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Gauteng: Morakane Mosupyoe, Address by Gauteng MEC for Economic Development, Agriculture, Environment and Rural Development, during her Budget Vote Speech for 2020/21 financial year, Gauteng Legislature virtual sitting (23/06/20)

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Gauteng: Morakane Mosupyoe, Address by Gauteng MEC for Economic Development, Agriculture, Environment and Rural Development, during her Budget Vote Speech for 2020/21 financial year, Gauteng Legislature virtual sitting (23/06/20)

24th June 2020

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Madam Speaker

Deputy Speaker

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Honourable Premier

Honourable Members

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Chairpersons of the GDED Boards

Members of Media

Ladies and Gentlemen

Introduction

The Covid-19 outbreak has had a massive effect on our economy, with a dual impact on the demand and supply side of the economy, a severe contraction of the economy, massive job losses, and a lot of small businesses under risk of permanently closing.

Madam Speaker, whilst the national lockdown has been effective in curbing the spread of the virus, allowing the government to get its ducks in a row in preparation for the anticipated spike in infections, the economy has taken the biggest knock and it will require a new social compact between government, the private sector, and other economic stakeholders in order to re-energise and kickstart the South African economy.

Government will have a critical role to play in terms of stimulating the economy, with a shift in focus to domestic markets and deliberate, focused, targeted investments in the manufacturing capacity of the country being one of the critical interventions needed to build a more self-sufficient economy. Government has a crucial role to play in boosting aggregate demand, with an infrastructure driven programme that can help take the economy out of the rut that it has been in, even before Covid-19.

Honourable Members, our economy has not been growing at levels that are desirable for tackling the socio-economic challenges, of high unemployment, poverty, and inequality, as Covid-19 has brutally highlighted. In line with the 7 priorities as set out by Premier David Makhura, the Gauteng Department of Economic Development has identified specific focus areas to grow the economy during the sixth administration: industrialisation and the establishment of multi-tier Special Economic Zones (SEZ); building a formidable township economy; trade and investment; economic and tourism infrastructure as well as economic interventions aimed at enhancing the ten high growth sectors as pronounced in the SOPA 2020, with a particular focus on manufacturing (furniture manufacturing in particular); services sectors including ICT, logistics and transportation; whilst exploring opportunities for alternative energy mix for the province.

Re-industrialisation and the establishment of multi-tier Special Economic Zones

As a critical part of our re-industrialisation drive, we want to introduce special economic zones (SEZs) in order to transform Gauteng into a single, multi-tier, integrated, special economic zone, in line with our city region approach.  This SEZ approach will help us crystallise and concentrate manufacturing; grow exports into strategic markets such as BRICs, South East Asia, Western Europe and drive intra-Africa trade. Most importantly, it will help create much-needed jobs. 

Madam Speaker, these SEZs must also help us to advance economic transformation and dismantle the monopolistic, high concentration levels across the various sectors of our economy, by unlocking the value chains of big, multi-national corporations to local suppliers. This is where transformative partnerships towards growing Gauteng together will be critical and strategic.

A pertinent example of this is the Tshwane Automotive SEZ and the opportunity it has created for us to promote local SMME development and localisation in components manufacturing, create jobs within a local context and drive industrial growth, not just for Tshwane, but for Gauteng City Region (GCR) as a whole. We want to replicate the same model, with its success in bringing in private sector investment, in all the development corridors within GCR.

Honourable Members, we are also working towards building mining and mineral beneficiation capacity in the western corridor as well as agro-processing in the southern corridor and the western corridor. We will be looking to create innovative incentive packages and corridor specific value propositions, to drive investment promotion and industrial growth in all the five development corridors that make up GCR.

The OR Tambo International SEZ in the eastern corridor (Ekurhuleni) is another initiative that is helping us drive industrial growth in GCR, with its focus on diamond and platinum group minerals beneficiation. It will continue to contribute to our goal of securing domestic and foreign investment for manufacturing activities within GCR.

Building a formidable township economy

Honourable Members, township economy revitalisation (TER) is yet to yield tangible transformation of the socio-economic landscape of our townships, despite the great work and massive advancements that we have made in terms of transferring procurement spend towards township-based enterprises. 

In order to refine attendant shortfalls in our TER interventions, we need to expand our capacity as the state to resource and support SMMEs. We will be intensifying our public procurement from township enterprises and through continuing to rejuvenate and invest in industrial parks, agri-hubs, and local produce markets, we will be providing catalytic economic infrastructure that will help us to take TER to the next level, where township businesses are thriving, producing proudly township manufactured  goods and accessing mainstream economy sector value chains.

Madam Speaker, we are going to reposition and repurpose the Gauteng Enterprise Propeller (GEP) to provide funding and business development support for the growth and sustainability of SMMEs and co-operatives. The reconfiguration of GEP will assist in ensuring that it is fit for purpose to deliver on the mandate of the department and by extension in reaching the targets set in the MTSF. 

We plan to support and develop corporative financial institutions as an alternative funding mechanism for township SMMEs. This assistance includes training of board members and ensuring that co-operatives are ready for registration through the Corporative Banking Development Agency. We will be supporting cooperatives across various sectors of the economy e.g. transport and human settlements.

Madam Speaker, in the 2020/21 financial year, we will focus on the enactment of the Township Economy Bill. This Bill will ensure that small businesses are formalised, regulated, and meet compliance requirements. The Bill will make it easier, more affordable, and quicker to register, open, and operate a business in the township.

