Irish firms in for the long haul in South Africa

High crime levels, political uncertainty and an Aids crisis have not dimmed South Africa's appeal for Irish business, writes Mark Hennessy

Just a few short years ago, much of the centre of Cape Town was derelict and a no-go area after dark, but life is coming back, partly due to the efforts of an Irish property developer.

Frank Gormley of Howard Eurocape has kept a low profile in Ireland, but he is already one of the biggest property developers in South Africa, with several flagship projects finished, under way or planned.

"People were beginning to write off the district. Seventy per cent of the buildings were derelict. Many were falling apart," he told Bertie Ahern this week as he showed him around Mandela Rhodes Place.

The first phase of the project, which retained the facade of five historic buildings, was completed in 2006, complete with a winery. Just 4 per cent of the apartments, offices and shops are unoccupied today.

A five-star hotel is under construction in co-operation with the Indian Taj Palace hotel group, and Gormley has also done a deal with the South African government to build hundreds of apartments for MPs just yards from the parliament.

While Gormley's operations are well established, dozens of Irish companies looking for opportunity travelled on a trade mission to South Africa this week, led by the Taoiseach and the Minister for Enterprise, Trade and Employment, Micheál Martin.

Ted Morchoe, of Gorey-based Bannow Exports, which makes pre-fabricated sewage treatment plans, has already done business in South Africa with hotels and resorts, but now wants to expand.

Following decades of apartheid, the townships that are home to millions of blacks and coloureds both in the Cape and throughout South Africa are mostly without services of any kind: sewage, water, electricity. The Wexford company hopes it can benefit as state and local authorities seek to undo the damage left by the apartheid regime, and cope with a growing population and rising pressures on the environment.

"Our system is much quicker to install. It takes just half a day, and is pre-fabricated in Ireland, though we have started to do licensing agreements here," Morchoe told The Irish Times this week.

If successful in South African townships, Bannow, which has already sold equipment in Mozambique and Tanzania, aims to move into other parts of sub-Saharan Africa, which look south for leadership and ideas.

South Africa's infrastructure is a mixed bag. Its main road network is superb for the most part, but utilities, protected and harmed at one and the same time by the years of isolation, are patchy.

The 2010 World Cup, which is to be held in South Africa, is acting as a spur to make up for lost years, and more than €5 billion is to be spent on infrastructure between now and then.

This week, ESB International signed a deal with Eskom, the country's electricity giant, to advise on the supply of an extra 1,000 megawatts of power in the Western Cape.

"While, clearly, this project is planned with the World Cup in mind and will provide enough electricity to power 400 Croke Parks, it is an important piece of infrastructure for the long term in a country where there is huge economic transformation," said Mr Martin, who attended the contract signing.

However, there are worries on the horizon for the business community. President Thabo Mbeki stands down in 18 months' time, and, for now, looks set to be replaced by the populist, left-wing leader, Jacob Zuma.

Ever colourful, Zuma, who has strong support in the townships and who is facing corruption charges, has called for property rights to be overhauled to give disenfranchised millions a share in the country's wealth.

Barred from running for the presidency again, Mbeki, on the other hand, has run a pragmatic, centrist, pro-market economy and wants to hand on the baton to a candidate of a similar hue. For now, the business community is convinced that little will change, even if Zuma wins, believing that most people accept that the growth rates of the last decade, averaging 6 per cent and more, are making their mark on poverty.

Irish businessman Paul O'Riordan, who came for the 1995 Rugby World Cup and never went home, is one of the optimists, notwithstanding the corruption cases that are such a staple of South Africa's newspaper diet. Last week, the country's police chief had to step down after it emerged that the anti-corruption police dubbed the Scorpions had uncovered evidence that he had taken bribes from a gangster who was later murdered.

"I point to the fact that people are being charged. There is a huge amount of faith in the constitution and the law, and in a strong media. Eventually, the country should settle down into a normal democracy," he told the Irish delegation this week.

Still, South Africa faces huge challenges. Four in every 10 men aged between 18 and 45 have HIV/Aids, while skilled workers are hard to come by. "It could take five people to do what one worker in Ireland could do," said one Irish veteran. Manufacturing industries are struggling, because of strikes, the strong rand and weakening domestic demand, and it contracted by 2.5 per cent in the last three months of 2007.

Crime is never far from conversation in a country where 17,000 people were murdered last year, where carjackings and thefts are commonplace and where shoppers opt for the safety of malls, rather than wander on streets.

Though white and, particularly, foreign white murder victims attract most of the coverage, the vast majority of the dead are poor blacks killed by other poor blacks. Security expert, Limerickman John Mason, however, believes that the fear about crime is worse than the crime itself, pointing out that one incident can reverberate for weeks within expatriate communities.