Is Gqeberha finally to get the diversified investment injection it has dreamt about for so long?
A series of new investments has the city, and the Nelson Mandela Bay (NMB) municipality of which it is the heart, dreaming that it may finally be able to reduce its economic reliance on the motor industry.
Retail, pharmaceutical, brewing and chemicals companies are among those investing heavily. And then there is Hive Energy, which plans to spend R105bn on a green hydrogen and green ammonia plant.
Denise van Huyssteen, CEO of the NMB Business Chamber, is leading an investment drive for what the chamber calls the “bay of opportunity”. The municipality includes the Coega special economic zone (SEZ), based around a new deepwater port 20 minutes’ drive east of the city, and the industrial town of Kariega (formerly Uitenhage), home to carmaker Volkswagen.
Vehicles have been manufactured in Gqeberha for 100 years, since Ford set up an assembly plant there in 1924. The US-owned company has since moved vehicle assembly to Tshwane but retains a thriving engine plant in Gqeberha. Isuzu builds bakkies and trucks there. They and Volkswagen have been joined in NMB by truck makers and manufacturers of tyres, catalytic converters and dozens of other critical components.
Many of these companies are subsidiaries of successful multinational corporations. French-based multinational Stellantis plans to build Peugeot bakkies in Coega from 2026 and, who knows, Chinese company Beijing Auto (BAIC) may one day actually fulfil its promise to build vehicles there in the vast “assembly plant” overlooking the N2. Coega officials say a number of imported car kits are bolted together in the building, but it is unclear when actual manufacture, which should have started in 2022, will begin.
Gqeberha used to style itself as SA’s version of Detroit, the US city called home by Ford and General Motors (the latter and its associates built cars in NMB from 1926 to 2017). But just as Detroit found that overreliance on automotive investment could be paralysing when that industry ran into trouble, so Gqeberha wants alternatives.
A peep along the coast, where East London nervously assesses the economic cost of the planned downsizing by Mercedes-Benz SA (MBSA), is a timely reminder of the need for industrial diversification.
NMB has a number of things going for it. It is the only SA conurbation with two ports: Coega and the long-established one on the edge of Gqeberha’s city centre.
Van Huyssteen describes the area as the world’s “mohair capital” and says the nearby Sundays River Valley is SA’s biggest producer of citrus fruit.
Ayanda Wakaba, CEO of the Eastern Cape Development Corporation (ECDC), believes the region should do more to build on its agricultural heritage. That and tourism are the biggest untapped sources of investment.
Green energy is starting to make inroads. Wind farms are springing up in the notoriously blowy region, though Wakaba says investment would be even greater if Eskom had capacity to absorb more power into its electricity grid.
Van Huyssteen says Hive Energy’s planned R105bn investment is an indicator of diversification potential. Company GM Colin Loubser says Coega’s deepwater harbour, with the local availability of high-quality skills and labour, can be the hub for exports of green hydrogen and ammonia to the Far East, Europe and US. Hive already has burgeoning wind and solar energy plants in SA.
Local businesspeople hope the project, and the additional investments it brings, will reduce the reputation of NMB and the Eastern Cape as a whole as an investment destination “afterthought”.
“We are seen as an outlying region,” says Wakaba. “Most investors, particularly foreign ones, look first to Gauteng and the Western Cape. We have to run faster than anyone else just to stay in the race.”
Some of that disadvantage, it must be said, is self-inflicted. The Eastern Cape is commonly perceived as badly run and politically corrupt — though Wakaba says that in his three years at the ECDC he has found the reality much more investment-friendly than he expected.
The NMB municipality has also been occasionally dysfunctional, as political coalitions have come and gone. At a recent conference, it was suggested — only half-jokingly — that mayor Gary van Niekerk, whose tiny National Alliance party is part of a governing marriage of convenience with the ANC and EFF, should receive a long-service medal for being in office for 13 months.
Then there’s national transport operator Transnet, whose legendary inefficiency remains a constant frustration for NMB industry. The two local ports may be better off than that at East London, whose performance is cited by MBSA as one of the reasons for cutting vehicle production, but the rail network remains a nightmare. Repeated promises to create a reliable north-south rail link between Gqeberha and Gauteng remain unfulfilled.
It was one of the conditions for Ford’s R16bn investment in its latest Ranger bakkie, so vehicles could be exported through Gqeberha. Isuzu, Volkswagen and BMW are among other companies that have stated that they would be heavy users of such a service.
So would Stellantis when its Coega plant is operative, says CEO Mike Whitfield. Isuzu Motors SA MD Billy Tom says 85% of Isuzu bakkies manufactured in Gqeberha are transported by road countrywide, at a huge additional cost, because of the lack of rail services.
“It’s hard to convince investors to come here when we can’t promise basic transport services,” says Wakaba. “However, I do get a sense that with the new Transnet leadership, we may see an improvement.”
Overall, NMB and Gqeberha believe the investment climate really is changing this time. The business chamber is leading a series of initiatives to attract new money.
The Coega SEZ has attracted dozens of companies, whose activities include automotive, food, logistics, chemicals, construction engineering, medical and even education. Coega marketing head Ayanda Vilakazi says the arrival of Hive and other green energy companies is expected to accelerate investment. No-one, though, is taking anything for granted. Economically, NMB and Gqeberha have experienced more false dawns than an insomniac.
Van Huyssteen and Wakaba acknowledge that only through constant, in-your-face lobbying can the area achieve the growth and industrial diversification it craves. Being SA’s Motor City is no longer enough.
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