Spain to invest R42bn in South Africa's energy transition, water projects

News24 | 11 April 2023

Spain is providing €2.1 billion (R42 billion) to help fund South Africa's energy transition and water needs, even as some of the world's richest nations struggle to push forward on a ground-breaking climate-finance initiative with the country.

The Spanish funding is being provided through a mixture of financial instruments, with the country's government working with its development finance institution, Cofides, and South Africa's Industrial Development Corporation, said Ambassador Raimundo Robredo Rubio.

While not part of it, the Spanish initiative is in line with the aims of the $8.5 billion Just Energy Transition Partnership between South Africa and funding partners including France, Germany, the US, UK and the European Union. That programme has been hailed as a pioneering example of how rich nations can help wean developing nations off their dependence on coal.

"This is the first time in history we have done something like this," Robredo said in an interview at his nation's embassy in Pretoria. "It is tailor-made just for South Africa," with the potential to replicate it in other countries, he said.

Spain, along with other developed countries that aren't part of the Group of Seven wealthy nations, weren't included in the JETP as it was an initiative of that bloc. JETPs are also being put in place in countries including Indonesia, Vietnam and Senegal.

Spain will provide €15 million (R297 million) in grants for feasibility studies, while the rest of the money will come in the form of loans at about half the cost of commercial credit, risk insurance, and capital investments, Robredo said.

Capital investments will be done together with Cofides and the IDC, with clear exit prices and dates, Robredo said. There will be a requirement that while those projects will be 100% financed, while 30% must go to Spanish companies in the form of equity or procurement, he said.

"Spanish participation is needed," Robredo said. "There must be a return to the taxpayer."

The funding will cover potential investments in renewable energy, battery storage, transmission, green hydrogen and electric vehicles. Unlike the JETP it will also be open to water and sanitation projects.

The IDC signed a cooperation agreement with Cofides in October, though the amount and funding instruments are still to be finalised, as are ownership and procurement levels, Tshepo Ramodibe, the development institution's head of corporate affairs, said in a response to queries.

A pipeline of opportunities is now being developed and agribusiness opportunities may be included, he said.

Denmark, Netherlands

Spain isn't the only European country seeking to help with South Africa's transition from its reliance on coal, which accounts for more than 80% of the power the nation produces.

Denmark has funded knowledge-exchange programmes on topics such as power-market operation and energy regulation, and oversaw the mapping of South Africa's wind resources.

It's also made South Africa, a middle-income country, eligible for development finance for infrastructure projects such as power plants and a fund of about 1 billion Danish krone ($146 million) to cover this, said Tobias Elling Rehfeld, the Nordic country's ambassador to the African nation.

The Netherlands is planning a study to identify energy-transition opportunities in South Africa for Dutch-funded businesses and investors, and will use existing instruments to execute this, a diplomat familiar with the plans said.

The country is also working with national power utility Eskom to repurpose land for labour-intensive agriculture at the site of the Grootvlei power plant, which is scheduled to be closed in coming years, they said.

That partnership would initially create 300 jobs and the aim is to form a commercial venture between Dutch and South African agricultural companies. Eskom didn't respond to a request for comment.

South Africa produced an energy-transition plan last year that estimated it will need R1.5 trillion in investment over the next five years. It comes at a time when frequent breakdowns of aging coal-fired plants are subjecting South Africa to rotational power cuts of often more than 10 hours a day.

"What I see now is a lot of other international partners moving in to see where they can help," Rehfeld said, adding that Denmark has been running energy programmes in South Africa since the end of apartheid in 1994.

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South Korea to allow online permit-free entry for tourists from 22 nations

South Korea will temporarily exempt people from 22 visa-waiver nations from mandatory online travel permits and transit visa requirements as part of efforts to attract more foreign tourists and boost domestic demand, the Finance Ministry said on Wednesday.

These are a set of measures aimed at attracting 10 million foreign tourists this year, a goal that could help spur private spending and revitalize the economy amid an economic slowdown, Yonhap News Agency quoted the Ministry as saying. The number of foreign visitors to South Korea hit a record high of 17.5 million in 2019, generating tourism revenue of $20.7-billion, according to data compiled by the Korea Tourism Organisation. However, due to the Covid-19 pandemic, the number of visitors dropped sharply to 2.5 million in 2020 and 967 000 in 2021, before increasing to 3.19 million in 2022.

