As the government prepares to develop more special economic zones (SEZs), Coega in the Eastern Cape has seen its income jump 15.9% to R18.9bn in two years, along with an increase in employment.
A review of business activity at the Coega SEZ, conducted by StatsSA, found that total expenditure grew to R17.85bn in 2023 compared with R12.68bn in 2021 — an annualised increase of 18.7%.
“The largest contributors to the total expenditure were purchases at R12.16bn or 68.1%, salaries and wages at R1.73bn or 9.7%, and depreciation at R551m or 3.1%,” wrote statistician-general Risenga Maluleke.
The survey covered all the active tenants within Coega for their financial year ending June 30 2023.
The development of the Coega SEZ outside Gqeberha was announced in 1999. Construction ended in 2014 and it began operating the following year. It was strategically placed near the Port of Ngqura to maximise its potential for export-orientated manufacturing.
A total of 43 tenants were operating at Coega in 2023, representing an increase of six enterprises over 2021. The SEZ features 28 non-manufacturing enterprises and 15 manufacturing businesses.
The government is eyeing further developments in its other SEZs, including the Tshwane automotive hub, and is planning to establish and develop similar zones in other parts of the country
“The total income in the Coega SEZ in 2023 was R18.93bn, an increase of 15.9% over the income reported in the corresponding survey of 2021 of R14bn. Manufacturing increased from a contribution of 69.5% in 2021 to 73.2% in 2023.”
The government has used the SEZ model as a way of providing a space for businesses to operate under less stringent regulations, with benefits including tax incentives and access to world-class infrastructure.
Maluleke said income in Coega was mainly from sales of goods between 2021 and 2023, but the share of income generated by services rose from 4.9% in 2021 to 5.3% in 2023.
The total number of workers, excluding those employed by labour brokers, was 6,079 by the end of June 2023. Almost 60% of workers are employed by manufacturing businesses. The number of jobs rose by 339 between 2021 and 2023.
“The Coega SEZ employed more males than females in both 2021 and 2023. The proportion of females increased from 32.3% in 2021 to 38.4% in 2023.”
Total capital expenditure on new assets increased 27% to R558m in 2023 compared with R346m in 2021.
“The largest categories of capital expenditure were capital work in progress at R230m or 41.2% and plant, machinery and equipment at R228m or 40.9%.
Coega chief knowledge and digital officer Magama Makgamatho said the report contributed to Coega's insights on investor performance.
“This in turn provides the necessary data to inform future strategies, operational efficiencies, and expansion plans. We are especially pleased about the employment data in the latest report.”
Coega unit head for raising capital Meike Wetsch said in a recent circular that the SEZ expected continued success from initiatives including its partnership with the Council for Scientific & Industrial Research (CSIR) to develop a biofibre hub.
“The CSIR’s nanotechnology innovation centre and chemicals units are far advanced in the development of biopolymers and bonding matrices that exceed the performance of the petrochemically based alternative.
“By partnering this considerable intellectual property with Coega’s ability to finance, commercialise and industrialise innovation, the biofibre hub is well-placed to commercialise existing biobased polymers and bonding matrices.”
The government is eyeing further developments in its other SEZs, including the Tshwane automotive hub, and is planning to establish similar zones in other parts of the country.
Speaking at the Sustainable Infrastructure Development Symposium of South Africa in Cape Town last month, President Cyril Ramaphosa said SEZs were among the government’s top 12 priority infrastructure projects.
“The priority projects include the Fetakgomo Tubatse, Namakwa, and Nkomazi [Mpumalanga] SEZs, which are earmarked for project preparation support.”
He said these projects aimed to leverage the technical and financial expertise of development finance institutions and multilateral development banks to increase the capacity of the state to deliver services and catalyse business activity.
“There are also priority projects for project preparation in energy security and the green economy, such as Eskom’s gas project at Mossel Bay and pumped hydro-storage project in Fetakgomo Tubatse SEZ.”
He said four of the top 12 priority projects support planned investment in rail and ports to alleviate freight congestion, shift transport of goods from road to rail, and boost exports through improved access to international markets.
Last year, the department of trade, industry & competition published its notice of intention to designate the Namakwa SEZ in the mining town of Aggeneys in the Northern Cape.
The government has also hinted at plans for the Vaal-Sedibeng SEZ in south Gauteng in a bid to revive the district's stagnant steel and manufacturing industries. The Fetakgomo Tubatse SEZ in the Sekhukhune district municipality in Limpopo will specialise in mining, agro-processing, and green energy.
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