Coega a 'victim of global investment lull'

Posted On Wednesday, 22 September 2004 02:00 Published by eProp Commercial Property News
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Management blames declining foreign direct investment in Africa for its failure to take off as initially projected

Alec ErwinTHE Coega industrial development zone's management has blamed the project's failure to attract investors on declining foreign direct investment globally and on a lack of investment by local companies.

The deep-water port and industrial zone, being developed at a cost of more than R3bn, will open for trade in the second quarter of next year, but is unlikely to have any large tenants then.

Its critics have predicted that it will become a white elephant, saying it is a political project not driven by economic needs.

Management company Coega Development Corporation conceded in its latest annual report that it had hoped to have at least one major investor by now.

The corporation's CEO, Pepi Silinga, said in the annual report that "we are disappointed that we are not able to confirm a formal signing of agreement with any of these investors".

There were also no developments on a mooted container terminal in the zone, National Ports Authority spokesman Donald Kau said yesterday. Talks between government and P&O Nedlloyd and TCI Infrastructure on the development of the container terminal and an industrial hub collapsed recently.

Coega's failure to attract investors comes despite management's intensified promotion efforts over the past year.

But Silinga said Canadian company Alcan's $2bn aluminium smelter was one of seven possible investments currently being considered.

Others included a $1bn ferronickel and ferromanganese operation, a $10m collapsible stainless steel packaging plant, a $20m polyester recycling plant and three Italian investments in the clothing and textiles sector worth about $30m. Silinga was "cautiously optimistic that a smelter will be built at Coega".

Public Works Minister Alec Erwin said recently that there "will" be an aluminium smelter at Coega. His remark came amid fears that Alcan might scrap the project, which it inherited when it merged with Pechiney last year.

Government initially reserved comment, but has now admitted that it is talking to at least one other potential investor Brazilian resources giant Companhia Vale do Rio Doce in the aluminium project.

Silinga defended the absence of investors at Coega, saying management competed for investments in an environment where foreign direct investment was declining significantly.

He cited United Nations Conference on Trade and Development data showing that global foreign direct investment had remained stagnant at $563bn last year, after two years of decline.

He highlighted that Africa featured poorly in terms of new foreign direct investment.

"No single African country appeared in the top-30 list of foreign direct investment recipients worldwide," he said. "Even more worrying is that, of the top 10 foreign direct investment recipients, only China at number two was outside western Europe and North America."

He said there had been no notable increase in investment by companies in SA. And there had been no dramatic expansion opportunities in the sectors Coega had targeted.

Silinga's cautious optimism about the zone's prospects were partly based on expectations of a rise in global foreign direct investment over the next year or so.

Coega Development Corporation chairman Moses Ngoasheng said the company would place even greater emphasis on investment promotion this year.

Last modified on Thursday, 26 June 2014 15:10

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