Status of SEZs & Industrial Parks: DTIC briefing; with Deputy Ministers

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Trade, Industry and Competition

03 May 2022
Chairperson: Ms J Hermans (ANC)
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Meeting Summary


The Portfolio Committee on Trade and Industry met with the Deputy Ministers of Trade, Industry and Competition as well as officials from the Department in a virtual meeting for a briefing on the Department’s new approach to the development of Special Economic Zones and Industrial Parks and a status report on those currently operating and those in the process of establishment.

The Committee was informed that Special Economic Zones and Industrial Parks were intended to form the backbone of re-industrialisation in the country. The Department had been working according to the Special Economic Zones Act and had designated a number of Special Economic Zones which were intended to attract new investments and to create employment through provincial governments. The Department was attending to the revitalisation of the Industrial Parks in the light of the aging infrastructure so that the Industrial Parks could attract investment to the rural areas. Digital hubs were being added to Industrial Parks. Important lessons had been learnt, including the negative impact of poor governance issues, the lack of involvement by provinces and municipalities and lack of involvement by communities which had led to poor performance.

In 2019, Cabinet instructed the Department to develop a new approach to ensure the success of those industrial areas. That was the “new approach”, currently being implemented. The New Spatial Industrial Development Model was to be driven through the District Development Model. The focus would be on governance arrangements; strong commitment from all spheres of government; the development of strong and credible investment promotion and facilitation plans; community involvement and facilitation; hybrid-ownership and feasible financial models. A political steering committee was to be established for each Special Economic Zone, headed by a Deputy Minister, to facilitate the process for the technical task teams.

The Department informed the Committee that a National Special Economic Zone Project Management Unit had been established to assist with the new approach. The former DG of the Department was appointed as Head of the Unit which was located at the Industrial Development Corporation and was actively intervening in seven Special Economic Zones, operational and non-operational, to accelerate investor mobilisation and break ground where that was required; and would re-examine an eighth project. The Unit was also coordinating the upgrade of railway infrastructure from Tshwane to Gqeberha to enable the transportation of new motor vehicles to the port for export.

To date, there were ten Special Economic Zones with an investment of R22 billion and to date, 19 000 jobs had been created. The most viable Special Economic Zones at present, based on actual occupancy and commitments, were Coega Industrial Development Zone, Tshwane Auto Special Economic Zone, Dube Trade Port and East London Industrial Development Zone. However, several others had potential and the Department believed that the new integrated approach would see several more viable Special Economic Zones in the near future.

One of the Committee Members expressed deep frustration that a business plan for Industrial Parks had not been set up and concessions made ready and available for those who invested in the Parks in far-flung areas as he had suggested many years previously. Members asked if the kind of money and investment that was going into the Industrial Parks and Special Economic Zones was worth it. Was there any benefit to the economy and was it sustainable? Why had it taken so long for the Department to realise that the project could not be operated without a project manager?

Other Members asked whether the Special Economic Zones were supporting beneficiation. How did they find expression beyond the borders of SA? How were opportunities being created for Black people in trade and industry? How many investors were Black? When was the issue of ownership of the Nkangala Special Economic Zone going to be addressed as currently, it was under Tshwane, which was under DA administration that would do everything it could to make sure that the project did not move? Members requested more clarity on the failed Special Economic Zones. What were the exact challenges and how could they be assisted?

Members asked about the allocation of funds to Industrial Parks which had been capped at R50 million. What was happening about the Industrial Park in the Gert Sibande district? What efforts was the Department making to collaborate with other departments to promote SMMEs in the economy?

Meeting report

Opening Remarks
The Chairperson wished all Muslims a blessed Eid Mubarak. On behalf of the Committee, she expressed condolences on the loss of life in KwaZulu-Natal (KZN) and neighbouring provinces.

She informed the Committee that the dtic had been invited to brief the Committee on the new model for the roll-out of the new SEZ programme, provide a status update on the Special Economic Zones Programme and the Industrial Parks Industrialisation Programme, and an overview of challenges and opportunities of the existing policy framework.

The Chairperson called on the Deputy Minister of the Trade, Industry and Competition (dtic), Deputy Minister Nomalungelo Gina, to present the report on the Special Economic Zones (SEZs).

