Programme Director Nonhle Mkhulisi
The Honourable Mayor of uMhlathuze Municipality: Cllr EF Mbatha
The Honourable Mayor of u Thungulu District Municipality:
Cllr TBV Mchunu
The Honourable Deputy Mayor of uThungulu District Municipality: Cllr TC Mashaba
The Honourable M. Mabuyakhulu MEC for Economic in KZN
The Honourable ES Mchunu MEC for Education in KZN
Ladies and gentlemen.
Introduction
It is a great honour for me to be given an opportunity to share with you the contribution of the Department of Economic Development on policy at home, ekhaya. I was with you in 2011 during the Maritime Sector Skills Development Summit. We used the maritime summit to excite and aspire our youth about the sea and shipping. Hopefully by 2030,in the spirit of the NDP VISION, we’ll have lunch in the boat built by girls from emkhanyakude.
We are meeting shortly after South Africa hosted the fourth Global Feed and Food Congress (GFFC that started on the 10th until the 12th of April 2013 in Suncity. The world congress reminded us of the value of land from the wealth creation point of view. Just to remind you, 2013 marks 100 years since the promulgation of the Native Land Act of 1913 which saw blacks being forcefully removed to the outskirts away from commercial land of their birth.
The President of the Republic of South Africa, Mr JG Zuma, during his 2013 State of the Nation Address compelled the government to accelerate land reform so that the value and benefits that lie inherent in land as a factor of production can be derived. The land question is a highly emotive matter. We need to resolve it amicably within the framework of the Constitution and the law.
The President further challenged the sector to “provide adequate resources, post-settlement to new land owners so that land continues to be productive...We also need to provide incentives for commercial farmers that are willing and capable of mentoring smallholder farmers”.
It is heartening to say besides our legacy related challenges, agriculture remains one of the most reliable drivers of the economy. Just to cite 2 areas:
Contribution of the Feed Industry
The total national feed production is today estimated at ± 10.7 million tons and the gross value of the total feed production is calculated at ± R22-25 billion per annum.
Since this administration took office, there has been a concrete effort to uproot the triple challenges, which is the legacy of Apartheid Spatial Planning. Our triple challenges are poverty, inequality and unemployment. Our socio-economic challenges are well known , Inequality, unemployment, low growth rates, levels of poverty in rural areas, malnutrition and skills deficits amongst others.
Apart from being an industrial and economic hub, the city of uMhlathuze enjoys a diverse natural environment. Importantly, the City of uMhlathuze is a progressive municipality that appreciates the need to achieve a successful balance and synergy between industry, its rich environmental assets and the community.
The largest production facility for the manufacture of phosphoric acid in the Southern hemisphere is located in uMhlathuze along with the single largest coal-handling facility in the world. All of South Africa’s aluminium is produced here at one of the world’s largest smelters and several of the world’s industrial giants are also situated here.
Vast fields of sugar cane and plantations of timber border uMhlathuze. This region also has South Africa’s largest and most diverse concentration of game reserves and conservation lands, as well as some of the continent’s most established wildlife sanctuaries. Two of the biggest mammals on earth – the whale and the elephant – can both be viewed near St Lucia, which also houses the largest single population of hippos in Southern Africa. The rationale for investing in the Port town is obvious – it is an ideal location for light-medium, resource-intensive industry, agro processing concerns and tourism projects.
Manufacturing is highly specialised and export-orientated, largely concentrated on basic iron and steel, paper and printing, as well as food and beverages. The sector is characterised by highly sophisticated manufacturing processes. The large-scale industrial strengths of the uMhlathuze centre comprise a varied industrial base of coal terminals and aluminium smelters, coupled with an impressive number of industries including mining companies and paper mills, forestry, production of materials handling equipment, as well as fertilizer and special chemicals production.
The City of uMhlathuze is rich in mineral resources, including ilmenite, rutile, zircon and pig iron. The mining of these minerals meets all of South Africa’s demand for titanium dioxide and zircon and almost all of the country’s pig iron requirements. Other natural advantages are evident in the diverse and intensifying agricultural production of the sub region, with the rich lands of sugar cane and timber having led to the development of numerous agro processing industries. The advent of the Richards Bay Industrial Development Zone within the vicinity of the Richards Bay harbour (largest deep-water port on the African continent), is serving to boost economic activity and attract international investors wishing to take advantage of the investment incentives on offer.
However a million dollar question is: why do these economic opportunities not translate to poverty eradication in the lives of our people.
Education
Programme director, allow me to make a few observations: It was the first democratically elected President who made an observation that education is the weapon to change the world.
Turkey, Sri Lanka and many other Asian countries have grown their economy curtailed job losses and reduced unemployment, grown their GDP ensured inclusion through SMMES.
The desired economic participation for job creation requires a radical review of the training system to address shortfalls in the much needed artisans and other technical skills. The Human Resource Development Strategy for South Africa addresses the skills needs for years to come.
