Business Development Unit. Investment Promotion: Coega Industrial Development Zone

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1 Business Development Unit Khwezi Tiya Executive Manager: Business Development Investment Promotion: Coega Industrial Development Zone The Business Development Unit was established in June 2007 as a result of a merger between the former Enterprise Development business unit and Metals units. In March 2008, it also incorporated the Nelson Mandela Bay Logistics Park (NMBLP). The unit is responsible for all investor attraction to the Industrial Development Zone (IDZ) and NMBLP. Rustum Mohamed (resigned March 2008) Executive Manager: Logistics Park Several site reservation agreements have been signed with prospective investors... A positive sentiment and an increasing awareness about the investment location solutions offered by the Coega project have steadily been generated through the commitment of large investors such as Rio Tinto Alcan - Canada (deferred for four years) and Straights Chemicals - Singapore. A further 11 investors have signed lease agreements to locate to the Coega Industrial Development Zone (IDZ), adding further momentum to investment promotion. An increasing global recognition of South Africa and the country s position in the African context has resulted in positive interest being expressed by stakeholders globally. The Coega Development Corporation (CDC) has received increased attention from potential investors in Europe, the Americas and in particular from Asian nations such as India and China. In the 2007/8 Financial Year, the CDC therefore increased the extent of focus placed on these key emerging markets. In addition to China and the Indian market, Brazil has been identified as providing niche opportunities in particular sectors. Furthermore, the operational date of the new deepwater port of Ngqura has drawn substantial interest from stakeholders, both in South Africa and abroad. Several site reservation agreements have been signed with prospective investors, while one tenant has already been secured for the speculative warehouse in zone 2 of the IDZ. 35 PAGE

2 PetroSA Site Visit November 2007 Deputy President Pumzile Mlambo- Ngcuka visit November 2007 Rainbow Nation Renewable Fuels at CDC March 2008 COEGA 2008 ANNUAL REPORT

3 During a review of the CDC s investment strategy, which was instituted for the first time in the 2007/8 Financial Year, it was determined that 70% of the signed investors originate from South Africa or have South African partners. Amongst them is a Black Economic Empowerment (BEE) compliant manufacturer of vehicle interiors and a supplier to major Original Equipment Manufacturers (OEM). In view of this, an increased amount of focus has been placed on attracting expansions and investment projects from South African based entities. At the same time, the developed markets, as South Africa s major trading partners, have continued to be a focus area in respect of attracting investments. National road shows were subsequently embarked upon to reach potential South African investors seeking to expand to locations such as the Coega IDZ, which offers better logistics efficiencies and exporting advantages. The result of these road shows will be seen in the course of the year and are dependant to some extent on how fast the following challenges will be addressed: The perception that services and buildings in the IDZ ought to be priced more competitively than elsewhere; The reliability issues of energy and inconsistencies in the messages conveyed to the public by the various stakeholders; and The uncertainty created by the delay in announcing government incentives, such as the Motor Industry Development Programme (MIDP). A number of potential investors have already shelved their decisions to expand into the IDZ due to this delay. auto industry in the region and the CDC. This strategic alignment also makes headway into sustaining the continuous drive towards long-term competitiveness of Nelson Mandela Bay (NMB) in the automotive industry, both nationally and internationally. The park was developed by the Nelson Mandela Bay Municipality (NMBM) as a specialised manufacturing location for the automotive sector in the region. The park comprises an area of ha (i.e. Precinct A comprises ha and Precinct B comprises ha) and was developed with the support of the automotive industry. As a result, a significant amount of focus is placed on meeting the requirements of Volkswagen South Africa (Pty) Ltd, Ford Engines, General Motors South Africa and other NMB assemblers, specifically with regards to housing just-in-time and just-in-sequence vehicle component manufacturers and suppliers. To date, two component suppliers, namely Rehau and Faurecia, have committed over R300 million towards the infrastructure of the Park. Further investments from two component suppliers are expected during the 2008/9 Financial Year. A significant amount of the CDC s successes can be attributed to the manner in which it continues to respond to investor requirements, the partnershipbased approach to developing business solutions and the ability to execute complex enabling projects that require the participation of multiple stakeholders. These investment promotion initiatives have also been largely enabled by the strengthening of the CDC s research capacity. In future, the Research Unit will continue to play a primary role in ensuring that potential investors are strategically identified and pursued in an efficient manner. In mid-2007 the CDC and the Municipality entered into negotiations with regards to the handing over of the management of the Nelson Mandela Bay Logistics Park (NMBLP) to the CDC. At the end of the 2007/8 Financial Year, the CDC signed a 50-year lease agreement for the management of this park, thus confirming the strategic synergies that exist between the Municipality, the In acknowledging the CDC s efforts, the Chief Executive Officer of Volkswagen South Africa, David Powels states that, Volkswagen may be in a position to attract fixed investments from international automotive component manufacturers through its integrated global network, but national, provincial and metropolitan governments have to do what they can to make these investments attractive 37 PAGE

4 and competitive compared with other global investment destinations. The Coega IDZ has been of significant benefit in this regard. South Africa needs new suppliers with new technologies. Numerous challenges were faced throughout the 2007/8 Financial Year. Notably, on the investment promotion front. The CDC was able to attract 83% of its anticipated target of signed investors in the IDZ. In the 2008/9 Financial Year, a significant amount of focus will be placed on integrating the critical challenges and opportunities presented by the energy crisis. In spite of the abovementioned challenges faced, the CDC, in the 2007/8 Financial Year, has yielded the following investment promotion successes: Five signed projects are at implementation stage with a total investment value of R7.5 billion. These projects fall within the Logistics, Chemicals, Renewable Energy, Metals and Business Process Outsourcing sectors. These emanate from diverse countries, including Singapore, Australia, India and South Africa. A further five projects are at negotiation stage with investment values ranging from R500 million to R20 billion. These projects originate from different countries, falling within the targeted regions of the CDC. Ultimately the successes achieved in the 2007/8 Financial Year have been instrumental in building momentum and paving the way for further investment attraction as well as socio-economic development in the Eastern Cape and South Africa at large. COEGA 2008 ANNUAL REPORT

