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30 September 2005

Programme Director
Our partners in Business Sector
Prospective partners in Business Sector
Distinguished guests
Ladies and gentlemen

In his speech when addressing the delegates of the Southern Africa Trade and Investment Summit President Thabo Mbeki said “the challenge facing our democracy and the rest of the continent is to improve the quality of life for ordinary citizens, to increase job opportunities and to ensure economic growth on a sustainable basis”.

I cannot agree more with the accuracy of the statement particularly with its relevance to the Free State Province, because for us the situation is even more urgent as we are rated amongst the poorest province in the country.

However, in addressing this challenge, the Free State Government drafted and adopted the Provincial Growth and Development Strategy on the 20 May 2005. A product of extensive consultation with organised labour, youth organisation, business and community structures.

For proper implementation and fostering integrated governance for economic development in the province, the government formed four clusters to specifically focus on different aspects that promote growth and development, which are the Economic, Employment and Investment cluster, Social and Human Development cluster, Justice, Crime Prevention and Security cluster and lastly the Governance and Administration cluster.

For the purpose of tonight’s discussion, allow me to concentrate mainly on the cluster lead by the Department of Tourism, Environmental and Economic Affairs, which is Economic, Employment Investment cluster and in doing so: I will refer to few key priorities encompassed in the provincial strategy which are:

* Strengthening the competitive advantage of the province
* Support the creation and expansion of small, medium and micro-enterprises (SMMES)
* Expand manufacturing industries in the province
* Optimising tourism opportunities

These are some of the key priorities that are identified towards addressing the challenge of job losses in primary industries due to global cost drivers as well as decline of agriculture and mining sector in the province.

Basic facts about the Free State Province

Programme director, allow me to let you and potential investors know who we are and where we come from. We are from the Free State which is located in the centre of South Africa and it shares boundaries with other six provinces as well as the Kingdom of Lesotho.

Our province occupies a land area of 129 480 km², which is 10, 6% of the total South African land. Following the research by Statistics South in 2003 the province's population is totalling 2,74 million, only 6% of the total population of the country.

The province’s contribution to the country’s total gross domestic product (GDP) was standing at 5,5% according to the research conducted in 2003, which is R69,1 billion.

The province mainly produces maize and wheat. It is for this reason that the Free State is traditionally known as the bread basket of South Africa. It also produces a third of the country’s total gold production.

The infrastructure is well developed and as a central province major national roads and rail networks pass through the province. It is for this reason that investigations are being conducted to find possibilities of Harrismith to be utilised as the road logistical hub.

Investment opportunities

The Free State is demarcated into five District Municipalities, which have their own pillars of economic strength.

Motheo District

The province’s capital city, Bloemfontein is located in this area. The District is the service centre of the province, with most company’s provincial headquarters situated in this area, e.g. banks, telecommunication centres, etc.

The district amongst others, houses a world class university, which the country’s sports codes utilise for anti-dope testing. Other institutions of higher learning are also found here and attract student from all over the country and students from as far as Lesotho, Botswana and Nigeria.

Recently established at the Free State University is the new (genetically modified organisms (GMO) testing facility linked to others in Europe. The facility is the only one that renders this service in the entire African continent, thus providing the province with a global accreditation status.

Research on the recent outbreak of typhoid was conducted at this institution. Given the capacity of work conducted at this university, prospects of expansion are very huge.

Programme Director, down sizing of major companies’ poses a serious challenge to this district hence a call for more companies to decentralise the work that is concentrated in the Gauteng Province to other provincial / regional areas like this service centre of the Free State Province.

Lejweleputswa District

Welkom and Virginia are some of the major towns in this district. They focus mainly on gold mining and gold jewellery manufacturing. As South Africa produces 14% of the world gold output, the Free State produces a third of the total output.

The establishment of Harmony Jewellery School in 2000, which offers training to aspirant jewellery makers, has provided employment opportunity for emerging and aspirant entrepreneurs.

It is worth mentioning that there is a great decline in this industry resulting in high job losses in the area. There is an urgent need for the business sector to come up with strategies that will shift focus from this declining sector to secure employment to this district.

It is also for this reason that mineral beneficiation is one of the economic development strategies our Provincial Government is seriously exploring.

Fezile Dabi District

Sasolburg, Kroonstad, Parys and Heilbron are some of the major towns that have economic potential for the district. The main focus is on synthetic fuels, petro-chemicals down-streaming, pharmaceuticals, tourism and beef farming.

SASOL company is the world leader in Fischer – Tropsch technology (extracting oil from coal). This gives the district a competitive advantage in the production of certain fuels, waxes, chemicals, plastics and low cost feedstock’s from coal.

