Every Friday, SAfm’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News & Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Kamwendo: South Africa’s development finance system is facing a major strategic challenge and could cave-in if it is not improved.

Creamer: Yes, when you think of South Africa’s development finance system, you think of groups like the Industrial Development Corporation (IDC), Land Bank, The Development Bank of Southern Africa and the National Empowerment Fund. If we look at the Land Bank at the moment that is having to raise a R3-billion liquidity facility, it has got to restructure its debt.

If we look at the IDC, we see the debt ratio is rising. Wherever you look at development finance, there is a need for some sort of new strategy, because we are really developmental as an economy. We need to develop our economy and these are the structures we normally use. When it comes to transformation and empowerment of people, these are the development financial institutions that have to do it. Some of them are now trying to reimagine how to do things more sustainably. They are looking at what they call blended finance, so that they don’t have to take all the risk in, say, a venture that requires R100-million. They are saying let us put in R60-million and let the government have the R40-million as an industrial development grant, or whatever you want to call it.

Now, whenever we use word grant, we should pick up our ears, because that is where you need a lot of transparency. If there is going to be a nonrepayable grant, particularly, we really need to know who is getting this money. I think one of the biggest things lacking is all these development finance institutions is transparency. You can see that when they deal with a private company that is not listed on the stock exchange, you can’t get information.

We find the problem now with the Kalagadi Manganese, where you see that it is defaulting on its debt to the IDC, which is exposed to the tune of over R6-billion, including what is owned to the African Development Bank as well, and they are not getting their money back in the form of loan repayments. Covid-19 is highlighgting a heck of a lot of problems that need to be restrategised. I think development finance is going to be one of those areas that needs a new strategy.

Kamwendo: A panel of experts is needed to oversee the future of the struggling government-owned diamond mining company, Alexkor.

Creamer: The government has chosen to go into diamond mining, which I don’t think is a good idea at all. Diamond mining and marketing is a very complicated business. I know we have had 100 years of it, but it has always been in the private sector. Now, Alexkor is starting to stumble, it has got an administrator there, who is saying that Alexkor is trading recklessly and it is not meeting its financial obligations.

You have got the whole Richtersveld community, in the Namaqualand area, which are part owners in the whole development of Alexkor, but it is just not working well at all. Again, when you see government going into something like this, often they are in deep water, and literally so with diamonds, because some of these diamonds are recovered from the sea. A panel of experts could be set up easily. I can even think of four people right away. These are really top people that are willing to do things, but they are never called forward.

I listened carefully to the President Cyril Ramaphosa yesterday answering questions in the House of Assembly and he was saying that he wants people to come forward and not lament, but come forward with solutions. I know there are a whole lot of people, because there is a long history of diamond mining, who could come forward and sort this out for the benefit of the people of the Richtersveld, who are really dependent on the Namaqualand diamond resource that South Africa has, which is run by the State-owned company, Alexkor.

Kamwendo: More border openings are needed to allow foreign mineworkers to get back to work timeously.

Creamer: The foreign border situation is not good when people are having to return, particularly in the Covid environment. The large numbers are really holding things up at borders. We have 4 000 mineworkers needing due to come through from Mozambique. There is one border post and there’s a lot of congestion at the Lebombo post.

Then we’ve got 12 000 mineworkers needing to come through from Lesotho, with also has only one border post. Maybe now, while I’m talking they changed that, but that it how it was the last time we looked at it. It seems as though they’ll need to open up more border posts, otherwise there is going to be a lot of accommodation needed, because as these mineworkers come forward they gather and they have also got the Covid situation to contend with, so they have to keep distance as well.

They need special accommodation and need to be screened and it is a problem. If more border posts can be opened, it will smooth things up for the better, particularly for our economy as well, because we need to get our mines going at 100% of capacity again, and the congestion at border posts is holding things up at the moment. 

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News & Mining Weekly.