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Business Unlimited is produced by the Eastern Cape’s economic development agency, Eastern Cape Development Corporation, and is distributed to its role players. For more information, contact: Ikhona Mvaphantsi Tel: 043 704 5600 • ikhona@ecdc.co.za Business Unlimited is also available in an electronic format and can be downloaded from www.ecdc.co.za
HEAD OFFICE ECDC House, Ocean Terrace Park Moore Street, Quigney, East London PO Box 11197, Southernwood 5213 Tel:+27 (0) 43 704 5600 Fax:+27 (0) 43 704 5700 KING WILLIAM’S TOWN 75 Alexander Road PO Box 498, King William’s Town 5600 Tel:+27 (0) 43 604 8800 Fax:+27 (0) 43 642 4199 BUTTERWORTH 24 High Street PO Box 117, Butterworth 4960 Tel:+27 (0) 47 401 2700 Fax:+27 (0) 47 491 0443 MTHATHA 7 Sissons Street, Fort Gale Private Bag X5028, Mthatha 5099 Tel:+27 (0) 47 501 2200 Fax:+27 (0) 47 532 3548
Sitembele talks on 2011 prospects for ECDC AND the region
01
Matla Solar helps ramp up the province’s profile in renewable energy Renewable energy opportunities in the province
02
Entrepreneur programme to pack punch in 2011/12
04
Services helping build stronger entrepreneurial sector
05
Good news for ICT sector as provincial ICT hub
06
goes “online” PE innovation poised to cream competitors
07
East London entrepreneur’s ice-making business sizzles
8
Exciting granite venture for BUTTERWORTH
9
Exports help turbo boost the auto sector
10
Snippets Appointments Chinese textiles EC’s 145-year old chamber renames aquaculture and finfish investment brochures
12
QUEENSTOWN 22 Cathcart Road Private Bag X7180, Queenstown 5320 Tel:+27 (0) 45 838 1910 Fax:+27 (0) 45 838 2176 PORT ELIZABETH 152 Cape Road, Mill Park PO Box 1331, Port Elizabeth 6000 Tel:+27 (0) 41 373 8260 Fax:+27 (0) 41 374 4447 Satellite offices
COVER: Local ICT and film entrepreneurs benefit from the ECDC funded ECITI incubation programme Some of the entrepreneurs which are part of the ECITI incubation programme. From left Peter Ogle, Mlandeni Zweni, Luyolo Magubane, Sbu Mjikeliso, Bukelwa Ngoqo, Pule Molebatsi and Nosizwe Dinga – see page 08.
MOUNT AYLIFF SEDA Building Nolangeni Street, Mount Ayliff, 4735 Tel:+27 (0) 39 254 0584 Fax:+27 (0) 39 254 0584 ALIWAL NORTH 97 Somerset Street P O Box 198, Aliwal North, 9750 Tel:+27 (0) 83 399 1427
info@ecdc.co.za www.ecdc.co.za
CONTENTS | BUSINESS UNLIMITED
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
SITEMBELE TALKS ON
2011's
PROSPECTS
FOR ECDC AND THE REGION
Eastern Cape Development Corporation (ECDC) chief executive Sitembele Mase says the launch of the Eastern Cape Investment Fund should ramp up private investment in high impact infrastructure development projects. The fund, to be managed by ECDC, aims to ring-fence R2 billion of local and foreign private investment in the 2011/12 financial year. This announcement has received positive reviews from political and business circles as it should add impetus to the quality and value of investments into the Eastern Cape. Indications of positive growth Last year’s massive investments in the automotive sector bode well for Eastern Cape’s economic growth beyond 2010. Mase cites the December 2010 announcement by Daimler AG that it would invest R2-billion in the East London-based Mercedes-Benz South Africa plant. This investment is in preparation for the production of the next generation Mercedes-Benz C-Class due to enter global markets in 2014.
Green sector potential for the Eastern Cape Belgium company Electrawinds invested R1,2 billion in the Coega wind farm project to build 25 turbines. Each turbine has a capacity of 1,8MW which translates into an annual yield of 5,700,000kWh, enough energy to power about 1,700 households. “The green industry is the future. Success in business and economic progress can no longer be measured by profit and statistics, but has to take a forward looking approach to environmental sustainability,” he says. Some of ECDC’s highlights in the 2010/11 financial year have been its R20 million investment in Matla Solar and millions more in the Joule electric car. The corporation holds a 15 percent share in Matla Solar.
