DEVELOPMENT OF UTHUKELA DISTRICT MUNICIPALITY INVESTMENT PROMOTION AND FACILITATION STRATEGY Situational Analysis: June 2013

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1 NOVEMBER 2010 NOVEMBER 2010 DEVELOPMENT OF UTHUKELA DISTRICT MUNICIPALITY INVESTMENT PROMOTION AND FACILITATION STRATEGY Situational Analysis: June 2013 SUBMITTED TO: Urban-Econ Development Economists 37 Hunt Road, Glenwood Tel: Fax: Page 1

2 TABLE OF CONTENTS 1. INTRODUCTION BACKGROUND TO THE STUDY OVERALL OBJECTIVES OF THE STUDY UTHUKELA INVESTMENT PROMOTION AND FACILITATION STRATEGY PROCESS STRATEGIC APPROACH AND METHODOLOGY SITUATIONAL ANALYSIS OBJECTIVES OBJECTIVES METHODOLOGY REPORT OUTLINE UNDERSTANDING INVESTMENT AND INVESTMENT FACILITATION BUILDING A CASE FOR INVESTMENT PROMOTION IN UTHUKELA DEFINING INVESTMENT PROMOTION AND FACILITATION KEY BARRIERS AND DRIVERS TO INVESTMENT KEY SUCCESS FACTORS OF INVESTMENT PROMOTION THE NEED FOR INVESTMENT PROMOTION, ATTRACTION AND FACILITATION IN SOUTH AFRICA REVIEW OF INVESTMENT POLICY ENVIRONMENT NATIONAL STRATEGIC FRAMEWORK PROVINCIAL STRATEGIC FRAMEWORK LOCAL STRATEGIC FRAMEWORK INVESTMENT ENVIRONMENT: KEY ROLE PLAYERS NATIONAL ROLE-PLAYERS PROVINCIAL ROLE-PLAYERS LOCAL ROLE-PLAYERS SUMMARY UTHUKELA DISTRICT OVERVIEW BACKGROUND DEMOGRAPHICS POPULATION BREAKDOWN PER GROUP AGE AND GENDER SPATIAL OVERVIEW AND ANALYSIS ENVIRONMENTAL AREAS KEY ECONOMIC NODES AND CORRIDORS UTHUKELA ECONOMIC SYNOPSIS SECTORAL CONTRIBUTION TO THE GVA IN THE DISTRICT SECTOR CONTRIBUTION TO THE EMPLOYMENT IN THE DISTRICT UTHUKELA IN-DEPTH SECTOR ANALYSIS AGRICULTURE TOURISM MANUFACTURING TRANSPORP SECTOR COMMERCIAL SECTOR UTHUKELA INVESTMENT PROFILE UTHUKELA PUBLIC SECTOR INVESTMENT UTHUKELA PRIVATE SECTOR INVESTMENT UTHUKELA INVESTMENT CONSTRAINTS BUSINESS RELATED CONSTRAINTS INFRASTRUCTURAL CONSTRAINTS GENERAL CONSTRAINTS CONCLUSION Page 2

3 1. INTRODUCTION UTHUKELA DISTRICT INVESTMENT PROMOTION AND FACILITATION STRATEGY 1.1 BACKGROUND TO THE STUDY Lazarus Developments in collaboration with Urban-Econ Development Economists were commissioned by KZN Department of Economic Development and Tourism, to develop a District Municipality Investment Promotion and Facilitation Strategies (IPFS) for uthukela District Municipality. This project emanates from the KwaZulu-Natal Provincial Investment Strategy which recommends that District strategies be created to unpack details at a regional level. This investment strategy is therefore directly aligned to the KwaZulu-Natal Provincial Investment Strategy. The KZN Provincial Investment Strategy acknowledges that research is fundamental in identifying ways to fully utilise the competitive and comparative advantages of the various districts. Creation of a DMIPFS for the different districts is recognition of the importance of investment at local level, and will be used to identify and promote priority sectors within the UThukela District. 1.2 OVERALL OBJECTIVES OF THE STUDY a) To identify the strengths and weaknesses, and develop a DIPFS based on the competitive and comparative advantages of the district; b) To identify and promote priority sectors within the district; c) To develop a comprehensive and pragmatic (SMART) implementation strategy outlining how investment aimed at maximising resource usage will take place at the local level. This will essentially translate into projects/interventions required; d) To develop a monitoring and evaluation framework, with short, medium and long term targets, e) Ensure alignment of investment promotion and facilitation initiatives between local and provincial authorities. 1.3 UTHUKELA INVESTMENT PROMOTION AND FACILITATION STRATEGY PROCESS The UThukela Investment Promotion and Facilitation Strategy is broken down into the following five phases in order to meet the above mentioned objectives. The process is currently on phase 2: Situational Analysis. Page 3

4 Phase 1 Inception Report detailing the scope of work and the methodology that will be used in developing the UThukela Investment Promotion and Facilitation Strategy Phase 2 2. Detailed Situational Analysis report involves a status quo of investment trends in the district including key competitive and comparative advantages of the District. Phase 3 Drafting of the District IPFSs entailing development of the IPFS which outlines the key priority sectors for inward investment and the key strategic interventions required to promote and secure new investment into the District. Phase 4 Detailed Implementation Plan and Monitoring & Evaluation Framework, including a detailed Implementation Framework outlining roles & responsibilities of implementing agents including time frames; and a monitoring and evaluation framework to track progress of projects identified. Phase 5 Close Out report 1.4 STRATEGIC APPROACH AND METHODOLOGY The approach undertaken is based on the integration of the various components of development economics, namely economic market focus, spatial aspects, sustainable planning and strategic development facilitation. Economic development opportunities are identified, spatial planning parameters drawn up and implementation guidelines specified in terms of facilitating actions. In considering the objectives and scope of this strategy, the following three key fundamentals pillars are key to the conceptualization and formulation of the Investment Strategy: 1. THE COMPARATIVE ADVANTAGES OF THE UTHUKELA DISTRICT with an aim of identifying the spatial and sectoral areas where investment should be aimed on. This aspect represent the demand for investment; 2. THE INVESTOR TRENDS AND OBJECTIVES IN MAKING INVESTMENT DECISIONS with an aim of identifying and targeting the right investors to the right investor opportunities. This aspect represents the supply of investment; and 3. THE IDENTIFICATION OF THE INTERVENTIONS THAT ARE NECESSARY TO MAXIMISE BOTH PRIVATE AND PUBLIC INVESTMENT this deals with the strategies and actions necessary to maximise the alignment between (1) the demand and (2) the supply as defined above. The methodology adopted throughout the process of formulating the UThukela District Investment Promotion and Facilitation Strategy is outlined in the figure below. This process involves extensive Page 4

5 On-going interviews, discussions and workshops when required UTHUKELA DISTRICT INVESTMENT PROMOTION AND FACILITATION STRATEGY consultation throughout the process through visionary workshops, stakeholder consultation and meetings. Phase 1 - Inception Phase 2 - Situational Analysis Desktop research to determine current environment, sectoral trends, investment patterns, district capacity and key challenges and opportunities Stakeholder consultation (interviews, discussions and workshops) to identify trends and gather information relating to their strategies and plans for investment Phase 3 Drafting the IPFS Development of the DMIPFS including key findings on the Status Quo, development of strategic interventions and key areas for investment sectorally and spatially, the approach required, role and responsibilities, alignment to the provincial investment strategy, and enterprise development and investment model Phase 4 Implementation and M&E Framework Development of an Implementation Framework detailing key intervention, roles and responsibilities, resource requirements, and an action plan for implementation Development of a Monitoring and Evaluation Framework which sets investment targets and allows for tracking and monitoring of the strategy implementation and new investment Phase 5 Close-out 1.5 SITUATIONAL ANALYSIS OBJECTIVES This report focusses on the situation analysis which will inform the strategy development process. The purpose of this Situational Analysis Report is to review and assess the current situation in uthukela with regards to Investment Promotion, Attraction and Facilitation. The two main aspects of this report are: 1. Understanding investment, investment trends and strategic framework in uthukela within the broader national and provincial context; Page 5

6 2. Understanding the current investment environment, profile and preferences of uthukela and related local municipalities with associated challenges and strengths OBJECTIVES The objectives of the situational analysis are as follows; a. Review and collate existing research recently undertaken within uthukela; b. Review of investment trends within the district, and in relation to the province; c. Analyse the key competitive areas and priority sectors for uthukela; METHODOLOGY The methodology utilized for the situational analysis includes; a) Literature Review/Desktop Analysis: Assessment of the current National and Provincial IPF frameworks, investment incentives, and relevant policy, strategy and interventions that influence investment promotion and facilitation are taken into consideration. In addition current district and local strategies that will influence Investment Promotion and Facilitation are also reviewed. b) Statistical Analysis: used to determine a sectoral analysis using baseline information and market intelligence to identify key issues and the districts growth potential, comparative and competitive advantages, needs, challenges and opportunities. c) Stakeholder Consultation: Workshop and interview preparations, facilitation and discussions with stakeholders to identify trends and gather information relating to their strategies and plans for investment as well as private and public investment in the district (including sectoral and spatial investment trends) as well as the investment climate. A variety of stakeholders are interviewed at a National, Provincial and Local Scale as well as a sectoral scale and an investor scale. 1.6 REPORT OUTLINE Section 1: provides an introduction to the strategy and key objectives and methodology undertaken; Section 2: provides an outline of key investment trends at a national, provincial and local level, and a review of the strategic policy environment surrounding investment promotion, attraction and facilitation; Section 3: outlines uthukela as an investment location with an audit of the infrastructure and resources in uthukela; Section 4: provides an economic synopsis of the district detailing the public and private sector investments; then comes The conclusion. Page 6

