South Africa's hydrogen export opportunity hinges on special economic zone overhaul

South Africa’s special economic zones are leaving investment on the table. That is the assessment of Shaun Moses, Acting Chief Director of Special Economic Zones at the Department of Trade, Industry and Competition, who argues that a fundamental redesign of how these zones operate could position the country as a serious competitor in the global green hydrogen economy.

Moses made the case during a panel discussion on SEZ policy at the Africa Green Hydrogen Summit in Cape Town, where he outlined why the current framework falls short for capital-intensive hydrogen producers. The existing structure offers a 15% corporate tax rate alongside customs and Value Added Tax benefits. Attractive on paper, but insufficient for the investment calculus hydrogen projects demand.

What investors actually weigh: capital costs, operating expenses, regulatory timelines and supply chain integration. Moses proposed replacing the current approach with dedicated Hydrogen Industrial Hubs that bundle fiscal incentives with guaranteed infrastructure, accelerated permitting and support for local manufacturing across the hydrogen value chain. The distinction matters enormously to project financiers. Tax breaks reduce the cost of doing business once operations are running; infrastructure certainty and regulatory predictability determine whether a project reaches financial close at all.

The hub model targets multiple revenue streams within the hydrogen economy. Green hydrogen production would anchor the zones, but the clustering approach also draws in green ammonia and green steel manufacturing, attracting capital across the entire value chain. For operators, proximity to complementary industries reduces fragmentation and improves unit economics, a structural advantage that standalone projects in dispersed locations cannot replicate.

Moses was explicit that fiscal incentives alone cannot deliver competitiveness. Dedicated renewable energy access, electricity transmission capacity, port facilities, rail and logistics networks, and streamlined regulatory processes (delivered through one-stop shops and coordinated permitting) are equally essential components. Effective coordination between national, provincial and municipal institutions, he stressed, would be critical to reducing development risk and improving investor confidence.

The proposal also carries strategic alignment with existing policy frameworks. The hub concept supports South Africa’s Industrial Development Strategy, which targets industrialisation and beneficiation, and fits within the Spatial Industrial Strategy by creating new industrial growth nodes tied to ports, renewable energy resources and logistics corridors. That policy coherence reduces the risk of initiatives stalling between competing government priorities, a concern that weighs on long-term infrastructure investors.

Moses did not soften the challenge. “If South Africa is serious about becoming a global green hydrogen player, we must move beyond incentives alone,” he said. The statement reflects a hard reality: emerging markets competing for hydrogen capital must offer more than a preferential tax rate. Regulatory predictability and operational efficiency are the variables that shift investment decisions.

The economic case for Hydrogen Industrial Hubs ultimately rests on compressing two numbers that matter most to project developers: the total cost of capital and the time to production. By consolidating infrastructure investment, regulatory coordination and fiscal support within designated zones, South Africa could compete not just as a hydrogen producer but as a manufacturing and beneficiation platform serving the global hydrogen economy. Whether the policy machinery can execute at the pace the market requires is the open question investors will be watching.