Z Mkhize: South African Chamber of Business Mid Year Conference

7 June 2007

Programme Director
Members of the business community
Distinguished guests
Members of the media present today
Ladies and gentlemen

I feel honoured to be your guest in this important gathering as you mark
your mid year period of business operations. But more importantly, this meeting
takes place at a time when our economy is performing well and yet at the same
bit faced with the prospect of rising interest rates and fuel costs. But the
latter possibilities are not necessarily putting a damper on the current
positive mood that is also stimulated by the optimistic sentiments relating to
the prospect of serving as a home to the 2010 Soccer World Cup festivities.

Infrastructure investments

Everyone, both in the private and the public sectors, is aware that the
acceleration of growth is what is needed in order to achieve government's
target of halving unemployment by 2014. Government's Accelerated Growth and
Shared Initiative for South Africa (AsgiSA) is aimed at ensuring that economic
growth is accelerated to at least 4,5% by 2009 and to an average of 6% between
2010 and 2014. AsgiSA has identified certain investments in order to accelerate
growth and part of this is the massive investment in infrastructure ahead of
the 2010 Soccer World Cup.

In KwaZulu-Natal infrastructure investments have been planned in such a way
that sustainable jobs are created even beyond the world cup. For instance, the
much talked about 70 000 seater Moses Mabhida Stadium will feature tourist
attractions and its design will ensure that the facility is used for other
activities such as the Olympics even beyond the 2010 Soccer World Cup. About
R2,2 billion has been set aside for the construction of the stadium.

In addition, more than R300 million has been set aside for the upgrading of
stadiums and construction of multi purpose sports facilities across the
province.

Although Durban will be the host city, we want to ensure that other
municipalities make a meaningful contribution towards the hosting of a
successful world cup. In view of the fact that many teams taking part in the
world cup will be selecting "base camps" we have taken a decision as provincial
government to ensure a dedicated budget for the upgrading of stadiums and
construction of multi purpose sports facilities in the following district
municipalities:

* Umgungundlovu District Municipality
* Amajuba District Municipality
* Ugu District Municipality
* uThungulu District Municipality.

The overall government infrastructure expenditure is R410 billion between
2007 and 2010. Of this, about 40% will be spent by public enterprises mainly
Eskom. About R84 billion will go towards energy generation, transmission and
distribution.

Transnet has a budget of about R47 billion of which R40 billion will go
towards upgrading of harbours, ports, railway and petroleum pipelines. More
than 19,7 billion will go towards water infrastructure. The Airports Company of
South Africa will spend R6,8 billion towards the construction of King Shaka
Airport and the Dube TradePort. This is the biggest single government
infrastructure investment in the province.

The construction phase of the Dube TradePort offer opportunities for
companies involved in the manufacturing sector. Upon its completion Dube
TradePort will boast agriculture and agri processing facilities and specialised
cold storage facilities that will be built in the government managed trade
zone. This will create opportunities across the province for the production of
fresh produce, cut flowers destined for the export markets in Europe and Asia,
particularly China. We see the 2010 World Cup as a springboard from which to
launch a massive export programme.

The passenger terminal on the other hand is set to boost tourism. Of all
provinces, KwaZulu-Natal attracts the largest number of tourists in the
country's tourism market. Last year KwaZulu-Natal attracted 11,6 million
domestic tourists making the province the number one leading destination in
domestic tourism, 1,6 million international arrivals making KwaZulu-Natal the
third destination of choice for international tourists. Hotel occupancy rate
has remained at 77% throughout the year above the national average of 71%.
Tourism contributed 20% to the economic growth rate of KwaZulu-Natal.

In fact the world cup presents more opportunities in tourism. The country's
hospitality industry is required to provide about 55 000 rooms for the World
Cup.

Already more than 25 000 rooms have been contracted from hotels and others
are expected to come from lodges and bed and breakfast (B&Bs). This figure
is however set to increase towards the end of 2009.

Linked to tourism is food and beverages sector. Food and food products have
averaged 3,5% growth for the period 2000 to 2004 and beverages have performed
marginally better at 4,0%. Together these industries contribute over 3% of
total Gross Domestic Product (GDP) in the province. The influx of international
visitors into the province during World Cup 2010 will ensure the growth of this
sector.

Road construction

The proper management of the province's road networks ahead of the 2010
Soccer World Cup is critical. The key initiative in road improvements is the
promotion of local economic development that will benefit local economies.

The Department of Transport has prioritised many roads associated with World
Cup activities. We want our road networks not only to meet international safety
standards but to ensure user comfort, convenience and minimum fuel consumption.
Travel by soccer fans, soccer teams and international guests to base camps and
training facilities during the world cup would be made easier.

