Honourable Speaker and Deputy Speaker,
Honourable Premier,
Honourable Members of the Executive Council,
Deputy Minister of Trade and Industry Ms. Elizabeth Thabethe,
Governor of Katanga Mr. Moise Katumbi,
Minister Mbaz in the Governor’s Office,
Counsul General to Katanga Mr. Mahlatsi Mminele,
MMC’s for Economic Development,
SANEC Chairperson Mr Herschel Masdorp,
The Italian Trade Commission Dr Sergio La Verghetta
Mr Maurizio Mariano represent the I of HIP
CEO’s of Companies and Chairperson’s of Boards,
Board members of DED Agencies,
Mr Peter Ven Harten, CEO ISA
Prof Lee Burger
Ladies and Gentlemen,
Family, Friends and Comrades.
Madam Speaker, I am standing before this august house with a broken roar, saddened by the passing on of Professor Phillip Tobias, a leading scientist, academic and anti-apartheid activist who passed on yesterday after a long illness. Prof. Tobias was the real authority in the palaeoanthrophology field, the work we pledge to continue pursuing in his memory and honor. Our deepest condolences to the scientist’s community at Wits and the rest of the human evolution fraternity.
Madam Speaker, I present the 2012/13 Department of Economic Development budget to the people of Gauteng, I do so with a renewed sense of hope inspired by developments across the globe which present new possibilities for emerging economies in general and our province of Gauteng in particular. Africa is now placed as the world’s third fastest growing region.
I am indeed inspired by the geo-political economic relations where for the first time emerging economies have proven to be the key drivers for world growth. Now more than before, it is crucial for emerging economies to collaborate and align their growth strategies for the common good of their nation the poor in particular.
Most thought leadership and research point to a rise in trade and investment between developing economies. According to the 2012 Africa Attractiveness Report by Ernst & Young, 3 out of the top 5 fastest growing investors in new projects in Africa are African, namely, Kenya, Nigeria and South Africa. These countries have registered a compounded annual growth rates of 77.8%, 73.2% and 64.8%, respectively, between 2003 and 2011.
Although these three countries are leading in growth, only South Africa is in the top 5 in terms of the cumulative share of contribution to new projects. In this regard, South Africa is in fifth position after the US, France, India and United Arab Emirates.
In relation to the future of the global economic landscape, again Ernst & Young produced a report termed Rapid Growth Markets Report. Amongst the key projections of this report, 25 rapid growth economies will account for 50% of global Gross Domestic Product (GDP) by 2020 and surpass the growth rates of the G7 countries. These 25 rapid growth markets are mainly emerging markets and they do not include any of the G7 countries and are spread over 5 continents. South Africa, Egypt, Nigeria and Ghana are the only African countries amongst these 25 economies. Our country is in good company of a group of countries that are projected to command 38% of world consumer spending, 55% of world fixed capital investment, 54% of world demand for motor cars and 48% of world production of consumer goods.
It is imperative that we should as the economic engine of South Africa, look beyond our province and country; and set our sight into the rest of Africa. The proposed Tripartite Free Trade Agreement between heads of states of 26 African countries is a step in the right direction to further expand intra-Africa trade and facilitate joint resource mobilization and project implementation. Bear in mind we are talking about an integrated market with a combined population of 600 million people.
It is within this context that I should remind this House that Gauteng accounts for more than 10% of Southern Africa Development Community (SADC) GDP and is ranked the 4th biggest economy in the continent and 56th in the world. Gauteng accounted for 46% of all new jobs created translating to 141 000 of the 305 000 net new jobs that emerged over the past 12 months. Despite concerns expressed by mining houses, we are pleased by the firm commitment of Anglo Gold Ashanti to invest substantial resources in mine asset optimisation in Carltonville.
As a City Region, we will continue to ensure that we have sound spatial planning, that our agencies contribute to creating conducive environment, attracting foreign direct investment (FDI), and support local business expansion to foster localisation. Our work should provide certainty to business so as to inspire them to invest. I will outline some of the key economic infrastructure plans, industrial linkage initiatives and sustainable environment projects. I will also outline key issues and initiatives on trade, investment and export promotion and touch on the regulatory issues that either hinder or support the attainment of our Growth Employment and Development Strategy.
Last year, we made a number of pronouncements. In the course of this speech I will explain progress made thus far, highlighting new investments to be made by the provincial government, municipalities, State Owned-Entities (SOEs) and private sector during the current financial year straddling right to the 2013/14 financial year. We will demonstrate how working together with key stakeholders can produce positive outcomes for the Gauteng economy and in turn increase the welfare of the residents of our province and the people of Africa as a whole.
Partnerships to develop a prosperous economy
This morning we hosted a breakfast in partnership with the Southern African Netherlands Chamber of Commerce (SANEC) and the company ISA that is specialist in optimising manufacturing processes. ISA made the decision to invest in our province and developed several programs to support the reindustralisation drive in South Africa. We will sign an MOU with SANEC to develop several new projects focusing on growing trade between the Netherlands and Gauteng. This includes developing a transport and logistics knowledge systems in Tambo Springs to be a smart technology logistics hub, and increasing investment in agricultural technology to improve yields per hectare particularly for small scale farmers.
This will be linked to the agricultural investor initiative facilitated between Gauteng Growth and Development Agency (GGDA) and SANEC to support the development of an agricultural college in the West Rand.
I am pleased to announce that in partnership with Ernest & Young we have established the Gauteng Investor Business Lounge located in Sandton. This Lounge will enable us to take our programme “Growing Beyond Boarders” to new heights. Our partnership with Ernest and Young provides state of the art technology screens containing up to date data regarding opportunities within Africa and the rest of the world. Investors from the province and beyond are urged to join our programme to “grow beyond boarders” in order to expand their markets and create more jobs in Gauteng.
