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< Previous10 February/March 2025February/March 2025 TRAVEL & LEISURE In the heart of South Africa’s scenic Winelands, Val du Charron Wine & Leisure Estate offers an unforgettable retreat for travellers seeking luxury, history and the art of winemaking. Located in the Bovlei Valley, just ten minutes from Wellington and under an hour from Cape Town, this working vineyard is an indulgent haven of tranquillity. Val du Charron offers exceptional accommodation options to suit every preference. The 4-star Guesthouse boasts 23 beautifully appointed suites, each with private balconies offering stunning vineyard views. For those who want more exclusivity, the 5-star Coach House provides privacy with three spacious suites, each featuring a plunge pool, wood- burning fireplace and a patio. The historic Manor House, which dates back to 1699, has been carefully restored, complete with a private pool, gym, and sauna, and is ideal for families or honeymooners. The estate’s restaurant offerings are remarkable. The Grillroom, a bespoke steakhouse, specialises in premium aged meats and diverse dishes, while Pizza Vista serves authentic Italian cuisine in a relaxed setting. Both restaurants are fully licensed and pair perfectly with Val du Charron’s award- winning wines. Val du CharronVal du Charron …Wine & Leisure Estate…Wine & Leisure EstateFebruary/March 2025February/March 2025 11 TRAVEL & LEISURE Val du CharronVal du Charron …Wine & Leisure Estate…Wine & Leisure Estate The award-winning estate wine is not to be missed. Wine tastings and vineyard and cellar tours are available. And the cellar produces hand-crafted premium red and white wines for export. Adventure seekers will enjoy the six mountain biking and running trails that wind through the estate’s stunning landscapes, catering to all skill levels. Val du Charron offers modern conference facilities with a vineyard backdrop - perfect for private functions and business meetings. By combining its rich winemaking heritage, luxury and modern comforts, Val du Charron provides a world-class escape. Whether you come for the wine, the cuisine, the conferencing or the serene surroundings, Val du Charron promises an experience to remember forever.◼ ◼ For more information or to book | www.vdcwines.co.za | stay@vdcwines.com | +27 (0)21 873 1256 |12 February/March 2025February/March 2025 VIEWPOINT Navigating Article 6 of the Paris Agreement As global leaders convened for the Sixth Session of the Conference of the Parties (COP) in Baku, the focus on Article 6 of the Paris Agreement renewed interest in international carbon markets and cooperation mechanisms. Article 6 offers a pathway for countries to work together to meet their climate goals through both market and non-market mechanisms. For South Africa, Article 6 presents significant opportunities to enhance its climate strategy - especially through avoidance credits and nature-based solutions (NBS). However, South Africa’s Climate Offset Administration System (COAS) currently limits companies’ ability to fully leverage these options for carbon tax offsets, posing both challenges and opportunities for future development. Mechanisms for international cooperation Article 6 is divided into three components, each allowing for different types of climate collaboration: σ Article 6.2 – Cooperation and ITMO trading This allows countries to engage in bilateral or multilateral agreements to transfer emissions reductions as Internationally Transferred Mitigation Outcomes (ITMOs). These can be used by countries to meet their Nationally Determined Contributions (NDCs) through flexible, decentralised trading. South African companies could, for instance, sell emissions reductions to other countries needing credits to meet their own NDCs. σ Article 6.4 – Centralised market mechanism (Sustainable development mechanism) This is the UN-supervised mechanism that allows both public and private entities to generate and trade certified carbon credits from specific emissions reduction projects. Known as the Sustainable Development Mechanism, it emphasises transparency and environmental integrity through rigorous standards. For South Africa, this presents an opportunity to develop projects that meet these high standards, particularly in areas like forest conservation, soil health and methane capture. σ Article 6.8 –Non-Market Approaches (NMAs) Article 6.8 enables countries to engage in cooperative climate actions that do not involve market transactions, focusing instead on areas like technology transfer, capacity building and sustainable development. South Africa could use this approach to support resilience-building projects, especially in agriculture and water conservation, where community involvement and knowledge-sharing drive impact. Exclusion of avoidance credits from COAS South Africa’s carbon tax policy, introduced in 2019, is designed to drive emissions reductions by imposing a financial cost on greenhouse gas emissions. Through COAS, companies can reduce their carbon tax liability by investing in eligible offset projects. However, COAS restricts offset eligibility to removal projects - such as reforestation and renewable energy - excluding avoidance credits, which are generated by projects that prevent emissions rather than capturing them. This