Coega Development Corporation: Setting the standard for Africa’s IDZs

Part of the challenge of transformation within South Africa is the development of historically underprivileged areas. The South African Government has worked hard to develop areas subjected to economic stimulus in the shape of Industrial Development Zones (IDZs), with Coega IDZ, located close to the Nelson Mandela Bay Metropolitan Municipality, one of the foremost projects of its kind.

The area is developed and managed by the Coega Development Corporation and represents a multi-billion Rand project that strives to drive local and foreign direct investments in export-oriented industries – positioning South Africa as the hub for Southern African trade. The Coega Development Corporation (CDC) is itself a state-owned entity formed in 1999 and mandated to develop and operate the Coega Industrial Development Zone (IDZ).

Along the way there are of course plenty of incentives for would-be investors to consider Coega IDZ, as the corporate website outlines:

coega-development“While offering global competitiveness through world-class infrastructure, tax incentives, rebates and a duty-free zone, (it) is purpose-built for manufacturing including beneficiation of export goods, investment and local socio-economic growth – skills development and job creation.

“Adjoining this, the largest IDZ in the Southern Hemisphere, is the Port of Ngqura – a modern multi-user deepwater harbour developed by the National Ports Authority of SA as a gateway to global markets.

“The Coega IDZ and the deepwater Port of Ngqura will remain catalysts for investment and local development.”

That ambition is certainly being realised and Coega IDZ became the first IDZ on the African Continent to attract double-digit investment in one financial year. No fewer than 10 investment projects worth 1.8 billion rand were signed and secured for the Coega IDZ in the financial year 2013/2014, with the largest investments recorded in the renewable energy sector with 793 million rand followed by the chemical sector with 500 million rand, and the automotive sector with 423 million rand. 

In June of 2014, Coega IDZ outlined the businesses that were already operational at the site; these included local businesses like Bosun Bricks, Cerebos and Coega Dairy/Coega Cheese; while General Motors Part and Accessories Distribution Centre was also located there. The international appeal of Coega was underlined by the presence of other companies which had their origins in Belgium, France, Germany, Holland, India and Spain.

The progress made is undoubtedly encouraging, but Coega IDZ anticipates far more success to come: “The achievements and successes of the Coega IDZ over the past couple of years have proven that a mixed approach to attracting investors is working. That said, however, a number of catalytic big projects valued at over R75-billion, are on the horizon and include PetroSA`s Project Mthombo which will enhance the attractiveness of the Coega IDZ as an investment destination and therefore future investment trends,” the website states.

The history of the development goes back almost 20 years and it was back in 1996 when the South African Government first identified a range of industrial development zones around the country, which would have the aim of attracting business investment opportunities to help stimulate economic development.

A year later a feasibility study identified the Coega region as a viable candidate for the creation of an IDZ and one which crucially, was well-suited to the establishment of a new deepwater port.

The early weeks of 2015 have already proved an exciting time for Coega IDZ, with the news coming through that the development had reported an 8 per cent self-generated revenue increase with the organisation’s total revenue increasing from 673 million rand to 725 million rand.

“The CDC’s self-generated revenue this year grew by 29 per cent to 383 million rand, when compared to the previous year, and, for the first time since the CDC’s inception, self-generated revenue was higher than state funding by 12 per cent,” the group stated.

“We have gone beyond the call of duty to break through various barriers to achieve remarkable milestones in the context of difficult global investment climate,” commented CDC Business Development Executive Manage, Christopher Mashigo.

“This speaks to an organisation that is maturing and building on sustained momentum, but it is also a testament to excellent teamwork.”

CDC Head of Marketing and Communication, Ayanda Vilakazi added that the IDZ was poised to become a case study for industrial development excellence and effective operations in an African context.

“We can easily be compared to other IDZ’s in the world and stand in a class of our own. The CDC is forecasted to reach 30 operational investors by the end of the 2014/15 FY, making Coega the first IDZ to reach 30 investors.”

Whilst the results are hugely positive news, there is a lot more to come from CDC and February also saw the organisation announce plans to invest R9 million in the establishment of a new laydown area, serving as a temporary storage site for abnormal cargo.

The lay down area, located on the boundary between the Port of Ngqura and the Coega Industrial Development Zone (IDZ), will stretch across 12 hectares of land in Zone 1.

“To date, the Port of Ngqura has been the port of entry for major abnormal-sized equipment, particularly wind turbine components and items such as the cold box units for the Afrox and Air Products air separation units, among others.

“The deep-water Port of Ngqura is a transhipment hub and an ideal entry point to South Africa for abnormal cargo due to the draft depth, dedicated berth for general cargo and uncongestiveness of port operations. The ease of movement and good road condition from the port through Coega IDZ onto the national road (N2) is an additional benefit to shipping to and from the Port of Ngqura,” it said in a statement.

“The laydown area thus provides an essential component to the logistics value chain; enabling cargo short-to-medium term storage,” added Linda Sityoshwana, CDC’s trade solutions project manager.

The laydown area will allow tenants of the area to move cargo between the port and IDZ, within an allocated space through a dedicated entrance, reducing heavy traffic on the main entrance route to the port.

According to Dr Ayanda Vilakazi, CDC head of marketing and communications, the lay down area will further enhance Nelson Mandela Bay as world class investment destination by leveraging the Coega IDZ and the Port of Ngqura as a transhipment hub and geostrategic point for the export and import of manufactured goods.

Coega IDZ has already travelled on a remarkable journey since it was first recognised as a possible site in 1997. The objectives set out look far into the future; there are many more good years to come, which will stimulate economic growth and jobs for South Africa.