The PIC or South Africa’s Pension Investment Corporation is rarely seen as an aggressive player. As the country’s biggest pension provider, it said it would use new methods that would see it as more of an aggressive player to help boost the country’s economy.
According to PIC Chief Executive Dan Matjila, the fund has about $117bn and is a key shareholder amongst South Africa’s top companies. Matjila plans to create a black consortium and to assert a major stakehold in Barclays Africa. The Johannesburg-based subsidiary of Barclays is selling off its company and the PIC wishes to use it to its advantage.
“The challenge is that we’re facing headwinds now — the economy is expected to grow below 1 per cent,” he says in an interview. “We’re now moving from the passive approach of saying, ‘Strategic asset allocation is going to work for us,’ to, ‘How do we then influence the economy this time? So that we can catalyse growth and therefore that will translate into asset growth’.”
Matjila estimates the new strategies can help drop the PIC’s returns from 14 per cent to 12.5 per cent a year. He said the PIC must be an instigator of growth by using investments to bolster employment.
It would also remove pressure in the Unemployment Insurance Fund given the new jobs the PIC and its other subsidiaries could offer for the country.
But the PIC has had to fend off worries that some of its decisions are politically driven and not necessarily in the best interests of the pension holders. It has also endured criticism from opposition MPs that it lacks transparency, particularly with its unlisted assets which account for 20 per cent of its portfolio.
Greater intervention in the economy is likely to increase scrutiny of the fund.
“We will be working hard to crack open the Public Investment Corporation and ensure that it is fire-walled from becoming a corporate battering ram and a piggy bank for the ruling (African National Congress) party in South Africa,” said David Maynier, an opposition Democratic Alliance MP, in a recent speech.
In an effort to expand South Africa’s economy, South Africa President Jacob Zuma had flown to Saudi Arabia during his state visit and had gone to the South Africa- Saudi Arabian Business Seminar in Riyadh, Saudi Arabia’s capital. The President intends to tighten the cooperation between South Africa and Saudi Arabia. He believes that South Africa has competitive offerings for the Muslim kingdom.
According to the South African President:
“The next important step is to enhance bilateral trade‚ investment flows‚ the identification of targeted areas of collaboration and to address impediments in this respect as well as the implementation of a mutually agreed upon framework to enhance economic‚ trade and investment cooperation‚” he said.
“This includes collaboration in skills and technology transfers‚ the strengthening of trade institutions and optimal cooperation between the governments and private sectors of our two countries.”
The President highlights agricultural products, food processing equipment, natural goods from agricultural produce, mining management, mining equipment and technologies, minerals mapping and benefication.
He also highlighted South Africa’s medical and pharmaceuticals sector, clothing, textiles and leather industries, advanced manufacturing equipment, forestry, pulp and paper and furniture.
Saudi Arabia, which has diverse partnerships with the United States and Europe, may find prices in South Africa to its liking. South Africa can benefit from immense business deals, which can help save and uplift its diminishing economy.
Africa’s growth does not depend on the decision of Davos according to analysts.
The Times South Africa said the continent did not depend on their visits to Davos to ask for favours that would benefit the country. The newspaper editorial said Africa is linked to the global economy and hosting an annual economic forum in their own country can help make matters better.
The newspaper said SA President Jacob Zuma must stop trying to sell South Africa to the world every time he visits Davos in Switzerland. Reaffirming his stance that South Africa’s economy is a potential gain for any country does not guarantee developed and other developing nations would immediately work with South Africa’s economy.
The paper suggests seeking new markets. It also stressed maintaining the existing economic agreements in the country to help it grow. South Africa, according to The Times, is looking as if it was begging for the world to invest in its country.
Currently, South Africa’s economic downturn is due to failing Chinese demand with the latter’s economy gradually falling. However, The Times editorial suggested that South Africa is rich in resources and manpower, making South Africa a preferred investment destination.
South Africa can only grow, according to The Times, if it would be prioritised by neighbouring countries for trade instead of relying on non-African nations to help its economy prosper.
Following its emissions rigging, Volkswagen is being investigated in South Africa as the carmaker admits about 11 million cars worldwide may have actually failed all emissions tests. South Africa’s Department of Environmental Affairs and Transport and the National Regulator for Compulsory Specifications said it was important to verify the possible rigging of US vehicle emissions tests.
Volkswagen CEO Martin Winterkom had resigned about two days. Matthias Mueller from Porsche may take over the business.
Meanwhile, the European Commission intends to launch a Europe-wide query into the Volkswagen scandal that many business analysts believe to be Germany’s biggest economic downfall. German Chancellor Angela Merkel said Volkswagen must restore confidence in its company.
Volkswagen provides about 250,000 local jobs in Germany and is a key economic player for the international carmaking industry. With Volkswagen’s failing investor confidence, Germany’s consumer economy could possibly fail. Volkswagen’s shares had gone down by 40 percent.
Development heads for Volkswagen, Porsche and Audi may be dismissed as the three were responsible in developing the software emissions examination. The software can lower the fume emissions of the vehicles while undergoing strict emissions tests from different regulators worldwide. Because of the rigging, US regulators had fined Volkswagen with $18 billion.