5 Infrastructure Development Unit Bridgette Gasa Executive Manager: Infrastructure Development Unit Introduction...the CDC, by providing the necessary support, were able to assist the learners to achieve higher performance levels than anticipated... The Infrastructure Development business unit is responsible for the construction of the landside infrastructure at the Coega Industrial Development Zone (IDZ), while the deepwater port of Ngqura is being completed by Transnet National Ports Authority. The business unit has over the past two financial years metamorphosed into a unit not only responsible for the planning and delivery of infrastructure, but one that has strengthened its reach into the industry through its focused development intent over construction businesses. The CDC s infrastructure development unit manages the rollout of services through the programmes as elucidated below: Programme 1: Enabling/Municipal infrastructure (zone infills); Programme 2: Commercial/Investor-driven infrastructure (warehouse facilities & buildings); Programme 3: General/Zone development; Programme 4: Professional services; and Programme 5: Five Year Development projects. The 2007/8 Financial Year saw substantial effort being put behind increasing the operational readiness of the area of the IDZ which lies east beyond the Coega River. As challenging a year as 2007 was, the unit managed to fully commit the allocated amount of R150 million into infrastructure purely developed to service signed investors. Within the limitations of the existing allocation requisite focus on meeting investor requirements and performed exceptionally in massifying the number of sustainable construction jobs through the roll-out of its infrastructure programme. On the building and facilities front, PAGE

6 saw the commencement and completion of the manufacturing facilities for Digistix in zone 1, UTI Sun Couriers in zone 2 and Cerebos in zone 7. Other achievements included successfully migrating the CDC from its old headquarters into a brand new CDC Head Office block locatd in the business district of zone 1 in the Coega IDZ whilst simultaneously extending the CDC Recruitment and Induction Centre and Retro-fitting the Media Centre to serve as a Call Centre for Absa. On the municipal infrastructure progamme, the business unit completed an Attenuation pond in zone 3, the Colchester bulk waterline which provides water into the East of the Coega River area, phases 2 and 3 of municipal infrastructure in the Automotive zone (zone 2), phase 3 bulk infrastructure in zones 3 and 5 as well as work on the National Road N2 and access roads to zones 6, 7 and 10, to name but a few projects. The completion of Expanded Public Works Programme Projects The 2007/8 Financial Year saw the successful completion of the Expanded Public Works Programme (EPWP) projects, which were initiated three years ago. Each of the 10 contractors enrolled in the programme completed their respective R6 million projects. As a result, they stand to graduate in the 2008/9 Financial Year and receive acknowledgement for their competence through being awarded a Construction Industry Development Board grading of 4. The CDC exceeded expectations in its approach to the EPWP projects. Due to the fact that contract values and the nature of projects were far beyond national recommendations, the CDC, by providing the necessary support, were able to assist the learners to achieve higher performance levels than anticipated. The CDC was the first corporation to implement the EPWP in the Eastern Cape and continues to receive awards of recognition from the Provincial and National Departments of Public Works for effective implementation of the EPWP principles. The corporation would like to acknowledge MEC Christian Martin and his team for the sustained support of the projects over the past three years. The CDC expresses its deepest appreciation for the high level of commitment and tenacity demonstrated by the learner contractors whilst implementing these projects. The success of Small, Medium and Macro Enterprise Development The CDC maintained its commitment to the economic transformation agenda of the government. Over 40% of the CDC s spend on infrastructure for the 2007/8 Financial Year went towards Small, Medium and Macro Enterprise (SMME) development. In addition, the number of SMME s supported by the CDC increased significantly from 20 to 79 during the 2007/8 Financial Year. The corporation approved an SMME development strategy which, among other things, culminated in a dedicated development plan for 36 months. The CDC also broadened the scope of focus of the construction inclined SMME Development Strategy, to include mentoring and on-site support services. The non-construction related SMME Development Strategy takes into consideration plant hire and material suppliers amongst other things. A staggering R15 million in contracts were received by SMME s in the category of material supplying businesses. COEGA 2008 ANNUAL REPORT

7 Coega Office Block Coega Zone 2 Warehouse 41 Coega Woman s Day Celebration PAGE

8 Meeting socio-economic objectives Over and above the successes of the CDC in terms of enterprise development opportunities, the Infrastructure Development business unit ensured meaningful involvement of recently qualified graduates. The business unit employed a total of 16 interns during the 2007/8 Financial Year as yet another effort towards addressing the shortage of skills in the industry. A total of 6 out of the 16 were permanently placed with employers in the consulting and contracting fraternity. In line with the CDC s strategic objectives of learning and growth, two of the senior managers and executive of the business unit offer their services (i.e. sharing knowledge and expertise) through lecturing at the Nelson Mandela Metropolitan University. The executive assists similarly with the Construction Management Programme run by Stellenbosch University. Lastly, the Infrastructure Development unit won a prestigious award from the South African Property Owners Association (SAPOA) for the efficient design of the General Upholsterers/ Acoustex investor warehouse in zone 3 during the year under review. The business unit also represented the CDC at a Construction Vision 2020 Conference in the United Kingdom in February 2008 where the theme was around the strategic outputs of construction clients leading up to the year In conclusion, the business unit acknowledges that without the concerted efforts of our strategic partners, it would have been impossible to achieve the successes that 2007 would be remembered for. Those acknowledged include the South African National Roads Agency Limited (SANRAL), the Construction Industry Development Board (CIDB) through the partnership on the Eastern Cape Contractor Contact Centers, all our service providers (DAB, consultants and contractors). COEGA 2008 ANNUAL REPORT

