West Coast Saldanha IDZ to bring economic benefit – economistApril 10, 2013 by: admin
New analysis of a business plan for the establishment of an industrial development zone (IDZ) at Saldanha Bay has found that such an industrial zone would create jobs, have significant economic impact and prove economically robust.
The project was expected to create an estimated 6 000 jobs – 2 600 of them direct – within the first year of its operation, University of Cape Town Graduate School of Business economist Barry Standish has said.
Standish and a team from the university found that over 14 700 direct and indirect jobs would be created within 18 years from the Saldanha Bay IDZ (SBIDZ).
Previous worst-case projections reported by Engineering News indicated that the project would create 4 240 direct jobs over a 25-year period, accounting for 16% of the labour force in the area, and a total of 11 975 direct, indirect and induced jobs. The best-case scenario proposed 8 930 direct jobs and a total of 29 020 direct, indirect and induced jobs would be created over a 25-year period.
“The results of the cost to benefit analysis for South Africa showed a total benefit with a present value of R42.8-million, versus only R4.5-million in present value costs. The real benefit comes from the benefit cost ratio – for every R1 that society spends, it will equate to R9.50 return,” said Standish.
Engineering News previously reported that the IDZ would contribute R3.4-billion to the country’s gross domestic product (GDP) within the first year and could add R11-billion to GDP after 20 years.
The IDZ project had been driven primarily by the Western Cape Investment and Trade Promotion Agency, or Wesgro, which had carried out the feasibility study for the SBIDZ.
The Wesgro IDZ business plan indicated potential revenue could reach in excess of R7.9-billion a year within five years.
The proposed SBIDZ would be an oil and gas and marine repair engineering and logistics services complex.
Trade and Industry Minister Dr Rob Davies previously commented that the region was well situated in relation to the fast-growing oil and gas industry in West Africa and the intention would be to provide the exploration and production service companies operating in the oil- and gasfields in sub-Saharan Africa with logistics, repair, maintenance and fabrication services.
The Western Cape Department of Economic Development and Tourism’s Herman Jonker said the biggest concern in the development of the Saldanha Bay IDZ, to date, had been the history of enterprise and development in the area.
“Many different projects have been taken at the Saldanha Bay site before, with little ‘trickle-down’ benefit and sustained economic development coming from these; some of the projects have themselves proved profitable, but with little benefit to wider society,” he said.
Standish commented that even during a sensitivity analysis, which looks at worst case scenarios, the project remained economically viable.
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