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TASEZ has much to celebrate as 2024 and Phase 1 draw to a close

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By Mandla Mpangase As 2024 draws to a close the Tshwane Automotive Special Economic Zone has much to celebrate, according to board chair Lionel October. “This is a project that is a shining example of the three government shareholders doing everything that was asked of them,” he adds. “When we asked the City of Tshwane for land, they gave us land. When we asked the Department of Trade, Industry and Competition to provide support for the Special Economic Zone’s top structures they did so to the tune of over R2-billion. The Gauteng government also played their role in providing bulk infrastructure, also at a cost of almost R2-billion.” Their drive and determination saw TASEZ rise from the dusty highveld in 2020 to becoming a fully-functioning, technologically innovative automotive manufacturing hub within two years. “The development happened in a record time,” October points out. During the construction phase 5 000 jobs were created, with 40% going to small, medium and micro enterprises in the neighbouring townships of Eersterust, Mamelodi and Nellmapius – “another record achievement”. In addition, a further 3 200 permanent jobs were created. TASEZ focuses on its priorities of job creation through aggressive infrastructure development, growing small, medium and micro enterprises, inclusion and accelerating economic reforms to unlock investment and growth. “People ask why government places such an emphasis on the automotive industry,” the chair notes, adding that it is an industry that requires highly skilled workers, and with that comes better wages. The South African automotive sector is one of the most visible sectors in receiving foreign investments and contributes significantly to the growth of the economy. It is an industry that generates millions both nationally and for the City of Tshwane. The automotive manufacturing industry contributes 4.3% to the annual gross domestic product and provides direct employment for 110 000 people. But it also goes beyond the initial investments provided by the original equipment and component manufactures, but the ongoing generation of money that grows the local economy. In addition, the automotive manufacturing industry represents the medium technology sector, removing workers from a low wage, unskilled future to the middle income. However, there is now a pressing need to up the ante with the development of new energy vehicles and the rapid progress of technology. “We need to transition into a high technology, high income economy.” And TASEZ is well placed to perform that role, with the establishment of a training academy as part of its Phase 2 developments. “We will have our own campus where we hope to train between one thousand to two thousand young people each year. “Furthermore, we will be working with the Industrial Development Corporation to create a stream of black industrialists in the automotive manufacturing industry,” October says. TASEZ is also exploring investment opportunities related to the manufacturing of NEVs. “It is important that we do so,” October adds. “We have about 10 to 15 years left for petrol vehicles, and we at TASEZ need to be at the centre of the new developments. “The fact that Gauteng is a major automotive market gives us a competitive advantage.”  

Business engineering key developmental milestone for SA auto manufacturing sector