Madam Speaker, I am also pleased to announce that we have finalised a project to establish a watch making training facility at the University of Johannesburg (UJ). The course duration is three years and will be run in association with Watches of Switzerland Training and Educational Program (WOSTEP). The first batch of 30 students began training in October 2011. Students will receive a world-wide recognised diploma on completion. Two international brands have already indicated interest to participate in the project. All Swiss brands will be invited to sponsor or subsidise student candidates. Once qualified, watchmakers will work for the brands that sponsored them for a negotiated period of time.
Through partnerships with the industry and the Further Education and Training (FET) institutions, we continue to focus on the critical task of skilling our people for economic inclusion and meaningful participation. The partnership between government, industry and academia is an imperative to address the shortage of technical skills. Countries that a similar model, in particular, Turkey, United States, Italy and Switzerland amongst others have reported an industry absorption rate of 80% for the trained students as opposed to 30% in South Africa. We therefore have to challenge the supply-driven skills development model and seek to build a vibrant partnership model that facilitates active industry-wide involvement in skills development programme. The role of industry cannot be limited to paying skills levy.
International experiences on skills development have been applied successfully in the toolmakers training programme in South Africa. The tooling industry is recognised as the centre of manufacturing activities in South Africa and Gauteng accounts for 60% of the tool making business which has an annual procurement of R12 billion. The demand for tools is satisfied by imports from China and Germany amongst other countries. This can be attributed to lack of tool-making artisan skills supply in South Africa. To reverse this, we have partnered with the National Tooling Association of South Africa (TASA), the Department of Trade and Industry (DTI) and Gauteng City Region Academy to train 250 tool making artisans who are scheduled to graduate at the end of 2014. The students are being trained at FETs in Kwa-Thema, Kempton Park, Soweto and Pretoria West. Madam Speaker, we intend to expand this initiative to other parts of the Gauteng in order to spread empowerment and economic participation opportunities to all those living in our province. We have also partnered with the National Institute of Foundryman to train 60 students starting from 2013 in Ekurhuleni East College.
The jewelry manufacturing precinct we are setting up at the OR Tambo International Airport requires skills for design and manufacturing high-end product that will satisfy the appetite for international markets. The Department in partnership with the Jewellery Council and Mining Qualifications Authority (MQA) will work together to harness and sustain the jewelry skills
pipeline.
Madam Speaker, we continue to support the Automotive industry in Gauteng. Our ongoing investment support in this industry is now paying off. The establishment of a world class Ford BEE Supplier Incubation Facility in Silverton, Tshwane is contributing to the transformation of this industry. Five new start-up BEE companies have been created, this being a first for Ford globally and for South Africa. These BEE companies are SA Die&Pattern, Motherson Sumi, Vacuform, Visteon, and Schnelltcke. About 150 previously retrenched people were re-skilled and redeployed into this incubator facility. By September 2012, the number of retrenched workers redeployed in manufacturing will increase from 100 to 250. I am delighted Madam Speaker that we are working to support the Nissan Incubation Programme. Both these programmes are meant to increase South Africa value proposition as a successful host of Original Equipment Manufacturers (OEMs) and to increase the level of value addition beyond components assembling.
Gauteng account for a lion’s share of the Aerospace industry in South Africa. In partnership with the DTI, the City of Tshwane and Aerospace, Maritime and Defence industries association (AMD), we are planning to turn the Centurion Aerospace Village (CAV) into a world class technology facility to increase the manufacturing of high-end aerospace components. This facility is a high-tech advanced manufacturing, aero-mechanical and defence cluster which is aimed at strengthening the supply chain by bringing the aerospace and defence companies in close proximity to one another. Plans are at an advanced stage to develop the SMME Incubation facility and the Aerospace Training Academy. Inherent in these initiatives is the fundamental commitment to the reduction of the skills deficit and to confront the structural barriers to an inclusive growing economy in our province. We remain determined as a team to making a significant contribution towards the achievement of the targets set in the skills accord to train 20 000 artisans nationally by 2015.
Industrial Development in Gauteng is about skills and jobs I am pleased to announce that we have now completed all the technical planning and commercial modeling work paving way to the execution phase of the project. We are now engaging national government to enlist its financial contribution towards the construction of the bulk infrastructure at the project site. Equally, we are now ready to host an International Bidders Conference in the next few months in which we will launch the international bid process for jewelry manufacturing, financiers, markets and other role players in the jewelry manufacturing value chain to bid for participating in our JMP.
The precinct would focus on creating an integrated platform linking production, beneficiation, retail and export within a regulatory environment consisting of zerorated
VAT on export- related transactions. In addition, an export centre for the cutting, polishing and trading of diamonds would be established. This project would give the appropriate concentration of critical mass to the jewelry manufacturing sector while lowering the input costs thus making South Africa globally competitive I am therefore confident that we will commence with the construction of the JMP within this financial year as I have pledged in my last budget speech. I am equally confident that the strategy will be significantly enhanced by the contribution of the Gauteng Jewelry Manufacturing Precinct.
Logistics and Freight Hubs
Honourable members, according to the 2010 World Bank study ranked SA 28th, dropping 4 places from 2007, in the world with Germany, Sweden and Netherlands as the top three in terms of the Logistics Performance Index (LPI) which considers most important factors in logistics environment, including:
- Efficiency of customs clearance process
- Quality of trade and export related infrastructure
- Ease of arranging competitively priced shipments
- Competence and quality of logistics services
- Ability to track and trace consignments
- Frequency with which shipments reach the consignee within the expected or scheduled time (timeliness)
This indicates that other countries are improving their logistics competencies faster that South Africa. Gauteng is at the centre of most regional and port connections in Southern Africa and flows are complex and there are no clear bypass routes. The GEGDS has proposed freight and logistics sector as a key driver to stimulate sustainable growth. The logistic efficiency will have positive spin off to the country ability to export and import goods. The freight ring is intended to move freight to rail, increase rail market share over time thereby reducing congestion on road, air pollution, and the impact on the surface of roads. The overall objective is to optimise Gauteng location as the gateway to emerging African market.