7 2. UNDERSTANDING INVESTMENT AND INVESTMENT FACILITATION 2.1 BUILDING A CASE FOR INVESTMENT PROMOTION IN UTHUKELA DEFINING INVESTMENT PROMOTION AND FACILITATION In line with the KZN Provincial Investment Strategy, key definitions and considerations informing investment promotion, attraction and facilitation that should be understood at the onset include: Investment: Investment entails all commitment of financial and or capital assets by a party in order to gain profitable returns in the form of interest, income, or appreciation of the value of the instrument 1, Investment promotion, attraction and facilitation can be defined as sourcing, promoting, communicating with, and attracting potential investors in an attempt to influence them towards investing in your location, and to facilitate and maintain new and existing investor relations to influence the establishment of new investment and the retention and expansion of existing business, Role of the public sector: this sector is seen as an investment facilitator to the private sector by creating an environment conducive to investment through enhancing the political and economic climate of a region. Examples of public sector involvement include the formulation of development incentives, infrastructure development, and policy statements as a tool to foster investment as well as playing an advisory role. Important to mention is the promotion of publicprivate partnerships to enhance investment attraction, Investment promotion Agencies (IPA): Trade and Investment KwaZulu-Natal (TIKZN) is the IPA for the province and is a public sector body involved with investment promotion and facilitation in KZN. Fixed Capital Formulation: is seen as essential for economic growth, Foreign Direct Investment (FDI): is the long term investment by an international company or entity into the domestic economy and is seen as essential for economic growth in developing countries. Advantages of FDI include; technology spillovers, assists human capital formation, contributes to integration and development of international trade, helps create a more competitive business environment and enhances enterprise development 2 as well as contributes to the tax base of the host country KEY BARRIERS AND DRIVERS TO INVESTMENT Barriers and drivers of investment are important as they determine the level of investment attraction into a region. Drivers of investment refer to elements of an economy which encourage investment by foreign and local investors and barriers are factors which drive investment away. These are summarized below in alignment with the KZN Provincial Investment Strategy which are taken into account in the uthukela Investment Strategy. 1 Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in Action in KZN Investment Strategy, Foreign Direct Investment for Development: Maximising Benefits, Minimising Costs, OECD OECD Publications Service: France in KZN Provincial Investment Strategy. Page 7

8 Table 2.1: Summary of Key Drivers and Barriers to Investment (Source: KZN Investment Strategy, 2010) Key Drivers of Investment Efficient administrative processes Transparent and inclusive policy and decision making Availability and quality of resources Sound and stable macroeconomic environment Productive, skilled, low cost labour force Growing markets in a specific area Perception of access natural resources Good quality developed infrastructure Perception of a safe region/ area Favourable and stable exchange rate Key Barriers to Investment Inefficient administrative procedures A lack of transparency and clarity in policy and decision making Perception of high levels of bribery and corruption Stringent land tenure and ownership arrangements Relatively unproductive and expensive and or low skilled labour force Cumbersome industrial relations and labour laws Expensive and or scarce natural resources Inefficiency in physical infrastructure Theft of communications and power infrastructure Exchange rate volatility KEY SUCCESS FACTORS OF INVESTMENT PROMOTION Key success factors to sustained investment as discussed through the Multilateral Investment Guarantee Agency (MIGA 3 ) of the World Bank Group, Presentation on Investment Promotion Best Practices and the KZN Investment Strategy, 2010 include the factors discussed below. These success factors emanate from Investment Promotion Agencies (IPA) whose main responsibility is to promote investment into a region. Key functions include; image building, investment generation, external relations government, strategy and focus, investor services and management of the promotional process, investor start up assistance, record keeping and research and monitoring and evaluation. Key success factors include; Lessons learnt from national and international success and failure in investment promotion, Quality control to maintain investment promotion, attraction and retention through a reviewed strategic plan (i.e. adequate planning, implementation and management) to retain existing investors and attract further investment through informal marketing, A coordinated institutional effort is necessary, Marketing and sales strategies to target the priority sectors and identification of external markets, A focus on a sectors competitive advantage and identification of opportunities, Effective management of and access to information to targeted entities through a website with a database of downloadable documents in relation to the local investment climate and links to potential sources of assistance, Provision of free advisory services and assistance to potential investors in the form of: o Information, advice and research, location scouting, site visits, and property searches, assistance with recruitment information and processes, identifying jointventure partners, facilitating networking among local companies, industry specialists, and educations and training organisations, supplier identification, profile 3 Part of the World Bank group set up in 1988 to promote investment flows to developing countries Page 8

9 of municipalities and facilitation of assistance with government departments, incentives, and regulatory processes. Provincial-level incentives are offered by a variety of agencies which target strategic priority objectives (sectoral, locational and employment based), Successful IPAs have administrative and bureaucratic independence from government, and yet are aligned to public economic and investment policy and planning. IPAs have representation from both private sector and government on their boards THE NEED FOR INVESTMENT PROMOTION, ATTRACTION AND FACILITATION IN SOUTH AFRICA The quality of a country s investment climate (IC) is determined by the risks and transaction costs of investing in and operating a business. These costs, in turn, are determined by the legal and regulatory framework, barriers to entry and exit, and conditions in markets for labor, finance, information, infrastructure services, and other productive inputs. The World Bank Group (WBG) supports improvements in investment climates by working with both the public and private sectors 4. The World Bank sees improvement of investment climates in developing countries as a means to target sustainable growth and poverty reduction. This view is intrinsically shared by the South African National government whereby investment is considered a key mechanism to target long term economic growth and to achieve sustainable development (see policy framework below). However, there is a concern globally about the difficulty in attracting foreign direct investment into South Africa 5. The National Investment Promotion and Facilitation Strategy indicates that foreign and domestic investment levels in South Africa remain below the average for other developing and emerging markets despite improved macroeconomic conditions. This is reiterated by the Investment Climate Assessment of South Africa undertaken by the World Bank which states that while South Africas overall business environment improved it is attracting far less foreign direct investment as much as it needs to, to tackle the challenges of unemployment and poverty. Foreign Direct Investment and fixed capital stock are seen as key contributors to economic growth in South Africa as a form of investment with FDI being an important source of fixed capital stock in S.A 6. As FDI has been identified as an important leverage of investment into the country it is important to understand the benefits it holds for the host country. The potential economic benefits of FDI include 7 : Job creation both directly and indirectly (suppliers and partners) and poverty reduction, Export market access: FDI is often more export intensive than domestic investment and can lead to local company exports through fostering international supply chain opportunities for local companies supplying foreign investors, 4 The World Bank Group Improving Investment Climates: An Evaluation of World Bank Group Assistance. 5 See African Millennium Cities Initiative, See United Nations Economic Commission for Africa, Economic Report on Africa 2010: Developing African Agriculture Through Regional Value Chains and NIPFS in KZN Investment Strategy, As discussed through MCI: City Investment Promotion Handbook, 2009 and the National Investment Promotion and Facilitation Strategy Page 9

10 Increased domestic investment through local linkages, Higher productivity increasing competitiveness in the local economy and cross pollination of ideas and management methods, Access to technology, research and development and innovation contributing to the knowledge economy and increase of local market competiveness, Foreign Exchange in countries with low savings and higher wage premiums associated with foreign companies can have spillover effects for the local economy, Human capital development and skills transfer and marketing of an area on a global scale, Resource-transfer effects, where capital, technology and management resources are supplied to the host country, which it otherwise would not have. 2.2 REVIEW OF INVESTMENT POLICY ENVIRONMENT The sub-section describes the policies and regulations related to investment promotion at the national, provincial and local level NATIONAL STRATEGIC FRAMEWORK NEW GROWTH PATH (NGP) The new growth path is a broad framework that sets out a vision and identifies key areas where jobs can be created within the South African National Economy. The new growth path is intended to address unemployment, inequality and poverty in a strategy that is principally reliant on creating a significant increase in the number of new jobs in the economy, mainly in the private sector. The new growth path sets a target of creating five million jobs by This target is projected to reduce unemployment from 25% to 15%. Critically, this employment target can only be achieved if the social partners and government work together to address key structural challenges in the economy. The new growth path seeks to place the economy on a production-led trajectory with growth targeted in ten jobs drivers. As a first step, government will focus on unlocking the employment potential in six key sectors and activities. These are: Infrastructure, through the massive expansion of transport, energy, water, communications capacity and housing, underpinned by a strong focus on domestic industry to supply the components for the build-programmes; The agricultural value chain, with a focus on expanding farm-output and employment and increasing the agri-processing sector; The mining value chain, with a particular emphasis on mineral beneficiation as well as on increasing the rate of minerals extraction; The green economy, with programmes in green energy, component manufacture and services; Manufacturing sectors in IPAP2 and; Tourism and certain high-level services. Page 10

