The Portfolio Committee on Trade and Industry on Monday expressed concern about the sustainability of South Africa’s industrial development zones (IDZs), given the financial model in which national government funds capital infrastructure, provinces provide operational expenditure and local government contributes to bulk infrastructure.

Committee chairperson Joanmariae Fubbs said that, over time, IDZs were expected to become more financially independent as their investment pipelines were realised. This followed media reports that the East London IDZ had run out of money.

“Part of their viability is often hindered by provinces withdrawing resources from these IDZs too soon, leaving [them] cash-strapped,” Fubbs said, adding that there has not been an appropriate balancing exercise done in terms of support available from provincial governments.

“In addition, the wage bill may be overextended by large executive packages, given the current environment of economic and fiscal constraints.”

“This situation is often compounded by a low rate of realising the investment pipeline, which requires a holistic approach and closer coordination among government departments to deliver critical services and infrastructure timeously,” she said.

Fubbs also noted that this inter- and intragovernmental cooperation and coordination was essential to ensuring the sustainability of IDZs and lessons learnt would go a long way to ensure the sustainability of future special economic zones.