Development Dilemmas of South Africa’s Special Economic Zone Industrialisation policy- the Case of Musina-Makhado Energy Metallurgical Special Economic Zone and its potential socio-economic impact.

Table of Contents

i. Executive Summary

i.i. Introduction

i.ii. Special Economic Zone Legislation in South Africa

i.iii. The Greenwash of the EIA

i.iv. Tick-box Public Participation

1. Introduction

2. Repackaging South Africa’s Development Policy Past: From Industrial Development Zones to Special Economic Zones- Understanding the difference

3. China’s Investment Aid to Africa and South Africa- infrastructural megaprojects

4. Why Special Economic Zones are key to South African Development

5. The Musina Makhado Special Economic Zone: Geostrategics and the Political Economy of the Global South

6. The MMSEZ Greenwash: the September Environmental Impact Assessment

7. Conclusion

8. Reference list

i. Executive Summary

i.i. Introduction

The immediate objective of this policy paper is to critically analyse the lack of sustainable development public policy thinking to South Africa’s largest development mega-project of the Covid era: the Musina-Makhado Special Economic Zone (MMSEZ). Fieldwork undertaken in 2019 and 2020 has established that local municipalities and communities in Musina-Makhado have little, if any, knowledge of the SEZ.

This policy paper further explores how the MMSEZ is part of the Brazil Russia India China South Africa (BRICS) and Forum on China -Africa Cooperation (FOCAC) Global South development strategy led by the People’s Republic of China (PRC) to accelerate ‘inclusive’ development and to rewire trade and developmental aid globally. The MMSEZ mega-project is linked to China’s Global South development narrative, and links to China’s da Yuanzu, or “going out” as a global economic strategy to reconfigure the geographical epicentre of the world economy to China, rather than the Global North. Central to the strategy is the Belt and Road Initiative (BRI).

The policy paper focuses on infrastructure led industrialisation in the Global South through Special Economic Zones. Two main aspects are examined, namely the impact on the environment and on local communities, given that the Zones are purported …

Muddying the waters in the Musina Makhado economic zone

Meshack Mbangula Hazel Shirinda Lisa Thompson

The Environmental Impact Assessment (EIA) of the Musina Makhado Special Economic Zone (SEZ) is touted by the government to be the new “regional economic epicentre” much like other mega-projects in the Global South.

Many of these projects drain the fiscus with heavy infrastructural requirements, heighten foreign extraction of resources and raise carbon pollution levels. Multinational companies, endorsed by governments for the fiscal kickbacks, commit to alleviate people’s poverty where the primary goal is to shift their need for Africa’s rich mineral resources and to offset their national carbon footprint.

The Musina Makhado SEZ, or MMSEZ as it is now called by the government, is a perfect case in point. The zone will be the first in South Africa to be operated by a foreign (Chinese) company, Shenzhen Hoi Mor. The company has committed to investing $3.8-billion to its operational success. This will mean an unprecedented level of foreign control. To make matters worse, of the proposed industries in the metallurgical cluster, nearly all of them are carbon intensive, environmentally destructive and a threat to the livelihoods of communities in the medium term, as even the EIA admits they are environmentally red-flag carbon dioxide emitters.

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Explaining Carbon Sequestration and the EIA’s Stupid Science

Carbon sequestration is a naturally occurring process whereby carbon dioxide is removed from the atmosphere. Trees play an important role in this process since they take in carbon dioxide and use it during photosynthesis to produce nutrients.

Uprooting of about 100 000 trees at the proposed construction site. Trees as we know, provide a micro habitat for small faunal and floral species and also provide, micro climatic conditions suitable for the survival of these species. Moreover, trees are carbon sinks and provide all living organisms with clean air for breathing. Thus said, cutting down trees, especially rare trees such as the baobab, and the mopani tree, on which the edible mopani worm feeds, will be disastrous to the ecology and to the livelihoods of those in Limpopo. The canopies of the huge trees such as baobabs also form micro-habitats since they limit light penetration allowing other species to grow in their shade.

If so many trees are uprooted from one site at once, many species, particularly birds, dependent on trees for nesting and resting, will be displaced. This will be problematic since species that are only endemic to the area could be completely eliminated and even driven to early extinction.

Even if the said number of trees are uprooted and taken somewhere, the species that are dependent on them cannot be transferred together with the trees. This implies that all those said species will be displaced and stand a great chance of elimination.

