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Hon. Speaker
Hon. Premier
Deputy Speaker
Hon. Colleagues in the Executive Council
Chief-Whip of the majority party
Hon. Members of the Provincial Legislature
Distinguished Guests
Hon. Speaker, last year when we tabled the budget for the Department of
Economic Development in this august house, we made the assertion that
radical economic transformation is what is required to move South Africa
away from the debilitating effects of what Nadine Gordimer called the morning
after. We remain convinced that the tale of our freedom will be incomplete for
as long as the poor have no share in the countrys wealth. We find it
necessary to reiterate this assertion, particularly on the eve of the 60th
anniversary of the Freedom Charter, which defined the contours of a South
Africa free of racial domination, class exploitation and gender oppression.
As we table this Budget Vote, Gauteng still occupies a significant position in
South Africa. The province contributes 34.7% to the countrys GDP, which
means that Gauteng has a huge bearing on the recovery and growth of the
South African economy as a whole. Exogenous economic shocks and
structural economic challenges have a significant weight on Gautengs
economic performance. The orientation of our exports in agriculture, mining,
manufacturing and vehicle assembly makes us particularly vulnerable to these
economic shocks. We were rudely awakened to this reality in 2008 when
stagnation of the economies in the Euro Area had a direct impact on jobs and
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Hon. Speaker, we table this Budget Vote against the backdrop of the annual
commemoration of the National Youth Day, a day marking the heroic struggle
of the youth of South Africa who rose up in June 1976 to give battle to the
barbaric system of apartheid.
In their honour, we should spare no energy to give practical expression to the
dream for total emancipation, freedom, economic justice and equality.
Hon. Speaker, the promise of political freedom was also a promise for
economic emancipation. Our political legitimacy rests on our ability to give
battle to forces that continue to subjugate the black majority and women.
Young people who are reeling under the indignity of unemployment; pressures
of casualisation, labour brokering and super-exploitation are getting impatient
with this promise. They want decent jobs and meaningful economic
participation.
In memory of the youth of 1976 and in dedication to future generations, we
recommit to a South Africa envisaged in the Freedom Charter, whose 60th
anniversary we will be celebrating in a few days time. We believe, Hon.
Speaker, that there is an umbilical cord that connects the battles waged by
our forbearers for a united and independent Africa and battles of the youth of
1976.
Hon. Speaker, the African continent occupies a special place in our
Transformation, Modernisation and Re-Industrialisation programme. Our
destiny and South Africas propensity to overcome the structural challenges
facing our economy is intricately tied to the fate of our sister economies on the
continent.
There is an emerging consensus that increasing the share of trade between
countries on the continent is crucial to Africas political stability, economic
development and prosperity.
We draw confidence from the Economic Report on Africa which states that
although intra-Africa trade is small compared to the continents trade with the
Across all these sectors there are serious issues related to market
concentration and ownership, with virtually all sectors dominated by no more
than eight companies. We also found higher profit rates coinciding with
diminishing workers income; low local content and largely unsatisfactory
levels of infrastructure for industry including electricity, water supply, transport
logistics and skills.
Based on these findings, the department is packaging Industrial Strategies for
each of these sectors in order to address ownership patterns, barriers to
entry, localisation, enterprise development and skills development.
More concretely, we will also package a range of high impact catalytic
industrialisation projects to increase each sectors contribution to employment,
income generation and poverty alleviation. Examples are a clustered food
manufacturing hub located in the Southern Development Corridor to process
locally farmed produce for sale to retail markets, correctional services,
hospitals and schools; the local manufacturing of LED lights and projects to
manufacture fuel from recycled tyres.
These projects will complement plans to create a layer of black industrialists
and minimise reliance on imports as well as promote local manufacturing and
beneficiation. Interconnectivity between the Development Corridors of the
Gauteng City Region as well as edge cities like Rustenburg, Secunda,
Witbank, Sasolburg, which together with Gauteng make up what is South
Africas industrial heartland will also receive impetus through these plans.
Hon. Speaker, although South Africa has experienced considerable
investments in the automotive sector, import penetration in the industry is still
too high. Only 35% of the components and parts used to manufacture
vehicles in South Africa are produced locally while the 65% are imported from
various parts of the world. Gauteng auto companies spend nearly R8 billion
per annum on imports for automotive parts, components and accessories. Our
plans for reindustrialisation will not come to light unless we alter this reality.
In partnership with Nissan, Gauteng launched the countrys second incubation
centre in March this year. Through this facility, eight (8) black owned SMMEs
will get an opportunity to supply parts and components for the Nissan Pick Up
truck which is due for production in 2018. An investment of R22 million was
secured from the Jobs Fund for this project. In addition, Nissan will be
investing R200 million for this project which will create 27 000 jobs in the
medium to long term. This initiative is aligned to our plans to increase black
participation in the automotive industry.
Hon. Members, the AIDCs automotive supplier efficiency programme is a vital
component of our plans to ensure the industrys expansion with increased
local manufacturing. Twenty two (22) component suppliers will be enrolled for
training on quality, costing, productivity improvement and supply stability.
