ATC150818: A Joint Report by the Select Committee on Trade and International Relations, and Select Committee on Economic and Business Development on their Joint Oversight visit to Northern Cape and Limpopo Provinces 21 - 24 October 2014
A Joint Report by the Select Committee on Trade and International Relations, and Select Committee on Economic and Business Development on their Joint Oversight visit to Northern Cape and Limpopo Provinces 21 - 24 October 2014
The Select Committee on Trade and International Relations jointly with the Select Committee on Economic and Business Development, having conducted a joint oversight visit to the Northern Cape and Limpopo, the ZF Mgcawu District Municipality and Vhembe District Municipality respectively, from 21 to 24 October 2014, report as follows:
The Select Committee on Trade and International Relations and the Select Committee on Economic and Business Development, in line with the constitutional mandate of conducting oversight in the three spheres of government, visited two district municipalities in the provinces of the Northern Cape and Limpopo, ZF Mgcawu District Municipality and Vhembe District Municipality respectively. The oversight sought to assess if the district municipalities have aligned their district budgets and programmes to the National Development Plan (NDP), Industrial Policy Action Plan (IPAP) and the New Growth Path (NGP). The aim of alignment being to ensure that the districts are able to address the national triple challenges of poverty, inequality and unemployment through sustained economic growth. The two committees further assessed the ability of these municipalities to harnessing all the available resources at their disposal towards employment creation.
1.1 Overview of the Oversight
The oversight visit to the Northern Cape and Limpopo provinces revealed that the socio-geographic and legacy factors play a role in determining the ability of a municipality to perform its constitutional obligations. Generally local authorities lack capacity in functional policy areas such as finance, spatial planning, and engineering including economic planning.
The leadership behaviours of councilors and heads of the executive management, also play a significant role in determining the ability of a municipality to perform well.
There is also a growing sense that current local government funding arrangements may not be addressing the objectives of rural development and redistribution adequately. The greatest challenge facing local government is the decline in public trust in municipalities. This is being reflected in public opinion surveys and increased public protests. At the heart of the problem appears to be growing public frustration with poor governance, resulting in poor service delivery in many municipalities. The service delivery protests point to the urgent need to improve the service delivery situation in many municipalities.
The report further confirms the findings of the National Development Plan (NDP), which reflects that there are severe shortage of technical and specialist skills in local government. There is an inability to fill the skills gap created by ageing cohorts.
There is a need to stabilise the political-administrative interface by focusing on skills and professionalism. The report also emphasis that experience and expertise in recruitment of senior managers, should be the key determining factor in appointment. Some municipalities perform poorly and warrant intervention and many have consistently performed well and set best practice, and that should be used as benchmark to improve overall municipal performance.
Variations are also demonstrated in relation with economic activities. Some of the municipalities are strong in agriculture and others in mining, tourism, and others have demonstrated strong potential and with regard to manufacturing as a relative strong industry. These differences would warrant individual municipalities to pursue different investment and service delivery strategies. The aim is to ensure that various sectors and industries have impact on the local economy, improve local communities’ spending, and thus have impacts on municipal revenues.
The oversight visit also covered the following areas:
- Infrastructure, through the expansion of transport, energy, water, communications and housing;
- Agriculture and the agro-processing sector;
- Mining and mineral beneficiation;
- The green economy and associated manufacturing and services;
- Manufacturing sectors identified in the industrial policy action plan; and
The oversight visit revealed that employment creation remains a challenge. An increase in employment would enable local communities’ to pay municipal services, and thus increase revenue capacity of local municipalities. Further positive growth of municipal revenue would enable local authorities to increase allocations for municipal infrastructure.
The NDP should also find its expression on the local government plans, and implementation programmes. Employment is one of the government’s high priorities. Government aims to substantially increase the number of jobs created through economic growth. Better alignment of national government plans with local government would certainly improve implementation of the NDP. However, local municipalities raised a concern that inadequate resources allocated to municipalities, coupled with incapacity of local municipalities to maximise revenue collection posed a potential to hinder the implementation of the NDP.
The current economic outlook would also have an effect to the local government economy. It should be noted that the slow recovery in global demand, had an effect on the South African economy. The country’s economy is not doing well as expected, and this performance is mirrored on the local government economic outlook. Different growth trends between the sectors of the economy exert different pressures on individual municipalities. For instance, when the manufacturing, mining and agriculture sectors are not doing well, municipalities leading in these industries would be worst affected. This trend had also been noticed in the provinces visited.
Capital expenditure should then be scaled-up, in order to drive investments. Noted reasons for municipal underspending on infrastructure include: unrealistic budget targets resulting in funding shortfalls, particularly due to low levels of funding from internally generated funds; inefficient supply-chain management and lack of capacity to plan and fulfil grant conditions.
Municipalities need to address capacity constraints through increasing the supply of local infrastructure and services in order to accelerate trade, investment and respond to regional economic development. Effective mechanisms to coordinate and sequence public investments are thus required. For example, a new school or a shopping mall will require infrastructure such as local roads, water, electricity and sanitation. Improved intergovernmental relations need no further emphasis.
It was also noted that municipalities should improve expenditure geared to improve productivity in the local economy. The local municipalities need to operate coherent or effective public works programmes. Furthermore, municipalities need to reduce the costs of doing business in their jurisdictions, exploring means to streamlining by-laws and development approvals.
