How to grow Limpopo
The province offers many opportunities for entrepreneurs with great ideas, the IDC’s Kgampi Bapela tells Setumo Stone
Limpopo grows more tomatoes than any other place in the southern hemisphere – that includes South America where tomatoes originate. The province grows two thirds of the tomatoes in South Africa as well as three quarters of the country’s mangoes and 60% of the avocados. It also has a number of game reserves all ripe for development and a wealth of mineral riches to be unearthed. Paradoxically, a shopper in Polokwane is more than likely paying more for that fruit than a shopper in Gauteng, says Limpopo regional manager of the Industrial Development Corporation (IDC) Kgampi Bapela.
This is because some of these agricultural products move from Limpopo – where they are grown – to Gauteng, where the products are packaged and brought back to Limpopo through grocery chain stores.
“It means Polokwane residents, for example, are buying their fruit and vegetables less fresh because though they come from their own back yard, the produce travels all the way to Johannesburg or Tshwane and back,” says Bapela.
The IDC’s solution is to foster beneficial platforms in Limpopo, which enjoys significant business opportunities for entrepreneurs with an interest in mining, agriculture and tourism, among others.
He explains that despite so many tomatoes being grown in the province “up to 30% of those tomatoes are thrown away every year because of grading issues”.
This is despite the demand in Europe for dehydrated products. This is where the IDC comes in – it identifies potential market gaps and, where entrepreneurs present good business plans, it can help fund and nurture those businesses.
Similar opportunities are available in the frozen vegetables space and though a few multinationals are playing in that space, they also only cater for domestic or household markets. Here there’s a chance for exporting a locally manufactured product.
Bapela says the corporation primarily targets entrepreneurs who are already manufacturing to check if there is capacity for them to expand or diversify and add other products.
A good example is a woman who preserves beetroot in jars and who is already supplying to one of the grocery chain stores. Before, she was operating from a small space that did not meet safety standards and requirements. Now, thanks to support from the IDC, she has expanded her business to better premises and can expand her small manufacturing business.
“These are the people who we can assist and take to the next level. We make them aware of some of the legislative requirements as well as offering financial and nonfinancial support in other areas,” he says.
The IDC interacts with would-be entrepreneurs and small business owners from all spheres of life, says Bapela, but it is those who have a clear idea of their market and how they are going to get their product to that market that are most likely to be successful.
“For example, a guy who is an engineer in the mines and who has been doing that job and managing a section for some years, we find that those are the guys who have what it takes. So, there is this opportunity for them to jump to the other side and be the supplier or provider of services to the same industry that they are working in.”
On the mining front, Limpopo is on a growth trajectory. It has just under 70 operating mines, mainly in the Sekhukhune area and Waterberg region. Close to 90 are in the pipeline, depending on whether there is water availability, which is usually an impediment for the development of new mines, he says.
“That is also one of the reasons for the massive housing developments in rural Limpopo. It means more people are getting employed and more money is being pumped into the villages, and that is where the growth is taking place.”
The mining developments are mainly in the platinum space. However, coal mining opportunities exist in the Waterberg area, from Thabazimbi all the way to the Vhembe district around the Makhado area.
“Coal has been around Mpumalanga for many years, but we have always known that there were big reserves in Limpopo,” says Bapela, adding that this explains why Eskom has one of its biggest new power stations, Medupi, in Limpopo.
The development of the new power station also led to the development of new junior mines coming in and taking advantage of supplying Eskom.
“Anglo Platinum has offloaded some of its assets in North West and chosen to expand in Limpopo. The quality of the reserves is significantly better and the cost of extracting is less in Limpopo, because in North West they have to dig deeper.
“With the expansion of mines, you start seeing the development of new residential estates, shopping malls and with all that there is demand for private hospitals, schools and so forth.”
He says one of the reasons behind the plan to have a special economic zone (SEZ) in Tubatse was to leverage the benefits of having up to 40 mines in the area. The idea is to locate all mining-related activities in one area to improve efficiency in trade. The SEZs bring in the private sector to be part owner of that development.
The second SEZ in Limpopo is the Musina SEZ, which will host the R38.8 billion South African Energy Metallurgical Base Project. This project can transform the economy in Limpopo. Built off a mineral resource base, it will develop businesses around it that process the riches that come out of the ground.
Bapela says the Limpopo provincial government and the local mining houses have given an undertaking that up to 20% of their spend would be in the province. This means increasing localisation and ensuring that where possible the companies operating there buy from Limpopo businesses.
“We are looking at opportunities for import replacement. You will find that mines are consuming certain commodities and it is common to import these from overseas. We are looking into those opportunities to see how best we could set up small manufacturing.”
Limpopo also has a lot of potential for growth in the tourism sector. Up to 80% of the Kruger National Park is situated in Limpopo, but the first province that comes to mind when people think of the park is Mpumalanga. The province has not done enough to market Limpopo as a tourism destination, he says.
The province has 53 state-owned game reserves covering just over 200 000 hectares and that this has the potential to create many opportunities. A small game reserve such as Madikwe in North West, he says, has been successfully commercialised. Nambiti in KwaZulu-Natal covers only 20 000 hectares, but is equally successful.
“We have been active in the tourism space. In the current financial year, we are dealing with several hotel transactions.”
One of them is a Radisson that will open in Polokwane soon. “It is the first luxury hotel in Polokwane with 160 rooms and it is 100% blackowned,” he says. There are also hotels are in Thohoyandou, Magoebaskloof and Bela-Bela.
Bapela says the IDC takes advantage of government initiatives such as the department of trade and industry’s black industrialist programme, which funds up to 50% of the value of a project limited to R60 million.
“We managed to get 100 applications recently. Obviously, not all of them will make it through, but some are promising,” he says.
“I always say I see Limpopo as what Gauteng was maybe 80 years ago. The resources are here and there is no other province that has the level of mining developments like Limpopo,” Bapela says.
“With more people with buying power residing in the province, things will start to fall into place.”
His wish is that every business application that comes through the door will make it.
He says the IDC is sector-focused and therefore there are businesses where it can not get involved, such as retail and property.
All the IDC’s regional offices offer support to help businesses become more funding ready, so that when they formally approach the corporation for financial backing they have bankable business plans.
“What makes me want to wake up and come to the office every day is knowing that we are making a difference. When I drive around the province and see smoke out of a chimney somewhere where the IDC has funded, it makes me proud to say that this organisation is bring about real change. And I want to see that happening throughout the province.”
True to his vision and passion, in the past financial year, Limpopo accounted for 40% or R6.7 billion of the R15 billion of the IDC’s total approvals. This series is reported by City Press and supported by the IDC
FARM FRESH Limpopo is the largest producer of tomatoes in the southern hemisphere
Limpopo IDC regional manager Kgampi Bapela