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By Mandla Mpangase Africa’s first automotive city, the Tshwane Automotive Special Economic Zone (TASEZ), is set to play a leading business engineering role in training a sklled workforce for a new automotive environment that will embrace new energy vehicles (NEVs) and cutting-edge technologies. A number of countries, including South Africa, have announced pledges to achieve net zero emissions over the coming decades. South Africa has set itself the task of zero net emissions by 2050, bringing global energy-related carbon dioxide emissions to net zero by that time to give the planet an even chance of limiting the global temperature rise to 1.5 °C. Many of the country’s automotive export markets have set stringent targets over the next decade and the original equipment manufacturers (OEMs) are gearing up for the change. Research by Deloitte, Automotive Pathways to Decarbonisation, notes that “by 2050, automakers are expected to reduce CO₂ emissions by 90%”. It goes on to note that “to reach these aggressive targets, however, the entire value chain will need to be decarbonised”. TASEZ has also set itself the bold mission of being a key contributor to creating new businesses, ensuring stable affordable energy supplies, and enabling robust economic growth. Pathway for SEZs TASEZ has proactively set out a cost-effective and economically productive pathway for special economic zones (SEZs) in Africa that will yield results for a clean, dynamic and resilient energy economy, dominated by renewables like solar, waste to energy, and hydrogen instead of fossil fuels. These initiatives will enhance productivity and competitiveness for the automotive manufacturing sector, contributing to South Africa’s socio-economic development through creating jobs and transforming the industrial landscape of the SEZs, says TASEZ CEO Dr Bheka Zulu. Deloitte suggests OEMS and component producers adopt circular business models and transition clean energy in both production plants and usage by prioritising sustainability when extracting and processing basic materials, producing vehicles and their parts, and decommissioning vehicles at their end-of-life. “The sector will need to eliminate traditional sector boundaries, involve suppliers and customers in the solution, and foster strong cross-sectoral collaboration.” This is where TASEZ is well-equipped to play a significant transformative role as an SEZ. Its strength is in building strong strategic partnerships, supporting current and potential automotive manufacturing tenants in creating green facilities that incorporate the latest technologies, and helping to train a workforce familiar with future trends within the industry. Based in Silverton, Pretoria, TASEZ sits adjacent to the Ford Motor Company of Southern Africa and provides infrastructure, just in time, just in sequencing, and bespoke services to a range of component investors. A relatively new entrant into the automotive manufacturing space, TASEZ gained traction when Ford announced it would be investing US$1-billion in upgrading its facilities in South Africa to increase its production from 160 000 vehicles a year to 200 000. The Ford Frame plant and 10 other component manufacturers began moving into the TASEZ space in 2020 to make this a reality – against a very tight deadline of some 18 months. The first Ford Next Generation Ranger came off the production line in November 2022. TASEZ strategic goals With that specific target met, TASEZ could expand its focus more broadly to the strategic goals of helping grow the economy and transform the South African automotive industry, as spelt out in the South African Automotive Master Plan; creating awareness and support for the development and growth of the automotive SEZ; attracting automotive and related industries and tenants into the SEZ; and supporting socio-economic empowerment within the surrounding communities. As a new development, focus was also on creating a zone that embraced the United Nations Sustainable Development Goals in helping end poverty, supporting green energy, and the transfer of skills to those previously excluded from the economic sectors. Phase 1 saw TASEZ creating 5 071 construction jobs (with 18% going to women, 60% going to youth, and 0.86% going to people with disabilities), 3 244 permanent jobs within the automotive manufacturing sector (with women representing 32%, youth 65.47%, and people with disabilities 0.83%), and 10 000 supply chain jobs. In addition, TASEZ provided small, medium and micro enterprises (SMMEs) with R1.7-billion in contracts. “South Africa sets a great store on the SMME sector as a driver of economic development and growth,” Dr Zulu notes. The National Development Plan 2030 (NDP) has set a target of 24 million people in employment by 2030, which 21.6 million would be in SMMEs. TASEZ’s Phase 1 development saw 3 244 permanent jobs in the automotive manufacturing sector created, with a further 5 071 jobs in construction. SMME procurement spend totalled R1.7-billion. New developmental phase As TASEZ begins to develop Phase 2, it is worth noting the importance of SEZs to South Africa’s industrialisation: SEZs are intended to attract foreign and local direct investment through offering various incentives; to enhance the country’s export capacity by providing a conducive environment to produce competitively priced goods; and to generate employment opportunities, particularly where there is high unemployment. TASEZ is well aware of the ever-evolving landscape of the automotive manufacturing industry, with NEVs just around the corner, the necessity to embrace Fourth Industrial Revolution skills in manufacturing, and a keen awareness of the need to ensure that everything is done sustainably, with a built-in resilience. Phase 2 sees TASEZ focusing on becoming a Centre of Excellence for current and future skills programmes, entrepreneurial incubation programmes and high-tech education programmes based on the needs of both the automotive manufacturing industry and the surrounding communities. TASEZ Training Academy “Youth development is a key component of our business case,” says Dr Zulu. Achieving net zero by 2050 cannot be achieved without the sustained support, behavioural changes and participation from citizens, particularly in advanced economies,” he adds. “The TASEZ Training Academy will develop high-tech youth empowering initiatives such as Carbon Capture, Utilisation and Storage (CCUS) programmes which will contributes to the transition to net zero in multiple ways. These will include tackling emissions from existing energy assets, providing solutions in some of the sectors where emissions are hardest to reduce, thereby

