Industrial Parks revitalisation: DTI progress report

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Trade and Industry

21 September 2016
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Industrial Parks revitalisation programme was introduced as being a structured programme for the revitalisation of industrial parks in the old industrial areas across the country and was initiated in September 2015. The programme has identified the first ten state owned industrial parks to be revitalised.

The purpose of the programme is to revitalise SA’s state owned industrial parks enabling them to serve as catalysts for broader economic and industrial development in their host regions (townships and rural areas). The DTI seeks to modernise the industrial parks infrastructure and upgrade security features to ensure a safe and secure working environment for both firms and clients. It is also firming up the industrial parks boundaries so as to curb encroachment and prevent environmental hazards.

The main objectives of the revitalisation programme are to accelerate economic development in lagging regions by attracting business investments to locate in those areas. The DTI wants to develop sustainable industrial clusters on the back of the old industrial assets in those regions and to support job creation in manufacturing and related sectors so as to arrest negative externalities associated with urban congestion. Also it wishes to provide new opportunities and support the high growth in the townships, rural and distressed areas.

The programme plan has four phases with phase one being security infrastructure upgrade, fencing, street lighting, top structures and critical electricity requirements. The second phase is engineering designs and construction of new and existing roads, bulk water supply and sewage treatment plants or industrial effluent control. Phase three is the upgrading of electricity infrastructure and building of new top structures in line with the expansion of the programme of the parks. The development of sustainable industrial clusters in the parks forms phase four.

So far Botshabelo, Seshego, Queenindustria, Babalegi, Isithebe and Vulindlela Heights have phase 1 completed. The rest of the four, DTI hopes will have its phase 1 completed by November. The industrial parks have thus far created employment within their communities as labour and supplies of goods used were locally procured.

Members asked how much the total infrastructure upgrades cost; whether the upgrades were done by black owned companies; about progress in Ezibeleni; the system and interaction between national, provincial and local government for this programme and what their joint responsibilities are; should fencing not be done by individual factory owners as in Queenstown some of the fencing has been cut through; surely provincial governments do not have money to assist; is DTI training young people to maintain these industrial parks; what is the linkage with the Black Industrialist programme; will the funding mechanism of the industrial parks be seriously reviewed.

Meeting report

Mr Sipho Zikode, DTI Deputy Director-General: Special Economic Zones and Economic Transformation, said the Industrial Parks revitalisation programme is structured for the revitalisation of industrial parks located in the old industrial areas across the country and was initiated in September 2015. The programme has identified the first ten state owned industrial parks to be revitalised. The programme focuses on both the physical infrastructure and other support requirements. The DTI has forged strategic partnerships for the implementation of the programme on a national scale. It has partnered with the Development Bank of Southern Africa (DBSA). The first phase covering six industrial parks has been initiated and by November the rest of the ten will also be initiated.

The purpose of the programme is to revitalise SA’s state owned industrial parks enabling them to serve as catalysts for broader economic and industrial development in their host regions (townships and rural areas). The DTI seeks to modernise the industrial parks infrastructure and upgrade security features to ensure a safe and secure working environment for both firms and clients. It is also firming up the industrial parks boundaries so as to curb encroachment and prevent environmental hazards.

The main objectives of the revitalisation programme are to accelerate economic development in lagging regions by attracting business investments to locate in the areas. The DTI wants to develop sustainable industrial clusters on the back of the old industrial assets in those regions and to support job creation in manufacturing and related sectors so as to arrest negative externalities associated with urban congestion. Also it wishes to provide new opportunities and support the high growth in the townships, rural and distressed areas.

The six industrial parks which are in their first phases are Botshabelo in the Free State, Seshego in Limpopo, Isithebe in KwaZulu-Natal, Queenindustria in Queenstown Eastern Cape, Vulindlela Heights in Mthatha Eastern Cape and Babalegi in the North West. The rest of the four are in Mpumalanga, Phuthaditjhaba in Free State, Ga-Rankuwa in North West and Nkowankowa in Limpopo.

The programme plan has four phases with phase one being security infrastructure upgrade, fencing, street lighting, top structures and critical electricity requirements. The second phase is engineering designs and construction of new and existing roads, bulk water supply and sewage treatment plants or industrial effluent control. Phase three is the upgrading of electricity infrastructure and building of new top structures in line with the expansion of the programme of the parks. The development of sustainable industrial clusters in the parks forms phase four.

The completed phase 1 in Botshabelo entailed the installation of access control gates complete with boom gates, pedestrian access point with a combination of turnstiles and pedestrian gates and installation of roller shutter doors. A 6.7km invisible fencing was erected. High mast new lighting was installed. Overall, 92 labourers were appointed for the Botshabelo industrial park. Material and supplies required were procured from local suppliers.

Ms Grace Shaba, Executive Core Operations: Free State Development Corporation (FDC), addressed the Committee and said the benefit has been immense and that there has been a decline in crime. There has been a retention of tenants as they now feel safe. Cherry Moss, which is one of the tenants, is expanding and has requested further space to rent. The Botshabelo industrial park is now sitting with 89% occupancy rate after security was installed.

The Botshabelo industrial park has attracted new business and created jobs from the following investors: ZZ Knitting (Pty) Ltd, Blue Maize (Pty) Ltd and Emerald Sky Trading (Pty) Ltd to mention but a few.

