Industrial Parks Revitalisation Programme: Department of Trade and Industry briefing

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Meeting Summary

The Department of Trade and Industry briefed the Committee on its Industrial Parks Revitalisation Programme.

President Jacob Zuma had asked Minster of Trade and Industry Mr Rob Davies to look at old industrial parks and try to revitalise them. A total of ten industrial parks were assessed and were the starting point of the Programme. The first phase covering six industrial parks was initiated. The purpose of the Programme was to revitalise SA’s old industrial parks and to allow them to serve as catalysts for broader economic and industrial development in their host regions. Amongst the objectives of the Programme was to accelerate economic development in the lagging regions such as the old homelands and rural areas, and also to support job creation in manufacturing and related sectors so as to arrest negative externalities associated with urban congestion.

Phase 1 of the Programme covered security infrastructure upgrades, fencing, street lighting, top structures and critical electricity requirements. Phase 2 dealt with engineering designs and construction of new and existing roads, bulk water supply and sewerage treatment plants or industrial effluent control. Phase 3 dealt with upgrades of electricity infrastructure and to build new top structures that were in line with the expansion programme of the industrial parks. Phase 4 dealt with the development of sustainable industrial clusters in industrial parks. The Department had already started with Phase 1 on ten industrial parks. Members were presented with a list of approved industrial parks together with figures on their respective approved budgets. In most industrial parks under Phase 1 the main issue was about providing perimeter fencing. Industrial parks occupancy figures ranged between 86% - 92%. The Committee was provided with background on each of the industrial parks listed. For example, the Phuthadijhaba Industrial Park in the Free State occupied a total of 257 360 square metres gross land area and had an occupancy rate of 67%. It was one of the biggest local employers in the textile sector employing 1200 locals of which more than 90% comprised of women. The Park was a major economic hub in the district with varied businesses. 

Members noted that the briefing had not mentioned timeframes for the completion of the various phases of the Programme. How did the Programme tie in with the Black Industrialist Programme? The Department was alerted to the fact that there were industrial parks in the Northern Cape Province and elsewhere that had not been identified for revitalisation but should have been. How could Members be assured that the Department covered all provinces? Members after all represented the interests of their respective provinces. There were many industrial parks around SA that were not mentioned in the briefing and it was felt that the Department needed to have a dedicated budget to seek out and identify industrial parks. The Department was asked how it would ensure that where buildings in industrial parks had been refurbished that over time they would not revert back to their dilapidated states. Members were disappointed that the briefing had not spoken to the feasibility of the Programme in relation to the revitalisation of industrial parks. Feasibility was an important consideration. What were the criteria used in identifying which industrial parks to revitalise? Members also felt that details of the industrial parks mentioned were lacking. No information was provided of the numbers of people that were employed at the industrial parks mentioned. How much money was going to be spent to retain the jobs that were there? The point was made that when industrial parks were established or revitalised that products coming out of those parks had to be up to par and that locals in the area of the industrial park had to benefit.

Outstanding minutes were adopted as amended.   

Meeting report

Department of Trade and Industry (DTI) on its Industrial Parks Revitalisation Programme
The delegation comprised of Mr Sipho Zikode, Deputy Director General: Special Economic Zones and Economic Transformation and Ms Stieneke Samuel, Chief Director: Regional Industrial Development.

Mr Zikode said President Jacob Zuma had asked Minster of Trade and Industry Mr Rob Davies to look at old industrial parks and try to revitalise them. A total of ten industrial parks were assessed and were the starting point of the Programme. The first phase covering six industrial parks had been initiated. Phase 1 of the Programme covered security infrastructure upgrades, fencing, street lighting, top structures and critical electricity requirements. Phase 2 dealt with engineering designs and construction of new and existing roads, bulk water supply and sewerage treatment plants or industrial effluent control. Amongst the objectives of the Programme was to accelerate economic development in the lagging regions such as the old homelands and rural areas.
 
