The Saldanha Bay Industrial Development Zone (SBIDZ) licensing company and Wesgro presented their respective 2019/20 Annual Performance Plans to the Committee, after which the Department of Economic Development and Tourism provided an introductory briefing to Members.
The state-owned SBIDZ was concerned with the entire chain of oil and gas production, from extraction to processing and distribution. They also maintained infrastructure which ensured that maritime products and services were open 24/7. They directly contributed R6 billion to the national gross domestic product (GDP) between 2015 and 2018, and were responsible for an average direct employment of 6 800 jobs a year. A six-point business model was detailed which the company abided by in order to promote ease of conducting business. Policy uncertainty would prevent investment into the South African oil and gas market beyond appraisal drilling, and it would take time to address this. Therefore, the SBIDZ could not set South Africa as its target market. Its market was Africa as a whole, with a particular emphasis the demand by passing shipping for vessel fabrication, repairs and maintenance, including retrofitting.
Members asked why there had been a delay in finalising the appointment of the chief executive officer.
Was it part of SBIDZ’s mandate to help address the decline in economic activity? How many jobs had SBIDZ created, and how much economic development was it responsible for? They wanted clarity on what the organisation wanted to achieve, since this was difficult to quantify in preliminary discussions of budgetary allocations with Members who did not fully understand the issues and challenges at hand.
Wesgro informed Members that it was the official tourism, trade and investment promotion agency for Cape Town and the Western Cape. Their mandate was to support and promote economic growth and development in the province. In order to meet their mission of developing the Western Cape into one of world’s leading regional provinces, the “Visit Knysna” initiative had been developed to ensure that Knysna, on the Garden Route, continued to be promoted as a tourist destination. Wesgro’s core functions included being an economic diplomacy role-player, as a part of a ‘whole of province’ approach to driving tourism, trade and investment, with a demand-led approach to sectors and markets. They had 35 years’ experience in providing effective and proactive investment facilitation in the Western Cape, and provided an accelerated route to foreign markets for clients to sell their goods and services.
Members asked what stake Wesgro had in the local film industry. Was it an investment company or an investment promotion company? Could they identify opportunities to invest in the informal economy? They wanted to know why Wesgro’s website was outdated, and if it also acted as an incubator of events. What was the impact of SA’s foreign policy on their operations? What had been the main export services they had helped to facilitate? What had been their contribution to the jobs targets, and how was it measured? What support was being given to the George municipality?
The Department of Economic Development and Tourism briefed Members on the role of the Department, which had some degree of oversight over both the SBIDZ and Wesgro. The Department hoped that they were able to develop the potential of the Western Cape. It encouraged competitiveness to promote expansion. Its economic operations were focused on programmes that promoted small businesses. It also developed entrepreneurial sentiments in order to sustain the development of these enterprises. It encouraged red tape reduction, and provided municipal economic support in order to promote economic growth in the province as a whole. Significant sectors for development included agri-processing, oil and gas, and the oceans economy. Tourism had always been a big sector in the Western Cape. The Department had a number of Cape projects aimed at achieving both infrastructure investments and the catalytic effect that these investments would have on the local economy.
Members asked the Department what it was doing about economic development partnerships; how it aligned strategies when providing municipal economic support; and while tourism might be considered part of the elitist economy, what was being done to help this industry benefit the poorer areas? Why were tours into the townships not being conducted by people who lived there?
Saldanha Bay Industrial Development Zone: Annual Performance Plan
Ms Kaashifah Beukes, Acting Chief Executive Officer (CEO): Saldanha Bay Industrial Development Zone (SBIDZ), said the organisation was a state-owned company (SOC) which promoted, managed and marketed the Saldanha Bay development zone. Its success was dependent on the economic landscape that the company found itself in -- it was not isolated from the wider economy.
The SBIDZ was concerned with the entire chain of oil and gas production, from extraction to processing to distribution. They also maintained infrastructure which ensured that maritime products and services were open 24/7. They had directly contributed R6 bn to South Africa’s gross domestic product (GDP) between 2015 and 2018, and were responsible for an average direct employment of 6 800 jobs per year. Repair and maintenance work constituted 81% of their provincial maritime industry.
