Programme Director,
The MEC for Co-operative Governance and Traditional Affairs, Nomsa Dube The MEC for Agriculture and Environmental Affairs, Dr Meshack Hadebe
The Deputy Mayor of the eThekwini Municipality, Councillor Nomvuzo Shabalala CEO’s from Public entities present
Ladies and gentlemen.
On behalf of the provincial government of KwaZulu-Natal, we want to extend a warm welcome to all delegates, partners and participants to this year’s edition of the Regional and Local Economic Development Summit.
As you are aware, this Summit was the brainchild of the provincial Cabinet which, in 2001, took that the three provincial government departments, Department of Economic Development & Tourism (DEDT), Cooperative Governance and Traditional Affairs (COGTA) and Agriculture & Environmental Affairs (DAEA) should work together to co-host the Annual Provincial RLED Summit as a means to create a collaborative platform for development partners to engage and address socio-economic issues that face local economic development in KwaZulu-Natal.
This year the departments have been joined by Trade and Investment KZN (TIKZN) and South African Local Government Association (SALGA) to co-host this third Annual Provincial RLED Summit.
The theme of this Summit is “collaborative planning and action for long term growth”
Programme director, we have been given the task of contextualizing this Summit and, in a brief manner, set the tone for the engagements over the next two days. The purpose of the Provincial RLED Summit 2013 is to provide a platform for the strategic engagement of key stakeholders for the development of strategic priorities for economic development facilitating sustainable economic growth, reducing growing inequality and promoting environmental sustainability.
The summit builds aims to build upon the principles set out in the PGDS 2011 of ensuring that all social partners namely, business, organized labour and civil society and the different spheres of government and state owned enterprises, collaborate effectively in pursuit of shifting KZN’s growth path towards shared growth and integrated, sustainable development.
The Provincial RLED Summit 2013 aims to achieve the identified objectives with the following outcomes and resolutions:
- Participants have a better understanding of the Provincial Growth and Development Plan, Industrial Development Strategy and their implications for their spheres of responsibilities;
- Principle agreement of collaborative planning and implementing LED amongst development partners;
- To have a better understanding of the economic profile of KwaZulu Natal province
- To have better understanding of case studies through partnerships between government and its partners ;
- Building sustainable partnerships in implementing LED and enhancing leadership in the area of LED,
- Better understanding of different approaches to municipal management of the informal economy.
As we all know, the purpose of local economic development (LED) is to build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which public, business and non-governmental sector partners work collectively to create better conditions for economic growth and employment generation.
Local Economic Development (LED) offers local government, the private and not-for-profit sectors, and local communities the opportunity to work together to improve the local economy. It focuses on enhancing competitiveness, increasing sustainable growth and ensuring that growth is inclusive.
LED encompasses a range of disciplines including physical planning, economics and marketing. It also incorporates many local government and private sector functions including environmental planning, business development, infrastructure provision, real estate development and finance.
Global Economic Outlook
Although the world economic prospects are slowly improving, the risks remain elevated and future growth forecasts remain subdued. In particular growth has begun to slow across many emerging economies, and advanced economies in Europe and elsewhere continue to struggle.
The IMF has, thus, revised downwards the global growth forecast from 3.2% to 2.9% for 2013, while 2014 prospects were also reduced from 3.8% to 3.6%. Major drivers for these developments include the potential consequences of a tapering and eventual halt of quantitative easing in the United States, the aggressive yet still incomplete financial and structural measures adopted in Japan, and the persistent unemployment and economic recovery challenges in Europe are factors that could put future economic performance at risk.
Similarly, growth in most developing countries and economies in transition has also decelerated notably, reflecting both external vulnerabilities and domestic challenges. Despite a majority of developing countries holding up relatively during the global financial crisis, these economies now face intensified adverse spillover effects from the slowdown in both developed and major middle-income countries.
There are parallels between the global economic discourse and the South African policy challenges. In seeking a pragmatic balance between recovery and consolidation, between economic power and social solidarity, between infrastructure investment and human development, between encouraging enterprise and regulating markets – we are grappling with issues that confront many other nations.
South Africa’s economic outlook
The growth momentum of the South African economy continued to moderate in the first half of 2013. While the outlook for the domestic economy has been boosted by signs of a more sustained improvement in developed countries, domestic constraints are set to ensure that growth remains sluggish for some time still. GDP growth reached 3 per cent in the second quarter of 2013 and is expected to grow at 2 per cent in 2013, rising to 2.8 per cent in 2014. Inflation, as measured by the average change in the CPI, has remained within the band, although on the upside.
