during the tabling of the budget vote for the Department of Economic
Affairs
22 June 2006
Madame Speaker
Honourable Premier
Members of the Executive Council
Members of the Legislature
Distinguished Guests
Ladies and Gentlemen
Todayâs tabling of the budget vote happens against the backdrop of a number
of significant developments in our quest to fight poverty and create work.
Amongst other things we are encouraged by the fact that Statistics South
Africaâs (Stats SA) Household survey makes some sterling observation about our
progress in extending services to the people of South Africa and the Northern
Cape in particular. The survey findings reports that on average the number of
household that have access to shelter, food, health and sanitation services has
increased. The household survey also observes that at least 83 percent of
households that rated the water services as good are living in the Northern
Cape and that the number of learners aged between 7 and 15 attending
educational institutions in our province has increased from 93 percent in 2002
to 96 percent in 2005.
Consistent with the findings of the General Household Survey the opinion survey
released by the Afrobarometer reveals the fact that South Africans are very
optimistic about many aspects of our society including the economy and public
services. Amongst other things the survey reports that more than 50 percent of
South Africans are happy with the current state of the economy while at least
63 percent expect the economy to perform even better in the next few years. At
least 65 percent of our citizens believe that our country is moving in the
right direction.
Madame Speaker, these findings are important in many ways. Firstly, they
mean that indeed our country and the province are making significant strides in
improving the quality of life of our people. Secondly, the revelations by Stats
SA and the Afrobarometer confirm the correctness of the observation by the
President during this yearâs State of the Nation Address that South Africa is
entering the age of hope. We are indeed living in the age of hope.
It is against this inspiring background that we table the budget vote for
the Department of Economic Affairs. This budget is also tabled against the
backdrop of a buoyant and growing provincial economy. Our analysis of the
economic indicators for our province also demonstrates the fact that progress
is being made in terms of achieving the objectives of the Provincial Growth and
Development Strategy (PGDS). Honourable Members will recall that during the
tabling of the Provincial Budget earlier this year we observed that the
contribution by inter alia government, finance, real estate and business
services, mining and quarrying and transport and communication sectors has led
our province to a 3 percent economic growth rate in 2004. The General Household
Survey reveals that unemployment stood at 26 percent in 2005. Indeed this is a
demonstration of the fact that the interventions of our government as enshrined
in the peopleâs contract to fight poverty and create work, are bearing
fruits.
In terms of the expanded definition, the unemployment picture is different
for all the five districts. In Pixley Ka Seme the figure stands at 43 percent,
40,3 percent in Frances Baard, 35 percent in Siyanda, 26 percent in Kgalagadi
and 23 percent in Namakwa. Frances Baard District contributed 41 percent to the
provincial GDPR (Gross Domestic Product per Region), Kgalagadi 24 percent while
Siyanda District contributed 13 percent. Namakwa District made a contribution
of 10 percent while Pixley Ka Seme contributed 10 percent. The economy of the
Namakwa district is driven mainly be mining and agriculture. These sectors
contribute 51 and 48 percent respectively to the primary sector in the Namakwa
District. Mining is also the highest contributor to the primary sector in both
Kgalagadi and Frances Baard District. In Siyanda and Pixley Ka Seme agriculture
remains the highest contributor to the primary sectors.
Madame Speaker, these achievements must also highlight the fact that we
still need to work harder to ensure that we extend services to all people of
the Northern Cape, as the economy grows and creates jobs, and that poverty and
hunger are addressed. Pursuance of these goals must happen in the context of
the Provincial Growth and Development Strategy. Accordingly, it gives us
pleasure to report to the house on a number of developments and progress made
in pursuance of the objects of the PGDS.
Mining and Manufacturing sectors
A number of developments in the mining and manufacturing sectors have
occurred and much more work is still being done to ensure that these sectors
contribute to the growth, transformation and diversification of the provincial
economy. The department recently signed a Memorandum of Agreement together with
the North West University Centre for Advanced Manufacturing (CFAM) in order to
look at ways to increase the contribution of the manufacturing sector to the
Gross Domestic Product of the Region. This development is also aimed at giving
effect to the objects of the PGDS in particular the diversification of the
provincial economy.
