Budget Speech delivered by the Member of the Executive Council Responsible for Economic Development, Environment. Conservation and Tourism - MEC Motlalepula Rosho
21 May 2012
Hon Premier ThandiModise
My Colleagues in EXCO
Members of the Provincial legislature Mayors and Councilors Traditional Leaders
Women in Business Young Entrepreneurs NGO's
Parastals Acting HOD CEO's
Comrades and friends
Hon. Speaker I want to borrow from the words of wisdom on the writings of Ngugi wa Thiong'o from the book of "Weep not, Child" that reads thus, "The African shops were built in two rows which faced one another. The air was full of noise and, near the meat shop, there was a strong stench of burning flesh. Some young men spent all their time doing nothing but loitering in the shop".
This statement may be interpreted differently, but my accession Hon Speaker is that the Department of Economic Development, Environment, Conservation and Tourism must be repositioned to establish effective and vibrant SMME’s as a bedrock of economic growth and sustainable jobs through Economic Development and Environmental Management.
Honourable Speaker, my ascendency to this podium today to deliver the budget speech for the department is one of a special kind, because here in South Africa and the world at large, we are celebrating 100 years of one of the oldest liberation organisation the African National Congress, our glorious movement that led the liberation movement for decades to arrive where we are today.
As I am about to reflect on economic development needs and priorities of this Province, allow me to hastily add that the kind of special moment of this day is further induced by our celebration of eighteen years since the yoke of political slavery and oppression was removed from the neck of South African majority citizens.
Honorable Speaker, when we all celebrate and treasure the political achievement of the last eighteen years, may we be reminded of the journey that we travelled as a country; and as a Province hand in hand side by together with our communities to fight against poverty and unemployment.
As we were at work for the last eighteen years, consolidating and cementing democratic values and system into our society, the economic landscape took different shapes as well.
The first is the extent to which eighteen years after the ushering of a new political dispensation, has economic transformation advanced the desire to reduce levels of poverty and underdevelopment in general. We are yet to see whether there is general economic responsibility over and above economic growth, profit making and expansion of investment into the motherland.
Secondly, it was exactly after 10 years in 2008, when the world experienced yet another crisis after the Asia triggered crisis of 1998. Four years later we are not reeling but on the verge of full recovery from the credit crunch that plummeted the economies of the world into a crisis in 2008,however,the wounds left by this unprecedented crisis is still gradually healing despite the fact that our economy was relatively not as affected as others.
For the past five years the economic growth rate of this province has never exceeded 3%. This is not an ideal rate that can help us extricate our people from the conditions of impoverishment and take their prosperity to greater heights. As matters stands, the human development index of the Province which looks at life expectancy, education, access to knowledge and income per Gross Domestic Product (GDP), stands at 0.51% as per the 2010 data fromGlobal InsightSouthern Africaand this is spot number eight above Limpopo. Economic Overview To the extent that as a country we have a New Growth Path and the Industrial Policy Action Plan (3), we are convinced that adaptation of these policies to the conditions of the regional economy and implementation thereof, is key to stimulation of theNorth West economy.
Honorable Speaker, our Province has the potential to make wonders towards the development of the people only if we do the right things right. Given that for many years, the primary sector dominated both employment absorption and contribution to Growth Value Add (GVA) over all other sectors, the growth of employment cannot rely solely on this sector. The primarysector is still responsible foralmost 40%ofthe provincial share ofGVA andmorethan27%ofprovincial share ofemployment, meanwhile the share of manufacturing is only 5%.
These low levels of value addition present opportunities and disadvantages to the Province. The National IndustrialPolicy Action Plan (IPAP) primary focus is on manufacturing, and as a result, some of the envisaged value adding activities does not have adequate footprints in the Province.As a result the benefits of IPAP may be limited and directed in areas where such activities exist in abundance. It is only when the Province can enhance its value adding activities that the impact of the IPAP can be better realised.
Sedor situation analysis, linkages and leakages
Honourable Speaker, it is important that in the North West, business and industry in general understand how the economy operates so as to be competitive out there. The relationship and inter-linkages across industries show us that there is dislocation of supply and demand across sectors in that the input and output activities between industries are not fully supporting one another to maximise the competitive edge of the Province.