Another prospective investor is Optimal Energy which is likely to build the Joule, SA’s first battery-operated electric car, in the province at the East London IDZ.
Eastern Cape pioneering new fibre processing possibilities “The Eastern Cape natural fibre cluster is likely to lead the country’s initiatives in natural fibre processing,” says Mase.
“The ripple effects the investments will have on related sectors will create business and jobs,” says Mase.
ECDC, together with the provincial Department of Economic Development and Environmental Affairs (DEDEA), the Council for Scientific and
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
Industrial Research (CSIR) and Cacadu District Municipality, are part of the team leading fibre development initiatives in the province. Already R21 million has been invested in research and product development of these fibres. Two hundred and six jobs have been created; 33 jobs in a hemp commercial pilot project and 173 jobs in the cashmere sector. Targeted fibres include cashmere, hemp and flax, pineapple agave Americana and wool and mohair industries. “We are currently mapping out the value chains for products in each industry. Part of the process is identifying gaps in technology and also those related to social and economic issues.” ECDC positioning in 2011 and beyond Mase explains that ECDC’s corporate strategy for 2011 to 2015 is defined by redesigning the corporate structure. This process, which is already underway, will ensure the corporation is favourably positioned and resourced to service customers and grow enterprises in the Eastern Cape.
BUSINESS UNLIMITED | PAGE 01
Matla Solar
helps ramp up the province
renewable
Matla Solar Water Heating (SWH) has established a R40 million manufacturing facility for solar water heaters in the East London IDZ, the first fully integrated mass production manufacturing plant for domestic and industrial solar water heaters in South Africa.
The first renewable energy sector investor to locate in the East London Industrial Development Zone (ELIDZ) is funded partly by Matla Thermal Holdings, Taiwanese investment consortium led by Funland Industrial Co, and the Eastern Cape Development Corporation (ECDC). ECDC holds 15% equity in the firm, Matla Thermal Holding holds 53% and Funland Industrial Co 32%. The Funland Industrial Co representing TzJeng Energy Technology and Ming Yang Solar Energy, is the number one high pressure solar water heating manufacturer in Taiwan with over 25 years of experience in the manufacturing, design, and installation of solar water heaters. “Our market research notes there are a number of small-scale manufacturers in South
PAGE 02 | BUSINESS UNLIMITED
Africa. With the technology and expertise we have, based on our current partnerships, we will be able to produce on a large scale locally which will lower the costs for customers,” says Matla SWH general manager Andy Bin-Chi Lu. Andy indicates the company will focus on supplying industrial and commercial systems to the medium to high density residences and bulk usage market in the first year, while also expanding into the domestic solar water heater market with the registration of the different domestic systems on the Eskom Demand Side Management rebate programme. “The main target market for us initially is industrial users such as mining sector change rooms, student residences, apartment buildings and hospitals,” he says.
The facility is set to employ between 80 and 110 people within the next year with a production forecast of 30 000 units per annum by September 2011. “We’ll also be the first company to provide a lease option on the industrial/commercial systems in South Africa, catering for our clients’ different cash flow requirements.” The industrial/commercial solar water heater market is estimated by Matla SWH to be around R4 billion, representing a maximum of 1,000MW of peak electrical demand to be reduced. East London IDZ business development executive manager Tembela Zweni says, “The Matla SWH’s investment is pivotal for the ELIDZ as it strives to operate a world class industrial park and operating a green IDZ.”
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
FAST FACTS
Renewable
province’s profile in
energy
Workers at the Matla SWH at the East London IDZ.
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
energy opportunities in the province
• Increase in the price of fossil based electricity in South Africa presents opportunity for renewable energies to be introduced in the province. • Eastern Cape imports almost all of its electricity from Gauteng. • The province is rich in primary energy resources such as solar, wind, hydro and bioenergy. • More than 29 renewable energy opportunities that could generate 7,700MW of power have been identified in various areas in the province. • Opportunities also include the manufacturing of renewable technologies and components, as well as the supply of raw materials. • The 610 328 households in the province that have no access to electricity can form a large part of the domestic market for renewable energy. • The East London and Coega Industrial Development Zones (IDZs) are making strides to realise opportunity in renewable energy: - East London IDZ secured first renewable energy investor, Matla Solar Water Heater. - One of 25 mega wind turbines is already functional at the Coega IDZ, a R1.2 million investment from Belgium company Electrawinds. • Other renewable energy developments include: - Kestrel Wind Turbines, subsidiary of Eveready South Africa in Port Elizabeth, produces household and commercial small wind turbines for the domestic and export market. - Blue Crane Development Agency has identified twelve sites in the Karoo and is looking for investors for hydro energy (from R80 million), solar energy (from R4 billion) and wind energy (from R6 billion). - AsgiSA Eastern Cape, in partnership with the Department of Water Affairs and Forestry, is assessing the feasibility of hydro-power and other alternative energy sources that have potential in the former Transkei.
