Download - Economic Development Department

Speech
By
The Deputy Minister of Economic Development,
Prof Hlengiwe Mkhize, MP
Date: 18 April 2013
Venue: Umhlathuze Municipality, Council Chamber
Time: 12:00
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Programme Director Nonhle Mkhulisi
The Honourable Mayor of uMhlathuze Municipality: Cllr
E.F.Mbatha
The Honourable Mayor of u Thungulu District Municipality:
Cllr T.B.V Mchunu
The
Honourable
Deputy
Mayor
of
uThungulu
District
Municipality: Cllr T.C. Mashaba
The Honourable M. Mabuyakhulu MEC for Economic in KZN
The Honourable E.S Mchunu MEC fir 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.
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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”
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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.
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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,
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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 subregion, 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 deepwater 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.
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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.
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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 cofinance 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
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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
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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 underdevelopment.
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.
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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 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.
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PICC
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
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 crosscutting 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.
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Industrial Policy Action Plan
Government has deployed a range of complementary and
integrated measures to grow the economy and create jobs. The
upscaled 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.
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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-ProgrammeThe 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
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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 realize 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
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International Port;

Provide
quality
infrastructure
including
ITC
and
transport infrastructure, business and utility services;

Attract foreign and local investment projects which:a. create jobs
b. export led
c. 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
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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 2011/2012 financial year, about 8 898
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jobs were created in these zones
3. Skills Development in communities- during the
2011/2012 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 entrepreneural 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.
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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.
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