The department concluded a Provincial Industrial Implementation Strategy that is to be discussed with all stakeholders to determine roles and responsibilities. This strategy is also based on the North West Sector Input- Output Analysis of which its information was central to this year's economic development priorities.Working with the North
West University School of Economics and the Centre for Scientific Institute and Research (CSIR) is proving to have been one of the important milestones of the year under review.
What we are noting are the leakages out of the North West Economy to other Provinces and even abroad, as an example for every rand of increased demand for transport equipmentintheprovince only30cents goes directlytolocal producers. In the construction sector, though better than transport and equipment sector, for every one rand of extra demand of final output, 59 cents goes directly to local producers. The implication here is that the balance of the benefits goes to services and other inputs these sectors acquired outside the Province.
The Chemicals and chemical products including plastic, followed by agriculture, basic metal products, business services then transport provide 4.3% of all inputs used by other industries Clearly there are leakages that do more harm than good to the economy of the Province and unless we work towards increasing supplies capacity in the Province the economy would not benefit from consumption patterns in the country. These leakages are also quite apparent in a manner we as government acquire goods and services, it is as good for the country as we buy goods and services from elsewhere as it is bad if we overlook products and services offered by the North West businesses.
Of course we also want to note thatthere are a lot of North West citizens working outside theProvince and actually thewages earned outside theProvince outweigh those paid by the Province to non - North West employees. The North West is a net supplier of skills to other provinces. For example the Province outsource skills from otherProvinces, whileweignoreto recognised thecapacityand skillsthatwe developed with timeformen, women and young people ofwhich we lost toother Provinces.
Honourable Speaker, there is urgency towards paying attention to the development and enhancing of sectors with high industry linkages and therefore potential to create jobs.
These are the industries that can also be targeted to develop our small business sector. For instance, Metal fabrication contributed 1, 0 % to employment in 2010 and grew by 0.2% between 1996 and 2009 Capital and transport equipment by 0.5% and experienced negative employment growth of -1.1%.Agro processing contributed 1.2% and experienced 0.6% employment growth for the same period. The other sectors that could be targeted are Plastics, pharmaceuticals, and chemicals with a 0.6% contribution and 0.9% employment growth.Clothing, textiles, footwear andleather industry contributed 0.4 % and employment growth in the sector shrunk by -1.3%. Lastly forestry, paper, pulp and furniture contributed 1.0% with 1.4 % employment growth.
It is this situation that compelled us last year to announce from this very podium before members of this august House our intention to approach economic development differently from previous years. We spoke oftheintentiontofocus onidentified projects that we will use to show case our intention to focus on Industrial Policy Action Plan (IPAP3) and New Growth Path priorities.
The Departmental Performance Last Year
Small Business Development
The department identified 26 projects across the key sectors some with the intention to advance youth and women as part of our intervention to empower previously disadvantaged groups and rural development.
I am proud to report to this House that we have completed construction of factory space that will house nine businesses in Mokgalwaneng. We have further established an enterprise information center for SMMEs as part of our rural development intervention.
Two other enterprise information centers were established in Bedwang and logagane respectively and six matriculants are receiving on job skills while gainfully employed as administrators at these three centers. These young people are undergoing training conducted by the CSIR to further their knowledge in business support and counseling and this is where they will be using this knowledge.
The SMME and Cooperatives 9: rategy identified access to markets as a problem and to alleviate this problem the department is; imparting skills to small business to master the art of competing using marketing and cost management techniques. During the year under review 400 SMMEs benefitted from our training in financial management and marketing.
During the last year, 2120 SMMEs have benefitted from our business advice and support programs and going forward, it is our intention to work with SMMEs registered in our data base for support and development, so that there is a systematic tracking of the impact of our intervention. To this end, we have 224 Enterprises that are our focus and we invite all SMMEs to verify their registration and update their details in our data base between now and the end of July. This will help us target sectors where development of SMMEs could have more impact as well as linkages between SMME suppliers and big businesses locally and internationally. The other intention is to create partnerships amongst small businesses to exploit collective supply capacities to meet the demand of large markets.
