Balindlela at Eastern Cape Trade and Investment in Osaka, Japan
16 March 2006
Honourable guests,
Molweni,
The Eastern Cape, South Africaâs second largest province, has a history of
people who have the stamina and appetite for overwhelming challenges. Former
President Nelson Mandela, President Thabo Mbeki, Steve Biko, to name only a
few.
It is also the birthplace of some of the countryâs most influential leaders
either black or white, man, woman across all sectors. Our learning institutions
are revered and seen as amongst the best in the country.
Over six million people inhabit the 170 000 square kilometres that is the
Eastern Cape. The province starts at Port St Johns in the north includes the
former homelands Transkei and Ciskei trails down to East London and then
further down to Port Elizabeth ending with some of the most scenic parts of
South Africa Jeffreyâs Bay and Plettenberg Bay in the south. It has also
equally beautiful inland areas which include the dry but hauntingly beautiful
Karoo.
The democratic elections of 1994 helped kick start the growth of a province
that had marginalised for many years. Since then the province has shown
unprecedented growth. While the province recorded the second largest population
in the countryâs 1999 census, the Eastern Capeâs economic growth has
outstripped population growth over the past six years with the average real
annual economic growth rate being 2,1 percent between 1996 and 2002 as against
a population growth of one percent. Exports grew by an average of 47 percent
per annum during 1995 to 2002.
These growth trends are been given further impetus by the provinceâs 10 year
Provincial Government Development Plan (PGDP), which aims to raise the
provinceâs contribution to GDP to 15 percent that means doubling its
contribution. In the short term this means a growth rate of five percent,
growing to seven percent in the next two to three years.
The PGDPs six point plan addresses huge challenges: poverty, transformation
of the agrarian economy, development of our manufacturing and tourism sectors,
infrastructure, human resources and public sector reform. Three sectors get
particular focus, we believe they will be the catalysts for progress
manufacturing, tourism and agriculture.
So how did the Eastern Cape Development Corporation (ECDC), the provincial
governmentâs enterprise development agency, attract foreign and domestic
investments to the value of R740 million last year?
We offer a compelling proposition for investors. It is based on four
factors:
* The right policy framework for foreign direct investment, this includes
economic and political stability and trade policies and agreements;
* Compelling economic determinants in terms of market size, per capita income,
cost of input costs and access to regional and global markets, raw materials
and required skills;
* Robust business facilitation such as social amenities and post investment
support; and
* The ability to attract inland manufacturers whose production is increasingly
targets export and can save on expensive land transport.
We also provide access to world markets through ports and benefits from the
European Union (EU) free trade agreement and the Africa Growth and Opportunity
Act (AGOA). That is why the province is particularly appealing to export
oriented investors and those that will build on opportunities in
underperforming sectors.
So let me tell you about our exciting progress in the three sectors
manufacturing, agriculture and tourism:
Manufacturing:
The Eastern Cape has two âduty freeâ industrial development zones the only
province to have two zones; itâs the intent of national government to ramp up
development in this region.
Coega is located in the western half of the province; the East London
Industrial Development Zone (IDZ) is in the eastern half. Together with the
adjacent ports, they have received well over R5 billion from government. Their
ports which are well positioned at the centre of the main east - west shipping
routes and are easily accessed from the rest of south and southern Africa via
road and rail links will get another R1 billion over the next two years.
Export success is being driven by the automotive sector which has had an
impressive run. With the help of the governmentâs Motor Industry Development
Programme (MIDP), the Eastern Cape has entrenched its position as South
Africaâs âlittle Detroitâ and it is here in Port Elizabeth where one of the two
successful Bridgestone [Firestone] factories is located.
The three original equipment manufacturers (OEMs) in the Eastern Cape,
General Motors, Volkswagen and DaimlerChrysler - provide 42 percent of South
Africaâs vehicle output. Last year Volkswagen, DaimlerChrysler and General
Motors secured contracts worth R70 billion over the next five years. Further
more VW is to set up one of only two truck facilities which the German
manufacturer has in the world.
Many of DaimlerChryslerâs 40 000 next generations C-class Mercedes Benz,
which are to be manufactured by the local operation are destined for your part
of the world. The German manufacturer currently builds Mitsubishi light
delivery vehicles (LDVs), a role it previously performed for Honda.
It is also worth knowing that the Toyota plant is only about 500 km away
from East London and many of our component suppliers form part of its supplier
base.
Dominance in the automotive sector has been further enhanced with the
establishment of two automotive supplier parks in both IDZs.
Agriculture
The IDZs are also attracting strong interest from mari culture and
aquaculture companies. Coega, which is situated alongside an abalone farm, is
soon to have a shrimp and mussel farm. East London IDZ has opened its doors to
Seatek, an abalone exporter. Other players in this sector include a third
abalone farm further up from East London at Kei Mouth and an eel farm near
Alice which is about 100km from Port Elizabeth. The province is looking for an
investor that would be interested in its koi farm in East London.
