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In the quest for a sustainable future, our journey is intertwined with the pursuit of critical minerals. Picture yourself in a world where clean energy powers our homes, where electric vehicles silently navigate down the streets, and where renewable technologies flourish. This is not a mere dream, but a tangible reality that some countries are beginning to recognise, and where others intend to be. The relevance of critical minerals in the green and sustainable economy cannot be overstated. They serve as the building blocks of renewable technologies, acting as catalysts for innovation and sustainability.

The composition of this essential list varies from nation to nation, mirroring their unique priorities, strategies, and needs. In South Africa, the Department of Minerals and Energy (DMRE) emerges as a focal point for listing these critical minerals. However, the compilation of such a list in South Africa remains a work in progress.  The table gives a general summary of these minerals and the role they play in the green economy.

Mineral% of Global ReservesUses
Cobalt72%Used in batteries for electric vehicles
PGMs80%Catalysts in hydrogen fuel cells and electrolysers
Nickel9%Utilised in the production of Li-ion batteries for electric vehicles and energy storage
Manganese80%Widely used in solar and wind farm construction
Vanadium30%Used in battery energy storage solutions
REEUsed in Energy-efficient lighting solutions and wind turbine generators
LithiumLi-ion batteries used in electrical vehicles and energy storage
Zinc11%Zinc is used as a coating to protect solar panels and wind turbines from rusts and other elements
GraphiteUsed in Li-ion batteries for electrical vehicles and energy storage

Source:  The Minerals Council of South Africa

The omission of the global share of reserves for some minerals listed on the table above is not intentional, but rather indicative of the lack of verified statistics and information due to limited exploration of those minerals. Highlighting a concerning statistic, the Minerals Council underscores that South Africa’s share of global exploration activity for critical minerals stands below 1%. This emphasizes the urgent need for increased investment and focus on exploration efforts. By encouraging exploration activities, South Africa can secure access to critical mineral resources and catalyse downstream industries such as manufacturing.

Leveraging these resources domestically can drive local value addition and significantly contribute to the country’s economic growth and competitiveness in the global market. In a country characterized by a high unemployment rate, recognising the value chain perspective is crucial, particularly in understanding the economic opportunities presented at each stage, from exploration through to processing and manufacturing.

This aligns well with South Africa’s Mineral Beneficiation strategy, which aims to enhance value addition in downstream industries. By embracing this strategy, South Africa not only mitigates the risk of merely exporting raw materials but also positions itself to participate actively in processing and manufacturing green technologies and solutions.

Similarly, local adoption of these technologies is vital for advancing the country’s efforts to meet its carbon emission targets. This also cultivates a domestic market for embracing such technologies, thereby spurring investment in localising supply chains. South Africa has developed several roadmaps, including the PGM roadmap, the new vehicle roadmap, and the Green Hydrogen roadmap, all of which contribute to the growth of the green economy and outline various steps, strategies and instruments aimed at realising the green economy.

The OR Tambo Special Economic Zone (SEZ) fosters an environment conducive to industries aiming to produce goods meeting international standards. From both incentivization and infrastructure standpoints, the OR Tambo SEZ notably supports the manufacturing of green technologies, encompassing a spectrum from electronics in the renewable space to fuel cells and electrolysers, alongside other components crucial to the green economy.

Moreover, the OR Tambo Special Economic Zone (SEZ) stands out for its strategic advantage in addressing the critical skills gap within the industry. Situated in close proximity to leading academic institutions renowned for their expertise in training students specifically for these sectors, the SEZ offers access to a skilled workforce. Additionally, its access to research institutions actively involved in driving advancements in green technology manufacturing ensures a dynamic ecosystem conducive to fostering innovation and expertise. This strategic positioning underscores the SEZ’s commitment to facilitating the growth and success of industries producing goods of international standards.

While the journey may appear extended, it remains within reach, guided by the concerted efforts of diverse stakeholders committed to a greener and sustainable future. For more information on opportunities available in the green economy sector visit www.gidz.co.za.

As an economic development tool, the South African Special Economic Zone programme can play a fundamental role in the Country’s economic future, given its desired focus to drive and grow manufacturing-led industrialization. The benefits of manufacturing notwithstanding, global concerns on the environmental effects of traditional manufacturing practices are growing; in tandem with emerging business practices that seek to support sustainable and low-carbon manufacturing solutions.

