SUPPORTED BY VNG INTERNATIONAL - Govan Mbeki ......At the national level, the New Growth Path (NGP) and National Development Plan (NDP) were developed to usher in a new trajectory

SUPPORTED BY VNG INTERNATIONAL

COMPREHENSIVE

LOCAL ECONOMIC DEVELOPMENT STRATEGY

2014 & BEYOND

“Mpumalanga’s most Diversified Industrial

Hub”

2

“BEYOND 2014:- INDUSTRIALISE......................., DIVERSIFY........................, INCUBATE........................”

LIST OF ABBREVIATIONS AND ACRONYMS

ASGISA Accelerated and Shared Growth Initiative for South Africa

BBSDP Black Business Supplier Development Programme

BOT Build Operate and Transfer

CBD Central Business District

CDT Community Development Trust

CHC Community Health Centres

CIP Capital Infrastructure Programme

CPA Community Property Association

CPFP Capital Projects Feasibility Programme

CPPP Community Private and Public Partnership

DARDLA Dept of Agric Rural Development & Land Administration

DEDET Department of Economic Development Environment & Tourism

FDI Foreign Direct Investments

GDP Gross Domestic Product

GENESIS Generating–Strategy–Innovation–Solutions

GIPBP Global Investment Promotion Best Practices

GMLM Govan Mbeki Local Municipality

GSDM Gert Sibande District Municipality

GVA Gross Value Added

HDI Human Development Index

IDC Industrial Development corporation

IDP Integrated Development Plan

IPI Investment Promotion Intermediary

ISP Incubation Support Programme

LED Local Economic Development

LUMs Land Use Management System

MEGDP Mpumalanga Economic Growth and Development Plan

NDP National Development Plan

NEF National Empowerment Fund

NGP New Growth Path

NSDP National Spatial Development Perspective

NYDA National Youth Development Agency

PACA Participatory Appraisal of Competitive Advantages

PIC Public Investments Corporation

PPP Private Public Partnership

SDF Spatial Development Framework

SMME Small, Micro and Medium Enterprises

SPV Special Purpose Vehicle

Stats SA Statistics South Africa

3


SWOT Strengths, Weaknesses, Opportunities and Threats

LIST OF TABLES

Table 1 GENESIS Model Outline

Table 2 Interactive Stakeholder Participation in Project Execution

Table 3 Demographic Indicators

Table 4 Labour Indicators

Table 5 Education Indicators

Table 6 Health Indicators

Table 7 Human Development Index

Table 8 Average Household Income

Table 9 Inequality and Poverty

Table 10 Basic Service Delivery/Infrastructure Indicators

Table 11 GDP Growth Rate

Table 12 Contribution by Local Municipal Areas

Table 13 Tourism Indicators

LIST OF MAPS

Map 1 Govan Mbeki in the Regional Setting

Map 2 Govan Mbeki in the Local Setting

Map 3 Govan Mbeki Settlement Patterns

LIST OF FIGURES

Figure 1 LED Strategy Review Context

Figure 2 NDP Cycle of Development and Social Cohesion

Figure 3 GENESIS Model and Process Flow

Figure 4 A Scenario Analysis of Stakeholder Groups

Figure 5 Stakeholder Identification Methods

Figure 6 Stakeholder Analysis

Figure 7 Pyramidal Approaches to Stakeholder Engagement

Figure 8a Sector Employment (2001 & 2011)

Figure 8b Sector Employment (2001 & 2011)

Figure 9 Household Services Index

Figure 10a Economic Sector Contribution

Figure 10b Economic Sector Contribution

Figure 11 Indicator Performance Measures

Annex A: Executive Summary Strategy Document

Annex B: Template for Programmes and Projects Identification and Evaluation

Annex C: Final Power Point Presentation

4


TABLE OF CONTENTS PAGE

1.0 INTRODUCTION 6

1.1 Background and Context of the Study 6

1.2 Local Economic Development Concept 8

1.3 Principles underpinning Strategy Review 9

1.4 Project Objectives, Scope and Deliverables 10

1.5 Structure of the Report 12

2.0 METHODOLOGY & TECHNIQUES 13

2.1 The Genesis Model and Process Flow 13

2.2 Systemic Competitiveness Framework 14

2.3 Methodological Tools for Analysis 14

2.4 Stakeholder Mapping 15

2.4.1 Stakeholder Identification 16

2.4.2 Stakeholder Analysis 16

2.4.3 Managing Stakeholder Communication 17

2.4.4 Stakeholder Engagements and Participation 18

3.0 SITUATIONAL OR PERSPECTIVE ANALYSIS 19

3.1 Legislative, Policy and Programmes Context 19

3.2 Location of the Study Area and Space Economy 25

3.3 Demographic Profile of Govan Mbeki 28

3.4 Socio-economic Profile of Govan Mbeki 28

3.5 Economic Profile of Govan Mbeki 35

3.6 Tourism Indicators 37

3.7 Conclusion 38

4.0 LOCAL ECONOMY ASSESSMENT &OPPORTUNITIES 40

4.1 Opportunity and Issue Analysis (SWOT) 41

4.2 Value Chain Mapping& Economic Opportunities 42

4.2.1 Agriculture& Agro-processing Value Chains 43

4.2.1.1 Maize Value Chain & Opportunities

4.2.1.2 Soya beans Value Chain & Opportunities

4.2.1.3 Tobacco Value Chain & Opportunities

4.2.1.4 Poultry Value Chain & Opportunities

4.2.1.5 Fresh Produce Value Chain & Opportunities

4.2.2 Mining and Mineral Beneficiation 48

4.2.2.1 Coal Mining Related Value Chains & Opportunities

4.2.2.2 Gold Mining Value Chain & Opportunities

5


4.2.3 Manufacturing Value Chains 50

4.2.3.1 Brick Manufacturing Value Chain & Opportunities

4.2.3.2 Organic Fertiliser Value Chain & Opportunities

4.2.4 Tourism Value Chains 52

4.2.4.1 Products & Opportunities for Tourism Hub Development

4.2.4.2 Culture, Arts & Craft Opportunities

4.2.4.3 Culture & Educational Tours

4.2.5 SMMEs and Cooperatives Incubation 57

4.2.5.1 Agriculture Business Incubation Concept

4.2.5.2 Agriculture Development Opportunities

4.2.5.3 Infrastructure Development Opportunities

4.2.5.4 Education & Skills Development Opportunities

4.2.5.5 Economic Sector Development Opportunities

4.2.5.6 Business Incubation Models

4.3 Conclusion 60

5.0 LED STRATEGIC FRAMEWORK, PROGRAMMES & PROJECTS 61

5.1 LED Vision, Strategic Goal and Objectives 61

5.2 LED Strategic Pillars / Programmes 62

5.3 LED Programmes and Projects 63

6.0 PROJECT IMPLEMENTATION GUIDELINES& FRAMEWORK 69

6.1 Project Implementation Principles 69

6.2 Phased Implementation and Roll-out Guidelines 70

6.3 Project Packaging & Implementation Framework 71

6.4 Govan Mbeki Investment Promotion Plan 93

7.0 MONITORING AND EVALUATION FRAMEWORK 99

7.1 LED Strategy Implementation Indicators 99

7.2 Programmes and Projects M&E Indicators 99

7.3 LED Development Impact Assessments 100

8.0 INSTITUTIONAL ARRANGEMENTS FOR IMPLEMENTATION 103

8.1 Internal Institutional Arrangements for LED 103

8.2 LED Roles and Responsibilities of Stakeholders 103

8.3 Conclusion and Recommendations 106

6


SECTION ONE: INTRODUCTION

1.1 Background and Context of the Study

In 2009 Govan Mbeki Local Municipality adopted a Local Economic Development (LED)

Strategy anchored around five pillars of:

a) Economic sector development and support,

b) Small, Micro and Medium Enterprises (SMME) and community development,

c) Good governance and institutional development,

d) Infrastructure development and services provision to business and

e) Branding and marketing of investment opportunities.

The targeted economic sectors in the strategy are manufacturing, mining, agriculture,

tourism and finance.

However, a number of new developments and changes have taken place and these

include the development of a detailed long term economic growth and development plan

aimed at fostering strategic coordination and implementation guidelines. In the process,

a new municipal vision and mission emerged. Review of the municipal Spatial

Development Framework (SDF) was completed early 2014 and a decision was taken to

segment the local space into four themes/nodes or focus areas of Bethal/Emzinoni

(Tourism), Secunda/Embalenhle (Industrial), Evander (Education), and

Leandra/Lebohang (Warehousing and Logistics). As part of implementation of the 2009

LED Strategy, a number of studies were conducted focused on identifying economic and

investment opportunities within the local space around agriculture and agro-processing;

manufacturing; mining and mineral beneficiation; tourism development and SMME

support. In addition, a Local Economic Development summit was held in 2012 to reflect

on implementation of the 2009 LED Strategy, as well as providing a matrix for

programmes and projects implementation. Some of the key summit recommendations

and resolutions have already been implemented; part of which include renewed focus on

both urban renewal and rural development.

At the national level, the New Growth Path (NGP) and National Development Plan (NDP)

were developed to usher in a new trajectory for addressing economic growth and

development challenges faced by South Africa. In 2011, Statistics South Africa (Stats SA)

conducted a census that produced new demographic and socio-economic data that

eliminates the overdependence on the 2007 Community Surveys and 2001 Census

statistics. At the provincial level, the Mpumalanga Economic Growth and Development

Plan (MEGDP) was developed to give direction on addressing growth and development

challenges within the province; as guided by the NDP. As a result, numerous plans and

strategies were also developed at the provincial level and these include the Provincial

Infrastructure Master Plan, Provincial Water Master Plan and Provincial Freight

Transportation Plan. Finally, Gert Sibande District Municipality reviewed the district LED

7


Strategy and held the district LED summit which sought to align all local municipal plans

and strategies to the district plans.

All these plans and strategies have a strong bearing on the relevance and efficacy of the

Govan Mbeki 2009 LED Strategy. Based on the above and other developments and

changes, it became prudent that the Govan Mbeki LED Strategy undergoes a review

process. The review is therefore premised on what was planned in the 2009 Strategy,

what was implemented between 2009 and 2014 as well as what is relevant in the current

dispensation; given all the developments and changes previously identified.

The review of the Local Economic Development Strategy for Govan Mbeki therefore takes

into account programmes and projects in the 2009 LED Strategy; successes and failures

in the implementation of the strategy between 2009 and 2014 (including critical success

factors); previously identified projects but not implemented (still relevant); programmes

and projects identified during studies conducted in 2012 (around agriculture and agro-

processing, mining and mineral beneficiation, and manufacturing); and any new

opportunities and projects identified by stakeholders; as shown on Figure 1 below.

Review

Review

Fig 1: LED Strategy Review Context

1.2 Local Economic Development Context

2009 LED

STRATEGY

Recommended:

Programs

Projects

PROGRAMS/PROJECTS

Implementation:

(2009---2014)

Successes

Failures

Critical Success

Factors &

Challenges

REVIEWED STRATEGY

New Focus

(2014 and Beyond)

Previous Projects

for Consideration

Projects from

Studies& Other

Role players

Other New

Opportunities

8


The concept of Local Economic Development (LED) “has been gaining prominence in

development theory and practice over the last decade. As a result, numerous concepts

and definitions on LED have emerged; partially overlapping, partially complementary and

partially contradictory.” As a concept, LED has gone through three phases. Phase One

focused strongly on the marketing of locations to external investors, often linked with

incentive systems such as tax breaks, reduced costs of public services and infrastructure

development. Phase Two focus changed to endogenous economic potentials, striving to

support the competitiveness of existing firms, promoting entrepreneurship and business

start-ups, usually through entrepreneurship development and training programmes,

business support and linkage mechanisms, providing access to finance, skills and rural

development and sector development and support. Phase Three is a more holistic

approach which focuses on enhancing the individual business support and sector

development approaches of the second phase. Its aim is to ensure that the entire

business and community environment is more conducive to economic growth and

development by providing a competitive local business environment, encouraging and

supporting networking and collaboration between business and public / private and

community partnership, facilitating workforce development and education, focusing

inward investment to support cluster growth and, supporting quality of life improvements

through decent jobs and business ventures.

Definition: Local Economic Development (LED) is defined as “an outcome based on local

initiatives and driven by local stakeholders.” It involves identifying and using local

resources, ideas and skills to stimulate economic growth and development. The aim of

LED is to create employment opportunities to the best of all local residents. The concept

of LED is premised on two fundamental concepts, namely economic growth and,

economic development. Economic growth is traditionally defined as the annual rate of

increase in the total production or income in the economy. Economic growth requires an

expansion of the production capacity of the local economy, as well as an expansion of

the demand of goods and services produced in the economy. Both the supply and

demand factors are necessary for sustained economic growth. On the other hand,

economic development refers to the improvement of the people’s living conditions. It

entails an improvement in the quality of life of the majority of the population as a result of

economic growth, the creation of employment opportunities, the reduction of inequality

and the eradication of poverty.

In reviewing the LED Strategy for Govan Mbeki Local Municipality, the process was

guided by the following LED characteristics;

LED entails stakeholders in a locality being involved in different activities aimed

at addressing a variety of socio-economic needs of the community.

9


LED is implemented based on local competitiveness in the context of local,

provincial, national and global economic dynamics.

The facilitation approach is at the heart of municipal LED planning,

implementation, monitoring and evaluation; supported by systemic thinking

principles.

1.3 Principles underpinning the Strategy Review and Cycle of Development

Review of the Govan Mbeki LED Strategy was guided by the following principles:

Local Economic Development (LED) will not be successful in the absence of an

appropriate asset base, infrastructure and delivery of basic services to business,

rural and urban communities

Local Economic Development will not be successful in the absence of

appropriate, synergistic and integrating mechanisms at local, district, provincial

and national levels;

Local Economic Development success is positively related to the extent to which

a location is able to equitably distribute benefits and proceeds from economic

activity thereby addressing the community’s socio-economic challenges;

In under-developed areas (particularly rural and farming communities), value

creation and generative growth are important to kick-start Local Economic

Development;

Local Economic Development success is positively related to the embeddedness

of the location in value chain networks, within and across sectors and spaces;

There are systemic relationships affecting LED between assets and

infrastructure, value chain embeddedness, distributive capacity, rent accrual and

integrating mechanisms

In the South African context, Local Economic Development seeks to achieve social

cohesion. The National Development Plan’s (NDP) Cycle of Development presupposes

that the ultimate goal for development in South Africa is social cohesion through

formulation and implementation of clear policies and sets of planned actions around:

Poverty reduction

Economic growth

Employment creation

Rising living standards

The above development objectives are best achieved in the context of active citizenry,

good leadership and effective government that in turn produces capabilities, opportunities

and conditions for development within communities. The following figure summarizes the

Cycle of Development concept as enunciated by the National Development Plan:

10

“BEYOND 2014:- INDUSTRIALISE........................, DIVERSIFY.........................., INCUBATE......................”

Fig 2: NDP Cycle of Development and Social Cohesion

This context analysis of Local Economic Development shows how social cohesion

interweaves with cycle of development. Rising living standards, poverty reduction,

economic growth and employment creation would help offer cohesion among societal

members. However, these variables need strong leadership with effective governance

and active participation of citizens in local economic development programmes and

projects. Active citizenry would thrive if strong leadership and effective government create

conditions of development, deliver opportunities and assist in building capabilities among

people. Total interactions cause social cohesion engendering strong cycle of

development for benefits to all South Africans.

