With the South African automotive industry being the fifth largest exporting sector out of more than 100 sectors and accounting for 18,7% of the country’s manufacturing output, it requires a robust Special Economic Zone (SEZ) to grow and transform
According to figures released by the National Association Automobile Manufacturers of South Africa (Naamsa), in 2021 South Africa’s global vehicle production ranking sat at 21, with a 0.62% global vehicle production market share. A key growth strategy for the country’s automotive industry is to become highly integrated into the global automotive environment on the back of increased foreign direct investment and trade. Under the South African Automotive Master Plan (SAAM) 2021-2035, the objective is to produce 1% of global vehicle production, or 1.4 million vehicles, per annum locally by 2035 which will substantially improve the country’s status and global vehicle production ranking.
The government, through the Department of Trade, Industry and Competition (the dtic) has identified several priority sectors, including the automotive industry, for the development of its Special Economic Zones (SEZs) programme.
SEZs are designated geographical areas within a country that offer incentives and benefits to attract foreign investment and promote economic growth. In particular, there is a concerted focus on the development of the automotive sector because of its potential contribution to economic growth, sectoral transformation, regional development, and job creation in the country: for every single job on the original equipment manufacturers (OEM) factory floor, there is a ripple effect with 14 jobs being created both upstream and downstream in the automotive value chain, totalling over 460 000 highly skilled and direct jobs.
Background
SEZs have been identified as key policy instruments for promoting industrialisation and economic development in South Africa, and their success is crucial for achieving the objectives of the Industrial Policy Action Plan (IPAP) as well as driving manufacturing. The Tshwane Automotive Special Economic Zone (TASEZ) was officially launched in November 2019, with a sod-turning event by President Cyril Ramaphosa.
In 2020, TASEZ, located in the City of Tshwane, Gauteng, was established as Africa’s first automotive city, and its construction phase was completed two years later in November 2022.
These first two years focused on creating an industrial complex around tier-one automotive suppliers, becoming a flagship and a test case for the implementation of a new approach to the country’s SEZ programme. This was under the stewardship of Lionel October, TASEZ Board chairperson and Executive Director of Industrial Zones Programme at the Industrial Development Corporation. October, the former Director General at the dtic, was instrumental in setting up the SEZ framework in South Africa.
TASEZ is a joint project between the three spheres of government and private investors as an initiative to contribute to the National Development Plan (NDP) and to address the United Nations Sustainable Development Goals (SDGs) framework. “As TASEZ we already address 12 of the SDGs as part of the NDP’s vision for 2030.
We incentivise and support private sector investments in plants, technologies, and skills that will have a long-term impact on the economy,” Dr Zulu says.
TASEZ achievements and milestones
Since its inception several milestones were reached during Phase 1 of the hub’s development:
- It provides a much-desired geo-location in the east-west and north-south pendulum, in close proximity to an existing automotive industrial complex, and offers world-class customised solutions, incentives, support services and systems for manufacturers seeking excellence.
- The zone supports its anchor tenant, Ford, to ultimately manufacture more than 200 000 units per annum, which equates to producing a car almost every three minutes.
- It has garnered private foreign direct investment (FDI) of R4.6-billion, exceeding an initial target of R3.4-billion, along with government investment in the Phase 1 development of R3.9-billion from all three spheres of government.
- A total of 7 887 jobs have been created, with 4 789 of these being construction jobs comprising 12% women and 53% youth. There are 85 graduates that have been placed within construction companies, with 64% sourced from surrounding communities.
- Some 3 098 jobs were created by the SEZ investors, against an initial target of 2 088 jobs: 34% of those employed are woman, 73% youth and 65% from the surrounding communities of Mamelodi and Eesterust.
TASEZ’s CEO, Dr Zulu speaks candidly about his aspirations and passions, particularly on transforming the automotive sector. His expertise in the maritime sector and in international trade is supported by an array of technical and academic qualifications and are a solid foundation for why he is the right person to steer TASEZ as a vital cog in the automotive industry’s manufacturing wheel.
Who is Dr Bheka Zulu?
