INVESTMENT
INVESTING IN REAL ECONOMIC GROWTH
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ECDC HAS INVESTED R752 MILLION WORTH OF FULLY-RESEARCHED PROJECTS IN NEW GROWTH SECTORS OF THE ECONOMY.
RESEARCHING AND PACKAGING REAL INVESTMENT OPPORTUNITIES In the period under review, the corporation set its sights on increasing the value of trade and investment into the Eastern Cape. This is important because ECDC uses investment and trade opportunities as propellers and real catalysts for the development of the provincial SMME sector. These investments and trade opportunities provide real downstream opportunities for small businesses to flourish and to make a meaningful development impact. Foreign and domestic investment inflows act as an anchor and a base for small businesses to feed off the catalytic projects that come with investment. In essence, there is real synergy between ECDC’s investment and trade activities with the corporation’s core business of opening the lines of credit as well as non-financial solutions to entrepreneurs. True to its strategy, ECDC continued to place particular emphasis on attracting investment and encouraging trade opportunities in key sectors of the provincial economy such as manufacturing, agro-processing, renewable energy, the green economy, automotives, construction as well as tourism. These sectors have the inherent potential of creating significant employment opportunities for the Eastern Cape. As such, ECDC has researched and packaged projects worth R752 million in these new growth sectors of the economy. In addition, ECDC has ensured that its investment and trade activities are streamlined with the efforts of other development agencies, industrial development zones (IDZs) and municipalities for a more productive and coordinated approach. For example, 17 entrepreneurs benefitted from specialised international standard training provided across various entities involved in investment promotion including municipalities. These investments have a catalytic impact on the provincial economy. To this end, the corporation also embarked on various projects which provided meaningful support to existing and aspiring exporters. These included conducting export awareness workshops in all districts, support to the Nelson Mandela Baybased Trade Point, and participating in various national pavilions with companies from the province. The corporation also strengthened its support to the Exporters Club in the province as well as collaborating with the Department of Trade and Industry (the dti) on the review of the National Export Strategy. Furthermore, ECDC collaborated with international trade bodies to facilitate access by local companies through information and networking sessions and registration on a global supply chain database.
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I am delighted to announce that ECDC’s involved and inspired approach to investment and trade promotion has paid dividends. The corporation facilitated investments worth R671 million from 22 investments during the review period. This is an increase of 9.6% from the previous year. This increase was mainly driven by the automotive, agro-processing and renewable energy sectors. The investments have created a total of 1,285 jobs.
THE VALUE OF TRADE FACILITATED BY ECDC STANDS AT R1.5 BILLION IN THE YEAR UNDER REVIEW.
On the trade front, the value of trade facilitated by ECDC stands at R1.5 billion in the year under review. In addition, ECDC assisted 37 new exporters compared to the previous year’s 11. The number of existing exporters supported stood at 144 compared to 40 in the previous year. Moving forward, ECDC will continue to exploit the potential that exists in the key strategic and infant sectors of the provincial economy by investing in research and the development of investment opportunities. Particular focus will be placed on enhancing the competitiveness of Eastern Cape businesses to ensure they are globally competitive and able to stand their ground against their global counterparts.
Sitembele Mase Chief Executive Officer
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INVESTMENT ATTRACTION AND TRADE AN ANCHOR FOR GROWTH AND DEVELOPMENT OF THE SMME SECTOR While development finance and non-financial support remains at the core of SMME support, investment promotion, through its catalytic nature, provides substantial downstream opportunities for the development of small businesses. In essence, investment attraction and trade, through foreign and domestic direct investment inflows; act as an anchor for the establishment, growth and development of the SMME sector. ECDC’s role is to facilitate catalytic investment into the key strategic sectors of the provincial economy as outlined in the Provincial Growth and Development Plan and the dti’s macroeconomic strategy. The corporation’s investment and trade efforts further provide significant wealth and job creation opportunities for small businesses. Essentially, ECDC’s investment and trade promotion role complements its development finance posture. Furthermore, the corporation aims to develop and maintain existing investments for long-term sustainability. These investments are also able to leverage from ECDC’s development finance and from investment platforms in the form of the corporation’s expansive investment property portfolio. Subsequently, in the year under review, ECDC placed significant focus on leveraging and exploiting investment and trade opportunities in the key sectors identified in the Provincial Industrial Development Strategy and Industrial Policy Action Plan. These include but are not limited to manufacturing, agro-processing, forestry, tourism, film, information communication technology, mari and aquaculture as sectors with the greatest economic potential.
