SEZs as a key driver in advancing South Africa’s Manufacturing Output and Trade with BRICS

South Africa will be hosting the 15th BRICS summit, from the 21st to the 23rd of August 2023, under the theme “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainability, and Multi-literalism”.

With a focus on increasing trade between the BRICS nations and rest of the world, a common notion is that Special Economic Zones (SEZs) are positioned to enhance value-added activities to further enhance trade. This article unpacks South Africa’s trade performance within BRICS and how SEZs could be utilised to advance linkages between local and international supply chains.

The evolution of BRICS

Initially conceptualised in 2001 by a Goldman Sachs economist as a grouping of the BRIC (Brazil, Russia, India, and China) alliance, the consortium was officially established in 2009. South Africa joined the alliance in 2011, adding further geographical diversity by being the first and currently the only African Country in the group. A common thread between these nations is that they are fast-growing economies with large populations, and they have vast natural resources at their disposal.

China and India are the most populous countries in the Group, with China also being the world’s second largest economy. Russia is the 11th largest economy globally and is concurrently, the second largest economy within BRICS. It is also the largest oil exporter in the Group.

Similarly, Brazil is the largest Latin-American economy and is a major exporter of raw materials and agricultural products. For its part, South Africa is the third largest economy in Africa and is endowed with a variety of minerals.

This diversity has been key to the growth of BRICS, making it a major global economic player over the years.

BRICS Economic Factsheet

The BRICS countries account for 41,5% of the world’s population and 29,3% of the world’s land mass. In 2020, BRICS contributed an estimated 26% of the global economy and accounted for 16% of the total trade.

South African Trade with BRICS

China and India are South Africa’s major trade partners owing to the diversity of the commodities and products between these nations as compared to Russia and Brazil.

FIGURE 1: SA’s trade with BRICS nations, source: SARS Statistics.

South Africa exports and imports 14% and 30% respectively with the BRICS alliance. The country’s export basket to BRICS is dominated by commodities and raw materials, whereas imports are mainly machinery, pharmaceutical products, and other manufactured goods. The table below gives details of South African exports and Imports to the other BRICS countries:

Country	Exports	Imports
China	Machinery (46%) Products of Iron & Steel (11%) Textiles (8%) Chemicals (8%) Plastic Products (5%)	Mineral products (70%) Products of Iron & Steel (14%) Precious metals (5%) Vegetables (2%) Textiles (2%)
India	Mineral Products (71.35%) Wood pulp & paper (10.47%) Products Iron & Steel (4.76 %) Chemicals (3.72%) Precious Metal (3.08 %)	Mineral Products (24.54%) Vehicles aircraft & vessels (22.11%) Chemicals (19.75 %) Machinery (11.57 %) Products Iron & Steel (4.14 %)
Brazil	Iron & Steel, Chemicals and Mineral products.	Live Animals, Equipment components and Products of Iron & Steel.
Russia	Vegetables and mineral product.	Products of Iron & Steel, Chemicals, Mineral products, and Vegetables.

BRICS Initiatives and Current Bilateral arrangements between South Africa and other BRICS Nations

The BRICS Economic Strategy (2025) defines a development path of BRICS and sets a framework for cooperation amongst its members.  In support of this cooperation, the Strategy has identified priority areas for partnership between the members; these include trade, investment and finance, the digital economy as well as sustainable development through the roll out of energy, infrastructure and human resource development.  In this regard, the BRICS Economic Strategy aims to promote and facilitate market access and linkages as well as trade and investment through a variety of channels such as the New Development Bank in respect of the financing of projects and the BRICS Business Council and BRICS Women’s Alliance in respect of market access linkages or engagements. 

In addition to the BRICS Economic Strategy, the following agreements are also applicable for South Africa’s benefit:

It is a mutual understanding between different spheres of economic development within South Africa and BRICS that the country should prioritize diversifying its manufacturing capabilities in various sectors such as automotive, pharmaceutical, and medical devices, agro-processing, aerospace, capital equipment and mineral beneficiation, to name a few.  

Within the South African context, Government has adopted the Special Economic Zone programme, which aims to offer world-class customised solutions and incentives to support the growth of South Africa’s manufacturing industry.  The use of the SEZ concept as a tool to promote industrial expansion and production is not new to the BRIC countries; in fact, it has been successfully employed in both China and India to promote industrialisation and economic development.  Seen as key drivers in advancing manufacturing through economic infrastructure development and access to special incentives, SEZs can potentially unlock intra-BRICS linkages between regional and international supply chains – given the diversity of the countries and the platform provided through the BRICS Group to enhance economic development and trade.

Investment Opportunities at the OR Tambo SEZ

The OR Tambo SEZ, located at the OR Tambo International Airport in Gauteng has positioned itself to respond to the common interest of BRICS in enhancing sustainable economic growth: by providing a platform that allows for manufacturing of various goods and their export to the BRIC nations.

The SEZ is a multi-site development, with two of the land parcels located near the airport, and the third land parcel located adjacent to a platinum refinery. Competitively located within reach of skills and workforce, logistics capabilities, access to natural resources as well as research and development institutions, investment opportunities in various sectors that utilise air freight as a mode of transport are available; these include mineral beneficiated products such as jewellery and polished diamonds; fuel cells and related components such as electrolysers, pharmaceutical and medical device products, electronics as well as fresh food products.

In addition to its competitive location, investors interested in the SEZ also have the support of government in setting up competitive manufacturing operations. This is done through the provision of competitive rental and lease arrangements as well as any other support that may be required for an investor to set up operations in South Africa. Working together with other arms of government, the OR Tambo SEZ can assist in the reduction of red tape an investor may face in setting up in a new market.

For more information on the SEZ and the investment opportunities available, visit: www.ortambosez.co.za