Programme Director – Ms Siki Mgabadeli,
Old Mutual Corporate Managing Director, Mr Madikizela,
All protocol observed.
On behalf of the provincial government of KwaZulu-Natal, we wish to start by thanking Old Mutual for providing this platform for us to engage on how we can work together in order to strengthen our symbiotic and mutually beneficial relationship.
Since the dawn of democracy in 1994, the South African government has clearly mapped and set out the parameters of the economy. The global recession that engulfed our economy since 2009, somewhat eroded the benefits of the buoyant growth witnessed in South Africa since 1994.
As an integral part of the integrated global economy, the country has been reeling from the effects of the exponentially worsening global economic climate. Although the national output marginally recovered from the downturn in economic activity that characterised the recessionary period of 2008/09 to post average annualised growth rates of 3%, the labour market remains subdued.
Notwithstanding this adverse situation, the South African economy has remained relatively stable with strong banking institution, good fiscal performance, and thriving services sector in general. The global economy has not yet completely recovered from the European financial crisis, despite the fact that the crisis risks seem more muted compared to a year ago.
The IMF recently downgraded global economic growth for 2013 from 3.5 % to 3.3%. Expected increases in the growth rate in 2011 and 2012 have failed to materialise because of uncertainties in Europe. Growth has been particularly slow in industrialised nations, who remain our major trade partners. This sends ripple effects through the South African economy and as a result, the country’s growth forecast for 2013 is a modest 2.8%.
It is important to mention that the national economy has been susceptible to the global economic conditions. South African economy posted a 2.5% growth rate in 2012, lowest growth after 2009 recession. On the other hand, KwaZulu-Natal grew by 2.7%. Although the provincial economy is growing comparatively better than the national economy, this growth is largely below potential.
This can be interpreted as being a result of depressed global demand, by our main trading partners, especially for our manufactured products. KwaZulu-Natal is comparatively the most industrialised province in the country given a large manufacturing contribution (20%) to provincial GDP compared to only 15% nationally. This makes the province more vulnerable to declines in this sector and by implication more vulnerable to global economic uncertainties.
As an integral part of the global economy, South Africa faces a precarious and an unpredictable economic future. The unstable global economic environment has continued to cause detrimental effects on the South African economy. Some of the consequences of this global economic turbulence are the high unemployment rate, as evidenced by the Quarterly Labour Force Survey released by the Statistics South Africa this week.
The global recession has taught governments around the world new ways of doing business and the increasing role of government in the economy to cushion business. We have seen during the recession that devising strategies to cushion the local economy against external vagaries is critical. Against this background, as the provincial government of KwaZulu-Natal we have adopted the maritime strategy which is aimed at broadening our industrial base and developing a resilient regional economy in Southern Africa whilst addressing the chronic challenges of unemployment, poverty and inequality.
Other strategies or programmes that we are implementing to achieve this include among others regional industrial economic zones, Special Economic Zones (SEZs), aerotropolis and a number of infrastructure programmes. Some of the programmes we are implementing include among others, the regional industrial hubs, special economic zones (SEZs), export development and a number of sector specific interventions.
We as a province 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, instigated by government but, which ultimately, must be driven by the private sector. It will also necessitate capacitating our people to take advantage of the opportunities which we as a province have.
South Africa has been viewed to be the most attractive African country to do business. In the Global Competitiveness Report released by the World Economic Forum, South Africa is ranked 50th out of 142 countries. South Africa ranked an average of 46th in the strength of our institutions, including 1st in the strength of our auditing and reporting standards; 2nd in the efficacy of our corporate boards; 3rd in the protection of minority shareholders’ interests and 10th in the strength of investor protection.
Our financial markets are particularly well developed and among the very best in the world ranking an average of 4th for financial market development. Though not as impressive, our ranking for government debt as a percentage of GDP is a respectable 54th. This all suggests that we are inherently investor friendly, and hardly a risky investment destination, particularly at a time when so many developed countries are bedevilled by poor fiscal stability and lacklustre growth among other challenges.
In this regard, investors should not be put off by archaic notions of a ‘dark continent’. KwaZulu-Natal cannot be side-lined, as it bolsters many kinds of opportunities for doing business in this province. In our recently approved Provincial Growth and Development Strategy, the province is positioned as the ‘Gateway to Africa’.
This is because of the location of the province on the eastern seaboard of the country, and on account of it possessing the new King Shaka International Airport and Dube Trade Port, an air freight terminal, as well as the country’s two most important sea ports, namely the Port of Durban and the Port of Richards Bay. The Port of Durban is the busiest Port in Africa, while the Port of Richards Bay handles the largest volumes of cargo.
This cargo includes coal (exported out of one of the largest coal handling terminals in the world); aluminium (accounting for 4% of the world’s total aluminium exports) and minerals like ilmenite and zircon derived from the largest sand mining operations in the world. The provincial government is also developing an aerotropolis strategy for the development of an
aerotropolis around King Shaka International airport.