Deputy Minister comments 
Deputy Minister Gina spoke of the floods in KZN. She mentioned that three decomposing bodies of people who had drowned in the floods had been found in Durban that morning. The situation in Durban was dire. Not only had there been a loss of life and property, but the floods had also had an impact on trade and industry in the flood areas. Even companies in the local Industrial Park had been badly affected.
The Deputy Minister informed the Committee that from 1 May 2022, Mr Shabeer Khan, the CFO, would be the Acting DG for the dtic. The presentation would be led by Mr Maoto Molefane, Acting DDG Spatial Industrial Development and Economic Transformation.

She explained that SEZs and Industrial Parks (IPs) were intended to form the backbone of re-industrialisation in the country.  The Department had been working on SEZs in terms of the Special Economic Zones Act and had designated a number of SEZs. Briefly, the SEZs were intended to attract new investments and create employment through provincial governments. The Department was there to apprise the Committee of work done so far. The dtic was also attending to the revitalisation of the Industrial Parks in the light of the ageing infrastructure so that the IPs could attract investment to those areas. An important factor was the adding of new and modern factors, such as the digital hubs.

It was important to say in both industrial development programmes, important lessons had been learnt as the dtic had proceeded with the innovation, including the negative impact of poor governance issues, the lack of involvement by provinces and municipalities and lack of involvement by communities where the IPs were located – all had led to the poor performance of the industrial development. In future, in response to challenges, the dtic would be reaching out to communities.

The dtic team would present the new SEZ model and show how it linked to the District Development Model of the Sixth Administration. District municipalities were no longer viewed just as midwives handing out funds. District municipalities had a vital role to play. The municipalities had a vital role to play in economic development.

The Tshwane SEZ had taught the Department many lessons learnt. The Tshwane SEZ had provided the foundation for the new approach to be used in all 52 district municipalities. The team would present the Department’s learnings to the Committee.

Presentation by  the DTIC on the status of the SEZs
Mr Maoto Molefane, Acting DDG: Spatial Industrial Development and Economic Transformation, dtic, made the presentation.

The National SEZ Project Management Unit (PMU) was established to help the dtic with the new approach to the SEZs. Mr Lionel October, former DG of dtic, was appointed as Head of the PMU. The PMU was located at the Industrial Development Corporation and was actively intervening in seven SEZs (operational and non-operational) to accelerate investor mobilization and breaking ground; and would re-examine an eighth project. The PMU was also coordinating the upgrade of railway infrastructure from Tshwane (Waltloo Siding) to the port in Gqeberha to enable the transportation of increased production planned by Ford Motor Company SA at Tshwane SEZ.

The viable SEZs, based on actual occupancy and commitments, were Coega IDZ, Tshwane Auto SEZ
Dube Trade Port and East London IDZ. Some SEZs were in the process of proving viability and those were OR Tambo, Saldanha, Atlantis and Richards Bay.  Maluti-A-Phofung, Musina-Makhado and Nkomazi were struggling, mostly as a result of a lack of local support and governance. Proposals for new SEZs that were currently being evaluated were Bojanala SEZ, Vaal SEZ, Namakwa SEZ, Fetakgomo-Tubatse SEZ and Coega Pharmaceutical and Vaccine SEZ.

The second half of the presentation was dedicated to a briefing on the Industrial Parks that had been developed by the apartheid government and which had collapsed when the generous incentives ended.

Mr Molefane presented the New Spatial Industrial Development Model which was to be driven through the District Development Model. The focus would be on governance arrangements; strong commitment from all spheres of government; the development of strong and credible investment promotion and facilitation plans; community involvement and facilitation; hybrid-ownership and feasible financial models.

Mr Molefane stated that the dtic had developed an integrated approach to Spatial Industrial Development Intervention. Key amongst the interventions that the dtic family would undertake during the financial year 2022/23 were:
-Establishment and support to SEZ and Industrial Parks
-Establishment and support for Digital hubs
-Identification of viable Spatial Industrial Development initiatives in every district
-Report identifying private sector industrial nodes at District level
-Participate in the investment mobilization drive
-Launch the Eastern Cape and Limpopo One Stop Shop.
-Coordinate the integration of interventions by the dtic and its entities into the District One Plans
-Develop dashboards of interventions by the dtic and its entities for all 52 districts
-Compile reports on work completed on integration of the industrialisation and transformation effort of the dtic and its entities at district levels
-Implement Sector Master Plans in various districts
-Targeted industrial financing support in the nine provinces as well as at a metropolitan and district level.

