This article was first published by Business Day on 12 January 2026
South Africa is facing an economic crisis that has resulted in countless people being excluded from the workforce and an economy that is not growing at the same pace as its population. Wholesale deregulation does not appear to be favoured by some members of the South African commentariat and political sphere; however, what about limited deregulation?
The solutions to create prosperity are well known: deregulation, reducing state intervention, lowering taxes for the population, and ensuring that the infrastructure (water, roads, and electricity), funded by citizens, and which the state monopolises, is functional.
South Africa faces a crisis of unemployment and economic growth. The solutions are well known, yet their adoption across broader South African society remains limited. Why not experiment with these tried and tested ideas within Special Economic Zones (SEZs)?
SEZs are designated geographical areas subject to a regulatory regime distinct from that of their surrounding regions. Generally, an SEZ serves as a location to conduct studies or experiments involving regulatory frameworks that differ from those applied in the rest of the country.
It is usually an area that facilitates activities that generate prosperity and capital. Most notably, suchSEZs can be found in places like Shenzhen, China, which is regarded as the centre of the world’s electronics manufacturing. Shenzhen is a designated SEZ, where businesses are permitted to operate with greater freedom than in other parts of China.
These areas are typically established to achieve the best of both worlds. If a national government is unwilling, for one reason or another, to adopt more liberty-based policies – which are the only way to build prosperity – it then creates a zone where such policies are permitted within a controlled environment.
South Africa is meant to have SEZs, with one in the Eastern Cape serving as an example. However, the South African government has not observed the outcomes typically associated with SEZs, even in the regions where they are established, let alone at a national level. Why is this the case?
The South African government appears never to have fully understood the rationale behind SEZs. Most SEZs in South Africa depend heavily on state largesse in the form of affirmative action. The SEZ model employed by our government involves designating specific geographical areas for increased state intervention, rather than reducing it.
Policies such as the Job Seeker’s Exemption Certificate would be ideal for a SEZ, if implemented correctly by the state. The JSEC is a policy proposal by the Free Market Foundation that would allow individuals who have been unemployed for six months or more and choose to acquire it to be exempt from all labour legislation. In an area characterised by extensive deregulation, such a policy would be ideal for thoroughly testing the conclusions of economic science, which assert that, free from state intervention, individuals can and will generate wealth for themselves.
Our SEZs South Africa are not fully capitalising on the unique circumstances faced by South African society. The challenges of structural unemployment, particularly among the youngest members of our population, present a distinctive opportunity to adopt a bold policy outlook.
State intervention of some kind has been attempted. From the Public Works programme, which is rife with corruption, to the idea that the state can employ unemployed youth through various initiatives, the phenomenon of teacher assistants is one such programme.
Instead of allowing the state to take the lead in addressing this issue, liberty – through deregulation and minimal state intervention – should be the solution. By deregulating our labour market, which is often cited as one of the primary causes of high unemployment, we can tackle the unemployment problem, even if only in a limited area such as an SEZ.
Our law permits differentiated regulatory regimes. In other words, it allows for variations in the regulation of certain activities or processes that may be similar. For example, it is possible to establish a SEZ where businesses operating within it are subject to a different, often less stringent, regulatory regime than their counterparts or competitors outside the SEZ.
We need to re-evaluate the approach to SEZs in our country. Their implementation has the potential to provide the impetus our broader economy requires to recover. For this to happen, we need a genuine SEZ that represents a clear break from the orthodoxy of stringent labour laws and other restrictive regulations.
Ideally, solutions involving freer markets and deregulation should be implemented throughout the entire country. If this ideal is not achievable, then a practical approach would be to implement policy proposals such as the JSEC in areas designated for intensified economic activity, namely SEZs.
Failure to embrace the principles of liberty in the economic sphere, even in a limited form such as through a SEZ, will only lead South Africa further down the road to serfdom.
