Great Scope in Mining, Manufacturing & Farm Sectors
Mpumalanga
Beckons Global Investors
Mpumalanga, “the place where the sun rises”, lies in the eastern part of South Africa, north or KwaZulu-Natal and bordering Swaziland and Mozambique. In fact it is the only province in South Africa to border two provinces of Mozambique and to border all four districts of Swaziland.

It's the proximity of these two countries that gives Mpumalanga its unique edge over other rural South African Provinces. With widespread availability of energy, water and sewerage utilities and telecommunications system links to regional and global markets; the province is able to support the growing Petro-Chemical, Stainless Steel, Tourism, Agro-Processing, Forestry and Energy sectors that are ripe for investment.

Mpumalanga boasts a business-friendly environment with a strong tertiary services sector, Mpumalanga allows all types of businesses to prosper and grow. Investors can benefit from an informed financial system a sound banking sector, strong investment ratings, and effective trade support facilities in a huge emerging market. The plentiful supply of both skilled and trainable labour with proven entrepreneurial abilities; investors can have the confidence to work with Mpumalanga Economic Growth Agency (MEGA) to create a platform for long term business development.

Geography
Mpumalanga is made up of 79,490 square kilometers (30,690 sq miles) and the diversity of the province is mirrored in its geography. The Drakensberg Escarpment divides Mpumalanga into a westerly half consisting of mainly high-altitude grassland called the Highveld and an eastern half situated in low altitude subtropical Lowveld/Bushveld, mostly Savanna habitat.

In addition to its capital, Nelspruit, Mpumalanga has three major industrial cities, Witbank, Middelburg and Secunda.

Witbank is the energy centre of South Africa and is the focal point of Africa's largest coal fields, power stations and stainless steel manufacturing, supplying over 80% of South Africa's total power consumption.

Middelburg boasts strong coal mining activities in the area supported by large mining concerns as well as independent operators. In the manufacturing sector, Columbus Stainless Steel, the world's fifth largest stainless steel producer anchors the stainless steel cluster.

The fuel from coal producing petro-chemical complex, SASOL, situated in Secunda, produces over 250 different by-products providing further beneficiation opportunities.

And the largest paper mill in the Southern Hemisphere, located just outside of Nelspruit, provides opportunities further down the paper production value chain including packaging material and printing.

Infrastructure
Mpumalanga's major road artery is the East/West N4 highway linking the rest of South Africa with the Mozambican port city of Maputo. The Kruger Mpumalanga International Airport (KMIA), situated just 25km form the capital of Nelspruit, has enabled quicker access to the region by local and international businessmen and tourists. Including a myriad of freighting options available for local and international businesses. The railway line from Gauteng to Maputo has received an investment of around US$70 million, providing highly efficient access to the port of Maputo.

Investment in new infrastructure has been accelerating over recent years with the aim to promote social development and meet basic needs. This has involved change on a grand scale including investment in electricity generation, electrification, roads, commuter rail, housing, bulk infrastructure, research & development, water & sanitation, and schools, hospitals and clinics.

In fact, Mpumalanga has achieved the 2nd largest growth in improving basic infrastructure out of all major South African provinces.


* Source Census 2001, Department of Water Affairs & Forestry, National Electricity Regulator of South Africa, Department of Minerals & Energy & Statistics SA Non Financial Census of Municipalities

This investment has had many large scale effects on other industries in the province apart from manufacturing. The increased demand has led to benefits for the civil engineering and construction; metal products; coal mining; finance and business services; transport equipment; basic iron and steel; fabricated metal products and even the protective clothing industry.

Demographic and Socio-Economic Indicators
Mpumalanga has a population of 3,643,435 people constituting 7% of South Africa's population. The population is fairly young with children under the age of 15 counting for 33% for the population suggesting an expansive (rapid growth) profile.


* Source Community Survey 2007 (Revised Version)
The Economically Active age group of Mpumalanga is stable, mirroring the female an male gender split across the population as a whole with no indications of losing qualified and competent labour to other provinces.


* Source Community Survey 2007 (Revised Version)
At 8.2%, Mpumalanga matches the National population growth rate, creating stable economic growth and job opportunities; keeping skilled workers within the province.

Whilst not representative of projected population growth Population Doubling Time is a fascinating statistic and puts the current growth rate into perspective for example South Africa's population doubling time is 8.5 years. If Mpumalanga continued at its current annual population growth rate, it would double in 8.4 years, the Western Cape's population would double is just 4 years and Gauteng, 5 years.


* Source Community Survey 2007 (Revised Version) & MEGA Calculations
Mpumalanga is therefore, more likely to cope with their population growth in terms of national government investment in public services such as health and education.

