In a virtual meeting, the Ministry addressed the Members of the Select Committee (SC) on Trade and Industry, Small Business Development, Tourism, Employment and Labour, on the progress of the implementation of the Special Economic Zones and the Industrial Parks Revitalisation Programmes (IPRP) which are both driven by the Department of Trade, Industry and Competition (the DTIC). Delegates from the Department briefed the SC, as did delegates from National Treasury (NT).
The Ministry said the Special Economic Zones Programme will play a critical role in the implementation of South Africa’s economic reconstruction and recovery plan. This is due to the SEZ Programme being at the core of the reimagined industrial strategy, which is purposefully structured to stimulate local and foreign direct investments.
Despite the devastating impact of the COVID-19 pandemic on economies throughout the world, the value of private investments in the South African SEZs increased by R1.8 billion from March 2019 to March 2020. It went from R17.7 billion to R19.5 billion. The number of operational investments increased from 129 to 143 in the same period. It is expected the number and value of operational investments will increase by almost R10 billion when the next financial year ends.
Eastern Cape presented on the Coega SEZ; Mpumalanga presented on the Nkomazi SEZ; North West presented on the Bojanala SEZ, and the Western Cape gave an update on the Halal Park/Hub.
Members of the Select Committee asked questions which related to challenges in the various SEZs; the issue of infrastructure, including electricity, access to water, and rail and road facilities. There are challenges in SEZs, for example, in the Nkowankowa IP, Musina-Makhado, and Seshego, and there are the challenges of water shortages. It discourages investors. Members asked what the Department’s plan is to address these challenges; what the plan is to attract more investors in those SEZs; asked if the Department considered offering a tax initiative; asked about factory building allowances for any investors who employ a minimum of 2 000 people, and asked about paying a minimum wage and occupation contribution to attract more investors. The challenge in those SEZs is attracting more investors. Members asked what the plan is in making sure IPs attract SMMEs owned by women, people with disabilities, and youth.
The Department said there are seven IPs under construction. Members asked when those are expected to be finished. A Member said most of the presentation was meant for Gauteng, since most of the IPs are in Gauteng. The Member raised the issue of vandalism in IPs. The vandalism of rail in certain areas, and particularly copper cables for electricity, is becoming a major issue.
Members asked how all three spheres of government address this.
On the Babelegi IP, Members asked about the issue of governance, if it is something the SC picked up when it visited the area before. As the National Council of Provinces (NCOP), it needs to deal with the other spheres of government, or attract it to look at the issues of governance and to sort it out.
On the Devland industrial zone Members asked questions about vandalisation and crime; how these issues will be dealt with; how government will attract investment, as investment does not just come. Investors will invest in an area where investors can get a return on investment. If South Africa has too much red tape, it will not attract this kind of investment. The Member also asked how IPs can be placed in the development and spatial development plans of cities. In Gauteng, there is the intention of creating two new smart cities.
Members asked if there is a plan to create IPs which could serve these new cities. These new cities are going to be smart, eco-friendly, and have different forms of incentives for people to move in, both house holders and businesses.
A Member asked about the Nkomazi SEZ; and the SC is also aware of the Mpumalanga Economic Growth Agency’s (MEGA) struggle to meet its income generation target. This is a huge issue. In 2017, MEGAs revenue decreased from R196 million to R183 million. MEGA, who is supposed to be the driver of this SEZ, is under investigation by the Auditor General (AG).
Members wanted to know what offers are on the table for investors at these SEZs, with regard to, for example, tax incentives, and any relapsed industrial regulations; if this project was put on hold, or set aside, how many jobs will be lost; when it will be completed, and how much is expected to be added to the GDP, not only for the country, but for Mpumalanga as well.
Members asked how many jobs will be created in construction, industry, and agriculture; how many tenants want to take up space at this SEZ; and what the sizes are of the areas.
Members had touched on the empowerment of women, youth and people with disabilities; and asked if it would not be wise to put more emphasis on concentrating on South Africa’s rural towns and rural areas to minimise urbanization.
A Member asked what incentives would attract investors to go to an industrial park, instead of a SEZ, which would be under 100km away; and asked for clarification on the timeframes for each of the phases of the IP revitalisation.
Members asked about buildings in the designated areas like Dimbaza where the building was vandalised, and wanted to know what the Department is planning to do about rebuilding the vandalised structures there. On the issue of investment, Members asked if the Department considers local business people, especially women and the youth; if there is any way in which the Department can support the emerging young black women and the youth to play a vital role in industrialisation in South Africa.
In final questions, Members asked the Western Cape about halal certification, saying in Saudi Arabia, the definition of halal is much wider, because it takes in the question of naturalness. The Member wanted to know if livestock is being fed with genetically modified organisms (GMOs), and said if so, this will not be accepted.
The Chairperson welcomed the Deputy Minister of Trade, Industry and Competition and the Members of the Select Committee (SC), provincial officials, and municipality representatives. He apologised for the late start to the meeting. Not all of the provinces and municipalities would be able to be accommodated in one meeting, so from time to time, the SC selects certain municipalities and certain provinces. The SC started with tourism last year. It took the form of a district model where the SC invites the national government department, provinces, and the local government under one roof to discuss the programmes relevant to the particular department. The focus would be on the Department of Trade, Industry, and Competition (DTIC) specifically on the Special Economic Zones (SEZs), and the Industrial Parks (IPs). These are the programmes of the DTIC, but the SC would like to know how these programmes find expression in the provinces, and also in local government. It also invited National Treasury (NT).
Deputy Minister’s Opening Remarks
Deputy Minister (DM) of Trade, Industry and Competition, Mr Fikile Majola, said DTIC would present progress on the implementation of the SEZ programme, and IP revitalisation. COVID-19 dramatically changed the way things are done, perceptions, and planning. It is associated with mental impact on communities felt everywhere. There were serious disruptions to global value chains and international trade. South Africa declared the national state of disaster, including lock downs of major economic activities, aimed primarily at saving lives and curbing the rate of infections. It is not known when COVID-19 will end, but the vaccination process programme is now underway. Over the next few months the programme would expand, and the Department believes it does provide a solution to this serious health crisis South Africa faces. The impact of COVID-19 cannot be overestimated. But it is important the Department continues to guide its vision, purpose, and actions towards the economic reconstruction and recovery plan. The Special Economic Zones programme is expected to play a very significant role in supporting the implementation of the country's economic reconstruction and recovery plan. The SEZ programme is at the core of the reimagined industrial strategy, purposefully structured to stimulate local and foreign direct investment. In the DM’s recent visit to the Saldanha Bay SEZ, which is a marine repair, oil, and gas zone, he saw how some of the SEZ developments have the potential to contribute to security at South African ports, integrating some Department of Home Affairs (DHA) functions into its functionality. The effort of pursuing a coordinated framework through the District Development Model approach, presents an opportunity for the creation of a balanced ecosystem for integrated development. He raised this point because he wanted to highlight how intergovernmental relations, horizontally, and vertically, is important in the Department achieving its set objectives for its reimagined industrial strategy. It is only through cooperation at the national, provincial, and local government levels that South Africa can build an inclusive economy. The DTIC continues to coordinate, champion, and drive the implementation of the SEZ programme. This process requires collaborative effort from all spheres of government to ensure there are efficient, well-coordinated and economically connected SEZs. The success of the Tshwane Automotive Special Economic Zone reignited desire, and the vision to turn the Gauteng city region into a single multi-tier, an integrated SEZ. This SEZ is one of the recent shining examples. It now joins Coega, the Dube Trade Port, and East London as some of the more successful SEZs. The Director General and Deputy Director General would present the progress in the Department’s implementation of the SEZ programme, and the revitalisation of South Africa’s industrial parks.
The DM was quite confident the SEZs were going to play a very important role in the economy during the reconstruction and recovery plan. The SEZs will play a very important role in the new African Continental Free Trade Area (AfCFTA) as South Africa positions itself to become a manufacturing hub of the African continent. The Department would have to take all the necessary steps to ensure these economic zones can be positioned. The Department is now going to focus on those designated, but not operating effectively, for many years. The Department prioritised a few SEZs, and will focus on it to ensure it can function optimally during this financial year. The Department set up a National Programme Management Unit at the Industrial Development Corporation (IDC) to help the DTIC to ensure it can give more support to the SEZs. The Department is quite happy with the progress it made, with changes to the implementation of the new approach also ensuring national government, provincial government, and local government work together and share responsibility for the implementation of the SEZs.