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REAL INVESTOR ATTRACTION
R671 MILLION
9.6 %
22 NEW INVESTMENTS
1,285 JOBS
in facilitated investments
attracted
more than R612 million facilitated in the previous year
facilitated through investments
17 ENTREPRENEURS
benefitted from the specialised international standard training
REAL TRADE PLATFORMS
R1.5 BILLION
in generated exports
37 NEW EXPORTERS
compared to 11 in the previous year
144 ASSISTED
existing exporters assisted compared to 40 in the previous year
EXPORT PROMOTION INTERVENTIONS • ECDC invested R2 million to place seven companies on a 30-month permanent trade fair in Ningbo, China. • Awareness workshops in all districts including support to Nelson Mandela Bay-based Trade Point. • Participation in national pavilions with Eastern Cape companies. • Strengthened support to the Exporters Club in the province. • Collaborated with the Department of Trade and Industry on the review of the National Export Strategy as well as international trade bodies to facilitate access by local companies through information and networking sessions and registration on global supply chain database.
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31%
2%
AUTOMOTIVE
OTHER
2%
AQUACULTURE
3%
INFRASTRUCTURE
8%
METALS
INVESTMENTS FACILITATED PER SECTOR
10%
FORESTRY
28%
AGRO-PROCESSING
16% ENERGY
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SMMEs FUNDED
R145 MILLION approved funding
496 SMMEs funded
1,849 JOBS
created through funding
R130 MILLION
disbursed
R24 MILLION
disbursed to 129 youth-owned businesses
R21 MILLION
disbursed to 113 women-owned businesses
1.5% THIRD-PARTY FUNDING R77 million secured from third-party funders for development projects
SECTOR DIVERSIFICATION LOANS SPREAD
R59.9 MILLION Construction
R37.1 MILLION Services
R13.5 MILLION Agro-processing
R5.6 MILLION Manufacturing
R2.4 MILLION Tourism 6
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2.5%
4% 33.5% 9.6%
44%
LOANS BY GEOGRAPHIC SPREAD • • • • • • •
14%
Amathole OR Tambo Nelson Mandela Bay Chris Hani Joe Gqabi Alfred Nzo Cacadu
44% 33.5% 14% 9.6% 4% 2.5% 1.5%
NON-FINANCIAL SUPPORT
204 SMMEs
R2 MILLION
1,167 BUSINESSES
R6.6 MILLION
14 WORKSHOPS
6,089 NEW BUSINESSES
supported in priority sectors
trained in business skills
conferences, seminars, trade fairs and/or exhibitions held
allocated for non-financial support
generated by creative and ICT industries
registered
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INSPIRED INVESTOR ATTRACTION Although the recovery from the recession is slow, there is an upswing which is backed by a strong investor confidence as evidenced by the increase in the rand value of investments facilitated. The rapid roll-out of the Renewable Energy Independent Power Producer Procurement Programme, Jobs Stimulus packages, concerted efforts towards supporting the agro-processing, forestry and automotive sectors through various incentives have made the Eastern Cape attractive. As such, ECDC proactively undertook inspired investment attraction and investor servicing activities which were geared towards the generation and retention of meaningful foreign and domestic investment inflows. This work was further supported by collaboration with the East London and Coega IDZs. As a result, the corporation facilitated investments to the value of R671 million from 22 investments, which is 9.6% more than the amount invested in the previous year. This increase was driven mainly by the automotive, agro-processing and renewable energy sectors. The automotive sector bounced back strongly from the recession in the review period. This had a direct link to the expansion in components manufacturing. A total of 1,285 jobs were facilitated through these investments. In addition, 17 entrepreneurs benefitted from specialised international standard training provided across various entities involved in investment promotion including municipalities. These investments have a catalytic impact on the provincial economy.
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22 INVESTMENTS
R671 MILLION
1,285 JOBS FACILITATED
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FOREIGN AND DOMESTIC INVESTMENT KEY TO JOB CREATION AND ECONOMIC GROWTH
ECDC is negotiating with a German company to base the trials for the growing of the vitex plant in the Eastern Cape. This would be for the supply in the alternate season to the existing European supplier. This is a medicinal plant that is exclusively used by the company to manufacture a medicine that is already on the market. Should the trials prove to be a success, this would open opportunities for local farmers to grow a high value crop with an export off-take.
