Speech by KwaZulu-Natal MEC for Finance and Economic Development, Dr Zweli Mkhize during South African Chamber of Business (SACOB) Mid Year Conference scheduled to take place at the Royal Hotel in Durban

Programme Director
Members of the business community
Distinguished guests
Members of the media present today
Ladies and gentlemen

I feel honoured to be your guest in this important gathering as you mark your mid year period of business operations. But more importantly, this meeting takes place at a time when our economy is performing well and yet at the same bit faced with the prospect of rising interest rates and fuel costs. But the latter possibilities are not necessarily putting a damper on the current positive mood that is also stimulated by the optimistic sentiments relating to the prospect of serving as a home to the 2010 Soccer World Cup festivities.

Infrastructure investments

Everyone, both in the private and the public sectors, is aware that the acceleration of growth is what is needed in order to achieve government's target of halving unemployment by 2014. Government's Accelerated Growth and Shared Initiative for South Africa (AsgiSA) is aimed at ensuring that economic growth is accelerated to at least 4,5% by 2009 and to an average of 6% between 2010 and 2014. AsgiSA has identified certain investments in order to accelerate growth and part of this is the massive investment in infrastructure ahead of the 2010 Soccer World Cup.

In KwaZulu-Natal infrastructure investments have been planned in such a way that sustainable jobs are created even beyond the world cup. For instance, the much talked about 70 000 seater Moses Mabhida Stadium will feature tourist attractions and its design will ensure that the facility is used for other activities such as the Olympics even beyond the 2010 Soccer World Cup. About R2,2 billion has been set aside for the construction of the stadium.

In addition, more than R300 million has been set aside for the upgrading of stadiums and construction of multi purpose sports facilities across the province.

Although Durban will be the host city, we want to ensure that other municipalities make a meaningful contribution towards the hosting of a successful world cup. In view of the fact that many teams taking part in the world cup will be selecting "base camps" we have taken a decision as provincial government to ensure a dedicated budget for the upgrading of stadiums and construction of multi purpose sports facilities in the following district municipalities:

* Umgungundlovu District Municipality
* Amajuba District Municipality
* Ugu District Municipality
* uThungulu District Municipality.

The overall government infrastructure expenditure is R410 billion between 2007 and 2010. Of this, about 40% will be spent by public enterprises mainly Eskom. About R84 billion will go towards energy generation, transmission and distribution.

Transnet has a budget of about R47 billion of which R40 billion will go towards upgrading of harbours, ports, railway and petroleum pipelines. More than 19,7 billion will go towards water infrastructure. The Airports Company of South Africa will spend R6,8 billion towards the construction of King Shaka Airport and the Dube TradePort. This is the biggest single government infrastructure investment in the province.

The construction phase of the Dube TradePort offer opportunities for companies involved in the manufacturing sector. Upon its completion Dube TradePort will boast agriculture and agri processing facilities and specialised cold storage facilities that will be built in the government managed trade zone. This will create opportunities across the province for the production of fresh produce, cut flowers destined for the export markets in Europe and Asia, particularly China. We see the 2010 World Cup as a springboard from which to launch a massive export programme.

The passenger terminal on the other hand is set to boost tourism. Of all provinces, KwaZulu-Natal attracts the largest number of tourists in the country's tourism market. Last year KwaZulu-Natal attracted 11,6 million domestic tourists making the province the number one leading destination in domestic tourism, 1,6 million international arrivals making KwaZulu-Natal the third destination of choice for international tourists. Hotel occupancy rate has remained at 77% throughout the year above the national average of 71%. Tourism contributed 20% to the economic growth rate of KwaZulu-Natal.

In fact the world cup presents more opportunities in tourism. The country's hospitality industry is required to provide about 55 000 rooms for the World Cup.

Already more than 25 000 rooms have been contracted from hotels and others are expected to come from lodges and bed and breakfast (B&Bs). This figure is however set to increase towards the end of 2009.

Linked to tourism is food and beverages sector. Food and food products have averaged 3,5% growth for the period 2000 to 2004 and beverages have performed marginally better at 4,0%. Together these industries contribute over 3% of total Gross Domestic Product (GDP) in the province. The influx of international visitors into the province during World Cup 2010 will ensure the growth of this sector.

Road construction

The proper management of the province's road networks ahead of the 2010 Soccer World Cup is critical. The key initiative in road improvements is the promotion of local economic development that will benefit local economies.

