department of trade industry and competition Archives

‘Vision with action can change the world’

It is fitting, in a month where the world remembers former president Nelson Mandela, that the Minister of Trade, Industry and Competition, Parks Tau, opened his budget vote address with a quote from Madiba: “Action without vision is only passing time. Vision without action is merely day-dreaming. But vision with action can change the world.” These words reverberate within the Tshwane Automotive Special Economic Zone’s core, sitting at the heart of the special economic zone’s (SEZ) ethos. Speaking in Parliament on 16 July 2024, Minister Tau noted that the words also echo the country’s aspirations to build a dynamic, industrial and globally competitive South Africa that is transformed, inclusive and equitable. This is “anchored on industrialisation, transformation, job creation and building a capable and developmental state”. The minister emphasised the importance of manufacturing-led growth. “Manufacturing creates jobs in upstream and downstream sectors,” Tau explained, adding that these jobs were typically permanent and paid decent wages, with workers able to access to skills development and career path opportunities. Instruments such as the South African Automotive Masterplan are crucial; with their focus on supporting localisation, increasing investment, and creating and retaining jobs. “We have industrial capabilities as a country,” he added. The Department of Trade, Industry and Competition (the dtic) would, in identified industries, work closely with relevant state-owned entities and industry to support local manufacturing of key products and to create jobs. Growing the export markets Of importance to TASEZ, is the fact that the minister identified the need to expand and improve exports. South Africa’s automotive sector already exports the bulk of the vehicles manufactured here. In May 2024, naamsa noted that “record high vehicle exports ensured that the automotive industry outperformed the rest of the manufacturing sector” last year. “The export value of vehicles and automotive components increased by R43.5-billion, or 19,1%, from the R227.3-billion in 2022 to a record R270.8-billion in 2023, comprising 14,7% of total South African exports.” Naamsa noted the export performance included “record exports to all major regions, including the European Union, Africa, the Southern African Development Community, and North America”. Minister Tau pointed out that South Africa’s location at the tip of “the second-fastest growing region in the world”. To reduce a dependence on a small domestic market, “the dtic will implement new export measures, coupled with expanding the current measures and improving their effectiveness” and will work towards expanding its export footprint through BRICS+ (Brazil, Russia, India, China,Iran, Egypt, Ethiopia and the United Arab Emirates), the African Continental Free Trade Area (AfCFTA), the African Growth and Opportunity Act (AGOA) partnership with the United States, and the Economic Partnership Agreement with the EU. Turning to SEZs, the minister reminded parliament that the reason the country had set up SEZs was “to expand economic activity to under-developed parts of South Africa. There are many benefits to this including, creating jobs closer to where our people live and thereby reducing the cost burden poor people carry.” There was no logical or economic rationale for forcing people to live far from their families in increasingly crowded living spaces. “Spatial equity is therefore, a non-negotiable.” Referring to the 11 SEZs established so far, the minister noted: “These SEZs have generated investments amounting to R19.6-billion. In addition, these SEZs provide an on-going revenue stream to national government through ongoing corporate, PAYE and VAT payments. These contributions to tax revenue across over 100 firms located in SEZs far outweigh the initial establishment costs.” Like TASEZ, which is located between Eerstrust, Mamelod and Nelmapius, South Africa’s industrial parks are often located in or adjacent to townships. And these industrial parks provide jobs and incomes to people from the neighbouring townships. “We, therefore, encourage private-sector participation in the industrial parks, in order to assist to improve operations and facilities, and encourage private sector investment.”

Minister of Trade, Industry and Competition delivers key policy assessment at TASEZ