The Chairperson requested Deputy Minister Majola to add his comments.

Comments by the Deputy Minister 
Deputy Minister Fikile Majola stated that he had two main messages. The first was in relation to the main storyline and which regions had low uptake with respect to SEZs and IPs. A few SEZs at SA’s ports of entry had been designated in 2010. Those SEZs had been very successful. In 2014, the SEZ Act was promulgated but the new SEZs added at that time had not been successful. The dtic was entering a new phase based on the August 2019 directive from Cabinet and the District Development Model. The SEZs and the IPs would be driven together in a coordinated approach.  The dtic was now acting directly in SEZs and making good progress in driving a coordinated development model in each of the 52 districts as per the President’s request.

The dtic was fast-tracking and upscaling its work. One example of that was the SEZ at OR Tambo which had long been declared an SEZ but had not moved. It had been assigned to the PMU under Mr October who had dispatched a multi-disciplinary team to focus on completing the construction of the top structures of the SEZ at OR Tambo.

Mr Molefane was in Limpopo because the team was there to drive the Musina-Makhado SEZ. A team would be visiting the Nkomazi SEZ the following week to ensure that SEZ began to move. The team would meet with Transnet so that the new investors, Dubai Port World, could locate its new operation there, and that would attract other investors. The Deputy Minister believed that the team would break ground within the next few months. Similar activities were taking place at other SEZs: Saldanha, Atlantis and Richards Bay
He had visited the Wild Coast a couple of weeks earlier to elevate that SEZ.

Deputy Minister Majola stated that having studied similar developments internationally, the dtic wanted to elevate and upscale the role and place of SEZs in the economy and to promote economic development, seeking the same successes experienced internationally using that approach. He explained, as an example, how, with the involvement of Dubai Port World, Nkomazi SEZ had the potential to change the landscape of the province of Mpumalanga as a whole, linking SA to the African Continental Free Trade Area. It was necessary to be bolder and more ambitious.

Regarding the rail corridor from Silverton to Gqeberha, the Deputy Minister stated that it was not a possibility, it was just a matter of time. The dtic had a deadline of 2025 because that was when the production of Ford would reach the point that it would be dependent on that rail corridor to export its vehicles. It was not a possibility but a matter of time.

The Chairperson noted that, as some Members were travelling to Parliament, they had left questions on the presentation in the platform chatroom.

The Secretary indicated that he had received questions from Mr W Thring (ACDP) that he had forwarded to the dtic.

Mr D Macpherson (DA) found the presentation frustrating because five years ago, or before when the Department had decided to embark on the IP project, he had warned that the project was doomed to failure without a business plan and concessions ready and available for those who invested in the IPs. The attitude of the then Minister was that they were just going to fix lights, erect new fences, fix potholes, etc. as all that businesses wanted was the infrastructure. Already more than double the amount budgeted had been spent on the project. When he had put the point forward regarding the business plans, concessions, etc. and how businesses worked, he had been accused of racism.

The IPs were originally set up because businesses could get cheaper labour in the “Homelands” and that was why the businesses went to the far-flung areas. Even today, businesses required a concession to make it financially viable to relocate to far-flung areas. Neither the business plan nor the concessions for IPs had ever been prepared. When he had raised questions about the IPs, he had been accused of racism, that he wanted black people to remain unemployed and that all of his questions about the IPs were indicative of his racism. However, the dtic had now admitted in its presentation that it should have had a business plan and that concessions still did not exist and, despite all the money poured into the project, IPs were in a worse condition that they had been five years earlier. It was a tragedy that they had not listened to one another at the time, and taken on those concerns instead of accusing him of grandstanding, etc. That was a travesty for the country and those people who were in need of employment and a waste of R1 billion. Parliament did no more than pay lip service to listening to the concerns or issues raised by opposition party Members.

