ATC181114: Joint Oversight Report by the Select Committee on Economic and Business Development and the Select Committee on Trade and International Relations to the Western Cape, West Coast District Municipality, Dated 14 November 2018

NCOP Economic and Business Development

Joint Oversight Report by the Select Committee on Economic and Business Development and the Select Committee on Trade and International Relations to the Western Cape, West Coast District Municipality, Dated 14 November 2018
 

The Select Committee on Economic and Business Development and the Select Committee on Trade and International Relations, having conducted a joint oversight visit to the Western Cape, West Coast District, from 14 – 18 August 2017, report as follows:

1. Introduction

In terms of section 42(4) of the Constitution, the National Council of Provinces (NCOP) is mandated to ensure effective cooperative governance and intergovernmental relations between the three spheres of government. This unique mandate of the NCOP further seeks to ensure that the provincial interests are taken into account in the national sphere of government. It is within this context that the Select Committee on Economic and Business Development and the Select Committee on Trade and International Relations conducted a joint oversight to the West Coast District Municipality in the Western Cape Province.

The District is one of the coastal districts in the Western Cape Province, and its headquarters are in Mooreesburg. The District is composed of five local municipalities namely: Msatzikama; Cederberg; Bergrivier; Saldanha Bay; and Swartland.

The purpose of the oversight was to assess progress in implementing government development programme, and identify challenges that need to be addressed by various government departments and agencies in order to influence growth and development of the regional economy. In the main it is to ensure that government programmes, in partnership with the private sector including civil society, support job creation, enable local businesses to expand and increase investments in the regional economy. The focus of the oversight as informed by the strategic plans, focused on the following areas:

• Assess the level of support of SMMEs in the district across various sectors and how the Small Enterprise Development Agency (SEDA) and Small Enterprise Finance Agency (SEFA) and other development partners contribute in growth and development of small enterprises.
• Assess progress and challenges encountered by the Department of Labour and its selected entities in ensuring less glitches in processing claims and matching employers with job seeking employees in the labour market.
• Oversee progress in the implementation of the Industrial Policy Action Plan (IPAP) by the Department of Trade and Industry, Provincial and Local governments. In the recent past, government has announced various instruments such the Industrial Development Zones (IDZs) and Special Economic Zones (SEZs) to jump-start industrialisation programmes, and to this effect, Parliament has passed the Special Economic Zones Act.  The Saldanha Industrial Development Zone (to be converted as an SEZ) and the envisaged Atlantis SEZ (GreenTech Atlantis) are part of the country-wide industrial initiative to boost economic growth, support job creation, improve competitiveness of the economy and increase exports to international markets.
• The Saldanha SEZ would focus on the oil and gas industry, and the envisaged GreenTech Atlantis SEZ would harness and enhance green economy. The industrial development programmes find expression in the National Development Plan including operation Phakisa.
• The oversight also involved visits to some of the renewable energy development programmes, which were supported by the National Treasury, and the departments of Trade and Industry and Energy.   
• The oversight further assessed the progress and the potential impact of the implementation of the Presidential Infrastructure Coordinating Commission (PICC), particularly with Strategic Integrated Project (SIP) 5 on the Saldanha/ Northern Cape Development Corridor.

 

2. Multiparty delegation

The delegation consisted of the following members:

Hon MI Rayi (ANC) Chairperson and Co-Leader of the delegation

Hon ER Makue (ANC) Chairperson and Co-Leader of the delegation

Hon BG Nthebe (ANC)

Hon SG Mthimunye (ANC)

Hon MC Dikgale (ANC)

Hon WF Faber (DA)

Hon JJ Londt (DA)

Hon LV Magwebu (DA)

Hon MM Chabangu (EFF).

The delegation was accompanied by the following parliamentary officials: Mr H Mtileni and Ms NG Dinizulu (Committee Secretaries), Mr L Sishuba (Content Advisor), Mr Z Ngxishe and Mr A Ganief (Researchers), Mr S Maputi (Media Officer) and Mr M Erasmus (Committee Assistant).

2. In attendance

The meetings were attended by the Municipal Councillors, officials from the West Coast District Municipalities, National and Provincial Departments and other entities listed below:

West Coast District Municipality: Mr H Prins, Municipal Manager; Mr E Williams, Manager Strategic Services; Mr HR Robertson, Media & Communication Officer; Mr J Hoop, Councillor.

Swartland Municipality: Ms H Balie, Manager Community Development; Mr L Fourie, Strategic Manager.

Department of Small Business Development: Ms Y Solomon, Deputy Director: Monitoring and Evaluation; Mr T Rapopo, Manager: Local Economic Development.

Department of Trade and Industry: Mr T Klassen, Director: SEZ Projects; Mr A Tau, Chief Director; Mr C Mnisi, Media Relations Officer.

Department of Labour: Mr R Caraizen, Acting Deputy Director; Ms M Bronkhorst, Chief Operations Officer; Mr X Mnene, Customer Care: Compensation Fund.

Seda and Small Enterprise Finance Agency (Sefa): Mr AT Qunta, Provincial Manager: Western Cape; Mr KK Mhlongo, Branch Manager: Overberg, West Coast (Seda).

Small Enterprise Forum Agency and NYDA: Mr B Mchunu, Head of Regions; Mr S Ntika, Senior Manager Operations; Ms N Mphahlele, Executive Director.

Saldanha Bay Industrial Development Zone (SBIDZ): Ease of Doing Business: Executive: Ms B Mahlangu, Executive Manager; Mr D Southgate, Chief Executive Officer.

Saldanha Bay Black Business Chamber and Sunrise: Ms M Siwisa, Chairperson; Mr W Bopape, Manager; Mr J Mavs, Plant Operator.

Umoya Energy and Aurora Rietvlei Solar Power: Mr S Cook, Senior Facility Manager; Mr D Currie, Chief Executive Officer.

Provincial Department of Economic Development and Tourism, Green Cape, Sarebi: Mr F Abrahams, Deputy Director: Energy; Mr M Mulcaly, Chief Executive Officer; Mr E Hattingh, Incubation Manager; Ms B Dlangamandla, Communications and Events Officer.

The report is structured on the following themes: West Coast District as a potential region for growth and new destination for investment and Saldanha Bay Industrial Development Zone f as a platform to stimulate growth, investment and employment; and Renewable Energy Industry, including Greentech as an emerging growth and job opportunity industry. The report further outlines the observations and highlights recommendations.