Gauteng currently has four intermodal terminals in operation. These include Pretcon in the north, Vaalcon in the south and Kascon and City Deep which are located centrally. Together they have a maximum handling capacity of 650 000 TEUs per annum, the demand for container transportation will increase rapidly over the next 30 years, container movement to the province is projected to over 3 million TEU pa in 2015 and 4 million TEU’s by 2020, additional container terminals are required by 2016 to meet the demand, City Deep will have reached its capacity by 2016.
The next generation of inland hub will create an integrated multimodal ( air, road, rail, sea) logistics capability, improve the ability to move freight to and from Gauteng as part of the inland and it will achieve a quantum leap from existing generation of hubs operating capabilities. The province working with City of Johannesburg and Transnet envisage developing City Deep by focusing on infrastructure development, upgrading of signal systems and modernisation of City Deep.
Tambo Springs and Sentrarand will be the next generation of inland hubs, it will connect air, sea, rail and road as an intermodal hub. By 2018 Tambo Springs will handle 500 000 TEU’s, the hub will focus on economic development and job creation, creation of multifunctional working, living and recreational environment. Tambo Springs will serve as an incubator to stimulate the establishment and growth of new venture, create opportunities for SMME’s and create 150 000 new jobs. We are working towards an agreement with Transnet by September 2012 so that funding can be committed to start implementation by June 2013 with phase 1, the railway arrival and departure terminal, being completed by March 2014.
The Air Cargo plays a significant role in attaining sustainable development across various sectors of society, including promoting of trade and investment in the province. The airports within the Gauteng Province range from small and simple landing strips up to ORTIA which is of international standards and the largest aircraft in the world. The shippers and receivers of air cargo are located in Gauteng, as well as other parts of the country. The industries that are primary users of air transport are OEM’s, electronic and communication technology, textiles and clothing.
The Department is working with national carrier and Acsa in developing the Air Cargo Strategy for the province, the strategy. Our future has to be more sustainable and we must continue to innovate Madame Speaker and Honourable members, I am happy to indicate that we are hard at work in partnership with Municipalities in developing the Green Economy in keeping with our agenda to industrialise the province and to build a more sustainable future. Gauteng Municipalities have identified a variety of projects for implementation in the next 3 years.
The projects range from solar farm development, efficient public and street lighting, eco-construction, waste water refurbishment and efficiency, landfill gas harvestation, development of cycling lanes, public transport upgrading in the form of BRT and many others. The total investment value is in excess of R 6 Billion rand for the next 3 years. Joint working agreements with West Rand District Municipality and City of Tshwane are at an advanced stage to consider the joint development of green economy projects. In considering the further diversification of our energy sources the gas distribution network within the province will commence in the townships as pilot areas for the initial roll-out of gas reticulation networks to low and middle income households. The required total capital cost of this pilot is estimated at R98.6 million, inclusive of the provision of subsidised gas stoves to individual households.
In Sedibeng we will be implementing the Industrial Waste Exchange Project which aims to set a platform for industries to exchange their waste and by-products resulting in new business opportunities being created, less disposal of waste and its associated negative impacts. We anticipate to expand the project province wide. Our Climate Innovation Centre at the Innovation Hub collaborates with the World Bank’s InfoDev unit. Through this initiative, entrepreneurs will also be linked to other climate innovation centres established by the World Bank worldwide. The Climate Innovation Centre will play a key role in helping us achieve the “New Growth Path” objectives of job creation, industrial development and improved environmental performance and the shift to a “Green Economy” in line with Gauteng Province’s Green Economy Strategy. Over the next 5 years, we will to create 2400 jobs through the Climate Innovation Centre.
To date 270 minibus taxis have been converted to be green friendly. The conversion kit is being showcased today. A further 85 will be converted during 2012/13 with a proposed allocation of around R1.6 million. This project has great potential to be fully commercialised to target the conversion of the bulk of the 35,000 taxis operating across the Province, as well as converting Metro busses and other government vehicles. Initial indications are that CO2 emission can be reduced successfully up to 10% - this in turn can greatly contribute to accumulating carbon credits. During 2012/13 localisation of component manufacturing will also be considered as the conversion kits are presently wholly imported.
In addition, a private investment worth R250 million is being facilitated with respect to Bio-Gass power. This project when completed by 2014 will produce 11.3 mw of energy. Our Offgrid Solar PhotoVoltaic (PV) system pilot project is an Energy Security innovation using of indigenous source of energy. We have provided access to clean and reliable energy to 50 homes new houses in Winterveldt through a pilot project. In order to harness the full potential of Gauteng to support the country’s alternative energy generation programme, the Department is in discussion with the Minister of Energy to become their implementing agent to roll out agreed to projects in the province. We have an acute land shortage in Gauteng and therefore have to explore other mechanisms like roof top solar panels to generate energy for private households, business premises, shopping malls and public buildings like hospitals, schools etc. This move will foster partnership with property developers, business and government in providing energy security.
The SKA Project site decision made on Friday, May 25th, 2012, in the Netherlands clearly put Southern Africa at the centre of one of the world’s most global, and most complex, science project. Gauteng is ideally placed to capture some of the benefits of this project. Other than the opportunities presented for Gauteng industries to participate in the contracts for the manufacturing of pedestals and dishes for the MeerKat and SKA projects, there are opportunities to participate in the intense data capture and use that will define the next growth phase for new industries. Gauteng has begun to become a node in the network of centres of competencies around the world for some of the capability necessary for the successful execution of the SKA project.
Building a knowledge economy
In our quest to become a leading knowledge-economy in the continent we have to embrace and appreciate the value and opportunities presented by ICT. Knowledge on its own is merely a product, while a knowledge-based economy is a tool which are deploy can be used extensively to produce economic benefits and to create jobs. The creation of knowledge can only be driven through a robust skills and capacity programme aimed at creating human capital by government, private sector and communities. For Gauteng citizens to actively participate in the information society and the knowledge-based economy, ICT skills are key.
