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South African Business 2023

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The 2023 Guide to Business and Investment in South Africa.

Partnerships show the

Partnerships show the way for Special Economic Zones Collaboration between the private sector and government and its agencies is paying off in eight provinces. The goal of industrialising the South African economy is a major objective of the Special Economic Zone programme. These zones (which include Industrial Parks) are intended as catalysts for economic growth in established sectors and in stimulating new industries. Collaboration between national government (through the Department of Trade, Industry and Competition, the dtic, which oversees the programme), provincial departments and municipalities, economic development agencies and private companies in key sectors is a vital component in making Special Economic Zones work. Policy goals As defined by the dtic, Special Economic Zones (SEZs) are geographically designated areas set aside for specifically-targeted economic activities, supported through special arrangements (laws, tax rebates) and systems that are often different from those that apply in the rest of the country. South Africa’s Industrial Policy Action Plan (IPAP) identifies SEZs as growth engines towards government’s strategic objectives of industrialisation, regional development and employment creation. The purpose of the SEZ programme is to: expand the industrialisation focus to cover diverse regional development needs; provide a clear, predictable and systemic planning framework for the development of a wider array of SEZs to support industrial policy objectives; clarify and strengthen governance arrangements, expand the range and quality of support measure beyond provision of infrastructure; and provide a framework for a predictable financing framework to enable long-term planning. Partnerships In some parts of the country, an anchor tenant is central to the concept of the approved or proposed SEZ. In East London, the presence of Mercedes- Benz South Africa makes the clustering of automotive suppliers in the East London IDZ both logical and cost-effective. The Northern Cape’s proposed Namakwa SEZ is predicated on the huge operations of the existing Gamsberg Zinc Mine (pictured) and the proposed smelter to be built by international investor Vedanta Zinc International. In eastern Limpopo, the Mining Supplier Park run by mining company Glencore is forming the core around which the Fetakgomo-Tubatse SEZ is being created. Local and district municipalities are investing in basic infrastructure, while the provincial government has allocated staff from its Department for Economic Development, Environment and Tourism to drive the process. The same provincial department has created a stateowned-company to run the Musina-Makhado SEZ in the northern part of the province. SOUTH AFRICAN BUSINESS 2023 18

SPECIAL FEATURE Credit: Kevin Wright/Vedanta Zinc International The country’s biggest diamond miner, De Beers, is partnering with the local tertiary college, the Venda TVET College, by offering engineering graduates a chance to gain practical experience at its Musina operations. The decision by the college to locate its engineering facility within the SEZ is another example of collaboration. Part of the value proposition of the Upington Industrial Park is based on the plans of Airports Company South Africa to develop the local airport as a base for storage of aircraft and for maintenance and repairs. The fact that major automotive manufacturers test their cars in the Northern Cape on a regular basis is something that the Northern Cape Economic Development Agency (NCEDA) is promoting as an opportunity for investors. Mining is at the heart of another planned Northern Cape project, the Kathu IDZ. Big companies such as Sishen Iron Ore Company, Kumba, Assmang and South32 have expressed support and the project has been submitted by the NCEDA to Infrastructure South Africa to be registered as a catalytic project. The OR Tambo International SEZ (Gauteng IDZ) leverages the advantages of being located at a major transport hub for access to African and international markets. The SEZ’s location within the Ekurhuleni Metropolitan Municipality means that there are also many opportunities for tie-ups with a huge variety of manufacturing enterprises – Ekurhuleni has the country’s densest concentration of manufacturing operations. An interesting example of inter-government partnership came about in December 2020 when the City of Cape Town transferred general industrial-zoned properties worth R56.5-million to the Atlantis Special Economic Zone Company (SOC) Ltd. In return, the City became a shareholder in the company. An earlier cooperative agreement between the City of Cape Town and the Western Cape Provincial Government had set out the terms for the transaction once the Atlantis SEZ Company was registered. The signing of this land agreement meant the ASEZ Company assumed responsibility for the usage, administration and control of the property. The total area of proclaimed land is 118 hectares, of which 25ha has already been developed by five investors. The difficulty was that the other 94ha of land belonged to the City of Cape Town and was subject to various conditions about the rate at which it could be rented out or sold. By incorporating the City of Cape Town as a shareholder, the land was unlocked and the SEZ was in a position to expand. A few kilometres north of Atlantis, the Saldanha Bay Industrial Development Zone (SBIDZ) has to work hand-in-hand with the Saldanha Bay Municipality (SBM) and the Transnet National Port Authority (TNPA) as it defines its role and expands its offering. As an example of the level of cooperation envisaged for SEZ development, the R3.5-billion first phase of the expansion of the Port of Saldanha is described in an SBIDZ press release as being understood as “a long-term partnership between the government, its institutions and the private sector”. The press release further explains how the process fits into the national context: “This transaction model has proven the best way to fund long-term assets in a competitive environment. The SBIDZ has begun the formal process of submitting this project to the Investment and Infrastructure Office in the Office of the Presidency, supported by the National Treasury, for inclusion in the Sustainable Infrastructure Development Symposium (SIDS).” ■ 19 SOUTH AFRICAN BUSINESS 2023

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