The aerotropolis is one of the flagship programmes of the department identified to develop a formidable and resilient regional economy in South Africa. We envisage the aerotropolis as a tool for planning and advancing urbanisation in the province in line with our efforts to build a resilient and sustainable regional economy in South Africa using KZN major airports as drivers.
This is possible through stakeholder coordination and investment attraction. Against this backdrop, we view an aerotropolis strategy as an important step to bring stakeholders together and commit them to aerotropolis development in KwaZulu-Natal. The department is confident that the aerotropolis in our province is an economic model to address economic challenges rural/urbanmigration, unemployment, and urban poverty. We, therefore, regard an aerotropolis as nothing other than sustainable airport city development.
Against this background, through partnership with various players in the private and non-government sectors, the government has committed itself to stimulate economic growth that will create employment, alleviate poverty and improve the quality of life for all. A number of policy frameworks have been developed to guide us towards the achievement of this agenda.
Amongst these frameworks is the New Growth Path, which identifies critical drivers of economic growth, and key sectors to invest in in order to create jobs. One of strategies is to invest in infrastructure. The Government adopted a National Infrastructure Plan in 2012 that intends to transform our economic landscape while simultaneously creating significant numbers of new jobs, and to strengthen the delivery of basic services.
The plan also supports the integration of African economies. Government will over the three years from 2013/14 invest R827 billion in the building of new and the upgrading of existing infrastructure, Minister of Finance Pravin Gordhan announced in his 2013 Budget Speech.
These investments will improve access by South Africans to healthcare facilities, schools, water, sanitation, housing and electrification. On the other hand, investment in the construction of ports, roads, railway systems, electricity plants, hospitals, schools and dams will contribute to faster economic growth.
Infrastructure development is critical to position KwaZulu-Natal for growth, given its strategic position as gateway for trade to SADC and other major global countries. To this end, the Durban-Free State-Gauteng logistics and industrial corridor is in advance stage of planning, including development of feasibility studies.
Construction has already started on several projects, including:
- the building of a R2,3 billion container terminal at City Deep
- a R3,9 billion project to upgrade Pier 2 at the Port of Durban
- R14, 9 billion procurement of rolling stock for the rail line which will service the corridor.
Work has also started on the R250 million Harrismith logistics hub development to set up a fuel distribution depot, as well as on phase one of the new multi-product pipeline which will run between Johannesburg and Durban and transport petrol, diesel, jet fuel and gas. The aim of these projects and others which form part of SIP 2 is to strengthen the logistics and transport corridor between South Africa's main industrial hubs and to improve access to Durban's export and import facilities.
It is estimated that 135 000 jobs will be created in the construction of projects in the corridor. Once the projects are completed a further 85 000 jobs are expected to be created by those businesses that use the new facilities.
Old Mutual’s contribution
Before I can raise my opinions on the contribution Old Mutual can make towards a common vision for economic growth, job creation and upliftment of quality of life, let me reflect on some statements from “Doing Great Things” concept document, and I quote:
“The need for social and economic development in SA is so great that no single agency, government department or civil society group can achieve significant change on its own. But partnerships of the sort that the Old Mutual Foundation builds can help build economically viable communities and bring dignity and livelihoods to thousands of people.” (Shirley Koaho, Old Mutual’s General Manager for Marketing).
The same sentiment was reiterated by Dr. Pandelani Mathoma, Old Mutual’s General Manager for Corporate Affairs; when he said “Old Mutual’s Corporate Social Responsibility programme is specifically geared towards playing a pivotal role in this socio-economic development of our country.
As a good corporate citizen we do this work passionately in alignment with the Government’s national priorities and salute all the corporate and individuals who contribute to the countries future with their CSI efforts. We are confident and pleased that all our combined efforts will ultimately contribute towards the realisation of the objectives of the National Development Plan’s Vision 2030″.
From these statements one can deduce that Old Mutual’s thinking is in line with Government’s perspective on partnership for economic growth. One can also notice and appreciate the history and growth of old mutual’s investment through its corporate social Investment Programme.
This has grown to the level of establishing Old Mutual Foundation. To this end you have made a global footprint, and your social investment programme already prioritizes areas that have been identified by the government, including infrastructure, human capital and investment in sectors such as energy, ICT, Agribusiness, etc.
You have already identified enterprise development, youth and women as a focus on your RSI programme. This package of services is already within the government’s priorities for economic growth. What you need to do is then to scale up your investments in line with some of the government provincial initiatives, such as the industrial hubs as stated above.
In conclusion, once again, I wish to thank Old Mutual for creating this avenue where business and government as well as other role players can converge and share ideas on how to take our country forward as we have a common responsibility of contributing to the development of our country and indeed our continent.
I thank you!