The SBIDZ intended to upgrade waste treatment works, internal engineering services and construct additional roads and bridges. There were also ongoing plans to build a general warehouse. The total value of these projects would require R742 million in Special Economic Zone (SEZ) grant funding. Some funding had been secured for three tenants totalling R292 million.
The company abided by a six-point model in order to promote ease of conducting business. Stress was also placed on the business’s hiring record. A total of 2 199 individual training opportunities had been created since 2014/15. Policy uncertainty would prevent investment into the country’s oil and gas market beyond appraisal drilling, and it would take time to address this, so the SBIDZ could not set South Africa as its target market. Its market was Africa and relied on passing shipping demand for vessel fabrication, repairs and maintenance, including retrofitting. Commercial sustainability depended on the acceleration of the tenant pipeline into operational projects, which in turn was co-dependent on the business operation environment within and beyond the zone. Inclusion depended on awareness and understanding of the community and the development of local people and businesses for specific needs.
Mr A van der Westhuizen (DA) said he believed the position of CEO had been vacant for a year, and wondered why there had been a delay in finalising this appointment. What was meant by “free trade” for those wanting to use the port? He commented that the South African economy was experiencing particular challenges at the moment -- did it form part of SBIDZ’s mandate to help address that?
Ms N Nkondlo (ANC) wanted to understand what was meant by “social community transformation” in the presentation. It was stated that inclusion depended on one’s understanding of the community, with which she broadly agreed, but she wanted to know what strategy had been put in place to ensure this. What profile do they have in place for this area? How were they going to measure and quantify what counted as inclusion? They had referred to 520 learners completing training -- which specific areas had they been trained in and where had they been allocated? There was talk about 1 495 individuals being trained later, and she was not sure how this training measured up. How were they ensuring that enterprise development was related to sector needs?
The Chairperson asked what SBIDZ needed to happen for these particular investments.
Mr Douglas Southgate, Chief Operations Officer, saud that the intention was to finalise the CEO appointment next week.
Ms Beukes added that she would delegate those questions to her board, given that they specialised in particular issues. From the viewpoint of measuring before and after, her company ran their investments through an economic model. Firstly, it was a provincial level model. The board had asked the question of whether the GDP measured more than growth. It did seem to measure inclusion, so they were developing a model that would help determine what their impact would be on the local economy. They were trying to foolproof the model.
Ms Benedicta Durcan, Executive: Ease of Doing Business, asked Mr Van der Westhuizen what type of free trade he needed clarity on.
Mr Van der Westhuizen replied that he wanted clarity on SBIDZ’s understanding of the different types of free trade.
Ms Durcan said that some goods which passed through counted as imports. SBIDZ did not want to be hindered by these tariffs. Shipping could be delayed for up to a week. Free ports allowed for greater ease of transfer. With regard to port of entry, ships might need crew changes, or have people leave or arrive. The Department of Home Affairs was concerned with the movement of people in and out of the country, and SBIDZ wanted to streamline this process and make it easier for companies.
Ms Laura Peinke, Executive: Business Development, SBIDZ, said the company worked within the WC government. On an issue of problem like addressing the price of electricity, they were working together to address their concerns over how cheaper energy might be supplied to their facilities. There was a natural dependence on companies in the area. Steel, for example, would be sourced from local facilities. They were aware of the recent ministerial visit and wanted to ensure continued integration. They were clarifying whether companies were engaging with them to receive their petroleum pipeline licences. They had received their environmental authorisation with a lot of support from the Department of Environmental Affairs.
Mr Patrick Lakabane, Executive: Development Programmes, SBIDZ, commented that since 2013, the company had made a lot of partners because development projects were unfortunately under-funded. They had been successful so far so they could not complain that they had not received funding. They were building, bit by bit, programmes that ensured they met the needs of trainees. The numbers given referred to individual training opportunities. Not all learners would necessarily graduate. A learnership took a minimum of three years. After that, they would move to an apprenticeship before full employment. The system was functional -- it was just a question of improving its qualities. One question was how they used their funds in such a way that local enterprises benefited from it, as they wanted to ensure that the businesses they associated with were fully accredited.
