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GIDZ charts a new course in investment

We need to reduce the red tape, roll out the red carpet and invite foreign and direct investors into the country’ – Seipati Mangadi

NASTASSIA ARENDSE: The manufacturing industry in Gauteng has often come under the spotlight, where key players, including the government have highlighted the importance of partnerships between government and the private sector in creating an economy, which is sustainable and inclusive. The Gauteng Industrial Development Zone is charting a new course in investment for the Gauteng city region and joining us for more is Seipati Mangadi, who is the CEO of the Gauteng Industrial Development Zone. Thank you so much for your time.

SEIPATI MANGADI: You’re welcome, thanks.

NASTASSIA ARENDSE: Now to those who are listening and they often hear of these terms and they hear about the aerotropolis that has been created, tell us a little bit about the Gauteng Industrial Development Zone, what are you mandated and tasked with?

SEIPATI MANGADI: The Gauteng Industrial Development Zone is an entity that is a subsidiary of GGDA, the Gauteng Growth and Development Agency, it’s fully owned by Gauteng Provincial Government. Our core mandate is industrial development and support, using SEZ framework, which is a DTI framework, that has a suite of incentives and that suite of incentives in summary would be tax incentives, would be creating critical economic clusters and also there is SEZ infrastructure funding which enables capital injection that we then develop world class precincts. The support is on regional development and on sector development, regional development if I go into detail, for instance, we are an industrial hub that is in the Eastern Corridor of Gauteng that is within close proximity to the OR Thambo International Airport, the primary transport hub in the country, the biggest and the busiest airport on the continent and, therefore, we are exploiting that competitive advantage. We also, as you just mentioned, operating in the same footprint as the aerotropolis masterplan that Ekurhuleni Metro has launched and in that way it is like government is working in concert with all three spheres of government, concentrating on industrial development and advanced manufacturing in the Eastern Corridor of the province.

NASTASSIA ARENDSE: Now in terms of the projects that you have been involved with, what are some of the exciting ones and what has been the progress thus far on them?

SEIPATI MANGADI: To start with because we are in the Eastern Corridor and Gauteng being such a small province, land is a very limited resource, therefore, we have the unique advantage, unlike other SEZs in the country, in that we are allowed to operate purpose-built non-contiguous multi-sites. Right now we are concentrating on the catalytic project, which is in a precinct within the airport precinct itself, we have dedicated R250 million from the SEZ fund in infrastructure development, it’s a green-field project and it’s planned to be completed at the end of this financial year, which is March 2017. Concurrent to that we then have support initiatives of the jewellery sector, which is what we have identified as our catalytic project. One of the support services or initiatives we’re embarking on is we have developed a world class studio in Germiston, where we have a post-graduate course on CAD design for jewellers and we have young talented people, who have done a national diploma in jewellery that now we actually create a niche for them to become designers. It’s been happening for the last four years, we are now on the fourth intake and also promoting and encouraging entrepreneurship, in that way we are bringing new blood into this industry that is now aging and we are now bringing in new entrants and it’s very exciting when you look at the kinds of designs and products they produce Concurrent with the development we are embarking on an investor attraction drive because now we need to attract anchor tenants into this precinct and the response has been absolutely positive. We are earmarking certain countries where we know they actually lead in jewellery and design, they are also markets, so we want to attract foreign direct investors to the precinct. But we are also earmarking some of our local direct investments to also be attracted into it. Therefore, I am expecting in a couple of years we should be having a very vibrant jewellery industry that is also export-oriented.

NASTASSIA ARENDSE: From your assessment and in talking to these talented jewellery designers, what is your take on South Africa’s jewellery manufacturing market?

SEIPATI MANGADI: The market has really declined in that when you go to the jewellery stores around the country what you find is imports, particularly Asian imports, and we are actually trying to instill a culture where people should buy proudly South African. However, we then need to differentiate, hence, we thought let’s go the route of introducing designers. We cannot compete with products that are coming from our Eastern competitors but we surely can compete on a bespoke jewellery, on designs that have an African feel but also that will appeal to the global market. That is what we are aiming for, we are not aiming to compete with the low-end jewellery that is coming into the country. At the same time we believe that if we create bespoke jewellery that has got a heritage design for South Africa but it’s also high-end jewellery, we will be able to position ourselves to enter markets in Europe and the USA, which are the leading markets for jewellery in the world.

NASTASSIA ARENDSE: We were having a conversation with the CEO of the Gauteng Innovation Hub and the bulk of that discussion was basically about entrepreneurs and some of the exciting things that he has seen come up. From your side how is the Gauteng Industrial Development Zone helping entrepreneurs who are in that jewellery space?