11 The New Growth Path indicates that current investment and savings is below the levels required for sustainable growth which is seen as an imbalance in the economy. The NGP therefore sees the need for government to encourage stronger investment by the private and public sectors to grow employment-creating activities rapidly while maintaining and incrementally improving South Africa s core strengths in sectors such as capital equipment for construction and mining, metallurgy, heavy chemicals, pharmaceuticals, software, green technologies and biotechnology and sees the need for investment from emerging centres of economic power such as China, Brazil etc. The New Growth Path also views foreign Direct Investment as a mechanism to counter appreciation of the rand NATIONAL DEVELOPMENT PLAN (NDP) The recently established National Planning Commission (NPC) has developed the NDP vision for 2030 for South Africa which is classified as a long term strategic framework for the country to work towards collectively. A Diagnostic Report was released in June 2011 and sets outs South Africa s achievements and shortcomings since The central challenges identified are: Too few people work; The standard of education for most black learners is of poor quality; Infrastructure is poorly located, under-maintained and insufficient to foster higher growth; Spatial patterns exclude the poor from the fruits of development; The economy is overly and unsustainably resource intensive; A widespread disease burden is compounded by a failing public health system; Public services are uneven and often of poor quality; Corruption is widespread; South Africa remains a divided society. In reaction to these fundamental challenges, the NDP 2030 plan spells out the key strategic development areas which require focus over the next 20 years. These are: Employment and economy; Economic infrastructure; Environmental sustainability; An integrated and inclusive rural economy; Positioning South Africa in the world; Transforming human settlements; Improving education, training and innovation; Promoting health; Social protection; Building safer communities; Building a capable and developmental state Fighting corruption; Transforming society and uniting the country. Whilst the above strategic areas are broad the 3 priorities that are highlighted include; raising employment through faster economic growth, improving the quality of education, skills Page 11

12 development and innovation and building the capability of the state to play a developmental, transformative role. These are seen as essential to achieving higher rates of investment and competitiveness, and expanding production and exports. uthukela aims to work toward the national long term vision of growing the economy and creating employment as well as skills development and innovation through investment attraction, promotion and facilitation. The NDP acknowledges the need for increased investment in competitive infrastructure through improved governance to lessen the risk on international investment. This can be achieved by rising exports, attracting investment in competitive infrastructure, and lowering the cost of doing businesses through improving efficiencies in transport and logistics NATIONAL INDUSTRIAL POLICY FRAMEWORK In January 2007, Cabinet adopted the National Industrial Policy Framework (NIPF), which sets out government s broad approach to industrialisation. The NIPF identifies a challenge in the South African labour economy. The NIPF is written with the view to create a competitive national environment for investment, create capability in Trade and Investment South Africa for investment promotion in line with global best practices and investor after care services (which it identifies as being effective in encouraging further investment); provide input into the development of incentives which take cognisance of global best practices; and to develop an effective investment monitoring and evaluation framework. The objectives of the strategy are: To facilitate diversification beyond our current reliance on traditional commodities and non tradeable services, which requires the promotion of increased value-addition, characterised particularly by movement into non-traditional tradeable goods and services that compete in export markets and also against imports; To ensure the long-term intensification of South Africa s industrialisation process and movement towards a knowledge economy; To promote a more labour-absorbing industrialisation path, with the emphasis on tradeable labour-absorbing goods and services, and economic linkages that create employment; To promote industrialisation, characterised by the increased participation of historically disadvantaged people and marginalised regions in the industrial economy; and To contribute towards industrial development in Africa, with a strong emphasis on building the continent s productive capacity. The NIPF does not explicitly identify targeted sectors. Instead the framework highlights five sector groupings where much of South Africa s economic potential lies: natural resource-based, medium technology (metals fabrication; machinery and equipment; downstream minerals beneficiation; chemicals and plastics; and paper and pulp), advanced manufacturing, certain labour-intensive and tradable services sectors. These areas are further broadened by the recently developed National Industrial Action Plan, to include forestry and furniture in paper and pulp, and capital equipment and transport equipment into metals fabrication. uthukela adheres to the NIPF by contributing to a competitive national environment for investment through the priority sectors identified by the NIPF. The NIPF provides an overarching framework for Page 12

13 investment and identifies key economic sectors with potential for growth and investment. It also guides further policy coherence NATIONAL INVESTMENT PROMOTION AND FACILITATION STRATEGY, 2008 The vision of the NIPFS is to: To develop an investment promotion and facilitation service and domestic forum able to attract the optimal amount of investments into South Africa through global best practices. The IPFS aligns to the NIPF. The IPFS acts as a strategic alignment enabler between The DTI and public and private stakeholders involved in investment promotion and facilitation. This strategy was formulated in response to Foreign and domestic investment levels in South Africa remain below the average for other developing and emerging markets despite improved macroeconomic conditions even though South Africa has high FDI potential and is listed as one of the 25 most attractive FDI destinations in the world 8. The IPFS covers a range of issues that are important to fulfilling the dti s mandate of increasing the value of inward FDI. The document outlines the current challenges facing SA in attracting substantially greater amounts of inward FDI. New innovations in the operation of Trade and Investment South Africa (discussed in section 2.3 below) are motivated and described. The diagram below illustrates framework within which to achieve the below objectives: Create a competitive environment for investment, Create an effective investment promotion and aftercare servicing capability within the dti, housed in TISA with the appropriate level of budget, resources and skills, Facilitate the effective operation of a national forum of investment promotion activities, by building the requisite levels of capacity and cooperation between institutions, Develop global best practices in investment promotion, comprising: investment strategy, lead generation, facilitation, and investor servicing, Input into the development of new investment incentives to global best practice standards, in conjunction with TEO and National Treasury, Establish a monitoring and evaluation framework that ties the IPFS to TISA s institutional performance and individual officials performance. 8 Presentation: Kuni, D The Investment Promotion and Facilitation Strategy. DTI South Africa. Page 13

14 Figure 1: Process of the National Investment Promotion and Facilitation Strategy, 2008 (Source: Kuni, D. 2008) The uthukela DIPFS aligns directly to the mission and vision of the National IPFS. The IPFS provides a strategic framework for investment promotion and key components necessary for the functioning of an attractive investment climate. It also outlines a process for investment promotion from focussing on a regions priority sectors, alignment to policy, adequate marketing, and investor aftercare and partnership facilitation as well as performance monitoring INDUSTRIAL POLICY ACTION PLAN 2013/ /16 (IPAP2) In January 2007 Cabinet adopted the National Industrial Policy Framework (NIPF) which sets out Government s broad approach to industrialisation. Implementation of industrial policy was set out in the Industrial Policy Action Plan (IPAP), which was later revised to incorporate a longer-term 10 year view of industrial development, to form the IPAP 2. The IPAP constitutes a central tool in the NGP job-creation strategy. It is anticipated that IPAP / /13 interventions will lead to direct jobs and indirect jobs, totalling jobs.the analysis indicated that seven sets of policies are critical to achieve a scale-up of industrial policy and a shift towards strengthening the productive side of the economy in general. These policies are: Stronger articulation between macro and micro economic policies; Industrial financing channeled to real economy sectors; Leveraging public and private procurement to raise domestic production and employment in a range of sectors, including alignment of B-BBEE and industrial development objectives, and influence over private procurement; Developmental trade policies which deploy trade measures in a selected and strategic manner, including tariffs, enforcement and SQAM (standards, quality assurance and metrology) measures; Page 14

15 Competition and regulation policies that lower costs for productive investments and poor and working class households; Skills and innovation policies that are aligned to sectoral priorities; Deploying these policies in general and in relation to more ambitious sector strategies, building on work already done, Interventions designed to stimulate sub-regional growth, including key sectors and value chains by way of the Special Economic Zones (SEZ) policy and programmes; Interventions that give expression to Government s commitment to regional economic development and integration in Africa; and The deployment of these policies in general and in relation to more ambitious sector strategies, building on the significant platforms POLICY ON THE DEVELOPMENT OF SPECIAL ECONOMIC ZONES IN SOUTH AFRICA, 2012 This policy aligns to IPAP and the New Growth Path and was formulated in response to the challenges faced by the Industrial Development Zones with the aim of addressing these deficiencies through an improved strategic framework drawing on lessons learnt from the attempted implementation of the IDZs. The objective of the policy is to support and accelerate industrial development in the targeted regions by the provision of special measures needed to develop targeted industrial capabilities and attract targeted foreign and domestic direct investment. The SEZ programme is a tool that is used by many economies to promote trade, economic growth and industrialisation. The country aims to create and sustain economic opportunities in all its regions, especially the under-developed regions, develop much needed regional development platforms, create jobs for a growing population, and improve the general living standards of its citizens. This main aim is supported by the following objectives: Support the development of targeted industrial capabilities and foreign and direct investments in support of the IPAP, regional development strategies, and the NGP. Develop world-class industrial infrastructure in line with the requirements of the targeted industries and investments. Promote beneficiation and value addition of the country's mineral and agricultural resources. (iv)contribute to the creation of jobs and increase exports of beneficiated commodities in the targeted regions. The policy indicates that strong coordination at all levels of government, adequate financial and technical resources and clearly targeted industrial capabilities and investments are needed for the success of the implementation of SEZs in South Africa PROVINCIAL STRATEGIC FRAMEWORK PROVINCIAL GROWTH AND DEVELOPMENT STRATEGY AND PLAN (PGDS AND PGDP) Page 15

