In a first for any South African Industrial Development Zone (IDZ), Coega has made investment history signing 10 clients at an investment value of just over R1.8-billion in the 2013/14 financial year.
The company broke through the psychologically significant double digit barrier for new investments, it reported today as audited figures on the organisation’s performance, for the financial year which ended in March, trickle through.
Working with a “strong and dedicated multi-disciplinary team”, Coega has clinched investors across diverse sectors, including the manufacturing, logistics, chemicals, renewable energy and automotive industries.
Coega’s ascent over the past three years has been “beyond remarkable” given the mercurial investment climate, says Christopher Mashigo, Coega Development Corporation (CDC) Business Development Executive Manager, who has kept a steady hand on investment deals over the past year deploying business development managers to “dig out great results” and “bleed the pipeline”.
Speaking about the CDC’s new business development approach, Mashigo outlined how the company sent business development managers upstream so they would better know the value chain and where the financial decisions lie to get projects “unstuck” and the pipeline converted into signed investors.
The results have been outstanding, as Mashigo forced managers to sacrifice the investment ace up their sleeves in an effort to outperform in spite of – and because of – the recession.
“At the start of the financial year, the CEO mentioned a target that became a call to action, a magic number,” said Mashigo. “The response was interesting. Some said it was suicide in a performance arena that condemns failure to achieve. Pepi Silinga wanted us to dream an impossible dream in a changeable economic climate – a dream that would turn everyone into a salesman.”
The investment target was set at double that of three years prior. The long road had begun.
In the first quarter of the year no investor had been secured. The jitters set in. The question on everyone’s lips, according to Mashigo, was “do you even need to set targets under such strenuous circumstances?”.
“By the time the second quarter rolled on through, only 10% of the target had been reached, but the Board said it was too late to change the targets and the challenge became entrenched.”
Part of the problem, says Mashigo, was the volatile expansion and contraction of the pipeline – a trend that needed to be reversed to convert prospects into signed investors.
“The challenge required creative innovation in deal-closing that was not standard,” Mashigo said, adding that business development managers’ scorecards were weighted heavily in favour of developing the pipeline, at one fifth of their overall score.
The entire commercial and business development teams, including executive management, the chief executive and Board were also put on perpetual standby to bring home conversions.
Asked about the achievement Mashigo said: “To go from 10% of an impossible dream to 111% makes it very special. I can proudly say we have signed 10 new investors in what was arguably the most difficult year in a long time. This achievement is a testament to the strength of the team behind us.”
The ten investors – which equate to an investment total of R1.841.6-billion – include:
- SAMRT (SA) (automotive): R400-million
- Qtech Moulding (automotive): R23-million
- Digistics SA (logistics): R20-million
- ID Logistics (logistics): R35-million
- Afrox SA (chemicals): R300-million
- No. 1 Corporation (agro-processing): R40-million
- ITPASA (manufacturing): R30-million
- Ulba Tantalum Africa (chemicals): R200-million
- Poweway/Sungrow JV – Inverters (renewable energy): R127-million
- Powerway/JA Solar JV (renewable energy): R666.6-million
ITPASA and the Powerway/JA Solar JV are already operational in the IDZ.
“About 60% of these investments will be at some point of commencing or commissioning within this calendar year. This means we are establishing a trend in the IDZ that new investors signed in one year and on the ground in the next, as is case with some new IDZ investors such as DCD Wind Towers, Famous Brands and Air Products,” Mashigo added, saying there is evidence of momentum after a dearth of activity.
The diverse investments play into Coega’s strategy to attract a wide range of catalytic and turnkey investments that will enable future growth within the IDZ. Supply chain integration is also already evident in the IDZ investments.
Mashigo said agro-processing had shown “a fantastic coming of age in the IDZ” and the integration with the Port and back-of-port logistics was solidifying the Port-IDZ-rural hinterland connection.
“Coega has carved a niche as a platform for the cold chain, linked particularly to perishables, while the port has the necessary infrastructure for their distribution with 1682 refrigeration plug in points – a convenience not found elsewhere in the country,” he said.
“The IDZ was becoming a springboard into the retail sector, local or global – and talks to why we actually have IDZs in the first place.”
The CDC is basking in the glow of what looks like its best year yet: Ten new investors, an immediate investment value of R1.84-billion which will create in excess of 900 jobs in the future, and the creation of 16 444 economy-wide jobs created in the last year. The organisation continues to make trailblazing firsts a part of its approach.
“The winning formula was to activate the delayed projects pipeline, go back upstream and unclog these while at the same time building and converting the pipeline. Key to this was knowing the value chain and its finance decision points and bringing to the table the necessary experience as and when required. The rest, they say, is now history.”
Alan Straton
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