1.4 Strategy Review Objectives, Scope and Deliverables

In line with the Municipal Growth and Development Plan, the primary objectives of the

LED strategy review for Govan Mbeki are to:

a) Launch a fight against poverty, inequality and unemployment more effectively

through the development of an inclusive, dynamic and competitive local economy

b) Develop greater awareness of the significance of the regions (themes/focus

areas) within the municipality as nodes of economic growth and development

11


c) Intensify support for the local economy and building on the local economic

potential; thereby achieving local economic stability, develop diverse economy

and employment base that will create quality jobs for the communities

d) Strengthen intergovernmental coordination of economic development planning

and implementation; and between the municipality and non-governmental sectors

e) Develop and promote targeted economic sector growth in line with key district,

provincial and national targets

f) Promote and support SMMEs, cooperatives and communities in order to address

socio-economic challenges

g) Enhance LED good governance through the development of appropriate

institutional structures and arrangements that can deliver

h) Ensure the development of appropriate business infrastructure in line with IDP

processes and developments; and

i) Promote investment opportunities in line with the municipal, district and provincial

economic potential and identified initiatives

The other more specific objectives of the strategy review project include the following:

a) To provide an economic perspective or profile of the local economy so that

strategic economic drivers of the local nodes are known and well promoted;

b) To develop a common vision and strategic thrusts for LED in line with municipal

growth and development vision and mission;

c) To develop an Implementation Framework for LED, dealing with the following

aspects;

Matters of institutional arrangements; funding and financing mechanisms and

capacity development, and

Identification and prioritisation of key anchor LED implementation initiatives or

projects in the local municipality within specified time frames

d) To recommend a Monitoring and Evaluation Framework that will link all the existing

monitoring and evaluation programmes; develop common impact indicators and

be able to track delivery progress and areas that need continued support over time

in the municipality.

The key output of the LED review process is the Local Economic Development Strategy

for Govan Mbeki Local Municipality clearly showing the following deliverables:

Methodology employed in project execution as well as stakeholder participation in

the process

Perspective or situational analysis of the municipality clearly showing the

economic, demographic and socio-economic dynamics within the locality;

Local Economic Development Strategic Framework which clearly highlights the

vision, goals and key objectives of LED to be achieved;

12


Programmes (development thrusts) and projects (initiatives) for implementation

across sectors within each node and theme

Programmes and project prioritization across sectors, nodes and themes, to guide

implementation support and funding;

Implementation framework which clearly indicates time frames, funding

mechanisms, institutional collaboration across projects and sectors;

Monitoring and evaluation framework with clear indicators, responsibility and time-

frames.

Capacity and skills development are an integral part of the LED planning process both at

the municipal and community (stakeholder) levels. The objective is to improve the level

of understanding of LED processes, ensure strong leadership & stakeholder buy-in and

ultimately improve the quality of the decision input

1.5 Structure of the Report

The rest of the strategy document is structured as follows:

Section Two – outlines the methodology and techniques utilised in data gathering

and analysis thereof; to include how LED stakeholders were part of the review

process

Section Three – provides a perspective of the current situation of the municipality

from a demographic, socio-economic and economic stand point. It also

summarises the key legislative, policy and programmes imperatives of LED

Section Four – details the value chain linkages across sectors and industries within

Govan Mbeki; as well as economic opportunities identified within these value chain

networks

Section Five – presents the strategic framework that captures the LED vision,

strategic goal and objectives; as well as programmes and projects recommended

for implementation

Section Six – summarises the framework for LED programmes and projects

implementation, i.e. implementation framework

Section Seven – captures mechanisms for LED monitoring and evaluation; to

include need for conducting impact assessment studies and strategy reviews

Section Eight – concludes the strategy with set of institutional arrangements that

underpin LED programmes and projects implementation, monitoring and

evaluation

SECTION TWO: APPROACH, METHODOLOGY AND STAKEHOLDER MAPPING

The following approach, methodology and tools were utilised in the review of the Govan

Mbeki LED Strategy;

Genesis Model- Approach and Methodology

13


Systemic Competitiveness Framework- Analytical Techniques

Methodological Tools in LED Planning- Tools for Strategy Development

2.1 The GENESIS Model

GENESIS – which means Generating – Strategy – Innovation – Solutions for Local and

Regional Development; “is a robust and innovative methodology to define strategic

priorities and launch or accelerate a process of transformation in local or regional

economic development.” The following diagram illustrates how the GENESIS Model was

adopted in the review of the Govan Mbeki Local Economic Development Strategy:

Fig 3: GENESIS Model and Process Flow

The approach and methodology helped in identification of and engagement with relevant

and interested local stakeholders; analysis of sector competitiveness based on

quantitative and qualitative data; exploring existing studies and direct interaction with

stakeholders; formulation of scenarios to paint a rich picture of alternative possible

futures; identification of possible strategic interventions and projects; build an

Contracting

Orientation

Inception

Build up and

Mobilization of

Stakeholders

(Stakeholder

Mapping)

Assessment of

current LED

projects (part of

fact finding)

Scenarios and

Prioritisation of

Programmes and

Projects

(Strategic

Framework)

Fact Finding

(Assessment of

Value Chains across

Sectors; and

Projects

Identification)

Data Mining,

Analysis and

Interpretation

(Desktop Study)

Recommended

Studies, Plans,

Programmes and

Projects

Implementation

Plan, Monitoring

and Evaluation

Mechanism

14


implementation plan, monitoring and evaluation framework; and identifying early warning

indicators to trigger future corrective action.

2.2 The Systemic Competitiveness Framework

The framework suggests that the performance of a local, regional or national economy

depends on factors at four levels and on the interplay between them. The levels are:

Meta level- analysis of the societal, political and economic factors that influence

the performance of the local economy and how this impacts on the strategy review

and implementation.

Macro level-analysis of the macro-economic policy and institutions, programmes

and regulations that govern business operations.

Meso level-analysis of the policies and organizations that assist in skills

development, infrastructure development and business financing.

Micro level-analysis of the companies and markets, to include the value chains,

beneficiation, clusters and networks.

The Systemic Competitiveness Framework was utilized in determining the competitive

and comparative advantages of sectors within the local municipality, clusters and value

chains and potential for beneficiation within and across sectors, innovative initiatives

identification and networks development and analysis of market systems in the locality.

2.3 Methodological Tools and Techniques

The specific methodological tools and analytical models that were used in the whole LED

review process include but not limited to the following;

Diamond Model (by M Porter) - utilized to analyse the competitive advantages,

competitiveness and clustering of supporting industries, the quality of factor conditions,

as well as the demand conditions during value chain analysis, and stakeholder

workshops.

SWOT Analysis - tool utilized to analyse the strengths and weaknesses of the locality and

industry cluster and the opportunities and threats in its environment. Other tools such as

Appreciative Inquiry methods were also adopted and utilised. A SWOT analysis of the

whole local environment was undertaken to determine internal strengths and weaknesses

as well as external opportunities and threats from an economic, demographic and socio-

economic perspective.

Value Chain Mapping - utilized to depict the structure of the value chains, that is, the

various activities and players involved in the creation of products, from raw materials to

the sales counter. Promoting a value chain means supporting its development by

15


externally facilitating a value chain upgrading strategy. Value Chain Analysis was

undertaken across various economic sectors of the locality; to include mining, agriculture,

tourism, manufacturing and related agro-processing activities. Based on this assessment,

specific opportunities and projects across sectors were identified.

Participatory Appraisal of Competitive Advantages (PACA) - Rapid appraisal process

through the Participatory Appraisal of Competitive Advantages (PACA) was adopted to

ensure maximum participation of all key stakeholders. The Project Steering Committee

(PSC) was utilised for purposes of presentation and discussion since it was represented

by all major or key and relevant stakeholders. Stakeholders from across sectors were

thoroughly consulted. In the final analysis, data collection relied on two methods, namely

desktop research and action research.

Desktop research was utilized to analyse secondary data available, demographic, socio-

economic, and economic profiles; as well as legislation, policies and programmes.

Action research was utilized to generate primary data through PACA on economic

activities, clusters and value chains; socio-economic enablers and bottlenecks; LED

vision formulation, strategic goals and objectives setting; and programmes and projects

identification and prioritization.

2.4 Stakeholder Mapping and Mobilisation

The stakeholder approach to strategic planning was developed as a direct response to

the concerns of managers who were baffled by increasing levels of complexity and

change in the external environment. This approach expands an organisation’s

responsibility to include individuals or groups who significantly affect or are significantly

affected by the organisation’s activities. Review of the LED Strategy for Govan Mbeki

required the identification and engagement of all key and willing LED stakeholders who

were part of the process. Arriving at a comprehensive list of all key stakeholders required

that the following questions are answered:

Who are the key LED stakeholders?

What are their specific interests in LED?

What is their influence in the planning and implementation of LED?

Given their interest and influence, what specific roles do they play in the broad

LED management horizon?

How are these stakeholders expected to participate in the review / development

and implementation of the municipal LED Strategy; at what stage of the process,

what role will they play and how will they be communicated with?

2.4.1 Stakeholder Identification

Key stakeholders were identified through desktop study and interactions with

stakeholders in each nodal area and broader community within the local municipality. It

16


involved getting project team in place and introducing them to local municipal authorities

for further ideas on stakeholders. A process of listing existing stakeholders at various

levels was made for future use in the strategy review. Figure 5 below illustrates the

various methods used in stakeholder identification.

Fig 5: Stakeholder Identification Methods

2.4.2 Stakeholder analysis

Stakeholder analysis seeks to categorise stakeholders based on their interest and

influence/power on local economic development. This analysis involved understanding

what interest they have on the various outcomes of the strategy review process; as well

as how they will influence both the process and projects implementation. Analysis of long

list of stakeholders helped create and group them on the basis of interests from clearly

identifiable groups of stakeholders. A complete scenario matrix of interest and influence

or power helped develop communication plan to align with stakeholder concerns and

priorities.

Brainstorm with business and communities, sector

departments, local and

district municipality

Identify lists from IDP, SDF etc. to know how

stakeholders are relating to LED projects planning &

execution

Management mind

mapping of ideas on

flipcharts and whiteboard

Organisational charts and directories to gain insights

about stakeholders on

LED projects

Generate and type LED and

other stakeholder lists to use for realistic future

stakeholder mapping

Categorize stakeholders for better identification such as

rural users, steering

committees, unions, suppliers

STAKEHOLDER IDENTIFICATION

METHODS

17


This mapping for analysis helped to prioritise needs in order of importance. A four

quadrant matrix was developed by using power/influence of stakeholders and interest; on

a high to low continuum as shown in Figure 6 below.

Fig 6: Stakeholder Analysis

2.4.3 Planning and Managing Stakeholder Communication

Stakeholder planning and management strategy involves effective managing of

stakeholders without negative impact on projects planning and implementation; by using

a win-win strategy for negotiations and encourage communications among participants.

This helps develop stakeholder communications and reporting plans using stakeholder

information from inception data gathering and on-going processes. It documents

requirements for accurate information frequency, communication senders and channels

of communication to and from stakeholders. This plan used visual presentations, face-to-

face and focus group discussions, briefings and project execution meetings, email,

telephone, community forum, and printed presentations.

2.4.4 Stakeholder Engagement and Participation

Stakeholder involvement throughout project planning and implementation processes

cannot be overemphasized. These ensure acceptance and ownership of LED

programmes and projects both at planning, implementation, monitoring and evaluation

phases. Table 2 lists stakeholder participation phases for prioritizing in project planning,

execution, monitoring and evaluation.

QUADRANT B

Important stakeholders

QUADRANT A

Meeting stakeholder needs

essential

QUADRANT D

Stakeholder shows consideration

QUADRANT C

Less important stakeholders

Infl

ue

nc

e o

f S

tak

eh

old

ers

Interests of Stakeholders

18


Stage Stakeholder participation Reasons for this engagement

1 Planning consultations Capturing ideas on project objectives,

process flow, implementation plan and key outcomes Collaborative project planning

2

Cooperating in business and community appraisals

Identify and select anchor projects Business and community project identification

3 Project preparation and design Formulate LED vision and strategies

(programmes and projects Project appraisals

4 Participatory project implementation

Correct on-going deviation from plan Taking part in project monitoring

5 Participatory project evaluation Outcome and impact assessment Table 2: Interactive Stakeholder Participation in Project

Stakeholders actively participated in strategy development and are also expected to be

part of implementation. Stakeholders were part of activities in the following phases of the

strategy review process:

1. First engagement—during primary data collection through stakeholder focus group

discussions and in-depth interviews;

2. Second engagement—during workshops to present socio-economic statistics,

research findings and development of strategic framework, and;

3. Third engagement—during final feedback, follow-up presentations and consolidation

phase of the project.

Major stakeholder groups for engagement in the LED strategy review process were

categorised as follows:

Category A: Business formations across sectors

Category B: Mining houses (to include ESKOM and SASOL)

Category C: Small businesses and Cooperatives

Internal Stakeholders: Municipal departments, management and Council

Government sector departments and support institutions at national, provincial and district

levels also participated in all the four categories; (for detailed list, see Annex A.)

SECTION THREE: SITUATIONAL / PERSPECTIVE ANALYSIS

3.1 Legislative, Policy and Programmes Context

19


Local Economic Development planning is undertaken in the context of global, national,

provincial and local imperatives. These externalities impact on how project planners and

implementers conceive and deliver programmes and projects for economic growth and

socio-economic development. In the South African context, a number of multi and bilateral

agreements as well as national and local contexts are critical for consideration in local

economic development planning. The table below summarizes the legislation and policy

imperatives that underpin local economic development. It highlights the legislation or

policy, its provisions and implications on local economic development.

LEGISLATION LEGISLATIVE PROVISIONS IMPLICATIONS ON LED

COSTITUTION OF RSA

To provide democratic and accountable government for local communities,

To ensure the provision of services to communities in a sustainable manner,

To promote social and economic development,

To promote a safe and healthy environment.

Local authorities have a legal mandate to promote social and economic up-liftment within their areas of jurisdiction. This legislative provision therefore forms an integral part of principles from which Local Economic Development strategies are formulated and implemented

THE WHITE PAPER ON

LOCAL GOVERNMENT

(OF 1998)

Key imperatives are: The concept of developmental

local government Municipal institutional systems Municipal transformation

By introducing the concept of developmental local government, the White Paper encourages local municipalities to spearhead development in their space.

MUNICIPAL SYSTEMS ACT

(32 OF 2000)

Exercise the municipality’s executive and legislative authority and use the resources of the municipality in the best interests of the local community,

Encourage the involvement of the local community,

Strive to ensure that municipal services are provided to the local community in a financially and environmentally sustainable manner,

Give members of the local community equitable access to the municipal services to which they are entitled.

Local Economic Development is one of the strategic tools through which local municipalities adhere to its duties, as prescribed by the Municipal Systems Act. Section 25 (1) of the Act states that each municipal council must, within a prescribed period after the start of its elected term of office, adopt a single, inclusive and strategic plan for the development of the municipality.