16 The recently completed PGDS provides a high-level view of key issues, mechanisms and interventions necessary to achieve continued balance growth in the province for the 30 year time horizon. This PGDS provides KwaZulu-Natal with a reasoned strategic framework for accelerated and shared economic growth through catalytic and developmental interventions, within a coherent equitable spatial development architecture, putting people first, particularly the poor and vulnerable, and building sustainable communities, livelihoods and living environments. The strategic focus of the PGDS is: to build on the smart province concept, through improving all growth sectors enhancing their employment generating potential, transformation of the economic sector in respect of representivity of our population, appropriate provision of economic and social infrastructure and building of sustainable communities in our Province, and contributing to this on a nation and Continental level. The Provincial Growth and Development Plan (PGDP), the implementation framework for the Provincial Growth and Development Strategy (PGDS), provides a number of interventions. Attention is given to the provision of infrastructure and services, restoring the natural resources, public sector leadership, delivery and accountability, ensuring that these changes are responded to with resilience, innovation and adaptability. This will lay the foundations for attracting and instilling confidence from potential investors and developing social compacts that seek to address the interconnectedness of the Provincial challenges in a holistic, sustainable manner, whilst nurturing a populous that is productive, healthy and socially cohesive. The PGDS aligns itself to the Millennium Development Goals (MDGs), the New Growth Path (NGP), the National Development Plan (NDP), as well as various other national policies and strategies. It identifies seven strategic goals, all of which have a direct bearing on economic development. They are: Goal 1: Job Creation Goal 2: Human Resource Development Goal 3: Human & Community Development Goal 4: Strategic Infrastructure Goal 5: Environmental Sustainability Goal 6: Governance and Policy Goal 7: Spatial Equity Strategic Goals 1, Job Creation, deals directly with economic investments, and is of particular importance to the purposes of the current analysis PROVINCIAL SPATIAL ECONOMIC DEVELOPMENT STRATEGY (PSEDS) The PSEDS provides a strategic framework, sectoral strategies and programmes aimed at a rapid improvement in the quality of life for the poorest people of the Province. It sets out to address the developmental challenges posed by these socio-economic contexts through a ten year development plan. The PSEDS specific programmatic interventions are built around the particular nature of inequality and poverty in the KZN. There are several spatial considerations that will have bearing on this project, but most importantly, the fact that ethekwini and uthukela are still identified as primary nodes that fall on a priority transport corridor (N2) between the Richard s Bay and Durban Page 16

17 Ports. The PSEDS is currently in the process of being reviewed by the Department of Economic Development and Tourism (DEDT). It must however be noted that as part of the revised PSEDS, the province seeks to identify the key driving commercial activity within the province and map this spatially. This will allow for a view of what economic concentration exists in uthukela within the provincial context. The successful implementation of the PSEDS is dependent on the implementation at local level KZN INDUSTRIAL DEVELOPMENT STRATEGY (IDS) The IDS aims at developing KZN s manufacturing industry and related services. In doing so it sets out the short to medium term programmes that have been identified by the Department of Economic Development to address these issues. Through the Strategy, it was identified that the Province needs to: Pursue policies designed to ensure macroeconomic stability, growth, low inflation and high employment to the extent possible; Increase emphasis on investment; Increase effective delivery of - skills, infrastructure, research and development, and innovation - especially vocational and scientific/technical education; Continue with its active industrial policy to protect and enhance modern manufacturing capacity but should also focus heavily now on re-organisation of agencies and resources in partnership with business and labour, for significant improvements in the speed and quality of implementation; Ensure funds are made available and administered appropriately, to fund the training and retraining of workers who have been made redundant or whose skills need updating. The strategy seeks to increase the level of development diversity in the provincial economy. The Strategy identifies two critical issues which must form the overall focus of the Province in achieving industrial development, namely, productive growth and job creation. In order to achieve this, the human capital potential of the provincial economy will need to be further enhanced. The clusters identified within the KZN IDS are: Cluster 1 Infrastructure Development; Cluster 2 Skills Development; Cluster 3 Sustainable Job Creation and Entrepreneurship; and Cluster 4 Productive Industrial Growth. These clusters are intrinsically linked to investment KZN INVESTMENT STRATEGY The KZN Investment Strategy was developed as to tool for all stakeholders to assist in attracting and facilitating foreign and domestic investment in KwaZulu-Natal. The objective of the Strategy is to enable all stakeholders in the province to work together in promoting, attracting and facilitating: Foreign and domestic investment; Both of a public and private sector nature; Into productive industries (income and asset creation); Driven by the comparative advantages of the province; In order to stimulate job creation and income generation. Page 17

18 The key areas of focus of the strategy are: Improving structures and systems of investment promotion and facilitation, and working together; Attracting investment to meet job targets; Channeling resources to where they have the greatest impact (i.e.: foreign countries, geographic areas, economic sectors); Ensuring that competitive advantages are utilised to the fullest and building on these; Alignment and integration with national, provincial and local policies, strategies and programmes (incl. Richards Bay IDZ, DTP); Maximisation of job creation and retention through business retention & expansion; Gaining optimal benefit from incentives such as DTI sector-based Incentives and service & utility incentives; Public sector investment into infrastructure to lead the private sector (incl. rural and small towns) KZN EXPORT STRATEGY A Provincial Export Strategy was undertaken to identify the major challenges facing the province in terms export promotion and present implementable solutions to these challenges. The following are requirements identified by exporters as key to ensuring growth within the export market: Good communications; Cost-effective and reliable transport; Certainty that goods will be efficiently delivered across international borders to customers; Competitive pricing of the goods at destination through assistance with constraints; Efficient payments to exporters and access to finance for exports; Minimising of red tape associated with exports; Skilling for exports and training in reducing input costs; Smart export development, including spatial export development. The strategy incorporates these elements into targeted programmes to provide exporters with assistance in the challenges they face. However in order to successfully overcome these challenges and achieve the goals of the strategy, buy-in from all export stakeholders is required, along with a recognition of the vital role external bodies such as national government and export councils play in creating an enabling environment for trade. In response to this, the Strategy presents five key programmes: Programme No. 1: Enhancing the Export Climate and Competiveness Programme No. 2: Improving Market Penetration Programme No. 3: Exporter Development Programme No. 4: Export Promotion Programme No. 5: Export Strategy Performance Measurement, Management & Review LOCAL STRATEGIC FRAMEWORK UTHUKELA INTEGRATED DEVELOPMENT PLAN (IDP) (2012/ /17) Page 18

19 The Municipality s IDP sets out a development plan for the area for the next five years (2012/ /17) and it does so by taking into account all aspects namely economic, physical infrastructure, social, economic and environmental, to ensure truly integrated development. The IDP is informed by extensive community participation to maintain the local authority s aim of providing services to its people according to their needs. This includes creating an environment conducive to the development and growth of economic investments. The IDP allocates resources both financial and human to projects that need to be implemented in the municipality which is updated on an annual basis. The uthukela IDP vision is: A stable, sustainable and prosperous district with committed servants who serve with excellence in governance, service delivery and economic development. In order to achieve this vision uthukela District developed a mission statement with a number of core values. The IDP mission statement reads: We promote a people-centred environment with emphasis on consultation, integrity, accountability, economy, effectiveness and efficiency. The district core values read: SHOPS meaning solidarity, honesty, ownership, professionalism, and self-reliance Solidarity Self-reliance SHOPS Honesty Professional ism Ownership The IDP prioritises the growth and development of the economy through private sector initiatives and investment to maximize employment creation and income generation. It also states that a strong and rapidly growing economy will assist with addressing service backlogs. Page 19

20 The IDP also prioritises the need for an enabling environment to be created in which the private sector could be empowered to compete effectively in international markets. Other approaches to development include protection and management of the natural environment in accordance with international standards and practices to ensure that long term sustainability of the communities, tourism and manufacturing practices. In addition, community capacity building and health care provision is prioritized for socio-economic development. The strategic priorities identified in the District IDP include: Water and sanitation provision, safety, addressing backlogs, operation & maintenance Ensuring enhanced service delivery with effective institutional arrangements (enhancing administrative, institutional and political capacity) Effective Management of Resources and Infrastructure Coordination of Local Economic Development and Tourism Participation in Health Structures (HIV, Aids, TB, STIs, etc.) The uthukela Investment Strategy aims to work within the framework of the IDP to assist in achieving the vision set out for the District Municipality UTHUKELA SPATIAL DEVELOPMENT FRAMEWORK (2008) In 2008 the District developed a Spatial Development Framework with two major aims: To create sustainable human settlements and quality urban environments in line with the NSDP, and To achieve economic growth and development through maximizing the potential comparatives advantages of the District From the preceding aims, key objectives intended by the SDF in the district included the following: To enhance linkages between the rural areas and urban settlements To encourage urban integration at local settlements to redress the imbalances of the past To ensure the protection of environmental sensitive areas To enhance potential movements corridors To enhance the comparative economic advantages of uthukela To enhance the potential tourism linkages transnationally and internationally To enhance agricultural activities that will benefit local economic development To upgrade infrastructure that will enhance the economic competitiveness of the District In order to achieve the above aims and objectives the following strategies needs to be adopted: 1. The town of Ladysmith is to be developed as the Primary Admin Centre of the District. 2. The industrial area at Ladysmith is to be developed as the Primary Industrial Hub of the District. 3. The town of Estcourt is to be developed as the Primary Agriprocessing Hub of the District. Page 20