Gauteng province has the largest share of the ICT corporations in the country with 57% of ICT companies based in Gauteng. Taking advantage of the ICT dominance together with the four universities and research institutions in the Gauteng province has started developing a Smart City that will be based at Nasrec. The Gauteng Smart City together with the Innovation Hub will form part of the Gauteng ICT cluster which will position Gauteng as a leader in the knowledge economy.
The Gauteng Smart City will be a geographic concentration of interconnected companies and institutions in the ICT sector. In this cluster, cooperation and competition will strengthen innovation which will lead to higher productivity. The cluster will unlock new ways of creating wealth in Gauteng and open new avenues for constructive action by the industry in partnership with government. We have established a working relationship with Tecom Investments, a member of Dubai Holdings, who are a world-renowned government institution specialising in the conceptualisation, design, master-planning, implementing and management of world-class smart cities and smart city clusters.
Madam Speaker, I am pleased to announce that work towards the Smart City Blue Print is already in advanced stages and is scheduled for completion and stakeholder consultation in August this year. Key focus areas for the Gauteng Smart ICT Cluster are the establishment of:
- An Electronics Assembly and Manufacturing Centre,
- ICT Research & Development Centre, Media & Content Production Centres,
- ICT Knowledge Centre to be built in partnership with international ICT Knowledge experts such as the ITE Education Services of Singapore and MIT of the United States of America,
- ICT Connectivity & Transaction Switching centre,
- Business Process Outsourcing facility with the capacity to host 5000 seats as well as Logistics and Distribution.
Within the next 2 weeks, the Department will issue Expressions of Interest for localisation of electronic components manufacturing. In this financial year we aim to facilitate the inception and implementation of a 5000 seat Business Process Outsourcing (BPO), the Electronics Manufacturing and Assembly Centre, an open-access Data Centre as well as a Film Production Centre, which will be used for the generation of content for films, television and mobile phones to assist public and private broadcasters and sports channels within the country and internationally. The development of this content is to be driven by SMMEs, sole operators and media production companies.
Currently skills such as business intelligence, software development, and application development especially mobile and web development are in high demand. Programmes such as the “Thousand Jobs Strategy”, and “CoachLab” in partnership with the Johannesburg Centre for Software Engineers, as well as other skills driven initiatives with private sector players such as MTN and Microsoft, are already in place. Various agreements with a number of multinationals to move their call centres to the smart city are advanced stage. Initiatives such as BPO centre and the high tech manufacturing will commence in the next few months.
We have also taken the lead in bridging the digital divide through bringing broadband connectivity to townships such as the Alexandra Wimax pilot project. The project aims to provide internet connectivity, e-content distribution and storage as well as subsidised voice communication services to SMMEs and coorperatives as well as non-profit organizations.
This project, and similar projects to be piloted throughout the province, will create new business opportunities for SMMEs broadband service provision, technical support services, product distribution services, internet broadband service as well as training services. In terms of the connectivity infrastructure, Gauteng still has serious gaps especially with regards to broadband connectivity. Gauteng has a high mobile penetration which is sitting 100%. Fixed line connectivity is however low and on the decline especially for households.
The reason for the low broadband internet connection is the lack of infrastructure for access and the high cost of broadband connectivity. Households with Internet access is only 11.7%. Only 29% of all internet users have access to broadband. The World Bank estimates that for every 10-percentage-point increase in penetrations of broadband services, there is an increase in economic growth of 1.3 percentage points. The Internet Matters: “The Quiet Engine of the South African Economy” Report commissioned by Google South Africa, states that “Approximately 150,000 SMEs in South Africa would not be able to survive without their Web presence. With SMEs accounting for about 7.8million jobs (~55% jobs) in South Africa, this means as many as 1.56-million jobs would be in jeopardy were it not for the Internet”.
With the statistics showing higher usage of broadband amongst the youth as well as increasing importance of websites for SMEs, it means that the investment in broadband will increase economic activity in Gauteng thereby significantly spurring contribution of our youth and SMEs to the economy.
The current contribution of ICT to the Gauteng economy is at 7% which is set to increase significantly with the smart city programme. We recognise and appreciate the initiatives instituted by some of the GSM operators to aggressively drive the cost of voice calls and broadband down in a bid to decrease the cost of doing business and making mobile telephony and broadband more affordable to all citizens. As such we appeal and hope that this will encourage all players within the Telecoms sector to follow suit. Harnessing science and innovation to be the economic catalyst for the future We have started engagement with the Department of Science and Technology to establish an ICT ‘plug and play’ facility at The Innovation Hub for youngsters to provide an opportunity for them to start to develop their skills in ICT and explore their creativity so that they can participate in the future of our economy.
Madam speaker, published studies indicate that SMEs contribute between 52 – 57% to the national GDP and provide about 61 % of the country’s employment. It is on this basis that the Maxum Business Incubation Programme at our Innovation Hub focuses on early stage and start-up SMMEs with innovative ideas. We continue to reposition this programme to ensure that it provides an enabling environment and support for start-up companies from the knowledge-intensive sectors such as ICT, biosciences, electronics and advanced materials and manufacturing to be fast-tracked to compete globally. Through the mLab, an initiative in collaboration with CSIR’s Meraka, Nokia, Finnish Government, the World Bank’s InfoDev unit, we will increase our efforts in ICT skills and entrepreneurship development to ensure development of mobile applications that will profoundly enhance government service delivery, access to information by our citizens and provide economic opportunities for the youth. An amount of R2million has been allocated in 2012-13 to this project, with at least 10 innovations expected to be supported for commercialisation purposes.
Honourable members will be pleased to note that a “Start-Up Innovation Support Programme” has been established. This programme will provide financial support in the ranging between R50,000 to R500,000 to young entrepreneurs from concept to commercialisation. I appeal to private sector to partner with us, to fund more R&D and develop a sustainable intellectual property base that is truly South African. Earlier this year, the Premier announced that Gauteng will be establishing the Biosciences Park to ensure that we develop a viable biosciences cluster. South Africa’s biosciences based economy accounts for at least 10% of the GDP. This is predominantly downstream manufacturing based on agriculture contributing 7% and pharmaceutical industries 1.5%. A vast majority of products are imported thereby resulting in South Africa’s technology balance of trade deficit and high cost of goods.
