In marking a significant step in South Africa’s industrial development journey and turning eastern Gauteng into an aerotropolis, FNB Gauteng Business and the Gauteng Growth and Development Agency (GGDA) have declared the OR Tambo Special Economic Zone (SEZ) Precinct 2 development “open for investment”.

During an official launch of the Precinct 2 development on November 7, GGDA subsidiary Gauteng Industrial Development Zone chief investment officer Maidei Matika unpacked the precinct’s manufacturing and export hub potential and strategic value for investors from a cost and infrastructure perspective.

With support from FNB and the Department of Trade, Industry and Competition, the GGDA has progressed with bulk infrastructure on site, including roads, electricity and water.

The SEZ offers incentives for investors such as value-added tax exemptions, reduced employer tax incentives and duty-free importation of production-related material and assets.  

Matika explained that the real value of the SEZ lay in its location next to Africa’s busiest airport and in the economic powerhouse province of South Africa, which afforded easier access to market and lower logistics costs.

The GGDA is also offering one-stop-shop assistance, which involves facilitating a single point of contract for investor establishment and retention issues through Invest South Africa. This includes communication with various government departments for regulatory requirements such as licences, registration and access to incentives.

The GGDA, as the implementation arm of the Gauteng Department of Economic Development, is mandated to develop the SEZ at OR Tambo International Airport which so far comprises the 7.5 ha (62 000 m² of leasable space) Precinct 1 area and the planned 29 ha (265 000 m² of leasable space) Precinct 2 area.

Matika confirmed that construction on the Precinct 2 area started in March and is planned to be operational in 2026. It is offering industrial space of between 500 m² and 10 000 m² in size, targeting products that are high value and low weight, and therefore suited to air freight.

Some of the targeted sectors for investment include agroprocessing, information and communication technology components, as well as electronics, and medical care and pharmaceutical products.

Matika noted that the vision of the GGDA was to position Precinct 2 as part of a production network that supported regional and global value chains looking to service the African market.

The GGDA is also in the process of taking to market the Springs Precinct which is planned to have 13.9 ha (50 000 m² of leasable space). This SEZ is located right next to a platinum refinery of Impala Platinum.

Construction on the Springs Precinct is planned to start in April.          

Matika said the Springs Precinct would be a mixed industrial development with fuel cells at the core, broadening to other platinum group metal value-add-related suppliers and advanced manufacturing.

In terms of the types of investors GGDA is targeting, Matika listed the preferred investors as those interested in operations within an 18- to 24-month lead time; those seeking long-term tenancy in the form of lease agreements guaranteeing rights over a defined period; those looking to expand into Africa and capitalise on Africa’s growth trajectory; those looking to expand already established operations by working with government to realise growth potential; and those looking to forge partnerships with government and other key stakeholders, including established local players.

Matika pointed out the Precinct 2 project offered significant potential for green financing and attracting investments aimed at sustainable development and environmental stewardship in emerging markets. It also provided a platform for innovative green manufacturing solutions that were aligned with the United Nations’ Sustainable Development Goals.

The GGDA requires tenant lease terms of at least ten years, with the payback period for investments being between eight and ten years – depending on funding raised.

The agency estimates an internal rate of return of between 15% and 16% for investors in Precinct 2.

Electricity and water rates are currently estimated to be R2.76/kWh and R42.70/kilolitre, respectively.

The investors will be responsible for construction of the top infrastructure of their operations.

FNB Gauteng regional head Andile Ncoyini maintained that SEZs are catalysts for exports and job creation and that Precinct 2 can “plug into” the current trade fragmentation opportunities and evolving value chains globally.

He added that FNB aimed to foster ecosystems that supported business growth through partnerships rather than just funding. Ncoyini emphasised the importance of public-private partnerships in driving exports, foreign direct investment and job creation.

He further mentioned that there was a potential $75-billion that could be unlocked just by supporting exports of existing products to Africa and globally. FNB ultimately encouraged engagement with stakeholders to leverage SEZs to develop the economy.