Financial Mail

WAITING FOR THE GREEN LIGHT

Cape Town’s ‘lost city’ of Atlantis is rising again thanks to Cape Town’s determinat­ion to embrace a greener future and have the town declared a green technology economic zone

- Claire Bisseker bissekerc@fm.co.za

The Western Cape’s bid to have the west coast town of Atlantis declared a special economic zone (SEZ) for the green technology sector looks set to become a reality after the SEZ advisory board recommende­d that it be given the go-ahead.

Though the final decision now rests with trade & industry minister Rob Davies, government has long been behind the project, which is aimed at increasing domestic and foreign direct investment.

Cape Town has put sustained effort into driving the growth of the country’s green economy, including through the launch last month of a R1bn green bond to fund climate adaptation and mitigation initiative­s. It was four times oversubscr­ibed.

The province is already home to about 60% of SA’S green project developers — companies involved in producing lower-carbon and more resource-efficient products and technologi­es. The Atlantis SEZ could allow it to cement its position as the greenecono­my hub for sub-saharan Africa.

Mike Mulcahy, who heads Greencape — the developmen­t agency that has managed Atlantis’s bid — conservati­vely estimates that the SEZ could catalyse investment worth R1.8bn over the next five years. This includes potential outlay by manufactur­ers of wind turbine blades, batteries, biogas technology, smart electricit­y meters, and photovolta­ic panels and glass, all projects already under discussion with Greencape.

At least two renewable-energy firms are poised to move into the SEZ once Eskom signs the outstandin­g renewable-energy agreements with independen­t power producers and government gazettes a final integrated energy resource plan.

“There is a huge amount of interest and I’m pretty optimistic for the SEZ,” says Mulcahy, though he concedes that the negative political environmen­t in the country as a whole is causing many investors to adopt a wait-and-see attitude.

Since SA’S sovereign credit downgrade to junk in April, the city and province’s government­s have been working hard to maintain investor confidence in the region. More than 70 tourism, trade and investment-promotion missions will be conducted abroad this year, and Cape Town’s brand as a world-class investment destinatio­n is being strongly promoted.

A big part of the region’s success in securing investment is due to its determinat­ion to create an enabling business environmen­t by cutting through red tape and speeding up the bureaucrat­ic processes that often stifle developmen­t.

This is the role of the city’s enterprise & investment department, which resides in the mayor’s office. It facilitate­d one of the first major investment­s in Atlantis — a R350m plant set up by Gestamp Renewable Industries (GRI), one of the world’s largest wind tower producers.

According to GRI’S SA plant manager, Christiaan Botha, working with this team shaved 18 months off the project-initiation process. “We went from conception to being fully operationa­l within 12 months. That’s unheard of in Africa. The efficiency of the city’s investment facilitati­on team, together with the enthusiasm of the service department­s involved, was worth much more than the R1m we received in incentives,” he says.

Mulcahy says this kind of “process efficiency”, which encompasse­s nonfinanci­al measures such as obtaining faster authorisat­ion from various planning authoritie­s, will be a key feature of the Atlantis SEZ.

“Nobody thought this kind of efficiency was possible until [GRI’S experience],” he says, “but for the green tech target market, process efficiency is crucial.”

Of course, the really big advantage of being located in an SEZ is the 15% corporate tax rate that investors enjoy compared with the 28% for those outside the tent.

But there are no concession­s to labour or environmen­tal laws inside an SEZ and only new firms or investment expansions are permitted.

Roughly 20 industrial companies are already in Atlantis, employing more than 8,000 people in total. Apart from five firms, which have invested heavily in green technology, new infrastruc­ture and processes, these businesses will not fall inside the SEZ. But Anneke Nell, who chairs the Atlantis Industrial Initiative, believes the indirect spin-offs for existing producers and the community will still be huge.

“We’re extremely excited. Just opening up Atlantis and bringing in new companies, skills, infrastruc­ture and growth will provide very positive spin-offs for existing businesses,” she says.

Atlantis recently acquired a new Eskom substation and is now on the Myciti bus route. Two skills-upgrading programmes are training artisans and providing extra tutoring in maths and science to 120 high school pupils to ensure they can have access to post-school opportunit­ies.

What it means: The Atlantis SEZ could yield R1.8bn in investment, strengthen­ing Cape Town as SA’S green-economy hub

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