The dtic had to look long and hard at the concept of SEZs and IPs. There had to be reasons for businesses to be located in those places. There had to be financial incentives and concessions. Infrastructure was crumbling, and Transnet did not work, so rail transport was out of the question and so businesses could not rely on infrastructure to transport goods from those areas. It would become more and more difficult to sell a business case for relocation to an SEZ.  He found it difficult to justify the ongoing expenditure and he believed that the Committee should grapple with the kind of money and investment that was going into the IPs and SEZs. Was it worth it? Was there any benefit to the economy?

He was sad that the Committee would continue to call him racist when he provided rational advice. And he would, as now, again be proven right. He got no pleasure in being proven right because it was the country and the people who were suffering. It was time that the government started listening to the Opposition and to experts and stop wasting time and money as the dtic had finally admitted what had happened in respect of IPs and SEZs.

Mr F Mulder (FF+) referred to slide 42 which addressed the existing spatial instruments and constraints. It was evident that the government could not sustain SEZs or IPs because of poor service delivery, or a total lack of service delivery. It was common knowledge that local government was in a state where road, water and other service supplies from SEOs were not sustainable. Slide 42 also referred to Eskom, which was unable to supply electricity on a regular basis. In short, the government was unable to support the projects as described in the report. He referred to slide14 which portrayed the performance of the SEZs. The performance showed that R22 billion had been spent and19 000 jobs created, which suggested that each job came at a cost of over R1 million. He knew that it was not that simple a calculation, but he asked how sustainable the project was. In the light of the current conditions in which the government could not provide support services, and the economy was still recovering from state capture and Covid-19 regulations, did the Deputy Minister and the Department really think that it was sustainable?

Mr Z Burns-Ncamashe (ANC) welcomed the presentation as a comprehensive, frank, honest and genuine one. Where the Department had done well, it had indicated that it had identified weaknesses and had presented a plan to mitigate those weaknesses. He and his colleagues lived with their people and knew what their challenges were. The challenges were largely of a historical nature. If there was any tragedy in the situation, it was committed by colonial and apartheid systems that had alienated his people who constituted the majority. They were deprived of all opportunities and reduced to labourers for exploitation. The current government’s policies and projects were predicated on a transformative imperative. The entire presentation sought to achieve that, i.e. improving the economy by breaking from the conglomerates that favoured the oligarchy that pushed the interests of a few white industrialists. That was the reality. He could not apologise for transformational imperatives which were government and ANC policy and the requirement of all who wanted to see an inclusive economy.

He appreciated that there were SEZs that were performing well, but he noted that the automotive sector had given many SEZs a boost. He referred to the East London IDZ and asked how many industrialists in that sector were black industrialists. He wanted to know that the transformation imperative was being adhered to. It was necessary to make sure that all spheres and organs of government worked together as per sections 40 and 41 of the Constitution which required cooperative governance. In the context of the District Development Model, he wanted to see results and programmes that had an integrated approach and that brought everyone on board. He asked that those could be presented to show what was being done on that front.

Mr Burns-Ncamashe said that he was looking at trade and industrial opportunities in the AfCFTA. He wanted to see his people in the mainstream economy. His people could no longer be limited to labour. How were opportunities being created for his people in trade and industry? How did they find expression beyond the borders of SA? SA and the region could not continue, with its natural material endowments, to be reduced to raw material producers, and when it came to processing, that material was exported and then, once processed, brought back to the continent. By exporting raw materials, the country was actually exporting jobs. He wanted a deliberate and conscious plan that showed the creation of conditions that would allow regional goods to be processed before being exported. He wanted to see the AfCFTA working in that regard.

He asked if it was not time that the Department had an outreach indaba where similar information could be shared with all of SA. There were areas like Butterworth that had an IP that was dead. In areas like Dimbaza, one could see some work being done. The Industrial Parks might have been part of consolidating Bantustan states where an establishment supported by the Nationalist Party government and the Democratic Party, which later combined to form the Democratic Alliance, but those were historical …

Mr Macpherson interjected, stating that as a point of correction, Mr Burns-Ncamashe had forgotten that the National Party joined the ANC.

The Chairperson and other Members called for order.

