South Africa as an Investment Destination amid the Energy Crisis

This paper examines the impact of load-shedding (energy crisis) and the performance of Special Economic Zones (SEZs) in South Africa, focusing on the experiences of the Coega Industrial Zone (IDZ). Despite their potential to attract Foreign Direct Investment (FDI) and foster economic growth in the country, SEZs have been plagued by unreliable electricity supply since 2008. This study analyses the consequences of load-shedding on SEZs, drawing on existing literature, Coega IDZ documents, reports, and newspaper articles from reputable sources. The findings reveal that load-shedding significantly hinders investor confidence, forcing businesses to contend with production losses, increased operational costs, and supply chain disruption. The study highlights how these challenges have resulted in a suspension of major investment projects, resulting in a loss of job creation and economic development. This research contributes to the under-researched literature on SEZs and FDI in Africa, emphasising how electricity supply, a key component of infrastructure and a critical pillar of competitiveness, can directly affect FDI and the country’s global economic standing. The study underscores the urgent need for a sustainable solution to South Africa’s energy crisis to unlock the full potential of its SEZs and foster inclusive economic growth.