While Moody’s has not downgraded the City’s credit rating, the drought has the potential to negatively impact on investor confidence in our region and country. We are determined to limit this impact as far as possible.
To date, Wesgro has received a handful of queries from new and existing investors about the impact of the water crisis on the Cape economy. At this stage, all potential investors we were engaging with at the end of 2017 remain interested in investing in the Cape.
Investment decisions are usually taken over a period of several years, so most investors are looking for clarity around water security over the medium term - well beyond the next few months.
That is why we are taking a number of steps to ensure that all queries by existing and potential investors are taken seriously, and responded to as a matter of urgency. This includes:
• A special “Water War Room” has been created at the Agency, to assist in answering queries received from potential investors, local businesses, and the tourism trade. You can contact the War Room at water@wesgro.co.za.
• GreenCape, the Western Cape Government, and the City of Cape Town have provided drought support to businesses through regular briefings and critical research. GreenCape has a dedicated water desk, and specific support is offered on business continuity planning so that businesses can plan for Day Zero, should it happen. This will be continued, and has been ramped up. See GreenCape’s drought support page and case studies of businesses.
• The City of Cape Town has clarified that it will continue to supply water through the usual reticulation system to key economic areas which are essential for the economy and job creation. These areas will soon be outlined, and the plan communicated.
• The Premier of the Western Cape, Helen Zille, the Minister of Economic Opportunities, Alan Winde, and Wesgro CEO, Tim Harris, have briefed the Consular Corps in Cape Town. The Consuls-General are important messengers to foreign visitors, tourists and investors alike.
• Wesgro will host a briefing for top CEOs in the province next month, providing them with a detailed update. The networks and resources of these businesses are essential during this time, and can help instil confidence in the broader international community.
• During the course of the next year, Wesgro will be embarking on 24 investment promotion missions around the world. These missions will be used to instil confidence in the region, and land new foreign direct investment into the Cape. This will be used to counter any negative perceptions that have emerged because of the drought.
• Together with industry stakeholders, and partners in government, we are working with the domestic and international tourism trade to ensure that visitors receive accurate information on visiting our region. Tourism in Cape Town and the Western Cape supports more than 300 000 jobs. International tourists meanwhile only add 1% to the population of the province, at peak season, and are relatively modest water consumers when the full spectrum of usage is considered. A dedicated website will be developed to communicate that visitors are welcome to Cape Town and the Western Cape, but they must be mindful of the drought.
• The Wesgro leisure and business tourism team, supported by the Western Cape Government, will also embark on approximately 16 trips to trade shows in key markets. This will also provide confidence to the trade, through one-on-one meetings. Most recently, our tourism team met with the trade during the New York Travel Show, and provided updates on the drought.
• Together with the City of Cape Town and Western Cape Government, Wesgro will be working with conferences to reduce their water consumption, and where possible, become water-neutral. This will ensure events can still go ahead, contributing hundreds of millions of rands to the provincial economy. The Cape Town Cycle Tour, for example, will transport water into the city to make-up for any additional use by riders travelling to Cape Town. We will work to make sure this approach is replicated by other conferences and events
• We will continue to promote the entire Western Cape as an investment destination. Areas such as Cape Overberg and the Garden Route, have sufficient water and are not in a drought situation which means investors in these regions would be unaffected by water shortages.
• A round-table with the Film and Media industry will be held this week, so that the sector can receive information on how they can mitigate effects of the drought and continue to be a prime location for international productions. By providing information on best practise and business continuity planning, and by show-casing the array of attractions on offer across the Western Cape, we are confident the Cape will remain a top choice for movie-makers.
Minister of Economic Opportunities Alan Winde said “we recognize the difficult position many businesses currently find themselves in, and the potential for our current water crisis to impact investor confidence. We want to reassure businesses and investors that will do everything in our power to avoid Day Zero. In many of our key sectors, we have been pushing strategies for many years which have significantly reduced consumption, and resulted in more sustainable business practices. These strategies are now being ramped up, as we look toward building a responsible, climate smart economy which will be more sustainable in the near term, as well as into the future. We want to thank businesses across sectors from agriculture, to tourism, retail, construction and manufacturing for playing their part in reducing their water usage. We encourage all businesses to seek out water-saving technologies and processes as part of working together to beat Day Zero.”
Wesgro CEO, Tim Harris said: “The availability of water is an important factor for investors, but the majority of companies we work with at Wesgro have cut their consumption by monitoring water use, becoming more water efficient, adopting adopt water re-use, or using alternative sources.
“In addition, climate change will be a reality for more and more cities in the coming years. We are confident that Capetonians will be able to cut their consumption in the coming months, and avoid a “day zero scenario”. This ability to avoid a one-in-a-thousand-year crisis would significantly boost the investment case for Cape Town and the Western Cape. A resilient city is an attractive city for investors.”
“Cape Town and the Western Cape also continue to offer excellent access to the South African and wider African market, as well as the strongest higher education skills pipeline on the continent, world-class infrastructure and an excellent quality of life for investors. These are all factors that will continued to be viewed favourably by investors."
“In fact, the current drought and the drying trend caused by climate change, present important opportunities for local and foreign investors,” added Mike Mulcahy, CEO of GreenCape.
“GreenCape’s market intelligence shows that the demand for technologies and services that enable resilience to water scarcity has substantially increased across all urban markets, and new investment opportunities have opened up in water metering and monitoring, water efficiency, water reuse and alternative market supply”. According to Mulcahy, “municipalities are increasingly interested in potable water reuse of their municipal wastewater. In Cape Town there is a potential market of over R5 billion, with a similar market for ground and rainwater systems. Projects that reduce non-revenue water in South Africa present a market worth about R2 billion per year.”
Deputy Mayor of the City of Cape Town, Ian Nielson says: “We are very aware of the critical need to keep our economy going, and to preserve the jobs that depend on it. The City is doing everything it can to engage with businesses on the measures they can take in the coming months to reduce their consumption, and how they would need to adapt in the event of Day Zero. Our first priority is to continue reducing consumption. If we are able to do that, we can avoid running out of water. In the longer term, we need to become more resilient in our approach to water so that we never have to face such a situation again. We are planning to increase the water security of the city by diversifying our augmentation projects so that we become less reliant on surface water. These plans include desalination, groundwater abstraction and water re-use.”
"Our key message to the international community remains that Cape Town and the Western Cape are open for business. If we all work together, and reduce our consumption, we can not only avoid Day Zero, but emerge from this drought stronger than ever," concluded Harris.
