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 country’s 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 country’s 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 Gauteng’s 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 growth in this province.

Hon. Speaker, the first few months of 2015 saw the South African economy showing positive signs of recovery. The South African economy expanded 2.1% year-on-year in the first three months of 2015. This was an increase from 1.3 % in the previous period and the highest growth rate since the last quarter of 2013. Nonetheless, the manufacturing sector still faces its share of challenges with few convincing signs of recovery. The infrastructure challenges such as secure power supply for industry continues to be a thorn in the flesh for the economy.

Without radical economic transformation, our efforts to redistribute the wealth of our country to the majority will be piecemeal and only limited to social goods over which the state wields direct influence. We are of the firm view that the strides we have made in making a range of social goods like housing, quality public education and healthcare accessible to all must correspond with economic inclusion – jobs and increasing the poor’s share of the national income.

To achieve this transformation, an overhaul in the patterns of ownership and control as well as the rapid development of labour intensive sectors of the economy through inclusive industrialisation, is necessary.

More importantly, our economic policy along with our interaction with economic actors should be underpinned by a sense of urgency to resolve the historic process of subjugation, oppression and exploitation visited upon black people since the beginning of the colonial project.

If we are to realise the intents of the transformation, modernisation and re- industrialisation programme, we must be prepared to take bold political steps and ensure that the economic pendulum swings in favour of the poor whose patience has been tested beyond our imagination.

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 Africa’s 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 Africa’s 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 continent’s trade with the rest of the world, standing at 11.5%, hopes to industrialise our economies must be pinned primarily on ourselves.

This observation stems from the fact that trade between and amongst African countries is significantly more industrialised, meaning that we export and import more manufactured and finished goods to and from each other than we do with the rest of the world.

While Africa’s trade with other regions is primarily in the extractive industries like minerals, metals and hydrocarbons, the share of manufactured goods traded within the continent amounted to 40% of total trade in 2011. By contrast, African exports in manufactured goods to the rest of the world stood at a measly 13% in the same year. Promoting intra-Africa trade will embolden our efforts to industrialise and achieve inclusive economic growth.

In view of these reflections and in the quest to give practical expression to pillar ten of the Transformation, Modernisation and Re-Industrialisation, we will launch a series of strategies, which together constitute the Economic Plan for the City Region.

One of these is the Trade and Investment Strategy, which will be unveiled in July. This strategy is underpinned by the need to strategically steer Gauteng’s exports to new markets and destinations and to strengthen Gauteng’s role in Africa’s re-industrialisation process and to open up markets for Gauteng’s manufactured products.

As things stand Hon. Members, South Africa is far too reliant on EU, US and Asian markets. While this is not necessarily a terrible thing, recent events have shown the extent to which our economy is vulnerable to external dips in commodity prices as well as recession and economic downturns in EU and the US.

Our economic calculations tell us that South Africa’s growth is highly dependent on the recovery of the EU. A growth rate of 4.5for Gauteng highly depends on the Euro Area growing at 3%.

Moderate growth in developing countries is likely to affect commodity prices, trade and investment flows between Africa and the rest of the world. In the face of these risks, African countries need to continue to implement measures to boost domestic demand, diversify production and promote rapid expansion in intra-African trade.

The strategy is geared at repositioning the province’s trade and investment approach, turning our attention to the SADC region and the continent at large.

We also believe that this thinking requires the re-orientation of our international engagements. To this end, we will, in the next month launch the Gauteng International Relations Strategy through which we envisage a bigger role for economies in the African continent, BRIC countries and other emerging markets.

In line with the strategy, forty (40) Gauteng companies in manufacturing will receive support to expand their operations. Of these companies, ten (10) firms that are looking to expand operations in Africa to supply inputs to mega infrastructure opportunities identified in the five development corridors will receive our support.

The attraction of investments in targeted sectors contributes to the development of the province’s priority sectors. New foreign and domestic investments to the value of R1 billion will be attracted to the eleven priority sectors of the economy which will result in creation of 1500 jobs.

Hon. Members, the 2014 Economic Report on Africa makes a common yet very potent observation about the role of the state in championing Africa’s industrialisation agenda. The Report calls for proponents of the “free market” who criminalise state intervention to “re-acknowledge that state support is vital to address market failures and spur industrialisation.”

We are emboldened by this analysis and it is in the same spirit that we conducted studies to take a closer look at the finance, ICT, retail, food and beverage, pharmaceuticals, construction and automotive sectors.

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 sector’s 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 Africa’s 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 country’s 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 AIDC’s automotive supplier efficiency programme is a vital component of our plans to ensure the industry’s 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 government’s industrial development programme as reflected in, amongst others, the IPAP. A critical component of the ICT IDZ would be to increase access to broadband infrastructure to underserviced communities, including township enterprises.

In order to pursue re-industrialisation of the city region, the province has finalised Regional Economic and Industrial Plans for the Western and Southern Corridors. The City Region has allocated R3 billion to spur the industrialisation of the Western and Southern Corridors through agro- processing, green industries and tourism.

