Minister of Economic Opportunities Alan Winde delivers budget speech for Department of Economic Development and Tourism
Honourable Speaker,
Honourable Premier,
Cabinet Colleagues,
Members of the Provincial Parliament,
Heads of Departments,
All the staff of the Department of Economic Development and Tourism, and
Citizens of the Western Cape, business leaders, entrepreneurs and job seekers
Honourable speaker, in 2014, the people of the Western Cape entrusted us with the task of creating a vibrant economy in which they can participate to meaningfully improve their lives. And whether this participation is in the form of getting up every morning to go to work, or learning a new skill, or building a business that creates a livelihood for themselves and others, our task has been to ensure that these endeavours are possible.
In the past year, our economy has encountered considerable challenges ranging from the impact of the drought, to avian flu, and it has felt the knock-on effect of the instability in our national politics. Both the Rand and the South African brand have taken a knock.
But I am proud to stand here today and say that because of our concerted efforts at building an economy that is diverse and resilient, more people in our province are able to get up and go to work each day. This is due to the enabling environment we have created in our region which has given the private sector the confidence they need to invest, and also to the programmes we’ve put in place to help grow start-up businesses, cut red tape, and to nurture the young, technical minds that will help to build our future.
The drought has forced us to think about resilience. Cape Town has become the model for international best practice in water savings, as we’ve more than halved our water consumption, and implemented the 50 litres per person per day limits.
Businesses have also played their part. Yesterday, Sea Harvest in Saldanha opened their desalination plant. Also in Saldanha, Oceana is also developing their own desalination plants. In tourism, Tsogo Sun and the V&A Waterfront have also made investments in water.
These companies are investing in their own resilience, and at the same time relieving stress on the water system. They’re also at the forefront of kick-starting our water economy.
All of this reinforces our belief that saving water will help to safeguard jobs.
Our number one aim has always been to create jobs, and the latest jobs numbers reflect our efforts.
The most recent job statistics released by StatsSA show that the Western Cape has the lowest unemployment rate in the country, which at 19.5 percent is 7.2 percentage points lower than the national average.
This is because in everything we do, we have not allowed ourselves to lose sight of why we do it: giving the hard-working people of the Western Cape the opportunities they deserve to live better lives.
Since we came into office in the Western Cape in 2009, 598 000 more people have jobs. The number of people employed in the province increased by 106 000 year-on-year between the fourth quarter of 2016 and the fourth quarter of 2017.
The latest Bureau for Economic Research data released last week shows that business confidence in the province has improved dramatically- moving from 35 index points in December to 50 points in March. This level of confidence has not been seen in our economy since 2016.
This, despite a once-in-400 year drought, which has cost our agricultural sector R5.9 billion and which has challenged our tourism establishments to rally together with a strong message to maintain visitor numbers.
The Western Cape remains open for business and there is a lot to be confident about in our economy.
Tourism GVA grew by R2 billion or 11 percent year-on-year between the third quarter of 2016 and the third quarter of 2017 and we’ve created more than 26 000 jobs in the sector since the inception of our Project Khulisa initiative.
International, regional and domestic arrivals at Cape Town International have all shown growth between December 2016 and December 2017, despite fears of a decline.
These numbers are boosted by the sterling work of the Air Access team which has managed to grow the number of inbound seats into Cape Town by 700 000 since their inception in 2015. This year alone, Air Access has secured new routes with three airlines, six route expansions and connected Cape Town with four new destinations, all of which are set to add an additional 106 000 inbound seats.
It is estimated that these new routes introduced this year alone will create additional direct tourism spending of R620 million and it’s only March.
We were delighted that President Cyril Ramaphosa highlighted the importance of growing tourism in the country as a path towards creating more jobs. This has been at the heart of our Project Khulisa economic strategy for years and we are eager to share our insights and lessons with him. We are also pleased to have Minister Derek Hanekom back in the driver’s seat of this crucial portfolio. Minister Hanekom has expressed an interest in improving safety at our key tourism sites, and we look forward to collaborating with him in making improvements in this space. Partnerships between all spheres of government, and the private sector, are crucial to driving growth.
