Answer to Question #228564 in Macroeconomics for Nono

Question

Explaine the weaknesses of the RSA's Industrial Development Zones

Answer 1

In her question to boost investments, economic growth and to promote skills development as well as employment, the government of South Africa (RSA) established IDZ, areas dedicated exclusively for manufacturing and storage of goods with external linkages vide air and water routes. This quest saw the establishment of about five IDZ, one them being Coega IDZ which was commissioned in the year 2001.

Despite being able to create jobs, promote economic growth and foreign exchanges, these ambitious project steered by RSA have brought with them a number of shortcomings.

To begin with, the RSA's IDZs have resulted in loss of massive amounts of taxes attributed to incentives and exemptions extended to the units established within the delineated areas. Although the government intended to attract both foreign and local investors, incentives and tax exempt have results in loss of potential revised.

In addition, these projects have been seen or noted to have distracted the government of SA attention from more pressing and urgent issues. The government was the main financier from the inception of these IDZs through grants and direct expenditures on infrastructure.This has saw the chunks of national resources running into billings of Rands being diverted into funding these projects at the expense of other important projects such as education and health.

Furthermore, exploitation of workers and environmental degradation have been reported. Workers in the industries work under deplorable conditions without necessary gears and protection policies and poor waves rates. Pollution resulting from factory effluence and smoke have been blamed for poor and ill health notable in many South Africa living around the neighborhood of IDZs.