A REGIONAL OVERVIEW OF
A REGIONAL OVERVIEW OF GAUTENG The Cullinan Mine is expecting its expansion project to start producing in 2024. A move to Johannesburg by a De Beers division has strategic significance for the Gauteng economy, not least in supporting the idea of Special Economic Zones as sector accelerators. The Vaal SEZ is the latest initiative to move forward, with the goal of revitalising the Vaal regional economy. By John Young Gold is what made Johannesburg but diamonds are in the news today. Gold mining continues in Gauteng, and new technologies are making it profitable to work on historic tailings, but the industry is now one of many rather than being the thing that defines the city or the province. Gauteng diamonds first made a big splash when the huge Cullinan diamond was discovered in 1905. It went on to become part of the crown jewels of the British monarch. Petra Diamonds recently approved another expansion project which will cost 3-million and is expected to start producing in 2024 and reach steady state in 2026. As of January 2023, De Beers Group’s Sightholder Sales business started operating out of Sky Park Industrial in Johannesburg, having been in Kimberely in the Northern Cape since diamonds were first discovered. Although the move has significance for the mining sector, De Beers’ choice is also a reflection of a long-term shift in the nature of the Gauteng economy that has for decades been moving away from resources and towards services. The move is also in line with the policies of national and provincial government to support Special Economic Zones (SEZs), in this case the Gauteng Industrial Development Zone (GIDZ). The aim is to attract entities engaged in mineral beneficiation to the zone, with this cluster being conveniently located near to the OR Tambo International Airport. The National Department of Trade, Industry and Competition (dtic) is the lead agent in the creation of SEZs, which are part of the national Industrial Policy Action Plan (IPAP). SEZs are designed to attract investment, create jobs and boost exports. Three district municipalities across the south of Gauteng are to host to the Vaal Special Economic Zone (Vaal SEZ) which will have GAUTENG BUSINESS 2023/24 6
SPECIAL FEATURE multiple sectors represented and be located at multiple sites. The area already has many industrial assets and infrastructure and is well served by transport routes. Among the targeted sectors are agro-processing, logistics, the lowcarbon economy, light manufacturing and the Blue Economy, taking advantage of the Vaal River. Gauteng accounts for 45% of South Africa’s manufacturing capacity, so the province is well placed to expand an already strong and diverse sector. Manufacturing makes up 14.5% of formal sector output in Gauteng, making it the fourth-largest sector. One in nine jobs in the province are created in the sector. According to the Gauteng Growth and Development Agency (GGDA), six out of 10 foreign direct investment (FDI) projects in Gauteng have flowed to the manufacturing sector and its subsectors. The GGDA is an implementing agency which aims to facilitate business enablement, develop small, medium and micro enterprises (SMMEs) and promote investment and job creation. Focussed support for these specific subsectors is intended to spur other investments: automotive sector, mineral beneficiation, capital equipment, agro-processing, pharmaceuticals and tertiary services such as BPO, ITC services, tourism and the knowledge economy. GGDA subsidiaries include The Innovation Hub (technology), the Automotive Industry Development Centre (AIDC), which manages the Automotive Supplier Park (ASP), and InvestSA Gauteng (red tape remover for investors). The Johannesburg Development Agency (JDA) plays a similar role as the City of Johannesburg’s development agency. JDA’s focus is on helping create resilient, sustainable and liveable urban areas in identified transit nodes and corridors. In 15 years, 387 projects have been implemented. The Provincial Government of Gauteng has identified 10 “high-growth” sectors where it intends concentrating its efforts to build infrastructure and attract public and private sector investment: • Energy: new technologies and a diverse energy mix • Transportation and logistics • ICT, media and digital services • Tourism and hospitality • Agricultural value chain • Construction and infrastructure • Automotive, aerospace and defence • Financial services • Cultural and creative industries • Industrialisation of cannabis Overview of the province Gauteng is South Africa’s smallest province in terms of landmass but in every other respect it is a giant. The province is the nation’s key economic growth engine. At 18 176km², the province makes up just 1.5% of South Africa’s territory. The 14.3-million people living in Gauteng in 2017 generated a gross domestic product of R1.59-trillion, about a third of South Africa’s GDP. Gauteng recorded the highest provincial growth rate in 2019. The 0.6% rise was mainly driven by finance, real estate and business services, which is the dominant industry (StatsSA). Gauteng is a leader in a wide range of economic sectors: finance, manufacturing, commerce, IT and media among them. The Bureau of Market Research (BMR) has shown that Gauteng accounts for 35% of total household consumption in South Africa. The leading economic sectors are finance, real estate and business, manufacturing, government services and wholesale, retail, motor trade and accommodation. The creative industries (including advertising and the film sector) contribute significantly to the provincial economy. In Johannesburg, financial services and commerce predominate. The JSE, Africa’s largest stock exchange, is in Sandton and several new stock exchanges have recently received licences. Tshwane (which includes Pretoria) is home to many government services and is the base of the automotive industry and many research institutions. The Ekurhuleni metropole has the largest concentration of manufacturing concerns, ranging from heavy to light industry, in the country. The western part of the province is concerned mainly with mining and agriculture, while the south has a combination of maize farming, tobacco production and the heavy industrial work associated with steel and iron-ore workings. Individually, the biggest Gauteng cities contribute to the national GDP as follows: Johannesburg (15%), Tshwane (9%) and Ekurhuleni (7%). ■ 7 GAUTENG BUSINESS 2023/24
