and Economic Development, Dr Zweli Mkhize in the Provincial Legislature
2 May 2006
Honourable Chairperson
Our Premier, Manzankosi
Fellow Members of the House
Distinguished Guests
Members of the media present
Friends
Ladies and Gentlemen
Chairperson, I want to touch on some of the initiatives that have been part
of our attempts to turn our province into a thriving, empowered and globally
competitive economy. A detailed report will be comprehensively covered in the
Departmentâs Annual Report, due in the next few months.
Local Economic Development:
Chairperson, one of the major challenges facing our districts, especially
rural areas and smaller towns, is their inability to compete effectively with
other affluent areas in attracting investment required for sustainable economic
development. This has necessitated collective intervention by all spheres of
government to support Local Economic Development (LED) initiatives within our
local municipalities.
As a result, the 2005/2006 financial year was the most active period for the
Department with the operationalisation of the multi-million rand European Union
funded Local Economic Development initiative, Gijima KZN, especially in the
four learning districts of uMkhanyakude, Ugu, uMgungundlovu and uThungulu. To
date, more than 250 applications for LED projects have been received and a R115
million worth of projects was assessed and about R53 million awarded to fund 66
projects while another R50 million had been leveraged through contributions
from applicants. We envisage that the implementation of all these projects will
result in 17-thousand employment opportunities being generated.
Further more, we have had successful discussions with some financial
institutions to help facilitate equity financing for projects that have been
scoped. Banks include Standard Bank, ABSA, Development Bank of Southern Africa
whom we have involved in the provision of professional project evaluation to
help realize possible economic spin-offs.
Gijima KZN is now the most successful EU funded project in the country.
Eastern Cape and Limpopo provinces are now using this programme as their case
study. Certainly, 2006/2007 will still be a busy period for the programme and
R50 million will be committed this year. To assess the impact of Gijima KZN, a
Monitoring, Learning and Research Facility will be established with a budget of
R12 million.
Sector Development:
The development of the Industrial Development Strategy, has helped us
identify sectors with potential to generate sustainable employment and
contribute to the expansion of Black Economic Empowerment (BEE) through the
establishment of new small-scale enterprises and facilitation of joint ventures
and partnerships between Small medium small, medium and micro enterprise (SMME)
and big industries.
Furniture Industry: The abundance of timber products, creativity and
technical skills make KwaZulu-Natal a serious contender for a top slot in the
furniture industry. However, this has been partly hampered by lack of
co-ordination and appropriate marketing of timber products in the province. As
a solution, a formal structure, the KwaZulu-Natal Furniture Cluster was
established and registered as a Section 21 Company boasting 55 members. A
marketing plan has been developed featuring a website and industry specific
publications. Last year, the Department facilitated the participation of
furniture producers in two world-renowned trade exhibitions in Italy and
Gauteng to give them exposure to international market. Participation in Italy
resulted in the establishment of a skills training partnership with the
University of Milan for cluster members. This financial year, SMMEs will be
assisted to gain technical and marketing know-how to be competitive.
Arts and crafts: KwaZulu-Natal has appreciated the role of arts and crafts
as alternative economic options to be encouraged. As a result, we have
established a number of centres to help producers treat their creations as
business ventures to earn a living and create jobs.
Information and Communication Technology: During 2005/2006 the Department,
focused on the development of an ICT Strategy for defining and supporting
priority ICT projects as well as the establishment of a stakeholdersâ forum to
serve as a think-tank to influence the provinceâs attitude towards this
sub-sector. The Department was also active in the development of the uMsunduzi
ICT Hub, which is part of the Greater Edendale Development Corridor.
Clothing and textile: To assist rejuvenate the clothing and textile
industry, three projects were identified for implementation this year. A
provincial Clothing and Textile Cluster with 23 stakeholders was set up to
facilitate co-operation between government and industry to enhance
competitiveness to counter the impact of cheap imports in this sector. Four
business plans were also developed to cover Manufacturing Competitiveness,
Human Resources Development, Government Interface and Labour Flexibility
resulting in the registration of the Cluster as a Section 21 Company to
implement these business plans.