Special Economic Zones and Industrial Parks Revitalisation Programme: Progress on the Implementation
Mr Lionel October, Director-General (DG): DTIC, said the Department would be presenting a high-level overview of the progress with the SEZs. There is good progress being made, not only in the main SEZs such as Coega, East London, Dube Trade Port, and Tshwane, but also in all the other provinces. The Department is seeing good progress across the country, such as in Saldanha Bay, and Richards Bay. There is also progress in provinces such as North West, and so forth. It must be understood, the SEZ is one tool in South Africa’s industrialisation box. It is something which can promote industry, and the SEZ and IPs provide world-class infrastructure to private players to invest in. A key role of the spheres of government is to work together to provide this world-class infrastructure, which can attract massive investment. Coega has over 40 investors already. In Tshwane, about R20 billion worth of investment has been attracted in a short space of time. It shows the tool of SEZs can work. Resources must be put into it, and it needs to be used effectively.
Mr Maoto Molefane, Chief Director: Special Economic Zones, DTIC, presented on the following headings:
2. Key Highlights
3. SEZ Investment Performance Overview
4. Pending SEZ Expansion Application
5. Gauteng High Capacity Freight Corridor
6. The DTIC’s intervention to struggling SEZ
7. National Project Management Unit
8. Priorities for 2021
9. Industrial Parks Revitalisation Programme
- Due to the unprecedented challenges confronting the globe, the manufacturing sector experienced a decline in growth.
- South Africa, like many other developed and emerging economies continues to experience manufacturing decline, companies are struggling due challenges brought by COVID 19, unreliable power, and limited demand for its products.
- As part of the economic recovery plan, South Africa is using Special Economic Zones to reignite manufacturing led industrialisation in an accelerated manner.
- Although the SEZ programme is relatively new in SA (started in 2014, it has and continues to attract significant number and value of investments in various regions.)
- The rapid growth of SEZs such as Coega, East London, Dube Trade Port and Tshwane Automotive sector continue to demonstrate the significant role played by Special Economic Zone programme in the country.
Mr Molefane said these investments will be operationalised by the end of the financial year. The reason is because of the new approach seeking to coordinate the efforts of the three spheres of government. It works together within the context of the District Model, also strengthening the partnership between government and the private sector, and strengthening the implementing structures of the SEZs. One of the key issues the Department is focusing on is strengthening the capacity of the institutions charged with the implementation of SEZs. Previously, there were only three SEZs functioning optimally, but now more are beginning to shape up in the areas of making sure there are strong management teams, sound board members, and there are a number of investors attracted.
Key Highlights 2020/21 Financial Year
Despite the devastating impact of COVID 19 in the economy, SEZ programme achieved the following during 2020/21 financial year:
Dube Trade Port secured new investments worth approximately R600 million, the investments are expected to create 841 jobs.
Coega signed four new investors estimated to be valued at approximately R49 million, and are expected to create an estimated 101 new jobs.
Saldanha Bay industrial development zone (SBIDZ) is completing the construction of two manufacturing facilities with an investment value of R380 million, it is expected to create approximately 90 direct jobs.
Richards Bay industrial development zone (IDZ) is completing the construction of edible oil factory and Titanium Dioxide factory with a combined private investment value of R5.8 billion, it is expected to create approximately 600 direct jobs.
Designated & Proposed Special Economic Zones in South Africa
Mr Molefane noted there are currently ten SEZs in seven provinces. Projects the Department is working on includes: Duwazi SEZ in the Sekhukhune district, Limpopo; Wild Coast, Eastern Cape; Namakwa Northern Cape; Bojanala, North West; Vaal River SEZ; and Ekandustria, Gauteng. While these are proposed SEZs, the Department worked with provinces to ensure, while administrative processes are being dealt with, the SEZs are simultaneously developed. The Department took the position these are economic nodes of provinces, therefore the Department needs to intervene while following the processes of designation. It established that SEZs in countries across the world are the main drivers of economic development. Therefore, the Department will use SEZs as the main economic hubs to drive industrialisation in South Africa’s provinces.
(See page five for a graphical representation)
SEZ Investment Performance Overview
Of the companies the Department attracted to the SEZs, there are 230 attracted as investors. Rand value of private investment for operational and secured but non-operational investors, is R55.8 billion. The number of direct jobs created and expected amount to 25 621.
(See page seven for the figures on what each operational SEZ contributes)
Coega is the largest SEZ for operational investment, while Dube Trade Port is the fastest-growing SEZ.
Two SEZs were yet to break ground: Musina-Makhado (Limpopo), and Nkomazi (Mpumalanga).
Pending SEZ Expansion Application
- Finalisation of the Dube Trade Port SEZ expansion application (approved by the SEZ Advisory Board on 7 August 2019).
- The respective provincial development agencies are currently finalising applications for the designation of the proposed SEZs. The tables on page ten and 11 capture the respective proposed SEZs, which are at various stages of planning and completion. These include the Bojanala SEZ in the North West, where the business case had to be revised prior to Cabinet approval; Vaal River City (Gauteng); Namakwa (Northern Cape); and Tubatse (Limpopo).
Mr Molefane said the Vaal River City would potentially be one of largest SEZs.
Gauteng High Capacity Freight Corridor
- The DTIC, Gauteng, Eastern Cape provincial governments, and Ford, proposed the development of the Gauteng-Eastern Cape (EC) high-capacity freight corridor to support the expansion of Ford and the Tshwane Automotive SEZ;
- Tshwane Automotive SEZ also stimulated a proposed development of a high capacity rail infrastructure corridor between Gauteng (Silverton), and Eastern Cape (Port Elizabeth);
- The rail corridor will assist with the efficient movement of finished vehicles for export through Port Elizabeth. This corridor development will include the deep-water port which stands to benefit from roll out of strategic infrastructure, including creation of jobs and Small Medium and Micro Enterprises (SMME) empowerment;
- The high-capacity rail freight corridor with Port Access will allow Ford and other original equipment manufacturers (OEMs) in Gauteng to motivate further expansion of investment to include other models;
- The project was embraced by Transnet leadership and the Department of Public Enterprises;
- Transnet will commence with the extensive feasibility study process in the new year, to test the long-term viability of the initiative.
The DTIC’s Intervention in Struggling SEZ
Dedicated intervention teams consist of the DTIC senior officials, established to support the following prioritised proposed and struggling zones:
– Vaal River City and Tshwane Automotive SEZ (Gauteng);
– Nkomazi SEZ (Mpumalanga);
– Maluti-A-Phofung (Free State);
– Bojanala (North West);
– Namakwa (Northern Cape);
– Musina and Tubatse (Limpopo);
– Wild Coast (Eastern Cape).
The intervention teams will assist provinces in implementing, amongst others, the following:
– Develop and implement tripartite agreements;
– Planning and development of infrastructure for the zone;
– Mobilise funding from all spheres of government for operations and infrastructure;
– Investment facilitation;
– Stakeholder mobilisation and management;
– Compliance and institutional development;
The intervention team will be supported by the SEZ Project Management Unit established at Industrial Development Corporation (IDC).
The work already started in provinces such as Limpopo, North West, Gauteng, Northern Cape, and Free State.
National Project Management Unit
- The National Project Management Unit (PMU) is located at the IDC headquarters, and will work closely with both the IDC and the Development Bank of Southern Africa (DBSA);
- The Cabinet approval included the reconfiguration of the SEZ programme to include intimate involvement of the national government in the planning and management of Special Economic Zone;
Priorities for 2021
1. Policy and Legislation
- Finalise the provincial consultations on the new SEZ approach;
- Finalise the ten year SEZ Development Roadmap (SEZ Strategic Framework 2020 2030);
- Consultations with the Ministers of Public Enterprises and Transport, including Transnet to explore possible discounts on ports tariffs as well as the development of Gauteng Eastern Cape rail corridor.
Fast Tracking the Development of Newly Designated SEZs
• Nkomazi SEZ (Mpumalanga);
• Tshwane Automotive SEZ (Gauteng);
• Musina-Makhado SEZ (Limpopo);
• Atlantis SEZ (Western Cape).
Fast tracking the planning of proposed SEZ
- Finalise the planning for the proposed Bojanala SEZ (North West);
- Finalise the feasibility studies for the proposed Namakwa SEZ (Northern Cape);
- Finalise the planning for the proposed Wild Coast SEZ (Eastern Cape);
- Planning for the proposed Vaal River SEZ (Gauteng);
- Planning for the Tubatse-Fetakgomo SEZ (Limpopo);
- Planning for proposed automotive supplier park and clothing and textile SEZ (KZN).
Industrial Parks Revitalisation Programme
Mr Thami Klassen, Director: Economic Zones, DTIC, presented.
Introduction: Industrial Parks Revitalisation Programme
The Industrial Parks Revitalisation Programme (IPRP) is implemented in line with the DTIC’s regional industrial development strategy to accelerate economic and industrial development in the lagging regions, by attracting business investments to locate in those areas.
IPRP supports state-owned industrial parks, mostly located in the historically disadvantaged areas and former homelands.
It is a key enabler to develop rural and township industrial economy acceleration, to promote transformation, and encourage the establishment of black industrialists in the IPs.
IPRP focuses on both the physical infrastructure and other governance and compliance support requirements, with the key objective of enhancing industrialisation.