Hon. Members, last year this administration took an unprecedented move to transverse 65 townships consulting businesses and entrepreneurs across Gauteng. With great enthusiasm, young and old, men and women responded to our invitation to chart the course for a transformed economy that affords township people equal opportunities to the spoils of our land.

In a clear demonstration of an unwavering commitment to work with government and various stakeholders to propel the township economy to new heights, township-based entrepreneurs attended the roadshows in multitudes and filled our community halls, churches and sports centres in all the townships we visited. Through these engagements, we had a unique face-to- face interaction with no less than 50 000 entrepreneurs in a period of three months.

This was an unprecedented programme underpinned by a philosophy of people-centred and bottom-up consultation. Through these engagements, which culminated in the first economic summit with township businesses, our entrepreneurs were afforded an opportunity to voice their concerns and table solutions to challenges plaguing their businesses. We heard of their difficulties in securing markets for township goods and services. We drew insight from township entrepreneurs who bemoan the shortage of industrial land  and space for conducting business as well as restrictive regulation  and compliance framework. We were also made aware of the onerous requirements that township businesses have to meet in order to qualify for private sector funding.

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 know- how 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 topical issues that we discuss in our communities, radio stations, television programmes and newspaper opinion pages.

Hon. Members, the successful integration of township businesses into the value chains of white owned big business cannot be achieved without the cooperation of the private sector. Many people depend on the private sector for employment and activities that generate income. It is this reality that informs the partnerships we strike with established business. The partnership model we are striking with various private sector players is based on principles of radical economic transformation, which entails the democratisation of the ownership and control of the economy.

The banking sector is responding to our call to transform the way it conducts its business operations. We have also entered into a partnership with the banking association to explore incubation approaches and  innovative financing models for township enterprises.

The retail industry is heeding the call we made to big business to integrate township based merchants and producers of goods and services!

As we table this Budget Vote, the department is hard at work to finalise a partnership that will result in R650 million cash injected into various townships across Gauteng. This partnership is spearheaded by MassMart and will see the establishment of 500 retail shops within Gauteng townships.

Unlike the prevailing trends  that define expansion of retail businesses in townships, entrepreneurs operating in our townships will have a significant share in this development as owners. This project will be piloted across the six townships of Katlehong, Attridgeville, Sharpville, Randfontein, Alexander and Khutsong. The project is envisaged to create more than 1000 jobs.

Hon. Members, competition largely explains the tensions between local and immigrant business people in our townships. They compete for the incomes and buying power of township residents who are their customers. We have heard the cries of the spaza shop owners across the province who are battling to survive in a highly competitive township retail market.

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 Pay’s 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 Commission’s 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 government’s procurement budget.

To fulfil the commitment to allocate 30% of government’s procurement spend to township businesses, we have assisted hundreds of township businesses

with “government-procurement readiness” training, which entails information sharing about procurement opportunities, verification of BBBEE status, tax clearance and registration as suppliers on the provincial database.

This is not the only example of government stepping in to guarantee market access for township businesses. We can cite the following as laudable outcomes of the Township Economy Revitalisation campaign:

    A total of 287 township businesses in construction and building maintenance companies are undertaking government construction projects, maintenance of electricity and lighting, plumbing and the structural upkeep of government buildings, schools, hospitals and 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. These awards will showcase township business excellence, a novelty that is not replicated anywhere else in South Africa. Through these awards, we will reward hard work and dedication and demonstrate that township business can stand head and shoulders above the rest.

Hon. Speaker, we all know that many township businesses are precluded from accessing government and private sector procurement opportunities due to non-compliance with various aspects of the business regulation landscape. Perceptions about the high costs and burdensome nature of business compliance are too common amongst our small businesses. A recent study by the World Bank Group and the National Treasury titled ‘Doing Business in South Africa 2015 found that although our business registration process is relatively cheaper, it is not time efficient and tends to be administratively tedious.

To change these perceptions and awaken small businesses to the economic benefits of business formalisation, we will be embarking on a campaign aimed at increasing the business compliance levels in the small business sector. Through the Qondis’ ishishini Lakho (Fix Your Business) campaign we will once again visit Gauteng townships to offer onsite registration to 10 000 SMMEs.

We are committed to intensifying programmes to support township business in this financial year.

    345 township businesses operating in labour-absorbing sectors of the economy such as manufacturing, tourism, ICT, retail and infrastructure businesses will receive financial support from the Community Fund.
    250 township business will benefit from Township Business Renewal Programme which offers grants up to R50 000 towards marketing, equipment and refurbishment of operational premises.
    We have also piloted an invoice discounting system, which allows short-term borrowing to small businesses against outstanding sales,invoices.
    This gives small businesses access to cash flow and working capital amidst payment delays. Fifty (50) township-based businesses are targeted for this initiative.
    The department has also piloted a system that enables us to pay suppliers within 14 days. Our agencies are currently paying all suppliers within 5 working days.

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 paleo- anthropology 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 region’s 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.

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 & Young’s 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.

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 Gauteng’s 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 re- industrialise 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 Transformation, Modernisation and Re-Industrialisation.

I thank you.