SUMMIT OVERVIEW 2015 SOUTH AFRICA ITALY SUMMIT SECOND EDITION - - PDF document

SUMMIT OVERVIEW

2015 SOUTH AFRICA – ITALY SUMMIT

SECOND EDITION

Building a community of leaders for growing their enterprises in the two countries and continents

Thursday, October 1 and Friday, October 2, 2015 Belmond Mount Nelson Hotel, Cape Town 76 Orange Street, Western Cape, 8001, South Africa

Participants

The Summit is open to selected CEOs, business leaders and representatives of Italian and South African institutions. Participation at the Summit is by personal invitation only.

Contents

Following last year’s successful event, the Summit aims to become the annual gathering for the political, government and business leadership of Italy and South Africa. The goal of the Summit is to strengthen relations and bilateral investments through in-depth discussion about the strategic opportunities between the two countries and their respective continents. The Summit provides a unique opportunity for the top management of Italian and South African companies to take a leading role in the growing market of Sub-Saharan Africa. The main topics on the agenda are:

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South Africa and Italy relations in the current regional and global geopolitical scenario;

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Agri-business value chains in South Africa and SADC;

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SADC regional integration and investment opportunities;

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Collaborative models with SMEs and entrepreneurship for growth;

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Urban development and smart technologies; and

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Innovation in banks and payment systems as a driver for socio-economic development.

Contents and proposals of the position papers prepared by The European House - Ambrosetti under the guidance of an international Advisory Board, will be presented during the Summit. The papers examine the potential for partnerships between companies of the two countries in the digital payment, collaborative models with SMEs and agribusiness sectors. The Summit will bring together selected CEOs, business leaders, leading economists and governmental authorities from Italy, South Africa, and Sub-Saharan Africa.

Summit Sessions Overview

Geopolitical and Economic Scenario Strengthening the “South-South axis” has become one of the key issues into the new geo-political scenario for the African continent. The relationships between industrialized economies and African countries are now facing a new phase of increasing political dialogue and economic and social

• cooperation. At the same time, also the network among the countries of Sub-Saharan Africa (SSA)

has been strengthened, with the new challenge to balance principles and different national interests. In this scenario, South Africa can be a gateway to a continent with immense cultural and economic potential that is undergoing deep cultural and economic transformation; the country is also an important member of the BRICS, the new vibrant economies of the 21st century. However, the current geo-political situation risks to weaken the political attention towards foreign policy relations with Europe, which remains not only the main trading partner for South Africa, but also a reference player for dealing with specific key issues like migration and security (democracy, energy, food, etc.). To date, Italy’s presence in this exciting entrepreneurial context is still minimal, restricted mainly to a small number of enterprises operating in the infrastructure and energy sectors. The reasons are numerous and pertain to organization as well as cultural spheres. Recently, thanks to a renewed dynamism by Italian institutions in developing more coordinated and systemic initiatives (and also in consideration of the fact that several North African countries are experiencing periods of extended political crisis), Sub-Saharan Africa features prominently within the remit of Italian companies’ international policies. In this framework, South Africa represents a huge opportunity for Italy: it is a market with ample potential, but also a platform from which to launch business operations in numerous emerging Sub- Saharan countries and a new constructive dialogue between the leaders of the two countries and continents to which they belong: Africa and Europe. The role of Agri-Business Value Chains in South Africa and SADC Agri-business potential in SSA is huge, the issue is how to make it work: Sub-Saharan Africa has 202 million of hectares of available cultivable land (compared to 123 million in Latin America) and its consumer food markets is expected to grow from $330 to $1,000 billion between 2010 and 2030 (4x times in urban areas; 2x times in rural areas). Agro-industrial parks are a key tool for overcoming the issues affecting the agri-food sector in

• SADC. Agro-industrial parks have been largely implemented in many areas of the world (China,

India, East Europe, Israel, Latin America, etc.): despite the commitment of African Governments and international donors and organizations, agro-industrial parks in SSA, as of today, are still under their potential.

