Economic impact assessment

In economics there are always trade-offs. Changes in policies, laws, and regulations, and every government intervention creates both positive and negative impacts, winners and losers.

Genesis works across the continent with governments, law-makers, and the private sector to provide this analysis. We help our clients to understand potential economic, social, environmental and health impacts of policy and legislation on markets and people.

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Expertise Areas

Socio-economic and regulatory impact assessment

We help governments, law-makers, and the private sector to map and understand the economic, social, environmental, and health impacts of proposed changes to policy and legislation.

We produce strongly independent analysis that seeks to balance economic with social concerns, markets with society, public with private interests.

Our ability to see the position of all sides is our stand-out strength.

Typically, our clients ask for our services on complex issues in multi-stakeholder environments that are often polarised. This is because we are trusted by the market and the state, and have a hard-earned reputation for rigour, ethics and quality.

Economic modelling

Our work is supported by a full set of conceptual, modelling and research tools (both qualitative and quantitative) including:

  • Social Accounting Matrix (SAM) modelling
  • Computable General Equilibrium (CGE) modelling
  • Cost Benefit Analysis (CBA)
  • Social Return On Investment (SROI)

These tools allow us to assess the potential economic impact of policies, regulations, projects and company operations with the aim of enabling decision-making that is driven by evidence and data.

Our modelling principles are based on transparency and a depth of understanding within each of the sectors that we work. We believe that the quality of model results is heavily dependent on the quality of input into the model and the applicability of the assumptions that drive the model. As such we take great care in crafting model input that is accurate, reliable and credible.

Economic appraisal

We provide extensive expertise in the economic appraisal of infrastructure projects across multiple sectors. The economic viability of an infrastructure project is critical, especially when public-sector funding is sought. We assess whether a proposed infrastructure project will result in a net positive impact on a society, through the use of cost benefit analysis, economic valuation, shadow pricing and the use of multipliers.

Our goal is to provide crucial information regarding the relative economic viability of a project to empower a sponsor and investors with an understanding of the overall impact of the project.

This ultimately informs the funding decision and ability of the project to attract capital, particularly from international donors and development partners.

Read more about our work in project preparation

Corporate impact

Impact can be assessed for a company, an investment, a project, or a sector and is an important tool in strategy, project implementation, regulatory advocacy, staff motivation and reputation management.

We are leaders in helping companies and investors conceptualise, measure and articulate the social, economic and environmental value created (or destroyed) by a company, sector or investment.

The quality of our work lies in economic rigour supported by a full set of conceptual, modelling and research tools, as well as a keen eye for producing compelling and truthful strategic narratives.

Impact can be assessed for a company, an investment, a project or a sector and is an important tool in strategy, project implementation, regulatory advocacy, staff motivation and reputation management.

Regulatory economics

Genesis is also a leading provider of regulatory economics advice, offering the full spectrum of expert economic and regulatory accounting services to governments, regulators and private firms. We have played a central role in critical policy and regulatory debates across numerous sectors.  

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Impact of regulatory decisions

We conduct ex-ante and ex-post impact assessments comparing the costs and benefits of regulatory decisions. We determine the efficiency and effectiveness of proposed regulation in terms of the impact on various stakeholders and the economy as a whole.

We have expertise in:

  • Market and situational analysis of the regulatory context
  • Analysis of the financial/economic cost and impact of regulation, including the effect on prices, profitability, and industry competitiveness
  • Assessment of the distributional impact of regulation on stakeholders
  • Compliance of regulation with existing legislation and policies
  • Development of alternative scenarios relating to costs and other variables
  • Public consultation and engagement with stakeholders.

Our offer is strategic: to review regulation and policy, develop insight into how each might affect the trajectory of regulated entities and related businesses, and to develop scenarios of impact that inform our clients’ choices.

Projects

What value does Airbnb add to the South African economy?

Project name:
Airbnb in South Africa: Hospitality/tourism Area of Expertise: Economic modelling and impact assessment

Service:
Shared value and corporate impact

Sector:
Hospitality and tourism

Area of Expertise:
Corporate impact
Economic impact assessment
Economic modelling

Client:
Airbnb

Date:
2018

Country:
South Africa


Since its launch in 2015 Airbnb has grown rapidly in South Africa. Like other disruptive businesses, it has faced pushback from the traditional hospitality industry.