People from 22 nations, including Japan, Taiwan, Hong Kong, Singapore, Macau, the US, Canada and the UK, will be able to enter South Korea without getting a permit through the online travel permit system, the Korea Electronic Travel Authorization (K-ETA), by the end of next year if they visit the country for sightseeing and attending events.

The K-ETA is required for travellers from 110 visa-waiver nations, and the 22 countries were chosen as the entry rejection rate among their nationals `is quite low`, according to the ministry.

South Korea also plans to resume transit visa exemptions for transit passengers from 34 nations, including the US and European countries, to allow them to stay here for up to 30 days.

Group tourists from China can stay for up to five days in the city where the domestic airport that they use is located or the Seoul metropolitan area if they transit through the southern resort island of Jeju, about 450km south of Seoul, the Ministry said.

The government will also ease conditions for visa issuance for group visitors from Vietnam, the Philippines and Indonesia, while creating new visa programs for high-income foreigners and for young people.

The number of international flights will be increased to the pre-pandemic level.

The government will increase flights to and from China to 954 per week by September from the current 63 flights, and those for Japan will rise to 1 004 per week from the current 863 flights.

South Korea also vowed to offer various large-scale events related to K-pop, shopping, food and other cultural items.

Major K-pop concerts will take place across the country from May through October, including the Seoul Festa 2023 slated for April and a concert to be held in the port city of Busan, 325km southeast of Seoul, in May.

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Rising property trend among wealthy in SA, apartment living

The 2023 Wealth Report said when it came to price growth, luxury apartments have been the best-performing residential property segment in the country over the past decade. 

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• The 2023 Wealth Report says apartment living is on the rise for the wealthy in South Africa.

• Johannesburg and Cape Town have the top luxury apartments in the country, but Umhlanga, Plettenberg Bay and Hermanus are also on their way up. 

South Africa is home to almost twice as many high-net-worth individuals as any other country on the African continent, according to a new wealth report, and there is an interesting trend on the rise where they are increasingly investing in luxury apartments. The 2023 Wealth Report said when it came to price growth, luxury apartments have been the best-performing residential property segment in the country over the past decade as buyers move away from standalone houses. 

The report by Henley & Partners and New World Wealth added this trend could possibly be linked to the safety and security offered by apartment complexes, potentially lower municipal rates and how much easier it was to maintain an apartment versus a house. 

Johannesburg and Cape Town have the top luxury apartments in the country, while Umhlanga, Plettenberg Bay and Hermanus are towns that are on the up and up in this regard. 

Here are some of the most notable ones: 

Some of SA`s top luxury apartment complexes. 

Towns on the rise

The report also highlighted Plettenberg Bay, Hermanus, Keurboomstrand, and Nature`s Valley (all in the Western Cape) as the country`s up-and-coming `wealth hubs`. 

`After Johannesburg and Cape Town, [Plettenberg Bay] is the top location in South Africa for ultra-luxe homes, with approximately 350 homes valued over $1 million [R17.8 million]; [it] has seen a big rise in permanent residents over the past few years, which has boosted its wealth,` it said, adding while Cape Town suburbs dominated, square metre prices in parts of Hermanus and Plettenberg Bay were starting to catch up. 

Hermanus` rise is attributed to its increasing popularity as a retirement destination, while Nature`s Valley`s appeal as a relatively untouched natural gem has made it a key city for nature lovers with big pockets. 

African billionaires leaving the continent 

The report also revealed the continent`s millionaire population was estimated to grow by 42% in the next decade, with 37 800 dollar millionaires living in the country now. 

On the flip side, several African-born billionaires have left the continent.

The report said:

Notably, there are 52 African-born billionaires globally, of whom only 23 still live on African soil. 

`This is a significant concern as many billionaires are entrepreneurs and company founders who therefore have the ability to create significant employment in their host countries.`

New visas planned for South Africa

The Department of Home Affairs says it has started laying the groundwork for new visa types to be introduced in South Africa, in a bid to draw in skilled workers.

The department has published its 2023/24 annual performance plan, which includes its intentions and targets for the current financial year.

In the plan, Home Affairs minister Aaron Motsoaledi said that the department is currently exploring new visa categories, including start-up visas and remote working visas.The minister has long responded to inquiries about these visas by saying that the current regulatory framework to introduce them does not exist, and had indicated the department had no plans in place to change this.

However, these visas, and a wider push to draw skilled labour to South Africa, have been key points in president Cyril Ramaphosa’s State of the Nation Address (SONA) for the last two years.

