Trade & Investment KwaZulu-Natal: Investing in South Africa's Future – Zamo Gwala
South Africa is an industrial powerhouse and opportunities for international firms are abundant. Zamo Gwala, CEO of Trade & Investment KwaZulu-Natal, explains to Finance Director Europe why the province offers investors a competitive advantage, and how its climate, multinational population and improved airport and ports are all key factors for economic growth.
Known as the 'garden of South Africa' due to its tropical and subtropical regions, KwaZulu-Natal, on the east coast, is one of nine provinces in the country, and has the second largest economy.
"It's easy to see why KwaZulu-Natal is an attractive option for EU-based organisations, and we've got all the ingredients for continued growth," says Zamo Gwala, CEO of Trade & Investment KwaZulu-Natal (TIKZN), a provincial trade and investment promotion agency. "South Africa has the biggest economy in the continent. Most of the companies we see investing are from Europe. One of the main reasons is because of the easy connections - we've got daily flights - and another advantage is that we're in the same time zone. Overnight, you can get from London to Durban, or vice versa."
The new international airport in Durban, King Shaka, which caters for 7.5 million passengers a year, is a further incentive for potential investors. "There are more flights than ever before and there is now an easier connection with a number of other regions that we trade with," notes Gwala.
KwaZulu-Natal enjoys a varied climate. The Midlands, an inland area of the province, is often covered in snow in the winter, while the temperature on the coast rarely drops below 14°C, and during the summer months it is about 30°C consistently. "On the coast we have a tropical climate," says Gwala. "However, if you drive two hours inland it gets extremely cold. It's one of the coldest places in South Africa. So we have a good balance in terms of what can be produced."
Location, location, location
Gwala also notes that the province's multinational population provides further potential advantages. "In Durban we have more than one and a half million people of Asian origin," he says. "That makes KwaZulu-Natal easy to link up with the East, and it's easier to build business in these countries since we have people who have cultural understanding of those markets."
KwaZulu-Natal's two ports, Durban and Richards Bay, the two largest harbours in South Africa, are largely responsible for the province's reputation as a business hub. The combined cargo tonnage that passes through the ports amounts to 78% of South Africa's freight, and a substantial investment is being made over the next five years to improve capacity and maintain the harbours. "Most of what comes in and leaves the country has to go through our harbours," notes Gwala.
"If an organisation wants to come and manufacture in South Africa and import some of its raw materials, the company is in a better position if it's based in Durban in comparison to Johannesburg. Take Toyota South Africa; if it was set up away from the coast it would mean that whatever comes in would have to put into a truck and driven a number of kilometres to get it to the site. As the company has established an automotive supplier park in Durban, it is already very close."
Toyota is the key automotive player in the province, the market leader for the past 30 years, and is the number one selling vehicle brand in the country. In addition, the company has demonstrated its commitment to the economic development of the KwaZulu-Natal region by attracting component suppliers to the region as well as investing further in its own expansion programme to cater for increased production in the future.
While tourism, real estate, government and financial services, including the call centre industry, are flourishing in KwaZulu-Natal, manufacturing currently dwarfs all other business sectors in the province. As well as the automotive industry, KwaZulu-Natal is particularly prolific in sugar production and manufacturing, which is an important provider of jobs and is the cornerstone of business development in rural areas where sugar cane is grown. "Currently, manufacturing is the largest sector and makes up roughly 25% of the provincial economy," Gwala notes. "This is a key area and we're finding that going forward there is a huge opportunity for growth in this sector, as well as for suppliers."
Gwala recognises, however, that a close connection with Johannesburg, South Africa's economic centre, is vital. "The distance from here to Johannesburg is five hours when driving and there is a flight every hour," he says. "We have offices located in Johannesburg, because if we want companies to do business in KwaZulu-Natal then we need to engage the decision-makers and be close to organisations' head offices."
Informed investment decisions
TIKZN deals with trade and investment opportunities in the province and assists with negotiation of local government incentives on behalf of investors. "We advocate for a conducive business environment," explains Gwala. "We also engage the government, and try to improve the investment climate. We'll conduct assessments and look at the issues of labour and tax. Essentially, we tell the government that in order for us to improve the business surroundings this is what needs to be done, and it's our role as an agency to do that.
"In addition, when I come to London to talk to a company I need to be able to provide the organisation with information about the region," he continues. "It is essential that the information TIKZN supplies is credible, on time and accurate. We invest a lot of effort and money to be able to put out dependable information. Furthermore, if I'm able to convince the company to fly over to South Africa to look at what the province can offer, if becomes our role to take the company around."
The services that TIKZN offers investors include facilitating joint ventures and business linkages between organisations of all sizes, assisting foreign companies with application for permits, supporting investors to locate suitable premises, helping businesses to engage with the property owners, and securing project and operational financing.
"For example, if a company has some employees that are sitting in London that it wants to move to KwaZulu-Natal then we'll help the company apply for the permission to get them over here, we'll get its electricity in place, and basically put up the infrastructure," concludes Gwala. "The purpose of this agency is to hold your hand through all the processes."
The South African government expects the country's economy to grow by 6% by 2014, and TIKZN cites that the country is placed third globally in terms of industrial production growth. With KwaZulu-Natal at the heart of that growth, the agency aims to support investors and help them take full advantage of the province's untapped opportunities, and provide aftercare services once a business has been set up.