News / By Jenny Tennant

The Tshwane Automotive Special Economic Zone (TASEZ) was chosen to host the delivery of a critical national policy assessment by the Minister of Trade, Industry and Competition, Ebrahim Patel on Tuesday, 7 March 2024. The minister delivered the Industrial Policy and Strategic Review – Transforming Vision into Action: Charting South Africa’s Industrial Future. “TASEZ was chosen as the venue for this occasion as it demonstrates how changes in the approach to implementing industrial policy has given different, significantly positive, results,” the minister said at the beginning of his review. This review – and plan for the future – takes place at a critical time, as the country celebrates 30 years of democracy, and a few weeks before South Africa’s seventh administration takes office. South Africa’s economic development has, over the past three decades, leaned into the national industrial policy to drive growth and transformation in an effort to eliminate poverty and reduce inequality, with industrialisation identified as a key to unlocking the economy, building investor confidence and creating jobs across multiple sectors. Economic impact of investment into South Africa Minister Patel noted that foreign direct investment (FDI) into South Africa rose to R1.1-trillion between 2019 to 2023, a significant increase from the previous five-year period which garnered R312-billion. Investments over the past five years were 3½ times larger. This was despite the turbulent headwinds the country had to endure over the last five years: The FDI packages ameliorated much of the negative impact of the six shocks the country endured. “The resilience of the South African economy has surprised many commentators,” Minister Patel noted. He referred to the 2023 EY Attractiveness Africa Report which highlighted that South Africa attracted the most FDI projects in Africa – 157, making up 23% of the continent’s total. According to the report, South Africa’s FDI was valued at US$26.8-billion and created about 15 000 jobs, the highest number in southern Africa. The minister also noted that of the R1.5-trillion pledged at the five cycles of the South Africa Investment Conference, a third of the projects had already been completed, with others under construction. “What we did in these five years is to try and get investment to flow notwithstanding the headwinds – and we have already seen some real impact.” Minister Patel reviewed the work done by the Department of Trade, Industry and Competition over the past five years, discussing a number of success stories in a variety of sectors; examining the challenges that had arisen; and charting a way forward to speed up the various economic programmes. Several key elements were vital to the success of the reimagined industrial strategy, including: This was supported by a number of programmes including the development of sectoral masterplans, which saw a move towards a multi-stakeholder approach, “in which government, the private sector and labour collectively developed and implemented plans”. The masterplan process modelled a new approach, where the state works in a flexible way to address the diverse concerns facing individual companies and other stakeholders. A catalytic project on SEZ development TASEZ is shining example of this approach; showcasing a more rapid and coordinated development process, particularly in reference to setting up special economic zones. One of the key drivers of TASEZ’s business approach is the South African Automotive Masterplan, with its focus on transforming the sector, promoting localization and creating jobs. TASEZ is a critical case study in the speedy implementation of the special economic zones in South Africa. It took four short years for TASEZ to develop from a dusty veld to a modern industrial hub, with an automotive original equipment manufacturer (OEM) – the Ford Motor Company of Southern Africa – supported by other component manufacturers. “Investment was unlocked through an anchor firm, Ford, while the dtic, the Gauteng government, and the City of Tshwane pooled their resources and capabilities,” the strategy review notes. “This solid base allowed for the rapid unlocking of 11 investments by component firms and help establish the SEZ by developing a network of interconnected producers around the zone.” The review noted: “All of this was underpinned by strong alignment with pre-existing policy including state support through the Automotive Production and Development Programme and investment funding through projects like the Automotive Investment Scheme.” In its short existence, TASEZ has seen an investment of R16-billion from Ford; R5.6-billion from the various component manufacturers; and R3.92-billion from government – in its first phase of development. In addition, the first phase of TASEZ has seen the creation of 3 244 permanent jobs in the automotive manufacturing sector and a further 5 071 jobs in construction. Procurement spend in the small, medium and micro enterprise sector has totalled R1.7-billion so far. “This mode – of moving quicky, working through partnerships, coordinating across the state and aligning with broader support programmes – offers a sturdy pathway for the revitilisation of industrial policy,” the review report noted. TASEZ is now preparing to begin the second phase of development, with several investors already preparing to join the hub. “As a special economic zone that plays an integral role in transforming the automotive manufacturing sector,” TASEZ CEO Dr Bheka Zulu, adding that the Africa’s first automotive city could attest to the importance of a strong industrial policy in encouraging global investors.

Tshwane SEZ shows the way on how to successfully attract investment and create employment

News / By Jenny Tennant

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: 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: “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: 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.”

Women of the SEZs initiative launched in Mamelodi

News / By Jenny Tennant

Shining a spotlight on the role of women in South Africa’s economy, a significant event took place in Mamelodi on 7 September 2023 with the launch of the Women of the SEZs initiative. The initiative aims to showcase the achievements of women in the special economic zones (SEZs) space, inspire future generations, and create an environment that nurtures their growth and success. Welcoming participants to the event, Tshwane Automotive Special Economic Zone (TASEZ) corporate services executive Vangile Nene said the intention of the initiative is to create a legacy, much like how people look back at the contribution made by the women of 1956, who marched to the Union Buildings protest the pass laws. “We hope that generations will look back on this day,” she added. Among those attending the launch was the chair of the SEZ CEO Forum Kaashifah Beukes; the acting deputy director-general responsible for industrial finance at the department of trade, industry and competition and TASEZ board member, Susan Mangole; Irene Ramafola, the chair of TASEZ’s audit and risk committee; TASEZ’s CFO, Rebecca Hlabatau; and Lebogang Zwane, project manager at the Motheo Construction Group. Also present were community liaison officers from the Community Project Committee, a structure set up between the local communities of Eersterust, Mamelodi and Nellmapius and TASEZ to find ways of working together to create local job opportunities and training programmes; representatives from DSV, Feltex and Automould – factories based within the TASEZ hub; and the women of TASEZ. The Women of the SEZs initiative is a declaration of the sector’s commitment to building a future where women’s voices are not only heard but celebrated, and where their contributions are not only acknowledged but revered. Growing the Women of the SEZs initiative “We want to grow this initiative and involve all the other SEZs across the country, and beyond,” Nene added, while Mangole noted that “today marks an important day, where we find ways to inspire and build women.” Central to the launch was a panel discussion on the role of women in South Africa’s key economic sectors and how the role they can play in bring about transformation. Ramafola, as the panel moderator, pointed out that the women of 1956 had their own challenges, and “we have ours”. “While South Africa has made great strides in building a non-sexist society and progress has been made to promote gender equality, the same cannot be said when it comes to the economy,” she said. “Why is this the case?” she asked the panel. Panellists Mangole, Beukes and Zwane spoke passionately about the challenges women face in the industrial sectors, sharing practical solutions and personal experiences. Ideas raised during the wide-ranging discussion included: The Women of SEZs initiative is a rallying cry, a call to action to champion diversity, foster inclusivity, and empower excellence. It serves as a testament to the unyielding determination of women who continue to steer the course of progress, innovation, and collaboration within the SEZs and beyond.