SEIPATI MANGADI: Taking the alumni of Design@50, that’s what we call the programme for the CAD designers, it takes on 15 students per annum and of that 15 we have seen approximately 30% to 40% of those when they finish the programme they actually become entrepreneurs and that is because of how we have positioned the course itself. There is an element of marketing and product development and some business development that we have introduced because we believe that it would be more impactful if some of these trainees then become their own business and they also then start taking on other younger people to become employed in their business. So with 30% to 40% going towards entrepreneurs I say that it’s a pretty good outcome.

NASTASSIA ARENDSE: From your view what are some of the challenges or difficulties that you battle with that can probably be easily solved within the short to medium term? What are you dealing with when you walk into the office, what’s your biggest challenge that can possibly be solved?

SEIPATI MANGADI: Industry, government’s primary role is not creating jobs, it’s not running business, it’s creating an enabling environment within which private initiatives should come to the fore and take on the challenge and create inclusive wealth. Hence, we identify industries that need support and that are in distress and jewellery was one of those. When you are actually now trying to lend support to the industry, with the industry players all you are getting is that they want more and more, they are not willing to put forth, for instance we are doing this initiative of training students, they come out of it and they actually become value to this industry, they get absorbed. Some of our students are entrepreneurs and some are not entrepreneurs, they actually get absorbed into the industry. Now you go to the industry to say we’ve proven that this concept works, can you contribute a little because obviously you need to invest and also you have seen the value of it and that’s not coming forth. So we need private-public partnerships in all the initiatives that government undertakes, for it to actually have the desired impact.

NASTASSIA ARENDSE: I was speaking to Siphiwe Ngwenya and, of course, he is the former CEO of the GGDA, now he is with tourism, so he had a lot to share about where people need to go for tourism in the townships and all of these things. The one question I asked him, which I will pose to you, was particularly on attracting investors into the Gauteng area. So he had his ideas of what needs to be done and what they are working on to be able to do that. From your side how do we create Gauteng to be…it’s a brand as it is, people are already coming in but how do we elevate the game and lift it to the next level where international investors want to be around your projects, they want to be around OR Thambo International Airport.

SEIPATI MANGADI: That’s a very difficult question, one that we deal with on a daily basis. If I were to simplify it, we need to reduce the red tape, roll out the red carpet and invite foreign and direct investors into the country. By that we have regulatory systems that sometimes become counterintuitive of what we are seeking to achieve and we also function in silos in other areas. When investors approach Gauteng they don’t want to know that there’s a window for this and a window for that, we need to have a one-stop concept, where they come in and all their issues are addressed, where we can guarantee our responses that if we say in a week we will dish out permits and certain things we need to actually adhere to that. That’s why in the group of GGDA there is a Gauteng Investment Centre, it’s a one-stop shop, if you like, and there we send our investors to make sure that everything from permits to Home Affairs issues, to anything that they need to establish their business, the length of time can be reduced. That is the first phase of what you then experience in Gauteng. Then the second phase is that, of course, the other concern is comparing us to other cities, Gauteng doesn’t compete, so to speak, with other provinces, we don’t compete with each other, we actually compete with other cities like New York, London and Shanghai, and when you talk to investors their concern is always cost conversion. They want to know how much it will cost for them to produce a widget or something relative to if they had put their business somewhere else in the globe. Therefore, we all need to come together, be it labour to be productive, be it different spheres of government to bring the costs down to guarantee bulk infrastructure, energy, to improve our telecommunications, all those things then put us on par with the other countries because there are a lot of people who want to come and invest in South Africa, they just need to know the good story.

NASTASSIA ARENDSE: How important is collaboration between you and the other provinces, where there are other IDZs?

SEIPATI MANGADI: In fact the DTI has embarked on a drive that all the IDZs don’t compete, we all craft our niche and then we stick to that. For instance we are linked to the airport, therefore, the types of sectors that we will develop is low mass, high value industries that have linkages to airfreight as a mode of transport. If an investor comes to town and what they are doing is what would be best served in another province, in another IDZ, we actually direct them to that. If the other IDZs are out in the globe attracting investors and they actually have come across investors that are geared towards us then they direct them to us in that way.

NASTASSIA ARENDSE: We’re almost halfway through the year what are some of your objectives that you’ll be tackling from the moment you leave this studio?

SEIPATI MANGADI: The bane of my existence is to find anchor tenants for this precinct, there is no point in building and saying they will come. So on a daily basis I’m on the phone with internationals, on a daily basis I’m receiving missions of people who are coming, and all of them we are addressing the question of what would it take for them to move some of their businesses to this country. Then there are our competitors like Mauritius, who also have SEZs, we are talking to them to see how we can instead of competing to our detriment we can rather support each other and share in the value chain. So investor attraction, responding to investor queries and their demands, and trying to craft some customised value chain for them or value proposition, that’s what I do.

NASTASSIA ARENDSE: Seipati, thank you so much for your time.

SEIPATI MANGADI: Thank you for having me.

NASTASSIA ARENDSE: That’s Seipati Mangadi, she’s the CEO of the Gauteng Industrial Development Zone.

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