TASEZ shares investment ideas, experience with African SEZs

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By Mandla Mpangase The leaders of Africa’s special economic zones (SEZs) – including Africa’s first automotive city – are putting their minds to the role they can play in attracting impactful investments and redefining competitiveness. This theme set the tone for the annual meeting of the African SEZs which was held in Nairobi, Kenya, at the end of November 2024. The meeting was attended by some 300 participants representing governments, international experts, decision-makers, financial institutions and representatives from the various SEZs. The Tshwane Automotive Special Economic (TASEZ) team participated in the meeting in order to “see how we are positioned in terms of the SEZs across the continent”, according to TASEZ CEO Dr Bheka Zulu, adding that it was surprising to find that TASEZ was ahead of the curve. “We have a lot to contribute, and we have much to learn too,” Dr Zulu adds. There are more than 200 operational SEZs in 47 countries on the continent, according to the African Economic Zones Outlook 2021. This breaks down into 150 000 hectares dedicated to manufacturing, ago-processing and services. It is estimated that more than $2.6-billion has been invested in these zones. South Africa currently has 11 SEZs based in different provinces: in the Eastern Cape are Coega and the East London SEZs; Maluti-A-Phofung is in the Free State; OR Tambo and the Tshwane Automotive Special Economic Zone (TASEZ) are situated in Gauteng; Dube Tradeport and Richards Bay are based in KwaZulu-Natal; the Musina/Makhado SEZ is in Limpopo; Nkomazi is based in Mpumalanga; and the Atlantis and Saldanha Bay SEZs are in the Western Cape. The African SEZs annual meeting is the flagship event of the African Union Commission (AUC) and the Africa Economic Zones Organisation (AEZO), providing insights on critical issues related to the development of SEZs in Africa. Said Business Development Executive Msokoli Ntombana: “SEZs are viewed as one of the key instruments to accelerate industrialisation, attract important foreign direct investments, and stimulate the country’s economy. It is crucial that these elements are firmly in place to answer the call of the National Development Plan to create jobs, fight poverty and promote socio-economic equality. “Not only are these priorities for South Africa, but are crucial for Africa’s success, as driven by the Africa Agenda 2063. SEZs have a critical role to play in shaping Africa’s economic landscape long-term,” Ntombana says. Topics covered at the Nairobi meeting included: Building intelligent infrastructure, focusing on necessary infrastructure upgrades, such as 5G networks and data centres to support industrial activity securely; Workforce development, looking at strategies for upskilling the workforce to integrate large-scale technologies; Regulatory frameworks for new technologies, examining how policies can be adapted to foster technology innovation while protecting data privacy and ensuring ethical use; Sustainability, discussing the integration of circular economy principles, eco-industrial parks, and sustainable urban planning in SEZ development; Financing sustainable SEZs, looking at innovative financing mechanisms such as green bonds and climate funds to support the sustainable development of SEZs; and Policy and governance, examining how African governments can create conducive environments for the growth of socially inclusive and sustainable SEZs. “As we head into the age of the new energy vehicles (NEVs), it is important to recognise that most of the commodities required for NEV development comes from the African continent,” the CEO says. “So for us to tap into the relationships with our brothers and sisters is actually forward- looking, because we have the insight to be able to create trade lines between ourselves,” Dr Zulu notes. “It is important to capacitate the rail infrastructure between the original equipment manufacturers based in the City of Tshwane and our ports, which are crucial to the export of vehicles to our global markets,” TASEZ CEO Dr Bheka Zulu noted.

