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 MbangulaHazel ShirindaLisa 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.

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 8th 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 …