9 Operations Business Unit Themba Koza Executive Manager: Operations Business Unit Introduction The Operations business unit was established in June 2007 as a result of the merger between the former Safety, Health, Environmental and Quality (SHEQ) business unit and the Zone Operations business unit. The merger was necessitated by internal restructuring, which resulted in streamlined processes and improved performance, particularly on the service delivery front. The Operations business unit consists of the following departments:...the safety of everyone involved in the Coega project continues to be a priority... Customs and logistics; Safety, Health, Environmental and Quality (SHEQ) management; Investor services; Commercial; ICT; and Facilities/Estates management. The following report briefly outlines the highlights for the 2007/8 Financial Year. Customs And Logistics During the 2007/8 Financial Year, the Customs and Logistics department investigated the proposed customs environment for the IDZ, and compared it with best practice standards at two zones, namely Mauritius and Dubai. 43 PAGE

10 Primary focus areas at these two zones were found to be trade facilitation, revenue protection and border management. The customs administration process at both zones has, in recent years, undergone restructuring, while their focus on trade facilitation and service delivery has also been improved. Furthermore, both zones engaged in modernisation and reform programmes to bolster their compliance with the World Customs Organisation Framework of Standards. The investigation highlighted the distinct separation between the zone operator (CDC and its systems), customs (South African Revenue Service and its systems) and the port operator (National Ports Authority) at the Coega IDZ. It showed that from a systems viewpoint, the tight integration of these entities with the other logistics role players (traders, carriers, agents, etc.), to form a Cargo Community System (CCS), whilst challenging, is absolutely necessary. No supporting best practice cases were found for the operation of the customs controlled area concept within an IDZ. Therefore, it was concluded that an open warehouse model, generally associated with a free trade zone, as defined by the Kyoto Convention of General Agreement on Tariffs and Trade, should be the preferred operational model for the IDZ. Discussions with SARS regarding this approach are continuing. Safety, Health, Environmental and Quality Department The CDC s ability to monitor the safety, health and environmental (SHE) performance of contractors and tenants within the IDZ greatly improved during the financial year with the addition of two new SHE project managers to the section, bringing the number of people directly involved with SHE compliance monitoring to seven. The safety of everyone involved in the Coega project continues to be a priority and the CDC recorded a Disabling Injury Frequency Rate (DIFR) of 0.6 at the end of the financial year. This is well below the industry norm of around 2.0 for construction projects of this nature and can be attributed to the sound health and safety culture that has been instilled in all contractors associated with the project. From an environmental perspective, the area within the IDZ available for investment purposes increased, with the receipt of a positive Record of Decision from the National Department of Environmental Affairs and Tourism for the remainder of the IDZ (the IDZ land outside of the initial core development area ) thus paving the way for the development of investments within the metallurgical and chemical fields. An exciting occurrence was the discovery of a breeding colony of Damara Terns (9 adult birds and three successful nests) within the IDZ. This species is one of 14 bird species classified as endangered in the Eskom Red Data Book (Barnes 2000) with less than 125 pairs estimated to breed in South Africa. As the main reasons for its decline are disturbance and urbanization, conservation measures depend on the protection of its limited breeding habitat. Accordingly the breeding area is being closely monitored and measures have been implemented to ensure that construction does not encroach onto this area. The success of the IDZ s HIV and AIDS initiative was assured during this time period, with contractors taking ownership of their own programs for HIV and AIDS prevention and awareness within their areas of accountability. The creation of an IDZ HIV and AIDS co-ordination committee amongst the contractors and the training of one peer educator per thirty contractor employees by the CDC have had a positive influence on the level of HIV and AIDS awareness within the IDZ. The roll-out of the CDC s Quality Management System (QMS) began in earnest during this reporting period. Efforts to train certain employees as Internal Quality Auditors and to train all employees on the requirements of a QMS were successful. The initiative has gained momentum with the successful mapping of a number of CDC core processes and the development of Service Level Agreements (SLA) between the various COEGA 2008 ANNUAL REPORT