3. West Coast District as a potential region for growth and new destination for investment

The Select Committees received submissions and presentations from the following stakeholders: West Coast District Municipality; Department of Trade and Industry; Saldanha Bay Industrial Development Zone; Economic Development Department with the support of the Industrial Development Corporation (IDC), Small Business Development Agency (SEDA), Small Medium Enterprise Agency (SEFA), National Youth Development Agency (NYDA), Department of Labour, Department of Energy, South African Renewable Energy Business Incubator; and Greentech Atlantis Special Zone.

3.1 West Coast District Municipality (WCDM)

The Western Cape Government’s 2016 Municipal Economic Review and Overview (MERO) highlighted that the West Coast District (WCDM) is one of the fastest growing regional economies in the Province. The West Coast District economy is the third largest non-metro district within the broader Western Cape Province economy, contributing 4.4 per cent to the Growth Domestic Product of the region (GDPR) of the Western Cape in 2015, making it a relatively minor contributor. The WCD economy is expected to grow by 2.8 per cent on overage between 2016 and 2021. The GDPR growth has been set to show significant improvements from 2019 onwards and industries that are projected to grow the fastest during the forecasted period are construction, transport and storage, wholesale and retail trade. Growth in the agriculture, forestry and fishing industries is expected to range between 0.5 per cent in 2016 to 1.2 per cent in 2021 translating into a 0.9 per cent growth rate across the forecast period. The WCD experienced an average GDP growth rate of 3.9 per cent between 2014 and 2015.

The delegation was informed that the industries that have contributed the most to GDPR and employment are: finance, insurance, real estate and business services; manufacturing; wholesale and retail trade, catering and accommodation; agriculture, forestry and fishing; transport, storage and communication.

WCD explained that the employment per sector is recovering at a lower rate than the GDPR per sector in all the local municipal areas within the District. In general, WCD reported that skills levels in all the local municipality areas in the District are improving indicating either better access to education or up-skilling by employers.

In terms of the main economic value chains, WCD highlighted that wheat and tourism are the major contributors to the GDPR and employment. The wheat value chain reported to be well established and further opportunities need to be investigated in terms of the drought-resistant crops and will look at the more cost effective alternatives to the farming inputs. Tourism value chain was adding to the growth of the accommodation facilities, tourist attractions, events and local tour operators.

WCD reported on the infrastructure spending and explained that a review and analysis of the infrastructure spending within the District was a priority, taking into account the economic spin-offs in terms of attracting investment and enhancing development. The municipalities will focus on accelerating implementation of basic services and infrastructure in line with economic infrastructure plans, and to attract private sector participation. The investment plans are aligned with the municipal development plans, which are aligned with the provincial priorities and National Development Plan (NDP) and other sector strategies.

WCD emphasised a need for greater private sector participation in the formulation and implementation of economic and industrial development programmes. It further emphasised the need for closer collaboration with other spheres of government including development agencies.

The district municipality further highlighted new opportunities for growth and development of the regional economy. The following development programme have the potential to stimulate regional economic growth, attract investment, boost employment and skills development:

• Road infrastructure investment; upgrade of the N7. It would allow smooth movement of goods and services. It offers a potential for businesses to serve the Cape Town market while enjoying lower operating costs.
• In terms of crime levels, the district enjoys lower levels of crime. That is good for business and residential development.
• Many businesses want to relocate next to producing markets (protein, dairy and other food producers), and that offers an opportunity for growth of logistics firms.
• Growth of mines in Matzikama and abalone production pose a potential for development.
• Construction of the dam in Cedeberg has the growth potential for the agricultural industry.
• The investment initiative in Saldanha with the huge investment, the envisaged SEZ, and positioning the industry platform for an oil and gas industry.
• The region has many tourism attractions, leisure activities and events.    

Challenges in the District:

• Like the rest of the country, specifically in the Western Cape, lack of water, and water related infrastructure poses a threat that hinders development initiatives. Lack of coordination of investment, and discouraged private sector participation would compromise investment infrastructure. The construction of the Clanwilliam dam could be better managed with the involvement of all relevant stakeholders.
•  The district need to have a complete and comprehensive investment plan, which is linked to the integrated plans of local municipalities. The greater participation of the private sector including national and provincial development agencies need to be improved.
• Lack of regional development funds also hinders any opportunities to leverage private sector investments. The removal of the Regional Services Council (RSC) also created challenges, and reduced the revenue base for municipalities thus affected development initiatives.
• The district municipality has been operating under difficult challenges such as shortage of critical personnel, inadequate capital budget including lack of maintenance of vehicles and usage of outdated equipment.
• High levels of inequality and poor levels of performance in education most municipalities.
• There is a need to increase employment opportunities.
• Population growth has an adverse effect on the demand on basic services.

3.2 Small Enterprise Development Agency (Seda)

The Small Enterprise Development Agency (Seda) is an agency of the Department of Small Business Development. Seda was established in December 2004, through the National Small Business Amendment Act, Act 29 of 2004. Seda is mandated to implement government’s small business strategy; to design and implement a standard and common national delivery network for small enterprise development; and to provide non-financial support to small enterprises.

In terms of support within the WCD, the select committees identified the following challenges:

• There are only two business advisors responsible for the entire district. The business advisors are overstretched; this hinders the support services to the SMMEs in the region.
• Insufficient financial resources also inhibit the support to SMMEs. Resource allocation has no strategic business focus on key industries of the provincial economy.
• There are no strong linkages with other critical stakeholders within the SMME ecosystem.
• The Seda presentation did not link Seda’s work in the districts in terms of rural development initiatives.
• There is a need for Seda to expand its footprint in the district and work closely with all local municipalities in a well-coordinated manner.
• Seda needs to establish and strengthen partnerships with institutions of higher learning, including civil society supporting for small businesses. 

Despite the current challenges, Seda through partnership with the Department of Land and Rural Development has supported SMMEs to tackle opportunities presented by the Agriparks. In the district, Seda has supported the following small businesses:

• FA Fruit Packers were awarded funds to the value of R450 000 to purchase a pallet jack, forklift, laptop and furniture;

• Doringbay Atlantic Pebble was given 4 Ton Truck; and
• Doringbay Abelone was funded to the tune of R7.4 million, to purchase equipment that would be used for processing in the factory.

