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The Good, Bad… And expensive

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Across the globe, more nuclear power units are under construction today than at any other time in the last 25 years. This is happening despite the 2011 crisis in Japan at Fukushima. It is important to note the Fukushima crisis and resulting problems was not a result of a nuclear disaster, but rather a tsunami that laid waste to large parts of Japan and killed around 20,000 people.

At the start of 2015 there were 436 operating nuclear reactors across the globe. By year-end this had increased to 439, despite the closure of seven units during the year. The countries driving nuclear construction are largely in Asia, with China, at last count, building 30 new reactors to add to their fleet.

In South Africa, it’s clear that the government is intent on pressing ahead with a new nuclear build program. The Integrated Resource Plan calls for 9,600MW of nuclear power and this still seems to be the target for the new build. One reason seemingly being that since nuclear is an expensive and complicated industry; it would simply be more cost effective over the long term to invest in a fleet of reactors that can be supported by an underlying industry. If this should transpire, it will certainly lead to a boom in jobs across many sectors of industry.

The environment is another reason nuclear power is punted as an option for South Africa. At the United Nations Climate Change Conference in December, countries reached an agreement to hold the average global temperature increases to less than 2 degrees Celsius, compared to preindustrial levels. The targets agreed upon will require significant reductions in the global greenhouse gas emissions and one of the major areas targeted for reduction of carbon dioxide outputs would be energy generation. The bulk of the globe’s electricity is still generated by fossil fuels, with nuclear power supplying roughly 10% of global electricity. The use of nuclear power is recognized as being a means to achieve climate change targets.

Another serious question around South Africa’s energy future is the planned decommissioning of old power plants. By 2030, Eskom, by law, must close down 14,800MW of existing capacity, while Eskom’s new mega build projects will only add 10,932MW over the same period. These older plants are currently supplying a large part of South Africa’s baseload electricity. The country can ill afford to lose such a big part of its capacity and there is still no clear plan as to what will replace this baseload capacity. The role of renewables is limited; the availability of power output from renewable energy is still not comparable to that of fossil fuel or nuclear plants. Add into the mix the environmental considerations and there is only one option to replace old baseload with new baseload – nuclear.

The major constraint to a new nuclear build in South Africa is funding. Accurate estimates of what a 9,600MW fleet could cost are largely unavailable; they range between $45.4 billion and $68 billion. The only thing we know for sure is that is going to be very expensive. There are other concerns over safety, waste and the ability to run a corruption free and timeous build process.

However, there are also some benefits. The country cannot ignore the environmental issues and the need for a reliable baseload power system that can allow the economy to grow. The South African economy may be moving away from mining but there is no need to ignore the potential in the future of mining, as well as in added beneficiation. Reaching this potential would require a lot of electricity and of course, the more the economy grows, the greater the need for electricity.

Where will the first new plant be built? The Eastern Cape province still seems the most likely area. When will the first new reactor be built? The current economic downturn has given the country some breathing room and the pressure is off for now, but there can be little doubt that new construction could start within the next two years. Following that, the full fleet of 9,600MW could follow over the following 20 years. In addition, given government’s appetite for nuclear power, I would not be surprised if South Africa sees more than 9,600MW of nuclear power by 2050.

Is that a good thing? Time will tell.

 

James-Brent Styan authored a book on the energy crisis called Blackout, The Eskom Crisis. It was published in 2015. He writes in his personal capacity.

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Economy

Cryptocurrency for Africans

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George Gordon is on a quest to revolutionize the financial system. The director of Africa Master Blockchain Company talks digital currencies, blind risks and board games.


What is this new African cryptocurrency you are offering?

Where the majority of current digital currencies are based on speculative models, AfriUnion Coin (AUC) and the AfriNational Tokens (ANT)are designed for a transactional purpose allowing international payments, remittances, foreign direct investment as well as day-to-day transactions at local retail stores and other outlets. While the option for speculative trade is available with AUC, the focus is not around that.

Each African country will have a specially-designed ANT which will allow users to pay for goods and services and bills easily through completely digital means without requiring any bank account. AUC and ANT will be fully interchangeable to one another and there will be no fees for the user.

It’s the natural next step for digital finance from mobile banking which most Africans are accustomed to. The ability to freely have the power to send and receive money locally and internationally will allow the freedom of choice and spending power many Africans don’t have currently.

What is your own investment philosophy?

I am a gambler! I believe in taking risks and putting things on the line. That being said, blind risk or whimsical guesses don’t get you very far. Always acquire enough information to understand to a reasonable level what the thing you are planning on investing is or how it works and then trust your instinct and gut feel.

What advice would you give entrepreneurs wanting to invest in blockchain?