Eradication of poverty remains the number one priority in improving living standards. In Mpumalanga over 1 million people live on less than $1 per day. With a budget to date of over ZAR 51m to support subsistence farming; the gap between the national and provincial average is closing.


* Source: Global Insight ReX version 2.1c (381) July 2008

Education helps to increase the value of other from a of social and physical investment, as an education expands the range of options from which a person can choose from, so creative fulfilling lives. The level of learners between the ages of 5 and 19 years is well above average to the national enrolment rate. Therefore, by creating and sustaining adequate employment opportunities, this meeting of a basic need of knowledge and skills will sustain and accelerate the overall development of Mpumalanga.


* source Statistics SA Community Survey 2007
Robust allocation of government spending, particularly on education, basic health service and the local commitment to the policies of affirmative action and employment equity have contributed to the Human Development Index of Mpumalanga to be 0.54. South Africa as a whole currently rates as 0.6 therefore Mpumalanga is investing in the right areas to improve the standard of life for all.

Economic Indicators
The labour force statistics indicate a reduction of 5.1% in number of unemployed people from 352 000 (28%) in September 2006 to the lower of 292 000 (22%) in September 2007. During the same period, the number of workers increased from 906 000 to 983 000, showing an increase of 77 000 people getting work during that time.

Despite the rising trend in interest rates, the South African economy has managed to sustain growth rate above four percent per annum. Mpumalanga's economy grew by 4.3% in 2005 and then by 4.4% in 2006 respectively, and a percentage point lower than the national average which registered a 25 year high of 5.4% in 2006.


Mpumalanga's economy is supported by a concentration in specific sectoral areas, however some diversity within these sectors does exist demonstrated by the Tress Index for the province of 37.6.

Mining, manufacturing and agriculture are the three main drivers of Mpumalanga's economy, providing a wealth of opportunities for investors.



Key Sectors & Investment Opportunities
Mpumalanga has six key sectors with numerous investment opportunities including Stainless Steel, Chemical and Chemical products, Agri-food processing, non food related Agri-products, wood products, furniture and components and Tourism.

Stainless Steel
Columbus Stainless, the fifth largest stainless steel manufacturer in the world, is situated in Middelburg, Mpumalanga.

Columbus has the capacity to produce 600,000 tons of stainless steel a year. The development of a stainless steel technopark in Middelburg is also in the planning stages.

The opportunities for the manufacturing of downstream products from stainless steel include:
• Tubes and pipes • Catering Equipment • Hollow-ware
• Catalytic converters • Kitchen sinks • Cutlery

Chemical and Chemical Products
More than 22% of South Africa's chemicals and chemical products are manufactured in Mpumalanga. There are three main players in the basic chemical industry: Polyfin, Sasol, AECI.

Numerous products and feedstocks are available form the Sasol plant. The following feedstocks can be used for downstream manufacturing:
• Solvents, alcohols, ketones • Tar products, depitched tar acids, coal tar pitch, creosote, anode coke sulphur, ammonia, crypton/xenon, nitrogen, oxygen
• Inorganic sulphur • Petrochemical feedstocks: ethylene, propylene, acrylonitrile, alfa olefins • Fuels: petrol, diesel, liquid petroleum gas, illuminating paraffin, fuel oil
• Plastics: propylene, polyethylene, polyvinyl chloride reagent chemicals

Agricultural - Food Processing
The agricultural sector is of major importance to the Mpumalanga economy and provides large quantities of raw materials for further processing. The most important crops in Mpumalanga are maize, sugar, citrus, vegetables, bananas, beans, subtropical fruits, oil seeds, potatoes and nuts.

Many opportunities exist including:
• Cattle feed • Sugar by-products • Processing of sauces • Production of fruit yoghurt
• Fruit Juice blending • Bakeries and confectioneries • Caning of fruit and vegetables
• Dog food pellets • Sorghum beer manufacturing • Processing of tropical fruit and macadamia nuts.

Agricultural Products - Non-food related
The most important non-food agricultural opportunities involve wool, tobacco and cotton. Some of the opportunities in this sector are:
• Wool washing and combing • Spinning and weaving
• By-products Lanolin processing • Final product manufacturing including clothing etc.
• Cigarette manufacturing • Smokeless tobacco products

Wood Processing
Wood and paper related manufacturing activities contribute 40% of all manufacturing activities in the Lowveld region of the province. This industry consists of the manufacturing of household, office, professional and restaurant furniture and fixtures, pulp, paperboard and fibreboard.

