A World Bank study has concluded that South Africa’s Special Economic Zones Programme (SEZ’s) has proved successful so far, attracting some R14.8 billion in revenue and creating more than 30 000 jobs.
The World Bank study was welcomed by Minister of Trade, Industry and Competition, Parks Tau on Monday, who said that the findings confirm that South Africa has the infrastructure, legal framework, and institutional capacity to build a world-class SEZ programme.
“The study draws on surveys from all 12 SEZs nationwide, interviews with provincial government representatives and SEZs businesses, administrative data from the Department of Trade, Industry and Competition (the dtic), South African Revenue Service, National Treasury, and international case studies from India, China, Poland, the United Arab Emirates and Jordan.”
Tau added that, as the government, they are encouraged by the outcomes of this study. “It has confirmed the impressive progress that we have achieved in the roll-out of the programme, as well as the hugely positive impact that it has made on the economy of the country in general, and the provinces where they are located in particular.”
Tau said that the fact that a revenue of R14.8 billion has been generated by the SEZs that are operational, and more than 30 000 jobs have been created, speaks volumes of the capacity and potential of the programme to contribute immensely to the country’s economic growth, transformation and industrialisation.
Tau said the department will critically look into the recommendations of the study with the aim of expanding the programme and increasing its impact.
“The study has identified various areas of improvement and recommendations, which we need to thoroughly analyse and consider implementing in line with the Revised Special Economic Zones Implementation Model, which is part of our Spatial Industrial Development Strategy.”
Tau said the recommendations include:
- Establishing a formal five-year intervention framework for underperforming zones
- Extending the 15% Corporate Income Tax rate to all SEZs
- Designating private-sector industrial parks within all SEZs using the Dube TradePort model
- Formalising municipal service-level agreements across the network
- Accelerating build-to-let mixed-use complexes to attract SME tenants
- Formalising the Special Economic Zones Fund with distinct infrastructure and top-structure pathways
Tau said they have already designed various interventions that they have prioritised for this financial year, some of which are in line with the recommendations of the study.
“These are going to result in more SEZs being designated, more investments flowing into the SEZs, more jobs being created, and more small businesses being created in and around the SEZs,” he said.
PSG senior economist Johann Els said that he agrees with the findings of the report. “South Africa has strong infrastructure and very strong institutions such as the Treasury and the South African Reserve Bank. There is also a strong and improving policy environment and Operation Vulindlela, which has eased regulations for the private sector and increased its role in the South African economy.”
Els added that the private sector has invested significantly in infrastructure. “This infrastructure includes telecommunications and data centres. The environment in South Africa is positive and many foreign investors agree, especially with our independent judiciary and a strong constitution. This creates a vibrant environment for business.”
Efficient Group Chief economist Dawie Roodt said that this is good news and doesn’t come as a surprise. “South Africa has everything that is needed for special economic zones and one thing that is needed in the South African economy is somewhere businesses can operate relatively free from state intervention, and that is what Special Economic Zones are.”
Roodt added that South Africa is certainly ripe for a special economic zone.
DTIC is expected to host the 2nd International Special Economic Zones Investment and Infrastructure Conference in Durban next week.
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