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ENTREPRENEUR PROGRAMME TO
PACK A PUNCH IN 2011/12
Stronger, tougher and more sustainable small businesses. That’s what ECDC will focus on in 2011/12 as it moves forward towards building a cadre of small quality businesses.
“In this coming financial year,” says executive manager Noludwe Ncokazi, “ECDC will grow the skills of small business managers so that they can better manage their businesses. We will help them with financial management systems, identifying and scoping new opportunities, developing products which the market needs, and accessing new markets.” Noludwe says ECDC helps to register thousands of businesses and co-operatives each year with its partner, the Companies and Intellectual Property Commission (previously called the Companies and Intellectual Property Registration Office). “But many are necessity entrepreneurs and these don’t necessarily translate into a quality pipeline of SMMEs who are market-ready and competitive. And that’s what we are looking for.” CRITICAL SKILLS FOR SUCCESS In order to better understand the skills needs, ECDC is currently undertaking a study with the Walter Sisulu University to analyse the financial skills of 288 clients and understand the gaps in skills which affect market readiness. This “market readiness” as Noludwe terms it, is when small businesses have the necessary skills for their businesses to be sustainable. “By providing skills, we want to move small businesses to a point where they “see” the opportunities,” Noludwe adds. And to be able to “see” the opportunities, one has to research markets so that you know who they are, what they want, how, why and when they want it. Obviously key to this process is product development which is another area of ECDC support.
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“Even in the agricultural sector which is often overlooked, there are high value crops and organic products for which retailers will pay a premium,” she explains. HOLISTIC SUPPORT FOR DEVELOPMENT Another part of the skills development and empowerment process is the support offered to small businesses after finance such as mentorship or coaching. “With the walls between financial and nonfinancial support falling away, this means better support for SMMEs. Financial problems are quickly established because there is robust reporting and account management. In some cases, it may be more skills or business systems support and in others, it may mean rescheduling the loan repayment over a longer period whilst instituting a turnaround or business re-engineering strategy.” “Other support which ECDC offers is the mentoring of these businesses by experienced managers who help entrepreneurs with the day-to-day challenges of managing a business.” This tried-and-tested model has worked well for the construction industry where ECDC leads the country. However, Noludwe explains that the success in construction is largely attributed to firm partnerships which ensure the sustainability of ECDC’s programme. Establishing these partnerships in other areas has proven to be a challenge. “What makes this mentoring particularly useful is that the mentoring is also monitored,” explains Noludwe. Other sectors of the economy which will
benefit from ECDC’s continued tailor-made training include tourism and creative industries. Further support for sensitive groups like the youth and women will come through partnerships with the National Youth Development Agency and the provincial Department of Social Development. In order to strengthen its footprint, ECDC is also holding small business seminars throughout the province. Areas which have not been serviced extensively in the past, Alfred Nzo and Joe Gqabi districts, have been prioritised. More are planned, culminating in the province’s largest SMME Summit towards the end of the year. “We also work with several organisations to help entrepreneurs in various sectors. These include the Tourism Enterprise Programme, Small Enterprise Development Agency, business chambers, relevant government departments, municipalities and ICT incubator in East London, the Eastern Cape Technology and Information Initiative (ECITI).” PARTNERSHIPS TO DRIVE GROWTH “Another sector receiving support includes agriculture and agro-processing through the provincial co-operative development fund, Imvaba, because of the socio-economic impact it brings. If you employ ten women, we are talking about ten households being assisted. They are also in the right place to take charge of local opportunities,” ends Noludwe. ECDC is also working with Avusa Eastern Cape, the regional publisher, to print a bimonthly small business insert in the Daily Dispatch which will be packed with useful information and celebrate small business success in the province.
