Regional overview of the Eastern Cape
The Eastern Cape is on the south-eastern coast of Africa, a location that is proving to be an international asset. The allocation of two of South Africa’s fi ve industrial development zones (IDZs) to the province is confi rmation of the potential that resides in catering to the shipping traffic that operates between Europe and Asia.
The province is well served logistically, with two major airports in Port Elizabeth and East London, and several facilities serving smaller towns such as Mthatha and Bhisho. In addition, many farms and private game reserves have airstrips. The construction of the large new port at Ngqura, within the Coega IDZ, brings to three the number of eff ective ports operating in the Eastern Cape. The province’s road network is defi ned by the west-east axis of the coastal N2, with three other national routes (N9, N10 and N6) providing north-south routes through the region. The province’s rail network needs to be revitalised to assist
in rural upliftment.
The Eastern Cape’s Gross Domestic Product Regional (GDPR) was R99.2-billion in 2008 and was projected to be R101.9-billion in 2011 (Economic Profi le and Outlook, 2010, Eastern Cape Department of Economic Development and Environmental Aff airs, DEDEA).
The province’s automotive producers export just more than half of the motor vehicles produced in South Africa. The companies that operate in the Eastern Cape are Mercedes-Benz SA (East London), Volkswagen (Uitenhage), General Motors South Africa and Ford, both in Port Elizabeth. The Ford plant assembles engines. These operations support many subsidiary industries such as pressed steel, plastics and leather for car seats. Port Elizabeth, one of only six metropolitan municipalities in South Africa, has become a world leader in the production of catalytic converters. The electric car, Joule, will be made in the Eastern Cape.
The Nelson Mandela Bay Logistics Park (NMBLP)
serves as an automotive cluster, supplying logistical support and economies of scale for companies servicing the motor industry in Port Elizabeth and Uitenhage. National government has allocated R30-million to this project in its medium-term expenditure framework. The East London Industrial Development Zone has a similar initiative which is attracting automotive supply companies.
Other major manufacturing sectors in the province are food and beverages (Cadbury, Nestlé, SAB, Clover, Dairybelle) and pharmaceuticals (Aspen). Tourism is a major growth industry. Addo Elephant National Park is the largest of the province’s four national parks and there are more than a dozen provincial parks and a growing number of private game farms, lodges and reserves. The province’s beaches and waves are very popular, with adventure tourism luring in tourists wanting to go on 4x4 trails, jump off bridges or fly microlight aircraft.
According to the DEDEA, total gross domestic fixed investment in the Eastern Cape has been dominated by the machinery/other equipment and building and construction sectors over the last 13 years. The machinery/other equipment sector contributed 44% of fixed investment in the period 1995-2008, with building and construction averaging 41% in the same period.
As a sign of the growing confidence in the Eastern Cape as an investment destination, there have been some significant investments made into the region in the course of 2009 and 2010:
• R250-million spent by General Motors SA on a Pan African Parts Distribution Centre at the Coega Industrial Development Zone.
• A diamond beneficiation project in the East London Industrial Development Zone. This will help South Africa to beneficiate more of its own resources and create opportunities for skilled employment.
• The decision by Volkswagen of South Africa (VWSA) to invest R500-million in its
• The construction of the SAS Radisson Port Elizabeth (Radisson Blu Hotel), and investment of R320-million and a significant addition to the tourism offering of the region.
• A facility in the ELIDZ intended to produce 300 000 flat-panel solar-water heaters, as well as more affordable vacuum-based systems per year. The Eastern Cape Development Corporation (ECDC) holds 15% equity in a firm of mostly Taiwanese investors and is putting R20-million of the R33-million capital into the start-up. Some 250 direct and indirect jobs will be created.
• The opening of the R1.5-billion Hemingway’s Mall in East London. Put together by the Billion Group, at 210 000 square metres, it is the biggest shopping centre in the Eastern Cape.
• Several wind-farm projects are either being constructed or are under consideration. Belgium company Electrawinds has started installing 25 wind turbines at Coega Industrial Development Zone while Rainmaker
Energy, an independent power producer (IPP), is planning two new windpower projects in the Eastern Cape, called the Dorper project and the AB’s project. Together, the two projects will generate a total of 610MW.
• The Ford Motor Company of Southern Africa is investing R3-billion in its two South African facilities. The Struandale engine plant in Port Elizabeth will have increased capacity for the making of 220 000 machined components, of which 75 000 would be used for engine assembly for the Silverton plant (near Pretoria), with the rest destined for export.
The Port of Ngqura and the IDZs at Coega and East London represent large infrastructure investments, as do the upgrades of most of the province’s airports. A possible future investment that will have a huge impact on the province is the Mthombo project, a planned mega crude-oil refinery for the Coega IDZ that is still awaiting final approval. The PetroSA project, if implemented, will cost
R60-billion and create 20 000 jobs.