Investment opportunities include:
• Furniture manufacturing • Timber frames for housing
• Processing of timber waste • Roof trusses • Packaging materials
• Ultraboard/chipboard • Wood transmission poles • Wood charcoal manufacturing
• Coffin manufacturing • Processing of bark • Paper products
• Publishing and printing • Pallet manufacturing

Tourism
With its rich array of natural features and scenic beauty, Mpumalanga is a prime destination in South Africa for foreign and domestic tourists. Apart from the world famous Kruger National Park there are also more than 70 private game parks and exclusive lodges, like Richard Branson's Ulusaba, where tourists can hut down the big five with their cameras.

The tourist potential of the province I fairly well developed but the rapid growth in tourism expected in the future makes large scale investment in tourism facilities a must. Several tourist investment opportunities exist in the province:
• Accommodation (hotels, lodges, guest houses, camp sites etc.)
• Man-made tourist attractions: e.g. theme parks, gambling resorts
• Entertainment facilities
• Rural tourism development in co-operation with local chiefs and rural communities
• Adventure tourism development: e.g. golf courses, hang gliding resorts, air balloon adventures, hiking trails, developments etc.
• Agricultural tourism development: e,g. environmental protection awareness camps, youth development camps, adventure schools

2010 Preparations
A number of infrastructure related projects spanning across various sectors have been identified. Apart from a world class international multi-purpose stadium, key projects include rail and road improvements with pedestrian walkways and high occupancy vehicle traffic lanes, and multi modal interchanges in 12 towns in the Province. Projects n the Health and Disaster Management Sector include the upgrading of various strategically placed hospital and clinics; purchasing of additional emergency vehicles (ambulances) band medical equipment and upgrading 10 EMS stations.

Investment Highlights
Mpumalanga has filled many investors with a “Pioneering Spirit” and many investment projects are in progress.


Incentives
Black Business Supplier Development Programme (BBSDP)
The Black Business Supplier Development Programme (BBSDP) is an 80:20 cost-sharing grant, which offers support to black-owned enterprises in South Africa.

The Critical Infrastructure Programme (CIP)
The Critical Infrastructure Programme (CIP) is a non-refundable, cash grant that is available to the approved beneficiary upon the completion of the infrastructure project. The scheme covers between 10% and 30% of the total development costs of the qualifying infrastructure.

Business Process Outsourcing and Offshoring (BPO and O)
The BPO and O Investment incentive comprises an investment grant ranging between R37 000 and R60 00 per seat and a training support grant towards costs of company specific training up to a maximum of R12 000 per agent. The incentive is offered to local and foreign investors establishing projects that aim primarily to serve offshore clients. The objective of the incentive is to attract BPO and O investment that creates employment opportunities. The BPO Investment incentive is effective from 06 December 2006 to 31 March 2011.

The Sector Specific Assistance Scheme (SSAS)
The Sector Specific Assistance Scheme is a reimbursable cost-sharing grant scheme whereby financial support is granted to nonprofit business organisations in sectors and sub-sectors of industries prioritised by the dti.

Technology & Human Resources For Industry Programme (THRIP)
A partnership programme, which challenges companies to match government funding for innovative research and development in South Africa. THRIP focuses on projects that specifically promote and facilitate scientific research, technology development and technology diffusion, or any combination of these.

All projects funded by THRIP must include human resource development, but the choice of technological focus is left to the industrial participants and their partners.

Support Programme for Industrial Innovation (SPII)
The programme, administered by the Industrial Development Corporation of South Africa, promotes technology development n the manufacturing and IT industry through innovation of new products and processes.
All private sector firms and commercialized state owned companies, which incur direct costs n the development of innovative new products/processes qualify for the funding.

Film Incentives
A large Budget Film and Television Production Rebate Scheme has been introduced where an eligible applicant will be repayed a sum totaling 15% for foreign productions, or 25 % for qualifying South African productions. This includes official co-productions of the Qualifying South Africa Production Expenditure that the applicant has spent on the eligible film production.

Enterprise Investment Programme (EIP)
Launched in July this year, EIP is a new incentive intended to stimulate growth and employment and broaden participation.

EIP will initially comprise the Manufacturing Investment Programme and the Tourism Support Programme. The programme will be accessible to both local and foreign-owned entities wishing to locate their operations in South Africa.

It provides an investment grant of between 15% and 30% towards qualifying investment in plant, machinery and equipment, and customised vehicles required for establishing new or expanding existing production facilities or upgrading production capability in existing clothing and textiles operations.

Export Marketing & Investment Assistance Scheme (EMIA)
The scheme partially compensates exporters and investors for costs incurred in respect of activities aimed at developing export markets, and assists with the facilitation of investments into South Africa.

What can MEGA do for you?
As the official trade and investment promotion, enterprise development and property management arm of the Provincial Government of Mpumalanga our objectives are to provide a one stop development service. Our services include: