South Africa in unprecedented foray into SL, starts entry with $ 122 m

South Africa, Sri Lanka’s leading trade partner in Sub-Saharan Africa and the third most competitive economy in the $ 13.7 trillion BRICS grouping, is making an unprecedented investment foray into resurgent Sri Lanka with no less than a $ 122 m initial investment –and is scheduling yet another strong business delegation to Sri Lanka next.

“I am pleased to announce that SAPOA, South African Property Owners’ Association, the biggest South African property owner only second to the Government of South Africa, is coming to Sri Lanka in 2013 February/March. In South Africa, they are ‘the people with money’ in real estate and properties,” announced Geoff Doidge, High Commissioner of South Africa in Colombo on 7 September.

Doidge was addressing the special dinner event hosted by the Export Development Board of the Ministry of Industry and Commerce in honour of the visiting high level South African business delegation to Sri Lanka. Also in attendance were Chairman/CEO of EDB Janaka Ratnayake, EDB Director General Sujatha Weerakoone, EDB Executive Director Yousuf Maraikkar, officials from various local business chambers, private sector representatives and Sri Lankan exporters to South Africa.

This delegation is the largest South African business and industry delegation to visit Sri Lanka in the recent trade history and  it consisted of 30 leading business members of the powerful Progressive Business Forum of African National Congress (ANC-PBF), the ruling ANC’s business collective.

The delegation was led by South Africa’s Deputy Minister of Economic Development Hlengiwe Mkhize, and accompanied by Renier Schoeman, Core Convenor of ANC-PBF/former Deputy Foreign Minister).

Doidge revealed: “SAPOA is mulling huge ‘initial investment’ here. It is tentatively in the overall range of South African Rand one billion ($ 122 m) with a medium and long term in Sri Lanka.”

Addressing the visiting delegation, Secretary of the Ministry of Industry and Commerce Anura Siriwardene said the visit was very promising for businesses at both ends: “Let me extend my congratulations to the visiting delegation for their success in business to business and other related activities in Sri Lanka since their arrival here. There is no doubt that these win-win efforts are promising and will pave the way for stronger bilateral trade in the long term.” He added: “When it comes to bilateral trade, I am pleased to note that South Africa has become the most important trading partner for Sri Lanka in the Southern African region. I also observe that there has been nearly 70% total trade increase between the two countries in 2011 to $ 65.52 million. This shows that there is much unrealised scope for further trade enhancement between the two countries.  We are also happy to note that the Progressive Business Forum, which has a significant global reach and has facilitated trade delegations all around the world, has realised the potentials in the resurgent Sri Lankan economy as a result of the committed leadership of President Mahinda Rajapaksa. We are confident that this bold and far-sighted initiative will expand existing opportunities for our respective business communities thereby resulting in vigorous cooperation in bilateral trade.”

Hlengiwe Mkhize, South Africa’s Deputy Minister of Economic Development was upbeat on the success of her mission to Colombo: “This has been powerful. Our private sector representatives are talking seriously with Sri Lankan businesses. Cooperation in engineering, manufacturing, trade in general. I am quite happy. We are focusing on investments in infrastructure, water, and energy. Sri Lanka is our entrance mechanism to Asia. South Africa and Sri Lanka share cultural ties, spices, foods and even certain values with people of Asian origin in South Africa.  I am pleased to inform you that a second business delegation from South Africa is coming soon. That second business delegation will have a thrust (focus) of women with many leading SA women biz representatives including from the ANC-PBF.”

Among the top South African business and industry entities in the delegation were SAWIMA (the powerful SA Women’s Mining Association; Deputy Minister Hlengiwe Mkhize is a key figure in SAWIMA), Sphandile Trading (SA conglomerate involved in telecom, banking and insurance, healthcare, education, government and enterprises, management consulting, information technology, outsourcing — Sphandile is looking to import safety gear such as gloves from Sri Lanka), Nydes Construction (engineering – looking for construction opportunities in residential property development in Sri Lanka), Tudu Construction (looking for shopping mall and urban property development in Sri Lanka), Nhlengani Consulting (PTY) LTD (looking for rubber based floor covering and rubber construction material from Sri Lanka), mynextmail.com (2005 cloud computing start-up in South Africa which has now become the largest enterprise and institutional hosted email provider in SA, supplying email power to the government of South Africa and some large enterprises), TMA Trading (from Pretoria – looking for import and export opportunities in cable and electrical products and large scale agriculture and pivot irrigation projects in the north), Mnthonbeni Associates (engineering constructions – looking for partnership in large and medium scale infrastructure construction  projects), Red Ant Security Services (resettlement, relocation, food security and dairy), and Boffin & Fundi (irrigation, water supply, and urban sewerage development).

Madoda Khuzwayo, international thought leader and visionary founder CEO of South Africa’s mynextmail.com, said: “I am amazed at opportunities in Sri Lanka’s IT sector. Yes, I want to set up here very much and this is our entry point to the whole of Asia. I am excited by India-Sri Lanka and Pakistan-Sri Lanka FTAs also. I believe there are huge gains for us in cloud computing in the sub continental South Asia as part of overall entry to Asia.”

Khuzwayo however, did not quote any initials investment values nor revealed mynextmail.com annual turnover numbers. “We are working on it at this moment,” he said.

Dennis Classen, COO, Red Ant Securities Ltd. ($ 60 m annual revenues), whose firm specialises in ‘specific government assistance in relocation and resettlement of people, including IDPs,’ said: “We are initially looking at a different type of investment here-in that, the dairy sector with $ 2 m outlay. I am looking to start livestock farming in Northern Province by bringing 1,000 head of cattle from South Africa. I am also looking to develop large-scale ranch and a wild animal-park in Sri Lanka for adventure tourists by the introduction of selected South African wildlife here.”

Cyril Zwaine (Chairman, Boffin & Fundi; $ 55 m annual turnover), said: “We are highly excited by what we see in Sri Lanka. I am looking to invest in large scale water, irrigation, pipes and sewerage projects at our earliest. I also see strong potential in agro irrigation in northern province on which we are interested in partnering with a suitable local partner.”

Thereafter, on 8 September, the SA delegation undertook a one-day tour of the Northern Province facilitated by the Government of Sri Lanka, and it stood in amazement seeing the fertile soil conditions of the Northern Province and especially of Jaffna peninsula. Several SA business reps readily expressed their keen interest to enter agriculture and farming sectors in the Jaffna peninsula on a large scale. “We see enormous opportunities to develop agriculture in the Northern Province and Jaffna peninsula’s agro potential is very high. We strongly recommend pivot irrigation systems to overcome region-wide drought problems in northern areas. SA is an expert in such large scale irrigation systems,” said representatives from Pretoria-based TMA Trading, which specialises in cable and electrical products and large scale agriculture and pivot irrigation projects as well as Boffin & Fundi. “We are ready to invest and partner with a suitable Lankan firm to reap from northern agro sector,” they revealed.

The delegation, concluding their successful tour in Sri Lanka, left for South Africa on the early hours of Sunday 9 September.