The programme’s objective is to increase investment and job creation in the identified regions.
Mr T Apleni (EFF, Eastern Cape) wrote the following questions in the chat box: (1). Buildings were vandalised in the designated areas such as Dimbaza. He asked what the Department is planning to do to rebuild the vandalised structures there. (2). On the issue of investment, he asked if the Department considers local business people, especially women and the youth. He asked if there is any way in which the Department supports young black women and the youth playing a vital role in industrialisation in South Africa.
The phased approach of the implementation programme is as follows:
Phase One: Security infrastructure upgrade, fencing, lighting, critical top structures, and electrical requirements. The first phase requirements were requested by the industrial parks management agencies which experienced high crime levels.
Phase Two: Compliance to regulatory requirements – landfill sites waste and water,
treatment plants, fire, health safety requirements, and renewable energy initiatives.
Phase Three: Engineering designs and construction of new and existing roads, bulk water supply, and sewage treatment plants, or industrial effluent control.
Phase Four: Upgrading electricity infrastructure, and build new top structures in line with the expansion programme of the parks.
Phase Five: Development of vacant land and sustainable industrial clusters in the parks.
Mr Klassen said the phases are not limited, but are a systematic approach in which the Department is rolling out the programme.
For key highlights, see attached document
State Owned Industrial Parks Identified for Revitalisation
Mr Klassen said the Department is doing work in all nine provinces. However, there is a province where the Department has not yet started making a direct intervention, namely Northern Cape. The Department is working with this province on two proposed IPs. One is in Kathu, and the other one is in Upington. The one in Kathu is putting together an interesting business case for the Department, where the Department will involve the private sector in making sure it can also offer a different provision, but the land is still state-owned. There is an interesting dynamic there, and the Department is trying to develop a model with the province itself.
A meeting participant wrote in the chat box: The slide from Mr Molefane showing the number of direct jobs created by the SEZs to date, amount to over 15 000 over an investment of nearly R20bn. Isithebe alone in KZN has nearly 20 000 job opportunities, strengthening the case as to why more support is required, to invest in the upkeep of Industrial Parks, and support the jobs in place in the rural/township areas. Perhaps an Industrial Parks Fund will be a good start.
IPRP Provincial Impact
Gauteng and the Eastern Cape received the most funding for Critical Infrastructure Programme (CIP) funding, disbursed per province, in the scheme provided by the Department. Mr Klassen noted some of the constraints in other areas, such as the Northern Cape. There were provisions in making sure there is a consolidated strong business case for such provinces to be able to access and identify those nodes which could be revitalised. It is critical for such provinces to have a state-owned IP supported by investment, and this would stimulate the local economy, so the Department could then help to provide the world-class infrastructure.
It is estimated, cumulatively 65 000 people are employed in the first 12 IPs which underwent Phase One revitalisation. The Industrial Parks have an occupancy rate of between 60% to 90% of its Gross Lettable Area (GLA).
In Limpopo, the Seshego and Nkowankowa IPs received a combined support of about R52 million. In Gauteng, the Babelegi and Ga Rankuwa IPs received a combined support of about R89 million. Babelegi received support for the first phase, and the second phase was approved for another R49 million. Ekandustria received support of about R49 million. KwaZulu-Natal also received a relatively large amount of support, of about R49 million for the Isithebe IP. The Department is working with other IPs as well, and largely with the province itself in identifying and centering activities around IPs.
The IPs had a positive impact on retaining jobs, and on attracting new clients. The Department saw a particularly striking example when it visited a black industrialist who was supplying some of the heavy steel manufacturing and steel equipment to the mining houses and Transnet as well. This person is based in Bophirima in the North West. A number of multinationals retained, and strengthened positions in IPs. This is due to such companies seeing the positive role government is playing in setting the provision of a competent infrastructure for its companies to thrive.
On Industrial Parks status, Mr Klassen said COVID-19 had an impact on construction. Other IPs are still at the planning phase.
Digital Hubs Programme
The Digital Hubs Programme (DHP) is an initiative of the DTIC currently under implementation in the state owned industrial parks and special economic zones.
The Hubs are aimed at connecting communities through digital, and information and communication technology (ICT) related skills training, business development support services, access to work spaces, as well as provide access to training on cross-cutting skills development.
The Digital Hub is designed to provide digital platforms for prospective entrepreneurs and the youth. It is an opportunity to access a hybrid of technological services, digital learning skills, and the use of shared office space.
See page 21 for the full details
Priorities for 2021
Development of an Industrial Parks Development Policy.
Development of a collaboration compact with all provinces to align with the national implementation strategy framework for IPs.
Finalising existing application for seven industrial parks.
Mr Klassen said currently, there is a misalignment the Department was working on, together with the provinces and the municipalities. The Department would want to provide a better offering when it comes to ensuring there is a clear policy direction on what the Department does, and how it does those things. It is also looking at developing a collaborative compact with all the provinces, so the national imperatives regarding strategy of revitalisation works hand in glove with the provincial economic growth strategy. IPs play a critical role in ensuring the local community benefits from jobs, and are able to find strategic locations, which are important to make sure people’s businesses thrive, and are able to launch and offer services to global markets.
On Global Eco-Industrial Parks Programme (GEIPP) practices, he said those IPs would be a practice lab, so when the green economy is discussed, there is an articulation of making sure environmental awareness is taken care of. Therefore, all the parks and its management will have a clear idea of which standards it needs to apply. Such parks are able to attract strategic firms into its industrial parks. As more companies today are looking at green offerings in service provision, it is critical the Department finds it a location where most of the challenges are located for townships and rural communities, creating those linkages in its value chain.
National Treasury’s Cities Support Programme Industrial Park Revitalisation Programme
Mr Collins Sekele, Projects Director: National Treasury, said in the Industrial Park Revitalisation Programme, National Treasury (NT) is working with the Department of Small Business Development (DSBD) and the DTIC, and associated agencies, particularly with metros. NT working with metros does not mean it does not value intermediate cities and rural municipalities. It is a prioritisation used because of the impact it can generate with cities, and also because of the contribution to the overall national gross domestic product (GDP).
NT gave an update on where it was, and what was going to happen
Ms Karen Harrison, Economic Development Programme Lead: Cities Support Programme, National Treasury, said the programme contained the following content:
Mandate of the City Support Programme (CSP)
National and city economic context
Spatialised city economic development focus
Industrial Park Revitalisation Project
Lessons Learnt and Opportunities
Value of City Industrial Parks
Rates contribution to the Metro, such as, Jacobs Rates collection R144 million annually or R12 million / month in 2019/20 year
Gross Value Add
Value chain linkages city, regional, global
Clustering (certain sectors are dominant in certain spaces)
Supports start-ups and enterprise incubation
Environment where local and international firms interact
Knowledge sharing and technology transfer
Global Best Practices
These spaces are strategically positioned on national industrialisation strategy
International best practice
Strategic positioning of Industrial Parks regarding national industrialisation strategy
Access to high quality industrial land
Reliable service delivery
Competitive service delivery charges
Compliance with environmental regulations
Cluster enhancing activities e.g. vocational training, logistics, business development services, techno-parks
Functional internal land market
Good governance – representative structures of entrepreneurs and public sector
Industrial Park Regeneration Programme
Aim: Build capabilities of cities to retain jobs and inward investment in well located industrial spaces
a) Retain and expand investment by firms through getting the basics right;
b) Retain and expand employment opportunities in proximity to townships and
c) Put in place institutional urban management mechanisms (including municipal and inter-governmental) to ensure the effective and ongoing management of these spaces;
d) Build community awareness regarding the value of these spaces regarding employment generation and economic inclusion and development; and
e) Build local business networks to facilitate access to available incentives, markets, and business support.
Industrial Park Revitalisation Framework
(See page 14 for a graphical representation)
Ms Harrison said safety and security issues are major issues in these parks.
Employment and Firm Trends in the Industrial Spaces
(Line graphs on pages 17 to 18 showed the trends for Jacobs and Wadeville.) Ms Harrison said the trends show Jacobs contributes significant numbers to employment. A concerning factor was there was an increase in the numbers of firms in jobs, from 2013 to 2016, but it declined beyond this. As this data is analysed into the future, NT will be able to see the impact of COVID-19. Wadeville contributes over 9 000 jobs to the Ekurhuleni economy. It had a similar trend to Jacobs, although a bit more flattened out towards 2017 and 2018.
Turnover Trends in the Industrial Spaces
(Page 19 and 20 showed line graphs concerning turnover in Jacobs and Wadeville.) Ms Harrison said the trend being picked up in Jacobs was also a declining trend, with a similar pattern in Wadeville.
