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17 March 2009

Programme director and Head of the Department of Economic Development Ms Carol Coetzee
MEC for Finance and Economic Development Dr Zweli Mkhize
MEC for Local Government, Housing and Traditional Affairs Mr Mike Mabuyakhulu
Your worship, the Deputy Mayor of eThekwini Councillor Logie Naidoo
Director-General of National Treasury Mr L Kganyago
Heads of department
Members of the media
Ladies and gentlemen

Good morning!

It is, indeed, an honour for me to open this annual Local Economic Development Conference.

Let me first express my appreciation to all of you for travelling from your various municipalities, to Durban, to share your views and expertise on how to best ensure local economic development, in our province, as we surge towards 2014.

This gathering takes place when serious economic woes are knocking on our doorsteps. No doubt, the current global financial crisis, which is unfolding, shows the failure of good governance at an international level.

What does this mean for us?

This simply means that the gains that we have made, as a country, since the first democratic elections will be tested over the next few years. In particular, it highlights the importance of having sound leadership, capable of putting in place strategies, to ensure sustained economic development.

As we all react to the financial crisis, it is worth noting that the macroeconomic as well as microeconomic reforms, which were introduced by the democratic government 15 years ago, have borne fruits.

We have achieved sustainable economic growth and development whilst, at the same time, creating conditions for job creation. This would have been impossible had we failed to stick to the rules of good governance.

It is not surprising that the international confidence in our economic management has been very encouraging. For instance, the Organisation for Economic Co-operation and Development (OECD) released a report, in July last year, which praised South Africa for economic policies which had seen respectable rates of economic growth and relatively low inflation, and which had resulted in South Africa’s first-ever budget surplus.

The organisation noted that the awarding of the 2010 FIFA World Cup to South Africa meant that this country was seen as “a stable, modern state.” It also noted that South Africa was “in many ways a model for the rest of the continent.”

The discussions and debates, during this conference, should therefore focus on building on the successes of the macroeconomic reforms.

Ladies and gentlemen, we are in 2009 how far have we gone, in this province, in creating job opportunities at local level?

This year’s conference will provide a snapshot of what government has done over the past five years on this issue, but more importantly, the conference has created the opportunity to identify gaps and bottlenecks, and to plan strategies for improvements.

As the province, we have set goals of reducing poverty by 50 percent and growing the economy by 8 percent by 2014. In pursuit of these goals, we have been implementing a number of programmes that seek to remove constraints and bottlenecks as well as promote entrepreneurship and small business development. At the same time, stimulating local economic development and facilitating sector development and industry competitiveness is also important.

Deserving special mention, this morning, are the efforts we have made in ensuring alignment and proper coordination of the different activities of government, and its agencies, toward the achievement of the province’s economic development goals.

For instance, the provincial government’s cluster approach is proving successful in dealing with problems that occur at all levels of government.

Black Economic Empowerment (BEE) a catalyst for local economic development

Programme director, the MEC for Finance and Economic Development, Dr Zweli Mkhize, and MEC for Housing, Local Government and Traditional Affairs, Mr Mike Mabuyakhulu, and other speakers, scheduled to present papers after me, will elaborate more on a number of strategies, government interventions and policies aimed at poverty reduction at a local level.

However, I would like to briefly reiterate that our vision is to make KwaZulu-Natal a vibrant province, with a fully inclusive and knowledgeable society, where the culture of entrepreneurship is entrenched.

This determination stems from the partnerships we have built, as government and private sector, over the past five years.

There are many examples of partnerships and these include the establishment of the KwaZulu-Natal growth coalition as an initiative which brings government and business together.

The establishment of the coalition marked the start of a new approach regarding the advancement of BEE, which in my view, is a catalyst for local economic development.

In August 2007, the Co-Chairperson of the Coalition, Mr John Barton, committed the industry to:
* The transformation of all charters, scorecards and Codes of practice for Broad-Based Black Economic Empowerment (BBBEE). Furthermore, he committed the industry to reporting on an annual basis on the progress made regarding this matter.

