Business

Impoverished Nkomazi gears up for R7bn special economic zone

2019-01-18 05:21

Mpumalanga’s impoverished Nkomazi region is getting ready for a R7 billion investment after Trade and Industry Minister Rob Davies approved a licence for the establishment of the Nkomazi special economic zone (SEZ).

The Nkomazi SEZ will seek to maximise the participation and development of local agriculture and small and medium-sized enterprises throughout the value chain – from primary agriculture to the production of high-value end products.

SEZs are driven by the department to attract direct foreign investment, reindustrialise South Africa, promote economic growth and create sustainable employment and jobs in underdeveloped regions.

They are industrial estates, or geographically designated areas, set aside for specifically targeted economic activities that are supported through special tax incentives for investors.

These incentives are often different from those that apply in the rest of the country. They include a reduced corporate tax rate, an employment tax incentive and tax relief applicable to businesses in terms of the Value-Added Tax Act, the Customs and Excise Act and the Customs Duty Act.

The Nkomazi SEZ is the tenth one that Davies has designated in the country.

Department spokesperson Sidwell Medupe said: “To date, the SEZ programme has attracted 115 private companies with a total value of R11.6 billion from private investments, leveraging on the R4.6 billion from public investments. The SEZ programme has created more than 14 020 direct jobs and many multipliers.”

According to a plan hatched by the Mpumalanga Economic Growth Agency (Mega), the Nkomazi SEZ will focus on primary agriculture, agroprocessing, nutraceuticals and fertiliser production, as well as meat and leather products, which are all expected to contribute R97.6 billion to the country’s GDP.

They are also expected to generate R3.5 billion in exports and R5.3 billion in primary agricultural products.

Rob Davies

Mega’s plan envisages that citrus, subtropical fruit, nuts, sugarcane and other products will contribute R38.4 billion to GDP in the first 10 years of operation.

The export value has been pegged at $160 million (R2.2 billion) over the same period. A total of 28 100 jobs will be created at the SEZ and in its value chain.

The meat and leather products industry will contribute R2.7 billion to GDP. Their export output is projected to be $123 million, while 16 630 jobs will be created.

The aromatic plants sector is set to contribute R4.5 million to GDP and $270 million in export value. More than 15 000 jobs will be created.

The parastatal envisages that, in total, 81 765 jobs are expected to be created in agriculture, 8 275 in construction and 9 505 in other industries.

Mega spokesperson Desiree Ntshingila said the licence was likely to be issued to Mpumalanga’s department of economic development and tourism by the end of March and that, soon after that, the department would establish the Nkomazi SEZ and appoint its board of directors.

“Based on the application for designation, it was estimated that, over a period of 10 years, the SEZ would produce goods and services in excess of R50 billion a year and create in excess of 50 000 jobs, the majority of which would be in the primary agricultural sector,” Ntshingila said.

“As a result of a plan to produce high value-added products derived from locally available agricultural inputs – such as citrus, tropical fruits, sugarcane, peanuts and meat – it is expected that a significant proportion of the jobs created will be at a high skills level. For example, food scientists, production and operation specialists, and management.”

She said about R20 million had been spent on the high-level planning of the Nkomazi SEZ.

Based on the designation application, Ntshingila said, it was estimated that an initial investment of about R1.5 billion would be required for the enabling infrastructure, such as roads, water, waste water, electricity and factories, and for the initial functioning of the SEZ.

Ntshingila said three companies had so far committed to be located at the SEZ.

“Since the project is still in the planning phase, there are no tenants that have taken space yet. The SEZ will be designed to accommodate approximately 100 tenants with factory sizes varying from 1 000m² to 25 000m².

“The design will, however, be flexible to accommodate any size based on an agreement between the potential tenant and the SEZ entity,” Ntshingila said.

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February 17 2019