Sectoral Trends By Employment
(See the line graph on page 21)
The sector Manufacture of other Fabricated Metal Products was a significant contributor to employment in Wadeville, but there were significant job losses in the period 2013 to 2016. In other sectors which represent Wadeville, NT saw some sectors declining, some staying the same, some with slight increases, but not being able to make up the job losses in one sector. There were similar trends in Jacobs, with the sector Manufacture of Wearing Apparel, except Fur Apparel, being critical. Employment levels were maintained to a large extent, but there were some signs of decline as well.
Crime Level Trends
In all four IPs except for Wadeville, crime levels have increased. Ms Harrison added that when NT engaged with some of the businesses in Babelegi, businesses said that in particularl, crime associated with metals, informal metal trade, etc., theft related to that had increased a lot. There was intimidation by neighbouring business forums, with those parties coming into industrial estates and threatening industrialists.
Cost of Crime
(See the table on page 27.)
There is a very significant cost of crime undermining the viability of firms.
Top Eight Issues Impacting Business Retention
These issues were:
Unresolved governance issues
Interrupted and unstable power supply
Market conditions / Foreign competition and cheap imports
Basic Service delivery and infrastructure
No financial support
Human resources and labour relations
(See the table on page 28 for the rankings of what was most important in different spaces.)
In each of these spaces, NT asked industrialists how the management of each space could be improved (pages 30 to 31 present the proposed interventions for Babelegi, Jacobs, and Wadeville.) Crime came out as a major issue in all spaces. Security needs to be addressed, and there needs to be a police presence.
Industrial Park Revitalisation Plans
Next step is to develop Industrial Park Revitalisation Plans for each site
Plan requires the buy in of all Park stakeholders
Park management authority, city, provincial department, and agencies, DTIC
Informed by a shared vision or turnaround strategy for the Park
Articulates stakeholder roles and responsibilities and commitments
Clear financial sustainability strategy for the Park
Required institutional arrangements
Effective Park Management authority
Transversal city park management teams (Ethekwini has already put this in place)
Social enterprise to ensure inclusion of micro and informal businesses and non-governmental organisation (NGO) sector
Representative business organisation
Lessons and Opportunities
Industrial parks are valuable city (and national) economic assets
However, it is under performing. There is declining employment and turnover, primarily owing to:
Service delivery constraints especially energy
Safety and security
Ineffective park management and inadequate reinvestment in the space for infrastructure investment and maintenance
Competitiveness and broader regulatory environment
Park level interventions to address the service delivery, infrastructure and park management issues will make a significant contribution towards job retention
However, the interventions need to be part of integrated IP turnaround plans
For example, infrastructure investment without effective park management yield, limited return new investment is soon subject to vandalism and decay
Failure to resolve land and governance issues will perpetuate under performance
Cities are well placed to co-ordinate the development and implementation of Industrial Park Revitalisation Plans together with other spheres of Government, state owned enterprises (SOEs), and the private sector
Turning these Parks around is a quick win for government – industry and jobs already exist and it is not about investment attraction
The Industrial Park Revitalisation approach is consistent with the District Development Model (DDM) One Plan model
Ms B Mathevula (EFF, Limpopo) thanked the DTIC for the presentation. She asked about the issue of infrastructure, including electricity, access to water, and rail and road facilities. There are challenges in SEZs, for example, in the Nkowankowa IP, Musina-Makhado, and Seshego, there are the challenges of water shortages. It discourages investors. She asked what the Department’s plan to address these challenges are; what the plan is to attract more investors in those SEZs; if the Department considered offering a tax initiative and factory building allowances for any investors who employ a minimum of 2 000 people; or paying a minimum wage and occupation contribution to attract more investors. The challenge in those SEZs is attracting more investors. She asked what the plan is to make sure IPs attract SMMEs owned by women, people with disabilities, and youth. In its presentation, the Department said there are seven IPs under construction. She asked when those are expected to be finished.
Mr M Dangor (ANC, Gauteng) said most of the presentation was meant for Gauteng, since most of the IPs are in Gauteng. He raised the issue of vandalism in IPs. The vandalism of rail in certain areas, and particularly copper cables for electricity, is becoming a major issue. He asked how all three spheres of government address this. On Babelegi, he said the issue of governance is something the SC picked up when it visited the area before. As the National Council of Provinces (NCOP), it needs to deal with the other spheres of government, or attract it, to look at the issues of governance and to sort it out. On Devland he said it is a question of vandalisation and crime. He asked how those issues will be dealt with. He was at Devland yesterday, and most of the things were stripped out. He wanted to know how government will attract investment. Investment does not just come. Investors will invest in an area where investors can get a return on investment. If South Africa has too much red tape, it will not attract this kind of investment. He used to serve outside the country trying to bring investments in, and these are the kinds of questions potential investors are asking on a continuous basis. This needs to be looked at very carefully. He also asked how to look at IPs and place it in the development and spatial development plans of cities. In Gauteng, there is the intention of creating two new smart cities. He asked if there is a plan to create IPs which could serve these new cities. These new cities are going to be smart, eco-friendly, and have different forms of incentives for people to move in, both house holders and businesses.
Ms H Boshoff (DA, Mpumalanga) said her questions would be concentrated on Mpumalanga, as she represented this province. She mentioned the Nkomazi SEZ – the talk of this has been a bone of contention for some time. R700 million worth of pledges were withdrawn due to delays by government with land development, and the setting up of a unit to drive the project. The SC is also aware of the Mpumalanga Economic Growth Agency’s (MEGA) struggle to meet its income generation target. This is a huge issue. In 2017, MEGAs revenue decreased from R196 million to R183 million. MEGA, who is supposed to be the driver of this SEZ, is under investigation by the Auditor General (AG). She wanted to know what the Department would do with regards to the Nkomazi SEZ. She said people were promised and promised and promised for years now, and absolutely nothing is really taking off.
Since the Department said it reignited this SEZ, she asked who of those investors who pledged support were contacted to find out if the investors are still interested. In general, she wanted to know which offers are on the table for investors at these SEZs, with regard to, for example, tax incentives, and any relapsed industrial regulations.
If this project was put on hold or set aside, she asked how many jobs will be lost. If the Department starts, as it says it has, she asked when it will be completed, and how much is expected to be added to the GDP, not only for the country, but for Mpumalanga as well. She wanted to know how many jobs will be created in construction, industry, and agriculture, because this is the concentration field at this SEZ; she asked how many tenants indicated they want to take up space at this SEZ, and what are the sizes of the areas, or if it varies.
Other Members touched on the empowerment of women, youth and people with disabilities. The President, at the Atlantis launch, reiterated the stance of empowering these three groups. She asked how the Department will empower these three groups; if all the SEZs are going to concentrate on the establishment of green technology hubs; Ms Harrison spoke about the urbanisation which is a problem, and she asked if it would not be wise to put more emphasis on concentrating on South Africa’s rural towns and rural areas to minimise urbanisation. If there was something to keep people in those areas, South Africa would not be struggling with urbanisation. As Mr Dangor said, the whole presentation was practically about Gauteng. It would appear the smaller provinces are left in the dark.
Ms Mathevula asked about the electricity supply, the municipal services, the crime, and asked how the Department will approach these issues which are a stranglehold on IPs and SEZs.
The Chairperson asked if the DTIC looked at a situation where it has an SEZ, and less than 100km away, there is an IP. He asked why an investor would go to an IP instead of an SEZ, which has incentives and top structures. One would not go to an IP, where it is not yet clear what will be there, and what incentives would be. He asked what incentives would attract investors to go to an industrial park, instead of an SEZ, which would be under 100km away.
The Eastern Cape was used as an example, where there was a SEZ in East London, but also an IP at Fort Jackson, which is less than 40km away. There is also another IP at Dimbaza. He asked why an investor would go to either Fort Jackson or Dimbaza, where there are no incentives. He was concerned about the long time these phases are taking. If one looks at the maps in the presentation, most of the IPs are still at phase One.
The Chairperson had a meeting with the Dimbaza IP, the Head of Department (HOD) of the Department of Economic Development and Tourism in East London, the Eastern Cape Development Corporation (ECDC), the Mayor of Buffalo City, and also some other departments. At the time, in January 2020, the meeting outcome was Phase One would close in January. He asked if there is still a report in 2021 regarding if the IP is still in Phase One. He asked when Phase Two commences at Dimbaza. He was told the close-out report was only finalised in November 2020. In January, it was said the close-out report would be finalised around January.
The Committee Secretary read out questions by Mr T Apleni (EFF, Eastern Cape) about buildings in the designated areas such as Dimbaza, where the building was vandalised. He asked what the Department is planning to do regarding rebuilding the vandalised structures there. On the issue of investment, he asked if the Department considers local business people, especially women and the youth. He asked if there is any way in which the Department can support the emerging young black women and the youth to play a vital role in industrialisation in South Africa.