The intricate linkage of the domestic economy to the major developed economies, particularly, the Eurozone, has negatively affected the performance of our external sector. In 2012, the South African exports grew by just 1.1 per cent in real terms, while at the same time imports increased by 7.2 percent.
The disparity in these figures pointed to an increased current account deficit. Indeed, the deficit on the current account of the balance of payments was 6.1 per cent of GDP. The disruption in the mining sector mid last year and the subsequent wildcat strikes across most sectors, partly contributed to this poor performance of the country’s external position.
Despite the seemingly insurmountable challenges the country is facing, all hope is not lost. Over the last few years some of the foundations for faster growth have been laid in place. Strong capital investment by the public sector through the Strategic Infrastructure Programme (SIP2), the addition of electricity- generating capacity, relatively stable inflation and low interest rates will support improved growth rates over the medium term.
In particular, a significant increase in private sector investment and competitiveness is needed in the wider economy: agriculture, manufacturing, tourism, and communications – every sector has to play its part in expanding trade, investment and job creation.
The provincial Government is in the process of developing an integrated Aerotropolis strategy for the province. The development of an aerotropolis is one of the catalytic projects identified by the Provincial Growth and Development Strategy (PGDS), approved by Cabinet at the February 2012.
The aerotropolis is also one of the projects identified by the Presidential Infrastructure Coordinating Committee (PICC) under strategic infrastructure Projects (SIP2). The Department has also identified Aerotropolis as a strategic lever to support the turnaround efforts of the province.
Labour Markets
Although the latest employment results show that 24.7% of the working populations are officially unemployed in the third quarter of 2013, job creation remains a key challenge that confronts all spheres of government and requires immediate policy priority. The challenge which appears to be structural would require reforms to both the labour markets and the education system in order to correct the demand and supply side constraints within the economy.
Current projects funded by DEDT
Programme director, since this is the last RLED Summit before the end of the current term of administration and on the eve of the twentieth anniversary of our democratic breakthrough, allow us to share with the delegates some of the successes we have notched as a resulted of the coordinated efforts of all social partners.
Local Competitiveness Fund (LCF)
In the Budget Policy Speech 2010/2011, we announced the re-launch of the KZN Local Competitiveness Fund (LCF) initiative funded by the Department. As highlighted, the resuscitation of the Fund was based upon the demonstration of good practices that had been learned from the EU-funded programme, and the successes of the EU-sponsored LCF under the auspices of the flagship Gijima KZN LED Programme.
In the budget speech, a budget allocation of fifty nine million rand (R59, 000,000) towards the revamped initiative over the medium term expenditure framework, highlighting the focus of the Fund which is to provide support to partnership-based LED projects and business ventures that stimulate and strengthen competitiveness for the creation of decent jobs.
Since the re-launch of the GKZN LCF in 2010/2011, four Calls for Proposals have been opened and awarded by the RLED Sub-Programme. Two projects funded are already complete and are as follows
- Opus 1 – Clothing and Textile project in Tongaat, DEDT contributed R1,003,868 during 2011/12 financial year and manage to create 107 jobs with the applicant and its partners leveraging a total of R430,227 in the form of debt or equity.
- Farmgate Dairy – UHT Milk Processing Plant in Creighton, DEDT contributed R4,350,000 during 2012/13 financial year and managed to create 53 jobs with the applicant and its partners leveraging a total of R4,356,000 in the form of debt or equity.
We are currently implementing 6 projects across the province with DEDT contribution at R21,784,898 during 2013/14 financial year and the expected number of new jobs to be created ranging from 160 to 200 with the applicants and partners leveraging a total of R19,243,546 in the form of debt or equity.
We are also reviewing projects submitted in the previous call for proposals that closed in September 2013 for future funding request. If the projects meet the selection criteria they will be taken on board and an announcement of the results is expected by end of December 2013, we are also expecting to create additional jobs for various sectors that have applied for funding.
Capacity Building for Regional Local Economic Development in KZN
RLED can provide can provide a flexible and effective approach to enhance economic growth and reduce poverty. In KwaZulu-Natal and in South Africa more broadly, there is really a need to build capabilities of those involved in development and transformation to improve success in LED interventions.
The Regional economic development initiative was launched early in 2012. This initiative is fully funded by and supported by KwaZulu-Natal Department of Economic Development and Tourism (DEDT) and has an academic home at the Graduate School of Business and Leadership at the University of KwaZulu-Natal’s Westville Campus.