exclusion limits South African businesses in several ways. As a country rich in natural resources and opportunities for conservation, South Africa is well-positioned to benefit from projects that prevent emissions, such Diksha Pillay | Associate Director | KPMG Southern Africa | diksha.pillay@kpmg.co.za |February/March 2025February/March 2025 13 VIEWPOINT as land conservation, soil health improvement and wetland preservation. Without COAS eligibility, companies miss out on opportunities to reduce their tax liability by investing in projects that offer tangible climate benefits and generate revenue through verified carbon credits. Future inclusion of avoidance credits The recent advancements in Article 6 create a pathway for South Africa to potentially align COAS with international standards, enabling it to include avoidance credits. In October 2024, the Article 6.4 Supervisory Body finalised standards for both emissions removal and avoidance credits, emphasising environmental integrity and rigorous verification [UNFCCC News].[1] [1] These standards pave the way for South Africa to expand COAS, allowing businesses to develop high-quality avoidance projects that meet global criteria and are eligible for both carbon tax relief and international trading. If COAS were to incorporate these standards, companies could benefit from investing in diverse projects that prevent emissions. For example: σ Land conservation projects Protecting biodiversity-rich areas could prevent emissions from deforestation while creating avoidance credits that align with both national and international climate goals. σ Methane capture initiatives Capturing methane from agriculture or waste management facilities could generate credits and prevent potent greenhouse gases from entering the atmosphere. σ Energy efficiency improvements Avoidance credits could also apply to industrial upgrades that prevent emissions at their source, supporting both emissions reduction and operational efficiency. NBS for avoidance and removal credits Nature-Based Solutions (NBS) offer South African businesses a valuable opportunity to generate both avoidance and removal credits by enhancing the country’s ecosystems and supporting sustainable development. South Africa’s unique landscapes - forests, grasslands, wetlands, and savannas - are well-suited for projects that either prevent emissions or actively capture carbon, creating high-quality credits for both local and international markets. σ Forest conservation and restoration Forest projects both protect existing carbon stores (avoidance) and capture new carbon (removal) through restoration and reforestation. These projects generate valuable credits, support biodiversity, and offer eco- tourism and community benefits. σ Sustainable agriculture and soil health Practices such as agroforestry, conservation tillage and rotational grazing prevent emissions from traditional farming (avoidance) and enhance soil carbon storage (removal). These projects improve soil productivity, support climate resilience and generate marketable credits. σ Wetland and grassland restoration Wetlands and grasslands act as significant carbon sinks. Protecting these ecosystems prevents emissions (avoidance) while restoration increases their carbon capture capacity (removal). These projects improve water quality, preserve biodiversity and provide ecosystem services to local communities. By investing in NBS for both avoidance and removal credits, South African businesses can generate revenue, enhance ecosystem health and contribute to climate and community goals, supporting both local and global climate action. Conclusion Article 6 of the Paris Agreement provides South Africa with a framework to enhance its climate strategy through international cooperation and carbon markets. [1] https://unfccc.int/news/key-standards-for-un-carbon-market-finalized-ahead-of-cop29 ▶▶14 February/March 2025February/March 2025 VIEWPOINT Copyright © 2023 SYSPRO. All rights reserved. All brand and product names are trademarks or registered trademarks of their respective holders. Scan this QR code or call 011 461 1000. Manufacturing a sustainable economy with SYSPRO Bill of Materials Software. 732945 OSFF SYSPRO EMEA@SYSPRO_Africa From raw materials to finished product (And everything in between) Although COAS currently excludes avoidance credits, the progress in Article 6.4 suggests a potential future alignment that could allow South African companies to capitalise on a broader range of emissions-reducing projects. By developing avoidance credits and removing nature-based solutions, businesses can create revenue generating assets, aligned with both national and global climate goals to drive meaningful impact for communities and ecosystems.