20


MUNICIPAL FINANCE

MANAGEMENT ACT (56 OF

2003)

Ensuring transparency, accountability and appropriate lines of responsibility in the fiscal financial affairs of the municipalities and municipal entities,

The management of their revenues, expenditures, assets and liabilities and the handling of their financial dealings,

Budgetary and financial planning processes and the coordination of those processes with the processes of organs of state in other spheres of government,

Institutions, to which the Municipal Finance Management Act applies, as stipulated in Section 3 of the Act, include all municipalities, all municipal entities and national and provincial organs of state to the extent of the financial dealings with municipalities. It is therefore necessary that local municipalities adhere to financial procedures presented in the Act when engaging in financial matters relevant to any Local Economic Development activities.

NATIONAL FRAMEWORK FOR LOCAL ECONOMIC

DEVELOPMENT

Developed as a guide that seeks to advance an understanding of Local Economic Development

Seeks to guide the implementation of the Local Economic Development Key Performance Indicator of the five year Local Government Strategic Agenda through the suggested actions.

The framework aims to support the development of sustainable local economies through integrated government action.

To shift towards a more strategic approach to the development of local economies and overcome challenges and failures in respect of instances where municipalities try to manage litany of non-viable projects or start-ups,

WHITE PAPER ON SPATIAL PLANNING

The white paper on spatial planning and land use management was developed to deal with the relationship among the following elements of human kind:

Social Economic Environmental

The white paper clearly states that municipalities are the regulators of land use management.

21


NATIONAL SPATIAL

DEVELOPMENT PERSPECTIVE

(NSDP)

To provide common principles and mechanisms to guide infrastructure investment and development spending across government,

To provide a description of the spatial manifestations of the main social economic and environmental trends which should form the basis for a shared understanding of the national space economy,

To provide an interpretation of the spatial realities and the implications for government interventions.

Support and promote more extensive local economic development within areas displaying significant economic development potential and aimed at supporting rural quality of life in areas displaying little potential for economic development

NATIONAL PRIORITIES FOR

NEXT FIVE YEARS: (2009-

2014)

The Medium Term Strategic Framework 2009-2014, builds on successes of the 15 years of democracy.

The Medium Term Strategic Framework base document is meant to guide planning and resource allocation across all spheres of government.

National priorities ensure the speeding up growth and transforming the economy to create decent work and sustainable livelihoods and also strengthen the skills and human resource base.

REGIONAL INDUSTRIAL

DEVELOPMENT STRATEGY

To reduce economic disparities between regions,

To address the needs of first and second economies,

Pay particular attention to the needs of those regions which are lagging behind the national norms,

To promote sustainable economic growth and employment in provinces and municipalities,

The strategy is therefore tasked in enhancing the capabilities and potentials identified in the urban spatial competitive framework and the local economic development framework that seeks to address spatial constraints and opportunities related to industrial development in municipalities

BROAD-BASED BLACK

ECONOMIC EMPOWERMENT

Increasing the number of black people that manage, own and control enterprises and productive assets,

Facilitating ownership and management of enterprises and productive assets by

The successful implementation of Black Economic Empowerment ultimately ensures the promotion of economic transformation in order to enable meaningful

22


ACT (53 OF 2003)

communities, workers, cooperatives and other collective enterprises,

Human resources and skills development,

Achieving equitable representation in all occupational categories and levels in the workforce.

participation of black people in the economy

NATIONAL STRATEGY FOR

THE DEVELOPMENT

AND PROMOTION OF

SMALL BUSINESSES IN SOUTH AFRICA& COOPERATIVES

ACT

Facilitate greater education of income, wealth and earning opportunities,

Address the legacy of apartheid-based disempowerment of black businesses,

Support the advancement of women in all business sectors,

Create long-term job opportunities,

Stimulate sector focused economic growth.

The strategy provides the Local Economic Development practitioners at all spheres of government base from which interventions to pursue the objectives of the strategy can be formulated. Policies need to be formulated with national, provincial and local spheres of government that will unlock potentials of SMME’s.

ACCELERATED AND SHARED

GROWTH INITIATIVE FOR SOUTH AFRICA

(ASGISA)

ASGISA is aimed at promoting a growth for all strategy for South Africa with its intention to half poverty and unemployment by 2014.

Maintaining a steady growth in GDP of above 4.5% in the short term and adopting envisaged growth of 6% between 2010 and 2014 is the cornerstone of this initiative.

Developing labour absorbing industries that generate value added activities is the core of this initiative.

Asgi-SA is rooted in local levels implementation on and designed to help eradicate inequalities and poverty, which are desired outcomes of the local Economic Development efforts.

NATIONAL YOUTH

ENTERPRISES DEVELOPMENT

STRATEGY

To ensure that entrepreneurial skill , talent and experience are nurtured among youth , women and men to enhance their capacity to participate in all aspects of the economy

The strategy aims to focus on the creation of entrepreneurial culture, strengthening and expanding successful youth support schemes and addressing the financial

23


To ensure that young women and men are recognized as a key target group of need and resource in the development of small enterprises with national, provincial and local economies

needs of youth entrepreneurs.

NEW GROWTH PATH (2011 AND

BEYOND)

Identifying areas where employment creation is possible on a large scale (by targeting specific sectors of the economy)

Developing policy packages to facilitate employment creation in the specific sectors of the economy.

The development of the Mpumalanga LED strategy is largely driven by government’s New Growth Path in terms of economic sector growth, creation of decent work opportunities through targeted sector activities as well as the fight against poverty and wealth inequality.

NATIONAL DEVELOPMENT

PLAN (NDP)

The NDP recognises that poverty is still pervasive, yet the country has the potential and capacity to eliminate this scourge as well as reduce inequality over the next 2 decades.

Among other things the success of this approach is premised on; the active participation of all citizens in their own development; faster economic growth and higher investment and employment; strengthening the links between economic and social strategies; and collaboration between the private sector and public sectors.

MPUMALANGA ECONOMIC GROWTH AND DEVELOPMENT PLAN (MEGDP)

Emanating from the National Development Plan (NDP), the MEGDP seeks to address socio economic challenges of unemployment, poverty and inequality; in line with national targets

Key sectors identified for stimulating economic growth and development include agriculture value chains, mining and mineral beneficiation, manufacturing value chains and infrastructure development

The Mpumalanga Economic Growth and Development Plan focus on fighting unemployment, poverty and inequality resonates with LED strategy review focus. In addition, sectors targeted by the province such as manufacturing value chains, mining and mineral beneficiation; and infrastructure development are key for growth and development within Govan

24


Mbeki and therefore have a direct bearing on LED strategy review

GOVAN MBEKI INTEGRATED

DEVELOPMENT PLAN (IDP)

The municipal IDP (2012-2016) identifies 8 KPAs of which Economic Growth and Development is one.

It further identifies 11 Key Focus Areas (KFAs), which include investment promotion, diversification of the economy, improved productivity and innovation, urban renewal and rural development; as well as job creation, poverty reduction and skills development.

The Govan Mbeki reviewed LED strategy pillars/development thrusts, programmes and projects should focus on the identified key focus areas that ultimately eliminate dependence on the manufacturing sector through economic diversification, thereby addressing socio-economic challenges of unemployment and poverty

GOVAN MBEKI SPATIAL

DEVELOPMENT FRAMEWORK

(SDF)

The SDF provides a spatial analysis and synthesis of the Govan Mbeki Municipality in terms of settlement patterns, location of economic activities (mining, manufacturing, agriculture etc), land ownership and land claims.

More importantly, the SDF brings into the fore a new concept of segmenting the local space into 4 nodes and themes of Bethal / Emzinoni (tourism), Secunda / Embalenhle (industrial), Evander (education) and Leandra / Lebohang (warehousing and logistics).

The SDF further identifies economic opportunities around economic sectors and geographical segments

By introducing the concept of space and economic activity segmentation, the SDF directs local economic growth to take place within clearly defined spaces. LED projects that will be recommended for implementation already have defined locations or zones. Secondly, by zooming into economic opportunities identified in the 2012 LED studies, the SDF is compelling the strategy review process to seriously consider these opportunities as sources of LED programmes and projects for 2014 and beyond.

3.2 Location of the Study Area

Govan Mbeki Local Municipality is situated in the south-eastern part of Mpumalanga

Province, abutting Gauteng Province in the south-west; approximately 150km east of

Johannesburg and 300km south-west of Nelspruit (capital city of Mpumalanga). It is one

of the 7 local municipalities under the jurisdiction of Gert Sibande District (the other

25


districts being Ehlanzeni and Nkangala) and one of the 18 local municipalities within

Mpumalanga. The following map (Map 1) shows the location of Govan Mbeki within Gert

Sibande District and Mpumalanga Province.

Map 1: Govan Mbeki in the Regional/District Context

26


The Govan Mbeki area is mainly agricultural / rural with 3 urban conglomerates, namely;

Leandra (Leslie, Lebohang and Eendracht) in the western edge

The Greater Secunda (Trichardt, Evander, Kinross and Secunda / Embalenhle)

conurbation in the central part and

Bethal / Emzinoni in the east

Map 2: The Locality of Govan Mbeki

27


The rest of the municipal space constitutes the farming / agricultural community (both

small and large scale commercial farming), mining activities (coal and gold), and fuel from

coal SASOL activities. Within urban conglomerates are various economic activities

ranging from trade, finance, transportation, and construction and government services.

Govan Mbeki Municipality is traversed by the Gauteng / Richards Bay Corridor formed by

the N17 road and the Gauteng / Richards Bay railway line running through the area;

making it a very strategic link to both Gauteng and the port of Richards Bay. The

municipality has the ‘most’ diversified economy within Gert Sibande District (though overly

dependent on few key sectors), dominated by petro-chemical industry (SASOL); and coal

and gold mining (making it a very strategic area within the district, province and country).

Major settlements within Govan Mbeki Municipality (as identified in the 2014 Municipal

SDF) are as follows:

Secunda Kinross

Evander

Embalenhle

Trichardt Charl Cilliers

Bethal

Leandra

The following map shows the location of the various settlements, mining activities and

farming area within Govan Mbeki Municipality.

Map 3: Govan Mbeki Settlements

28


3.3 Table 4: Demographic Indicators

DEMOGRAPHIC INDICATORS

Stats SA Census

Stats SA Census

Share of Gert Sibande’s

figure

Share of Mpumalanga

figure

Ranking: highest (1) – lowest (18)

2001 2011 2011 2011 Population number 221 747 294 538 28.2% 7.3% 6

Number of households

61 714 83 874 30.7% 7.8% 5

Area size (km2) 2 955 9.3% 3.9% 12

Population per km2 91

Stats SA Census figures (2011) show the population of Govan Mbeki at 294 538; a jump

from 221 747 in 2001 (signifying a 32.8% population growth rate over the 10 year period

and being the 4th highest in the province). This growth could be as a result of migration

and or natural growth. Of this population, 48.3% are female and 51.7% are male; with

Africans constituting 80.5% of the population, Whites at 16.0%, Coloureds 1.5% and

others 0.4%. The youth (up to 34 years) constitute 66.4% of the Govan Mbeki population;

a slightly lower percentage to the district and provincial averages.

The table above also shows the population contribution to district (28.2%) and province

(7.3%). Female headed households stand at 30.8% and child headed households (up to

17 years) at 0.4% in 2011. With an area size of 2 955km2, the population density of Govan

Mbeki stands at 91 people per square kilometre.

3.4 Socio-economic Indicators

3.4.1 Table 5: Labour Indicators

LABOUR INDICATORS Census Census Share of Gert Sibande

Ranking: best (1) – worst (18)

2001 2011 2011 Economically Active Population (EAP)/Labour Force

100 866 134 386

Number of employed 60 676 99 138 38.3%

Number of unemployed 40 190 35 249 32.1%

Unemployment rate (%) 39.8% 26.2%

5 Unemployment rate stands at 26.2% (strict definition) in 2011; a decline from 39.8% in

2001. With an Economically Active Population of 134 386 (2011) and unemployment

29


figure of 35 249 (2011), the percentage of unemployed to EAP stands at 26.2% showing

a decreasing trend. The unemployment rate for females stands at 34.9%, males 20.1%

and youth unemployment at 34.4% in 2011. Within Gert Sibande District, Govan Mbeki

shares 38.3% of employment and 32.15% of district unemployment.

3.4.2 Sector Employment

Fig 8a and b: Sector Employment (2001 & 2011)

Leading sectors in terms of labour force are Trade (21.7% in 2011; an increase from

20.9% in 2001), Manufacturing (20.7% in 2011; a decline from 23.2% in 2001) and Mining

(19.8% in 2011; also a decline from 20.5% in 2001). Of concern is the contribution of

Agriculture4.8%

Mining 20.5%

Manufacturing23.2%Utilities 0.7%

Construction4.0%

Trade 20.9%

Transport 3.9%

Finance 3.6%

Community services 10.3%Private

households8.1%

2001

Agriculture2.9%

Mining 19.8%

Manufacturing20.7%

Utilities 0.5%Construction

6.0%Trade 21.7%

Transport 4.4%

Finance 5.8%

Community services 11.1%

Private households

7.1%

2011

30


Agriculture to labour (2.9% in 2011, a decline from 4.8% in 2001). Other sector labour

contributions are also reflected in the two figures above.

3.4.3 Table 6: Education Indicators

EDUCATION INDICATORS Trend Latest

figure Better (+) or

worse (-)

than Gert

Sibande

Better (+) or

worse (-)

than

province

Ranking:

best (1) –

worst

(18) 2001 2011

Number of population 20+

with no schooling 22 383 14 806 10

Population 20+ with no

schooling (%) 16.5% 7.9% (+)

(13.4%) (+)

(14.1%) 3

Population 20+ with

Matric & higher (%) 28.7% 44.0% (+) (37.2%) (+) (38.7%) 4

Functional literacy rate

(%) 69.0% 83.1% (+) (76.4%) (+) (76.9%) 3

Statistics show that in 2011, 7.9% of the population of Govan Mbeki had no schooling (a

decline from 16.5% in 2001) and within the same period, 44.0% of the population 20+ had

Matric plus higher (an increase from 28.7% in 2001); while functional literacy stands at

83.1% in 2011 (an increase from 69.0% in 2001). Within the same period (2011), the

percentage of people with no schooling, with Matric and higher as well as functional

literacy is better than both district and provincial averages (and has 3rd highest functional

literacy in the province). Matric pass rate stands at 64.2% in 2012 with the university /

degree admission rate at 20.0% in 2012; and both are have declining trends.

3.4.4 Table 7: Health Indicators

HEALTH INDICATORS 2009 2010 2011 Ranking: best (1) – worst

(18) HIV prevalence rate - survey (pregnant women attending antenatal clinic 15-49 years old)

40.0% 32.7% 45.8% 13

HIV prevalence rate – DHIS (excluding pregnant women)

35.3% 35.3% 33.0% 17

2010 2011 2012 Ranking: best (1) – worst (18)

31


PUBLIC HEALTH FACILITIES 2012

Number of clinics 11

Number of community health centres (CHC) 3 Number of hospitals 2

HIV prevalence rate for pregnant women stood at 45.8% in 2011 (an increase from 32.7%

in 2010) while HIV prevalence rate-DHIS (excluding pregnant women) stood at 33.0% in

2011 (a decrease from 35.3% in 2010). The period 2010 – 2012 has seen a decline in

the number of TB cases as shown on the table; which also highlights the number of public

health facilities within Govan Mbeki.