The aims of this programme are as follows:
- To promote LED research and learning
- To build critical thinking in relation to LED
- Continuing professional development
- The creation of a professional network of LED graduates
- To strengthen the implementation practice of LED institutions
This initiative is made up of 5 elements as follows:
1. Postgraduate degrees
The initiative offers two degrees; Master of Commerce and Postgraduate Diploma focusing on LED.
2. Annual winter school
The RLED initiative holds as annual Winter School that is useful for practitioners- offering short workshops such as project management for LED and financial management, investment and promotion for LED. In addition, there are opportunities for networking and for critical discussions on LED related topics through LED forums and events.
3.Young Research Programme
Postgraduate research is an important means of building capacity for LED. The programme aims to attract young graduates with an interest in LED and offer opportunities for several students to undertake a masters and PhD through research. We have an annual intake of 10 young researchers who are fully involved in doing LED related research in the province.
4.Journal: Skills at work
The skills journal was launched four years ago and it included its first LED issue in 2011. It is envisaged that one issue per year will address LED and its various themes.
5.The Champions Programme
The Regional Local Economic Development Initiative has identified the Champions programme as one of its development programs, aimed at attracting and developing social entrepreneurs within KZN. Participants are drawn from provincial, district and local level in government, business and civil society organizations in KZN.
Existing practitioners based within key LED institutions in the province of KwaZulu-Natal are encouraged to apply. This initiative has an intake of 10 LED champions per annum.
The Department in collaboration with UKZN has accepted and registered 47 students for LED Postgraduate programme for the academic years 2012/2013 and 44 students for LED postgraduate programme for the academic year 2013/1014. We are currently supporting 91 beneficiaries drawn from various key LED institutions in KZN. This is fully funded directly by the Department through its own budget vote for 2012/2013 and 2013/2014 financial years.
At the end of a four year contract between the two partners, it is intended for the programme to become self-sustaining and become one of the mainstream programs offered by the Graduate School of Business and Leadership within university of KwaZulu-Natal going forward. This initiative is targeting LED officials, LED Managers, LED activists and practitioners in NGO’s and CBO’s and as well as those active in local business chambers.
The Richmond Special Development Initiative (RSDI)
The Richmond Special Development Initiative (RSDI) originated from an acknowledgment by the KwaZulu-Natal Government that certain areas of KZN were severely affected by political violence from the 1980s to the 1990s which violence had profound and adverse impact not only on socio- political circumstances but local economies of these areas.
In the case of Richmond the Local Economic Development (LED) Unit of the Department of Economic Development and Tourism (DEDT) was tasked to establish the environment and raison d’etre (reason for existence) for a special development initiative to address the specific legacy of conflict.
Accordingly a study was commissioned under the auspices of the Gijima KZN programme to establish, not only the context for developmental interventions but to make recommendations on how to address the legacy of conflict and return the Richmond area to an equal footing with those areas which did not experience the devastating consequences of conflict.
The study, termed The Richmond Special Development Initiative: An investigation into the requirements for initiating a development process in the Richmond Municipal area, was completed in 2006. The report concluded that there was indeed a need for a special development initiative in Richmond.
The successful implementation of the RSDI should contribute towards the attainment of the objectives espoused in the Richmond IDP, the Provincial Growth and Development Strategy (PGDS), the Provincial Spatial Economic Development Strategy (PSEDS) and the National Spatial Development Perspective (NSDP). In line with the PGDS, the RSDI was to be a vehicle to address the legacies of the apartheid space economy, to promote sustainable development and to ensure poverty eradication and employment creation.
The overall objective of this contract (project) is to establish a Project Management Unit (PMU) that would induce a sustainable LED programme and that over a period of time will grow the local economy, lead to a reduction in poverty and unemployment and secure a lasting peace in the area.
RSDI Achievements
The following is a summary of achievements to date. The details of these achievements have been discussed in the sections that precede this section.
- Establishment of structures needed for the successful facilitation of Local Economic
- Development in Richmond. These include the Project Management Unit itself, the Project Steering Committee as well as the Project Management Committee.
- The procurement of mobile offices and related equipment necessary for the effective management or facilitation of Local Economic Development in Richmond
- Three calls for proposals have been administered of which two were successful. DEDT’s contribution to this initiative amounts to R4,721,878.00.
- 351 individuals from cooperatives and SMMEs have participated in financial and business skills training workshops to date.