Although the economic outlook is not looking good, local government would still continue to receive fiscal transfers to create a stable fiscal environment for municipalities to operate in. Financial governance remains a challenge and priority. The most common weaknesses identified through the Auditor- General’s audit reports are in management and accounting skills, shortcomings in operational financial management, lack of internal controls and weaknesses in revenue management, supply chain management and asset management. These weaknesses resulted in high levels of material losses/impairments, unauthorised expenditure, fruitless and wasteful, and irregular expenditure.
1.2 Report Structure
Section A of the report captures, in summary, the first leg of the oversight trip which was to the Northern Cape Province. The Northern Cape section is divided into four subheadings each dealing with the outlined objectives of the oversight. The Committees received specific presentations from the District Municipality and each local municipality. Where possible, after each presentation, the committees made recommendations, and these are recorded accordingly in the report.
Three projects were visited by the committees in the Northern Cape. These were: a. the Roepersfontain, Kanoneiland Farm – a privately owned multinational agricultural business with a significant footprint in the local community; b. the Eksteenskuil Agricultural Cooperative – a cooperative of about 107 members’ local grape farmers; and c. the Abengoa Solar Energy Plant – this an alternative energy generation plant with local (Industrial Development Corporation) and Spanish investment.
Section B of the report, also in summary, focusses on the oversight trip to the Limpopo Province. This part of the oversight was to the Vhembe District Municipality. The presentation from the District Municipality, in line with the objectives of the oversight, are reflected as is. One tourism project was visited by the committees in Limpopo; this is the Mapungubwe World Heritage Site. A brief narration of history and current programmes on the World Heritage Site is reflected on the report. This section then concludes with a summary of observations made by the committees on the presentations by the District Municipality and on the oversight trip to Mapungubwe. Finally some direct recommendations with regards to the oversight to Limpopo are made.
Section C, and the last section, of the report presents high-level issues as recommendations. These are structured as policy focus questions that the joint committees will have to facilitate with departments.
2. Multiparty delegation
The delegation consisted of Hon L Suka (ANC) and Hon E Makue (ANC) as leaders of the delegation; Hon EC Van Lingen (DA); Hon LG Mokoena (EFF); Hon SG Mthimunye (ANC); Hon MC Dikgale (ANC); Hon WF Farber (DA); Hon BG Nthebe (ANC); Hon JJ Londt (DA) and Hon YC Vawda (EFF).
The delegation was accompanied by the following parliamentary officials: Ms NG Dinizulu and Mr Hlupheka Mtileni (Committee Secretaries), Mr L Sishuba and Mr Z Masilela (Content Advisors), Mr Z Ngxishe, Mr A Ganief and Mr T Makhanye (Committee Researchers), Mr M Erasmus Committee Assistant and Mr S Maputi (Media).
2.1 In attendance:
The meetings were attended by the Mayors, officials from the District and Local Municipalities, National and Provincial Departments and Stakeholders.
ZF Mgcawu District Municipality: Mr Z Mjila, Speaker; Mr G van Staden, Mayor; and Mr E Ntoba, Municipal Manager;
Kai !Garib Local Municipality: Ms S Jacobs, Speaker; Mr B Fienies, Concillor; Mr J Mackay, Director Planning and Development; Ms D Ngxanga, Municipal Manager; Gen JJ Oly, Mayor; Mr B van Kratenburg, LED Officer; and Mr G Cloete, LED Officer.
//Khara Hais Municipalities: Ms L Koloi, Mayor.
Mutale Municipality: Mr TI Ravhurai, Communication Manager; Mr P Nepfumembe, IDP Manager; Ms S Rambuda, Mayor; Ms LH Ntetshipisel, Speaker; Ms Tshifhiea Raluswinga, Exco Member Corporate Services, Mr G Netshisaulu, Exco Member; Mr AN Lieba, Exco Member Finance; and Mr SS Razwiedani; Municipal Manager.
Makhado Municipality: Mr R Maita, Personal Assistant (Mayor); Mr SA Mathonsi, LED Manager; Mr SM Sinyosi, Portfolio Head Technical; Mr D Ratshikuni, Councillor; Mr R Thandavhathu, Portfolio Head : Sports, Arts and Culture; Mr PF Mashimbye, Portfolio Head; Mr JD Mutavhatsindi, Mayor; and Mr JP Underwood, Executive Councillor.
Musina Local Municipality: Mr T Ncube, Manager IDP; Ms GN Milanzi, Councillor; Mr W Dzebu, Communications Manager; and Mr J Matshivha, Municipal Manager.
Vhembe District Municipality: Mr M Mushaphi, Local Economic Development Manager; Mr MT Baldwin, Executive Mayor; Mr M Samuel, Protocol Officer, Mr L Manyuha, Member of Mayoral Committee; Mr M Litshani, MMC Finance; Mr E Baloyi, Speaker, Ms D Mboyi, MMC Corporate Services; and Ms CK Mphaphuli, MMC for Special Programmes;
Thulamela Local Municipality: Ms NG Mahosi, Mayor; TC Ngobeni, Senieor Manager: Corporate Services; Mr JE Makhomisani, Portfolio Head for Community Services; Ms TS Mbedzi, Portfolio Head of Roads Services; Ms LP Vhengani, Exco Portfolio for Community Service; Ms MS Rammela, Exco Head of Special Council; Mr SG Maluleke, Exco Head: IDP and LED; Ms K Maholwana, Exco Member Finance; Mr M Nemakonde, Manager LED; and Mr E Munjedzi, LED Officer: Agriculture;
Limpopo Provincial Legislature: Mr MS Chego, Portfolio Member, Mr FT Dau, Portfolio Committee Chairperson; and Ms M Mabusela, Coordinator: Economic Development;
Department of Agriculture Northern Cape: Mr S Esterhuysen, District Manager, Ms R Mokwena, Project Coordinator; and Ms T Kadinwa, Project Manager.
