Boosting SA’S development
The new special economic zones (SEZS) plan has come a long way from humble beginnings, but more work is needed
Years ago government acknowledged the failings of SA’S industrial development zones (IDZS), saying they had not lived up to expectations. This came after the jewel in the crown among them — the 11,500 ha Coega IDZ near Port Elizabeth — had struggled to find an anchor tenant.
Since then, trade & industry minister Rob Davies has been active in designating special economic zones (SEZS). These offer incentives including a 15% tax rate, building allowance, employment tax incentive, and value-added tax and customs relief.
The IDZS had offered worldclass infrastructure in strategic geographical locations — but not much else. Now SEZS will be categorised as IDZS; free ports; free trade zones; or sector development zones focused on the development of a specific sector or industry.
Coega continues to boast an “investment portfolio in excess of R181bn”. However, total investment in all five of SA’S former IDZS has never come near that sum. Coega’s biggest completed investment has been the 342 MW Dedisa gas-fired peaking power station, which cost R3.5bn. Now China’s Beijing Automobile International Corp has broken ground for an R11.5bn vehicle plant. Another R1.2bn of investment in SMMES that will supply components to a new automotive industrial park in the zone is in the pipeline.
President Jacob Zuma recently told traditional leaders in parliament that SA’S operational industrial zones had attracted a total of 69 projects worth only R9.4bn. But he says “already signed investment projects” are being prepared for roll-out with a total investment value of R41bn. The Coega Development Corp (CDC), the zone operator in Nelson Mandela Bay, says it has signed deals with 61 new investors in the past five years, with a combined investment value of R35.8bn.
But in welcoming four new operational investors since January 2017, Ayanda Vilakazi, CDC head of marketing and communications, says the “newly plugged-in companies pushes the total number of operational investors at the Coega SEZ to 40, with an investment value of R7bn”. This alone is about 75% of total actual investment in existing zones, as mentioned by Zuma.
The global financial crisis, helped by high Eskom electricity tariffs and erratic power supply, helped turn investors away. In recent years the Richards Bay IDZ lost a former BHP Billiton aluminium smelter, and later a Tata
Steel ferrochrome facility
But Richards Bay now has had Bidvest Tank Terminals invest R1bn in a new liquid petroleum gas import and storage facility for a global logistics company. In Coega, there is now a proposed R25bn 1,000 MW liquid natural gas project, and also a potential 2,000 MW gas-fired energy project at
Richards Bay.
Meanwhile, Transnet National Ports Authority in May appointed Oiltanking Grindrod Calulo, a BEE group, to fund, construct, maintain and operate a new petrochemicals liquid bulk handling facility at the Port of Ngqura. This is a deepwater bulk commodities and container transhipment harbour that is
What it means: Diverse funding mechanisms and partnerships to grow business, create jobs at designated zones