Programme Director, Mr Sbusiso Myeza;
The Premier of the Province of KwaZulu-Natal, Dr Zweli Mkhize;
The Deputy Mayor of Ethekwini Municipality, Councillor Nomvuzo Shabalala;
Members of the Provincial Legislature Present;
The Chairpersons and CEOs of our Public Entities;
Eminent speakers who will address this conference;
Delegates attending this conference;
Dignitaries Present;
Ladies and gentlemen;
All protocol observed
On behalf of the province of KwaZulu-Natal, it gives us pleasure that we meeting today for the second instalment of the International Entrepreneurship and Investment Conference, an august gathering which seeks to ensure that our province becomes a centre of economic growth on the back of innovative entrepreneurial drive.
Programme Director, this year’s theme of the conference is: Positioning KwaZulu-Natal at the Epicentre of Africa’s Sustainable Economic Growth and Development. We have chosen this theme because of the latest developments within the global economic space which have shown that Africa is not only the next frontier of growth but is destined to be the biggest economic story of our times.
It, therefore, stands to reason that as a province which has positioned itself as the gateway to the continent we should begin to leverage on these opportunities because our fate is intertwined with that of the continent.
As all of us know, according to the International Monetary Fund (IMF), for the first decade of this century, six of the 10 fastest growing economies in the world were in Sub-Saharan Africa and this region is projected to have some of the fastest growing economies in the next few years. In short, Programme Director, we believe that as the province we need to locate our economic prospects within the positive economic sentiment permeating our continent.
Programme Director, gathered here are some of the finest minds in the world, men and women with great insight and intellect, who are passionate and committed to seeing the eradication of poverty and unemployment in our society. With this calibre of people present, we are convinced that our deliberations in the next two days will provide an excellent platform to develop some of important strategies of taking our province, our country and our continent forward.
Ladies and gentlemen, one of the key themes of this conference is developing a culture of entrepreneurship and innovation which both attracts and adds value to investment in this province. As such we urge you to, likewise, be innovative in your thinking, to throw off the constraints of the current epoch in our global economic system, and to not be afraid to dream. Salvador Dali once said, “intelligence without ambition is a bird without wings”.
Ladies and gentlemen, we live in a spectacular province. We are blessed with veritable bounty of both natural and human treasures. As such, the province enjoys many comparative advantages over other provinces in the country and indeed when compared to other regions in the world. These comparative advantage endowments, however, need to be translated into economic opportunities which meaningfully better the lives of our people.
This requires significant levels of investment, enabled by government but, driven by the private sector. It will also necessitate capacitating our people to take advantage of the opportunities which we as a province have. In this respect inculcating a culture of entrepreneurship and innovation among our people is absolutely vital and a prerequisite of our conference.
Assuming we are not content with modest economic output for the province, there are three possible approaches to addressing this issue.
1. We can re-orient our trade toward developing countries which have far better growth prospects than our traditional markets.
2. We can provide a greater level of support to the manufacturing sector to enable it to become more competitive and better able to compete for scarce levels of demand;
3. We can diversify our economy by looking to develop new high growth potential economic sectors.
Ladies and gentlemen, we firmly believe that these approaches are not mutually exclusive and a combination of all three is necessary to put the province back on to a higher growth trajectory.
Programme Director, as all of us know, the South African Revenue Services recently released figures which showed that SA’s trade account recorded yet another deficit in August, which reflects the challenges faced by the country’s exports due to the slow global growth. The deficit on the trade account was recorded at R12.2 billion in August. The R12.2 billion is the highest since January this year when shortfall was recorded at R13.5 billion. In essence, Programme Director, exports decreased by R2.1 billion to R61billion in August while imports rose by R3.4 billion to R73.6 billion.
Apart from the fact that this widening gulf between the imports and exports makes our economy even more vulnerable to outside market gyrations, what this shows is that more than ever before we need a productive economy that will be able to produce goods that we can sell to other nations. History has shown that nations that prosper are those whose economies are growing at the back of huge exports.