21 4. The towns of Ekuvukeni, Estcourt, Ntabamhlope and Bergville are to be developed as Secondary Admin Centres to locate an admin centre within each local municipality. 5. Tertiary Nodes are to be located at Driefontein, Mhlumayo, Weenen, Colenso, Loskop, Kwadakuza and Winterton and will be places where a decentralization of administrative functions may take place. These nodes will also be targeted for economic investment. 6. Tourism nodes will be focussed upon along the Drakensberg and in Ladysmith to make full use of the Drakensberg World Heritage Site and the Battlefields routes. 7. The N11 and N3 are identified as Primary Corridors and play an important part in making the District economically competitive. 8. Secondary Corridors were identified to link the Secondary Nodes and in some cases the Tertiary Nodes where such nodes are located on a route to an adjacent district. 9. A Primary Tourism Corridor was identified and runs from Estcourt along the Drakensberg over the Olivier s Hoek Pass, to give effect to the Provincial tourism/ trekking initiative. 10. Secondary Tourism Corridors have been identified from the Primary Tourism Corridor to the Tourism Nodes located along the Drakensberg World Heritage Site to benefit the local communities on these routes. 11. The portion of N11 stretching between Ladysmith and the N3 has been identified as a priority upgrade, as well as a stretch of dirt road between Loskop and Bergville in order to enhance the access to Ladysmith and the Primary Tourism Corridor respectively. 12. The N3 Corridor Development Nodes have been located along the N3 in order to derive some benefits from this major transport route. 13. Water and Sanitation Infrastructure Investment are identified in the uthukela District Municipality Water Services Development Plan (2007). It should be noted that SDF has highlighted the primary and secondary investment nodes and corridors based on the local opportunities of the area UTHUKELA SERVICE DELIVERY AND BUDGET IMPLEMENTATION PLAN FOR THE 2012/2013 BUDGET uthukela district developed a Service Delivery And Budget Implementation Plan (SDBIP) for to assist in accelerating the delivery of services in all its Municipal areas. The SDBIP process entails the following: Drafting of a municipal Integrated Development Plan (IDP) Submission of IDP projects to inform the Municipal Budget Drafting of a Municipal Budget Developing of Performance Targets and Key Performance Indicators Drafting of a Draft SDBIP by the Municipal Manager and Management Team Submission of the SDBIP to the Mayor Approval of the SDBIP by the Mayor (28 days after approval of the annual budget) Approval of the SDBIP by the Mayor Monitoring the SDBIP and Financial Oversight Review of the SDBIP on a Quarterly Basis Page 21

22 Bi-annual reporting to Council Reporting on Service Delivery in terms of the SDBI It should be noted that the DBIP is crucial to the investment promotion in the area as it accelerate the delivery of services an infrastructures that in many areas act as barriers to investment promotion FORMULATION OF ORGANIC PRODUCTS SECTOR PLAN FOR UTHUKELA DISTRICT MUNICIPALITY The district was identified as having the highest agriculture potential suitable for the production of a variety of vegetables (cabbage, tomato, carrot, and potato) as well as many legumes. Further, the area is also suitable for animal production, especially beef production. Therefore, the overall objective of the project was to have a plan that stimulate and boost the production of organic food and products in the Uthukela District Municipality. The plan suggested the following strategies; Awareness creation: Extension Officers and the small scale farmers in the District need to be made aware of what organic agriculture production is. Both the advantages and challenges of converting to and practicing organic production need to be highlighted. Stimulating the correct production practices: m ost of the farmers are practicing low external input sustainable agriculture (LEISA) due to poverty. It is likely to be easy to use this as a stepping stone to organic agriculture production. Grouping successful farmers together to obtain critical mass: there is a need to monitor and evaluate the performance of farmers who will be participating in the project Putting in place key support infrastructure: It is crucial to have key infrastructure like markets, storage facilities, animal handling facilities, training centres and coordination centres in place for efficient operation UTHUKELA DISTRICT MUNICIPALITY PUBLIC TRANSPORT PLAN The uthukela District Municipality Public Transport Plan (PTP) developed the following vision To provide integrated, affordable and accessible public transport services to the community To enable uthukela to attain its vision several goals were developed taking into account the packaging of subsidised services and the associated policies, the levels of service to be provided, the integration with land use, addressing travel demand management and the modal integration of services where applicable. These goals have been divided into four broad categories namely: Public transport infrastructure: Improve and invest in public transport infrastructure based on the identified needs and develop a policy towards the funding and provision of public transport service; Planning and development: Ensure integration whilst implementing the Public Transport Plan; Page 22

23 Road infrastructure: Improve the accessibility to the public transport service by investing in road infrastructure especially in rural and deep rural areas; and Public transport demand and safety: Ensure safe, secure, reliable, affordable and sustainable public transport service based on public transport demand. It should be noted that transport infrastructures play pivotal role in stimulating or in blocking investments to flow in an area LOCAL MUNICIPALITIES LOCAL ECONOMIC DEVELOPMENT STRATEGIES The five Local Municipalities (Indaka, Emnambithi/Ladysmith, Umtshezi, Okhahlamba, and Imbabazane) making up the uthukela District has each a LED Strategy that sets out a vision for the Municipality. The main components of these Strategies are to identify and explore economic development opportunities, take advantage of local economic comparativeness and competitiveness, overcome local economic development challenges. It implies that such imperatives must be considered within the context of developmental local government. In order to achieve the vision developed in each LED Strategy, Municipalites need to to consider the following: Improve internal capacity and optimise stakeholder participation, Promote sustainable community based entrepreneurship and investment, Provide strategic infrastructure and services, Identify, support and promote private sector high impact projects, Provide support for informal economic activities LOCAL MUNICIPALITIES INTEGRATED DEVELOPMENT PLANS The Municipals IDPs set out a development plan for the area for the next five years and they do so by taking into account all aspects namely economic, physical infrastructure, social, economic and environmental, to ensure truly integrated developments. Municipal IDPs are informed by extensive community participation to maintain the local authorities aim of providing services to their people according to their needs. This includes creating an environment conducive to the development and growth of economic investments. The IDPs allocate resources both financial and human to projects that need to be implemented in the municipalities. They do this over a five-year forecast and is updated on an annual basis. SYNOPSIS The National, provincial and local policies presented above are all relevant to the current study as they all promote job creation, economic development and growth. Investment Strategy for UThukela needs to be developed with these above principles in mind, i.e: ensuring that the municipality creates a conducive environment to ensure effective promotion and attraction of investment, as well as efficient facilitation of investment. To this end, the strategy must: Make suggestions towards improving the business environment in uthukela; Page 23

24 Seek to improve coordination between key stakeholders who are required to work together to promote and facilitate investment; Identify key sectors and focus areas for inward investment (based on comparative advantages); Promote the sharing and development of research and information. 2.3 INVESTMENT ENVIRONMENT: KEY ROLE PLAYERS This section provides an overview of the key stakeholders in investment promotion at the national, provincial and district levels with key roles respectively NATIONAL ROLE-PLAYERS THE DTI AND TISA Trade and Investment South Africa (TISA) is a division of the national Department of Trade and Industry that is responsible for trade and investment promotion in South Africa. Its mandate is to develop the South African economy by focusing on investment promotion and facilitation; export development and promotion as well as managing its network of foreign economic offices. The Investment Promotion unit of TISA is responsible for attracting foreign direct investment as well as developing and promoting local direct investment by undertaking the following tasks: Identifying investment opportunities in South Africa, Packaging investment opportunities, Identifying potential investors, Promoting investment opportunities, Facilitating investment into and in South Africa, Providing a dedicated aftercare service, Providing general information on investing in South Africa and the domestic business environment, Arranging inward and outward investment missions, Facilitating funding and government support. In terms of investment support, the DTI offers a number of incentives and programmes in order to provide additional motivation to potential investors to choose South Africa as an investment location. These include the Clothing and Textile Competitiveness Improvement Programme (CTCIP), Production Incentive (PI), Automotive Investment Scheme (AIS), Enterprise Investment Programme (EIP), Black Business Supplier Development Programme (BBSDP), Critical Infrastructure Programme (CIP), Business Process Outsourcing and Offshoring (BPO and O), Page 24

25 Sector Specific Assistance Scheme (SSAS), The Co-operative Incentive Scheme (CIS), and Film Production Incentives (FPI). Although TISA is a division of the DTI mandated to undertake trade and investment promotion on a national level, there are various other department and institutions that play a role in the complete investment promotion process. These are briefly discussed below OTHER NATIONAL DEPARTMENTS AND INSTITUTIONS Although most other national departments are not mandated to undertake investment promotion and facilitation, there are a number of objectives that the various departments need to fulfil in order to assist in creating an enabling investment environment. This includes Making provision for infrastructure that is required to support domestic and foreign investment, Creating policy, legislation, and regulatory frameworks, as well as Providing education and skills development and training to ensure that the work force has sufficient capacity to meet the requirements of investors. Investors often make investment decisions based on the investment or business environment of a location, and therefore the role of the other national departments must not be overlooked. With regards to Tourism, the national tourism agency South Africa Tourism undertakes marketing and promotion of South Africa as a tourist destination, and therefore has an important role to play with regards to the Tourism Sector. Additionally, the Department of Foreign Affairs and High Commissioners in the various South African embassies located abroad also play a role in investment promotion and facilitation. This relates to ensuring strong public relations, image building in foreign nations, and facilitation of certain regulatory processes in the specific foreign nation FINANCIAL INSTITUTIONS Financial institutions such as the Industrial Development Corporation (IDC), Kula Finance, and Development Bank of South Africa (DBSA) also have a role to play in creating and enabling investment environment. These institutions, although also not active in investment promotion or facilitation, offer funding and other financial services to potential investors which enhances the investment climate of South Africa, and provides alternative financing options to investors other than commercial banks BUSINESS CHAMBERS The overarching business chamber in South Africa is the South African Chamber of Commerce and Industry (SACCI). The objective of SACCI is to actively protect and promote the interests of business. Page 25