Ms Danielle Manuel, Acting Executive: Stakeholder Management, added that the SBIDZ was trying to ensure that everyone was involved in a meaningful and sustainable way.
Ms N Makamba-Botya (EFF) wanted to find out how many contractors were people of colour and how many were white people?
Mr Van der Westhuizen added that the Committee had heard a lot about the organisation. The biggest parameter of success, though, was how many jobs they had created. Since SBIDZ was partly funded by public money, their own jobs excluded, how much economic development were they responsible for?
Ms Nkondlo maintained that SBDIZ was here to contribute to a better environment. It needed to demonstrate tangible results. One of the contribution targets was the creation of jobs. Could the Committee be given this information? She wanted tangible descriptions of what they had achieved, and would still achieve. They could not talk about what they wanted to achieve, since this was difficult to quantify in preliminary discussions of budgetary allocations with Members who did not fully understand the issues. Specifically, how many people had participated in programmes -- this was a welder, this was a coder and so forth? The taxpayer could not indiscriminately service projects sitting in the pipeline. Concrete data was needed.
Ms Beukes said that SBIDZ could provide information about the pipeline plans to Members after the presentation. Their economic model could give figures for development and employment in coming years. On numbers, they were moving away from the GDP and jobs to examine inclusivity impacts.
Ms Peinke commented that on the nine leases the SBIDZ had signed, eight companies were either level 1 or 2 black economic empowerment (BEE) compliant. One company was a R2 billion investment -- these were not small companies. While it was easy to report an accreditation level, it was harder to get a grasp on how this related to their aims.
Wesgro Annual Performance Plan
Mr Tim Harris, CEO: Wesgro, said their mandate was to support and promote the economic growth and development of the Western Cape and the City of Cape Town. Members would notice that their aspirations had changed since previous meetings. This had been in order to meet their mission of developing the Western Cape into one of world’s leading regional provinces. A template of the company’s mandate was presented, which included details of the “Visit Knysna” initiative programme. Wesgro wanted to ensure that Knysna, on the Garden Route, continued to be promoted as a tourist destination, after some issues had been raised by the local municipality.
Wesgro’s core functions included their being an economic diplomacy role-player, as a part of a ‘whole of province’ approach to driving tourism, trade and investment. They had an integrated economic diplomacy value chain approach, including a demand-led approach to sectors and markets. They had 35 years’ experience in providing effective and proactive investment facilitation into the Western Cape. They provided an accelerated route to foreign markets for their clients to sell their goods and services.
Wesgro’s five-year strategic framework set out their strategic positioning for the period 2020/21 to 2024/25. The framework would inform their strategic plan, annual board plans, annual performance plans and operational plans, as illustrated in their strategic planning process. In terms of efficiency improvements, they intended to stop incubating projects that resulted in duplication of functions and/or effort.
Mr L Mvimbi (ANC) asked what percentage stake Wesgro had in the film industry here. What was the value of their intervention? Was Wesgro an investment company or an investment promotion company? Could they clarify what their general aims were? Could they identify opportunities to invest in the informal economy?
Mr Van der Westhuizen said that apart from promoting the Western Cape, Wesgro also seemed to be assisting it. On their website, they were promoting events that happened two years ago. Why were they so behind in their marketing? He had been to Europe as a tourist in the summer and had been struck by the number of events. His question was, to what event did Wesgro also act as an incubator of events? To what extent could people with enthusiasm approach Wesgro for their support in order to stage their events?
Ms Nklonda commented that the backdrop to international engagement had to be done against South Africa’s foreign policy. Where were the challenges there? Regarding facilitated, assisted exports, what had been the main export services that they had helped to facilitate? What had been their contribution on the jobs targets, and how did they measure them? What was the scope of the project that they were working on with the Knysna municipality? How were they helping them to develop their own projects?
