“Now it’s our turn !” Identifying opportunities for the development of The Southern Cape Corridor

There is a most beautiful stretch of southern coastline and adjacent plain, cooled by the Indian Ocean on its south and protected by the Outeniqua Mountain Range to the north. 

This corridor stretches from Wilderness in the east through to Stilbaai in the west and is called the Southern Cape Corridor (SCC).  In many respects, this region is better positioned for economic growth and development than the Pretoria-Midrand-Jo’burg corridor was in the 1980s.  We do not have the traffic congestion, pollution and crime of Gauteng, yet have the added advantage of a harbour at Mossel Bay with significant potential.  Further, we have the George International Airport, a stretch of N2 highway in excellent condition, many thousands of hectares of land suitable for housing and commercial development, and an existing regional population of 300 000.

An Underpinning Economy

From the developments currently underway in the area between Blanco and the George Airport, it seems that Agri-Processing is emerging as a key sub-sector of the new economy of the region.  To date, the region has largely been dependent on Agriculture, Fishing, Viticulture, Beer & Beverages, light/medium Engineering, Industry and Construction, Logistics, Tourism, and Timber growing and processing.  Employment and the capital generated from these sectors have kept the regional communities in relative socio-economic stability. Current projections are that the population of the region will exceed 500 000 by 2025.  By this time, the economic sectors on the employment and capital generation menu will need to have grown substantially (quantity) and substantively (quality), or further growth will be short-lived and stunted.

Growth Sectors

A number of opportunities are obvious when one simply considers population growth.  These include:

  • Provision of new low and medium cost housing (low through to high-density)
  • Adequate, affordable and safe transport and road infrastructure  (impressed by what is happening on the road linking the N2 to Stilbaai)
  • Provision of utilities, particularly water and energy
  • Building of new and/or extension of schools and primary health care facilities

In terms of the expansion and deepening of sectors currently already in play, the following are possible areas for growth:

  • Core inputs for agriculture including fertilisers and machinery
  • Expansion of food processing facilities (perhaps incl. canning, refrigeration, abattoir)
  • Expansion of timber processing facilities and introduction of carpentry/joinery factories for value add to timber products
  • Upgrade and/or expansion of rail network lines, stations, sidings, rolling stock and general infrastructure
  • Expansion of logistics and warehousing (incl agri and agri-processing)
  • Capacity in terms of skills and supply of material for the construction industry will need to be expanded and increased

Critical new sectors will need to be established and capital will need to be raised for investment in the following:

  • Energy – water, wind and solar (could be incorporated with development of new dam and reservoirs)
  • Artisan and technical training facilities (could be done sensibly under the brands of NMMU and/or South Cape College)
  • Telecoms, info & comms technology, electronic / digital infrastructure, provision & maintenance.

Timing

As is almost always the case with investment, timing is the key strategic issue; apply capital and get the ball rolling too early and others simply ride the momentum of the wave you create and/or leapfrog over your operation.  If you get in too late, not only is the competition already established, but the cost of entry is significantly higher, and the low-hanging fruit has already been eaten!

Triggers

Imagine being allowed to start a 100m sprint three seconds before the starter’s pistol is fired !!  You should win hands-down every time, although perhaps Hussein Bolt would still catch you!  Nevertheless, my point is that the next hike in interest rates and/or a downgrade by the Ratings Agencies of SA Sovereign Debt will be the trigger for the race to take ownership of the opportunities noted above.  Why ?  Both these events will drive inflation and in turn, spur the private sector to hunt for market share, improved turnover and better margins/returns.

By maximising the current infrastructural and productive capacity of our George Airport, Mossel Bay Harbour, road and rail networks, and skilled population, there would be few reasons to doubt that for the decade ahead, we should not enjoy better-than-inflation, economic growth.

Pjm 27.2.17

southcapecorridor@gmail.com

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