SMMEs engaged in the manufacturing of bumpers, foundry consumables,
seatbelts, windscreens, airbags and moulded plastic components will be
targeted for this programme. In order to transfer skills to the youth, ten
engineering students will be placed in the selected companies for the duration
of the programme. To date, twenty companies have participated in this project
with 221 people receiving training.
The Gauteng Automotive Learning Centre, which was
launched in the
previous financial year, will continue to address the skills needs of the
automotive industry. A total of 1 595 people will be trained at the centre during
this financial year.
Hon. Speaker, work on the Industrial Development Zone (IDZ) located at OR
Tambo International Airport, in the Eastern Corridor of the city region is
proceeding well. The land lease for this project along with the funding
agreement with the Department of Trade and Industry (dti) has been
concluded. The IDZ will boost manufacturing capability in targeted, export
driven sectors such as pharmaceuticals and electronics assembly. Our
financial commitment for the IDZ is R8 million while an amount of R200 million
from the dti has been allocated for bulk infrastructure.
A feasibility study on the establishment of an ICT Special Economic Zone
(SEZ) in the Central Corridor is being finalised. This is an important tool for
accelerating
implementation
of
governments
industrial
development
What set these engagements apart is that we did not as government arrive in
our townships with ready packaged solutions to the challenges facing
township economies. On the contrary, together with our entrepreneurs we
collectively identified the challenges and together, crafted the solutions, which
are now contained in the Township Economic Revitalisation Strategy.
Apart from giving birth to a defined policy on the township economy, the
Township Economy Revitalisation campaign is making great strides in
removing the bottlenecks that prevent township businesses from claiming a
greater share of the national income.
We are proud to declare that the Gauteng City Region has inspired a
countrywide movement to mainstream the interests of township businesses
and place them at the centre of policy discourse and development practice.
We speak with confidence when we say that today the issues and challenges
facing township entrepreneurs are no longer peripheral subjects discussed
only in townships, taxi ranks, trains and popular areas of association.
The township economy revitalisation campaign has galvanised our society
behind the vision to transform townships from labour dormitories to sites of
production with thriving commercial activity. Indeed, the times when townships
were considered poorer relatives of the South African suburbs are fast going
by. The commonly held misconceptions about township businesses the
myth of poor workmanship and unreliable service are being demystified.
The campaign has inspired unmatched confidence in the goods and services
that township businesses offer. Few can contest the reality that Gauteng and
South Africa boasts a wealth of township-based entrepreneurs with the knowhow and entrepreneurial drive to produce goods and services that can be
consumed by the South African and international market.
Today everyone knows that township entrepreneurs are capable players in the
economy capable players whose only bottlenecks is the tragedy of our
history of exclusion and the slow pace of post apartheid transformation.
We are neither chest thumping nor are we claiming easy victories when we
say today the township economy is an integral part of the lexicon and the
of
radical
economic
transformation,
which
entails
the
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We are hopeful that the partnership we are striking with the retail giant Pick n
Pay will go a long way in resolving the challenges faced by spaza shop
owners. This partnership will secure spaza shops a foothold to Pick n Pays
distribution channels, giving them access to a variety of stock and
merchandise at competitive pricing. It will allow spaza shop owners to pool
their resources and take full advantage of the benefits of bulk buying while
also giving township entrepreneurs opportunities to participate in the Pick n
Pay franchise model.
While still on the subject of competition, we welcome the Competition
Commissions inquiry into the retail market in townships and encourage
township businesses to participate in this probe. This investigation is a direct
response to the challenges highlighted by township businesses in our
engagements with them. We are particularly interested in the real impact of
the expansion of retail giants into township markets, barriers to entry for small
business such as shopping mall tenancy agreements as well as the
competition dynamics between local and migrant owned grocery retail
businesses.
Hon. Speaker, entrepreneur training and development is vital to the success
of our township businesses. Many small businesses battle with managing
cash flow, records and maintaining good administrative practices. The
partnership between Pick n Pay, UCT and UJ is aimed at addressing these
challenges.
We want to see more of these fruitful partnerships and repeat our call for
private sector to pledge resources and help us to find innovative ways of
supporting township enterprises.
Hon. Members, government has a vital role to play in supporting township
businesses stimulating demand for township produced goods and providing
market access for township businesses. Township businesses deserve a
share in the governments procurement budget.
To fulfil the commitment to allocate 30% of governments procurement spend
to township businesses, we have assisted hundreds of township businesses
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police stations.
Fifty three township based and black owned clothing and textile
businesses are supplying linen to hospitals across Gauteng, while 40%
of hospitals will procure their fresh produce supplies from black farmers
in 2015/16. This number will be increased to 80% by the next financial
year.
Township bakeries and confectionaies will get a boost as 20% of
hospital bread procurement is earmarked for these businesses in the
current financial year. This number will be increased to 40% in the next
financial year.
These strides would not have been possible without township entrepreneurs
standing up and raising their hands to be counted among the men and women
who will be remembered for their contribution in changing the economic
landscape of the Gauteng City Region. We look forward to more collaborative
efforts
between
government,
township
businesses
and
established
corporates.