11 Business Units. Further training, with emphasis on the entrenchment of the core processes within the organization, is the focus for the immediate future. The publication of the CDC s first ever Sustainable Development Report was a landmark occurrence. The need for development within the IDZ to occur in a sustainable manner has always been critical to the success of the IDZ. The current energy crisis in South Africa has only strengthened the CDC s resolve and sustainability issues continue to be given priority on agendas within the organization. services to the IDZ. The negotiations culminated in the conclusion of an agreement to jointly manage the supply of electricity to Investors located within the IDZ. Discussions are continuing in respect of the provision of other municipal services. The unit also negotiated the take-over of the Nelson Mandela Bay Logistics Park (NMBLP) from the NMBM, adding another dimension to the value proposition of the IDZ. Furthermore, the property development function was absorbed into the unit and has assisted a number of investors with space solutions, particularly in the NMBLP. Investor Services ICT Achievements For 2007 During the year the first steps were taken to establish a One Stop Investor Services Centre (OSISC) During the 2007/8 Financial Year, the ICT Unit achieved the following: The OSISC is a service management centre with a mandate to provide a central point of contact for all stakeholders, particularly investors. The OSISC eliminates the need for numerous entry points to information, and ensures that information is conveniently made available, consolidated and consistently communicated to investors. As such, the OSISC is the nerve centre for services provided to investors located in the Coega IDZ. A common service desk, with the technological ability to maintain the identity of customers/investors, will ensure the endto-end management of service level expectations. The OSISC will operate seven days a week, 24 hours a day, with the primary focus being on incident management to ensure that services are restored in the shortest possible time. Relocated to new premises; Provided Bosun Brick with voice and data services; Implemented a data centre for the provision of shared services; Implemented a new Labour Management System (LMS) which streamlines the labour acquisition and management processes; Implemented a Property Management System which streamlines the invoicing of tenants in the IDZ; and Facilitated the establishment of the ABSA call centre. Commercial Facilities/Estate Management Due to the increased number of engagements with potential investors, the Commercial Unit was expanded during the year. Initially, the primary focus fell on contractual negotiations in respect of leases of land to investors with all lease agreements being negotiated by the Unit. Following the expansion, the Unit began negotiations with the Nelson Mandela Bay Municipality (NMBM) for the provision of bulk ABSA Contact Centre The Facilities Management Department continues to provide services to the ABSA Contact Centre which started operating at the Vulindlela Village in January A number of previously unemployed individuals were trained as call centre agents, security and cleaning personnel, and are now employed at the Centre. 45 PAGE

12 Vulindlela Village The Vulindlela Village, through effective marketing initiatives, is now 90% occupied. The Village leases accommodation to private individuals and provides accommodation for employees from outside Port Elizabeth who are working in the IDZ. A number of private companies have also shown interest in leasing accommodation in the Village. In addition, the Village is a popular venue for workshops, conferences, functions and training. Masibambane Community Trust The Masibambane Community Trust was formed by the Coega 360 community which relocated from the IDZ to Wells Estate. The Trust employs a total of 24 people from the Coega 360 community. Typically, these individuals undertake grass-cutting, pavement and street-sweeping, litter-trap maintenance, vegetation control and sidewalk and verge maintenance at the IDZ. COEGA 2008 ANNUAL REPORT

13 Coega Human Capital Solutions Zuko Mapoma Executive Manager: Human Capital Solutions Qualifications: B Proc, LLB, LLM, MBA Background During 2006 a decision was taken to respond effectively to the challenge of skills shortage that would impede the CDC s ability to attract investment and to address the employment creation responsibility. The Coega Human Capital Solutions (Coega HCS) business unit, focuses on development of the requisite human capital for the Coega Industrial Development Zone (IDZ), Nelson Mandela Bay (NMB) and the Eastern Cape province. The core mandate of Coega HCS (CHCS) is to provide competent human...the CHCS has shifted boundaries by ensuring that unemployed job seekers have the opportunity to benefit from government programmes... resources thus ensuring a managed labour environment for investors and local businesses, and to generate revenue thus enabling CDC to be self sustaining in the long term. The services offered by the unit are underpinned by an advanced labour management information system and employment relations framework, specifically suited to support the management and development of mega projects. The Coega HCS, in collaboration with the ICT unit, recently completed the new Labour Management System (LMS). The web-enabled system has functionalities that allow for the tracking and production of instant reports about all candidates trained, skills areas and skills level in which they were trained, employed candidates within the various IDZ projects and those that have been demobilized. The optimised utilization of local human capital has therefore been made possible through the implementation of a proactive Human Resources Development (HRD) strategy aimed at meeting the short, medium and long-term requirements of not only investors in the IDZ, but for the external business environment. The continuously improved and updated LMS store a repository of information that allows for the effective recruitment, screening, induction and selection of suitable local job seekers, as well as monitoring of human capital development. Through this, Coega HCS has pitched the Coega IDZ on a competitive edge as an 47 PAGE

14 investment destination of choice through the provision of adequate human resources and the creation of an enabling labour environment for investors. Addressing the Skills Shortage The innovative business model of the Coega HCS and projects undertaken are informed by the critical shortage of skills available countrywide. Although there is a shortage across all levels, the research conducted by Coega HCS during the year under review has stashed that the most critical skills shortages in NMB are experienced in the electrical/ mechanical field; construction (civil, building, and piping) industry; and the manufacturing, engineering and call centre industry. The skills shortage challenge is further exacerbated by a lack of available candidates with maths and science knowledge, the low number of students undertaking qualifications within these sectors and a large percentage of unemployed people with work experience but no formal qualifications. With a view to addressing these challenges more effectively, continuous review of the Coega HCS business model, based on lessons learnt from the erstwhile Coega Labour Business Management Services (LBMS) unit, which started operating in 2002 has yielded a focused approach to critical skills. Coega HCS initiated a process, linked to the Provincial Growth and Development Plan (PGDP), to determine how the skills shortage would impact on the CDC, NMB and the Province. The model is informed by ample experience in the process and system management of labour, human resource management and planning for mega projects within a regulated environment. This process focuses on the energy; manufacturing; information, communications and technology, metals, automotive, chemicals, services, tourism, agriculture and construction sectors. The unit makes use of research, analysis and forecasting on skill types and levels in order to fulfil the requirements of investors locating to the Coega IDZ, the NMB and the Eastern Cape Province. Based on these projections, Coega HCS has managed to strike strategic partnership with the relevant government Sector Education Training Authorities (Setas) as well as the Department of Labour (DoL) and secured funding for training programmes. Strategic Partnerships in Human Capital Development The success of the Coega HCS in the implementation of Human Resources and Development (HRD) initiatives have largely been made possible through partnerships and support of a range of critical stakeholders in the skills development arena. The Department of Labour, the Department of Trade and Industry, the Office of the Premier, the Skills Education Training Authorities and business chambers, such as the Port Elizabeth Regional Chamber of Commerce and Industry (PERCCI), as well as Trade Union movement, have strong linkages that have been kept alive with the Coega HCS. As a result of these linkages, a range of HRD training programmes on critical and scarce skills have been executed through the provision of grant funding of over R100 million from government. Other key strategic partners have been the Nelson Mandela Bay HRD, EDTA units and public and private training and educational institutions. Through our relationship with business formations, over 180 businesses have assisted Coega HCS in providing experiential training and workplace learnings to candidates. Thus, a critical component of the success of HRD is the establishment of solid partnerships with stakeholders and key players within the field and to ensure that the curricula offered by colleges, institutions and universities address the labour market requirements. This was also borne out by a further process of establishing similar partnerships with Further Education and Training (FET) institutions in the Buffalo City Municipality region. Among these are the Eastern Cape based FET Colleges such as East Cape Midlands; Ikhala College and PE College; various Sector Education and Training Authorities (SETA); the Departments of Labour and Education; the Office of the Premier and the Department of Public Works (DPW). COEGA 2008 ANNUAL REPORT