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
SERVICES HELPING BUILD
STRONGER ENTREPRENEURS OUR RANGE OF FINANCIAL PRODUCTS Our short and long-term product offering is targeted at initiatives that bring a meaningful development impact to the Eastern Cape province. NAME OF LOAN
VALUE
TERM
INTEREST
FEES
CASH MANAGEMENT FEE
Termcap loan
R500,000 to R20,000,000
5 - 7 years
from Prime -2% to Prime +3%
1-2% structuring fees
N/A
Nexus trade loan
R10,000 to R500,000
1 - 6 months
0%
N/A
2.5 to 5% of loan value
Workflow contractor loan
R100,000 to R20,000,000
3 - 36 months
from Prime -2 to Prime +3%
Structuring fees of 1% of the loan value
2.5 of loan value
Power plus small loan*
R20,000 to R500,000
12 - 36 months
Linked to the prime interest rate
Structuring fees do apply
N/A
OUR NON-FINANCIAL SERVICES Through our network of accredited service providers, we provide a range of non-financial services aimed at helping businesses perform to their full potential. Business advisory services • B-BBEE transaction advisory services • Incubation (ICT and craft) • Business plan development • Business systems • Feasibility studies • Financial management • Franchising • Intellectual property • Marketing strategy development • Mentorship and training • Quality management • Workshops and seminars Emerging contractor development programme • 24-month skills training and mentorship: National Qualification Framework (Level 2)
Creative industries programme • Product and business development • Capacity building • Market access: national and international exhibitions, expos and fairs • Linkages to retail outlets Export and trade promotion • Trade missions (international) • Trade fairs and exhibitions (national & international) • Market information (international) • Electronic trading resources • Partnerships: overseas buyers, distributors and joint ventures • Trade leads • Workshops, seminars and forums
COMMERCIAL AND INDUSTRIAL PROPERTIES Our diverse property portfolio includes manufacturing and warehousing space in Dimbaza, Fort Jackson, King William's Town, Butterworth, Mthatha and Queenstown, retail space at the Mdantsane Shopping Centre, and office space in several ECDC offices.
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
BUSINESS UNLIMITED | PAGE 05
GOOD NEWS FOR
ICT SECTOR
AS PROVINCIAL HUB GOES
“ONLINE” Established to develop an ICT hub by the Eastern Cape Development Corporation (ECDC) and various industry players in the Eastern Cape, the Eastern Cape Information Technology Initiative (ECITI) supports 11 small ICT businesses - nine of which operate at the ECITI hub employing about 25 full-time staff. ICT envisaged as platform to drive growth in other sectors The small ICT entrepreneurs operating from the ECITI hub use shared infrastructure and services such as boardrooms, training and meeting rooms and IT infrastructure. “The Eastern Cape needed an ICT platform which could be used to drive other sectors of the economy, using technology.” “This is how we came up with the idea of locating small businesses who are interested in ICT in the hub. You have to create a hub to attract small enterprises to come together and develop solutions to enable growth in other sectors of the economy,” says ECITI executive manager Patricia Dlamini. Virtual programme to reach small ICT players Besides the entrepreneurs in the hub, ECITI also supports those enterprises who are not located within the hub or have office space. ECITI plans to use this virtual model to reach small ICT players in other parts of the province. “ECITI’s role is to help small ICT businesses to properly manage their businesses. They are put through an 18 to 24 month programme. The length of time spent in the programme depends on the needs of the business. ECITI a key player in science and technology park Dlamini, the former head of entrepreneurship development at Southern Africa’s first Science and Technology Park, the Innovation Hub in Pretoria, says ECITI is one of the key backers of the East London Industrial Development Zone’s planned Science and Technology Park in East London. ECITI business support services The hub, which offers business support services such as links to tertiary institutions, mentorship, networking, access to local and international markets, funders and potential investors to name a few, is working on establishing relationships with academic institutions, government and industry. Although all the businesses are from East London, there are plans to set up ICT centres in other regions in the Amatole District Municipality and the OR Tambo District Municipality. Currently, ECDC is the key funder of ECITI. ECITI exective manager Patricia Dlamini.
