Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development, Lebogang Maile’s remarks at the tabling of the Department Economic Development 2014/15 Annual Report, Gauteng Provincial Legislature
Madam Speaker Hon. Premier,
Colleagues in the Executive Council Hon. Members of this House.
We value the opportunity to present to this august house a complete account of the performance of the Department of Economic Development and its public entities for the 2014/15 financial year.
We believe that this process is more than a “box ticking” exercise but an important means of gauging the impact of our work. This process also ensures that the plans we table to this house do not just become paper tigers but are given practical expression in the work that we undertake on a daily basis.
Hon. Members, in order to provide a full account of our work in the period under review, it is important to draw attention to the global economic environment that invariably exerts influence and pressure on our vision to grow the economy of the province, radically transform its structural composition and increase the poor’s share of the income and spoils generated.
Without a doubt, the South African economy is undergoing extremely difficult times, with industries such as mining and manufacturing facing enormous strain and challenges.
As we table this Annual Report, our major trading partners in the form of the EU and the US are still reeling under serious economic pressures. Similarly,
developments in what seems to be nascent economic woes in China are a cause for concern.
These realities have immediate and direct implications for our electoral mandate, whose primary concern is to swing the economic pendulum in favour of the poor.
Quite simply, it means that whilst we should rightly continue to champion the creation of new jobs in the economy, the question of job retention will have to assume centre stage in some of our interventions and plans as a province. It also means that our efforts to diversify the economy, build new industries and cultivate new markets for our goods and commodities must be magnified.
Enterprise Development and the Township Economy
Hon. Members, In the year under review, the department was hard at work to lay a solid foundation for the vision for transformation, modernisation and re- industrialisation. What follows are some of the highlights of our work during the 2014/15 financial year.
Hon. Chair, the vision to build Gauteng townships into thriving commercial centres and productive economic activities received great impetus in the year under review.
As a result of the township economy revitalisation road shows and the province wide summit with township entrepreneurs, Gauteng now boasts a bottom-up policy guide on how to transform and integrate township economies into the mainstream economy.
Apart from giving birth to a defined policy on the township economy, the Township Economy Revitalisation campaign is making great strides in removing the bottlenecks that prevent township businesses from claiming a greater share of the national income. This campaign has created a platform
for mainstreaming township business needs and interests in policy discourse and development practice.
In the year under review, a total of 84 small and emerging businesses were incubated at our renovated industrial hubs in Orlando, Payneville, Garankuwa, Residentia and Charmdor in the West Rand. These businesses are currently receiving businesses advisory services and have access to shared infrastructure and services at these facilities.
In the same spirit, the Department has facilitated the incubation of 289 businesses with various private sector partners operating in manufacturing, green industries, ICT and construction. This programme facilitates the transfer of skills from big to small businesses, promotes supplier development and creates market opportunities for township businesses.
Hon. Members, access to industrial space and the cost of rates and service charges were identified as major challenges for township businesses in Gauteng. To address this, the Department is accelerating efforts to revive and industrial parks and township enterprise in Toekomsrus, Khutsong, Mabopane, Hammanskraal, Ennerdale, Residentia, Katlehong, Garankuwa and Orlando. These industrial parks and hubs will provide township entrepreneurs with clustered and cost effective infrastructure.
In the next few weeks, we will be initiating a discussion with our Metros and District municipalities about a special dispensation designed to reduce the cost of rates and service charges for township businesses, particularly those involved in light and heavy industry.
Hon. Members, we must put it on record that although most of us are now conversant with the challenges facing the Gauteng Enterprise Propeller, the agency performed fairly well in the area of providing financial and non- financial support to small businesses and cooperatives.
There are several praiseworthy highlights in GEP’s record of performance in
the year under review. These include:
- Providing financial support to 643 existing SMMEs against the target of 105 businesses.
- The agency supported 3252 existing and 1809 new SMMEs non- financially with non-financial business development interventions against the planned target of 1260 and 540 SMMEs respectively.
- The agency also provided business development interventions to 953 cooperatives.
- Informal businesses also received their share of support from the agency with 983 township-based informal business benefiting from tailor-made training
Hon. Chair, we are convinced that the bold steps we have taken to strengthen the agency’s ability to implement the programme for transformation, modernisation and re-industrialisation will bear fruit. We have taken the Auditor General’s apprehensions about aspects of the agency’s work to heart and have every intention to act on them. As part of this, a process to address challenges linked to loan repayments is currently underway. We are instituting a loan management system to quantify amounts owed to the entity and to device means to recover debts for future distribution to entrepreneurs.
