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This is something that is not really covered in the South African financial media. How well SA's Industrial Development Zones (IDZ) are doing? What is the turnover of these zones? Are they making money? And how many people are employed at IDZ in South Africa. We take a look at South Africa's IDZ's below.
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Three IDZ
The three main IDZ in South Africa is Coega (in Eastern Cape), East London (in Eastern Cape) and Dube (in KwaZulu-Natal). Below a short summary of the three zones. Why does SA have IDZ? According to the Department of Trade and Industry (DTI), ‘the South African government, in an effort to reposition itself in the world economy, established the Industrial Development Zones (IDZ) Programme. The Programme's main focus was to attract Foreign Direct Investment (FDI) and export of value-added commodities.’
Coega IDZ
The Coega IDZ is the largest IDZ in southern Africa. It was designated in 2001 and became South Africa’s first industrial development zone. It is located in the Nelson Mandela Bay Metropolitan Municipality in the Eastern Cape province and it is strategically located on the east-west trade route to service both African and global markets. The Coega IDZ leverages public-sector investment to attract foreign and domestic direct investment in the manufacturing sector with an export orientation. The IDZ has attracted investment in the agro-processing, automotive, aquaculture, energy, metals, logistics and business process services sectors. This has advanced socioeconomic development in the Eastern Cape region through skills development, technology transfer and job creation.
East London IDZ
The East London IDZ (ELIDZ) was established in 2003 as part of a South African government initiative to improve industrial competitiveness and economic growth in the country. The zone has since become a prime industrial park in South Africa, renowned for its customised solutions for various industries including automotive, agroprocessing and aqua-culture. The ELIDZ offers growth-oriented companies a specialised manufacturing platform, innovative industrial and business solutions, access to new markets and strategic industry networks.
Dube Trade Port
Dube Trade Port is a catalyst for global trade and a portal between KwaZulu-Natal and the world. It is the only facility in Africa that brings together an international airport, a cargo terminal, warehousing, offices, a retail sector, hotels, and an agricultural area. Located 30km north of Durban, Dube Trade Port is positioned between the two biggest sea ports in southern Africa, and linked to the rest of Africa by road and rail.
The pie chart below shows the income earned by each IDZ
Coega IDZ
The Coega IDZ is the largest IDZ in southern Africa. It was designated in 2001 and became South Africa’s first industrial development zone. It is located in the Nelson Mandela Bay Metropolitan Municipality in the Eastern Cape province and it is strategically located on the east-west trade route to service both African and global markets. The Coega IDZ leverages public-sector investment to attract foreign and domestic direct investment in the manufacturing sector with an export orientation. The IDZ has attracted investment in the agro-processing, automotive, aquaculture, energy, metals, logistics and business process services sectors. This has advanced socioeconomic development in the Eastern Cape region through skills development, technology transfer and job creation.
East London IDZ
The East London IDZ (ELIDZ) was established in 2003 as part of a South African government initiative to improve industrial competitiveness and economic growth in the country. The zone has since become a prime industrial park in South Africa, renowned for its customised solutions for various industries including automotive, agroprocessing and aqua-culture. The ELIDZ offers growth-oriented companies a specialised manufacturing platform, innovative industrial and business solutions, access to new markets and strategic industry networks.
Dube Trade Port
Dube Trade Port is a catalyst for global trade and a portal between KwaZulu-Natal and the world. It is the only facility in Africa that brings together an international airport, a cargo terminal, warehousing, offices, a retail sector, hotels, and an agricultural area. Located 30km north of Durban, Dube Trade Port is positioned between the two biggest sea ports in southern Africa, and linked to the rest of Africa by road and rail.
The pie chart below shows the income earned by each IDZ
The two IDZ in the Eastern Cape totally dominates income earned with Dube in KZN contributing just 2% to total income earned by IDZ. So the next question is what do they earn their income from? The pie chart below takes a look at the contribution of various activities to IDZ's income earned.
It is clear that the majority of income earned from IDZ is based on Manufacturing activities, with it making up almost 77% of income earned at IDZ, while not manufacturing activities earns about 23% of the income at IDZ.
Type of Income and Expenses at IDZ
The next two pie charts will be showing the types of income earned and expenses paid at IDZ during 2015.
Income |
Expenses |
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To those who added the total income and total expenses well done. As this tells a very interesting story. In 2015 IDZ actually made a loss. The table below breaks down the income and expenses and shows the profit/loss after taxes
Description |
Rand Value |
Income |
14 449 000 000 |
Expenses |
15 303 000 000 |
Net profit after taxes |
-400 000 000 |
The table below shows the R400million loss split between the various IDZ.
Description |
Rand Value |
Coega |
-168 000 000 |
East London |
-182 000 000 |
Dube |
- 50 000 000 |
Based on the above it is clear that there is something very wrong at South Africa's IDZ, and if these results were shown too international investors to attract FDI, we doubt it would make a compelling case for investing or operating in South African IDZ. Once again a great idea by the South African government, but it looks like its implementation and desired affects are not what government expected or planned. Question is how long will these zones operate before they start becoming white elephants which will eventually turn to ghost towns? Eastern Cape metro's such as Nelson Mandela bay (PE) and Buffalo City (East London) has some of the highest unemployment rates in South Africa, and if these IDZ's close down this will make it even worse, as these zones employ a large amount of people. (See latest unemployment per province and metro here).
See the table below for the number of employees per industrial zone.
See the table below for the number of employees per industrial zone.
Description |
Number of employees |
Coega |
8 095 |
East London |
3 435 |
Dube |
337 |
Total number of employees |
11 867 |