Mr Burns-Ncamashe said that he was not oblivious of the history of the current Democratic Alliance in terms of its direct participation in consolidating apartheid because it had a programme to make sure that his people were excluded from the mainstream economy and he was not going to apologise for that. He proposed an indaba in all provinces so that the dtic would not be seen as aloof but part of the functional capability of his communities. Information was power and the Department had to empower the people with information and thereby create inclusive conditions that would drive an inclusive economy, which was the antithesis of what the Democratic Alliance stood for.

Mr C Malematja (ANC) said he should speak his mind as it was as if they were begging the government to assist when, in fact, they were in charge and that attitude allowed others to benefit as if they were not aware that the ANC was in charge. He was tired of the papers that showed one thing when things were very different on the ground. The masses were raising concerns because they said, when the plans were introduced to them, they had felt they could be patient as jobs were coming, there would be an inclusive economy and they would be taken care of. Those who had remained in the rural areas were now ageing and could not get any jobs, even if the plans came to fruition.

The Department had to ensure that it fast-tracked everything that it had promised in order not to lose the confidence of the masses. The masses had been badly treated by the apartheid regime that had ensured that they could only be job seekers and not able to become industrialists. It was a concern when, time and again, there was no evidence of any progress being made in structures that had been created. It was vital that the Department did not just put information on paper alone; it had to assist. A number of regulations were oblivious to upcoming entrepreneurs. As much as one appreciated the production of the incentives, one also wanted to hear what requirements had been relaxed so that those who were new in the economy were able to go in without barriers because, in many cases, the regulatory barriers were preventing people from participating. That was a problem.

Mr Malematja asked why it had taken the dtic so long to realise that it could not run such a massive operation without a project management team. Each SEZ was a project on its own and could not be run by the Head of Department or managers without a project manager. That was a serious mistake and should never happen again. He emphasised project management because there had to be people who were capacitated and competent in understanding the multi-disciplinary approach of a project manager in carrying out such massive jobs. It was all very well talking about the Tshwane SEZ but Gauteng was the province that had the Vaal River. Each province required a different approach. It could not be correct that people in the north were enjoying the SEZ while people in the south were not enjoying an SEZ.  One could not allow a municipality governed by a different political party to enjoy something that other people were not enjoying. That was wrong and had to be corrected.

He referred the Department to slide 9 of the presentation which mentioned 54 investors. How many of those investors were Blacks? If they were not there, what was the Department doing to ensure that Blacks were also part, as the SEZs were about an inclusive economy? That was mandatory so there had to be Black investors. The idea was not to create job seekers but Black Industrialists.

If one spoke of the Musina-Makhado SEZ, one would see that there were no investors and yet the Committee was told that the team was there that day. Why? Because the Department was going to Parliament. It could not be that the dtic took so long when people were waiting. The Nkomazi SEZ was a total disappointment; it was a failure. If he were to point out the failures, it would be exactly what he had said earlier on: there was not a permanent CEO who should be the main player, ensuring that day-to-day activities were monitored and reported somewhere. One could not expect an SEZ to start without a permanent CEO.

He cautioned that the technical-political standing committee should never take over the project from the project steering committee because the stakeholders were represented on the project steering committee. The technical-political standing committee had to account to the project steering committee because the stakeholders should never be cast aside. No one could supersede the steering committee. He was stating that in order to avert a wrong-doing there.

Mr Malematja turned to the issue of the Industrial Parks. Without fear, favour or prejudice, he could say that until they could address the issue of ownership, especially in the case of Nkangala which was driven by Tshwane – one had to remember that Tshwane was under DA administration and a DA administration would do everything it could to make sure that the project did not move. What he had realised and observed was that the Nkangala IP would just decay until it reached white elephant status. Those were his concerns.

Lastly, he asked what efforts the dtic was making to collaborate with other departments to promote SMMEs in the economy.

Mr S Mbuyane (ANC) said most of the Members had already indicated what was happening in terms of SEZs and industrial parks. The Committee also heard apologies from Mr Macpherson.