Born and bred in the Zulu kingdom province of KwaZulu-Natal, Dr Zulu attributes his success to his late parents who played a significant role in South Africa’s political struggle. Dr Zulu’s illustrious voyage started as a Cadet Navigating Officer (CNO) on the Grindrod Logistics-Unicorn Shipping car carriers and product tankers and extended to several senior and executive positions in the private and public sectors to now being TASEZ’s Chief Executive Officer (CEO). While reflecting on his early career, he starts by telling us that he vividly remembers the fascination when seeing ships all the way from the hills of KwaMashu-Ntuzuma Township sailing into the Durban harbour transiting along uMhlanga and into the one of the busiest ports in Africa. “I always tell people that where I grew up, I had a spectacular 180-degree ocean view, and we were about 35km away from the sea. As soon as I stepped out of our house—or even looked out of my bedroom window—I could see the ships and was absolutely fascinated by those small objects moving on the water. So, I wondered what kind of people are supposed to be on those ships and how I could be one of them one day. I always dreamed beyond the horizon of my disadvantaged background.” says Dr Zulu. His foray into the maritime industry started at a young age and was pure coincidence, which turned out to be the experience of most people in this sector. One day while walking from the beach to the taxi rank, heading home, he saw a newspaper advert by Grindrod Shipping recruiting for cadets. He instinctively knew that this was the opportunity he had been looking for. “I completed the job application and posted it at the local post office immediately.” he recalls.
Soon after he got the call for an interview, however, he did not realise what a daunting experience and journey this would be. “I remember while waiting to go into my interview, there were about seven white guys, the same age as I, who came from affluent backgrounds, and they were talking about their sailing experience and how their parents’ owned yachts and their fathers were marine engineers. This was in stark contrast to the reality of black candidates, like me, who knew nothing about the ocean, ships, and sailing.” Despite this, Dr Zulu was determined to seize the opportunity and succeed.
Three weeks later he was awarded a bursary by Grindrod Shipping which enabled him to pursue a National Diploma in Maritime Studies at, the then, Natal Technikon. However, with as few as 12 black students, sponsored by Grindrod Shipping and Portnet (Transnet) in a class of 80, there were many hurdles to overcome and succeed in the course. A case in point, “Our HOD told us that ‘one in four students passes this course’. In his experience of being in charge in this department and at sea, where he was a captain of a ship, he had never seen a black person passing anything nautical at officer level and he was very clear on his opinion of us not passing this course. He offered us Change of Curriculum forms and discouraged us from continuing with the course. His advice was that we switch to the ‘much easier’ courses such as electrical or mechanical engineering. Unfortunately for him we had no choice, as our bursary conditions were specific to nautical studies. We had to stay on the course and were more determined to succeed against all odds. By the grace of God, and through our hard work and dedication, we all passed and most of us are in leadership roles, as Port Captains/Harbour Masters, Port Managers, Marine Pilots, Marine Surveyors, Marine Superintendents, Vessel Traffic Managers, Ship Agents, Captains of all oceans and CEO’s all over the world.” says Dr Zulu.
Reflecting on his career, Dr Zulu believes he was destined to be in the maritime industry. “I didn’t even know what the industry was about nor was there a career guidance. All I knew was that I wanted to be part of it. So, I believe I was destined to be in this industry, and I found myself at the right place at the right time.”
His maiden voyage into international trade began with exposure to the automotive sector through Grindrod’s Unicorn Shipping Car Carrier/Ro-pax and an oil/product carrier sailing from port of Durban into the deep seas. While trading and travelling to more than 70 ports/countries around the world, his first ports were the Reunion Island, in the Indian Ocean, and Mauritius being the second in his liner trade. He boasts operational and trading knowledge from his port experience in China, Japan, Hong Kong, India, Belgium, South America, the Mediterranean, East and West Africa, the Persian Gulf, the Gulf of Mexico, the United States of America, the Suez Canal, Scandinavian countries and his personal favourites, Rotterdam, and Singapore where he was trained in Ship Handling, Marine Pilotage Ports, Operations and Management.
A dad and a caring family man, having lost a lot of time with family and friends in his earlier days at sea, Dr Zulu has learnt that family comes first, and time should always be prioritised for the ones you love. “In my dedication to my career at sea, I was unable to pay my last respects to both my father and my grandmother as I was at sea in a trade between Persian Gulf and US Gulf/Gulf of Mexico.” During his leisure time he prioritises his health by walking with his partner and, being a thought leader, he also writes journal articles over weekends. His efforts have already come to fruition with three articles being published in accredited journals.