Eksteenskuil project: Mr L Adams, Treasurer; Mr P Van Wyk, Ms F Shwartz, Coordinator; Mt S Titus, Additional Member; Mr D W Smith, Vice Chairperson; Mr M Schwartz, Chairman; and Ms E Beukes, Secretary.
Northern Cape Provincial Legislature: Ms G Oliphant, Deputy Chair of Chairs; Mr Mohlakoana, Committee Coordinator; and Mr L Koegelenberg, Acting Manager: Research and Library Services.
Department of Energy: Mr S Mohapi, Regional Energy Director: Petroleum Lincensing; Mr L Mahlangu, Director: IPP Monitoring; Ms B Mxaku, Regional Energisation Manager; Mr L Madzhie, Electrification Planning; Mr G Tshisikhawe, Director: Petroleum Licensing; Mr L Mojanaga, Director IPP Monitoring, and Mr G Ambani, Regional Project Manager.
Department of Economic Development, Environment and Tourism: Mr T Nemutanzhela, Manager; Ms P Mashau, Enterprise Developmen; Mr M Mokqahlane: Manager LED; Mr MS Mashele, Manager; Mr C Khosa, Manager: Loan Proposal and Origination; and Ms T Vhudere, Branch Manager.
Roepersfontain, Kanoneiland Farm: Mr P Karsten, Managing Director; Mr J Bekker, Group Training Manager; and Mr F Botha: Independent Development Corporations.
Abengoa Solar Plant: Mr K Drewes, General Manager.
3. Section A: Presentation by ZF Mgcawu District Municipality and its four identified municipalities
In the Northern Cape, the Committees received a presentation from the ZF Mgcawu District Municipality. The presentation by the District covered the following areas:
- The background and location of ZF Mgcawu District Municipality to give the committees the socio-economic and geographical perspective of the environment the district operates;
- A discussion on the local economic development (LED) strategy, the forums already in place, and the key economic drivers and contributors to the local Gross Domestic Production (GDP);
- Measures in place aimed at supporting small, medium and micro enterprises (SMME) and Co-operatives;
- Interventions designed to attract investment, and to develop and promote local tourism; and
- Update on the Special Economic Zone (SEZ) designation process.
3.1 Local Government Presentation Outline
3.1.1 Enhance local government capacity to attain socio-economic objectives
- ZF Mgcawu District Municipality (DM), was formerly known as Siyanda District Municipality forms the mid-northern section of the province on the frontier with Botswana. It covers an area of more than 100,000 square kilometers (almost 30 per cent of the entire Province) out of which 65,000 square kilometers compromise the vast Kalahari Desert, Kgalagadi Tran frontier Park and the former Bushman Land. The DM comprises six Local Municipalities namely: Mire; Kai! Garb; Kara Hails; Tsantsabane, Kheis and Kgatelopele.
- Upington is the district municipal capital where the municipal government is located. The whole area is managed by the District, which is classified as a category C Municipality. The District has 21 councillors; 13 of them are ward councillors and the other eight are proportional candidates elected to represent political parties on the basis of proportional representation.
- The DM has built on the progressive improvements in internal controls of the past few years to achieve a clean audit. Clean Audit remains a high priority. The DM therefore needs to ensure that the clean audit outcome it has received is sustained, and should be shared as a good practice in local municipalities within the district.
3.1.2 Trade, investment and economic development
- The DM has adopted a Local Economic Development Strategy (LEDS), which is aligned to the Provincial Growth and Development Strategy (PGDS). The main funding for the implementation of the LEDS was co-funded by the Independent Development Trust and the DM.
- As articulated in the LEDS, agriculture and mining sectors are the main contributors to the regional economy, jointly contributing an average of 52 per cent to the district economy. The combined contribution of the manufacturing, electricity and construction represent 7 per cent to the district economy, whilst the tertiary sector, main government services contribute 41 per cent to the economy.
- The LEDS focuses on the following strategic policy components: Institutional development; Agricultural development; Industrial and investment development; Green economy; Infrastructure development; Tourism development; SMMEs and Skills development.
- The DM plans to lobby the national government to establish a tertiary education institution in Upington, with a main focus on agricultural development and management including renewable technology development. Industrial development and investment promotion in mining beneficiation coupled with business support services for the primary sectors are a priority.
- The DM has been declared as a Solar Hub which resulted in the establishment of solar plants across the District, these solar plants are located in Khara Hais, Kai Garib and Kheis Municipalities. The renewable energy investment initiatives have a potential to boost the regional local economy, create employment and improve income level of households.
- However the DM, raised a concern about the lack of involvement of local authorities in the planning and development of the renewable energy plants in the region. The Department of Energy and the developers need to improve engagements and communication with local communities, local and provincial governments regarding the socio-economic development benefits of the energy development projects in order to manage risks that could compromise completion and sustainability of the developments.
- Better management and implementation of social labour plans (SLP) and acceleration of the agro-processing hub and establishment of the Special Economic Zone (SEZ) in Upington would add a valuable contribution to the growth and employment targets for the DM.