One of our plans to grow tourism in the province is by focusing on culture and heritage tourism. To this end, we have launched our Madiba Legacy project. This project will trace former president Nelson Mandela’s footsteps in the province, and encourage tourists to follow in them.
In 1997, when he received the freedom of the City of Cape Town, Nelson Mandela said: “Cape Town’s greatness not only lies in its contribution to our economy but in its involvement in our country’s history”.
It is time that we share this history with the world.
In the coming year, we will honour Former President Mandela through the creation of a public showcase of his life, and the struggle against Apartheid, at Cape Town City Hall. We have chosen this site specifically, as it is where Madiba made his iconic first speech after his release.
Artists Xhanti Mpakama and Barry Jackson have been commissioned by heritage experts Koketso Growth to create a celebratory art work in his image, which will be unveiled later this year as part of the Nelson Mandela centenary celebrations. This work is being undertaken in collaboration with the City of Cape Town and Nelson Mandela Foundation.
It is no secret that I am an avid cyclist but my passion extends beyond just being in the saddle because cycling has the ability to contribute substantially to tourism and our economy, especially in rural towns.
A study in Oregon in 2012 showed that cycle tourism generated $400 million for the state. It is estimated that in Germany, 10 percent of tourism revenues come from cycle tourism.
Which is why last year, we launched the Cross Cape Cycle Route which takes riders on a journey through many of our special small towns between Plettenberg Bay and Stellenbosch. This year, we will be launching two new routes, taking cyclists on multi-day rides in other parts of our province, growing their economies through tourism and hospitality.
But it’s not just tourism that is impacted - there is a real need for new skills in this industry ranging from bicycle mechanics to guides. In the new financial year, six young people from Kayamandi will receive training to become adventure guides.
Another important part of growing tourism in our region is ensuring that travellers to our destination feel safe. Tourism in our province employs over 200 000 people and it is our responsibility to build our city and our province’s reputation. We must face this important work head on, to protect and grow employment in this crucial sector of our economy.
We share the concerns of our residents and visitors about safety in the Table Mountain National Park, which is managed by a national entity. We are focussing on safety with renewed energy. We have budgeted R1 million for safety and security initiatives which include proactive communications campaigns. We’ve identified Table Mountain National Park as a hotspot and we’re building partnerships with SAPS, the NPA and rangers in the park to ensure safety.
Recently, it emerged that a sophisticated syndicate of criminals was targeting tourists using ATMs in the Cape Town CBD.
The information emerged via a task force created by provincial government specifically to investigate the issue after it was raised by concerned hospitality establishments. The task force includes the Cape Town Central Improvement District (CCID), police, City of Cape Town Law Enforcement, the provincial Department of Community Safety (DOCS), Cape Town Tourism and representatives of the hospitality industry, banking fraud investigators and the National Prosecuting Authority.
The Department of Community Safety deployed 14 officers to seven ATM sites in the city between 15 December and 15 January and DEDAT supplied funding to keep them operational from January through to the end of February.
During this three-month period, members of the unit were able to stop 17 such incidences from occurring.
The department will once again be rolling out the ATM fraud prevention project in the coming year, in collaboration with DOCS and the CCID, and with the help of 50 trained students from the Chrysalis Academy.
DEDAT has committed an amount of R1.26 million toward this initiative.
The people who work in our tourism and service industries have an important role because they are our marketers and the front desk of the province.
Last year, we rolled out our Journey to Service Excellence programme in Saldanha Bay and Langebaan, after piloting it in Clanwilliam in 2016. Through J2SE, we offered hospitality training to locals from all sectors, and we awarded businesses for service excellence. The overall winner of this year’s intake, Mike Killian, is a true tourism ambassador. From his post at the Total Service Station in Saldanha Bay, he is providing the warm Weskus welcome our tourists deserve, and we are extremely proud of the example he is setting for the region.