NEGOTIATIONS WITH GERMAN COMPANY TO BASE TRIALS OF THE VITEX PLANT IN THE PROVINCE
ECDC, jointly with Eastern Cape Rural Development Agency (ECRDA) is implementing approved DBSA Jobs Fund projects for the province. These involve forestry rehabilitation and development to the value of R113 million and the Trading Post and Maize Milling project (R91 million) over a three year period, which will create jobs in excess of 1,000 over the same period.
ECDC & ECRDA JOINTLY IMPLEMENT APPROVED DBSA JOBS FUND PROJECTS
Key in the ECDC’s agenda of ensuring that it invests in key economic growth sectors is economic market research and trend analysis. One of the most successful ICT research partnerships saw ECDC facilitating broadband deployment to the tune of R40 million to enhance research capacity at Fort Hare, Walter Sisulu, Rhodes and Nelson Mandela Metropolitan universities.
FACILITATING BROADBAND DEPLOYMENT FOR ENHANCED RESEARCH CAPACITY
By successful project packaging and marketing assistance, ECDC helped the community-owned Nqabara Lodge become operational in December 2012. This is a SURUDEC initiated project situated on the Wild Coast at Nqabara, just south of Dwesa.
NQABARHA LODGE
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CLOVER SA EXPANDS ITS PORT ELIZABETH UHT PLANT
In the agro-processing sector, ECDC played a central role in facilitating the expansion of the Clover SA UHT Port Elizabeth plant which brought about investment of R100 million. This resulted in 100 additional jobs being created in the factory. The Nelson Mandela Bay Municipality provided the required incentives which ultimately made the metro a preferred location from various competing locations in KwaZulu Natal. The future prospects are great for further expansion in the medium to long term.
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876 MEGAWATTS OF THE NATIONAL RENEWABLE ENERGY PROCUREMENT PROGRAMME AWARDED TO EASTERN CAPE BIDDERS 12
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ECDC is excited that it played a crucial facilitation role in ensuring that renewable energy bidders obtained all the necessary support in the province: by the end of the financial year, 876 megawatts of the National Renewable Energy Procurement Programme have been awarded to preferred bidders in the Eastern Cape. This Eastern Cape allocation is constituted by 10 wind farms and one solar photovoltaic farm. The province has secured a significant proportion of the national allocations due to suitable factors including excellent wind and solar resources by international standards, grid access, access to land, and the comparative absence of competing activities or landuses. In addition to solar and wind power, the province has significant potential for biomass and biogas energy and biofuels as well as hydro power. This lays a broad foundation for the region which, within this decade, could potentially rely on renewable energy as a significant source of power.
In the period under review, ECDC concluded a fiveyear memorandum of understanding with the Council for Scientific and Industrial Research Meraka Institute. Through this collaboration ECDC is developing an evidence-based ICT Infrastructure Investment Plan in order to effectively leverage on public and private sector broadband initiatives implemented by players such as SANReN, SANRAL, Broadband Infraco, Dark Fibre Africa and FibreCo. The market-related study will be concluded in the third quarter of the 2013/14 financial year.
DEVELOPING EVIDENCE-BASED ICT INFRASTRUCTURE INVESTMENT PLAN
The first marron (freshwater crayfish) produced by an ECDC client, Smiling Valley Marron in Kei Road in the Eastern Cape were sold on the South African market in 2012. This was the first commercial scale product sold out of the Eastern Cape. ECDC is currently assisting its client to export marron in the 2013/14 financial year. If successful, this will be the first marron ever exported from South Africa.ECDC also helped with the regulatory environment and the requirements for the access of new markets.
FIRST FRESHWATER CRAYFISH PRODUCED BY ECDC CLIENT SOLD IN SOUTH AFRICAN MARKET
Furthermore, the first abalone ranching rights in the province were awarded. Ranching involves the seeding of small abalone in the sea. These animals are protected by the ranching rights holder who monitors the zone. When they are of market size, they are harvested. This is a new development for South Africa and viability remains to be tested. The abalone industry has collapsed due to poaching and ranching offers the only abalone fishery revival prospects. ECDC was involved in policy advocacy with the Department of Agriculture, Forestry and Fisheries and working with the rights holders in resolving issues with the department.