 

Some of the support, although not adequate, focused on the following areas:

• Agriculture-primary wheat, canola, rooibos, grapes and wine;
• Fishing- includes deep sea fishing;
• Manufacturing includes agro-processing, fish and marine resource processing and mineral processing;
• The Department of Tourism investment in solar power contributes towards this economic sector; and
• Mining which include limestone, kaolin and phosphate, this feeds into the transport sector.

Seda further reported the following success stories, which are attributed to the work of the agency in the WCD:

Global Catering, Construction and Accommodation: Suraya Adams is the owner of Global Catering Construction and Accommodation. The business is based in Saldanha and started operating in 2014. The business was assisted with marketing material, website development and advice on safety regulations. The turnover increased by 353 per cent and the net profit increased by 359 per cent. The business started with three staff members, now it has increased to seven staff members by creating four new job opportunities.

Cindy Cleaning Services: Cindy Cleaning Services is based in Vredenburg and owned by Ntombosindiso Ndevu. The business started operating in 2013. Ntombosindiso is a former domestic worker, who used to clean houses in Langebaan and surrounding areas. In 2013, she received a cleaning services tender from Transnet and at the local municipality. She attended short informal business courses to improve her business skills. The business received business support advisory services and branding of the business vehicle.

Barrelstone Construction (Pty) Ltd): Barrelstone is a Saldanha based construction company that was established in 2012 and started operating in 2014. The company is 100 per cent black owned and has 50 per cent female ownership. The vision of the business is to build the company that has a long lasting reputation and deliver quality services. The business focuses on carpentry, roofing, renovations and industrial cleaning. The business was assisted with marketing material and branding of the company vehicle.

3.3 Small Enterprise Finance Agency (Sefa)

Sefa is a merger of the South African Micro-Finance Apex Fund (Samaf), Khula Enterprise Finance and IDC (Industrial Development Corporation)’s small business activities. Sefa was launched in April 2012 as a fully owned subsidiary of the Industrial Development Corporation (IDC). The vision of Sefa is to be the leading catalyst for the development of sustainable survivalist, micro, small and medium enterprises through the provision of finance.

It was reported to the select committees that following are some of the key challenges faced by many SMMEs throughout the country, including the WCD:

• Access to finance and credit;
• Poor physical infrastructure;
• Low levels of research & development;
• Weak linkages between small and larger firms;
• Onerous labour laws;
• Inadequate educated workforce;
• Ineffective government bureaucracy;
• High levels of crime;
• Lack of access to markets.

SMMEs and Cooperatives can access various funding solutions (from Sefa) through Direct Lending from R50 000 to R5 million, Wholesale Lending from R500 to R5 million and Credit Guarantee Scheme up to R5 million.

3.4 Department of Labour

The Department of Labour reported that the WCD area is serviced by the Vredenburg Labour Centre as one of the satellite office. The service points are important channels that the Department of Labour uses to render services in rural areas such as Moorreesburg, Hopefield, Velddrift, St Helena Bay, Laingville, Paternoster, Bitterforntein, Nuwerus, Molsvlei, Rietpoort, Klawer, Doringbaai, Ebenhaeser, Koekenaap, Lutzville, Kliprand, VanRhynsdorp, Citrusdal, Clanwilliam, Graafwater, Elands Bay, Lamberts Bay, Algeria and Wupperthal. The centre is serviced by a staff establishment of 30 which include the Regional Head and other staff members in various positions.

The number of workplaces inspected, to determine their compliance levels in terms of the relevant labour legislation, have not reached the target of 151. During the first quarter in 2017 the number of workplaces inspected per year to determine their compliance with Occupational Health & Safety (OHS) legislation reached the target of 49, which was more than the performance target for inspection and enforcement services.

It was reported that the Department has a healthy relationship with the Business Chamber and a good working relationship with the IDZ. The Provincial Department also participates in the Intergovernmental structures.

The following are the services rendered by the Department in the WCD:

• The applications and payment of Unemployment Insurance.
• The inspection and enforcement services to determine compliance to labour laws such as Basic Condition of Employments Act, Unemployment Insurance Act, Occupational Health & Safety Act and Employment Equity Act.
• The services include registration and placement of work-seekers, Counselling and Education & Advocacy campaigns.
• Currently the Helpdesk has issued 5909 forms, the bargaining council referrals were about 24, CCMA referrals were approximately 94 and the clients serviced by the Centre 3917.

 

4. Saldanha Bay Industrial Development Zone - a platform to stimulate growth, investment and employment

The Department of Trade and Industry (the dti) made a presentation on the transitional framework of the Saldanha Bay Industrial Development Zone (SBIDZ) to a Special Economic Zone (SEZ). The content of the presentation focussed on the following areas: definition of SEZ programme, strategic objectives of SEZ programme, key transitional imperatives, challenges and opportunities.

The definition of SEZ: is a geographic area of a country or region set aside for designated economic and industrial activities, which are supported through special measures that do not necessarily apply to the rest of the country.

The goal is to stimulate and accelerate economic activities starting in the designated areas but expanding beyond the broader region and country.

The key objectives of an SEZ is to among others; attract foreign and domestic direct investment, build additional industrial hubs, and build strategic industrial ecosystems in host regions.

In terms of the transitional plan, the dti reported that the SBIDZ Operator, Western Cape Provincial Government, is in the process of developing the SBIDZ Transitional Plan. The Transitional Plan after being finalised shall be submitted to the Director-General of the Department of Trade and Industry for approval- before implementation.

In terms of challenges and opportunities, the following areas were highlighted:

• In order for the SEZs to become a success, implementing institutions need to have sound governance capacity and capability.
• Water and energy constraints need to be addressed. This means that investment in energy and water infrastructure should become a priority.
• Development of technical skills, technicians and artisans that are critical for industrial development would determine whether host communities benefit or not.
• The Department of Trade and Industry emphasised the importance to continue strengthening cooperative initiatives with countries such as China, Japan, and Malaysia to unlocking investment opportunities.
• Improve alignment between the dti and National Treasury including provincial government and hosting local municipalities to unlock more value.

After the presentation by the dti, Saldanha Bay Industrial Development Zone made a presentation to the select committees. The presentation was aligned to the dti presentation, but focused more on key priority programmes such as the infrastructure investment programme which is mainly funded by the dti, enterprise development, skills development and the innovation campus.

