Absence of competitive incentives retards Coega growth

Work is due to start this year on one of the most visible investments in the Coega Industrial Development Zone (IDZ) – a R200-million assembly plant for China’s First Automotive Works, which is situated alongside the N2. This will help boost local confidence in the IDZ. Little action is visible from the freeway despite ten years of promise of its sparking economic growth in Port Elizabeth and surrounds. However, the IDZ is currently home to 21 operational investors amounting to R1.2 billion in investment, according to Ayanda Vilakazi, Coega Development Corporation (CDC) head of marketing and communications. “Obviously, the financial year 2012 is still in progress and it’s easier to measure the outcomes of the 2011/2012 performance, but the feeling is that 2011 was a tipping point and that its precedents and investments are going to define the future of the Coega IDZ in the next three to five years,” he says. Lease agreements have been signed with an additional 15 investors, bringing the total to 36. Of these, the majority of logistics-related investments are in the Nelson Mandela Bay Logistics Park situated alongside the Volkswagen factory in Uitenhage. They mainly supply just in time components to VW. A further R7.5 billion in investment is in implementation stage. Projects in negotiation stage are valued at R8.1 billion and those under feasibility account for R116.3 billion, he says. The biggest success in terms of job creation in the region is the agro industrial sector. Close to 25 000 seasonal and semi-permanent rural jobs in the region are linked to food processing companies in the Coega IDZ, according to Vilakazi. Total operational and direct jobs within the IDZ stand at around 3 700. Responding to questions about the “slow” progress of Coega, Vilakazi says the CDC was told from the outset to look 50-75 years into the future. “Effectively, we were planning the new industrial heartland of the Nelson Mandela Bay Municipality (NMBM), and arguably the Eastern Cape and South Africa, for the 21st and 22nd centuries. “So success on development projects is really measured in retrospect. The Coega IDZ is only 13 years into that initial 50-75-year future and the impact of sustained careful planning is beginning to yield the fruits of investment, against the odds and in spite of policy limitations.” Those ‘limitations’, FTW understands, include the absence of competitive incentives being offered by the South African government in order to attract foreign direct investment in the face of competition from hundreds of other IDZs or their equivalent around the world. As a government-funded and owned development company, the CDC has been largely silent on the matter. “We are guided by the policies and incentives as offered by the dti. They have played a pivotal role in securing investments,” he says. INSERT ‘Lease agreements have been signed with an additional 15 investors, bringing the total to 36.’