3.4.5 Table 8: Human Development Index

2001 2007 2011 Ranking: best (1) - worst (18)

Emalahleni 0.61 0.63 0.70 1 Steve Tshwete 0.62 0.63 0.69 2 Govan Mbeki 0.59 0.62 0.68 3 ThabaChweu 0.52 0.57 0.64 4 Umjindi 0.53 0.56 0.64 5 Mbombela 0.52 0.55 0.64 6 Emakhazeni 0.51 0.56 0.63 7 Lekwa 0.52 0.54 0.62 8 Msukaligwa 0.51 0.54 0.61 9 Victor Khanye 0.52 0.53 0.61 10 Dr JS Moroka 0.46 0.50 0.60 11 Thembisile Hani 0.45 0.49 0.58 12 Dipaleseng 0.46 0.49 0.57 13 Dr PixleyKaIsakaSeme 0.46 0.49 0.57 14 Bushbuckridge 0.43 0.48 0.57 15 Chief Albert Luthuli 0.43 0.47 0.56 16 Mkhondo 0.43 0.44 0.53 17 Nkomazi 0.39 0.42 0.52 18

The Human Development Index (measure of people’s general living standards and their

ability to access services) for Govan Mbeki shows significant improvement over the period

2001 and 2011. In 2001, HDI stood at 0.59; improved to 0.62 in 2007 and 0.68 in 2011.

This signifies improvements on people’s ability to access a number of services such as

communication and educational facilities. Over this period, the municipality has

consistently been position 3 in the province (following Emalahleni and Steve Tshwete).

32


3.4.6 Table 9: Average Household Income

MUNICIPAL AREA 2001 2011 Ranking: highest (1) – lowest (18)

Steve Tshwete R55 369 R134 026 1 Govan Mbeki R47 983 R125 480 2 Emalahleni R51 130 R120 492 3 Mbombela R37 779 R92 663 4 Lekwa R38 113 R88 440 5 ThabaChweu R35 795 R82 534 6 Msukaligwa R31 461 R82 167 7 Umjindi R35 244 R81 864 8 Victor Khanye R35 281 R80 239 9 Emakhazeni R36 170 R72 310 10 Dr PixleyKaIsakaSeme R23 399 R64 990 11 Dipaleseng R19 454 R61 492 12 Mkhondo R26 935 R53 398 13 Chief Albert Luthuli R22 832 R48 790 14 Thembisile Hani R18 229 R45 864 15 Nkomazi R19 195 R45 731 16 Dr JS Moroka R17 328 R40 421 17 Bushbuckridge R17 041 R36 569 18

Average household income for Govan Mbeki stood at R47 983 in 2001 and jumped to

R125 480 in 2011. This shows a significant increase over the 10 year period, an indication

that family incomes are improving. 2011 figures show that it is number 2 in the province;

compared to its number 3 position in 2001 (and is only second to Steve Tshwete Local

Municipality). Improved household income can be a sign of improved employment levels

or better salaries for the employed. Its significance is looked at from a demand

perspective in that increased household income improves family demand for goods and

services.

33


3.4.7 Table 10: Inequality and Poverty

INDICATORS Trend Latest figure

Better (+) or worse (-) than

Gert Sibande

Better (+) or worse (-

) than province

Ranking: best (1) –

worst (18) 2001 2007 2011

Gini-coefficient (0 best to 1 worst) 0.66 0.64 0.61 (+) (0.63) (+) (0.62) 13

Poverty rate 37.0% 29.4% 26.5% (+)

(40.5%) (+)

(39.4%) 4

Number of people in poverty 96 500 83 294 78 586 10

Poverty gap (R million) R99 R131 R169 10

The table above shows inequality and poverty figures for Govan Mbeki over the period

2001 and 2011. Gini-coefficient (a measure of inequality) stood at 0.66 in 2001, improved

to 0.64 in 2007 and now at 0.61 in 2011. Despite the improvements registered, statistics

show that the municipality is number 13 in the province in terms of inequality (although it

is better than both provincial and district averages).

In terms of poverty rate, statistics show a 37.0% poverty rate in 2001 (with a total figure

of 96 500 number of people in poverty); declined to 29.4% in 2007 (total of 83 294 people)

and now stands at 26.5% in 2011 with a total number of 78 586 people living in poverty.

These figures are better than both provincial and district levels. However, the poverty gap

within the same period is increasing, as shown above; a very worrisome trend which

shows that inequality is increasing.

3.4.8 Table 11: Basic Service Delivery/Infrastructure Indicators

BASIC SERVICE INFRASTRUCTURE INDICATORS

Trend Latest figure

Better (+) or worse (-) than Gert Sibande

Better (+) or worse (-)

than province


worst (18) 2001 2011

% of households in informal dwellings 35.1% 27.9% (-)

(16.8%) (-)

(10.9%) 17

% of households with no toilets or with bucket system

18.3% 2.4% (+) (5.8%) (+) (7.2%) 2

% of households with connection to piped

96.7% 98.9% (+) (91.2%)

(+) (87.4%) 1

34


(tap) water: on site & off site

% of households with electricity for lighting 71.3% 90.3% (+)

(83.4%) (+)

(86.4%) 5

% of households with weekly municipal refuse removal

82.9% 91.7% (+) (63.6%)

(+) (42.4%) 1

Basic service delivery indicators in Govan Mbeki are improving and better than both

provincial and district levels (except for % of households in informal dwellings). In terms

of % of households with no toilets or with bucket system, Govan Mbeki is number 2

(second best) in the province (a change from 18.3% in 2001 to 2.4% in 2011). Serious

service delivery improvements over the same period were also recorded in % of

households with connection to pipe or tap water, electricity and refuse removals;

recording best, fifth and best respectively. In all cases, the performance is better than

both provincial and district levels. According to the Blue Drop Report, Govan Mbeki is

recorded 7th in the province, a slight decline between 2010 and 2012. Waste water

services ranked 14th in Green Drop Report in 2012 and this needs urgent attention.

Finally, in terms of overall household services index, Govan Mbeki ranks 2nd in the

province; behind Steve Tshwete Local Municipality; as shown on the figure that follows.

Fig 9: Household Services Index

3.5 Economic Indicators

0.5

8 0.6

5

0.6

5

0.6

2 0.6

8

0.7

0

0.7

0

0.6

8

0.7

2 0.7

7

0.7

7

0.7

2

0.7

1

0.7

3

0.7

4

0.7

1 0.7

5 0.8

4

0.7

0

0.7

0

0.7

1

0.7

1

0.7

2

0.7

4

0.7

6

0.7

9

0.8

1

0.8

1

0.8

2

0.8

3

0.8

3

0.8

4

0.8

4

0.8

5

0.8

7

0.8

9

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Ho

use

ho

ld s

erv

ice

s in

de

x

Region2001 2011

35


3.5.1 Table 12: GDP Growth Rate

ECONOMIC

INDICATORS Trend

1996-2011 Forecast

2011-2016 Better (+) or

worse (-) than Gert Sibande

Better (+) or worse (-) than

province


worst (18)

GDP growth (%) 3.3% 4.6% (+) (4.1%) (+)

(3.5%) 1

Trend Latest figure Ranking:

best (1) – worst (18)

2001 2007 2011

Contribution to Mpumalanga GVA (%)

18.6% 19.4% 18.5% 2

Gross Domestic Product (GDP %) for the period 1996-2011 averaged 3.3% and is

projected to grow at an average of 4.6% per annum over the period 2011-2016. This rate

is expected to be the best or highest in the province; better than both provincial and district

averages. Gross Value Added (GVA) in 2011 stands at R30billion at current prices and

20.7 billion at constant 2005 prices; being the second largest in the province (with an

18.5% contribution). Key sectors that are expected to contribute to the growth of the

Govan Mbeki economy are manufacturing, finance and mining & electricity.

3.5.2 Table 13: Contribution by Local Municipal Areas to Gert Sibande’s industries

(GVA constant 2005 prices)

INDUSTRY Chief

Albert

Luthuli

Msuka-

ligwa Mkhondo Dr

PixleyKaIsakaSeme Lekwa Dipale-

seng Govan

Mbeki Gert

Sibande

Agriculture 12.3% 14.7% 21.7% 12.9% 22.8% 7.2% 8.5% 100.0%

Mining 2.8% 10.4% 3.0% 0.3% 14.6% 0.6% 68.3% 100.0%

Manufacturing 0.4% 0.6% 1.1% 0.2% 2.0% 0.2% 95.6% 100.0%

Utilities 4.8% 8.6% 1.4% 10.9% 44.4% 6.6% 23.4% 100.0%

Construction 6.9% 6.7% 4.2% 11.8% 10.4% 1.9% 58.1% 100.0%

Trade 7.0% 18.6% 7.4% 6.4% 10.4% 4.8% 45.4% 100.0%

Transport 4.7% 28.4% 7.4% 7.0% 12.7% 1.4% 38.4% 100.0%

Finance 6.2% 24.7% 8.0% 4.6% 9.8% 2.2% 44.4% 100.0%

36


Community

services 15.0% 21.3% 9.3% 6.3% 17.7% 2.9% 27.6% 100.0%

Total 5.0% 12.1% 5.2% 3.7% 10.9% 1.9% 61.2% 100.0%

Statistics show that Govan Mbeki contributes 61.2% to the district economy; mainly

through manufacturing (at 95.6%), mining (68.3%) and Construction (58.1%). Except for

agriculture and utilities, all other industry sectors in Govan Mbeki dominate the district

economy. In the far distant are Msukaligwa (12.15%) and Lekwa (10.9%); and this shows

the dominance of the industries within Govan Mbeki in the Gert Sibande district economy.

3.5.3 Economic Sector Contribution (2001 and 2011)

Comparison of GVA economic sector contribution in Govan Mbeki between 2001 and

2011 shows some interesting scenarios as shown in the two figures that follow.

Agriculture 0.7%

Mining 31.7%

Manufacturing 46.3%

Utilities 1.5%

Construction 1.0%

Trade 5.0%

Transport 2.8%

Finance 5.5%


2001

37


Fig 10a & b: Economic Sector Contribution

Manufacturing (at 54.7%) and mining (15.7%) are the leading industries in Govan Mbeki;

jointly contributing 70.4% in 2011. The figures show an increasing share of manufacturing

and finance; and a declining share or role of mining over the same period. The other

sectors showing signs of improvement are transport and trade. However, the over

reliance on two complimentary sectors (manufacturing and mining industries) is not ideal

for the future growth and development of the municipal economy.

3.6 Table 14: Tourism Indicators

TOURISM INDICATORS

Trend Latest Percentage share of

Gert Sibande

Percentage share of

Mpumalanga


worst (18)

2001 2007 2011

Number of tourist trips 116 400 193 082 211 583 37.1% 6.1% 6

Bed-nights 813 846 834 148 943 575 36.8% 6.0% 6

Total spent R million (CPs) R414.0 R650.8 R752.9 43.3% 6.6% 7

Total spent as a % of GDP (CPs) 3.0% 2.3% 2.1% 18

Agriculture 0.6%

Mining 15.7%

Manufacturing 54.7%

Utilities 1.4%

Construction 2.0%

Trade 7.1%

Transport 4.6%Finance 8.3%


2011

38


Over the period 2001-2011, the number of tourist trips increased from 116 400 in 2001,

193 082 in 2007 and 211 583 in 2011. This represents 37.1% contribution to the Gert

Sibande total and 6.1% contribution to the provincial total. In terms of beds, Govan Mbeki

contribution to Gert Sibande stands at 36.8% and 6.05 share of Mpumalanga. Spent

figures also show increasing trends over the same period. However, the total spent as a

percentage of GDP (at current prices) show a decline between 2001 and 2011; as shown

on the table above.

3.7 Conclusion

Analysis of the demographic, socio-economic and economic profile for Govan Mbeki

Municipality presents scenarios full of opportunities and challenges for local economic

development. Key issues emerging from the analysis include but not limited to the

following:

Although average annual population growth between 2001 and 2011 stands at

3.7% p.a, it is the high proportion of the population aged between 0-34 years

(youth) that is worrisome; since this is the age category characterised by low skills

levels, work experience challenges and therefore high unemployment. This

scenario poses a number of economic development challenges for Govan Mbeki

and therefore requires targeted effort aimed at addressing youth challenges.

Govan Mbeki Municipality is faced with a number of socio-economic challenges in

the form of the levels and rate of unemployment (particularly among the youth),

poverty, inequality and low skills levels. The decreasing levels of matric pass rate

and university or degree admission rate is a worrisome development since this in

turn signifies the skills level available in the locality and potential to job

opportunities. Major victims are the youth and in such scenarios, companies tend

to import labour at the expense of the locals; particularly in manufacturing, mining,

electricity (utilities) and finance related industries. As a consequence of low skills,

unemployment is a feature of the local space and in turn perpetuates poverty and

inequality.

Basic service delivery within Govan Mbeki Local Municipality is comparatively

good. However, the number of informal dwellings are too many (second highest in

the province) and put further strain on the municipality’s resources if the

mushrooming of informal settlements is not put to a stop. Infrastructure and basic

service delivery are key enablers of LED and therefore resources need to be

channelled towards formal establishments. Addressing housing backlogs is

therefore mandatory; as much as controlling mushrooming of informal dwellings

erected by people who come into the space in search of job opportunities.

On the economic front, the over-dependence of Govan Mbeki on manufacturing

(SASOL) linked to coal mining is a very worrisome scenario. With depletion of coal

resources and or change in technology (and therefore emergence of new fuel

sources); Govan Mbeki economy will decline dramatically with devastating

39


consequences on employment, poverty, inequality and a host of other social ills.

Diversification of the economy into other sectors and industries is therefore an

imperative as well as industrialisation of the local economy.

The above scenario paints a picture full of opportunities and challenges in the review of

the Govan Mbeki LED Strategy and therefore underpinned the whole review process. The

project task was therefore to identify and prioritise LED programmes and projects that

would assist unlock economic potential of the local space and address the identified

economic and socio-economic challenges.

40


SECTION FOUR: LOCAL ECONOMY ASSESSMENT & OPPORTUNITIES

IDENTIFICATION

The perspective analysis section above shows that Govan Mbeki Local Municipality is

faced with a number of economic and socio-economic challenges. These challenges are

not a unique feature of the Govan Mbeki municipal space; but are commonly shared

across various spaces within the Republic of South Africa. As highlighted in the previous

section, the municipality is faced with, among others; unemployment, poverty, low living

standards and inequality. In addition, the declining matric pass rate and lowering degree

or university admission rate are worrisome developments that threaten the municipality’s

skills base. Coupled to these challenges is the mushrooming of informal and illegal

settlements on vacant land; that puts a strain on the municipality’s ability to deliver basic

services to communities.

On the economic front, the perspective analysis section shows that the economy of

Govan Mbeki is sustained by the industries within the manufacturing sector followed by

mining; and the two sectors contribute more than 70% to the local economy. A closer look

at these sectors depicts complementarities in the form of coal mining feeding into the

SASOL fuel from coal production. Such lack of economic diversification and dependence

on the finite coal resources poses serious challenges to the future growth and

development of Govan Mbeki. There is therefore need to explore growth and

development potential across other sectors as linked to the current source of comparative

and competitive advantages. The low employment, growth and GVA contribution of

agriculture to the economy of Govan Mbeki as well as absence of agro-processing

activities are serious concerns that warrant attention in the short to long term.

