A Hard Message for South Africa’s SEZ Bosses

FTZ News: Last week the chief executives of South Africa’s special economic zones spent two days in Coega, Gqeberha. Officially, the meeting was about aligning their plans with the government’s new Spatial Industrial Development Strategy. What they actually received was a fairly direct talking-to from Fish Mahlalela, chair of the SEZ Advisory Board at the Department of Trade, Industry and Competition.

Mahlalela made it plain that the zones can no longer be judged mainly by how much investment they announce. They need to change the economies of the provinces where they operate—by creating real jobs, building skills, and opening space for small and medium-sized businesses. The pressure is especially high on youth employment. South Africa’s youth unemployment rate remains one of the most stubborn problems in the economy, and the government is looking to the SEZs for measurable help.

The Numbers on the Table

He put concrete figures in front of the group. More than R380 billion in potential projects sits in the combined investment pipeline. The five-year plan under the Spatial Industrial Development Strategy is supposed to turn a substantial portion of that into operating factories, infrastructure, and payrolls. At the moment South Africa has 13 designated special economic zones across eight provinces. Nine of them are active. Together they host roughly 224 companies that have invested about R31.7 billion. Those companies have created more than 28,000 permanent jobs and generated around R14.8 billion in revenue.

The numbers are not trivial. They are also not yet enough to match the political expectations that now surround the program.

A Clearer Set of Priorities

“SEZs are a key element to address the unemployment and youth unemployment crisis,” Mahlalela told the CEOs. “There is a huge expectation for the SEZs to ensure they contribute and assist the country in addressing this problem.” He added that the zones will never solve every structural difficulty, but they can still make a serious difference on industrialization and spatial development if they are managed with clearer purpose.

The tone of the conversation has shifted. For years the dominant language around SEZs was about attracting capital and spending on bulk infrastructure. The current emphasis is harder on results: jobs created, skills transferred, and tangible impact on the surrounding provincial economies. Officials from the department used the Coega meetings to push the zones’ individual implementation plans into closer coordination with the national strategy. Some of the CEOs raised familiar complaints—policy uncertainty, slow approvals, difficulty turning pipeline projects into actual operations. The department took note, but the overall message remained firm.

Performance Will Be Measured

A new 20-year framework for the SEZ program includes five-year performance reviews. Zones will be scored on investment, exports, job creation, and participation by smaller firms. Those that consistently fall below 60 percent could face formal intervention—restructuring, repurposing, or, in extreme cases, de-designation. The government is no longer content to keep underperforming zones on the books indefinitely.

Whether the CEOs left Gqeberha with renewed urgency or simply another set of expectations is hard to know. What is clear is that the old measure of success—announcing large investment figures—is being replaced by a more demanding one. R380 billion looks impressive on a slide. It only starts to matter when factories open, young people get hired, and paychecks begin to move through local economies. That was the point Mahlalela kept returning to over the two days in Coega./.