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EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
PE INNOVATION SET TO
CREAM
COMPETITORS A visit to the Department of Economic Development and Environmental Affairs (DEDEA) by a group of people living with albinism has led to the creation of a range of new skin creams which have produced dramatic results. The Zwelakhe Creams project is being implemented by the Eastern Cape Development Corporation (ECDC) and it has developed a range of moisturising creams, anti-ageing creams for the neck and face and a cream for legs and arms. ECDC says trials on people with albinism in inland and coastal areas in Port Elizabeth and Middledrift have proven the creams to be more effective than any other similar product in the market. “A group of people with albinism approached the Department of Economic Development and Environmental Affairs (DEDEA) and asked the department to create creams that will be more effective for their sensitive skins. DEDEA allocated R714,000 for the project and asked ECDC to manage the process. “The corporation then conducted feasibility studies. The studies indicated that the idea is feasible in the absence of products for people with albinism in the market. They require creams of Sun Protection Factor (SPF) 40 and SPF 50 and we managed to do this. SPF refers to sun protection factor,” says ECDC programmes manager Phakamisa George. Phakamisa says the development financier appointed a service provider to conduct the feasibility study, cream formulations and the trials. While there are similar products of SPF 40 in the market, Phakamisa says “the trick is in the ingredients that make up the creams which are more effective than anything currently in the market. This gives the Eastern Cape a valuable piece of intellectual property.”
“The effects of the cream, on all participants were very dramatic. Within three weeks of applying the creams a drastic change could be seen in all the trial participants. In all of the cases the colour and complexion of the participants changed. The skin became whiter and softer.
buy these creams once they are produced on a commercial scale.
“The red effect of the sun on the skin had disappeared. In most cases the top of the forehead and the ears were badly burnt and peeling and in some cases had developed sores covered with thick scabs. After the application of the creams these sores and scabs had disappeared leaving soft new skin beneath,’ says Phakamisa.
“Our focus is on the low-income earners and our creams will be very affordable unlike those in the market,” says Phakamisa.
“We cannot produce these creams until an off-take agreement is secured. Plan B is to produce the creams on a small scale and take these to chain stores to test the market.
He says the trials were successful and the creams were sent to the Medical University of South Africa (MEDUNSA) for testing to determine whether they are really SPF 40 and SPF 50. Results confirmed this. Medunsa also confirmed that the creams are also effective and issued certificates in this regard. Currently people with albinism experience severe skin irritation due to sunburn and accelerated ageing because of their sensitive skins. They rely on creams from clinics which have a SPF 15 which is only effective on people with ordinary skins. They require creams with an SPF 40 or SPF 50, and those that are available in the market are too expensive for them. ECDC is currently looking for a commercial partner to run the project and off-take agreements from the Department of Health to
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
BUSINESS UNLIMITED | PAGE 07
EAST LONDON ENTREPRENEUR
ICE-MAKING BUSINESS
SIZZLES
Tapping into Eastern Cape Development Corporation (ECDC) resources has seen Thami Manona’s ice business heat up, now plans are afoot to expand into the rural market within one year of starting. Based in East London, the entrepreneur who hails from Queenstown accessed financing and non-financial support to the tune of over R390,000 from ECDC, which he says was a solid base to get his business up and running. Manona is the founder and managing director of Frosty Ice which supplies ice to clubs, pubs, and restaurants. While his background in sales and marketing was a key driver that helped him identify an untapped market, he says ECDC support fills the gap for key business development expertise which he needed to turn his business idea into reality. “I approached ECDC and gained access to a team of experts who guided me through the process of setting up a business at each step of the way from registration, to business plan development and financing.” Manona registered his business through ECDC which provides the service on behalf of Companies and Intellectual Property Registration Office (CIPRO) at its head office in East London.
PAGE 08 | BUSINESS UNLIMITED
An ECDC service provider helped him conduct a feasibility study and develop a business plan which he presented for financing. The corporation paid the largest portion of his business plan development fees at a time when working capital was constrained.
Frosty Ice, which was started in July 2010, now employs four people and has plans of expanding to the Mthatha area with a view to supply ice to rural communities in the coming months.
He adds that ECDC helped him identify weaknesses and threats in his original plan and modify it so that the gaps could be closed and avoid the risk of failure to his business. “ECDC gave me support and guidance all along the way, giving expert advice as to what makes business sense. My service provider also helped me with the viability study. They (ECDC) were there throughout the process and with my service provider; we bounced off ideas with ECDC because we had to comply with ECDC standards.” Lulama Moses, ECDC’s Queenstown regional manager who was an account manager at the time, says “the original business idea was great, yet he was flexible enough to change it to take advantage of the soccer world cup when he decided to start supplying pubs and sports bars,” Moses says.