One of the ideas being employed in pursuit of more efficient and sustainable production practices is the Circular Economy (“CE”), a concept that, although relatively new, is gaining a lot of attention from the academic community as well as the public and private sector.

Globally, CE is acknowledged as one of the approaches that will help the United Nations Sustainable Development Goals (SDG) be achieved, with numerous governments promoting the adoption of CE policies and principles in order to fulfil their SDG commitments. 

Underpinned by the concepts of reduce, reuse, and recycle, CE aims to reduce waste and pollution by optimizing the resources in a manufacturing process. 

Specific to the OR Tambo International Airport SEZ, the CE approach is at the center of its industrial development approach.  The OR Tambo SEZ does this by pursuing a cluster approach to its manufacturing activities.  Through this, manufacturing value chains that take into account a specific industry’s inputs, materials, processes, and products are located at the Zone, based on three CE principles or considerations:

Whilst there are numerous CE solutions that can be applied in the development of an industrial park or SEZ, the OR Tambo SEZ’s focus is primarily on the above. To this end, its objective is on ensuring that as far as possible, sustainable development and operational practices are pursued and entrenched in the SEZ.

Despite this bold objective, it is impossible to deny that more work must be done to develop an innovative and efficient system that will support a viable CE model at the OR Tambo SEZ. Due to scarcity factors (such as land) necessary to facilitate on-site water treatment, waste management or even a full on off-grid energy solution, the OR Tambo SEZ is presently exploring creative ways through which it can further address CE issues at its Phase 1 operational precinct. 

It is also engaging with market players on the next phases of development; with a view of ensuring that ORTIA Precinct 2 (a 29ha land parcel located next to Precinct 1 and in proximity to OR Tambo International Airport) and the Springs Precinct (a 13ha land parcel located next to a major platinum refinery) are designed as sustainable manufacturing eco-parks. 

For more information visit www.ortambosez.co.za

Africa is a resource-rich continent with substantial untapped opportunities. This is because the Continent has historically been regarded as a primary resource economy that derives its economic status from agricultural and mining activities, minimizing its GDP capabilities.

To drive industrialisation, growth and job creation, African countries have recognized the importance of increasing value-added activities, while also promoting intra-African trade in high-value products such as medicines.

This article briefly explores Africa’s potential in the pharmaceutical and medical products market. The African Pharmaceutical and Medical Products Market.

The African Pharmaceutical and Medical Products Market

Africa is the world’s second most populated Continent, accounting for just under 18% of the global population. In spite of this, the Continent is accountable for at least 25% of the world’s disease burden.

With more than its fair share of communicable and non-communicable diseases, the World Economic Forum estimates that the total demand for pharmaceuticals in Africa is around $18 billion per year. 61% of that demand is serviced through imported products (mainly from China and India).

Concurrently, only about 36% of the demand is serviced from products manufactured within the borders of the individual African countries, leaving only 3% being allocated for intra-Africa trade.

Africa’s manufacturing capabilities

Around 40% of Africa’s medical manufacturing capabilities are confined to packaging and labelling, with the remaining 40% limited to filling and finishing (Who Owns Whom, 2023).

In recognition of this and the demand available for various health products on the Continent, there is a drive to ramp up Africa’s production capabilities as well as strengthen value chains in the supply of medical products.

Africa’s Medical Production Ambitions

More recently, African countries have recognized the need to diversify their value chains in order to grow their economies and create job opportunities.

This realization was compounded at the outbreak of the COVID-19 pandemic when the Continent had to rely heavily on international supply chains for a variety of critical supplies.

This constraint prompted the African region to take steps to improve its medical manufacturing capabilities, with the African Union setting a goal for at least 60% of vaccines used on the continent to be manufactured in Africa by 2040 (this against a backdrop of just 1% of the total vaccine demand in Africa presently being produced on the Continent).

It is envisaged that this target will be supported by the single market resultant from the African Continent Free Trade Area Agreement (AfCFTA), same that with a population of 1,4b provides a market for the production and trade of medical products such as vaccines.

Furthermore, the AfCFTA is an effective tool to drive value-add activities: by providing economies of scale for local manufacturing, enhancing collaboration, lowering costs, and increasing competitiveness.

OR Tambo SEZ: An ideal location for pharmaceutical and medical products manufacturing

Underpinned by factors such as a skilled labour force, established infrastructure and a world-class banking and financial services sector, South Africa has long been a location of choice for Multinationals looking to locate in Africa. The country also has an established supply chain, and supportive infrastructural capabilities to foster medical manufacturing expansion.