However, a number of opportunities exist within the local space; capable of addressing

the socio-economic and economic growth challenges previously highlighted, hence it is

the focus of the first part of the section. Section 6.1 highlights critical favourable and

unfavourable conditions in the municipal internal and external environment. It is

essentially a SWOT analysis of factors that promote and or impede on local economic

development. Section 6.2 captures value chains capable of unlocking the economic

potential of the local space; through a process of value chain mapping across sectors (as

opposed to sectoral economic analysis). The economic value chains assisted in

opportunities, programmes and projects identification. These opportunities and projects

were identified by stakeholders through workshops structured along sector linkages;

using PACA (Participatory Appraisal of Competitive Advantages) methodologies. A

structured questionnaire was administered to assist stakeholders generate economic

development opportunities from value chains presented (see Annex D).Emanating from

the identified opportunities within value chains, section 6.3 captures the programmes and

projects identified across sectors.

41


4.1 Opportunity and Issue Analysis (SWOT Analysis)

The following is a SWOT analysis summary of favourable conditions in the internal and

external environment (strengths and opportunities); as well as unfavourable conditions in

the environment (weaknesses and threats).

Strengths

Improved organisational structure for Local Economic Development with creation

of position for Manager LED and Director for Planning and Development

‘Housing’ of all planning related units under one directorate (Planning and

Development); such as IDP, Spatial Planning, LUMs and LED

Functional LED Forum with sector based committees for engaging stakeholders

on LED issues

Sound government-private sector relations; based on willingness of business to

participate in LED and other municipal related activities

Political willingness to address economic and socio-economic challenges through

stakeholder engagements (as evidenced during Cooperatives Summit, business-

mayoral breakfast meetings and planned jobs summit)

Sound revenue base, implementation of capital and basic infrastructure projects

and provision of basic services

Comparatively low unemployment, poverty, inequality and living standard levels

within the district and province

Weaknesses

Too concentrated (not diversified) an economy dependent on two complimentary

sector industries reliant on finite coal resources

Weak exploitation of the agricultural and agro-processing potential within the local

space for SMME and cooperatives development

Low and declining skills base caused by declining matric pass rates and

degree/university admission rates

Inability and or unwillingness to control and manage mushrooming of informal

settlements within municipal area of jurisdiction

Absence of investment promotion policy and incentive schemes is not helping in

the marketing of the local space and its investment opportunities.

Opportunities

Potential for industrialisation of the local economy leveraging on current

comparative and competitive advantages

Huge potential for economic diversification based on manufacturing, agriculture

and agro-processing activities linked to current and other dominant sectors

42


Potential for improved agriculture and SMME contribution to the local economy

based on SMME and cooperatives incubation

Strategic location of municipality in terms of road (N17) and rail network (Gauteng-

Richards Bay and planned Maputo) relative to local and international markets

offers great potential for product and market development

Threats

Coal is a finite resource and exhausting coal deposits and reserves means Govan

Mbeki will become a ghost town with very high unemployment, poverty and poor

living conditions

Uncontrolled mushrooming of informal and unplanned settlements is putting a lot

of financial strain on the local municipality in terms of basic service delivery.

Political interventions are therefore needed to stop the practice

Decaying and sometimes unused buildings in towns and CBDs are unattractive

sites for investment promotion and therefore require urban renewal and city

development programmes.

4.2 Value Chain Mapping and Opportunities Identification

In its simplest form, a value chain is typically considered to be three or more otherwise

independent businesses from different segments of an industry ‘working’ together to ‘help

each member’ in the chain meet their business goals. It is a strategic collaboration of

organizations for the purpose of meeting specific market objectives over the long term

and for the mutual benefit of all links in the chain. Fundamental to successful value chain

participation is a move away from the confrontational and sometimes adversarial

relationships between and amongst players customary in many industries. Openness,

trust and a genuine desire to see all parties succeed are fundamental prerequisites to an

effective value chain scenario. Value chain mapping is therefore the process of reducing

the industry value chain to a diagram. In reality the chain is a matrix. This is because the

players in an industry aren’t sequentially linked like a chain formation, but rather have a

variety of interrelationships that form part of the matrix. Value chain analysis includes a

breakdown of the various activities and players involved in the creation of a product or

service from the raw material to the sales counter. Value chain research has received

increasing attention in recent years since it offers a more realistic description of real

economic processes than, say, sectoral studies. There are two options in value chain

mapping. A descriptive value chain map tries to depict the various steps involved in the

production of a product or the delivery of service. However a more analytical value chain

map that distinguishes different levels of value creation is more useful in LED planning

and this technical analysis focuses on the material, knowledge and monetary flow

between and or among firms, industries and sectors; as well as the power structures

between and among them. Value chain mapping and analysis is the methodology that

43


was used to identify economic opportunities and projects across sectors and industries

within Govan Mbeki; using both 2012 sector studies and participatory appraisal of

competitive advantages by all key stakeholders during workshops. The key sectors and

industries fully explored during stakeholder workshops are agriculture and agro-

processing, mining and mineral beneficiation, manufacturing; and tourism and related

activities.

4.2.1 Agriculture and Agro-processing Value Chains & Opportunities

4.2.1.1 Maize Value Chain & Opportunities

3.1.1 Maize Value Chain& Opportunities

A number of opportunities exist within the maize value chain. As shown on the matrix, key

opportunities exist through manufacturing and or supply of agriculture equipment and

machinery, growing and supply of maize seed, production of organic and non-organic

fertiliser, production of agriculture chemicals and irrigation systems. Transportation of all

these products to farms that produce maize and baby corn; and subsequently to silos is

Manufacturing

Agriculture

Equipment

Machinery

Maize Seed

producing farms

Fertilizers

production (non-

organic)

Production of

organic

fertilizers

Production of

Agriculture

Chemicals

Production of

Irrigation

systems

Maize production +

Growing of mealies or

baby corn

Export to SADC

Manufacturing

Companies

Ethanol

Production

(Technical

advice needed)

Milling

Companies

Furfural

Production

(Technical

Advice needed)

Maize Seed

(Technical

Advice needed)

Food processing

cluster for agric.

production

Cereals

Cooking Oil

Flour

Production

of animal

feed

Other Starch

products

Production

of Packaging

Materials

Retailers,

Restaurants,

Breweries,

Paint

manufacturers

44


another great potential within Govan Mbeki capable of changing the contribution of the

sector to the local economy. Upon production of maize, serious opportunities arise within

the manufacturing sector for animal feed, cereals etc.

4.2.1.2 Soya beans Value Chain & Opportunities

As is the case with the maize value chain, the soya beans value chain offers a number of

opportunities ranging from manufacturing and or supply of equipment and machinery,

production of soya seeds, organic and non-organic fertiliser, chemicals as well as

irrigation systems. More interestingly, diesel from soya beans production is a possible

reality within Govan Mbeki; given technology possessed by SASOL. The other

Manufacturing

Agriculture

Equipment

Machinery

Soya Seed

Production

Fertilizers

production (Non-

organic)

Production of

organic fertilizers

Production of

Agriculture

Chemicals

Production of

Irrigation systems

Production

of

Soya bean

Soya

Bean

Silos

Manufacturing

Companies

Cooking Oil

or Oil

Companies

Export of

Soya beans

and soya

production

Stock feeds

Milling

Companies

Diesel

Production

Soup &Soya

Mince

Milk

pdn(soya)

Soya Flour

Stock Feed

Oil Cake

45


opportunities post soya beans growing are also highlighted in the matrix; with transport

also playing a leading role in the whole value chain. Warehousing and logistics facilities

are also demanded.

4.2.1.3 Tobacco Value Chain & Opportunities

Currently, tobacco growing is not a feature of the Govan Mbeki economy but the

agricultural sub-sector offers immerse opportunities for growing the local economy.

Through backward linkages, opportunities exist in the form of manufacturing and or

supply of seeds, equipment, fertiliser, chemicals and irrigation systems. Employment

opportunities also exist in the harvesting, grading, curing and baling of the tobacco; in

Seedling production

Primary Coops: Tobacco growers

Secondary Coops: Tobacco growers

Agriculture machinery production

Production of Fertiliser

Production of Organic fertiliser

Production of Chemicals

Production of Irrigation systems

Harvesting Curing Grading Baling

Tobacco Marketing /Sales

Cigarette manufacturing(cigarette, Cigars, Snuff, Chewing tobacco)

Tobacco Processing

Export of raw tobacco, cigarettes, cigars, snuff

Packaging

Branding,

Introduction

of new

brands

Retailers

Wholesale

46


addition to the transport opportunities shown on the matrix. Once processed,

opportunities also arise for cigarette manufacturing, export of raw tobacco as well as

packaging, wholesaling and retailing.

4.2.1.4 Poultry Value Chain & Opportunities

According to studies conducted, the poultry industry in South Africa has great potential

once it is ‘insulated’ against unfair competition from Brazil, Greece and other countries.

Within Govan Mbeki, opportunities exist across the whole poultry value chain. As

indicated in the matrix, opportunities associated with creation of an enabling environment

include establishment and training of cooperatives as well as research related activities.

Within the value chain itself, opportunities within Govan Mbeki exist as linked to grain

production (primary agriculture), establishment of a feed mill or granular plant (agro-

processing or manufacturing), layers, hatchery, one day old chicks, broilers and abattoir.

Enabling Environment Agriculture& Poultry Value Chain

Organisations

(Cooperatives)

Research &

Innovation

Communications

& Information

Training &

Development

Financing

Product

s/

Services Grain

Feed-Mill/

Granular

Plant

Broilers/

Free

Range

Abattoir Markets

Layers

Hatchery

47


Other opportunities are associated with the retail markets that emanate from these

production processes. The poultry value chain offers great opportunities for SMME and

cooperatives incubation.

4.2.1.5 Fresh Produce Market Value Chain & Opportunities

The fresh produce market concept is gaining traction within the Mpumalanga Province

and plans are afoot that at least one market should be established in each of the 3 districts

within the province. Establishment of one such a market or sub-market offers a number

of opportunities in Govan Mbeki; as shown in the matrix above. As shown on the matrix,

opportunities exist that are linked to primary agricultural activities. In addition,

Primary Farming

Cooperatives

Secondary farming Cooperatives

SMMES: Farming

Speciality Vegetables, Maize tout peas, baby vegetables etc

Deciduous fruit production

Fertilizer production (Non-organic)

Organic fertilizer Production

Agric. Chemicals production

Production of Irrigation systems

Agric. machinery manufacturing

Fresh

Produce

Market

School Nutrition

Export to EU/SADC

Retailers

Restaurants

Small Traders

Vegetable Processing Plant (Clearing/ packaging/ Reduction/ dehydration/ preservation)

Waste Management/Recycling

Catering Companies

Juice Extraction

from Citrus

Beverage Industry

Canning Factories

Grading/Pa

ckaging

Cold

Storage

48


opportunities also exist through establishment and training of agriculture cooperatives,

growing of specialty vegetables and importation of deciduous fruits (as well as fertiliser,

equipment and chemicals). Transportation of farm produce to the market is another great

opportunity for SMMEs and transport cooperatives; followed by the grading, packaging

and storage of the fresh farm produce. As indicated in the matrix, other opportunities also

exist in the form of vegetable processing, waste management, local and export markets;

as well as juice extraction and canning.

4.2.2 Mining, Mineral and Mining Beneficiation & Opportunities

4.2.2.1 Coal Mining: Backward, Forward and Side Linkages & Opportunities

Like Emalahleni and Steve Tshwete Local Municipalities (Nkangala District), Govan

Mbeki has a natural comparative advantage of coal mining (through abundant coal

SH

OP

PIN

G M

ALLS

– B

US

IN

ES

S &

IN

DU

ST

RIA

L

PA

RK

S – H

OT

ELS

&

B

nB

s.

PR

IM

AR

Y A

GR

IC

ULT

UR

E (C

ro

ps &

A

nim

als;)

& A

GR

O_P

RO

CE

SS

IN

G

HOUSING DEVELOPMENT, INFRASTRUCTURE

& BASIC SERVICES

BACKWARD LINKAGES

Mining Supplier Park

(Industrial Park)

Manufacturing of:

Mining plant

Mining equipment

Mining machinery

Mining consumables

(component parts)

Manufacturing of

Equipment / machinery

& component parts for

electricity generation

Manufacturing of

Electricity Meter Boxes

and Treated Poles

SASOL plant, equipment,

machinery & parts supply

NATURAL COMPARATIVE

ADVANTAGES: COAL MINING

(Abundant Coal Reserves)

SIDE LINKAGES

Infrastructure

Development

Development of

Transportation and

Logistics Facilities/Hubs

ICT Development

Mining Land Rehabilitation

Skills and Capacity

Development

Development of Green

Industries (new energy

sources)

FORWARD LINKAGES

Electricity from Coal

Generation

Fuel from Coal

Production (SASOL)

Other Petro-chemical

products

Brick / Cement

manufacturing from

coal ash

SELECTED URBAN RENEWAL &

CITY DEVELOPMENT

49


reserves). Coal mined within the local space is predominantly used in the production of

fuel by SASOL and the rest is either fed into the ESKOM power stations or exported to

Europe and Asia. Coal mining and fuel production therefore provide great opportunities

for further industrialization of Govan Mbeki. As can be seen from the value chain linkages

depicted in the matrix; forward, backward and side linkage opportunities can be explored

and exploited within Govan Mbeki.

Backward linkage opportunities include but not limited to the following:

Establishment of a mining supplier park (industrial park)

Manufacturing and or supply of component parts, machinery, equipment and

consumables for mines and SASOL

Manufacturing and or supply of component parts, machinery, equipment and

consumables for ESKOM power stations and farms.

Forward linkage opportunities include but also not limited to the following:

Production of a variety of goods from SASOL petro-chemical activities; such as

plastic products, detergents, lubricants, paints, fibers, adhesives etc; and these

form the basis for industrialization of Govan Mbeki

Manufacturing of bricks from coal ash (fly ash)

Cement manufacturing

Side linkage opportunities include but not limited to the following:

Infrastructure development (road, rail, electricity, water and waste water)

Development of warehousing, transportation and logistics facilities

Rehabilitation of mining land for agricultural purposes

New energy sources (preferably renewable energy such as solar, wind and diesel

from soya beans)

SMME skills and capacity development (junior miners development)

Implementation of the above opportunities within mining, manufacturing and other sectors

will trigger demand for housing, hotel accommodation, office parks, agricultural produce

and selected city development and urban renewal; as shown on the matrix.

4.2.2.2 Gold Mining & Beneficiation Opportunities

There is limited gold mining within Govan Mbeki Local Municipality area of jurisdiction;

with a number of abandoned mines. As shown in the matrix below; economic

opportunities exist in the form of supply and or manufacturing of equipment,

consumables, component parts, protective clothing, and engineering services. Other

opportunities exist in the form of rehabilitation of land on abandoned mines, brick

manufacturing and greening of the environment; and to a lesser extent, processing of

jewelry products (in addition to gold export).

