Main Bulletin:The Real Economy Bulletin - First Quarter 2024

Participants in the petroleum industry value chain, represented by the South African Petroleum Industry Association (SAPIA), are currently granted exemption from the Competition Act largely on the basis of ensuring security of supply of petroleum products. This exemption was invoked in 2002 for 18 months to ensure fuel supply security after the termination of the Main Supply Agreement whereby oil companies in South Africa were obliged to uplift and market a substantial proportion of Sasol’s fuel production from its plants at Sasolburg and Secunda. The Designation and Exemption was not renewed. However, after severe supply shortages were experienced in 2005, the Moerane Commission of Inquiry recommended its reinstatement. Following the 2010 World Cup, SAPIA applied for, and was granted, exemption between 3 October 2011 and 31 December 2015 with some conditions being attached after 2011. Since 2015, the exemption has since been extended some 21 times.

The continuous exemption of the fuel industry value chain over a period of more than two decades constitutes a risk to the integrity of Competition Policy. The Department of Trade, Industry and Competition (the dtic) and the Competition Commission are currently evaluating the merits of SAPIA’s 2020 application in this context.

This paper draws on a confidential report of an investigation commissioned by the dtic to assess the merits of SAPIA’s application for further Designation of the South African petroleum industry. It examines the technical and infrastructural root causes of supply security risks and identifies measures that would contribute to reducing such risks, thereby eliminating the need for a general exemption of the fuel industry from the Competition Act.

South Africa had a R21.7 billion trade surplus in the fourth quarter of 2023, up from R7.8 billion in the fourth quarter of 2022, but lower than the R41 billion registered in the third quarter of 2023. Imports declined by R17 billion to R498 billion in the year to the fourth quarter of 2023, while exports declined by 0.5% to R519 billion in same period. This was in part due to a R22 billion fall in coal exports in the fourth quarter of 2023.

Trade & Industrial Policy Strategies (TIPS) hybrid Development Dialogue on
Developing the Renewable Energy Industrial Value Chain
Thursday 30 May at 13:00 – 15:00 PM (SAST).

TIPS Dialogues bring together academics, policymakers, civil society organisations, workers, and practitioners
to discuss important issues and share ideas on industrial policy.

PRESENTATIONS

Saul Levin (TIPS) - Greenining Industrial Policy 

Gaylor Montmasson-Clair - What would it take to localise the renewable energy value chain in South Africa?

Gerald Nienaber - Case study: Modetech Services

Fazel Ernest - Insights from Labour

MEDIA

Supply-side support will be required if South Africa aims to join green industrialisation race - Engineering News 30 May 2024

POLICY BRIEF

Bridging the gap between aspiration and reality: What would it take to localise the renewable energy value chain in South Africa

AGENDA

Dr Saul Levin (TIPS) – Presenting on Greening Industrial Policy
Gaylor Montmasson-Clair (TIPS) – What would it take to localise the renewable energy value chain in South Africa?
Gerald Nienaber (Modetech) – Case Study Modetech Services
Fazel Ernest (CEPPWAWU - Cosatu) – Insights from Labour

Background
This Development Dialogue will unpack the opportunities for South Africa in the development of renewable energy and battery storage value chains, in line with the framework of the South African Renewable Energy Masterplan (SAREM) and the country’s broader transition to green industrial policy.  The fast-rising roll-out of renewable energy and storage technologies, both domestically and globally, presents an opportunity for South Africa to foster economic development, employment creation and social transformation.

The development of industrial value chains, leveraging South Africa’s existing manufacturing and service provision capabilities, is one such opportunity. Looking ahead, understanding the landscape of opportunities in the value chain and the necessary interventions required to realise the potential will be the focus of the dialogue.

TIPS Dialogues bring together academics, policymakers, civil society organisations, workers, and practitioners to discuss important issues and share ideas on industrial policy.
TIPS is partnering with the Department of Trade Industry and Competition (the dtic).
 

About the Speakers

Moderator

Muhammed Patel is a Senior Economist at TIPS. He works on TIPS's work on sustainability and just transition. Muhammed’s background spans work in industrial development, and competition and regulatory economics as well as the telecommunications and energy sectors.

Presenters

Saul Levin is Executive Director of TIPS since 2014.  He has a PhD in Development Studies from the University of Johannesburg, with his thesis on industrial financing. Saul was previously a chief director in the Economic Development Department (EDD) with oversight of the Development Finance Institutions reporting to EDD. He also held several senior posts in the Department of Water Affairs and Forestry, Department of Minerals and Energy, and Department of Trade and Industry.

Gaylor Montmasson-Clair is a Senior Economist at Trade & Industrial Policy Strategies (TIPS). He leads TIPS's work on sustainability and just transition, and is the Facilitator for the South African Renewable Energy Masterplan (SAREM), the industrialisation plan for South Africa’s renewable energy value chain. He has been working on inclusive development and green economy issues for more than fifteen years and has carried extensive research on the transition to an inclusive green economy from a Global South perspective, with a focus on policy frameworks, industrial development, just transition and resource security.
 
