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Service - Leadership in Government - Issue 76

  • Text
  • Agenda
  • Development
  • Governance
  • Government
  • Leadership
  • Inequality
  • Poverty
  • Digital
  • Economy
  • Cape
  • Global
  • Industrial
  • Sector
  • African
  • Economic

S economy In the zone:

S economy In the zone: districts of development Building the Coega IDZ (1998 to 2005) The Special Economic Zone programme is a mechanism used by the government to attract foreign direct and domestic investments, integrate local firms into global value chains, increase exports, develop local industrial capabilities, accelerate the beneficiation of natural resource endowments, fast-track the development of the country’s lagging regions and create decent jobs. Special Economic Zones (SEZs) are defined as geographically designated areas of a country that are set aside for specifically targeted economic activities and supported through specific arrangements and systems that are often different from those that apply to the rest of the country. Our SEZs, which are informed by the South African government’s National Development Plan and Industrial Policy Action Plan, are strategic instruments to deepen industrialisation. They do this by encouraging the beneficiation of available resources and offering a range of advantages to enterprises through incentives and services that are supported by national, provincial and local governments. Incentives include tax breaks from the South African Revenue Service, subsidised interest rates from the Industrial Development Corporation, subsidies for employees earning below a certain level, training grants from the Department of Trade, Industry and Competition (dtic) and discounts from national electricity utility Eskom. The SEZ is also a customs-controlled area. The SEZs are located in a municipality and for the SEZ programme to succeed, municipalities must be part of the planning, design and implementation of these spatial development catalysts. The local government sector is, therefore, an important stakeholder in the drive to build sustainable and successful SEZs. To date, there are 11 approved SEZs in seven provinces; the latest one is Tshwane Automotive SEZ, launched by President Cyril Ramaphosa in 2019. Coega and Dube TradePort SEZs are at the forefront of sustaining growth in investment attraction. The SEZ programme has attracted 234 investors with an estimated value of over R61-billion. There are five additional proposals that the dtic is surveying in partnership with provinces. They include the Bojanala SEZ (North West Province); Namakwa SEZ (Northern Cape); Vaal SEZ (Gauteng); Tubatse SEZ (Limpopo) and Wild Coast SEZ (Eastern Cape). ___ __ “With the introduction of a much broader SEZ programme, more areas of strategic economic potential can be leveraged to attract foreign direct investment. The most pertinent outcome envisaged by the SEZ programme is the expansion of the manufacturing sector and the creation of additional industrial hubs to regionally diversify the national industrial base.” Dr Rob Davies, Minister of Trade and Industry of South Africa from 2009 to 2019. No. 34968 Government Gazette, 23 January 2012 “The Special Economic Zones programme is expected to play a significant role in supporting the implementation of the country’s economic and recovery plan. This is since the SEZ programme is at the core of the reimagined industrial strategy, which is purposefully structured to stimulate local and foreign direct investments. The SEZs are also going to play an important role in the African Continental Free Trade Area as we position our country to become a vibrant manufacturing hub of the African continent. “It is only through cooperation at national, provincial and local government levels that we can successfully build an inclusive economy. Inter-governmental relations, both horizontally and vertically, are important in us achieving the set objectives of the reimagined industrial strategy. The efforts of pursuing a coordinated framework through the district development model approach has presented an opportunity for the creation of a balance ecosystem for an integrated development.” Deputy Minister of Trade, Industry and Competition, Fikile Majola on SEZs, 16 March 2021 “Our President has directed us to work as one government focusing on rolling out a new integrated Khawuleza district-based approach to address our service delivery and local economic development challenges. The district development model is designed to turn plans into action because we have listened to our people’s concerns about lack of implementation. The district development model means that all departments throughout the three spheres of government, all entities and agencies must have one plan and one budget to drive government’s priorities. The President has been clear with us, government must move away from working in silos to a collective and coordinated approach. Inclusive economic growth remains vital. It is therefore imperative to find ways to align the SEZ programme with other key government programmes.” Deputy Minister of Trade, Industry and Competition, Fikile Majola on SEZs Policy and Strategy Dialogue, 25 February 2021 10 | Service magazine