Frosty Ice owner Thami Manona.
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
EXCITING
GRANITE VENTURE FOR BUTTERWORTH THE EASTERN CAPE DEVELOPMENT CORPORATION (ECDC) HAS THROWN ITS WEIGHT BEHIND AN EASTERN CAPE GRANITE MINING PROJECT, WHICH HAS UNEARTHED GRANITE TO BE MINED AND PROCESSED IN THE PROVINCE.
The project is spearheaded by acclaimed entrepreneur Monde Tabata’s company Bold Moves, near Butterworth. Monde says Bold Moves aims to sell granite block internationally, granite slabs locally and intends to set up a processing factory in Butterworth, which is expected to have major spin offs on the economy. To date, ECDC has pumped over half a million rand into feasibility studies. The projected investment outlay towards the project for which trial mining is set to resume this month, is R30 million, Monde says. “ECDC has invested R530,000 for feasibility studies but a further R990,000 is needed for the trial mine and test quarry,” says ECDC’s Bowell Solwandle. Monde adds that ECDC is a valuable force in the Eastern Cape economic sphere and fills a space left by commercial banks. “Firstly, ECDC came in at a critical point to finance the competent person’s (evaluation) report which included the business plan,” Tabata says. “Secondly, ECDC stepped in to assist in trial mining. One can’t emphasise enough that without such a development corporation (in the Eastern Cape), it would probably be difficult to do business. Commercial banks would not have given me the financing as ECDC did.” Bold Moves has already put up R275,000 to obtain the mining permit and has concluded
the sampling and drilling process. Monde says Bold Moves discovered four variants of granite in the Butterworth area which have never been mined before. “This is a greenfield project. Although granite mining was done in the Centani area in the past, it has never been done in Butterworth before. We estimate that 383, 000 cubic kilometres of granite is there,” Monde says. The envisaged market for the granite is the United States while in the second phase of the project, Monde says, a factory to manufacture memorial stones, counter tops, building blocks will be set up near Butterworth. Monde’s view is to add to Eastern Cape’s economic activity and logistic spin offs through exporting the granite blocks from the mines via Eastern Cape ports. “We’ve already tested the samples and have a major player in the industry that is responsible for international sales of South African granite. Exporting through the East London IDZ would be first prize or as an alternative Coega IDZ. For me, Eastern Cape is home and this business must be a catalyst for economic activity here. In that way we will also minimise costs to our clients,” Monde says. The entrepreneur has made his mark in South Africa’s business landscape as director at Peermont Hotels, of which he was cofounder and is also the managing director of Primedia’s sport division Megapro.
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
He has held a number of top positions including chief executive of National Small Business Council, chairman of East Rand Youth and Children’s Trusts, director and deputy chief executive at Megapro Marketing in an illustrious career spanning construction, youth development, sport, gaming and hospitality. His acclaim in business circles recently culminated in a honourary doctorate from Monash University SA, (an Australia university), in recognition of his achievements in business. The community including the chieftaincy, women as well as Zagwityi and Mgagasi communities in the Amasaleleni locality around the mine are set to get 20,5 percent of the business. Tabata says the community empowerment component of the project is structured to avoid potential conflict and manage dynamics within the communities’ social structure. “In this business, you undermine rural communities at your peril. They might not be educated or know the technical language, but they’re smart and they know what they want,” Monde says. Nine skilled, three semi-skilled and three casual workers are to be employed in the mine while most jobs will be created through spin offs. The project is expected to create major spin offs in manufacturing, transportation and logistics sectors locally and internationally.
BUSINESS UNLIMITED | PAGE 09
Cars ready for export, Port of East London.