Inclusive growth path will benefit SA economy – Finance Minister

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By Mandla Mpangase While fiscal prudence is the name of the game for the Minister of Finance Enoch Godongwana, a key standout – as far as automotive manufacturing industry in general, and the Tshwane Automotive Special Economic Zone (TASEZ) in particular – is the confirmation of rail upgrades between Tshwane and Gqeberha. Minister Godongwana delivered his 2024 Medium-term Budget Policy Statement (MTBPS) in the National Assembly on 30 October 2024. His policy statement outlined the country’s strategy to lift the economy to a higher and more inclusive growth path, and rests on four pillars: maintaining macroeconomic stability; implementing structural reforms; supporting growth-enhancing infrastructure; and building state capability. Speaking of the renewed energy that followed the national elections earlier this year, the minister said: “There is a new light that is shining down on our country and on our economy. The recent elections demonstrated the resilience and maturity of our young democracy.”   Three priorities sit at the heart of government policy: Pillar three of the MTBPS is about effective infrastructure investment that will boost economic activity and enable higher growth over the medium term. “In this regard, we are implementing reforms that will create conditions to attract greater private sector participation.” One particular aspect of this is “to increase the pool of funders to diversify public infrastructure financing through new mechanisms and instruments. These include build-operate-transfer (BOT) structures and other concessions”.   Included in this particular programme are capacity upgrades on the rail network from Watloo in the City of Tshwane – near TASEZ and the Ford plant in Silverton – to Gqeberha. This is particularly important given that the South African automotive industry is export-driven, with vehicles needing to be shipped to international markets. “It is important to capacitate the rail infrastructure between the original equipment manufacturers based in the City of Tshwane and our ports, which are crucial to the export of vehicles to our global markets,” TASEZ CEO Dr Bheka Zulu noted. Minister Godongwana added that a request for proposals will be issued this year for funders who are interested in supporting projects such as the Watloo to Gqeberha upgrades. “Collectively, the infrastructure reforms will strengthen planning, appraisal, contracting, financing, and monitoring and evaluation.  “The outcome will be faster delivery of infrastructure that supports economic growth, the expansion of access to basic services and boosting job creation.” According to naamsa, the Automotive Business Council, Gauteng has the highest diversity in the country’s automotive profile, housing three OEMs as well as the majority of first- and second-tier automotive component suppliers in the country. “The economic muscle of the South African automotive industry, with its economic gains far outweighing its fiscal costs, cannot be underplayed.” Vehicle export value topped R203,9-billion in 2023.

SA determined to drive towards new energy vehicles

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By Mandla Mpangase Consideration must be given to providing incentives for manufacturers as well as tax rebates or subsidies for consumers to accelerate the uptake of electric vehicles in South Africa. This statement by President Cyril Ramaphosa in his key note address at the South African Auto Week 2024 was greeted by much applause by the industry role players. Speaking at the high-level event in Cape Town on Thursday 17 October 2024, the president recounted the recent economic diplomacy efforts of government globally, including in New York, London and Beijing. “Our experience confirms a greater interest in South Africa’s prospects.” South Africa’s auto industry makes a significant contribution to the country’s gross domestic product, which currently sits at 5.3%, a fifth of the value add within local manufacturing comes from vehicle and component production. The auto industry accounts for around 15% of the country’s total exports.  “[The industry] continues to blaze a trail in strategic economic markets on our continent, in North America, in Europe, as well as Indonesia.” It is also a major employer, collectively employing half a million people directly and indirectly across the value chain. Importantly, “the sector continues to actively support transformation”. The transformation targets have been set out in the South African Automotive Master Plan 2035. The plan sets out a number of targets: “The Automotive Industry Transformation Fund has supported a number of beneficiaries. It has facilitated market access for black-owned and female-owned firms to the value of R4-billion and supported thousands of jobs across the industry.” This year is a milestone for the automotive industry, marking 100 years of vehicle manufacturing in South Africa since the first Model T Ford rolled the assembly line of the Ford plant in Port Elizabeth (now Gqeberha). Industry leaders have shown great confidence in South Africa. Today the automotive manufacturing footprint has expanded exponentially, with international auto companies now major investors in the South African economy. “They have consistently featured prominently at the annual South African Investment Conference, which was inaugurated in 2018,” the president said, adding that “over the past few years, these companies have invested an average of some R8-billion rand a year.” Component suppliers have also invested a considerable amount into the South African economy – about R4-billion a year. However, the industry faces many challenges, including the transition towards decarbonisation, with a move to cleaner, more sustainable fuels and stringent regulations. “Even as the journey to net zero poses a challenge for the auto industry there is, at the same time, immense opportunity. The local automotive sector needs to position itself to take advantage for the demand of electric vehicles (EVs), new energy vehicles (NEVs) and sustainable fuels.” President Ramaphosa noted that this was a government priority. “The automotive industry has a critical role to play in achieving South Africa’s climate targets. We’re committed to working with the private sector to promote the production of NEVs and the development of the necessary infrastructure to support them.” This includes the beneficiation of critical minerals for the production of NEVs and their associated value chains, as well as the production of batteries and green hydrogen fuel cells for EVs. “We are working to finalise comprehensive NEV policy guidelines that include alternative technologies such as hybrids and plug in hybrids, so consideration must be given to incentives for manufacturers as well as tax rebates or subsidies for consumers to accelerate the uptake of EVs.” The president noted that this was not just about creating a greener future, but also about ensuring South Africa remains competitive in the global market. “This is a major industrialisation opportunity for our country and the region as well, particularly within the context of the African Continental Free Trade Area. This will position South Africa as a forward-thinking green economy.”

