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Date : 07/11/2006
Source: KwaZulu-Natal Provincial Government
Title: Mkhize: Opening of Local Economic Development Conference


    Address by KwaZulu-Natal (KZN) MEC for Finance and Economic Development, Dr Zweli Mkhize, at the opening of the Local Economic Development (LED) Conference, Sibaya Conference Centre, Durban

Programme Director,
Honourable Premier, Mr Sibusiso Ndebele,
MEC Mr Michael Mabuyakhulu,
Members of Provincial Parliament present,
Executive Mayor of eThekwini Metro, Mr Obed Mlaba,
District and local mayors,
Business representatives,
Government officials,
Members of the media,
Honoured guests,
Ladies and gentlemen,
Good morning to you all. This conference marks the realisation of my undertaking to the people of KwaZulu-Natal. In planning this conference we have involved all major role players in LED such as the Department of Traditional and Local Government (DTLGA), public entities namely Trade and Investment KwaZulu-Natal, Dube TradePort and Ithala.

Ladies and gentlemen, the collective approach we have adopted is in line with the principles of local economic development that emphasises a partnership based approach in reflecting joint planning and implementing economic activities at local level. In the true spirit of our commitment to inter-governmental relations we had to postpone this conference when we learnt that the national Department of Provincial and Local Government (dplg) was launching its National Framework on LED in August 2006.

This conference is aimed at aligning our Provincial Growth and Development Strategy (PGDS) to our Spatial Economic Development Strategy (SEDS) and thereby guides local government in drawing their LED strategies as well as their Integrated Development Plans (IDPs) and thereby guiding both government interventions and private sector investment in different municipalities.

Before I go any further it is important that I reflect on our understanding of LED. Such understanding has shaped our programmes and strategies of implementing LED in KwaZulu-Natal. We believe that LED is about a localised process that provides the opportunity for the private and public sector to collectively mobilise resources to improve local competitiveness, lay the foundation for sustainable development and ensure a more equitable distribution of wealth and income. LED is focused on identifying the competitive advantages of an area in order to alleviate unemployment and poverty on a sustainable basis. Investments in the local economy particularly of public sector are therefore focused on positive outcomes for poor people.

It is for this reason that our programmes had placed much emphasis on supporting the poor who, through no fault of their own, are locked in the vicious cycle of poverty. We have not folded our arms and mourned the predicament of poor people; instead we have continuously explored various strategies of extricating them from poverty. This we have not done alone but together with the people. We have adopted an approach to capacitate and mobilise local people to take charge of their economic destiny.

Our commitment to work side by side with the people of KwaZulu-Natal has seen the massive growth of Small, Medium and Micro Enterprises (SMMEs) and the co-operative movement in the province.

More than 4 000 primary and 10 secondary co-operatives have been established in KwaZulu-Natal. These co-operatives have been supported through training by Further Education and Training (FET) colleges. They have been assisted to access finance (mainly through Ithala) and markets. We have also formulated a mentoring and incubation programme for them. We have been inspired and pleasantly surprised by the interest and commitment shown by ordinary people of this province towards the co-operatives programme. This indicates clearly to us that with the enabling business environment created, people will grab the opportunity with both hands.

Another case in point, ladies and gentlemen, has been our vigorous implementation of the European Union Gijima KZN LED. The branding of this programme "Gijima" which if loosely translated means run, demonstrates our haste to see our local people reaping maximum benefits through sustainable local economic initiatives. Already Gijima has funded more than 90 projects and is poised to creating more than 3 000 direct sustainable jobs in our province. It has been funded with R52 million, they have spent R14 million and R17 million has been leveraged by the private sector. Gijima KZN seeks to bridge the gap between the first and second economies by promoting pro-poor LED, building the capacity of local government in LED, leveraging resources from the private sector and increasing local competitiveness through partnerships.

Our commitment to partnerships with the private sector has already reaped some benefits as we have seen major financial institutions such as Standard Bank, ABSA, Development Bank of South Africa (DBSA), National Development Agency (NDA) and Ithala showing interest in supporting LED initiatives. You will recall, ladies and gentlemen, that financial institutions have historically tended to ignore the majority of our people because of their lack of capital to use as collateral. Some of these institutions such as Standard Bank and ABSA have gone a step further and signed memorandum of understanding (MoU) with my department to support LED projects. This was not just a sudden change of heart from the side of the banks.

