October 2021

The world has been reeling from the financial crisis and Covid19 crisis with reverberations being felt throughout the real economy on production, consumption, jobs and well-being. At times like these, we are all reminded of just how intertwined our future prospects have become and forced to reflect on how history has led us to our current circumstances. The economic progress of past decades has improved the material well-being of emerging economies while South Africa experienced deep looting of state owned companies, established with a centred vision to solve socioeconomic conditions.

The energy sector played a role in creating an enabling manufacturing processes, rapid standardization, industrialization and also make life more comfortable and enjoyable. Energy is the “oxygen” of the economy and the life-blood of growth in a developmental state such as South Africa. Acknowledging that the core problems in Eskom spring from broken generation and the solution is to lose the unproductive and attract the skills, investment and expertise to sort out the existing fleet, is crucial to turning Eskom around.

The challenge is, solutions focused on restructuring debt or finding new capital allocations doesn’t redress the critical deal with the broken vertebrae at the power utility, but cancelling Eskom contracts can assist and have cost effective electricity to help the industrial development and transitioning the economy to sophistication or innovation driven. Eskom’s expensive electricity generation inefficiencies, which are the cause of the growing debt, the collapse of South African manufacturing industry and expensive mining sector, needs be changed and that’s possible through prioritizing new service providers that are affordable.

The government can fix the Eskom problems and they don’t need to sell any division of Eskom to operate well, the president needs to restructure the energy facility as his main priority moving forward, to position South Africa as a manufacturing hub for the continent, that wìll prepare for upstream industrial production and reduce unnecessary imports to the continent.

The PIC propositions to Eskom bailout are steps leading us to the envisioned capable state. The PIC’s . Reuel Khoza highlighted that the impact of the bailout to Eskom and reduce financial crisis the power utility faces for about R400-billion in debt. Tatana Khoza further indicated that, Jointly the GEPF and the PIC have bonds with Eskom and those would amoun, while their proposed feasible solution of using R250-billion in PIC funds to pay some of the utility’s burgeoning debt are strategically placed to rebuilding the power utility as the core oxygen for the South African economy.

The PIC manages more than R2-trillion on behalf of the Government Employees Pension Fund (GEPF); Unemployment Insurance Fund (UIF); Compensation Commissioner Fund (CC); Compensation Commissioner Pension Fund (CP) and Associated Institutions Pension Fund (AIPF). The PIC’s role is to invest funds on behalf of its clients, based on the investment mandates set by each client and approved by the FSCA.

For PIC to be a catalyst of continental economic integration and a global investor and realise their vision to be a global leader in impactful investing, they need to prioritize re-establishing Eskom as a centre for continental solutions in energy, for Industrial development to peak the Africa continental free trade agreement and prepare for a great pie of the targeted or projected materials boom in the next 40 years.

The energy sector currently accounts for two-thirds of global carbon emissions and expedited progress on energy efficiency and low-carbon sources in the energy mix is required to achieve deep decarbonization.

1. We need an energy transition.

Business as usual will use up the Paris Agreement carbon budget within 20-30 years and bring us towards a hothouse earth. We need a transition from energy that emits greenhouse gases to renewable energy to avoid this fate.

2. We know what we need to do.

The broad shape of the energy transition is to reduce demand where possible through energy efficiency and behavioural change, decarbonize electricity, electrify everything you can and use some variety of renewable-based hydrogen for the rest. To transition at the necessary pace may also require the use of biomass and emissions removal technologies.

3. The energy transition will be difficult.

Fossil fuels provide around 80% of global energy supply and are the foundation of modern society. Many countries and companies are dependent on the wealth generated by fossil fuels and the Bank of England has noted that up to $20 trillion of assets are at risk from the energy transition. South African Banks must work with public sector, for mitigation and policy mindfulness to allow the economy to be ready with measures and targets set.

4. The forces of transition are likely to prevail.

Those who would benefit from a transition vastly outnumber those who benefit from continuity; 80% of people live in countries that import fossil fuels. Just 1% of the global workforce works in the fossil fuel industry and a large share of the rents from fossil fuels flow into the hands of a small number of fossil fuel exporters.

We are living in a fast changing world and South Africa needs to have foresight on what will replace coal exporting , we can use it locally while catching up to make our production cost effective.

5. The energy transition is just.

The global view is, Fossil fuels are used mainly by the rich and the few, while their costs are shouldered mainly by the poor and the many. In contrast, renewables are everywhere, can be deployed at any scale and are being used to solve last-mile problems and provide electricity to the 1 billion people who lack it. Domestically, we are one of the leading exporter of coal, which require reflectiveness and mindfulness leadership on policy transitions. The International Renewable Energy Agency (IRENA) predicts an energy transition that will create more new energy jobs than fossil fuel jobs, while South Africa can lose jobs when the transition is not planned well.