Mr D Mitchell (DA) asked what role Wesgro would play in bringing tourists and investment into the Western Cape. What was the investment into the George area, given that it was the second biggest municipality after Cape Town?
The Chairperson asked what the province’s largest export markets were. What were their projects in the African regions? There was legislation for AirBnB establishments before Parliament --what impact would it have on the WC should it be adopted? What investments were being made in the Karoo area? There was land there that may or may not have received investments - what was the scope for looking at wind and solar development there? United Airlines was launching a direct flight to Cape Town from New York -- how was that implementation going?
Mr James Milne, Head: Investment Promotion, Wesgro, said Wesgro had developed phase one of their partnership development with the George municipality. It had taken them through several phases of component delivery that allowed them to develop a platform to promote themselves to investors. The municipality was being promoted in Sweden, the United Kingdom (UK) and the United States (US), as well as in Durban, Johannesburg and Cape Town itself. Wesgro was also training them on the proper business decorum for dealing with investors.
Mr Harris added that Wesgro had taken a 10% stake in the film studios. It had some leverage to hold the film studios to certain investment targets. On the informal economy, there was no investment mandate linked to the informal economy. Because Wesgro was specifically looking to develop direct and foreign investment, it was focused on the top end of the market. It worked with smaller companies and helped them develop their export capabilities.
Wesgro supported a number events across the region. It had won more than 100 bids for events against competing places in larger regions.
Ms Kendra Stoffberg, Chief of Staff: Wesgro, commented that the website was going to get an upgrade. It would become more functional for visitors and clients. Wesgro requests employment statistics from those companies that they co-operate with, which was a way in which they quantified their impact. Some municipalities had had their tourism mandate repurposed. Wesgro would try to work with these regional tourist markets too. They had such a significant number of events that they had separate calendars for different types of events.
Mr Harris added that Wesgro had organised over 100 foreign missions in recent years, and co-ordinated with the embassies to organise these. The Western Cape’s top five exports were oil, citrus, wine, grapes and apples. Wesgro also had a particular focus on growing export services.
Regarding land reform proposals, if an issue became a big enough problem within the Cape economy, Wesgro would begin to get involved. They had developed a contingency programme for this during the drought, through which they would be better able to field a co-ordinated publicity response.
Recent deals with the African regions included helping a Stellenbosch-based company to launch a R90 million trade deal with Ethiopia. The United Airlines link with New York was positive news for the province, given the tourist revenues it would bring in.
Mr Mitchell said that some issues existed between the municipal and provincial offices. He was questioning this because some smaller towns had huge potential for the development of a tourist infrastructure. Were these kinds of opportunities being explored? Was Wesgro focusing on the tourism aspect? What was the link between Wesgro and the government’s Department of Tourism?
Mr Mvimbi asked if Wesgro could consider promoting these tourism and exports in the informal economy too? In most of these poor communities, sport was a big thing. One would see people playing soccer and rugby in the townships. Could this be developed? Lastly, could they help these communities and municipalities to develop strategies for promoting investments?
Mr Harris responded that Wesgro had recently spent two days with various municipalities and mayors in the province to discuss developing these strategies. On co-operating with the Department, Wesgro promoted and developed particular projects, and then co-ordinated with the Department on their implementation. It had created a pitching contest for events this year, to allow entrepreneurs the chance to pitch their events to them.
Department of Economic Development and Tourism: Briefing
Ms Jo-Ann Johnston, Deputy Director General (DDG): Department for Economic Development and Tourism, informed members that the Department had some degree of oversight over SBIDZ and Wesgro. They encouraged further engagement with these companies. The Department hoped that they were able to develop the potential of the Western Cape. They encouraged competitiveness in order to promote expansion. They sought to provide economic growth with their leadership.
