Across South Africa – and Africa – there are various tools and policies put in place to drive the growth of small to medium-sized enterprises (SMEs) and tech startups. These key drivers are used to attract investment, promote industrial innovation and development, and create jobs. One such tool put in place for this is something called special economic zones (SEZs).
What are Special Economic Zones (SEZs)?
SEZs are geographically designated areas of a country set aside for specifically targeted economic activities, supported through special arrangements (that may include laws) and systems that are often different from those that apply in the rest of the country.
For SMEs, these designated areas come with a range of benefits and arrangements that aim to make the development process easier and cost-effective for businesses. Additionally, they can offer infrastructure and streamlined processes to attract local and international investors.
In this article, we look at where the SEZs are located in South Africa, what benefits they offer businesses and how SMEs can take advantage of them.
Special Economic Zones in South Africa
Here are some of the locations of the SEZs in South Africa.
1. Saldanha Bay, Western Cape
Located two hours north of Cape Town, this SEZ is an oil, gas and marine repair engineering and logistics services complex, servicing the upstream oil exploration industry and production service companies operating in the oil and gas fields off Sub-Saharan Africa.
2. Coega, Eastern Cape
Coega is in the Nelson Mandela Bay Metropolitan Municipality on the East-West trade route to service both world and African markets. It has attracted investment in the agro-processing, automotive, aquaculture, energy, metals, logistics and business process services sectors.
3. East London, Eastern Cape
Considered a prime industrial park, this zone is renowned for its customised solutions for various industries, including automotive, agro-processing and aquaculture. It is an ideal location for exporting manufacturing and processing, providing investors with connections to major markets, locally and across the globe.
4. Musina-Makhado, Limpopo
Strategically located along the N1 North-South route into the Southern African Development Community (SADC), and close to the border between South Africa and Zimbabwe.
5. Maluti-A-Phofung, Free State
This zone in Harrismith is at the mid-point of the crucial Durban-Johannesburg route, offering access to the port of Durban as well as logistics for the transfer of freight between road and rail.
6. Dube TradePort, KwaZulu-Natal
Located 30 km north of Durban, this zone focuses on manufacturing and value-addition primarily for automotive, electronics and fashion garments.
7. Nkomazi SEZ, Mpumalanga
Nkomazi was formalised to provide a competitive and highly efficient industrial cluster that positioned itself as the leading location for agro-processing and logistics services activities within South Africa, in response to investor demand.
8. Richards Bay, KwaZulu-Natal
This industrial estate is on the north-eastern South African coast. The N2 business corridor links the province’s two major ports of Durban and Richards Bay, and connects with Maputo in Mozambique and, ultimately, areas of East Africa. With prime rail and road access, this zone is considered a portal to the world.
9. Platinum Valley SEZ, North West
The main hub of the Platinum Valley SEZ is to be housed in a 100-hectare site of the Bodirelo Industrial Park. The industrial park is located near the town of Mogwase in the Bojanala Platinum District of the North West Province. The site will be developed in three phases, comprising a logistics park, light manufacturing space and a heavy industries manufacturing space.
10. Atlantis SEZ, Western Cape
Atlantis is the home of the Greentech SEZ. Situated on the West Coast of South Africa, the Atlantis SEZ capitalises on the province’s booming renewable energy and green technology sector. The SEZ has already attracted investments of R680 million and created over 312 direct jobs to date, paving the way as Africa’s only Greentech hub.
11. The OR Tambo SEZ, Gauteng
The OR Tambo SEZ is transforming South Africa’s industrial landscape by attracting international investments and nurturing local talent. This dynamic centre fosters innovation and economic development across various sectors, from food production to jewellery manufacturing, positioning the nation as a significant player in global markets.
12. Tshwane Automotive SEZ, Gauteng
Located in a prime position, this SEZ offers world-class manufacturing and logistics infrastructure that supports freight-oriented activities, accommodating both containerised goods and roll-on/roll-off equipment that will require access to rail connectivity to South Africa’s ports.
13. Namakwa SEZ, Northern Cape
Although still under construction, the Namakwa SEZ unlock mining beneficiation, production of green hydrogen, infrastructure development, renewable energy and agro-processing.
Special Economic Zone Incentives/Benefits
A number of incentives are available to ensure SEZs growth, revenue generation, creation of jobs, attraction of foreign direct investment (FDI) and international competitiveness. The incentives are as follows:
- Preferential 15% Corporate Tax: Businesses (prescribed in the SEZ Act) that are located in a SEZ may be eligible for tax relief, including the reduced rate of corporate income taxation. In addition to satisfying the requirements of the SEZ Act, further criteria for some of the available tax incentives are stipulated in the Income Tax Act.
- Building Allowance: Businesses and operations working within an SEZ may be eligible for tax relief, including the building allowance, subject to requirements contained in the Income Tax Act.
- Employment Incentive: Businesses and operators working within an SEZ may be eligible for tax relief, including the employment tax incentive, subject to requirements contained in the
Employment Tax Incentive Act
Customs Controlled Area: Businesses in SEZs will be eligible for tax relief as per the Value-Added Tax Act, the Customs and Excise Act, the Customs Duty Act 2014 and the Customs Control Act.
How to Benefit from Special Economic Zones
In order to become a beneficiary of the SEZs, your company must be a ‘qualifying company’. This means meeting the following criteria:
- Conduct business from a permanent establishment of business within a recognised SEZ
- Be incorporated or managed in South Africa
- At least 90% of the business’s income must be from conducting business or delivering services within that SEZ
- A limit of no more than 20% of income received or 20% deductible expenses incurred from transactions with connected persons, whether resident or non-resident; additionally, the transactions are attributed to a fixed place of business in South Africa
- Certain companies may not access these incentives. Examples include alcohol, tobacco, arms, and ammunition industries
For SMEs, special economic zones are an opportunity to leverage developed infrastructure, tax incentives, and attract investment into their businesses. Remember, FDI is not only for tech startups but rather for innovative business ideas that are built for sustainability and scalability.