6. We have technology solutions.

There are rising numbers of technology solutions available to start the transition in a cost-effective manner. Efficiency gains have already curbed energy demand growth from 3% to around 1% on average and could drive growth still lower. Reflecting on the manufacturing technologies we can take advantage to match the global manufacturing industry standards and have smart factories and smart industries with innovation factor driven tier systems.

7. Incumbents are at risk.

Peaking demand and technological competition put incumbent players in the energy system at considerable risk of lower prices and stranded assets if they fail to react in time. Coal became too expensive to the South African economy, making electricity prices more expensive to businesses and households, which suggest adaptation to renewables and transition to cost effective electricity. That’s the only way South African manufacturing industry can peak and be competitive. Coal is too expensive to the South African economy, we must manage production to serve the required just transition phase and decarbonize the future economy.

8. We need more policy action to reach Paris goals.

Policy-makers need to take much more assertive action if they wish to drive the transition fast enough to meet the aspirations of the Paris Agreement. There is tremendous scope for major policy action.

9. Policy-makers need to plan for change.

Policy-makers need to retool fossil fuel dependent states and systems, to retrain workers in order to ensure that the transition is just, to plan for new sources of tax revenue and to hold back from investing capital in assets which are likely to be stranded by the transition. Eskom and coal companies must start training a pool of their staff for the just transition or renewable energy materials and management of systems. Transformation must be communicated to all staff in time and have a decade or two decade plan that will make ease to tailored programmes to shape human capital to the decarbonized future economy.

It remains uncertain on how the political economy will play out in South Africa. Every country is different and there is no single solution. Some countries’ fossil fuel interests have been able to seize the reins of government to try to hold back an energy transition, while the energy transition will also create new constituencies that benefit from investment and growth as well as jobs in the wider economy. The sustainability and Impact Investment criteria forces unlisted investments and banks adapt to the just transition.

The economic recovery in Tourism sector has an important role to play in placing the South African economy on a sustainable inclusive growth trajectory. Promoting growth and development of the tourism sector and Promoting the practice of responsible tourism for the benefit of South Africa and for the enjoyment of all its residents and foreign visitors, must be the responsibility of all South Africans
from promoting our cultural heritage, improving our local tourism, improving our hospitality to local and global tourists with an understanding that all our visitors play a critical role in boosting our GDP, Job Creation and Investment.

On average, The Travel and Tourism Sector directly contributes 4.4% of GDP, 6.9% of employment and 21.5% of service exports in OECD countries. It is of vital economic, social and cultural importance, and offers real prospects for sustainable and inclusive development; however, integrated and forward looking policies are needed to ensure this growth better delivers benefits for people, places and businesses. The Tourism Sector in South Africa, directly accounted for 2.8% of real gross domestic product (GDP) and The indirect contribution of the Tourism Sector to the economy’s GDP in 2018 was at 8.2%. Transformation is a hidden challenge in the South African tourism industry and pro broad based policies are needed to rebalance the sector to portray the South African diversity.

The future of tourism will be impacted by large-scale social, economic, political, environmental and technological changes, bringing new and often unseen challenges, threats and opportunities. These “megatrends” are slow to form, but once they have taken root, exercise a profound and lasting influence on human activities, processes and perceptions, including for tourism. Four megatrends are likely to have significant impacts and relevance for tourism: evolving visitor demand; sustainable tourism
growth; enabling technologies; and travel mobility.

The tourism sector and related industries are parts of the global economy set to be affected by a variety of megatrends. For instance, the International Air Transport Association (IATA) predicts that passenger demand over the next 20 years will be impacted by the emerging middle class in developing countries, diverging demographic outlooks, increasing liberalisation of aviation markets, and climate change (IATA, 2016). Based on feedback from member and partner countries, industry and international organisations, this chapter will explore similar trends, in relation to: Evolving visitor demand, Sustainable tourism
growth, Enabling technologies, Travel mobility.

When considering its likely evolution over the coming decades, it is clear that tourism will be transformed by large-scale social, economic, political, environmental and technological changes. While slow to form, once such “megatrends” have taken root, they exercise a profound and lasting influence on human activities, processes and perceptions. Megatrends bring new and often unseen challenges,threats and opportunities, the impacts which may vary between the economy as a whole and individual sectors.

It is critical for both governments and industry to explore and understand the multidimensional implications of these megatrends in order to inform policy and shape the future of tourism. An in-depth discussion of such trends will better enable policy makers to bring currently unforeseen and emerging issues onto the strategic policy agenda, develop potential scenarios and policy responses, and better
assist public and private actors to capitalise on opportunities and challenges as they arise.
Miyelani Mkhabela is a founder and CEO of Antswisa Transaction Advisory

Food markets will face many more months of uncertainty due to COVID-19, but the agriculture food sector is likely to show more resilience to the pandemic crisis than other sectors. The COVID-19 crisis has highlighted the risks of unhealthy diets and the extreme fragility of the global food system.