- With regard to the green economy, the focus shall be on manufacturing of biodegradable packing, waste recycling plant and solar energy plant. On the infrastructure development, the focus of the DM would be among others, to attract investment to build community shopping centres, roads maintenance and upgrades, establishment of vehicle testing facility in Kai !Garib Local Municipality and building dams/reservoirs.
- Finally on tourism and SMMEs development, the District wants to develop a well updated tourism website to promote and market the tourism potential in the district. SMMEs hub, SMMEs marketing strategy would be developed and encourage utilisation of SEDA services.
- With regard to cooperative development, the DM has provided technical support to various cooperatives. Through the Expanded Public Works Programme support grant, the DM has supported and developed the Kalksloot Rural Development and Green Plan Cooperative respectively, both cooperatives have created 14 and 10 jobs respectively. The DM has managed to secure further funding on behalf of Green Plan Cooperative from the Department of Trade and Industry, of which a boiler machine and a bakkie were purchased. In the overall, SMME support remains a high priority in DM.
- The Upington Special Economic Zone (SEZ) was among the 29 proposal from all provinces. The Department of Trade and Industry has identified Khara Hais Municipality to be a solar hub in the region. Having been identified, the Khara Hais Municipality has taken a decision that endorsed the development of the Solar Hub SEZ to be located in Upington. To that effect, land has been made available. The Department of Trade and Industry would provide technical support in the development of the Master Plan studies for the upgrading of connector services in respect of electricity, water and sewerage services.
The following section would attempt to outline issues based on the presentation of the Kgatelopele Local Municipality, Khara Hais Municipality and Kai! Garib Local Municipality.
- The population of the Kgatelopele Local Municipality (KLM) was recorded as 18 687, and male population representing 51 per cent and female population 49 per cent. The KLM falls under the Gamagara Corridor which is the mining belt stretching from lime acres, Danielskuil to Hotazel in the North. The growth of the corridor brings a lot of people in the region, putting enormous pressure on the resource and service delivery.
- The main mining firms operating in the area consists of Petra Diamonds, Idwala Lime and PPC cement, including other solar energy firms; Lesedi and Jasper Solar Projects.
- The unemployment rate in Kgatelopele recorded 22.3 per cent with young people representing 29, 1 per cent of the unemployment.
- Investment in municipal infrastructure is critical for promoting and sustaining economic growth, as well as for eradicating service delivery backlogs, responding to demographic changes such as urbanisation, and rehabilitating ageing infrastructure. KLM has invested R10 million to the following infrastructure projects: development of solid waste site, additional water source, bulk water supply, streets and storm water upgrade.
- KLM requires infrastructure investment in following areas: electricity network upgrade, replacement of asbestos pipes, sewer network connection, and 203 households’ sewer/water project.
- With regard to the mines’ Social Labour Plan (SLP), investment from 2008-2013, Petra Diamonds contributed R12, 7 million and Idwala Lime R20,5 million and PPC cement was not clearly quantified in the SLP.
- Local Economic Development/SMME Development initiatives covered by the KLM included the development of the business hub to support and promote SMMEs, enhance skills development, and further serve as an information sharing platform for private sector procurement opportunities.
- In an effort to stimulate local economic development, KLM has established an SMME forum and the municipality would increase internal capacity for local economic development by appointing a LED Officer.
- Employment creation is a high priority. Municipal Infrastructure grant and the Extended Public Works Programme (EPWP) initiatives, would also be used to create employment opportunities.
- Key challenges faced by the municipality are largely in relation to infrastructure investment. Furthermore the municipality, like many municipalities in the region, has low revenue base negatively impacting its delivery of social and economic services. Other challenges identified by the municipality relate to the following social and economic service delivery programmes, namely; inadequate bulk infrastructure funding to promote conducive investment environment, low investors’ confidence as a result of past experiences relating to the damage of state assets and properties due to unrests and a high rate of unemployment. Furthermore illegal occupation of land is the biggest challenge that delays development.
- Out-migration in the municipality was also highlighted as another key challenge. This trend would require a deliberate investment in the local economy to create jobs, and to retain skills in the municipality.
- From 2010/11 to 2012/13 financial years, the KLM, in terms audit outcomes, received disclaimers. Consultants were used to assist with financial reporting (preparation of financial statements and responding to audit findings) and revenue management, as a result the municipality paid R1.4 million to consultants in 2012/13 financial. The municipality is one of the municipalities in the province that is experiencing shortage of skills particularly in management.
- The population of the Khara Hais Municipality is 93 494 with the male population representing 49 per cent and female population 51 per cent (Stats Census 2011). Basic services in 2011 registered a marked improvement. According to the 2011 Census figures, unemployment was sitting at 22 per cent, down from 34 per cent in 2000.
- The Khara Hais Municipality, with the support from the provincial Department of Economic Development and Tourism is currently revising the LEDS. Due to financial constraints, the municipality was unable to provide financial assistance to SMMEs and Cooperatives, however with the assistance of national and provincial development agencies, the municipality has been able to provide support to local communities with establishment of a bakery and sewing manufacturing. The Khara Hais Municipality recognised that in order to address unemployment in the local economy, the municipality would need to establish and deepen relations with the local business community. To that effect, the municipality has sought to deepen transactional relationships with local business community, thus cement the current network forums.