To establish the contribution of Airbnb, the Shared Value practice at Genesis Analytics was asked to undertake an independent study to quantify the benefit of Airbnb to the economy.

The report found that since Airbnb’s founding, two million guests have arrived at listings on Airbnb in South Africa, and over 3.5 million guests have arrived at listings across Africa as a whole. Roughly half of these arrivals occurred in the past year. Cape Town remains the top destination by a long way, followed by Johannesburg and Durban.

Among other things, Genesis estimated that in 2017/2018 host and guest activity on Airbnb generated about R8.7 billion ($678 million) for the economy, which corresponds to support 22,000 jobs.

Read the report

Study counts value of deep-sea hake fishery prior to 2020 rights allocation

Project name:
South African Deep-Sea Trawling Industry Association

Service:
Regulatory economics and accounting
Economic impact assessment

Sector:
Forestry and fishing

Area of Expertise:
Socio-economic and regulatory impact assessment
Economic modelling
Sector strategy and regulatory frameworks
Impact of regulatory decisions

Client:
South African Deep-Sea Trawling Industry Association (SADSTIA)

Date:
2018 - 2019

Country:
South Africa


Access to fishing rights in the deep-sea hake fishery, the largest fishery in South Africa, is determined by the Department of Agriculture, Forestry and Fisheries (DAFF) through the fishing rights allocation process (FRAP). The deep-sea hake fishery makes a substantial socio-economic contribution to local fishing communities along the west coast and is responsible for over R4.5 billion in sales annually and 7200 direct jobs.

Deep-sea hake fishing rights were last allocated in 2005 and are due to revert to the state in 2020 when these will be subject to a new allocation process (FRAP 2020), along with a number of other fisheries.

It is within this context that the South African Deep-Sea Trawling Industry Association (SADSTIA) approached Genesis to produce an independent economic report on the deep-sea hake industry. This was to provide a sound basis for meaningful engagement between the industry and DAFF, and ultimately assist informed decision making with respect to FRAP 2020. The Genesis report was based on extensive engagement with large, medium and small rights holders to provide an independent, rounded view of the industry.

The Genesis report presents key analysis relating to the socio-economic contribution of the industry, the history of entry and transformation, the economic characteristics and revealed business models adopted by the industry as well as the challenges experienced by different rights holders.

All these factors have relevance to the policy and regulation of the industry in terms of its ability to optimise the objectives of:

  • Conservation of the fishery resource;
  • Economic development via optimum utilisation of rights, and;
  • Meaningful transformation within the fisheries.

Based on the above analysis the Genesis report identifies critical design considerations for the FRAP 2020. For example, a reallocation of rights must have regard for the scale requirements of the different business models that have emerged in the industry and their relative contribution in terms of value-add, jobs and local economic development.

This is particularly important when considering the impact of a fragmentation of rights. Further, previous experience suggests that small quota allocations to uninvested new entrants in this fishery are unlikely to result in new independent fishing operations. However, this does not mean that smaller transformed fishing industrialists cannot be created, but rather that such industrialists may come from diversified fishing companies that are already invested in fishing assets.

The executive summary of the Genesis report can be found here.

Financial evaluation of third National Lottery applicants

Project name:
Financial Evaluation of Third National Lottery Applicants

Service:
Regulatory economics and accounting
Economic impact assessment

Sector:
Public and Social
Entertainment

Area of Expertise:
Socio-economic and regulatory impact assessment
Economic modelling

Client:
Minister of Trade and Industry

Date:
2014

Country:
South Africa


Every eight years the licence to operate the National Lottery is awarded to a successful bidder through a rigorous and lengthy tender process. After receiving conflicting recommendations from the Evaluation Committee and the National Lotteries Board, the Ministry of Trade and Industry brought in Genesis to conduct an independent and substantive evidence-based assessment of the financial and business models of the competing applicants.

The purpose was to assist the minister in selecting a successful (and reserve) bidder in order to negotiate and conclude a licence, and where the rationality and reasonableness of the decision would likely be under intense scrutiny.

Genesis used its experience to distil the key features of each business and financial models, and identify quantitative measures that would enable an independent evidence-based comparison across the bids on the five different variables that formed part of the assessment criteria. This included assessing a ranking on likely sales based on capex, distribution networks, prize payouts and new game development. It also included assessing financial solvency by subjecting the financial models to different revenue scenarios. In the process Genesis developed a robust new scoring method that built on the quantitative measures of the business and financial plans, but also built on the techniques applied in other government procurement programmes (such as relative points based on relative pricing).

