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THE CITY FOR ALL REASONS

2018/2019 contact us for more information

THE CITY FOR ALL REASONS INVESTMENT QUERIES Pedro Oliphant Tel: +2744 801 9089 E-mail: [email protected]

INVESTMENT PROMOTION Tel: +2721 487 8600 E-mail: [email protected]

James Milne Tel: +2721 487 8678 E-mail: [email protected] RESEARCH Jodie Posen Tel: +2721 487 8614 E-mail: [email protected]

We would like to acknowledge the contribution of Latecia Phillips of Wesgro IQ for tourism research and Janine Botha of Wesgro IQ for editing. Table of Contents

INTRODUCTION 1

FOREWORD 2-3

1. AT A GLANCE 4 1.1 Competitiveness 4

2. GEORGE: A FIRST-CLASS CITY 5

3. GEORGE AT A GLANCE 6 3.1 Education and skills 7 3.2 Employment profile 8 3.3 George’s economy 9-11 3.4 Trade and Foreign Direct Investment profile 12 4.4.1 Exports and imports 12-16 4.4.2 Foreign direct investments(FDI) 16 3.5 Governance 17 3.6 George Initiatives 17 3.7 Infrastructure and Costs 18 3.7.1 Transport infrastructure: Road, Railway, Airport and Port 18-20 3.7.2 Information technology infrastructure 21 3.7.3 Electricity and water 21 3.7.4 Building plans, office space and industrial land 22-23 3.8 George Accolades and Cost of Living 24-25

4. SECTORAL POCKETS OF EXCELLENCE 26 4.1 Financial and Business Services 26-27 4.1.1 Business Process Outsourcing 28-29 4.1.2 Information Communication Technology 29-30 4.2 Food and Beverages/ Agri-processing 30-31 4.3 Manufacturing 32 4.3 Film and Multimedia 32-33 4.4 Hospitality and Tourism 34-37 4.4 Real Estate 38 4.5 Renewable Energy 39-40

5. REGULATIONS & LEGISLATION 41

6. ACCESS TO INTERNATIONAL MARKETS 42

7. KEY INCENTIVES 43-44

8. KEY CONTACTS 46-47 introduction This document has been developed to showcase the high growth sectors for investment. Facilitated by current investment climate within George for potential the combined efforts of the general public, private investors. This will enable more enlightened business sector and public sector; these incentives, devel- decisions. The document identifies the opportunities opments and growth sectors present current and afforded to businesses; and provides information on future investors with a resource to inform decisions five identified sectors of the economy that present and promote engagement.

page 1 George Executive Mayor: Melvin naik

George Municipality is still the “ largest economy in the Garden“ Route and potential for growth remains positive.

George as a city is on the cusp of greatness. The partners, reliable infrastructure, favourable real estate people of George are exceptionally fortunate to live, values and pro-business positioning. George also boasts work, and play in this great city. top quality trails, parks, recreation and sporting facilities that businesses value for their employees. George Municipality is still the largest economy in the and potential for growth remains Ongoing investment in one of the best run transport positive. services, the Go George, will also improve people’s access to urban opportunities. The prospect of establishing a University of the Southern Cape in George has been widely welcomed The municipality’s human settlements section has and this bodes well for the region. We live in an age already identified development zones to accommodate of great possibility, one of new technology, informa- the much-needed middleincome housing market. tion systems and intense global competition. Thus, a University will be a significant investment in our city George Municipality is business-ready for partnerships with vast new opportunities. in promoting the agri-processing sector, the municipality promotes the green economy and would like to see The George Municipality is progressive in creating an greater investment in biomass and solar energy. environment for growth and the creation of jobs. We will continue to provide access to sufficient water, I wish to remind all potential investors that we are sewer reticulation and electricity services. financially and politically stable.

Our unique strengths as a city include our strategic location, access to industrial and urban markets, a GeorgeMelvin Executive Naik Mayor progressive labour force, passionate community page 2 George has emerged as an economic hub and driver of growth in the Garden Route of the . As the third largest municipality in the province, it continues to attract top financial and business services, contributing to the Cape’s growing services sector.

The natural beauty of George, coupled with its world- class infrastructure have helped put the city on the map in South Africa. George’s natural scenic appeal with a beautiful coastline and the famous makes it an obvious choice as a destination for tourists and businesspeople alike. This has resulted in global companies deciding to do business in the municipality.

Wesgro’s trade promotion programme has also helped position the Western Cape as a key gateway to the rest of Africa, with a consumer market expected to reach over 2 billion people by 2050. This bodes well for George, given its key position in the Western Cape.

Indeed, during the last financial year (2017/2018), the Trade team facilitated a total of 53 business agreements with an estimated economic value of R2.8 billion resulting in 679 jobs. In addition, the unit facilitated a total of six “Outward Foreign Direct Investment” projects into Africa to the value of R190 million.

Wesgro’s investment unit continues to be at the forefront of proactively recruiting investments into the Cape. The Wesgro chief Executive officer: unit realised a total of 12 investment projects, to the value of more than R2 billion during the financial year 2017-2018. This has assisted in the facilitation of 1,014 jobs and helped to grow the Western Cape’s industrial base. tim harris A collaborative public-private partnership, which we are very proud of, is the Air Access initiative. This project has seen 13 new routes and 18 route expansions, adding over 1,5 million two-way seats to Cape Town International Airport, over the past three years. George Airport has also experienced just over 9% growth per year over the past 5 years and we anticipate greater passenger and cargo traffic in the fu- ture through this logistics and tourism hub.

The hub of the Garden Route also enjoys the strategic advantage of being situated on the major transport routes between Cape Town in the South and in the East. This location is advantageous for investment, The natural beauty of George, particularly for manufacturing, logistics, warehousing, “ coupled with its world-class tourism and lifestyle. I’m confident that with all that George has to offer, along infrastructure have helped“ with their willing and helpful municipality, this city will continue to be an inspiring place to do business in Africa. put the city on the map in South Africa.

TimChief HarrisExecutive Officer page 3 1. 1.1 Competitiveness

In 2017, South Africa was the 36th largest global destination market for greenfield investment out of 162 South countries monitored globally. The country was the largest destination and source market for greenfield investment on the African continent (FDI Markets, 2018). The 2019 Doing Business Report ranked South Africa as the 82nd most competitive country out of 190 nations africa surveyed. South Africa performed relatively well in the following indicators: protecting minority investors (23rd) paying taxes (46th) and resolving insolvency (66th). at a glance The table below highlights key competitive indicators across the BRICS countries. South Africa is the branch of the bloc on the African continent.

KEY COMPETITIVE INDICATORS, 2017 INDICATOR SOUTH AFRICA BRAZIL CHINA INDIA RUSSIA DEMOGRAPHICS Population (millions) 54.8 207.4 1 379.3 1 281.9 142.26 Life Expectancy at birth (years) 2017 64 74 76 69 71 rate (%) 27.6 11.8 4 8.8 5.5 THE ECONOMY GDP (PPP USD, bn) 766 3 240 23 160 9 459 4 008 GDP per capita (USD) 13 500 15 600 16 700 7 200 27 800 Total Investment (% of GDP) 2017 20 15.6 43.3 27.5 21.1 Gross national savings (% of GDP) 16 15 46 30 27 Inflation average consumer prices (%) 5.3 3.4 1.6 3.6 3.7 Source: CIA World Factbook (2018) page 4 2. GEORGE: A FIRST-CLASS CITY

George has a sophisticated, diverse and dynamic transport hub along the and is the 4th most im- economy, and is a hub for entrepreneurship and in- portant contributor to provincial employment among novation in the Garden Route, which makes up 40% the Western Cape’s 25 municipalities. George has of the district economy. George, as well as being the also consistently recorded higher economic growth main economic base for the Garden Route, also had rates than the district economy, the provincial econo- the highest average economic growth rates over my and the national economy in the past 5 years with the past 5 years. an average growth of 2.64% p.a., showing impres- sive resilience during a challenging period for South George is the 3rd largest municipality in the Western Africa. The municipality also boasts a trade surplus, Cape after the and , however it accounts for the lowest value exports out and is larger than and . of the four municipalities tabled below. George is strategically located as a logistics and table 1: Key economic indicators of George

Population (2017) 218 678 Gross Domestic Product - Regional (GDPR) R16 bn (current prices), 2016 Inflation (2017 average for Western Cape) 6.3% Coloured (55.78%), Black (24.40%), White (19.74%) and Ethnic Groups of Garden Route Indian and Asian (0.08%) GDPR Growth 2017e 1.4% HDI 0.72 Source: Quantec, 2018

Table 2: Comparative analysis of George and other Western Cape Municipalities Indicators Cape Town Drakenstein George Stellenbosch Breede Valley Population (‘000) (2017) 4,174 280 208 176 201 GVA at current prices 380 20 16 14.6 11.7 2016 (R bn) Average annual GDPR 2.04% 2.06% 2.64% 2.12% 2.41% growth (constant prices, 2011-2016) Imports (Rbn, 2017) 148.68 4.97 0.55 3.30 19.74 Exports (Rbn, 2017) 82.43 13.70 0.66 11.47 1.66 Source: Quantec, 2018

page 5 3. george at a glance George is a local municipality located within the Garden Route District in the Western Cape. It is bordered by the in the North and East, and the in the South, and in the West. George has spectacular natural scenery and is a renowned tourist and lifestyle desti- nation. The hub of the Garden Route also enjoys the strategic advantage of being situa- ted on the major transport routes between Cape Town in the South and Port Elizabeth in the East. This location is advantageous for investment, particularly for manufacturing, logistics, warehousing, tourism and lifestyle.