To illustrate this point, let us take the example of South Korea which reported a trade surplus equivalent to $3.1 billion in September. Of course, South Korea’s economy is driven by mainly exports of finished products such as electronics etc. But, this example shows that for our country and our province in particular to be at the epicentre of economic growth we need to crank up the productive side of the economy.
As a member of Brazil, Russia, India, China and South Africa (BRICS), South Africa is in an excellent position to increase its trade and investment linkages with the world’s fastest growing economies. We understand that we should continue to forge partnerships with these countries with a view to learning vital economic development lessons from one another. We also appreciate the imperative to position ourselves optimally for investment by the BRIC countries. This calls for interventions, across the spectrum, aimed at making the province more investment friendly.
In this respect, we are fully cognisant of the investment opportunities within our country and province. Trade and Investment South Africa and Trade and Investment KwaZulu-Natal have important roles to play in the identification of these opportunities. It is for this reason that we are vigorously pursuing a state where, in particular the investment promotion outfits, share a coordinated and synchronised approach to investment promotion, in which all relevant officials speak with one voice, are equally aware of existing opportunities and, as a result, we are able to compete with the best investment regions in the world.
Membership of BRICS, however, should not mean that we lose sight of the immense opportunities that exists for South Africa on the African continent. It is in Africa that South Africa has the greatest opportunity to expand its manufacturing exports. Programme Director, as all of us know, next year our province will host the BRICS summit, the first to be held on the African soil. This presents our province with a unique opportunity to leverage on this platform by ensuring that we begin to open up space for our businesspeople to exports goods to these countries.
Apart from the pomp and ceremony which accompanies such big events and the formal declarations that are signed, such occasions provide an opportunity for networking and exploration of opportunities. As such, there will a number of business people from these countries who will be part of this gathering. As the hosting province, we aim to utilise this opportunity to create space for our businesses and entrepreneurs to have access to these markets so that we can begin to export our products to these countries.
With the BRICS family touted as the next frontier for global economic growth and Africa emerging as the investment destination of choice, we contend that the hosting of the BRICS Summit next year in our province, will present a once-in-a-lifetime for opportunity for us to creatively utilised to position ourselves as the gateway to the African continent.
In this regard, therefore, this second edition of the International Entrepreneurship and Investment Conference must be seen as a precursor to the BRICS Summit next year. We, therefore, at this Conference, have an opportunity to directly influence the future of the global economy and particularly the terms of engagement between the world economies and Africa.
Ladies and gentlemen, linkages with the African continent are at the forefront of the vision for the province as expressed in our Provincial Growth and Development Strategy. “By 2030, the province of KwaZulu-Natal should have maximised its position as a gateway to South and Southern Africa as well as its human and natural resources, so creating a safe, healthy and sustainable living environment”
KwaZulu-Natal’s major comparative advantage in the region is its global and regional connectivity. The province borders three countries; has two international sea ports; one international airport; a world class air freight facility; and possesses the greater part of the busiest road freight route in the country. These factors make KwaZulu-Natal the perfect springboard for international investment into the country and indeed into the greater Southern African Development Community (SADC) region. Despite this, there are relatively few multi-national head offices, which have footprints into the wider SADC region, located in KwaZulu-Natal.
As such, a key strategic objective of the province is to attract major multi-nationals by offering them competitive locational advantages, which, inter-alia, include excellent global connectivity through King Shaka International Airport; efficient facilities for the export and import of goods; and access to the vast SADC consumer market.
As we speak, it is estimated that the SADC market stands at more than 250 million consumers. It is our view that producers of goods and services can only access this market at their own cost. If we take into account that there are serious efforts to establish, Africa’s Free Trade Area made up of SADC; the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). When concluded, this FTA will have a marked of 590 million people with more than 26 countries participating in it, thus making it more than half of the continent’s current population.
We have no doubt that this province will be at the centre of such developments. Therefore, the case that we are making over the next two days is not based on sentimental reasons but on sound and practical grounds. We believe that we are a province that is more than ready to be the springboard, the base and gateway for any company that wants to tap into the expansion potential offered not only by our province and our country but the rest of the African continent.