The SBIDZ was officially designated as South Africa’s fifth SEZ on the 31st October 2013, with the Saldanha Bay IDZ Licencing SOC Ltd (SBIDZ-LC) as the official public entity licence holder and operator of the zone in the Port. The SBIDZ is the first zone to be designated in a South African port. SBIDZ is a public entity reporting to the Western Cape Government- Department of Economic Development and Tourism (DEDT). The SBIDZ has been established as South Africa’s first sector-specific zone in support of the upstream oil and gas services; marine repair and engineering sector.

Some of the main functions of the SBIDZ-LC include the promotion, management and marketing of the zone domestically and internationally. Furthermore, the SBIDZ-LC provide internal infrastructure in the IDZ to suit investor requirements, the leasing of land to investors, and the facilitation of an ease of doing business model for investors.

The select committees were also briefed about the functions of the Community Skills and Training Committee’s (CSTC). The function of the CSTC is to create a link and forge partnership between the community of Saldanha and SBIDZ-LC. In the main, it is to ensure that local individuals are skilled in order to equip them with the necessary skills to enable them to take future opportunities presented by the developments in the SBIDZ. Furthermore, to increase the potential of sustainable employment for the local community.

Another important programme which the select committees were briefed about was the iThemba Skills Programme. The programme was initiated by the SBIDZ-LC and funded by the MerSETA and the dti with the aim to train 674 candidates in foundational welding, fabrication, rigging, electrical, bricklaying, plumbing and carpentry skills.

Support of local business enterprises remains a key priority, and a challenge throughout the country. The IDZ Business Forum was established to build an inclusive partnership with local business chambers and forums to maximise business opportunities, and enhance local supply opportunities. The business forums would open opportunities for local businesses to take advantage of business opportunities in an oil and gas and marine repairs.

The SBIDZ-LC emphasized that the programmes are designed to increase local community participation within the context of an integrated regional local economic development. Furthermore, the success of the SBIDZ-LC largely depended on public-private partnership, with a valuable role played by Transnet and Transnet National Ports Authority.   

The delegation also received a briefing presented by the Department of Economic Development. The presentation focused on the implementation of Strategic Integrated Project (SIP) 5 as an integral component of the Strategic Infrastructure Plan, the Saldanha Northern Cape Development Corridor. The infrastructure plan covers a range of economic and social infrastructure projects where all nine provinces are covered, with emphasis on poorer provinces. The work is being aligned with human settlement planning and with skills development, as key cross-cutting areas.

With regard to the Saldanha-Northern Cape Corridor Strategic Integrated Project, the main aim is to promote balanced economic development; promote mineral extraction and beneficiation; address socio-economic needs; promote job creation; and help integrate human settlements within the broader economic development initiatives. So far, a total amount of R713 million was spent in the development of the project, creating 920 jobs including 296 jobs for youth.

The main driver of the SIP 5 is the Sunrise Energy (Pty) Ltd (Sunrise) gas facility project, a public-private partnership (PPP) economic development programme between IDC (31%), MOGS (Pty) Ltd (60%) and Ilitha Group Holdings (IGH), (9%). The initial investment to develop and construct the Liquefied Petroleum Gas-Import and Storage facility was approximately R1.2 billion.

The Sunrise economic development programme has the following economic benefits and opportunities:

• The Terminal consists of 5 500 tons (5 X 1100) LPG (liquefied petroleum gas) storage tanks, which were manufactured in Saldanha using local artisans, loading gantries and a marine component, with the necessary support infrastructure, safety systems and utilities.
• Due to continued increasing demand for liquid and gaseous fuels and decreasing or ailing manufacturing capacity of local refineries, the outlook of Sunrise is to be the preferred facility for importers.
• The terminal is best placed to substitute road imports from KwaZulu-Natal and Gauteng.
• The government’s plan to reduce heating and cooking from the grid by replacing electricity with LPG.
• The governments drive to increase the penetration of gas use in the South African economy.
• The Sunrise Energy LPG Import Terminal in Saldanha Bay is designed for imports into the Western Cape from May 2017 and thus the removal of supply constraints.
• This terminal is strategically located and will allow for supply from a variety of sources (Gulf of Guinea, Gulf of Mexico, Middle East or East Africa).
• Currently, it is the only purpose-designed LPG import terminal in South Africa.
• The Sunrise project is a direct contributor to Industrial Policy Action Plan (IPAP) (2016/17-2017/18), due to its contribution towards a more favourable energy use pattern, employment creation and growth in the economy, specifically in the downstream oil and gas services and equipment.
• The project supports the IDC’s strategy of being the leaders in capacity development, creating enabling infrastructure, growing local manufacturing capacity, increasing job opportunities and promotion of SMMEs.
• It also fits well with the IDC’s strategy of creating downstream distribution capacity of LPG by offering an “open access” import facility that will break traditional supply arrangements by providing much wider access to LPG in the Western Cape.

This facility, with reliable LPG supply, would benefit South Africa in a number of ways:

• The LPG market would grow in applications such as iron ore, ceramics, space heating, cooking; water heating and light industries, making downstream manufacturing more competitive.
• SMME’s could use LPG to develop cylinder filling and distribution depots.
• Provide a portable safe, multi-purpose energy source in rural areas which focus on the reduction of cardboard, wood and coal burning that have a negative effect on the environment and health.
• Have a fall back energy source for generating a peak power source in the Western Cape, thereby taking some of the load off Eskom’s electricity grid.

The project contributes towards the development of local suppliers that built the bullets and up-skilling of local artisans. During the construction, approximately 474 jobs were created and out of this number 431 were local Saldanha people. The project is operational and supported with 33 staff members of which 28 are from Saldanha.

The project is regarded by the Department of Economic Development as one of the key development projects that demonstrates the importance of the PPPs in addressing economic development initiatives.  Furthermore, the success of the project was also attributed to the importance of central project coordination and implementation, by bringing all critical development partners in a central planning platform.

For instance, Transnet National Ports Authority (TNPA) with its Section 56 tender process awarded Sunrise a concession to build and operate an open-access import terminal. NERSA issued the project with the construction and operating licences. The unique thing about the project is that it had to get both Marine and Land EIA and these were issued by Department of Environmental Affairs. The IDC and the Public Investment Corporation made funding available to ensure successful execution of the project.

