Gaut­eng IDZ aims for 2021

Gaut­eng In­dus­trial De­vel­op­ment Zone CEO Seipati Man­gadi sheds light on when the var­i­ous precincts at OR Tambo In­ter­na­tional Air­port will be op­er­a­tional. She also talks about new projects that are in the pipeline.

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ekurhu­leni is the main man­u­fac­tur­ing hub in South Africa. So we want to take that ex­ist­ing syn­ergy and lend trade­able ser­vices that are ex­port-fo­cused,” says Seipati Man­gadi, CEO of the Gaut­eng In­dus­trial De­vel­op­ment Zone Com­pany (Gaut­eng IDZ). The Gaut­eng IDZ, a sub­sidiary of the Gaut­eng Growth and De­vel­op­ment Agency (GGDA), was es­tab­lished in 2009, with the aim to de­velop and op­er­ate the des­ig­nated In­dus­trial De­vel­op­ment Zone (IDZ) at OR Tambo In­ter­na­tional Air­port.

Man­gadi joined Gaut­eng IDZ in 2010, and shortly af­ter Gaut­eng was awarded a per­mit to de­velop an in­dus­trial hub in the air­port’s spe­cial eco­nomic zone (SEZ). At that early stage of the game the SEZ was still very much an amal­ga­ma­tion of con­cepts, which Man­gadi in­her­ited and had to de­velop a com­mer­cial case for.

They had to iden­tify par­tic­u­lar sec­tors to fo­cus on in or­der to de­velop an in­dus­trial hub. “In this in­stance, one linked to our mag­nif­i­cent OR Tambo In­ter­na­tional Air­port, the big­gest port of en­try for the SADC re­gion. As such, our man­date is to un­der­take eco­nomic de­vel­op­ment in and around the Ekurhu­leni area,” says Man­gadi.

The Gaut­eng IDZ fo­cuses on sec­tors with high-value, low-mass prod­ucts, as the pri­mary mode of trans­port for any prod­ucts be­ing ex­ported from the IDZ is, of course, via air freight.

The in­cen­tives pro­vided by the Gaut­eng IDZ are ex­por­to­ri­ented, in­clud­ing cor­po­rate in­cen­tive tax of 15%, cus­toms and ex­cise in­cen­tives, em­ploy­ment tax in­cen­tives and VAT in­cen­tives.

The lay of the land

CEO of the Gaut­eng In­dus­trial De­vel­op­ment Zone Com­pany

The SEZ at OR Tambo con­sists of two sec­tions: a 7.5ha and 32ha site. It is on the south­ern precinct of the 7.5h site that the well­known 4ha jew­ellery man­u­fac­tur­ing precinct, which the Gaut­eng IDZ cham­pi­oned early on, will be sit­u­ated. Since an­nounc­ing this project in 2016, the Gaut­eng IDZ has also em­barked on the de­vel­op­ment of a 3.5ha agro-pro­cess­ing plant in the north­ern precinct, which Man­gadi says will be op­er­a­tional early next year.

“It has taken us a good two years to get the north­ern precinct de­vel­op­ment done, but bear in mind the land was com­pletely un­ser­viced… We have since built a se­ri­ous de­vel­op­ment.” A nearly 4ha fac­tory has been built on this precinct. De­sign of the jew­ellery man­u­fac­tur­ing precinct is cur­rently un­der­way, Man­gadi says. “We will be clus­ter­ing jew­ellery man­u­fac­tur­ers and di­a­mond ben­e­fi­ci­ates. We are hope­ful that the reg­u­la­tor and the state di­a­mond trader will take oc­cu­pancy there, as we want the en­tire value chain rep­re­sented in that space.” Man­gadi ad­mits that they have gone through a learn­ing curve when it comes to de­vel­op­ment, but she is hope­ful that this will help shorten the tra­jec­tory of the south­ern precinct’s com­ple­tion. “In my opin­ion, come the end of 2020, we will be do­ing site han­dovers and start­ing op­er­a­tions.” She ex­pects the jew­ellery man­u­fac­tur­ing precinct to be op­er­a­tional by 2021.

Par­al­lel to the work be­ing done on the 7.5ha site, Man­gadi says they are cur­rently de­vel­op­ing a pipeline for the other 32ha at OR Tambo. She hopes to at­tract elec­tron­ics and phar­ma­ceu­ti­cal man­u­fac­tur­ers – par­tic­u­larly phar­ma­ceu­ti­cal prod­ucts that re­quire “just-in-time pro­duc­tion and need to be loaded onto a plane for trans­port”.

Fur­ther afield, in Springs, about 40km from the OR Tambo SEZ, the Gaut­eng IDZ is in the process of de­vel­op­ing a plat­inum group metal (PGM) SEZ in part­ner­ship with Im­plats, who is avail­ing a piece of land for this. Man­gadi is in the process of hav­ing this SEZ ge­o­graph­i­cally de­fined as such by the de­part­ment of trade and in­dus­try.

She projects that af­ter SEZ des­ig­na­tion is pro­vided and fund­ing be­comes avail­able, it will take around 18 months just to com­plete the bulk in­fra­struc­ture de­vel­op­ment. Dur­ing that time, they will work on con­tract ne­go­ti­a­tions to pre­pare for op­er­a­tions. She be­lieves that five years from now the PGM SEZ at Springs should be op­er­a­tional.

Fund­ing

Fund­ing has proven chal­leng­ing and has cer­tainly played a part in project lag. Luck­ily, the fi­nan­cial bur­den has eased over the past two years since the new SEZ Act was pro­mul­gated, ex­plains Man­gadi. “Be­fore this, we didn’t have a struc­tured fa­cil­ity to get fund­ing. With the SEZ Act, we are now in a po­si­tion to put for­ward pro­pos­als and ac­cess fund­ing.”

The cur­rent eco­nomic cli­mate is a se­ri­ous con­cern, but Man­gadi as­sures that the fund­ing for all the work on the 7.5ha OR Tambo precinct has been se­cured – a to­tal of R208m in pub­lic funds for the bulk de­vel­op­ment of the en­tire site and a fur­ther R134m in pub­lic fund­ing and R129m in pri­vate funds for the de­vel­op­ment of the north­ern precinct.

Se­cur­ing fund­ing go­ing for­ward may be chal­leng­ing, but Man­gadi is not de­featist about this. “We are go­ing to have to be ag­ile, we are go­ing to have to be in­no­va­tive with our op­er­at­ing mod­els. There is a chance to even bring in a pri­vate op­er­a­tor, which the new SEZ Act al­lows us to do, but we are not there yet… Those are the kinds of things we will have to look at in the fu­ture – all the SEZs in the coun­try will have to, in my opin­ion, be­cause at some point we will run low on funds.”

The de­vel­op­ments Man­gadi is work­ing on for the next three to four years, are funded, she says. ■

“In my opin­ion, come the end of 2020, we will be do­ing site han­dovers and start­ing op­er­a­tions.”

Seipati Man­gadi

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