The Genesis assessment provided the basis for the decision by the minister to select the successful bidder. Furthermore, the Genesis report and scoring have stood up to intense scrutiny as the minister’s decision has been subject to a number of reviews by one of the unsuccessful bidders. As such, the Genesis work has also proved invaluable to the High Court judges in adjudicating the litigation.

Raising the drinking age to 21: Pros and cons

Project name:
Evaluating the economic, health and social impacts of the proposed Liquor Amendment Bill, 2017

Service:
Economic impact assessment
Shared value and corporate impact
Regulatory economics and accounting

Sector:
Health
Manufacturing
Public and Social

Area of Expertise:
Socio-economic and regulatory impact assessment
Corporate impact
Financial modelling
Impact of regulatory decisions

Client:
National Economic Development and Labour Council (NEDLAC)

Date:
2017

Country:
South Africa


Most South Africans do not drink alcohol yet the consumption per capita is extremely high by international standards. In other words, those who do drink, drink to excess. Binge drinking is typical and levels of youth drinking are also high.

Based on this, government (led by the Department of Trade and Industry and supported by the Department of Health) proposed amendments to the national Liquor Act, 2003, including:

  • Raising the legal drinking age from 18 to 21;
  • Banning alcohol advertising;
  • Introducing vicarious liability for manufacturers, distributors and retailers of alcohol.

Genesis was asked by the National Economic and Development Labour Council (NEDLAC) to conduct an independent study on the likely economic, health and social impacts of proposals.

The team produced the most comprehensive review to date of the alcohol industry and of alcoholic consumption patterns. It found that South Africa faced four main challenges.

First, while most South Africans do not drink those who do, drink to excess - thus heavy binge drinking is a big challenge.

Second, there is a worryingly early uptake of alcohol by children and high levels of binge drinking by teens and young people. This is particularly dangerous for the cognitive development of the brain, which is only complete at 24.

Third, much hazardous drinking occurs in the large unlicensed sector.

Finally, we found evidence that existing liquor laws are poorly enforced.

Using seven approaches to estimate impact, we found that the proposals would reduce consumption of between 3.2% and 7.4%. This was also in line with the views of the major alcohol companies.

The proposals will help to bring down levels of hazardous drinking over time, slow the uptake of drinking by young people and create public health savings of up to R1.9 billion a year. We also estimated that about 185 lives a year would be saved from alcohol-related traffic fatalities.

We further estimated that the alcohol industry would create fewer jobs (between 645 and 1 500 fewer jobs in the next 10 years). The advertising industry would lose about R400 million (about 1% of its current revenue), and the media would lose about R800 million in revenue. Hardest hit would be SABC, e.tv and Multichoice.

Moreover, advertising spending by the bigger liquor companies will move from above-the-line to below-the-line marketing like store promotions, events, and competitions. This would crowd out smaller firms that tend to use below-the-line marketing, which would negatively affect competition in the alcohol industry.

Genesis’s technical inputs across three practices produced a rigorous, independent and objective study that provided the social partners and the government with facts and evidence to further debate the merits of the amendments.

Genesis’s report provides a full and balanced view of the pros and cons, in line with our company purpose to help leaders make better decisions, fairly and fully informed.

Why Nedlac wants a new study to quantify cost of liquor

Government wants to ban liquor ads

Full report

Economic impact of De Beers on Botswana

Project name:
Evaluating the socio-economic impact of De Beers in Botswana

Service:
Shared value and corporate impact
Economic impact assessment

Sector:
Mining

Area of Expertise:
Corporate impact
Economic impact assessment
Public policy

Client:
De Beers

Date:
2015

Country:
Botswana


De Beers, the world’s largest diamond miner, has been in partnership with the government of Botswana for 50 years - arguably the world’s most successful public-private partnership.

De Beers asked Genesis and PwC to produce an independent report to analyse the economic contribution of the partnership to Botswana.

The report included the history of the partnership from 1967 and an analysis of the economic contributions in 2014.

