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Africa Outlook

Coega Development Corporation
CDC
Coega Industrial Development Zone
IDZ
South Africa economy
South Africa energy
Africa energy
Eskom
foreign direct investment
corporate social responsibility

THE COEGA DEVELOPMENT CORPORATION

The Coega Industrial Development Zone is a flagship contributor to South Africa’s economic future, with the Coega Development Corporation sustainably driving its ongoing prominence

Right Place, Right Time, Right Choice

 

Writer: Matthew Staff

Project Manager: Kane Weller

 

Since 1999, The Coega Development Corporation (CDC) has fulfilled - beyond expectations - its mandate to develop the 11,500 hectare Coega Industrial Development Zone (IDZ) in South Africa.

Located adjacent to the modern deepwater port facility, the Port of Ngqura, the Coega IDZ is South Africa’s foremost investment hotspot and preferred location for industries with a global outlook on the continent. And the state-owned CDC has leveraged this ambition to improve the lives of millions of local people through the IDZ projects and the delivery of infrastructure programmes in the Eastern Cape and the rest of the country.

Addressing key parameters including skills shortages, unemployment, constrained planning, project management capacity, and under-expenditure; the IDZ has gone from strength to strength since its inception as its vision to be the leading catalyst for the championing of socio-economic growth gathers momentum.

“In line with this, the CDC has positioned the Eastern Cape as a preferred investment destination, demarcated into 14 zones - more than 6,443 hectares of prime lettable land - with a focus on the following sectors: metals; automotive; business process outsourcing; chemicals; agro-processing; logistics; trade solutions and training & development; energy; and maritime,” the Head of Strategic Marketing, Brand and Corporate Communications for CDC, Dr. Ayanda Vilakazi notes. “The Coega IDZ has set the benchmark for investment destinations in Africa, achieving near-impossible results; becoming the first industrial development zone to attract double digit investment in one FY - 2013/14 - signing no less than 10 new investors in that year.

“The IDZ attracted eight new investors in the previous year. This was subsequently followed by an additional 19 new investors signed in the FY 2014/15, and 17 new investors in the FY 2015/16, an indication of high investor confidence in the Coega IDZ.”

In total, the Coega IDZ has attracted an impressive 61 new investments, to the tune of R35.8 billion over the past five years; indicative of the Company’s vision to deliver on its mandate to change the lives of the country’s communities. Many progressive and successful IDZs in Africa, arguably in the developing countries as well, have not achieved the same levels of success as have been demonstrated by the Coega IDZ, over such a short period of time.

The best of them all

As a consequence of its various projects in the IDZ and virtue of Infrastructure Development Programmes, the CDC has created a total of more than 83,405 jobs over the past eight years alone, and 96,776 since inception compounded by training opportunities being provided to more than 91,772 citizens.

“I’ve been to many developing countries and industrial development zones in the world [and] the Coega IDZ is by far the best of them all,” said Dr LI Yuanchao, Vice President of the People’s Republic of China in November, 2016.

Sakhumzi Somyo, MEC for Economic Development, Environmental Affairs, and Tourism added: “The Coega IDZ is the best performing and has done very well to win national awards in South Africa; we are very proud of this institution.”

At present the CDC has increased its operational investors in the IDZ from 36 in the previous financial year 2015/16 to 41, including those located in the Nelson Mandela Bay Logistics Park who are direct suppliers to Volkswagen South Africa as an example of the kinds of high profile enterprises benefitting from the Zone (18 international companies and 23 home-grown companies are found in the Coega IDZ). 

Across the 41, an estimated R7 billion has been invested; other notable contributors including Coega Dairy & Cheese, PE Cold Storage, Dedisa Power Peaking Station, FAW, Dynamic Commodities, Famous Brands, Discovery, WNS, and General Motors Pan African Distribution Centre.

“The success of the Coega IDZ stems mainly from an alignment with the Industrial Policy Action Plan, Special Economic Zones Incentives, Sector Specific Incentives, and Municipality Incentives and Support; all of whom are aimed, amongst others, at boosting the targeted economic sectors and promoting investment in the country,” Dr Vilakazi emphasises. “As a result, the Coega IDZ has taken full advantage of these support mechanisms from Government, including establishing its own one-stop-shop portal, to increase the number of investments, create job opportunities, training and development, and SMME support and development.”

“Coega is a flagship programme we are very proud of. It’s effectively the best functioning and most successful IDZ in the country and also has world-class management and corporate governance systems,” echoed Lionel October, Director General of the Department of Trade and Industry in December, 2016.