The municipal area is 5,190.43 km² and includes the following:

• City of George; • Villages of Wilderness and Herold’s Bay; • Various coastal resorts, such as Kleinkrantz and ; • Rural areas, such as the area around Rondevlei (east of Wilderness), Geelhoutboom, Herold, Hansmoeskraal and Waboomskraal, as well as Uniondale and Haarlem. page 6 3.1 Education and Skills

George achieved high matric pass rates of above 80% from 2012 to 2017, which indicates positive education outcomes for the area. The City of George is home to the following higher education institutions:

University George campus (NMU); • University of South Africa (Unisa) - open distance learning institution; • South Cape College; • Rundle College; • Boston City Campus & Business College; • Africa Skills Village; and • other private colleges.

NMU brings together the best traditions of technicon and university education. QS Top Universities ranked NMU in the top 200 Universities of the BRICS countries’ universities (Brazil, Russia, India, China and South Africa). NMU’s George campus offers four faculties, namely Business and Economic Sciences; Science; Law; and the faculty of Engineering, Built Environment and Information Technology. Unisa, South Africa’s biggest distance learning institution, has a strong presence with a service centre in George. The establishment of a Garden Route University would be catalytic in addressing the demand for a tertiary institution in the region, and given the position of George, it is an ideal location to invest in a facility of this nature. The municipality also encourages investment into skills development and incubators for scarce-skill development.

The table below indicates the skills levels of formally employed workers in the George municipal area. Table 3: George Skills Level, 2016 Formal employment Skill level contribution (%) Average growth (%) Number of jobs by skill 2016 2006 - 2016 2013 - 2017e 2016 2017e Skilled 31.8 3.9 3.1 18 835 19 176 Semi-skilled 40.0 1.1 1.6 23 689 23 697 Low-skilled 28.2 -0.6 1.5 16 685 16 575 Formal employment Skill level contribution (%) Average growth (%) Number of jobs by skill 2016 2006 - 2016 2013 - 2017e 2016 2017e Total 100 1.3 2.0 59 209 59 448 Source: Quantec, 2018 (e denotes estimate)

In 2016, 59,209 workers in the George municipal area were formally employed. This is estimated to have in- creased slightly to 59,448 in 2017, mainly due to an increase in semi-skilled workers, which is in line with the large estimated increase of wholesale and retail trade, catering and accommodation sector workers in 2017.

In the last five years, the number of skilled workers has increased by an average rate of 3.1% p.a. in George. In 2016, 31.8% of workers were skilled. Together with the above average growth rate in this skills category, it is indicative of a higher demand for skilled workers in the area which is in line with the urbanisation of the George municipal area, tertiary sector job creation as well as economic growth (MERO, 2018). page 7 3.2 Employment Profile

Table 4: George’s Employment Indicators, 2017

Working age population 139,666 Labour Force Participation Rate 68.9% Employed 80,884 Strictly Unemployed 15,199 Not Economically Active 43,583 Strict unemployment rate 15.8% Source: Quantec,2018

George had a lower unemployment rate than the City wholesale, retail, catering and accommodation. The of Cape Town, the Western Cape and South Africa in finance and business services sector employed the 2017. George contributes 36% towards employment largest number of skilled individuals in 2017 (6,255) in the Garden Route district and has the third lowest and the wholesale, retail, catering and accommo- unemployment rate in the district after Hessequa and dation sector employed the largest number of semi- Kannaland. George’s top formal employing sectors skilled individuals (6,373). were finance, real estate and business services and

Figure 1: Sectoral Employment Split in George, 2017

Wholesale, retail trade, catering and accommodation

Finance, insurance, real estate & business services

Community, social & personal services

Agriculture, forestry & fishing

Manufacturing

General government

Construction

Transport, storage & communication

Electricity, gas & water

Mining

0 5000 10 000 15 000 20 000 25 000

Skilled Semi-skilled Low skilled Informal Source: Quantec,2018

page 8 3.3 George’s Economy

George, the hub of the Garden Route is a magnet for national economy. The city’s GDPR grew by an average talent, investment and production, utilising economies of 2,25% between 2013 and 2017, on average grow- of scale to grow faster than the broader region in which ing 0,7 percentage points faster than the national it is located. The city, nevertheless, as shown in Figure 2 economy during this time. below, finds itself affected by economic shocks to the

Figure 2: Growth in GDPR at constant 2010 prices in South Africa (%), 2013-2017e GDP growth, 2013 - 2017e 3.50 3.00 2.50 2.00 1.50 1.00 GDP growth (%) 0.50 0.00 2013 2014 2015 2016 2017e George 3.12 2.88 2.08 1.73 1.43

South Africa 2.56 1.95 1.25 0.66 1.33 Garden Route 2.86 2.62 1.49 1.22 1.16 Western Cape 2.63 2.36 1.49 1.25 1.03 City of Cape Town 2.47 2.01 1.50 1.47 0.72 Source: Quantec,2018

The George municipal area had a GDPR of R16bn in 2016. The economy grew by a rate of 1.7% in 2016, which is slower than the 2.1% recorded in 2015. The slower GDPR growth can be attributed to the contraction of the primary sector, mainly agriculture. Of the main economic sectors in the George municipal area, the finance, insurance, real estate and business services sector recorded the strongest growth in 2016 (3.7%), followed by transport, storage and communication (2.2%) and manufacturing (2.1%). page 9 Table 5: Breakdown of George’s GVA by sector (2011-2016, R millions)

Contribution Rm Trend Real GDPR growth (%) Sector GDPR value (%) 2016 2016 2006 - 2016 2013 - 2017e 2012 2013 2014 2015 2016 2017e Primary Sector 4.3 680.6 1.8 0.3 1.2 1.8 6.9 -2.6 -7.7 3.0 Agriculture, forestry 4.1 652.9 1.8 0.2 1.2 1.7 6.9 -2.7 -7.9 2.8 and fishing Mining and quarrying 0.2 27.7 1.2 4.4 2.0 3.9 7.9 0.5 1.2 8.5 Secondary Sector 24.1 3 858.8 2.0 1.1 2.1 2.0 1.1 0.7 1.2 0.4 Manufacturing 15.0 2 391.2 2.4 1.5 2.8 2.0 1.2 1.0 2.1 1.1

Electricity, gas 3.5 554.0 -1.7 -1.7 -0.9 -1.7 -1.7 -2.5 -2.7 -0.1 and water Construction 5.7 913.6 3.5 1.3 1.7 3.9 2.4 1.5 0.2 -1.4 Tertiary Sector 71.6 11 448.7 3.7 2.7 3.9 3.6 3.1 2.8 2.5 1.6 Wholesale and retail trade, catering and 18.3 2 920.2 2.7 1.6 4.2 2.6 1.7 2.1 2.1 -0.6 accommodation

Transport, storage 11.5 1 845.1 4.1 3.1 3.5 3.9 4.7 2.3 2.2 2.7 and communication Finance, insurance, real estate and 26.7 4 275.5 4.9 4.0 4.7 4.4 4.0 4.6 3.7 3.2 business services General government 8.9 1 425.4 2.5 1.0 2.3 3.3 2.3 0.1 0.2 -0.7 Community, social 6.1 982.5 2.0 1.5 2.3 2.2 1.6 1.0 1.5 1.1 and personal services Total George 100 15 988.1 3.2 2.3 3.4 3.1 2.9 2.1 1.7 1.4 Source: Quantec, 2018; note: “e” denotes estimate

It is estimated that the agriculture, forestry and fishing sector grew by 2.8% in 2017. The transport, storage and communication sector also had a higher estimated GDPR growth rate compared to 2016 at 2.7% growth, highlighting the important linkages between these two sectors.

page 10 Detailed sectoral breakdowns George’s food, beverages and tobacco sub-sector was the largest manufacturing component in 2017 accounting for an estimated 32% of total manufacturing. This was followed by petroleum, rubber and plastic products (18%) and metals, machinery and equipment (14%). The pie below shows the composition of the manufacturing sector in George in 2017.

Figure 3: Sub-sectoral breakdown of the manufacturing sector, 2017e Electrical machinery & apparatus 2% Radio, TV, instruments, Other non-metal watches & clocks mineral products 2% 3% Textiles, clothing Food, beverages & leather goods & tobacco 3% 32% Transport equipment 6%

Furniture; other manufacturing 9%

Wood & paper; publishing & printing 11%

Petroleum products, Metals, metal products, chemicals, rubber & plastic machinery & equipment 18% 14% Source: Quantec, 2018, note: “e” denotes estimate

The largest sub-sectors of the tertiary sector in George were wholesale and retail trade (24%), business services (24%) and finance and insurance (14%). Figure 4: Sub-sectoral breakdown of the tertiary sector, 2017e

Catering & accommodation services 1% Education (Private) Health & social 1% work (Private) 3% Wholesale & retail trade Communication 24% 4% Other community, social & personal services 5%

General government 12%

Transport & storage 12% Business services 24% Finance & insurance 14% Source: Quantec, 2018 page 11 3.4 Trade and Foreign Direct Investment profile 3.4.1 Exports and Imports

George accounted for 19.5% of the Garden Route’s exports and 40% of imports in 2017, with annual average growth in exports of 35% p.a. between 2013 and 2017. Exports from George were worth R658m in 2017, resulting in a R104m trade surplus.