Ladies and gentlemen, we have touched on the issue of making the province a more attractive investment destination. This goes hand in hand with making the manufacturing sector more globally competitive and ensuring that we reap the greatest rewards for the province’s comparative advantage in manufacturing. In this respect, we would like to bring you up to speed on the current work being done around the Special Economic Zones concept.
The draft Special Economic Zones Bill was released by the Department of Trade and Industry (DTI) at the end of 2011 and the final Bill is set to be adopted in the next few months. This Bill essentially seeks to regulate the designation, development, promotion, operation and management of Special Economic Zones (SEZ). The draft SEZ bill defines the SEZ as “a geographically designated area/s of a country, set aside for specifically targeted economic activities which are supported through special arrangements which may include laws and often support systems that are different to those applied in the rest of the country”.
Ladies and gentlemen the SEZ programme is a timely tool with which we are confident to attract major investments in the manufacturing sector within KwaZulu-Natal. Increasingly, SEZs have become the primary vehicle through which developing countries successfully attract Foreign Direct Investment (FDI). We must not be left behind and there is need to partner together to ensure that these SEZs become internationally competitive.
In identifying an appropriate SEZ for the province, it is essential to build on the comparative advantages of the province. One such comparative advantage, as alluded to earlier, is the King Shaka International Airport and Dube Trade Port. Accordingly, the Department of Economic Development and Tourism in conjunction with the DTI has proposed the development of an SEZ around the Dube Trade Port. Utilising the air cargo export capacity of the Trade Port, one of the focus industries of the SEZ will be the processing of agricultural products for export.
The SEZ will also focus on ‘green economy’ manufacturing, and the research and development of green technology. It is befitting that KwaZulu-Natal, as the host of the landmark, COP17 Climate Change Conference, should develop the country’s first dedicated green research and manufacturing zone. It is envisioned that this ‘green manufacturing’ would also spill over into the agro-processing industry, whereby ‘green’ production and processing techniques will be extensively used.
Ladies and gentlemen, the SEZ programme will also incorporate the existing IDZ at Richards Bay, which will be upgraded to SEZ status. The focus of this SEZ will predominantly be toward heavier manufacturing, looking particularly at metals and mineral beneficiation. In particular, the SEZ would look to attract investors who can add value to our mineral resources which currently leave our shores in a largely untransformed state.
I hear, ladies and gentlemen, you asking about other regions in the province, and particularly the inland areas, will there be support measures for investment in these areas? In recognising the spatial inequalities prevalent in our province and the need to see development occur in not just the major economic nodes but wherever significant concentrations of people reside, we have embarked on a process of establishing industrial hubs in every district. In total, our province boasts eleven districts including the eThekwini Metro.
These hubs are themselves a form of SEZs, and while they will not be a part of the SEZ programme, will nevertheless aim to create an attractive environment for investors. The Department of Economic Development and Tourism is currently in the process of appointing teams to drive the establishment of these hubs in each district. Some of these hubs will enhance support for existing industries in which the region possesses a comparative advantage (i.e. Clothing and Textiles), while others will be in emerging sectors with significant potential (Furniture Manufacturing; Green energy).
Ladies and gentlemen this brings me to talking about some of the new or at least less explored sectors of the economy which could be developed in KwaZulu-Natal and which we think would provide good future investment opportunities.
The following industries/sub-sectors show exceptional potential and should be a focus of government investment into the future of the province: Green economy and renewable energy: The COP17 conference in Durban provided significant momentum in the area of ‘green economy’ research. As a result the Department of Economic Development and Tourism has recently finalised a provincial ‘Green Strategy’ and many district and local municipalities have followed suit.
This certainly lays the policy and institutional foundation for green economy developments, while a growing research capacity in this field at the province’s universities and in private consultancies provides for a human capital skills advantage in this sector. In terms of renewable energy development, the province is aided by the fact that there are vast spaces of untransformed land, which could be sustainably used for Wind Power or Hydro Power energy generation in particular. In summary, Ladies and gentlemen, the province has the right mix of institutional support; skills and expertise; and natural conditions to be the country’s forerunner in the field of green economy developments.