It will also help loosen red tape, remove bottlenecks, and improve the ease of doing business for township enterprises. Combined with offtake agreements which aim to ensure that Gauteng provincial government procurement process is refined to the benefit of township businesses, creating market access for township enterprises, it promises to be a game-changer in our quest to revitalise and mainstream the township economy and move towards a new wave of authentic empowerment for township enterprises and black-owned businesses.

Trade and Investment

Madam Speaker, In order to increase the global trade footprint of Gauteng enterprises, R2 billion worth of trade deals will be facilitated by the GGDA in 2020/21, 400 Gauteng firms will be assisted with sector-specific training on export readiness and R2 billion worth of infrastructure opportunities for local firms will be explored. Over and above our ambitions of driving intra-African trade, one of our strategic objectives going forward is to increase trade with other BRICS countries, with a target of R500 million for the financial year, but the potential is much more than that and needs to be vigorously explored.

Honourable Members, we aim to facilitate a minimum of R13.5 billion in foreign direct investment and R3 billion in domestic direct investment. We want to secure investment for further development at the OR Tambo International SEZ as well as The Innovation Hub in Tshwane, which we want to transform into Africa’s Silicon Valley, a digital hub for ICT innovation and e-business development, critical within the “new normal” of the post-Covid-19 economy.

Madam Speaker, through the GGDA, we are working at developing a framework for accounting for all investments in Gauteng, so that we can track, monitor and account for investments in the province much more accurately. 

Economic and Tourism Infrastructure and Interventions

Honourable Members, the following key economic infrastructure projects will be implemented in the financial year:  The Visitor Centre at Constitution Hill, the Bio Park Phase 3 at The Innovation Hub, the Jewellery Manufacturing Precinct (JMP) Superblock at IDZ ORTIA, the IDZ ORTIA Southern Precinct. Other infrastructure projects which will be initiated are the IDZ ORTIA Phase 3; the Auto SEZ construction and the Bronkhorstspruit SEZ construction.

The Bio Park Phase 3; the JMP Superblock and the Visitor Centre will be completed in the 2020/21 financial year and the High-Tech Advanced Manufacturing Hub Special Economic Zone (SEZ) Programme studies will be commissioned during this financial year. 

Madam Speaker, to realise our goal of improved automotive production competitiveness, the AIDC will contract 30 companies to the Efficiency Improvement Programme in 2020/21 and ensure that there’s a 20% production improvement in these companies in the medium-term. The AIDC will further incubate SMMEs in the auto industry, with a view to growing exports in the sector. The Innovation Hub will incubate 60 innovative companies at its ICT eKasiLabs and commercialise 60 innovations. Constitution Hill will create multiple opportunities for creative SMMEs to access markets in the medium-term.

Business Regulation and Governance

Madam Speaker, we are committed to improving compliance by businesses in Gauteng through government regulation. Our regulatory bodies the Gauteng Gambling Board, Gauteng Liquor Board, and Consumer Affairs have continuously been inundated with complaints around tobacco manufacturing, counterfeit textiles, prohibited business conduct, illegal gambling, and liquor abuse. The regulatory bodies will continue to intervene in favour of workers and the most vulnerable in our society, even as we promote the sustainable, responsible growth and transformation of the liquor and gambling industries.

Much work lies ahead for our regulatory bodies working in sectors as, liquor and gambling, which have been devastated by Covid-19. The work of our regulatory bodies will focus on maximising the likelihood of recovery of affected sectors, additionally, there will be increased focus in helping those sectors become more socially responsible and responsive in a post-Covid-19 economy.

Conclusion

Honourable Members, we believe the outlined plans and programmes, if implemented diligently and meticulously, have the potential for great impact and could help us make significant inroads in reconstructing the Gauteng economy, considering Covid-19 realities and the “new normal” these realities have introduced. The opportunity beckons to build a new, transformed, more inclusive economy post Covid-19.

We are committed to building a social compact and transformative partnerships, led by government and supported by labour and civil society to drive inclusive economic growth, to create opportunities for economic transformation and to usher Gauteng into the new, digital, e-commerce-based economy that Covid-19 has fast-tracked us into going towards.

Madam Speaker, the 2020/21 allocation for the department and its agencies is R1, 841 676 000 billion. The department will transfer R1, 309 346 000 billion to its agencies and subsidiaries to ensure the successful implementation of its mandate as the custodian of inclusive and sustainable economic growth and development in Gauteng City Region. 

Madam Speaker let us take this opportunity to thank the Premier of our Province for his leadership and stewardship during these very trying times. We want to also thank fellow Members of the Executive Council for their team ethos and support as well as the Chairperson of our portfolio committee along with the entire portfolio committee. Finally, we want to thank the Executive Management Team of the Department including that of our Agencies and the Boards of our Agencies, for their commitment towards growing and transforming the Gauteng economy.

In closing, let us remind ourselves of the noble words uttered by former President Thabo Mbeki, whose birthday we celebrated last week, when he said, “gloom and despondency have never defeated adversity. Trying times need courage and resilience. Our strength as a people is not tested during the best of times.” As we battle Covid-19, as we seek to reconstruct our economy in a post Covid-19 environment, may these words perennially remind us that our task may be hard, but it is not impossible. That there is opportunity behind every obstacle that confronts us and that our greatest strength as a people has always been our resilience, our fortitude, and our courage amidst the most trying circumstances.

 

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