We have set ourselves a target of at least 30 000 additional engineers by 2014. This requires that strengthen measures to ensure greater and more equitable access to science and maths education at secondary level and expand and bridging programmes to tertiary institutions.
Our goal is to have at least 50 000 additional artisans by 2015, with annual targets for state-owned enterprises. SETAs must agree to numerical targets for completed apprenticeships, with systems to track progress, particularly in construction, mining, manufacturing and new industries such as in the green economy. Apprenticeship systems must be reviewed to support broader access.
We are putting resources in place to improve skills in every job and target 1,2 million workers for certified on-the-job skills improvement programmes annually from 2013. Every SETA should aim to facilitate and co-finance training for 10% of the workforce annually. Improve SETA performance by strengthening governance, accountability and administrative systems.
I would raise a few questions:
1. Are our family, religious, cultural and early education system preparing us for innovation and engineering, emanating from the inculcated culture of reading. Are our families a hub of discipline, trust, cooperation, tolerance, respect and so on?
2. Are our teachers on time, inspiring each and every child, preparing them to be competent, efficient and trustworthy citizens?
I am saying these things which might sound irrelevant for people who are aspiring to grow the economy but these constitute a solid foundation upon which to build our economy. Economics is about people.
The big debate is about our institutions of our higher learning. We need to constantly ask ourselves the question, how many of our institutions are hard at work trying to align their pursued academic certificates and degrees with the skills needed to grow the profits of the companies which are driving the economy in this neighbourhood. I am saying these things because we are having a conversation as a family of Umhlathuze Municipality.
3. What steps should be taken so as to ensure that our education is strategic and responsive to our economic needs?
The New Growth Path
At the inauguration of the department the President of the Republic of South Africa Jacob Zuma, stated the following;
The New Growth Path is our vision to place jobs and decent work at the centre of economic policy. It sets a target of five million new jobs to be created by 2020. It sets out the key jobs drivers and the priority sectors that we will focus on over the next few years. It is based on strong and sustained, inclusive economic growth and the rebuilding of the productive sectors of the economy. Infrastructure development in particular is a foundation for more jobs and addressing rural under-development.
This vision calls for joint commitments by all South Africans – investors and workers, government and civil society – to realise the common goals. We have set clear targets for national, provincial and local governments to make employment a central focus of their activities. We are now reorienting the work of state-owned enterprises and development finance institutions to be aligned with the jobs drivers in the New Growth Path.
We are engaged in social dialogue with organised labour, business and community organisations to forge a common vision and work together to achieve the jobs goals. I call on all South Africans to join us in this journey to a better life for all, founded on ensuring that the economy, in the private and public sectors, is able to create jobs for millions of unemployed persons and offer hope to young people, the rural poor and women.
The shift to a new growth path has required the creative and collective efforts of all sections of South African society. Leadership and strong governance is key for us to be successful. It takes account of the new opportunities that are available to us, the strengths we have and the constraints we face. We will have to develop a collective national will and embark on joint action to change the character of the South African economy and ensure that the benefits are shared more equitably by all our people, particularly the poor.
The establishment of the Presidential Infrastructure Coordinating Commission (PICC) talks to that vision of leadership, coordination and integrating efforts so as to partner to create new decent work opportunities. There is growing consensus that creating decent work, reducing inequality and defeating poverty can only happen through a rigorous transformation and restructuring of the South African economy. Impact of our interventions is measurable through improved rates of employability and employment, equity in society and an acceptable growth rate of our GDP.
In the 1980s IDC invested in aluminium smelters which are now part of BHP billiton. They also made large investments into Bell Equipment around 2010.
Presidential Infrastructure Coordinating Commission
The South African Government adopted a National Infrastructure Plan in 2012 that intends to transform our economic landscape while simultaneously creating significant numbers of new jobs, and to strengthen the delivery of basic services. The plan also supports the integration of African economies.
Government will over the three years from 2013/14 invest R827 billion in the building of new and the upgrading of existing infrastructure.
Eighteen (18) key Strategic Integrated projects (SIPs) were identified, The SIPs cover social and economic infrastructure across all nine provinces (with an emphasis on lagging regions).
The SIPs include catalytic projects that can fast-track development and growth. Work is being aligned with key cross-cutting areas, namely human settlement planning and skills development.
Key to this province, Is the work of SIPs on:
1. Building Rail capacity to Mpumalanga and Richards Bay
2. Improve access to Durban’s export and import facilities.
3. N2-Wild Coast Highway which improves access into KwaZulu-Natal and national supply chains.
Industrial Policy Action Plan
Government has deployed a range of complementary and integrated measures to grow the economy and create jobs. The upscale Industrial Policy Action Plan (IPAP) 2012/13 - 2014/15, which was released by the Department of Trade and Industry (the dti) in April 2012, is one of the key pillars of this broader approach. It builds on the National Industrial Policy Framework (NIPF) and represents the fourth annual iteration of the first IPAP launched in the 2007/08 financial year.
