Posted: March 10, 2022
Deputy Minister Majola.
Acting DG Malebo Thompson.
Acting DDG Maoto Molefane.
CEOs of the SEZs
Representatives from the designated SEZs.
Ladies and Gentlemen.
We are excited to be invited to this important SEZ CEOs Forum of the Department during the time when we are seeing normality beginning to settle as COVID viciousness is degenerating. Business continuity is gaining momentum. There is no doubt that the impact that COVID-19 and national lockdown, had devastating effects to the economy and to our SEZs drive to attract more investments.
As government, our task is to sustain efforts aimed at boosting the country’s economy. This as the prevalence of socio-economic ills such as high unemployment rate continue to rise unabated. The July Unrest of last year worsen our economic outlook and inflicted more harm with results that more companies have shut down, and some are facing liquidity challenges already under business rescue. In such a satiation, retrenchments have been inevitable.
Last year, Minister Patel announced the policy of Localisation. Manufacturers must increase the local content of intermediary goods within the domestic supply chains of producers. This will protect local emerging suppliers and give them space to grow at an accelerated pace, whilst creating local jobs and thereby contributing the overall growth of the country. Some detractors have attempted to accused us of nationalism and protectionism. The state of the economic conditions dictates that our national interest must precede all the others.
Government is repositioning itself for a long-term industrial and economic development. Among other strategic interventions, is the Special Economic Zones (SEZs) Programme, which include specifically targeted economic activities, supported through special arrangements (which include laws, regulations, incentives) and systems that are different from those that apply in the rest of the country.
Special Economic Zones seeks to create a sustainable environment for foreign and domestic direct investment, build sector-based industries, which will help the South African economy to develop its strategic industrial capabilities and industrial capabilities. The Special Economic Zone (SEZ) Programme serves as a key policy programme underpinning spatially integrated industrial development, particularly in the context of unlocking or optimizing South Africa’s comparative and competitive advantages. The SEZ’s Programme has now entered a full implementation phase with designated SEZs continuing to show a positive progress in terms of the number of investors operating in the zones. The number of designated Special Economic Zones in South Africa has now reached ten (10), covering seven (7) provinces.
In my address in Parliament last year in May, on the occasion of the Departmental Budget Vote, I said the following about the SEZ regime in the country:
“As part of the Economic Reconstruction and Recovery Plan (ERRP), SEZs will be an important element of reigniting manufacturing led industrialization in an accelerated manner. We have embarked on a new SEZ approach that draws in all spheres of government to a partnership in the planning, development and management of Zones.
Whilst many of the SEZs are effectively standing on their own feet, with strong governance and solid management, we are paying attention to few designated SEZs which must be developed in order to begin attracting more investors. It’s satisfying that even before these SEZs are operational, already there are investors waiting to settle, out of interests. We are working on finalizing the business case of Bojanala SEZ in North West along the platinum belt. We are building management capacity for Maluti-A-Phofung SEZ in Free State, addressing governance issues and building of its infrastructure through Development Bank of Southern Africa. We are finalizing the Namakwa SEZ application in Northern Cape. We are held back by the conclusion of environmental impact assessment (EIA).
We are addressing the policy issues with regards to the scheduling of SEZ companies registration as it relates to inhibitions posed by PFMA against the provisions of the SEZ policy. This problem is affecting in particular the Western Cape Atlantis SEZ as it cannot be scheduled appropriately to do its work as a government agency”
I am making this full quote to this CEOs Forum because these were effectively 2020 matters, and I am not expecting a similar status report on these issues today, unless we have been casual in our approach to address some of these issues, except the policy related challenges that involves Treasury on company scheduling.
I want to once again take the opportunity to congratulate the East London Industrial Development Zone (ELIDZ) SOC Ltd in the two new investors (Ebor Automotive Systems and Auria Automotive Systems) and the expansion of TI Automotive Systems. It is interesting that the three investments are all within the Automotive Sector and are part of the 16 new investments attracted in the sector since 2018. These investments translate into R3,327 billion worth of private sector investment with a job creation potential of 2078 new direct jobs in the Zone. These investors are now operating their facilities in the ELIDZ and have started producing components for the new Mercedes Benz South Africa (MBSA) C-Class model.
Few weeks ago I met with the CEO and Chairperson of the Inyanza Light Metals, the largest investor in the Richards Bay IDZ to listen to their challenges and requests for railway line from the site connecting to the one leading to the Port, and bulk water supply from the nearest dam or desalination plant. I have taken up these issues including engaging the Minister of Water and Sanitation. RBIDZ has completed the construction of phase 1 (i.e. Technical Service Centre) of Nyanza Light Metals (Pty) Ltd.’s titanium dioxide plant, which is valued at R130 million, and created 286 construction jobs. Once completed, the value of this investment will be R4,5 billion and is expected to create an estimated 550 direct jobs.
I want to implore the SEZ Division team to move with speed in finalising the assessment of the designation application for the proposed Namakwa SEZ (NC) and the cabinet process. Its unimaginable that we can complete this year without that SEZ starting to function in that area. This is the case with Bojanala SEZ which is beginning to be a red flag to us. We will address issues of the non-cooperative municipality at the level of Premier in North West soon and the MEC, my office is finalizing new dates for the meeting.
I am excited that the SEZ Chief Directorate has thus adopted a new more comprehensive and integrated approach in developing SEZs, which is anchored in the District Development Model, with a strong involvement of national government to ensure greater success, provincial and districts/Metros.
All that I am pleading for, is for us to double our efforts than before in fast tracking teething issues in our SEZ landscape. The country is at the economic slump, we need more investments, more jobs and growth to GDP. It is SEZs that can play as a flywheel to catalyze these efforts for the country.
To CEOs, we plead with you that in all the mega projects taking place and those on the pipeline with the Zones, please ensure that women and the youth are benefiting either through employment at a construction phase and as subcontractors. This empowernment is in line with what we are emphasizing as government. Statistics that you always furnish us in terms of direct and indirect job creations, the contracts and sub-contracts at construction phase must disaggregate clearly the women numbers and youth. For me, I think that the SEZ division must put this as one of the performance pillar that we must influence SEZ boards to consider . We need to be very deliberate about gender impact, and we need to be serious about youth employment, and youth enterprise.
I believe SA is still an investment fertile economy. Our business confidence may have gone down, but we are poise to rise like phoenix in the ashes. Government is to hold an investment conference again, to stimulate investments including following up on those commitments before COVID. We are hopeful that those commitments are still with us. The World is unstable, especially the Europe with the war raging that will impact on commerce and inflations. We are observing these developments against our economic base and that the impact will not be felt severely to our economy, as we are setting it up on the road to post –COVID recovery.
I wish you a successful meeting with tangible results.