The findings were launched at a Chatham House conference in Gaborone in 2015. More than 1 000 people tuned into the live feed of the conference and the website was viewed 1 600 times over the two days. With over 2 300 unique mentions on social media, the hashtag #Botswana2015 was seen more than 12.5 million times.

Ryan Short presents findings at Chatham House conference in Gaborone

Download the report

Impact of multi-billion move from sugar to corn syrup

Project name:
Socio-economic impact assessment of a new production plant, and impact on BEE transformation

Service:
Shared value and corporate impact
Transaction advisory
Market analysis and positioning

Sector:
Manufacturing
Agriculture and Agribusiness

Area of Expertise:
Economic impact assessment
Corporate impact
Public policy

Client:
Confidential

Date:
2018

Country:
South Africa


Genesis was appointed to evaluate the economic pros and cons of a multi-billion-rand mega-transaction in the FMCG sector.

Two of the world’s biggest consumer goods brands wanted to build a new multi-billion-rand production plant and switch from using sugar to corn syrup produced from maize.

The transaction was one of the biggest BEE deals in history and would also source one third of maize from emerging farmers.

Genesis was appointed to undertake an independent assessment of the economic costs and benefits of the new project, measured in a net contribution to GDP and employment.

Genesis was also asked to evaluate whether the deal would be good for transformation of the economy and what impact it would have on food security.

Our work found that the project would create a net positive growth of the economy, and would be a net positive for transformation. This had to be balanced, however, by harm done to the sugar industry. It was net neutral for food security.

The independent report was used to present the pros and cons of the project to the policy-makers to secure government and regulator support for the transaction.

Financial lead in multi-million plan to revamp Joburg CBD

Project name:
Kopanong Precinct Project

Service:
Project preparation
Transaction advisory

Sector:
Infrastructure
Urban and built environment

Area of Expertise:
Financial and economic appraisal
Assessing project feasibility and bankability
Financial modelling

Client:
Gauteng Department of Infrastructure Development (GDID), Gauteng Infrastructure Financing Agency (GIFA)

Date:
2016 - ongoing

Country:
South Africa


The Kopanong Precinct Project (KPP) aims to transform the Johannesburg Central Business District (CBD) by upgrading and refurbishing office accommodation for the Gauteng Provincial Government. 

The multi-million project will create an administrative focal point for Gauteng, housing the Office of the Premier and other key provincial government departments.   

This will promote urban regeneration of the city and improve service delivery through efficient inter-government engagement. Such plans will premised on getting the fundamentals for regeneration in place. These will include security, transport, amenities, aesthetics and a clean city.

The Turner and Townsend-led consortium was appointed as transaction adviser to the Gauteng Department of Infrastructure Development to conduct a feasibility study for the project. 

Genesis is the lead financial and economic adviser on the project and will undertake the following analysis: assess the economic impact of implementing the project; determine the project’s affordability and bankability; and assess whether undertaking the project through a Public Private Partnership (PPP) delivers Value for Money (VfM). 

The Genesis team will also provide financial and economic advisory services during the procurement stage of the project, specifically in the evaluation of bids and negotiations with preferred bidders.

Meet the Team

Areas of Service Expertise

  • Socio-economic and regulatory impact assessment
  • Economic modelling
  • Economic appraisal
  • Corporate impact
  • Regulatory economics
  • Impact of regulatory decisions

Projects

Project

What value does Airbnb add to the South African economy?

Since its launch in 2015 Airbnb has grown rapidly in South Africa. Like other disruptive businesses, it has faced pushback from the traditional hospitality industry. To establish the contribution of Airbnb, the Shared Value practice at Genesis Analytics was asked to undertake an independent study to quantify the benefit of Airbnb to the economy.

View Project
Project

Study counts value of deep-sea hake fishery prior to 2020 rights allocation

Genesis Analytics quantified, for the first time, the socio-economic contribution of the R6,7-billion deep-sea hake trawl fishery. The SA Deep-Sea Trawling Industry Association (Sadstia) commissioned the report ahead of the allocation of long-term rights for 12 commercial fisheries by the Department of Agriculture, Forestry and Fisheries in 2020.

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Leading the team

Ryan Short

Partner (Shared Value)

Ryan Short
Partner (Shared Value)
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​Joel Barnor

Manager

​Joel Barnor
Manager
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Paul Anderson

Partner (Competition and Regulatory Economics)

Paul Anderson
Partner (Competition and Regulatory Economics)
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