26 There are also a range of specialised chambers and forums such as the Minara Chamber (Muslim Businesses), the Black Management Forum, the Chambers of Commerce and Industry South Africa (Chamsa), The South African Chamber of Business (Sacob), The National African Federated Chamber of Commerce (Nafcoc), Afrikaanse Handelsinstituut, and The Foundation for African Business and Consumer Services (Fabcos). All these chambers have a role to play in the South African investment promotion and facilitation arena given that they are the voice of business in the country and assist in creating an enabling environment for businesses PROVINCIAL ROLE-PLAYERS KZN DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM (KZN DEDT) The Department of Economic Development has the strategic mandate of fast-tracking economic growth essential for the creation of jobs and the reduction of poverty in the province. The Department has numerous units or directorates that relate to specific programmes and subprogrammes of the DEDT. The directorate responsible for overseeing trade and investment is the Trade and Industry Development Directorate. Within this directorate is the Trade & Investment Promotion sub-directorate, which deals with issues surrounding the facilitation of investment and trade. Their key role is to develop policy and assist by creating an enabling environment with regards to export and investment promotion. It should be noted that, the implementation of this policy is undertaken by Trade and Investment KZN (TIKZN); which was established as the implementing agency of the DEDT. TIKZN is responsible for trade and investment promotion and facilitation in KZN, their role is discussed in greater detail below TRADE AND INVESTMENT KWAZULU-NATAL (TIKZN) Trade & Investment KwaZulu-Natal (TIKZN) is KwaZulu-Natal s provincial trade and investment promotion agency, developed and mandated to promote the province as an investment destination, and promote trade by assisting KZN based companies to identify markets and export their products 9. TIKZN offers the following services to potential investors: Facilitation of joint ventures and business linkages between small and big business; The provision of relevant, reliable information to investors and traders; Assistance with applications for investment incentives and export marketing incentives; Assistance to foreign investors with applications for business permits; Negotiation of local government incentives on behalf of investors; Provision of project support and aftercare services; Assistance to merging international traders and with international trade enquiries; Assisting investors to locate suitable premises and to secure project and operational financing; Provides assistance with access to industrial development zones (IDZ) and spatial development initiatives. 9 Page 26

27 TIKZN primarily focuses on identifying and facilitating investments of R50 million and above. This criterion has evolved over time as other agencies, like the KZN Growth Fund and ithala Bank promote investment and offer lendings at thresholds below R50m for large-scale projects. Thus the specific focus allows for the best use of TIKZN s scarce resources to focus on investment in-flows FINANCIAL INSTITUTIONS In KwaZulu-Natal there are two main financial institutions affiliated with the provincial government, namely the KZN Growth Fund and ithala Development Finance Corporation. The KZN Growth Fund The KZN Growth Fund is a long-term debt fund structured as a unique Public-Private Partnership between the KZN provincial government, the Development Bank of Southern Africa (DBSA), Standard Bank Limited and the Infrastructure Finance Corporation (INCA). The Fund provides project funding for large economic projects, i.e. over R30 million in value, which can stimulate faster growth and job creation, have broad economic impacts and yield a direct long-term financial return for government. The Fund also provides capital for approved public-private partnership infrastructure projects that stimulate the growth of selected sectors, as defined in the KZN PGDS & PSEDS, and to take advantage of the competitive advantages of the province. This entails providing capital for investment in tourism, bulk water supply for economic development, transport and logistics, industry, viz. automotive, clothing and textile, agri-industry, bio-diesel, and other investments that would lead to the diversification of the provincial economy. Ithala Development Finance Corporation The ithala Development Finance Corporation is a development bank that aims to stimulate economic development and empowerment in KwaZulu-Natal. Its main activities are listed below: To provide development finance to private sector enterprises in order to promote, encourage and facilitate investment in KZN; To provide property development assistance; and To assist with planning, implementation and monitoring of development projects and programmes in KZN. Both of these institutions have an important role to play in the regional investment picture in that they provide funding for targeted infrastructure development as well as development finance to private sector in order to stimulate and facilitate investment in KZN LOCAL ROLE-PLAYERS At the local level there are also a number of important role-players, although their role and mandate in investment promotion and facilitation in negligible in many instances. The role-players include the district and local municipalities in KZN, investment promotion and economic development agencies, as well as business chambers. Page 27

28 DISTRICT AND LOCAL MUNICIPALITIES There are 11 district municipalities and 50 local municipalities within the KZN provincial boundary. Both district and local municipalities typically have a department or unit that deals directly with Local Economic Development issues, which includes stimulating development and growth via increased inward investment (generally domestic). Most district and local municipalities therefore undertake some form of investment promotion and facilitation from within the Municipality. uthukela is the District Municipality that this strategy will focus on in the wider context and encompasses five local municipalities, namely, Indaka, Emnambithi/Ladysmith, Umtshezi, Okhahlamba, Imbabazane BUSINESS CHAMBERS There are a number of business chambers within KZN with the Ladysmith Chamber of Commerce and Industry being of importance in uthukela District. The most common function of business chambers is to provide information and assistance to their members, who are local businesses. They also provide a link between local business and the local government, effectively playing a facilitation role with local business. The mere presence of a business chamber adds to the business environment of an area and it is for these reasons that business chambers must be considered when formulating strategy for investment promotion in the province. SUMMARY The table below provides a summary of the roles and responsibilities of key role players in the South African investment promotion and facilitation arena on a national, provincial, and local level. It should be noted that all the agencies/departments involved are coordinated, and maintain and constantly improve upon their existing relationships, as each has a strategic role to play in assisting to promote, attract and facilitate investment in KZN. Further, it is critical that there is coordination and a good working relationship between the active investment promotion and facilitation role players and other role players such as other national, provincial and local departments, financial institutions and business chambers. This will ensure that the priorities of all spheres of government, in the various sectors, are aligned with promotion efforts, and supported by developmental and financial institutions and organisations. Table 2.2 Investment Promotion and Facilitation Key Stakeholders Levels Stakeholders Current Roles Policy, planning and implementation of economic DTI development initiatives National Trade promotion and facilitation, TISA Investment promotion and facilitation Page 28

29 Levels Stakeholders Current Roles Other departments Creating a conducive environment (Policy, regulation, (Planning, Public Works, legislation, infrastructure) etc) IDC, Kula Finance, DBSA Financial/developmental assistance & support SACCI and other Business networking, support, and assistance specialised chambers (chambers) DEDT Policy, planning and implementation of economic development initiatives Trade promotion and facilitation, TIKZN Investment promotion and facilitation Provincial Other Departments Creating a conducive environment (Policy, regulation, (Agriculture, Tourism, legislation, infrastructure) etc) KZN Growth Fund, ithala Financial/developmental assistance & support Local LED Departments & EDA's Policy, planning and implementation of economic development initiatives Local Local IPA's & EDA's Trade promotion and facilitation, Investment promotion and facilitation Other Departments Creating a conducive environment (Policy, regulation, legislation, infrastructure) Ladysmith Chamber of Business networking, support, and assistance Commerce and Industry (chambers) Page 29

30 3 UTHUKELA DISTRICT OVERVIEW 3.1 BACKGROUND DEMOGRAPHICS The Census 2011 population estimate for the uthukela is people living in households. It is noticeable that the population of uthukela is decreasing from (community survey, 2007) to as per Census of They are number of factors that contribute to the decrease of population in uthukela district and amongst other things are the impacts of HIV/AIDSrelated deaths and migration. The population of uthukela district municipality is unevenly distributed. The largest population is in Emnambithi/Ladysmith local municipality and the small population is in umtshezi local municipality. The table below shows the number of wards in uthukela and how the population is distributed from the 2001 to 2011 Census Table 3.1 uthukela Populations Municipality Wards 2011 census % Emnambithi % of district OKhahlamba % of district Imbabazane % of district Indaka % of district umtshezi % of district Total population of uthukela %of province Source: Statistics SA: Census POPULATION BREAKDOWN PER GROUP The majority of the people that lives in uthukela district municipality are Africans and Coloureds are minority. The following table shows the population breakdown of the uthukela district municipality. This breakdown is showing the Africans, Coloureds, Indians and Whites. Table 3.2 uthukela Race Groups Municipality 2011 census % African Coloured Indian White 11, Source: Statistics SA: Census 2011 Page 30

31 3.1.3 AGE AND GENDER According to the Census 2011, the number of people between age is increasing to 391,369. Females are more than male and are occupying 55% in this category whereas male are on 45%. With regards to 0-14, males are leading with 51% while females are sitting in 49%. The last category which is , females are more with 69% and males are in 31%. The breakdown below shows age and gender of uthukela district municipality. Table 3.3 uthukela Age Groups AGE MALES % FEMALES % TOTAL ,497 51% 121,712 49% 246, ,056 45% 214,314 55% 391, ,631 31% 21,638 69% 31,269 Source: Statistics South Africa SPATIAL OVERVIEW AND ANALYSIS uthukela district municipality (DC23) is one of ten district municipalities in the Province of KwaZulu- Natal. uthukela district municipality derives its name from one of the major rivers in the Province of KwaZulu-Natal, the uthukela River that rises from the Drakensberg Mountains and supplies water to a large portion of KZN and as well as Gauteng. uthukela district municipality has three district municipalities bordering onto it within the Province of KwaZulu -Natal, namely Amajuba, umzinyathi and UMgungundlovu. uthukela district municipality consists of five local municipalities namely, 1. Indaka (KZ233) 2. Emnambithi/Ladysmith(KZ232) 3. Umtshezi (KZ234) 4. okhahlamba(kz235) 5. Imbabazane (KZ236) Only four of the five LMs have urban areas i.e. former Transitional Local Councils (TLC) and R293 towns, namely: Emnambithi LM: Ladysmith/Steadville, Ezakheni and Colenso/Nkanyezi. Indaka LM: Ekuvukeni. umtshezi LM: Estcourt, Wembezi and Weenen. Okhahlamba LM: Bergville, Cathkin Park (Bergview) and Winterton/Khethani. However, according to the Municipal Demarcation Board (MDB) major towns in the district also include: Emnambithi LM: Driefontein, Peacetown, Roosboom and Van Reenen. Indaka LM: Vaalkop, etholeni, Limehill, Uitval and Kliprivier. umtshezi LM: Cornfields and Frere. Okhahlamba LM: Zwelisha, Bushingatha, and Mkukwini. Page 31