Mr October replied to questions Ms Mathevula asked about electricity, water, rail, vandalism, decay, and dilapidation of basic infrastructure, especially in the areas of Nkowankowa, Seshego, Musina-Makhado, and so forth. She also asked about what kind of incentives the Department provides. The main attraction of an IP or SEZ, if it is private or public, is really to provide world-class infrastructure to companies. This is a key issue. Therefore, one finds massive underinvestment, and no maintenance. The Department’s biggest Achilles heel is how in the IPs in former homelands, there is a lack of investment in water, electricity, rail, road and security infrastructure. This is why the Department developed partnerships. Water and electricity is supposed to be provided by the municipality, the metro, or by provinces for roads and other infrastructure. Where it works well, and where the Department was able to provide world-class infrastructure, is when the three tiers co-operate. This is why the new model the Department has is one where SEZs are equally owned by each tier. It is 33% owned by the municipality, 33% owned by the province, and 33% owned by the national government. Therefore, all parties must come to the party. For example, in Tshwane, the Tshwane metro provides the bulk infrastructure; the province helped it to be able to give upfront funding when it has a shortfall of funding.
Mr Sipho Zikode, Deputy Director General (DDG): Special Economic Zones and Economic Transformation Division, DTIC, continued with Mr October’s explanation. The Department has this new approach for all infrastructure development, either in SEZs or IPs, it will follow the District Development Model, where each sphere of government will have to co-own the development of the particular IP or SEZ.
Firstly, at the governance level of the Board itself, the DTIC, as national government, will be represented at 33%, and provincial government and municipal government will both also have 33% ownership. When it comes to the provisioning of assets, such as funding, development of the infrastructure, it goes the same for all three spheres of government. It is a new approach. The Department started with some of the SEZs, especially those which have been recently designated.
Ms Boshoff had questions on the Nkomazi SEZ: Since this SEZ is right at the border of South Africa, the Department will use such a SEZ for cross-border industrialisation, and cross-border facilitation of trade. The Nkomazi SEZ is strategically located to play the role of strengthening regional integration. He agreed with Ms Boshoff, there were serious delays in the development of the SEZ, because of challenges faced by the provinces and the local development agency, MEGA, over the past two to three years. With the advent of this new approach, the Department is now strengthening the operation of this SEZ, which will be done by a new provincially-owned company at Board level. The DTIC will contribute three members to the Board of this newly-established operator. The Province will also contribute its own members, as will the municipality. The Department is putting aside a part of the budget as the contribution of the DTIC, and it expects other spheres of government to do the same. The Department is working on establishing the operator which is going to start implementing projects on the ground for this SEZ, and also on ensuring there is enough budget for projects. There is the question of some investors who committed to come into the SEZ two to three years ago. This new operator will be working very hard with institutions such as the IDC and other national agencies to ensure it attracts more investors to replace those who are uncertain about coming in.
He said what is really important is for government to provide top-class infrastructure in these areas. Many investors are attracted by the infrastructure; the mere fact the investor will be able to operate without any worry about how its inputs into production are going to come in, without worry about how exports into other countries are going to be facilitated; this is the first promise, namely the infrastructure development. There are other incentives such as tax incentives under the auspices of the NT. Those are secondary to the Department, because tax incentives are more of a long-term aspect. For any industrial development, in the first five to eight years, the companies are still forming regarding its operations. Such operations start claiming tax. At the moment for the Department, it is the promise of top-class infrastructure, and the tax incentives would be an add-on. The Department is hoping, through a discussion with the NT, SEZs such as the Nkomazi SEZ are also going to be designated by the NT for the tax incentives. As the SC knows, the DTIC designates the land as an SEZ. Then its co-department, the NT, because of the mandate on tax incentives, designates the SEZ designated by the DTIC for tax benefits. With Nkomazi, the Department hopes it will be one of the batch of SEZs which will benefit from tax incentives in the near future.
On the issue of the SEZ and IPs proximity and the varying incentives, Mr Zikode could say the Department is revitalisng. Most of the IPs are old. Most of the industrialists are offered very low rentals. The IPs have the advantage over the newly-established SEZs which are still investing in infrastructure, such as roads, bulk infrastructure, top structures, and such. The SEZs have good incentives on paper, but for the investor, one will find many of those investors would prefer to go into an IP over an SEZ because of the immediate benefits. In the long-term, when the tax issues come in, maybe it would be another story.
Mr Molefane replied to questions of electricity and water, especially in rural SEZs, such as Musina. One of the key challenges the Department is confronted with in Musina-Makhado, which is part of the reason why the SEZ was a bit delayed in construction, was the issue of water and electricity. Regarding water for example, the Department also had this challenge in the Western Cape. But Mr Molefane thought it resolved itself naturally. In this regard, the Department partnered with various spheres of government. It is working closely with the national Department of Human Settlements, Water and Sanitation (DHSWS), and with the provincial government, which is the champion of the SEZ. It is also working with the DBSA. The Department concluded a pre-feasibility study on the establishment of a dam. The Province would be undertaking further technical studies to visualise a bankable feasibility stud,y which would ultimately lead to the construction of the dam. From the outcomes of the study, it looks positive. The dam is likely to be viable.
On the issue of electricity, part of the reason why the Department introduced this new approach is to ensure it works collectively with all spheres of government. The new approach is a feeder into the District Development Model. The idea is to let the Department coordinate itself, have one plan in all the zones it identifies as strategic for development. In some instances, a SEZ will be mixed use, for example in Tshwane. With all the factories the Department is developing there, the top roof is designed in such a way it can put in solar power in all the structures, and ultimately operate in SEZs such as Musina. One of the reasons the environmental impact assessment (EIA) was delayed was because the Department realised electricity was a challenge. This is why there are also plans to establish a power station.
Investment promotion is done by all spheres of government. At the national level, the Department is working closely with the Presidency, and within the DTIC. It is also working closely with the provincial development agencies, the provinces, and municipalities. SEZs also have the machinery responsible for investment promotion. At the national level, there are also coordinated efforts at the SEZ level which then promote one value proposition for the SEZ programme. Part of the reason why there are multiple SEZs is SEZs are based on unique value propositions. Coega is anchored in the automotive sector, and linked to VW Motors, and the ocean economy. In East London, most of the companies there are linked to Mercedes-Benz. In the Tshwane automotive SEZ, the value proposition there is proximity and it is strategic for the export market. All the SEZs have unique value propositions. The Department has marketing strategies in all SEZs. Over and above this, the Department is working with various embassies. It has bilateral agreements with various countries; which is why it had investors such as Beijing Automotive Industry Holding Company (Ltd) (BAIC) South Africa at Coega.
The Department has investors such as Ford bringing its own automotive supplier. There are multiple roles the Department plays in investment promotion, and each agency has got a role to play. Those activities are all co-ordinated by Investment South Africa.
There was another question related to Mpumalanga. Colleagues from Mpumalanga would be making a presentation on the Nkomazi SEZ. The Department is working closely with the province. It does acknowledge there have been delays, but the Department has agreed on a path for 2021, which Mr Molefane thought if properly implemented, would work. It would also be using the Project Management Unit (PMU) it established to ensure it accelerates the implementation of the zone.
Mr Klassen said the Department is looking at making sure the ecosystem in a particular area or region where the IP is located is efficient in providing this. The Department does this via collaborating with the district municipality. It is currently involved in the Mopani district municipality in addressing the issues of water shortages in the area. The ultimate matter the Department has to address is all the systems which contribute to the malfunctioning of the industrial complex in the area. It is not just a single challenge; it is a complex set of issues which need to be addressed.
On women and youth participation, to a certain extent, those where the Department was able to give statistics, was where it is able to dispense the amounts for infrastructure develop. This means it is able to account for those numbers of women, and those numbers of youth who were participating, including the SMMEs. Going into the future, the Department is designing a template to ensure it works with the management of the parks to be able to intervene and know where it is making an impact and where it is not. The background to this would be the presentation Ms Harrison made, which touches on the complexities of these areas and the challenges faced by individual parks. The Department is looking at an ongoing programme to improve on its reporting, improve on understanding challenges, and so on. What the NTs scope has done so far is it teased out some of the challenges the Department needs to address so the whole ecosystem in the particular area articulates to the ambition of promoting industrialisation.
On the number of parks being revitalised, he said the parks are in Babelegi, Nkowankoa, Vulindlela, Komani, Botshabelo, Bodirelo and Isithebe. Slide 21 showed which parks were still under construction.
On the issue of Gauteng being the province which benefits largely, Mr Klassen did not agree with this, because if one looks at Limpopo, Eastern Cape, North West, one will see the work the Department has done there. North West does benefit to a certain extent from IPs, namely Babelegi and Ga Rankuwa. There is also Ekandustria, which is a complex the Department is currently working with. There is effort being made to distribute benefits equally. The Department was also working intensively with the Northern Cape. It was one of the lagging areas due to its complex nature. Originally, the Northern Cape focused on developing a SEZ at Upington, but it is now focusing on developing the complex as an IP, because it could not meet the criteria as stipulated in the guidelines for applying for a SEZ designation.