Agro-industrial parks require several critical steps that could hinder their implementation: planning: (park position, size of scale, use of space, productions selection, etc.), economics/investments (PPP schemes, financing and risk mitigation mechanisms, employment, knowledge, infrastructure, etc.), transport/mobility (traffic and transport flows, accessibility to the final markets, etc.),

• rganization/governance model (park management, activities, relations with internal stakeholders,

relations with out-growers, etc.), accountability/communication (standards, high-quality and sustainable production, food security, etc.). Italy and South Africa could establish profitable partnerships to fully exploit agro-industrial parks, in terms of: ― Governance/management: Italian cooperative system is a model internationally renowned. ― Technologies: South Africa has leading technologies in aquafarming and for maize, sugar cane, wine and deciduous fruit, whilst Italy has leading technologies for cold chains, seeds, fertilizers, water management and irrigation. ― Machinery: Italy is the 3rd largest world producer of agricultural machinery and the 1st largest world producer of packaging and packing equipment. ― Industry: agro- processing industry is the 2nd manufacturing sector in South Africa; food industry in Italy is the 1st economic sector with approx. $200 billion turnover. ― R&D: South Africa is the 2nd biggest spender in agro-industry related R&D in SSA ($250 million in 2013), whilst Italy has 25 universities and numerous scientific centers with world-class capabilities. ― Market: South Africa is a growing market (+20% in food demand by 2050) and offers easy access to SADC regional market (SSA’s population is forecast to reach 2 billion by 2050); international markets available thanks to higher quality standards. SADC Regional Integration and Investment Opportunities Sub-Saharan Africa is an area comprising countries with the highest growth rates: over the past decade its GDP has tripled, its consumption quadrupled and the region saw its investment levels rise from $42 billion to $61 billion between 2013 and 2014. South Africa remains at the top of the list of destination countries in Africa, measured by number of projects (116 in 2014 compared to 57 in Kenya and 50 in Mozambique), despite a 15% decline compared to 2013. To face up to this development, the leading Sub-Saharan countries have launched a comprehensive investment plan covering infrastructures, energy, construction as well as water systems and communication networks. In particular, during 2015 the Regional Indicative Strategic Development Plan (RISDP) has been revised, allowing a synchronization of the four SADC regional integration pillars between 2015 and 2020 (industrial development and market integration; infrastructure development; peace and security cooperation). The implementation of regional infrastructural network (such as mobility and energy) is pivotal, since it is a key enabler to economic integration and development, and more importantly, in support of SADC industrialization efforts. Then, SADC aims to achieve a common market by agreeing common policies on production regulation area in 2015, monetary union through macro-economic convergence by 2016, a single currency and becoming an economic union by 2018.

SADC Industrialization Strategy and Road Map are targeted to place SADC countries among the most industrialized economies in the world, and include industrialization as a driver for economic and technological transformation, competitiveness as an active process to move from comparative advantage to competitive edges, and regional integration and geography as the context for industrial development and economic prosperity. These reforms could act as key drivers for speeding up economic growth and regional integration, thus boosting additional investments from other African and European investors. Collaborative Models with SMEs and Entrepreneurship for Growth While FDI flows to South Africa remain high (the country is top FDI recipient in Africa, accounting ~20% of total African Inward FDIs), stocks have decreased over the last five years (-22%) between 2010 and 2013 to $140 billion): disinvestments in the country might result in de-industrialization, also considering that contribution of South African manufacturing sector to national GDP decreased from to 19.2% to 13.2% between 2000 and 2013. Among the industrial sectors, automotive is a pillar of South Africa’s manufacturing and Italy has sound competences in the industry. On the one side, South Africa is an established global player in the automotive industry, fully integrated in the automotive global value chain: ― Today SA accounts for 68% of the African motor vehicle production (2014); the industry is worth 7.2% of national GDP, 30% of South African manufacturing production and ~12% of total export.1 ― Several major multinationals choose SA to source components and assemble vehicles for the local market, but also as a platform for the international exports. ― Europe is the largest export destination (~38% of the total South African automotive exports). On the other side, Italy has one of the few integrated value chains in the world (from R&D/design, to components, assembly and distribution) with world-class brands and 1.2 million employees: ― The Italian automotive components value chain is particularly strong, accounting for >2,500 companies; >165,000 employees with €40 billion of turnover, ~70% of production for export and a wide range of products.2 Collaborative model with Small and Medium sized Enterprises (SMEs) could be fostered by creating integrated techno-manufacturing clusters: we propose to create an “ecosystem” able to foster: (i) value chain integration, (ii) collaboration among big and medium-size companies, (iii) innovation (and potentially start-ups), (iv) human capital development and skills upgrading, (v) attraction of investments. These clusters could have the following characteristics: ― Focus on a specific manufacturing sector, well established in South Africa and where Italy has matching competences (e.g. automotive).