Through this agreement the North West University will provide both research
and technical skills aimed at assisting with the establishment of manufacturing
centres and clusters in our province. This process will also entail
identification of those products within the mining and agricultural sectors
that are being imported to the province in order to determine the quantity and
cost, as well as the annual financial market potential of these products. The
establishment of manufacturing centres would also help to ensure that
procurement in the mining and manufacturing sector favours people and companies
domiciled in the Northern Cape. This will give effect to the commitment made by
the Honourable Premier that we need to source at least 50 percent of products
from within our Province.
Our work aimed at realising mining beneficiation in the province continues.
In the past financial year the department has worked hard to establish
partnerships and attract investment into our mineral beneficiation projects.
Amongst other things, partnerships were established with Gold Chain
Technologies, an Italian-based company, which has expressed an interest to
relocate their gold jewellery and manufacturing factory from Italy to South
Africa, Kimberley, in the context of the Africa Growth Opportunities Act
(AGOA).
This company will very soon be relocating their machinery and start
operations to Kimberley. The Industrial Development Corporation has been very
helpful in terms of the provision of funding for this initiative and the
provincial government will also be making a R8 million contribution in order to
ensure that this investment initiative becomes a reality. The initial total
investment value of this project will be R45 million. We hope that this
initiative will bring the requisite investment capital going forward in order
to contribute towards our economic growth and job creation.
The Province has also entered into a development partnership with an
organisation from Belgium called the International Economic Strategy (IES) to
execute a wide-ranging rapid economic and social development programme in the
Northern Cape Province. This company is pioneering a path-breaking Rapid
Concurrent Diamond and Economic Development Program (RCDEDP) in the Northern
Cape. The RCDEDP seeks to optimise development in the Northern Cape Province in
Core Diamond Industry, mining, production, broad beneficiation, jewellery,
tourism and branding.
The Accelerated and Shared Growth Initiative for South Africa has identified
our province as a diamond beneficiation hub for South Africa. This process is
linked with developments in terms of the legislative changes in the diamond
industry and our quest to have the State Diamond Trader located in the
province. In keeping with this vision, we have started discussions with De
Beers Consolidated Mines in order to establish the Kimberley School of
Gemmology. This school will be established in order to:
* support the economic growth of the province as a diamond hub by developing
the expertise required in all areas of beneficiation
* develop appropriate partnerships with government and industry in order to
maintain focus on strategic objectives
* develop local and international institutions and bodies in order to achieve a
high quality curriculum
* seek accreditation and recognition with local and international authorities
and institutions
* lead and partner in research projects related to the diamond industry
* become a centre of excellence for Africa as a whole and build an
international reputation.
Proposals have been completed and submitted to relevant agencies for the
establishment of a Diamond Park should we succeed in our quest to have the
State Diamond trader located in Kimberley. Within its precinct, we envisage the
park to house the State Diamond Trader, diamond cutting and polishing
factories, jewellery manufacturing factories, training facilities and the
necessary support services to the diamond industry.
I am pleased to announce that we have entered into a further partnership
with Mintek to send 15 young women to China to acquire new innovative skills in
diamond cutting and polishing as well as jewellery manufacturing. This
initiative is aimed at making available necessary skills in the province.
Madame Speaker, our province is synonymous with diamonds and as such it would
be important for us to brand those precious stones being cut and polished here
as such. To this end we are in the process of developing a branding strategy
for diamonds cut and polished in Kimberley and to also link it with diamond
jewellery manufactured in the province.
We have established a relationship with Standard Bank in the province with a
view to facilitating preferential mining procurement initiatives in the
province. To also compliment this process, the department actively participates
in the Northern Cape Mining Preferential Procurement Forum. This programme is
intended to allow small and micro enterprises to benefit from procurement
processes in the mining sector. This is further intended to give impetus to the
mining charter.
In terms of current procurement patterns in the Northern Cape mining sector
a total of R3, 4 billion was spent on procurement in the previous financial
year. In total only R800 million was channelled towards black economic
empowerment (BEE) companies in and out of the Northern Cape. This figure
represents about 26 percent of the total procurement in the mines. It is also
worth noting that only 10 percent of the R800 million went to Northern Cape
companies.
