Address by KwaZulu-Natal Premier Sihle Zikalala during the Growth Coalition Breakfast held at the Inkosi Albert Luthuli Convention Centre
Ladies and Gentlemen;
Good Morning to you all!
Thank you very much for this opportunity to interact with members of the business community in KwaZulu-Natal which has been made possible through the generous sponsorship of Investec.
This marks the 17th year in which Investec has again sponsored the KZN Top Executive Breakfast which is implemented under the umbrella of the KZN Growth Coalition. We wish to express our greatest appreciation to Investec and we certainly look forward to the continuation of this productive partnership as we approach 20 years of working together.
As a public-private partnership initiative, the KZN Growth Coalition provides a unique platform for senior business leaders in the province to interact with government, and for government to tap directly into the well of wisdom and skills that prevail in the private sector.
For this reason, the KZN Growth Coalition remains one of the most critical bodies as we tackle the common challenges of our province, especially those brought to the surface by the recent flooding disaster.
Our partnership is in line with our recovery, rebuilding and economic re-orientation programme in line with the objectives of the KZN Growth Coalition which among others are to:
- Combine our long-term vision with concrete, practical and collaborative action to address the most pressing issues facing KwaZulu-Natal;
- Bring business and government together in honest and courageous discussions pertaining to pressing issues in KwaZulu-Natal;
- Drive socio-economic transformation.
KZN Economic Recovery and Transformation Plan
Ladies and Gentlemen, a month ago we held a strategic session on the South Coast of our province and committed to work on a number of issues that were raised by business.
Over the past few days we have seen the delivery of Budget Speeches by a number of Members of the Executive Council including the Office of the Premier, responding in part to the recent floods and to some of the issues raised during our ongoing engagements.
What we are facing as a province is unprecedented. While from March 2020 the whole country faced the consequences of a shutdown occasioned by Covid-19, in July 2021 KwaZulu-Natal also had to deal with civil unrest. This meant that when we were hit by the floods in April, the province was already on its knees, and we were just picking up the pieces.
The floods have placed an even bigger burden on our limited financial resources and placed pressure on the delivery of much-needed services for the poor and the vulnerable.
The latest update on the Floods
During the second week of April 2022, KwaZulu-Natal sustained devastating floods caused by inclement weather. To date, it is estimated that over 445 people have died, with 48 people still unaccounted for.
No less than 7 639 people were affected, about 6 847 were left homeless and 43 were reported injured.
The Greater eThekwini has been most impacted by this inclement weather and the floods have regressed the provincial economy further after the devastating looting and Covid-19.
The estimated economic impact of the Floods is around R20 billion which has affected both economic and social infrastructure.
A survey by the Department of Trade Industry and Competition shows that at least 826 companies were affected and the cost of the damages to the companies is estimated at R6.4 billion. The majority of businesses affected were in Agriculture (22%) followed by Manufacturing (12%).
The National DPWI and the Department of Defence will soon finalise the construction of 18 damaged bridges across the city and province. While the issuance of S30A authorisations to public institutions is up to date, the facilitation of applications from the private sector such as developers continues.
Update on Aviation Fuel
Ladies and Gentlemen, we have noted with contentment the announcement by ACSA confirming that there is no aviation fuel shortage at King Shaka International Airport and that there is an excess supply of 7 days available at any given point. ACSA says the shortages have been experienced at OR Tambo International Airport due to the rail problems between Durban and Gauteng.
Water and Electricity
As we stated during the State of the Province Address, expanding access to water is one of our government’s top priorities. We have adopted the KZN Provincial Water Master Plan which now guides our municipalities in their annual planning, prioritising and budgeting for their water needs.
Allied to this is the KZN Provincial Electricity Master Plan which provides a detailed, district-level intervention plan for existing and future loads. We are rolling out the Electricity Master Plan in 2022/2023 to tackle the persistent electricity challenges.
As we stated during SOPA we are supporting our municipalities across the province in exploring alternative energy generation and appropriate procurement options with plans already advanced in eThekwini Metro and uMgungundlovu district.
Interruption of Power Supply to Key Business
With regard to the supply of water at Nestle and Defy by the Uthukela District, the municipality has developed a water supply response plan and is in regular engagement with both companies in pursuit of a lasting solution. We have through the MEC for EDTEA been made aware that the NPC Cement Durban Factory was experiencing intermittent power supply which was affecting production. The Acting City Manager of eThekwini is attending to the matter on an urgent basis.
Funding to Aid Recovery
The EDTEA will reprioritise R67.5 million towards SMME/COOPs Relief which has been approved by Provincial Treasury. The Relief Fund will prioritise Township and Rural Businesses and Informal traders affected by the recent floods.
The Department of Forestry Fisheries and Environment continues to work with the provincial government focusing on cleaning the beaches and the removal of alien plant following the storms. In the long term together with EDTEA, national government working with the City of eThekwini will develop strategies to prevent flooding in communities residing along riverbanks.
The national department has committed to providing funding for clean-up and deploying specialists to support the City of eThekwini to reduce the risk of river mouth busting on nearby communities.
Funding the Recovery of Business
- The DTIC Infrastructure Support Grant aims to provide 50% cost-sharing grant funding to SMMEs and large businesses affected by the floods for the reconstruction of physical and bulk infrastructure inside the premises. This will cover the reconstruction of physical and bulk infrastructure inside the premises.
- The DTIC Working Capital Grant aims to provide 30% cost-sharing grant funding to SMMEs and large manufacturing businesses affected by the floods. The support includes working capital shortfalls (excluding salaries) as a result of supply chain disruptions, which could result in delayed receipt of raw materials and subsequent cancellation of sales orders.