◼ Natural gas - fuelling mining’s energy transition When it comes to reducing its environmental impact and futureproofing its energy needs, natural gas is the best answer for the mining industry. Transitioning to natural gas or renewable energy sources can improve energy efficiency significantly, thereby reducing emissions. Utilising alternative energy resource like natural gas, solar, wind and hydropower, as well as implementing energy-efficient technologies, are crucial steps. The role that natural gas can play in the energy transition of African mines is inextricably linked to its ability to help address environmental problems. With concerns about air quality and climate change looming large, natural gas offers many potential benefits if it displaces more polluting fuels. This is especially true given limits to how quickly renewable energy options can be scaled up and the fact that cost-effective zero-carbon options can be harder to find in some parts of the energy system. Natural is less expensive, cleaner, and more efficient and cost-effective than coal. It emits 50% to 60% less carbon dioxide (CO2) when combusted in a new, efficient natural gas-power plant compared with emissions from a typical new coal plant. Studies have shown that the CO2 produced when burning fuel is a function of the fuel’s carbon content. The flexibility that natural gas brings to an energy system can also make it a good fit for the rise of variable renewables such as wind and solar power. Natural gas can provide reliable energy in remote mining locations that do not have access to grid power and can also assist mining companies to avoid the financial challenges of volatile diesel and heavy fuel oil prices. Economic and social impact The use of natural gas in mining operations impacts local communities and job creation in Africa. Sustainable development is about meeting locally defined social, environmental and economic goals of communities over the long term. Interactions between the mine and community should add to the physical, financial, human and information resources available. The challenge is to ensure that the effects of such interactions are regarded as positive by those affected locally as well as by the promoters of the project, and that communities develop in ways that are consistent with their own vision. This may be realised through, for example, the provision of social services, income or skills development. Communities can receive compensation and substantial flows of revenue when gas-to-power infrastructure is established, which can act as an important catalyst for change and growth. For areas previously peripheral to the cash economy, these monetary flows can transform the economic and social basis of communities. Energy mix and commitments South Africa is a signatory to the United Nations Framework Convention on Climate Change (UNFCCC) and to the Paris Agreement. As an energy and emissions intensive middle-income developing country, the government has recognised the need for the country to contribute its fair share to the global effort to move towards net-zero carbon emissions by 2050. Lindiwe Mekwe | General Manager | Regulatory and Legal Affairs | ROMPCO | info@rompco.co.za | ▶▶February/March 2025February/March 2025 15 VIEWPOINT Copyright © 2023 SYSPRO. All rights reserved. All brand and product names are trademarks or registered trademarks of their respective holders. Scan this QR code or call 011 461 1000. Manufacturing a sustainable economy with SYSPRO Bill of Materials Software. 732945 OSFF SYSPRO EMEA@SYSPRO_Africa From raw materials to finished product (And everything in between) In the 2023 Integrated Resource Plan (IRP), natural gas emerged as a critical part of South Africa’s future energy mix. With an existing gas infrastructure capable of supporting the mining industry’s energy needs and the possibility to accommodate the expansion of that infrastructure, the mining industry will be guaranteed to secure sufficient energy resources to sustain its future activities. As South Africa decarbonises its economy, natural gas plays a key role as a transition fuel to replace more emissions-intensive fossil fuels like coal and diesel. Energy demand on the continent threatens to outstrip supply. The advantages of natural gas over traditional energy sources are its domestic availability, established distribution network, relatively low cost and reduced environmental footprint. To date, South Africa consumes ~180 Petajoules per annum (PJ/a) of gas, predominantly in the synfuels sector (110 PJ/a) and the industrial sector (70 PJ/a), which supports up to 56 thousand (k) jobs across the value chain, generates up to ZAR215 billion (bn) in taxable revenue and contributes ~1–2% of GDP. This has been made possible by the constructed a 26-inch 865 km high- pressure cross-border gas transmission pipeline and transport natural gas from the Central Processing Facility (CPF) in Mozambique to gas markets in Mozambique and South Africa. Infrastructure and regulation The high -pressure gas transmission pipeline has been owned and operated by the Republic of Mozambique Pipeline Investments Company (ROMPCO) since 26 October 2000 under the Pipeline Agreement. The Mozambican government granted ROMPCO the exclusive right to occupy the pipeline corridor as a zone of partial protection under the Land Law to conduct its pipeline operations. In addition, on 27 February 2007, the National Energy Regulator of South Africa (NERSA) issued ROMPCO a licence to operate the 334 km section of the Mozambique Secunda Pipeline (MSP) transmission pipeline in South Africa. The MSP gas network, including the Komatipoort Compressor Station, is a single source of supply of natural gas from CPF in Mozambique to several customers in different industries in the South African economy. The existence of, and/or additional investment requirements for gas extraction and transportation, is an important determinant of the economic viability of new or extended gas exploitation. The domestic gas utilisation infrastructure, such as gas-to-power plants, could be another investment opportunity. The shift to gas infrastructure that is more flexible in application and location - such as Floating Storage and Regasification Units (FSRUs) and small, modular and flexible electricity generation plants - offer lower risk profiles and will have longer term economic implications. Availability of finance is key to infrastructure development, for both gas and renewables. A catalyst for growth In conclusion, natural gas can also support Africa’s industrialisation, which can lead to economic growth and the development of renewable infrastructure.