Fazel Ernest is a South African trade-unionist at CEPPWAWU - Cosatu who organises, facilitates, evaluates, and reports on capacity building for members in his leadership role at the union. He supports operational and strategic leadership structures and represent the union in legislative and stakeholder structures. He is deeply rooted in social solidarity with the poor, destitute and vulnerable with a background in political and community activism. He has served on numerous SETA Boards/EXCOs and is the former CHIETA Chief Operations Officer.

Gerald Nienaber is a partner of Modetech Services which is a small but growing high-tech engineering and manufacturing business which is poised to move from servicing traditional markets, such as mining, to new emerging markets, such as the renewable energy sector. He has extensive experience in several key industries in South Africa, leading the development of EOM parts and dedicated to providing OEM parts solutions for the world's most critical markets.

TIPS is partnering with the Department of Trade Industry and Competition (the dtic).

FOR ENQUIRIES - Rozale@tips.org.za

Over its short history, the renewable energy and battery storage industrial value chain value chain has already gone through a boom and a bust. More recently, efforts have been underway to revive the value chain. This policy brief reviews the state of the renewable energy and battery storage value chain in South Africa, and looks at possible avenues to support increased localisation.

SMME INCLUSION IN THE JUST TRANSITION

Focus Group: Opportunities and Barriers for SMMEs in Just Transition towards a Low Carbon Economy
Sector Focus Area: Sustainable waste management

As the global community increasingly prioritises the transition to a sustainable and equitable economy, the imperative to ensure the inclusion of small, medium, and micro enterprises (SMMEs) becomes paramount. Within this context, empowering youth and female-owned SMME newcomers in green industries emerges as a pivotal strategy for fostering just transition inclusion. This paper explores the business challenges and opportunities faced by SMMEs owned by marginalised groups such as youth and women as they navigate the transition to greener practices and industries. Drawing on a review of existing literature and case studies, the paper identifies key SMME business barriers such as limited access to capital, a lack of technical expertise, and limited market opportunities. Moreover, it examines green sectoral challenges faced by youth and female entrepreneurs, including energy, water and waste sectors. Building upon these insights, the paper proposes a set of tailored strategies to strengthen the participation of youth and female-owned SMMEs as newcomers in green industries to ensure a Just Transition does not leave anyone behind. These strategies encompass capacity initiatives, targeted financial support mechanisms, business development, and mentorship programs, enterprise and supplier development initiatives and policy interventions aimed at levelling the playing field and fostering an enabling business environment for inclusive participation in the Just Transition as local green entrepreneurs. By addressing the unique needs and aspirations of youth and female entrepreneurs, empowering SMMEs owned by these demographics can drive meaningful progress toward a Just Transition, promoting economic resilience, social equity, and environmental sustainability.

Presenters

Elize Hattingh joined TIPS in November 2020 as a Researcher: Sustainable Growth. She has a Master’s Degree  in Sustainable Development and Management from Stellenbosch University’s School of Public Leadership in partnership with the Sustainability Institute. She has been actively involved in promoting the sustainable development agenda for more than 15 years.

Michael Hector has a PhD in Political Science from Stellenbosch University, where his research focussed on the green economy and environmental governance in South Africa. His thesis studied the use of ecological modernisation and market mechanisms (and the implementation thereof) in South Africa’s environmental and waste management policies,

Julie Wells is a communication and business management specialist with almost 30 years of experience. She has been involved in driving the green industry agenda since 2012, as the communication and operations manager at the National Cleaner Production Centre, South Africa (NCPC-SA). The NCPC-SA is a national support programme that assists companies to adopt more sustainable business practices, saving valuable resources and promoting inclusive economic growth. 

Dr Jenitha Badul is the Senior Manager/Policy Advisor for Sustainability Programmes and Projects, at the Department of Environment, Forestry and Fisheries and has been with the Department since February 2003. Her professional experience includes the co-ordination of green economy project planning, and co-rdination and of implementation across spheres of government, in collaboration with United Nations Agencies and country donor partners.

Aysha Lotter is an environmental and mineral law consultant and researcher focusing primarily on the Anglophone African countries. Her research focuses on Extended Producer Responsibility, Integrated Environmental Management and Transformative Negotiations. She is pursuing an interdisciplinary PhD (Private Law and Chemical Engineering) at the University of Cape Town

Susanne Karcher started her company EnviroSense CC (an Environmental Consultancy) in Cape Town in 1999 after completing Chemical Engineering studies in Germany. Her company specialises in the planning, development and facilitation of tailor-made governmental, industrial/commercial and residential Integrated Resource and Waste Management programmes ultimately geared towards pollution prevention. Susanne is also a founding member of the African Circular Economy Network.