For instance, research by the African Society for Laboratory Medicine found that while Africa has less than 500 internationally accredited laboratories, 90% of these are based in South Africa.

As part of its industrial focus, the OR Tambo International Airport Special Economic Zone has identified the pharma and medical products sector as one that is suited for location at its Zone.

This is because the Zone’s cold storage infrastructure and distribution capabilities – located next to sub-Saharan Africa’s busiest and major airport provide a reliable mechanism to maintain the integrity of the medical products from the production base to air freight for export.

In addition, the size of the OR Tambo SEZ Precinct 2 development makes provision for a medical cluster, further enhancing production efficiencies and reducing the cost of production. Equally important, the Zone is located in proximity to institutions of higher learning as well as research institutions, providing a basis for ongoing quality improvement and new product development.

All the above, coupled with South Africa’s locational considerations as well as the province of Gauteng’s competitive positioning serving as a gateway to sub-Saharan Africa make the OR Tambo SEZ an ideal location for the production, export, and trade of pharmaceutical and medical products.

For more information on the pharmaceutical and medical cluster being developed at OR Tambo International Airport SEZ, visit: www.ortambosez.co.za

Transport connectivity and its role in economic development 

The month of October has been declared as Transport Month in South Africa. A key input into economic activity, transport has a direct interface to any country’s GDP. This is because it is essential to the movement of goods and people, thus playing a central role in economic productivity. 

Specific to the OR Tambo International Airport SEZ, transport and logistics are at the centre of the SEZ’s offering. Located at the doorstep of sub-Saharan Africa’s largest and busiest airport, the value proposition of the OR Tambo International Airport SEZ is centred around the transport and logistical capabilities of OR Tambo International. The SEZ is also supported by the extensive land transport network available on the eastern corridor of the Gauteng City region. This makes it the ideal location for the production and export of goods from South Africa to regional and global markets. 

Transport and its key role in the success of an SEZ 

Whilst it is understood that any SEZ must be designed to encourage manufacturing output, an SEZ’s access to transport and logistics is central to its success. This is because a well-functioning transport system reduces the cost of moving goods and people around, thus increasing productivity, economic linkages, output and performance. 

The below unpacks the transport offering of the OR Tambo International Airport SEZ, same that is a key input in the SEZ’s offering. 

Unpacking OR Tambo International Airport SEZ’s transport Offering. 

Quality Infrastructure 

A good transport system must consider the quality and reliability of the infrastructure to enable the movement of goods and services. Located at and in proximity to OR Tambo International Airport, the transport offering of OR Tambo SEZ is mainly centred around OR Tambo International. 

With all the features of a global air hub (with long runways, terminals, baggage handling, lounges, food service areas and more) and measuring over 80 000m², OR Tambo International has two terminals and two runways that can service the movement of 220 000 aircrafts. The Airport also has the capacity to handle up to 28 million passengers annually. 

The quality of the Airport’s infrastructure has resulted in it being ranked among the top Airports globally. 

Extensive Connectivity Network 

OR Tambo International has an extensive route network that services 5 continents with over 42 international, regional and domestic airlines flying in and out of the Airport. Additional connections are being pursued as part of Gauteng Air Access, an initiative that aims to prioritise direct links to all major economic destinations, thereby reducing travel time and giving businesses access to a wider marketplace. 

THE CONNECTIVITY BENEFITS OF LOCATING AT OR TAMBO INTERNATIONAL AIRPORT SEZ

Operational efficiency and service standards 

Operational efficiency is central to an Airport’s service offering. In terms of the International Air Transport Association’s (IATA) Level of Service concept, the industry benchmark for optimum passenger terminal facilities includes check-in time, security, passport control, boarding gates and baggage handling, amongst others. The Airport Council International’s (ACI) Guide to Airport Performance Measures also considers six categories, namely: safety and security, service quality, cost-effectiveness, environmental factors, financial considerations and the core aspects of passengers, aircraft movements, air freight and non-stop connections. 

In order to measure an Airport’s operational efficiency and service, an Airport operator can procure an independent assessment of its service and operations. By far one of the largest globally, Skytrax is a leading assessor of airline and airport service quality that on an annual basis, assesses customer services and facilities in over 500 airports as part of its World Airport Awards. 

