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Coega achieves more than half-a-billion rand in revenue

Coega Orthophoto

INVESTMENT NEWS: BAIC SA Plant artist impression, a R11 billion investment in the Coega SEZ and the biggest single automotive investment in Africa in 40 years.

The Coega Development Corporation (CDC) announced its year-end unaudited performance results for the Financial Year (FY) 2016/17, which, it says, exceeded expectations. The organisation achieved double-digit growth in new investments in the Coega SEZ for the third consecutive year.

This follows the CDC's recent announcement that more than R1 billion of newly signed investments in the Coega SEZ are ready for implementation, including:
• A R650 million manufacturing cement grinding plant,
• A R71 million ready mix concrete plant, and
• A R350 million Gas Cylinder Plant.

Highlights of the 2016/17 FY unaudited Performance Results:
• New investors signed: 16
• Value of new investment signed: R11.69 billion
• Jobs created: 16500

─ The SEZ has now reached 7 170 Operational jobs
─ 9 330 new construction jobs both in the SEZ and new infrastructure projects

• Training achieved: 5886
• SMME spend achieved: 36%
Furthermore, SMME spent in 2016/17FY amounted to R776 000 000 (2015/16FY: R 1.013 billion), more local SMMEs are benefiting from the CDC’s projects. For example, the BAIC project has seen 11 Nelson Mandela Bay Municipality SMMEs (including two females-owned companies), given work packages valued at more than R17 million to clear the BAIC site, prepare a platform for BAIC SA, and for plant & equipment hire.

“The CDC, for the first time in 17 years, has hit a half-a-billion rand in revenue generated, achieving R532,77 million against a budget of R451,2 million,” said Lionel Billings, CDC Chief Financial Officer.

He adds that Operational investors have increased from 36 to 40 (11%) within one year, a significant milestone given the tough current economic environment in South Africa. The cumulative value of private sector investments already on the ground and operating is R6,996 billion with a further R1 billion having commenced implementation and the first R5 billion of the BAIC investment having hit the ground in earnest.

Of particular significance, in line with CDC’s vision of being a catalyst for championing of the socio-economic development in the Eastern Cape and South Africa, is the number of jobs created during the 2016/17FY.

For the first time in the history of the CDC, the organisation has surpassed the 100 000 jobs created milestone during 2016/17FY.

The cumulative number of jobs created since inception 17 years ago increased from 94732 to 102,794 (8,5%). This includes the 16 500 jobs that were created in the 2016/17FY (7 170 Operational jobs against a target of 7,115 and 9 330 Construction jobs), said the CFO.

In addition, training and development is critical to the economy of the province in providing the much needed skills, especially to the youth. As such, the CDC has trained 5886 people in the period under review.

"This has the potential to reduce skills flight to other provinces and contribute to the development of the Eastern Cape economy," added Billings.

According to Dr Ayanda Vilakazi, CDC’s Head of Marketing, the aforementioned results show that the CDC continues to be a pillar of hope in the Eastern Cape, and through its projects countrywide the impact has reached more than six million people (or 11% of the population).

A recent independent report by Muffin Consulting confirmed this, by showing, among others, that:
• 84% of the companies invested in the Coega SEZ reported an increase in profitability,
• 85% of investors have increased their workforce since opening in the Coega SEZ, thus reducing the scourge of unemployment in the province,
• 62% have expanded their factories, this includes PE Cold Storage, Coega Dairy, to name but a few,
• More than 90% of operational investors described the Coega SEZ and its logistics park where VWSA is located as the ideal location for industries wishing to grow, and
• Over 50% of companies surveyed sourcing more than 78% of their inputs locally, thus boosting the local economy.

The organisation attributes its achievements to sheer determination and hard work as well as the strategic and visionary direction provided by the CDC Board together with the its Chief Executive Officer and the rest of the Executive Management and Staff, who together have tirelessly been focusing on achieving outstanding annual performance results, said Vilakazi.

"CDC stakeholders have also played a significant role in the achievement of these results as well as assisted the organisation to move closer to achieving its 2020 Sustainable Growth Strategy," concluded Billings.

To this end, the CDC received the highest praise from foreign dignitaries as well as local government officials and politicians.

The People’s Republic of China’s Vice President, Dr LI Yuanchao, during his State visit to South Africa and the Coega SEZ said, “I’ve been to many developing countries and industrial development zones in the world, the Coega IDZ is by far the best of them all.

”These sentiments were echoed by the DEDEAT MEC Somyo, who said “the Coega SEZ is the best performing and has done very well to win national awards in South Africa, we are very proud of this institution.”

In December 2016, the DG of the dti, Mr Lionel October, further highlighted his support and was pleased with the CDC’s progress and achievements as an SEZ when he said “Coega is a flagship programme we are very proud of. It’s effectively the best functioning and most successful SEZ in the country and also has world class management and corporate governance systems.”

The Tunisian Ambassador on her visit to the CDC further expressed support for the Coega SEZ. The interest in the Coega SEZ from the Tunisian government stems from the CDC’s widely publicized latest achievements and successes broadcast all over the World as the preferred investment destination for global businesses with an Africa Agenda. “Our objective is to learn and have a sense of appreciation of all opportunities which relate to the Coega Special Economic Zone (SEZ),” said HE Ms N Dridi Ambassador Extraordinary and Plenipotentiary.

It is therefore no surprise that CEOs of blue chip companies and others, government officials and head of states from the rest of the African Continent and all over the world have shown an interest on how the CDC has managed to achieve such high level of success, over such a short period of time, despite the difficult economic environment, that has made the Coega SEZ the number 1 brand in the developing countries in terms of industrial development.

Issued by: Coega Development Corporation