Iberdrola wind park
The chief executive of ICEX Spain Trade and Investment, Francisco Javier Garzón, and the head of investment promotion at the South African department of trade and industry, Yunus Hoosen, will officially open the Southern Africa – Spain Investment and Business Cooperation Forum, organised by ICEX in Johannesburg on July 7. The main goal of this event is to promote investment partnerships among Spanish and Southern African companies in the energy, water and transport infrastructure sectors.
In April 2013, the Spanish Chamber of Commerce in South Africa was created, with members from Portugal, Spain and South Africa. It already has some 60 members and was recognised as an “Official Spanish Overseas Chamber of Commerce” by the Spanish Ministry of Economy in September 2014. The participation of Spanish professionals in Southern African markets has increased by five in the years between 2010 and 2014. There is a high concentration in the Northern Cape, where half of the nearly 2?000 Spanish workers in South Africa today live. This is mainly due to the construction of 20 Spanish renewable energy projects in this South African province.
Two other forums have been hosted in the last four years in South Africa and Mozambique, but this is the first one with this regional reach.
These business meetings showed a new and much bigger interest by business communities in Spain and Southern Africa in working closely together.
These milestones led to the organisation by ICEX of this first Regional Investment Forum, with the collaboration of many entities, particularly the Department of Trade and Industry of South Africa and Spain’s Commercial Office in Johannesburg.
The broader, regional nature of this year’s forum is underscored by substantial road projects developed by Spanish companies in Botswana and railroad corridors and power plants in Mozambique. The Spanish government wants to reinforce this positive trend.
It is increasing financial support, both by COFIDES and FIEM, planning for a new Trade Commission in Mozambique and working with the South African government for extended ECIC and CESCE, the South African and Spanish export credit insurance companies, for improved conditions at new operations in the Southern African region.
Also, Spanish representatives at all multilateral agencies active in the region — such as the EU Commission, the African Development Bank or the World Bank Group — are making new and stronger financial commitments to the development of major regional infrastructure projects, such as the INGA or Lesotho Highlands Water Hydro Projects, or the rail an power grid integration projects financed by the IIPSA program.
There has been an impressive development of economic bilateral relations in recent years. Spanish exports have doubled in the last few years, reaching the figure of €1.351-million in 2014, making Spain’s share of the South African import market 4%.
From the traditional bilateral trade deficit till 2010, Spain has turned to a surplus of almost €520-million in 2014 and import/export coverage of 150%. Spanish investments have increased three-fold with a “stock” value of €6.000-million in 2014, from €2.200-million in 2010. Spain is in fifth position among the investing countries in South Africa and third in the EU, after Great Britain and Germany.
Leadership in renewable energy
As a driver for the new and strong Spanish involvement in Southern Africa are the substantial infrastructure programmes launched by several governments around the region. Among these is a very successful independent power producer and renewable energy independent producers (IPP) programme, developed by the department of energy and the national treasury of South Africa.
It has achieved the following goals in its four years of existence:
• More than 5 000 MW have been awarded in four years of which 2 500 MW is in full operation;
• Tariff reduction has been spectacular, with more than 60% rebate on average;
• The cost of bids for registered independent power producers has gone down by 45% between the first and fourth rounds of bidding;
• The local component at the EPC has climbed from 25% on average in Round 1 to 50% in Round 4;
• As regards employment, 17 500 direct jobs were created by Spanish/SA partnerships;
• The strong development of the renewable energy sector in South Africa already provides around 10% of the electrical generation capacity. The important construction concessions and contracts that the Spanish companies are obtaining — around one third of total IPP and EPC contracts — has been the essential factor to explain the recent growth of the bilateral relations.
Some other positive consequences of this huge Spanish impact on the renewable energy sector in South Africa include:
• The creation in 2011 of a Consort–ium of Renewable Energies in South Africa. Currently, the consortium has 19 companies as members. The fundamental objective of the consortium is to promote the trademark “Spain Renewable Energies” in Southern Africa, emphasising the values of the Spanish companies, particularly experience and technological capacity;
• Also in 2011, a grant from Spanish financial co-operation instrument FIEM. This included the design of a Technology Centre for Renewable Energies. The Renewable Energy Centre of Excellence (RECE), given its name by the South African government, was established on August 5 2014 with the presence of three South African ministers during its official inauguration in Upington in the Northern Cape. Its commitments are professional training, certification of equipment and materials of the renewable energies sector, technology development and the promotion of local SMEs. At the end of November 2014, the South African government started the construction of RECE in Upington;
• The bilateral technological co–operation programme called “South African & Spain Innovating (SASI)” is being developed by Spain’s Center for Industrial Technology Development (CDTI), and the South African Technology Innovation Agency (TIA) to promote the international technological co-operation between entities of South Africa and Spain by means of projects led by companies from both countries. The recent signing of the EUREKA (EU) Program in South Africa and the resulting direct involvement of South Africa’s department of science and technology allows the expectation that the implementation of SASI will be sped up;
• And finally, with the leadership of Spain’s trade commission, the Spanish Chamber of Commerce and the Industrial Development Corporation of South Africa, Spain is now promoting the RENO Cluster, to help improve local SME operations in the renewable energy sector in the Northern Cape.