◼16 February/March 2025February/March 2025 VIEWPOINT Digitising governance - reform and recovery through leadership and tech In the face of escalating governance challenges in South Africa’s State-Owned Enterprises (SOEs), which include Eskom, Denel, Transnet, PRASA and SABC, there has never been a greater need for urgent reform, and it critical that we begin to take appropriate action. Leaders repeatedly admit, “We know we have a governance problem, but we do not know how to fix it or where to start.” Governance in crisis The country’s governance problems - fuelled by corruption, mismanagement and weak leadership - are undermining the operational effectiveness of key public sector entities. These struggles are linked to a broader decline in South Africa’s economic performance, marked by poor GDP growth, rising debt ratios, and mounting unemployment. Without addressing the governance issues, the economic outlook for the country remains bleak. South Africa’s credit rating has been downgraded three times in recent years, with the country now sitting at one of its lowest positions on the global credit scale. According to Standard & Poor’s, Fitch Ratings and Moody’s, the country’s triple downgrade status - known as ‘junk status’ - reflects both governance and economic concerns. These downgrades are a stark reminder of South Africa’s annual GDP stagnation, including our national debt, which exceeds R6 trillion (circa 75% of GDP),[1] [1] and unemployment, which has reached historic highs with circa 34%[2] [2] of the working-age population unable to find work. South Africa’s economic performance remains weak, and GDP growth struggles between 0.1 - 0.2%, which is a far cry from the 4 - 5% growth rate anticipated to tackle the unemployment crisis. Many market analysts believe the country will consistently require double-digit GDP growth over the next decade to alleviate this ongoing crisis. Government spending on social grants has surged due to high levels of unemployment, exacerbating the country’s fiscal deficits. The continuing decline in Foreign Direct Investment (FDI) is even more concerning. In recent remarks, U.S. President Donald Trump has criticised South Africa’s governance policies linked to Expropriation Without Compensation, including the country’s inability to address corruption and inefficiency within its public sector. Indeed, such comments will undoubtedly affect South Africa’s ability to attract new FDI and rally international support. His statement regarding the suspension of the PEPFAR grant underscored that the U.S. would be reassessing its financial contributions to South Africa in particular, signalling a significant decline in international backing from the United States of America. These comments reflect growing concerns from global stakeholders, with many questioning the stability and long-term viability of South Africa’s governance structures to ensure the country is a safe and secure investment destination. Undoubtedly, the nation urgently needs a “leadership reset” where good governance and accountability are placed at the centre of that change. Most of South Africa’s SOEs continue to be emblematic of the country’s broader governance challenges. Mismanagement, corruption and a lack of accountability have stymied their operational capacity, creating ripple effects that impact the national economy. For example, Eskom’s ongoing power crisis, Denel’s financial troubles and Transnet’s supply chain bottlenecks have all contributed to the erosion of investor confidence. The role of professional organisations While these governance challenges may seem insurmountable, South Africa has an opportunity to turn things around if it leverages its professional Bodies, educational institutions and technological solutions. Key Terrance M Booysen | CEO | CGF Research Institute | tbooysen@cgf.co.za |February/March 2025February/March 2025 17 VIEWPOINT stakeholders such as the Institute of Internal Auditors South Africa (IIASA), the Institute of Directors South Africa (IoDSA), and the Institute of Risk Management South Africa (IRMSA) have an important role to play in advocating for sound governance practices that can turn the tide. Professional Bodies like the IIASA can help institutionalise independent audits and governance reviews, ensuring that both the public and private sectors adhere to high ethical standards. The IoDSA’s emphasis on corporate governance principles (found in King IV™) can guide leaders towards more accountable, transparent and responsible decision- making. Furthermore, IRMSA can offer expertise in managing