Eastern Cape Business 2018 edition
In this publication, the Eastern Cape’s investment and business opportunities are highlighted. Here are some special feature articles, followed by overviews of the major sectors in the region.
Special Features:
These are special features on the role of the renewable energy sector on the region’s future and on the growth of tourism:
1. Explore the diversity of this year’s chosen Tourism Month destination
September is Tourism Month in South Africa and the Eastern Cape has been chosen as this year’s #TourismMonth2018 destination. Read more…
2. The new Big Five in the Eastern Cape Province
The Eastern Cape is creating a new Big Five as maritime activities, renewable energy and tourism grow in importance to the provincial economy. Read more…
3. SA’s wind power hot-spot is creating new opportunities
A quarter of the projects so far approved in the REIPPPP programme have been allocated to the Eastern Cape with 91% of these being wind projects and the balance solar photo-voltaic. Read more…
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Sector Insight:
These are articles providing insight into each of the key economic sectors of the province, including business and investment opportunities:
Agriculture
The provincial government hopes to find private investors who will take a majority share in two large tea estates that have failed. In their heyday, Magwa and Majola produced more than a million kilograms of tea but the current business rescue plan includes a proposal to plant additional crops such as avocado and macadamia nuts, one of the fastest growing sub-sectors in South African agriculture.
The DRDAR will partner with the private investor and local community in the proposed project, and the provincial government has committed an amount of R116-million to get the scheme up and running.
There is also enormous potential in the Eastern Cape for the development of natural products, for which there is a growing international market. Herbal medicines and teas and non-toxic healing methods of all sorts are all very popular. Read more…
Forestry
Forestry is an important part of government plans to expand agri-processing. More than 3 400 ha of new land has been planted and timber harvests are expected within three years.
Downstream opportunities created by new plantations include a planned treated-pole plant in Butterworth and a paper and pulp mill in Mthatha, which has also been selected as a future furniture-sector incubator.
Aquaculture
Aquaculture is an important part of the South African government’s Operation Phakisa strategy. The intention is to increase the aquaculture sector’s revenue from about half a billion rand, to R1.4-billion in 2019.
Investment in local infrastructure at the East London Industrial Development Zone (ELIDZ) is focussed on localising fin fish farming technology. Read more…
Agri-processing
The Eastern Cape has more livestock than any other South African province, produces close to a quarter of South Africa’s milk and is the second-largest producer of citrus fruits.
Agri-processing therefore offers many opportunities in the region. Part of the provincial strategy is decentralisation, or locating facilities in smaller or rural centres.
Zone Three of the Coega IDZ is devoted to agri-processing. Read more…
Manufacturing
The provincial government supports diversification. Several cluster development programmes in the Eastern Cape aim to develop specific industries by bringing together expertise and logistical support.
With the automotive sector supplying 30% of manufacturing employment and 32% of manufacturing gross value-added, the province’s economy might be vulnerable to fluctuations in demand for vehicles.
The strategy is targeting sectors where the province already has a competitive advantage (such as wool and mohair), is labour intensive, will have a broad impact and has low barriers for SMME entry.
Sectors targeted include: agri-processing and food; timber; tourism; construction; chemicals; energy and mariculture.
There is great potential to create more value from the excellent wool, leather and mohair that the province’s livestock produce. Read more…
Automotive and components
The Eastern Cape manufactures half of the country’s passenger vehicles and provides 51% of South Africa’s vehicle exports.
The potential of computers to improve efficiencies in the automotive sector is enormous. Smart factories are the subject of research being undertaken by the Department of Computing Sciences at the Nelson Mandela Metropolitan University (NMMU). The research is supported by Volkswagen SA and Mercedes-Benz SA.
An Automotive Production and Development Programme (APDP) is in place to support the automotive industry and to encourage investment in local facilities. It is run by the Department of Trade and Industry.
