An important consideration when investing is the state of affairs in the region you are considering investing in – and this goes beyond the obvious financial and political considerations. Ask questions about the sustainability of the region’s energy and water sources, its waste management policies as well as its biodiversity conservation. With all considered, South Africa still ticks most of the boxes for being a desirable region to invest in.
Traditionally South Africa’s energy was derived from coal, with a smattering of nuclear, hydroelectricity, solar and wind. But with the escalation of the climate change conversation internationally, and the brutal evidence of climate change – floods, droughts and extreme weather – seen, both globally and on our doorstep, it’s not surprising that virtually everyone is looking at renewables as a viable option. And when you have an abundance of sunshine, coastlines that lend themselves to wind generation, and huge dams with hydroelectricity potential, the possibilities are endless.
Solar energy is the transformation of the sun’s radiation into electricity through photovoltaic cells, or through concentrated solar thermal. We get lots of solar radiation, especially in the west, so a solar plant here can produce up to 20% more electricity than a similar plant (with about the same capital investment) would in Europe. For example, a solar park in the Northern Cape is set to deliver 180,000 MWh of solar energy per year. And it is estimated that only 3,000 square kilometres of land used for solar energy is required to meet South Africa’s current electricity demands.
Wind power makes use of wind turbines to mechanically generate energy by converting the wind into kinetic energy, so an obvious requirement is a relatively consistent supply of wind. Fortunately, many of South Africa’s coastal regions receive an abundance of wind. There are currently 22 operational wind IPPs (Independent Power Producers) with more than 900 wind turbines located in three provinces, with a capacity of 2,078 MW connected to the national grid. Additionally, local community ownership through community trusts has seen local communities benefiting financially through dividends from their shareholdings as well as socially through IPP initiatives focusing on education, health and social welfare.
South Africa is a water-scarce country, but with careful management and the capture of its (sometimes abundant) seasonal rainfall, the sustainability of its water supply can be assured. In addition to being water reservoirs, these dams offer the potential for producing hydroelectricity. The Gariep Dam in the Free State has a maximum capacity of 360 MW of power and a total storage capacity of approximately 5,340,000 megalitres. Even more interesting is the Drakensberg Pumped Storage Scheme, which includes four dams in KwaZulu-Natal and the Free State.
This operates as an energy storage facility. Water is pumped to a highaltitude dam during times of low power consumption and released back down through turbine generators during peak demand. Interestingly, this is not a new innovation – it was commissioned in 1974 and completed by 1981.
An escalating population and growing economy mean a growth in the challenges of dealing with the resultant waste. Thankfully the Department of Environmental Affairs has legislation in place to ensure that waste is dealt with in a responsible manner – although it is not always easy to enforce, and some local municipalities struggle to keep pace. On the bright side, however, environmentally responsible entrepreneurs are proving that ‘garbage’ can be a resource, if properly managed. Most supermarket chains are now either using recycled plastic for their carrier bags or have banned plastic completely, such as many of the privately owned Spar franchises – the Kloof SuperSpar, in addition to its ‘paper bag only’ policy, is a drop-off point for eco-bricks (two-litre plastic beverage bottles stuffed full of non-recyclable plastic, which are used to build houses and other structures). Many restaurant outlets have banned plastic straws, and either offer their patrons paper straws or suggest they bring their own bamboo or stainless steel ones. And some coffee shops are ditching the idea of disposable takeaway coffee cups in favour of eco-cups that can be reused time and again.
Even the manufacturing giants are joining the party – Unilever’s Sunlight dishwashing liquid, a household brand, has recently launched its 100% ‘recycled and recyclable’ bottle, and as a brand Unilever has committed to reducing its environmental impact by half by 2030. It doesn’t sound like much, but when you consider the volume of waste that users of the brand generate, this will have a huge impact. Clothing manufacturers are jumping onto the bandwagon with fabric created from recycled PET bottles – back in 2007, Billabong created board shorts from this recycled fabric, and have recently committed to making all their board shorts from 100% recycled PET bottles. The 2019 Splashy Fen Music Festival in KZN decided to go plastic-free this year, and no longer will you receive your new Vodacom smartphone in slick plastic packaging – the plastic is being phased out and replaced with paper bags.
Despite there being a focus on recycling in South Africa, only about 10% of waste is recycled. So, while we might turn our noses up at the waste pickers going through the garbage on our verges, they fill a huge need, not only in the collection of recyclable material and the alleviation of pollution, but also in the easing of poverty and hunger. Many of these people can fund schooling for their children through their waste picking micro-enterprises.
Whether your investment is in real estate, tourism or the business sector, the conservation of South Africa’s biodiversity is crucial.
With over 100,000 known species of plant, animal and fungus, and according to scientists an estimated 50,000 species that have not yet been discovered and/or named, South Africa is a biodiversity hotspot on a global scale. Consequently, developers of property, infrastructure and industrial developments have to comply with strict laws requiring predevelopment assessment of the likely impact on natural and cultural resources.
With vast tracts of undisturbed land and conservation areas on our doorsteps, most South Africans are committed to conserving their natural wealth – whether it be their own ‘little piece of Africa’, the nature trail down the road, or something vast and of national importance like the Kruger National Park.
So, with its first-world infrastructure, growing commitment to environmental best practice and its incredible biodiversity, where else offers investment opportunities under such clear and sunny skies?