Figure 5: George Trade, 2009-2017 800

600

400

200 Value (ZARm)

0

-200

-400 2009 2010 2011 2012 2013 2014 2015 2016 2017 Export (ZARm) 55 93 143 163 186 261 488 622 658 Import (ZARm) 175 204 274 258 375 496 734 638 544 Trade Balance (ZARm) -121 -111 -131 -95 -189 -234 -246 -17 104

Source: Quantec, 2018

page 12 Figure 6: George Global Export Regions, 2017

Oceania 1%

america 7% asia 12%

13% Africa 67%

Source: Quantec,2018

In 2017, George’s major export regions were Africa (67%), Europe (13%) and Asia (12%). In 2017, the top export destinations for George were (R148m), Lesotho (R85m) and Zambia (R62m).

In 2017, cheese and curd was the largest exported product from George at a value of R63m. This was followed by coal, briquettes and coal fuels at a value of R49m, and worth R48m. Approximately 25% of all exports from George are from the textile and leather goods sector, followed by the food and beverages sector (15%). page 13 Figure 7: George’s Top 10 Exported Products, 2017

70

60

50

40

30

Value (ZARm) 20

10

0 Cheese & Coal; Motor Clothing Other Equipment Prepared Skins & Fruit & Parts of curd briquettes, cars accesso- footwear for photo- leather other parts vegetable aircraft or ovoids & ries graphic after of birds/ juices spacecraft fuels labs, tanning or feathers screens crusting ZARm 62.88 48.70 48.26 42.58 39.62 39.18 35.54 20.31 18.83 18.32

Source: Quantec,2018

page 14 Figure 8: George’s Top 10 Imported Products, 2017

90

80

70 60

50

40

Value (ZARm) 30

20

10 0 Prepared New Harvesting Unglazed leather Natural Frozen Knitted pneumatic Other or Parts of ceramic after rubber & Centrifuges fish T-shirts rubber aircrafts threshing aircrafts flags and tanning or gums tyres machinery paving crusting ZARm 78.18 46.77 38.80 20.83 20.56 18.29 17.82 16.24 14.97 13.19

Source: Quantec, 2018 R78 million

knitted t-shirts R47 million R39 million

In 2017, frozen fish was the largest imported product into George at a value of R78m, followed by knitted T-shirts (R47m) and prepared leather (R39m).

page 15 In 2017, George exported almost all of the Garden radio, TV, instruments, watches and clocks. George Route’s mining and quarrying, 88% of the Garden also exported 58.8% of the Garden Route’s transport Route’s other non-metal mineral products and 80% of equipment in 2017. Table 6: Key Commodities Exported by George, 2017 SOUTH WESTERN GARDEN GEORGE % TOP 10 EXPORTS AFRICA CAPE ROUTE GEORGE OF GARDEN (Rbn) (Rbn) (Rm) (Rm) ROUTE Total 1180.00 125.00 3370.00 658.00 19.5 Textiles, clothing and leather goods 18.60 5.07 591.00 162.00 27.4 Food, beverages and tobacco 68.00 26.90 410.00 95.35 23.3 Transport equipment 127.00 3.23 143.00 84.06 58.8 Agriculture, forestry and fishing 68.90 36.30 1500.00 67.65 4.5 Mining and quarrying 431.00 15.80 48.91 48.88 99.9 Radio, TV, instruments, watches 16.30 3.19 60.00 48.15 80.3 and clocks Metals, metal products, machinery 239.00 14.70 117.00 44.05 37.6 and equipment Furniture and other manufacturing 54.60 5.44 255.00 37.57 14.7 Petroleum products, chemicals, 101.00 10.00 173.00 25.71 14.9 rubber and plastic Wood, paper, publishing and printing 32.00 2.13 33.54 17.68 52.7 Other non-metal mineral products 7.33 0.69 18.52 16.26 87.8 Electrical machinery and apparatus 11.90 1.02 15.55 10.17 65.4 Electricity and gas 8.60 0.00 0.00 0.00 -

Source: Quantec, 2018

3.4.2 Foreign Direct Investment (FDI)

FDI Markets, owned by the Financial Times (2018) recorded one major investment into George by Walmart (United States) subsidiary Builders Warehouse in a retail project worth an estimated R483m, which created around 179 jobs.

The top source markets for FDI into the Western Cape from 2003 to September 2018, were as follows: • United Kingdom (25% of projects and 12% of capital expenditure (capex); • United States (22% of projects and 22% of capex); • Germany (8% of projects and 7% of capex); and • Netherlands (5% of projects and 6% of capex).

Source: FDIMarkets (2018) page 16 3.5 good governance

George is one of the municipal entities in South Africa to have taken several important measures to ensure good governance such as anti-fraud and anti-corruption measures. Ascribing to the King IV Code of Gover- nance principals, George recognises the active role of municipalities in maintaining a code of ethics and sound governance. In this vein, George has a whistle- blowing policy to ensure fraud and corruption are promptly addressed.

In 2016, George was rated highly for its sound fiscal position and prudent financial management by Good Governance Africa (GGA, 2016). The survey affirmed George’s position as the 18th best performing local municipality out of South Africa’s 234 municipalities. George has also achieved its fifth consecutive clean audit report.

3.6 George Initiatives

George is home to several initiatives aimed at expan- ding its functionality, attractiveness and efficiency as an investment destination, including:

• Garden Route university/ research institute/ tertiary academy, including ancillary projects are being initiated; • George Integrated Public Transport Network project (GO GEORGE), including Urban Design projects have already commenced; • Establishment of a Garden Route International Convention Centre; • George Airport Commercial Expansion; • Light industrial, warehousing and logistics precinct; • Innovation – Silicon Park Science and Technology project; • Establishment of a resort for tourists at Gwaing River Mouth; • Establishment of a call centre/ Business Process Outsourcing hub; • ICT incubator and broadband expansion; • Tourism and business hub – the Destiny Africa eco-sphere project; and • The establishment of an agri-park. page 17 3.7.1 Transport Infrastructure: Road, 3.7 Railway, Airport and Port

George enjoys the strategic advantage of being situated infrastructure on the major transport routes between Cape Town in the south and Port Elizabeth in the east. This creates investment opportunities, particularly with regard to manufacturing, logistics and warehousing.

An excellent system of highways and national roads & costs links George to Cape Town (420 km) and Port Elizabeth (320 km). George is well connected through the national bus service routes, with transport available to and from major centres in the country.

In support of infrastructure growth and recognising the important correlation between infrastructure investment and standard of living, George, through an inter- governmental agreement with the Western Cape was allocated .9m for infrastructure development over the 2017 Medium Term Expenditure Framework (MTEF). During the 2015-2016 and 2016-2017 financial years, R18m was spent on the resealing of road infrastructure and a further R40m has been used for maintenance. A clear emphasis is placed on the importance of the existing road network as a key enabler of growth for the economy. To this extent, the city directed R497m towards the George Integrated Public Transport Network (GIPTN).

Some companies in George have let us know about their reason for investing in George. Below find some questions answered by Distell, who focus on logistics at their facility in the region.

page 18 what is the nature The Distell Sales and Distribution facility in George is predominantly of your business used to distribute all our products in the Garden Route. in George?

1. Our strength as a company is in the products we make, the brands we grow, and the people and relationships we build. We pride ourselves in crafting inspiring experiences and advantages of What are the top having a footprint in George is that it is central to the Garden Route advantages of with a high tourism and holiday destination attraction and footprint. 2. George is alive with an abundance of festivals as well as outdoor being in George? activities and events. 3. For our staff, living in George offers high quality service delivery, it is safe and the schooling at all levels provides the highest quality education. Railway George boasts a sophisticated air, road and rail link to all the major cities of South Africa, making it the ideal corporate and holiday destination. The Outeniqua Transport Museum, which houses an array of steam locomotives and carriages from days gone by, is a railway museum located in George.

Transnet announced its intention to re-introduce the Outeniqua railway service between George and Knysna in November 2017. This will add great tourism value to the region, as well as being a viable commercial proposition for transporting a variety of cargo, including household waste.

page 19 Airport

George Airport was recently voted the “2018 Best Airport by Region” in the Africa category for airports with under two million passengers. George Airport also came out tops in the Airports Council International’s (ACI) annual Airport Service Quality Awards for 2018. George Airport was the winner of the Best Airport in Africa over 20 000 air traffic miles. George Airport is one of the gateways for international tourists to easily access the Garden Route.

• George Airport (Airports Company South Africa) is situated 7 km from the George city centre and is the largest airport in the Garden Route District. It caters for both passengers and commercial cargo; • Four passenger airlines operate from the airport (, Kulula, and ), flying between George and either (O. R. Tambo International Airport) or Cape Town (Cape Town International Airport); • The airport exports locally produced goods such as fresh cut flowers, oysters, herbs and ferns; • Passenger transport has increased significantly over the past few years – up to 700 000 passengers per annum (47% of these travellers come to George for business and 27% are holidaymakers); • Terminals are becoming too small and are being enlarged. The runway is 2km long and needs to be ex- panded to at least 3 km in the future.

The rise of online retail and e-commerce has led to a greater demand for short delivery times. Air transport serves as a means of addressing this trend. Warehousing services provided in conjunction with air transport also help to reduce retail and distribution costs.

Over the last five years, George Airport has maintained a steady flow of passenger movement and reflected a positive annual average growth rate of 9.1% p.a. across the period. 2017 marked the highest number of arrivals through the airport, while the highest year-on-year growth was achieved in 2015 (+17.3%).