About 150 automotive suppliers of various types operate in the Eastern Cape. Sectors include leather works, batteries, automotive tooling, catalytic converters, glass, lamps, radiators and alloy wheels. Yet, only 35% of the components and parts used to make vehicles in South Africa are produced locally.
Both the Coega IDZ and the East London IDZ are positioning themselves as sites for the components manufacturing sector. Read more…
Water
Several plans are under consideration to alleviate the water shortages facing the Eastern Cape’s towns and rural areas.
A water supply and hydro-power project is planned on the Umzimvubu River (learn more), which entails the construction of two multipurpose dams, Ntabelanga and Laleni Dams, on the Tsitsa River, which is a tributary of the Umzimvubu, to supply irrigated agriculture, domestic and industrial water requirements, and hydro-power generation in the catchment area. The smaller dam at Tsitsa Falls will supply the hydro-power element.
Purification, desalination, water-leakage management and waste-water treatment are some of the problems facing the sector and solutions are urgently needed. There are opportunities for innovative entrepreneurs in this field. Read more…
Education and training
There are several examples in the Eastern Cape of collaboration between the manufacturing sector and educational institutions.
Nelson Mandela University has launched an Ocean Sciences Campus and bio-gas digesters are under the spotlight at Fort Hare University.
The Eastern Cape has eight Technical and Vocational Education Training (TVET) colleges. The provincial government has committed a sum of R1.5-billion over five years to aligning TVET colleges more closely with the needs of the local economy through learnerships. Read more…
Banking and financial services
Agriculture and renewable energy are two of the most important economic sectors in the Eastern Cape. The first is as old as settlement in the province, the second has taken off only in the last few years: for both sectors, the banking and financial services sector is vital.
Nedbank Business Banking has a new focus on agriculture, with business managers in Port Elizabeth, Humansdorp and East London all supported by agricultural specialists. Nedbank sponsors the Komga Show and the bank has paid out loans to the Humansdorp Co-Op which specialises in citrus and dairy products.
Several new licences for banks are in the pipeline, with the first of these being a digital bank. The banking licence issued in 2017 to Take Your Money Everywhere (Tyme, by Commonwealth Bank of Australia) is the first to be issued since Capitec was granted a licence by the South African Reserve Bank in 1999.
Another applicant for a new banking licence is Discovery, an existing giant on the JSE. Read more…
Development finance and SMME support
The Seda Technology Programme (Stp) helps potential businesses become trading entities. Seda has a programme to make co-operatives and jointly owned enterprises stronger. Seda’s main provincial office is East London, with nine other offices located around the province.
The Masisizane Fund offers loan financing at good rates and training through its Business Accelerator programme. As a non-profit initiative of the Old Mutual Group, the fund focusses on the cash flow of potential businesses rather than insisting on security in the form of property.
The big retail banks have desks dedicated to promoting small enterprise and several agencies have a specific focus, for example the Eastern Cape Rural Development Agency (ECRDA).
The National Empowerment Fund (NEF) provides financial support from R250 000 up to R75-million for start-ups, the expansion of existing business, as well as the acquisition of equity. In the Eastern Cape, the NEF is supporting companies working in the fields of solar energy, restaurant franchises and transport. Read more…
Business Chambers in the Eastern Cape
Contact details: Eastern Cape Provincial Government
To learn more about doing business or investing in the Eastern Cape, visit the Eastern Cape Business 2018 e-book edition here.
Distribution:
Eastern Cape Business is distributed:
- internationally on outgoing and incoming trade missions, through the Eastern Cape Development Corporation (ECDC);
- to foreign offices in South Africa’s main trading partners around the world;
- at top national and international events;
- through the offices of foreign representatives in South Africa;
- as well as nationally and regionally via chambers of commerce, tourism offices, trade and investment agencies, provincial government departments, municipalities and companies, as well as major airport lounges.
To enquire about participating in the 2019 edition of Eastern Cape Business, contact us today.