At the 2023 Skytrax World Airport Award ceremony, OR Tambo International was ranked the 3rd best Airport in Africa, after Cape Town International and King Shaka International Airport. The Airport has also been ranked as a 3 star, meaning it is achieving a fair quality performance in facilities, performance, and service standards. 

Cargo capabilities 

Another measurement of an airport is its air cargo capabilities. This is because air cargo has grown at a faster rate than passenger demand (IATA, 2013). In this space, OR Tambo International remains the largest air cargo hub in South Africa, accounting for 87.9% of all inbound air cargo traffic and 76.4% of all outbound air cargo (ACSA, 2022). This equates to 400,000 tonnes of cargo processed at OR Tambo International annually. 

To support the growing air cargo demand, plans are already underway to expand OR Tambo International’s air cargo offering. 

The Offering to Investors 

Investors generally require different types of transport services, based on the urgency of their goods, and the suitability of transport to handle those goods. 

In response to its competitive location and the service capabilities of OR Tambo International, the OR Tambo International Airport SEZ is the best location for companies that manufacture high-value, low-mass products that move via air freight. 

For more information, visit: www.ortambosez.co.za

Mining in South Africa began with the discovery of a diamond along the banks of the Orange River – close to Hopetown in what is now the Northern Cape Province. This finding led to the discovery of the kimberlite pipe and the subsequent surge of large-scale diamond mining operations in the central part of the country. By the 1880s, the town of Kimberley was producing around 95% of the world’s diamond supply. Around the same time, prospectors discovered the existence of gold-bearing reef belts in Johannesburg, intensifying the surge of Western investors and migration of workforce from other parts of the country into these mining areas.

Over the years, more minerals and metals have been discovered across the country with diamond, gold, platinum, and coal dominating the commercial mining operations. The mining sector has in multiple ways, shaped the economic, political, and social landscape of the country. It has contributed immensely towards economic growth, skills, and infrastructure development. The sector has also enabled industrialisation, inducing the formation of secondary and tertiary industries thus creating forward and backward linkages. Backward linkages refer to the supply of goods and services into the mining sector, and forward linkages refer to the processing of the natural resources and their use to produce other finished goods.

Today, the mining sector remains a major contributor to South Africa’s economy.  In 2022, it contributed R494b to the country’s GDP.  This equates to a 7,53% contribution to the economy.  The sector also employs 475 561 individuals (source: Mineral Council South Africa, 2022 figures).

Future projections show that the South African mining sector still has the potential to contribute towards transformation of the country. This article investigates two areas that can serve as the next frontier of the South African mining industry.

The 4th Industrial revolution (4IR)

The 4th Industrial Revolution has become a buzzword in global development.  Simply put, 4IR alludes to the introduction of disruptive technologies and trends that change the way people live and work.

Within the context of mining (especially in South Africa), there has been some contestation in embracing technologies that introduce new ways of working.  This is based on the fear of job losses resultant from technologies that could reduce human capital requirements. 

To counter this effect, it has been suggested that the reskilling and upskilling of affected mine workers into other roles within the mining value chain will help mitigate the potential negative impact of rolling out new technologies, resulting in the long run, in the overall positive transformation of the sector.

In addition, 4IR opens a wide range of market offtake opportunities for minerals to be used in products that can aid the creation of new industries and product lines.  For example, 3D printing – a 4IR technology supports the use of minerals in new automotive designs as well as medical products, creating opportunities for enhanced output in these traditional industries. 

The Green Economy

With the recent pressure to reduce greenhouse gas emissions, countries, and industries all over the world have put in place measures to mitigate against carbon emissions. Key to the transition towards a greener society, is the deployment of green technology particularly in the energy arena.

South Africa holds a comparative advantage in this since it is the world’s leading primary producer of Platinum Group Metals (PGMs).  PGMs have a strategic role in creation of the hydrogen economy: they are used in the production of electrolysers needed to produce green hydrogen. Presently valued at over US$150b with a compound annual growth rate of 9,3%, the green hydrogen generation market is seen as the new frontier for alternative energy solutions; green hydrogen is also at the centre of a global drive to meet climate change targets set at COP Conferences. 

The dawning of a new era

It is evident that the mining sector still holds an important role in the industrialisation of South Africa as well as globally. The Country hosts some of the largest mineral reserves in the world, and thus provides further opportunity for growth.