This scenario makes it imperative for the government to engage relevant role
players to ensure that Northern Cape companies benefit sufficiently from mining
related procurement. To this end we are encouraged by the fact that the forum
is likely to approve a new policy framework in the coming few weeks aimed at
improving and increasing the share of procurement that goes to BEE companies
and Northern Cape based companies. In particular we are encouraged that through
the new policy the measurement will be shifted from narrow BEE to a broad based
approach, preference will be awarded to Northern Cape companies and more focus
will be devoted to manufacturing. Implementation of these measures will ensure
that the province is placed in a good path for accelerated and shared
growth.
Fishing and Mari culture
In line with the Provincial Growth and Development Strategy provincial
government has attached a high priority to promoting investment in the fishing
and Mari culture sectors as a means to mitigating the future negative
socio-economic impact associated with diamond mining downscaling. It is our
view that exploration of this sector to its maximal potential will help us to
achieve and maintain an economic growth rate of between 4-6 percent.
Honourable Members will recall that in January this year the Premier
officially launched the Fishing and Mari culture Park in Port Nolloth. The
launch of this park was also made possible by the investment secured from our
partners in China. It is expected that this project will create more than 250
jobs in the medium term. Following the official launch of the Fishing and Mari
culture Park in January this year we are able to report that detailed
development planning has been completed. This includes engineerâs designs for
the water intake and pump house, surveys of the site, entrance designs and dam
designs. The Environmental Impact Assessment has been completed together with
all the specialist studies required. The specialist studies included a
vegetation impact assessment, a marine ecology assessment and a heritage and
archaeological assessment.
Part funding has also been provided for operations to be transferred to the
Mari culture Park once the entire infrastructure has been erected in the Park.
The operations include an abalone nursery in Port Nolloth, an oyster farm in
Kleinzee and kelp processing in Hondeklipbaai and Port Nolloth. About 30 people
were employed from the Hondeklipbaai and Port Nolloth communities on these
operations.
The employees are undergoing on-the-job training whilst working. The
personnel costs have thus far been carried by the Social Responsibility
Funding. The erection of the boundary fence has been completed. The
construction of the internal roads and the entrance is virtually 80 percent
complete. Thus far more than 100 people have been employed in the construction
phase. The rest of the infrastructure development is expected to commence in
the current financial year.
Our work in other sectors continues and at this stage we are able to report
for instance that the Finish government has committed to assist our province
financially with the development of Northern Cape Information Society Strategy
and Development Plan (NC ISSAD). This strategy will focus on the development of
the small, medium and micro-enterprises (SMME) sector in the Northern Cape. It
is important that we are able to keep track of the impact made by projects
launched and financed by the provincial government. To this end, we have
developed a Social Accounting Matrix to use in guiding and evaluating the
impact of economic policy through indicators such as household income
distribution, growth sectors as well as studying and understanding the macro
economic impact of high impact and anchor projects in the province.
Business regulation
Madame Speaker, business regulation is another important function that needs
additional attention in our quest to create an environment conducive for
economic growth. In particular gambling, liquor and consumer protection are
areas that require more focus than provided in the past.
Honourable Members will recall that in the past financial year the Gambling
bill was tabled as part of our quest to improve and modernise the regulatory
framework in the province. During this financial year we intend to table in
this house the Northern Cape Liquor bill and the Northern Cape Unfair Business
Practices bill.
The purpose of the new liquor legislation is to amongst other things
regulate the retail sale and micro-manufacturing of liquor, set ethos of social
responsibility in the industry, set up the liquor board as a public entity,
encourage community participation in the issuing of liquor licences, confine
liquor outlets in business areas away from residential areas, combat and reduce
alcohol abuse.
Madame Speaker, it is also befitting and appropriate to report that both the
Liquor and Gambling Boards are now properly constituted and in full operation.
Through the work done by the Gambling Board the Executive Council resolved in
the previous financial year that the location of the third casino licence
should be shifted to the Kuruman area. This decision will make provision for
the construction of a casino and entertainment centre in Kuruman.