- 806 individuals from Cooperatives and SMMEs have been assisted with Business Support Services (this includes: Registration on CIPC database as users, Registration of Companies/Cooperatives, Restoration of Companies, SARS and CIPC Annual Returns, Submission of Tenders, Registration on Databases and Referral to other agencies
- More than 50 new companies have been registered with eth Companies and Intellectual Property Commission to date.
- More than 20 new cooperatives have been registered with the Companies and Intellectual Property Commission to date.
- The table below outlines the value of funds leveraged from other agencies for projects in Richmond including the 10% own contribution from the SPF projects already approved.
Community Economic Development Initiative (CEDI)
The DEDT entered into a Service Level Agreement (September 2013 to July 2014) with Lima and PPT to implement a Community Economic Development Initiative (CEDI). The overall objective of the CEDI is for DEDT to collaborate with NGOs to provide support to local and legally registered community based entities within selected rural areas of KZN.
The purpose is to identify and stimulate economic opportunities that will allow for increased productivity and improved livelihoods, the acquisition of skills to ensure sustainability and the active participation of these groups in the economic growth process.
The collaboration between NGOs and the DEDT consists of two distinct phases, namely, Project Identification and Packaging and Project Implementation Support. The NGOs appointed by DEDT (Limaand PPT) have the requisite capacity and experience in implementing community based programs and projects. Therefore, the aim is to allow for the sharing of specific competencies and capacities with NGOs in order to achieve sustainable community economic development within rural communities in KZN.
The CEDI is at its inception phase and comprehensive guidelines detailing the funding purpose and criteria are being discussed with the targeted Municipalities.
Operation Vuselela
Operation Vuselela is a partnership between Tongaat Hullet Sugar and KZN Department of Economic Development and Tourism. As part of this partnership 3534 hectares of cane was planned for planting over a three year period.
In reporting progress to date, this project has made significant progress with 2884 hectares of sugar cane planted over the period 2011 to 2013 in the rural areas, Felixton, Amatikulu and Maidstone resulting in 2633 temporary jobs, 42 permanent jobs created and 2878 beneficiaries trained on small scale farming.
The beneficiaries of this project include people from the local communities, emerging enterprises, women, youth, cooperatives and farming committees. The group farming initiative benefitted members as they earned income even if their fields were not harvested. To increase small scale farming efficiency within the Imphapahala area, the department has recently funded farm equipment.
The department together with Tongaat Hullet facilitated the registration of 26 co-operatives, whilst mentorship and management training was provided by Tongaat Hulett.
Furthermore as one of the main aims of this project was to create SMME service providers for the small scale cane growers, Tongaat Hulett contracted with newly established SMMe’s and Co-operatives to provide services in so far as land preparation, planting ,supplying fertilizers and transport.
Tongaat Hulett as the implementing agent provided the technical, managerial and logistical support over the three year period. The Operation Vuselela concept has gained popularity internationally when the model was presented at the Local Economic Development Course conducted by the Wageningen Centre for Development Innovation in Netherlands
Abaqulusi Local Economic Development Initiative (ALEDI)
The history of the ALEDI Project dates back to the EU funded KwaZulu-Natal Gijima economic development initiative where Abaqulusi was identified as an area requiring special support. In a case study of the area conducted in 2008, three focal programs were identified as critical for the Abaqulusi Municipality, namely:
- Institutional and administrative interventions - which were interventions concerned with the overall management of the proposed LED intervention.
- Planning, spatial and enabling interventions – these are interventions related to the need to develop good planning processes and the support of both the private and public sector.
- Economic development interventions – which are interventions that must leverage off each other in order to have a real impact
With the Service Level Agreement between DEDT, Abaqulusi LM and UWP Consulting and implemented over a three year period, some of the key achievements include the following:
- Institutional and Administrative Interventions
- Training of Municipal Councilors in eight LED modules
- Training of 17 Informal Traders
- Training of SMMEs and cooperatives in a joint undertaking involving DEDT integrated Business Support Section and Umthashana FET College
- Proposed institutional arrangement for the Municipality LED Unit
- Planning, Spatial and Enabling Interventions
The ALEDI through the Project Management Unit (PMU) successfully leveraged funding from COGTA for projects to the value of R22.9 million over a two year period to revitalize and upgrade the Vryheid Town Centre which is the economic hub for the Zululand District. The projects include, an Urban Design Framework for the CBD and facilities in Mason Park, the Upgrade and Expansion of Informal Trade spaces and facilities in Mason Street, the Upgrade of East Street and Mason Road Taxi connector and the High Bridge development to connect the CBD and the Northern suburbs to relieve traffic congestion on East Street.
