THE ATLANTIS SPECIAL ECONOMIC ZONE

THE ATLANTIS SPECIAL ECONOMIC ZONE

INVESTING IN GREENTECH MANUFACTURING

A Special Economic Zone (SEZ) is typically defined as a geographic area in which the regular rules and policies applying to industry are different. This can take the form of incentives, special conditions and/or other types of policies or programmes. Typically, the aim is to try innovative ways to attract investment and create jobs.

In South Africa the SEZ programme has typically been used to target development in underserved areas and communities. The Atlantis residential and industrial area in the City of Cape Town represents one such community. Atlantis was originally established as a new town and the industrial area set-up as a deconcentration point to house coloured people forcibly removed under Apartheid. In the early nineties it underwent severe contraction and disinvestment as a result of subsidies being removed. This resulted in growing poverty and joblessness in the area.

Since 2010 and onwards there has been a concerted effort to revitalise the area and bring in new investment. The old industrial area was already serviced and with large stands, plus the continually improving transport connections and growth of Cape Town meant emerging opportunities for growth. The Atlantis SEZ is the outcome of this revitalisation effort and represents a collaborative response by the three spheres of government. At this time (around 2013) the Renewable Energy Independent Power Producer Programme (REIPPP) represented (and still does) an opportunity to target the growth of greentech manufacturing.

Matthew Cullinan, Executive: Infrastructure Development

Early initiatives and work by the three spheres of government resulted in the Atlantis SEZ being promulgated in 2018. This was followed by a process of establishing the operating company and obtaining the necessary licences and approvals to operate as a Provincial (Western Cape) Business Enterprise.

The Atlantis SEZ Company (ASEZCo) was the outcome of this process. Originally 100% owned by the provincial government of the Western Cape, the company acquired the land to operate the zone through a land-for-shares agreement with the City of Cape Town.

Through this the City of Cape Town became a minority shareholder. Seed funding from the DTIC SEZ Fund to put in place the civil infrastructure for the first precinct has kick-started the development of the zone. A great example of how the three spheres of government have come together to make this idea a possibility. The ASEZCo is now leading the process of working with the private sector to develop the Atlantis SEZ.

Among the many lessons learned from successful special economic zone programmes, the key elements include a strategic location, integration of zone strategy with the overall development strategy of the region, understanding the market and leveraging comparative advantage, and, most importantly, ensuring that zones are “special” in terms of an agile business-friendly environment, a sound administrative framework and an embodiment of sustainability – a combination of factors not often found in SOEs.

The SEZs in China, for example, were originally designed to test and apply a more liberal, market-orientated approach to manufacturing and production within the context of a communist state. They were an experiment with market economics – a very successful one it turns out. In line with this thinking, the top priority for the Atlantis Special Economic Zone is to work with the local community and government stakeholders to attract job-rich investment linked to growing the green economy. It is a combination of spatial targeting (Atlantis and surrounds) and targeting of greentech manufacturing within an eco-industrial park that promotes sustainable and green manufacturing practices.

The SEZ aims to benefit the country from an economic, manufacturing and job creation perspective and will do so on several fronts – but two are worth emphasising.

First, there is a strong emphasis on exploring how we can support the just transition to a green and sustainable economy. That means a heavy focus on building local skills and enterprises geared towards the green economy. Working with the local community to build shared value is central to our value proposition.

Second, we are targeting the development of a greentech manufacturing cluster. Our vision is to be Africa’s leading green manufacturing zone. Green manufacturing is no longer a nice-to-have – with increasing consumer awareness and growing requirements for low-carbon, resourceefficient goods, and services (in some cases moving to law), it is the future of all manufacturing. As a green industrial park, housing manufacturers of green technologies, the ASEZ presents itself as an important role player in the broader enabling ecosystem of renewable energy projects and the roll out thereof. Components destined for these projects need to be manufactured in a suitable location that provides them with sophisticated green infrastructure, a level of energy security, and a green precinct rating, which further improves the manufacturer’s global competitiveness.

Other than the boosting of manufacturing that adds upstream and downstream value, another important aspect is infrastructure—including both physical and non-physical infrastructure. For the former, a zone should provide high-quality connectivity through roads, ports, fibre, etc. and essential utilities including reliable power and water supply as well as environmental facilities such as waste and effluent treatment plants.

The Atlantis SEZ is not only a greentech investment destination, but also a zone that will be increasingly operated on green principles. Green infrastructure can be defined as services derived from well-functioning ecosystems, such as wetlands purifying water, that enhance and support human well-being and that are healthy and resilient. The definition can be extended to mechanical (human-made) infrastructure thatover their whole life - minimise carbon emissions, pollution, are resource efficient, and support natural systems functioning (soil, land, water, and biodiversity). Good examples would be wind or solar energy or industrial waste-water treatment and filtration systems. It is important to recognise that there is human agency at work in any infrastructure provision.

From this perspective infrastructure projects must be designed and planned with a good understanding of their whole-life costs. In other words, not just their cost of ownership and operation, but also to include an understanding of how they will enhance (and at least not undermine) natural processes and human well-being. From a climate crises perspective, this can also be considered as contributing to resilience. Resilience is defined as the ability to absorb short-term shocks and to self-organise to adapt to long-term stress. Green infrastructure, according to this definition, would seek to support local resilience rather than erode it. The inclusion of wholelife costing of infrastructure requires that the construction, management, maintenance and decommissioning costs and impacts of the project are considered – both internally and in terms of the natural and human systems.

Beyond the physical infrastructures, zones also need to provide important non-physical infrastructures, such as skilled labour, education and skills training, innovation platforms and nonphysical connectivity, such as efficient trade and logistics services. For example, plans are currently in place to open the defunct railway line between the Atlantis SEZ and the Port of Cape Town.

Green manufacturing is increasingly central to economic competitiveness in the context of growing consumer demands for sustainable goods and services. These demands are increasingly backed up by government regulations and targets around things such as the carbon content of goods. Having an SEZ with specific targets around net-zero carbon, net-zero water (positive water balance), netzero waste to landfill, and working with nature, ensures that we are laying the foundations for truly green and sustainable production. A focus on inclusivity and building skills and enterprises off the manufacturing base also leads to social stability and resilience.

The Atlantis Special Economic Zone will continue to grow the regional economy in a meaningful and impactful way, enabling the regeneration of Atlantis and a leader in green economy manufacturing in an eco-industrial park that puts sustainability, job creation and social inclusion at the top of its agenda.