Despite the success recorded in the implementation of the SIP-5, the implementation of the project has been identified as one of the SIPs projects that need special attention. The Department of Economic Development has acknowledged that there is a need to accelerate implementation of the SIP-5. Some of the constraints that hinder smooth implementation of the SIP-5 are the following:

• The mines expansion and Iron Ore Rail and Port Upgrade: Project is still on hold due to the commodity downturn.
• Desalination Plant: DWS has requested motivation from the Saldanha Bay Municipality for increase in the allocation from the Bergriver as an alternative source of supply.  No progress reported to date. This is understandable considering the drought situation in the Western Cape.  The revival of the desalination plant is currently being considered.
• Clanwilliam Dam: Funding challenges for commencement of construction.
• Vaal-Gamagara: Whilst Phase 1 is progressing, through funds obtained from RBIG, Phase 2 funding is still not secured.

5. Renewable Energy Industry

Government has a commitment to increasing the uptake of renewable energy with the objectives of industry development in order to:  

• create new jobs and attracting investment;
• stimulate national and regional economies, building an industrial base for local economic development;
• partner with other industry players such as higher education, SMMEs, and supporting broader economic and social development initiatives;
• protect the environment (through cost effective carbon pollution reduction and the potential for energy resilience as the climate changes); 
• deliver customer and government value; and
• allow for efficient operation of the energy market.

The Delegation visited the following renewable energy projects:

5.1.1 Aurora–Rietvlei Solar Power

Aurora-Rietvlei generates 10.9MV solar energy was selected as part of Round 2 of the REIPP program being implemented by the DoE and the IPP Office and has a contracted capacity of 9MV. The construction of the facility commenced in Q3 and was connected to the national grid on 22 December 2014.

5.1.2 Technical specifications

The facility is a solar PV generation facility that uses a fixed tilt, ground mounted module technology.

5.1.3 Electricity Generation

The facility has been operation for 2.5 years and to date has exceeded expectations by around 5 per cent due to higher irradiation and better than expected performance. During the month of July 2017, the facility had injected 52GWh of electricity into the National Grid and is estimated to contribute over 340GWh.

5.1.4 Community Trust and Shareholding Structure

The local community is a shareholder in the project through the Local Community Trust. In terms of the REIPPP obligations, the project is required to make contributions to the local communities in the form of both Socio-Economic Development and Enterprise Development initiatives. These initiatives were aimed to benefit Black South Africans and Black-owned businesses in the locality of the project. Aurora-Rietvlei Solar Power focused on the two closest towns to generate solar; namely Aurora and Redlinghuys.

In terms of socio-economic development, the Aurora project supported the following initiatives:

• The development of an Early Childhood Development Centre (ECD) in Aurora, which was the first facility in the area;
• The local rugby clubs in both Aurora and Redelinghuys;
• The Women’s Network;
• The local school by paying the salary of a governing body post and providing school shoes to scholars;
• Providing the service of an auxiliary social worker to assist the local community;
• Providing Learners and Driver’s Licence lessons to the community members;
• Assisting the community members with bursaries;
• Supplementing the cost of local transport for school children; and
• Local businesses in both Aurora and Redelinghuys.

 

5.1.5 Shareholders

The shareholders of the facility are as follows:

• Solairedifect Southern Africa of ENGIE) – 19.5 per cent;
• Old Mutual Life Assurance Company South Africa – 49 per cent;
• J&J Group-29 per cent; and
• Local Community Trust - 2.5 per cent.

 

5.2 Hopefield Wind Farm Project- Umoya

• The Wind Farm is Located 125km north of Cape Town on the R45 in the Saldanha Bay Municipality in the Western Cape province, Umoya Energy Wind Farm generates approximately 176 600 MWh of clean renewable energy every year.
• The wind farm began supplying electricity to the grid in late 2013 and achieved commercial operation date on 1 February 2014, just over one year after construction started. It was the first commercial wind farm in the country to reach this milestone.
• Part of Round 1 of the South African Government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), Umoya Energy Wind Farm connects to Eskom’s Kerschbosch switching station located at the wind farm.
• Umoya Energy Wind Farm comprises of 37 Vestas V100 1.8MW wing turbines which stand 95m at hub height. The wind farm spans about 900 hectares but only occupies a small percentage of the land area.
• The Farm (RF) Pty Ltd is owned by Old Mutual, various funds managed by African Infrastructure Investment Managers (AIIM), Tomlo Commodities Pty Ltd and the local community companies.
• Umoya Energy owns three adjoining farms with a combined area of approximately 2 400 hectares. Roughly half of this land was designated as a Conservation Area and is managed by SANParks and will be declared part of the West Coast National Park.
• The wind farm produces enough green electricity to supply approximately 49 000 low-income homes (at a usage of 3 600kWh/year), or 22 000 medium-income South African homes (at a usage of 7 800kWh)/year), and in so doing avoids approximately 183 200 tonnes of carbon emissions each year- when compared to traditional fossil fuel power plants.

5.2.1 Social and Economic Community Empowerment

• The wind farm is empowering and strengthening the local communities through capacity building, skills transfer and funding of various beneficiary programmes in the surrounding areas. The aim is to empower and to build capacity of these communities through the funding of various socio-economic development programmes that positively address local skills gaps and needs, and empower the communities to be economically independent and take ownership of their future.
• The approach is holistic and is characterised by continuous engagement, the sharing of knowledge and experience. All of Umoya Energy Wing Farm’s local economic development programmes are results and impact driven programmes designed to be sustainable and to make a lasting difference in the communities within which the company operates.

Social Labour Plan (SLP): In terms of funding of educators’ salaries, the Umoya Energy responds to the needs of the local schools in the surrounding area through funding of educators’ salaries and educational excursions and events. Since 2014 the Holvlei, Hopefield and Langebaan Primary schools benefited through this initiative.

The Scholarship Programme: The Wind Farm Energy identified various skill shortages in the local communities of the surrounding area. To address these skills gaps and help to create marketable skills within the young men and women of the area, Umoya Energy has a Scholarship programme.

The programme provides tertiary education funding for young students from designated groups living within a 50km radius of the wind farm. The fields of study include teaching, engineering, science, environment and nursing.