He said that they were talking about industrialisation, transformation and also a capable developmental state. He thought that the presentation concretely spoke to the capable state in which national, provincial and local governments should be able to work together in delivering all the SEZs and the IPs. He proposed that the Committee request more clarity on the failed SEZs. What were the exact challenges? How could the team establish more industrial parks even as some were failing? They might be shooting themselves in the foot. Mr Mbuyane said that the team should be able to establish the political steering committees in all the failing SEZs. Given the fact that the dtic was now part of the programme, the dtic officials should be able to move SEZs. One could not leave provinces to run SEZs when they did not have capacity to execute all the necessary processes. He requested more clarity on the status quo of all the SEZs, and where all the IPs were in terms of revitalisation. There were only three IPs in Mpumalanga, one of which, Ekandustria, had been moved to the City of Tshwane in Gauteng. In Mpumalanga, there were only two IPs, one of which was a disaster.

Mr Mbuyane asked about the allocation of funds to IPs, which had been capped at R50 million. What was happening about the IP in Gert Sibande district? No information had been supplied on that IP. He proposed that the Committee request the total number of IPs so that those could be dealt with by the Committee. Looking at the industrial model in terms of the districts proposed, it did not make sense because, as Mr Malematja had said, one could not have functional SEZs in some provinces and not in others. Mpumalanga did not have a viable SEZ or IP and that was where the poorest of the poor lived. So it did not make sense.

He asked about the establishment of the digital hubs as there was no status quo report on those. The IPs were being vandalised, but the challenges in that regard had not been explained. He proposed that the Deputy Minister should come back with a report that stated the challenges and the solutions to each challenge. Political will could not help. People were starving. There were reports that the economy was still in the hands of white people and the black people were suffering after 28 years of democracy.

Mr Molefane responded to Mr Mbuyane’s concerns regarding the projects in Mpumalanga. The Industrial Parks were owned, managed and driven by the province, so the only slowness that could be attributed to dtic would be if dtic was slow in dealing with an application for the establishment of an Industrial Park from a province. The last application from Mpumalanga was being finalised with the Development Bank of SA that would need to support it. The reality was that the approval of an application would not address the challenges that Mr Molefane had raised in the presentation. With the new approach, the dtic wanted all stakeholders involved. If the dtic gave the money for the building of infrastructure and the province did not provide security for the Park, that infrastructure would either be demolished through vandalism or just collapse due to non-maintenance by the province. He stated that he was aware of the other concerns. The current activity was to identify opportunities in all districts that did not have an IP.

Mr Molefane denied the accusation by Mr Malematja that the dtic was in Limpopo because of the parliamentary meeting. The dtic had consistently been meeting with provinces and the Limpopo visit had long been arranged to identify the needs in districts and to plan the rollout of the Fetakgomo-Tubatse SEZ. The Limpopo meeting had been postponed from 9:00 to 13:00 as a result of the Portfolio Committee meeting. The intention was to explain the new approach and how that would work in Limpopo and assist them to develop their plans. They would also be drawing up the Quadripartite Agreement showing what each of the four parties - dtic, Limpopo, district, and local – would commit to doing, how the company would be established, what it would do and how the community and the private sector, especially the mining houses, would be involved, etc.

He said that he had provided the details in respect of the current engagement in Limpopo both to assure the Committee that it was a genuine visit, planned irrespective of the Portfolio Committee meeting and because it was an example of what the dtic was doing in other provinces as well. The Deputy Minister had mentioned the fact that they had had a similar meeting in the Eastern Cape recently to discuss the SEZs in that province. The process was being rolled out across the country.

Mr Molefane explained that the political steering committee provided guidance to the team but also assisted in unlocking challenges that the team might experience. He thought that the current arrangement had helped in Tshwane. Deputy Minister Majola had been there and he had led from the front, ensuring that all the requirements could be put into place. Much of what had previously taken two years to accomplish had been accomplished within three months and the dtic wanted to see the same system implemented in all provinces.
He said that those were some of the practical examples. Another example was the proposal for an SEZ in the Wild Coast but it was so ambitious that the dtic had been able to persuade the province to adopt a phased-in approach, starting with an Industrial Park. In that way, they would be able to accept investments before designation as an SEZ. The province could contribute immediately to bulk infrastructure and the dtic would be able to supplement what the province had contributed, so agreements could be made before the SEZ began.

