Dube TradePort: A Development Blueprint?

The Dube TradePort (DTP) which sits alongside the King Shaka International Airport, was created to help stimulate the KZN economy. But are taxpayers getting bang for their buck, asks Shirley Le Guern?

Total investment in the Dube TradePort (DTP), post construction of King Shaka International Airport, stands at R3,143-billion. Of this, R1,138-billion worth of infrastructure development has come out of taxpayers’ pockets, with the remainder – R2,05-billion – from private sector investors.

A further target of R5-billion in private sector investment in the rapidly evolving second phase of development will propel private sector spend over the R7-billion mark and, according to CEO of the DTP, Hamish Erskine, there are not only green shoots post Covid-19 but a sound development pipeline.

For Erskine, the greatest achievement has been commercialising and operationalising infrastructure built between 2007 and 2010 and creating an investment and business hub.

Currently, the DTP itself is developing the last site in TradeZone 1 which is a 10 000m² facility for a new food processing plant to be operated under the combined umbrella of a multinational and large locally-owned company.

This follows the development of a thin strip of land into spaces for smaller companies wanting to be in an SEZ either as start-ups or as service providers to bigger manufacturers.

“We built 18 mini-factories which are already 60% occupied. Now, we can have big multinationals, large local companies and SMMEs all operating within one precinct. That has lowered the barrier to entry and allowed us to really target a much wider market,” says Erskine.

Dube TradePort’s first phase of its light industrial zone includes the Dube Cargo Terminal facility, which processes airfreight. This together with the mini-factory development and the Dube Trade House encompasses all of DTP’s developments in Zone 1. Moving into Zone 2, Erskine says DTP plans to own and develop more buildings.

Two investments have been confirmed for Zone 2 and construction is about to begin on a second factory for healthcare product manufacturer, LM Diapers, and a facility for industrial chemical manufacturer, Synergy Blenders.

Negotiations for the establishment of a pharmaceutical plant with new product lines and technologies for an existing manufacturer are at an advanced stage, says Erskine. Additional investments in Zone 2 should include more cold storage and another electronics company.

“We allow in strong investments that are sustainable, offer good quality jobs and are technology orientated. We do quite rigorous assessments and look at them from a due diligence, a sustainability and a technology perspective,” he says.

Although the collapse of Mara Phones’ manufacturing plant remains an elephant in the room (at least R238-million of the overall R492-million investment was IDC funded), the remainder of companies operating at the DTP – including Samsung, Conlog, Yangtze Optics Africa, industrial textile manufacturer Tuff Bag, iDube Cold Storage and AIH which assembles Mahindra pickups – are performing well.

Erskine says that, during the current financial year, the DTP expects to have signed leases for half of Zone 2 with the balance to be concluded during the next financial year. Actual development and construction will take three to four years.

This will immediately trigger movement on to the DTP’s Zone 3, known as uShukela.

“We’ve built a major road down to link up with Watson Highway. It’s a very attractive and strategic site because of its proximity to the N2 and N3. It is of a similar size to Trade Zone 2 but its platforms are slightly smaller, so we’ve looked at some interesting mixed use opportunities with a strong focus on pharmaceuticals.”

In total, DTP has four zones.

“We’ve managed to acquire a significant amount of additional land to the south and the west, so our total land holdings are now much larger than when we started. That was very intentional for two reasons – one, because we are in an environmentally sensitive area we have acquired land for rehabilitation and offset, and, two, because we have created so much momentum that needs to be sustained over the long-term. The additional land parcels are all continuous and fall within our boundaries and the greater aerotropolis area,” he says.

Already, Erskine believes the investment in both the new airport and DTP is showing results.

“If you are going to spend that amount of taxpayers’ money to do a relocation, you have to make sure it impacts on the maximum number of areas of the economy to optimise the investment. That was always the plan,” he says.

From the outset, Durban had what many major cities didn’t – a 2 000-hectare greenfield site that allowed for considered spatial planning.

“The airport itself is an amazing engine for growth. Airports and air services make up a key component of the overall logistics, manufacturing, trade and property development component of an economy as part of what’s known as multi-modalism – which is sea, air, road and rail.

“This was the first time that an airport was going to be built in close proximity to a major hub port in a very deliberate fashion. Another advantage was that Durban was the country’s second largest manufacturing and the largest trade centre in South Africa. That component was critical to the masterplan. For the first time, we were going to take a very unique and specific focus on air cargo and provide the highest quality environment for managing and developing it.”

But, right now, is the DTP on track and covering its costs?

Erskine says DTP has mapped out a self-sustainability model towards which it has been continually making strides. It has been increasing revenues generated by property leasing and rentals, cargo operations and processing as well as commercial ICT services in order to ensure long-term sustainability.

“However, as a section 3C public entity, our mandate is to drive economic development through the provision of infrastructure and facilities that support the re-industrialisation of the economy, with a primary objective of job creation. This always needs to be balanced with the long-term goal of self-sustainability,” says Erskine.

He is, nevertheless, confident the DTP will achieve its long-term self-sustainability goal within the previously set timeline of the next 10 years.

Meanwhile, it is already making inroads into easing unemployment. Between 2012 and the end of March 2022, the DTP created 10 615 jobs. During 2020, at the height of Covid, 606 new jobs were added and, during 2021, 693. DTP exceeded its target of 270 permanent jobs in 2020/21. While 400 new jobs emerged, temporary employment was below target due to Covid-19 restrictions.

Projected jobs for the next three financial years (up until 2024/25) are 2 300 permanent jobs, plus 3 171 construction jobs, reaching a total of 5 471.

Cargo volumes, too, are quickly moving back towards pre-Covid levels, Erskine says.

“Although investment activity by the private sector has been constrained, we were able to achieve R77-million in 2020/21 and a further R170-million in 2021/22. This ensured that during the first two years of Covid-19, we achieved R247-million in investment, which has allowed us to build momentum,” he notes.

“The numbers are saying that, absolutely, we are doing what we set out to do – every layer is built on another layer. But you have to do it off a solid base. Sometimes, our statistics don’t appear to be completely shooting the lights out when compared to other projects. But we prefer to remain conservative and not over state numbers. That way, we can exceed our targets and expectations,” Erskine says.