1 Source: Automotive Industry Export Council (AIEC), 2015. 2 Modules and systems, components starting and ignition, components lighting and signaling, electric and

electronic components, powertrain, components of supply and discharge, engine components, organs steering, suspension and braking, components body and interior, equipment and molds, various components, tires.

― Cluster (possibly linked to Special Economic Zones) integrated along an entire value chain thus favoring sub-contracting schemes with SMEs (foreign and local). ― Localization within the cluster of research and tech-transfer center and specialist training activities under PPP scheme and by leveraging on partnerships with (and among) South Africa and Italy’s universities. ― Business incubator to foster the development of start-ups linked to the productions of the cluster (e.g. for example, components – products, technologies, etc. – in the case of the automotive). Urban Development and Smart Technologies Today, cities produce >50% of GDP (75% by 2030), have 55% of population (5% in 1800), and consume 90% of resources. By 2030, African cities will see the concentration of 60-65% of the African middle class (income >$10,000/year; PPP as of 2005) with a purchasing power of €1,300 billion (in the 18 major African cities). SSA urbanization involves some major challenges: (i) spatial (urban planning, real estate development, housing); (ii) infrastructural (utilities; access to services; mobility; energy); (iii) environmental (sustainability; pollution); (iv) economic (financing; formal & informal economy); (v) social (poverty; inclusion; security; education); (iv) institutional (governance; strategic planning; decision-making processes). Ongoing initiatives from South Africa and Italy could inspire an African model of "smarter city". On the one side, in Italy the creation of Metropolitan Cities3 has become a pivotal issue and best practices at operational level could be exchanged between the two countries for the governance of large urban areas and the identification of priorities for action. Italy is one of the most advanced countries in terms of smart initiatives with leading capabilities: ― 75% of Italian cities with a population of >100,000 inhabitants have undertaken a smart initiative (vs. EU-average of 28%); >1,200 smart city projects have been launched in 105 municipalities, involving 14 million people (1 out of 4 Italians). ― Italy stands among the leading investors in Europe for smart grids (e.g. was the first nation in the world to adopt Smart Grid on a national scale in 2006) and on next-generation smart metering. ― The country has established industrial and R&D competences in several “smart” value-chains (transport, home automation, green building, appliances, etc.) and widespread governance capabilities in the Public Administration. On the other side, urban growth in SSA countries promoted the launch of pan-african projects on smart cities (such as the “Smarter Cities initiative” promoted and developed by IBM Group) and several smart city projects are taking up also in South Africa (e.g. Johannesburg smart city project). In particular, South Africa seeks to move rapidly to benefit from the “urban dividend”: ― Need to face the continuing urbanization, reduce the urban sprawl and overcome the legacy of racial segregation, poverty, and exclusion (the UN estimates that 71.3% of the South African

3 Metropolitan Cities (10 cities instituted by Italian Law 56/2014, 4 cities under discussion) are the backbone

• f Italy: >1,300 Municipalities with >38,000 km2 (12.7% of Italy's surface area), 1.8 million companies (35%
• f total), 22 million people (~36% of Italy's population) and €670 billion in GDP (>40% of national GDP).