The important question is “where are blacks located in the economy of KwaZulu-Natal?”

We have seen some progress made by previously disenfranchised entrepreneurs in some projects, but the number of black participants in larger projects, especially construction, in terms of ownership and management, is not yet reflective of our demographics.

To address this issue, a commitment was reached between government and the KwaZulu-Natal growth coalition that, at least, 50 percent of work outsourced by the industry would go to BEE candidate enterprises.

On the other side, government, as we have a direct influence over 63 percent or more than R7,5 billion procurement budget, has ensured that procurement prescripts are crafted in such a way that we are able to spend more aggressively to drive BEE.

All provincial government departments have established supply chain management units and are now better placed to promote BEE.

Although we are encouraged by the progress this government has made, we are mindful of the fact that the implementation of BEE is skewed. There is visible progress in cities such as Durban and Pietermaritzburg but very little can be said about the implementation of BEE in other parts of the province, especially at local level.

Black Economic Empowerment and Local Economic Development cannot be separated. I believe that this conference should also look into this matter.

It is essential that we stress that in order to facilitate the process of empowerment in the province, the provincial government BEE strategy was signed off in 2007.

It is implemented through the following programmes:
* Provision of enterprise development support
* Skills development, mainly for the unemployed youth
* Empowerment of target group enterprises through preferential procurement
* Empowerment of persons or groups or communities to increase their ownership and control of enterprises and other productive assets such as land
* Enforcement of Employment Equity Act
* Encouragement of well established firms to engage corporate social investment, particularly in the areas of socio-economic development and youth learnership and apprenticeship.

The implementing strategy focuses on:
*information dissemination, call centre and outreach
*skills development for the unemployed youth
*financing
*preferential procurement
*enterprises development
*partnership and stakeholder relations.

The strategy also embodies a well-articulated coordination mechanism providing for a monitoring and evaluation component, and clarifying roles for identified role-players, which, of course include business.

Services for local communities

Reflecting on past local economic development conferences, we have all agreed on the need to work together to take advantage of opportunities that are there for the taking. We are all aware of the objectives of the national framework on local economic development. We fully understand the approach of the Department of Trade and Industry to regional industrial development. Equally, we have embraced the Provincial Spatial Economic Development Strategy (PSEDS).

PSEDS is premised on the recognition that all government development programmes have to take place within a spatial context. This simply means that, as government, we need to direct fixed infrastructure investments to areas of greatest economic development potential as well as areas of greatest needs, based on poverty densities.

For many years, members of the community have raised concerns that many services are located in Durban, Pietermaritzburg and, to a lesser extent, secondary cities such as Richards Bay and Port Shepstone. Attempts to ensure economic development and to develop a strong entrepreneurial culture will not succeed if we fail to provide adequate infrastructure at local level.

Throughout the world, poverty, generally, has a rural face. Three quarters of the world’s poor live in rural areas, in most cases, without adequate means to achieve food security for their families.

It is for these reasons that, as government, we are speeding up the provision of infrastructure such as one-stop shops, information communication technology centres and other advisory services for co-operatives and small, medium and micro-enterprise (SMMEs).

Being guided by the PSEDS, we have also been able to review the competitive and comparative advantages of the province’s economy and have identified sectors which have the greatest potential to drive growth and impact on poverty and underdevelopment.

The agricultural sector is also our main focus. We are implementing an agribusiness programme its long-term objective is to help match small scale farmers and agricultural cooperatives with established agribusinesses. We are doing this to increase agricultural production which appears to be decreasing, to ensure food security and to increase agricultural exports.

We are making massive investments in logistics to improve road connectivity. The 2010-related infrastructure projects are now also coming on stream. These are bound to stimulate local economic development, thereby, creating opportunities and spin-offs for emerging entrepreneurs.

With these few words, I wish to officially open this conference and I am looking forward to your resolutions. Together, we can make KwaZulu-Natal the winning province.

Masisukume Sakhe!

Thank you

Issued by: Office of the Premier, KwaZulu-Natal Provincial Government
17 March 2009