Youth and Women Development
Honourable Speaker, this august House has on numerous occasions decried the plight of unemployed young people in the Province. Unless this clarion call is heeded to, the conditions of unemployed youth if not seriously attended to using multi-pronged strategies that can result not only in employability but actual employment and income generation activities, this Province and Country in general faces a bleak future.
As a department we have embarked on several projects as our intervention, in Kgetleng Rivier Local Municipality we have established a brick making cooperative bringing to 38 brick making outlets owned by youth that are under our development and support and this programme is continuing.
As we get into the last phase of this project, the department intends linking these young people with the Department of Human Settlement to provide South African Bureau of Standards (SABS) approved high quality bricks for the construction of RDP houses.
A group of 6 young people in Sannieshoff were supported with funding to expand their farming project to include chicken layers and have started supplying eggs to neighboring shops in and around Sannieshof.
Honourable Speaker, our car wash outlets are operational in Mahikeng and Naledi they are still waiting support from government departments, municipalities and entities.
A group of 10 women in Mahikeng stands to benefits from a Pottery project that the department started with the assistance of Mintek. The construction of this building is complete and machinery were procured and the project will be commissioned this year.
Honourable Speaker, 60 young people, women and people with disabilities will further receive an opportunity to be part of our waste recycling initiative in Mfidikoe and Mahikeng respectively. We have started a partnership with National Department of Environmental Affairs on one hand, and municipalities on the other to establish buy back centers.
In Mfidikoe the building is in place, machinery was supplied and 30 young people were registered into a cooperative for both recyclable waste and package-processing.The feasibility study for another buy- back is underway in Mahikeng and we want to thank the Barolong Boo Rra Tshidi for making land available for this project and it will be taken further this year.
The department has facilitated a partnership between The Barolong Boo Rra Tshidi Development Company with an investor to set up a tyre recycling facility in Mahikeng. The Tribal Council allocated land for this purpose. This project will include the setting up of used tyres collection centers as part of our waste reduction campaign and will create jobs for the unemployed youth.
We have partnered with the Department of Agriculture and Rural Development to implement aquarulture activities that would result in fish farming taking place in the dams such as Modimola,Tontonyane and Disaneng.
In pursuit of our vigorous program to empower young people, eight young people are to benefit from our cultural industries program in Matlosana, this project is awaiting final due diligence and construction of the cultural village will take place in due course.
In Maquassi Hills we will finalise the diamond cutting and polishing facilities that was started years back to help communities living on small scale diamond digging to increase the value of their ownership of productive assets.
In taking forward the empowerment agenda of young people we intend to have partnership with the North West University to structure a research and development capacity.
This projectwillinspire youngpeople intheprovincetodeveloptheirinquisitive intuition into finding innovative solutions thatwill increase the competitiveness of businesses in the North West. To this end, various stakeholders like the Department of Higher Education and Learning and private sector companies will be invited to assist in enrolling business and economics graduates for further research that is linked to economic development.
Role of National State Owned Entities
We have engaged development finance institution;to raise concerns about the lack of their footprint in the North West, we are beginning to see the fruit of that engagement During the year under review there are enterprises that benefited from the National Empowerment Fund (NEF), The new Small Enterprise Finance Agency (SEFA) and the Development Bank South Africa (DBSA).The Industrial Development Corporation (IDC) approved funding to the tune of more than R1, 8 billion with a potential to create 10 447 jobs.
While we applaud this performance we want to share with this House our concerns with respect to the growth of the foot print of these entities in the Province. We are worried by the allegations and perceptions of the businesses in the Province that it is the people from other provinces wanting to do business in the North West who benefit from these funds. I am taking it upon myself to get to the bottom of this allegation that I will have a sense in the next 30 days after I interacted with the leadership of these entities. We will get a list of how much was disbursed in last five years, who benefitted and what did the North West people benefit.
The 2012 - 2014 Economic Development Priorities the North West Government and the Private Sector have no other choice but to work jointly. A partnership must be established to identify high value Projects in different sectors in pursue of private/public partnership (PPP) investment drive into the economy.
Honourable Speaker, We are building on what last year we noted as a need to begin a protracted and yet revolutionary departure from how we have been handling economic development in the province. We now need manentum least we are left behind.