This sector is at the centre of the OR Tambo Special Economic Zone’s Phase 1 development.  The SEZ supports the growth of beneficiated minerals from South Africa, with a focus on lightweight, high-margin, export-oriented products such as jewellery, diamonds, fuel cells and 3D products.

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

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.

PopulationGlobal GDP
  • 3.27billion
  • 41.3%
  • $28,6 Trillion
  • 26.6%
  • Source: worldbank.org

    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:

    CountryExportsImports
    China
    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
    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
    Brazil
    Iron & Steel, Chemicals and Mineral products.Live Animals, Equipment components and Products of Iron & Steel.
    Russia
    Russia
    Vegetables and mineral product.Products of Iron & Steel, Chemicals, Mineral products, and Vegetables.
    Source: SARS Trade Stats

    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:

    Agreement/ForumMember countriesObjectives
    India-Brazil-South Africa Dialogue Forum (IBSA)South Africa-India and BrazilIBSA is a trilateral cooperation forum aimed at coordinating efforts in poverty alleviation and social development. IBSA also provides a platform that enhances the exchange of information, skills, technology, and innovation.
    Russian Generalized System of PreferencesSouth Africa and RussiaThis system allows for preferential market access for over 1000 qualifying products originating from South Africa.
    The Comprehensive Strategic Partnership Agreement (CSPA)China and South AfricaSupported by an MOU between the two countries, the CSPA aims to enhance economic collaboration between the two countries particularly in value add and manufacturing activities.

    Enhancing South Africa’s manufacturing output through SEZs: A win-win for BRICS

    South Africa is renowned for its mineral products and has a well-established primary manufacturing industry. Currently, South Africa has a trade deficit with BRICS countries, mainly owing to the significant imbalance between the production of raw materials and secondary production. The trade deficit highlights the potential for growth and economic diversification with emphasis on value-adding manufacturing, same that currently accounts for between 4% and 9% of total exports to BRICS.

    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

    The OR Tambo International Airport SEZ is one of 11 SEZs presently gazetted in terms of the South African Special Economic Zone Act.

    Approved as designated areas set aside for targeted economic activities, the purpose of the South African SEZ programme includes the attraction of foreign as well as domestic investment, the promotion and establishment of industrial activities in select sectors or industries, innovation uptake, enhanced regional development as well as the production and export of products from South Africa to global markets. It is in respect of the latter that South African SEZs can explore opportunities available through Preferential Trade Agreements (PTA) for the enhanced export of goods manufactured locally for the international market.

    Once such PTA or programme is the African Growth and Opportunity Act (AGOA).

    With the recent US – Africa Business Summit held in Botswana from 11-14 July 2023 at which private and public sector stakeholders from U.S and African countries engaged and provided insights on trade related issues, this paper unpacks the Africa Growth and Opportunity Act, its trade performance and applicability to the OR Tambo International Airport SEZ.

    The African Growth and Opportunity Act

    The African Growth and Opportunity Act (AGOA) was initially enacted in 2000, and has since been extended twice, with the latest extension coming to an end in 2025. The Act provides competitive market access to eligible sub-Saharan African countries: through the provision of duty-free trade of designated goods into the US market. County eligibility is determined by the country’s commitment towards upholding the rule of law, eliminating barriers to trade with the US and protection of human rights. On the other hand, eligible goods should either be fully extracted or sufficiently manufactured in an AGOA eligible country and imported directly to the US.

    Beneficiaries of AGOA and it’s trade performance

    Since the enactment of AGOA, 36 sub-Saharan countries have benefited from the programme (as of 2023, only 35 countries are eligible), with close to 6000 products making it into the eligible goods list. In 2022, total AGOA exports amounted to a value of $30 billion. Presently, the top exporting countries under AGOA are South Africa, Nigeria, Ghana, Cote d’Ivoire, and Angola.

    Figure 1: Top AGOA export beneficiaries into the US Market (source AGOA.info)
    Figure 1: Top AGOA export beneficiaries into the US Market (source AGOA.info)

    South African Trade relations with the U.S

    South African has strong trade with the US, owing to its established capabilities to locally manufacture value-added products, when compared with other sub-Saharan countries. Between 2016-2021, South Africa exported R651.3 billion worth of goods and services to the United States, with exports under AGOA (including the General System of Preference or GSP) accounting for nearly 25%.