According to economic development analysts, Mozambique’s growing economy is offset by its challenges to urbanise the capital of Maputo. According to them, half of households only live on less than $125 monthly.
The capital has a population of 2.5 million, which would grow to four million by 2025. With no clear urban planning growth in the 1980s, thousands of plots of land were redistributed for citizen housing. Because of this unregulated urban growth, it has overstretched the city’s health, education and transport systems.
This had led to the poor quality of living in the area. Residents are living in inadequate housing in low areas prone to flash floods, virtually no access to water and sewage systems, and waterborne disease outbreaks.
About three quarters of residents live in informal settlements. Most of these are built with poor material. According to SciDev.net’s research, most apartments in Maputo, despite their comely appearance, are prone to power shortages.
Road development is also an issue in Maputo. The roads have been loosely developed with poor materials. Because of the poor construction, some sewage systems have been exposed, allowing patches of farmland in the urban area to use it for crop irrigation.
According to the Maputo Port Development Company, they expect the Port of Maputo to exceed its current record of 17 million tons of cargo. According to the Mozambican news agency AIM, Minister for Transport and Communications Gabriel Muthisse, said that the efforts for growth and commitment to the national and regional economy had the port’s growth as evidence.
The expectations of the Maputo Port Development Company come at a crucial time as the Sappi group is eyeing the African port as its export centre to Asian Markets. The group announced in October that together with four more companies, they will make use of the port to ship 10,000 containers yearly using the Port of Maputo. The group’s factory resides 250 kilometers away in Mpumalanga.
The Sappi group dissolves wood pulp, which it exports to different clients and business all over the world such as China, India and Indonesia. Its primary use is to make thread for textiles and other luxury flooring.
According to Muthisse, more work is needed for the port to have “economic justification”. Muthisse hinted that future projects could mean renovating the port to accommodate larger ships to put it at the same level as the Richards Bay and Durban ports in the area.
The Oil and National Gas Corporation, which is the international branch of the local indian Oil and Natural Gas Corporation, is to borrow a record-breaking $4 billion from the industry and the government to fund its acquisition of a giant Mozambique gas field.
Other companies, OVL and Oil India LTD will be buying 10% of the Mozambique gas field, which amounts to $2.475 billion. OVL confirmed it is willing to borrow $4 billion to acquire the gas field stakes. OVL and OIL’s joint venture will split their field purchase at 60/40 as OVL’s share is $1.485 billion from the $2 billion price. The company plans to raise $1.5 billion to purchase the land next week.
OVL plans to refinance the $1.5 billion loan within 3-4 months as India’s economy is looking good. The company recently purchased an $800 million interest in an Azerbaijan oil field.
The Mozambique Rovuma Area 1 could possibly hold 35 to 65 cubic feet of gas reserves. These gases are then converted into LNG, used in most households and allows for better transportation for extractors.
The car manufacturing giant had announced that it would use both South Africa’s Durban and Maputo ports to ease the burden on SA’s Durban port in exporting the latest 3-series Sedan currently manufactured in a BMW assembly plant in Rosslyn, Pretoria. With five-digit exports, an almost 70,000 unit export was too heavy for Durban, leaving Maputo to take at least 30% of the burden.
BW SA Manager Bodo Donaeur said that the new export system is the beginning of a new competitive logistics network. The export network would allow access to South African Development Community ports and other sea, rail and road freights.
BMW’s attention turned to Maputo after its disappointment with South Africa’s rail and port services, which lacked in performance. Donaeur said the new split-port system will allow the business great clout in terms of logistics and will allow him to assess Maputo’s long-term stability for BMW’s stay.
The new 3-series Sedan in Durban will be exported to the United States as 20% is sold locally in South Africa. Around 14% of Durban’s exports go to Japan, 6% to China and 4.4% to Australia.
The Maputo Port, which invested highly in the car import and export industry, looks to other Pretoria manufacturers such as Nissan SA and Ford SA to take advantage of the capabilities of the port after BMW SA takes it up on its deal.
Maputo is a great place to spend a vacation in, but if you want to continue living in the country, you need to own at least one residential property to begin your business. Starting a business in Maputo is similar to every country’s guidelines. However, you’ll also need to face the following.
1. Market Research
In Maputo, regardless of how beautiful the place and city is, you might find little to no information about low-cost start ups and support for your endeavours. However, most researchers say that most of the time, Maputo market gaps include the smallest of things, including varieties, quantities, choices, luxuries and even gardening tools. This can serve as a good starting point.
Be sure to identify the resource areas you’ll be getting your supplies to produce your product or provide your service. These resources include the factories that will make the packaging for your products, the equipment you need for your services. Locate the nearest in the vicinity to ensure lower costs in delivery and faster delivery track dates.
3. Registering Your Name
You could make use of a company-registering service that charges a fee to register your name or you could do it yourself. You will also need to pay for the copyright and trademark of the name if possible. In Maputo, they would need you to name your company as something related to your industry. For example, Axel’s Heavy Industry talks about construction.