When otherselsewhere say''Kuyasheshwa" thenwemustsay totheNorthWest "thanyaspoti"- Kolobe ya morago e baJwa ke dintja':It is still hard to sense the vibrancy of the North West economy hence, we need to catch up and move in tandem with the rest of the world.
In line with both IPAP3 and the New Growth Path, the acceleration of the turnaround approach this year going forward will see this province focusing on agriculture, manufacturing and tourism sectors bringing them to the contribution levels of the Mining and services sectors. To achieve these objectives the following projects would be initiated and prioritised over the next two years: Manufacturing and Value add activities towards implementation of IPAPl and NGP
Following the new policy shift from Industrial Development Zones (IDZ) to Special Economic Zones, the Department would be initiating key economic zones to upscale Manufacturing and Tourism Economic activities in the Province. Each district will have a hub founded on the basis of its comparative and competitive advantages obtaining in the region.
In Mahikeng we will initiate a Platinum Hub that would see a Greenfields investment towards establishment of manufacturing activities that utilise platinum as a catalyst to manufacture fuel cells and hydrogen technologies. Discussions are underway with the Department of Trade and Industry (the DTI) to direct potential investors to this direction. A feasibility study will be undertaken this year to inform us of the right things to do to make this project a success.
In Bojanala we have witnessed growing industrial activities recently and this will create conducive grounds to initiate an Automotive Hub in Brits and link it to the proposed Gauteng Automotive Hub in Rosslyn.
For quite some time we wanted to establish a mining supply chain hub in Rustenburg and Moses Kotane. We will be engaging the mines and these municipalities to resuscitate this project. It has the potential to draw small and medium enterprise into a cluster that could exploit economies of scale to be supported by the proximity of these firms to the mines to reduce costs.
The Department is working on the study that was conducted by the Small Enterprise Development Agency to develop a business for the Food processing plant in Dr Ruth Segomotsi Mompati district. In this district the Department will further revive what was once a clothing textile hub with small factories manufacturing school, police and traffic uniforms. We will work with our development finance partners to revive these factories.
Honourable Speaker, after completing a business plan to establish a science park in the North West a need arose to assess between Mahikeng and Tlokwe as to in which area could the Science Park have more impact. This discussion will be taken further so as to bring finality and the project must take off the ground.
Honourable Speaker, cultural industries and tourism contribution to the GVA is 3.2% with 3.6 % employment growth respectively. In spite of the shrinking visitor numbers by 0.7%, the tourism sector is the only one that sustained employment in the Province. Therefore, there is no doubt that this august House will agree with me that we need to support this sector to do more. As we begin to welcome a growing market in Africa as well as neighboring provinces, our products in different parks will respond to the needs of the market, thus addressing geographic spread.
We are declaring the Dr. Ruth Segomotsi Mompati Region as a hunting destination,and to this end, the Molopo Game Reserve is crucial to tourism development in the district, and so is the envisaged Taung Game Reserve which is being developed.The hunting expedition will benefit from accredited training that will be now offered by our Hotel School. We are aware of the challenges that come with hunting.
Honourable Speaker, we hold a view that resources need to be invested in Dr. Ruth Segomotsi Mompati and the Taung Skull site will assist in promoting Heritage Tourism. The Madikwe Game Reserve and Pilanesberg National continue to be the two main tourism icons in the Province. Through our collaboration with the National Department of Tourism, Madikwe Access Roads and Pilanesberg National Park are part of the national infrastructure agenda. We will continue to develop appropriate products in line with the domestic, cultural and rural tourism strategies. Needless to say, we align ourselves with the view that the bedrock of tourism in any country is domestic, meaning thattheindustry can be easily sustained through domestictourism. We further
encourage our communities to take own initiative and use the rich history and cultural heritage of our society as a tourist commodity out of which they can create income generating activities.In partnership with the Department of Sports, Arts and Culture, we will assist our communities in establishing centers to market and sell African artifacts as part of developing cultural and creative industries thus stimulating, the people's creativity.
Honourable Speaker, it is with a sense of pride to report that the claimant communities will soon generate value out of land that was successfully claimed.The Barokologadi and Baphalane ba Sesobe Community are amongst communities that will benefit from our people and parks programme.