This is especially in healthcare and has an impact on food security. We have secured the commitment of the CSIR and University of Pretoria to work with us to realise the vision of the Biosciences Park. Through The Innovation Hub, we have signed an agreement with Emory University of Atlanta, Georgia in the USA, to implement the Gauteng Accelerator Programme in Biosciences. This will assist us in development of bio-entrepreneurs to anchor the biosciences cluster. We continue to align this process with the bioeconomy strategy driven by the Department of Science and Technology.
Last year we travelled extensively to different parts of the world and we are pleased to announce that two projects will be launched sometime in August 2012 as a result of invest attraction engagements undertaken during these trips. The first is the manufacturing of intravenous catheter sets with full sterilisation units and complete plus 100 000 HVAC clean room systems. The second project is about the manufacture and assembles of tablets and laptops. These products are currently sold in India, China and Singapore. The number of jobs to be created is 360. The total value of the investment of the two projects is R56m. This investment will assist in replacing imported products and thus contributing to the national effort of increasing localisation to improve the country’s manufacturing capability.
Early this year, we launched the Moringa Oliveira Project in the Moloto area (falling within City of Tshwane jurisdiction), with a focus on innovation in agriculture and beneficiation innovations. With initial plantation of 51 000 Moringa trees on 25 ha of land, the initial focus of this project is on food security, with initial harvesting in August this year. Downstream value chains are in pharmaceutical, water treatment, and biodiesel. To date, the project has employed 55 people. The local community is being trained on various aspects of the value chain. Expansion to 60 hectare of plantation is planned for 2012/13, with more jobs expected to be created and with greater emphasis on beneficiation. An allocation of R6 million has been made to this project for the 2012/2013 year, which will consider food crop production, pharmaceuticals, biodiesel as well as water purification in the value chain of beneficiation.
In July 2011 working in partnership with the University of Johannesburg School of Tourism and Hospitality we jointly showcased the result of the extraction of functional soy protein with the replacement of animal based proteins like dairy, meat, eggs. Vegetable protein is the future for human food security and South Africa has taken a lead in this new innovative technology.
Our flagship attraction for tourism
Tourism has been recognised as an important driver of economic growth and job creation. Last year we hosted a successful Tourism Summit which informed the development of our new Gauteng Tourism Sector Strategy. The resolutions adopted at Summit supports strong partnerships between government, the private sector and communities. Madam Speaker, I am pleased to announce that we have taken initial and bold steps towards consolidating the three tourism entities in the department into one. We have merged the Gauteng Tourism Authority, the Cradle of Humankind World Heritage Site and Dinokeng Trading Entities into one entity. We will now focus our energies during this financial year to align the legislative framework and policy regimes to give legal effect to the single tourism with our department.
Madam Speaker, over 8.3 million foreign tourists visited South Africa in 2011, boosting international arrivals by 3,5 percent compared to 2010. Gauteng received nearly half of these international arrivals resulting in an increase in tourism revenue from R26,9 billion in 2010 to R27,5 billion in 2011. A focus this year will be on growing a strong and vibrant domestic tourism portfolio. Domestic tourism is an essential contributor to the growth of our tourism economy and provides a foundation for sustainable tourism growth and development, especially in times of global uncertainties. Our “stay another day” campaign is aimed at capturing the many business travelers to explore the many different offerings by our province. We will this year launch new tourism routes that will among others include the struggle route, an important route tracing the historic liberation struggle footsteps highlighting some of the places like the recently opened Pretoria Central Prison Gallows Museum, the Sports route showcasing places like the world cup venues and activities route and other international big events that will further cement our standing as an all-round 24/7 entertaining competitive city region with world-class events and offerings.
Last September we launched the highly successful AmaGeePee domestic marketing campaign inviting Gauteng residents to be tourists in their own backyard by taking advantage of hundreds of free and discounted tickets to participating attractions. The AmaGeePee loyalty card is currently in the hands of 15 000 AmaGeePee’s. One of the critical success factors of this campaign has been strong partnerships and collaborative initiatives with media, the industry and communities. If you do not have a card you are encouraged to register here today and start being a tourist in your own Province. Globally, social media has changed the way consumers and brands connect. We have therefore increasingly shifted marketing resources online to engage target audiences in channels such as Facebook, Twitter, Flickr, and YouTube. Smartphone mobile usage is steadily increasing along with the demand for location-based applications. In this year, we introduce a GP mobile application (AP) that will showcase attractions and activities based on the traveller’s interests.
At the same time our world-class website (Gauteng.net) is continually being enhanced to match its offerings to increasingly demanding users in an increasingly competitive digital landscape. The supporting Visitor Information Services framework will result in a seamless visitor experience that includes real-time book-ability and multi-language support through our visitor information centres in Sandton, Newtown and or Tambo International.
The retail shopping segment remains the main reason for cross-border visits from neighbouring SADC countries. Through a stronger collaboration with the City of Johannesburg we will harness the best possible value from retail cross-border shoppers through interventions such as the Johannesburg Shopping Festival, Summer Cup and other big events in the city.
Johannesburg City Centre is no longer a no-go for tourists, investors and Gauteng residence. This is largely due to the sterling efforts of a number of different role players. The Maboneng Precinct provides work and recreation spaces to artists, filmmakers, fashion designers, actors, entrepreneurs and residents. The man behind this development, Jonathan Lieberman, seated in the gallery, was selected as a Global Shaper for his success in regenerating the inner city and driving development and recently represented South Africa at the recent World Economic Forum gathering in Addis Ababa. Lieberman bought several derelict warehouse and office buildings and converted them into have-to-be-there places that have rejuvenated the eastern edge of the central business district. The area now offers restaurants, markets, flats and penthouses, a hotel, galleries, shops, a cinema and creative work spaces. But his biggest success had been in creating many young new business owners and the brand Made in Maboneng.
