Gqeberha, South Africa, 1 November 2023 – Africa’s leading Special Economic Zone (SEZ), owned and operated by the Coega Development Corporation, has caught the attention of global investors from the automotive and energy sectors due to its excellent infrastructure and services that enable the advancement of project development and growth for tenants and clients. Supported by a competitive and strategic location, international brand recognition, awards of excellence, well-maintained modern infrastructure, one-stop-shop services, and a business-friendly environment establishing green hydrogen and ammonia production facilities, the Coega SEZ is fast becoming a hub for cutting-edge catalytic industrial projects in the automotive and energy industries, says, Dr. Ayanda Vilakazi, Coega’s Unit Head of Marketing, Brand and Communications.
The automotive industry has a long-standing presence in the Coega SEZ, with leading global manufacturers choosing to invest their world-class facilities and equipment in the Zone, employing thousands of workers. Companies benefit from the SEZ’s access to reliable road, air, and sea transportation networks, including the deepwater port of Ngqura, Port of Port Elizabeth for containers and vehicles, respectively, and an international airport. Linking east and west international trade routes, Coega’s strategic location allows for seamless exports and imports as a gateway to African and world markets, and an ideal industrial business environment for automotive enterprises looking to expand their operations to the African continent, South Africa, in particular.
Located in the Eastern Cape Province of South Africa, positioned as the home of legends, Coega is one of the largest and most well-established SEZs in Southern Africa, with robust infrastructure, attractive incentives for investors, efficient logistical networks, and a complete value chain service offering. The Coega SEZ provides businesses of all sizes and sectors with the essential prerequisites for growth and success. Notably, recent investment activity in the automotive and energy sectors highlight the Coega SEZ as a prime investment location with massive growth potential in terms of business expansion, sector growth, and the development of local value chains.
Feedback from the 2021 Coega SEZ Investor Survey indicates that 91.7% of operational investors stated that their business key performance indicators improved since locating at the Coega SEZ, 92% of operational investors agree that Coega has met its obligations to tenants since locating in the Coega SEZ, and 91.6% of operational investors would encourage other businesses to locate at the Coega SEZ. Additionally, Statistics South Africa (Stats SA), is one of the entities that has continued to measure the economic activity of Coega SEZ investors. Stats SA and Coega have had a partnership since 2017 for the statistical agency to measure investors’ economic activities. Stats SA has produced three reports to-date on the Coega SEZ. The latest report is comprised of the assessment of the economic activities of investors in the Coega SEZ for the financial year 1 July 2020 to 30 June 2021. This report measured income, employment, capital expenditure, and value of imports and exports in the SEZ. The highlights indicated that the Coega SEZ investors made R 14,3 billion in income.
The total income reflected an annualised increase of 9,0% compared to the income reported in the corresponding survey of 2018 (R11,0 billion). In addition, the total Coega SEZ expenditure in 2021 was R13,5 billion compared to R10,8 billion in 2018 (an annualised increase of 7,5%). The largest contributors to the total expenditure were ‘purchases’ (R8,3 billion or 61,9%), and ‘salaries and wages’ (R1,6 billion or 11,9), to name a few, making a significant impact on the local economy. The total number of persons employed in the Coega SEZ as at the end of June 2021 was 8 046 (798 more employees compared to 2018), and the latest 2023 audited results indicate that 9 378 people were employed in the SEZ during the 2022/23 financial year.
In terms of energy, since establishment the Coega SEZ has successfully attracted over R4 billion worth of energy projects that are operational and has also implemented numerous energy projects, including the progressive and innovative Coega Solar Rooftop Project, discussed below. The Coega SEZ is an ideal investment location for green hydrogen projects and has serviced developable land available that is suitable for greenfield projects.
The Coega Solar Rooftop Project, in its initial phase, will fit five buildings within Coega SEZ and the Nelson Mandela Bay Logistics Park (also operated by the Coega Development Corporation) with cumulatively 4.5MW solar PV panels. So far, the first building has been fitted, and the roof assessments and designs have been approved for the remaining four buildings.
Power cuts, or load shedding, has increased in South Africa during the year, posing significant challenges to small businesses – which account for a third of the country’s gross domestic product. However, the recent noticeable improvements on loadshedding have been welcomed.
The Coega SEZ Energy Strategy identifies approaches to managing the energy supply, demand, efficient usage, and investment in current and new energy technologies in a manner that is environmentally friendly, institutionally sound, socially acceptable and cost-effective utilising the best mix of energy supply and demand options.
Coega has implemented short-term interventions including exemption from loadshedding up to stage 4, uninterrupted power supply at its Business Process Outsourcing Park, and a 24-hour load curtailment schedule. Long-term interventions include the development of solar farms in the Coega SEZ, due to land availability, electrical distribution networks, ability to transmit electricity to external customers via a wheeling agreement, and excellent solar and wind resources.
Regarding the auto manufacturing industry, it is one of the strongest sectors of South Africa’s economy, and the country wants to produce 1% of the world’s automobiles. As cities encourage greater use of public transportation to limit emissions from personal vehicles, automobiles will play a large role in how humans move around for the foreseeable future, whether they’re traditional internal combustion engine (ICE) motors or new energy vehicles (NEVs) which are gradually becoming more common and affordable.
The Coega SEZ recently welcomed The Stellantis Group (Middle East and Africa) announcement to locate their R3bn state-of-the-art CKD auto manufacturing plant in the Coega SEZ, in partnership with the Industrial Development Corporation (IDC). This bold initiative reinforces Stellantis MEA Region’s Dare Forward 2030 ambition to sell one million vehicles by 2030 with 70% regional production autonomy.
The Coega SEZ is currently home to various automakers including China’s BAIC and FAW Trucks and component suppliers, including Grupo Antolin, Faurecia Interior Systems, Hella, VSL Manufacturing Benteler Automotive, Inergy Automotive Systems, Rehau Automotive, Q-Plas Automotive, MICB Automotive and Schenellecke Automotive. The Coega SEZ’s offering to the automotive investors includes cost effective comprehensive manufacturing solutions in Zone 1 and 2 of the Coega SEZ and in the Nelson Mandela Bay (Automotive) Logistics Park in Kariega. Plans of developing an automotive components supplier’s park in the Coega SEZ are also underway.
Coega aims to support automotive investors, assemblers, and component suppliers alike with a diverse range of services to allow companies to focus on the core business of manufacturing and distribution. Investors in the Zone will also be linked to government supported initiatives, including the Automotive Production and Development Programme – Phase 2 (APDP – 2); dtic’s corporate tax reduction, the Eastern Cape Tooling Initiative and others supported by Provincial and National Government.
The Coega SEZ leverages innovation, business ecosystems and strategic collaboration to enhance competitiveness and attractiveness, as an investor location of choice for automotive and energy projects, while ensuring that Coega remains relevant to the developmental trajectory of Southern Africa. In our current economic climate, Coega’s accomplishments are noteworthy, and reflect significant growth momentum. Despite various challenges, Coega has successfully attracted investment into the region, demonstrating its potential as a crucial driver of economic development, job creation, and overall economic growth.
The automotive and energy sectors have contributed to the overall performance of the Coega SEZ. As per the recently published Integrated Annual Report in October 2023, the reported number of operational investors stood at 58, including FAW SA, Benteler Automotive and Dedisa Peaking Power Plant, to name a few, concludes Dr. Vilakazi.