Another potential risk to the SEZ is that during rainy seasons, trees intercept rainfall, increases and increases infiltration, thereby reducing the risks of flooding.…

The Sham of the Public Participation Process on the Environmental Impact Assessment for the Musina-Makhado Special Economic Zone (SEZ) 14-19 September 2020

Meshack Mbangula, Hazel Shirinda and Lisa Thompson

The Environmental Impact Assessment (EIA) of the Musina Makhado Special Economic Zone (SEZ) echoes the promises made by government backed mega projects in the Global South. Multinational companies, endorsed by governments for the fiscal kickbacks, commit to alleviate people’s poverty where the primary goal is to shift their need for Africa’s rich mineral resources and to offset their national carbon footprint. The Musina Makhado SEZ, or MMSEZ as it is now called by government, is a perfect case in point. The SEZ will be the first in South Africa to be operated by a foreign (Chinese) company, Hoi Mor Shenzhen. This will mean an unprecedented level of foreign control over the SEZ. To make matters worse, of the proposed industries in the metallurgical cluster, nearly all of them are carbon intensive, environmentally destructive and a threat to the livelihoods of communities in the medium term due to the health implications of such large CO2 emitters

The high-level EIA, as it is called, was completed by the Delta Built Environment Consortium (Delta BEC) and made public in September 2020. While admitting the environmentally harmful nature of the SEZ, it is still a self-justificatory document. The EIA assessment glosses over the endemic water scarcity issues in the Limpopo Valley stating “… if insufficient water is available in the catchment, and the social and economic opportunities offered by the SEZ operation are sufficiently attractive, additional water may be brought in from a neighbouring catchment”.

Although not unexpected, but still shocking in its lack of community buy-in, is the public participation process that has just taken place. All large-scale developmental initiatives, especially those with huge community impacts, should abide by the principle of “free, prior and informed consent (FPIC)” so that those affected communities can engage from

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Killing the Holy Ghost: Limpopo’s Musina-Makhado SEZ – A not-so-go zone?

By Brandon Abdinor

The draft environmental impact assessment (EIA) report on the controversial proposed Musina-Makhado Special Economic Zone was released on 1 September, and public participation meetings started in Limpopo and Tshwane in the week of 14 September 2020. Input from community members and other interested parties saw powerful questions and concerns being added to the sensible and potentially prohibitive ‘ifs’ and ‘buts’ raised by the report’s expert authors.

Also read Kevin Bloom’s two-part series on the SEZ: Part 1, Killing the Holy Ghost: Inside the R145bn plan that would destroy the Limpopo River, is here and Part 2, How a R10.7bn “zero waste” megaproject was buried by Limpopo’s Chinese deal is here.

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ENVIRONMENTAL IMPACT ASSESSMENT PROCESS

EIA PHASE FOR THE APPLICATION FOR ENVIRONMENTAL AUTHORISATION AND CHANGE OF LAND USE FOR THE PROPOSED MUSINA-MAKHADO SPECIAL ECONOMIC ZONE (SEZ), LIMPOPO PROVINCE

The Limpopo Economic Development Agency proposes to establish a Special Economic Zone with Metallurgical Cluster between Musina and Makhado, therefore, an Environmental Impact Assessment (EIA) has thus been undertaken according to the Environmental Impact Assessment Regulations, 2014 (as amended) and in terms of Section 24 (5) of the National Environmental Management Act (Act No. 107 of 1998). The Scoping Phase of the project was successfully completed and accepted by LEDET on 30 May 2019 and was followed by an impact assessment of issues identified during scoping. An Environmental Impact Assessment Report has been compiled.

DRAFT ENVIRONMENTAL IMPACT ASSESSMENT REPORT AVAILABLE FOR REVIEW

As part of the Environmental Impact Assessment (EIA) and public participation process, you are invited to review the draft Environmental Impact Assessment Report. This report includes the public participation and impact assessment carried out during the EIA phase of the project; the report also includes proposed mitigation measures for potential impacts identified during the study. A draft Environmental Management Programme (EMPr) accompanies this draft report. The report will be available for review from 1 September 2020 to 22 October 2020 at the following public places:

Venue	Address
Musina Municipal Office	21 Irwin Street, Musina
Makhado Municipal Office	83 Krogh Street, Louis Trichardt
Mulambwane CPA	R525 at Lekkerlag
Delta Built Environment Consultants Offices	Rynlal Building 320 The Hillside Road, Lynnwood, Pretoria
Delta Built Environment Consultants website	www.deltabec.com
Limpopo Economy Development Agency website	www.lieda.co.za

Please submit your written comments on this draft Environmental Impact Assessment Report by no later than…

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Post-Covid Development Dilemmas: Reconciling Sustainable Development, South Africa’s Spiralling Debt, and Big Hopes for Special Economic Zones ( Part 2)

Reviewing the state of the economy as the country eases out of lockdown reveals the urgency of public debate on government’s development policies and levels of accountability in its sustainable development strategies.