15 A mutual project between the Coega HCS and the Nelson Mandela Bay Municipality (NMBM) involves the Municipality s Department of Economic Affairs and Development, and is aimed at ensuring the integration of support to all investment initiatives in the NMB region, in particular the HRD aspect. The strategy of the project is informed by NMB and the Province s economic activities and investment pipeline. It is anticipated that the project will enable the identification of skills gaps and the requirements necessary to fill those gaps. Contributions to the Joint Initiative on Priority Skills Acquisition (JIPSA) The Coega HCS is involved with the Eastern Cape division of the Joint Initiative for Priority Skills Acquisition (JIPSA) through participation of its management on the Council and Working Group levels respectively. Three JIPSA-EC Working Groups are focused on maths and science, while skills audits and research are also a priority. Coupled with this initiative, Coega HCS has conceptualised a Maths and Science teacher development project in partnership with the Services Seta, and this project will be rolled out in the next financial year. Human Resources Development Initiatives Currently there are 750 apprentices funded by the Services SETA and the Foodbev SETA respectively. In addition, the trade testing of a further 895 candidates will be facilitated while implementing several technical learnerships in partnership with the Provincial Department of Labour, MERSETA, CHIETA and ESETA. The HRD initiatives include apprenticeships, learnerships, internships and skills programmes in the engineering and construction trades, manufacturing and chemical sector trades as well as the Business Process Outsourcing and Offshoring sector. During the 2007/8 Financial Year, Coega HCS secured contracts for ten projects valued at over R100 million. These are being rolled out during the 2008/9 Financial Year and will be to the benefit of 6052 learners. 49 PAGE

16 Sanlam Delegation November 2008 Port of Rotterdam Delegation November 2007 CDC NMMU Collaboration COEGA 2008 ANNUAL REPORT

17 The table below presents the various CHCS HRD initiatives which are funded by different partners. Table 1: Learnerships NQF Level 2008 / / 2010 FIVE YEAR TOTAL % NSF ESETA MERSETA T NSF ESETA MERSETA T NSF ESETA MERSETA TOTAL % % % % TOTAL % The following table is representative of one of the key successes achieved in the past year, namely the signing of grants that allow CHCS to roll out the largest apprenticeship project in the Eastern Cape. Table 2: Apprenticeships SETA 2008 / / 2010 TWO YEAR TOTAL % S28 S13 T S28 S13 T S28 S13 TOTAL SERVICES % FOODBEV % TOTAL % Skills Development Centre and Trade Testing Facilities In an effort to further the achievement of the set HRD objectives, the CDC initiated the establishment of the Coega Skills Development Centre, which is anticipated to be fully operational by The Centre will ensure the development of skills at all occupational levels within dominant sectors of the Eastern Cape. In collaboration with the Department of Labour s Indlela Centre, the trade testing facility, which will also be incorporated into the centre, which will be the first of its kind in the Eastern Cape, will allow for the trade testing of all learnership and apprenticeship candidates qualifying for artisan trade testing. The trade testing facilities will be in accordance with the standards that are set by the Department of Labour s National Trade Test Centre. Employment Relations One of the key successes is management of employment relations with both employer organizations and trade union movement. This has established and improved upon a labour management policy framework that creates an enabling environment that is focused on maintaining labour stability and a culture of respect for the dignity of human life. The Zone Employment Relations Policy and the Zone Labour Agreement remain effective through the application of a common and consistent labour management approach, both on the Coega IDZ and the Port of Ngqura. Coega IDZ has recorded the downtime of 0.12% compared to 2.4% in the industry nationally. 51 PAGE

18 HRD Initiatives KEY STATISTICS MAY 2008 Contracts awarded (Total Coega Project to date) 140 Sub-contracts awarded (Total Coega Project to date) Job Seeker Pool Labour requisitions processed Lost time as a consequence of labour strike action 0.12% Cumulative man-hours on site to-date Currently employed % Current Employment for residents of Nelson Mandela Metro 83% % Current Employment for residents from outside Nelson Mandela Metro 17% Total employment created COEGA 2008 ANNUAL REPORT

