Archive for February, 2013

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rules of origin for South Africa trade agreements

Wednesday 27 February, 2013

The Durban Chamber of Commerce hosted a seminar on rules of origin, which specified how products are treated for export/import purposes by countries which have various trade agreements (RTA’s-regional trade agreements).  The event was sponsored by SGS, a French company which facilitates trade in Africa by serving governments & non-governmental organizations (NGO’s) with import verification, trade, & aid efficiency programs.

The meat of the program was presented by Nathi Cazes of the South African Revenue Service, (SARS-not the disease).  SARS administers the trade agreements in which South Africa participates.  We discussed primarily agreements with the EU & EFTA that were initiated in 2000 & now encompass 27 & 8 countries respectively, & SADC, agreed upon in 2008 & accounts for 12 countries.  Countries are divided by how their products are treated for tax purposes, either non-preferential, upon which tariffs, quotas, duties are imposed, or preferential, which receive preferential treatment with lower or no tariffs, quotas, &/or duties.  South Africa also adheres to internationally-recognized General System of Preferences with the EU since 2004, Norway, Turkey, Russia, & Switzerland 2004-08.  South Africa also benefits from the AGOA act passed by the United States government, which provides preferential tariffs for African textiles entering the US.  Due to competitive pressures, the number of countries participating in some of these agreements is declining.

Proof of origin is required for products exported directly from member countries.  It’s important to determine if they were “wholly obtained” & “significantly worked.”  The rules of origin criteria are as follows:

  • Origin status- Origin verification can take 3 months with SADC, but up to as many as 10 months with other organizations.
  • Cumulation
  • Minimal operations
  • General tolerance rule- There are different value tolerances for agreements with different regions:  SADC 15%, EU & EFTA 15%, Turkey 5%, Norway 5%, & Russia 50%.
  • Direct transport
  • Proof of origin- Documentary evidence must be translated.
  • Approved exporter-  Approved exporters must make a minimum of 12 shipments per year to gain approval as approved exporters.

A value-added test & ex-works costs & prices are used to determine origin criteria.    Some processes which do not confer origins, such as packaging, dilution, & assembly, are addressed in other RTA’s. Minerals, vegetables, & livestock are considered wholly-produced goods.    SARS regulates the certificate of origin process whereby, for example, forms must be returned to customs.  It’s the responsibility of the exporters & importers to assure that their documentation is complete before sending it to customs & SARS.

There was a problem in shipments to Zimbabwe recently where customs officials suspected the illegal importation of good from China embedded in other shipments, so they opened every single box to inspect for these goods.  Needless to say, it provided a major discouragement to shipping to Zimbabwe.

The South African government is working on agreements between the EU & Eastern African Countries (EAC) & potentially with the BRICS nations, Brazil, Russia, India, & China.

Like my 1st sales manager @ Xerox used to say, “There are 2 sides to every business:  they’re either sales promotion or sales prevention.”  All of this paperwork to document the origins of products is clearly a bureaucratic, but necessary, exercise in sales prevention.  On the other hand, some of these sales would not even be possible without these agreements, so I guess it depends on how you look @ it.  Obviously minimizing the requirements makes it as smooth as possible.  I asked how automated these processes are & was told they are, but I’m a skeptic in that area.

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Rural electrification in South Africa

Wednesday 20 February, 2013

Those crazy krauts are @ it again.  The German-South African Chamber of Commerce put on a seminar on rural electrification here in Durban, South Africa, so I sat in on as many sessions as I could.  Most of the content seemed to be provided by Renewables Academy.  This was a comprehensive 4 ½ day seminar, covering photovoltaic (PV) systems, solar resources, cells, modules; batteries & energy storage; electronics, installations, wiring, fuses, loads, applications; off-grid system design & sizing; hydropower systems, & project design.  The featured speakers were Peter Adelmann & Ivan Karau Kisembo.