Starting with the ongoing evils of Eskom, load-shedding in August. News of the SOE’s deepening structural weaknesses, including aging infrastructure, poor maintenance and unsustainable level of debt, is no laughing matter, especially when government starts mentioning using state pension funds to disappear the problem.

To make matters more painful for the South African taxpayer, is how much of the money Eskom has borrowed over the last decade has been inappropriately managed. The World Bank’s 2010 loan of US 3.05 billion for what was advertised to be the largest coal fired power station in the world, Medupi, could be regarded as odious debt.

Medupi is still incomplete 10 years later, and the state of its infrastructure and maintenance is appalling, as Eskom’s Operating manager Jan Oberholzer, self-confesses.

In February 2020, ESKOM CEO Andre de Ruyter confirmed a rumoured critical design flaw in both Medupi and Kusile, the two power stations lauded to end South Africa’s electricity problems. De Ruyter revealed that the boilers had design flaws. Business Day reported on the return of Medupi and Kusile’s Chickens to their Boilers:

“…(d)esign is one aspect that underpins this negatively, affecting cost and time frames. Other failures — procurement, construction, commission and testing, and operations and maintenance — are evident. An Eskom board minute requiring all projects to be commissioned on a turnkey basis was overridden and ignored, and construction at Medupi and Kusile were embarked upon for all the wrong reasons, including the accommodation of graft in a scenario that had no plan”.

The sheer ignominy of this incompetence is compounded by the corruption scandal surrounding Chancellor House Holdings and …

Post-Covid Development Dilemmas: Debt and the Dream of a South African Developmental State (Part 1)

On the 8^th of July 2020, the ANC’s Economic Transformation Committee released a discussion document entitled “Reconstruction, Growth And Transformation: Building a New, Inclusive Economy”. The document, described by the head of the committee, Enoch Godongwana, as the basis for a social compact, argues for the South African government to play a larger role in steering the tattered South African economy into the post-Covid global economic terrain.

Finance Minister Tito Mboweni’s revised budget released in late June, states the cruel reality, “the main budget deficit, estimated at 6.8 per cent of GDP in the 2020 Budget, is now projected to reach 14.6 per cent of GDP”.

There is not much new about this vision:

The ANCs New Inclusive Economy recycles infrastructural spending towards greater localisation of production linked to export led growth.

In 2018, Cyril Ramaphosa announced his new economic stimulus package at the Union Buildings, “Infrastructure expansion and maintenance has the potential to create jobs on a large scale, attract investment and lay a foundation for sustainable economic expansion.”

Through the Forum for China- Africa Cooperation, infrastructural investment in Africa and the development of Special Economic Zones, lauded by the World Bank as a key developmental tool of the People’s Republic of China, has been granted centre stage in escaping South Africa’s development conundrums.

Local job creation promises are linked to the ANC’s disconcertingly vague vision of large scale infrastructural investments are promoted as part of public-private partnerships and foreign direct investment initiatives. In the past few months, trade linkages into Africa have been reinforced by the belated launch of South Africa’s Sustainable Infrastructure Programme.

Special Economic Zones are being promoted by the Department of Trade and Industry as the way of actualizing all of the above. The Zones, brought into …

Special Economic Zones an engine to stimulate growth

JOHANNESBURG – Covid-19 has become a pandemic that has reverberated across the globe. Its associated detrimental impact on economies has been felt far and wide, with serious disruptions in global value-chains and international trade being evidenced on a daily basis.

In the South African context, Covid-19 is threatening to exacerbate the already entrenched socio-economic challenges of poverty, unemployment and inequality that epitomised the country before the virus affected the world.

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China’s Belt and Road Initiative and the COVID-19 crisis

Coronavirus represents both a demand and a supply shock to the global economy. The key question is which assets are exposed most to shock and to the associated volatility? The BRI focuses largely on physical infrastructure that is declining as a priority. The shock has produced a significant stimulus to digital versus physical connectivity. The need for physical infrastructure declines where digital connectivity can substitute for physical contact.

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