On vandalism, he said it is a challenge which needs to be addressed through collaboration with the stakeholders, those being the community, and current businesses there. Communities do benefit, but one sometimes finds these ill-intended elements, who when infrastructure is built, come and remove some cameras, and so on. Parks then have to put in new cameras. It will be addressed when stakeholders in the three spheres of government, and the communities which are impacted by these negative accounts where vandalism takes place, all work together. It is not across the board. It is people who know what is happening at those parks, where one finds vandalism takes place. The NTs presentation did touch on these elements. It gives the Department data and information which would guide its understanding in formulating a policy, which would help it to address those issues.
The Chairperson asked Mr Klassen if he could clarify the timeframes for each of the phases of the IP revitalisation.
Mr Klassen said it would not be correct to give a timeframe now. Some of the projects did not meet some of its targeted delivery dates due to COVID-19-related experiences. Some of these, to a certain extent, do set these timelines with regards to engineering teams and project management teams. Sometimes there is a delay. Some of the SMMEs in some of the parks have not been able to deliver on time. Sometimes there would be a reappointment required. What the Department discovered is the parks itself tend to be indecisive with making choices and sticking to those choices. Once parks start on a particular choice of, for example revitalising five factories because of potential tenants, it is met with a request for a security feature required. Parks then have to go back to the DTIC to request an amendment of an addition to its scope of work as originally asked. Those types of delays would then affect when Phase One is finished. Ideally, it should be finished, depending on the scope, within a particular period of time, because some parks have not been doing a heavy-duty kind of construction. Some parks had light construction to a certain extent. The Department has done work in Botshabelo; one would see in its scope it estimated six months would be ideal to finish Phase One. But some of the parks have not been able to finish in due time, because of the challenges alluded to.
Mr Sekele replied to a question on urbanisation: The IPRP is part of a broader programme of the economic recovery and reconstruction programme. The NT prioritised areas. Urban centres prioritised areas where some of the IPs are. The issue with urban areas is most of the population is residing in urban centres, to a large extent in metros. The solution which needs to be provided is looking at what needs to be done now, and what needs to be done in future. The NT will take a two-pronged approach. In the urban centres, the NT prioritised areas which have different names. In the planning documents of metros, there are build performance plans which the NT terms the integration zones. Some people refer to those as development corridors. There, one has specific nodes, and some of it is attached to IPs. What the NT has done with rural municipalities is to work closely with the Department of Rural Development, with South African Local Government Association (SALGA), the DTIC, and others. The NT has identified 27 nodes in rural areas; it calls these regional service centres. The NT plans for these, and some of the developments it is putting up, or at least the infrastructure it will be providing, to support light industrial development. These projects are at various stages. What the NT is presenting now is what it has prioritised, but the model is then going to be cascaded into the intermediate cities and some rural areas, so going forward, there are some of the services or land uses which will provide services in those regional service centres. Once it does this, it will retain a certain number of people at those particular locations. It will take quite some time to deal with the issue of urbanisation.
On crime he said, as part of the comprehensive programme, there was the development of the precinct management plan, or the area management plan. Part of those plans is to look at issues of crime and maintenance of infrastructure, retention of business, and attraction of new investment. The NT has worked hard with cities on capacitation and how it will engage with the private sector. There was also a question on preference given to industrial parks and SEZs. The Second element is a function of scale. Most of these are existing, and what the NT tries to push is the issue of inclusive economic growth. The NT goes into the areas when it is developing the precinct management plan, interacts with different stakeholders, youth and women being part of those plans, as well as some of the social structures in communities, and SMMEs, to ask what parties need to create differently, or to acquire better trading spaces. IPs provide this opportunity of absorbing SMMEs from local communities.
On incentives he said the big thing is the provision of infrastructure which will support investment coming into an area, but over and above that, also retain the existing investment which is there. The importance of the management plan is the operations and management of the area. This gets funded, and is going to be specific to those prioritised areas which the IPs are part of. This is part of the comprehensive programme the NT has.
Eastern Cape Presentation by the Department of Economic Development, Environmental Affairs & Tourism
Mr Mlungisi Mvoko, MEC for Finance, Economic Development, Environmental Affairs and Tourism (DEDEAT), Eastern Cape, said the Chief Executive Officer (CEO) of the Coega Development Corporation can go ahead with the presentation.
Mr Khwezi Tiya, CEO: Coega Development Corporation (CDC), spoke about:
CDC Strategic Overview
CDC Operational Investors 2019/20
Coega SEZ Priority Sectors
Projects in Implementation 2020/21
Implementation of the SEZ challenges & opportunities
Digital Hubs Implementation Status
CDC Five Year Performance 2019/20
Coega Development Corporation (CDC) signed a number of investors and achieved some of those targets. Converting those investors into operations could be a challenge, because sometimes investors have to finance projects. There are delays, and one will find the number of operational investors the CDC had, met 90% of its target. Over the last three years, there were challenges with infrastructure. With the number of construction jobs, the CDC is battling to meet the target, but with operational jobs, it is more about the conversion of the investors already signed. The CDC was happy it progressed on spending on SMMEs, and training about 30 000 people as part of the construction and operational investment process.
CDC Operational Investors 2019/20
These partners come from many different parts of the world, such as China and Germany (see page five for the full details). There are also a lot of South African investors, especially in the agro-processing area.
Coega SEZ Priority Sectors
These include agro-processing and aquaculture, automotive, chemicals and energy. Mr Tiya said the Minister of the Department Mineral Resources and Energy said Coega is going to become the hub, and it is working hard to make sure it realises this. It is working collaboratively with the Ports Authority and Transnet around the maritime sector to advance the investments linked to this.
Projects in Implementation 2020/21
(See page seven for the full details). These projects would have been funded through both the stimulus fund in the province and through the SEZ fund from the DTIC.
SEZ Implementation Challenges
Cost of doing business (incentives);
Scarcity of Resources (water & electricity).
SEZ Implementation Opportunities
CDC Implementing Agent of choice regional, provincial, and national;
Participate in national programs (Energy);
Extend industrial base;
Deepening Collaboration and Partnership with local municipality;
Leveraging on CDCs capability to unlock value;
CDC self-sustainability goals.
Digital Hubs Operating Model
Mr Akho Skenjana, Department of Economic Development and Tourism, Eastern Cape, presented. He said:
The objective of the Digital Hubs Programme (DHP) is to promote inclusiveness in the digital economy.
The programme seeks to have a long-term impact on the youth, including emerging entrepreneurs operating from the rural and township economies.
He said Department of Economic Development, Environmental Affairs and Tourism (DEDEAT) is looking at this opportunity for the local communities to access the Information and Technology Communication (ITC) services. It also links to the provincial economic recovery plan, where it identified this connectivity as a real challenge.
Digital Hubs Implementation Status
DEDEAT approached by DTI in September 2020 on concept / programme.
The provincial technical steering committee (PTSC) consisting of DEDEAT and the DTIC met on 16 February 2021 to consider the proposals.
Komani ICT hub project approval must still be sought from the DTICs.
SEZs are a critical enabler to achieve DEDEAT objectives;
Continued funding challenges might impact pace of investments;
Continues to be a strong oversight by DEDEAT;
CDC is leveraged to assist in various government programmes such as the Wild Coast SEZ, and other infrastructure related projects;
The model on Digital Hubs is aligned to government strategy for digital infrastructure.
MEC Mvoko said there continue to be challenges for all the SEZs. In the Eastern Cape, there are two SEZs and a number of IPs. The DEDEAT will continue to do oversight on the SEZs and IPs. It is leveraging on the capacity, especially of the Coega Development Corporation which will assist the DEDEAT in various government programmes.
In some of the IPs, DEDEAT has been dealing with the project phases, including infrastructure and security.
Progress report on the implementation of the Nkomazi SEZ to the Select Committee on Trade and Industry, Economic Development, Tourism, Employment and Labour (Mpumalanga)
Ms Nonto Khoza requested her colleague, Mr JM Mnisi, to present.
Mr JM Mnisi, Chief Director: Trade and Sector Development, Department of Economic Development and Tourism (DEDT), Mpumalanga, spoke about:
1. Strategic Intent
2. Background to SEZ
3. Conditions of Designation
4. Phases of development
5. Land Preparation and Bulk Infrastructure
6. Investment Pipeline
7. Establishment of SEZ Entity
Strategic Intent of the Nkomazi SEZ
In light of question raised earlier, Mr Mnisi wanted to start with slide five. The Nkomazi SEZ is one of the projects in the DEDTs industrial development programme. There are four industrial technologies the DEDT is pursuing, and the Nkomazi SEZ falls within this. It takes a slightly different approach because its view is the SEZ must be able to influence development within district, rather than just concentrating on the area where the SEZ is established. It is also linked to the forestry technology IP and the agriculture technology IP in Nelspruit. The DEDT looks at this as an ecosystem within the district to develop the entire region of Mpumalanga.