Supply of Protective

Clothing

Rehabilitation of

abandoned mines for

agricultural

50


4.2.3 Manufacturing Value Chains and Opportunities

4.2.3.1 Brick Manufacturing Value Chain & Opportunities

As previously indicated, brick manufacturing opportunities emanate from both coal and

gold mining activities. River sand harvesting, quarry dust harvesting and gravel or ¾ stone

harvesting are some of the key opportunities for SMMEs and cooperatives within Govan

Mbeki. In addition, transportation opportunities arise since the brick manufacturing factory

requires constant supply of raw material as well as transportation of bricks to various

market destinations. Supply of cement and brick making machinery and equipment are

some of the opportunities associated with the establishment of the factory.

Supply and

Manufacturing of Mining

Equipment

Civil Engineering

Contracts

Prospecting and

Development of New

Gold Mines or New

Mines in General

Establish Mining

Incubation and

Development Centre for

SMME’s

Chemical Manufacturing Cyanide/Mercury

GOLD

MINING

Training in Mining

operations from

across Africa and

the World

Training of Gold

panners

(zamaza

Reworking mine

dumps

Environmental

Monitoring

Brick manufacturing

for RDP houses

Greening projects

Repairs of Machinery

Quarrying

Cement

manufacturing

Gold

processing/Refining

Export of Gold/Gold

related products

(Jewellery)

51


6.2.3.2 Fertiliser Manufacturing Value Chain & Opportunities

Production of organic and non-organic fertiliser within Govan Mbeki is critical for boosting

the agricultural sector contribution to the local economy. The matrix below shows

opportunities associated with production of fertiliser; starting with the harvesting of

seaweed at beaches, transportation of seaweed either by train or road and the actual

production of organic fertiliser (preferably by SMMEs and cooperatives). Post production;

packaging, marketing and transportation of finished products are some of the key

opportunities that could be tapped into by businesses within the local space. However,

skills and capacity development of SMMEs and cooperatives is fundamental to successful

implementation of this project.

Coal Fly Ash

&River sand

Harvesting

Quarry Dust

Harvesting

Gravel or3/4

Stone Harvesting

Cement

Manufacturing

Companies

Precast

and Brick

Making

Factory

Manufacturing

Pre-Cast

Concrete

Products

Manufacturing

Bricks

Marketing of

Concrete

Products and

Bricks

Brick Making

Machinery and

Equipment

Transport Services

52


4.2.4 Tourism Value Chain & Opportunities

4.2.4.1 Products for Development of Tourism Hub

Tourism contributes quite significantly to the economy of Govan Mbeki (as shown in the

Perspective Analysis Report). Industrial or business tourism (as opposed to leisure

tourism) is characteristic of the local space. Key tourism products include bed & breakfast

accommodation facilities, one hotel (Graceland Hotel) and a number of lodges across the

municipal space. Responses from these facilities show that utilization is good Monday to

Thursdays and very bad for the rest of the week. Opportunities that could help address

the current challenges are indicated on the matrix below. These include performance of

live shows during weekends, establishment of more up-market night clubs, revival of

some of the abandoned festivals (e.g. Bethal potato festival), arranging tours of

abandoned gold and coal mines; as well as cultural, arts and craft related opportunities.

The aim is to bring vibe within the local space during weekends and compliment business

tourism that booms during the week days.

Seaweed

Harvesting

at Beaches:

Mozambique

/ Richards

Bay etc.

Rail

Transport

Road

Transport of

Seaweed

Production

Organic Seaweed

Fertiliser

[SMME’s/ Coops]

Exports of Seaweed

Marketing of Seaweed

Packaging of Seaweed

Market Gardening

Agriculture Production

(See also Maize/Soya

Beans and Fresh Produce

Market)

Training Services in use

of Seaweed Fertiliser

Catering Services

Travel and Tourism

Services

Night Clubs

Restaurants

53


4.2.4.2 Culture, Arts and Craft Opportunities

Opportunities associated with culture, arts and craft include adventure activities such as

horse riding, hot air balloons and paint ball shooting. Art and craft opportunities include

African art and craft painting, sculpting, weaving and knitting. Conservation related

opportunities include municipal parks, nature reserves establishment, bird watching and

flower farms viewing. These opportunities are shown on the figure below and the primary

goal is to attract leisure tourists into the Govan Mbeki space; particularly the areas around

Bethal / Emzinoni. Revival and utilization of the municipal museums and old mines; as

well as sporting activities like golf, soccer and boxing are also key in revitalizing leisure

tourism within Govan Mbeki.

Govan Mbeki

Entertainment

and Tourism

Hub

Retail Shopping Centre

Development

Office Space Development

Accommodation Facilities (Hotel)

Food and Beverage

Supply

Laundry Services

Oil/ Gas Supply

Security Services

Tourism Promotion

Services

Live Shows

Accommodation Facilities

(Bed and Breakfast)

Arts and Craft

School of art and Craft

Cultural Activities

Adventure Activities

Horse riding

Hot air balloon

Paint ball shooting

Country hotels

Arts & Craft

African art and craft

Jewellery

Metal works

Painting and drawing

Sculpting

Weaving and Knitting

Glass/Ceramics

Conservation and

Wildness Safaris

Biosphere reserve

Bird watching

Grass and wet

lands (Educational)

Ecosystems

Municipal parks

54


4.2.4.3 Culture, Education and Tours

Cultural and educational tours are critical for boosting leisure tourism within Govan Mbeki.

Among others, cultural opportunities identified include anthropological excursions,

dancing, music festivals, street theatre or drama and establishment of cultural village

(properly packaged). On the educational front, opportunities exist around touring old

mines and the SASOL petro-chemical plants. Such tours would require proper packaging

and marketing for them to be viable and sustainable. Other opportunities also exist around

improved stock and crop farming, fruit and vegetable gardening, fish hatchery and tree

planting initiatives that will beautify the Govan Mbeki space.

Cultural Interest

Activities

Educational Industrial

Activities

Other Special Activities

Sport Tourism

Canoeing

Dancing

Clay pigeon shooting

Boxing

Athletics

Badminton

Golf courses

Historical/Educational

Archaeological sites

Museums

Battle fields (potato festivals)

Church/cathedral

Old Mine visits

55


Anthropological

excursion

Cultural festival/cultural ceremony

Dancing

Open air theatre/Drama

Cuisine

Cultural village

Music festivals

Textile manufacturing tours

Tour of mining areas

Power generation tours

Food processing tours

Petro-Chemical tours

Steel and iron tours

Crop farming

Forestry/Timber

Livestock

Fish hatcheries

Fruit and vegetables

Unique farms

4.2.5 Small Business and Cooperatives Incubation

The vision for business incubation within Govan Mbeki is to nurture emerging and existing

small scale businesses and cooperatives through anchor projects within networks of

public private and community partnership programmesinto successful business

enterprises; thereby reducing failure rate at infancy stages of the business cycle.

Agriculture has been identified as one sector that provides great potential and

opportunities for small business and cooperatives incubation. This will be done through

the establishment of an ‘Agricultural Centre for Business Excellence or Agriculture

Business Incubation Centre’. Acquisition of a sizeable farm that can accommodate

various agricultural activities in one is fundamental for realization of this vision; and both

national and provincial departments responsible for land acquisition and support will play

their part.

4.2.5.1 Agricultural Business Incubation Concept

The figure below shows the scope and extent of the incubation programme as it tapes

into both LED and rural development (around agriculture). In addition, opportunities for

skills and capacity development also exist through research and development, training,

network development, financing, market development and business modeling services.

RURAL DEVELOPMENT

STRATEGIC THRUSTS

Land Acquisition and

Availability

Formation of Development

http://www.google.co.za/imgres?biw=1093&bih=490&tbm=isch&tbnid=l15KFkY58v9ojM:&imgrefurl=http://www.fws.gov/midwest/genoa/&docid=hxmrIbW9A5SbEM&imgurl=http://www.fws.gov/midwest/genoa/images/GenoaNFH_setting_1.jpg&w=940&h=548&ei=GyuTUv3iKePE0QXOhYCIBQ&zoom=1&ved=1t:3588,r:13,s:0,i:124&iact=rc&page=2&tbnh=171&tbnw=293&start=4&ndsp=12&tx=178&ty=100

56


Research and

Development

Entrepreneurship and Strategic

Thinking

Business Modelling

Capacity and Skills

Development

Finance and Rural Asset

Management

Rural Market Development

Social Asset

Networking

4.2.5.2 Rural & Agricultural Development Programmes

57


Rural and local development opportunities exist around the need to address food security

and nutrition concerns by producing maize, soya beans, cattle, sheep and variety of other

crops and meat. Cash crops and fresh produce are also lively opportunities that SMMEs

and cooperatives can tap into; in addition to opportunities around vegetation and

reforestation and construction of farm produce storage facilities.

4.2.5.3 Rural Infrastructure Development Programmes

One of the key principles of local economic development is that it only takes place in

areas with an asset base, and where provision of infrastructure and basic services is

guaranteed. Rural infrastructure development is therefore an important enabler for the

successful implementation of the incubation programme. Infrastructure development

opportunities exist in the form of road, water, electricity and waste water provision to the

incubator farm as well as farms owned and or run by incubates. Housing and storage

facilities development would be undertaken as well at the incubation center and incubate

farms; in addition to the establishment of training facilities at the center. A fresh

opportunity ultimately arises through the establishment of a rural agricultural cooperatives

bank in the locality, province and country. Rural financing (particularly for SMMEs and

cooperatives) is a huge challenge because of collateral security demands by funding and

financing institutions and therefore such an initiative offers great opportunities for growth

and development.

Agricultural Development

Food Security and Nutrition

Cash Crop and Herbs Production

Fresh Produce Markets

Vegetation and

Reforestation

Farm produce Storage

Facilities

58


4.2.5.4 Education, Capacity and Skills Development Programmes

As previously stated, skills and capacity development are key pillars of the SMME and

cooperatives incubation concept. Developing rural libraries for reading habits, brain

storming sessions and visits to other similar ventures for benchmarking and best practices

are also important opportunities for developing incubates. Assigning incubates to

specialist mentors will also develop new ventures’ practical capacity to run their

businesses.

Rural

Infrastructure Development

Roads, Transport and

Communication

Sanitation and Waste Disposal

Management

Rural Housing Development

Rural Financial Institutions

Infrastructure Storage

Facilities

Education and Skills

Development

Soft and

Technical

Skills Training

Mentoring and

Experiential

Learning

Brainstorming

Ideas and

Incubation

New Venture

Bootstrapping

Best Practices

and

Benchmarking

Tours

59


4.2.5.5 Rural Economic Sector Development Programmes

In addition to the economic opportunities previously identified across sectors, other rural

development sector opportunities include arts, craft and traditional medicines; tourism,

health and wellness and farm recreation; agro-processing; renewable energy, mining and

quarrying. These opportunities can also be taken up by some SMMEs and cooperatives

that may not focus on core agricultural activities.

4.2.5.6 Rural Business Incubation Models

In terms of rural business incubation modeling, the role of the incubation center will be to

structure small businesses into one or more of the following models:

Cooperatives (both primary and secondary coops)

Community Property Associations (CPAs)

Special Purpose Vehicles (SPVs)

Community Development Trusts (CDTs)

Public Private Partnerships (PPPs)

Community, Public &Private Partnerships (CPPPs)

Privately owned companies (Pty Ltd) etc.

Rural Economic Sector

Development

Arts and Crafts, Culture and Traditional Medicines

Tourism, Health and wellness

Farm and Recreation

Manufacturing and Agro-

Processing

Renewable Energy and

Environment

Mining and Quarry Creations

60


4.3 Conclusion

The preceding section highlights sector and industry value chains and opportunities

relevant for consideration within Govan Mbeki. From the value chains and opportunities,

stakeholders were requested to identify and locate relevant programmes and projects for

implementation within the next 5 years and beyond. A template was developed,

administered and utilised in the process of generating relevant programmes and projects

(see Annex B). Section 5 that follows summarises key programmes and projects

identified, relevant for implementation within Govan Mbeki after being subjected to a

rigorous process of programme and project appraisal, validation and prioritisation in the

final workshop with all relevant stakeholders.

Rural Business Incubation

Models

Small Business Development and

Management Support

Creating Sustainable

Cooperatives

Community Property

Associations

Special Purpose Vehicles

Community Development

Trusts

Public Private Community

Partnerships

61


SECTION FIVE: LED STRATEGIC FRAMEWORK, PROGRAMMES & PROJECTS

To gain a good understanding of the concept of LED strategic framework, key concepts

need to be defined as follows:

Vision: The vision describes the stakeholders’ (government, community, private

sector, municipality, non-governmental organizations etc.) agreement on the

preferred growth and development future of the local space in the context of

current/future challenges and opportunities.

Objectives: Are set performance standards and target activities for development.

They act as key performance measures and indicators and should be SMART.

They can be qualitative as opposed to quantitative SMART objectives.

Strategies: Are based on the overall vision and specify desired outcomes of the

LED planning process upon achievement of the stated objectives.

Programmes: Are set out approaches to realistic LED development goals. They

are also commonly known as key emphasis areas or pillars for LED. Each

programme has a number of projects within the component.

Projects and Action Plans: Projects implement specific programme components.

They must be prioritized and all costs must be established (where possible). They

are also known as LED initiatives or action plans.

5.1 LED Vision and Strategic Objectives

Municipal Vision

The new Govan Mbeki Municipality vision is stated as “Model City and Centre of

Excellence”. Local Economic Development has great contribution to make, in the

realisation of this municipal vision; by championing economic growth and development

for a model city and centre of excellence.

LED Vision

‘Mpumalanga’s most Diversified Industrial Hub’

Strategic Goal

‘To become Mpumalanga’s industrial hub anchored around comparative and competitive

advantages, economic diversification and small business incubation’

Strategic Thrusts or Strategies

Industrialisation

Economic diversification

Small business incubation

62


Strategic Objectives

Industrialisation of the Govan Mbeki economy using current& future comparative

and competitive advantages; and newly targeted industries

Diversification of the local economy to reduce overreliance on the two

complimentary sectors of coal mining and fuel from coal SASOL production

Incubation of small businesses and cooperatives to reduce failure rate at infancy

and boost SMME and agriculture contribution to the local economy

Improvement of living standards of the local citizenry through business and

employment opportunities across economic sectors and industries

Becoming number one contributor to the provincial economy within the next 5

years

5.2 LED Strategic Pillars or Programmes

Six strategic pillars or programmes identified for the achievement of strategic objectives

are as follows:

Pillar One: Govan Mbeki Industrialisation Programme–the programme thrust is

industrialisation of Govan Mbeki using current comparative and competitive advantages

of coal mining as linked to SASOL fuel production activities. In addition, the programme

focuses on manufacturing activities based on sectors and industries with future growth

prospects especially agro-processing and alternative energy sources. The aim is to

diversify the economy and reduce dependence on the two dominant and complimentary

sectors of coal mining and fuel production.

Pillar Two: SMME and Cooperatives Incubation Programme–national and international

research has shown that 2 in every 7 newly established business ventures fail at infancy.

The small business and cooperatives incubation programme seeks to address the

problem of high ‘infant mortality rate’ of small businesses and cooperatives. Agriculture

and agro-processing have been identified as key sectors and industries that can provide

leverage for SMME and cooperatives incubation. Land availability is therefore a critical

factor for the success of this programme.

Pillar Three: Tourism Hub Development Programme– in terms of the Govan Mbeki SDF,

tourism has been identified as one of the key segments for promotion around

Bethal/Emzinoni. Stakeholder consultation findings show that tourism within the local

space is mainly business or industrial; as opposed to leisure (as evidenced by variations

in room occupancy levels within a week). Focus of this programme therefore is to

compliment current visitor levels by introducing leisure dimensions to the tourism product

portfolio within Govan Mbeki.

