Tourist paradise, investor hotspot
Limpopo has long been a haven for wildlife lovers and hunters, adventure enthusiasts, culture creatures, twitchers (bird watchers) and those looking to recharge their batteries. According to Ndumiso Matlata, chief executive of the Limpopo Tourism Agency, the province’s tourism sector is now poised to grow and attract new investment. “The global growth in tourism presents an opportunity for Limpopo; the challenge is for the province to increase its global share,” Matlala told the recent Limpopo International Investor conference.
Globally about a billion people visit an international destination each year as leisure or business tourists. In 2015, tourism grew by 4.6% and the number of tourists is forecast to reach 1.8 billion by 2030.
Seventy percent of South Africa’s tourists come from the country’s six neighbouring countries, most visiting Gauteng to shop, enjoy the nightlife, and for social and business reasons.
Matlala notes that although Limpopo tourists are increasing their length of stay and therefore average spend, the province still attracts a low proportion of both domestic and international tourists. Tourism is a crucial growth source as it is mainly driven by SMMEs in areas such as transport and accommodation, alongside the large, established players.
He says most of the country’s annual 10 million international tourists hail from the US, the UK and Germany, but Limpopo only captures 2% of this market. “They come to the Kruger [Park] in Mpumalanga, then fly to Cape Town, then leave” is the standard industry joke.
Limpopo captures only 5% of the African market, with 97% of the continent’s travellers being Zimbabweans who primarily come for shopping but, by virtue of being overnight visitors, are regarded as tourists by Statistics South Africa. For the rest of South Africa key tourist markets in Africa are Mozambique, Angola, Nigeria, Kenya and Tanzania. In the domestic market, Limpopo captures just 9% of visitors, 38% of whom come from Gauteng and 4% from the North West.
Matlala says steps to improve tourism to Limpopo include supporting South African Tourism international marketing efforts and increasing destination awareness about Limpopo in core markets and neighbouring countries. The province also aims to increase leisure offerings for coastal visitors from KwaZulu-Natal and Cape Town, while offering weekend breaks to those from Gauteng, North West and Mpumalanga.
This aggressive marketing requires investment across the tourism value chain. But what is the tourism value chain and where exactly can one invest? Matlala says this starts with advising tourists about the product — in this case Limpopo — and creating opportunities through the travel agency business.
In South Africa, there are opportunities to invest in road transport but limited opportunities for air travel investment, as there are few privately owned airlines. Transport within the provinces via buses and shuttle services presents another opportunity for transport investment.
Provision of food and accommodation is big business, which is why Polokwane is literally brimming with hotels and bed-and-breakfast establishments as well as thriving, upmarket eateries such as Asha. Investing in site operators who run facilities can also be yield lucrative returns, especially at popular sites such as private game reserves. All of these investments will be supported by tour operators and the tourism board or agency.
One of the latest key tourism investments in Limpopo is the Park Inn by Radisson Polokwane, which is about to open in the city’s CBD. The hotel, which has about 170 rooms, was jointly funded by the National Empowerment Fund and the Industrial development Corporation (IDC) to the tune of almost R150-million.
Mofasi Lekota and his brother Makgaledisa have harboured a dream to open a classy but affordable hotel in the city since the build-up to the 2010 FIFA World Cup. Although Polokwane was a host city through the Peter Mokaba stadium, the city did was bypassed on accommodation because the teams that played there and their travelling supporters drove in and out for matches.
The Lekota brothers nevertheless persisted with their vision, which they have now realised six years after the soccer spectacle. They see the opportunities for Park Inn in both the leisure and business travel segments, as Polokwane hosts both types of travellers. They also note the province’s strategic location to neighbouring countries as a key driver of business, which makes Polokwane a convenient stopover point.
Matlala says areas to think about investing in also include a Northern Kruger National Park concession, a game reserve in Polokwane to save weekend visitors a drive, recreational facilities, improvements in nightlife as well as the creation of a tourism hub in Phalaborwa-Hoedspruit.
He notes that Polokwane aims to grow its business tourism offering through both infrastructure and incentives, noting that only Johannesburg, Cape Town and Durban presently have proper convention centres.
Limpopo’s top tourist destinations are wide-ranging and include the Kruger to Canyons Biosphere Reserve, which was registered in 2001, the Stone Age site Cave of Hearths in Mokopane, Lake Fhunduzi and Thathe Vhondo Forest, Modjadjikloof and Thulamela.
Earning their social licence to mine
One of South Africa’s leading mid tier platinum miners, Northman Platinum, is poised to help grow the economy of Limpopo province and South Africa and help to overcome some of its social challenges.
Collin Smith, executive for Human Resources at Northam, told the recent Limpopo International Investment Conference about the company’s ambitious expansion prospects, which form part of its R1.2-billion capital expenditure programme announced in the 2016 financial year.
Northam Platinum is a fully integrated producer of the six platinum group metals that include platinum, palladium and rhodium. These have extensive industrial, cosmetic and jewellery applications, but platinum’s most popular use is for manufacturing medical devices and clean catalytic converters. The platinum industry has been depressed since the financial crisis of 2008 and the European debt crisis that followed it, but Northam nevertheless maintains a strong production pipeline. It has just over 11 000 employees.
The company’s assets, which lie on both the Eastern and Western limbs of the Bushveld Complex, are all located in Limpopo. Following its Black Economic Empowerment deal last year, the company has a 31.4% empowerment shareholding, which exceeds the requirements of the Mining Charter currently being revised by government and industry.
The Company’s wholly owned mines are the Booysendal Mine, a shallow, mechanised mine currently producing 160 000 oz per annum. There is also Zondereinde mine, which produces 480 000 oz of the best platinum grade in the industry. Like most platinum miners, Northman produces chrome as a by-product and has a wholly owned chrome-producing subsidiary called Northam Chrome.
The Booysendal North mine has received about R 363-million in capital expenditure, while R14-million has been spent on affordable housing for some of its 2 900 employees. Booysendal South is set to undergo expansion that begins with an R450-million acquisition targeting an ore body that contains an estimated 60 million ounces of platinum. The Zonderinde mine is currently undergoing R303-million expansion project to sustain the mine’s 30-year lifespan. About R24.4-million has been spent on affordable housing for some of the mine’s 8 300 employees.
Northam also has two concentrators, a smelter, a base metals removal plant on site at Zondereinde and is about to spend R750-million on smelter expansions. In addition to all this, Northam Platinum is also set to acquire the Amandelbult mining rights, worth R1-billion, on the northwestern boundary of Zondereinde.
Smith notes that Northam is well positioned in a stressed sector and that the expansion programme is fully funded. This positions the company well for when the global economy recovers, or if newly elected United Sates President Donald Trump delivers on his planned infrastructure spending, which may provide a boost to various metals and commodities, including iron ore and platinum.
The South African mining industry has been a leading capital investor as well social spender over the past decade or so. It is a leading contributor to social housing delivery, which has seen 2.4 million units delivered since 1994 and is recognised by the World Bank as being the most comprehensive in the developing world. Mining companies contributed to delivering housing by taking part in a programme to convert single hostels to family units.
Smith acknowledged that the housing shortage is one of the critical issues the company will have to address as it expands its operations. This, along with power and water supply are issues, are issues the company constantly tackles together with government.
Smith says the area that he is in charge of (human resources) is addressing the shortage of suitably skilled employees for the mine. He says this requires constant collaboration with both universities and Training and Vocational Education Training (TVET) Colleges to help produce and refine the skills that the mining industry requires.