Whilst our philosophy continues to emphasise the importance of development finance and friendly loan terms for entrepreneurs, we are also adamant that in the context of limited fiscal revenue, loan repayments are a lifeline to our continued support for start-ups and enterprises that wish to grow and expand their operations.
In the same light, we are engaged in a process to review post investment initiatives to assist us in identifying early warning signs for clients that are in distress and to proactively intervene to create sustainable entrepreneurs in the province.
Cognisant of the fact of the increasing weight of the informal sector in our economy, the Department developed and finalised an all-encompassing policy for the informal sector. The Gauteng Informal Business Upliftment Strategy (GIBUS) will ensure that the informal sector receives financial and non- financial support crucial for its growth and sustainability.
Trade and Investment
During the year under review, the Gauteng Growth and Development Agency (GGDA) facilitated 13 investments mainly from China, followed by India, Brazil, Russia and Portugal. The Gauteng Investment Centre assisted investors to navigate the South African business terrain by facilitating business visas, work permits and the company registration process. These investments are in agro- processing, property development, business process outsourcing and green energy.
For year under review, the GGDA assisted 5 companies to retain their business operations in the province whilst an equal number received technical assistance with expansion projects. These companies operate within the priority economic sectors for Gauteng namely: manufacturing, agro- processing, automotive, finance and construction. Our export promotion programme was instrumental in securing R170 million worth of trade deals for 20 companies.
In line with the commitment to diversify our export markets and promote the intra-Africa trade, the province has adopted the Gauteng Trade and Investment Strategy that is underpinned by the need to facilitate investments to prioritised industries and sectors to all development corridors in the city region and strengthen Gauteng’s role in Africa’s re-industrialisation process.
Equally, Regional Economic and Industrial Plans for West Rand and Sedibeng were finalised in the year under review. These plans are aimed at arresting the evident economic decline and de-industrialisation plaguing the Southern and Western development corridors.
Our research into the eleven priority sectors of the economy is nearing completion. This work sheds insight into our economy and its structural maladies - highlighting market concentration; barriers to entry for new players; higher profit rates vis-à-vis diminishing workers’ income; low local content and largely unsatisfactory levels of infrastructure as some of the fundamental challenges confronting these sectors. The overall findings of these studies will guide us in designing a range of strategies and high impact catalytic projects to grow each sector and increase its job creation capacity.
Township Entrepreneurship and Tourism
The following are highlights and achievements on the tourism front:
- We have finalised the packaging and marketing of 25 unique township and neighbourhood tourism experiences for our domestic and international tourists
- A total of 236 beneficiaries from the fifty townships were trained in tourism skills at the Ga-Rankuwa Hotel School while 216 township entrepreneurs received training on food, beverages and accommodation services through the Tourism Buddies programme
- Gauteng was the host of 40 international meetings, conferences and exhibitions with the rand value of R350 million.
Institutional changes and mechanisms
The role of the Department’s agencies and subsidiaries came under enormous scrutiny during the 2014/15 financial year. A panel of experts was appointed to advise the province on the best ways to remodel its entities in line with the mandate for radical transformation, modernisation and re- industrialisation.
Amongst others, the panel recommended the establishment of a single industry regulation agency to exercise regulatory and compliance functions for industries such as liquor and gambling. Under this model, the Department would have the responsibility for the strategy, policy and oversight while the agency environment would provide the implementation capacity. This report will be presented to Exco for discussion and adoption and subsequently released to the public.
Financial Management and Revenue Collection
Hon. Chair, Financial prudence significantly improved in the period under review with the Department and ten of the public entities and subsidiaries under its orbit receiving clean audits. We have recorded great strides in our voluntary target for the Department to pay its service providers within 14 days whilst agencies are making headway in processing payments within five days.
Revenue collection by the Gauteng Gambling Board also significantly improved with the entity generating R883 million, exceeding the targeted amount of R778 million by 13.5%. We must place it on record that the challenges of revenue collection at the Gauteng Liquor Board are receiving dedicated attention.
Hon Chair, I take this opportunity to recognise the decisive political leadership of the Premier and his inspirational commitment to a service oriented, people centred, responsive and modernised public service.
I also extend a word of thanks to the Chairperson of the Portfolio Committee Hon. Errol Magerman, the Department’s Accounting Officer Ms. Phindile Mbanjwa, the Executive Management of our agencies and their respective teams. This hard and dedication are critical to the successful execution of the fifth administration’s mandate to transform Gauteng into an economically inclusive and socially cohesive city region.
Thank you!