Thanks to innovative and passionate tour operators like Gerald Garner also in the gallery today. Downtown Johannesburg's restored buildings, pedestrian streets and sidewalk cafe’s are attracting an unusual breed of tourist - local residents who are starting to rediscover their own city. These tours provide insight into the history and early establishment of Johannesburg, the city's rapid rise as a skyscraper capital, its later decline, the birth of democracy and its eventual regeneration.
We commend Claus Tworeck, the South African City Sightseeing franchise owner, who is here today, for his commitment and personal start up investment of over R20 million to bring this new product to Gauteng that will assist greatly in making the CBD a more tourist friendly zone. City Sightseeing is the number one open top bus operator globally. These red open top buses are a well-known feature in almost 100 locations worldwide spanning six of the seven continents. This product will grow the tourism footprint and associated spend at the various tourist attractions along the route as tourists can hop-on and hop-off easily to visit attractions, including Constitution Hill; the Origins Centre; Newtown; Apartheid Museum, Transport Museum and Gold Reef City just to mention a few. The commentary on the busses, in 17 different languages, will tell the story of Johannesburg through the many historic buildings along the route including Ghandi Square, the City Hall; the Gauteng Legislature; Barbican Building and the Rissik Street Post Office amongst others. City Sightseeing will be launched in Johannesburg in January 2013 and later in Tshwane. The Gautrain will provide the link between these two unique experiences. One of the Johannesburg City Sightseeing hop-on hop-off bus is parked outside for you to see and experience.
Madam speaker, the Meetings, Incentives, Conference and Events and Exhibitions sector is the key driver of the tourism economy in Gauteng. If Gauteng wants to stay in the forefront of the South African and International Meetings and Conventions circuit we have to stay competitive. Gauteng has a strong corporate meetings industry, largely driven by the national and regional source markets, with Johannesburg managing to attract events from North America and Asia as well. However, the lucrative incentive space mostly caters to demand from South Africa, particularly from within the province and we need to win more international bids. We are pleased to announce that as part of this protracted drive we have won an international broadcasters conference, the DISCOP Africa to be held in October 2012 at the Sandton Convention Centre with over 800 delegates from across the world.
Madam Speaker, in August of 2008, a new fossil site named appropriately Malapa “my home” was discovered in the Cradle of Humankind World Heritage site by Prof. Lee Berger of Wits University who is here with us today. Just a few weeks later his son Matthew found the first piece of what is arguably the most complete specimen of an early human ancestor ever discovered – the skeleton of a young teenage boy, who had died almost two million years ago. This child, found by a child, belonged to a previously unrecognised species of human ancestor – Australopithecus Sediba. The discovery of this site and its remarkable fossils shows the foresight of the Gauteng Government in supporting the proclamation of this World Heritage site. The management of this world heritage site however is a delicate balance of the environmental, conservation and economic imperatives, balancing the right to llow development to take place in order to create employment on the one hand and beneficiation of local communities on the other. Creating preferential access for local people to certain economic opportunities will be the focus of our work this year.
A Fossil Casting Project will see the establishment of a facility at Sterkfontein for the casting of fossils and other heritage objects which will be marketed to the scientific and educational community, museums, and general public. The project, implemented by our partners at the University of Witwatersrand will create a minimum of 50 new jobs for community members and impart significant skills in the process. We will also be implementing a Craft Product Development Programme with 30 local producers in the Cradle which will result in the 18 production of a minimum of 90 unique new craft products that are linked to the tourism experiences in the Cradle of Humankind. Our flagship tourism ambassador project with the National Department of Tourism currently employs 200 community members and a further 200 will be employed in Dinokeng in 2012/13.
Informed by this, Tourism Gauteng has also identified Dinokeng as the preferred “destination” in the Province to host World Tourism Day themed around the Sustainable Use of Energy. This augurs well for Dinokeng and is a great way to showcase that the urban Gauteng is green and boasts world-class leisure tourism experiences.
SMMEs and young entrepreneurs are the foundations of our economy SMMEs play an important role to develop the economy. An amount of R112 million has been allocated to our SMME development agency for the 2012/2013 financial year. The Gauteng Enterprise Propeller (GEP) is being re-modeled to fund and support more entrants into the economy, to support business retention especially for ailing SMMEs and to develop a Pipeline of entrepreneurs. We must ensure that unnecessary delays for expansion and diversification of our local enterprises do not hold up the potential for entrepreneurs to growth their businesses and create new jobs.
In the last year we committed R45 million to 83 SMME’s. This resulted in 1009 new jobs being created. From the SMME’s supported with finances 33% were women owned and 20% were youth owned. The predominant sectors financed were ICT, manufacturing, construction and services. Sive Infrastructure Services is a turnkey ICT solutions and services company we supported. They have managed to secure contracts to the value of R10 million in the last year and currently have projects to the value of R20 million. A total of 10 permanent jobs were created by this company with an additional 80 employed seasonally.
About 96% of the approvals for financial support on the micro finance fund went to women owned businesses including young women. A total of 2 664 SMMEs and Co-operatives were assisted at a cost of R14 million. These SMMEs and Co-operatives collectively employ 2404 people. Our partnership with the National Department of Agriculture on the MAFISA scheme resulted in loans totaling R8.3 million being approved for cooperatives and SMMEs since commencement.
We will continue to work with Hope Africa to engage the private sector towards eliciting more funds for the Youth and Graduate Entrepreneurship Programme (Y-AGE) launched in October 2011. The programme emerged as a result of an announcement made last year and has successfully reached out to more than 100 000 during participants. The programme will continue to assist existing and potential entrepreneurs in Gauteng to be mentored in business and where possible to place young graduates into jobs.