PAGE 10 | BUSINESS UNLIMITED
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
INDICATIONS ARE THAT THE WHEELS OF THE EASTERN CAPE ECONOMY ARE STARTING TO TURN, WITH EXPORT ACTIVITY AT THE PROVINCE’S COMMERCIAL PORTS SHOWING A MARKED INCREASE IN 2010, UP BY 1.5 MILLION METRIC TONS FROM THE PREVIOUS YEAR. This comes at the back of positive figures from the Eastern Cape business barometer released in February. The barometer, which measures the economic pulse of five of South Africa’s provinces, indicates that the province’s export market is performing well and attributed increased exports to the rest of Africa. This is backed by the province’s 9,9% increase in economic activity in the fourth quarter of last year compared to the same period in the previous year. Eastern Cape port figures show exports jumped from 3,8 million metric tons in 2009 to about 5,4 million metric tons in 2010, an increase of just over 1,5 million metric tons. The overwhelming majority of the export activity in 2010 continues to be generated by the Port Elizabeth port at 4,9 million metric tons shipped versus the Port of East London’s 459,000 metric tons. The export market should be buoyed by the barometer’s finding that while manufacturing has been slow to recover nationally, the province’s manufacturing index at 7,5%, was the only one to show a surge.
Automotives still key driver of exports Not surprisingly, the driver of exports in East London continues to be automotives. This trend is unlikely to change with Mercedes-Benz’s announcement of a R2 billion investment into its East London plant to manufacture the new generation C-class. Furthermore, the East London Industrial Development Zone (IDZ) has been named as the front-runner as a location to manufacture the Joule electric car. While automotives dominate bulk and breakbulk cargo in East London and Port Elizabeth, the indirect inflow of manganese ore exports from the Northern Cape to the Port Elizabeth port is also a key driver. Bulk cargo is any unpackaged cargo, ranging from fuel, bulk liquids to a variety of grains such as maize, sunflower seed and wheat. VW Group SA expects further growth in automotive market One car-maker that has taken advantage of the upward swing in exports is Volkswagen Group South Africa (VW Group SA) which forecasts further growth of 10% this year in the
automotive sector. “VWSA recorded a 0,5% increase from 2009 to 19,9% in 2010 in the South African market share. We also had an impressive 101% increase in production volumes in the last year. This means we were able to make 119,500 cars in 2010 compared to 59,500 in 2009,” says Uitenhage-based manufacturer. To add weight to the export figures, VW Group SA says 76,900 of the 119,500 cars it made in 2010 were exported compared to 29,200 in 2009. The balance of 42,600 went to the domestic market compared to 30,300 in 2009. Trade agreements provide easy access for export The Eastern Cape Development Corporation (ECDC) says exporters have access to offshore markets through several preferential agreements, at regional and bilateral level. The country is also a member of the World Trade Organisation (WTO) and General Agreement on Tariffs and Trade (GATT). Countries with which South Africa has trade agreements provide easier access to their markets.
EXPORTS GIVE
AUTO SECTOR
TURBO BOOST EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
BUSINESS UNLIMITED | PAGE 11
SNIPPETS CHINESE CHAMBER CHIEF SAYS EASTERN CAPE A “GO-TO” LOCATION
The Eastern Cape’s existing textile and clothing factories, availability of skills and easy access to the ports have positioned the province as the “go to” location for future textile investments, says Chinese Sweater Chamber president Xu Wei. “The province has existing textile and clothing factories which means there is skilled labour, solid transport infrastructure for exports such as the port and infrastructure is readily available at sites like the East London Industrial Development Zone and factories in Fort Jackson,” says Wei. Wei explains that they are looking to launch a phased investment with the first phase due to start in East London, with a possibility of expansion to other areas in the province. The Chinese chamber uses a model which trains rural women in clothing manufacturing and this was supported by the Department of Trade and Industry’s (the dti) women delegation at Shanghai. It aims to improve production and the manufacturing potential of women by improving skills such as embroidery, netting, sewing and beading. It also wants to help women participate in all levels of the economy. The dti will select 160 women from the Eastern and Western Cape who will be trained to operate sewing machinery, manage small enterprises, production and personnel as well as innovation and creativity. The head of the chamber which represents 128 companies producing over 300,000 sweaters a year and exports to Europe, United States, Middle East, Russia, as well as South Africa, says the model has been successfully replicated in the United States and Russia.
CHINA EYES THE EASTERN CAPE FOR AGRICULTURE PRODUCTS Eastern Cape’s abundant agricultural land has seen China survey the province for farming business opportunities to supplement its food needs in the face of its scarce land resources. The opening of the Shanghai Yebo Africa Trading Hall (ATH) is intended to facilitate trade between Africa and China. This will also expand opportunities for Eastern Cape business to trade with China, says Eastern Cape Development Corporation (ECDC). ATH is an entity formed by Chinese business in conjunction with that country’s government, with the aim of facilitating trade between Africa and China.