There will be a focus on agro-processing, where activities will constitute 52%, nutraceuticals manufacturing will constitute 38%, and bulk and industrial will constitute 10%. In its feasibility study, the DEDT is looking at the SEZ generating R97.6 billion in revenue over a period of ten years, the export impact thereof to be around R3.5 billion. Primary agriculture will be R5.3 billion, generated over a ten-year period. There will be about 8 275 construction jobs, 9 505 industrial jobs, and 81 765 agricultural jobs. This SEZ is biased towards agriculture. The DEDT is aware the SEZ will trigger development around the precinct. The municipality has already developed a precinct plant which takes care of the other services which will be needed by the users of the park; for instance, with the Department of Human Settlements, there is a precinct plan around this. Even with issues around schools and technical colleges which will be triggered by the SEZ, the plan is incorporated within the National Spatial Development Framework.
Nkomazi SEZ: Background
The process of establishing the Nkomazi Special Economic Zone was initiated in 2012.
The focus of the proposed SEZ will be on Agro-processing, nutraceuticals, as well as logistics.
This process is having three distinct phases namely: The Designation Phase, Interim Phase and Development Phase.
Conditions of Designation
• The Minister of Trade and Industry approved the Designation in January 2019.
• The Letter of Designation outlined the following conditions, including:
– Upon the designation, the Province must appoint an operator with the necessary capacity, knowledge and experience to manage the SEZ.
– The Nkomazi SEZ Board must have representation from the Department of Trade and Industry
– The applicant must demonstrate private sector participation, particularly in the funding of the SEZ infrastructure.
Nkomazi SEZ: Phases of Development
(See page eight for the full details.)
High Level Implementation Plan (Adjusted)
(See page nine for the full details.)
Mr Mnisi said the DEDT initially aimed to complete the plan at the end of the financial year, but because of COVID-19 lockdown, it lost some time and had to adjust the implementation plan slightly. It anticipates completing Phase Two around June or July.
This area dealt mainly with township establishment, the Environmental Impact Assessment (EIA), and infrastructure.
This process had six milestones, as detailed on page 11. The DEDT is now at milestone five, which is Approval of the Plan by the Office of the Surveyor General.
- Environmental Authorisation of SEZ: Completed.
- Water & wastewater: An application has been lodged already with the Department of Water & Sanitation (DWS). The DWS was engaged with a view of finding a way to shorten the time period. The DEDT expects to conclude this process in the next four months.
This includes sewers and storm water.
Mr Mnisi said the agriculture water used in this area was converted into industrial water. It is sufficient to support the SEZ. The SEZ also has a water treatment plant.
Green Infrastructure- renewable energy from solar and biomass
Some of the bulk infrastructure will be supplying green sources of energy in the SEZ, particularly from solar and biomass.
Investment Pipeline- Post Designation
Mr Mnisi said there was a question on investment. During the designation period, there are a number of investors who de-registered, but the DEDT has now undertaken a process where it is re-engaging these investors to re-establish if the investors are still interested. (See page 24 for the full details.) The DEDT team is working with the investors to make sure the investors’ needs are addressed.
Establishment of SEZ Entity
Mr Mnisi said this concerned governance issues, which were dealt with by the DTIC, and the DEDT would be finalising the appointment of the Board. (See page 26 for the full details.)
Development of SEZ Strategy
This is already underway.
Appointment of a service provider is finalised and work commenced during December 2020.
The strategy would concentrate on the following intervention areas:
Marketing and business development
Innovation and partnerships
Primary agriculture development
Infrastructure (water, energy, and logistics)
The service provider will also develop a corporate plan for the SEZ entity.
(See page 29 for issues which require attention.)
Presentation on Bojanala SEZ (North West)
Mr Lufuno Tshikovhi, Head of Department (HoD), North West Department of Economic Development, Environment, Conservation and Tourism (DEDEC), introduced the presentation.
Mr Davis Sadike, Delivery Project Executive: North West Development Corporation Soc Limited, presented on the following:
Bojanala SEZ in North West; Key Pillars for Industrialisation; Digital Hubs; Progress to Date; Bojanala SEZ Robust Investment Pipeline; Current Opportunities Identified; Bojanala SEZ Investment Pipeline; Digital Hubs in the SEZ; Implications for Digital Hubs; and Recommendations.
Platinum Valley Special Economic Zone
Mr Sadike said DEDECs feasibility study showed it could build an SEZ on the back of the mining industry. Mining and mineral beneficiation is a key sector DEDEC is focusing on.
Key Pillars for Industrialisation
Partnership with Private Sector
Mr Sadike said the North West Development Corporation’s (NWDC) main target is the mining industry, so the SEZ can be included in its plans, especially around the location of its suppliers, and the procurements of goods which will go into the mining industry.
The North West provincial government, led by the Premier, hosted a dialogue with the private sector to solicit input and to forge strategic partnerships in implementing economic recovery plans.
Skills, Science and Technology
The role of tertiary institutions remains critical;
North West University (NWU) and Universities of Technology to be structured closer to people across the province;
Curriculum to inform or be informed by regions competitive advantages and new industrial clusters;
Tertiary institutions to drive closer collaborations with local, national, and international partnerships.
Research and Development
Research and development (R&D) to be informed by material conditions on the ground
Innovation to improve people’s lives and service delivery and execution ICT critical to enhanced connectivity across the province
Business Process Services (BPS) strategy to be reviewed with much vigor and new clear vision.
State Capacity Coordination
The core function of state is to mobilise resources to meet its developmental challenges and manage long term social and economic development, and change,
A capable state is best placed to respond and harness opportunities for growth and development.
The state emphasises economic performance, education, healthcare, food security, and infrastructure development,
Foster co-operative governance through the District Development Plan.
Mr Sadike said one of the weaknesses the Province had before, was the co-operation between the province and municipalities. When the NWDC went to Cabinet, it highlighted its need to improve on governance. It has to strengthen the co-operation between the district, the local municipality, and the province, and this has now been addressed. It has a well co-ordinated plan to involve all three stakeholders. The Minister of the Department of Mineral Resources and Energy (DMRE) has been appointed as the co-ordinator of the District Development Model, and so far, the NWDC is seeing traction in identifying the roles to be played by each party. Going forward, every institution can make its own contribution, using the SEZ as an example of projects which can be co-ordinated and run using this model.
Other matters presented on were Digital Hubs; Progress; Current Opportunities identified; Digital Hubs Existing and Planned for B-SEZ; Implications for Digital Hubs; and Recommendations.
Recommendations included the Select Committee of Trade and Industry, Economic Development, Employment and Labour, to note the progress made by the North West provincial government on the implementation Bojanala SEZ, and to support the resubmission of the revised Bojanala SEZ Business case for designation.
Update on Halal Park/Hub (Western Cape)
Mr Rashid Toefy, Deputy Director-General (DDG), Western Cape Department of Economic Development and Tourism (DEDT), said he was in the meeting on behalf of Western Cape MEC Mr David Maynier. His colleagues from the Western Cape Department and Western Cape Tourism, Trade and Investment Promotion Agency (WESGRO) were also present.
The presentation contained the following:
Halal Industrial Park
Halal Pillars & Programmes
The main focus would be the Halal Park/Hub. The DEDT developed relationships with the labour unions in the area. This is important, because the idea of these industrial hubs is ultimately to benefit SMMEs. On the Atlantis Green Tech SEZ, the land has been secured, and the DEDT is raising the funds and driving the investment. It was a joint effort between the Atlantis SEZ team, WESGRO, and DEDT.
Health Tech Park
Something on the DEDTs radar is a health tech park. This health tech park is now underway, and the DEDT is attracting investment. BioVac will be involved in producing a vaccine locally.
Agri-processing: Three Strategic Intent
(See page 6 for the details)
Halal Market opportunities for the Western Cape:
1. The potential to extend into mainstream markets, such as the United Arab Emirates.
2. Increase supply to food dependent markets, for both primary and premium commodities.
3. Actively involving new consumer segments in market – food and non-food.
4. An opportunity for emerging entrants, meaning new exporters from South Africa.
Integrated Halal Strategy
(See page eight for the full details.)
Project Roadmap for Halal Industrial park (HIP)
(See page nine for the full details.)
Why a Halal Industrial Park: Decision on proceeding
There were three choices the DEDT had, as shown on page ten. The DEDT chose the path of Investor-led with Government Incentives.
The decision was taken to position the whole of Western Cape as a halal hub with the following pillars. A virtual hub is similar to what is done in cities such as Kuala Lumpur in Malaysia, where the whole of Kuala Lumpur is a halal destination.
