Special Economic Zones add hope in an era of unemployment

Tempo de leitura: 1 minuto

President Cyril Ramaphosa’s announcement of a massive R16-billion investment in the Tshwane Special Economic Zone brings hope at a time when the economies of the country and the world are battling to recover from the effects of the coronavirus and lockdowns.

As the global economy seeks ways to recover from a slump that cost an estimated 220-million jobs, this investment will provide South Africans with much-needed employment.

Ramaphosa said the Ford Motor Company had announced the multi-billion rand investment to expand its manufacturing facility in Tshwane for the next-generation Ford Ranger bakkie. “This investment will support the growth of around 12 small and medium enterprises in automotive component manufacturing,” he said.

Ramaphosa added that nearly half of the procurement spend on construction of the bulk earthworks and top structure at the Tshwane Special Economic Zone (TSEZ) during this phase is expected to be allocated for SMMEs. He said this would amount to an estimated R1.7-billion in procurement opportunities.

A week after Ramaphosa’s announcement Statistics South Africa, in its Quarterly Labour Force Survey for the fourth quarter of 2020, laid bare the stark reality of the country’s unemployment situation.

The survey showed that the number of unemployed persons increased by 701 000 to 7.2-million compared to the third quarter of 2020. It also noted that the number of discouraged work-seekers increased by 235 000 (8.7%), resulting in a net decrease of 890 000 in the economically active population.

However SEZs can contribute to economic growth and the battle against unemployment. The Special Economic Zones Act 16 of 2014 provides for the designation, promotion, development, operation and management of SEZs. Several SEZs, among them the Tshwane SEZ, have been designated since the act was signed into law in February 2016.

In a 2019 paper titled Special Economic Zones: Lessons from the Global Experience, global economist Douglas Zhihua Zeng argued that SEZs can be an effective instrument to promote industrialisation if implemented properly in the right context, as shown in some of the emerging countries, particularly those in east Asia. 

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