economy S ___ __ TARGET SECTORS • Automotive • Renewable energy • Agri-processing • Aquaculture • Chemical engineering • Pharmaceutical • Copper and steel • Business Process Outsourcing COEGA SEZ (EASTERN CAPE) The Coega SEZ, located in the Nelson Mandela Bay Metropolitan Municipality, is South Africa’s foremost investment hotspot for industries with a global perspective. South Africa’s Industrial Policy Action Plan (IPAP) has included the Coega SEZ in the drive to increase manufacturing production and beneficiation in our country. Developed and managed by the Coega Development Corporation (CDC), this multi-billion-rand project aims to drive local and foreign investments in exportoriented industries – positioning South Africa as the hub of Southern African trade. The SEZ was deliberately established near Port of Ngqura, a deep-water port that provides a vital conduit for our value-added products to the world and African continent. “Transnet has committed to invest in the East London Port to grow volumes and expand the capacity of the port. They will deepen and widen the entrance channel to accommodate larger vessels. This will enable the port to support the city’s positioning as a manufacturing hub anchored by a strong automotive sector. This commitment will cater for the continuous growth of export volumes by Mercedes-Benz SA in the next three years. “We welcome the R16-billion investment by Ford in South Africa. Transnet will invest in the extension and the upgrade of the SouthCor rail corridor, which will realise the high logistics rail corridor for the movement of goods between Gauteng and Nelson Mandela Bay. Working with Transnet we are going to turn the Port of Port Elizabeth into a mixed-use precinct anchored by the waterfront development. By the end of December 2021, the Manganese terminal will be relocated to the Port of Ngqura. Transnet will also initiate a process to identify a cargo owning equity partner for the Transnet Port Terminals at Ngqura to drive the trans-shipment strategy on volume uplift from Asia, specifically China. “Our province has already initiated consultations with the secretariat of the AfCFTA to ensure that the competitive advantages which our province has in the agricultural sector, automotive sector and the Oceans Economy are fully integrated into the African economy.” State of the Province Address by Premier Lubabalo Mabuyane on 23 February 2021 One of the most consequential investments for this SEZ is that of Chinese automotive manufacturer Beijing International Automotive Corporation (BAIC). The total investment by BAIC was R11-billion and significantly added to the province’s already strong reputation for excellence in the automotive sector. The Eastern Cape Provincial Government has identified agriculture as an economic growth sector with large-scale investment potential which could contribute significantly to economic diversification and job creation. The CDC has also planned for the The Dedisa substation development of a R2-billion aqua-farming facility, which will focus on the commercial cultivation of marine animals and plants. Over a century of expertise in mining has made South Africa the world’s leading producer of a range of minerals and metals. Coega SEZ with its strategic logistics linkages provides an ideal platform to beneficiate these metal resources. A particular focus of the Coega SEZ is to ensure greater local processing of South Africa’s abundant natural resources. Coega has a mix of wind farm investment projects planned with an overall capacity of 183MW, a 12MW photovaltic solar farm and bioenergy projects in the pipeline. The CDC and various organs, including DoE, Eskom and CEF, have conducted extensive preliminary work to advance the readiness of Coega to locate a gas-to-power project. The project entails the generation of over 2500MW electricity and the value to the regional economy of the project is approximately R25-billion. Coega is home to the Dedisa substation, which is vital infrastructure for injecting large amounts of power into the grid. “We have done considerable work on the Gas-to-Power Programme to host additional gas-driven power generation of between 1000 and 3000MW. We will host the first infrastructure site for the importation of Liquefied Natural Gas (LNG). The Coega Development Corporation has signed a Joint Development Agreement with Central Energy Fund and Transnet that will anchor this project. “The construction of this infrastructure will catalyse the development of a gas industry in the province and energyintensive investments. We envisage a network of pipelines from the existing Dedisa power plant to other major industrial areas and new gas-to-power plants that will be built when the Department of Mineral Resources and Energy invites bidders for the construction of new gas-to-power plants. “We are looking at other domestic gas opportunities beyond the LNG. We all are aware of the discovery of natural gas and condensate through the Brulpadda and Luiperd wells by the Total-led consortium that holds a licence for a site that is located near Mossel Bay. We are positioning Coega as the natural location for the critical off-take projects that will be needed to unlock the development of the offshore projects, and thus use this domestic gas-for-power generation and gas-based industrialisation. This is the critical next phase of the work to develop the gas hub at Coega.” State of the Eastern Cape Province Address by Premier Lubabalo Mabuyane on 23 February 2021 The sod-turning ceremony of BAIC Automobile SA in 2016 Service magazine | 11

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