    Figure 2: Breakdown of South African Exports to the US
    (Source AGOA.info; COMTRADE data)

    A closer look at the statistics however reveals that whilst overall trade between South Africa and the USA increased between 2010 and 2022, exports under AGOA declined slightly between the 2010- 2022 decade with a more noticeable decline under the GSP regime during the same time frame. These decreases, specifically notable between 2020 and 2022 were mainly due to the constraints in trade and manufacturing caused by the COVID-19 pandemic, which had a dire impact on the global supply chain.

    Top Products Exported to the USA

    The minerals and metals sector is the top exporter by value into the U.S market; however only 7% (mainly jewellery) is exported under AGOA (figure 3). The Automotive, Agricultural and Chemical industries also contribute a significant percentage in terms of total AGOA exports. The strong trade in the precious metals market mainly lies in SA’s endowment in mineral resource.

    Figure 3: Breakdown of products exported to USA under AGOA (Source: AGOA.info)

    Gauteng’s Trade with the US Market

    Specific to Gauteng city region, the province represents approximately 30% of goods and services into the U.S, making it the largest trading province with the US and, South Africa’s largest recipient beneficiary to AGOA. Below is a tabular representation of the overall top products originating from Gauteng for trade to the US:

    CountryShare of Gauteng ExportsTop 5 Exported GoodsTop 5 Fastest Growing ExportsCompetitive Exports
    USA4.74%– Ores and slag
    – Motor Vehicles
    – Iron and steel
    – Organic Chemicals
    – Precious stones and metals
    – Capital Equipment
    – Cotton,
    – Cereals,
    – Tin related articles and
    – Vegetable preparations.
    – 23% Organic chemicals
    – 14% Aircraft and spacecraft parts
    – 10% Original equipment components
    – 9% Motor vehicles
    Table 2: Summary of Gauteng’s export trade with the US (GGDA BI)

    Unpacking SA’s SEZ policy and potential benefits from AGOA

    To respond to the opportunity of enhancing export-led growth, South Africa has enacted the Special Economic Zone Act which simply put, allows for manufacturers within geographically demarcated zones or areas to access special tax incentives as provided by the Act.

    The mushrooming of SEZs across South Africa and the rest of the sub-Saharan Africa region provides a platform for eligible countries to maximise the benefits of preferential trade programs such as AGOA: by attracting investment to boast manufacturing activities for export to huge consumer markets.

    The above notwithstanding, it should be noted that whilst PTAs such as AGOA allow for developing markets to export to advanced economies such as the US, there is a need to ensure that the incentives offered do not promote trade at the cost of policy autonomy by the offering country or for that matter, an un-even regional heterogeneity outcome that can impact the broader development of the African continent.

    The OR Tambo International Airport SEZ Offering

    The OR Tambo International Airport SEZ provides a competitive edge in the form of its geographical location, in lieu of its placement at the largest and busiest airport in sub-Saharan Africa. In considering AGOA and the benefits of enhancing products manufactured in South Africa for the US market, this SEZ is well placed to drive exports to the world’s foremost consumer market.

    Presently, there are one or two passenger flights flying out of OR Tambo International directly to the US daily. Furthermore, connection flights exist through other destinations such as the UAE or even the EU, further enhancing air freight export from the OR Tambo International airfreight hub and SEZ to the largest economy globally.

    A statistical analysis reveals that major products exported to the USA through OR Tambo include Rhodium, Palladium, Platinum and other precious metal ores and concentrates.

    With a focus on high value, low mass products that utilise air freight as a mode of transport, OR Tambo SEZ is well positioned to facilitate the production and export of products that form part of the AGOA regime (e.g., jewellery, agriculture products or automotive components).

    Specific to jewellery, a bold development already underway at the OR Tambo SEZ is construction of a globally competitive Jewellery Manufacturing Park. This development clusters and plays host to a variety of players in the jewellery and precious metal fabrication industry, with a view of firstly, enhancing the operational competitiveness of investors in the Zone and secondly facilitating their access to key incentives that reduce production costs. These incentives include the standard SEZ incentives such as VAT relief, import duty customs relief and the Employment Tax Incentive.

    Through all the above, it is envisioned that products beneficiated at the Zone with an export focus will increase. With the completion of its Phase 1 development, plans are already underway to expand the SEZ with a view of accommodating more investments in the manufacturing of, inter alia, capital equipment, pharmaceuticals, medical devices, and automotive components for the global market.

    For more information visit: www.ortambosez.co.za

    Email: info@gidz.co.za