Energy

The dire consequence of continued load shedding have been acknowledged and commitments made towards ensuring additional capacity is added to the system both in the short and medium term with 3 900 MWs to be added between those preferred bidders under round 4 and 5 of the Renewable Energy Independent Power Producer Procurement Programme (the “REIPPPP”) and the Risk Mitigation power procurement program.

Promises have also been made that REIPPPP Bid Window 6 to procure 2 600 MW of renewable energy will be opened soon and requests for proposals (“RFPs”) for 3 000 MW of gas power and 500 MW of battery storage will be released later this year. On top of this, municipalities are looking to procure their own energy supplies and are currently in the process of procuring approximately 1 400 MW.

It also appears as if the government is committed to allowing the private sector to solve their own electricity problems through the release of reforms to the Electricity Regulation Act which ‘will enable a competitive market for electricity generation and the establishment of an independent state-owned transmission company’ by the end of the year. Considering the president has noted that an estimated 4 000 MW of embedded generation projects will be procured by the mining sector it appears as if reliance on private sector ownership and co-operation in this previously monopolistic state-owned market is not only receiving the Governmental stamp of approval but recognised as a means to help Eskom out of its dark hole.

Infrastructure

Unsurprisingly there is significant focus on infrastructure projects to be rolled out over the coming year(s). Infrastructure projects not only provide significant investment injections into the economy (‘a pipeline of projects with potential investment value of c.R96 billion in student accommodation, social housing, telecommunications, water and sanitation and transport’ is being developed by the Infrastructure Fund with projects to the value of R21 billion commencing construction this year), but infrastructure projects also tend to be labour intensive and as such hold significant capacity for job creation. It is therefore unsurprising that government is looking to build and upgrade 685km of rural road using labour intensive methods in the next 3 years. The wonder of infrastructure development is that in addition to money and jobs they also create opportunities making it possible for people to travel for work and school and to gain access to the broadband information highway. With this in mind it is exciting to hear that ICASA, will [finally] commence with the auctioning of the high frequency communications spectrum in about three weeks from now. Unlock[ing] new spectrum for mobile telecommunications for the first time in over a decade.
Having seen the success of government partnership with the private sector, through various rounds of RFPs, in the strengthening of the energy sector, it is exciting to hear that Transnet will be looking to increase their operational efficiency at their ports through requests for proposals for private partnerships in relation to some of their container terminals within the next few months with the aim being to have these partnerships in place by October 2022. Also, ‘Transnet will start the process of providing third-party access to its freight rail network from April 2022 by making slots available on the container corridor between Durban and City Deep in Gauteng.’

Mining and Commodities

In as much as infrastructure development and construction is a job creating industry so is mining and, hopefully, the mining exploration strategy which government will be finalising soon should inspire investor confidence and attract investment as the country aims to ‘continue to support the development of the upstream gas industry’ and ‘expand [the] mining industry in strategic minerals that are crucial for clean energy, like platinum, vanadium, cobalt, copper, manganese and lithium.’

Water

As a country in a region heavily affected by climate change South Africa must manage its water consumption wisely but the current water use licence application system is a frustrating process for industry. It is therefore encouraging that the President has committed to institutional reform and the development of ‘a comprehensive turnaround plan to clear backlog for Water Use Licence applications by June 2022 and process 80% of all applications within 90 days during next Financial Year’. This will be a massive improvement from the 300 days processing period applicants have had to navigate in the past.

Infrastructure development is also a focus within this space and ‘Government has initiated the process of delivering the uMzimvubu Water Project. The project is made of the Ntabelanga Dam and Lalini Dam, irrigation infrastructure and hydo-electric plant, Ntabelanga water treatment works and bulk distribution infrastructure to reticulate to the neighbouring  communities. The closing date for the first of the two-stage procurement process is scheduled to close later this month, with the preferred bidder likely to be announced in September 2022.’

Agriculture

Government continues to recognise the roll that this labour intensive industry plays in job creation and is hoping to create opportunities in industries previously untapped through ‘review[ing] the policy and regulatory framework for industrial hemp and cannabis to realise the huge potential for investment and job creation’ in an industry which has the potential to create more than 130 000 new jobs.

The role of small-scale farming in creating jobs and ensuring food security has not gone unmentioned and support plans for small scale farmers are being rolled out, including subsidies in the form of input vouchers currently available to 100 000 small-scale farmers with plans to scale up to reach 250 000 in this year. The possibility of arable state land being made available to ‘millions of thriving small-scale farmers’ was also alluded to. This, however, one does need to take this with a pinch of salt and read against the backdrop of the expressed intention to approve the Expropriation Bill during this year, albeit to ‘[move] ahead with land reform in terms of the Constitution’.

Making it easier to do business

Government has acknowledged that ‘there are too many regulations in this country that are unduly complicated, costly and difficult to comply with. This prevents companies from growing and creating jobs’ and if they want to encourage economic growth they need to remove some of the red tape businesses get stuck behind. There are several initiatives in the works to improve the ease of doing business in South Africa over the next few years: discussions have finally started with a view to reviewing labour regulations, for now focusing on smaller businesses, which will ‘enable them to hire more people’. To protect small business which have been severely affected by the pandemic and civic unrest to enable them to ‘bounce-back’ a loan guarantee scheme is being implemented and, finally, the eVisa system has been launched in 14 countries and the Critical Skills List has been updated. This should make it easier for businesses to ensure they have access to the essential skills needed to grow their businesses in South Africa and to do business in South Africa with their colleagues from other countries. Hopefully, with the review of the work visa system which is currently underway we will also see a start-up visa and remote working visa becoming reality.

If implemented, these initiative certainly point towards the ‘prospect of great progress’ to be made in the year to come.