ACTION NINE: Use the private sector to turbocharge the SEZ programme outlines CDE’s two policy proposals to turn South Africa’s Special Economic Zones into powerful instruments to drive new investment and expand employment.

Despite government spending more than R25 billion on the programme, SEZs are often poorly managed; they are not special enough to attract investors and there is no evidence that they have generated large amounts of NEW investment and jobs.

South Africa should draw inspiration from places like China and Mauritius, which used their SEZs to enable localised reforms at a time when countrywide changes were ideologically unpalatable and politically unfeasible.

The GNU should support the establishment of an experimental zone within the Coega SEZ to expand low-skill manufacturing by creating a less restrictive set of labour market regulations.

Firms in the Coega SEZ should be exempt from agreements reached by sectoral bargaining councils. Wages, working conditions, piecework, productivity bonuses, and shift hours should be allowed to be negotiated at factory level, while still requiring compliance with the national minimum wage and adherence to health and safety regulations

The SEZ programme overall should be reformed to allow the private sector to establish and manage a diverse set of SEZs. Private companies should play a much larger role in identifying opportunities, designing and structuring zones, taking financial risks and bringing in new investors.

The attraction of zones should be that they are ‘special’ i.e. different from conditions in the rest of the economy which is struggling to attract investment.

Report by the Centre For Development And Enterprise