There are a number of off-grid PV applications:

  • Solar home systems (SHS)
  • Clinics, schools,
  • Rural businesses
  • Tourism
  • Solar water pumping
  • Telecom, 2-way radio
  • Street lighting & signs
  • Back-up
  • Mini-grids
  • Small portable appliances

There are also many different configurations of PV systems:

  • Off-grid & tied to the grid
  • Off-grid wind powered & grid-tied wind powered
  • PV-only off-grid
  • Wind-only off-grid
  • Hybrid off-grid
  • Pico & micro-hydro off-grid
  • Ac- & dc-coupled micro-grids
  • grid-tied PV & wind

It’s important to choose the correct pv module to match the system type.  Modules for off-grid & grid-tied are not usually the same.  Mistakes can be expensive.

Photo-voltaic modules & arrays can be mounted many ways off-grid:

  • Roof
  • Free standing-ground & flat roof
  • Pole
  • Tracks
  • BIPV (building integrated PV)
  • PV slates & tiles

Mounting structures can be made locally out of steel or wood, & aluminum is easy to work with, but expensive.

Batteries can compose 70-80% of the cost of a PV system, so battery management is a key factor.  Charge controllers in off-grid PV systems protect the battery from being overcharged & overdischarging.

Lighting & small appliances are some of the most desirable uses for off-grid PV systems.  Computers, refrigerators, & hvac use too much energy to make sense for off-grid applications.  Adelmann found 100% of rural residents in Ethiopia charged their cell-phones & listened to radios, 30% watched TV, & none used dishwashers or washing machines.  (There they have ample hydroelectric energy-energy distribution is the problem.)  LED’s offer less light, but use little energy.  Incandescents use far more than low-energy bulbs.  Fluorescents last 5-10,000 hours while halogens are cheaper than fluorescents, but not recommended.  How lights are installed can make a big difference in energy consumption.  Areas should be lit with the appropriate level of light & light only areas that require lighting.  Reflectors multiply light.  Avoid wall lights generally as less efficient.

DC appliances, such as lights, tv’s, 2-way radios, fridges, & pumps,  are designed to be run on batteries & are generally more efficient than AC equivalents.  Although DC appliances are more expensive & not easy to find, some mobile home & boating suppliers stock them.  Adelmann worked on a solar project in western China with Shell Solar.  They hired a Chinese company to do the installation.  The Chinese firm then sold the users big TV’s that were big power consumers which overloaded the system, resulting in the project being called a disaster.  People will connect whatever they can to the system, which ruins the reputation of solar energy.

Solar water pumping can be expensive.  Making the borehole can cost more than the PV system.  These are generally more suitable for humans & animals than for crop irrigation.  Mechanical wind pumps are used in South Africa extensively.

Site surveys for off-grid systems are available from renac.  Designing & sizing off-grid PV systems involves the following:

  • Determining the exact energy/power requirements
  • Obtaining information on irradiation @ location
  • Determining output of PV array
  • AC or DC or both?
  • Charge controller?
  • Inverter?
  • Battery type & size
  • DC cable sizes/voltage drop

To plan for sustainable systems that will have a long life, i.e. longer than the 1st battery bank, take into consideration technical, financial, & organizational issues.  Many systems in developing countries, major markets for off-grid systems, last no longer than the original battery bank.  Trying to replace or compete with the grid can be problematic.  According to Mark Hankins of African Solar Designs in Kenya, small PV systems fail for both technical & social reasons:

Technical;

  • Poor design for
  • Quick sales
  • Lack of thought about system use
  • Poor sizing-too small
  • Lack of money to buy a complete system
  • Poor installation
  • Poorly matched components

Social;

  • Lack of plan for energy balance
  • Poor consumer understanding of technology-appliances, batteries, inverters
  • Load creep

He compares small PV systems with electricity from the grid this way:

Small pv system Grid electricity
Power sources multiple Single
Limits many None
Voltage drop possible None
Appliances Select carefully Use any
Energy management necessary Not needed

Here are some best practices for small hydro-electric power construction:

  • Avoid bends in pipe to prevent water velocity loss
  • Use anchors for support @ bends
  • Be sensitive to regional environmental authorities for, e.g. fish migration
  • Pay attention to all these risks:  completion, technological, operations/maintenance, market/distribution, resource, regulatory framework, country, interest, inflation risks
  • Test pipes to the maximum to assure they won’t burst & harm the environment
  • Take all this into account in the design stage