risk effectively and reducing vulnerabilities that lead to poor governance and financial instability. Beyond these organisations, South African universities, such as Stellenbosch University, WITS and the University of Pretoria, are pivotal in providing the academic rigour necessary to support this change. By aligning with industry leaders, these institutions can provide continuous education on the best practices in governance, risk management and digital transformation, preparing South Africa’s next generation of leaders to drive sustainable growth. The power of digitised governance Technology presents a significant opportunity to address South Africa’s governance challenges. Cloud-based governance frameworks can empower public and private sector organisations to automate governance workflows, ensure compliance and provide real-time monitoring of the standard of governance practices within an organisation. These systems offer transparency and ensure that leadership decisions are traceable and accountable. Digitising governance practices within an organisation offers a solution to combat corruption and inefficiency in government departments and SOEs to ensure that public resources are managed effectively and efficiently. These platforms can make governance more transparent, efficient and effective through real-time governance reporting and data-driven decision-making. Notably, adopting modern governance systems will make South Africa a more attractive destination for FDI, and the country must move in this direction. Investors are wary of regions with weak governance, but the transparency enabled by digitised governance systems can reassure potential investors. As a result, South Africa could see a boost in FDI, which is vital to addressing the country’s debt and unemployment problems. In this vein, Stellenbosch University has recognised the need for embracing digital transformation, specifically in the public sector and issued a Briefing Note in June 2024 entitled Fast-Tracking Digital Transformation: A Framework for South Africa’s Public Sector which, amongst others, aims to address the complexity of South Africa’s digital transformation efforts to accelerate the achievement of the SDGs. Organisations that embrace digital governance frameworks have a distinct advantage in streamlining their operations, reducing waste, and increasing efficiency, all of which contribute to better economic outcomes. South Africa’s adoption of digitised governance frameworks could help reverse the negative trend of declining FDI and improve the country’s standing in the global market. A call for leadership and collaboration South Africa’s governance crisis is not an insurmountable obstacle but requires immediate and concerted action from a broad collection of actors. To rebuild the country’s global standing, government and business leaders must embrace a new era of governance - digitally empowered, ethically grounded and supported by professional organisations and academic institutions. Digitised governance combined with the expertise of professional organisations can provide the roadmap for leadership to transform their governance practices, turning challenges into opportunities and helping South Africa achieve its full potential. By working together, we can build a governance ecosystem that is transparent and effective, and that truly serves the best interests of the nation. This collaborative effort will not only elevate South Africa’s governance performance but could also set a global benchmark for other countries to follow. The road to recovery is clear - South Africa must adopt modern governance frameworks, invest in leadership development, and embrace the opportunities offered by technology. In doing so, the country can reclaim its position as an economic African powerhouse on the global stage.◼ [1] Source: National Treasury - as of January 2024 [2] Source: World Bank: Q2-202418 February/March 2025February/March 2025 VIEWPOINT I’m too damn selfish not to defend the rights of others! Classical liberal Friedrich Schiller said: “The first law of decency is to preserve the liberty of others, the second is to demonstrate one’s own freedom.” I’ve become convinced that the philosopher/novelist Ayn Rand’s concept of “selfishness,” when understood properly compels one to do many things for others - as did Rand herself in private, without bragging about it. I think defending the liberty of others is critically selfish in precisely the way she meant it. Few of us are members of groups who are on the outer fringes of freedom. We tend to be fairly similar whatever our visions of individual grandeur may be. Freedom, however, is snatched away at the fringes. No government goes for the heart and soul of the society but moves against the outcasts and rejects. Of course, once they are dealt with, and the fringe is removed, a new fringe develops on the carpet of society, and once again the anti-freedom advocates start to move against the new fringe. The social carpet slowly but surely shrinks in size with the fringe coming closer and closer to the center. The best way I can defend my rights is to defend the rights of others who are currently under attack or battling recent assaults on their rights. Fight for the freedom of others and it becomes harder for anyone to take away your own