In addition considerable progress has been in terms of the allocation of the
Kuruman Casino licence to a successful bidder. The successful bidder will have
to satisfy government policies of broad-based BEE as well as contribute to the
betterment of the lives of the people of Kuruman. The operation of the third
casino in the province is expected to increase revenue derived from the
gambling related activities to about R15 million. This will further boost the
efforts by the provincial government to increase provincial revenue. In
addition, we expect the tourism and leisure industry to contribute an extra R50
million rands to the Gross Domestic Product of the Region. This is in addition
to the R12, 5 million collected in terms of revenue.
We are also in the process of formulating the Horse Racing Bill and it is
envisaged that this bill will be completed by 2007. The new promulgated horse
racing legislation will repeal the current ordinances. We are currently
investigating the feasibility of establishing a fully-fledged horse racing
track, associate infrastructure, amenities and facilities.
In relation to consumer protection significant progress has been made and we
will shortly be appointing a Consumer Protector to the Consumer Tribunal. The
Consumer Protector will have the responsibility of establishing the Office of
Unfair Business Practices. The Department will continue to provide the
necessary support in order to ensure that this office is established in
earnest. We will also address matters of consumer education in line with the
new National Credit Act. The Department will ensure that the necessary
conditions exist in order to allow for this legislation to be more
effective.
Economic developments
The support we provide to SMMEs in the province is critical to the
development of this sector and ensuring that it contributes to economic growth
and job creation. It is for this reason that in partnership with the Department
of Trade and Industry and concomitant funding, the Local Business Service
Centres (LBSCs) were collapsed into the Small Enterprise Development Agency
(SEDA). The launch of the Provincial SEDA office was conducted recently and
work continues for the establishment of regional offices. The Frances Baard
regional office should be ready for occupation by Mid July while the Siyanda
and Namakwa regional offices will be launched by the end of July 2006.
We are also in the process of winding up activities of the Kalahari
Development Agency (KDA). It is our wish that both Kgalagadi and Pixley Ka Seme
offices be launched during August 2006. We expect to have fully fledged and
functional SEDA offices by the last quarter of the 2006/07 financial years.
Apart from the establishment of the SEDA regional office in the Pixley Ka
Seme District the department will be devoting more resources towards assisting
with the development of this area. It is well known that Pixley is the poorest
district in the province and that its economy has not been performing well
recently. In order to address the institutional weaknesses and facilitate new
and increased economic activities in this district a District Growth and
Development Summit will be held before September this year.
The support we provide to SMME development must be guided by some form of
policy framework in order for it to be effective. It is for this reason that
the Provincial SMME Strategy was developed. Consultations with relevant
stakeholders are currently underway and we anticipate these to be concluded by
November 2006. An official launch will take place during December 2006.
Our department views the Expanded Public Works Programme (EPWP) as an
opportunity to alleviate poverty, develop skills and create jobs. This approach
should further be amplified in order to ensure that those persons who
participate in the programme are not lost but are trained in order to
participate in our SMME sectors. Further to this is our wish to see that these
participants actively partake in the second economy with a view to them
graduating to the first economy.
We are seriously focusing our attention on Local Economic Development in
order to place this mandate at the centre of our broader economic development
strategy. We are in consultation with the Department of Housing and Local
Government to facilitate capacity building within the different municipalities
in our Province. This is done through the facilitation of training in the
following areas:
* cooperatives development
* franchising business opportunities
* networking facilitators course
We are in the process of re-aligning and refocusing our strategic approach
to investment promotion within our province. We envisage establishing a trade
and investment promotion agency that will work with other agencies to make the
Northern Cape an investment destination of choice. Madame Speaker, the proposed
Northern Cape Investment and Empowerment Promotion Agency (NCIEPA) would be
positioned within the context of the PGDS to promote investment and attract
domestic and foreign direct investment.
The position of the provincial government remains that the Economic Growth
and Development Fund, formerly the Innovation Fund, should be used
systematically to unlock development funding for creative and innovative
business initiatives. In line with the spirit of this policy a number of
projects have been funded. Amongst other things a feasibility study for the
establishment of the Upington Airport as an International Cargo Hub was funded
to the tune of R2 million. This airport will be developed as a competitive
destination for the trans-shipment of both perishable and time-sensitive
products out of the Southern Africa region as well as other surplus cargo
products not catered for by the more congested cargo hubs in other areas.