Ms Stieneke undertook the actual briefing. The purpose of the Programme was to revitalise SA’s old industrial parks and to allow them to serve as catalysts for broader economic and industrial development in their host regions. Another objective of the Programme was to support job creation in manufacturing and related sectors so as to arrest negative externalities associated with urban congestion. She reiterated that Phase 1 of the Programme covered security infrastructure upgrades, fencing, street lighting, top structures and critical electricity requirements. Phase 2 dealt with engineering designs and construction of new and existing roads, bulk water supply and sewerage treatment plants or industrial effluent control. Phase 3 dealt with upgrades of electricity infrastructure and to build new top structures that were in line with the expansion programme of the industrial parks. Phase 4 dealt with the development of sustainable industrial clusters in industrial parks.

The DTI had already started with Phase 1 on ten industrial parks. Members were presented with a list of approved industrial parks together with figures on their respective approved budgets. In most industrial parks under Phase 1 the main issue was about providing perimeter fencing. Industrial parks occupancy figures ranged between 86% - 92%. The Committee was provided with background on each of the industrial parks listed. For example, the Phuthadijhaba Industrial Park in the Free State occupied a total of 257 360 square metres gross land area and had an occupancy rate of 67%. It was one of the biggest local employers in the textile sector employing 1200 locals of which more than 90% comprised of women. The Park was a major economic hub in the district with varied businesses.  

Discussion
Mr S Mthimunye (ANC, Mpumalanga) pointed out that the briefing did not speak to timeframes. It did not elaborate on when Phase 1 or Phase 2 of the Programme was to be completed. He asked how the Programme tied in with the Black Industrialist Programme.

Mr Zikode, on timeframes, said there were project plans in place. Four of the industrial parks in the Programme would complete Phase 1 by September 2016, a further four by the end of November 2016 and another two by the 1st Quarter of 2017. These all related to Phase 1. On Phase 2 the DTI was doing an intense assessment of industrial parks. The DTI needed to get an idea of what was needed. Besides the Black Industrialist Programme there were also amongst others the Supply Development Programme and the Enterprise Development Programme. The DTI worked with the Small Enterprise Development Agency (SEDA) on various programmes to assist black business people to access the Black Industrialist Incentive. The DTI also entered into partnerships with provincial governments. The idea was to assist people in Special Economic Zones (SEZs). Several Memorandums of Understanding (MOUs) had already been signed. For instance, the DTI was working with the KwaZulu-Natal Province on setting incentives for the Black Industrialist Programme.

Mr W Faber (DA, Northern Cape) asked if it was correct that the DTI had ten industrial parks in its Programme. Why were industrial parks in the Northern Cape not part of the Programme? The briefing stated that the purpose of the Programme was to upgrade and revitalise industrial parks in the old homelands and rural areas. He referred to places like Taung and Pampierstad that had fallen under the old Bophuthatswana which had thriving industries during the old Apartheid era. He felt that places like these had huge potential. The M18 highway was right there so access was not a problem. The DTI was asked what it was doing to look at that part of the Northern Cape Province.

 Mr Zikode responded that industrial parks in other provinces would also be looked at, budget allowing of course. The industrial parks mentioned in the briefing were the first batch that was looked at.

Ms Samuel said she was not aware that the Northern Cape had an industrial park. Other areas were on the DTI’s radar and it was work in progress. Work was being done on a Special Economic Zones Unit. 

Mr Faber responded that at Pampierstad in the old Bophuthatswana there was a huge industrial park. It had however become dilapidated. Trucks and buses amongst other things had been built there. How could Members be assured that the DTI covered all provinces? Members after all represented the interests of their provinces.

Mr Zikode gave the assurance that the area referred to by Mr Faber would be looked at by the DTI and it would report back to the Committee.

Mr B Nthebe (ANC, North West) commented that in the Taung area the Department of Agriculture was working with the provincial government of the North West Province on an Agro-Processing Plant. The project however depended on whether funding could be made available.  The issue was about the DTI identifying places. Taung was located between the Northern Cape and North West Provinces. The Industrial Park at Taung served both Provinces. There were also industrial parks at Zeerust and Mafikeng and there were many examples. The DTI needed a budget in order to identify industrial parks. He pointed out that the DTI had in April 2016 reported to the Portfolio Committee on Trade and Industry that it was almost complete with Phase 1. Was Phase 1 nearing its end? The DTI needed to speed up things.