It was as a result of our tireless efforts in demanding that financial institutions should cater for the poorest segment of the society as well.

Our efforts to empower people in the second economy have seen us intensifying our initiatives to support SMMEs. We have worked tirelessly to create small enterprise development agencies (SEDAs), which are geared to mentor and incubate SMMEs. At present we have SEDA branches in Pietermaritzburg, Durban, Richards Bay, Port Shepstone, Ladysmith, Newcastle and Kokstad. The remaining four which will cover the rest of the districts of the province should be established in the 2007/08 financial year.

We are in the process of establishing one stop shop centres in KZN which will facilitate easy access to markets for SMMEs. Through our international study tours, we have been able to identify SMMEs' best practices in India through the National Small Industry Corporation (NSIC). NSIC has done marvellous work in supporting SMMEs in India and we have wasted no time in engaging them through a contractual relationship to come and advise us how we can best support our SMMEs.

The government is prepared to create a better environment to enable our entrepreneurs to compete at international level. The key economic catalytic projects such as King Shaka Airport, 2010 Soccer World Cup, road and rail infrastructure provides opportunities for SMMEs to compete in the global economy. Already SMMEs are creatively and proactively identifying their niche markets linked to these key economic catalytic projects. I have been very impressed with enthusiasm shown by SMMEs in opportunities that are being created. It makes me very happy to hear people talking about business opportunities rather than work opportunities. This means that the entrepreneurship spirit is growing amongst many people of this province. This, ladies and gentlemen, is again not a coincidence of history but is as a result of our efforts to build a strong entrepreneurship culture amongst our people.

Our capacity building programmes are geared to reverse the legacy of Bantu education which taught us how to be better employees. In our pursuance of economic advancement for our people, we are mindful that both colonisation and apartheid brutally dispossessed African people of control and access to their prime means of production land. This historic theft was made possible by the 1913 Native Land Act, which formed the basis on which South Africa was and is divided along racial lines. The Act divided South Africa into areas where black people could own land (called 'reserves') and the rest of the country, where they could not.

I am reflecting on this sad history, ladies and gentlemen, because I want you to understand why the current government has recently adopted the Provincial Spatial Development Strategy (PSDS). It is in recognition that a spatial based economic development strategy is essential to reverse the legacy of the past. It will be wrong for our government to perpetuate the situation where some people are living in areas that have no economic potential, whilst others are enjoying the benefits dispensed by apartheid planners. This could only be resolved through formulating clear strategies of how the majority of people can reap rewards and share benefits of economic spin-offs found in areas with economic potential. The Provincial Spatial Economic Development Strategy (PSEDS) is helping us to identify which areas have got what economic potential so that both the public and private sector can invest their resources wisely.

The PSEDS will be successful if it is accompanied by redistribution of economic resources to the majority of our people. In this regard government through the Department of Agriculture has unveiled the agrarian revolution, which involves a pattern of land redistribution, landownership structure, farming systems and social and institutional arrangements. Agrarian revolution is in line with the Freedom Charter adopted by the People's Congress in 1955, which promised that the land shall be shared among those who work it and the State shall help the peasants with implements, seeds, tractors and dams to save soil and assist the tillers.

The PSEDS has not shifted our approach that places local government at the centre of development planning and implementation. The IDPs remains the torchbearer for all local economic development initiatives. It is important that whilst we improve on strategies of empowering people we do not lose focus that people themselves should take charge of their development.

A major part of what LED does is help municipalities to assist communities in addressing poverty. That's why we've invited people and organisations here over the next two days to deal with essential services that are critical in the development of LEDs such as electricity and energy, agriculture and tourism. All these will help municipalities formulate their own plans because we will be travelling to the various district municipalities around the province to hold regional LED summits.

Ladies and gentlemen, there is no doubt that we will triumph in our collective desire to emancipate people from poverty into economic prosperity. We have made many strides towards that goal. We should not be under the illusion that there will be no challenges lying ahead. However, these challenges can only make us stronger and inspire our resolve to eradicate poverty and unemployment in our country. Together, ladies and gentlemen, let us accelerate local economic development in KZN!

I wish you all the best in your deliberations during this conference.

Thank you!

Issued by: Department of Economic Development, KwaZulu-Natal Provincial Government
7 November 2006

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