19 Coega Development Corporation Services Unit Dr Mpumi Mabula Executive Manager: CDC Services Qualifications:? Background Coega Development Corporation Services Unit (CDC-S) is a special purpose vehicle of the CDC, aimed at providing assistance on infrastructure development to the Eastern Cape provincial government. It focuses mainly on fast-tracked projects, where rapid delivery is required. The involvement of the CDC in provincial projects was informed by the fact that:...cdc Services has implemented a number of projects on behalf of the Provincial Government and continues to do so... (a) One of the CDC s corporate objectives is to advance socio-economic upliftment in the Eastern Cape. CDC-S involvement in the provincial projects enables the CDC to contribute meaningfully in this regard; (b) The CDC considers its involvement in provincial projects as a form of contribution towards Corporate Social Investment (CSI), due to the number of people who benefit from the projects that it rolls out; (c) Involvement in the development of critical infrastructure in the province assists in unlocking and realising sustained economic development; and (d) The CDC needs to ensure that there is meaningful backward integration with the province, which is enhanced via the provision of basic infrastructure. In turn, the attractiveness for investments in the province is improved. 53 PAGE

20 Services (a) Project facilitation, i.e. assisting in conceptualising projects and transforming them into plans that can be implemented; (b) Acts as implementation agent, where it implements projects on behalf of its clientele, adopting a cradle-to-grave approach in doing so. This includes planning the infrastructure roll-out, budgeting, procuring services of various service providers, management of these aforementioned service providers and commissioning of infrastructure; (c) Assisting in developing monitoring systems on infrastructure roll-out and to carry out monitoring and reporting on infrastructure budget expenditure; (d) Facilitate inclusion of socio-economic aspects during the implementation of infrastructure projects. This includes facilitation of Small and Emerging contractor development; infusion and Expanded Public Works Programme (EPWP) approach on its projects; and encouraging labour based methods of construction to maximise job creation. Projects Rolled Out Since its inception, CDC-S has implemented a number of projects on behalf of the provincial government and continues to do so. Although CDC-S considers all the projects that it embarks upon as being of utmost importance, the key projects that CDC-S has been involved in during 2007/08 Financial Year are listed in the table below: Key Projects Client Dept Project Name Description of Project Est Contract Value Upgrading of Cecilia Makiwane Hospital (CMH) Rebuilding Cecilia Makiwane Hospital in Mdantsane in Mdantsane to a 600 bed Primary Hospital where it would provide Level 1/2 Services R2.1 billion Department of Health Upgrading Frere Hospital Forensic Pathology Laboratories (FPL) (Mortuaries) Demolishing and rebuilding some parts of Frere Hospital in East London where it would provide Level 2/3 services with 830 beds. Construction of 15 new FPLs in various hospitals grounds and upgrading of 5 FPLs in various SAPS premises around the province R1.9 billion R84 million Dept of Sports, Recreation, Arts & Culture Dept of Education National Dept of Environmental Affairs & Tourism Community Health Centre in Mdantsane Eastern Cape Sports Academy Steynsburg Indoor Sports Centre Mt Ayliff Arts & Culture Centre Construction of new 40 bed Community Health Centre at NU 17 in Mdantsane Development of a new Sports Academy in the Eastern Cape Construction of a new Indoor Sports Centre in Steynsburg Construction of a new Arts & Culture Centre in Mt Ayliff R85 million R20 million R6.9 million R2.9 million Mthatha Archives Construction of a new Archives in Mthatha R6.0million Mt Ayliff Museum Construction of a new museum in Mt Ayliff for the Alfred Nzo District Municipality R7.2 million Tsitsikama Museum Construction of a new museum in Tsitsikama R3.3 million Upgrading of Bayworld Upgrading some parts of Bayworld aquarium in Port Elizabeth 51 EPWP Schools Construction of 51 schools under the Expanded Public Works Programme around the eastern part of the Eastern Cape using Learner Contractors R3.9 million R74 million Vusubuntu Cultural Village Construction of a new Cultural Village in Cradock. R13 million CDC-S managed to create 1900 jobs during the construction of these projects. COEGA 2008 ANNUAL REPORT

21 Khoisan Community Centre, Tsitsikamma 55 Molteno Forensic Pathology Laboratory, May 2008 PAGE

22 Awards CDC-S prides itself for winning the following awards and certificates of recognition: Best Government Enterprise Development Programme (EPWP Big News Awards for 2007) The main objective of this award is to contribute towards the success and impact of SMME s in South Africa by rewarding, publicising, documenting and encouraging good practices in Enterprise Development (ED). It recognises and rewards companies, organisations and individuals who contribute meaningfully towards strengthening SMME s. Eastern Cape EPWP Contractor Recognition Award An employee of the CDC-S unit received the 2007 Eastern Cape Department of Public Works MEC award which recognised the efforts of the CDC-S in assisting the Eastern Cape government to implement the EPWP within the Eastern Cape. Development of Best Practices CDC-S conceptualized and developed together with the Construction Industrial Development Board (CIDB) and the Business Trust Unit that supports the Expanded Public Works Programme (EPWP) the Specification for Social and Economic Deliverables in Construction Works Contracts. The aim of the specification is to ensure that objectives of the Millennium Development Goals (MDG), Accelerated and Shared Growth Initiative for South Africa (ASGISA) and Joint Initiative on Priority Skills Acquisition (JIPSA) are being achieved. The CDC, via CDC-S, will continue providing the necessary support to the provincial government and state-owned enterprises, particularly in infrastructure development. COEGA 2008 ANNUAL REPORT

