The OR Tambo Special Economic Zone

 

 

South Africa has the largest skills base in mineral beneficiation on the African continent, supported by years of mining gold, diamonds and other precious and semiprecious stones. Skills in this industry are also being enhanced through various skills development initiatives, including the OR Tambo SEZ’s own skills programme designed to enhance jewellery, diamond and platinum group metal beneficiation. South African firms are ranked as first in Africa for their skills and quality products, and the sector plays a significant role in terms of job creation.

Gauteng was awarded a permit to develop the Industrial Development Special Economic Zone at OR Tambo International Airport in 2010. The Gauteng Industrial Development Zone Company (Gauteng IDZ) is a subsidiary of the Gauteng Growth and Development Agency that was established to develop and operate the designated Industrial Development Zone at OR Tambo International Airport. The strategic intent of the Gauteng IDZ is to identify, design, package and secure domestic or foreign investment in the manufacturing and exporting of products through OR Tambo International.

The underlying vision of the Gauteng IDZ is economic development, which includes over 15 000 direct and indirect jobs; an over R1-billion contribution to the country’s exports; R300-billion in revenue projections; return on investment within a 10-year horizon; increased exports through OR Tambo International; and enhanced technical skills, supported by a successful skills development programme.

The value proposition is centred on OR Tambo International, Africa’s largest airport with the capacity to handle 400 000 tonnes of cargo and more than 21-million passengers per year. The Special Economic Zone (SEZ) is located within reach of a large skills base, with high-end skills in food processing and packaging as well as aerospace manufacturing. The SEZ was established to support industrial development in Gauteng province, with a specific focus on export-oriented, value-added industry in Ekurhuleni. The SEZ is part of the Ekurhuleni OR Tambo Aerotropolis, with a high development concentration.

The SEZ is a major contributor to South Africa’s industrial output and GDP. Gauteng has the largest skills base in South Africa; it has 24% of the country’s population, with the largest disposal income. It is the second-largest inland depot in the world, and is the financial capital of Africa. Gauteng is the home of the JSE, the 17th-largest stock exchange in the world by assets. OR Tambo is a well-positioned logistics and distribution hub for air cargo internationally and within the region; 82% of South Africa’s air cargo comes through this airport.

OR Tambo International is Africa’s largest and busiest airport, with excellent infrastructure and connectivity to the rest of the region and the world. The SEZ offers ease of access to Africa’s more than 200-million consumers through its connectivity capabilities. The SEZ has competitive rental lease rates, with access to incentives.

The Special Economic Zone has incentives packaged to support foreign or domestic direct investment. With the support of the department of trade and industry’s SEZ fund, designated SEZs can apply for grant infrastructure funding for the development of bulk and top structure, resulting in lower rental rates being offered to the market, and duty-free imports of raw materials or equipment utilised for production in the SEZ. Tax deductions are offered for projects above R200-million, and a lower corporate tax of 15% instead of the standard 28% is proposed for companies housed within the SEZ. There is also exemption from value-added tax for goods produced in the zone for export.

All employers operating in a designated SEZ are entitled to access the employment tax incentive, which helps to reduce the employer’s cost through a cost-sharing mechanism with government. There is provision of working capital loans through a metals financing scheme. Businesses operating within approved SEZs will be eligible for an accelerated depreciation allowance on capital structures (buildings) at a rate equal to 10% per annum over 10 years.

The OR Tambo SEZ is open to investors who are looking to manufacture in Africa for export to other parts of Africa or even globally, who have a bankable project, who are looking to be located in the heartbeat of Africa’s economy, and are in the high-value, low-mass business.

The Special Economic Zone is a phased campus development, with construction already underway. It has high security and confirmed reliability of basic services such as electricity and water. Tenants secured in the first phase have been operational since February 2019. The first phase comprises 7.5 hectares located within the property boundaries of the airport; the focus is on high-value, low-mass production for export, specifically in the processing, packaging and export of fresh food products and jewellery and diamond manufacturing.

The OR Tambo precinct expansion phase is sector-focused on perishables such as food and medicine; advanced component manufacturing (avionics, electronics); and tertiary metals processing. Investors and tenants that are already on board include agro-processing company In2foods Group factory; multinational diamond company Diacore; Julius Klein Diamonds; Schachter & Namdar South African Diamonds; and the world’s leading diamond company, the De Beers Group.

The Gauteng IDZ has conceptualised and is planning for the establishment of a Jewellery Manufacturing Precinct (JMP) on land identified for such purposes within the OR Tambo precinct. The development of the JMP provides for specific work streams and packages, including the design and development of bulk infrastructure, enablement works and top infrastructure, as well as tenant and investor attraction.

Regarding infrastructure development, a mixed-use master plan has already been finalised for the development of 30 295 square metres of infrastructure space, which includes: industry-specific facilities for precious metal and gold beneficiation, located in a highly secure customs-controlled area (CCA), where jewellery manufacturing and beneficiation can take place. The CCA will be effectively managed in line with Sars procedures and guidelines and there will be space for the beneficiation process and business services. An investor support services platform is located in the multi-commodities centre of the JMP, known as the one-stop shop.

April 5 2019 marked the launch of a successful public-private partnership investment project and heralded the opening of the world’s second largest refrigeration plant and the biggest food processing operation in the southern hemisphere. This investment of R400-million will stimulate real economic growth in the province of Gauteng, creating over 600 direct jobs and sustaining a further 5 000 jobs throughout the agricultural value chain.

The state-of-the-art In2Foods Group factory is 22 708 square metres in size and is located on 3.5 hectares of land located in the northern precinct of the OR Tambo SEZ, placing In2Foods Group at the heart of Africa’s best transport and logistics hub. In2Food’s new plant has been developed to the quality specifications of Woolworths, which it has been supplying for over 28 years. In2Food will also be exporting their products to other markets such as the United Kingdom.

“In the last five years, the province of Gauteng attracted foreign direct investment to the tune of R199-billion and created more than 30 000 jobs,” said Gauteng premier David Makhura during his 2019 budget speech. The OR Tambo SEZ has been a major contributor to this.

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