We are also able to report that the initial feasibility study was
successfully conducted and its findings put Upington in a favourable position
in the bid to make it an International Cargo Hub. The study found amongst other
things that in the light of congestions in various airports in our country
there is a wide interest by airfreight companies to use Upington as a cargo
facility and that there is a proven need for a cargo facility in Upington.
Because cargo facility needs both incoming and outgoing cargo a challenge
lies in ensuring that Upington achieves this balance. In this regard our
discussions with the automobile industry in the Eastern Cape have led us to
agreement for a possibility for them to export their cargo through Upington.
This development has increased possibilities for cargo from various parts of
the country to be exported to the global market through Upington.
In the coming few months the Municipalities in the Siyanda District will
consider the findings of this study and introduce this item as a priority in
their District Growth and Development Forum. This process will be followed by a
formal presentation of this item to the provincial government, which will
facilitate interaction and lobbying of relevant national stakeholders. The
Department of Economic Affairs has entered into a number of partnerships in
order to allow us to carry out our mandates. We have facilitated the
partnership between the Office of the Premier, NEDBANK and the Umsobomvu Youth
Fund. This partnership is called the Batsha Fund and the three participants
have jointly contributed R5 million rand each to this fund.
Human resources
Honourable Members, during the presentation of last yearâs budget vote we
highlighted the need to position the department in such a manner that it can
respond appropriately to the developmental challenges of our province. It is in
this context that the recruitment process has been completed and we know have a
more stable organisation. In the past financial year we have recruited 37 new
people to undertake different responsibilities in the department. It is our
expectation that through this increased human resource the department is better
positioned to carry out its mandate by creating an environment conducive for
economic development in the province.
Through the recruitment of staff we have ensured strategic acquisitions
aimed at further boosting capacity in the department. Our main aim was to
strengthen the department and gear it towards service delivery. In this regard
two directors were appointed in the Economic Development Programme with the
responsibility and mandate to manage processes relating to enterprise
development, local economic development as well as trade and investment. Our
Policy, Planning and Research Programme was also beefed by the appointment of
the director for strategic management. These acquisitions are expected to
position the department in a better position for quality service delivery.
Madame Speaker, we are also able to proudly report to this house that of the
four senior management service appointments made 50 percent are female.
This is line with the policies of our government aimed ensuring equity and
fair representation of women in key and management positions. More than 50
percent of the total appointments made were also female. Through the recent
appointments the proportion of people with disabilities was increased to 4
percent which brought the department closer to 5 percent targeted by our
provincial government.
Summary of the budget
Honourable Members at this point let me provide an overview of the budget
for the Department of Economic Affairs for the 2006/07 financial year. The
department has been allocated a total budget of R67 million which represents
about 1, 53 percent of the total Provincial Budget. Transfer payments including
the Economic Growth and Development Fund makes about 43 percent of the total
budget of the department.
An amount of R9, 4 million has been allocated to the Economic Development
Programme which is charged with the responsibility to manage the implementation
of the economic development strategies, focusing on a diversified economy, job
creation, urban and rural regeneration, industries, SMME, business creation and
sustainable enterprise development. In addition R11, 9 million will be
channelled to the Policy, Planning and Research Programme in order to render
policy, planning and research services in line with the vision and mandate of
the department.
In order to ensure effective regulation of business practices and compliance
with and implementation of liquor and gambling legislation while maximising
provincial revenue, an amount of R6, 6 million will be channelled towards the
Business Regulation and Consumer Protection Programme.
Madame Speaker, in essence this is the manner in which the department will
be utilising the financial resources allocated to it to enhance and create an
environment conducive for economic growth and job creation in the province. I
commend this budget to this house.
Thank You!
Issued by: Department of Finance and Economic Affairs, Northern Cape
Provincial Government
22 June 2006
Source: Northern Cape Provincial Government (http://www.northern-cape.gov.za)