Speaker, tourism is just one of the legs of our Project Khulisa initiative aimed at growing the economy and creating jobs. In 2014, we set ourselves a target of growing jobs in agri-processing by 100 000. We met that target in 2016, however, this sector has been exposed to both avian flu and the drought and has subsequently seen the shedding of some of these gains.
Despite this, we are still showing a net gain of 37 370 jobs in agri-processing and 60 000 primary agriculture jobs.
Through Project Khulisa, we have managed to mitigate some of the negative effects of recent natural- and disease-born disasters on this sector, although there is more to be done.
The impact of the drought in agriculture is currently estimated at R5.9 billion. Its devastation is undeniable. in my Agriculture department budget speech next week, I will discuss the programmes we have put in place to alleviate pressure in the short term, and to safe guard ourselves against the threat of climate change in the long term.
But the drought also presents us with a unique opportunity to stimulate a new economy in our province, driven by the private sector, which is centred around preserving this important resource.
The growth we have seen in private sector water saving services and technology has been nothing short of incredible and has shown the innovative, adaptive and responsive nature of our economy.
These new services and technology are backed up by the services offered by our drought economic work stream which is supporting businesses to understand their consumption patterns, recognise potential savings opportunities, and, finally, to augment their own water supply.
Our partnership with Green Cape in offering these services has been instrumental. They’ve directly assisted 563 businesses with advice on water related matters.
In the next few weeks, they will be launching their market intelligence reports for Water and energy services and renewable energy and waste. DEDAT contributed R5.85 million toward this work, which was supplemented by an additional R2.55 million for further work in the water sector in January. This support has helped leverage even more funding, and has allowed for the facilitation of R1.2 billion in green economy investments for the financial year.
Despite the massive shift in focus brought about by the unprecedented water crisis we are facing, GreenCape has continued its other important work, most notably in the green economy and waste sectors.
As a result of their hard work, the National Minister of Trade and Industry has announced that the designation of the Atlantis Special Economic Zone will take place in this financial year. So far, R680 million in private sector investments have been made, and there are at least five potential investor applications for land which are currently being processed.
We are especially proud of this team for being announced as the runners up in the Circular Awards which were held in Davos. The award was for their work in the waste economy, for an industrial symbiosis project through which the waste materials of one business are recycled for use in the manufacturing process of another.
In addition to the strong role it has played in bringing more tourists to our shores, our partner Wesgro, which is the Western Cape’s official investment, trade and tourism promotion agency, has also done sterling work in securing investment and landing trade deals.
In the past year they have secured a total of 20 investments with an estimated value of R3.3 billion, resulting in the facilitation of 1346 jobs.
In collaboration with a host of partners, they also launched the Cape Investor Centre midway through the last financial year, which has already landed R40 million worth of investments into the province.
On the trade promotion front, they facilitated the signing of 80 business agreements with a combined export value of R11.5 billion, resulting in the facilitation of 1278 jobs.
Wesgro has also played an important role during this drought, ensuring travellers, investors and businesses know that the Western Cape remains open for business.
In our other Khulisa priority area of oil and gas, we, together with the Department of Trade and Industry have invested R500 million in the development of core infrastructure at the Saldanha Bay IDZ. The oil, gas and marine sector supported 8 320 jobs in 2016 and contributed R1.03 billion the province’s gross value add.
The Saldanha Bay IDZ has signed a lease agreement with Transnet National Ports Authority, the first step in making the IDZ a reality. We are currently focused on providing upskilling opportunities to meet the needs of investors, and we’re looking at ways of cutting red tape for businesses in this space. This includes the exploration of a customs control area.
Speaker, our Red Tape Reduction Unit continues to do excellent work in ensuring that we are the easiest province to do business in in South Africa. When we established this unit, we set ourselves the bold goal of realising R1 billion in saving by 2019, and current estimates show that we are not only on track to meet this target, but to exceed it.