Infrastructure: Over the period of two years, 18 previously unemployed residents were trained and now work as artisans. The Farm has made improvements to more than 600 homes in this small town. The phase 1 of the Home Improvement project include plumbing, electrical and carpentry training of 18 previously unemployed residents, which included a course at Northlink College in Cape Town and on the job training through the project. The installation of solar water geysers, insulated ceilings and electrical reticulation in 590 Hopefield homes.

It was reported that during the completion of Phase 1 of this project, Umoya Energy conducted and Entrepreneurship Incubation Programme for 18 artisans that implemented Phase 1. The outcome of the Entrepreneurship Incubation Programme was the establishment of 3 businesses that are now used to implement Phase 2.

During the implementation of Phase 2, Umoya Energy established three year fixed term contracts with three local businesses, all of which would receive business support, training and mentorship from the project. These businesses employ local people as well as the labour from Phase 1. This Phase would include the improvement of 360 homes over a period of three years. (The delegation could not visit; the improved homes).

Environment: The Wind Energy’s environment development programmes included funding of the South African National Parks Conservation Project. The local contractors are clearing alien vegetation as well as performing other land management activities under contract with SANParks. The objective of this initiative was to train local people with skills to allow them to access the formal economy through securing permanent employment and or establishment of small businesses. Since inception, the programme has provided employment to a minimum of 50 people per annum.

6. West Coast National Park

The West Coast National Park was established in 1985 with the aim of conserving the Langebaan Lagoon and surrounding landscapes, including the islands in Saldanha Bay. The key conservation areas of West Coast National Park are the Langebaan Lagoon and the offshore islands in Saldanha Bay, which together form the Langebaan Ramsar site, a wetland of international importance. The lagoon has a rich diversity of marine invertebrates and seaweeds and supports approximately 10% of the coastal wader population in South Africa. The offshore islands provide important nesting areas for several red-listed seabird species.

Geelbek Restaurant provides a safe haven for the West Coast and South African heritage. The restaurant is situated on the lagoon in the Geelbek main house. This Cape Dutch building is a National Monument and was renovated three times since it was built in 1744.

The park falls within the West Coast District Municipality and in the Saldanha Bay Local Municipality, while it adjoins the Swartland Local Municipality in the south. The park forms the northern core of the Cape West Coast Biosphere Reserve, (CWCBR) and is fully integrated in the various integrated development plans (IDPs) and spatial development frameworks (SDFs) of the municipalities.

Key attributes include:

• A large unique marine lagoon system.
• The park is a globally important centre of biodiversity due its variety of diverse habitats.
• As an open ecological system, the park is dependent on successful conservation measures outside of the park at local, regional, national and international levels.
• The park hosts a number of altered landscapes.
• A rich cultural and natural heritage merges within the park.
• The park has a high level of protected conservation status.
• The park is experiencing a growth in tourism demand due to its proximity to the country’s major tourist hub of Cape Town.
• Park support from a diverse local community with a range of skills, knowledge and culture.
• The park is centrally situated and has facilities for the implementation of vibrant eco-education programmes in the Cape west coast region.

The park offers the following tourism features:

• Open access, limited income generation (via boat permits) water based recreational activity on the Lagoon.
• Self-drive sightseeing tourism (views and bird hides)
• Recreation at the day visitor sites in the controlled access portion of the park and limited over-night accommodation facilities. These facilities are:

• Abrahamskraal – a six-bed (two-star grading) self-catering unit at the Abrahamskraal waterhole which has been upgraded.
• Joanne’s Beach Cottage – an eight-bed selfcatering unit (three-star grading).
• The concessionaire managed 44 bed Duinepos rest camp.
• Two houseboats based at Kraalbaai managed by a concessionaire

• The historical Geelbek homestead is managed by a concessionaire as a restaurant and curio shop.
• Park information centre at Geelbek.
• A limited hiking and mountain biking network in the park.
• The Postberg contractual area which is currently open for wild flower viewing during August and September only.
• Kraalbaai and the adjoining Preekstoel are popular day visitor sites during summer and public holidays drawing crowds from the communities surrounding the park.

Challenges raised in relation to tourism are:

• Lack of overnight facilities within the park.
• Limited access to important recreational areas.
• Need to ensure continued safety and security of visitors to the park.
• Need to build strong relations with local tourism industry.
• Park products and pricing.
• A limited budget for maintenance in the face of theft, removal and general deterioration of the physical heritage resources.

The key tourism infrastructure focus of park management over the long term is firstly to unlock the tourism potential of the Langebaan hotel site through a Public Private Partnership (PPP). While detailed precinct planning is required, current options are for a nature-based commercial centre, park head office and park gateway. Secondly, the establishment of a rest camp within the park, where EIA processes were initiated to assess the feasibility of a rest camp.

The long-term strategic plan calls for a move away from the seasonal spikes in tourism numbers (spring for flowers, summer for the lagoon) to offer year round attractions. Within the park there are existing sites that currently are, or in the future will be, fulfilling a specific tourism and visitor role. These sites are all at locations with existing facilities and infrastructure that have traditionally provided a tourism or visitor service and / or access to the park. The type and nature of facilities provided for at these sites need not only meet visitor expectations, but also be compatible with the ethos of the area. In order to enhance the visitor experience of these tourism features, appropriate and sustainable infrastructure and facilities need to be provided. A number of unused historical homesteads and farm buildings in the park are currently falling into disrepair. In order to preserve them an appropriate use must be found for them. Several of the buildings lend themselves to a mixed use of tourism accommodation and auxiliary functions, while Mooimaak farm has the potential to support environmental education programmes.

7. Greentech Atlantis Special Economic Zone (Greentech SEZ)

The select committees were informed that in 2013/14, GreenCape and the Department of Trade and Industry signed a Memorandum of Funding Agreement to establish a Project Management Unit to facilitate establishment of the green technology (Greentech) SEZ in Atlantis. The initiative is a partnership between GreenCape as the managing agency, the City of Cape Town, Western Cape Provincial Treasury and the dti.

Atlantis, was identified by the development partners as a priority development node to host the envisaged Greentech SEZ. The City of Cape Town allocated 101 ha of land for the park to support the revitalization of Atlantis.  The select committees were further informed that the current firms in the designated site would be re-engineered to form part of the Greentech hub and proposed SEZ.

