These SEZs offer incentives, infrastructure, and streamlined processes to attract both local and international investors. They also contribute to employment by supporting sector-specific development in areas such as automotive manufacturing, agro-processing, and logistics. However, concerns remain about the quality and sustainability of the jobs created. Many positions are low-wage or temporary, raising questions about long-term benefits for communities. SEZs are also intended to reduce spatial inequality by boosting development in underdeveloped areas. Yet, in many cases, they operate in isolation from local socio-economic realities. This article examines the role of SEZs in promoting local economic development (LED), focusing on their employment impact, sectoral alignment, and regional integration. It also highlights the policy and governance challenges that limit their effectiveness and suggests ways to improve their developmental outcomes. 

Methodology

The research followed a mixed-methods research design to examine the role of SEZs in contributing to LED. Qualitative data were gathered from 30 key informants representing national institutions, SEZ authorities, private sector players, and municipalities in South Africa, specifically Ulundi, uMsunduzi, eThekwini, Richmond, Umzumbe, Mandeni, Umdoni, Newcastle, Capricorn, Collins Chabane, Polokwane, Tshwane, Emfuleni, Matatiele, Sarah Baartman, Namakwa, Chief Albert Luthuli, Nkomazi, and Enhlanzeni. Questionnaires were utilised to gather quantitative data from 151 respondents in communities around SEZs located in KwaZulu-Natal, Gauteng, Limpopo, Mpumalanga, Eastern Cape, Northern Cape, and the Western Cape. Thematic analysis based on Braun and Clarke informed qualitative analysis, whereas SPSS version 29 (statistical software) was utilised to conduct descriptive statistical analysis. This combination of stakeholder interviews and community surveys allowed for a wide-ranging evaluation of SEZs, supplementing the quantifiable trends with qualitative data across provinces.

Results and discussion

This section explores the empirical research results on the role of SEZs in the promotion of LED in the communities. The objectives of the study guide the interpretation of both quantitative and qualitative findings.

Participants' responses regarding the role of SEZs in fostering socially cohesive, sustainable and inclusive LED

The data suggests that SEZs play a significant role in fostering social cohesion and collaboration in LED. The highest level of agreement was recorded for "SEZs promote collaboration between local communities, businesses, and investors" (58% strongly agree, 19.8% agree, totaling 77.8%), indicating a strong perception that SEZs create platforms for cooperation among key stakeholders. Similarly, "SEZs help reduce social tensions by providing economic opportunities for different social groups" (43.2% strongly agree, 33.3% agree, totaling 76.5%) shows that SEZs are seen as effective in easing socio-economic divisions by facilitating job creation and inclusive economic participation. However, trust-building remains more nuanced, as seen in "SEZs enhance trust between local residents and external investors" (32.1% strongly agree, 34.6% agree, totaling 66.7%). While a majority still agree, the higher neutral response (27.2%) suggests that while SEZs contribute to trust-building, their effectiveness in fully integrating external investors into local communities remains limited.

The qualitative results clearly demonstrate the role of SEZs as the catalyst for human capital development and industrial growth. For example, in Limpopo, SEZs were said to emphasise leather and meat processing, providing thousands of jobs to SMEs and local communities. Most participants agree that SEZs have helped generate job opportunities for SMEs and communities. Further analysis revealed that SEZs are essential instrumental in ensuring socially cohesive and sustainable LED. By focusing on compliance, upskilling, and sector focus, they uplift the community and fight poverty. These findings highlight the spectrum of impact SEZs can have as an integral development instrument for widespread economic development.

Participants’ responses regarding the skills and interventions pivotal for the SEZ to thrive in the local government sector

The findings show strong agreement on the importance of professional skills for SEZs administrators and local government officials. The highest agreement (63.5% strongly agree, 23.8% agree, total 87.3%) was on the need for strong communication skills. This suggests that engaging stakeholders effectively is a critical aspect of SEZ management. Community engagement skills (63.2% strongly agree, 23.5% agree, total 86.7%) also received high agreement. This highlights the importance of building trust and collaboration with local communities. Strategic thinking and planning skills (62.9% strongly agree, 24% agree, total 86.9%) were also rated highly. This indicates that long-term planning is essential for SEZ sustainability.

