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Coega on the cusp of driving economic growth through SMME development - published 16 Jun 2022


GUARD HOUSE: built by SMME’s at Ingquza Hill Municipality as part of the CDC SMME Development Programme.

Coega on the cusp of driving economic growth through SMME development - spends more than R 1, 5 billion on SMMEs

Gqeberha, South Africa, 15 June 2022 – Today, the Coega Development Corporation (CDC) announced that R 1,569,219,792.87 on Small, Micro and Medium Enterprises (SMMEs) procurement spend during 2021/22 financial year, ending March 2022, is in line with its socio-economic development and transformational goals through SMME Development programmes. 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, the Coega’s SMME spend distribution on the disaggregated targets indicates the following: spent on black-owned was R1.3 billion (84%), including black women owned - R419,3 million (32%), and black youth owned - R38,9 million (3%).

Coega’s success in this area further recognizes 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 the appointment of the main contractor. Coega, through the value engineering process, can identify and set aside packages that could be implemented by SMMEs, to afford opportunity to smaller contractors. This approach has delivered tremendous value to the entire industry, stimulated jobs, and inclusive growth and development. Worth highlighting is also Coega’s achievement in employment creation, with a massive 19, 194 jobs created (construction jobs: 9,540 and SEZ cumulative operational jobs: 9,654), 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 during this very challenging economic environment, and particularly because of the role SMMEs play in creating jobs and growing the economy. We have seen in the first quarter of this year, 2022, that South Africa’s unemployment rate continues to be a cause for concern, and with Coega’s intervention utilizing SMME development to create jobs and stimulate the economy, the future looks promising. According to StatSA (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 per cent in 2022 compounded by GDP growth of 1.8 per cent over the next three years.

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 to be set to succeed for both short and long-term for 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 pro-activeness and dedication to SMME development cannot be overemphasised. 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 R10.38 billion. “In one of Coega’s mega projects, i.e., the Tshwane Automotive Special Economic Zone (TASEZ) just last year, R324.3 million was achieved on SMME procurement spend out of R2 billion expenditure on the project from April 2021 to December 2021,” says Unathi Maholwana, CDC’s SMME Programme Manager. As a matter of fact, the TASEZ Project in Tshwane, represents the best-case study in South Africa on how to fast track the implementation of mega infrastructure projects, with Coega as an Implementing Agent of Choice. More than R1,5 billion was spent in less than 8 months, whilst maintaining strict governance protocols, ensuring compliance with legislation, and generating sustainable value for all 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 deepen government capacity not only to implement infrastructure programmes but to fast track them within scope, quality, and costs. More information on the TASEZ project can be found on the website: www.tasez.co.za.

Coega’s SMME initiatives include a very successful Development Programme that is championed by the SMME Business Unit, 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 2021 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 CIDB grading through Coega’s intervention and support during 2021.

SMMEs have been identified as productive drivers of inclusive economic growth and development in South Africa and around the world. The small business sector in South Africa is a critical part of the national economy with the government’s National Development Plan 2030 (NDP 2030) looking to SMMEs to be major sources of employment and drivers of growth in the economy; they are considered an important driver for reducing unemployment, especially since the formal sector continues to shed jobs. Gideon Nieman, Professor Emeritus (2009), argued that SMMEs have become an important focus for policy makers. SMMEs provide the higher labour- absorptive capacity of small business sector than that of other size classes; the average capital cost of a job created in the SMME sector is lower than in the big business sector; they allow for more competitive markets; they can adapt more rapidly than larger organizations to changing preferences and trends; they often make use of local resources; there is provision of opportunities to aspiring entrepreneurs especially those who are unemployed, under-employed or retrenched; workers at the smaller end of the scale often require limited or no skills or training; and subcontracting by large enterprises to SMMEs lends fertility to production processes. Similar arguments had been advanced by the World Business Council for Sustainable Development (2004).

Coega continues, as one of the main objectives, to create an enabling environment for the development and participation of SMMEs to ensure sustainability and empowerment through Coega’s SMME Database. Key to this though is also ensuring that Coega spreads the pool of SMMEs benefiting from its projects according to its footprint, nationally; and this programme has recorded successes in other areas far and wide with a balanced split of SMMEs benefiting in district areas, covering Alfred Nzo, Amathole, O.R Tambo and Sarah Baartman, to mention but a few” concludes Maholwana.

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