Mr Zikode stated there were many industrial parks all over SA and the DTI would attempt to go to each one. He explained that in April 2016 Phase 1 of two industrial parks had been completed. At the end of September and October 2016 Phase 1 at various industrial parks would be launched. It would also happen during the 1st Quarter of 2017. The DTI’s Industrial Parks Revitalisation Programme had started in September 2015. The DTI was working with speed.

Ms M Dikgale (ANC, Limpopo) pointed out that on page 7 of the briefing document the budget allocation of the Limpopo Province was lower than that of other provinces. However, on page 9 the occupancy of the Limpopo Province was higher than the other provinces. She asked for an explanation.

Mr Zikode conceded that the budget allocation and occupancy figures of Limpopo Province seemed skewed. He explained that there was not much that had to be done on Phase 1 at Seshego Industrial Park. The budget for Phase 2 would be greater. Other factors were that the industrial parks in the Limpopo Province were not so big and were not in such a bad state.

Ms Dikgale asked how the DTI would ensure that buildings at industrial parks that were refurbished would not revert back to their dilapidated states.

Mr Zikode explained that after industrial parks were revitalised the DTI, provinces and municipalities would have to come on board to attract investors to maintain the industrial park. They would also have to find suitable businesses to utilise the industrial park. Proper management of industrial parks was a must. Provinces and municipalities needed to have a plan in place. No industrial park would be revitalised without a proper plan. The DTI worked close with provinces.

Dr Y Vawda (EFF, Mpumalanga) was disappointed that the briefing did not speak to the feasibility of the Programme in relation to the revitalisation of industrial parks. Whatever small projects were being invested in had to be feasible. What was the plan to turn around things? How many industrial parks were there nationally? What were the criteria in choosing which industrial parks to revitalise? The briefing had not been consistent about specifics on industrial parks. On some industrial parks specifics were given whilst on others they were not. Even though mention was made of ten industrial parks he only counted six in the briefing document. What was an industrial park? The Committee needed detail on the location, size and industry type of industrial parks. No detail was provided on the numbers of people employed at the industrial parks mentioned. How much money was going to be spent to retain the jobs that were there? Detail should have been provided on what specifically needed to be done at the industrial parks mentioned. He conceded he was being critical of the presentation but that his intentions were noble. With the Black Industrialist Programme billions of Rands were involved.

Mr Zikode stated that the DTI had a detailed plan with the Development Bank of Southern Africa (DBSA) i.e. project plan. The project plan would touch on the feasibility of industrial parks and on the companies operating within industrial parks. The DTI worked with SEDA which had incubator programmes. Organisations of government were being used to assist the competitiveness of businesses. On the Black Industrialist Programme the aim was initially to assist 100 black industrialists limited to what was budgeted for. The economy itself would generate more black industrialists. They had to be genuine and feasible and the environment itself would find them. The issue was not only about DTI incentives.

The Chairperson was concerned that the aim of the Programme was after all to build the economy whilst at the same time benefitting locals. He said in the area of Ottery in Cape Town there was an industrial park that was not forcefully occupied by locals. He also noted that a great deal of foodstuffs that were imported into SA were not good health wise. When industrial parks were established it had to be ensured that the products were up to par and that locals were benefitting.

Mr Zikode said the questions and comments of the Committee were useful. The Committee could be provided with a detailed report on the assessments done on industrial parks. In this way Members would have a clear understanding of what plans were and on what was happening. The DTI would wish to return to the Committee in order to brief Members on its policy on industrial parks. It would speak to the DTI’s long term plan. It would shed light on both private owned and government owned industrial parks.
           
Committee Minutes

Minutes dated 24 August 2016 were adopted as amended.

The meeting was adjourned.
 

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