Together, we can grow the auto sector

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By Mandla Mpangase From attracting foreign direct investments, to supporting auto component producers, to providing skills for the future, to opening up opportunities for local communities, the Tshwane Automotive Special Economic Zone (TASEZ) has an several key roles to play in the transformation of the automotive manufacturing sector.  TASEZ CEO, Dr Bheka Zulu, described just some to the work TASEZ does during a panel discussion on the opening day of South Africa Auto Week 2024 in Cape Town. TASEZ is a key partner of this annual gathering of the industry. A hot topic at the high-powered event, taking place from 15 – 18 October 2024, is that of training skilled workers for an evolving sector, as the production of new energy vehicles (NEVs) is no longer on the horizon, they are already here. “South Africa’s workforce must keep pace,” Dr Zulu said. The rise of EVs, autonomous driving technologies, and smart manufacturing requires an entirely new set of skills. This is where the TASEZ Training Academy comes into play. With the manufacturing sector in constant change as the Fourth Industrial Revolution takes hold, TASEZ, through its’ training academy, is making sure that workers are equipped for this future. “This initiative is critical in ensuring that the country not only retains its competitive edge in automotive manufacturing but also contributes to the development of a highly skilled, future-ready workforce.” “But,” Dr Zulu told the panel, “our academy goes much further; it also offers training to emerging businesses and small, medium and micro enterprises (SMMEs) in both business management as well as the soft skills of marketing their products.” The CEO pointed out the importance of supporting SMMEs and the local communities bordering the SEZ. Currently SMMEs are estimated to contribute 40% towards South Africa’s Gross Domestic Product (GDP). The National Development Plan highlights the importance of SMMEs to the economy. It envisages that 90% of all jobs will be generated by small enterprises in 2030. “As South Africa charts a course toward a more competitive, inclusive, and sustainable automotive industry, we must all go all out to make grow and transform our sector,” Dr Zulu added.