Action on Ramaphosa’s promises is now finally being taken.

“The comprehensive review of the work visa system is underway to explore new visa categories that could enable economic growth, such as a start-up visa and a remote working visa,” Motsoaledi said.

“In this regard, certain process and policy recommendations proposed by the Vulindlela Task Team are being considered by the DHA for implementation. These recommendations are aimed at establishing a visa regime that will attract skills and promote tourism. ”

As part of these plans, the department said it would publish a White Paper on the Management of Citizenship, International Migration and Refugee Protection, which will address these new visa types, among other key immigration issues.

President Cyril Ramaphosa’s 2023 State of the Nation Address made commitments such as the establishment of a more flexible points-based system to attract skilled migration, implementing a trusted employer scheme to make the visa process easier for large investors and streamlining application requirements as well as introducing a remote worker visa and special dispensation for high-growth start-ups

These will all be covered in the whitepaper, the department said.

A consultation document (green paper) is expected to be completed by the end of the first quarter of the financial year (end June), with a whitepaper expected to be submitted to cabinet by the end of the fourth quarter (April 2024).

In the meantime, the DHA said it will also continue rolling out an e-Visa system, which will place technology at the centre of operations by making it easy and secure to enter and depart South Africa.

Visa chaos

While the department has big plans for reworking the visa regime, it is currently sitting with a massive backlog that is causing chaos in its back offices.

The department announced last week that it would be extending the validity of some standing visas while it tries to process over 62,700 applications and waivers that have backed up.

To put the extent of the backlog in context, the department aimed to have most critical skills visas processed within four weeks of application in 2022, but has estimated that it only managed to process 20% of these applications in that time.

This is down from 57% in 2021. The DHA has now set a lofty goal of having 90% of these visas processed in 2023  however it anticipates only being able to clear the current backlog some time in 2024, so this is looking unattainable.

One of the key solutions the department is proposing is introducing “one-top-shop” visa processing through the Visa Adjudication System (VAS).

“The VAS enables the capability to submit visa applications online and adjudicate electronically, from receipt of applications to issuing of outcomes. This brings efficiency and supports facilitating the movement of business persons, migrant workers with skills and prospective investors to South Africa,” the department said.

The implementation of these one-stop-shop centres will offer investors and their families reduced turnaround times for priority applications by establishing a dedicated centre at the back office to deal with applications received from these centres and offer immigration-related advice.

The VAS will provide for the central administration of all visa and permitting applications made within South Africa through the department’s appointed frontline servicing partner, VFS Global.

“The White Paper on Home Affairs states that by 2025 core elements of the new model must be fully functional, including basic administrative and core business systems, and required security standards must be maintained,” it said.

By 2029 the envisioned end-state must be achieved with the legacy model fully replaced, world-class standards maintained and funding for the full execution of the DHA mandate secured.

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SA has significant deficits in areas like technical skills. 

A major overhaul of South Africa`s visa regime is needed, and during his upcoming investment conference, President Cyril Ramaphosa should address the issue, according to Business Leadership SA (BLSA).

`The president could use the opportunity to announce a credible intervention to fix the visa mess. That would go far to addressing one of the major sources of a lack of confidence in South Africa`s investment case,` the BLSA says in its latest newsletter.

Visa administration problems at the Department of Home Affairs are unacceptable and a serious impediment to the South African economy, according to BLSA.  

The slow processing of applications for work visas and the extension of existing ones create an `impossible situation` for companies doing business or wanting to do business in SA. This is despite efforts by Operation Vulindlela in the Presidency to revise the scarce skills list, the BLSA said in its weekly newsletter on Monday.

`For company executives, the uncertainty created by the administrative chaos is a massive turnoff. If a company is considering the location of their regional headquarters, how does South Africa compare to competitors such as Dubai?` asks the BLSA.

It estimates that more than 50 000 foreigners working in SA face losing their status when their visas expire, purely because the Department of Home Affairs has been unable to process their applications in time.

It points out that SA has significant deficits in areas like technical skills. `We need to give international companies the confidence to plan on investments here without the fear that they will simply be unable to send their people because we cannot manage our bureaucracy,` states the BLSA.

`Next week, the president will be hosting the fifth South Africa Investment Conference, which is aimed to attract foreign investment to the country. The president could use the opportunity to announce a credible intervention to fix the visa mess...Organised business is eager to help.`

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