Mr Molefane compared that approach to the attitude of Mpumalanga which expected the dtic to adopt the old approach. The new approach meant that provinces and municipalities were obliged to implement.

Regarding Mr Mulder’s concern about state investments in the SEZs and IPs, he explained that the R22 billion was the investment by the private sector. The relatively small number of jobs was because the dtic was only counting factory floor jobs and not multiplier jobs or support staff such as security workers. The 19 000 were factory floor jobs. In addition, Covid had forced a few closures and in some cases, jobs had been shed but, more importantly, many were high tech companies and those came at a cost of jobs. 46 400 jobs had been created in the IPs at an investment value of R6 billion. The IP Programme was still necessary; it was still critical. Many IPs were still viable, but there had to be alignment and collaboration between all spheres of government because some IPs with huge potential, such as the strategically located Ekandustria and Garankuwa, were being held back by governance issues. Even if it was agreed that they become privately owned, that issue had to be resolved.

Mr Molefane stated that he did not have the number of Black Industrialists involved in the SEZs at hand, but he would submit the information in writing.

In respect of Mr Thring’s question about which SEZs were focussing on beneficiation, he said that all SEZs had some elements of beneficiation, especially in the agro-processing in Coega and in dairy production in East London and some mineral-related activities at Dube Trade Port. One of the reasons for introducing SEZs was to look at SA’s resource endowment. Current SEZs earmarked for beneficiation included Musina-Makhado SEZ which was to engage in agro-processing and minerals beneficiation.

For a long time, the team had been dealing with challenges that were beyond its control, i.e. the Environment Impact Assessments (EIAs) for the Musina-Makhado SEZ. Now that the EIAs had been completed, he hoped that even the appeals would be won and that would unlock serious opportunities in mineral beneficiation as well as agro-processing. Fetakgomo-Tubatse SEZ was mainly about platinum group metals beneficiation, both at upstream and downstream levels with mining input supply and also downstream supply. He added that the team recognised that it would be a long journey for downstream beneficiation because at the moment there were more than 20 mines in the region but there was no refinery and no smelter. Part of the plan was to attract investment for a refinery and a smelter.

Mr Molefane responded to the question on why Nkomazi was not operational, despite the dtic spending over R20 million on the project. When the SEZs had originally been identified, monies had been set aside for project management as well as feasibility studies, which included EIAs and other processes necessary for implementation. Once an SEZ had been proclaimed, in the old approach, the province would take over the SEZ. There had been serious delays by the Mpumalanga province after implementation and it was only once the dtic had been able to get involved, as per the Cabinet decision, that things had begun to move. The dtic had been able to get municipalities involved and to help the SEZ get investments. The new approach was definitely showing results in that part of the country. The PMU had committed to ensuring that ground would be broken by the end of the year and that by the end of the financial year, bulk infrastructure would have commenced. The dtic had engaged with Dubai Ports World which had every intention of starting operations in the current financial year. In summary, if all went well, the first investor would be on the ground by the end of the current financial year.

Responding to the comment on the current job bloodbath and the question of when SEZs would be operational, Mr Molefane pointed to the SEZs worth R22 billion that had created just under 20 000 jobs. Further investment of R40 billion had been secured. He also explained that non-operational investments referred to those investments that had been secured but the investors had not yet begun operations. One example was at the Tshwane SEZ where there were three operational factories but there were also nine empty factories. Those factories had been secured by investors, but were not yet operational, and were therefore not yet employing staff. Those jobs could not be counted until the companies began operations. Non-operational investors might be waiting for the approval of building plans while others might be in the construction phase. Building plans required approval by multiple municipal departments, so it was tedious and time-consuming. Under the new approach, a single committee would be established in the municipality that would coordinate approvals.

Mr Molefane informed Members that proposed SEZs were not simply proposed; they were going through different stages of preparation to attain the point at which the Minister would be able to declare them as SEZs, such as feasibility studies, EIAs, land acquisition, securing of investments, etc. It was not simply the completion of an application form.  The SEZ would not be designated unless it was feasible and had an investment commitment. When an SEZ was designated, a plan could show exactly when the investor would become operational. It was a tedious and complex process so there would always be “proposed SEZs” as that was a process to be gone through before an SEZ could be designated.