The phase 1 of the Seshego industrial park was approved for R21 069 308. The initial scope of the industrial parks comprised of security upgrades in-line with the Phase 1 objectives. A major problem experienced by the Seshego industrial park was illegal occupation and dumping in areas of the industrial park that were not in use.

Mr Tshepo Phetla, Group: Chief Operations Officer, Limpopo Economic Development Agency (LEDA), addressed the Committee and said that Seshego has an advantage in that it is situated 10kms from the city centre. LEDA has engaged with the municipality and has received about 100 hectares of land. There is a high demand and currently Seshego industrial park is sitting at 92% occupancy rate. The key manufacturing client is Nampak.

The presentation was concluded with a future prospective for industrial parks and that is to create “a highly cohesive industrial park thriving on local content and innovation that leads to efficient production of high value goods and services”.

Discussion
Mr A Williams (ANC) asked how much the total infrastructure upgrades cost. And whether the upgrades in all the industrial parks were done by black owned companies and if they were not, why not?

Mr Lionel October, DTI Director General, responded that the DTI has allocated R189 million for the entire programme for the year and it has not received an additional budget. It has taken money from the critical infrastructure programme and reallocated it using the DBSA as its mechanism.

Ms P Mantashe (ANC) said she wished the DTI could change its delivery pattern. She has been to Queenindustria and she has not seen the work the DTI spoke of there. In the report, it is only confined to Queenstown and yet the brief combined Ezibeleni. She said so far the work is in the white zones and not where the former black areas are.

Mr October responded that the DTI takes her guidance on the matter and the aim is to change what exists. The DTI wants to break old realities.

Mr A Alberts (FF+) asked the DTI to explain more on the interaction between National, Provincial and Local government. He asked what their joint responsibilities are. He asked the DTI to elaborate on what they meant by labour reforms with regard to the industrial parks?

Mr October responded that when these areas were created, they were specifically created and banned labour unions. There were no labour laws and there was abuse. When the Taiwanese were brought in it was under that commitment. If the areas are to become world class, labour must be modernised.

Mr G Hill-Lewis (DA) said he is not sure why the focus was on putting fences on the parks if they are not going to be an Industrial Development Zone (IDZ) or Special Economic Zone (SEZ). He is not sure why all these amounts of money were spent to close off the industrial parks when it could be like any industrial area in the country and if it is closed off it is done individually by the factory owners. He said we are now going to sit with a situation where in Queenstown some of the fencing has been cut through and the DTI will have to spend money maintaining it. He said there is a benefit in letting factory owners do it themselves as it is an incentive to maintain the infrastructure and keep their premise safe. He said Cape Town has to deal with Atlantis that is also about 60km outside Cape Town as a result of the Apartheid madness. It is an enormous struggle to get businesses to invest, it comes down to massive expenditure for government, massive financial gifts such as tax and electricity to get companies to go to Atlantis. Provincial government does not have money and local government can at least give service discounts. He does not see how provincial governments can assist.

Mr October said the DTI does a ‘needs assessment ‘before it proceeds and gets everyone involved. He said business owners are leaving because of crime so how can we ask them to put up fences?

Mr B Mkongi (ANC) welcomed the report and said he understands there are challenges faced by local government in terms of revenue collection and the burden put on provinces for example with SEZ. The revitalisation of the industrial parks is a national fundamental that responds to the five national goals of boosting the economy, employment creation, reducing crime, and rural and peri-rural development. He said if we agree that the establishing of those industrial parks will assist the government in achieving those national goals therefore the issue of national consensus will be necessary to talk about where the funding should come from. He said he is worried about skills transfer and skills development of the youth. He asked if DTI is training young people to maintain these industrial parks. He asked what the linkage with the Black Industrialist programme is.

The Chairperson said he hopes there is a system in place between different spheres of government working together. She said she understands there are budget constraints, but she hopes the funding mechanism of the industrial parks is seriously reviewed. She asked if government can overcome some of the challenges it has faced in the past.

Ms Stieneke Samuel, DTI Chief Director: Regional Industrial Development, responded that the firms or contractors DTI engaged to do the revitalisation programme had an emphasis on black owned companies and not only that, but first preference is to a contractor in the local area. The products used are locally procured and the labourers are locally sourced and in doing this the DTI involves the municipality to ensure it is a local programme. She referred to Ezibeleni, saying the DTI has implemented what Ms Mantashe suggested and it has met with the agents dealing with Queenindustria and the municipality. Phase 1B is the link with Queenindustria and Ezibeleni. She said the DTI wants to do roads but it does not have adequate funding for the roads yet. She said the DTI is linking the parks with the Black Industrialist programme.

Mr David Selamolela. Manager: LEDA, responded that squatters was a big challenge, but the fencing has resolved that. He said there would not be people using the land illegally again. He added that the maintenance is monitoring fences with daily patrols.

Mr October said the DTI is really in the early stages of the programme and for the programme to work it needs the three tiers of government to work together. The DTI will be the catalyst of the programme to get everyone’s interests in this programme.

Mr B Mkongi (ANC) closed off by saying that the issue now is how the programme will be funded.

The meeting was adjourned.

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