The unit has now managed over 8000 cases, with a resolution rate of 85%. Our ongoing tracking tool shows that we have already saved businesses R600 million.
They’ve helped businesses that import eggs, and businesses that export boats, and many in between.
Each query resolved helps a business to grow and create jobs, or to retain the jobs that are so vitally important to our residents.
Globally, there is increasing evidence that an apprenticeship-based teaching and learning system is the best way to improve employment opportunities for young people, while growing the competitiveness of the economy. In Switzerland, which is number one on the INSEAD Global Talent Competitiveness Index, 70 percent of young people are involved in an apprenticeship-based learning system.
That’s why, in 2016, the Western Cape Government introduced the apprenticeship game changer.
By identifying the specific needs of industry in our province, and training young people to meet that demand, we can deal with two of the most pressing problems in our economy – unemployment amongst our young people and skills shortages.
Our data as at the end of December shows that a total of 6782 learners registered on work-placed based programmes such as apprenticeships since we set our targets in April.
Even more importantly, these learners are taking part in 62 of the 91 specific occupations linked to the five priority sectors of the Western Cape.
We aim to put at least 13 221 young people in similar programmes by March next year. And to do this, we’re focusing on making it easier for businesses to take on apprentices. Our Red Tape call centre is on hand to take queries from interested businesses. Any employer that receives a learner grant from a SETA in 2018 should contact the unit to see how best to get apprentices on board.
Our work readiness programmes will be receiving a R3 million boost as we implement a new approach that links employers, SETAs, and our funding for a customised work readiness programme which can accommodate 300 young people over the next year.
Speaker, I would like to congratulate some really inspiring young people who are all doing our province proud. ABCD Concepts won the Ikasi Bright Ideas competition, thirteen year old Zintle Masoko has won a full TedX scholarship and Thula Mndayi was accepted into the Spier Arts Academy’s Mosaic Apprenticeship programme.
All of these young people are linked to the Khayelitsha Bandwidth Barn, a township tech incubator that the department supports. It boasts 70 tenants, with six hot desking spaces. Over the past year, it has hosted numerous public events and offered ICT skills training programmes that have reached about 5000 people. In addition, 142 Grade 10 to 12 girls were trained in the Code4CT web development programme.
The Western Cape has set itself the goal of becoming a leading global, digital hub. Last year, the Savills world research survey on tech cities identified 22 cities that have the potential to lead the world in the global tech industry, and I am proud to say that Cape Town was on the list.
The fourth industrial revolution is upon us, and we need to be ready to respond to this game changing hyper-connectedness. Last year, we supported Ed-Tech to set up their first business incubator in Africa, based here in Cape Town. We also partnered with the Department of Education, teachers, the business sector and local start-ups, which can be taken through the incubation process with the opportunity to prototype and commercialise their products. We have set aside R2.6 million to drive this initiative in the coming year.
In a similar vein, we’ve partnered with the Department of Community Safety to address safety concerns through the Securi-Tech project which aims to bolster safety issues through technology.
In 2015, the Western Cape undertook a digital readiness assessment, which found that businesses lag in their uptake of technology. In response, the department is developing a digital online platform to assist SMMEs to access digital tools and resources to boost their tech readiness. Best of all, when the Toolkit launches in the second half of 2018, business owners will be able to do all of this from their cell phones as we have found that 93.8 percent of residents in the province access the internet primarily by phone.
They will also be able to access the toolkit and site using one of our broadband wi-fi hotspots.
The cost of internet access in South Africa is still exorbitantly high which is why we are continuing to grow our Public Access Wi-fi offering with Liquid Telecom (formerly Neotel). Over 300 000 residents have made use of a monthly free allocation of 250 megabytes of data available at our 178 hotspots across the province over the past two years.
This month, we completed the final phase of our Internet Champions project which trained 332 mostly young, unemployed people to deliver basic mobile literacy courses and assist citizens to locate and use public hotspots.
