E Cape fertile ground for economic opportunity

MUCH unsown seeds of export opportunity lay in the Eastern Cape’s agricultural sector, delegates heard at the annual Eastern Cape Export Symposium in East London this week.

The sector boasts substantial global competitiveness through its citrus exports that are second only to Limpopo, and wool and mohair exports – just over 51 percent of global mohair production is processed through the province, and it produces 38 percent of that amount.

Agriculture was touted as one sector that could help to diversify the province’s reliance on the automotive industry for much of its economic activity, its exports and imports, as well as go a long way to generate employment in the region.

According to Ntandazo Mbenya, an economist at the Eastern Cape Development Corporation, exports from the Eastern Cape amounted to R64.5 billion last year, after contracting 10.4 percent from 2020. In 2017, exports were R50.4bn. Motor vehicles and components accounted for R51.1bn of exports last year.

He said the EU was the province’s biggest export market, accounting for R38.2bn of exports last year, but the figure had contracted by 37.5 percent from 2020, because of the impact of Covid on the global economy.

He said the province had long realised the need to diversify its economic base, but little was happening.

He said that for instance, the province was the second-largest cattle producer, but the cattle were fed-up in the

Free State and Gauteng and sold as produce from those provinces.

“Why are we not feeding up our own cattle,” he asked?

He said maize was being imported, but the east of the province were large tracts of land suitable for substantial maize production.

He said the land was extremely fertile in the east, making it suitable for many crops, including the expansion of citrus and grain crops.

Another sector that could help diversify the provincial economy was renewable energy. Asanda Xawuka, a senior manager Business Development Executive Manager Coega Development Corporation said, for example, that Hive Hydrogen had this year undertaken a R75bn project to manufacture green hydrogen, at a rate of some 780 000 tons a year, at the Coega industrial development zone.

There were also plans to generate some 1 000 megawatts of renewable energy at Coega, she said.

The Dedisa peak power gas cycle plant in Gqberha was producing 335 megawatts, she said.

She said the province also continues to attract investment from the automotive industry, and some 150 out of 200 motor component manufacturers operated out of the province.

It emerged at the conference that both the Coega and the Buffalo City Special Economic Zone’s (SEZ) continue to attract investments, including from the automotive sector.

Buffalo City SEZ senior manager Ayanda Ramncwana said SEZS were proving successful globally – more than 5 400 SEZS operated in more than 160 countries.

SEZS are areas usually situated near a port where businesses can obtain special concessions from the government in return for the socio-economic benefits of investing in the SEZ.

Buffalo City mayor Xola Pakati said the city was working hard to make Mercedes-benz’s multibillion rand expansion of its plant easier through, for instance, speeding up land and other city administration applications, and the building of necessary infrastructure such as roads.

He said that in the aftermath of the Covid pandemic, the city developed its own export and development programme, in line with other development policies, that focused on consolidating the city as an automotive hub, and to diversify its economy further by promoting other sectors.

Last year, Mercedes-benz announced it would invest a further R3bn into its East London plant, following the launch of production on the New Generation C-class model in South Africa. The capital expenditure announcement had followed a R10bn investment drive first announced in 2018, which saw the East London plant go through numerous upgrades in preparation for the production of the new model.

Pakati said East London SEZ was growing well – its export turnover had increased by 53 percent at the end of the past financial year.