International Tourism: We are all aware that KwaZulu-Natal has traditionally been the province’s top domestic tourism destination. The province’s foreign tourism performance, however, is way below its potential. If the province can more robustly market its unique cultural and eco-tourism attractions, there is no reason that the province should not perform better than Gauteng or the Western Cape in attracting foreign visitors. Critical in this regard, is the attraction of more direct international flights to King Shaka Airport.
SA Express’s recent launching of Southern African flights from and to King Shaka is a promising development in attaining this objective. Increasing the ability of the tourist market to access KZN’s tourism products, however, is not a substitute for effective product development. Constant innovation and development is always necessary in the tourism sector and in this respect the following projects are being explored:
- A large scale, all inclusive beach resort for the province
- Coastal hiking routes
- A consolidated and state of the art museum of Zulu history
- A Drakensberg arterial route linking the isolated Drakensberg regions and resorts
Rail manufacture: Ladies and Gentlemen, you are perhaps aware of Prasa’s rolling stock replacement programme. With a substantial steel industry, the province sits in an ideal position to contribute significantly to the manufacture of new coaches, and other rail equipment.
Ship building: With two large international sea ports located on a major marine trade route, KwaZulu-Natal should increase its ship-building capacity. As with rail manufacture, the development of this industry could have backward linkages to the Steel and Wood Industries. We are in the process of developing a Maritime strategy for the province which aims at identifying niche areas for the province in this regard.
Furniture manufacture: KwaZulu-Natal contributes more than 45% of the total output of the forestry sector in South Africa. Indeed forestry plantations constitute a large part of our commercial land use. However, the beneficiation of wood is relatively undeveloped in the province. Initiatives aimed at incentivising and clustering furniture manufacturers will aim to better capitalise on these natural endowments.
Information and Communication Technology (ICT): While the province struggles to compete with Gauteng in the ICT industry, it has one critical advantage in this sector, namely, the Seacom cable which enters the country at Mtunzini. This infrastructural advantage provides the opportunity to widely distribute broadband capacity across the province, including to relatively marginalised areas. In so doing, the province is looking forward to start developing ICT incubators which take advantage of broadband access. Currently the Department of Economic Development and Tourism is working on an ICT and Broadband Roll Out Strategy which will look to create a comparative advantage for the province in this growing sector.
Ladies and gentlemen, that was a non-exhaustive list of opportunity sectors for the province, there are many opportunities in our diversified economy. These sectors/industries, however, cannot flourish or be sustainable without the buy-in of the private sector. It is the role of government, through strategic infrastructure spending and other support measures to ‘crowd-in’ private investment, but it is then the role of the private sector to fully realise these opportunities and in so doing create much needed jobs for our economy. As a catalyst for private investment, government is embarking on a number of high-profile developments in the province.
These, among others include:
The development of a new Dig-out Port at the old Durban international Site Durban Port upgrades Regional airport upgrades The unlocking of the potential of the Durban-Gauteng-Free State N3 corridor as captured in the SIP programme The construction of new hydro-electricity station in uThukela The development of an aerotropolis around Dube Trade Port Establishment of SEZs and District industrial hubs.
Government’s role is not just limited to strategic infrastructure spending, however, but rather, must of necessity include, capacity building. It is essential, that we capacitate individuals to take advantage of the opportunities that increased levels of public and private investment provide. It is clear, by now that the benefits of economic growth do not always trickle down to the poor, and that formalised paid employment is not an automatic outcome of increased investment, at least not in the short term. For this reason, it is essential for us to engender entrepreneurial and business leadership skills among our workforce.