Honourable Speaker, the might African Rhino is still under siege. We shall continue to fight this battle.The law enforcement agencies in the country are flexing their muscle in defense of the Rhino. It should be noted the enemy is fairly sophisticated, but the truth is that we shall overcome.
Transformation of State Owned Entities
To drive towards increasing economic activities, we will find a boost this year as we are beginning the process of implementing the long awaited amalgamation of economic development entities into one development agency. In due course a task team will be set up to give proposal to the Provincial Government so that in 2013/14, Investment promotion and other high value economic programs are driven from one centre.
Business Regulations and Management of Regulatory Environment
As a department we will continue to improve enforcement of regulations that govern environment protection and conservation, liquor sales and consumption; consumer protection, gambling and betting. The pursuit of this enforcement result in government nettingrevenue and thegambling and betting alone contributedR 82,4mtototal revenue of R 90,8m collected by this department.
Gambling and Betting
Honourable Speaker, the gambling and betting industry is growing in the North West as evidenced by phenomenal growth of revenue fromR 67 million 2010/11 to overR 82 million in 2011/12. The projected for 2012/13 is over R 87 million and almost R 100 million in 2014/15. With additional budget to the institution responsible for managing this sector, we may do more. We want to issue a stern warning to illegal operators of casinos and other gambling outlets and activities; you close down or face the might of the law. This year we will embark on an unprecedented campaign to eliminate illegal gambling so that there is no exploitation of the economy of the province without paying due levies.
The North West gambling board must ensure that transformation of this industry is taken to another level by the year 2014, and to achieve this we need to streamline Broad Based Black Economic Empowerment targets and ensure that compliance with the said target is strictly monitored. I enjoined the North West gambling board to review its current empowerment policies and strategies to ensure that transformation takes shape in this industry without delay.
Liquor regulation and Consumer Protection
We are in the ninth month since the Moratorium on new liquor licenses was issued and since then the Department has been working on new mechanisms to regulate this industry. In due course we will be recalling all licenses in the hands of holders to be replaced with new ones that cannot be forged and this will be linked to a system that will track regular renewals.Compliance enforcement will be also stepped up to eradicate illegal liquor operators. Last year we were able to conduct inspection on 524 liquor outlets and resulted in a total penalties of R 500 000 imposed on those we found not compliant with the Act.
Environmental Management Services
Honourable Speaker, in my humble opinion, there is no conflict between environmental protection and development. The two are rather complementary. However, those businesses that start and continue their operations without the necessary approvals and authorisations compromise environmental integrity and also threaten sustainable development.
In our efforts to ensure compliance with environmental legislation, we have investigated 10 cases of alleged illegal commencement of listed activities in the past financial year. A totalof 378 inspections for compliance with environmental legislation and 11 enforcement actions were undertaken for non-compliance. We managed to issue 252 environmental authorisations, exceeding our expectations. A total of 19 applications in terms of the National Environmental Management Act, Section 24(G) were received, out of which 11 authorisations were issued.
We worked closely with district municipalities on Air Quality Management, Environmental Pollution and Ambient Monitoring. We shall continue to provide technical support towards this programme. My office is ready to designate Environmental Management Inspectors, commonly known as green scorpions in our Municipalities. I am also ready to enter into a Memorandum of Agreement with Municipalities to this effect.
Honourable Speaker, we undertake to crystallise our Biodiversity Management and Conservation efforts. In this regard, we shall.
- Develop North West Province Norms and standards for Protected Areas Management Plans to guide uniformity in developing Management, Plans to for managing all Protected Areas in the Province,both Private and State Owned protected Areas.
- The development of the Magaliesberg Protected Environment Regulations in order to regulate activities within the Magaliesberg Protected Environment.
- The River Habitat Index Survey would reveal the status of our riparian vegetation condition,thereby ensuring adequate conservation effort to our irreplaceable biodiversity in those areas.
- Develop a Provincial Environmental Crime Prevention Forum with various law enforcement agencies in order to curb environmental crime and work ferociously toprevent and or reduce illegal hunting and poaching activities.
The department shall continue its work with relevant stakeholders to ensure that Magalieberg is listed as a biosphere by UNESCO. Biospheres assist to promote and demonstrate a good and balanced relationship between humans and the environment.