In the past financial year R30 million was invested in this programme. It is anticipated that with this commitment, the province would forge strategic partnerships with the private sector to take the project to greater heights. In taking the Y-age project further we have identified 50 opportunities linked to new investments in the economy, which will arise, from the GGDA work and 58 new ventures in tourism. We intend to link these opportunities to the youth who have registered with Y-age.
I look forward to the Finance Sector funding bankable business plans that emerge from the Y-age programme. All businesses in Gauteng are invited to identify further opportunities for new venture creation for the youth registered in the Y-age programme. Following the Premier’s announcement during this year’s State of the Province Address on the development of Township Enterprise Hubs as an avenue for entrepreneurship and job creation and in keeping with our youth employment strategy, we have finalised consultations with City of Tshwane; City of Ekurhuleni; Sedibeng District Municipality; Mogale City; where the hubs will be created, and with GPG Departments; NYDA; JCCI; The DTI; Auto Industry; and Retail Motor Industry.
The Premier in her State of the Province Address committed to the establishment of the Township Enterprise Hubs. To give practical expression to this commitment, we have finalised planning and commercial modeling of 6 Township Enterprise Hubs for each of the areas designated by the Premier. On the 20th of this month, we will launch the establishment of these Hubs in the six sites, namely Winterveldt in the City of Tshwane.
As we build these hubs, we are mindful of the historical imperative to alter the racial spatial planning paradigm of yesteryears and put in place a dispensation that integrates work and living spaces in a harmonious manner. We are also determined to build greener and aesthetically sound hubs to bring dignity to our people. These hubs will create conveniently 1200 direct permanent jobs and about 12 500 indirect jobs. Given our commitment to building decent township economic infrastructure comparable to any other of the 21st century developmental society we will have to raise additional capital from the DFI’s and private sector to roll out this programme given the constraints in the fiscus. We have a Co-operative Support programme to match labour intensive co-operatives with a combination of financial and non-financial interventions such as Business Development Support and training. We will continue to support creative ways in which more small businesses can be incubated and supported, through partnerships with municipalities and other public and private sector support organisation. All incubators based in Gauteng are encouraged to participate in our flagship project Y-age.
An amount of approximately R100 million has been set aside by GEP to train young people with requisite technical expertise to ensure quality, standards and industry norms are maintained to assist SMME’s to grow their businesses and increase employability of those who are not inclined to be entrepreneurs. Cooperation agreements are at an advanced stage with agencies in the City of Johannesburg, such as City Power, the Johannesburg Roads Agency and City Parks with respect to setting up new ventures. GEP has collaborated with the City on the Nasrec ICT training and development of young people in the development ofsmart educational systems and smart health care services together with the GCRA. This investment was approximately R17 million.
Our support to SMMEs is underpinned by partnerships and collaborations. We have established cooperation agreements with other National Development Finance Institutions such as Khula Enterprise Finance with whom we will co-locate at selected existing GEP regional and satellite offices to provide a full basket of services from both institutions. We are making all of government more accessible to our people. R50 million wholesale funding has been set aside for on lending by GEP to SMME’s. Procurement and sourcing of required machinery and equipment is always one of the biggest challenges faced by SMME’s. We have finalised a cooperation agreement with the Department of Trade and Industry’s Black Business Support Programme where funds will be ring fenced for SMME’s that are in our portfolio. DTI will also co-locate with GEP in identified regional and satellite premises to once more provide a comprehensive service offering to SMME’s.
A further collaboration has been established with the Industrial Development Corporation (IDC) for on-lending finance at a 5% management fee, to this end an amount of approximately R100 million has been negotiated with IDC. We have also engaged the DBSA on collaboration for the support and re-engineering of ailing SMME’s towards sustainability and growth. This is non-financial support collaboration with the Bank.
The South African Broadcasting Corporation (SABC) has finalised an agreement with GEP where 25% of their procurement spend will be dedicated to SMMEs. SABC business opportunities will also be hosted on the GEP platform and GEP will be afforded some free airtime for SMME support programmes as per the agreement.
The performance of the province on preferential procurement spends recorded 43% to historically disadvantaged groups, 16% to women owned businesses and 6% to Youth enterprises. Work with SMMEs on the requirements and compliance to the BEE Act has been in place and will continue. Through these efforts we are hoping that the performance on preferential procurement spend by the province will increase.
On Regulatory issues
The gaming industry has during the past financial year contributed R701 million into the budget of Gauteng Provincial Government. We envisage collection from the industry to exceed R700 million during this financial year.
Madam Speaker and Honourable Members, I am pleased to announce that we have now established an automated web-based liquor application system with embedded client relations management functionality that communicates progress of the application to each applicant through SMS. We have also strengthened the support to the board and we are now poised to process applications within the prescribed timelines. We have also initiated a process to back scan the liquor license files to secure the integrity of our records. Similarly, we have established a security of liquor licenses revenue by approving a license policy. This policy provides for the institutionalisation of the defining of what is a valid license and otherwise.
Based on the MOU we have concluded with SALTA and the Gauteng Liquor Forum and ongoing discussions, with other stakeholders, we are looking towards a new dispensation for the liquor industry especially in the traditionally African and black townships. The idea is to create entertainment zones on a clustered and co-operative basis with appropriate business and zoning right. These zones will ensure that we remove the nuisance attributable to liquor trade in residential areas to reasonable distances. This we intend to use as a decisive interaction to transform the liquor industry in the province and improve compliance with all applicable business and trade laws in the country.
Our effort and philosophical approach, Madam Speaker, is to alternatively reduce the levels of alcohol consumption in our communities and protect families and children from harm associated with unregulated levels of liquor consumption. It is a regrettable truth that whiles the majority of South Africans and in particular Gauteng residents gamble with little or no adverse consequences, the percentage of people with gambling problems is bound to increase with time as gambling becomes more socially acceptable. It is for this reason that a province-wide responsible gambling campaign is being intensified during this financial year. The aim of the campaign is to highlight the dangers associated with gambling in a simple, compelling and persuasive manner by employing a multifaceted promotional mix of integrated marketing and communication elements.
