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Branching out
REGIONAL REPORT: SOUTH AFRICA
july-august 2013
international
construction
stations and numerous renewable projects such as wind and solar
farms. It is presently struggling to complete the Medupi power
plant, the world’s largest dry-cooled coal station, which is two
years behind schedule.
Due to the lumbering progress on this, and a sister coal plant
also underway, sceptics have poured doubt on Eskom’s nuclear
ambitions. But as the country’s need for power grows, and
environmental concerns make coal plants ever more contentious,
nuclear is likely to be viewed as the best solution
Outside South Africa
In the meantime, South African companies are looking further
north; the continent is home to the six fastest growing economies
in the world, and infrastructure spend is increasing rapidly.
“South African companies are setting up offices across the
continent,” says Michael Vincent, leader of the Strategy practice
at Deloitte Consulting in Johannesburg. “They are spreading
their risk and looking for new growth in the rest of Africa. Many
countries to the north of here have outperformed the OECD
economies by a wide margin.”
Although Africa as a whole is a tough place in which to do
business, local South African companies are running into
operational constraints at home that are weighing on profitability.
Union militancy and above-inflation wage increases, coupled
with declining productivity, have impacted on the bottom line.
“Companies are caught in the jaws of the crocodile – higher
wages but lower productivity. This is largely absent in the rest of
Africa,” Mr Vincent concluded.
iC
holding funds controlling ZAR 4.6 trillion (US$ 460 billion)
– almost five times the capital required – are in talks with the
government to act as banker to the infrastructure programme.
The stunning success of the World Cup build, which saw five
new stadia and a mass transit system put in place in the face of
substantial international and local scepticism, suggests that once
financing is in place, projects will go ahead.
Eskom, the electricity utility, is in the early stages of a long term
process to double the country’s power output. It needs to add
nearly 40 GW to the country’s grid, and plans five new nuclear
Cape Town’s Greenpoint stadium, under
construction ahead of the 2010 World Cup