FIRST ABALONE RANCHING RIGHTS IN THE PROVINCE AWARDED
In the tourism sector, ECDC made available funding of R200,000 to a joint marketing agreement with GoWay – a major Canadian tour marketer – in order to increase tourist numbers into the Eastern Cape from that country and the USA. This was done in conjunction with Eastern Cape Parks and Tourism Agency (ECPTA). ECPTA has already had success with other joint marketing agreements and future agreements are planned for the 2013/14 financial year.
JOINT MARKETING AGREEMENT WITH MAJOR CANADIAN TOUR MARKETER
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EASTERN CAPE POTENTIAL ON DISPLAY IN GERMANY
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In line with its mandate to market the Eastern Cape, ECDC set up the Eastern Cape from Above photographic exhibition in Oldenburg, Germany, as a joint initiative with Buffalo City Municipality. The exhibition was placed on the forecourt of the Oldenburg Station where it received a tremendous amount of attention over the month it was displayed. The exhibition both shows off industry and infrastructure as well as tourism sites and the scenic beauty of the province.
MEANINGFUL SUPPORT TO EXISTING AND ASPIRING EXPORTERS ECDC set its sights on improved export and trade activity in the province. As such, ECDC placed great emphasis on ensuring that its SMMEs are market-ready and can compete favourably with their international counterparts. The end result of these efforts is evident in solid trade performance and outputs. The corporation is thus confident that its efforts have met the objective of increasing the value of trade and the number of exporters in the province, exploring new markets, and broadening trade within Africa. To this end, the corporation embarked on various projects which provided meaningful support to existing and aspiring exporters. These included conducting export awareness workshops in all districts, support to the Nelson Mandela Baybased Trade Point, and participating in various national pavilions with companies from the province. The corporation also strengthened its support to the Exporters Club in the province, collaborated with the dti on the review of the National Export Strategy as well as collaboration with international trade bodies to facilitate access by local companies through information and networking sessions and registration on a global supply chain database. These interventions resulted in the value of trade facilitated by the corporation stabilising at R1.5 billion in the period under review. ECDC generated 37 new exporters in the review compared to the previous year’s figure of 11. A significant increase was also recorded in the number of existing exporters assisted at 144 compared to the previous year’s 40.
Perhaps the most exciting of the interventions was the facilitation of exhibition space for six Eastern Cape companies at the Ningbo trade fair in China for a 30-month period. The first South African company to exhibit at the international Ningbo exhibition, ECDC hopes to open opportunities for Eastern Cape companies to access the large Chinese consumer market.
SIX COMPANIES PLACED ON 30-MONTH CHINESE TRADE FAIR
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Being placed on a 30-month exhibition in Ningbo, China opens immense opportunities for Grahamstown-based Carara. The company produces pickled products such as cherry peppers and patty pans for the export market destined for European markets, such as Germany and the United Kingdom, and smaller amounts to Australia. Opportunities offered by the Chinese market are significant and Carara intends to grow in the region. At peak production, Carara is the single largest employer in Grahamstown with a full staff complement approaching 1,000. Taken together, Carara and its subsidiary facilities have created approximately 2,000 and 2,500 on-farm seasonal jobs.
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IMMENSE TRADE OPPORTUNITIES FOR GRAHAMSTOWN PICKLED PRODUCTS PRODUCER
REAL INVESTMENT. REAL TRADE. REAL OPPORTUNITY. NEW PRODUCT DEVELOPMENT Together with Eastern Cape communities and municipalities, we help develop and implement projects that create new opportunities and markets. We are welldisposed to markets that: • Unlock economic potential in low-income areas. • Implement broad-based black economic empowerment through publicprivate partnerships. • Create and save jobs in declining sectors and distressed enterprises.
PROMOTING INVESTMENT We promote the investment potential of the province by supporting new and existing investors at no cost by: • Identifying business opportunities in key sectors • Facilitating and financing joint ventures • Accessing investment incentive schemes and local business service networks • Creating access to a diverse portfolio of available land and buildings • Facilitating corporate relocations and aftercare services • Lobbying provincial and national government for relevant interventions.
EXPORT OPPORTUNITIES FOR LOCAL MANUFACTURERS Our trade and export promotion service focuses on the development of exports from Eastern Cape companies. This value is realised through: • Our vast experience in trade finance that has assisted local companies to penetrate global markets • The trade linkages created between local enterprises and our trade contacts in sub-Saharan Africa and the BRIC (Brazil, Russia, India and China) countries • Our partnerships with the European Union and United States that provide a platform for trade with developed markets.
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