Business and Economy

Limpopo’s industrial park takes off ahead of construction

The Musina-Makhado Special Economic Zone (SEZ) has already secured R40 billion worth of investments from Chinese investors. Picture: Supplied

The industrial park that is being set up in the Limpopo province, close to the border with Zimbabwe, is gaining momentum.

Construction of the industrial park, known as the Musina-Makhado Special Economic Zone (SEZ), has not commenced yet, but the project is hitting the ground running and international investors are taking note. 

In September last year, the SEZ secured R40 billion worth of investments from a consortium of Chinese investors, led by Hong Kong Mining Exchange, shrugging off concerns over South Africa’s policy and political concerns.

The Chinese investors will plough the money into the SEZ’s metallurgical cluster that will see the construction of coking plant, ferrochrome plant, ferromanganese plant, ferrosilicon plant, pig iron plant, steel and stainless steel plant, lime plant, and a power station.

The SEZ is also looking to attract investors that are interested in investing in diverse sectors such as health, logistics, tourism, food, medicinal, and education.

Sidwell Medupi, spokesperson for the Department of Trade and Industry (DTI), which oversees the development of the SEZ, told GetBiz that there are other potential investments in the pipeline covering sectors such as logistics and transportation, light manufacturing, vehicle assembly, and petro-chemicals.

“These are at various stages of readiness and details will only be disclosed at the right time,” Medupi said.

The Musina-Makhado SEZ is expected to bring spinoffs to the economy of Limpopo, which is currently dependent on mining and tourism. Medupi said the SEZ will stimulate the province’s and Southern African mining industries given that it will process mineral resources such as iron ore, coal, coking coal, manganese, silica, and chrome.

It will also lead to the development of other industries including retail, energy, health, logistics, education, real estate, construction, personal services, finance and banking.

Small and medium-sized businesses in Limpopo could benefit from being integrated into the supply chains that are going to be created as a result of the establishment of the SEZ.

“There are already plans underway to strengthen systems to support small and medium enterprises, and these include establishment of incubators through public-private partnerships, strengthening technical training institutions and systems in the area.

“The Black Industrialists Programme is already being implemented in the province through a partnership that includes Industrial Development Corporation (IDC),” said Medupi.

Following a slow progress by South Africa’s established four industrial development zones (IDZs) in attracting investors, the IDZ programme was broadened to include SEZs. Medupi said the two programmes are essentially the same, though the SEZ programme is in essence a re-design of the IDZ programme. However, there are minor design differences between the two.

“The IDZ Programme was only implemented in regions with access to an international port (airport or sea port), while with the SEZ Programme the key determinant factor would be economic or industrial potential irrespective of region.

“The IDZ Programme was not supported by any tax incentives, while the SEZ Programme is supported through a 15% corporate tax incentive for qualifying investments,” explained Medupi.

The IDZs struggled to attract investors after their inception. But the Musina-Makhado SEZ seems to be breaking the jinx that bedevilled its forerunners as it has been able to attract investors even before its construction.

Medupi attributed the SEZ’s attractiveness to its strategic location and a strong public-private partnership from inception, with some of the catalytic projects identified and proposed by the private sector.

“The region has a huge economic development potential given its strategic location in a key transport and trade route between South Africa and Africa. In addition, the region has and is surrounded by other regions with significant and diverse mineral deposits and also agricultural resources,” he said.

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