23 Corporate Services Unit Nomawabo Msizi (resigned March 2008) Executive Manager: Corporate Services Background The Coega Corporate Services (CS) business unit is tasked with overseeing human capital and the creation of a work environment that is conducive to the maximisation of the Coega Development Corporation s (CDC) potential to achieve its vision of becoming a preferred investment destination. The unit offers human resources management, legal services, office management and travel management services. Employee Development...CDC s commitment to being the leading knowledge-based organisation in the country is reflected in its investment in human capital development... A competitive advantage of the CDC is its ability to secure quality human capital and the efficient management of the available talent pool, which is a major focus area of the human capital strategy. The CDC s commitment to being the leading knowledge-based organisation in the country is reflected in its investment in human capital development. During the 2007/8 Financial Year, the CDC provided funding for employees enrolled in 13 post graduate/honours qualifications, 16 masters degrees and 3 PhD s. In addition to these individual study programmes, CS coordinated corporate employee development programmes in project management (Project Management Body of Knowledge - PMBOK), voice clinic training, executive personal assistant, computer training, driver training and investment in excellence. As a knowledge and service-driven organisation, the CDC s priority is to recruit, develop and retain a team of people who can support investors and tenants across key sectors. As such, employees are encouraged to further their studies in order to add additional value to the knowledge and skills base of the organisation. To this end, the CDC provides financial support towards employee development. Furthermore, as a 57 PAGE

24 performance-driven organisation, the CDC recognises and rewards individual excellence and the contribution of teams to the achievement of the business objectives. Corporate Research Foundation (CRF) In the 2007/8 Financial Year, the CDC was once again recognised as one of the best employers in a survey conducted by Corporate Research Foundation (CRF). Among the key dimensions and focus areas of the survey were the CDC s human capital priorities, which placed the organisation among the best in the country. Best Company To Work For The CDC is the industry winner among the public sector/utilities companies, which participated in the annual 2007 Deloitte/FM Best Companies To Work For survey. A core aspect of the survey is the measures taken by the company to attract, develop, motivate and retain its human capital. The purpose of the survey is to enable companies to understand what motivates and engages employees as well as what hinders them in the workplace. The results of the survey will assist the organisation in developing retention strategies that contribute to the success of the business. Corporate Social Investment (CSI) The CDC places a significant amount of focus on socio-economic growth in South Africa. As such, the CDC, which is the opperator of the Industrial Development Zone (IDZ), can be classified as a Corporate Social Investment (CSI) initiative. It is government funded, with the bottom line being the creation of jobs and economic empowerment. Internally, the CDC has established an internship programme with a corporate target of employing 50 interns per annum. The ultimate aim of the programme is to increase the employability of the inexperienced graduates, through experiential learning, mentorship and other training and development initiatives. In the 2007/8 Financial Year, a total of 63 interns were placed in the programme of which 30 have secured permanent employment. Apart from the internship programme, the latest CSI programme involves the sponsoring of driver training for interns and unemployed graduates at various centres around the Eastern Cape. A total of 60 CDC interns and 89 graduates from tertiary institutions throughout the province have received driver training during the first phase, which took place in the 2007/8 Financial Year. In addition, the CDC Board approved the establishment of a bursary scheme to provide financial support to high school learners and tertiary students. CS has secured grants from the Services Sector Education and Training Authority (SETA) to finance the programme, which will involve the support of high school learners on academic programmes as well as life skills training. In the 2008/9 Financial Year, this initiative will progress to support students at tertiary level. Coega Corporate Travel Corporate Services launched the Coega Corporate Travel (CCT) as a fully licensed travel agency to provide corporate travel management services to CDC and investors in the IDZ. CCT aims to become a financially independent and sustainable unit by sourcing business from entities outside of the IDZ. As such, the marketing of CCT will be one of the priorities of the CS unit in the following Financial Year. COEGA 2008 ANNUAL REPORT

25 Coega Corporate Travel Launch Coega Open day Hellenvale November Interns Initiative Sinethemba benefit program PAGE

26 In this section: _ The Board of Directors & Sub-Committee 63 _ Statement of Responsibility of the Board of Directors 65 _ Attendance Schedule of Board & Sub_Committee Meetings 66 _ Risk Management & Internal Controls 67 _ Certificate by Company Secretary 68 _ Report of the Audit & Finance Sub-Committee 69 COEGA 2008 ANNUAL REPORT

27 Corporate Governance Statement 61 PAGE

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29 The Board of Directors and Sub-Committees The Board of Directors comprises executive and non-executive directors. The non-executive directors have a wide range of skills and significant commercial and other interests that enable them to bring independent judgement to the Board s deliberations and decisions. The roles of Chairperson and Chief Executive Officer do not vest in the same person. The chairperson is a non executive director. The Board and its sub-committees meet at least four times a year, and more frequently if necessary. Decisions on material matters are in the hands of the Board. Company Secretary & Professional Advice All Directors have access to the service of the company Secretary, who is responsible for ensuring that the Board functions effectively. All Directors are entitled to seek independent professional advice about the affairs of the Company at the Company s expense. Audit & Finance Sub-committee The Audit and Finance Sub-committee is chaired by an independent chartered accountant who is neither a member of the CDC management nor the Board of Directors. Other members are the three non-executive directors and an external independent member. The committee is attended by the Chief Executive Officer and the Chief Financial Officer. The Audit & Finance Sub-committee functions under the powers and authority delegated to it by the Board to: 63 PAGE

30 Oversee the internal audits; Review the annual financial statements; Agree the scope and ensure the independence of the statutory auditors; Monitor internal control systems the process of risk management; Monitor compliance with the Code of Corporate Governance and the Company s Code of Ethics; Human Resources & Remuneration Sub-Committee The Human Resources & Remuneration Sub-committee is comprised of four non-executive directors. The Human Resources & Remuneration Sub-committee s specific terms of reference include direct authority for, or consideration of, and recommendation to the Board on matters relating to, inter alia, general staff policy, remuneration, bonuses, Directors remuneration and fees, service contracts and other benefits. Investment Promotion Sub-committee The Investment Promotion Sub-committee is fully mandated by the Board. It is composed of five members, two of whom are independent members and three non-executive directors. Its terms of reference are to: Review the CDC s investment policy and strategy Ensure compliance with the adopted framework, through which investments can be monitored. Ensure that a justifiable process, is aligned to the strategy, is followed. COEGA 2008 ANNUAL REPORT

