Special Economic Zone in Mahikeng: viable but not a cure-all

Marelize Santana -- Tue, 08/29/2017 - 14:55

Special Economic Zone in Mahikeng: viable but not a cure-all

A Special Economic Zone (SEZ) in Mahikeng, with an agro-processing focus, could hold economic benefits for the city and the North West Province - provided there is sufficient policy and planning support.

This is according to a study done by the TRADE research entity at the North-West University (NWU) at the request of the North West Provincial Government’s Department of Finance, Economy and Enterprise Development (FEED). The province asked TRADE to conduct a high-level pre-feasibility study on the potential for establishing a SEZ in the provincial capital.

In many parts of the world, SEZs have proved to be effective drivers of foreign direct investment, more competitive and export-oriented industries, enhanced job opportunities and higher economic growth.

However, SEZs should not be seen as a cure-all for economic problems linked to a particular geographical region or industry sector. To deliver value, the development of an SEZ should be accompanied by a robust economic development strategy ensuring that the zone operates in a supportive policy and regulatory environment, and has access to sufficient financial investment, strong physical and technological infrastructure, and human talent.

Developing successful SEZs

The TRADE project team looked at the rationale and key success factors driving SEZs, and undertook an analysis of Mahikeng and the province as a whole. They considered land types and availability, natural resources, transport networks, main industries and urban characteristics. The contributions of FEED and other participants at a practical workshop held in April 2016 formed part of the study.

Developing a successful SEZ goes hand-in-hand with getting the economic basics and foundations right. Many of the essential building blocks in an SEZ development strategy are those used in a general economic development drive aimed at enhancing business/investment opportunities, creating more jobs, and encouraging strong governance and stability. In the absence of such a foundation, a SEZ initiative is unlikely to take root.

Key to the success of a SEZ would include ensuring that Mahikeng secures a more prominent role on the national planning calendar, and that strong partnerships are forged between the zone task team and those entities responsible for South Africa’s national industrial and economic development efforts.

Initiative can drive development

On the basis of their research and analysis, TRADE, in consultation with the FEED counterpart team, is cautiously optimistic that an SEZ in Mahikeng could deliver economic benefits to the city and surrounding region, particularly if the focus is on agro-processing and potentially on pharmaceutical products that draw on existing agricultural and mineral know-how.

In conclusion, TRADE recommended that FEED and its strategic partners should be optimistic but realistic in communicating about the SEZ. Their message should be that the SEZ would not be an economic cure-all, but rather an initiative that is well-poised to drive the development of certain industries - given the necessary policy attention and a supportive economic landscape.