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May 28, 2008

Real Economy Report

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© Reuse this From Creamer Media in Johannesburg, this is the Real Economy Report. Our top stories this week: technology group Reunert expects future demand for fibre optic cables to increase, the IFC's aim to boost private sector investment into infrastructure in Africa, and the Department of Science and Technology and the French government pair up to create awareness on nanotechnology.



Shannon O'Donnell:
Technology group Reunert is focusing its energy on fibre optic cables for the telecommunications industry. Chanel Pringle has the story.

Chanel Pringle:
JSE-listed technology group, Reunert's Chief Executive Gerrit Pretorius says its electrical engineering subsidiary, CBI-Electrical's telecommunications cable joint venture with Altron, which was formed in February 2007, was a sensible decision and has led to a successful business, with demand for fibre cable expected to continue growing.

Pretorius says that Altron's Aberdare Cables business and Reunert's ATC business, were both losing money before the merge, as a result of fixed-line operator Telkom, buying less copper cable.

While Pretorius expects some future demand for copper cable from Telkom, he explains that there will be greater demand for fibre cable from cell phone operators.

Reunert CEO Gerrit Pretorius

Chanel Pringle:
Pretorius adds that the telecommunications cable business has the capacity to handle even more business before it starts experiencing capacity constraints.

Gerrit Pretorius

Chanel Pringle:
In addition, Pretorius expects continued future demand for electrical cables and conductors manufactured by CBI-Electrical's African cable business.

Gerrit Pretorius

Chanel Pringle:
The African cables business has already been awarded one tender for the delivery of aluminium conductor, steel reinforced cable to Eskom.

Shannon O'Donnell:
Infrastructural development is vital to bolster growth in Africa, and the International Finance Corporation is eager to play a role in supporting private sector participation in this development.

Christy van der Merwe:
Power, water, roads, transportation, healthcare, and education. To provide these at the rate required in Africa, the private sector needs to play a role alongside governments.

Establishment of a successful public-private-partnerships is a daunting task - which is why the IFC's business advisory services division believes it can play a key role in advising stakeholders on how to structure solid, successful partnerships.

IFC, Vice President: Business Advisory Services, Rachel Kyte:
"Its very difficult for a private firm to have won the bid on a cost competitive basis and then realise they are going to have to spend an awful lot of money getting the project up to the specification of getting the project financiers to finance. Financiers are requiring high environment and social standards now."

"If the government is very clear at the very beginning on how to structure this to meet the ultimate demands of consumers and the ultimate demands of investors, then I think the process moves much more smoothly and our role has been important."

There are lots of questions around the actual bidding process and how you attract private sector bids that would be to the higher standards of corporate governance and transparency so that there are no questions asked later, once a firm of a consortium has won a bid and is now seeking financing.

There is awhole question of how to structure the partnership so that the risks are managed well, so that the public sector's risk is appropriate, so that the private sectors risk is appropriate, and the private financiers who will finance the project, that their risk is appropriate as well. So working out how to use guarantees how to structure these deals is something that we can help with.

And then I think in addition to all of this we are very interested in helping link infrastructure development to SME development - how do you help small and medium sized enterprises get their products and services to market? And really thinking of that in the design of infrastructure.

Christy van der Merwe:
The IFC also invests directly in infrastructure projects, often alongside other regional development banks and commercial banks. The corporation says its stands ready to advise and invest in infrastructure projects which it views as fundamental to Africa's ability to develop a dynamic economy and help people grow their way into wealth. For Creamer Media television, I am Christy van der Merwe.

Shannon O'Donnell:
The La Villette nanotechnology exhibition was launched at the Sci-Bono Discovery Centre in Johannesburg - a drive by the Department of Science and Technology and the French government to create awareness of this science.

Brindaveni Naidoo:
To promote and create awareness of nanotechnology in South Africa, the La Villette nanotechnology exhibition was launched at the Sci-Bono Discovery Centre in Johannesburg. The exhibition, which will be showcased around the country, is the result of a partnership between the Department of Science and Technology, and the government of France.

DST emerging research areas and infrastructure, MD Daniel Adams

French Ambassador to South Africa, Denis Pietton

Shannon O'Donnell:
And now for a sneak preview of this week's Engineering News magazine:

Read about how opening up baseload electricity power generation opportunities to private utilities is seen as an important step by analysts

We report that the R69-million facelift of the Dobsonville stadium, in Soweto, is ahead of schedule and should be completed before the end of next month

And, we detail how the global aviation industry is tackling environmental challenges

And in Mining Weekly this week:

Read about how two-year-old Sylvania Resources is cash flush as it recovers platinum from chrome tailings

We report that South African gold major Gold Fields has teamed up with Peru's largest publicly traded precious metals mining company

And, we investigate how new technology is making inroads into the global explosives market

Shannon O'Donnell:
That's Creamer Media's Real Economy Report. Join us again next week for more news and insight into South Africa's real economy.

Edited by: Creamer Media Reporter
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