EC’S 145 -YR OLD
CHAMBER RENAMES
Nelson Mandela Bay Business Chamber is the new name of the former Port Elizabeth Regional Chamber of Commerce and Industry (PERCCI), which traces its origins back more than 145 years, it announced recently. The chamber also represents small and medium enterprises, which today account for 75% of total membership.
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PUBLICATIONS The corporation’s investment and trade promotion unit has also launched the new-look finfish and abalone brochures. The information provides a brief synopsis of the suitability of the Eastern Cape for finfish and abalone investments and gives an overview of labour, climate and logistics issues concerning aquaculture farming in the Eastern Cape. For electronic copies, go to www.ecdc.co.za
An ECDC-led trip to Shanghai business expo, the biggest exhibition of its kind for marketers, buyers and business stakeholders from all over the world, has laid the ground work for future Chinese investment in the Eastern Cape. A number of leads have been identified and mooted, says ECDC agriculture sector manager Mlamli Nodada, but a project on the table that can be run immediately is pomelo production in the Eastern Cape. China’s ATH is in talks with Alfred Nzo Development Agency (ANDA) to supply land for cultivation. Pomelo is a type of the citrus variety, popular in the United States and Asia for nutritional properties.
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
APPOINTMENTS
Thabo Shenxane has been appointed as the manager for the Eastern Cape Imvaba Cooperative Fund which forms part of the financial products offered by ECDC.
Nopasika Mxunyelwa takes the reigns as ECDC’s senior manager for communications, marketing and stakeholder relations, effective February 2011.
Previously, he was the managing director of Chumisa Consulting which is a co-operative and enterprise development advisory firm in Pretoria. Past employers include Umsobomvu Youth Fund (now called the National Youth Development Agency) as a senior manager for enterprise finance, and the Department of Trade and Industry where he was director of co-operatives policy development and assistant director for the SMME policy unit.
After nearly 15 years of experience in the field of marketing, Nopasika joins ECDC as the development financier seeks to position itself as a lender of first choice in the Eastern Cape.
He holds a Bachelor of Commerce Honours Degree from the University of the Western Cape and currently at work on his thesis for a Masters in Economic Policy from the University of Stellenbosch.
She started her marketing career in 1997 and has accumulated marketing and brand management experience from companies as diverse as accountancy firm Sizwe Ntsaluba, Masana Petroleum Solutions and Kaya FM. As a young marketer, she worked for iconic brands such as Yardley Cosmetics Company and advertising agency Hunt Lasclaris TBWA. Nopasika holds a Bachelor of Social Sciences degree and a post graduate diploma in marketing from the University of Cape Town.
Lulalma Moses has been appointed Queenstown regional manager at Eastern Cape Development Corporation (ECDC) after serving as its acting micro-finance manager for nearly six years. Moses, who holds a Bachelor of Commerce from the University of Fort Hare, started her career in 1982 as a professional officer at the Department of Commerce Industries in Mthatha. She joined ECDC in 1986 as a debtor’s controller before being promoted to divisional accountant in 1997 followed by a divisional manager role from 1999 to 2005. She has experience in micro-finance, management, accounting and teaching. As acting finance manager at ECDC, Moses was part of the management team responsible for the formulation of micro finance solutions and implementation of micro finance services at ECDC.
Buhle Dlulane joins ECDC as its executive manager development investments from the South African Micro-Finance Apex Fund (Samaf). Buhle’s experience in the fields of development, finance and agriculture totals over 25 years. His abilities as a turnaround strategist have earned him esteem in the development finance and developmental micro-finance fields. When Buhle took charge of the Eastern Cape Rural Finance Corporation (trading as Uvimba Finance as transitional chief executive in 2008, the corporation delivered on time unqualified financial statements for the year ended March 2009, following serious audit qualifications in 2006/07 and 2007/08. He has also served in the national department of agriculture as deputy director general where he developed and rolled out the R1,6 billion MAFISA development wholesale fund designed to support emerging farmers. Dlulane holds a masters degree in business leadership from Unisa, Bachelor of Agricultural Economics Honours from Fort Hare University, and diplomas in Marketing and Management Development from Newport University in California as well as a number of post graduate courses in credit law, corporate banking, turn around management, rural banking from various institutions in South Africa, USA and Europe.
EASTERN CAPE DEVELOPMENT CORPORATION | MAY/JUNE 2011
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