He noted that many inputs were merely comments or suggestions, which the Department welcomed and would consider.

Concluding remarks by Deputy Minister
Deputy Minister Majola observed that Mr Molefane had addressed many of the questions raised by Members, but he would provide a few responses to Members.

Regarding Mr Thring’s consistent question on beneficiation, he explained that was exactly what the team intended to do with the Bojanala SEZ along the platinum belt, although that SEZ had not yet taken off the ground. Currently, the team was focussing on the Fetakgomo-Tubatse SEZ because it was a mining area which gave the dtic the opportunity to work with the local mining companies to ensure that the SEZ became a hub for mineral beneficiation. The Musina-Makhado SEZ would also become a hub for mineral beneficiation as it was also situated in a mining area. The SEZs were focussing on beneficiation as that was an objective of government.

The Deputy Minister assured Mr Macpherson that the ministry and the Department did take the comments of all Members of Parliament seriously and they were taken forward for consideration. In respect of Mr Macpherson’s comments on IPs, the Department would be reviewing each IP in line with the broader plan for IPs: some would be revamped and others would be re-focussed, while yet others would be given to the private sector to manage.

Mr Mulder had asked a big question when he had asked if the programme was, given what had happened thus far. The Deputy Minister said that it was recognised that things had to be done differently; that was the instruction that Cabinet had given the Minister and the Department in 2019. The approach to SEZs had changed and he believed that progress was being made. He pointed out the value of Coega as an industrial development zone (IDZ) in the Gqeberha region that would be in a drastic situation without it. The same applied to the IDZ in East London. Those regions would have no investment at all without the IDZs. The R16 billion investment by Ford was based purely on the agreement to create an SEZ in Tshwane. Without the SEZ, that investment would have gone to Thailand. The Deputy Minister recognised the challenges but the team was acting on them.

He informed Mr Malematja that in future meetings, it was highly likely that the members of the team would be presenting from different parts of the country. As he had said, he was in the Eastern Cape the previous week and would be joining the team in Limpopo shortly and in the following week, they would be in Nkomazi. He hoped that in the future, Committee Members who were located in those areas would join the team so that they could see for themselves the work that was being done. He realised that Mr Malematja had raised the issue of stakeholders before and he assured him that the team had learnt valuable lessons from its experience with stakeholders in Tshwane and would therefore be engaging with stakeholders in all SEZ preparations.

The Deputy Minister assured Mr Mbuyane that the team was working hard to ensure that there were functional steering committees at all SEZs which included the dtic, the province, district and municipality as well as private investors, where necessary, to create a functional working team. Regarding a concrete report, he would be happy to return in a few months’ time to provide a progress report on what had been achieved since the beginning of May 2022.

He noted that some questions had not been responded to but those responses would be provided in writing. He thanked the Chairperson for the opportunity to brief the Committee.
Closing Remarks
The Chairperson requested written responses from the dtic, where necessary, within seven days. She was pleased that the Deputy Minister had offered to return with a progress report as the Committee was taking SEZs and IPs very seriously as they were in line with government’s overarching programme of industrialisation and promoting job creation through manufacturing capacity as Deputy Minister Gina had said in her introduction. She noted the objective of transforming the economy and making it more inclusive. Industrialisation would lead to job creation which would lead to work and the ability of people to put food on the table.

She thanked the Deputy Minister for offering Members the opportunity to join the team in their own regions as it would assist Members to understand how the dtic was tackling the problems. She wanted an indication of when the new approach would go to Cabinet for approval.

The Chairperson stated that the meeting had produced very robust and honest interaction and she looked forward to the progress report and further discussions.
The Committee Secretary stated that the secretariat had supplied a first draft of the Budget Vote Report to Members; it was a first draft and editing was ongoing so there could be errors in that draft. He requested that Members submit recommendations and concluding remarks by 9:00 the following day so that they could be included in the report to be presented to Members at the meeting the following day. He requested that the meeting on 4 May 2022 be delayed until 11:00 for precisely that purpose.

The Chairperson noted that the House was sitting at 15:00 so the meeting could begin at 11:00 on the morrow.

The meeting was adjourned.

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