularly useful for rural and remote areas not serviced by Home Affairs offices, and for targeting Grade 12s so they could write their exams in possession of a new smart ID card.

Nzuza said the number of pupils writing Grade 12 exams without an ID card had been reduced from 8,187 in 2020 to 2,560 in the 2021 academic year. 

The department had a target of registering 90% of all births within 30 days by 2024, he said. To achieve this, they wanted to expand Home Affairs’ birth registration sites to all 1,145 health facilities in the country with maternity wards. Currently, only 391 had birth registration capabilities. 

However, Roos warned there needed to be an indigent programme to waive the DNA testing fees required to establish paternity in the case of absent fathers, or where one of the parents was a foreigner.

He said he was aware of a case where the child of a Swazi mother and South African father was not given an ID because the father could not afford a DNA test to prove the child was his. The lack of an indigent programme meant the mother and child faced generational poverty because the child would not be able to acquire education or employment without an ID.

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How much it costs to buy an estate agency franchise to tap into SA’s property market

How much it costs to buy an estate agency franchise to tap into SA’s property market

Business Insider SA – 10 Nov 2022

 

  • Almost all leading estate agencies in South Africa operate off franchise models.
  • This means you can buy a brand-name turnkey property business and benefit from ongoing marketing and head office support.
  • But several companies fiercely compete in this sector, and most don't disclose total financial commitments until you've declared an interest and signed an NDA.
  • Here are some property franchises that do disclose fees, which range between R500,000 and R1.2million.

Covid-19 threw a few curveballs into South Africa's property market but rebounded to experience unprecedented activity levels in 2022. 

It's possible to tap into this as an estate agent by earning commissions on sales. But if you have deep pockets and an entrepreneurial spirit, it's also possible to buy a turnkey real estate franchise from several leading brands.

Most household-name estate agencies like RE/MAX, Rawson, Pam Golding, Jawitz, and Just Property operate as franchises in South Africa. They sell the rights to specific regions to franchisees and offer varying levels of support. And central to the appeal of a franchise is a recognisable, established brand backed up by good websites and advanced listing services. 

These estate agent franchises in South Africa will likely cost more than starting your independent initiative from scratch, but it limits some risks and guides you through the process.

How much assistance you'll receive as a franchisee and how much you'll have to pay depends on the company you buy into. It's also essential to research the company - and to ascertain precisely how big your sales footprint will be. 

Although most estate agencies in South Africa operate on a franchise model, many hide the financial commitments behind NDA and other restrictions. Others, like those below, are happy to share some details of their models and franchise cost structures.

Here's how much it costs to buy an estate agent property franchise in South Africa:

Jawitz Properties

Jawitz Properties has more than 50 years of experience in the property industry. They offer training, property sales technology and social media assistance, business development support, and a referral system. They're looking for franchisees with interpersonal skills and a passion for the property industry and are selling franchises throughout South Africa and in several neighbouring countries.

Jawitz Properties costs: Jawitz charges an upfront fee between R30,000 and R200,000, depending on the size and location of the franchisee's area. They require working capital of between R600,000 and R1 million and expect the total development costs to be about R1.2 million. They also charge ongoing fees of 8% of turnover, which they split between advertising, marketing, and management. 

Just Property Group

Just Property Group has been in South Africa for more than 20 years. Over this time, they've built an extensive network of 122 franchises and 88 physical branches throughout the country. A head office team of 21 supports franchisees with finance, marketing, learning and development, and various operations and technology functions.

Just Property Group costs: Just Property charges a R250,000 establishment cost and estimates the total investment amount to be R500,000. They also require franchisees to have R500,000 in working capital and charge 8% monthly turnover for advertising, marketing, and management.

PropertyGuys.com

PropertyGuys.com claims to have developed a "distinctive, unique and sound business format" that provides homeowners with tools to sell their own homes and pay a fixed rate rather than a percentage of their property's value. They are selling franchises that allow franchisees rights to list properties in specific areas and assist with most aspects of set-up and ongoing operations.

PropertyGuys.com costs: Franchisees must pay an upfront fee of R250,000 and an establishment cost of R100,000 to R150,000. They also recommend a working capital of R150,000 and expect the total investment to be no more than R650,000. They charge ongoing fees of approximately R206,000 per year, which includes an advertising contribution, and royalties of 7% of gross revenue.

RE/MAX

RE/MAX is a US-founded company that's grown to become a global leader in the real estate industry. They currently have 130,000 agents based in 110 countries, of which South Africa is one. The local branch opened here in 1994 and has more than 2,500 agents working from 160 offices.

RE/MAX costs: RE/MAX does not publicly disclose full costings but says these are available upon application and depending on the licensed area. They charge 1.5% of turnover as a management fee and a national marketing fee of R660 per person, among others.

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