Agri-business: KwaZulu-Natal is often referred to as the countryâs food
basket because of its agrarian profile and over the past years the Department
had been working on identifying and promoting niche markets for specific
products and the expansion of value-adding productions for domestic and
overseas markets. Growing demand for cut-flowers has encouraged us to cluster
this industry. A hub that will serve as the epicentre to facilitate
participation of historically disenfranchised communities in this lucrative
sector is being established. Several other projects have been initiated to
strengthen the provinceâs food processing capability including the development
and packaging of a business plan for the establishment of an agro-processing
facility in the Ilembe district as well as the setting up of a pecan nut estate
and processing facility in Ladysmith.
Trade and Logistics:
In ensuring that we grab the opportunities presented by the globalisation of
the countryâs economy, a unit to help undertake projects that are aimed at
maximizing our trade and investment chances was set up and became active during
the past financial year.
At the end of the financial year, Trade and Logistics Unit entered into a
partnership with our industry partners to host the provinceâs first high
profile Trade and Investment Faire. Billed to be an annual feature, the faire
seeks to serve as a platform for businesses within the Southern African
Development Community (SADC) region to showcase their competitive strengths
while enabling them to interface with their counterparts. Meanwhile, we have
injected about R1, 2 million towards the founding of the Durban Trade Point,
which will assist emerging enterprises gain access to international
markets.
Business Regulation:
Consumer Affairs: Chairperson, economic growth often comes with some
challenges. As we appreciate the up-turn in our economy, there is also an
increase in consumer demand, which is sometimes coupled with the abuse of
consumers by some unscrupulous individual traders. My department is therefore
vigilant in ensuring that consumer rights are not being violated. Our
complaints handling section responded to approximately R2,7 million worth of
cases that were successfully dealt with on behalf of complainants a 71% success
rate. On the other hand, itâs also important that traders are also encouraged
to adhere to best practices. In this regard, a Business Pledge has been
initiated, with the intention of soliciting business commitment to the respect
of consumer rights and acknowledgement of the consumerâs role in the economy.
The response to the pledge has been positive demonstrating the growing trust we
are building with business.
Liquor affairs: Meanwhile the Department continues to provide administrative
support to the provincial Liquor Board, which is charged with the
responsibility of adjudicating on applications for liquor permits.
Notwithstanding some challenges experienced in identifying potential candidates
to replace the old board members whose term of office expired in November last
year, I am pleased to announce that a new Board has recently been formally
appointed. I further believe we have managed to keep up with the challenge of
ensuring that regulatory measures are kept in place to ensure acceptable trade
in this booming industry. We also envisage promulgation on the KZN Provincial
Liquor Bill by the latter part of the year.
Integrated Business Support:
The provision of business support to small enterprises was improved last year.
As part of this exercise we have helped to facilitate the establishment of the
provinceâs SMME Support Service Delivery Network.
Further, continuous integration of all small enterprise support programmes
is being undertaken and the conceptual framework for this project has been
completed. This framework is aimed at improving the Departmentâs direct
involvement in the promotion of SMMEs especially in the provision of expert
advice on the development of credible business plans to access financial
support from financial institutions as lack of funds makes it difficult for
budding entrepreneurs to achieve their business dreams.
Regarding the Provincial Business Rehabilitation Trust Fund, I want to
report that credit guarantees worth R3,8 million have been issued by the banks
to deserving applicants with an average loan of R65 476.
Public Entities
Chairperson, I now wish to proceed to the activities of the three public
entities reporting to my Department.
Ithala Development Finance Corporation:
As the provinceâs major development agency, Ithala Development Finance
Corporation has in the past contributed significantly to KwaZulu-Natalâs
development. However, to sustain this, we have had to reposition this
institution to ensure it played an even greater role in the transformation of
our economy by also promoting Black Economic Empowerment. In the past year
Ithala has taken major steps to achieve its strategic mandate.
Co-operatives:
One of the vehicles we have pursued in driving economic transformation to
benefit the poor has been the activation of co-operatives as a form of an
economic entry point for historically excluded communities into real business.
The response has been overwhelming attracting 951 co-operative applications â
worth R149 million in approved funds.
