THE IMPORTANCE OF SPECIAL ECONOMIC ZONE PARTNERSHIPS THAT WORK TO UNLOCK SA’S INDUSTRIAL POTENTIAL
Andile Ncoyini
South Africa’s Special Economic Zones (SEZ) have had a mixed track record in South Africa. Government has invested nearly R30 billion in SEZ infrastructure across the country, yet only attracted around R20 billion in private investment. Some, like the Dube Trade Port and the Tshwane Automotive SEZ, anchored by Ford, are thriving. Others have struggled due to inadequate funding, poor coordination, and limited investor awareness.
The SEZ makes sense. The World Bank describes a SEZ as “geographically delimited areas within a country that operate under different economic regulations,” offering tailored tax and regulatory incentives to promote industrial development.”
The question, however, isn’t whether SEZs can work – we know they can – it’s what makes the difference between success and failure? The answer is genuine partnerships between government, financial institutions and the private sector. This is the model that has been built at the OR Tambo International Airport Special Economic Zone (ORTIA SEZ), which is now ready for investment in Precinct 2 and the Springs Precinct.
Two hours from 142m customers – location matters
One fundamental challenge facing many inland SEZs has been their distance from ports of entry. The ORTIA SEZ’s competitive advantage is its strategic location at Africa’s busiest airport, within a two-hour flight radius of 142 million people across Southern Africa. For high-value, lightweight products like pharmaceuticals, medical devices, electronics and advanced manufactured goods, this proximity to global cargo terminals is transformative. The Springs Precinct, on the other hand, is located opposite the Amplats refinery and unsurprisingly targets platinum group metals beneficiation, fuel cell components, and the hydrogen economy. Both precincts offer investment-ready, serviced land with bulk infrastructure in place.
The power of coordination
The country’s successful SEZs tend to have one thing in common, which is that they have enjoyed strong collaboration and coordination between national government, provincial authorities and local municipalities. Phase one of the ORTIA SEZ has mastered this. The City of Ekurhuleni provides municipal services and approvals, Gauteng Province has committed R500 million for bulk infrastructure and the DTIC and SARS have provided policy and tax support.
But government coordination alone isn’t enough – which is where private sector partnership becomes crucial. Recognising this, FNB has partnered with the other stakeholders and the ORTIA SEZ Dealmakers 2 with a view to connecting existing clients, especially manufacturers, property developers, and businesses in agro-processing, with ORTIA SEZ opportunities. We’re leveraging our international presence in China and India – where significant investor interest exists in pharmaceutical and electronics manufacturing – and also providing business intelligence and economic analysis which are capabilities that supplement the services and support provided by government partners.
Export growth matters now more than ever
With subdued domestic economic growth, South African businesses must explore export markets as a key avenue for growth. Africa presents a compelling opportunity in this regard. It’s the world’s second-fastest-growing region after Asia, accounting for 11 of the 20 fastest-growing economies globally. The continent is projected to have the highest population by 2050, with rapid urbanisation driving strong consumer demand, infrastructure development and a growing middle class. Despite this, intra-African trade remains at just 15%, compared to 50% in other regions. Recent research by RMB identified approximately $75 billion in potential exports of existing South African products.
A compelling business value proposition
For businesses considering ORTIA SEZ, the benefits are tangible, and significant:
- Tax and regulatory incentives including employment tax incentives, VAT exemption, and duty-free importation of production-related materials. which can massively reduce operational costs.
- Strategic market access to Africa (supporting AfCFTA implementation), Europe, and the Americas through OR Tambo’s cargo facilities.
- One-stop shop support providing a single point of contact for investor establishment, work permits, business visas, regulatory approvals and banking services.
- Supply chain integration opportunities with established manufacturers, and access to broader value chains.
From import substitution to export growth
There is plenty of evidence of the ability of SEZs to create the favourable environment for production and trade by reducing costs and improving efficiency, which in turn drives exports and accelerates economic growth. In ORTIA SEZ Precinct 1, for example, companies involved in jewellery manufacturing have been able to establish entire value chains, from raw material refinement to finished products for export. The Tshwane Automotive SEZ (TASEZ) in Silverton and Rosslyn also exemplify the power of the SEZ model, providing substantial supply chain support and driving billions in automotive exports.
ORTIA SEZ Precinct 2 and Springs Precinct are equipped to help businesses capitalise on these types of opportunities – particularly, but not exclusively, those involved in pharmaceuticals, medical devices, agro-processing, agri-tech, electronics, advanced manufacturing, PGM beneficiation, and hydrogen economy components.
So much more than just another industrial park, ORTIA SEZ is a blueprint for unlocking South Africa’s industrial potential, creating jobs, boosting exports and driving reindustrialisation. The infrastructure is ready, and the partnerships are in place. All that’s needed now are business leaders with vision to step forward and grab the opportunity to grow their business and help build South Africa’s economic future.
Andile Ncoyini, Regional Head: FNB Business in Gauteng, and Thokozani Thwala, CEO of GrowthMap Infonomics. They write in their personal capacity.
