Gauteng positioning itself as a jewellery manufacturing hub

27th November 2015 By: David Oliveira - Creamer Media Staff Writer

Gauteng positioning itself as a jewellery manufacturing hub

The Gauteng Industrial Development Zone (GIDZ), together with the Gauteng Infrastructure Financing Agency, will soon appoint professional deal brokers to attract and secure tenants and investors in the GIDZ’s Jewellery Manufacturing Precinct (JMP).

GIDZ senior project executive Seipati Mangadi explains that the deal brokers will safeguard the participation of companies to operate jewellery manufacturing facilities at the 6.5 ha JMP, owing to its strategic location adjacent to OR Tambo International Airport, which allows for the quick transport of low-mass, high-value products to export markets.

The R237-million construction project for the long-awaited JMP started in September this year with a ceremony to break ground, which was attended by Gauteng Growth and Development Agency (GGDA) group CEO Siphiwe Ngwenya, Gauteng Economic Development MEC Lebogang Maile and Department of Trade and Industry (DTI) Deputy Minister Mzwandile Masina.

The JMP, headed by the GGDA subsidiary GIDZ, aims to rejuvenate the South African jewellery manufacturing sector by introducing clustering measures, which will attract new entrants into the local sector and develop new markets for local manufacturers.

Mangadi highlights: “The JMP is a catalytic project to spearhead the Ekurhuleni Aerotropolis project, which is aimed at offering businesses quick access to suppliers and enterprise partners both locally and internationally.”

While the initial focus of the JMP is to have international players set up shop in South Africa, it will not exclude participation of local companies, she asserts, adding that the GIDZ will help promote the development of entrepreneurs.

She points out that the budget allocation for the construction of bulk infrastructure at the JMP was shared by provincial and national governments, with Gauteng contributing about R28-million and the DTI about R238-million.

Handover of the bulk infrastructure development is scheduled for September 2016 by project contractor South African multidisciplinary construction company Liviero Civils; however, the development of manufacturing facilities will start only once occupation agreements from companies have been signed, Mangadi explains.

Liviero’s scope of work includes installing water drainage, sewer and water reticulation infrastructure and perimeter and electric fencing, as well as erecting a guard house that will contain advanced surveillance systems, comprising closed-circuit television and X-ray machines.

Mangadi highlights that a number of companies have expressed interest in establishing facilities at the JMP; however, to date, none have signed contracts.

While the GGDA is targeting international manufacturers to help develop the local industry, Mangadi emphasises that all interested parties are welcome to participate, including local jewellery manufacturers and entrepreneurs, subject to meeting Special Economic Zone qualifying criteria, as set out by the DTI.

To further promote the development of a competitive local jewellery manufacturing sector, Mangadi explains that the GGDA is partnering with key industry players, such as the Jewellery Council of South Africa (JCSA), the DTI and the Department of Mineral Resources, the custodian of mineral beneficiation in the country.

International Expertise
Mangadi says several incentive structures have been put in place to make the JMP more appealing for international companies.

In addition to the JMP’s close proximity to OR Tambo International Airport and, therefore, international markets, it is also near the world’s largest precious-metals refining and smelting complex in the world – Rand Refinery – in Germiston.

Several incentive schemes are offered through government’s Special Economic Zone policy, which the JMP forms part of, as the primary focus of the GIDZ.

Qualifying foreign investors will receive grants that will compensate tenants for the cost of moving certain equipment to South Africa.

Also, under specific conditions, companies within the GIDZ will receive import duty rebates for production-related raw materials, excluding machinery and assets, which are imported to South Africa.

Value-added tax (VAT) exemptions will also be applied to goods produced for export by manufacturers located in the JMP. Further, VAT suspensions will be applied to supplies procured locally for input into beneficiation processes within the GIDZ.

Companies in the JMP will receive a 15% lower preferential corporate tax, instead of the current 28% headline rate applied to manufacturers beneficiating in other areas of the GIDZ.

An incentive to encourage employers to hire locals will also come into effect, which will reduce the cost of hiring people through a cost-sharing mechanism with government that will have no effect on the wages of employees.

Further, subsequent to registration as an employer in South Africa, companies operating in the JMP will be eligible to claim employee tax incentives (ETI) and reduce their pay-as-you-earn tax, with the total ETI amount calculated in respect of all qualifying employees.

The JMP will offer mandatory and discretionary skills development grants to investors, enabling companies to claim back up to 20% of their contributions reported in their ‘Workplace Skills Plan and Annual Training’ report. The JMP will also provide grants for companies offering discretionary bursaries, which include tuition fees, books and accommodation, to learners.

A cost-sharing grant for critical infrastructure will also be put in place for projects that will improve critical infrastructure. Qualifying projects are those that will hinder investment performance if the infrastructure was not put in place.

An accelerated depreciation building allowance incentive will provide accelerated depreciation allowances on buildings of businesses operating in the GIDZ. The rate will equal 10% a year over ten years and will apply to buildings being erected or improved, as well as other fixed structures or buildings.

A gold loan scheme, which targets gold jewellery manufacturers, will provide working capital loans at a fixed interest rate of 3% a year.

There will also be added benefits, owing to the African Growth and Opportunity Act, or Agoa, which will allow companies in the JMP to have enhanced market access and export duty-free to the US.

Design @ 50
These partnerships have resulted in several initiatives aimed at promoting the local jewellery manufacturing sector, such as the GIDZ and the JCSA’s development of a commercial jewellery design school at Rand Refinery called Design @ 50, in 2013.

Design @ 50 project head Edna de Bruyn explains that the 11-month programme offers postgraduate students training in marketing and customer services, commercial jewellery design, three-dimensional printing, as well as computer-assisted design training.

She highlights that the programme aims to address “the gap between what universities offer students and what real-world expectations are in the industry”, and to offer youthful exuberance to an industry in which the average age of goldsmiths is 54.

It also provides exposure for students to jewellery design experts, with international luxury goods and jewellery professional Francesco Lopresti, as well as local jewellers Jenna Clifford and Michael Pneuma, offering guidance on commercial jewellery design.

The programme has also received support from local jewellery retailers, with students having submitted product designs to American Swiss, Sterns, NWJ and Galaxy Jewellers.

De Bruyn asserts that the programme has gone from strength to strength in the past three years, with many of the graduates working as jewellery designers and freelancers, with others starting their own jewellery companies.

JCSA CEO Lorna Lloyd asserts that education programmes, such as Design @ 50, are key to revitalising the jewellery manufacturing industry in South Africa, which she notes has shrunk significantly in the past 30 years, resulting in gross undercapitalisation of the industry.

“The industry has changed,” she laments, explaining that manufacturers who acted as wholesalers in the past have now been replaced by importing wholesalers who have flooded about 80% of the local market with goods produced internationally.