The business of doing business in Africa

By | 2019-01-10T14:06:01+00:00 January 9th, 2019|News|
Protea Chemicals
Oli South Africa
Demag cranes

By Marcel Ley, Victaulic South Africa’s regional manager

A resurgence in the local economy on the basis of favourable international investment has ensured that industries such as mining and renewables will remain major contributors in attracting business to the sub-Saharan region of Africa.

Marcel Ley, Victaulic South Africa’s regional manager. Image credit: Leon Louw

Marcel Ley, Victaulic South Africa’s regional manager. Image credit: Leon Louw

Mining has long played a crucial role in the development of African nations, with the continent renowned for having the largest mineral resources in the world. With gold ranking number one in African mining resources, the continent boasts a rich plethora of other valuable minerals including bauxite, cobalt, industrial diamond, phosphate rock, platinum-group metals and others.

This in mind, while Africa should be enjoying the riches of its land, it has historically been plagued with issues of conflict and war, long making the security and essentially the viability of foreign investment in the mining industry across parts of central and sub-Saharan Africa a topic of discussion.

In relation, political unrest and poverty have long since played a role in the potential financial stability and investment opportunities of a nation. Zimbabwe in particular has played a catalytic role in the exposure of investment and business opportunities in Sub-Saharan Africa, with current president Emmerson Mnangagwa continuously emphasising the fact that Zimbabwe is ‘open for business’, and that he would ease local ownership rules and re-engage lenders such as the IMF.

According to the World Bank Group report on Doing Business in Africa: Sub Saharan Africa 2018; Mauritius, in 25th place in the rankings, is the highest ranked economy in Sub-Saharan Africa. Other economies in the region that perform well on the ease of doing business rankings are Rwanda (at 41), Kenya (80), Botswana (81) and South Africa (82).

And while vastly improved economic and political landscape across the continent has secured a favourable foundation for Africa’s continued growth strategy, corporates and industry have to ensure capital flow to ensure the future of work.

The recent IMF Regional Economic Outlook highlights a strengthening macroeconomic outlook for sub-Saharan Africa. The report predicts expectant growth from 2.7% in 2017 to 3.1% in 2018, reflecting domestic policy adjustments and a supportive external environment, including continued steady growth in the global economy, higher commodity process, and accommodative external financing conditions.

The favourable investment conditions of sub-Saharan Africa were reemphasised during the recent investment summit hosted by South African president Cyril Ramaphosa. Across the spectrum of industries, the major investment contributors in South Africa was Anglo American, that pledged an investment of R71.5-billion into the country over the coming five years.

In second place on the investment standings was Vedanta, another mining multinational with operations in South Africa, guaranteed to invest R21.4-billion towards the country’s metal industry. And in seventh place in the overall investment standing was Ivanplats, the local subsidiary of Canadian mining company Ivanhoe Mines, who promised R4.5 billion in investment in the local economy. And while the mining sector may have experienced a slight investment slump over the past few years, I am confident that this fresh investment may well result in a resurgence on the sector.

Although the resurgence in mining is reassuring, as an industry, mining must ensure that it remains a sustainable enterprise in the manner in which it operates, ensuring that safety and cost containment are key elements to guaranteeing that the investment was worth the buck.

We as a technology provider in the mining sector, see a number of opportunities that exist across the various divisions, ensuring that safety and underground effectiveness play pivotal roles in ensuring even greater investment.

As a contributor to the mining industry since the 1920s, we as Victaulic identified the need for products that are easy to assemble, disassemble, move, and reuse; products that offered flexibility, and would be able to be fitted in a fraction of the time in tighter spaces with far less labour and equipment than conventional joining methods.

We pride ourselves in our innovative designs that ensure that our products are easily installed and maintained. These improvements have provided even greater system durability, and with a decrease in time spent on underground fitment and maintenance, there is an upsurge in jobsite safety.

Ultimately mining doesn’t have to be unsafe, and with the introduction of stricter safety legislation and protocol, as well as advances in safety equipment, the industry has seen its fatality rate drop over time. Although the goal of zero harm has not yet been achieved, it remains the standard that mining companies continue to strive towards, and with the right innovative products at hand, the opportunity to consistently meet this standard beckons.