The district also focuses on the down-streaming processing of solvents, waxes, olefins, tar products, inorganic chemicals and gasses for production of detergents, paints, solvents, etc.

As alluded earlier the decline of agriculture in this area, which was one of the food baskets of the province, has lead to migration of farm workers to Sasolburg in search of employment.

The Heilbron wine route and cellar even though producing at a small scale, has already shown growth potential, which could result in economic growth and employment in the area.

The inscription of the Vredefort Dome in the United Nations Education, Scientific and Cultural Organisation's (UNESCO) list of world heritage sites has indeed opened up possibilities for huge tourism attraction and economic growth. The process has already begun for the establishment of the management authority and the development of the integrated management plan.

Thabo Mofutsanyana
Major towns found in this area are Bethlehem, Qwa-qwa, Clarens and Harrismith. The area is known as the jewel of tourism in the province. It also focuses on agro-industry and wheat production.

The good texture of the soil found at the Thabo Mofutsanyana District enables the area to trade in cut flowers. An estimate of 1.2 million cut flowers is annually exported from this region.

Thabo Mofutsanyana is also home to fruits and vegetables that are exported from this area. Approximately 100 000 tons of vegetables and 40 000 tons of fruits are grown each year for both the national and international markets.

Popular fruits are apples and cherries due to the temperate climate of this area. Farmers have quick access to export markets through the Johannesburg Airport

Although there are some exports from this region, the different economic sectors referred to in this district are unable to carry the load of unemployment in the region which a direct result of retrenchment caused by closure of mines.

Xhariep District

Major towns found in this area are Trompsburg, Jacobsdal, Jagersfontein and Koffiefontein. The district is the second poorest in the province. It focuses on wines, crafts, ostrich products, tourism, fishing and sheep farming for its economic activities. Lake Gariep initiative in Aventura Dam has good investment opportunities especially on sport tourism, leisure, etc.

Programme director, I am raising all this district’s profiles to paint a picture of challenges that are faced by government in addressing the challenges of unemployment.

We are aware that alone we cannot be able to tackle these challenges. It is for this reason that we call upon you to cease available opportunities so as to partner with the Free State Government in addressing these challenges.

Tourism sector

As the province we have identified tourism as a key driver for our economic growth. We have seen a serious decline of tourism in the province from 2.4% in the previous year to 0.2% this year.

This has indeed affected our province’s economic growth enormously thus exacerbating the problem of poverty and unemployment facing our government.

During the launch of the Provincial Growth and Development Strategy (PGDS) the Free State Premier, Ms Beatrice Marshoff committed the department through our cluster to optimise tourism opportunities to ensure growth and development.

As government we will increase tourism events and activities to ensure that we keep hospitality industry busy. This will enable us to provide opportunities for creation of SMMEs and adequately provide after-care support that is highly needed.

For the next two to three weeks accommodation will be full in Bloemfontein as a result of Mangaung African Cultural Festival (Macufe) and we intend to have more of such events in the province.

With Bloemfontein Celtics winning the South African Airways (SAA) cup for 2005, sports enthusiasm in the province has grown, especially the soccer sporting code. During the game of Bloemfontein Celtics and Kaizer Chiefs our beds were full, which demonstrate our people's love for the games. This to me demonstrates capacity and the readiness of the Free State people to host the 2007 SA Games and 2010 FIFA World Cup.

The first inspection report compiled by FIFA about the readiness of our city gives us more hope that we are going to win the hosting of the 2010 World Cup games.

Programme director, the issue of investment is one of the major strategies that the Free State Government has identified to make interventions to address the challenge of first and second economy.

As we all know the first economy is highly competitive, globally integrated with a well-developed capacity to export high value-added exports on goods and services.

Whilst the second economy, by contrast, consists of large numbers of the unemployed and people without the necessary skills, resources or opportunities to participate in the first economy.

In the document of the PGDS the Premier said, “the Free State aims to optimise and broaden the province’s current economic profile by placing more emphasis on the key economic sectors such as tourism, industrial development, agro-processing and manufacturing”.
This demonstrates our readiness to invest in infrastructure, hence we committed ourselves to allocate huge budgets for infrastructure development. Steps will also be taken to monitor implementation of these funds in order to ensure that the environment becomes conducive for investors to invest in our province.

Today’s event is amongst one of many interventions by the department to create conducive trading environments for our product owners to have access in the world of exports market.

We will continue to utilise any platform such as SAITEX to expose the value of products of our emerging and developed entrepreneurs.

Our participation is aimed at encouraging investment, economic growth and job creation.

I thank you.

Issued by: Office of the MEC for Tourism, Environmental and Economic Affairs, Free State Provincial Government
30 September 2005