Figure 10: Passenger Movement Through the George Airport, 2013-2017

450 000 20.0% 17.3% 400 000 18.0%

350 000 393 057 16.0% 356 479 348 146 14.0% 300 000 296 911 12.0% 250 000 279 180 10.3% 10.0% 200 000 6.4% 8.0% 150 000 6.0%

Number of passengers 100 000 2.4% 4.0%

50 000 2.0%

0 0.0% 2013 2014 2015 2016 2017

Source: ACSA, 2018 page 20 3.7.2 Information Technology Infrastructure

Information Technology (IT) infrastructure is well established in George. George has a strong Information Communication Technology (ICT) industry comprised of a diverse network of companies focusing on soft- ware and hardware development.

The Garden Route ICT incubator will not only help train up new skilled workers in the region, but will also attract new work to the region. As a result, it will catalyze growth in the ICT industry and assist with other economic development spin-offs. George’s ICT sector, in cooperation with Dark Fibre Africa (DFA), Neotel, MTN and BBI, has deployed 52km of fibre infrastructure to the value of R15m. The new fibre infrastructure will assist in attracting investment into the city and supporting entrepreneurial growth.

George has taken advantage of the high growth in cellphone usage in South Africa and has launched a municipal app. In strengthening George’s strategic objective of good governance, this app allows for easy and direct communication with the municipality, increasing engagement in matters that affect citizens and enables effective and relevant service delivery.

3.7.3 Electricity and Water

Extensive investment in electricity infrastructure across the country is apparent, whereby a large proportion of the focus is on renewables. Although electricity costs in South Africa are increasing, the country retains a relatively low position in terms of global electricity pricing. George municipality was fortunate not to have experienced any load shedding in recent years and has indicated that they do not foresee any in the coming years. A number of consumers are moving to other forms of energy and are considering gene- rating their own renewable electricity. The city invested R20.4m on electricity infrastructure development and maintenance in the 2017 financial year alone. The new 25 MVA transformer for the George sub-station has also been commissioned.

George’s Water and Sanitation Directorate has re- ceived numerous awards, such as “Best Wastewater Pond System” and “Best Internal Wastewater Labo- ratory”. Additionally, they have received two winning trophies from the Water Institute of (WISA) for excellence in the treatment and provision of clean and safe drinking water. The bulk resources are sufficient and purification capacity is adequate to accommodate growth and development.

The City of George can ensure investors that you will have access to clean, potable water that is adequate for both agricultural and industrial use. George’s dam level reading over the last three years have been esti- mated at around 87%.

Recent developments include, but are not limited to, the construction of a 12.5 million litre reservoir, as well as the expansion of a telemetric system. Furthermore, R54m was spent on water infrastructure development and maintenance in the 2017 financial year. page 21 3.7.4 Building Plans, Office Space and Industrial Land

George has evolved into a business services destination, offering a high quality and modern environment for business and innovation. The total current value of property in the Central Business District (CBD) amounts to over R1bn (George Central and George South, Municipal General Valuation, 2018). George approved 1,761 building plans from January to October 2018. In this period the majority of building plans were ap- proved within 30 days of having been submitted.

Figure 11: George Municipality Building Plans Approved Jan-October 2018

less than 30 days less than 60 days Outside stipulated timeframe

44% 54%

2% Source: George Directuate - Planning and Developments

Office developments in George have grown, particularly in the CBD. York Street and surrounds are the main nodes for offices, as they provide accessibility to the main areas of town. Dynarc Capital, formerly based in , relocated their head office to the George CBD, investing R60m into this new project, demon- strating its confidence in the future of the CBD. The current office trends are shown in the table below: Table 7: George Office Trends George CBD George Decentralised Average Rentals R65/m2 R50/m2 Vacancies 20% 25% Preferred Size Mostly small office spaces between 50m2 and 140m2

Source: Local Brokers, 2015

There is a demand for small, medium density, A-grade offices, located adjacent to or on the two major roads, York and surrounds, within the George CBD area. The space demand is estimated at between 5,900m2 Gross Lettable Area (GLA) and 8,900m2 GLA in 2018 in the CBD.

page 22 Source: Quantec,2018

Table 8: Office Space Demand Potential Cumulative Additional Space Demand Up to 2018 2023 2028 Finance and insurance (sqm GLA) 5 713 14 101 20 769 Business services (sqm GLA) 24 079 50 551 77 885 Total: George 29 792 64 652 98 653 CBD nodal share (min) 5 958 12 930 19 731 CBD nodal share (max) 8 937 19 396 29 596 Average 7 448 16 163 24 663

The City of George supports residential densification zoned and serviced industrial properties available in within the CBD and along major transport corridors. industria. The precinct is strategically The Local Spatial Development Framework (LSDF) located close to the railway line to facilitate rail for the CBD indicates that at densities of 80 units/ha, freight. It is the primary industrial node of the city an additional 4,000 households can be accommo- and is identified as an essential development node, dated over the next 15 years and, over the long term, offering 59 hectares of municipal-owned land for possibly up to 28,000 households. A range of housing industrial zone 1 light and general. This site is loca- types are to be accommodated, including government- ted close to N2 highway intersections and is readily led social housing and private sector delivery of “gap” accessible to the airport, and is therefore suitable housing. for attracting industrial and commercial investments. This includes a zone for the noxious industry, as To meet the high demand for residential apartments well as an identified hub for manufacturing green within the CBD, particularly from people who want technologies, which is a part of the catalytic projects to work, live and play within the CBD, the municipality proposed in George. supports developers in their applications for higher density projects. Restructuring sites have been identi- Other key industrial areas include the proposed fied in the CBD where partially subsidised high-density Western Gateway industrial area where future in- developments will be established to bring workers dustrial expansion will be facilitated, and a new closer to places of employment and increase consumer sub-regional commercial node near the N2 and thresholds in the CBD. A range of incentives are airport. This is targeted at South Cape manufac- offered for development in this area. These include turing, freight, logistics, and service industries that amongst others building plan approvals within a support the airport usage. A number of city incentive shorter period, lower parking ratios and financial in- schemes for the growth of industry operations are centives. available, as outlined in Section 7.

The city is host to diversified and vibrant industrial areas. Land north of Pacaltsdorp offers several vacant, page 23 3.8 george accolades and cost of living

The City of George receives regular accolades and awards, which are related to lifestyle, opportunities, service offerings and overall living standards, including (but not limited to):

• George Municipality is the first B-municipality to roll • Western Cape Award 2016 for Best out a fully integrated public transport service (GO Rural Housing Programme; GEORGE,) winning the Certificate of Outstanding • 2017 Award for the Best Waste Water Pond System Achievement for an Innovation Project in 2015; for the Waste Water Treatment Works • 2015 Institute of Municipal Finance Officers Award • 2017 Award for Best Internal Waste Water Labora- for Clean Audit; tory for Outeniqua Waste Water Treatment Works • 2015 Certificate of Recognition from the Minister of • 2017 Runner up Award: Best Water Treatment Cooperative Governance and Traditional Affairs, Works for Wilderness Water Treatment Works Pravin Gordon for Outstanding Services Rendered in Firefighting; • 2017 Runner up Award: Best Wastewater Treat- ment Works for Kleinkrantz Wastewater Treatment • Energy Game Changer Participation Award for the Works Implementation of Solar on Rooftops; • SAICA Southern Cape Award - Most Outstanding • Nominated for Municipality of the Year (Planning Civil Engineering Achievement 2018: Community- and Service Delivery Section) by African Utility Week Based Project, Pipe Bridge No.5 • Certificate of Registration of Commitment and Un- • SAICA Southern Cape Award - Most Outstanding dertaking for electrical candidate engineers and Civil Engineering Achievement 2018: New 12,5ml establishing a mentorship scheme in accordance Reservoir at George Old Water Treatment Works with ECSA’s training requirements in 2015; • 2015 ACSA Feather Awards; • Best Enhanced People`s Housing Process Programme – Protea Park Project • Certificate of Recognition for Greenest Municipa- lity in 2015; • Best Emerging Youth Contractor – Haarlem Farm Workers Project • Certificate of Outstanding Achievement for the Most- Improved Municipality for Leadership, Compliance, The George Business Chamber was awarded the Institutional Arrangements and Public Participation Ahi National Award for the best Business Chamber in in 2015; South Africa in 2014 and 2016, with second place in • Western Cape Govan Mbeki Award 2016 for Best 2015. George has won numerous awards based on Enhanced People’s Housing Process Project their level of service delivery. The table below gives (Uniondale Housing Project); George Municipality service delivery indicators. page 24 Table 9: Service Delivery Indicators

Electricity 96% Water in urban area 100% Water in rural area by means of water tanks 80% Sanitation in urban area 100% Refuse removal and waste in urban and rural areas 100% T/A time to fix potholes (scheduled) 2 weeks T/A time to fix potholes after a complaint 2 days T/A time from complaint to repair of broken traffic lights 1/2 days Service Delivery Team (sanitation/water/electricity) Available 24 hours Source: George Municipality, 2018

In terms of total cost of living, George is 21% cheaper than the City of Cape Town and 9% cheaper than Port Elizabeth. Table 10: Cost of Living Indicators, George compared to Cape Town and Port Elizabeth Cities George: Cape Town George: Port Elizabeth Food -20% -14% Housing -49% -23% Clothes -18% -7% Transportation 12% -0% Personal care -5% 4% Entertainment -7% 3% Total cost of living -21% -9%

Source: Expatistan, 2018

page 25 4. SECTORAL POCKETS OF EXCELLENCE 4.1 Financial and Business Services

The business services sector including Business Process Outsourcing (BPO) and Information Technology (IT) contributed an estimated 24% (R2.9bn) to the tertiary sector in George in 2017, while finance and insu- rance contributed 14% (R1.7bn). Between 2013 and 2017 the finance, insurance, real estate and business services sector grew at a rate of almost double the total George economy (2.3% p.a.) of 4% p.a. This sector employs 20% of the skilled workforce in George and 16,524 skilled and unskilled people. In 2017, it was es- timated that George contributed 43% to the Garden Route finance, insurance and real estate sector.