63


Pillar Four: Warehousing and Logistics Hub Development Programme– the strategic

location of Govan Mbeki within the province and country suggests that warehousing and

logistics facilities development be considered seriously. In terms of the SDF, this

segment development is ear-marked for Leandra/Lebohang. Given both rail and road

network of provincial, national and international significance, this programme aims at

providing necessary facilities for the storage and movement of goods to various market

destinations locally, nationally and internationally.

Pillar Five: Education, Skills and Capacity Development Programme–educational and

skills levels from both a human resources and entrepreneurial view point is critical for

growth and development within Govan Mbeki. The programme thrust is to develop and

or boost the skills and capacity of small businesses and cooperatives within Govan Mbeki

through a series of interventions. Such interventions boost employee productivity and

ultimately reduce fatality or business mortality rate within the locality. Focus is on both

soft and technical skills. Skills around engineering for the mines and SASOL petro-

chemical activities are in high demand with few locals being part of the skilled force.

Pillar Six: Marketing and Investment Promotion Programme–space marketing and

investment opportunities promotion are key ingredients for the successful

implementation of the LED strategy. Development and implementation of municipal

investment incentive schemes, branding and marketing of investment opportunities and

infrastructure development and basic services provision are key pillars of this

programme. Among others, the municipality should consider investment incentives such

as;

Tax rebates or holidays

Reduced cost of land for development

Reduced bureaucratic practices on land and business approvals

Joint government and private sector infrastructure development arrangements

etc.

Such schemes have the potential of attracting investors to packaged and promoted

investment opportunities. Both space and product marketing are key strategies within this

programme.

5.3 LED Programmes and Projects

The table below summarises LED programmes and corresponding projects identified for

implementation in Govan Mbeki within the next 5 to 10 years. However, it should be noted

that these programmes and projects were subjected to a process of appraisal, validation

and prioritisation by stakeholders before packaging is done.

64


LED Pillars / Development

Thrusts

Proposed LED Projects / Investment Initiatives

Govan Mbeki Industrialisation

Programme

Development / establishment of an

Industrial Park

Diesel from soya beans production

Manufacturing and supply of component

parts, equipment and machinery for mines,

SASOL and agricultural farms

Manufacturing / production of organic &

non-organic fertiliser

Bricks and cement manufacturing from coal

ash

Manufacturing of petro-chemical products

such as detergents, lubricants, paints,

fibres, adhesives, plastic products

Renewable energy projects (solar / wind /

waste)

Establishment of hatchery and abattoir for

poultry & beef industries

Establishment of feed mill or granular plant

Agriculture and Rural Development

Food security projects

Cash crops and herbs

Fresh vegetables and greens

Fresh produce storage facilities

Agriculture and Rural Infrastructure

Development

Roads, transport, water, electricity and

ICT

65


SMME/ Cooperatives Incubation

Programme

Sanitation and waste disposal

Rural and farm housing development

Storage facilities development

Rural Agriculture and Cooperatives Bank

Education, Skills and Capacity Development

Mentorship programmes

Soft & technical skills training

Establish Coops Development Academy

National & international benchmarking

tours

Economic Sector focused projects

Arts, craft and traditional medicines

Tourism, wellness and health facilities

Agro-processing (crops and animal)

Mining and quarrying

Mining land rehabilitation

Renewable energy

Incubation Centre Services to SMMEs,

Coops, CPAs, CDTs, and SPVs etc.

Research and Development

Technical and soft skills training

Facilitate access to finance

Facilitate access to markets

Networking etc.

66


Tourism Hub Development

Programme

Revival of the Bethal – Potato – Festival

Renovation of municipal parks and

introduction of street theatre in the parks

and municipal halls

Arts and cultural performances at Nomoya

Masilela Hall

Live shows and performances linked to

Municipal & National Calendar

Promotion of night life during weekends

Old mines and SASOL tours

Revive sport tourism and adventure

activities

Establish cultural village linked to museum,

arts and culture performances

Warehousing & Logistics Hub

Development Programme

Establishment of fresh produce market or

‘fresh food court’

Development of rail-road intermodal facility

for coal transportation to longer distances

Development of storage facilities for various

commodities (e.g. Coca-Cola, SAB Miller,

Auction facilities etc.)

Establishment of truck stop with adequate

ablution and other facilities

Ring-fencing, targeted financing and

maintenance of all feeder roads (by

government and private sector players)

67


Education, Skills& Capacity

Development Programme

Establish Mpumalanga University Satellite

Campus on Engineering

Establish Cooperatives & SMME

Development Academy (affiliated to an

established University)

Undertake road shows to promote

cooperatives development and conduct pre-

incorporation training

Collaboration with established mining

houses for junior miners development

Promote local capacity development in

construction through joint ventures of

SMMEs with established contractors (ring-

fence some projects (government and

private sector)

Marketing and Investment

Promotion Programme

Establish technical committee to fund-raise

(for feasibility studies and business plans)

and oversee marketing and implementation

of projects

Develop municipal investment promotion

policy and incentives

Conduct feasibility studies on priority

projects and develop bankable business

cases or plans

Compile investments promotion prospectus

for all bankable projects

Conduct investments promotions summit

and participate in provincial, national and

international summits or such other

platforms

Urban Renewal and City Development

Projects (specific towns within Govan Mbeki

68


Other Cross-cutting Projects

that require urban renewal in line with

municipal SDF and LUMS)

Infrastructure Development Projects

(specific infrastructure projects linked to

LED projects planned for implementation

within Govan Mbeki)

Housing Development Projects (housing

development in order to address challenges

associated with mushrooming of informal

settlements as identified in municipal SDF)

HIV/AIDS Mainstreaming (how do we seek

to mitigate against the negative effects of

HIV/AIDS within the local space as growth

and development comes into the space)

69


SECTION SIX: PROJECT IMPLEMENTATION GUIDELINES & FRAMEWORK

6.1 Project Implementation Principles

Across sectors and industry clusters; programmes and projects, implementation of the

Govan Mbeki LED Strategy should be guided by the following principles:

Sustainability Seeks to balance between economic, socio-economic (social) and environmental goals of development in the short, medium and long-term.

Comparative and competitive advantages

Projects for implementation are based on the municipal economic comparative advantages as well as the competitiveness of the sectors and industries within the local space.

Employment, poverty and inequality

Creation of decent job opportunities, eradication of poverty and closing of the income and wealth gap are critical elements of successful local economic development implementation.

Community needs and challenges

Community needs and challenges must be identified and should form the basis for development projects for implementation to ensure community empowerment.

Investment promotion Both local and foreign investors should be afforded the opportunity to snatch investment opportunities available

Stakeholder linkages and participation

Implementation of LED programmes and projects is the responsibility of all key stakeholders and role-players and the local municipality acts as the center for LED coordination.

Skills and capacity development

Successful LED implementation is hugely anchored around well skilled and capacitated structures and businesses through a variety of strategic interventions.

Income generation and living standards

Implementation of LED projects has the ultimate goal of improving income earning capacity of individuals within communities as well as improved living standards of the citizenry.

BBBEE National BBBEE guidelines are a cornerstone of local economic development, both in terms of employment and procurement opportunities.

Efficiency and effectiveness

Doing things right and doing the right things are essential elements of LED planning, implementation, monitoring and evaluation. From institutional arrangements, capacity development, economic projects implementation to projects monitoring and evaluation; both efficiency and effectiveness are key ingredients for success.

70


Integrated development plan

The development of the Govan Mbeki LED strategy is viewed as part of the broader municipal integrated development planning process. It therefore stands that all LED programmes and projects must be mainstreamed into the municipal IDP, with budgets and responsibilities properly allocated.

6.2 Phased Implementation and Roll-Out Guidelines

The concept of phased implementation entails an incremental approach to execution of

the Govan Mbeki LED Strategy. The critical implementation phases have been identified

as follows but not necessarily sequential:

Phase Nature of Activity

1 Establish technical committee that will champion programmes and projects

implementation (post GENESIS activities)

2 Lobby and secure funding/financing for pre-feasibility, feasibility studies

and business plans development

3 Determine business development and implementation model (organizing

the effort through the formation of CDTs, CPAs, Cooperatives, SMMEs,

Special Purpose Vehicles, Private Sector Investments or Foreign Direct

Investments etc)

4 Check on location and land availability for all projects; especially

agriculture based projects.

5 Conduct Pre-feasibility and or Feasibility Studies(technical feasibility,

market feasibility and financial feasibility studies) depending on the

complexity of the project.

6 Establish partnerships especially with particular project sponsors

(Business Institutional arrangements)

7 Establish markets for products, goods and services to ensure sustainability

in the long-run (further enhance feasibility findings)

8 Project Development and Implementation (oversee actual construction or

establishment of factories and such other enterprises)

9 Continuous Implementation Monitoring and Evaluation and feedback

reporting to key stakeholders (as guided by institutional framework)

71


10 Conduct Impact Assessment Studies periodically (identify failures,

successes and lessons learnt for replication elsewhere) and Exit.

6.3 Projects Implementation Framework& Packaging Guidelines

A total of 6 programmes and 35 projects were identified and prioritised for

implementation. This first section provides summary implementation framework for all

programmes and projects recommended; on a 4 factor criteria as follows;

Project category ( quick win or catalytic anchor project)

Implementation time frame (short term – 1 to 3 years; medium term – 3 to 5 years

and long term – 5 years and beyond)

Proposed business development and implementation model (private sector,

cooperatives, SPVs, PPPs, CPPP etc)

Proposed project location

6.3.1 Projects Implementation Framework

Projects Project

Category

Implementation

Time Frame

Business

Development

Model

Proposed

Location

Govan Mbeki Industrialisation Programme

1. Industrial park

development

Quick win 1 – 3 years PPP Secunda /

Embalenhle

Conurbation

2. Diesel from soya

beans production

Catalytic +5 years Private Sector Secunda /

Embalenhle

Conurbation

3. Manufacture & or

supply component

parts, equipment and

machinery

Catalytic 3 – 5 years Private Sector Secunda /

Embalenhle

Conurbation

4. Manufacturing of

organic & non-organic

fertiliser

Catalytic 3- 5 years Private Sector Secunda /

Embalenhle

Conurbation

72


5. Bricks and cement

manufacturing from

coal or fly ash

Quick

wins

1 – 3 years Cooperatives Secunda /

Embalenhle

Conurbation

6. Manufacturing of

petro-chemical

products such as

detergents, paints

lubricants, fibres,

adhesives, plastics

etc.

Quick

wins

1 – 3 years Private Sector Secunda /

Embalenhle

Conurbation

7. Renewable energy

projects (solar / wind /

waste)

Catalytic +5 years PPP Secunda /

Embalenhle

Conurbation

8. Establishment of

hatchery and abattoir

for poultry & beef

industries

Quick

wins

1 – 3 years Cooperatives Secunda /

Embalenhle

Conurbation

9. Establishment of

feed mill or granular

plant

Catalytic

3 – 5 years CPPP Secunda /

Embalenhle

Conurbation

SMME / Cooperatives Agric Business Incubation Programme

1. Agriculture and

Rural Development

Projects:

Food security

projects

Quick win

1 – 3 years

Cooperatives

Farms

Cash crops

and herbs

Quick

wins

1 – 3 years Cooperatives Farms

Fresh

vegetables

and greens

Quick win 1 – 3 years Cooperatives /

SMMEs

Farms

Fresh produce

storage

facilities

Catalytic 1 – 3 years PPP Within Farms

73


2. Agriculture and

Rural Infrastructure

Development Projects

Roads,

transport,

water,

electricity and

ICT

Catalytic

1 – 3 years

CPPP

Within farms

Sanitation and

waste

disposal

Quick win 1 – 3 years Government Within Farms

and rural

areas

Rural and

farm house

development

Catalytic 3 – 5 years CPPP Farms & Rural

areas

Storage

facilities

development

Catalytic 3 – 5 years PPP Farms

Rural Agric

and Coops

Bank

Catalytic +5 years CPPP Secunda /

Embalenhle

Conurbation

3. Education, Skills

and Capacity


Mentorship

programme

Quick win

1 – 3 years

CPPP

Municipal

wide

Soft &

technical skills

training

Quick win 1 – 3 years &

continuous

CPPP Municipal

wide

Establish

Coops

Development

Academy

Catalytic + 5 years PPP Evander

National and

International

benchmarking

tours

Quick win 1 – 3 years and

continuous

CPPP National &

International

74


4.Economic Sector

based Projects:

Arts, craft and

traditional

medicines

Quick win

1 – 3 years

Coops / SMMEs

Bethal /

Emzinoni

Agro-

processing

(crops etc.)

Catalytic 3 – 5 years Coops/SMMEs Secunda /

Embalenhle

conurbation

Tourism,

wellness and

health

Quick win 1 – 3 years Coops / SMMEs Bethal /

Emzinoni

Mining and

quarrying

Quick win 1 – 3 years Coops / SMMEs Mining areas

Mining land

rehabilitation

Quick win 1 – 3 years PPP Previous

mining areas

Renewable

energy

Catalytic +5 years PPP Secunda /

Embalenhle

conurbation

5. Incubation Centre

Services to SMMEs,

Coops, CPAs, CDTs,

and SPVs etc.

Research and

Development

Catalytic

Continuous

PPP

Municipal

wide

Technical &

soft skills

training

Quick win 1 – 3 years and

continuous

PPP Municipal

wide

Facilitate

access to

finance

Catalytic 1 – 3 years PPP National

75


Facilitate

access to

technology

Catalytic Continuous PPP National &

International

Facilitate

access to

markets

Catalytic Continuous CPPP National and

International

Networking

etc.

Catalytic Continuous CPPP National &

International

Warehousing and Logistics Hub Development Programme

1. Establishment of

fresh produce market

or ‘fresh food court’

Quick win 1 – 3 years PPP Leandra /

Lebohang

2. Development of

rail-road intermodal

facility for coal

transportation for

longer distances

Catalytic 3 – 5 years PPP Leandra /

Lebohang

3. Development of

storage facilities for

commodities (e.g.

Coca-Cola, SAB

Miller, Auctioning

facilities etc.)

