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Mega moves to allay fears on SEZ

Nov 26 2017 06:00
Sizwe Sama Yende
The Mpumalanga Economic Growth Agency (Mega) has allayed fears that it will be unable to establish the province’s special economic zone (SEZ), following its failure to spend R33m in conditional grants since 2015. 

This unspent amount is reflected in Mega’s 2016/17 annual report and has nudged the DA into accusing Mega chief executive officer Xola Sithole of only being able to achieve his target of attending meetings and failing to show how millions of rands in the state-owned enterprise (SOE) were spent.

Mega wants to establish the province’s first SEZ in the impoverished Nkomazi Local Municipality, which is on the Mpumalanga border with Mozambique and Swaziland, with the aim of uplifting the economy and creating opportunities for entrepreneurs and ordinary job seekers.

The Nkomazi SEZ will focus on primary agriculture, agro-processing, nutraceuticals, fertiliser production, and meat and leather products, which are all expected to contribute R97.6bn to the country’s GDP, and generate R3.5bn in exports and R5.3bn primary agricultural products.

According to Mega’s plan, 81 765 jobs are expected to be created in agriculture; 8 275 in construction; and 9 505 in other industries.

SEZs are driven by the department of trade and industry (the dti) to attract direct foreign investment, re-industrialise 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, which are often different from those that apply in the rest of the country.

These incentives include exemption from duties on raw materials, equipment and intermediate goods, while tax is low and industrial regulations are lax.

“During the 2016/17 financial year, Mega’s only achievement towards the SEZ establishment was to hold meetings. As a result, Nkomazi has yet to be designated as an SEZ, despite Economic Development MEC Eric Kholwane giving the go-ahead in 2015,” said the DA’s economic development spokesperson, Bosman Grobler.

He said that, under Mega’s properties and infrastructure programme, within which the establishment of the Nkomazi SEZ falls, the SOE used 94% of its R170m budget to achieve just one out of its 13 targets, which was not the SEZ.

“This is yet another instance where Mega makes millions disappear with nothing to show for it,” Grobler said.

“As long as Mega focuses on attending meetings instead of fulfilling its mandate of fostering sustainable growth and development of the Mpumalanga economy, our provincial economy will remain stagnant with a negative outlook.”

Sithole, however, said that Mega was not sitting on its hands and was putting in efforts to make the SEZ a reality.

He admitted that the money had not been spent but said it was not forfeited either and would still be used.

Sithole said that Mega had been hamstrung by regulatory requirements and ensuring that the Nkomazi Local Municipality made land available.

“We’ve had multiple discussions with the dti and they understood why we were delaying. We have got the land and investors have written letters of intent [to invest],” Sithole said.

“As soon as our SEZ designation is approved, we will get on site and start construction by June next year.”

Mega’s plan envisages that citrus, subtropical fruit, nuts, sugarcane and other products will contribute R38.4bn to the GDP in the first 10 years of operation. The export value will be $160m (R2.3bn) over the same period and 28 100 jobs will be created at the SEZ and in its value chain.

The meat and leather products industry, according to the plan, will contribute R2.7bn to the GDP. Their export output will be $123m while 16 630 jobs will be created.

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

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