Table 11: Finance, Insurance, Real Estate and Business Services in George

Contribution Rm Growth Trend Real GDPR growth (%) Sector to GDPR (%) value 2006 – 2016 2013 - 2017e 2012 2013 2014 2015 2016 2017e 2016 2016 (av. % p.a.) (av. % p.a.) Finance, insurance, real estate and 26.7 26.7 26.7 4.0 4.7 4.4 4.0 4.6 3.7 3.2 business services

Source: Quantec, 2018

A significant amount of private investment and asset ment Services, Kruger International, Moore Stephens management services, as well as insurance and George, IFA Office and Ecsponent Financial Services personal service companies have relocated to George are also based in the city. The five major South African as it is a significant financial and business services banks (First National Bank, ABSA, , hub in the Garden Route. Top insurance companies Nedbank and Capitec Bank) have branches and ser- such as Old Mutual Brokers, Santam, Metropolitan, vices located throughout George. In the real estate Alexander Forbes, Boshoff Property Group and industry companies such as Sotheby’s Realty, Pam Sanlam have branches in George. Renowned invest- Golding, Remax Property, Just Letting, etc. operate ment and financial advisors such as Citadel Invest- in the city. Opportunities and Advantages of George as a Financial and Business Services Location

• The city’s urban development node incentives are a contributing factor to the promotion of the redevelop- ment and regeneration of the growing financial and business district within the CBD.

• Broadened access to banking services to low-income areas through reduced infrastructure costs and more accessible broadband.

• Strengthening credit extension for working capital to SMMEs, such as construction firms for contracts on the continent. The city and the private sector are working together to find ways of increasing business lending through the Small Enterprise Finance Agency (SEFA).

• Established business culture and clustering of financial institutions.

• A relatively compact and relaxed CBD environment with easy access and less congestion than Cape Town. page 26 Some companies in George have let us know about their reason for investing in George. Below find some questions answered by Task Applied Science, who focus on clinical trials at their new facility in the region.

1. The availability of infrastructure – especially concerning medical What motivated facilities and transport. your decision 2. The availability of skills also played a role. 3. The relevant role-players in George that we have been in contact to invest in George? with are all positive in wanting to contribute to the community and welcoming growth and further investment in community health.

What, in your opinion, are the top 2 1. Access to health facilities and skills. advantages of being 2. Access to transport infrastructure i.e. the GO GEORGE Bus system in George?

What has your In the past 5 years we have grown from 45 to 175 staff members. average growth This growth has been stimulated by establishing our brand and been over the past through high quality work. 5 years?

Are you planning to expand in the Yes. The George site is part of our expansion. next 5 years?

1. Stability funding – the world of clinical trials can be quite volatile due to changes in regulations and funding. This causes lulls in new What are the top studies starting. During these quiet times it is necessary for us to challenges your have investors allowing us to sustain the developed skills. company is facing? 2. Negative perception towards clinical trials from the community and health facilities due to people not being informed about clinical trials. We hope that George will be a research-friendlier environment.

page 27 4.1.1 Business Process Outsourcing

The Global Sourcing Association (GSA) conference in 2018 named South Africa the “Global Destination of the Year” for offshoring (the relocation of business processes). This marked South Africa’s fifth award since 2012 making South Africa and her cities leading offshore business process services (BPS) destinations. The South African Offshore BPS market has experienced a near 20% year-on-year compounded average growth since 2012. Figure 12: Service Function Breakdown of BPO in the Western Cape in 2017

2%2% Inbound customer service 3% 5% Inbound sales Outbound service Debt collection Legal process outsourcing 16% Shared services centre 48% Finance and accounting Other back office processing (document 15% processing, research, etc.) Other 9%

Source: BPESA, 2018

The South African government has identified Business Process Outsourcing (BPO)/contact centres as a key sector for job creation for the large population of unemployed South African youth. Eleven percent of the major BPOs in the Western Cape are located in George. The major BPO companies located in George in- clude:

• Merchants – Asda, iiNet and EE provide BPO services in Customer Relations Management. Their source market is the United Kingdom. • Solluco – provide BPO services in Customer Relations Management (and supply chain management services). Their source market is the United Kingdom. • Oakhurst Insurance – provides BPO services in knowledge processing outsourcing. Their source market is South Africa.

Second to the City of Cape Town, George is the most important market for BPO growth and investment. There are already well-established companies operating in the municipality. To support the growth in this sector, the George municipality supports the infrastructure for high-speed internet connections. There is also a drive to solicit highly skilled and innovative IT technicians that will assist the BPO market. page 28 Opportunities and Advantages of George as a BPO Business Location

• A rich talent pool with a predominantly English-speaking workforce that are able to engage with international clients. • The same as Europe, ensuring that working hours overlap. • George’s natural appeal, with its beaches and mountains provides for a quality enhanced lifestyle, a big draw card for mobile investors. • There are strong data protection laws and standards in South Africa, similar to those in Europe, which gives prospective businesses information security. • There is good availability of quality technology services. • George has relatively low costs of doing business, compared to other cities and Cape Town. • Complementary and supporting industries like the finance and ICT industries are strong in George. • The Western Cape is home to 61% of BPO endeavors in South Africa, with clustering advantages.

4.1.2 Information Communication Technology Africa

As part of the Western Cape government’s (WCG) 27 wards in George, of which five contain a WCG aim to improve business competitiveness and the Wi-Fi hotspot. The picture below shows that apart livelihoods of citizens through various broadband for the City of Cape Town, George is the second initiatives by 2020, free Wi-Fi has been installed in largest WiFi hotspot cluster in the province.

Western Cape Tourism Information Cape Town Tourism: Tel: +27 86 132 2223 [email protected] www.capetown.travel

Cape West Coast: Tel: +27 22 433 8505 [email protected] www.capewestcoast.org

Cape Winelands Tel: +27 21 888 5100 [email protected] www.tourismcapewinelands.co.za

Cape Garden Route +27 44 803 1416 [email protected] www.tourismcapegardenroute.co.za

Cape +27 23 449 1000 [email protected] www.tourismcentralkaroo.co.za

Cape www.tourismcapeoverberg.co.za

Southernmost tip of Africa Source: Western Cape Government, 2018

Southernmost tip of Africa Private companies, Cloud Connect and Fibrehood are also rolling out fibre for residential use and public insti- tutions. There is also a Garden Route ICT incubator, which supports this growing sector in the municipality. Table 12: Selected IT/support companies in George

Western Cape Digital Communication Cloud Connect Networks Gigabug.co.za B360 Wireless Vox Independent Dealer PYXL Intermatic CC Digital Village vanTo Corp PTY (LTD) VTS Communications Bover Technologies We Fix Garden Route.com page 29 Competitive advantages of George as an ICT location

• The industry is largely supply driven and the availability of ICT skills and, the prevalence of an entrepre- neurial culture, are key aspects. • There are benefits of agglomeration and clustering in George with over 50 ICT companies in different sub-sectors. • In a highly mobile sector, George’s natural beauty which allows for a better working environment and life style, is a strong pull factor to skilled employees. • The diverse eco-system of companies across the value chain and, a strong presence of supporting institu- tions, provide for ease of business operations. • The Garden Route ICT incubator provides infrastructure support and incubation for tech and tech-enabled businesses to grow and connect in George.

4.2 food and beverages/ agri-processing

The Western Cape is Africa’s agribusiness hub, with Breweries (SAB). The vegetable industry holds po- the province contributing close to 49% of the country’s tential for expansion in its processing capacity, and the commercial agricultural exports (Quantec, 2018).This berry sector has opportunities for agro-processing, is attributed to the Western Cape’s high level of agri- exports and tourism. There is a growing trend for cultural development and expertise, the quality of its fresh and delivered produce in George, where 35 infrastructure, access to market and services. hectares of land have been secured for a hydro- ponics facility to grow fresh produce for commercial The industry is one of the few manufacturing indus- exports. tries where the Western Cape has a positive trade balance and it is a very important earner of foreign George is one of the key strategic locations for timber exchange. The main agricultural activities in the George in the Western Cape. Timber is a traditional industry municipal area are farming mixed vegetables, live- in the Garden Route and extensive plantations still stock, honeybush, dairy, essential oils, berry fruits such exist. International players such as Cape Pine have as blueberries, and other tree produce such as mac- relocated their headquarters to George. Timber is adamia nuts. Due to the favourable climate, George predominantly used in the construction industry and hosts the sole hops farming area in the country, in specialised furniture manufacturing. garnering significant investment from South African page 30 Key interventions to promote the sector include an agro-processing facility and the establishment of an agri-park (5 000 square metres that has been approved by council). This park will function as an innovation system of agro-production, agro-processing, logistics and warehousing, cold storage, packing, canning, marketing, training and extension services to commercial and emerging farmers. Table 13: Selected agro-processing companies in George:

South African Breweries – Hop Farms Tikketia PTY LTD Lancewood Haygrown Eden Packhouse Morning Milk Golden Harvest FPM

Competitive advantages of the Food and Beverages industry in George

• George has access to the rich crops of hops, berries and vegetables. • Cape Town and its broader region provides a fast growing consumer market. • George Airport and a well-integrated road network supports national consumption and exports. • Logistics and storage companies are well established in the region. • The ecological agriculture programme at the Nelson Mandela University (NMU) School of Natural Resource Management facilities agriculture science and innovation. • George is particularly well suited for aquaponics, hydroponics and other “new generation techniques such as Controlled Environment Agriculture (CEA). • The establishment of an agri-park which will be approximately 5 000 square metres of industrial-zoned land in close proximity to the N2 and the airport comprising of two vacant plots situated in an industrial area in George. • Committed timber industry that is seeking to re-establish the timber, furniture and the design industry.