- The MCEP Industrial Loan Component seeks to assist SMMEs and large manufacturing companies affected by the floods through financing businesses that are not covered by insurance or funding the insurance cover shortfall.
The fund offers an interest-free loan to affected businesses for the replacement of stock, machinery and equipment, refurbishment of machinery and equipment, fittings, shelving and/or storage facilities, commercial vehicles and material handling systems.
It also covers Information and Communications Technology equipment; and business development services which include costs for preparations for certification and pre/initial assessment costs.
- In addition, the Industrial Development Corporation’s Flood Relief Fund will assist companies affected by the floods through financing businesses that are not covered by insurance or funding insurance shortfall.
Those companies that are fully insured may also be funded through Bridging Facility. The funds will be used to finance working capital shortfalls, buildings and/or building improvement and fittings for the affected premises. This will be done through debt, bridging finance and term-loans.
- The Flood Recovery Support Grant. Targeting businesses for inventory and based on invoices provide this support will be limited to 30 % of qualifying costs with a capped amount.
- The Infrastructure Fund provides grant funding to businesses affected by the floods for the reconstruction of infrastructure. The scope of the existing Infrastructure Programme which covers companies affected by the unrest will be broadened to include support to companies affected by the floods.
- Government has also set aside R500m for the Flood Relief Fund to help restore businesses, communities and livelihoods. This covers the recovery process and the rebuilding of affected infrastructure (roads, bridges, water supply, electricity, rail, and commercial buildings). The Fund is from R1 million as per the minimum funding amount and is capped at R60 million per applicant targeting companies within IDC mandate. Companies outside IDC mandate such as traders, retail, logistics, transportation, infrastructure and construction will be considered on a case by case basis with the funds limited to R10 million per strategic implementing partner (SIP) and R1.5 million per business. We need to emphasize that we exclude financial and consulting services, tobacco wholesale and distributors, and the repayment of existing debt obligations to commercial banks or other financiers.
- The Funding For Expansion refers to the repayment of shareholders/ Intercompany/ related loans. This covers South African companies in existence and operational for at least 12 months at the time of application and which were affected by floods.
SEFA Flood Relief
This programme is aimed at providing financial assistance to formal small enterprises affected by the floods in KZN and EC during the floods. It seeks to help restore businesses, communities and livelihoods.
The good news is that this is a full grant and is non-repayable providing amounts between R10 000 and R2 million per applicant targeting non-insured and underinsured small businesses.
The fund will support small enterprises requiring funding for working capital such as (equipment (including stock), furniture and fittings, tools and machinery provided that this remains below the threshold).
Safeguarding the Environment
Ladies and Gentlemen, the floods are an indictment of how we have allowed our cities to develop without much consideration for the environmental risk and geography. In the long-term, we must adopt measures to take better care of our environment by building and farming in ways that save our settlements.
We may need to make hard choices and consider the resettlement of communities and businesses away from flood-prone areas.
In addition, we will undertake:
- The restoration of natural ecosystems- afforestation to prevent future floods;
- Design climate change resilient infrastructure;
- Invest in efficient drainage systems or storm water management systems.
We revealed in the SOPA that our achievements in the fight against crime since the 2021 SOPA include 16 people convicted of private sector corruption and 24 government officials convicted for corruption.
We have noted the recommendations of business in this regard that the following areas be prioritised to build KwaZulu-Natal around 6 key strategic pillars:
- A safe and secure environment;
- Identification of priority catalytic projects that will stimulate growth quickly;
- Rapid provision of bulk services including planning approvals;
- Infrastructure development with budget allocation;
- Restoring investor confidence;
- Reduce the cost of doing business in KwaZulu-Natal
- Addressing Crime, Grime and Corruption
In our engagements, the issues that have been raised include the concern about the growing disregard for the law enforcement by the forums which are holding business hostage and leading to projects being delayed resulting in significant economic and financial losses.
During our engagements, we also addressed the concerns about crime and grime including safety and security, cleanliness, rundown buildings, and homelessness.
In this regard, we received a detailed presentation from the Provincial Commissioner of Police General Nhlanhla Mkhwanazi who committed to a very specific programme working with business and the security industry to deal with crime in the province.
It is particularly important to attract business back to the inner cities by reclaiming our buildings and restoring order.
We must reiterate that no corruption will be tolerated as we deal with this work. Together with Treasury, the Office of the Auditor-General, the Office of the Public Protector, Human Right Commission we will deliver a corruption-free response to the floods.
Again we invite the private sector to deploy its resources in the fight against crime and the resolution of the challenges of crime, poverty and inequality.
Once more, we wish to pay tribute to the patriotic business community of our province and country for lending a helping hand in the relief efforts and initiatives aimed at rebuilding KwaZulu-Natal.
On Sunday, we are happy that the President of the Republic, His Excellency President Cyril Ramaphosa will hear for himself the challenges that the KZN business community faces. The Durban Chamber of Commerce has written to us and the President indicating very specific issues that they wish to see attended to urgently. We have no doubt that working with you, the Presidency, and the provincial government, we will be able to fast track a programme aimed at addressing your concerns, improving the ease of doing business, and enhancing investor confidence in KwaZulu-Natal.
We applaud you for your continued vote of confidence in the provincial economy and we can assure you that it is in our interest to partner with you in growing the provincial economy, creating jobs, and reducing inequality.
Ladies and Gentlemen, let us continue to work together to grow the economy of KwaZulu-Natal and to address the needs of all the people of this beautiful province.
We look to you captains of industry to ensure that we weather this storm and emerge out of it wiser, stronger, and more resilient.
I thank you!