1. Halal Export Promotion in key markets
2. Investment Promotion targeting potential investors
3. Strengthening existing Halal Certification Bodies to expand market access
4. Africa Halal Week trade fair
5. Halal Supplier Development for SMMEs
Mr Toefy said instead of having one industrial park with a specific perimeter, anyone in the Western Cape falls into the Western Cape Halal Hub.
Major Achievement of the Last Five Years
1. Over 100 companies participated in trade missions.
2. Over 30 companies assisted through Supplier Development Programme.
3. Over R3 billion worth of export declarations.
4. Over 50 companies participated in Export Advancement Programme.
5. Export Capacity Building with five Halal Certifying Bodies.
6. Halal Investment Promotion – Generating Investment Pipelines.
7. Africa Halal Week with 200 exhibitors and 30 International Buyers.
Conclusion and Key Points
If South Africa is to ignite the economy, one of the things COVID-19 has shown is the Province needs greater intergovernmental and private sector collaboration. The Halal Hub concept positions the DEDT to be able to this, and so does its other physical industrial hubs, such as Saldanha, Atlantis, and the Health Tech parks.
For the full presentation, kindly see attached documents.
The Chairperson asked the Members to note which province the questions were directed to.
Mr Dangor asked the Western Cape about halal certification. In Saudi Arabia, the definition of halal is much wider, because it includes the question of naturalness. He asked if livestock is being fed with genetically modified organisms (GMOs). This will not be accepted. The last time South Africa got the market open there, Saudi Arabia cancelled it on the basis South African stock was GMO-fed.
The Chairperson said he had a mandate to the constituency where he is deployed in the Eastern Cape, and therefore he asked a question addressed to MEC Mvoko. He asked when the second phase for Dimbaza IP is going to start.
MEC Mvoko replied the first phase of the Dimbaza IP was about fencing, and the second phase is about doing internal roles. It was advertised sometime last year, because the DEDT (Eastern Cape) has given it to the ECDC. The roles were advertised around July/August. The ECDC has not awarded contracts for the internal roles but it is supposed to start this calendar year, as soon as the contract is awarded.
The Chairperson thanked the provinces, and apologised for cutting the time for presentations short. Regarding the way forward, what the SC will do is analyse the reports and develop a Committee report with recommendations. This will be tabled to the NCOP plenary session. MEC Mvoko was in the last plenary session. At the same plenary session, the SC presented a report on tourism, where it had a similar meeting. It invited some provinces, mayors and MECs, and it then developed a report with recommendations which was tabled last week. The SC will do the same for this sector, where it will develop a report with recommendations, which it will then table in the plenary session.
The Deputy Minister made closing remarks. He thanked the SC for bringing MEC Mvoko to the meeting, because he had not seen him in a very long time. He thanked the provinces, the DTIC, and the NT for the presentations. The Department took note of the issues which concern Members, and the Department will make sure it can strengthen its actions in those areas of weakness. The many issues Members raised today are issues the Department is concerned about itself. The Department is extremely concerned with the lack of progress in some of the IPs and SEZs. During this financial year, working with the other two spheres of government, the Department will make sure it can move at the necessary speed to attract investors into the IPs and SEZs, and those can be up-scaled. Many IPs and SEZs were designated for a very long time, but have not made sufficient progress. This is a matter which worries the Department. He said Ms Boshoff made an important point, which speaks to a balanced approach to economic development, where in dealing with matters of urbanisation, the Department’s economic planning has got to take into account it pays attention to small towns, rural areas, and townships, so it can impact more positively on the challenges of migration into the cities. He was concerned about the issues relating to the Nkomazi SEZ as well. He had a meeting the present week with the MEC of Economic Development in Mpumalanga, and would attend to this matter of ensuring work can be sped up on the Nkomazi SEZ.
In the context of the African Continental Free Trade Area (AfCFTA), the Nkomazi SEZ, as an agricultural and agro-processing SEZ, will become a very important SEZ, not only to supply food to South African citizens, but it can also become an important supply path for the whole of the African continent. The Department will strengthen its efforts with the province to ensure it can upscale its work there. It is trying to work with the Department of Agriculture, Land Reform and Rural Development so it can do an assessment of the total potential production capacity of Nkomazi so it can see if it can supply enough volumes of agricultural products to the African continent.
Mr Dangor said the Department spoke a lot about Gauteng. He asked about how to use SEZs and IPs to build smart cities. For a long time, the Department had a discussion with the government of the Eastern Cape, including some difference on its approach to the Wild Coast SEZ. The Department is sold on it now. The Minister of Co-operative Governance and Traditional Affairs (CoGTA) says the Department wants to build a mega postal city on the Wild Coast. The Department’s contribution will be to use a special economic zone, on the back of which it can build a new smart city. The Department will be working with CoGTA and the government of the Eastern Cape. There are other cities where the Department is looking at not just using SEZs as industrially-based spaces, but also using SEZs to revitalise and build new cities. IPs can also be very important instruments for small town, township, and rural economic revitalisation.
The Deputy Minister had been to Dimbaza. One of the things which happens there is if one looked at the town of Mthatha, one would see the Department put investment into the area to improve infrastructure. Very soon, the infrastructure was damaged. The Department has been looking at using an IP not just for industrialisation, but also as part of the revitalisation of Mthatha. The Department should be able to do this in many localities, where it can use other SEZs, and use IPs, to revitalise towns and townships.
The Department is very excited about the rail corridor between Silverton and East London, which is valued at about R10 billion. This rail corridor is the result of the doubling of production at Silverton Ford plant. This will help the Department to deal with the problem of congestion at the Durban port. But because of the important rail corridor, the Department could then set up several logistics hubs across the corridor. It is an exciting development which the Department will have to focus on in the coming years. The Department is looking at completing the rail corridor by 2025.
The Deputy Minister was at the Dimbaza IP with MEC Mvoko. As soon as the COVID-19 situation allows, the two will go back to the Dimbaza IP. He knew the challenges there are, it is a very large IP, and it will need enormous amounts of money for revitalisation. It is something the Department will take up through the Eastern Cape government to ensure it can successfully revitalise this IP.
The Chairperson asked Mr Toefy to reply to Mr Dangor’s question.
Mr Toefy said he messaged Mr Dangor. The two of them could take it up offline. He could assure the SC the DEDT was very aware of the phyto-sanitary needs, and the specific needs of different markets. The insight Mr Dangor has about Saudi Arabia is very valuable, and he asked Mr Dangor to be in touch with him, so the DEDT is aware if there are specific needs. But he was quite confident South African halal certifying bodies have got what it takes, and the production facilities have enough organic supplies to fit in with the standards of the Saudi Arabian market.
The Chairperson thanked the Deputy Minister, MEC Mvoko, the DG, DDGs of the DTIC, the HODs, Chief Directors, CEOs of entities, the SC Members, the staff of Parliament, guests, and the media.
Adoption of Minutes
The Committee adopted its minutes of 23 February 2021.
Adoption of the Committee Annual Report
The report was adopted.
Adoption of the Committee Strategic Planning Report
The report was adopted.
Adoption of the Second Term Committee Programme
The Chairperson noted this meeting was the last one for the first term. The SC would be going to constituencies for the constituency period, and come back in the first week of May 2021. The first Tuesday would be 4 May. According to the framework of the National Council of Provinces (NCOP), the SC would be dealing with the Annual Performance Plans (APPs) in preparation for the budget vote debates. These will be the budgets and APPs the SC would deal with on 4 May. In the morning, the SC would start with the Department of Tourism. There would not be any plenary on this day. In the afternoon, the SC would deal with the Department of Employment and Labour. The SC was asked to use Thursday afternoon, as in the morning there would be party caucuses, then in the afternoon on Thursday, the SC will be busy with the budget vote on the DTIC. On 18 May, it would be the Department of Small Business Development. The reason the SC did not have plenaries on other days was because it was a matter the SC raised with the Chief Whip. If one is going to receive the NCOP programme, one would find it full of plenaries. The SC raised the concern there is no space for committees. Those APP meetings would be the last meetings the SC would have; other than this, it would just have plenaries. There would be a briefing from the second clusters in the plenary, but also the budget vote debates. The committees would only take place after August, because at the end of June, the SC would be going for a plenary session which covers the whole of July. The last day will be before 18 June, and the SC would come back on 16 August.
The programme was adopted.
The Committee would see each other again in the afternoon plenary session; it had questions for oral reply with the Department of Public Works and Enterprises, and the Department of Public Works and Infrastructure.
The meeting was adjourned.
- WC Department of Economic Development and Tourism: Halal Programme Western Cape
- EC presentation
- Media Statement: Deputy Minister Fikile Majola on Special Economic Zones
- Media Statement: DTI Must Ensure Optimum Performance of SEZ and Industrial Parks during Recovery Phase, Select Committee
- National Treasury’s Cities Support Programme Industrial Park Revitalisation Programme
- Mpumalanga: Progress report on the implementation of the Nkomazi SEZ
- dtic: progress on Implementation SEZ
- North West Development Corporation presentation
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