Research shows that between 300 000 and one million ticket carrying soccer
fans will be in South Africa for the World Cup and will visit places of
interests during their stay. We want to enhance their experience of the Zulu
Kingdom.

The provincial government has allocated R3,18 billion for the upgrade of
major corridors in the province which include John Ross Highway, P700 from
Richards Bay to Ulundi and ultimately linking to Vryheid and the northern
KwaZulu-Natal region. This will provide a spectacular sealed link. Government
is currently working on finalising the budget for the construction of road
networks even in areas where there will be no world cup matches.

Investment in Information Communication and Technology (ICT)

The new modes of economic production are increasingly dependent on knowledge
and information technology. Knowledge and 'informationalism' has become central
to globalisation and to development. The sources of productivity and
competitiveness are increasingly dependent on knowledge and information being
applied to productivity. The increasing generation and accessing of knowledge
has led to what is often referred to as the 'knowledge society' (Castells,
1991).

There are endless opportunities available in Information Technology (IT).
The boom in the industry has generated high wage jobs and tens of billions in
annual tax revenues. In actual facts, the global market for IT products and
services was close to $1 trillion in 2003 and is projected to exceed $1,2
trillion by next year.

The call centre sector which is benefiting from government's drive to grow
the country's broadband network and is set to create 100 000 jobs by the end of
next year.

Provincial government demonstrated its commitment towards investment in ICT
when we announced the completion of a Provincial Broadband Strategy and Action
Plan which was spearheaded by economic development. The implementation of the
plan will see a co-ordinated approach by role players and stakeholders for the
extensive rollout of broadband communications throughout the province ahead of
2010 World Cup. This will accelerate the development of our knowledge economy
and information society and afford the international visitors access to a
wealth of information about this province.

Another area that we are investing in is the sophisticated technologies in
the areas of sensors, smart cards and satellite technology. This is set to
propel KwaZulu-Natal to become a smart cutting edge logistics hub. The research
and development (R&D) and innovation drive in the logistics sector can lead
to development of Intelligent Transport Systems (ITS) to enhance the efficiency
of road infrastructure.

ITS can provide transport operators with pre-trip planning and en-route
information that will result in travel time savings, improved road safety,
reduced vehicle operating costs and reduced vehicle emissions.

Technologies that can be developed in ITS include vehicle routing and
scheduling systems, track and trace systems, freight matching and vehicle
booking systems. Some of the ITS services that can be developed or enhanced are
traffic counting, speed measurement and flight monitoring systems. The
provinces strong capability in software engineering can be channelled towards
producing world class logistics applications for both local and export
purposes.

Small Medium and Micro Enterprises (SMME) and co-operatives

Although the major focus seems to be on big business, government is
committed to creating more opportunities for SMMEs and co-operatives. We fully
understand the role they play in creating job creation and stimulating the
economy of the province.

Perhaps a closer analysis of figures about 2006 Soccer World Cup will give
more sense:

Beverages

* 105 600 litres of beer were sold in the 12 stadiums
* 5 500 000 drinks in returnable cups were sold in the stadiums.

Transport

* 1 000 professional drivers were employed by Fifa and 1 000
volunteers
* about 60% of the spectators used public transport.

Information and Communication Technology and Electronics (ICTE)

* 1 000 kilometres (km) of cabling throughout the stadiums
* 15 000 km copper wiring was required for network
* 30 000 communication points in the press box, which included Integrated
Services Digital Network (ISDN) and internet connection.

Travel

* 16 440 security stewards in the 12 stadiums, on average 1 370 for each
match
* additional 2 760 security stewards were employed in team camps, headquarters,
official hotels and training camps
* 800 hostesses
* 80 travel and event services employees.

Entertainment

* 2 500 artists were employed for the opening and closing ceremonies.

Conclusion

Our success in implementing some of the catalytic infrastructural projects,
as well as benefiting from hosting the 2010 world Cup, all will hinge on how we
project ourselves as a nation that shares the vision for the future. Government
commitment towards the creation of business friendly infrastructure should be
reciprocated by business' preparedness to invest in the province and forging
partnerships with their overseas counterparts.

Then, once again, I want to thank SACOB for choosing KwaZulu-Natal as a
venue for this year's mid year conference. Together, we can make South Africa a
winning nation.

Thank you!

Issued by: Department of Finance and Economic Development, KwaZulu-Natal
Provincial Government
7 June 2007
Source: KwaZulu-Natal Provincial Government (http://www.kwazulunatal.gov.za/)