12 April 2024

The Tshwane Automotive Special Economic Zone (TASEZ) has set the benchmark for the development of South Africa’s new special economic zones.

Special economic zones (SEZs) are key to making South Africa an attractive option for foreign direct investments. SEZs are important instruments in advancing the country’s strategic objectives of industrialisation, regional development, the promotion of exports and job creation.

Africa’s first automotive city, based in the City of Tshwane, was an exemplary case in how to develop and set up an SEZ to hit the road running. From being gazette in January 2020 to seeing the first cars come off the production line in November 2022, TASEZ achieved all of this in just two short years – and during the Covid 19 pandemic.

The TASEZ case study was central to discussions that took place in a workshop held in Pretoria on Thursday, 11 April 2024, that looked at how SEZs can be implemented speedily.

Piloting a new method

“We are conscious of the responsibility we have been given in piloting this new model for the development of SEZs,” says TASEZ CEO Dr Bheka Zulu. “It could not have been done without the strong strategic partnerships between our investors and all three tiers of government.”

The TASEZ model has now set the benchmark for the establishment of new SEZs.

Representatives from the country’s new SEZs joined the teams from the Department of Trade, Industry and Competition (the dtic) responsible for SEZ development, the Industrial Development Corporation’s (IDC’s) SEZ unit, and TASEZ.

TASEZ chair and executive director of the Industrial Zones Programme at the IDC, Lionel October, said: “We are here today to begin to standardise and formulate SEZ set up procedures.”

The dtic’s Shaun Moses set the scene for the discussion, outlining the policy and strategies driving the development of SEZs.

He highlighted the underlying economic challenges South Africa had to tackle:

  • the unusually large income and wealth disparities within the country;
  • the high levels of joblessness;
  • low savings and high consumption levels;
  • a weak small and medium business sector with high levels of economic concentration in product markets;
  • a trade sector reliant on the export of raw materials and the import of capital and consumer goods;
  • a carbon-intensive economy; and
  • the focus on a few geographic areas for economic output.

This led to the government identifying a number of objectives to change the economic landscape: combining growth with transformation; boosting local production; growing exports and expanding trade within Africa; increasing investment; establishing a reliable and low-cost energy system while greening the economy; and growing employment.

This, Moses pointed out, would be achieved through promoting jobs and higher incomes via industrialisation; building an inclusive economy; and making sure public policies make an impact.

Factors for success

It was against this background that TASEZ became the pilot project for a new approach to setting up SEZs.

There were a number of critical factors that ensured the project’s success:

  • A committed investment, with a set deadline. In TASEZ’s case the Ford Motor Company of Southern Africa committed to a R16-billion investment to produce an extra 40 000 vehicles a year, moving from 160 000 units a year to 200 000 vehicles annually.
  • The political will to drive the project. All three tiers of government became equal shareholders, with clearly defined roles.
  • A hands-on project steering committee which was able to act decisively. The committee reviewed progress on a bi-weekly basis.
  • The appointment of an experienced implementing agent that had the capacity to drive the project. In the TASEZ case, the Coega Development Corporation was instrumental in transferring its knowledge and lessons learnt.
  • Action was key; the construction of the top and bulk structure was undertaken simultaneously.
  • Community participation was an essential element of the project, with community and SMME packages ringfenced during the first phase of development.
  • Construction tenders went out to market once the concept designs were concluded, with the detailed design taking place while tenders were open.
  • Beneficial occupation allowed for investors to access their plants while construction was still taking place.
  • The establishment of a project socio-economic development centre, along with appointing community liaison officers and the signing of a memorandum of understanding with local communities. This allowed TASEZ to regularly consult, engage with and report to the communities surrounding the development.

“The scale of the TASEZ project demanded a well-coordinated, systematic and objective approach in responding to the socio-economic performance targets, job creation and SMME opportunities.”

Crucially, it was the agile project management approach that ensured TASEZ’s success. Key factors to this success were:

  • the availability of funds up-front;
  • appropriate management skills to ensure ongoing success;
  • timeous procurement of materials and skills when required by the project;
  • the ability to manage processes concurrently, such as planning applications and preparations on site; and,
  • last but not least, implementing an active SMME mentoring programme.

One of the proposals to speed up the development of new SEZs, put forward by the technical advisor of the Industrial Zones Programme at the IDC, Dr Siyabonga Simayi, was the creation of multi-sites, or the extension of the boundaries of existing SEZs, to incorporate the development of new SEZs.

This would see the development of a zone with more than one site, or the development on land that did not share a border with the existing SEZ.

The licence of an existing Industrial Development Zone could be used to facilitate the creation of new SEZs, cutting down on read tape and allowing for a speedier and more agile process, Dr Simayi told the workshop.

This would see a single licensee, operator and entity, with one management team and board; single operating systems and processes, and a single budget with one audit process.

The workshop concluded by agreeing that there was a need to develop clear guidelines and operating procedures to implement successful SEZs within two years.

As Stieneke Jensma, the chief operations officer of the Industrial Zones Programme at the IDC, noted in summing up the day: “TASEZ has done it – we know it’s doable.”