- The municipality continued to extend electricity coverage, with the support of the Department of Energy. The Khara Hais Municipality in 2012/13 financial year electrified 881 houses, and for 2013/14 financial year it intended to cover 289 houses. Like other local municipalities, the municipality is experiencing infrastructure backlog, particular in roads and bulk infrastructure. As already reported elsewhere in this report, lack of infrastructure provisioning compromise private sector investments and thus compromise government socio economic objectives.
- For the 2012/13 audit outcomes, the Khara Hais Municipality recorded an improvement as it received qualified audit outcome from a 2011/12 disclaimer. Human resource management and supply chain management including poor financial management remained a high risk and key priority.
- The Kai !Garib Local Municipality is mostly constituted of the main towns of Kakamas and Keimoes in the midst of an intensive irrigation farming. Farming includes crops like vineyards, pecan nuts and citrus plantations. Local areas where these types of farming flourishes include Blouputs, Eksteenskuil, Riemvasmaak and Kanoneiland.
- The total population of Kai !Garib Municipality is 65 869 (Stats census 2011), growing at a population rate of 1.16 per cent since 2001. The male population is 52 per cent and female population 48 per cent households. Basic services in 2011 registered a marked improvement. According to the 2011 Census figures, unemployment was sitting at 13 per cent, down from 16 per cent in 2000.
- The Kai !Garib Municipality like other municipalities in the region, is faced with social and economic infrastructure challenges. Going forward in order to change the socio-economic situation in the community, the municipality would require funding for housing and social infrastructure such as electricity, potable water, sanitation and road infrastructure.
- The local economy is heavily depended on the agricultural industry. The major constraints for agricultural development relate to poor quality of access road to and from farms, farming skills amongst the youth, farming infrastructure including financing for emerging farmers. Agro-business, including agri-tourism, have an enormous prospect to stimulate the local economy and boost employment.
- The N14, R27 and R359 play a major role in contributing to growth and transport mobility in the municipality. The business services industry also shows great potential to grow and to contribute to the local economy. There is viable land that could accommodate industrial and business development. In the near foreseeable future, the solar industry would be one of the major contributors in the local economy with anticipated economic spin-offs to other industries such as real estate development including retail industry.
- The informal business sector would also be supported, and the municipality also sought to manage tensions in this sector caused by the participation of foreign nationals.
- Like the KLM, from 2010/11 to 2012/13 financial years, the Kai !Garib Municipality received disclaimers in terms of the audit outcomes. Consultants were used to assist with financial reporting (preparation of financial statements, update of the asset register, performing reconciliations and assistance on accounting work) at a cost of R6.8 million.
4. Oversight Projects in the ZF Mgcawu District Municipality
4.1 Eksteenskuil Agricultural Cooperative
- Eksteenskuil Agricultural Cooperative was formed in 1994 by a group of raisin farmers called the Eksteenskuil Farmers Association (EFA). The aim was to encourage other farmers to start vineyards and to support social development. In addition to helping small scale farmers to access training opportunities. The Cooperative produces Thompson Seedless Raisins, Golden Sultans and Orange River Sultanas.
- The committees found lack of agricultural infrastructure such as access roads, water and sewer reticulation, storm water drainage, refuse facilities and electricity, to support growth of the business. In addition, agricultural financing remained as a key challenge. Although the Provincial Department of Agriculture continued to support the Cooperative, agricultural financing remained a key challenge including marketing and distribution.
- Access to international markets remains a key priority that needs government support including establishment of partnerships with established agricultural businesses. To become viable, the Cooperative needed the support of government to provide agricultural implements.
- The Cooperative also needed support to meet the standards of the Perishable Products Export Control board (PPECB). At the moment the Cooperative does not meet the minimum standard requirements. In order to meet the requirements of the PPECB, the Cooperative would need additional funding amounting to R20 million.
- In order to increase production, the Cooperative needed to be assisted to obtain water rights, an issue that needs to be addressed by the Department of Water Affairs. In addition, land transfer and ownership by the members of the cooperative remains a challenge.
5. Roepersforfontein, Kanoneiland Farm
- The farming started in 1968 on Kanoneiland in Upington by two brothers. In 1980 they bought the farm Roepersforntein. The business operations are managed under the Karsten Group, which has its head offices in Roepersfontein. The Karsten Group has extended its operations beyond the Northern Cape to Western Cape, and it also has global foot print through its established logistics and Distribution Company located in the United Kingdom.
- Karsten Group exports an average of 3 to 3.5 million tonnes, containing 4.5 kilograms boxes, of grapes per year. The company produces seedless table grapes for domestic and global markets.
- The Karsten Group runs empowerment projects, which the company’s workers hold a significant stake in the business initiative. The employees own a significant stake in Keboes Fruit Farms, Mosplass Citrus and Newgro Farming.
- In 2012 the Karsten Group in partnership with the Provincial Department of Rural Development and Land Reform successfully implemented land reform. The Karsten Group is involved in various development projects, which have an aim to accelerate agricultural development.
- Skills development sits high on the business agenda of the company. Career planning accompanied by training plans for individuals, are done for permanent staff whilst on the job training is implemented for seasonal labourers. This enables permanent staff to improve and empower themselves for promotion whilst the seasonal workers are ultimately groomed for opportunities of permanent employment.
- The Karsten Group also runs an education and development programme, primarily focusing on primary education. The programme was reported to have positive impact on the farming community. The company is also a sponsor of the school vegetable garden project in the Siyanda and Namaqua regions.