32 The size of uthukela district municipality is approximately 11500km². Emnambithi is occupying 2,965.92km², Indaka is on km², Umtshezi km², Okhahlamba which is the largest is on km², Imbabazane is on km². the district is located in the western boundary of Kwazulu-Natal. uthukela district municipality is 75 % rural and the newly demarcated local municipalities, Indaka and Imbabazane, having no formal towns and mainly comprising of traditional areas. The main tourism hub is the Cathkin Park that falls within the Cathkin Park node and another node located near the Royal Natal National Park, called Babangibone Development Node. The Ladysmith town is a significant historical tourism destination and offers a number museums and historical sites while Bergville and Winterton towns are located within the vicinity of the Drakensberg and derive some benefits from the tourism industry. Map 3.1 uthukela Spatial Map ENVIRONMENTAL AREAS There is a range of environmentally sensitive areas within uthukela and include amongst others natural resources such as the important species sites, sites of intrinsic biodiversity value, watercourses and steep slopes. The greater central plateau and river valleys, such as the Sundays and Tugela River are some of the natural resources that should be protected. The most important environmental value associated with these valleys, are there value as catchments areas. The prevalence of dongas and soil erosion are also an indication of poor environmental management and there is therefore a need to develop and adopt an environmental management approach. Page 32

33 3.2.2 KEY ECONOMIC NODES AND CORRIDORS Urban areas Ladysmith and Estcourt are the two major towns and economic hubs within the uthukela District Municipality. Both Ladysmith and Estcourt are commercial centres for surrounding farming areas and serves as shopping centres for towns such as Bergville, which lacks a strong commercial presence. As Ladysmith is the economic and regional hub, the banking sector is service industry is prevalent. The town is further the industrial hub, with the majority if industries being located around Ladysmith. The only industrial estate in the District is also located a short distance from Ladysmith. Traditional Authority Area Large areas of traditional land are located within uthukela, with about 35% of land classified as either tribal or peri-urban. A spatial analysis revealed that a large portion of degraded land is located in traditional areas. This is especially true in the Emnambithi, Indaka and Umtshezi Municipalities. The high propensity for soil erosion in these areas, coupled with land mismanagement, has contributed to this. Indaka and Imbabazane has by far the largest share in traditional land, with areas as high as 83% being traditional land. As such, very little of the municipality s land has been transferred through the land reform process. By comparison, the municipalities with the smallest percentage of traditional land, being Emnambithi and Umtshezi have also experienced the highest level of land reform. In terms of overall ownership, tribal lands and land reform areas account for about 40% of all land in uthukela. Land Reform Projects As of 2007 a total of 55,523 hectares were transferred to 8,450 beneficiaries. The largest share of land was transferred in Umtshezi, followed by Emnambithi, accounting for roughly 93% of all land transferred. A single project in Besters accounted for the large portion of land transfer in Emnambithi during Only 1% of land has been transferred in Imbabazane and 6% in Umtshezi. Road Networks There are two national routes, the N3 and N11, traversing the District, which forms a critical link between uthukela and provincial, national and international destinations. The Indaka and Imbabazane municipal areas are relatively isolated from these routes and can only be accessed via the provincial road network. The N3 traverses uthukela and form the connection between Durban and Gauteng. This route carries a vast amount of goods and passengers, with only a few filling stations along the route gaining economic benefit. The N11 is an alternative route from Ladysmith to Gauteng and Limpopo and forms an important route between Ladysmith and Newcastle located in the neighbouring Amajuba District Municipality. Page 33

34 In line with Provincial Guidelines, tourism routes have been identified along the Drakensberg, linking areas such as Cathkin Park, Bergville, Winterton and the Northern Berg. The route has been expanded recently to include linkages to tourism nodes within the Drakensberg range. Page 34

35 4 UTHUKELA ECONOMIC SYNOPSIS 4.1 SECTORAL CONTRIBUTION TO THE GVA IN THE DISTRICT The total value of goods and services produced in uthukela in 2011 was R13.4 billion, contributing 5% to the provincial economy. The district s GVA contribution grew at an average of 6% per annum between 2001 and 2011 which is above the overall average for KZN of 4%. This is attributed to the high average growth in Okhahlamba, Indaka, Umtshezi and Imbabazane municipalities. The table below shows the GVA contribution of KZN and uthukela in Table 4.1 uthukela Sectoral Contribution to GVA Year 2011 Agriculture, forestry and fishing 12, Mining and quarrying 3, Manufacturing 61, , Electricity, gas and water 5, Construction 8, Wholesale and retail trade, catering and accommodation 40, , Transport, storage and communication 38, , Finance, insurance, real estate and business services 54, , Community, social and personal services 16, General government 35, , Source: uthukela IDP 2013 Further, the table shows the GVA contribution per sector in constant prices for the district and its local municipalities for The most significant sector in 2011 was manufacturing which contributed 21% to the district s total GVA.This was followed by wholesale and retail trade, catering and accommodation at 17%; and then finance, insurance, real estate and business services at 15%. The least important sector in terms of GVA in 2011 was mining and quarrying at less than 1%. Table 4.2 GVA contribution of Economic Sectors in uthukela and Local Municipalities Geography Kwazulu- UThukela Natal Total 277, , Geography Uthukela DM Emnambithi- LM Indaka LM Umtshezi LM Okhahlamba LM Imbabazane LM Sectors R/M % R/M % R/M % R/M % R/M % R/M % Total Industry Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and water Page 35

36 Construction Wholesale and retail trade, catering and accommodation Transport, storage and communication Finance, insurance, real estate and business services Community, social and personal services General government Source: Easy data 2013 In terms of sector growth, the table below displays the year on year growth rate of each sector in uthukela from 2001 to Most sectors have been fairly volatile experiencing both positive and negative growth, although this is part of any economic cycle. The Finance, insurance, real estate and business services sector has remained fairly strong over this period growing from 11.4% in 2001 to 15.4% in Agriculture, construction, wholesale and transport have also shown a slight growth over the same period as presented in the following table. Table 4.3 uthukela Economic Sector Growth Rates Over Year Sectors Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and water Construction Wholesale and retail trade, catering and accommodation Transport, storage and communication Finance, insurance, real estate and business services Community, social and personal services General government Total Source: Easydata Quantec 2013 In terms of the manufacturing sector itself, it is important to examine the specific industries and their growth over the same period for uthukela. Table 4.4 uthukela Manufacturing Sectors Growth Rates Over Page 36

37 Sectors Food, beverages and tobacco Textiles, clothing and leather goods Wood, paper, publishing and printing Petroleum products, chemicals, rubber and plastic Other non-metal mineral products Metals, metal products, machinery and equipment Electrical machinery and apparatus Radio, TV, instruments, watches and clocks Transport equipment Furniture and other manufacturing Total Manufacturing Source: Easydata Quantec SECTOR CONTRIBUTION TO THE EMPLOYMENT IN THE DISTRICT The main source of employment within the district in 2011 was wholesale and retail trade, catering and accommodation at 25%. This was followed by general government at 16% and community, social and personal services at 15%. Employment in the primary sector comprised around 7% of total employment in the district in 2011 It should be noted that government and community services that currently dominate the area in terms of employment with more than 30% of employment are the non-productive sectors (government services and social services) and have limited multiplier effects in the economy. Mining and agricultural activities that could contribute significantly to the job creation are undertaken at a small-scale hence have limited upstream and downstream linkages and therefore contribute insignificantly to local economic growth. Therefore, more effort needs to be concentrated on the producers sectors such as agriculture that have more multiplier effects should uthukela wants to meet its investment objectives. Figure 4.1 Sectoral Contribution to the Employments of uthukela Page 37

38 Source: uthukela IDP UTHUKELA IN-DEPTH SECTOR ANALYSIS The purpose of this sub-section is to provide details of the main economic sectors operating within uthukele District in order to understand their dynamics and needs for investment. The main sectors operating in uthukela Municipality include: Agriculture, Tourism, Manufacturing, Transport, Mining, and Retail sector or trade and Commerce (Small Medium and Micro enterprises and Informal Sector) AGRICULTURE Agriculture contributed R946 million to the district economy in 2011 and employed people. The sector contributed 7% to total GVA and employment within the municipality in Commercial agriculture occupies a large portion of the municipal land area but subsistence farming is the dominant activity in the municipality. The main crops planted are maize followed by potatoes, with the main areas for cropping being Estcourt and Bergville. In addition, chickens, pigs, cattles and sheeps are part of agriculture sector in the district. Beef ranching dominates in Emnambithi local municipality, whilst chickens are the dominant activity in Umtshezi local municipality. The main area of sheep and pig farming is also in Umtshezi local municipality. Page 38

39 Large areas of commercial agricultural land have been set aside for land reform in the uthukela District. These land claims are in various stages with some having been gazetted and others still being processed. This has resulted in loss of land to agricultural production unless leased back to commercial farmers for production purposes. Agricultural Investment Potential The soil from uthukela District is fertile for growing many crops and vegetables; this leads the agricultural sector to have a number of opportunities for investment in planting crops and other related services including the following: Vegetables plantation, Water sport, Game farming, Venison production, Sugar production, Livestock farming especially pork, Abattoir, Hunting, Aquaculture, Mushroom production, Forestry, Hydroponics,and Fishing TOURISM The current tourism destinations (or regions) that fall within the district municipality are the Battlefields and Drakensberg destinations (as defined by TKZN). The assessment of tourism in the municipality is therefore based on data available for these destinations. Foreign Tourism: an estimated foreign tourists visited the district municipality in This is based on tourists to the Drakensberg and tourists to the Battlefields. The main source markets of foreign tourists in the district are the UK, Germany, Netherlands and USA (as reported in the uthukela tourism strategy). Secondary tourism corridors are identified to each tourism node in line with provincial draft policy identifying a trekking route along the World Heritage Site. These routes lead from a primary corridor route running between the town of Estcourt and the Oliviershoek Pass. Tertiary corridors are identified to lead into the more rural areas adjacent to the Drakensberg World Heritage Site connecting to primary and secondary tourism routes. The tourism sector comprises three main parts. The berg experience with hotels, chalets and camp sites located from Mount Aux Sources in the north through to Giants Castle in the south. The second major part includes historical tourism involving the battlefields routes through the eastern part of Page 39