In the main the Greentech hub would support the manufacturing sectors to become suppliers and component manufacturers for the renewable energy industry, in particular independent power producers in the government’s Renewable Energy Independent Power Producers Programme (REIPPP). The wind towers manufactured in Greentech hub were installed at the Noupoort Wind Farm in the Northern Cape.

The hub has already attracted four large Greentech investors that are fully operational:

• Gestamp Renewable Industries (GRI Wind Steel, wind towers, investment R300million),
• Resolux (wind turbine internals, R25m),
• Kaytech expansion (geotextiles, R130m),
• Skyward Windows expansion (double glazing, R50m).

To date, the green tech hub has attracted investments amounting to R680 million. The investments attracted to the Greentech hub has created 312 jobs. The targeted investments, from 2014-2030, excluding gas to power (R30-R50 billion), amounts to R3.7 billion, expected to create 1,625 jobs. Currently there are 21 new investors, which have shown interest to form part of the envisaged SEZ, most of the investors are local, but those who have the highest investment value are foreign investors.

The existence of the Greentech hub has created a strong platform to drive skills development, through partnerships with youth organisations, local TVET colleges (West Coast FET College) and high schools. Skills development has been prioritised to ensure local skills meet the needs of industry locating in Atlantis.

The select committees were informed that the uncertainty in fully implementing the REIPPP, with Eskom refusing to sign off-take agreements has the potential to damage the manufacturing capacity, and possible loss of jobs.

Greentech SEZ, has been designed to form partnership with various agencies that would add value to the green economy. The delegation was also briefed about the work of the Renewable SMME incubation in Atlantis – South African Renewable Energy Business Incubator (SAREBI). SAREBI was officially launched by the dti in 2013. The Manufacturing Technical Centre was opened to incubate renewable energy SMMEs in 2015.

Current SAREBI incubatees include:

• Solar (solar water heater manufacturing and installations)
• LEDZshine (LED manufacturing and installations)
• NASAM Electrical Engineering (will be contracted to work with Resolux Africa).

 

8. Joint oversight tours

The delegation also undertook tours to the manufacturing plants, GIR Wind Steel, which is wind tower mast production facility and Hisense manufacturing plants in Atlantis. The tours offered an opportunity for the delegation to have an appreciation of the capacity and capability of the manufacturing plants. The non-operation of GIR Wind Steel was serious concern.  

 9. Observations

• In the West Coast region, high levels of inequality are prevalent in Swartland, Matzikama and Saldanha local municipalities and this has been exacerbated by job losses in the agricultural sector due to persistent drought from 2015 to date.
• Wheat and Tourism value chains are major contributors to the regional growth and domestic product (GDPR) and economic shocks in these supply chains can have devastating effects on regional economic growth and job creation.
• The West Coast district municipality has initiated a Regional Economic Development facilitation, which marks a policy shift away from the Local Economic Development (LED) strategy to a Regional Economic Development Strategy (REDS). This strategy is anticipated to leverage effective private sector partnerships where the municipality provides private investors with assurance of project success as detailed in their bankable business plans.
• In promoting regional economic growth, the WCD adopted an approach of establishing a social compact between labour, business and government and this framework allows social partners to hold one another accountable to the ethos of good governance and inspire business confidence from investors.
• Sectoral-based colloquiums were convened, and regional Business Development Forums (BDF) were set-up, which identified urgent blockages to unlock investment, create economic growth and job creation.
• The WCD reported that it is taking full advantage of social network based portals to provide seamless coordination of meetings and sharing of information among the role players in development. This include sharing update reports on projects, minutes, agendas and notices for meetings. This does not necessarily replace the importance of convening meetings.
• Generally, there is high prevalence of dropout rate from secondary schooling in the WCD. This poses a serious challenge for skills development, particularly in the engineering and artisanal skills that are required for traditional, emerging and future economic opportunities.
• WCD recognised various skilled development initiatives by various companies operating in different industries in the economy. For example, the SBIDZ-LC has a dedicated skills academy, and in addition to that, the PPC cement factory and ArcelorMittal iron ore smelting plant have established their respective skills development centres.
• Water shortages, due to prevailing drought, was identified as an impediment to economic development and job creation especially for Saldanha Bay IDZ, and various economic and social development programmes.
• The water reserves in the dams of Western Cape were reportedly 31 per cent as of August 2017 compared to 56 percent for the same month in 2016. Current projections have determined that if drastic measures were not taken, both households and the firms would be negatively affected.
• With regard to Operation Phakisa, small harbour laboratories are currently being revamped.
• Small enterprises in both urban and rural areas of the WCD are still contending with challenges of market access, lack of training, aptitude to prepare bankable business plans, mentorship etc.
• Seda does not have a direct interface with the district municipality but rather with Transnet because of economic activities around the IDZ business hub. In addition, the National Youth Development Agency (NYDA) only has one business centre in the Transnet hub at Saldanha Bay, as its footprint for the entire Western Cape Province.
• Medical doctors are reluctant to treat patients with injuries on duty chiefly because they encounter challenges with the payment of claims from the Department of Labour (DoL).
• There is resistance from certain sections of employers who refuse to allow DoL inspectors to enforce labour legislation through litigation and in some cases locking them out of their premises.
• The select committees welcomed the initiation of the Compensation Amendment Bill, which is currently in the phase of public consultation before it is introduced in Parliament. This amendment Bill seeks to include the domestic worker sector, which was historically marginalised by its despicable omission.
• DoL and the CCMA have initiated a pilot project where each labour centre has a referral officer to redirect queries to the CCMA and avoid turning away clients.
• In relation to the SEZs, the select committees emphasised the need for central coordination in which case at Provincial level the Member of the Executive (MEC) should be responsible for coordinating the nomination process to reduce contestation.
• The Director-General of the dti is responsible for ensuring that the nominated zone meets the specified requirements in accordance with the SEZ Act of 2014. After the SEZ have been proclaimed, the dti together with National Treasury provide capital expenditure for the designated zone while the host Provincial government is responsible for operational expenditure.
• The SIP 5 for the development of Saldanha Northern Cape corridor experienced delays due to subdued commodity prices particularly for iron ore leading to obstruction of mine expansions.
• On the construction of Sunrise Oil and Gas business premises, it took 16 months with no cost overruns. It is also pleasing to note that in constructing this plant, steel was the only material imported due to cost competitiveness and the rest of the equipment was sourced locally, and also 100 percent of labour was sourced locally.
• Volatile global economic conditions particularly slow recovery from the recession of 2008 and the domestic factors are delaying infrastructure rollout in the Saldanha IDZ because of negative influences from the business cycles.
• The Saldanha IDZ is collaborating with the Department of Higher Education and Training (DHET), DoL and the Western Cape Department of Economic Development and Tourism (DEDAT) to facilitate skills development for the IDZ. In this regard, 54 per cent and 80 per cent of the people under training are women and youth respectively.
• In Aurora, solar panel farm the select committees noted with appreciation a good example of local content whereby the steel for mounting solar panels was sourced from South Africa using 100 per cent local workforce except for the technical engineering teams.
• In addition, the company management also highlighted challenges of cheap imports of steel, which undermines the localisation imperatives espoused in the Preferential Procurement Policy Framework Act of 2011.
• The management of the solar panel farm indicated to the select committee that 80 per cent of investment shareholding belongs to Old Mutual of South Africa.
• In the Atlantis industrial park, a Western Cape industrial symbiosis programme was established by Green Cape and South African Renewable Energy Business Incubator (SAREBI) this initiative created 17 business opportunities in recycling wind turbines which have been shipped from Europe. After refurbishment, these turbines still have 15 years of productivity and a saving of 45 per cent of the cost of building a brand new wind turbine.
• The City of Cape Town has just bought ten electric busses for the MyCiTi Bus Rapid Transport (BRT) from China and this creates opportunities for producing electric batteries in the Atlantis industrial park.
• The Greentech Atlantis SEZ is a sector focused industrial zone with specific focus on clean technologies, electronics, solar and wind energy technologies, energy efficient technologies, alternative waste management, alternative building materials etc.
• The select committees acknowledged the investment in the renewable energy. For 2016/17, Greentech Atlantis Special Economic Zone has attracted investment amounting to R680 million into the SEZ. Of the attracted investments, R300 million was invested by GRI Wind Steel in 2014 for the construction of a wind tower manufacturing facility. The main aim of GRI Wind Steel is to enhance clean and renewable energy in the Country. Unfortunately, GRI Wind Steel had to retrench its staff due to production challenges.
• Eskom, is currently reluctant to sign any offtake agreement with Independent Power Producers (IPPs). This has a negative effect for manufactures, and that could result to a closure of manufacturing plant(s) and job losses adding to the current serious socio-economic challenges. In Atlantis, many households could be seriously and negatively affected.  
• Business incubation funding is largely located within the Department of Small Business Development and this department is supposed to identify and assist small businesses based in the country’s industrial hubs.
• The select committees acknowledged the investment in the renewable energy. However, the reluctance by Eskom to signed offtake agreements with IPPs has the potential to damage the renewable industry. This has a negative effect to manufactures, and that could result to a closure of manufacturing plant(s), and job loses adding to the current serious socio-economic challenges

