The Southern Cape Corridor ~ Risk and Return

It’s a question of capital …  without this source of ‘energy’, our train will never leave the station … and the fun of trying to push a locomotive down the tracks won’t last long I assure you!

Looking back at the eighteen years of history of the Coega Industrial Development Zone (IDZ) and the Port of Ngqura in the Eastern Cape, many commentators regard it as a ‘white elephant’ and a ‘business graveyard’ – an 115km² graveyard for white elephants !.  Whatever the opinion, three issues stand out clearly in a review of the processes used.  An enterprise perspective based on solid business pragmatics was not well enough developed at the conceptual / inception phases of the project.  Secondly, a critical mass of suitable investors was targeted and approached only ‘after-the-fact’, and thirdly, global economic trends were given limited play in terms of their indicative and predictive value.  It is distressing that the final development bill for the Coega IDZ remains untabled.  (In 2001, the estimated development cost was R3.2bn, by 2009 is had spiked to R10bn, and then the news releases went quiet.) 

(Aside:  In the 6000-word concept overview to the Coega IDZ, there is no reference to what investors might regard as valuable business propositions, let alone an analysis of the risk/return dynamics of the ‘opportunities’ listed in the document.  ) 

History is there for our analysis and the learning of lessons, but seemingly we humans prefer to endlessly repeat our errors.  Nevertheless, a key lesson from economic development projects all over the world is simply this:  If broad-based, community and stakeholder participation in the conceptual and initiation phases of these projects is not carefully managed, investors will be slow to ‘show up’ let alone ‘come aboard’.  A simple illustration will suffice:  community activists, trade unions, politicians and NGOs will all tout ‘job creation’ as THE important issue.  Now in a country like SA, where real unemployment is possibly at 55% + (with 17 million receiving social grants), the insistence on job creation seems reasonable.  However, in the free-market, capitalist economy, job creation is not an incentive to invest in or start a business.  Employment and its additives remain operating costs, and the enterprise approach works to minimise these!  You draw your own conclusions.

In building momentum around our Southern Cape Corridor (S.C.C.), the initial focus must be on qualifying and quantifying substantive, apolitical inputs from local, national and international investors and businesses.  This is not the terrain for academics or business politicians but for hard-nosed, experienced traders with solid enterprise approaches to economic development.  This hard work must be completed BEFORE the fact, and then we can begin to build progressive, value-adding relationships with these investors and businessmen and women.  The pragmatic, enterprise views drawn from private sector investors and institutions must form the backbone of the conceptual foundations of our S.C.C.  We have all the required strategic ingredients for a sustainable, region-wide trading platform.  At present the economic risks facing our southern Cape and Garden Route are far outweighed by the rewards offered by the proposed S.C.C. 

What are we waiting for ?  Inertia will get us nowhere.  Masambe … Let’s go !!

pj momsen


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