First, do some research in terms of what the blockchain technology is being applied for or created in terms of its application to an industry or project. Thereafter, check the white paper for the design of the platform as well as its functionality and applicability to what it is trying to achieve. If it aligns with your personal investment rules, then go for it,however, remember that blockchain is continuously evolving and thus you need to explore outside the usual and standard.

First cash-less, now card-less. What is the future of online banking?

If we are looking into what is currently science fiction, I would say the future is digital contact lenses that will be able to connect you to all your social media accounts, internet, news as well as make payments by just looking at QR codes or specialized barcodes to approve and accept payments.

Now, realistically we are not far off from such innovation and technology, but for the time being, I think the next step is scanning of QR codes at retailers and having the transaction automated from your wallet to the retailers digitally.

What is your most prized investment and why?

My mind. I believe that the work I have put into developing my mind, and continue to do so every day, is the number one investment that I have ever done. It allows me to look at things in a unique perspective as well as provides me with the tools to push boundaries and create new opportunities.

Money, success, fame? Which is most important to you?

I would have to say success… because it is most likely going to bring the other two as well, right? But success in the form of starting something and letting it grow and succeed and knowing that something new exists because of your efforts.

What do you spend your money on mostly?

Board games. I love board games and believe it’s a fantastic way to expand your mind as well as have fun with friends.

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Investment Guide

King Price CEO On Why He Invested On Insurance

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King Price Insurance’s CEO Gideon Galloway, who built an insurance company in South Africa worth over $226 million in six years, talks investments, industry trends and how self-driving cars will change the entire car insurance landscape.

(more…)

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Economy

Offering The American Dream

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Gar Lippincott and Daniel Ryan of Atlantic American Partners were in South Africa recently looking for high-net-worth individuals wanting to invest in the US.

It’s a warm spring day in September, and Gar Lippincott and Daniel Ryan have just arrived in South Africa. It is Lippincott’s first time in the country, and he is jet-lagged.

A little over two months ago, he was booked to fly here from the United States (US) but was turned back at immigration.

“At Atlanta airport, the lady looked at Daniel’s visa and let him through and she looked at my visa and she said ‘I am afraid you can’t get on the plane because you have to have a blank page on your passport’. I said ‘I have three blank pages’ and she said ‘no, it’s supposed to be the one that says visa on it’. She said it’s the rules in South Africa so I had to sadly go back home… now when I was coming, I was told that’s not an issue anymore so I am happy they have made traveling into the country easier,” says Lippincott.

With a brand-new passport, he’s here with Ryan looking for people who want to invest in the US in exchange for a green card.

Lippincott, the Managing Partner of Atlantic American Partners, says he has always been keen on South Africa for its growth opportunities and prospects.

“From what I understand, the things that are causing short-term decline in the economy in South Africa are set up to provide long-term growth and hopefully people will understand this,” he says. Ryan, the company’s Managing Director of Emerging Markets – Africa, agrees: “I lived in Malawi for 12 years and South Africa is still considered the shining one throughout the continent. Even with all the problems, everyone still wants to come here because of the opportunities.”

According to an AfrAsia Bank report, South Africa comes second to Mauritius in boasting the highest number of high-net-worth individuals.

These are the kind of people Ryan and Lippincott target through their work at Atlantic American Partners. The company has real estate investors and professional private equity fund managers that manage money for banks, insurance companies, and pension funds. In addition, they help people get US green cards and ultimately US citizenship through the US government’s EB-5 Immigrant Investor Visa Program.

“Basically we look for people who want to move to the United States and we help them do so legally by investing and the nice thing is, with our program, they are also able to get a nice return on investment,” he says.

According to Lippincott, for a $500,000 investment that creates 10 jobs for American workers, you could get a green card in about two years and be a US citizen in about six or seven years. “Twenty seven countries have an investor visa program but with most of them, it’s essentially a fee you pay, or you need to be actively engaged in the day-to-day operation of a business. For example, you invest $1.5 million in Australia, but you need to hire employees and generate a certain amount of revenue. One of the biggest advantages with our program is you actually invest the $500,000 into a fund. We act as a trustee of that money and within five to seven years, they get that money back with a bit of return on investment and you are a permanent citizen in the US.”

Atlantic American Partners invests the money in real estate developments like hotels, apartments and student accommodation.

“What’s nice about the program is it doesn’t only cover the investor; it covers the spouse and children under 21. Our biggest family was a Hungarian family with seven children so they got nine green cards for $500,000,” says Lippincott.

The company says it has had positive response in South Africa. “Two months ago, we were here and we had scheduled six presentations for 100 people and we ended up speaking to 450 people. Most were business people, people worried about the economy, people worried about the political future of South Africa and people concerned about the education future of their children,” says Ryan.

According to Lippincott, despite the news of the clampdown on immigration, the US economy is booming and will perish without immigration. In the era of Donald Trump and his anti-immigrant views, that’s heartening news indeed.

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