Growing township automotive sector through investment, regulating, upgrading skills

News / By Jenny Tennant

Government takes the automotive sector very seriously, Premier Panyaza Lesufi said at a workshop on township mechanics held in Johannesburg on Wednesday, 6 September 2023. Addressing a packed hall of industry role players including the Tshwane Automotive Special Economic Zone (TASEZ), the Retail Motor Industry Organisation (RMI), the MerSETA (Manufacturing, Engineering and Related Services), the Automotive Industry Development Centre (AIDC), professional automotive mechanics, apprentices and learners, Lesufi said that key to investing in and growing the sector – particularly in the province’s townships – it was important to make sure that the businesses needed to be regularised and be competitive. In addition, “those who want to invest in the townships must invest on our terms. They must consult with the local players and make sure they empower them”, Lesufi said. The workshop was part of the Growing Gauteng Together initiative run by the Gauteng provincial government and the Gauteng department of economic development. He told the delegates at the workshop that the township economy was critical to developing the country’s economy in general. “This is the only province that has passed a law ensuring that the government will buy services from townships, hostels and informal settlements.” TASEZ is a prime example of ensuring that townships are included in the development of the automotive sector. One of the policies essential to the TASEZ business model is that investors must make provision for the inclusion of local community members in their workforces. Lesufi’s message drew on the data shared by the Deputy Minister of Trade, Industry and Competition, Fikile Majola, who noted that the workshop should provide long-lasting, actionable solutions. SMMEs crucial to economic growth The triple challenges of unemployment, poverty, and inequality impact on the country’s development agenda, and the townships are the epicentre of these challenges. More than a quarter of South Africa’s population live in townships and more than half of those in the townships are unemployed, yet the township economy is critical to the country. He referred to the importance of special economic zones (SEZs) being connected to the township model of economic development. SEZs are geographically designated areas set aside for specifically targeted economic activities to promote national economic growth and exports by using support measures to attract foreign and domestic investments and technology. TASEZ, Africa’s first automotive city, is located in Silverton near the townships of Eersterust, Mamelodi and Nellmapius. Much of the workforce used in the factories based at TASEZ come from the surrounding communities. Majola noted that the South African Automotive Masterplan spoke about doubling production by 2035. “One million cars are manufactured annually on the African continent, with 700 000 of those coming from South Africa, Morocco and Egypt.” The continent had a population of 1.3 billion. He compared this to the production figures from India, which manufactures 4 000 000 cars a year. It has a population of 1.4 billion. “We must be more competitive and ramp up production.” And that can be done through developing small, medium and micro enterprises (SMMEs). “Globally, all economies are driven by SMMEs, but the number of SMMEs in this country is too small for an economy the size of South Africa,” Majola added. “If we are to expand the SMME base in South Africa, we have to think outside the box, but within the law.” Collaborative efforts TASEZ has a team dedicated to helping develop SMMEs and providing skills development programmes. Gauteng MEC for Economic Development Tasneem Motara pointed out just how important the automotive sector is to South Africa. It contributed 4.9% to the gross domestic product (GDP) in 2023. “It is a huge player in the economy with the potential to grow.” However, she added, picking up on the issues of SMMES: “How do we address the challenges small businesses face?” Common challenges include struggling to access to markets; financing; to support; and infrastructure. The automotive sector had added challenges, such as being unable to receive reliable parts; a lack of entrepreneurial skills; and the onerous and expensive accreditation processes. Collaboration was key to growing small businesses. “We need to focus on the informal sector, but also ensure that industry bodies are included.” Skills development was crucial, she added. “We have to find meaningful solutions.”