South Africa Eyes $46 Billion for Industrial Hubs by April

South Africa plans to attract billions of dollars in investment into its specialized industrial hubs by April to help revive a manufacturing sector that’s been in decline for decades.

(Bloomberg) — South Africa plans to attract billions of dollars in investment into its specialized industrial hubs by April to help revive a manufacturing sector that’s been in decline for decades. “We are targeting 750 billion-rand ($46 billion) worth of investments in this current fiscal year,” Maoto Molefane, acting deputy-director general at the Department of Trade said in an interview on the sidelines of the Special Economic Zones investment conference in Durban on Thursday. The department plans to raise the capital from infrastructure investments, development finance institutions and other lenders, and commitments secured at South Africa’s investment conference earlier this year.

Investors pledged a record 890 billion rand at the forum, with much of the capital earmarked for designated industrial sites, President Cyril Ramaphosa said in an address at the SEZ conference. Reviving manufacturing is key to South Africa’s growth strategy, with industrial parks at the heart of that effort. The sector’s share of economic output has fallen to 11% from 24% in 1994.

South Africa was once “a shining example of how Africa should develop,” but chronic power shortages and port inefficiencies and other infrastructure constraints have eroded its competitiveness, causing the decline in manufacturing’s contribution to gross domestic product, Molefane said. “We’re using the SEZs to reverse deindustrialization,” he said. Incentives include a reduced income tax rate of 15%, compared with 27% before.

The nation’s 13 SEZs currently host 224 companies, with cumulative investment of 31.7 billion rand and more than 28,000 direct jobs created. The department plans to officially designate a green-energy industrial park in the Vaal region of Gauteng province — South Africa’s main commercial hub — by April. It also aims establish a private-sector-led SEZ close to the OR Tambo International Airport, east of Johannesburg.

The SEZ will focus on electricity and energy and the state will support it with infrastructure, Molefane said. Sign up here for the daily Next Africa newsletter and subscribe to the Next Africa podcast on Apple, Spotify or anywhere you listen. (Updates with plans for new SEZ in eighth paragraph)