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Special Economic Zones to lead post-pandemic economic recovery

South Africa’s special economic zones (SEZs) are vital to the country’s economic recovery in the wake of the coronavirus pandemic, according to Department of Trade, Industry and Competition (dtic) Chief Director for SEZs and Industrial Parks, Thami Klassen. As one of the panellists at Proudly South African’s 2022 Buy Local Summit and Expo, he emphasised that SEZs were key to government’s localisation strategy aimed at stimulating demand for South African-made products, boosting small, medium, and micro enterprises (SMMEs), and revitalising the economy.

“SEZs represent a critical step in uplifting previously marginalised communities by creating new employment opportunities. Localisation can also expand more readily when the elements are put in place that make it easier for local SMMEs to enter the marketplace,” he said. “When you look at China and other countries that we benchmarked ourselves against, you’ll find that they use SEZs as a tool to build new cities.”

Klassen was joined by the CEO of the Saldanha Bay IDZ in the Western Cape, Kaashifah Beukes, and Charles Arendse, the co-owner of West Coast Corrosion Protection whose business is located within the Saldanha Bay IDZ, to explore the topic of how SEZs drive localisation, assist SMMEs, and create jobs.

By offering special incentives targeting specific industries and economic activities, SEZs act to stimulate labour-absorbing sectors with significant growth potential, driving the country’s economic recovery. Klassen stated that it was therefore encouraging to see an enormous increase in investors in recent years from a mere 14 companies to as many as 149 companies in the 10 SEZs across the country.

“We have seen several sectors taking the opportunity to help the economy grow, and among the most viable have been the automotive, logistics, and manufacturing sectors”, Klassen explained. The panel recognised that despite the incentives offered by SEZs, South African businesses nevertheless continue to face severe obstacles to growth. The discussion particularly looked at the ways in which the pandemic has impacted the local economy, and how businesses were rebuilding after Covid-19.

Turning to the impact of Covid-19 restrictions on SMMEs, Arendse noted that the lockdowns – especially in the initial stages – had an enormous impact; but added that business owners and community members all showed great resilience in the face of extreme difficulties.

“I think West Coast Corrosion overcame the challenges. At one time we had over 80 people on-site in a working day, but with Covid we could only allow around 10 people,” he said.

“Covid forced us to do things differently, and we had to keep adding value to the industry.”

In terms of ongoing challenges, Klassen added that solving South Africa’s energy problems was crucial to unlocking business growth.

“The current state of affairs in Russia and the Ukraine and its economic fallout regarding oil and gas prices, combined with loadshedding in South Africa, show how desperately we need secure, affordable energy if we’re to keep up with local and international demand for goods and services,” he said.

Beukes noted the importance of the green hydrogen programme, which was also referenced in the 2022 State of the Nation Address (SONA) by President Cyril Ramaphosa. This programme aims to make cleaner energy available to all sectors and to create new business opportunities for local SMMEs and investors.

“To start with, however, space is being made in the SEZs where local businesses have access to technology and each other,” she said. “This space will be for digital learning and increasing the overall business skills of business owners and entrepreneurs. It will be an engaging, diverse, and richly collaborative atmosphere. It is through working together that we can thrive together.”

SEZs act to stimulate labour-absorbing sectors with significant growth potential. Image credit: Proudly South African

SEZs act to stimulate labour-absorbing sectors with significant growth potential. Image credit: Proudly South African