Some companies in George have let us know about their reason for investing in George. Below find some questions answered by Morning Milk, who focus on dairy manufacturing at their facility in the region.

What is the nature of your business We are dairy manufacturers, employing between 40-50 people. in george?

What are the 1. The location and proximity to many dairy farmers from Tsitsikamma through to Cape Town means there is stock availability for our top 2 advantages of manufacturing. being in george? 2. Access to transport infrastructure i.e. the Go George Bus system

page 31 4.3 Manufacturing

The manufacturing industry made up R2.4bn (or 15%) of George’s GDP in 2016. The industry experienced growth of 2.1% in 2016. The manufacturing industry employed 9.5% of George’s workforce. Unsurprisingly, the food, beverages and tobacco sub-sector made up 32% of manufacturing in George with manufacturers such as Lancewood and Morning Milk. Other manufacturers are in the petroleum, rubber and plastic products (18%) and metals, machinery and equipment (14%). The fastest growth in 2016 was seen in the manufacture of transport equipment. Opportunities and Advantages for Investors in the Manufacturing Sector • Development opportunities within the manufacturing sector include agro-processing, waste recycling, timber- related products (prefabricated homes, coffins, school desks, etc.) and niche products (such as vintage cars and drones). • A major beverage manufacturing hub already exists encouraging clustering opportunities. • Potential for manufacturing bio-plastics from indigenous plants. • Opportunities using natural fibres and biomass, manufacturing diesel/ bioenergy from plastic waste and up- scaling recycling initiatives and linkages with the BioWise programme. • The use of vermiculture as means of reducing organic waste. • Potential for manufacturing products from waste exists. • Re-establishment of the FurnTech furniture manufacturing plant and design centre.

4.4 Film and Multimedia

The Garden Route boasts a remarkably diverse range of filming locations to suit the varied needs of the film, television and advertising industries. World-renowned as a tourist destination with a , George is an ideal location for productions. It has an abundance of diverse, scenic landscapes in close geo- graphic proximity to the George CBD and well-developed infrastructure.

A fully equipped studio was established by Garden Route Film Studios (GRFS) to support this sector. A former George cinema complex (over 1,000m² in size) was converted into a sound-proof studio, and in- cludes a workshop for set building, storage rooms, offices and smaller studios to shoot film, advertising and locally-produced TV series. Garden Route Film Studios can assist with in-depth local knowledge and provide producers or scouts with professional and friendly location services.

Table 14: Recent shoots in George and the surrounding district

Klein Karoo (movie) The Breed Knysna (movie) Hidden City (1992 - 1995’s TV show in ) The First Man (2016) The Bachelor (2016)

page 32 Competitive advantages of the Film and Media Industry in George • The region has a highly diverse landscape with the ability to replicate a multitude of foreign destinations at a lower cost than other destinations. • Time zone and ease of travel from Europe makes it a convenient destination for European producers. • The Department of Trade and Industry offers incentives for foreign film and television production and post- production that takes place in South Africa. • George’s expanding broadband infrastructure will gradually remove internet connectivity constraints some- times faced by the industry. • A centralised film studio, film office, film website and creation of an entity (NPC) supports the industry. • A world-class skills base, trained in filming with professional and semi-professional local actors and actres- ses in the area of film production, including both pre- and post-production activities.

Some companies in George have let us know about their reason for investing in George. Below find some questions answered by Fuzzy Logic, who focus on multimedia at their facility in the region.

Fuzzy Logic develops high-quality mobile apps, augmented reality and virtual reality products as well as video games. We started off de- What is the nature veloping games for Disney, Eurocom and Eidos Interactive, but over of your business the past seven years we have also become experts at app and aug- mented reality development, having worked on gamification projects in george? for big corporations. What we really love is creating quality products, growing a dedicated audience and making each project successful.

What are the top advantages of being 1. It’s beautiful! 2. It’s safe. in George?

What has your average Growth has been consistent, however we work in a ‘hit driven’ industry and this means that there are some periods where products or ideas growth been over the might not work as planned. From five years ago our revenue has at past 5 years? minimum doubled, but at times this has been even better.

We worked on a major project for Hasbro for around one and a half years What has and this allowed us to scale to twenty-five staff for that project. After stimulated that that, we were able to split the team to be able to focus on both new IP and client work, without each impacting on the other. This approach will growth? allow us to grow even more in the next two to three years.

Our biggest challenge is in educating our clients and users about aug- What is a challenge mented (AR) and virtual reality (VR). Most people don’t even know what AR is while we at Fuzzy Logic believe it’s going to change our your company is everyday lives in a fundamental way. We need to spend a lot of time facing? working with our clients to find the use case relevant to them or their clients. page 33 4.5 hospitality and tourism

The Garden Route is situated about 280km from attractions and supporting bodies have a presence Cape Town and is one of South Africa’s richest bo- in George. Adventure attractions in George also in- tanical treasures. The Garden Route is known as clude the world-renowned Gary Player golf course, the adventure capital of South Africa and there is Fancourt, and the Outeniqua power van railway journey. potential for mainstream tourism investment and The increase in domestic passengers at the George downstream activities such as operators, gear and airport of 8.7% between the 2016/17 and 2017/18 maintenance providers as well as hire companies. financial years also indicates the growth in domestic tourism to the region (ACSA, 2018). As with the rest of the Western Cape, over the past decades George has relied strongly on arrivals from Cape Garden Route Hotel Performance: primarily the UK (32% of arrivals into the Garden Route) Hotel occupancy levels in the Cape Garden Route and Western Europe. Arrivals from these countries have portrayed a very similar trend over the last five appreciate the area’s unique mix of European history years. From the occupancy levels depicted in the and culture, African contemporary lifestyles and nat- figure below, it is evident that seasonality continues ural beauty, with the proximity to Cape Town and the to play a vital role in the Cape Garden Route with sea being attractive factors. Major companies across the highest occupancy levels achieved during the a spectrum of sub-sectors including hotels, tour op- peak-season months (October-March). erators and hospitality, travel planners, restaurants, Figure 13: Occupancy Levels in the Garden Route, Jan-Dec 2013-2017

90.0 80.0 70.0 60.0 50.0 40.0 30.0 % Occupancy 20.0 10.0 0.0 2013 2014 2015 2016 2017 January 49.2 54.7 61.1 61.4 68.1 February 59.6 64.7 69.6 75.5 76.6 March 53.8 52.4 53.4 69.3 66.3 April 39.8 48.5 50.3 49.5 60.6 May 38.2 43.6 41.5 54.7 55.3 June 33.9 34.3 34.3 38.2 40.2 July 34.5 39.2 41.1 44.2 47.2 August 39.9 39.1 39.0 45.6 45.1 September 42.9 47.1 42.9 54.0 50.9 October 52.5 53.6 56.9 61.5 70.2 November 58.3 56.3 64.6 73.8 70.4 December 60.7 59.4 61.3 67.0 64.3

Source: STR Global, 2018

Over the past five years, the Cape Garden Route hotel market reflected a steady growth in revenue achieved across the period. 2017 also saw the highest value in revenue, achieved during the January, February and December months. page 34 Figure 14: Hotel Revenue Achieved in the Cape Garden Route, Jan-Dec 2013-2017

R1 400.00

R1 200.00

R1 000.00

R800.00

R600.00

R400.00 % Occupancy R200.00

R0.00 2013 2014 2015 2016 2017 January R563.02 R719.95 R812.48 R928.45 R1175.20 February R590.04 R714.23 R813.18 R999.92 R1163.60 March R490.56 R517.95 R591.42 R944.94 R898.81 April R295.48 R421.65 R468.97 R509.87 R686.23 May R261.90 R350.46 R344.34 R476.20 R519.81 June R241.42 R266.77 R275.35 .48 R347.06 July R257.01 R333.41 .80 R437.67 R455.63 August R299.13 R331.53 R364.46 R434.82 R441.81 September .43 .32 .64 R507.85 R504.00 October R448.96 R496.79 R569.91 R716.17 R825.18 November R536.59 R570.66 R722.17 R971.51 R945.39 December 746.19 R843.35 R994.44 R1134.46 R1137.40

Source: STR Global, 2018 Competitive advantages for the Tourism industry in George

• George has a natural scenic appeal with a beautiful coastline and the Outeniqua Mountains, a destination where tourists do not have to spend a lot of money to have a good holiday. • Hotels typically experience occupancy above 60% in high and mid-season months (STR Global, 2018). • Commercial expansion of George airport expected in the short term future. • A municipal catalytic project that has been identified is the establishment of a Convention Centre, as George is already a strong Business Tourism destination. • Extending the public transport routes to the airport and neighbouring towns. • Rejuvenation of the mid-town area to accommodate students, creating a conducive environment for niche tourism business development. • Entrepreneurs and SMMEs to become service providers for the tourism industry, including leisure, business and events tourism. Opportunities range from transport and tour guiding to security, cleaning, laundry and catering services, to the provision of basics such as amenities.

page 35 Some companies in George have let us know about their reason for investing in George. Below find some questions answered by Fancourt, who focus on tourism in the region:

What is your Montagu Street, Blanco, George location in George?