Nearly 60% of the province’s population is rural, unlike the trend in most other provinces. The Development Bank of Southern Africa is leading a Sustainable Communities Programme targeting rural communities such as Elliot. It also facilitated investment in the capital of the former Transkei, Mthatha, through the national Departments of Transport and Water for the upgrade of clinics and trading areas for small businesses. A provincial government initiative aims to transform the city, which has fallen on lean times.
The active Blue Crane Development Agency has a master-plan to revitalise the Karoo town of Somerset East. Work is finished on upgrading the town’s airport and the SkyWake light sport aircraft has been developed in partnership with the University of the Witwatersrand.
The Expanded Public Works Programme has a household-contractor programme whereby rural
households earn money for road maintenance and this created nearly 80 000 opportunities to work in 2009/10 and there are plans to create another 64 593 work opportunities in the 2010/11 financial year. Local economic plans are to be drawn up with local communities, taking into account opportunities in sectors such as tourism.
The primary sector of the provincial economy is underdeveloped with agriculture, mining, forestry and fishing contributing just 3% to the provincial economy (DEDEA). It is the provincial government’s intention to grow these sectors (particularly in the field of agri-processing) because that would help to develop rural areas and fight poverty.
The idea of mining mineral sands at Xolobeni has attracted some criticism from environmentalists but Transworld Energy & Minerals (a subsidiary of Mineral Commodities) is awaiting approval for a R1.8-billion project that is projected to last 22 years.
Alfred Nzo District
Towns: Matatiele, Mount Frere, Mount Ayliff
The smallest district is located in the mountainous north-east, with hiking trails being an attraction for tourists. Subsistence agriculture and forestry are the major economic activities.
Amathole District Municipality
Towns: East London, King William’s Town, Bhisho, Bedford, Adelaide, Peddie, Butterworth
This is a large and economically important district. East London and King William’s Town supply most of the district’s manufacturing capacity. Parts of the area are good for cattle and sheep rearing, and some pineapple production exists. Many farms have been converted to game farms or private game reserves. The 45 000ha Greater Fish River Conservancy Area is but one example of efforts to preserve the natural environment.
Cacadu District Municipality
Towns: Graaff-Reinet, Cradock, Humansdorp, Jeffreys Bay, Grahamstown
The western part
of the province contains the biggest municipality and is one of the biggest contributors to provincial GDP. Large commercial farms in the Karoo produce quality meat, wool and mohair, while the coastal belt has dairy farming and some forestry. The Kouga Valley is a big deciduous fruit producer, while the area around Kirkwood/Addo is known for its citrus.
Cacadu has three of the region’s national parks (Camdeboo, Tsitsikamma and Addo Elephant) and several private game farms. Grahamstown is the venue of the National Arts Festival, while Jeffreys Bay is one of the top surfing spots in the world.
Chris Hani District Municipality
Towns: Middelburg, Molteno, Dordrecht, Queenstown, Lady Frere, Elliot
Sheep farming is an important part of the economy. Some coal is found in the north and tourist activities include fly-fishing. The Nola factory in Molteno manufactures Ouma rusks. The Grootfontein Agricultural College and Research Station is in
Middelburg, and the Marlow Agricultural College is near Cradock.
OR Tambo District Municipality
Towns: Mthatha, Coffee Bay, Port St Johns, Qumbu, Bizana, Flagstaff
OR Tambo District Municipality encompasses some of the province’s least-developed areas and contains one of South Africa’s most important ecological areas, the Pondoland Centre of Plant Endemism. Mining is already pursued in some areas, but plans to allow titanium mining on seaside dunes are being contested. There is great potential for tourism. A Wild Coast Spatial Development Initiative exists to plot further development. Magwa Tea Estate and forestry concerns are among the biggest employers.
uKhahlamba District Municipality
Towns: Aliwal North, Burgersdorp, Lady Grey, Rhodes, Barkly East, Ugie
Cattle and sheep farming make up 80% of land use, while commercial forestry is a big contributor to employment. The hot springs at Aliwal North and skiing at
Tiffendell are two major tourist attractions.
The Eastern Cape extends over 169 580 square kilometres, representing 13.9% of South Africa’s land mass. The province has more livestock than any other province, with a fifth of the country’s cattle, a quarter of its sheep and nearly half its goats. Mohair is a speciality of the Karoo region. The province’s population of 6.9 million makes it the country’s third-most populous province, with about 15% of the national population. The overwhelming majority of people – more than 80% – speak Xhosa, with Afrikaans, English and Sotho (near the Lesotho border) as the other major languages. The Xhosa-speaking kings are recognised nationally.