- Major concerns that emerged relate to the challenges of primary health care and education in the surrounding area. These would require a clear intervention by the departments of health and education.
6. Abengoa Solar Project in Upington
- The area in and around Upington in Northern Cape is becoming the hub of South Africa's emerging solar energy industry. Apart from the Khi Solar One Concentrated Solar Panel project, Eskom also intends to develop a Concentrated Solar Panel (CSP) plant adjacent to the site on the Farm Olyvenhouts Drift. Furthermore the site for the proposed Upington Solar Thermal Plant Two and Three falls within the solar development corridor ear-marked within the Northern Cape Provincial Spatial Development Framework of 2011.
- Therefore the location of the Khi Solar One project, which is the biggest solar plant by Abengoa investments outside of Spain, is aligned with development planning in the region.
- Khi Solar One is a 50 MW utility - scale concentrating solar power (CSP) plant being built by Abengoa near Upington. The tower is 205 meters tall and uses more than 4,000 latest generation heliostats (ASUP 140), and covers 300 hectares. Khi Solar One uses super - heated steam, dry cooling technology, and a two - hour steam storage system. Technological advances incorporated in the design of this plant will increase efficiency and availability, as well as, reduce water consumption when compared to previous tower plants. This project is a partnership between the Industrial Development Corporation (29 per cent), a black economic empowerment program via the Khi Community Trust (20 per cent) and Abengoa (51 per cent).
- In terms of project details; the plant size equals 50 Mega Watts (MW) output. Abengoa has a signed agreement with ESKOM to purchase all electricity produced. The Solar field covers 300 hectares with approximately 4.000 latest generation heliostats (ASUP 140). Heliostats reflect sunlight onto the receiver.
- This technology prevents 183,000 tons of CO2 emissions. Electricity is generated with conventional steam turbines. Saturated steam storage will provide up to 2 hours of dispatchable energy to be used after sunset or if cloudy. Approximately one third of water consumption is required for the project operation because of natural draft dry cooling versus other wet cooling system.
- The positive social impact during large construction projects typically include job creation - some temporary and others short-term. Income earnings will also accrue into the surrounding communities and boost the local economy’s effective demand of goods and services.
- Renewable energy could play a meaningful role in boosting rural development, and changing the lives of rural communities. Abengoa has committed to contribute 1.1 per cent of the turnover to Community Social Investment, targeting education as a key priority.
- The projected has economic spin-offs to other industries within the local economy such as real estate development including boosting retail sales.
- There is a great potential that skills would be transferred to the local communities.
59. There is a need for more platforms for engagement between Abengoa and the Municipality. Good working relations would minimise social and political transaction costs. Greater involvement of the company on local economic development initiatives would add value to the overall management of the project. What is key is the alignment of development initiatives with the Integrated Development Plan (IDP). Coordination should be prioritised.
7. Section B: Presentation by Vhembe District Municipality
The Vhembe District Municipality through its Executive Mayor, Cllr Tshitereke Matibe, presented to the Committees on behalf of all the local municipalities in the Vhembe District and the presentation focussed on the following aspects:
- The background of Vhembe District Municipality and its geographical location;
- A brief outline of the district’s strategic focus areas;
- Alignment of the Integrated Development Plans (IDP) to the National Development Plans (NDP) and New Growth Path (NGP);
- Progress on the implementation of the Musina Special Economic Zone (SEZ), projects being considered for the SEZ, and current challenges in the process;
- Measures aimed at Marketing and promoting the District through exhibitions;
- The Skills Development Programme;
- Developments on the fresh produce market;
- Programme for agricultural equipment lending to local farmers; and
- Programme for investment promotion and attraction to the district.
7.1 Location and background of Vhembe District Municipality
60. The Vhembe District is one of five Districts in the Limpopo Province. It is located in the northern part of the Province and shares its municipal borders with Capricorn and Mopani District Municipalities. The District also shares the borders with three countries namely, Zimbabwe, Botswana and Mozambique. The local municipalities within the District are Mutale, Musina, Makhado and Thulamela. The District is predominately rural with 95% of its population residing in tribal settlements.
61. The total population according to census figures of 2011 is about 1.3 million. On the labour force, 53% of labour force is unemployed. The formal employment is highly concentrated in the government and personal services. The District only contributes 12 per cent of the province’s growth domestic product (GDP). The economy of the District is mainly driven and depended on agriculture, mining and tourism.
7.2 District strategic focus areas
62. The District shared its strategic focus areas aimed at improving the local economic conditions. As the District’s economy is depended on agriculture, the strategic focus is to develop the sector throughout the value-chain. The approach is to grow the sector though diversifying and expansion of agricultural sector production leading to value addition industries such as agro-processing and forestry processing industries.
63. Mining is another strategic focus area for the district. Mining is a major contributor to the economy of the district. As in the agricultural sector, the goal is to develop the value – chains in mining. This will then attract small and medium enterprises (SMME) especially in the supply of services such as transport services etc.
64. With regards to rural development, the district is cognisant of the fact that it is predominantly rural. There is a plan to revitalise all irrigation schemes which will aid and improve the production of those in subsistence farming. The district is also involved in assisting and proving support to beneficiaries of land claims.
7.3 Alignment of the Integrated Development Plans (IDP) to the National Development Plan (NDP) and the New Growth Path (NGP)
65. On the alignment of the Integrated Development Plan (IDP) to the National Development Plan (NDP) and the New Growth Path (NGP), the District reported that its IDP is a product of a strategic planning process. The IDP was developed in cooperation and consultation with stakeholders within the District. The District reported that it views the IDP as a principal strategic instrument which guides and informs the municipalities in decision making.