In terms of the big picture the provinceâs agricultural sector showed 60
percent growth in value added from 1998 to 2001.
To its credit, Eastern Cape already produces 70 percent of South Africaâs
pineapples and the total crop of chicory. It also has the biggest diary
industry in Africa, one that presents many opportunities for investors who have
skills in diary processing and in the production of cottage cheese, butter,
buttered milk and flavoured milk. Our western region is particularly strong in
the production of beef mutton, wool and mohair.
The province also has a rich timber resource. We were delighted to recently
announce that German furniture manufacturer Steinhoff is to establish a
chipboard plant in Ugie - Maclear - area. This R1,5 billion investment is
expected to generate 3 500 jobs.
The province with its rich resources is seeking out opportunities in natural
fibres using pineapples and aloe ferox, flax sisal, hemp, amongst others. Our
Council for Scientific Industrial Research has just made a substantial
investment in its national fibre, textile and clothing centre located in the
province.
One of the provinceâs pioneering projects is in the field of aloe ferox, an
indigenous plant which is used in healthcare and cosmetics. Whatâs more 80
percent of all aloe ferox found in the country is in the Eastern Cape. The
project which has a strong black economic empowerment element uses indigenous
plant and knowledge and is a strong job creator in rural areas where there is
little job creation opportunity. We are delighted that the project is now seen
by its funders, International Trade Centre which is co-owned by the World Trade
Organisation (WTO) and the World Bank as one of its crown jewel projects in the
organisationâs poverty alleviation programme.
The province is also involved in projects with a strong eco-element. These
include projects that relate to wind-energy, bio diesel as well as plastic
recycling. Plans are also in place for an eco friendly game reserve.
We are constantly looking at new areas and have started introducing new
crops such as flax, agaves essential oils, pecan nuts and macadamia nuts. The
province with its wealth of artesian water is also planning to bottle this
valuable resource. We are looking at what can be achieved with intensive
agriculture methods. With your skills in this area, I have no doubt that there
are some unexplored synergies for our two countries.
Tourism
The province has a spectacular offering. It is the only province in South
Africa that offers attractions such as snow skiing, malaria-free âbig fiveâ
game reserves, endless pristine beaches, mountains, fynbos, forests, the semi
desert Karoo, adventure sports, African and European cultural experiences,
battle fields, fossils, deep sea fishing, diving on coral reefs and wrecks,
hunting and hiking. All are within an hour or twoâs drive from the provinceâs
two main cities East London and Port Elizabeth.
The Eastern Cape offers the golfing enthusiastic a collection of some 50
spectacular golf courses. Low operating costs, good water resources and
relatively inexpensive land have paved the way for the development of a further
four golf courses.
The provinceâs entrepreneurs have also followed a global trend to build
investment estates around great leisure activities such as golf. One such
development is Bushman Sands which incorporates a housing estate on an 18-hole
Gary Player designed golf course within easy reach of a nature reserve.
Nature reserves are also big business in the province. Between 10 and 15
percent of landscape is allocated to provincial parks; private parks comprise
another 15 percent of conservancies. It is also home to one of the world best
game reserves, Shamwari. We see opportunity for South African and Japanese tour
operators to work more closely with each other so tours can be further
customised to specific needs.
Testament to this industryâs success is the growth of the provinceâs revenue
which rose to R4,6 billion last year.
And then, an industry when is strongly aligned to tourism, arts and crafts.
Our success is evidenced by the high uptake of our provinceâs produce at the
Dubai Arts and Crafts show. Right now we have delegation in Finland.
Other areas of opportunity
And with so much to offer it is understandable that our coastal areas are
being bought up quickly by our retired as it offers lifestyle which compares
with the best in the world.
Other areas of opportunities include call centres and the movie industry.
The province is already home to 23 call centres which have between two desks to
200 operators. The province recently established a provincial film office,
which aims to offer an attractive package to movie makers.
The provinceâs economy is an emerging one with a high prevalence of family
businesses. Like you, we understand that many good businesses start out as
family businesses. Consequently we believe that there is scope for creating
joint ventures where expertise can be shared.
Lastly, the Eastern Cape boasts some of the countryâs finest educational
institutions. South African national cricketing heroes Monde Zondeki, Makhaya
Ntini and Mark Boucher all of whom were born in the province are amongst those
who have graced their learning halls. It is the home province of 2010 World Cup
convenor which is to be held in South Africa Danny Jordaan.
We trust this gives an insight into what a compelling place the Eastern Cape
is to live, work and invest in and we welcome any interest in our province.
Sala kahle.
Issued by: Office of the Premier, Eastern Cape Provincial Government
16 March 2006
Source: Eastern Cape Provincial Government (http://www.ecprov.gov.za/)