SMMEâs:
About R200 million was allocated to Ithala to fund SMME development. Ithala
matched this with its own revenues. By the end of February, Ithala had approved
678 SMME applications for loans, totalling over R471 million well above the set
R370 million target. Moreover, Ithala also invested R9 million for the
expansion of a black owned KZN Security company and injected R21 million
towards the establishment of Ubuciko Twines and Fabrics enterprise. As part of
its mandate, Ithala was also able to create more than 4574 new jobs through
various businesses initiatives. About 1275 Hectares of agricultural land was
distributed while 102 000 new bank savings accounts were opened and around 3271
home loans approved.
Expectations for the new year:
A total of R400 million has been set aside for business support in the form of
SMMEs and co-operatives. A further R106 million will go to high economic impact
projects like the construction and maintenance of industrial buildings and
business centres. A target of 4060 hectares of arable land is to be financed
and more than 114399 new savings accounts are planned for this year. Ithala
also wants to achieve a 6511 target of new home-owners being financed. The
establishment of an accelerated economic development unit within Ithala to
co-ordinate specific initiatives in the second economy to enhance empowerment
is also underway.
Trade and Investment KwaZulu-Natal (TIK):
Chairperson, TIK has had an impressive record of attracting investors to our
province in the last financial year.
Investment:
About R700 million worth of investments that created 350 jobs was facilitated.
This included a R250 million from an Italian furniture manufacturer,
Constantine that partnered with a local business in Howick. Another R250
million came from Japan and France to develop the Mitsui and Steel Processing
Centre in Durban for automotive products and has generated 150 job
opportunities.
A further 100 people got jobs through a R10 million investment by Britainâs
Heartland Foods â based in Pinetown, while Golden Ribbon Trading of China
settled in Verulam with another R10 million worth investment creating 70 jobs
in the construction sector. TIK also welcomed a further fifteen investment
delegations directed at various sectors in the province such as chemicals,
printing, automotive, minerals, clothing and textiles. We believe these
fact-finding missions will translate into sustainable investments and joint
ventures and/or partnerships with local businesses. Several outward trade
missions were also undertaken to diverse nations, including Germany, India,
Japan and South Korea. I partook in some of these travels and was pleased with
their achievements. Visiting Japan and South Korea reaped leads valued at R500
million.
Dube Trade Port:
The Dube Trade Port, incorporating the King Shaka International Airport, is a
product of a long-term vision shared by all levels of government as well as
business to make KwaZulu-Natal realize its goal to be at the centre of advanced
international trade. Amongst the challenges in this project was overcoming
bottlenecks, including the acquisition of land from Airports Company of South
Africa and decommissioning of the current Durban International Airport.
There
has been significant success with regards to this and Power of Attorney over
the La Mercy site had been secured from Airports Company South Africa (ACSA)
allowing the management team to focus on other critical aspects of the project
like applications for the regulatory approvals for the utilization of the land
for this project. A memorandum of understanding was signed last year with ACSA
to confirm amongst other the things the sale of a 2050 hectares land,
decommissioning of Durban International and eventual establishment of Dube
Trade Port.
In conclusion, honourable members, the utilisation of Budget Vote 4 is
dictated by programmes and projects we believe would have a definite impact on
the levels of unemployment and poverty in our communities. This budget is
action driven and each rand spent is expected to deliver on our mandate.
However, because of the magnitude of backlogs across all levels of our economy,
we acknowledge that the
allocation for this year will not completely help delete existing
socio-economic disparities. But we are certain that if we continue applying
effective planning and resource management systems, we should be able to get
value for money.
Now I wish to move the Budget for Vote 4, which is the Department of
Economic Development for the year 2006/2007 according to the following
programmes:
Corporate Services: R28 726 485
Financial Management: R14 725 380
Trade & Sector Development: R98 778 121
Integrated Business Services: R236 996 113
Local Economic Development: R10 825 901
Total budget: R390 052 000
I now move the budget of R390 052 000 for the 2006/2007 financial year. I so
move.
I thank you.
Issued by: Department of Finance and Economic Development, KwaZulu-Natal
Provincial Government
2 May 2006