7.4 Progress on the implementation of the Musina Special Economic Zone (SEZ), projects to be included in the SEZ and challenges
66. The District tabled a report on the progress and some challenges impeding the designation of the SEZ. Firstly, the district is engaged in a process of reviewing policies in-order that they be aligned with government plans and programmes. For example, the district is reviewing the Local Economic Development (LED) plans to be aligned with the national Spatial Development Framework.
67. Part of the land area to be designated as a SEZ includes land owned by the state-owned enterprise, Transnet. The district has made an application to acquire the Transnet properties currently valued in an excess of R15 million. There is a further application to acquire Portion 1 of the Farm Anton Villa 7 MT from the Department of Land Reform and Rural Development. A quota of the Portion 1 Farm Anton Villa 7 MT is owned by the Musina Local Municipality which has since resolved the land application, via a Council Resolution, to lease the remainder of the Farm Anton Villa 7 MT to the Limpopo Economic Development Agency (LEDA) for the implementation of SEZ.
68. The projects to be included in Musina SEZ will include among others, construction of one stop customs/border post with advanced technology for checking goods; development of logistics hub for goods from within the country and the rest of Africa; development of industrial park for manufacturing of various goods that would be sold inside the country and exported to the rest Africa; establishment of chemical and petroleum cluster.
69. The challenges hampering the progress of implementation of the SEZ are (a) poor land accountability/distribution by government entities including a huge chunk of land belonging to the private sector; (b) lack of capacity to meet water and sewer services demands; (c) an electric substation which has reached its full capacity in terms of electrical services provision combined with the lack of finance to upgrade such bulk electricity infrastructure; and (d) poor road infrastructure.
7.4 Marketing and promotions of the District through exhibitions
70. The Vhembe District area is rich in culture, heritage, arts, tourism attraction and agricultural activities which are not known to the rest of the world. Although Vhembe is strategically located as a gateway to Africa, it is difficult for Vhembe products to penetrate national markets and be competitive.
71. In order to address the above challenge, the District and its local municipalities have embarked on marketing campaigns to support small businesses for market access.
72. The main objectives of these exhibitions and marketing campaigns includes, marketing the District as a tourism destination of choice, its products and support of small businesses involved in these sectors. The economic benefits of this marketing campaigns is for SMMEs’ to get access to markets and develop networks among themselves.
7.5 Skills Development Programme
73. The District has agreed with institutions of higher learning such as the University of Venda, Madzivhindila Agricultural College and Vhembe FET College to assist in the training of unemployed young people and graduates on various skills. The programme also seeks to expose the young people to work scenarios, different career paths and to assist them to compete better in the job market environment.
74. The achievements of the programme, in numbers, since the start of the programme is that: 90 unemployed graduates were offered internship; 488 youth have been trained in agriculture, plumbing, construction and finance; 4500 youth have attended the career guidance; and 288 young people are undergoing training on cooperatives.
7.6 Fresh produce market
75. In order to enhance market opportunities for emerging fruit and vegetable farmers, the District intends to open a fresh produce market to assist farmers to sell their fruits and vegetable at a competitive market price. The fresh produce market will assist farmers in removing barriers of accessing the mainstream agricultural markets and this market will be accessible by both farmers and consumers.
7.7 Agricultural equipment lending depot to local farmers
76. The Vhembe district is known to have competitive advantage in agriculture and over 15 different agricultural commodities are cultivated in the region. In 2000, agricultural activities showed a sign of decline particularly cash crop production. As a result of the decline in agricultural activities, this impacted on food security. The decline was attributed to limited access to agricultural equipment.
77. The equipment challenge prompted the creation of the Agricultural Equipment Lending Depot. The aim of the depot is improving access to agricultural implements to emerging farmers. The District has purchased 13 tractors and the project has further created 16 jobs. The tractors plough about 1200 hectares in a year. The income generated from this project is at around R731 158 per annum.
7.8 Investment Promotion
78. Thohoyandou has been identified by the district for massive investment promotion. Thohoyandou is one of the major towns in the district that has suffered from disinvestment. This has resulted in increased high unemployment.
79. Therefore the district decided to dedicate resources in promoting it as an investment destination. This has programme is bearing fruits. The Moolman Group and Old Mutual, through their retail space development, has contributed in job creation in the District.
7.9 Visit to Mapungubwe World Heritage Site
80. Mapungubwe is one of 8 World Heritage Sites in South Africa. The significance of the area is that it boasts archaeological discoveries confirming it as one of the first trading kingdoms in southern Africa. The national Department of Tourism has identified Mapungubwe as priority site for the medium term 2014/15. It is budgeting about R29million aimed at addressing accessibility, including signage and short-term accommodation, and marketing of the site.
81. The Committees took a tour of the actual site, visiting the historical mountain kingdom site. It received a history on the ‘discovery of the site’, the exploration work that has been done in-collaboration with institutions of higher learning, mainly the University of Pretoria, and further toured the Museum facilities.
82. Generally, the approach in the management and administration of world heritage sites wherein various departments and local authorities are involved requires a rethinking. The coordination cost is too high and in most cases coordination across stakeholders is poor. Mapungubwe is a World Heritage Site of major significance to the history of civilisation and trade in the region. However that the management of the site is by another department, services that the site require rest in another department or municipality, creates an environment where important things fall through the cracks.