Small Medium Entities
South Africa was privileged to be the first African country to host a critical 37th International Small Businesses Congress, which was held in Johannesburg last year. The aim of the Congress was to share the best ideas, strategies and policies that would strengthen the role of small and medium businesses in bolstering our economies.
In this regard, the role of the Department of Economic Development continues to be that first and foremost of chanting policy integration, coordinating and implementation.
Credit Access
The second area of our support is through improving access to finance for micro-enterprises. There are a number of actions that are taking place in this area including the work done by the Small Enterprise Finance Agency (SEFA) to improve their approach to lending to the Micro Finance Intermediaries. In the afternoon session EDD and SEFA will be discussing their contributions; and the discussion will be on the actions required by all players to improve support to the sector. Again it requires a collaborative approach to expanding access to finance for micro-enterprises and here the contribution of National Treasury is critical.
The IDZ-Programme
The Industrial Development Zones (IDZ) programme in South Africa (SA) was established in September 2000 essentially to augment the country’s manufacturing sector through encouraging investment in export oriented manufacturing industries, with emphasis on beneficiation or value adding of the country’s natural resources. The proliferation of the free trade zone has circuitously led to this concept earning multiple descriptions.
Nevertheless, the most common definition of a free trade zone, also applicable to the IDZ, is that of a clearly delineated industrial estate which constitutes a free trade enclave in the customs and trade regime of a country, and where foreign manufacturing firms produce mainly for export, benefit from a certain number of fiscal and financial incentives.
The rationale behind the free trade zones’ is to attract export-oriented manufacturing investment by setting aside a physical area where investors will be given a range of incentives. These include benefits such as tax breaks, waivers of industry regulations, exemptions from import and export duties, suspension of rules requiring foreign investors to make investments in conjunction with local partners, strict guarantees against expropriation, assurances of physical security and access to efficient communications and transportation networks.
The strategic intent of the Richards Bay Industrial Development Zone Company (RBIDZ) is to realise the fundamental objectives as set out by the Cabinet upon creating the IDZ Programme in September 2000, namely:
- Develop and establish a purpose built world-class industrial park incorporating a delimited Customs Controlled Area and linked to the Richards Bay International Port;
- Provide quality infrastructure including ITC and transport infrastructure, business and utility services;
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Attract foreign and local investment projects which:-
- create jobs
- export led
- sustainable
- Make arrangements for and mobilise financial, human and other resources for the development of the RBIDZ;
- Promote, foster and mentor BEE and SMME business opportunities in and around the zone.
IDZ: SMME’s-Value Proposition
1. Various downstream opportunities for SMME’s in Aluminium, Heavy Metals, Chemicals, Wood, Pulp, Paper, and Agricultural products. SMME’s encouraged. Supplier database established by IDZ, companies can apply to be put on the database.
2. Supply side opportunities for coops relative to value chains, pertaining to components and raw materials, especially pertaining to beneficiation process.
3. Government incentives, with respect to establishment, increasing competitiveness and innovation, importation of new machinery and establishment of export markets. Opportunities exist for the formation of business cooperatives amongst SMME’s to take advantage of these government incentives.
- incentives specific to IDZs are “the availability of preferential electricity rates for qualifying industries, duty-free imports for all inputs used in the manufacture of exports and a zero VAT rating on inputs procured in South Africa destined for exports.
IDZ: Community-Value Proposition
1. Improved Quality of lifestyle in respect of housing, medical and educational infrastructure within the surrounding vicinity of the IDZ.
2. The treasury has stated that one of the requirements of the IDZ programme is that companies in these zones have to employ a minimum number of people, job opportunities for the surrounding community. As manufacturing hubs these are inherently Labour intensive zones with an ability to create numerous jobs during the 2011/12 financial year, about 8 898 jobs were created in these zones
3. Skills Development in communities- during the 2011/12 financial year, about 8 898 jobs were created and 25 586 people were trained as part of the skills development programme of the IDZs
Youth
Youth economic inclusion is a critical aspect of the sustainability of our economy. As we are talking today, the President is launching the long awaited for youth social accord. Government has embarked on an intense consultation with all the partners. We have found a way of packaging youth economic inclusion from education, job placement and on-going entrepreneurial skills development.
Conclusion
You have a rich heritage preserved over years by our ancestors. We owe our future generations the benefits out of the value of our soil.
If I can leave this municipality with anything, I would say you have the sea and the land. Economic growths of these two always come back to these natural resourced.
Ours as planners is to think about the complete solution all the time. What I am saying is that whenever we think of agriculture and agro-processing, we should also think of alternative forms of energy, access to clean and safe water, labourer’s settlement, community beneficiation storage and transportation of goods. Our SMMEs should at all times be positioned in such a way that the complement and strengthen each other’s capacity.
I thank you.
