Investment in the Coega IDZ is opening up opportunities that will “drive regional development, diversify and expand industrial bases as well as create direct and upstream employment,” says Coega Development Corporation’s Christopher Mashigo.
By Ian Armitage
According to Christopher Mashigo, an executive manager of the Coega Development Corporation (CDC), the Coega industrial development zone (IDZ) in Port Elizabeth has helped “create jobs and drive growth” in the Eastern Cape.
Established by the South African Department of Trade and Industry, with the Eastern Cape Provincial Government and Eastern Cape Development Corporation as shareholders, and managed by the CDC, the IDZ is designed to “position South Africa as a hub for Southern African trade,” he says.
And it is succeeding.
In 2001 the government established four industrial development zones (IDZs) at Coega just outside Port Elizabeth, East London, Richards Bay and OR Tambo International Airport.
The zones were designed to “induce investment and create jobs”.
Critics say IDZs have largely failed, and the rate of job creation has been disappointing.
They think more could have been accomplished for economic development through direct investment from the state.
Mr Mashigo however says IDZs work and their successes should not be measured in mere years but in decades given that they are long-term development investments. He pointed to a number of investment projects in Nelson Mandela Bay and the Eastern Cape, including the deep-water Ngqura port project and a proposed multibillion-rand oil refinery.
“Investment in the Coega IDZ is opening up opportunities that will drive regional development, diversify and expand industrial bases as well as create direct and upstream employment,” he says. “The municipality and CDC are collaborating to put incentives on the agenda to create investments that create jobs and diversify the employment base.”
With the government trying to transform the country into an industrial state, a great noise has been made about the Industrial Policy Action Plan and the new growth path.
In this financial year [2012/13] alone 5,364 jobs have been created and 6,505 people have been trained by the CDC.
Since inception, the CDC, and its Human Capital Solutions unit, has trained 25,586 people and created 6,875 construction jobs, 3,484 permanent Coega IDZ jobs and 44,786 indirect jobs.
The employment figures – some 3,770 jobs – are driven by direct investments in the IDZ by business, such as Dynamic Commodities, Discovery Health, Acoustex, Benteler, Cape Concretes and Cerebos, Mashigo says.
New developments in the IDZs are focused mostly on functions in the industrial and manufacturing value chain, he adds.
“With a bouquet of projects valued at more than R140 billion, the IDZ is set to steer the Eastern Cape into the economic future, ensuring investments comes here and to help the region contribute more to the economic and developmental growth of South Africa.”
At present, the Coega IDZ contributes about 5.9 percent to the Eastern Cape’s GDP and 0.5 percent to national GDP.
“Naturally we want to boost that and grow it,” Mashigo says.
Among the most recent investors is Discovery, South Africa’s largest medical aid scheme provider.
Discovery Health opened a call centre at Coega that has employed 336 people and is expected to employ 400 by January 2013.
“That is an exciting project creating jobs. Discovery has grown four-fold in the last 12 to 14 months, which is a fantastic story of growth.”
The Coega IDZ is home to 22 operational investors, amounting to R1.2 billion in investment, and a further R7.5 billion in investment is in implementation stage.
One of the major investments includes Fortune-500 company First Automobile Works (FAW), China’s largest vehicle manufacturer, who are building a new R600 million vehicle and truck assembly plant, Mashigo says.
That investment is in Zone 2 of the IDZ, where the CDC plans to set up a tool, die and mould (TDM) cluster. FAW’s construction firm, WBHO Construction, recently broke ground on the site of the plant, which is due for completion by December 2013.
FAW’s investment is great news for Nelson Mandela Bay and the Eastern Cape economy.
“It is fantastic. Production capacity would be 5,000 trucks a year in the first phase and 30,000 passenger vehicles a year in the second and the investment is valued at R600 million, with R200 million earmarked for plant construction and equipment, and R400 million to start up and run the facility over the next few years. The trucks are destined for the local market as well as a number of African countries and this is all part of a bigger plan to create a platform for Tier 1 suppliers who aren’t yet present in SA.”
Mashigo says partnership, cooperation and the right incentives were “critical” in securing the investment.
“We have worked with government at all tiers to ensure and to continue to ensure we create a more competitive environment for all investors.”
This isn’t the only major coup. AfriSam, a leading black-controlled, unlisted cement company, recently signed a lease agreement worth R634 million to establish a Greenfield milling and blending plant in Zone 5 of the Coega IDZ.
The new facility will supplement its existing supply into the Eastern Cape market.
The construction of the plant will create about 400 temporary jobs, while its operation would create about 90 permanent jobs.
“This will see the Zone 5 metallurgical cluster filled,” says Mashigo. “It speaks of growing investor confidence in the IDZ. I believe AfriSam chose Coega because of the quality of its infrastructure and proximity to the Port of Ngqura, which makes it cost effective to import the raw materials needed to produce cement products.”
There is much more going on.
“We also have a wide variety of opportunities in agro-processing and a lot of local produce is being processed, packaged and exported from Coega IDZ through to Ngqura to international destinations. Dynamic Commodities has a staff of 1389 and they have exported more than R140 million of fruit sorbet, So Shi, and other fruit products around the world. We have Coega Diary, which produces UHT milk for local retailers, and there is EC Biomass with makes bio fuels from wood chips.”
Renewable energy is “an interesting field”, he says.
“We have three wind energy projects and one solar project that are in various stages of development, all of which will be contributing to the national grid by 2015. On top of that we have secured two ferromanganese smelters with a combined investment value of over R8 billion and the Coega IDZ is also home to the first steel mill in the Eastern Cape, pioneered by AgniSteels, an Indian company which partnered with a local business to form a consortium.
“The IDZ is coming into its own and is contributing to the future of the Eastern Cape,” Mashigo concludes.
To learn more visit www.coega.co.za.