Our first impression when meeting him, is that he is a very focused, professional, and serious man, representative of an industry of precision, discipline, and high standards. But as our interview continues his relaxed approach and great sense of humor is revealed. Having a passion for transformation and changing lives is not only part of his life’s purpose but is a reality in what he does daily.
A lifelong Passion for Learning
After pursuing his Nautical Studies, sailing as a Cadet Navigating Officer to become Master (Captain) of restricted tonnage/voyage/operations vessels, he further pursued various maritime professional qualifications up to PhD degree in Ocean Economy. Professionally he is a qualified Mariner with various international qualifications from institutions including Shipping and Transport College, Rotterdam, Holland, Institute for Port of Singapore, Stanford University and School of Ports SA. He currently holds various Post Grad Certificates in Maritime, B Tech (Finance& Strategy), Post Grad in Public Management, MBA, MCOM in Maritime Studies, and a PhD (Ocean Economy).
Dr Zulu attributes his success to a deeply enriching career in the maritime industry, honing his craft at various organisations across multiple industries developing his specialist skills and global awareness. His career has afforded him exposure in a sector where maritime skills were critical but scarce.
Furthermore, he concedes that in the maritime industry technology evolves at an unprecedented rate and this requires agility and adaptability. “The technology used on ships is always evolving and becoming more advanced, so you have to stay abreast of the latest technology. Every time I stepped on a different ship it was a new experience. From container ships to tankers, you’ll discover that the technology is completely different across various vessels, and this taught me to keep an open mind and keep learning.”
He notes that he learnt endurance. “Along with the safety and physical aspect of life at sea, there is also a psychological aspect to the job. From a young age, as an officer in charge, I had to learn to endure long periods of work, stuck on vessel with multinationals, being under pressure, being responsible for assets worth multimillion USD as well as the crew’s lives; because it’s literally a matter of life and death at sea”, he chuckles. “At times work lasted 48-72 hours or even more hours at a stretch over a period of 6-8 months while being away from home, family, and friends. Learning to withstand hardship and adversity is a life-long lesson and I do not regret a single day of my time at sea.”
Leading TASEZ
With his illustrious background, Dr Zulu is tasked with ensuring TASEZ enhances the production capabilities of the economy – particularly in the automotive sector.
South Africa currently imports more than it exports, however, TASEZ supports IPAP with a focus on manufacturing for exports. “This contributes directly to the transportation value chain of our ports through increased shipping volumes on the continent. We really need to move toward being an export orientated country to generate foreign currency, contribute to the world global production and be an integral part in Africa’s transport logistics,” Dr Zulu urges.
TASEZ is an SEZ that houses a timely value chain for the automotive sector and is currently driven by its anchor investor, Ford. The global automotive manufacturer committed to an investment of about USD into the South African sector. “We currently have a private sector investment of R4.6 billion out of a total of R26 billion invested into 11 designated SEZs. This investment is critical for the country as it helps create jobs–and we’ve been fortunate to be a part of that impactful contribution.” says Dr Zulu.
The impact of this foreign direct investment can be clearly seen in the jobs created by TASEZ, particularly for those living in surrounding townships. “At our SEZ, we currently have ten tenants, which are investors that feed into the production of the Ford Ranger. Our support for Ford has contributed to 113 000 total jobs in the automotive sector. We also construct world-class factories that house our investors, with investments coming from construction and the employment of small, medium, and micro enterprises (SMMEs),” adds Dr Zulu.
To date 304 SMMEs in the construction sector have been trained within TASEZ. “That’s a part of the role we play, transforming and contributing to our local SMMEs. TASEZ contributes towards the township economy and currently our procurement spend on the township economy is over R1 billion and that, in terms of percentages, is above the 30% procurement that is targeted in the construction sector. This is in support of implementation of the Township Economic Development Act ,” says Dr Zulu.
He explains that when the cars go through the ports, the 600km Gauteng and Durban south corridor into the ports, and then get exported via the Ro-Ro ships and car carriers that come into the country, “our contribution is not only on what we produce in terms of the components that make up a car, but we also provide direct and indirect jobs to other SEZs. In our zone we support our anchor tenant to export more than 65% of their production. That creates a value chain for the export markets that becomes sizeable tonnage for shipping – where my expertise is,” Dr Zulu adds.