Nicole Booyens is a socio-economic development specialist who seeks and shares new solutions to social problems. With a focus on sustainable and circular development, she promotes economically empowered, socially advanced, and environmentally conscious living. She founded Cause Development Agency in 2008 to provide insight, training, and project implementation services to changemakers and non-profit professionals.

Other Focus Groups

Sector Focus Area: Sustainable water management

Sector Focus Area: Renerable energy and energy efficiency

                                     Fund on International Energy (PIE) An International Platform Hosted at Stichting European Climate Foundation

SMME INCLUSION IN THE JUST TRANSITION

Focus Group: Opportunities and Barriers for SMMEs in Just Transition towards a Low Carbon Economy
Sector Focus Area: Responsible water management

As the global community increasingly prioritises the transition to a sustainable and equitable economy, the imperative to ensure the inclusion of small, medium, and micro enterprises (SMMEs) becomes paramount. Within this context, empowering youth and female-owned SMME newcomers in green industries emerges as a pivotal strategy for fostering just transition inclusion. This paper explores the business challenges and opportunities faced by SMMEs owned by marginalised groups such as youth and women as they navigate the transition to greener practices and industries. Drawing on a review of existing literature and case studies, the paper identifies key SMME business barriers such as limited access to capital, a lack of technical expertise, and limited market opportunities. Moreover, it examines green sectoral challenges faced by youth and female entrepreneurs, including energy, water and waste sectors. Building upon these insights, the paper proposes a set of tailored strategies to strengthen the participation of youth and female-owned SMMEs as newcomers in green industries to ensure a Just Transition does not leave anyone behind. These strategies encompass capacity initiatives, targeted financial support mechanisms, business development, and mentorship programs, enterprise and supplier development initiatives and policy interventions aimed at levelling the playing field and fostering an enabling business environment for inclusive participation in the Just Transition as local green entrepreneurs. By addressing the unique needs and aspirations of youth and female entrepreneurs, empowering SMMEs owned by these demographics can drive meaningful progress toward a Just Transition, promoting economic resilience, social equity, and environmental sustainability.

SMME INCLUSION IN THE JUST TRANSITION

Focus Group: Opportunities and Barriers for SMMEs in Just Transition towards a Low Carbon Economy
Sector Focus Area: Renewable energy and energy efficiency

As the global community increasingly prioritises the transition to a sustainable and equitable economy, the imperative to ensure the inclusion of small, medium, and micro enterprises (SMMEs) becomes paramount. Within this context, empowering youth and female-owned SMME newcomers in green industries emerges as a pivotal strategy for fostering just transition inclusion. This paper explores the business challenges and opportunities faced by SMMEs owned by marginalised groups such as youth and women as they navigate the transition to greener practices and industries. Drawing on a review of existing literature and case studies, the paper identifies key SMME business barriers such as limited access to capital, a lack of technical expertise, and limited market opportunities. Moreover, it examines green sectoral challenges faced by youth and female entrepreneurs, including energy, water and waste sectors. Building upon these insights, the paper proposes a set of tailored strategies to strengthen the participation of youth and female-owned SMMEs as newcomers in green industries to ensure a Just Transition does not leave anyone behind. These strategies encompass capacity initiatives, targeted financial support mechanisms, business development, and mentorship programs, enterprise and supplier development initiatives and policy interventions aimed at levelling the playing field and fostering an enabling business environment for inclusive participation in the Just Transition as local green entrepreneurs. By addressing the unique needs and aspirations of youth and female entrepreneurs, empowering SMMEs owned by these demographics can drive meaningful progress toward a Just Transition, promoting economic resilience, social equity, and environmental sustainability.

Sakhile Ndlovu holds a BA in Public Management and Governance and a BA Honours in Politics and International Relations from the University of Johannesburg, both attained with distinction. He is currently completing his MPhil in Economics specialising in industrial policy, from the same university. With research and teaching experience in the academic sector, Sakhile is an aspiring Development Economist and has research interests in industrial policy and industrial development, financialisation, emerging markets, and the political economy of South Africa.

The demand for electricity in the Southern African Development Community (SADC) region is anticipated to double from 280 terawatt hours (TWh) in 2010 to 570 TWh by 2030. By extension, the region will require significant amounts of electrical equipment, which includes items that are used for generation, conversion, transmission, supply, control, and utilisation of electric energy. The SADC region is a net importer of electrical equipment, although South Africa supplies some of the equipment, including cables and structural steel products to the region, and Zambia produces copper wire on a large scale. If more local requirements for electrical equipment were produced in the region, it would stimulate investment, innovation, manufacturing, and job creation both directly and indirectly.

This regional value chain report examines whether SADC countries can move up the value chain and produce more inputs. It considers opportunities for further value addition in three Southern African countries – South Africa, Zambia, and Zimbabwe.