Collaboration is needed to gear up to new auto future

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If South Africa is to transform the automotive sector as spelt out in the South African Automotive Master Plan 2035, the industry must take decisive action on a wide range of issues, including decarbonisation, writes TASEZ CEO Dr Bheka Zulu. As the country’s special economic zone (SEZ) focused primarily on the automotive industry, the Tshwane Automotive Special Economic Zone (TASEZ) is ready to play a key role in moving the transformation efforts forward. While South Africa has set itself the task of zero net emissions by 2050, many of the country’s automotive export markets have set stringent targets over the next decade and the original equipment manufacturers (OEMs) are gearing up for the change. No doubt, this will be one of the main talking points at this year’s South African Auto Week, taking place in Cape Town from 15 – 18 October 2024. The theme for this year’s event is Reimagining the Future Together: Celebrating 100-Years of automotive heritage, passion, resilience and ingenuity. Among the topics up for discussion are “Decarbonising the auto sector”, “A path to net zero”, and “SA NEV (new energy vehicle) transition: Policy choices and support instruments”. It is against these current discussions that input from research by Deloitte, Automotive Pathways to Decarbonisation, becomes both prophetic and doable. The report, that “by 2050, automakers are expected to reduce CO₂ emissions by 90%”. It goes on to note that “to reach these aggressive targets, however, the entire value chain will need to be decarbonised”. The Deloitte report states: “Despite ongoing advances in the fuel efficiency of vehicles with internal combustion engines, the automotive sector’s pathway to decarbonisation requires accelerated adoption of electric vehicles (EV). Beyond the regulatory push to reduce tailpipe emissions, this shift is also being driven by consumer demand. In response, automakers around the globe have been ramping up EV production and sales.” However, the sector is faced with the high costs of expanding EVs into the market place, inconsistent regulatory frameworks globally, insufficient access to green inputs such as batteries and steel, a lack of competitive green business models and strong sustainable strategies, the report adds. But all is not lost. “By quickly ramping up EV production, increasing usage of renewable energy, and establishing material circularity, automakers can enhance the industry’s ability to meet the Paris Agreement’s science-based emissions reduction targets.” Deloitte suggests OEMS and component producers adopt circular business models and transition clean energy in both production plants and usage by prioritising sustainability when extracting and processing basic materials, producing vehicles and their parts, and decommissioning vehicles at their end-of-life. “To achieve this target state, the sector will need to eliminate traditional sector boundaries, involve suppliers and customers in the solution, and foster strong cross-sectoral collaboration.” This is where TASEZ is well-equipped to play a significant transformative role as an SEZ. Its strength is in building strong strategic partnerships, supporting current and potential automotive manufacturing tenants in creating green facilities that incorporate the latest technologies, and helping to train a workforce familiar with future trends within the industry. TASEZ’s facilities already embrace green energy solutions, using battery and solar elements. In addition, the SEZ’s close ties with local industry associations, training institutions and industry role players ensure that investors are provided with access to the latest technologies. Because TASEZ is based in the City of Tshwane, it is surrounded by academic, innovative and technological institutions, which are more than capable of supporting tenants in terms of research and development. It is only through partnerships and collaborative action across the entire value chain that a strong decarbonised sector will be built – and there is not too much time left to do so.

Clean audit for TASEZ makes it four in a row

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Not only is the Tshwane Automotive Special Economic Zone (TASEZ) an innovative driver of economic development through supporting the manufacturing sector, it is also a shining example of good governance. Africa’s first automotive city has received its fourth clean audit from the Auditor-General, cementing TASEZ’s reputation as the premier special economic zone (SEZ) for automotive investments in South Africa. “This can be attributed to the effectiveness of the board’s strategic guidance and the SEZ’s commitment to rigorous corporate governance,” says TASEZ CEO Dr Bheka Zulu. This, as TASEZ heads into its Phase 2 development, broadening its offering to diverse investors in the automotive manufacturing space. The clean audit is important as it provides investors with comfort of knowing that the SEZ is committed to sensible, judicious and transparent fiscal management, Dr Zulu adds. “It assures our investors, both international and local, that their investments are managed with integrity and diligence.” As one of the key implementors of South Africa’s industrial development policies, TASEZ plays a critical role in the SEZ ecosystem. TASEZ’s mandate is to accelerate economic reform through attracting investment, creating jobs, and opening up opportunities for small, medium and micro enterprises, particularly for the communities of the nearby townships of Mamelodi, Eersterust and Nellmapius.