population will live in urban areas by 2030 compared to approx. 60% today, reaching nearly 80% by 2050). ― Strategic aim of the Government to build on urban centers to foster innovation and growth, also by upgrading the infrastructural endowment (urban centers produce over 80% of the national GDP). ― Launch of the Integrated Urban Development Framework (IUDF) designed to unlock synergy that comes from coordinated investments in people and places. Thanks to a widespread adoption of ICT technologies in the several fields of everyday life, smarter cities will be the key to the sustainability and inclusiveness of urbanization. Main outcomes for citizens and enterprises are, in particular: better use of resources (efficiency); enhanced participation to social life (active citizenship); higher reach and quality of services; better strategic planning (also via real time communication); lower ecological footprint; stimulus to innovation (technological and social); and better quality of life. Urban development requires relevant investments on infrastructures, technologies and buildings and the challenge of smart cities in SSA could involve urban regeneration (e.g. social housing, etc.) and industrial partnerships between the enterprises of Italy and South Africa. Innovation in Banks and Payments Systems as a Driver for Socio-Economic Development Digitalization opens new frontiers of innovation in the banking sector to better serve customers (for example, increased products customization and profiling of needs, etc.) and reach even those not banked yet. At global level, cash is still the preferred mean of payment, but non-cash transactions are taking up and have several positive impacts for developing countries, especially in terms of: reduction of cash-related costs (cash costs between 0.5-1.5% of SSA’s GDP annually; ~1% in South Africa); safety, traceability, ease and cost-efficiency of transactions; service innovation and economic fallouts (estimated direct and indirect contribution by mobile ecosystem accounted for 5.4% of Sub-Saharan Africa’s GDP in 2013); consumption growth; reduction of informal economy (which accounts 55% of SSA’s GDP and ranges from 20 to 30% in South Africa); financial and social inclusion (in SSA 70-80% of adults do not have a bank account; approx. 20-30% in South Africa). New technologies and digital applications could act as “game changers" in the years to come. Some successful experiences (such as the Italian Poste Mobile and the Kenyan M-Pesa transfer money system) could be exchanged as best practices between the two countries/continents. As of today, infrastructures for digital payments are deploying rapidly in Sub-Saharan Africa and in South Africa (by 2020 in SSA there will be 525 million of smartphones compared to 72 million in 2013) and more than 90% of South Africans have a smartphone and 21% of them do mobile banking. Therefore, it is key to understand how to promote partnerships/networks between the banking system and ICT/digital technologies providers. There are several key enablers (such as regulation, market, ICT, risks, etc.) and players (among them: government and regulators, payment industry players, technology providers, commercial banks, merchants, telecoms, and device providers)

• perating in the payment system: the creation of a “win-win relation” is a precondition for making

digital banking a driver for socio-economic development.

Advisory Board Members

Maria Chiara Carrozza She is Member of Italian Parliament, in the Chamber of Deputies, since February 2013. Currently she is Member of the third Commission (Foreign and European Community Affairs).She has been Minister of Education, Universities and Research from April 2013 to February 2014. She is Professor

• f

Industrial Bioengineering in the Department of Biorobotics at the Scuola Superiore Sant’Anna in Pisa. She was Dean of the same University for two terms, from 2007 to 2013. Maria Chiara Carrozza was born in Pisa and she has a degree in Physics and obtained a Ph.D. in Engineering. Alec Erwin He has been Minister of Public Enterprises from 2004 to 2008 and Minister of Trade and Industry of the Government of South Africa from 1996 to 2004. He was also President of the United Nations Conference on Trade and Development (UNCTAD) and held several positions in trade union organization at the national level. He was a member of the National Executive Committee of the of the African National Congress (ANC) from 1994-2007. Maurizio Mariano Attorney, Co-Founder and Director of BBM Inc, a medium-sized law firm in South Africa, with national representation across 5

• ffices. Based in Johannesburg, he is active in socio-political

affairs in South Africa and Italy. He has represented the Italian South African community in Rome in the General Council of Italians Living Abroad “Consiglio Generale degli Italiani all’Estero – CGIE”. He holds a Masters degree in International Law.

Ignazio Moncada He is Chairman of Fata S.p.A, and Fata Logistic Systems, Pianezza (TO). He is Deputy Chairman of Musinet Engineering S.p.A., and part of the Board of Director of Fata Hunter Inc., Riverside, California (USA) as well as Chairman of Fata Gulf Co. W.L.L., Doha (Qatar). He is listed in the Italian National Auditor Directory; he is member of the Board of Eu-China Business Dialogue, Beijing (China), Member of the Board of Italy-China Chamber of Commerce, Milan. He is Member of the Board of Italy-China Foundation, Milan. He is Member of the E.U. – QATAR relations Committee and Member of the Board of Italy- Iran Chamber of Commerce, Rome. Tseke Nkadimeng He is CEO of Afric Oil, a leading black-owned and managed fuel

• distributor. The company markets and sells diesel, petrol, paraffin

and lubricants to a client base that comprises leading companies in government, parastatal organisations and industry. He is also the Founder of Moopong Investment Holding (a previous advisor to Ba-Palaborwa communities regarding their BBBBEE (Broad- Based Black Economic Empowerment) transactions and land

• claims. He is previous Manager of Pembani Group.

