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

Airbnb host earnings in smaller SA towns soar

Study counts value of deep-sea hake 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 report has been used by current stakeholders within the industry to not only plan internally for the future of their own businesses but also to provide meaningful engagement with DAFF in the lead up to the 2020 allocation process. The value unlocked by the hake industry has led to further engagement with stakeholders in other fisheries (i.e. the pelagic fishery).

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

Socio-economic impact of debt forgiveness Bill

Project name:
Socio-economic impact study of the debt intervention measures as proposed in the National Credit Amendment Bill

Service:
Economic impact assessment
Shared value and corporate impact
Business and operating models

Sector:
Financial services
Public and Social

Area of Expertise:
Economic modelling
Socio-economic and regulatory impact assessment
Public policy
Evaluation & impact assessment
Shared value, transformation and inclusive business

Client:
Department of Trade and Industry (dti)

Date:
2019

Country:
South Africa


South Africa has a sophisticated financial system and well-developed credit market. However, many low-income earners manage only basic monthly consumption needs and financial shocks by accessing short-term unsecured credit. This has led to chronic over-indebtedness for many low-income households.

The legislative framework provided a system for over-indebted consumers to consolidate their debt in order to release themselves from a debt spiral. However, Parliament became concerned about the welfare of lower-income consumers to access this process of debt review. To assist the lower-income consumers Parliament introduced a bill, the National Credit Amendment Bill 2018, to create a separate debt review regulatory regime and process for a defined lower-income segment, called debt intervention.

Owing to the material impact that the Bill is likely to have on the credit markets, consumers and the state, Genesis was appointed by the dti (on behalf of Parliament) to undertake an independent socio-economic impact assessment of the Bill.

In undertaking this important work, the Genesis team consulted widely with the affected stakeholder, including consumer protection groups, Cosatu, debt counsellors, the banking industry, retail industry, micro-lenders and government departments and regulators.

Genesis unlocked value for the client by introducing into the public narrative, for the first time, an evidence-based quantification of the size of the problem of low-income consumers who are over indebted and did not currently have access to the debt review process. This was not known before the study.

Then we provided analysis of the proposed solution vis-à-vis the scale and nature of the problem, and provided a professional independent opinion on whether the Bill was net positive or net negative for the economy.

Genesis further provided an assessment of whether the proposed Bill was the most appropriate mechanism for the existing shortcoming of the legislation. We then provided recommendations on how the Bill could be amended to mitigate negative impacts while achieving the goal of assisting over-indebted consumers who did not have access to the statutory mechanism for unwinding debt.

Ramaphosa signs controversial debt-relief bill into law

Debt relief bill would leave over indebted worse off, says govt commissioned study

Debt amnesty doubt: Financial Mail studies Genesis report

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

Are 'sin taxes' on alcohol appropriate?

Project name:
Evaluating the appropriateness of excise tax on alcohol products

Service:
Shared value and corporate impact

Sector:
Manufacturing

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

Client:
Large alcohol manufacturer

Date:
2018

Country:
South Africa


Sin taxes are typically used as a policy instrument to increase the cost of a product so as to influence consumer behaviour and raise government revenue. In some instances, excise taxes are regressive, and the rates of excise on alcohol typically grow at a faster rate than other taxes.

Genesis was approached by a major alcohol manufacturer and distributor to assess the appropriateness of excise tax as a tool to reduce harmful consumption and to raise revenue for the state.

Our team provided research and analytics that informed the client’s policy submission to the national government. On balance of the evidence we found that the tax was not inappropriate.

However, we provided the company with a shared-value strategy focused on reducing public and social harms of alcohol which could be put forward in lieu of a more moderate growth in sin tax.

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:
Economic impact assessment
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.

Critical analysis of Eskom’s multi-year price increases

Project name:
Critical review and analysis of Eskom’s multi-year price determinations (MYPD 1, 2 and 3)

Service:
Regulatory economics and accounting
Economic impact assessment

Sector:
Energy

Area of Expertise:
Socio-economic and regulatory impact assessment
Tariff design and determination
Impact of regulatory decisions
Economic modelling

Client:
Electricity Intensive Users Group

Date:
2010 – 2015

Country:
South Africa


Eskom’s tariff increases as part of the MYPD (Multi-Year Tariff Determination) process has had a critical and far reaching impact on the South African economy. The Genesis team has played an important role in ensuring that these tariff increases are governed by sound regulatory principles, being deeply involved in critically assessing all the MYPD tariff applications of Eskom since 2009.

This involvement has included providing technical assistance and expert advice to the National Energy Regulator of South Africa (NERSA). This input comprised comprehensive responses to the tariff increases proposed by Eskom during its MYPD2 and MYPD3 applications, and its MYPD3 reopener application.

The price regulation of energy utilities raises intricate questions that require one to protect the interests of consumers while still preserving the operational sustainability of the utility and the impetus for investment needed to ensure energy security for the country.

This balancing act was particularly complex in these MYPD applications, given the need for Eskom to dramatically expand its generation capacity and to raise the necessary capital for such expansion.

Against this backdrop, we provided expert input on the appropriate tariff increases, drawing on our extensive regulatory accounting expertise, rigorous economic analysis and deep sector knowledge. In each instance the submissions from the Genesis team played an important role in shaping the final decision made by NERSA:

  • In 2009 we assisted Business Unity South Africa (BUSA) in assessing Eskom’s MYPD2 tariff application, which covered electricity tariff proposals for the three years ended 31 March 2013. Eskom initially proposed a tariff increase of 45% per annum. In our report we provided a comprehensive independent expert assessment of Eskom’s operating and capital cost assumptions using best regulatory accounting practices. We also undertook an assessment of the impact that the proposed price increases would have on the economy. Our assessment found that a tariff increase of 25% per annum was justified. NERSA’s MYPD2 tariff determination was consistent with this recommendation from the Genesis team.
  • In 2012 we assisted BUSA in assessing Eskom’s MYPD3 tariff application, which covered electricity tariff proposals for the five years ending 31 March 2018. Eskom proposed tariff increases of 16% per annum. Our technical assessment, once more drawing heavily on our regulatory accounting expertise, found that Eskom’s proposed increases were based on unsubstantiated cost escalations significantly in excess of inflation, with limited assumed efficiency gains. We identified about R138-billion worth of cost savings in addition to the savings identified by Eskom. We ultimately found that tariff increases of 10.8% per annum were justified, and our recommendations played a significant role in shaping the basis of NERSA’s MYPD3 tariff determination which was set at 8%.
  • In 2015 we assisted the Electricity Intensive Users Group (EIUG) and NERSA in their review of Eskom’s application to have its approved five-year price path reopened. Eskom applied for a further R62-billion of revenue allowance for the remainder of the MYPD3 period. In line with our recommendation, NERSA rejected the 'selective' reopener outright, indicating that there was rather an ex-post option to apply for the Regulatory Clearing Account settlement.
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

Read more about our work

Our Shared Value and Impact practice works where markets, government and society collide.

As the world searches for a more inclusive capitalism, the best companies are able to articulate their social purpose, measure social impact, use commercial models to create shared value, contribute to the Sustainable Development Goals, and navigate a robust yet constructive relationship with the state. Read more about our work: Download the brochure

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 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.

View Project

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Leading the team

Ryan Short

Partner (Shared Value)

Ryan Short
Partner (Shared Value)
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​Joel Barnor

Lead Manager

​Joel Barnor
Lead Manager
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Paul Anderson

Partner (Competition and Regulatory Economics)

Paul Anderson
Partner (Competition and Regulatory Economics)
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