SEZs remain attractive, but embracing broader scope as energy, technology change economy

15th September 2021 By: Schalk Burger - Creamer Media Senior Contributing Editor

The 12 special economic zones (SEZs) in South Africa remain relatively attractive destinations owing to the financial and non-financial incentives and support services they offer to specific industrial segments.

However, they are also developing additional services and offerings to meet demand from companies in new industrial segments, including renewable energy and advanced manufacturing.

During a webinar hosted by boutique investment advisory company Cova Advisory on September 15, representatives from three SEZs detailed some of the changes being made to meet growing demand for renewable energy, energy storage and advanced manufacturing facilities, in addition to meeting existing demand from companies in their industrial focus segments.

Saldanha Bay SEZ ease of doing business executive Benedicta Durcan noted the services the SEZ provides and the oil and gas, maritime and related companies it has attracted, stating that it has a 35% occupancy rate across all its facilities.

However, the SEZ saw an increase in wind energy equipment and components being imported during the past year for renewable energy projects in the Northern Cape, which resulted in the equipment importers and renewable energy project developers requiring short-term dedicated project facilities.

This drove unexpected demand for space during the pandemic-hit 2020, she said.

The SEZ, in collaboration with the Saldanha Bay municipality, has also established a small, medium-sized and microenterprise (SMME) collaboration centre that will provide small businesses with work spaces, access to laptops and connectivity free of charge to help them when interfacing with investors and clients.

The SEZ has also established an innovation campus, which is operating virtually at the moment.

Further, the SEZ is in talks with the Port of Saldanha Bay and State-owned Transnet about a potential megaproject to develop and enhance its marine infrastructure to provide related services for vessels and to attract investors and companies to the SEZ, said Durcan.

Similarly, the Dube TradePort SEZ, in KwaZulu-Natal, provides specialised services for agroprocessing, dry goods and perishables companies, but is planning to build a 12 000 m2 innovation centre to attract local and international innovative companies, said Dube TradePort SEZ COO Kaya Ngqaka.

"As an SEZ, we aim to focus more on the advanced manufacturing sector, and research and development and innovation are central in terms of driving this sector. We are working jointly with the Moses Kotane Institute, which is the provincial research institute, to develop the innovation centre to attract innovative companies," he added.

The SEZ is also developing its 50 ha Trade Zone 2, which provides fully serviced stands and bulk services and will be available for companies to build top-side structures by early 2022.

This zone presents an opportunity for the Dube TradePort and it is planning to develop a pharmaceutical and medical cluster, as well as an electronics cluster in this zone," Ngqaka noted.

In addition to the SEZ's Agricultural Zone 1, which has fully developed greenhouses supported by purpose-built packhouses and an agri laboratory, specialising in tissue cultures and which provides services to growers, the Dube TradePort is developing its 90 ha Agricultural Zone 2, which aims to attract more agroprocessing investment over the new few years, he said.

The Dube TradePort also has arrangements with institutions of higher learning and provincial government departments to help companies in terms of labour and to develop skilled personnel that will improve the attractiveness of the SEZ, he said.

Meanwhile, the OR Tambo International SEZ, in Gauteng, leverages the airport to facilitate easy access to global and African markets for its client companies, but the presence of the established industrial companies in Ekurhuleni presents an opportunity in the context of the value chain for the SEZ to work with investors to develop suppliers and opportunities for emerging enterprises, said OR Tambo International SEZ chief investment officer Maidei Matika.

"Ekurhuleni is historically a significant contributor to national production and supports our aim to leverage the assets of the airport and the local capacity to attract companies or investors looking to manufacture for export," she said.

Further, while the SEZ's product focus is defined as high-value, light-weight and includes the export of fresh produce to Africa and Europe, the SEZ currently also hosts one healthcare sector company.

The SEZ is working actively with the Department of Trade, Industry and Competition to explore further opportunities in this sector, given that Africa has 17% of the global population, but 25% of the global disease burden.

Additionally, the OR Tambo International SEZ is also focusing on attracting advanced manufacturing during the development of its Precinct 2, and aims to position itself to attract fuel cell manufacturing and component companies, given the growth in the hydrogen economy and in the energy storage sector, Matika said.

"Our focus over the next few months of developing Precinct 2 is on ensuring the readiness of land parcels for uptake by investors," she added.

The SEZ programme is a development of the earlier industrial development zone programme, which was mainly focused on supporting export-oriented operations.

"However, the SEZ programme is also aimed at developing latent potential in regions and provinces and also provides incentives for companies to develop manufacturing capacity in general and not limited to SEZs, said Cova Advisory joint MD Tumelo Chipfupa.