The Department of Transport has prioritised many roads associated with World Cup activities. We want our road networks not only to meet international safety standards but to ensure user comfort, convenience and minimum fuel consumption. Travel by soccer fans, soccer teams and international guests to base camps and training facilities during the world cup would be made easier.

Research shows that between 300 000 and one million ticket carrying soccer fans will be in South Africa for the World Cup and will visit places of interests during their stay. We want to enhance their experience of the Zulu Kingdom.

The provincial government has allocated R3,18 billion for the upgrade of major corridors in the province which include John Ross Highway, P700 from Richards Bay to Ulundi and ultimately linking to Vryheid and the northern KwaZulu-Natal region. This will provide a spectacular sealed link. Government is currently working on finalising the budget for the construction of road networks even in areas where there will be no world cup matches.

Investment in Information Communication and Technology (ICT)

The new modes of economic production are increasingly dependent on knowledge and information technology. Knowledge and 'informationalism' has become central to globalisation and to development. The sources of productivity and competitiveness are increasingly dependent on knowledge and information being applied to productivity. The increasing generation and accessing of knowledge has led to what is often referred to as the 'knowledge society' (Castells, 1991).

There are endless opportunities available in Information Technology (IT). The boom in the industry has generated high wage jobs and tens of billions in annual tax revenues. In actual facts, the global market for IT products and services was close to $1 trillion in 2003 and is projected to exceed $1,2 trillion by next year.

The call centre sector which is benefiting from government's drive to grow the country's broadband network and is set to create 100 000 jobs by the end of next year.

Provincial government demonstrated its commitment towards investment in ICT when we announced the completion of a Provincial Broadband Strategy and Action Plan which was spearheaded by economic development. The implementation of the plan will see a co-ordinated approach by role players and stakeholders for the extensive rollout of broadband communications throughout the province ahead of 2010 World Cup. This will accelerate the development of our knowledge economy and information society and afford the international visitors access to a wealth of information about this province.

Another area that we are investing in is the sophisticated technologies in the areas of sensors, smart cards and satellite technology. This is set to propel KwaZulu-Natal to become a smart cutting edge logistics hub. The research and development (R&D) and innovation drive in the logistics sector can lead to development of Intelligent Transport Systems (ITS) to enhance the efficiency of road infrastructure.

ITS can provide transport operators with pre-trip planning and en-route information that will result in travel time savings, improved road safety, reduced vehicle operating costs and reduced vehicle emissions.

Technologies that can be developed in ITS include vehicle routing and scheduling systems, track and trace systems, freight matching and vehicle booking systems. Some of the ITS services that can be developed or enhanced are traffic counting, speed measurement and flight monitoring systems. The provinces strong capability in software engineering can be channelled towards producing world class logistics applications for both local and export purposes.

Small Medium and Micro Enterprises (SMME) and co-operatives

Although the major focus seems to be on big business, government is committed to creating more opportunities for SMMEs and co-operatives. We fully understand the role they play in creating job creation and stimulating the economy of the province.

Perhaps a closer analysis of figures about 2006 Soccer World Cup will give more sense:

Beverages

* 105 600 litres of beer were sold in the 12 stadiums
* 5 500 000 drinks in returnable cups were sold in the stadiums.

Transport

* 1 000 professional drivers were employed by Fifa and 1 000 volunteers
* about 60% of the spectators used public transport.

Information and Communication Technology and Electronics (ICTE)

* 1 000 kilometres (km) of cabling throughout the stadiums
* 15 000 km copper wiring was required for network
* 30 000 communication points in the press box, which included Integrated Services Digital Network (ISDN) and internet connection.

Travel

* 16 440 security stewards in the 12 stadiums, on average 1 370 for each match
* additional 2 760 security stewards were employed in team camps, headquarters, official hotels and training camps
* 800 hostesses
* 80 travel and event services employees.

Entertainment

* 2 500 artists were employed for the opening and closing ceremonies.

Conclusion

Our success in implementing some of the catalytic infrastructural projects, as well as benefiting from hosting the 2010 world Cup, all will hinge on how we project ourselves as a nation that shares the vision for the future. Government commitment towards the creation of business friendly infrastructure should be reciprocated by business' preparedness to invest in the province and forging partnerships with their overseas counterparts.

Then, once again, I want to thank SACOB for choosing KwaZulu-Natal as a venue for this year's mid year conference. Together, we can make South Africa a winning nation.

Thank you!

Issued by: Department of Finance and Economic Development, KwaZulu-Natal Provincial Government
7 June 2007