These examples must be replicated and multiplied. We want to see township
businesses moving beyond being intermediaries for goods and services
produced elsewhere. We want to see township businesses enter the
productive sectors of the economy.
In recognition of the great work of township businesses, we will host the first
ever Entrepreneurship Awards for township businesses later in the year.
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Hon. Members, the Cradle of Humankind World Heritage Site located in the
Western Corridor continues to be a jewel in our crown. Last year we
completed the upgrades to Hominid House, a student facility at Maropeng.
This year we will deliver a new exhibition space to house temporary
exhibitions in the facility. Gauteng is uniquely placed to utilise paleoanthropology as an area of geographic advantage and take the lead on the
African continent.
Gauteng remains a leading provincial destination for foreign visitors. However,
there are clear market forces that demand an urgent strategic rethink with
regards to enhancing our market share. The Gauteng Tourism Authority is
leading the charge in developing a focused Africa Tourism Strategy and this
year, we have set a target of 2.7 million arrivals from the continent with a
value of R21 billion.
The recent reconfiguration of the Gauteng Tourism Agency to focus purely on
destination marketing and promotion will impact positively on these plans. The
targeted performance for the province for the 2015/16 period is 4.4 million
international arrivals and R35 billion in revenue generation.
Working with our municipalities, we have developed an extensive Township
Tourism Experience and Enterprise Development programme. We are
convinced that this intervention will change the tourism landscape to better
reflect the demographics of our country and mainstream township tourism into
a key component of the city regions economy.
We are already implementing this project in Soweto, Sophiatown, Fordsburg,
Fietas, Alexandra, Kagiso, Mamelodi, Atteridgeville, Refilwe, Onverwacht,
Rayton, Katlehong, Thokoza, Vosloorus, Tembisa, Sharpeville and Boipatong.
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At the heart of our tourism strategy is the visitor. One of the ways we will
better serve our visitors, domestic and international, is by taking information to
them. We are pleased to announce that Gauteng now has its first mobile
visitor information centre. Two new visitor centres will be unveiled later this
year to target domestic and African visitors.
This year we have committed R250 million to grow the tourism economy of
the province. Our focus this financial year will be on growing a strong and
vibrant domestic tourism portfolio. Our stay another day campaign is aimed
at capturing business travellers to explore the many different offerings by our
province and supporting this campaign will be our township tourism
experience promotional drive.
Hon. Members, we are pleased to announce that Cabinet has approved the
Bidding, Hosting and Events Strategy for the Gauteng City Region. This
means that our municipalities will now have a common approach and
centralised resources for hosting major events, giving practical meaning to the
motto city regions succeed when they cooperate internally to compete better
externally.
We are deeply concerned about the impact of xenophobia on our tourism
industry and the economy more broadly. Apart from the fact that South African
businesses generate considerable revenue from business operations in the
continent with a number of our JSE listed companies investing in various
markets on the continent, Gauteng also attracts a wide range of businesses
from the region. According to Ernst & Youngs Attractiveness Survey on Africa,
which examines the ranking of regions and countries as investment
destinations, South Africa was the second largest investor in the continent in
2012. Cross border visits from neighbouring SADC countries are anchors for
our retail shopping business.
We will join efforts to encourage peaceful coexistence between locals and
migrants from the continent. We will also work with the Department of
Community Safety to address organised crime and its negative impact on
business tourism.
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Hon. Members, the weight of the informal sector in our economy has
increased significantly in the past few years. The sector is the blood life for
families who have been battered by a hostile labour market, retrenchments
and casualisation. The number of people employed in Gautengs informal
sector amounts to 16% of the labour force. To respond to the challenges
facing the sector, the province has adopted the Informal Business Upliftment
Strategy. The aim of this intervention is to ensure that the informal business
sector is provided with financial and non-financial support for sustainability
including mechanisms for bulk buying.
In the next four weeks we will be launching the Gauteng Business Forum to
improve coordination in the economy, promote investment, enterprise
development, capital allocation and policy advocacy.
Hon Speaker, our agencies are the hands and feet tasked with implementing
the programme for Transformation, Modernisation and Re-Industrialisation. It
is against this background that we have set out to review their capacity to
respond adequately to the imperatives of the TMR programme. We will soon
make announcements about the nature of the changes proposed by the
Advisory Panel on the Review of Agencies.
The department has a total budget of R1,3 billion to undertake all the projects
and initiatives outlined here.
Madam Speaker, Honourable Members
I wish to extend gratitude to the Premier for his leadership and esteemed
colleagues in the cabinet their support. I am grateful to MECs in the Economic
Cluster who are always ready to maximise efforts to ensure that we reindustrialise Gauteng to create decent jobs, fight poverty and reduce
inequality. I also thank the Chairperson of the Portfolio Committee on
Economic Development, Environment, Agriculture and Rural Development
Hon. Errol Magerman, the Head of Department Ms. Phindile Mbanjwa, CEOs
of our agencies, our senior managers and all the public servants for all their
efforts and contributions to realising the objectives of the programme for
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