Naspers sets its sights on growth within Brics countries
But Russia gets go-ahead only for two medical reactors
● Brics nations will take a more central role in the growth of Naspers’s business interests in future, group chairman Koos Bekker said this week.
Bekker, who was a panellist at the Brics Business Forum, which was held on Tuesday ahead of the summit of Brics heads of state, said the five-member bloc comprising Brazil, Russia, India, China and South Africa held promise of growth opportunities as these countries “grow more quickly” and have “got vitality”.
Naspers has had a long winning streak in China through its investment in internet company Tencent.
It recently trimmed the stake by 2%, raising over R100-billion, which it will apply to digital businesses and strengthening its balance sheet.
Speaking to Business Times on the sidelines of the Brics forum, Bekker, a major shareholder in Naspers, said the future lies in investments in online food delivery and classifieds businesses.
Payment platforms are another area where Bekker sees further opportunity. “In the emerging world people struggle to pay.”
He said there was a “congruence towards Brics nations and Eastern Europe” in terms of finding new investment.
While Naspers’s shift towards e-commerce and the digital world is rising incrementally, it is in stark contrast to the somewhat muted energy it now dedicates to growing pay TV, for which Bekker is credited as the pioneer in South Africa.
Naspers launched M-Net in the late
1980s.
Bekker sees little to chase in the TV industry. “TV is more mature. There is no real opportunity left. They are small and quite difficult to get.”
Locally, MultiChoice — the holding company for the group’s pay-TV interests — is grappling with the growing threat posed by online and streaming services provider Netflix.
Bekker said the solution for MultiChoice is to become more digitally focused. Last year MultiChoice opened access to its videoon-demand offering, Showmax, to DStv Premium subscribers, including the access fee in its monthly subscription. But Bekker said the battle would remain tough.
“The big threat is not some local company. The big threat is Netflix.”
Much of Naspers’s concern is also over the regulation that has not yet been amended to recognise the challenge that companies such as Netflix pose. Another example was the impact that Facebook had had on advertising, he said.
While competition in the retail industry and in hospitality was different “when one goes online, there is not such a thing as local”. He said Facebook was a threat for most companies. “The vast majority of advertisements are going to Facebook and Google, not to any South African company. That’s a big problem and how are you going to regulate them?”
Of the industry regulator’s grip on the gravity of the situation, he said: “It’s not yet clear whether they understand the shift.”
Speaking as a panellist, Bekker praised the Chinese government for its efficiency, saying it had not received much recognition for changes it had made, particularly in protecting intellectual property — “and not because the Americans have complained”.
Last year, China registered more patents than the US.
He said China was evolving to become a very sophisticated economy while the quality of public service was high.
He cited a meeting with a Chinese government minister where “he tells you what the decision is and after the meeting people follow up. It is a pleasure to do business in China.”
But Bekker’s more striking comment was when he was asked what business required of the government.
He said people assumed it was a “zerosum game that business would like a weak government. But that’s completely wrong. What business does not need is subsidies. A subsidy works this way: there is a committee which anticipates the future and directs money to the future. We don’t know what the future is.”
He said the government was mainly required to provide an enabling environment for business to thrive.
● The Russian nuclear agency, Rosatom, will build two nuclear reactors in South Africa as part of a nuclear medicine deal, but still holds out hope for the mega nuclear deal which President Cyril Ramaphosa has put on ice.
Russian President Vladimir Putin reminded Ramaphosa on Thursday about the intergovernment deal on nuclear the two nations had signed in September 2014 in Vienna and Rosatom’s CEO for central and southern Africa, Dmitry Shornikov, told Business Times: “We do still believe that nuclear has an important role to play in the country’s energy mix and its future economic development.
“We remain ready to provide a proposal should a nuclear energy procurement programme arise in the country. We are proud of our world-class generation III+ technology and are confident of our offer.”
Shornikov said Rosatom had not officially been told that the governing ANC had cancelled the request for information on a massive nuclear reactor procurement it put out in December 2016, which was separate to the inter-governmental agreement signed by former energy minister Tina Joemat-Pettersson for the acquisition of eight nuclear power plants.
“We have not heard anything to date. Only what we have read in the news,” said Shornikov.
The cancellation of an inter-governmental deal between South Africa and Russia on nuclear procurement as well as the subsequent cancellation of the request for information has cooled relations between the two countries. When he arrived late at the Brics summit on Thursday, Putin brusquely moved to his car and failed to greet Higher Education Minister Naledi Pandor who had been assigned to welcome him, said officials.
The first intervention Putin made was to try to put the nuclear deal back on the table and South Africa has now been pushed into a more reconciliatory position on this form of energy, which is at the heart of Russia’s export ambitions. Rosatom is a global leader in nuclear power generation as well as in the ancillary industries of medicine.
“Our economic situation means we are not in a position to go further in terms of the nuclear build programme,” Ramaphosa’s spokesperson Khusela Diko said.
“Our economy is stagnant, it’s not growing at the rate that we want, so while we remain committed to an energy mix that includes nuclear, South Africa is not yet at the point where it is able to sign on the dotted line,” she said.
The Russians understood this, Diko said. But she added that Putin “was also very frank in the discussion around nuclear and the fact that South Africa and Russia have already signed an inter-governmental agreement around nuclear.
“There are no procurements that have taken place at this point but there is an understanding of co-operation between the two countries.”
Ramaphosa reiterated that nuclear expansion would take place at a scale and pace that South Africa can afford, said Diko.
The relationship between the presidents remained warm and Putin had congratulated Ramaphosa on his election as well as South Africa’s election to the UN Security Council. He also pledged Russia’s co-operation with South Africa on the council, Diko said.
The countries are now considering the expansion of trade. Agreements were signed on Thursday to co-operate in water resources and agro-processing.
“We are also considering with the Russians gas exploration just off the coast of South Africa in the Indian Ocean where there may be reserves of gas,” said Diko.
Russia’s bilateral relations with South Africa are not the same as they were under former president Jacob Zuma. The intergovernmental agreement on nuclear was placed in abeyance and the later RFI was cancelled after a pushback by civil society and a court order declaring that the government had to redo nuclear procurement because its attempt to splurge on nuclear had been unprocedural.
Reports from whistleblowers in the state have suggested that commissions related to the deal had already been paid to officials linked to Zuma. These have been denied by Rosatom and have never been proven.
Instead of the mega nuclear energy deal, Rosatom and South Africa’s state-owned nuclear company, Necsa, signed a much smaller agreement to extend co-operation in nuclear medicine by building two reactors in South Africa specifically for healthcare.
In a statement on Thursday Rosatom said: “The reactors are small-scale and relatively inexpensive reactors that are designed specifically for the cost-effective production of nuclear medicine products.”
Necsa CEO Phumzile Tshelane said: “Nuclear medicine is the most effective method in the early detection of cancer. The earlier cancer is detected the more likely it is to respond positively to treatment and this generally results in a greater probability of recovery.”
Rosatom and Necsa will set up cancer treatment centres across the continent where the nuclear agency has had more success in extending its energy ambitions.
While Putin and Zuma enjoyed a close relationship, Xi Jinping this week sealed a “special relationship” with Ramaphosa in a summit dominated by the Chinese leader.
We are not in a position to go further Khusela Diko Spokesperson for Ramaphosa