What is the average occupancy 53%. of your hotel?

How many people do Approx. 400 year-round and additional 200 casuals in season. you employ in George?

1. Great location on the Garden Route- a top tourist attraction due to In your opinion, what its amazing scenery and leisure activities. are the top advantages 2. Local produce (food and wine) of excellent quality – fresh and great variety. of being in George? 3. Smaller producers doing innovative things with great results.

page 36 George Visitor Trends 2017

share of overseas visitors 34% Top international share of domestic visitors 66% markets United Kingdom (23.6%) share of overnight visitors 26.2% Germany (28.8%)

% share of day visitors 73.8% 3 USA (4.9%) domestic niaM esoprup fo tisiv Top markets Holiday/Leisure 93.2% (7.0%)

Western Cape (77.7%) VFR 1.1%

3 Eastern Cape (2.2%) Business 3.7% Length of stay 1 night 3.1% Transport 12 2 nights 11.7% Travel group size Rented 10.9% Pairs %1.53 Alone 35% 3 nights 4.2% Own vehicle 10.3% Return Visits...... 8.8% Top information sources Word of mouth...... 7.3% Top activities Top accommodation in George Guesthouse 3.8% 3 Self-catering 5.6%

Scenic drives (21%) Outdoor activities (21%) Adventure (11%)

page 37 4.6

George has seen substantial new real estate de- velopment in recent years, with new malls and the relocation of the MediClinic Hospital. Economic activity in George is concentrated around the tertiary sector, providing demand for office and commercial space. Market rental rates for office real buildings were recorded in Rands per rentable m2 per month (gross leases excl. VAT). The rates for estate different grades are shown in the table below:

Grade A+ Grade B mean (Rand) Grade B mean (Rand) Grade C Broker contri- mean (Rand) mean (Rand) bution codes George Central 142,50 120,00 80,00 63,33 BVF, GRV, MUL George Decentralised 110,00 100,00 80,00 - BVF

Source: Rode Report, 2018:3

The Fancourt facility is well-known in the Western Cape. It incorporates residential holiday accommodation and a hotel with three golf courses. Kingswood is another golf estate in George, with a housing estate. Newer estates have been built on the eastern edge of George, including Kraaibosch estate and the Blue Mountain Lifestyle Estate.

The table below shows the average number of listings and value of properties in George, as listed on Property24.com from April to September 2018. Table 15: Average prices in George

No. of Beds Apr '18 May '18 Jun '18 Jul '18 Aug '18 Sep '18 Average List Price 0 bed 2 307 2 368 2 294 2 317 2 210 2 162 R1 408 330 1 bed 69 70 65 58 49 52 R1 033 834 2 bed 334 309 318 342 340 329 R1 550 847 3 bed 1 541 1 639 1 606 1 716 1 715 1 632 R2 650 596 4 bed 779 829 809 836 827 855 R4 188 245 5+ bed 374 375 365 367 377 397 R6 535 116

page 38 Competitive advantages for the Real Estate industry in George • George is viewed as a scenic and relatively cheaper city for retirement living with excellent medical facilities. • George is a holidaymakers location, with demand for houses to let, especially over the festive season. • George is known for its safe and luxurious estate lifestyle. • The economic growth and population growth in George creates demand for real estate investment in resi- dential, education, healthcare and retail. • Economic activity in George is concentrated around the tertiary sector, providing demand for office and commercial space. It is recommended that office space in the George CBD be revitalized in the short term and new office space be created in the medium term. • George is known as a logistics hub with growth in transport and storage sector providing demand for light industrial and warehousing depots.

4.7 renewable energy

The Western Cape has positioned itself as the Green within the first month of its existence and is expected Economy hub for South Africa. The province provides to save in excess of R1.2m worth of electricity per businesses and investors with prime locations, mod- year. ern infrastructure, a skilled workforce, low operational costs and an abundance of natural resources. George Biomass Energy is project-ready for financial close (where all conditions for financing have been The roll-out of renewable energy projects is escalat- met) and is awaiting the final signature of the Power ing in George. The Airport’s Photovoltaic (PV) Power Purchase Agreement (PPA) from Eskom, however Plant was initiated by the Airports Company of South this has been put on hold until the 1st quarter of 2019. Africa (ACSA) as part of its commitment to reduce the The plant, when complete, will produce electricity load on the country’s constrained power grid and to from biomass (wood and wood waste) and will be contribute towards sustainable development. The acti- able to feed into the local municipal grid. The elec- vation of the 75 kilowatts (kW) solar plant represents tricity produced would be 7 MW(e) nett at 11 kV. The the first phase in generating independent power for biomass plant will consume approximately 110 000 the George Airport. This R15m investment in Sep- tonnes of wood waste per annum. tember 2015 generated 47-megawatt hours of power Table 16: Renewable Energy companies located in George and the surrounds

Specialised Solar Systems Hydro Spark - Plumbing & Electrical made easy Solar4eden Powerhouse Energy Mzansi solar Solarframe CC Power Hour Solar Omnisolar MLT Power - George (Pty) Ltd Megatech power fencing Outeniqua Solar E-Power Technologies page 39 Opportunities and Advantages of George as a Renewable Energy Location

• A strong presence of renewable energy companies and financial services. • Notable market opportunities for businesses and investors across the agriculture, energy services, utility scale solar and wind, waste, water, bio-economy and resource efficiency streams. • The municipal Time-of-Use Embedded Generation Tariff for domestic clients that install their own small generation (Photo Voltaic) systems provides opportunities for suppliers. • Significant opportunity for industrial and commercial energy efficiency technologies and services. • Some of South Africa’s leading energy research and education institutions are located in and around George.

page 40 5. REGULATIONS & LEGISLATION

South Africa actively encourages foreign investment in all sectors of the economy, and there are consequently generally few restrictions on investment. Factors which potential investors should consider on exploring invest- ment in the city include:

Company registration and administration The six principal methods of doing business in South Africa are registering as a 1) Company (public or private) incorporated under the Companies Act 71 of 2008, 2) Personal Liability Company, 3) Partnership, 4) Business trust, 5) Sole Proprietorship, or 6) External Company (branch of a foreign company).

Duty Drawback Scheme Duty Drawback schemes provide refunds for import duties paid on the materials used in the production of goods that are exported. Drawbacks are administered by the International Trade Administration Commission of South Africa, and manufacturers may apply for refunds after the final product is exported.

Exchange controls and remittance of funds Exchange controls on South African residents are enforced by the South African Reserve Bank (SARB). Exchange controls are only exercised on residents and the transactions in foreign exchange entered in between non-residents and residents. There are no restrictions on foreign investors to acquire companies or businesses in South Africa, and additionally, the acquisition of shares or introduction of capital does not require SARB approval.

Land and buildings There is no restriction on foreign investors in acquiring property in the country. In order for foreign companies to acquire property, they must register as an external company in terms of the Companies Act 71 of 2008.

Employment and labour relations The employment sector within South Africa is regulated by statute, common law and contract. The main legislature regulating the employer/employee relationship can be found on the Department of Labour website http://www.labour.gov.za/DOL/ Foreigners must obtain a work permit before they are legally entitled to work in South Africa.

Taxation and Double Taxation Agreements (DTA) South Africa has a highly regarded tax system that is over-seen by the South African Revenue Services. The tax system is a residence-based system. Concerning non-residents, they are taxed on their income sourced from South Africa. For a status overview of DTAs with other nations, visit: www.sars.gov.za

Access to Finance To open a bank account, foreigners must be in the possession of a valid work or residency permit. Additionally, by law banks must request identity and a proof of residence. The limit placed on borrowing by foreign-owned companies is based on a pre-determined formula. When looking at 100% foreign-owned companies, the local borrowing limit is 100% of the effective capital of the South African company.

page 41 6. ACCESS TO INTERNATIONAL MARKETS

South Africa has signed multiple free-trade and bilateral agreements including the Southern African Customs Union (SACU), Southern African Development Community (SADC) FTA, Africa Growth and Opportunity Act (AGOA) and the Economic Partnership Agreement (EPA). Available www.thedti,gov.za.

MAIN TRADE AGREEMENTS BETWEEN SOUTH AFRICA AND OTHER COUNTRIES Trade Type of Participating Products Agreement Agreement Nations Main terms Involved Southern African South Africa, SACU jointly negotiate preferential trade Customs Union Customs Union Botswana, Lesotho, All products. agreements with third parties. (SACU) Namibia, Swaziland Angola, Botswana, DRC, Lesotho, Southern African Free Trade No import tariffs on 85% of products across Madagascar, Malawi, 12 countries. Market integration accompanied Development Agreement Mauritius, Namibia, All products. Community (FTA) by cross-border infrastructural development Seychelles, South Africa, and sectoral co-operation. (SADC) Swaziland, Tanzania, Zambia, Zimbabwe Industrial SACU – European Provisionally All SACU countries and Three bilateral agricultural agreements were goods and Free Trade applied Free individual EFTA concluded between SACU and individual processed Association (EFTA) Trade Agreement members EFTA states. agricultural Agreement products. A narrow range of SACU – Southern SACU; and Brazil, Promote sanitary and phyto-sanitary products in Preferential Trade measures & advance product coverage. Common Market Agreement (PTA) Argentina, Paraguay industrial, (Mercusor) and Uruguay Preferences for 1,000 products by both agricultural SACU and Mercusor. and fishery goods.

