SEZ’s multi-billion rand boost to EC economy

12 June 2019 | Web Article Number: ME201914787

Commerce & Trade
Government & Municipal
Import / Export
Manufacturing
SMME Development & Support
Special Economic Zones

WHILE recently released statistics on the contraction of the South African economy by 3.2% highlights a challenging economic environment, the Coega Special Economic Zone (SEZ) is helping to counter that trend in the Eastern Cape to the tune of billions of rands each year.

That was the upbeat message from Coega Development Zone (CDC) Head of Marketing, Brand and Communications Ayanda Vilakazi.

“The CDC’s performance during the 2017/18 financial year resulted in an approximately R3.9 billion contribution to the EC GDP,” he said, adding that the latest results show a contribution to fiscal revenue amounting to R1.6 billion in national taxes, R1.38 billion in balance of payments and a R2.2-billion impact on households.

“According to the independent Muffin Report, which examined the impact of the Coega SEZ on local markets, production chains, exports, and employment and wages, most of the 45 operational investors in the SEZ and Nelson Mandela Bay Logistics Park, created more than 100 full time jobs on average and 69% of investors reported that their workforce increased over the last five years.”

Addititionally, said Vilakazi, 86% of investors revealed plans to expand their businesses in the near future, while some of them are either on their second or third expansion, such as Coega Dairy.

Women constituted 44% of the workforce at Coega SEZ – a gender balance that the report said was contrary to the norm in industrial companies. Previously disadvantaged individuals (PDI’s) represented more than half of all the staff employed by 85% of the companies, while 68% of the workforce was between the ages of 18 and 45.

This seemed to indicate that investors in the SEZ are actively implementing SA’s employment equity legislation. It also bodes well for socio economic transformation in a city and province with a relatively young population. Just over 50% of investors said they sourced 78% of their inputs (goods directly linked to production) from NMBM and EC.

The Muffin Report concludes that the Coega SEZ plays a crucial socio and economic roles in achieving the industrial policy objectives of South Africa as well as the development of the region.

Focusing on CDC’s key performance indicators in the 2017/18 financial year, the SEZ created a total of 17,943 jobs - 9,733 in construction and a further 8,210 operational. This led to the CDC exceeding the 112 974 jobs already created since its inception 20 years ago.

“The CDC’s investment pipeline remains positive, which means that there will be ongoing efforts to convert potential investors into signed and confirmed investment projects for the Coega SEZ, thus reinforcement President Ramaphosa’s drive to attract $100 billion within five years.”

Vilakazi said that in the unaudited 2018/19 financial year, the SEZ was well on its way in cementing its place as a hub for job creation having already secured more than 8,000 additional construction jobs and 7,815 operational jobs.

“In the 2017/18 FY, the CDC secured 14 new investors with a combined investment value of R860 million, while the unaudited 2018/19 FY performance results indicate a staggering 16 new investors signed with a combined investment value of R2.6 billion, exceeding a target of R693 million. Currently, as at 31 March 2019, the Coega SEZ has 45 operational investors worth a combined investment value of R 7, 979 billion.”

Vilakazi said that in order to reduce the province’s economy’s reliance on the automotive sector, the CDC was aggressively pursuing new investments in the petrochemicals, BPO, food processing and aquaculture sectors. Further global growth industries such as pharmaceutical, energy generation and water (security, supply and distribution) projects are also part of the CDC investor recruitment agenda.

He added that notwithstanding the absence of OPEX funding, which has had a negative impact on the CDC, the organisation has continued to contribute to the growth of small businesses by awarding over 36% of all procurement spent to Small Micro Medium Enterprises (SMMEs) – this soared to R707 million in FY2017/18.

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