Industrial Development Zones and Special Economic Zones: Enhancing Value-Added Exports

By Raine St.Claire

The Industrial Development Zones (IDZ) programme was initiated by the South African government to attract Foreign Direct Investment and enhance value-added exports. However, limitations and the evolving economic landscape marked by BRICS necessitated a policy review, leading to the development of the Special Economic Zones (SEZ). This comprehensive policy, inspired by the National Industrial Policy Framework and the New Growth Path, aims to provide a structured framework for establishing and managing Special Economic Zones (SEZs) while addressing the challenges encountered in the IDZ programme.

Coega Special Economic Zone: Billions Invested in South Africa’s Auto Industry

A substantial investment of R3-billion from Stellantis, a multinational automotive company, to establish a state-of-the-art vehicle plant within the Coega CDC, is set to propel the realisation of CDC’s vision to foster economic growth in the Eastern Cape. In collaboration with the Industrial Development Corporation (IDC) and the Department of Trade, Industry and Competition (the dtic), this greenfield manufacturing project is on track for completion by the end of 2025. The inaugural product launch, scheduled for early 2026, will include a 1-ton pickup truck, with an anticipated annual production volume of 50,000 completely knocked-down (CKD) units for both local and export markets. The plant is designed with a capacity to produce up to 90 000 units per year, with substantial investments planned for painting facilities.

The Stellantis’s Dare Forward 2030 initiative aligns seamlessly with the company’s strategy for the Middle East and Africa to:

Achieve over 22% market share in the region by 2030

Sell one million vehicles by 2030

Attain 70% regional production autonomy.

To support the initial phase of capacity, Stellantis plans to:

Create 1,000 direct job opportunities

To invest over 500 000 hours in training and skills development to elevate the local workforce to global standards, with a goal of achieving a localisation rate exceeding 30%. The expected effect on the province’s GDP is estimated at R 664-million and approximately 1 800 jobs are anticipated to be created in the Metro, with an additional 2 097 jobs projected for the Eastern Cape Province.

Gauteng IDZ Drives Economic Growth and Investments

With a vision to establish itself as the leading economic zone in both the country and Africa, the Gauteng IDZ Development SOC Limited (GIDZ), a subsidiary of the Gauteng Growth and Development Agency (GGDA) located at OR Tambo International Airport, is actively promoting manufacturing investment opportunities. Their primary aim is to boost the growth of the OR Tambo International Airport Special Economic Zone (SEZ) and position the Gauteng City region as a globally competitive investment hub. This initiative is centred on job creation, enterprise development through sustainable partnerships, and contributing to overall economic growth. The precinct, which already houses key economic players, is attracting a growing list of tenants.

• The Jewellery Manufacturing Precinct unites key players in the mineral beneficiation sector, regulatory bodies, refineries, sales companies, and jewellery and diamond beneficiation firms. This collaboration enhances their ability to manufacture and export high-value products through OR Tambo International.

• In2Food, one of Africa’s largest premium food packing and processing companies, has made a substantial R241-million investment in a cutting-edge 22,700m2 fresh food facility, one of the largest in the southern hemisphere. In2Food not only supports emerging farmers in meeting Woolworths’ quality standards but has also created 600 jobs and substantially increased fresh product exports from the OR Tambo district.

• SolarAfrica, a leading Gauteng-based energy solutions company, was recognised as Africa’s top solar energy firm at the 2021 Africa Solar Industry Association Awards. Their remarkable project includes a 13.5 MW solar PV carport grid-tied system at Ford South Africa’s Silverton plant, leading to a 15% reduction in electricity costs. SolarAfrica is currently expanding its operations with a 1,000 MW solar farm near De Aar in the Northern Cape, expected to be operational in 2024.

Partnerships Drive The R4.5bn KwaZulu-Natal Titanium Value-Boosting Initiative

Located on South Africa’s Northern Coast, the Richards Bay Industrial Development Zone Company (RBIDZ) is a designated Special Economic Zone (SEZ) committed to securing a competitive edge in the global arena. In a substantial economic boost for KwaZulu-Natal, East China Engineering Science and Technology has recently formalised two significant contracts with Nyanza Light Metals for the construction of an 80,000-ton-per-year titanium dioxide (TiO2) pigment plant within the RBIDZ.

TiO2 is sourced from ilmenite or rutile minerals abundant in the sands of KwaZulu-Natal and widely used in various industries, including paints, coatings, plastics, cosmetics, and food products. After twelve years in the making, an initial investment of $750-million will kickstart this project, offering significant employment opportunities and the potential for future replication and expansion.

In terms of the ESG factors and coupled with East China Engineering Science and Technology’s impressive track record of constructing 31 similarly highly energy-efficient plants, this facility is poised to be one of the most advanced in the world. Construction, scheduled to commence in Q1 2024, will create 850 permanent positions and is expected to generate over 2,000 jobs. Additionally, with the establishment of a solar park and energy system, the project is set to invigorate both the local and national economy, potentially leading to the development of a rail link, siding, and shunting lines within the RBIZ.

Empowering Economic Growth In The Western Cape

Saldanha Bay Industrial Development Zone, known as Freeport Saldanha, is South Africa’s only SEZ with an integrated port. Purpose-built to cater to the oil and gas, maritime manufacture and repair sectors, and related support services, its aim is to attract new investments from export-oriented industries and related services, making a substantial contribution to economic growth, trade, manufacturing, and job opportunities, benefiting both the Western Cape and the national economy.

The recently completed access road to the IDZ at a cost of R24-million by the Western Cape Provincial Department of Infrastructure is in alignment with the department’s comprehensive budget allocation of R2.25-billion for West Coast District municipalities to stimulate economic activity and boost revenue for the region. This budget includes a total of 96 multi-year projects spread across the region, some of which are still in the planning stages or already in progress; these include the Middelpos Primary School, designed to accommodate 1800 learners and the R529-million Malmesbury bypass project to focus on relieving traffic congestion and enhancing safety in Malmesbury. Scheduled for completion by the end of 2025, the project is anticipated to generate approximately 220 job opportunities and provide prospects for 37 SMMEs.

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