Ndaba Ntsele He is an Executive Chairman and Co-Founder of the Pamodzi Group, one of South Africa’s leading conglomerate companies. He is currently the Chairman of Pamodzi Industrial and a Board Member of the Anglo Inyosi Coal and Land Mobility Technology. He serves as President of the Black Business Council, Co-Chair for South Africa-India CEO Business Council and Russia-South Africa Business Council as well as President of the NGO “Education Africa”. He is known for the central role he played in re-launching Nike in Southern Africa. He is also the advisor at Centre of Entrepreneurs at WITS University. Lapo Pistelli He is Senior Vice President at Eni and former Deputy Minister of Foreign Affairs and International Cooperation. He has visited many different countries in different capacities (monitoring elections, giving lectures, networking with leaders of progressive parties). He cooperates with various progressive think tanks in Europe and in the US. Lapo Pistelli earned a Master in Political Science in Florence and he is there visiting professor at the Bing Overseas Studies of Stanford University. He publishes regularly on issues related to European and international affairs. His last book is “Il nuovo sogno arabo – Dopo le rivoluzioni”, Feltrinelli 2012.

Tomaz Salomão Tomaz Salomão is a Mozambican economist, who served as the third Executive Secretary of the Southern African Development Community (SADC) from 2005 to 2013. He was the Minister of Transport and Communications from 2000 to 2004 and Minister of Finance and Planning from 1994 to 1999 (Mozambique). During this period, he also served as Governor of Mozambique at the African Development Bank, International Monetary Fund and the World Bank. Vincenzo Schioppa He has been Ambassador of Italy to South Africa (with secondary accreditations to Namibia, Lesotho, Mauritius and Madagascar) since November 2011. Previously, he was Ambassador of Italy to Libya (2010-2011), alternate Ambassador to the OECD in Paris (2001-2005), and Consul of Italy in Western Australia (1988- 1991), among other responsibilities. He has written several books, essays and articles, in Italy and abroad, mainly in the field of public governance and reform. He has been chair or member of various scientific, steering and managing boards. Iqbal Survè He is a medical doctor, an influential African entrepreneur and a recognized philanthropist. He is the Founder and Chairman of the Sekunjalo Group, and Investment Holding Conglomerate. He is also Chairman of the University of Cape Town Graduate School of Business and participated in several Presidential, Ministerial and Public Institutions advisory boards. In 1989, at UNESCO in Paris, he was honoured by Amnesty International for his medical and ethical work with victims of detention and torture. Nomatemba Tambo She is the Ambassador of the Republic of South Africa in Italy. Previously she has served as Consul-General for the Consulate General of the Republic of South Africa to Hong Kong & Macau and as Chairman of Masiyeni Mining and Exploration. She also held directorship positions across a diverse range of endeavors including Koketso, Webnet Solutions, and DTM Property

• Development. She is a Founding Member of Women in Capital
• Growth. She is involved in a number of community activities,

including the Adelaide Tambo Trust for the elderly, the We Care Trust for children and the Avril Elizabeth Homes. She is a member

• f the International Women’s Forum and, since arriving in Italy, a

member of the Gender Network.

European and South African Partners

Paolo Olivero Country Leader South Africa, CLN-MA Group Pier Paolo Fabbri Amministratore Delegato, Banca Agricola Commerciale Claudio Ceresani CEO, Perago Stefano Simontacchi Managing Partner, Bonelli Erede Pappalardo Studio Legale Giovanni Puglisi Chairman, Fondazione Sicilia Fabrizio Zago CEO, Building Energy Gustaaf Eerenstein Senior Relationship Manager, Standard Bank Mario Zini Country Manager, DHL Global Forwarding Italy Nico de Kock COO, Grown Consulting; Partner of TEH-A in South Africa

Session Sponsor

Tseke Nkadimeng CEO, Afric Oil Maria Chieppa Country Manager, Fiera Milano