More and more global investors find the Coega IDZ as the right place and right choice for their investment as the organisation provides benefits to investors in the IDZ, which includes, amongst others, a range of incentives, such as customs duties and VAT suspension; CCA incentives for those enterprises located in Zone 1 & 2 of the Coega IDZ; specific SEZ Incentives for qualifying tenants, which includes a 15 percent corporate tax benefit, building allowance, employment creation incentive, 12i Tax Allowance  (the incentive offers support based on capital investment and training), training allowance, sector focused incentives, to name but a few; easy access to road, rail, air & sea network and adjacent to the deepwater port of Ngqura; integrated logistics services, connecting emerging markets in Africa and the rest of the world markets; and one stop shop services, proving VISA/ work and study permits.

Dr Vilakazi adds: “Furthermore, since its establishment, year-in and year-out, the CDC has obtained an unqualified audit opinion from the Auditor General of South Africa, a welcomed milestone given the size of the operations. CDC has also achieved ISO certifications which are important for global investment promotion; and these include ISO 9 001 (Quality Management), ISO 14 001(Environmental Management), ISO 15 498 (Records Management), SANS 16 001 (HIV & AIDS), OHSAS 18 001(Occupation Health & Safety), ISO 20 000 (IT Service Management), ISO 27 000 (Information Management), and  ISO 31 000 (Risk Management).”

Significant milestone

The CDC has contributed enormously to the roll-out of economical and infrastructural developments in South Africa during its tenure, addressing most prominently the issues which will affect the country’s sustainable future; namely, energy and logistics.

“The CDC, in line with the National Development Plan (NDP) and IPAP Gas-based industrialisation plans, is leveraging natural gas as both a source of power generation and a driver of industrial diversification, as one of the cornerstones of the country’s industrial strategy,” Dr Vilakazi offers as an example. “In the process of diversification to include clean energy in the mix, in this instance through wind energy, the Coega IDZ provides a platform to localise the manufacturing of industrial components.

“In so doing, the organisation has been key to affecting the structural changes in the economy through breaking out of commodity dependence and moving towards a diversified, knowledge economy in which increasing value-addition and export intensity is paramount.”

Projects such as the DCD Wind Tower factory, the gas-to-power programme and numerous power plant developments affirm this influence on the sector; culminating in arguably its most significant milestone to date earlier this year.

“A significant milestone for the CDC is its recent agreement with Eskom to cooperate in the development of South Africa’s nuclear new build programme (NNBP). The agreement was signed on Tuesday 14 March, 2017 whereby the two state-owned Companies (SoC) will work together in support of Government’s plans to build local capacity through supplier development and localisation around the unfolding infrastructure for the nuclear programme,” Dr Vilakazi explains.

Eskom’s Group Executive for Group Capital, Abram Masango added: “We are gearing ourselves up in preparation for the nuclear new build programme in order to deliver the project within the set timelines and budget. We want to ensure that South Africans get reliable, decarbonised base load power that will bring sustainable economic growth.

“In addition, it is critical to lay the foundation for local people to participate meaningfully during the various stages of the project by skilling them for jobs as well as business opportunities.”

The landmark projects continue in the form of another historical project, the R11 billion investment signed by the CDC with the Beijing Automobile International Corporation (BAIC), the biggest automotive investment in Africa in the past 40 years.

Dr Vilakazi recalls: “The investment was described by the Minister of Trade and Industry, Dr Rob Davies, as significant and it deepens our economic relationship with China. The investment is strategic and is a major project in terms of SA’s bilateral relationship with China and is a key project supported by the Inter Ministerial Committee on Investment.”

Promoting development

As of the end of March, 2017 the following investor facilities and/or plants are currently under construction in the Coega IDZ: the Beijing Automobile International Corporation, Dynamic Commodities, General Warehouse, Q-Plas, Redisa, Corro-master, and Lension.

Yet, outside of these core headline-making initiatives, the CDC is also ensuring much wider community-driven sustainability, in line with its corporate social responsibility ethos.

“The CDC, together with its investors in the IDZ, is making inroads in promoting the development of communities in areas where it operates,” Dr Vilakazi affirms. “Among the notable community projects are the Driver Training Programme, Skills Development Programme, Internship Programme and Maths and Science Programme.

“In this regard, the CDC recently signed an agreement with the Centre for the Built Environment (CBE) to collaborate on the Maths and Science Programme to increase the number of students who failed mathematics and physical science (and those wishing to improve their results) from 50 to 90 per annum.