83. The time pressures faced by the Committees in the oversight of the site typified the challenges that a tourist would have to endure to access and enjoy the facility.
84. The road to the World Heritage Site is in a very poor state. The effect is that it takes longer to get to the place of attraction. Added to that the associated dangers of the narrow and poor road infrastructure maybe too high.
85. Signage, for which the department of Tourism has allocated a budget, is none-existent from the major airport in Polokwane to the heritage site. Beyond signage to the heritage site, the general signage i.e. indicating distance to destination or the nearest town etc. needs improvement.
86. The management of the heritage site has attracted guides from institutions of higher learning and further provided opportunities for further training. It has further allowed private institutions to place their students on the heritage site on internship. Two tour guides are pursuing their BA and MA degrees. One guide is attached on a 24 month internship – this student is pursuing a Business Studies (Enterprise) degree with a private tertiary institute and hopes to move into the tourism business.
The Committees observed that:
- Currently the District exports its agricultural products to the rest of the continent and world via Gauteng to Durban. There is a need to explore alternative distribution / export channels for its products from the Musina Border Post to the Maputo corridor which is closer. Whilst the Maputo corridor may be cost effective, it is in line with South Africa’s foreign policy priority of promoting regional integration;
- Agriculture value addition (agro-processing) is an area the district has just started exploring that has a great employment and income generation potential;
- Self-promotion/marketing of the district and what it has to offer as an investment destination, in terms of heritage and cultural tourism etc. has not been innovative and aggressive. The District, in order to market itself, needs to be visible and have a strong presence in the media for example it could consider applying for community radio and television stations,
9. Recommendations on Vhembe District and the Mapungubwe World Heritage Site
The Committees noted that the major challenges faced by the district and the local municipalities can be categorised into three (3) broad areas. These are:
- Infrastructure deficits for both social and economic infrastructure;
- Governance issues as a result of human resources capacity shortages. This has manifested in consecutive negative audit outcomes for the Vhembe District (currently identified by the AG as one under distress, and concerns with some of the local municipalities; and
- Planning deficits compounded by lack of coordination between the various national, provincial and local authorities, and the private sector.
Therefore the Committees recommend that the Vhembe District do the following:
- Develop an integrated bulk infrastructure plan. The plan should include all infrastructure backlogs in roads, energy, water and sanitation;
- Cost and use an integrated bulk infrastructure plan as a basis for negotiating budget allocation from the national fiscus on the one hand, and also a base document for engaging private sector investment. The investment promotion programme referred in the presentation should have its basis on this plan; and
- Urgently address the Auditor General’s concerns as a matter of priority;
- With regards to the Mapungubwe Heritage Site the Committees recommend:
- That the Tourism Department coordinate a meeting with other relevant departments to address issues of access (road infrastructure) to the site and maintenance (information plates etc.) of the actual site;
- Given the historical and cultural importance of the site, the Tourism and National Roads Agency should ensure that the signage to the Heritage Site should be from the main international airport Polokwane Airport to the site; intermittently; and
- That the Tourism Department address the issues of universal access into the site. Currently access is adequate to access the museum building only.
10. Section C High Level Policy Issues
In conclusion, the Committees raised the following high level policy issues that will require all parties to engage. These issues will inform the Committees’ future programmes as they engage with the various portfolios whose oversight they are responsible for:
- Renewable energy remains a serious challenge. The issue of local content and empowerment, in-line with national policy is slow in filtering into existing projects;
- Linking the renewable energy initiatives to Special Economic Zones (SEZ) will facilitate the building of an industry which would support and promote innovation. The renewables industry should be linked with the higher education and training institution in the provinces. It should build a strong manufacturing and business support development cluster in the provinces, in particular in the regions;
- Most local municipalities are not financially viable. A majority of the communities in the areas are indigent and therefore cannot pay for services. This has a ripple effect on the finances of District Municipalities – infrastructure development and general services provisions. There is a need to look at the funding models of these municipalities;
- Investment promotion and positioning these municipalities with viable investment opportunities is not gaining traction. From a local economic development perspective, the municipalities offer little support for investment due to the constraints discussed above;
- Linking Expanded Public Works Programme to national programmes such as the industrial policy is crucial;
- The international Bloodhound project provides opportunities for infrastructure development such as broadband internet that otherwise would not have been developed. However there are other opportunities, for example tourism, in the value chain that need further exploration;
- There is need for greater coordination across all spheres of government with regard to investments allocation;
- The local economy requires better use of strategically located urban land to leverage investment. This could also inform municipal infrastructure investment decisions in terms of how to creatively provide appropriate incentives to the private sector.
- There is a need to capacitate local municipalities to manage economic planning, trade and investments;
- Mining remains a key contributor to the overall economy, so expanding on beneficiation would boost exports to help finance development;
- The Jobs Fund, which is expected to spend about R3.9 billion over the next three years should also find expression in the local economies including boosting tourism industry;
- Community solid waste and public cleaning programmes should be supported to drive employment creation; and
- Technical capability remains a concern particular in the following areas:
- Sewerage and water treatment plant operators, road maintenance supervisors, health inspectors and planning and project managers; and
- The lack of infrastructure to support agricultural development and production, including lack of support of agri-business-financing and non-financial support was evident. In addition, there is a need to scale-up agricultural skills particular for young people.
Report to be considered
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