Transformation is critical to sustainable growth in South Africa's fuel retail industry

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South Africa's political history has left concentrations of business ownership and control in many industries, but it's an issue particularly pronounced in the fuel industry.

To comply with South Africa's Fuel Liquid Charter, businesses in the industry must transform. But industry experts believe that transformation in the industry is as much about compliance as it is about creating a sustainable business for the long term.

"Like most other countries, the fuel industry in South Africa is of strategic importance to ensure energy security and economic growth," says Karen Keylock, National Franchise Manager at Nedbank Commercial Banking.

According to the South African Petroleum Industry Association, businesses in the fuel sub-sector contribute roughly 8% of the country's gross domestic product, equating to approximately R300 billion in production output. There are also about 7,000 petrol stations across all brands, which create over 700,000 direct and indirect job opportunities that make up 5% of total formal employment in South Africa.

According to Keylock, the South African government has introduced several policy and legislative reforms to assist transformation in the fuel sector.

"These reforms include the Black Economic Empowerment and the Petroleum Products Acts, which promote the participation of black people in the South African economy, and the Competition Act that, among other things, promotes a greater spread of ownership, particularly an increase in the ownership stake of historically disadvantaged South Africans," says Keylock.

The government has also concluded agreements with specific industries and developed charters in terms of which industry participants agree to specific transformation goals - and the same is true for the fuel retail industry.

Keylock says that although the liquid-fuel industry is highly regulated with the government informing the petrol price, "black entrepreneurs still face challenges such as access to infrastructure, finance, and markets".

With this in mind, Keylock believes it is crucial for businesses in the industry to shape transformation holistically, encourage greater market integration, and remove obstacles that retard competition and entry into the sector. This, Keylock believes, is also as much to do about compliance as it is about creating a sustainable industry.

"Businesses are faced with the realisation that transformation is more than just a compliance exercise. They must now also look at ways to add sustainable value to the lives of historically disadvantaged South Africans through empowerment initiatives," says Keylock.

To achieve economic equality within South Africa, industry experts assert that key players must promote greater responsibility towards economic, political, and social objectives, driven by progressive, principled thought and positions.

Banks also have a role to play in this regard, says Prithivan Pillay, Head: Client Value Propositions at Nedbank Commercial Banking.

"Nedbank Commercial Banking partnered with PetroCONNECT to offer a comprehensive transformation program to the fuel retailer industry in collaboration with the major fuel brands," says Pillay.

PetroCONNECT developed a successful screening, training, monitoring and mentorship program to ensure the development of the required skills for new ownership entrants to the fuel retailer industry. In partnership with Nedbank Commercial Banking, this program from PetroCONNECT is augmented through the necessary empowerment funding and banking solutions to ensure success.

According to Keylock, Nedbank's partnerships with various oil companies, new entrants and black-owned businesses, together with the PetroCONNECT partnership, have helped advance and enable transformation in this industry.

"We have engaged with businesses in the fuel industry to collaborate on which funding structure is most viable and beneficial for new entrants," says Keylock. "And the flagship fuel-franchising partnership with PetroCONNECT has demonstrated the willingness and ability to address challenges concerning sustainability, ownership, and transformation within the energy sector."

This post was sponsored by Nedbank and produced by Adspace Studio.

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