freedoms. Not only does it stifle the anti-liberty movements, but it also attracts new allies when your rights are under attack. This is one reason what those I call “me-libertarians” do so much harm. Such individuals invent a scenario where it is the liberty of people just like themselves that matters - though they may remain among the most privileged of groups in society. In reality, they will be among the last to truly have their rights infringed upon, but after decades of ignoring the rights of people unlike themselves they may find it harder to rally defenders to their aid when needed. Fighting for the rights of others is insurance for your own rights. Charity toward others is needed as another form of insurance. If you, God forbid, need charity, you will be thankful you live in a charitable society. What goes out comes back. Send out charity and charity is more likely to be your safety net in times of need. Defend the rights and liberty of others and you are more likely to have others defending your rights and liberty. Shun them in their time of need if you wish, but expect to face your own crisis alone, without allies, and without help. We see the same thing at work in basic markets. You open a shop to make money, but to make money your products have to appeal to others. They must see the purchase as a means of making themselves better off or they would refuse to buy from you. You have to benefit them in order for them to benefit you. James Peron | President | Moorfield Storey Institute | Contributing Author | Free Market Foundation | jperon@fr33minds.com |February/March 2025February/March 2025 19 VIEWPOINT Adam Smith put it this way: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Many a business has found that in doing charitable deeds they not only feel good about the results but see results in their bottom line - often in unexpected ways. In 1992 Los Angeles police officers were filmed beating a man they pulled over as a drunk driver trying to evade them. They continued the beating long after the use of force was necessary. That was bad enough but then when the officers faced a trial the jury exonerated them, and rioting broke out in the city. Recently I saw a news report from Los Angeles about a Korean immigrant who had opened a shop years before in the area hit worst by the riots. Over the years he treated people well. He was respectful, helpful and friendly. He went beyond merely selling them products. When the riots hit shops all around his were burnt to the ground in the public rage. But at his small shop something else was happening. Individuals from the neighborhood came out to his store and stood in front telling rioters he was a good man and to leave his shop alone. His customers came to defend his business, and it was spared. He invested with kindness and reaped the reward of having his business spared from the riots. Always keep such things in mind. Take steps to defend your rights by protecting the rights of others and be kind and charitable to others as a means of creating a society that is kind and charitable to you when needed.◼ New Mechanism for Mitigating Currency Risk to Support Africa’s Energy Transition Africa is at the heart of the green energy transition, as vast reserves of many of the critical minerals required to power the clean energy transition are located on the continent. This gives Africa a key opportunity to leverage the global demand for those minerals while reducing the funding gap and helping the continent meet its development objectives. KPMG and the African Development Bank Group (AfDB) have introduced an innovative solution to address foreign currency risks that hinder the financing and delivery of energy infrastructure projects across Africa. The report, titled “New Mechanism for Mitigating Currency Risk to Support Africa’s Energy Transition”, was unveiled during the Africa Energy Summit held on January 27–28, 2025 in Dar es Salaam, Tanzania. The report proposes a shift in Africa’s project finance paradigm, with the introduction of financing mechanism centered around the creation of a “non-circulating currency” backed by a diversified basket of Africa’s critical minerals and a Pan-African settlements agent. The central questions are: how will the continent leverage its mineral wealth to attract more investment, and which key objectives will it pursue? This report suggests a mechanism that enables the continent to leverage its mineral wealth and to attract financing at a lower cost. This is achieved through shielding lenders and investors from the dual currency and convertibility risks that currently constrict international investors’ appetite for investments in transformational projects at scale. The report also proposes a mechanism that mitigates these risks, relying on the fact that a basket of critical commodities holds its value better than any African currency. Using a non-circulating currency underpinned by such a basket to finance clean energy projects in Africa could reliably mitigate the currency and convertibility risks embedded in such projects. This significantly reduces the high cost of financing paid by most African countries and creates an opportunity for a substantial rise in foreign direct investment into the continent. Take steps to defend your rights by protecting the rights of others...”Next >