African Growth Part of Trade and US, 39 sub-Saharan Provides duty-free access to 98% of US Over 7,000 and Opportunity Development Act African countries (South imports for AGOA members. products are Act (AGOA) (2000) Africa included) covered. Member states of Phase 1 Southern African covers only Tripartite Free Development Community, A tripartite initiative: market integration, trade in goods Trade Agreement FTA East African Community infrastructure development and industrial and core areas (T-FTA) and Common Market development. necessary to for Eastern & Southern support that. Africa

European Union – South Africa Some 95% of duties on products derived from Trade, products are FTA EU nations, Republic of South Africa are expected to be Development and only partially South Africa liberalized, and 86% of duties on EU Cooperation liberalized. originating products have been liberalized Agreement by RSA customs. (TDCA)

Unilateral preferences Generalized South Africa – EU, Specific granted under the A non-reciprocal trade agreement. System of Norway, Switzerland, agricultural enabling clause of Preferential market access was granted to Preferences Russia, Turkey, US, and industrial the World Trade South Africa as it is a developing country. (GSP) Canada and Japan products. Organization

In addition South Africa signed double tax agreements (DTA) with a number of countries to eliminate double taxation. For a list of the double taxation agreements please see the link below: http://www.sars.gov.za/AllDocs/LegalDoclib/Agreements/LAPD-IntA-DTA-2013-01%20-%20Status%20 Overview%20of%20All%20DTAs%20and%20Protocols.pdf page 42 7. KEY INCENTIVES

The City of George offers incentive schemes to lower the start-up costs and initial utility expenses of a new investment. This is aimed at improving cash flow and survival rates of companies.

Incentive Focus Urban Development Node Investments made in new developments in specific Industrial Development Node geographical areas within the urban edge Special Development Node tax incentive Discounts on rates and services Discount of 25% Discount on land purchases and rentals Rental discounts may also be applicable to municipal land where the rental is for 10 years and longer. Rebate on building plans 50% upon completion of construction Capital contributions Phased payment (5 years)

Source: Investment Incentive Policy

Each node is unique in terms of the location in George, the type of development earmarked, the scope of supporting developments and pre-approved or assigned development rights.

Page 43 The national Department of Trade and Industry (the dti) in collaboration for other public and private sector entities have developed a number of incentive schemes to assist with the growth of certain sectors. These national incentives schemes are listed below.

Incentive scheme Focus of scheme 1 Manufacturing Competitiveness Machinery, equipment, plant, commercial vehicles and Enhancement Programme (MCEP) land buildings. 2 Sector Specific Assistance Scheme Non-profit business organizations in sectors and sub-sectors of (SSAS) industries prioritized by the dti. 3 Clothing and Textile Competitiveness Manufacturers and other areas of the apparel value chain in Improvement Programme (CTCIP) South Africa. 4 Support Programme for Industrial Personnel Related Costs; Travel Expenses; Direct Material; Innovation (SPII) Capital Items and Tooling; Software; Documentation; Testing and Trials; Licensing Costs; Quality Assurance and Certification; Patent Costs; and Subcontracting and Consulting. 5 Manufacturing Investment Programme Local and foreign-owned manufacturers who wish to establish a (MIP) new production facility; expand an existing production facility; or upgrade an existing facility in the clothing and textiles sector. 6 12i Tax Incentive Improvement of capital stock in manufacturing sector including tobacco, alcoholic beverages, arms and ammunition, etc. 7 Automotive Investment Scheme (AIS) Automotive sector through investment in new and/or replacement models and components. 8 People-carrier Automotive Investment People-carrier vehicles through investment in new and/or Scheme (P-AIS) replacement models and components. 9 Critical Infrastructure Programme (CIP) Transport systems, Electricity and distribution systems, Telecommunications systems, Transmission systems, Sewage systems, Waste storage, disposal and treatment systems, Fuel supply systems. 10 Aquaculture Development and Stimulation of investment in aquaculture to increase production, Enhancement Programme (ADEP) create jobs, encourage geographical spread and broaden participation. 11 Business Process Services (BPS) Offshoring activities for back office processes, contact centres, finance and accounting services, human resource, IT and technical services etc. 12 South Africa Film and Television Feature films, Telemovies, Television drama series or miniseries, Production and Co-production Incentive Documentary or documentary miniseries, or documentary feature, Animation, Digital content and Video gaming. 13 Foreign Film and Television production Large-budget films and television productions and and Post-production Incentive post-production work.

14 The Location Film and Television Attract big-budget overseas film and television productions. Production Incentive 15 BPO&O Investment Incentive and Attract BPO investment and create employment opportunities and Training Scheme skills development.

page 44 pagePage 4543 key8. contacts

The table below shows contacts for the respective sectors (Please note the list does not show all possible contacts).

General Contacts Organization Website E-mail Contact Number [email protected] +27 (0) 44 801 9069 George Municipality www.george.gov.za [email protected] +27 (0) 44 801 9089 Wesgro www.wesgro.co.za [email protected] +27 (0)21 487 8600 George Business Chamber www.georgechamber.co.za [email protected] +27 (0) 44 874 3349 South Cape Economic www.wcedp.co.za [email protected] +27 (0)82 577 5302 Partnership (SCEP) BPO Business Process Enabling www.bpesa.org.za [email protected] +27 (0)71 838 5309 South Africa (BPeSA) Financial Services Financial Services Board www.fsb.co.za [email protected] +27 (0)12 428 8000 South African Reserve Bank www.reservebank.co.za [email protected] +27 (0)12 3133911 SA Financial Sector Forum www.finforum.co.za [email protected] +27 (0)21 4816700 The Banking Association of http://www.banking.org.za [email protected] +27 (0)11 645 6700 South Africa Food and Beverages Western Cape Department www.elsenburg.com [email protected] +27 (0)21 808 5111 of Agriculture Wines of South Africa www.wosa.co.za [email protected] +27 (0)21 883 3860 Agri-SA www.agrisa.co.za [email protected] + 27 (0)12 643 3400 HORTGRO www.hortgro.co.za [email protected] +27 (0)21 870 2900 Wesgro www.wesgro.co.za [email protected] +27 (0)21 487 8600 Western Cape Aquaculture [email protected] +27 (0)21 424 2572 Development Initiative Aquaculture Association of SA www.aasa-aqua.co.za [email protected] +27 (0)12 803 5208 SAFVCA. South African Fruit & Vegetable Canners www.safvca.co.za [email protected] +27 (0)21 871 1308 Association page 46 Renewable Energy Commercial www.transnet.co.za [email protected] +27 (0)11 308 3929 Green-Cape www.green-cape.co.za +27 (0)21 811 0250 Film & Multimedia Garden Route Film Office www.grkk-filmoffice.co.za/ [email protected] +27 (0)78 800 4172 categories-towns.htm National Film and Video www.nfvf.co.za [email protected] +27 (0)11 483 0880 Foundation Commercial Producers’ www.cpasa.tv [email protected] +27 (0)11 673 6809 Association (CPA) South African Association of www.saasp.co.za [email protected] +27 (0)28 423 3595 Stills Producers (SAASP) The Documentary Film www.docfilmsa.com [email protected] +27 (0)11 888 4349 Makers Association (DFA) Make Games South Africa www.makegamessa.com [email protected] +27 (0)82 675 3372 Writers' Guild of South www.writersguildsa.org [email protected] +27 (0)11 888 4349 Africa (WGSA) The Independent Producers www.ipo.org.za [email protected] +27 (0)11 799 2200 Organization (IPO) The DTI www.thedti.gov.za [email protected] +27 (0)12 394 9500 Animations South Africa (ASA) www.animationsa.org [email protected] See website for sector National Association of www.nama.co.za http://www.nama.co.za/contact.html See website for sector Model Agencies (NAMA) South African Screen www.sasfed.org [email protected] +27 (0)83-901-2000 Federation (SASFED) Interactive Entertainment www.iesa.org.za [email protected] +27 (0)82 675 3372 SA (IESA) South African Guild of Editors www.editorsguildsa.org [email protected] +27 (0)82 255 8077 Personal Managers’ www.thepma.co.za http://www.thepma.co.za/contact See website for sector Association Tourism Wesgro www.wesgro.co.za [email protected] +27 (0)21 487 8600 George Municipality: www.georgetourism.org.za [email protected] +27 (0)44 801 9103 George Tourism Tourism Business www.tbcsa.travel +27 (0)12 654 7525 Council South Africa/

For more information on this publication and other Wesgro publications please contact [email protected] or for more publications visit the Wesgro publications portal on our website at http://wesgro.co.za/publications. For more information on George, please visit george.gov.za.

Disclaimer: Wesgro and the George municipality have taken every effort to ensure that the information in this publication is accurate. We provide said information without representation or warranty whatsoever, whether expressed or implied. It is the responsibility of users of this publication to satisfy themselves of the accuracy of information contained herein. Wesgro and the George municipality cannot be held responsible for the contents of the publication in any way.

© Wesgro, 2019.

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