Asked whether other OEMs, like BMW and Nissan, are part of TASEZ, Dr Zulu said that Ford is currently the only OEM based in the hub. “As we grow, we are also attracting other OEMs that are eager to become a part of our zone and which will join us at a later stage.”
Dr Zulu says that TASEZ is in discussions with other OEMs while Phase 2 is under construction. “We are taking a phased approach in our growth. Phase 1 focused on the anchor tenant having specific requirements to produce their vehicles within particular timelines. Now we are ready for the next phase of development in the latter part of this year. TASEZ is looking at expanding to other OEMs who have shown interest. Several black industrialists and a few battery manufacturers have already shown an interest to come into our SEZ Phase 2 and 3.”
He adds that when Ford approached TASEZ to produce the new Ford Ranger, the company had the choice of going to Thailand or South Africa. Ford decided to expand their plant in South Africa. “I think that’s where the investment confidence was noted, because we are the first SEZ that’s purely focused on the automotive sector. Other economic hubs have a broader focus for development.”
Currently, the Eastern Cape, which is home to a number of global automotive companies, exports 44.6% of the vehicles produced in the country, this is followed by Gauteng at 28.2%, according to Naamsa’s figures. Dr Zulu adds that TASEZ and the SEZs in the Eastern Cape support one another to achieve the national goal of “having a production line that is equivalent to 1% of the world’s production. We are currently sitting at 0.6%. So, their production lines and our production lines are simultaneously contributing to this goal. We are not competing with each other. In fact, we complement each other. East London has Mercedes-Benz and other OEMs. We’ve got Ford and plan to attract other OEMs. So, there’s a huge difference in our markets. We are just playing our part.”
Dr Zulu is looking beyond the borders of South Africa and says TASEZ would like to see the SEZ becoming part of the transborder export market, looking at the African Continental Free Trade Agreement (AfCFTA) and Cabotage Policy position as some of the instruments to piggyback onto. He believes the vehicles being built in TASEZ are ideal for the African market. “The Ford Ranger fits the terrain of most of the African countries. We also want to grow the sector to supply the Southern African Development Community (SADC).” This would create business for all the countries involved, because what South Africa produces provides business opportunities for its trade partners. “For us at TASEZ, it is about how to make the best of our geographic location.”
Dr Zulu described TASEZ as part of a hub and spoke of development. “Because we are located in the City of Tshwane, the capital city of the country, which is a host to a number of diplomatic channels. We are also sitting in the Mozambique corridor, which is a favorable position for exports. We also have the Gauteng-Durban corridor as an advantage, and we’d like to establish a south-east corridor into the Eastern Cape through the railway line. Part of our future engagements with different stakeholders is to see a railway line that will transport products via the south corridor to Gqeberha for export. So, I think from a south north perspective, I would call TASEZ a hub with spokes to many areas because of our favorable location to even do trans-shipment into the other countries,” adds Dr Zulu.
He refers to one of his favourite countries, Singapore, as a benchmark in becoming a global economic role player. “It can teach us a lot–that a small country, is one of the biggest handlers of container trade. I think they’re in the top 10 and ranked three, after the two Chinese ports of Shanghai and Ningbo. If you look at Singapore, it’s a hub and spoke of east and west Asia because of its geographical location. They’re able to trade between the west and east. That’s where their market share is. Out of 237 designated SEZs in Africa we want to be a continental leader.”
What would this mean for TASEZ?
Dr Zulu says there is a well-crafted plan to meet this target. “We are currently sitting between 39%-41% so there is focus on increasing local content. I think that’s where we are trying to attract many SMMEs into the mainstream through the Black Industrialist Scheme, where they’re going to participate as suppliers —whether they come at tier three, tier two suppliers or tier one suppliers.
Our mission is to attract more local SMMEs and help them to understand the sector.”
Dr Zulu feels strongly that it is important to address the challenge of lack of understanding about the automotive sector. “We need to drive more awareness and empowerment, training, and upliftment of some of the component manufacturers and suppliers in this country.
TASEZ is currently working with the National Association of Automotive Components and Allied Manufacturers (NAACAM), which is a component association to see how we position some of these component manufacturers to feed into the local content.
It’s a work in progress, but the issue is always research and development that limits us. “We need to focus on research and development, which is also one of my passions where we say, how do we then tailor-make some technologies that will fit into the local content. If it’s not technology, how do we source raw material that will feed into the local content.”
