Free State Development Corporation: invest in the heart of South Africa
As the most central province in South Africa, the Free State region is a logistical corridor for the republic and is rapidly becoming an industry hub. Ikhraam Osman, acting CEO of the Free State Development Corporation, explains the benefits of investing in the area.
Situated deep in the heart of South Africa, the Free State province is well known for its connectedness. The area shares a border with six other provinces, as well as Lesotho, and provides major transport corridors between the country's main ports and cities. From here, you can travel to Cape Town, Durban, East London and Port Elizabeth, or on to the major markets of Gauteng.
"Most of our key national roads run through the Free State," says Ikhraam Osman, acting CEO at Free State Development Corporation. "These include the N1, which links Cape Town and Johannesburg, and the N3, which is one of the busiest roads in the southern hemisphere. In fact, if you go from Johannesburg and you want to get to East London and Port Elizabeth, you'd also have to drive through the Free State, so you can't escape us."
No surprises, then, that the Free State has been dubbed 'South Africa's centre of gravity in logistics'. With its extensive road and rail links, it is ideally placed for any business seeking access to markets within sub-Saharan Africa.
"More and more industries, particularly in transportation, are looking at establishing depots or offices in the Free State so they can get to all parts of the Southern African community," Osman explains. "We see ourselves as a major logistics player in the future of our country's development, with warehouses and distribution centres and logistics centres emerging all over the province."
As the business wing of the local government, the Free State Development Corporation is committed to helping companies harness the benefits of the area. While some of these apply to South Africa as a whole, others are more specific to the Free State.
"I think an important point to keep in mind is that the Free State province is very much part of South Africa," says Osman. "We do not really compete with other provinces; we try to complement each other in representing a common South African face. That said, we do have distinguishing features and certain competitive advantages which we can exploit."
Traditionally regarded as the 'bread basket' of the republic, the province is a leading producer of agricultural products. It is responsible for 37% of the country's dry beans, 90% of its cherries, 53% of its sorghum, 38% of its groundnuts, 51% of its sunflower, 30% of its potatoes, 29% of its wheat and 40% of its maize. For food processing companies, there is a significant opportunity to make a mark.
A focus for investment
The area is also known for its manufacturing industries, specifically petrochemicals. With raw materials widely available, South Africa has risen to become one of the top 25 chemical-producing countries in the world, and the northern Free State district of Fezile Dabi in particular is a hive of activity. There is even a town here, Sasolburg, which derives its name from the international petrochemicals company Sasol.
Other investment opportunities include services, mining, pharmaceuticals, agro-processing and renewable energies. The Free State has one of the most temperate climates in South Africa, and in recent years solar power has come into its own. According to various studies, the small town of Lückhoff (situated in the south western Free State) is the best location in the country for solar energy generation plants.
"The Free State province is well endowed with sunlight all year round, even during winter, and we're finding that the development of the solar power generation sector is going nicely for us," points out Osman. "Quite a few companies have now established power generation plants in the Free State that are based on solar energy."
There are other advantages too, not least the scenic beauty, cultural richness, nature reserves, game farms and dams. The province benefits from two universities, attractive wage rates and a labour force that is eager to work.
With many different industries represented, companies from all across the world have come on board. Recent foreign investment has arrived from Belgium, China and the UK, and projects currently under the consideration involve Dubai, Germany, India, the Republic of South Korea and the US.
The Free State is also turning its attentions to emerging markets. Since becoming part of BRICS in 2011, South Africa has been viewed as a springboard into the African continent, and there are investment opportunities for other BRICS countries, as well as the Middle East and Turkey.
Once a company arrives in the region, it can benefit from the free trade agreements between South Africa and the Southern African Customs Union. The most recent of these, the Southern African Development Community Free Trade Agreement, comprises 12 countries with a combined population of over 200 million. Meanwhile, the South African Union - European Union Free Trade Agreement (SACU-EFTA) provides duty-free access to over 90% of traded commodities.
"Every agricultural producer has significant export links with countries like Kenya, Mozambique, Tanzania, Zambia and Zimbabwe," says Osman. "We also have a free trade agreement with the EU, and we are discussing other benefits for countries that want to participate within the evolving and growing BRICS market."
Infrastructure and incentives
As South Africa becomes a bigger player on the international stage, the government is working to improve its infrastructure. The Presidential Infrastructure Coordinating Committee has developed 18 strategic integrated projects aimed at supporting economic growth and development. These cover all key infrastructure networks, rail, road, port, dams, irrigation systems and sanitation, new energy generation plants, transmission lines and distribution of electricity, and social infrastructure such as schools and hospitals.
In the Free State, the key focus is on logistics and a Special Economic Zone has been planned. This will be supported by regional industrial hubs, which link the zone with the rest of the province. Additionally, the government offers an array of incentives that seek to support the development of commercially viable enterprises through the provision of funding or tax relief. Incentives include a manufacturing investment programme (encouraging local and capital investments in productive qualifying assets), business process services (creating jobs through offshore activities) and the tourism support programme (stimulating growth within the tourism industry).
For any new investor in the Free State, the Free State Development Corporation makes an ideal first point of contact. At no cost, the corporation will help the investor to identify a suitable location for the investment project as well as offer a range of value-added services.
"We provide a one-stop shop to facilitate the establishment of any investment, whether it's local or foreign, into any municipality or location within the province," states Osman. "We look first at the provision of reliable information, and then we can assist with the securing of office or factory space. We serve as a link between the provincial local government and investors."
Above all, the Free State Development Corporation is an ambitious and enthusiastic community, ready to assist potential investors in every aspect of their business.
"When an investor comes into the Free State they will be welcome with open arms, and we will do our utmost to make them feel at home," says Osman. "We want to take our people to the next level, and work with them to create a prosperous South Africa. We're very keen to entertain enquiries from anywhere around the world."