Prevention is always better and most cost efficient than cure. Although online gambling is illegal in South Africa, most countries in the world have legalised online gambling and this creates a challenge when we have to deal with those who may be operating illegally in the South Africa through the Internet.
Madam Speaker, liquor and gambling are two industries that we have the mandate as a province to regulate, in this financial year, as part of the rationalisation of agencies we will be placing both these industries under one Institutional Framework.
In line with the obligations set out in Act 7 of 1996, and the Consumer Protection Act 68 of 2008, the province seeks to promote a fair, accessible and sustainable marketplace for consumer products and services; provides improved standards of consumer information; prohibits certain unfair marketing and business practices; and promotes responsible market behaviour. In order to increase the level of consumer protection, we receive, investigate and resolve consumer complaints. We received 4 981 complaints from the public in the 2011/12 financial year. We resolved 4 162 of the complaints received. Our resolution rate is 83%.
Due to the high volume of complaints received in the last financial year relating to the purchase of second hand motor vehicles, we will be conducting site visits to 40 second hand motor dealers in Gauteng this year to make the owners of these businesses aware of the conditions for sale of 2nd hand vehicles as prescribed by the Consumer Protection Act. Our intention is to influence owners of second hand motor vehicle dealerships to align their contracts of purchase and sale with the Consumer Protection Act and thereby reduce the number of complaints received regarding this sector.
We will continue to foster strong relationships with industry- specific statutory regulators and the media, including “Speak Out” television programme, which has assisted us in reaching out to 10 million consumers in Gauteng.
The establishment of the Gauteng Growth and Development Agency Madam Speaker, I am proud to announce that the Gauteng Growth and Development Agency (GGDA) has been established by the Legislature. The GGDA process will realise the consolidation and facilitation of the trade and investment strategic initiatives inclusive of the strategic economic infrastructure within Gauteng. The board has been appointed and geared to drive the green agenda of the employment creation through various employment initiatives.
We continue to intensify to efforts to attract both domestic and foreign direct investment which will focus on strengthening our capacity in manufacturing, minerals beneficiation and agro-processing. The objective is to ensure that all investments into the province contribute towards job creation and fundamental restructuring of the economy. Alternative Funding and Resource Mobilisation The department has established an Alternative Funding Unit with a mandate of ensuring that all economic development projects go through a rigorous appraisal process. The project appraisal process will include, amongst others, the following areas: economic, financial, legal, technical, environmental, risks and social analysis. The department is cognisant of the fact that for economic development to occur, private sector has to be crowded –in into the government economic development space in order to leverage on private sector funding, technical know-how, and market access. It’s apparent that government is confronted with the same economic problem of scarcity in regards to limited resources (treasury allocations) and the unlimited needs of the province which compete for the meagre resources.
This unit will ensure that all projects generated through the department will not only have economic and political rationale, but will also have sound commercial standing. To achieve this, the department is setting-up structures, systems and procedures to manage this process tightly and will involve participation of appraisal and investment management specialists from DFIs and some commercial banks in steering committees so that they can help guide the department on this function.
The Alternative Funding Unit is already working with Gauteng Fund Agency (GFA) and the Development Bank of Southern Africa (DBSA) on key economic infrastructure flagship projects. The unit has already been hard at work on the Jobs Fund process appraising all projects from agencies of the department to ensure that they are sound and meet the criteria
set by Jobs Fund.
Furthermore, the unit is investigating ways through which the various Trade Agreements concluded at bi-lateral and multi-lateral level can be used to increase Foreign Direct Investment to improve the province’s contribution towards the attainment of the balance of payments.
Making our services more accessible
To reduce the red tape, we have set up a one-stop service walk-in centre at 124 Main Street, Johannesburg. This initiative is aimed to make our economic services more accessible to businesses. From the Monday 2 July 2012, any business can walk in and receive information, frontline support and make application for licenses, business support and even funding. The public can use the walk-in centre to lodge complaints about unfair business practices and consumer complaints.
The World Economic Forum’s Global Competitiveness Report ranks South Africa No 50th for 2011/12 ahead of Brazil (53), India (56), Russia (66) and behind China (26) within the BRICS Block. In terms of the 2011 Doing Business Report by the International Finance Corporation of the World Bank, South Africa is ranked 34 (a decline from 32 in 2010) and is behind Mauritius, which is ranked, 20th. With our work in improving front-line support to businesses through the walk in centre, we are hoping to assist South Africa improve its ranking.
Conclusion
The only visible sign of intervention for our people and our only sign of success is when we shall all together half unemployment and poverty. Our economy is poised to grow only if we make it a joint effort with the private sector and broader civil society. All of us must identify and play our role in the economic development of our province.
Our intervention as government must be to create an economic climate that will attract investment to our shores. We need to be clear that the pronouncements we have made here must be monitored to see that indeed they create such a climate that will position the Gauteng economy differently to help us live up to the ideal of sharing the wealth of this country amongst all its people.
One in four people live below the breadline as we implement these measures that will put food on their table and attempt to build sustainable livelihoods we give our people a renewed sense of hope for economic emancipation.
Let me take this opportunity to thank the Premier for her sterling leadership, my colleagues in the Executive Council for their unwavering support, and the chairperson Mr. Nkosiphendule Kolisile and members of the Portfolio Committee on Economic Development for their incisive Oversight role and for keeping us on our toes, Board members of the various agencies. DED and Agencies staff members for their understanding, hard work and for tolerating my energy and me.
I would also like to thank the HOD Mr. Khulu Radebe for his patience, support, diligence and hard work. The team makes me look good in the eyes of the public and I want to thank you all sincerely.
Last but not least thank my family my aunts, uncles, brothers, cousins for their understanding when I miss family activities for one reason or the other. Thank my children who are not here due to schoolwork. My absence from home has not made me to love you less. My late mother who continue to be my guardian angel!
Kea a leboga
Ngiyathokoza