We believe that Magaliesberg offers a unique geological landscape, rich biodiversity, human evolution and history and therefore, has to be enjoyed byall of us including the future generation.
The North West Provinceparticipated in the successful 17th Conference of Parties (COP 17) that was hosted by the Republic of South Africa. We took part not only in the negotiations towards the reduction of greenhouse gases, but also in the Climate Change Response Expo where Provincial programmes were showcased. One may recall that the Department went to an in-depth environmental education and awareness campaign just before COP 17, known as Green Fridays.We went through the length and breath of our Province to conscientise our communities about climate change.
We are not going to break that momentum. We will engage with all sectors of our society on mitigation and adaptation measures on climate change issues. The business sector, farmers, manufactures and all others must also start moving the green direction. We have a plan in place that we shall share with both industries and communities.Our slogan of"savetomorrow, today"iswhatwe mustallmake thenormoflifein everything we are doing.
Trade and Investment Promotion
The North West and South Africa in general is geared to take advantage of improving trade relations between our country and the rest of the world, and being part of Brazil, Russia, India, and China (BRIC) created more opportunities that as the Province we will want to tap into. We undertook missions through Invest North toBrazil, Russia, China and India. Therefore the department could easily build on the existing relationship with the India National Industry Corporation and the Brazil Investment Promotion Agency to increase the footprint of the North West in these regions to position our economy to benefit from the BRICS Trade Protocol.
Interaction and coordinated economic: development program with municipalities Honorable Speaker, the impact of economic development will only remain a dream if we do not improve on coordination cross spheres and departments. We intend setting up an Economic Development Coordinating Forum that will fulfill the desires of other national policies that provide for the setting up of structures between economic development departments and municipalities.
In the main this forum will focus on coordinating tourism, small business development, environmental programs and we will lobby sister departments in our cluster to bring on board into this forum agriculture and economic infrastructure coordination.
Honourable Speaker, for the financial years 2012/13, this department is allocated R426, 945million and the remainder of the MTEF the allocations are R 463,749m and R496, 606m respectively. These amountincludethegrowthFundwithagrowth allocation of R 25,000 million this financial, R 30,000 million the following and R 31,&20m in the final outer year of the MTEF. These are indicative allocation andall other things else being equal, in the light of the progressive plans presented here these allocation could change based on the outcomes of feasibility studies and business plans that we will conduct in the course of this year.
Integrated Econ Develop Serv 24885
Trade & Industry Promotion 192 729
Business Regulate & Governance 45670
Economic Planning 5046
Environmental Services70 870
Total 426 945
A total amount of R 197,415million goes to our public entities. 2012/13 R'000
Invest North West 20824
North West Parks and Tourism Board 135 960
Mafikeng Industrial Development Zone (Pty) Ltd 10 693
North West GamblinQ Board29 938
Total Budget 197415
Honourable Speaker, we can confirm that indeed there will be no allocation for infrastructure development at the MIDZ though an allocation of R 10, 693m is made available for operational costs that would include the winding down costs of the Mafikeng Industrial Development Pty Ltd.
An amount of Rl, 026 million would be utilised towards extending the services of the North West development Corporation to areas outside the erstwhile Bophuthatswana to register a footprints of light industrial development in the areas of Tlokwe and Matlosana.Rll, 561m is allocated to accelerate the implementation of the Small Business Development Strategy with all priorities identified for this financial year.
In conclusion Hon Speaker, I want to take this opportune time to thank the members of the Portfolio Committee under the Stewardship of the Chairperson Hon. Kasienyane, furthermore acknowledge the contributions made bytheActingHead ofthe Department and his Management team to complete the mammoth task. My office team, my sincere thanks.
Many thanks for the support that I have endured from my family, friends and comrades. It would be unjust if I do not appreciate and thank the Hon Premier Thandi Modise and my glorious movement the African National Congress to have given me an opportunity to form part of the visionary team that will advocate for changing the lives of the people of North West.
Thank you!!!! Kea Leboga!!! Baie Dankie!!!
Issued by: North West Economic Development, Conservation, Environment and Tourism
21 May 2012
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