Mr Rashid Toefy, DDG: Department of Economic Development and Tourism, said that Economic Operations focused on programmes that promoted small businesses. It developed entrepreneurial sentiments in order to sustain the development of these enterprises. It also encouraged red tape reduction in order to catalyse and grow businesses, and provide municipal economic support in order to promote the economic growth of the province as a whole. They examined sectors where there were opportunities for growth. The mandate for Wesgro fell within the mandate of this Department and they co-ordinated with each other to promote growth. Significant sectors for development included agri-processing, oil and gas, and the oceans economy. Three horizons for development included agriculture, film and ecosystem development. Tourism had always been a big sector in the Western Cape. There were two aspects, marketing and management. With management, for example, they dealt with issues like safety for tourists. They also partnered with businesses in order to help develop skills.
Ms Johnston added that the social and economic development (SED) branch dealt with strategic economical acceleration and development into order to create growth and jobs. The digital economy was a significant component of the global economy, and they had looked at different initiatives in order to take advantage of this market. They had also examined opportunities in the green economy. There were a number of Cape catalyst projects in order to achieve both infrastructure investment and the catalytic effect that these investments would have on the local economy.
Mr Van der Westhuizen referred to the promotion of tourism, and commented that there used to be a guesthouse tourism association that took booking commissions. With online booking, how did they address this loss of income? Also, what model was best for working with municipalities?
Mr Solly Fourie, Head of Department: Economic Development and Tourism, replied that the Department was developing economic strategies for districts. They had developed a couple of hybrid systems which involved Wesgro staff helping to run local municipalities. They seriously needed to address the gap between national and provincial tourism. The Department did not have a complete answer as to what the model would be, but they were developing it.
Ms Nklondo asked where economic development partnerships (EDPs) were found in their reporting. On municipal economic support, how did they align strategies? Had they started working with municipalities to help address some of the legal issues that might arise when co-ordinating together?
Mr Mvimbi asked if the Department had looked into the development of Pick’n’Pay supermarkets in townships. Tourism had been called an elitist facet of the economy, there to benefit the elite - what was being done to help this industry benefit poorer areas? What events could help benefit poor areas? On tour guides, people who conducted township tours were not from the townships. Could this be improved on?
Mr Fourie replied that tourism promotion was all handled through Wesgro, so the website the Member might had consulted was now old and outdated. EDPs aimed at putting partnerships together within the economic development ecosystem. On municipal economic support, the Department had an alignment between local programmes and provincial development systems. In the central Karoo, the Department was talking with district heads to ensure that those towns were not left behind from a developmental perspective. Many businesses with red tape issues were being provided with solutions. The Department had done a lot of work on education and awareness for businesses who may have issues with operating properly before.
The Department encouraged the larger chains of supermarkets in the townships. While tourism may be elitist, it was still a significant boon to the economy. The DDG took the point on the appointment of tour guides.
Mr Fourie said he wanted the Committee to note that the country’s economy was in a crisis. A lot of what the Department did was to encourage development. When one started exporting, one started creating jobs in the area of semi- and low-skilled employment.
The Chairperson raised a number of issues. Were Members happy with a particular date for an oversight visit? Should the Committee request the racial split of the SBIDZ membership levels? Should the submission made on the Tourism Amendment Bill be sent back to the Committee?
Ms Nkondlo requested information on the Department’s strategic framework.
The Chairperson asked if Members wanted a summary of the funding for transformation. Staff needed to give the primary Members these documents. It featured a question and answer section, and was confidential.
Mr Mitchell had a broader point about questions posed to guest speakers. He argued that Members ought to protect the integrity of the process by not emailing questions ahead of time.
Mr Van der Westhuizen agreed that this was a good idea, but said that it may require short notice to prepare and distribute these questions. He also felt that it was very important that people should be allowed to vote on certain issues only if they attended all the interviews dealing with those issues.
The Chairperson asked Members how they would feel about a compromise position between prepared and unprepared questions. She added that in the scoresheet Members received in their pack, extra questions could be written on the scoresheet, or could be emailed to her. She encouraged primary members to stay for the day at the longer sitting the following week.
The meeting was adjourned.
The value proposition maintains that South Africa rehires ports and people for manufacturing repair and various support services. In terms of ongoing sales and investments, the sale of the IDC was in progress, 2 have been transferred and 6 were awaiting.
A lot of what the IFF was going to be doing, there was a natural depend from companies in the area.
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