The PMU further secured funding to the value of R1,5 million from the Department of Rural Development and Land Reform to revitalize Abaqulusi Secondary Nodes including Emondlo/Hlahlindlela, Hlobane/Coronation and Lowsburg. The purpose is to develop precinct plans in order to identify key issues and constraints, which if resolved, could attract investment, promote growth and address infrastructure problems in these secondary nodes.
Economic Development Interventions
To date, ALEDI has made a slow, modest but steady progress in facilitating and implementing projects that positively reinforce local economic growth and job creation in Abaqulusi Municipality. A Project Development Fund (PDF) was mobilized through an Open Call for Proposals.
The highlight is the contract to the value of R4million concluded by DEDT with the Hegeler Family Trust and the Jalimani Workers Trust who have entered into a partnership and established a company called Clemcor Farming PTY (Ltd) to construct broiler rearing facilities and a “state of the art’ abattoir that can supply free range chickens and products into unmet demand for accredited Country Reared Free-Range chickens and processed products by large retailers in Northern KZN.
There are currently no accredited producers and slaughter facilities of free range chickens in Northern KZN which are compliant with stringent Hazard Analysis and Critical Control Point (HAACP) requirements. Unlike frozen conventional chickens, chilled free range chickens are not susceptible to competition from cheap imported products from Brazil.
It is projected that the result will be the preservation and upgrading of the existing 20 jobs, the creation of additional 67 full time jobs (23 immediately, 30 within 2-3 years and further 14 by year 5 in broiler sheds, the abattoir and related services. It will further create 28 temporary job opportunities with contractors during the construction phase. Other economic development interventions facilitated by ALEDI PMU include the Vryheid Private Hospital, Mondlo Business Centre, Facilitation of land availability agreements with Spoornet in Vryheid Town Centre and Agricultural Value Chain Study.
Collaborative agreement between COGTA; DEDT and SALGA
On the 18 March 2013, a collaborative agreement was concluded between the DEDT and COGTA. In order to make this collaborative relationship more meaningful in terms of the different effect and impact that each party may make, SALGA then expressed desire to become partners with both DEDT and COGTA in order to achieve the desired outcomes of this collaborative agreement.
The two departments and SALGA have agreed to complement each other’s efforts for better realization of common goals in the area of regional and local economic development within KwaZulu-Natal province. As part of this agreement relationship, the parties have agreed to set up a Communications Forum with duly appointed authorized representatives from each party. The communication forum meets on monthly basis to deal with all the issues as of the memorandum of understanding.
The key function of DEDT is to provide economic development support services in order to assist government structures in fulfilling their development mandate. DCOGTA is responsible for performing oversight and support to 61 Municipalities and 294 Traditional Leaders and their institutions.
This department’s role is to ensure that the two institutions are adequately strengthened to discharge their mandate and responsibilities. The key function of SALGA is to be the voice and sole representative of local government, in striving for improved local economic development and greater intergovernmental alignment that supports employment creation and better jobs.
Objectives of the Collaboration
- The main objective of this agreement is to improve cooperation and strengthen the relationships on a wide range of issues in the different spheres of government (inclusive of District and Local municipalities).
- Better compliance and enforcement of key legislation impacting on service delivery at municipal level, and other related economic growth and development projects.
- The development and management of sustainable local economic development programs and projects and the monitoring and evaluation of business licensing function and related informal economic processes to be implemented at municipal level.
Programme director, it is our view that these successes and developments in the local economic development sphere are not the height of what our province can achieve in terms of its accelerated economic development agenda. Indeed these successes show us what can be achieved if, as social partners, we join hands towards a common objective.
This coordinated approach does not mean that we will lose our individual focus as partners but it accepts that there is more to be gained if we collaborate towards the attainment of the same objectives. In this regard, this Summit is about re- enthusing delegates about the need for partnerships and coordination.
During this Summit, we should candidly-assess our performance as local economic development practitioners, particularly with regards to how smart we have been in utilizing and pooling the meagre resources at our disposal to build the economy of the province at the local level.
The challenges we face, including unemployment; poverty and inequality, as well the need to build a globally-competitive economy inform us that this Summit cannot afford to be another talk-shop. We have the right policies; we have a conducive political environment and we have the willingness of all social partners to make local economic development work.
All that is left is to breathe life to the policies that are in place; apply innovation and creativity in dealing with whatever challenges in making the dreams of our people a reality. This mission, we must accomplish not only for ourselves but for the sake of our country’s future and the millions who will come after we have departed this world.
I thank you!
