Free State economy
The economy of the Free State grew by only 1.5% in 2022. Transport was the main contributor at 8.3% to this growth, followed by trade and agriculture at 2.8% and 2.7% respectively. The growth in the agriculture industry was as a result of increase in the production of field crops and horticultural products.
The mining industry’s contribution declined by 8.7% due to loadshedding, logistical constraints and subdued investor sentiment. The electricity industry declined by 3.3% and the construction industry by 2.3%.
The Free State province has become attractive for hydro, solar photovoltaic (PV) and wind renewable energy projects due to the existing transmission infrastructure in the province.
Most of the Free State’s exports are to the Southern African Development Community (SADC), totalling R1.7-billion, and to Asia-Pacific Economic Cooperation (APEC), totalling R447.2-million. Most of the imports were from the APEC economies (R2.9-billion) and from the European Union (EU), totalling R2.1-billion in 2021.
Working tirelessly for growth
The Free State economy was projected to contract by 0.1% in 2023 as a result of a projected contraction in mining by 5.0%, manufacturing by 2.4%, electricity by 2.0% and construction by 1.5%. Transport and agriculture were projected to expand by 3.2% and 2.1% respectively.
In 2024 the Free State economy is projected to grow by 0.7% and 1.4% by 2026. This sluggish growth rate calls for a different and urgent intervention to ensure that there is improvement.
It is for this reason that the Free State Provincial Government continues to work tirelessly in creating an environment that is welcoming to investors. As government, we are focussed on stimulating economic growth by harnessing partnerships for investments.
It is expected that Fezile Dabi District Municipality will achieve the highest average annual growth rate of 2.3% from by 2026 while Mangaung Metropolitan Municipality is expected to grow at an average rate of 1.6% in the same period.
The Free State economic growth is expected to be driven by growth in finance at an average annual rate of 2.9% by 2026 and transport at an average of 2.5%.
The Community Services sector is estimated to be the largest sector within the Free State in 2026, with a total share of 29.8% of the total GVA (as measured in current prices).
The mining industry is estimated to experience a negative growth at an average annual rate of -5.7% in the same period.
Why invest in the Free State?
The Free State Province lies in the heart of South Africa, with the Kingdom of Lesotho nestling in the hollow of its bean-like shape. Lying between the Vaal River in the north and the Orange River in the south, the region is one of flat, rolling grassland and crop fields, rising to lovely mountains in the north-east.
The province is the breadbasket of South Africa, with agriculture central to its economy, while mining on the rich goldfields reefs was historically the largest employer.
In May 2011, Mangaung, comprising Bloemfontein, Botshabelo and Thaba Nchu, became South Africa’s newest metropolitan authority. It has an established institutional, educational and administrational infrastructure and houses the Supreme Court of Appeal, the University of the Free State and the Central University of Technology.
Mining, gas extraction and energy
Although the mining sector is no longer dominant, coal, diamond and gold mining still make up an important part of the Free State economy.
Natural gas was first discovered at the Virginia gold mine in 1947 and the mine has been producing combustible gas ever since. A massive amount of helium is produced as a byproduct of natural gas production. Helium is a vital, non-renewable natural resource that is mostly recovered from natural gas deposits found in uranium and thorium in granitic basement rocks of Virginia in the Free State.
Lejweleputswa District Municipality dominates in terms of mineral composition and potential beneficiation opportunities in the mining industry.
Some of the most promising opportunities comprise the export of jewellery to existing markets such as Canada, Norway, Switzerland and the US, to which South African manufacturers have access.
New power sources
The Free State province has become attractive for hydro, solar photovoltaic (PV) and wind renewable energy projects due to the existing transmission infrastructure in the province.
There are currently five hydro projects in the province and several solar projects under development or operational. The vast flat, open landscape and good solar-radiation index makes the Free State an ideal destination for solar PV energy projects.
There are currently five hydro projects in the province and several solar projects under development or operational.
Special Economic Zone and Industrial Parks
The Maluti-a-Phofung Special Economic Zone (MAPSEZ) is strategically located on the key N5 and N3 logistics corridors which makes it an ideal investment destination. The MAPSEZ aims to attract R2-billion in new investments. Sectors prioritised in the zone are logistics, agro-processing, ICT, automotive, pharmaceuticals and manufacturing.
The 1 000ha estate is divided into four zones: Agro-processing, light industrial, heavy industrial and a container terminal area.
The Free State, working with the Department of Trade, Industry and Competition (dtic), is upgrading the Industrial Parks in Botshabelo, Thaba Nchu and Phuthaditjhaba to provide infrastructure to encourage manufacturing in these areas.
The manufacturing and retail sectors provide attractive opportunities for investors in these industrial parks.
Tourism investment opportunities
The Free State Province is home to several strategic and unique natural and cultural assets that offer significant opportunities for tourism investment through strategic partnerships. This approach, which has shown success in the Kruger National Park, can be replicated in the Free State by collaborating with private investors to develop high-end tourism facilities:
Sterkfontein Dam and Gariep Dam: These large dams are not only engineering marvels but also scenic spots perfect for developing luxury resorts, water sports and fishing activities. Private investors can build exclusive lodges and organise guided tours, capitalising on the breathtaking views and serene environment.
State resorts: Existing state resorts present opportunities for upgrades and modernisation. Private sector players can revitalise these resorts, introducing luxury accommodations, spa services and bespoke adventure activities tailored to discerning travellers.
Clarens and Vredefort Dome: Known for its artistic community and geological wonders, Clarens, alongside the Vredefort Dome, a UNESCO World Heritage Site, presents opportunities for unique lodging experiences that blend luxury with natural and historical exploration. Boutique hotels and eco-lodges can offer guests a blend of comfort, art and heritage tours.
Mangaung: As the provincial capital, Bloemfontein offers potential for urban tourism. Investing in upscale hotels, conference centres and cultural experiences like museum tours and city heritage walks will attract both leisure and business travellers.
Contact
Interested in setting up or expanding your business? Contact the investment facilitation team to discuss options available in the province:
