The presence of infrastructure in a special economic zone (SEZ) is a key driver in the attraction of foreign and direct investment, creation of employment and promotion of export-orientated growth.
When one considers infrastructure, one's mind automatically jumps to water, electricity, roads, drains, rail and the internet. These are all vital when it comes to setting up any area to be developed, such as a housing complex or a specially zoned industrial park. In fact, the plethora of cars on our roads bears testimony to how vital it is to plan when establishing new businesses or living areas.
These are vitally important, as has been brought home all too often this year with innumerable power outages as Eskom battles to keep the lights on amid failing equipment.
Water, too, is an essential service and we are being made aware of how much we need it as the threat of taps running dry looms large amid a backlog of infrastructure maintenance. In fact, up to 40% of our water is lost to leaks — the equivalent of R10bn a year. When it rains, our storm drains can’t handle the influx of water and roads flood as a result.
Transnet has also been under the whip of late, with a recent strike causing companies such as Sasol to declare force majeure as they could not transport goods from port to port. While that strike has ended, it showed just how much our economy relies on infrastructure.
The softer infrastructure of schools, police stations, hospitals and even libraries benefits all who live and work in and around the zone
SKILLS DEVELOPMENT
At the same time, we need what one may consider soft infrastructure. Skills and knowledge, networking opportunities and shared experiences are needed for SEZs to provide a contribution to the economy and create jobs while rebuilding South Africa’s manufacturing sector. This may seem a bit of a chicken-or-egg situation. However, skills will follow infrastructure once a zone is ready to sign its first tenant.
With an anchor company in place, others in the supply chain will see the benefit of working in proximity to either clients or suppliers and will establish facilities. This concept is at the core of an SEZ’s purpose. It eliminates geographical boundaries while offering attractive tax rates, 15%, to companies that move in. This has a snowball effect, with one company’s establishment being an encouragement to other businesses. In turn, a community will be established to house workers, which will be followed by health-care facilities, schools and malls — all of which will exist to service the SEZ.
In this way, local economies are grown and jobs are created. The softer infrastructure of schools, police stations, hospitals and even libraries benefits all who live and work in and around the zone.
OPPORTUNITIES
SEZs offer great economic benefits to countries that establish them correctly. Locally, we have 11 designated SEZs across Limpopo, KwaZulu-Natal, Eastern Cape, Mpumalanga, Free State and Gauteng. These areas are attractive to international investors such as carmakers. They increase exports, develop skills and reduce the logistical burden on our roads and railways, thus enhancing our country’s industrial capabilities. This is in keeping with the spirit of the Special Economic Zones Act, which states that SEZs must result in the creation of decent work and other economic and social benefits, which include increasing the economic participation of smaller companies as well as transferring skills and technology.
The trick, however, when it comes to enabling more industrial zones, will be infrastructure. South Africa is battling to maintain the infrastructure it has, let alone extend it. Here, the private sector can play an important part just as it has in helping South African communities and businesses survive load-shedding. We are seeing increased interest from businesses, small and large, and people in renewable energy: solar panels and batteries to power homes, for example.
The government cannot solve our socioeconomic dilemmas alone, it needs each of us to play our part, and we all can. From hawkers who direct traffic when the lights are out to initiatives such as the “pothole patrol” partnership between the City of Johannesburg and insurance companies. These teams literally go around filling holes in the road that are reported to it through an app. Then there are the pointspeople, a more organised method to keep vehicles flowing when there is no power.
There are many examples of South Africans standing shoulder-to-shoulder to help build this wonderful country and develop it to its full potential, allowing for equitable growth for all. Providing infrastructure for SEZs should be no different. Public-private partnerships can be used to great effect here as well, which will lead to immense benefits for our country as a whole.
• Sangweni is the executive for infrastructure at the Tshwane Automotive Special Economic Zone
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