Johannesburg - The World Bank has urged South Africa to consider taking more special economic zones (SEZs) to metropolitan areas to unlock economic value and to boost job creation prospects.
World Bank senior economist Marek Hanusch on Monday told the Department of Trade and Industry (DTI) economic policy dialogue that locating SEZ’s in cities would realise the growth potential of the zones.
Hanusch said the number of indirect and direct jobs created would change if more of the zones were located in cities.
“Although there are indisputable gains to be had from more equitable geographical distribution of economic activity, there [is] evidence that increasing urbanisation has strong, positive externalities through deeper and more extensive forward and backward linkages,” Hanusch said.
He said the success of the SEZs in creating large-scale jobs depended on greater policy co-ordination between the national government, provinces and cities to maximise the integration of SEZs in local economies. The SEZ Act was gazetted in 2014 with the government envisaging the development of 15 SEZs across the country, supported by various tax incentives.
The country has five operational SEZs: Richards Bay IDZ in KwaZulu-Natal (KZN), East London IDZ in Eastern Cape, Coega in Eastern Cape, Dube Tradeport in KZN and Saldanha in Western Cape.
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Another anticipated SEZ was Atlantis in Cape Town, which was awaiting designation by the ministry. Atlantis is expected to support manufacturing, mainly in the renewable energy sector. Last week, Mayor Patricia De Lille, said Atlantis got R1.3 billion in investment by multinational firm Pegas Nonwovens, which will open a plant in the city. De Lille said the investment was expected to create 200 direct jobs.
Limpopo premier Stan Mathabatha last month also said Makhado and Tubatse were to be declared as SEZs and were expected to attract R44 billion in Investments to the province and create 22 800 direct jobs.
Another province is the Free State. The 1 000 hectare Maluti-a-Phofung SEZ is a R4.8 billion project and would provide road and rail logistics and handling facilities for the Gauteng-Durban port and link the Bloemfontein-Cape Town corridor.
Investment Solutions head of market and economic research, Lesiba Mothata, said the focus should be bringing SEZs closer to metros as that would drive job growth. “We need SEZs to be in the cities in order to unlock value. While locating some SEZs in the periphery of the cities does add value, this is not sufficient to create the number of jobs we need to and to ignite higher levels of growth,” Mothata said.
Sidwell Medupe, DTI spokesperson said its policy was to spread SEZs across the country and not in cities.