Coega grows confident about the future

THE Coega Development Corporation (CDC) has attracted R4.1-billion in new investment in the financial year ending March 2012 and says it has also exceeded the targeted number of new investors.

This is according to figures outlined in the corporation’s recently released 2011/12 Annual Report.

The current value of operating investments and those in the pipeline at the CDC now exceeds R15-billion, the bulk of which comprises alternative energy (R6.4-billion), downstream metals (R4-billion), and auto manufacturing and components (R3-billion). The total value of projects in the pipeline sits at just over R140-billion.

Pepi Silinga, CDC chief executive, said the financial year 2011/12 – in spite of several challenges including the European debt crisis and electricity shortages delaying committed projects in the wake of funding scarcities and reduced commitments from power suppliers – had yielded positive results for the organisation, momentum it intends to capitalise on.

“The aim is critical mass. Initially, we believed that a single big investor would give Coega a boost towards its long-term viability. But it became obvious as the Industrial Development Zone (IDZ) developed that this original approach had limitations,” Silinga said. “Since then, the CDC has embraced the path of attracting a diverse blend of investors and investments that vary in size and scope.

“The groundwork for critical mass with diversity has now been laid and with 21 operating investors as of 2011/12 and the India-South Africa consortium, AgniSteels establishing operations in the IDZ and China’s biggest automotive manufacturer, First Automobile Works (FAW) soon to follow, there is no denying the attractiveness of the Coega IDZ as a strategic investment destination.”

The organisation also made the strong argument that the Coega IDZ’s development trajectory should not be evaluated against the short time it has been operational, with acting Chairman, Paul Jourdan emphasizing the long-term approach.

“As a Board member for 13 years, I believe the CDC’s achievements deserve wider recognition. It is important to remember that infrastructural developments such as the Coega IDZ should be measured in decades and not a few years. This success has been underpinned by the unswerving support of the national Department of Trade and Industry (DTI), with Minister Rob Davies now at the helm, and the Eastern Cape Department of Economic Development, Environment and Tourism led by MEC Mcebisi Jonas.”

The CDC, tasked with attracting investors and tenants to the Coega IDZ and Nelson Mandela Bay Logistics Park (NMBLP), has signed 36 lease agreements with investors since it started its investment promotion activities.

The CDC’s key performance areas centre on: moves toward financial sustainability, attraction of foreign investment, job creation, training, increasing SMME (small, micro, medium enterprise) share of procurement and investing back into society through corporate social investment programmes.

Consistent with the decline in government revenues, the budget allocations to the CDC from National Treasury, channelled through the DTI, were reduced from R626 million for 2010/11, to R336 million in 2011/12, however the organisation has made moves to generate income outside of the grant said Silinga.

“Starting with self-generated revenue of less than R10-million in 2004, last year the CDC generated just over R220-million (2011/12) which represents about 70% of the grant funding received from national government and is a major achievement in the light of South Africa’s continuing power crisis and the on-going global economic turmoil.”

This was as a result of new business acquired by the external services (non-IDZ) portfolio, which includes the major Roads Enterprise Development Programme and the upgrade of hospitals and schools for the Eastern Cape Departments of Health and Education and schools for the Kwa-Zulu Natal Department of Education, the organisation said.

The CDC’s revenue for the financial year totalled R579-million in 2012 (R773-million in 2011), while total assets on 31 March 2012 were R3.88-billion in 2012 (R3.7-billion in 2011).

Contributing to the future bottom line are the seven investments signed during 2011/12, which exceeded the targeted number of six, and included: GDF Suez (R2.7-billion in energy sector); EAB (R270-million in renewable energy sector); FAW (R600-million in automotive sector); DCD Dorbyl (R110-million in energy sector as a component manufacturer); Tyre Energy Extraction (R30-million in automotive sector); OSHO Cement (R380-million in construction sector); and the Newco Cheese Factory (R30-million in the agro-processing sector). These total an estimated R4.1-billion.

In terms of job creation and training the CDC fared well. A total of 8 898 jobs were created in the course of the financial year (7258 jobs on provincial and IDZ construction activities and 1640 direct operational jobs on IDZ and Nelson Mandela Bay Logistics Park investment projects), inclusive of 107 internships; and 10 826 people as part of the CDC’s Human Capital Development programme, showing major investment in the development of human resources in the Eastern Cape. The CDC also stimulated growth for SMME’s who benefited from a 31% overall share of procurement.

The CDC also emphasized that it prides itself on ensuring long-term benefits for its communities and beneficiaries, focusing on the areas of education, training and driver training.

It runs a driver training outreach programme aimed at empowering unemployed graduates with the opportunity to improve their employability status, and currently all of the CDC interns are receiving training to obtain drivers’ licences before the end of their internship terms.

Currently, the Coega IDZ contributes an estimated 5.9% to the provincial gross domestic product (GDP) and 0.5% to the national GDP, a figure the CDC would like to enhance as investment prospects arise.

The Coega IDZ is coming into its own, Silinga believes, through strategic linkages, investments and partnerships and, thereby cementing a competitive future for the Eastern Cape.

Coega IDZ currently accounts for Africa’s largest prime industrial space with 11 000ha of dedicated land. Download the Coega Development Corporation Annual Report 2011/12.

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