Ladies and gentlemen, entrepreneurs are people who, by nature, are impatient to wait for a formal job opportunity to come their way. Entrepreneurs, to refer back to Dali, are people with wings. They are ambitious, they have a vision of a future and through their action, call it into being. Unfortunately, ladies and gentlemen, the supply of entrepreneurs in our country and province is not at the level consummate with our long-term economic ambitions. In comparison to other African countries, we do not have a well-developed culture of entrepreneurship.
While we accept that not everyone can be an entrepreneur, we also contend that not everyone must be an employee of this or that company. For us to achieve our objectives, even beyond our economic objectives, we need to inculcate a spirit of entrepreneurship.
This is because it has been proven that successful economies are those that are promoting and encouraging innovation and creativity. All the opportunities that exist as a result of the favourable swing of the global economic pendulum in favour of Africa, will not yield positive results for African economies and communities, if the resident economic players within these economic communities are only content with playing the intermediary role.
It is for this reason that our provincial government unequivocally supports and promotes entrepreneurship endeavours. We have invested millions of rands in the promotion of cooperatives and small, medium and micro enterprises. Our development finance vehicle, Ithala Development Finance Corporation, was established, in particular, to promote this sector of our economy and, in the long run, to foster economic transformation in our province. While the work done by this and other institutions is commendable, we hope that this conference will share with us new approaches that we can adopt to ensure that the economic growth assists us in fostering social transformation and building a globally-competitive economy.
Ladies and gentlemen, in our investment promotion endeavours, we have realised that one of the ways of effectively entrenching this entrepreneurship spirit among our people is to target the youth. This is so, because KZN youth are vulnerable to the vagaries of globalisation and structural rigidities facing the economy. The recent global economic developments have had widespread detrimental ramifications to the economy and the youth have not been spared. A sizeable number of our youth have suffered job losses as a result of these external shocks.
In response to the chronic challenges the youth is facing the Department of Economic Development and Tourism is currently developing a Youth Economic Empowerment Strategy (YEES) which seeks to help the province positively respond to the national call of encouraging youth participation in the country’s economy. The KZN YEES is, thus, developed out of an ardent desire to finding a lasting solution to the myriad of challenges facing the province’s youth in an economy fraught with jobless growth and other huddles.
The draft YEES is proposing a number of programmes to develop entrepreneurship among our youth. Some of the programme identified in the YEES include among others:
- Leverage development finance institutions to streamline resources toward youth development initiatives in the Province
- Create a Youth Economic Empowerment Fund for the province
- Provide technical assistance in the development of bankable business plans
- Increase entrepreneurship awareness and leadership skills
- Up scaling mentorship programmes for young businesspeople through twinning arrangements
- Make franchise opportunities more accessible for the youth
- Supporting youth entrepreneurship through public procurement
- Strengthen the linkages of the KZN Youth Business Chamber with established Business Chambers
- Promote early youth entrepreneurship and leadership development
- Establish a Youth Business Leadership Development programme
Ladies and gentlemen, we believe the implementation of these programmes will inevitably catapult youth from the current doldrums and woes they find themselves deeply embedded in to a more economically stable and sustainable situation.
Ladies and gentlemen, in our quest to expeditiously implement government programmes, we cannot afford any retrogressive procrastination in which we desire to march in a neat single file, like lackadaisical termites, when the proverbial Kingdom is burning. Our approach to investment and entrepreneurship requires dexterity and ingenuity in making our economic endeavours efficacious.
The time to implement government programmes is now and among us, we have all it takes to change the fortunes of our Great Country for the better. This conference must be our launching pad for developing important strategies of taking us forward.
This conference is a call for us to device a collective roadmap that will place our province at the epicentre of growth on the African continent. As such, this conference is called upon to come up with practical, clear and concrete resolutions on how to achieve our collective goal.
For this conference to be successful it must identify the quick wins and build a solid base for future growth trajectory. The world is a dynamic space which is liable to constant change. So should be our approaches to the subject matters at hand. In this regard, this conference calls upon all of us to re-imagine the world, we live in.
We, therefore, hope that the deliberations of this conference will be the germination of an immortal seed that would transcend the scope of our aspirations for a prosperous province in South Africa.
I thank you.