40 the district. The third part involves game reserves and the wildlife experience in the lower lying bushveld (as opposed to berg) areas of the district in proclaimed and private conservancies. This includes an expanding area devoted to game farming and professional hunting. Adventure tourism is closely linked to the berg and the bush experience. Tourism Investment Potential uthukela has the potential to become one of the most destinations of choice for tourists to KwaZulu-Natal and South Africa, especially for those tourists who desire the country ambience. The district is rich in natural, cultural and historical heritage with the major attractions being the ukhahlamba-drakensberg World Heritage Site and the Battlefields. In addition, the municipality has cross-boundary linkages with Lesotho and the Free State (e.g. through the Maloti Drakensberg Trans frontier Project); Amajuba and Umzinyathi Districts (e.g. Battlefields); and the midlands (including the Midlands Meander). Further, the warm temperatures, summer rainfall, scenic beauty and environmental significance of the area make the climate excellent for tourism. Apart from other sectoral investment opportunities, tourism can also play a pivotal role in the advancement of communities. The survey organised in the area has indicated that tourism sector has the following investment opportunities: Establishment of uthukela tourism route; Expansion and consolidation of Weenen Game Reserve and potential to establish it as a Big Five reserve; Restore Umsuluzi Game Reserve near Colenso; Upgrade the Rock Art Centres in Okhahlamba and develop environmental interpretation centres; Expansion of the Bushman cave in Okhahlamba, Cableway in the Drakensberg; Invest in the Giant Castle, Develop township and rural tourism projects; Develop a themed heritage and cultural route along the R74; Develop a new conference venue in the district; Reconstruction of Royal Natal Hotel; Develop a themed tourism information node/hub and district craft hub along the N3 and N11; and Establish a hospitality and tourism training centre in the district MANUFACTURING Manufacturing is among the significant economic sectors to the economy of uthukela in 2011 and employed an estimated people. The sector contributed 21% to total GVA and 14% to employment within the district municipality in The district s manufacturing sector contributed 5% to total manufacturing GVA of KZN in 2011, up from 4% in Employment in the Page 40

41 municipality s manufacturing sector as a proportion of total manufacturing employment in KZN remained stable at 6% between 2001 and The main sub-sectors within manufacturing of the district are food, beverages and tobacco; petroleum products, chemicals, rubber and plastic; and then textiles, clothing and leather goods. All of the manufacturing sub-sectors have remained relatively stable in terms of the contribution to the manufacturing sector since The dominant manufacturing areas of the district are in Emnambithi local municipality and Umtshezi local municipalities, with Ezakheni Industrial Estate and Danskraal forming the major industrial areas in Emnambithi local municipality. Large manufacturing enterprises are based in both municipalities and include Defy Appliances, Zorbatex, Nestle, Eskort, Apollo Tyres and Clover. Ezakheni was established as an industrial decentralisation point in the late 1960s by the nationalist government and industry locating into the area relied on government subsidies up until the change of government in the early 1990s. This resulted in the removal of the subsidy and the closure of the more marginal companies in the industrial area (around 50% occupancy in the early 2000s). Since then the numbers of companies operational at Ezakheni has increased owing to the benefits associated with accessibility to land, rail road and utility services. Manufacturing Investment Potential There is a demand for manufactured products in uthukela such as clothing and textile, footwear, furniture, food, beverages and building material. Further, uthukela local economy is dominated by primary sectors, which implies that there is availability of raw material to a certain extent. However, because the manufacturing sector is not developed and all its full potentials are not yet utilised, in most instances raw material is transported to other centres outside the district for processing. The following investment opportunities are available in the manufacturing sector: Electronics Clothing and Textile Leather production; Agro-processing, Maize Mill, Coffee waste transformation into mushroom Charcoal plant, Traditional medicine, Transport and Machinery equipment TRANSPORP SECTOR uthukela is mainly served by an East-West and North-South corridor. These corridors are the N11 national route that connects the N3 with Mpumalanga Province coal mining areas and the N3 that forms an East-West link which connects two of the country s most economically active metropolitan Page 41

42 areas namely Gauteng and Durban in KwaZulu Natal. The N3 also serves a major urban community namely Pietermaritzburg. Of all roads in the uthukela district area 1 410km are surfaced roads and 1 320km are un-surfaced or gravel roads. The majority of the surfaced roads can be found in Emnambithi/Ladysmith municipality. Transportation sector ranges from road freight transport, public road transport to rail freight transport. Transport of goods from distributors and wholesalers to a range of rural retailers is also growing in the area especially with the local transporters. This is allied to the requirements for specialised manufacturing and servicing of the vehicles. Transport Investment Potential With regard to the transport sector, internal road networks within uthukela District are underdeveloped as most communities access primary roads through gravel roads. Investment opportunities in this sector include the following: There is an opportunity for a Drive Port or one stop shop/rank around N3 and N11 to link Lesothu, KZN, Mpumalanga and Swaziland, The current rural road maintenance and upgrading are public investments that will create jobs and alleviate poverty. Opportunity exists to build new and formalise some informal taxi ranks in the area COMMERCIAL SECTOR The commercial sector contributes substantially to the district GVA with wholesale and retail outlets located in all the centres in the district and certain of the smaller centres located in the Ingonyama Trust Board areas. Higher order commercial services are provided in Ladysmith, Estcourt, Bergville and the Central business districts at Bergville and Winterton. Generally, the commercial sector in this context is used as a generic term for most businesses included the following sectors (as defined by the Standard Industrial Classification): (1) financial intermediation, insurance, real estate, and business services, (2) wholesale and retail trade (excl. Hotels and restaurants), (3) community, social and personal services. This can be grouped in small, medium and micro enterprises (SMMEs) and informal traders. The SMME sector in uthukela includes wholesalers and retail trade as well. The majority of businesses are concentrated in major towns of the district and this makes them the important commercial and service centres for other surrounding areas. Further this sector includes the street trading which is one of the key means of living in the district and makes an important contribution to the economic and social life of the majority of the residents. It absorbs workers who would otherwise be without work or income. Most people enter the informal economy in uthukela not by choice but out of a need to survive. Especially in circumstances of high unemployment, underemployment and poverty, the Page 42

43 informal economy has significant job and income generation potential because of the relative ease of entry and low requirements for education, skills, technology and capital, but the jobs thus created often fail to meet the criteria of decent work. There are large areas of displaced urban/rural settlement in the district including Limehill, Loskop, Mazizini, Dukuza, Emaus etc. Each of these areas has access to local spaza shops and some retail outlets which provide for local needs of the community. Commercial sector Investment Potential The retail sector is concentrated in major towns of the district. The level of income leakages is estimated to be moderate since the location of uthukela district is not far from major provincial and regional towns such as Pietermaritzburg, Pinetown, and Durban. Retail sector s investment opportunities in this area include the following: There are opportunities to construct a retail centres in all rural municipalities such as Okhahlamba, Imbabazane and Indaka, There is an opportunity to construct trading markets for SMMEs and informal traders in all nodes around taxi ranks, Sport facilities, Warehouses, Music academy, Recording studio, and Property development. Page 43

44 5 UTHUKELA INVESTMENT PROFILE This section presents the current public as well as private investments of uthukela District. 5.1 UTHUKELA PUBLIC SECTOR INVESTMENT The focus here is on identifying major capital investment projects undertaken by the district with a budget exceeding R 1 m. It should be noted that public sector investments in many cases are used to establish new nodes, to serve as catalyst for further private investments in the area. The table below is extracted from the Provincial Treasury payment estimates to district. This does not provide a picture of the public investment as it includes operational expenditure. However, it provides an indication of the allocation of funds from the various national and local departments to each district, of which a portion would be allocated to infrastructure development. From the graph, it is clear that ethekwini and umgungundlovu take the lion s share of budget allocations, totaling 49.7%. uthukela receives approximately 5.7% of the total provincial budget. Figure 5.1 Provincial Treasury payment estimates to districts Source: KZN treasury The graph below provides an indication of the specific public investment spending in the province from the various departments in 2011: Page 44

45 Figure 5.2 specific public investments spending in the province Source: Provincial Spatial Economic Development Strategy (PSEDS) Database Analysis 2011 It is clear that the largest contribution of investment expenditure within the uthukela region is attributed to the Department of Human Settlements, followed by the Department of Education and then Co-operative Governance and traditional Affairs. The table below displays a total of all departmental investment and the number of projects: Table 5.1 Departmental Expenditures for uthukela DEPARTMENTS TOTAL % Arts & Culture 1,002, COGTA 28,202, DOE 89,414, DOA&E DEDT 2,047, DHS 147,438, DSD DSR 2,100, DOT 287, Umgeni Water Total Source: KZN treasury In terms of specific public sector investment into projects within the District, the tables on the following page provide a breakdown of the projects that are either historic, current or planned for the District. This was extracted from the PSEDS District Profiles report for uthukela, and provides an indication of the public sector investment in the region. Page 45