31 Statement of Responsibility of the Board of Directors The Board is responsible for the preparation, integrity and fair presentation of the financial statements for the year ended 31 March The financial statements have been prepared on a going concern basis, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. The directors also prepared the other information included in the annual report and are also responsible for both its accuracy and its consistency with the financial statements. Management has been delegated with the responsibility of implementing systems of internal control and maintaining accounting and information systems. These systems are designed to provide reasonable assurance as to the reliability of the financial statements, safeguarding of assets, execution and recording of transactions in accordance with generally accepted business practices and procedures and that the risks of error, fraud and loss are minimized in a cost-effective manner. The going concern basis has been adopted in preparing the financial statements. The directors have no reason to believe that the company will not be a going concern in the foreseeable future. The financial statements have been audited by the independent auditing firm, PriceWaterhouseCoopers Inc, which was given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the board of directors and committees of the board. The directors believe that all representations made to the independent auditors during their audit were valued and appropriate. Price Waterhouse Coopers Inc s audit report is presented on page 73. The financial statements set out on pages 75 to 100 were approved by the Board and are signed on its behalf: 65 Chairperson PAGE

32 Attendance Schedule of Board & Sub-Committee Meetings Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Board Meeting Attendance Date M Ngoasheng (Chair) P Silinga M Kwenaite P Jourdan J de Bruyn S Zikode M Matshamba S Nondwangu L Maasdorp P Ndoni Investment Promotion Sub-committee meeting attendance Date P Jourdan (Chair) M Ngoasheng M Kwenaite B Rayner G van Wyk Human Resources Sub-committee meeting attendance Date J de Bruyn (Chair) M Ngoasheng P Jourdan S Nondwangu Audit & Finance Sub-committee meeting attendance Date X Ncame (Chair) J de Bruyn L Maarsdorp A Mjekula M Matshamba COEGA 2008 ANNUAL REPORT

33 Risk Management Risk Management The board is accountable for the process of risk management and effectiveness of the system of internal control and for this reason has continued to devote considerable efforts to ensuring the practice of responsible, pro-active and sound risk management. There is a formally defined risk management policy and strategy in place designed to ensure that risk management practices are maintained at best practice levels There is an ongoing process for identifying, evaluating and managing the significant risks faced by the company that has been in place for the year under review There is an adequate system of internal control in place to mitigate significant risks faced by the company to an acceptable level. Such a system is designed to manage, rather than eliminate, the risk of failure or maximise opportunities to achieve business objectives. Internal Audit The board recognizes the need to oversee internal controls within the organization. In accordance with the approved Internal Audit Charter, Internal Audit reviews the systems and management controls to determine the effectiveness of the process around: safeguarding of assets; integrity and reliability of financial and operational information; compliance with legislation, and; the adequacy of the risk management and internal control process. 67 PAGE

34 Certificate by Company Secretary For the year ended 31 March 2008 Declaration by the Company Secretary in terms of Section 268G (D) of the Companies Act. The Company has lodged with the Registrar all such returns as are required of a private company in terms of the Companies Act, and all such returns are true, correct and up to date. Miranda Pango COMPANY SECRETARY 26 June 2008 COEGA 2008 ANNUAL REPORT

35 Report of the Audit and Finance Sub-Committee The Audit and Finance Sub-Committee has adopted formal terms of reference, which have been approved by the Board, and has satisfied its responsibilities as set out in the terms of reference. In performing its responsibilities the Audit and Finance Sub-committee has reviewed the following: The functioning of the Risk Management internal control system The functioning of the internal audit department The risk areas of the entity s operations to be covered in the scope of the internal and external audits Financial information provided by management The accounting or auditing concerns identified as a result of the internal or external audits The entity s compliance with legal and regulatory provisions The credibility, independence and objectivity of the external auditors as well as their audit reports The Audit and Finance Sub-Committee is satisfied that internal controls and systems have been put in place and that these controls have generally functioned effectively during the period under review. The Audit and Finance Sub-Committee considers the company s internal controls and systems appropriate in all material respects to: Reduce the company s risks to an acceptable level Meet the business objectives of the company Ensure the company s assets are adequately safeguarded Ensure that the transactions undertaken are recoded in the company s records. The Audit and Finance Sub-Committee has evaluated the annual financial statements of Coega Development Corporation (Proprietary) Limited for the year ended 31 March 2008 and concluded that they comply, in all material respects, to the requirements of the Companies Act (Act 61 of 1973, as amended) and International Financial Reporting Standards. The Audit and Finance Sub-Committee agrees that the adoption of the going concern premise is appropriate in preparing the annual financial statements. The Audit and Finance Sub-Committee has therefore recommended the adoption of the annual financial statements by the Board of Directors at their meeting on 22 August X Ncame Chairperson: Audit and Finance Sub-Committee 22 August PAGE

36 In this section: _ Independant Auditor s Report 73 _ Directors Report 75 _ Balance Sheet 80 _ Income Sheet 81 _ Statement of Changes in Equity 82 _ Cashflow Statement 83 _ Notes 84 COEGA 2008 ANNUAL REPORT

37 >>> Financial Statements 71 PAGE