The Food and Agricultural Organization’s, Food Price Index (FFPI) averaged 93.2 points in June 2020, some 2.2 points (2.4 percent) higher than in May, representing the first month-on-month increase since the beginning of the year. Amid market uncertainties posed by COVID-19, the prices of vegetable oils, sugar and dairy products rebounded to multi-month highs following sharp declines registered in May, while in cereals and meat markets, most prices remained under downward pressure.

The COVID-19 pandemic should spur us to redefine how we feed humanity. The African countries now has a unique opportunity to adopt long-term measures to promote healthier diets, encourage farmers to produce a wider range of food, and strengthen collaboration among the public-health, food, and agriculture sectors. A new approach in agricultural research can play a vital role in transforming food systems and making them more sustainable and resilient.

The need for change is clear. For starters, unhealthy diets are one of the leading risk factors related to COVID-19 fatalities. The Coronavirus disproportionately affects people who are overweight, diabetic, or suffer from cardiovascular disease – all of which are linked to poor diets. The economic reconstruction that will follow the pandemic is an opportunity to provide better nutrition and health for all.

This Covid-19 crisis has also exposed the extreme fragility of the global food system. Social-distancing and lockdown measures to curb the virus’s spread have significantly reduced people’s incomes and thus global food demand.

GDP From Agriculture in South Africa increased in the first quarter of 2020. South Africa needs to invest in agriculture and agroprocessing to reduce basic imports such as Maize, Wheat and Chicken. Zambia has a huge potential for Maize, wheat and livestock market to feed in the food security challenges. GDP From Agriculture in Zambia increased in the fourth quarter of 2019.

The Fourth Industrial Revolution takes the automation of manufacturing processes to an unprecedented level, with the introduction of smart, autonomous systems that are capable of self-cognition, self-optimization and self-customization. While these processes present numerous opportunities for producers and manufacturers, it creates a heightened level of uncertainty for policymakers and development practitioners. This is partly due to the new challenges that will arise, especially in terms of employment, educational systems and industrial policies.

The June 16 1976 Uprising that began in Soweto and spread countrywide profoundly changed the socio-political landscape in South Africa, yet 44-year later youth unemployment is still a struggle. The youth   unemployment rate in South Africa is expected to be 70 percent by the end of 2020, as Covid19 puts jobs at risk for about 1.6 million to 2.5 million in South Africa. The International Labour Organization estimates 1.6 billion jobs to be lost because of COVID-19 that could make it even worse for South Africa.

Secondary challenges for youth are the current Education that’s not aligned with the needs of the Fourth Industrial Revolution and Future Revolutions and financial exclusion at institutions of higher education and training.

Ultimately, the aim of Industrial revolution awareness for youth and families is to explore the potential impact of Industry 4.0 and digital technologies on developing countries and youth participation in the future job market, given the changing dynamics. The transformative potential of digital technologies is clear and must therefore be properly understood and utilized to take advantage of opportunities, while mitigating the challenges, specifically for the youth.

Covid19 an unprecedented humanitarian challenge for all countries. Weeks of South Africa national lockdown have given time to make a concerted effort to flatten the pandemic’s curve. South African Coronavirus pandemic spread was at 42 % and it was controlled to 4% three weeks in lockdown, which portrayed good decision making and leadership.

South African health conditions are ranked lower at (118th), based on World Economic Forum Global competitiveness index 2019, which is not conducive to tackling the Coronavirus pandemic. Our infrastructure and systems are not at a state to manage the complexities, we are being saved through sustainable decision making from public sector leadership at the moment.

We have observed leaders weighing up the value of life versus the value of a functional economy and trying to strike the right balance between the two, in order to ultimately protect the population from the virus, while at the same time ensuring that the economy does not suffer irreversible harm. This requires critical and analytical thinking, with high mindfulness and reflections about the life’s that can be lost overnight, when good decisions are not taken by both public and private sector leaders.

The benefits will be measured in infections avoided and in lives saved. The future incomes of those spared to continue productive working lives will be measured as part of the economic benefits realised.

Now that the attention is shifting to reopening the economy, while containing the virus,  the challenge arises from multiple stakeholders as they are thinking for their businesses not to be wiped out from the market , while employees also want to go to work to save their jobs. South African socioeconomic imbalances are the main drivers on the context of our thinking and how we would like to do things, based on history of the country. Macroeconomic stability are lower in South Africa and our corporates and small businesses are not resilient to manage the vulnerabilities and uncertainties of Covid19.

Statistics South Africa reported that, five in six businesses surveyed experienced a drop in turnover over the reference period. 85,4% of businesses surveyed reported turnover below the normal range. Respondents in the construction, real estate and other business services, and transport industries were the most affected by lower than expected turnover.