Picture: ISTOCK
Picture: ISTOCK

 

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 green-economy hub for sub-Saharan Africa.

The Atlantis SEZ could yield R1.8bn in investment, strengthening Cape Town as SA’s green-economy hub

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.

Solar geysers on roofs in Atlantis on the West Coast — made in the town itself. Picture: ESA ALEXANDER
Solar geysers on roofs in Atlantis on the West Coast — made in the town itself. Picture: ESA ALEXANDER

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.

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
Anneke Nell

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."

A solar panel at a factory in the Atlantis industrial area in Cape Town. Picture: ESA ALEXANDER
A solar panel at a factory in the Atlantis industrial area in Cape Town. Picture: ESA ALEXANDER

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.

In addition, an environmental impact assessment is being undertaken in the hope that a 600MW liquefied natural gas power plant will be established in Atlantis on the back of a recent ministerial determination.

Mulcahy says these initiatives are intended to raise the area’s competitive advantage by creating a more enabling environment in which to do business, irrespective of the SEZ designation.

This should help prevent a repeat of the mistakes made by SA’s apartheid planners, which established Atlantis as an industrial centre and community for Cape Town’s coloured population in the 1970s. For a while the town boomed, thanks to targeted government support, but activity plummeted after the withdrawal of incentives in the mid-1980s.

For this community, the designation of Atlantis as an SEZ would be a very happy ending after years of economic marginalisation.

bissekerc@fm.co.za

Picture: ISTOCK
Picture: ISTOCK

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