Special Economic Zones are key interventions in SA’s economic recovery plan
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Every product that is manufactured in South Africa advances our nation’s development. It moves us away from a reliance on traditional commodities to a more globally competitive economy.
An industrialised economy translates into greater economic activity, transfer of technology and skills and the creation of more jobs. With the economic fallout from the Covid-19 pandemic and the drastic impact it has had on our economy, we are turning to the industrial sector to play a bigger role in driving the economy.
Among the key interventions we have put in place to enlarge our industrial base is the establishment of Special Economic Zones (SEZs), which are geographically designated areas set aside for targeted economic activities.
These zones give effect to our economic reconstruction and recovery plan, which responds to the impact of Covid-19 on the economy. A key pillar of this plan is to grow our industrial base to create jobs and build a more sustainable economy.
As we work to draw more businesses to our SEZs, we are confident there will be a ripple effect throughout the economy, particularly as we aim to reverse the impact of Covid-19 on livelihoods.
We have designed our SEZs to offer investors incentives such as a preferential 15 per cent corporate tax rate, building allowances, employment tax incentives, customs controlled area and tax support on greenfield investments.
It means that from day one, companies that begin operating within these zones have a head start in growing their operations, thereby generating more revenue, creating new jobs and competing successfully internationally.
Our investment in SEZs has helped us attract foreign direct investments, grow our export market and make South Africa competitive in international markets. A recent example is the R16 billion investment by the Ford Motor Company of South Africa to expand operations as part of the Tshwane automotive SEZ.
The investment increases vehicles manufactured by Ford from 168 000 to 200 000 vehicles a year. This will boost the country’s vehicle exports and affirms our position as a global automotive manufacturing destination of choice.
The Tshwane automotive SEZ was launched in 2019 and is supported by the Department of Trade, Industry and Competition to an estimated value of R3.15 billion over the next three years. Government’s investment in the zone will see the creation of an expected 2 000 direct manufacturing jobs and about 8 600 short-term jobs during the construction phase.
This SEZ is already making strong inroads into positioning the country as a manufacturing hub in Africa. Twelve automotive component suppliers to the value of R4.33 billion have also been attracted and the construction of 12 factories is being accelerated for these investments.
SEZs similar to the Tshwane one can be found across our country. These zones have slowly begun to reverse the economic marginalisation and spatial inequalities we inherited from apartheid.
Government believes the spread of economic opportunities is central to building a more inclusive economy that benefits all South Africans. In establishing new industrial centres through our SEZs, we are helping balance growth and industrial development.
Our SEZs include the Coega industrial development zone (IDZ) in the Eastern Cape, the largest IDZ in Southern Africa. The Richards Bay IDZ in Kwazulu-Natal is linked to the international seaport of Richards Bay while the East London IDZ located in Buffalo City was one of the first IDZs to be operational.
The Saldanha Bay IDZ in the Western Cape serves as the primary oil, gas and marine repair complex in Africa. The Dube trade port in Kwazulu-Natal is a catalyst for global trade, with a focus on manufacturing and value addition, primarily in the automotive and electronics industries as well as fashion garments.
Going forward, we are finalising SEZs in Atlantis in the Western Cape as a green tech-manufacturing hub and in Nkomazi in Mpumalanga which is strategically located between northern Swaziland and the south-west of Mozambique.
We also have on the cards the Bojanala SEZ in the North West, also known as the Platinum Valley SEZ, which will focus on mineral beneficiation of platinum group metals.
The OR Tambo SEZ, linked to the OR Tambo International Airport, is currently in expansion. It focuses on manufacture for export and uses air freight for the movement of these products.
Since the inception of the SEZ programme, we have attracted R18.6 billion in private investment from 136 operational companies. An additional 99 investment expressions of interest by companies, worth R48 billion, are currently being considered.
Local and international companies are encouraged to explore the exciting opportunities that our SEZs have to offer. Investing in these zones will not only breathe new life into a company’s operation, but help grow South Africa.
* Majola is the Deputy Minister of Trade, Industry and Competition.
** The views expressed here are not necessarily those of IOL.