Here are some online resources

sizing tools

commercial systems

solar pumping

renewable energy software

Although the country of Malawi provides a free solar system if a family plants 200 trees, Adelmann’s main thrust was that rural electrification should be left to the private sector in South Africa.  The problem is not that people can’t /won’t pay:  the proliferation of cell-phones proves that.  Many consumers now pay more for energy for less service, for example, for kerosene.  The next issue will be productive use, i.e. how to enable those in the countryside to make money, which requires much higher productivity.  We must improve the countryside to fend off urbanization, but South Africa has no commercial farming.

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South Africa @ Africa Cup of Nations Tournament

Tuesday 5 February, 2013

It was a big weekend for sports here in South Africa(SA), as SA is the host country for the Africa Cup of Nations “futbol” Tournament.  Durban is 1 of the venues, along with Johannesberg, Cape Town, etc., but Durban is the host for the group with the home country of South Africa.  I’ve attended 2 games & thought I’d describe the differences between attending major sporting events in South Africa & elsewhere from a business perspective.

1st of all, tickets weren’t readily available online.  You have to go to the local Spar supermarket to buy them, although the colleague who got tickets for me went to 2 other places, but couldn’t get them because their printers broke.  I understand there was a pre-sales period to acquire tickets, but I’m not sure how much of a manual or automated process it was.

Sponsors include some of the usual suspects, such as Orange-the wireless network provider, Pepsi & Doritos, Samsung, Standard Bank, & a few I haven’t seen before, Nàsuba express-a French language provider of debit & credit cards, Pan Atlantic ( I search for it & find nothing & their logo is on the AFCON website, there is no link), &  a real interesting 1 IFD Kapital, a Russian financial services firm-how/why they got there, I’ll never know.  If I were a sponsor, I’d be a bit upset-they don’t seem to be getting much for their money.  There is ample signage @ the stadium, but I don’t see much more.  I’m not watching on TV, but maybe they’re getting more publicity there.

Moses Mabhida Stadium is a cool place to watch a game.  The seats are covered, but it’s open air, so the players might get rained on, while the fans don’t.  There is actually a ride you can take up to the top, & I believe they do bungee-jumping from there as well.  I’ll let you know if/when I take the plunge, or just the ride.

Not much seems to be sold @ the games.  Tickets are relatively inexpensive, $10-12/ticket, but this is Africa, so that’s to be expected.  There are concesion stands which sell the standard food & drink, some which also sell beer.  It’s fairly inexpensive, $2.50 for a beer, 1/2 that for a soda. However there are no programs being sold & no vendors going out to the seats hawking their wares.

My colleagues told me these were some of the most exciting games seen here in a long, long time.  The crowd was buzzing for the last 1st round game against Morocco, because a win or tie got SA to the playoff rounds.  Morocco went up 1-0 in the 1st 11 minutes of the 1st 1/2.  SA tied it up before 1/2-time.  Morocco went up again with 20 minutes to play, while SA evened up again a few minutes later.  Horns were blasting the whole time.  I was told these were the biggest games for the national team in Durban for decades.  Bafana Bafana, the nickname given to the SA national futbol team as a term of endearment which means “the boys,” didn’t play in Durban the last time SA hosted the Cup of Nations tournament in 1996, when they won it all.  A big part of the buzz was because of how the boys came back.  It was an exciting evening.

Bafana Bafana advanced to the 1/4-final against Mali Saturday night @ 20:30.  Rather than starting out slowly as they did against Morocco, they stormed out quickly & took a 1-0 lead.  Unfortunately, they could not keep up the pace, & allowed Mali to tie it up in the 2nd 1/2.  Extra time went scoreless & Mali ended up winning on penalty kicks 3-1.  It was an unceremonious end to the season for SA.  Given what’s going on in Mali, maybe it’s kind of cool that fans can rally around thier futbol team.  There only seemed to be a few dozen fans @ the game.  They will play Nigeria in the semi-final in Durban-I wonder how full the stadium will be, now that the home team is no longer playing.  The final will be in Johannesberg on Sunday.