Five potential investors in Mpumalanga’s Nkomazi Special Economic Zone (SEZ) have withdrawn R700 million worth of pledges after government’s delays in implementing processes, plans and setting up a unit to drive the project.
The Mpumalanga Economic Growth Development Agency (Mega), the driving force behind the Nkomazi SEZ, has failed to timeously finalise land development processes, re-establish the project management unit and develop the bulk infrastructure master plan.
But Mega spokesperson Thulani Nobela said that the parastatal was still in contact with all potential investors, including those that have withdrawn.
“Investors are still keen to invest in the Nkomazi SEZ hence they are citing the issue of delays. In the previous and recent engagements with them, they have indicated that Mega should contact them once it starts the construction of bulk infrastructure so they can align their relocation plans to the SEZ bulk infrastructure master plan,” Nobela said.
The department of trade and industry initiated the SEZ concept to attract direct foreign investment, re-industrialise South Africa, promote economic growth and create sustainable employment and jobs in underdeveloped regions.
The SEZs offer investors special tax incentives and relaxed industrial regulations. There are nine other SEZs being set up in the country.
However, Bosman Grobler, DA spokesperson on finance and economic development, said the investors pulled out due to the instability and financial irregularities at Mega.
Grobler said that the DA would write to Trade and Industry Minister Ebrahim Patel, to investigate Mega and to help save the project and about 100 000 jobs that would be lost if it collapsed.
“The DA believes that potential investors are being scared off due to Mega’s instability. To make matters worse, the interim board was dissolved in June without concrete reason after serving just over a year. The previous board was dissolved in March last year,” he said.
Grobler added that Mega struggled to meet its income generating targets and its revenue had decreased from R196.5 million in the 2017/18 financial year to R190.8 million in the 2018/19 financial year. The revenue further fell to R183.3 million in the 2019/2020 financial year.
“The agency is currently under investigation by the Auditor-General for financial irregularities. Due to Mega’s suspected financial irregularities and financial inviability, the SEZ project may fail and the people of Nkomazi may lose much-needed jobs,” he said.
Nobela, however, said that Mega had made “good progress” in addressing the SEZ implementation delays. Nobela said that regarding the land development processes, the Nkomazi Local Municipality had endorsed the township establishment.
“The pegging of the site and the development of a general plan for the SEZ site is well underway, and it will be finalised by the end of quarter three of the 2020/21 financial year,” he said.
Four officials, he said, had been appointed to the project management unit to focus on the development of the Nkomazi SEZ strategy, the business plan and the bulk infrastructure master plan.
Nobela said that 11 potential investors submitted their letters of intent to invest R1.183 billion in the SEZ in the 2019/2020 financial year. Their interests were in agro-processing, logistics, pharmaceuticals and nutraceuticals, furniture and green energy.
The economic impact of the SEZ once completed in 10 years is expected to add R97.6 billion to the country’ GDP. It is also expected to create 8 275 jobs in construction, 9 505 in industry and 81 765 in agriculture.