Statement by the Executive Mayor, Alderman
Patricia de Lille
City incentivises job creation in Cape Town
As part of our commitment to building an opportunity city in which we
create the necessary enabling environment to drive economic growth,
development and inclusion, the City of Cape Town has recently introduced
a series of incentives to help attract job-creating investment into Cape
Town.
This innovative approach is unique to the City of Cape Town and is
illustrative of our commitment to using all available mechanisms to help
reduce unemployment in the city.
Investment incentives are used as a tool by governments throughout the
world to boost investment, stimulate economic growth, and create
employment opportunities within a particular region. Incentives are most
effective when used to achieve specific objectives as part of a broader
investment attraction strategy. They encourage investors and influence
investment decisions towards particular regions or economic sectors.
The City of Cape Town adopted a targeted investment incentives scheme
for Atlantis on 29 May 2013, followed by the adoption of a city-wide
Investment Incentives Policy on 28 August 2013. The Investment
Incentives Policy responds to the opportunity city principle as articulated
in the City of Cape Town’s Integrated Development Plan by providing for
incentives which help foster increased opportunities for economic
participation through creating an enabling business environment.
The City focused on Atlantis as this community is in urgent need of
assistance and was the victim of misaligned economic polices during the
apartheid era.
Background on Atlantis investment incentive pilot project
This initiative is a pilot project within the framework of the city-wide
Investment Incentives Policy. The purpose of the scheme is to stimulate
job creation by making it easier for entrepreneurs to start new business
and for existing business to grow in the Atlantis industrial area.
In addition to being a testing ground for assessing the uptake and success
of an investment incentives scheme, the Atlantis industrial area was
chosen as a pilot because it has quantifiable development potential in that
it holds:
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A large skilled labour force (technicians, administrative,
supervisory)
Large brown field sites available at very competitive prices
Good infrastructure
Effective and reliable services (e.g. water and electricity supply)
Developments and investors most likely to take up the incentives offered
by this scheme include the medium to heavy manufacturing industry, as
well as other commercial uses to a lesser degree.
Package of Atlantis incentives
The incentive measures available in the Atlantis scheme include both
financial and non-financial measures.
The financial measures include the following:
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Exemption from building plan scrutiny fees, i.e. no scrutiny fees
payable for building plans submitted for approval
Exemption from land use application fees, i.e. no submission fees
payable for land use applications and amendments
Deferral/debt write-off for development contributions, i.e.
exemption from development contributions in respect of both civil
and electrical development contributions up to a maximum value of
R1 million per project
Electricity tariff subsidy, i.e. ‘Time of Use’ tariff is pegged at the
2012/13 level for users in the industrial area
The non-financial measures offered as part of the Atlantis pilot scheme
include:
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Fast-tracking of building plans, i.e. complete building plans are fasttracked for approval within five days from submission date
Fast-tracking of land use applications, i.e. applications are fasttracked for approval within three months from submission date
Fast-tracking of Environmental Impact Assessments, i.e. the City
will facilitate and assist in obtaining faster environmental
authorisation decisions from the Western Cape Government’s
Department of Environmental Affairs and Development Planning
Biodiversity offsetting, i.e. where biodiversity conservation is
required for new developments, the City holds nature reserve land
that can be made available as an offset
Qualifying for incentives
Except for the development contributions deferral incentive, all of the
investment incentives automatically apply to any business intending to
locate or expand operations within the Atlantis industrial area. In addition,
any business that intends to create more than 50 permanent jobs within a
24-month period qualifies for this deferral incentive.
Investment incentives in other targeted areas of the city
Once the City has assessed the impact of the pilot incentives scheme in
Atlantis, consideration will be given to providing similar measures in other
carefully selected parts of Cape Town. In these areas the following
incentives would be available:
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Reduced or exempted building plan application tariffs
Reduced or exempted land use management application tariffs
Development contribution debt deferral and potential write-off
Reduction in electricity tariff charges (subject to NERSA approval)
Waived broadband connection charges
Fast-tracking of development applications
Services of dedicated investment facilitation officers (to assist with
projects generally)
Facilitation with the Department of Trade and Industry to obtain
other relevant incentives
Provision of spatial economic information
Skills development assistance
Access to sector support organisations
As with the Atlantis pilot, all of the investment incentives (with the
exception of the development contributions deferral incentive) will
automatically apply to any business intending to locate or expand
operations within geographically targeted and defined areas within the
city.
Businesses that intend creating more than 50 permanent jobs in a 24month period within the broad manufacturing sector would qualify for the
development contribution deferral/write-off incentive, as long as they
operate within the priority areas defined by the City.
A business that intends creating more than 30 permanent jobs in a 24month period within the priority sectors identified by the City would
qualify for the development contribution deferral/write-off incentive.
The priority sectors identified by the City are:
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Oil and Gas Processing
Boat Building
Business Process Outsourcing
ICT
Creative industries
Agro-processing
Green technology
Medical technology and pharmaceuticals
Finance and Insurance
Rolling out investment incentives further in the city
The targeting of specific areas in respect of revenue-impacting incentives
is essential to prevent ‘free-riding’ which might undermine the
affordability of the incentives scheme, and ensure the City’s development
objectives are met. International best practice has found that investment
incentives are most effective when they are spatially targeted. This is for
the following reasons:
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By having defined parameters, spatial targeting ensures the
incentives are affordable to the City
Spatial targeting prevents ‘free-riding’ by excluding areas with
strong existing investment flows and minimal impediments to new
investment
Spatial targeting can assist in removing area-specific blockages to
investment or systemic market or regulatory failure
Spatial targeting enables the City to achieve its development
objectives in specific areas, thereby addressing issues of spatial
inequality
As guiding criteria, investment incentives are likely to be made available
in areas where there is significant potential for job-creating investment
but where impediments to investment currently exist.
The City is identifying geographical areas where further roll-out of
investment incentives will be implemented. These areas will be selected
based on a process currently being undertaken to systematically track
over 70 business and industrial nodes across the city and assess their
current performance and long-term growth potential. The target date for
completion of this process is early 2014.
For more information about the City’s Investment Incentives Policy,
individual incentives, or how to access them, please contact Stanley
Visser of the City’s Economic Development Department on: 021 444 8305
or via email to Stanley.visser@capetown.gov.za or
Christopher.hewett@capetown.gov.za.