10. Recommendations

• Strategic and financial support should be solicited from national and provincial government as well as investments from the private sector to support regional economic development. Development finance institutions working closely with provincial and regional development agencies should improve investment coordination. All efforts should be made by the government to create a conducive environment for private sector confidence in the economy and sustainable investment that supports economic growth and development.
• WCD should collaborate with the Department of Basic Education (DBE), the Department of Higher Education and Training (DHET), the DoL and the private sector to streamline curriculum development in order to ensure that the skills that are produced meet the demands of the traditional industries including emerging and future industries. The oil and gas industry, including the green-economy linked industries would need appropriate skills that would propel the growth of the industries. In addition, centres of excellence in Mathematics and Science must be established to prepare local people to take advantage of new economic opportunities presented by SEZs.
• WCD together with the Western Cape Department of Agriculture, including national departments of Agriculture, Forestry and Fisheries, Land Reform and Rural Development as well as development finance agencies (such as Land Bank) need to collaborate with industry players and restore investment and business confidence in the agricultural industry.
• On the water crisis in the Western Cape and the associated challenges of cooperation between national Department of Water and Sanitation and the Western Cape Provincial Government, the select committees recommended that the issue be referred to the Portfolio Committee on Water and Sanitation.
• Seda must be able to identify and empower potential entrepreneurs including women, youth and people living with disabilities in both urban and rural areas.
• Such entrepreneurs who are already producing marketable goods and services should be linked with markets, mentors and business consultants to develop sustainable business plans and guide them to start viable small businesses.
• The delegation noted, with concern, the ostensible domination of services in the hospitality industry by migrant workers. The select committees suggested that a multi-stakeholder forum needs to be established to include the Department of Home Affairs, Department of Labour and the South African Police Service (SAPS) to address this matter.
• NYDA should establish a portal to ensure their services are accessible to the youth without necessarily attempting to have satellite offices in all local municipalities.
• The select committees raised a concern about the lack of youth programmes in the WCD. A consultation would be facilitated by the select committees to assess the challenges faced by the NYDA. The entity was required to present concrete plans that would map-out how the agency would address youth development.
• A detailed breakdown on the processing of claims for the Compensation Fund (CF) and the Unemployment Insurance Fund (UIF) was requested for the joint select committee to determine the number of people that have been assisted.
• The introduction of ICT system in processing the claims has led to a slow pace of the system owing to the parallel nature of the UIF and CF online system and the select committees recommended that the databases for jobseekers and claims should be integrated.
• On resistance of employers to enforcement of labour legislation, the DoL should provide a breakdown of the number of undertakings issued on non-compliance to Basic Conditions of Employment Act (BCEA), Labour Relations Act (LRA) and Employment Equity Act (EEA) etc.
• To avoid unwarranted contestation for resources and business opportunities, the SEZs in different regions must focus on specific sectors based on regional natural endowments.
• The SEZs should enhance transformation and broaden its industrial base through development of industrial hubs. This must ensure participation of youth, women and people living with disabilities.
• On beneficiation, the dti was required to brief the select committees on the rationale for mineral beneficiation executed outside the mine zones as this has negative effects on job creation and small business activity in mining towns.
• Government needs to remove any existing policy and regulatory barriers that affect the development of the renewable energy industry. The renewable energy industry should be used to maximise/leverage broader government support programmes to support regional economies and add to lift employment, and poverty reduction initiatives.
• The SANParks should be invited by the Select Committee on Trade and International Relations to present its challenges regarding structural projects in the West Coast Park.

 

Report to be considered.