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Opportunity Issue 99

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Opportunity magazine is a niche business-to-business publication that explores various investment opportunities within Southern Africa’s economic sectors and looks to provide its readers with first-hand knowledge about South African business. Opportunity also looks to present South African business to international markets that may have interests in investing in South Africa. The publication is endorsed by the South African Chamber of Commerce and Industry (SACCI).


INTERVIEW PUTTING POLICY INTO PRACTICE Atlantis Special Economic Zone Acting CEO Dr Pierre Voges is determined that the zone’s audits are going to be as clean as the green technology that underpins the investment case for this West Coast SEZ. Gestamp Renewable Industries (GRI) is one of the large international companies that is turning the Atlantis SEZ into a green technology hub. Credit: GRI What are the origins of the Atlantis Special Economic Zone? The idea of a Greentech Special Economic Zone was mooted around eight years ago, but the company came into being in 2020. Twenty-five hectares of the land is privately owned and it has already been built up with Greentech investors such as Kaytech, who manufacture construction sheeting out of recycled plastic, and Gestamp Renewable Energy who manufacture the steel wind turbines which are being built across South Africa all those steel wind turbines that are going up across South Africa. The special challenge then was to unlock the 94ha of completely greenfield land that belonged to the City of Cape Town. How did you go about that? We didn't have the financial means to buy the land so we made the City of Cape Town a shareholder in the SEZ company, a provincial enterprise.The Atlantis SEZ has since signed all the relevant agreements and has been in existence for 18 months. What is your focus? National government is currently busy with the renewable energy programme and many of these components will hopefully be manufactured in Atlantis SEZ. Will you compete with the SEZ at Saldanha? The Saldanha IDZ is more focussed on marine and oil and gas. Atlantis is in the green manufacturing sector with solar panels, wind turbines and battery storage. In the end SEZs and IDZs will probably compete with one another for business because Greentech and green manufacturing is becoming the “in” thing, particularly with the government promoting green and renewable energy products to be manufactured in South Africa. Is the province a stakeholder as well? The province is paying for the operational budget of the SEZ company. Any SEZ will try to break even at some point; not to be dependent on the province for its operational budget. We have to do that within a period of 10 years but the capital for the infrastructure and the factories being built is supposed to be covered by the National SEZ Fund. But all those things could not happen if you do not have access to land. This is why we approached the City of Cape Town to acquire the land from them for SEZ purposes. They are now a minority shareholder. What type of problems did the SEZ experience? Our first real challenge was around the fact that there are a lot of expectations of an SEZ as opposed to the practical reality of one. With land and site investment from the National SEZ Fund, you start to have an SEZ concept come together. The second big problem related to the National SEZ Act where every SEZ must be a business enterprise. With the problems around state-owned enterprises, we had to motivate very carefully to the national government to make us a provincial business enterprise. If we had not had access to that land, we would not have been able to prove to the national government that not all our assets were coming from the provincial budget. By default, it worked out quite well. Tell us about the governance and administration of the SEZ. A clean audit of state-owned enterprises has become an achievement where it should be a given. Before private investors invest, they will be quite wary of who they are dealing with. If they do not have trust in the CEO, the company, the structure, systems and a good administration, then they will not sign a 20-year leases. 32 |

INTERVIEW We were adamant in building a strong administration with good checks and balances and as well as very good supply chain management system. We have a team that's quite diverse in culture and in race but also in experience and expertise. If you have the right people in the equation and the equation works well, then you are lucky. I am adamant that every year you must have an unqualified audit. It is absolutely non-negotiable. Who is in your executive team? We've been lucky to secure some great staff members. In business development there is Jarrod Lyons. In the area of commercial development, we have Iemrahn Hassen, a chartered accountant with many years of experience. Matt Cullinan is in charge of infrastructure and planning. The CFO is Waheeda Saib. She came to us from the Auditor General's office. Ellen Fischat is in charge of all the skills training and the community participation. What lessons have you learned since the inception of the SEZ? You must have strong relationships with the three tiers of government. We have a great relationship with Wesgro from an investment and marketing point of view and with GreenCape and the funders. The lesson you learn is to build bridges with funders, government, universities and all the institutions that make up your ecosystem. What is the nature of your relationship with universities? Vital. Universities have a research capability that you don't want to build within your SEZ. You can be creating a living lab in your own SEZ with regard to power and water. How green are your operations? We want to become a Greentech industrial park. We also want to be green in our internal operations around power provision and water, to create a blueprint for truly green industrial parks. We are on our way there but it is not easy. In Europe the year 2030 will be the last year for petrol cars. All these manufacturing plants in South Africa exporting to Europe will have to make green cars. All those sub-components will have to be made somewhere, and we hope Atlantis could become part of that. Do you have green rules in the SEZ? Our stipulations are that every building in the SEZ must have solar panels on the roof or be designed in such a way that panels can be installed. South Africa is the 31st-driest country in the world, so maybe we should have had solar tanks attached to every house already. Do you have investment targets? Investment now in the 25ha section is at R680-million with about 340 jobs created through those five investments. We hope to take that recipe to the 94ha. So no signings yet for the new land? We were waiting for that land agreement to come through. Top structures will probably be in place within two years’ or so because you have to put the civil works in first. And that will be funded by the SEZ fund? Yes, but if we do not get SEZ funding for 100% of the civil works we may link up with private property developers to develop the top structures. That will obviously bring a serious change in our revenue model and operational model. What role can government play in creating demand? The government plays a vital role in agriculture and renewable energy. A good example is Andre de Ruyter from Eskom announcing that his board has approved that all future vehicles bought by Eskom will be electric vehicles. If that can be duplicated by every provincial government and municipality you will suddenly have a big demand for electric vehicles. What is the role of SEZs in this? The SEZ is not a policy-making vehicle. We don’t determine policy. We can influence policy but the SEZ is a mechanism to put policy into practice, to actually go and do it. As you know there aren’t many “doing” examples in government and the SEZ is a “doing” example. Dr Pierre Voges’ qualifications include a B Comm, Accountancy and Economics (University of Stellenbosch), Honours in Economics, M Comm and a Doctorate in Urban Planning and Economics, University of Pretoria. He is a Member of the South African Planning Institute (SAPI). As a Director with Grant Thornton International he worked on infrastructure projects in the Middle East and gained extensive experience in managing the finance of infrastructure projects in the public and private sectors. He worked in Europe for the South African Foreign Service and served as Advisor (RDP Office) in the Office of former South African President Nelson Mandela before becoming CEO of the Mandela Bay Development Agency.

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