Coega on the cusp of driving economic growth through SMME development

The Coega Development Corporation (CDC) announced a total spend of R1,569,219,792.87 on Small, Micro and Medium Enterprises (SMMEs) during the 2021/22 financial year, ending in March 2022.

The organisation said that this achievement is aligned to its socio-economic development and transformational outcome of increasing economic opportunities for the marginalised through advancing SMME economic participation.

This is a 35.32% achievement (target: 33%), inclusive of SEZ and non-SEZ programmes.

Coega also focuses on Women and Youth SMME development. In this regard, Coega’s SMME spend distribution on the disaggregated targets indicates R1.31bn spent on black owned SMMEs (84%) - inclusive of R419.3m on black women owned SMMEs (32%), and R38.9m on black youth owned SMMEs (3%).

Coega’s success in this area further recognises the readiness of SMMEs to be operational in both construction and non construction activities, as the focus areas. In the construction sector, this achievement is due to Coega’s responsibility to facilitate the process of ensuring SMME packages are identified prior to the appointment of the main contractor. Coega, through the value engineering process, identifies and sets aside packages that can afford infrastructure implementation opportunties to SMME contractors. This approach has delivered tremendous value to the entire industry, stimulating jobs, and inclusive economic growth and development. Coega’s achievement in employment creation is also worth highlighting, with a massive 19,194 jobs created (9,540 construction jobs and 9,654 SEZ cumulative operational jobs), exceeding its overall jobs target by more than 50%. Coega’s achievement surpasses the pre-COVID-19 pandemic results that were last seen in 2018/19.

Coega’s astounding performance is welcomed, especially in this very challenging economic environment, and particularly because of the role SMMEs play in economic growth and job creation. We have seen in the first quarter 2022, that South Africa’s unemployment rate continues to be a cause for concern, and with Coega’s intervention utilising SMME development to create jobs and stimulate the economy, the future looks promising. According to StatsSA (QLFS), the current official national unemployment rate stands at 34.5% for the first quarter of 2022, while the unemployment rate was 63.9% for those aged 15-24 and 42.1% for those aged 25-34 years. Furthermore, South African gross domestic product (GDP) expanded by 1.9% in the first quarter of 2022, representing a second consecutive quarter of upward growth, says StatsSA.

Moreover, the size of the economy is now at pre-pandemic levels, with real GDP slightly higher than what it was before the COVID-19 pandemic. South African National Treasury’s economic growth projections indicates a 2.1% in 2022 compounded by GDP growth of 1.8% over the next three years. The Chief Executive of the Nelson Mandela Bay Business Chamber, Ms. Denise van Huyssteen, said: “We welcome Coega’s significant and targeted support of developing and growing SMMEs in South Africa, and especially in Nelson Mandela Bay. This is key in terms of driving local economic activity and building a solid foundation for these businesses to be strengthened and set to succeed for both short and long-term growth.

“The days of big businesses being the main source of job creation are over and rather going forward, jobs will be created within the SMME sector. The Chamber has prioritised SMME development as part of its strategic plan and looks forward to partnering with Coega and others to collectively further SMME growth opportunities.”

Coega’s proactiveness and dedication to SMME development cannot be over emphasised. As an example, Coega is the Implementing Agent (IA) of Choice in South Africa for many infrastructure development projects and on behalf of several clients, with a portfolio of more than R10.38bn.

“Just last year, in one of Coega’s mega projects, i.e., the Tshwane Automotive Special Economic Zone (TASEZ), R324.3m was achieved on SMME procurement spend out of R2bn expenditure on the project from April to December 2021,” says Ms. Unathi Maholwana, CDC’s SMME Programme Manager.

As a matter of fact, the TASEZ Project, represents South Africa’s best case study on how to fast track the implementation of mega infrastructure projects, with Coega as an Implementing Agent of Choice. More than R2bn wasspent on the project in less than 12 months, whilst maintaining strict governance protocols, compliance with legislation, and generating sustainable value for partners, stakeholders, and the client.

SMMEs and communities surrounding the TASEZ project played an important role to ensure the success of the project, adds Mr. Chuma Mbande, CDC’s Executive Manager of Business Development (Non-SEZ Services). Coega’s 23 years’ expertise in mega infrastructure development in the country has enhanced public sector capacity to implement and fast track infrastructure programmes within scope, quality and budget.

More information on the TASEZ project can be found at: www.tasez.co.za Coega’s SMME initiatives include a very successful Development Programme, which comprises the Training and Mentorship of SMMEs on tendering for construction contracts, basic business concepts, applying health and safety standards, and business finance. From April to December 2021, a total of 213 SMMEs benefitted from this training, at a cost of R710 300.00.

As at 31 December 2021, Coega’s total value of contracts awarded to SMMEs through the SMME Business Unit’s Development Programme stands at R537,852,730. Furthermore, the SMME Mentorship Programme has ensured that 80% of SMME-awarded contracts have been successfully completed, and 51 SMMEs have successfully improved their Construction Industry Development Board grading through Coega’s intervention and support during 2021.