In total, the project has registered 410 000 people over two years, and a number of champions have moved into formal jobs as a result of their involvement in the project.
According to the director general of UNESCO, Irina Bokova, analysis has shown that in developed economies, 90 percent of jobs will require some level of digital skills. Our focus in 2018 will be on providing access to digital skills for our citizens and the project will kick start in selected libraries and youth cafes.
In 2015, we established the I-CAN centre in Elsies River as a proof of concept for a community based approach to teaching digital skills. So far, we can report that there have been over 34 000 visits to the centre. 835 people have completed DEDAT-funded courses, 34 337 have participated in free courses there and 1 695 people have registered for wi-fi.
We are looking to roll this project out in other municipalities and so far, Mayor Paul Swart from Agulhas has shown real interest and we hope other municipalities do too.
Last year, we started an exciting new project called I-CAN play which aims to teach young people new skills through digital gaming. The aim is to establish entrepreneur driven gaming sites in poor communities, and at the same time, to constructively engage young people in learning new skills.
The first I-CAN play site opened in January at the Khayelitsha Bandwidth Barn, and we have secured partnerships with VS Gaming and Lenovo as device sponsors. A second test site will be opened in the coming financial year.
Speaker, entrepreneurship is one of our key focus areas because of its ability to create jobs and stimulate growth in our economy. The Real State of Entrepreneurship study done last year found that more than half of entrepreneurs in South Africa are young people.
Tech entrepreneur and founder of LinkedIn, Reid Hoffman, once said “an entrepreneur is someone who jumps off a cliff and builds a plane on the way down”. In the past year, DEDAT has helped over 2000 small businesses in this province to build their planes by providing financial and non-financial support.
One of our projects, in partnership with Pick ‘n Pay, is helping to turn township spaza shops into independently-owned supermarkets. So far, we’ve converted two stores and plan to roll out more in the coming year. At Nozinga’s market in Gugulethu, 15 new jobs were created upon opening, for people from Gugulethu and Langa.
The annual Western Cape Funding Fair, in collaboration with Deloitte attracted over 1000 existing and potential entrepreneurs, who were able to engage with about 20 funders.
Our ongoing Investment Readiness Workshops have to date resulted in more than R20 million being raised for entrepreneurial ventures.
Our Agri-Processing Supplier development programme is aimed at increasing business skills and at growing the scale and efficiency of businesses. With an investment of R2.5 million, we were able to assist 21 businesses. Of these, 14 have managed to improve their turn-over by a total of R18.9 million, creating an additional 87 jobs.
One of these businesses is Darling Sweets, which was started as a side venture with some old-fashioned toffee recipes. It has grown into a 500 square meter production facility which employs 21 full-time and 11 part-time staff. The toffee factory, which uses butter as one of its main ingredients, has also become one of Darling’s favourite tourist attractions.
Honourable speaker, for the 2018/19 year, DEDAT has been allocated a total budget of R 433.46 million.
- Programme 1: Administration, will receive R65. 22 million
- Programme 2: Integrated Economic Development Services, is allocated R44.05 million
- Programme 3: Trade and Sector Development, will receive R 48.76 million
- Programme 4: Business Regulation and Governance, gets R10.80 million and programme 5: Economic Planning, will receive R140.85 million
- Programme 6: Tourism, Arts and Entertainment, is allocated R54.78 million and Programme 7: Skills Development and Innovation, will receive R68.98 million.
This budget will help create opportunities for the residents of the Western Cape to thrive through the development of new skills, the creation of new jobs and by opening up new entrepreneurship ventures.
We will open these opportunities by focusing intensely on the Project Khulisa and game changer goals we have set ourselves and by partnering with the private sector, and other spheres of government.
I would like to thank the HOD of DEDAT, Mr Solly Fourie and his team at the department, whose hard work, and dedication make all of these programmes possible. They have been a nimble and dedicated team, and the outcomes of their efforts are evident in our economy.