He believes local content aspect is not a huge challenge. “It’s not that we don’t have the resources, but the challenge is how do we refine the resources to be able to feed into the just-in-time of what these OEMs are looking for as well.”
Asked about the transition to electric vehicles (EVs) and the readiness to produce EVs in South Africa for export, Dr Zulu believes that there must be discussions at a policy level to identify how to build a local market along with the infrastructure to support EVs. “If the OEMs have the appetite to produce EVs, and with all of the manufacturers moving towards electric cars, then as a country, we will have an uptake. Once you have an uptake, then you have a market. All you must do is to develop technology that’s going to fit into the market.” The technology will improve over time, he suggests, pointing to the hybrids already available in the market.
Another challenge most OEMs highlight with regards to the production of EVs and NEVs is the question of the ethical sourcing of resources. He believes the value chain needs to be protected in terms of ensuring the transparent, clean, and auditable sources of raw material.
The adoption of policy for EVs and NEVs is lagging, Dr Zulu believes that it’s moving at a slower pace than the sector would like. “The sector is waiting for policy pronunciations that are going to support NEVs. But from a policy development perspective, a policy is something that’s always evolving, and you need technocrats to feed into the policy with the latest trends, developments, global changes and implementation of policies, and the driving factors. If you develop a policy, you need to be aware of the need of the sector, the traction and direction, and the future of where the sector is moving toward.”
He suggests that perhaps there should be a specialised task team that’s going to focus on fast tracking the EV/NEV policy. “They could meet on a regular basis, set dedicated timelines, and get buy-in from the relevant sectors and stakeholders. With this approach, prior stakeholder engagements will accelerate the entire process. By the time you go to Naamsa and other advocacy groups, you have already had representatives who have contributed to the policy. So, the thinking would already be aligned to the objective’s representative of each stakeholder. In simple terms, the policy would address the needs of all stakeholders who have researchers that would benchmark at a global standard. This would be time-efficient and effective and policy changes could be implemented in a shorter space of time, because a focused technical group with temporary appointments could get it across the line much faster.”
Outlining the medium- to long-term vision, Dr Zulu says TASESZ’s vision is to become a world class leader in the automotive sector, competing with of the world’s already-established business SEZs. “We are part of just over 5 000 SEZs across the globe and 237 in Africa. We still want to have our market share and our leadership role. Part of our vision is to capacitate the sector.”
Additionally, he adds that part of the growth plan is to establish an automotive e-campus that will hone the requisite skills to grow the sector, with staff from the automotive sector for research and technological skills development, for TASEZ to consistently develop the SMME community that operate within the hub.
“We also plan to develop a feeder programme where manufacturers can develop SMMEs to become part of the tier-one and tier-two suppliers within the automotive sector at large. These SMMEs could then feed into the township economy or the aftermarket, either as emerging SMMEs dealers or component manufacturers looking at different aspects of the value chain and not only at supplying parts but at supplying automotive centers in different aspects. Training will assist in developing new entrepreneurs that are feeding into the sector. Developing our black industrialist programme is also important to us, where we want emerging black industrialists to participate in the global value chain of the automotive sector.”
Ease of trade is critical for Dr Zulu, he says that TASEZ will aim, within the next five years, to provide solutions to enhance the automotive and associated sectors for future investors. “As a dedicated and the biggest automotive SEZ, we also have a huge responsibility in accelerating Africa’s growth. We are determined to developing partnerships and training agreements with SEZs across the continent, which are going to feed into our capabilities to increase production and component suppliers.”
“In the future we want to play a catalytic role in the AfCFTA within the trans-shipment sphere (green lanes) , or dry port facility for trade within SEZ – that is part of our growth vision, being in the automotive sector and the logistic value chain, so that we are seen as a destination for the world as a dynamic country to partner with.”
Dr Zulu concludes by emphasising that the growth vision for TASEZ is to play an active role in the transformation of the automotive sector. Through localisation and increasing the number of SMMEs participating in the SEZ.
For more information about TASEZ, visit www.tasez.co.za
Edward Moleke Makwana is an independent automotive industry consultant and freelance contributor, as well as Founder and Managing Director of Makwana Public Relations (Pty) Ltd.
