A critical investigation into the creation of special economic zones in South African mining areas

Abstract

The Bushveld Complex (BC) hosts the largest known deposits of platinum group metals (PGM) bearing ore in the world, divided into the Eastern Limb, Western Limb and Northern Limb. The three largest PGM producers include Sibanye Stillwater, Impala Platinum and Anglo-American Platinum and they have operations spread around the BC. With this endowment, the opportunity exists for South Africa to not only be just a producer country and exporter of the PGM but also be involved in several secondary and tertiary PGM activities by establishing business clusters around mining areas. The objectives of this research study were to assess the nature of the local Special Economic Zones (SEZ) landscape, including a detailed overview of the Bojanala and Fetakgomo-Tubatse SEZs on the western and eastern limbs respectively, and to develop a viability matrix to assess which of the two SEZs, namely Bojanala and Fetakgomo-Tubatse, is likely to succeed based on the socio-economic profile, sector analysis, education level and spatial linkages. The research sought to answer whether the Special Economic Zone model implemented in South Africa is adequate to enable successful SEZ operation in the BC and whether the current spatial linkages in the BC are sufficient to support the existence of a PGM SEZ. The research design is a case study, and the qualitative research methodology was chosen as the most appropriate. The data used involved desktop study from research papers, books, journal articles, conference papers, documents from government agencies, websites, annual reports, news articles, web blogs and published statistics from research organisations. A thematic analysis was used to interpret the literature reviews, case studies, and other secondary data cited in the study. The results indicated that the Fetakgomo-Tubatse SEZ has a high viable potential to succeed as an SEZ because it scored higher in the viability matrix, even though it scored lower on the spatial linkages and sector analysis. The likelihood of success of the Fetakgomo-Tubatse SEZ over the Bojanala SEZ was mainly driven by the value proposition offered and the regional education level assessment where it was found that the Fetakgomo-Tubatse municipality has a bigger population size and a larger iii [OFFICIAL][OFFICIAL] number of people with matric (30% of the population) and post-matric (4% of the population) qualifications. That is, it is likely to provide local labour with the qualifications and skills required in the SEZ. Furthermore, both SEZs have been successful in acquiring funding from companies that want to locate in the zones, so it could be argued that both of them will be in a position to promote business clustering in the area if the right ingredients such as government intervention, presence of small and medium enterprise, and integration of internal and external markets are in place. The study further supports the view that industrial policies have a role to play in changing and addressing market failures to encourage economic growth. However, these development efforts need to be based on the assessment of the implementation landscape of the SEZ to ensure its success. Lastly, it is acknowledged that the robustness of this study could be improved by conducting interviews with SEZ operators in South Africa, the Department of Trade, Industry and Competition SEZ Lead, North West Development Corporation (NWDC) and Limpopo Economic Development Agency (LEDA). The NWDC and LEDA are development agencies tasked with the development of the Bojalana and Fetakgomo- Tubatse SEZs respectively. Insights could also be gained by focusing on group discussions and interviewing community leaders, business forums, and traditional leaders in affected regions.