The qualitative findings revealed that strong communication and stakeholder engagement skills were frequently cited as essential for SEZ’s success. SEZ administrators and LED officials must effectively negotiate with investors, manage public-private partnerships, and engage with local communities. Findings reflected further that skills enable SEZ administrators and LED officials to plan, coordinate, and oversee SEZ initiatives effectively. Additionally, the findings highlight that SEZs require technical expertise, interpersonal skills, and financial management to attract investment, drive economic development, and integrate successfully with local communities. Strengthening capacity-building programs in these areas will improve SEZ performance and ensure long-term sustainability 

Participants’ responses regarding the enabling systems, structures and policy frameworks that could be used to enhance the coordination and planning of SEZs in LED in promoting the District Development Model (DDM)

The survey data revealed that an overwhelming majority of respondents (90%) agreed while a lesser percentage of 1,4% disagreed and 7% remained neutral as to whether social programmes within SEZ address community needs such as affordable housing, healthcare and education. With regards to SEZs having adequate coordination, monitoring and evaluation systems to track performance, a majority of respondents (68%) strongly agreed, a lesser percentage of 7,1% combined strongly disagreed while 24,3% of the respondents remained neutral. These findings demonstrate the presence of enabling systems and structures in SEZs to attract foreign direct investment (FDI), ensure economic growth, including steering the DDM.

Qualitative responses demonstrated that collaboration between SEZs and municipalities under the DDM framework is crucial but faces several operational challenges. For example, stakeholders from Ulundi, Capricorn, and Polokwane municipalities underscored the importance of joint committees and stakeholder meetings. However, these mechanisms often underperform due to unclear performance metrics and inconsistent reporting, which are critical for evaluating collaborative success.
Participants' responses on the determinants of achieving equitable LED in SEZs

The majority of respondents (83%) strongly agreed,  while 17.1% remained neutral, and no respondent strongly disagreed nor disagreed that understanding trade and investment regulations is essential for SEZ administrators to navigate the legal and regulatory environment. Another question was posed to the respondent on whether SEZ personnel must have the technical knowledge in infrastructure development, including logistics, transportation and utilities. Majority of respondents (87,1%) agreed, while the minority of respondents (5,7%) strongly disagreed and 11,4% chose to remain neutral. These findings demonstrate that SEZ officials need to have specific skills in areas such as logistics and proper skills to comply with the legal environment.

It was also established that strategic planning and project management are the essential skills for SEZ administrators and LED officials. Respondents highlighted that SEZs operate in complex environments requiring long-term planning, resource management, and coordination with multiple stakeholders. Managing large-scale SEZ projects also requires advanced project management skills, including time management, resource allocation, and stakeholder engagement.  

Participants' responses regarding the efficacy of existing SEZs located throughout the country in enhancing economic growth, LED and investments

The quantitative data shows that most respondents, 34,8% strongly agreed; 42% agree that SEZs have successfully attracted FDI, while a lesser percentage of 4,3 % disagreed, while 19 % remain neutral. These statistics correspond with the literature on SEZs, which affirms that in South Africa SEZs have benefitted mainly from FDIs, which are crucial in turning around the country's economy.

The analysis of qualitative findings regarding the role of SEZs in attracting FDI indicated that leading SEZs such as COEGA and Dube Tradeport are excelling, although red tape in government is viewed in SEZs globally as a deterrent to speedy decision-making and attracting investments. Findings reflected that in South Africa, SEZs experience the dilemma as the red tape associated with political authority determines the level of investment, type and place where potential investors could interact with SEZs. The red tape, if not managed, may negatively affect investor confidence and largely affect LED in the communities. 

Participants' responses on benchmarking with the international and regional experiences

The data analysis reveals that SEZs have played a crucial role in driving economic development worldwide. South Africa can learn valuable lessons from both the successes and challenges of SEZs in countries such as China, Vietnam, and the United Arab Emirates (UAE), which have adeptly utilised SEZs to catalyse economic advancement by drawing foreign investments, nurturing industrial clusters, and ensuring regulatory efficacy. A salient insight derived from China's experience is the paramount importance of robust institutional frameworks and accountability systems designed to mitigate corruption and facilitate effective management. Similarly, the UAE has revitalised its economic landscape through the expedited development of SEZs designed explicitly for targeted industries, thereby illustrating the efficacy of strategic planning in promoting economic progress. Nonetheless, international experiences also indicate that it is imperative to meticulously evaluate local conditions when implementing SEZ frameworks, given that social, political, and economic contexts differ markedly across various regions. 

Conclusion

Research show that SEZs play an important role in economic transformation in South Africa. COEGA and Dube Tradeport are excellent examples of SEZs that have attracted foreign investment and boosted LED. SEZs are viewed as key to the development of the South African economy, but the literature presents contradictions in their development, for instance, targeting foreign investors at the cost of local (business) communities. Local governments are failing to maximise the potential of SEZ due to a lack of adequate information on how to incorporate them into economic strategies. Additionally, social issues like poverty hinder small businesses from partnering with SEZs. The findings highlight the need for stakeholder support of local SMMEs to access finance and expertise to tackle SEZ opportunities. There must be municipal representation on SEZ boards to incorporate municipal planning with SEZ activities for community benefit. 

This article is part of a series reporting on research commissioned by the Local Government Sector Education & Training Authority (LGSETA) (Contact: matodzir@lgseta.org.za).