Quick

wins

1 – 3 years PPP / Private

Sector

Leandra /

Lebohang

4. Establishment of

truck stop with

adequate ablution

and other facilities

Quick win 1 – 3 years PPP Leandra /

Lebohang

5. Ring-fencing,

targeted financing

and maintenance of

all feeder roads (by

government and

private sector

players)

Quick

wins

1 – 3 years and

Continuous

PPP Leandra /

Lebohang

76


Education, Skills and Capacity Development Programme

1. Establish

Mpumalanga

University Satellite

Campus on

Engineering

Catalytic

+5 years

PPP / Government Evander

2. Establish

Cooperatives &

SMME Development

Academy (affiliated to

an established

University)

Catalytic +5 years CPPP Evander

3. Undertake road

shows to promote

cooperatives

development and

conduct pre-

incorporation training

Quick

wins

1 - 3 years and

continuous

CPPP Municipal

wide

4. Collaboration with

established mining

houses for junior

miners development

Quick

wins

1 – 3 years CPPP Municipal

wide

5. Promote local

capacity development

in construction

through joint ventures

of SMMEs with

established

contractors (ring-

fence some projects

(government and

private sector)

Quick

wins

1 – 3 years

CPPP

Municipal

wide

77


Marketing and Investment Promotion Programme

1. Establish technical

committee to fund-

raise (for feasibility

studies and business

plans) and oversee

marketing and

implementation of

projects

Quick win 1 – 3 years PPP Municipal

wide

2. Develop municipal

investment promotion

policy and incentives


wide

3. Conduct feasibility

studies on priority

projects and develop

bankable business

plans

Quick

wins

1 – 3 years PPP Municipal

wide

4. Compile

investments

promotion prospectus

for all packaged

bankable projects


wide

5. Conduct

investments

promotions summit

and participate in

provincial, national

and international

summits or such

other platforms

Catalytic 1 – 3 years PPP Municipal

wide

Other Cross-cutting Programmes

1. Urban Renewal

and City


(specific towns within

Govan Mbeki that

require urban renewal

Catalytic 3 – 5 years PPP

Selected

Towns

78


in line with municipal

SDF and LUMS

2. Infrastructure


(specific infrastructure

projects linked to LED

projects planned for

implementation within

Govan Mbeki)

Catalytic 1 – 3 years and

Continuous

PPP LED Linked

Projects

3. Housing


(housing

development in order

to address challenges

associated with

mushrooming of

informal settlements

as identified in

municipal SDF)

Catalytic 1 – 3 years CPPP Selected

Communities

4. HIV/AIDS

Mainstreaming (to

mitigate against the

negative effects of

HIV/AIDS within the

local space as growth

and development

comes into the space)

Quick win 1 – 3 years CPPP Municipal

wide

6.3.2 Projects Packaging & Implementation Guidelines

This second part of the section provides detailed guidelines for implementation of one

selected project per programme; illustrating how the project is packaged and guide

implementation in the short to long-term. The priority programme projects are as follows:

Govan Mbeki Industrialisation Programme – Establish Industrial Park for

Manufacturing

SMME/Cooperatives Incubation Programme – Establish SMME/Cooperatives

Agricultural Business Incubation Centre

79


Warehousing and Logistics Hub Development Programme – Establish

warehousing facilities for commodities (e.g. Coca-Cola, SAB Miller products,

Auctions etc.)

Education, Skills and Capacity Development Programme – Establish Mpumalanga

University Satellite Campus for Engineering

Tourism Development and Promotion Programme – Revive the Bethal-Potato-

Festival

Marketing and Investment Promotion – Develop Investment Promotion Prospectus

for all packaged projects

6.3.2.1 Programme & Project Name: Govan Mbeki Industrialisation Programme –

Establish Industrial Park for Manufacturing

Criterion Factor Description of Criterion Factor

[1]

Project description

(nature of project)

Industrialisation of Govan Mbeki will focus on

manufacturing of a number of products from the SASOL

petro-chemical activities (thought to be around 75). In

addition, mining and agriculture sectors as well as SASOL

activities use and require machinery, equipment and

consumables in their everyday operations. The industrial

park project seeks to establish a hub for production of these

and other manufacturing related products.

[2]

Project Rationale

(justification)

Industrialisation has been identified as a cornerstone to

future growth and development of Govan Mbeki (It reduces

dependence of coal, a finite resource). Establishment of

industrial park is first step in that direction and this will

trigger up, down and side stream activities that will

ultimately diversify the economy of Govan Mbeki.

[3]

Proposed project

location in terms of 4

segments

In line with Govan Mbeki Spatial Development Framework,

the industrial park is ear-marked for Greater Secunda /

Embalenhle conurbation. Details on size and scope of the

project will be determined by the feasibility study to be

conducted

[4]

Lead project drivers

and support

institutions

Lead Project Drivers: Govan Mbeki LM, DTI, DEDET

Support Institutions: VNG International, COGTA, GSDM,

IDC, NEF, MEGA

80


[5]

Proposed business

implementation

models

The industrial park development project is a fairly complex

and multi-faceted project. As such, a number of models for

consideration could include the following:

Private Sector Investments

FDI

PPPs

SPVs

BOTs

[6]

Key project

promoters/ Funders /

Investors identified

Key project promoters and funders should include

following:

Mining houses, SASOL, VNG International – by

providing finance for feasibility studies

IDC, DBSA, PIC, NEF, MEGA – by contributing

equity funds

[7]

Proposed project

budget

The budget for the project should be viewed as follows:

Component 1 Budget – feasibility studies and

business plan development

Component 2 Budget – financing of the industrial

park infrastructure

Component 3 Budget – Financing of various

manufacturing activities associated with project

[8]

Project perceived

challenges

Key challenges associated with this project that require

attention include:

Land availability

Finance for relevant studies and packaging of

business opportunities

Poor marketing of business opportunities and lack of

investor confidence

Water and electricity supply challenges in case of

machinery, equipment and parts manufacturing

[9] Project implementation has following potential benefits:

Job creation in factories, up and downstream

activities

81


Project possible

benefits

Improved household income and standards of living

Reduced dependence on mining and SASOL

activities and better future economic outlook

Potential to create down, side and upstream

business activities across economic sectors

[10]

Implementation Time

Frame

This project should be regarded as one of the quick win

projects with catalytic effects in the economy of Govan

Mbeki. Implementation should be therefore done within the

2014-2015 period of the municipal calendar (study) and

2015-2016 (actual projects); since it already finds traction

among stakeholders

[11]

Project Value chain

linkages

[Multiplier Effects]

The full extent of beneficiation and linkages of the industrial

park development project to the other sectors and

industries is the responsibility of the feasibility study. This

project is directly linked to mining, SASOL petro-chemical

activities and agricultural sectors. Indirectly, the project is

linked to warehousing and transport, construction and

housing & accommodation facilities demand.

[12]

Project

Implementation

Recommendations

Future growth and development of Govan Mbeki is largely

dependent on industrialisation and diversification of the

local economy and therefore implementation of the project

is first step in addressing the challenges of concentrated

economy.

6.3.2.1 Programme & Project Name: SMME/Coops Incubation – Establish

Agricultural Business Incubation Centre


[1]

Project description

(nature of project)

This project seeks to establish a “farming community”

housing animal rearing, crop production and related agro-

processing activities. It is a learning centre of excellence

with many services offered to emerging SMME and

cooperative enterprises. Acquisition of a sizeable farm is

critical for the establishment of this ‘Centre of Excellence’.

82


[2]

Project Rationale

SMME and cooperatives contribution to the local economy

require boosting to address high fatality rate of these

businesses at infancy. The SMME/cooperatives agriculture

business incubation centre development seeks to address

high failure rate, low contribution of agriculture sector and

diversify economy into related agro-processing activities.

[3]

Proposed project


segments

The SMME/cooperatives agriculture incubation centre has

the potential of impacting on the whole of Gert Sibande

District since a farm of the required size (probably 1000 to

3000 hectares) may only be found outside of Govan Mbeki

area of jurisdiction. Soil suitability is also a critical factor.

[4]


and support

institutions

Lead Project Drivers – Govan Mbeki LM, VNG

International, Mpumalanga Dept of agriculture, VNG

Support Institutions – DARDLA, DTI, SEDA, GSDM

[5]

Proposed Business

Implementation

Models

In line with DTI model for funding incubators, the SMME /

cooperatives incubation centre should be private sector

established, and managed to ensure profitability.

Community participation can only be through a SPV.

However, the feasibility study should also assist in

determining best business model.

[6]

Key project



Key funders and promoters of the project include but not

limited to the following:

GMLM, GSDM and DARDLA

DTI, DEDET, MEGA, SEDA

IDC, NEF, NYDA

New National Department for small businesses

[7]

Proposed Project

Budget

The budget for this project should be viewed as follows:

Component 1 Budget – feasibility study and

business plan development

Component 2 Budget – infrastructure development

Component 3 Budget – livestock and crop

production preparation

83


[8]

Project Perceived

Challenges

Key challenges include following:

Identification and acquisition of suitable land

Huge capital requirements for infrastructure,

stocking and staffing the centre with experts

Capital requirements for stocking farm

Political bickering due to project boundaries

[9]

Project Possible

Benefits

Key project benefits include following:

Reduce infancy mortality rate of agricultural SMME

and cooperative businesses

Boost in agricultural sector as emerging farm

productivity improves

Agro-processing of farm produce will boost

manufacturing sector across localities within the

GSDM

[10]

Implementation Time

Frame

Implementation of project should be sequentially structured

as follows:

2015 – feasibility study

2016 – land acquisition and infrastructure

development

2016 – Stocking and enrolment of incubates.

[11]

Project value chain

linkages


Many sectors, industries and clusters are linked to the

Agriculture Business Incubation concept for SMMEs and

cooperatives and these include crop and animal

production, manufacturing of equipment & fertiliser, agro-

processing and fresh produce market. In addition, the

project is also linked to warehousing & logistics as well as

construction and tourism sector.

[12]

Project

Implementation

Recommendations

The first step in project implementation is feasibility study

and business plan development to identify scope and depth

of the project; followed by farm acquisition. The project has

potential to transform agriculture within Govan Mbeki and

SMME/cooperatives contribution to the local economy.

84


6.3.2.3 Programme & Project Name: Tourism Development – Revive Bethal-

Potato-Festival


[1]

Project description

(nature of project)

The Bethal-Potato-Festival has both historical and political

connotations and stands out as a reminder to the ills of

Apartheid. This project focuses on reviving the once

popular festival which was abandoned. However, project

implementation must consider the past in the context of

current political, economic and social realities, i.e. it should

not be implemented in its old previous form.

[2]

Project Rationale

Business or industrial tourism is a feature of the Govan

Mbeki economy and this project seeks to compliment

current activities by introducing leisure activities. However,

this project requires proper packaging and complemented

by other recommended tourism products for effective

appeal to various tourism market segments.

[3]

Proposed project


segments

In line with the municipal SDF on geographic segmentation,

this project is ear-marked for Bethal – Emzinoni; primarily

segmented for tourism.

[4]


and support

institutions

Lead project promoters – GMLM, GSDM, MTPA

Support Institutions – SANPARKS, DEDET, Local Farmers

[5]

Proposed business

implementation

models

The project is primarily government driven. However, to

ensure profitability, considering a PPP or private sector

investments is not a bad idea given potential financial spin-

offs from the project. SPVs and other forms can also be

considered.

[6] Key project funders include:

MTPA

GSDM

85


Key project



NEF

[7]

Proposed project

budget

Funding for this project takes into account:

Component 1 Budget – feasibility study and

business plan

Component 2 Budget – land acquisition for potato

farming

Component 3 Budget – business establishment

[8]

Project perceived

challenges

Critical perceived challenges to project implementation

include;

Political and community resistance

Failure to secure funding

Farmers’ unwillingness to venture into potato

farming

[9]

Project possible

benefits

Key project benefits of project include:

Boosting tourism sector within Bethal/Emzinoni and

broader Govan Mbeki

Fostering social cohesion among racial groupings

and healing wounds of apartheid

Reviving economy of otherwise dormant Bethal and

neighbouring areas

[10]

Time for

Implementation

Project implementation is guided as follows:

2015 – feasibility study, business plan and land

acquisition

2016 – secure investor and project implementation

[11]

Project Value chain

linkages


The project is directly linked to a number of other tourism

products recommended for implementation within Govan

Mbeki. In addition, it also influences the agriculture sector

through the growing, marketing and distribution of potatoes

within and outside of the municipal space

86


[12]

Project

Implementation

Recommendations

Despite potential economic spin-offs, this project

implementation should be politically and socially sensitive

to the memories of apartheid victims. Feasibility study

should therefore recommend improvements to the original

Bethal-Potato-Festival

6.3.2.4 Programme & Project Name: Warehousing and Logistics Hub – Establish

Facilities for Products Warehousing (Coca-Cola, SAB Miller etc)


[1]

Project description

(nature of project)

This project seeks to establish facilities or warehouses for

a number of commodities that are in high demand within

Govan Mbeki Local Municipality; and key among the

facilities are products for;

Coca-Cola

SAB Miller

Fresh Produce Market

Auctioning facilities

Car breaking facilities

Truck Stop and

Road-rail Intermodal facilities

[2]

Project Rationale

The strategic location of Govan Mbeki in relation to national

rail and road network and demand for various commodities

currently sourced from as far as Witbank (120km away)

makes establishment of warehousing and logistics hub the

only logical decision.

[3]

Proposed project


segments

In line with municipal SDF, warehousing and logistics hub

development is ear-marked for Leandra/Lebohang, given

the strategic location of this space segment in relation to

rail and road network.

[4] Lead project drivers – GMLM, GSDM, Private sector

players

87



and support

institutions

Support Institutions – DEDET, DPWR&T, SANRAL,

TRANSNET

[5]

Proposed business

implementation

models

Key models for consideration include:

PPPs

Private Sector Investments

BOTs (Build Operate & Transfer)

Cooperatives

[6]

Key project



Key funders of this initiative should among others, consider:

IDC

NEF

DPWR&T

Private Investors

[7]

Proposed project

budget

Project budget should consider following:

Component 1 Budget – feasibility studies and

business plans

Component 2 Budget – infrastructure and facilities

development

Component 3 Budget – business development and

financing

[8]

Project perceived

challenges

This project is one of the major quick wins of this strategy.

The only perceived challenge is availability of land for

development and marketing of initiatives for investor up-

take.

[9]

Project possible

benefits

Key projects benefits among others, include:

Accessibility of commodities currently difficult to get

in bulk

Employment creation

Multiplier effects on other sectors due to value chain

linkages etc.

[10]

88


Time for

Implementation

2015 financial year, all project components should have

been implemented

[11]

Project Value chain

linkages


This project is linked to a number of sectors such as

manufacturing, agriculture, mining, transport and tourism;

and as such it is at the centre of economic diversification

and industrialisation of Govan Mbeki and SMME/

Cooperatives incubation

[12]

Project

Implementation

Recommendations

Feasibility studies for the programme projects should focus

on following fundamental issues;

Range of commodities that require warehousing

within Govan Mbeki

Implementation models suitable for the various

projects

The strategy regards this project as easy to implement and

therefore a quick win with catalytic effects

6.3.2.5 Programme & Project Name: Education, Skills & Capacity Development –

Establish Mpumalanga University Satellite Campus for Engineering


[1]

Project description

(nature of project)

Mining and SASOL petro-chemical manufacturing activities

within Govan Mbeki require engineering and other technical

skills. The project focuses on establishment of

Mpumalanga University Satellite Campus on Engineering

related programmes

[2]

Project priority status

and development

impact

Engineers and artisans working for SASOL and mines

within Govan Mbeki is mainly migrant labour with very few

locals. Projects aims at boosting local engineering skills

needed across key economic sectors of the municipality

[3] In line with municipal SDF, the project will be located within

Evander and suitable land should be made available.

89


Proposed project


segments

[4]


and support

institutions

Lead project drivers – GMLM, Department of Higher

Education, Mpumalanga Provincial Government,

Mpumalanga University

Support Institutions – Mining houses, SASOL, GSDM

[5]

Proposed business

implementation

models

Although the satellite Campus will be part of the

Government owned Mpumalanga University, Public Private

Partnership is recommended to ensure relevance of

Curricula and absorption of graduates by business

[6]

Key project



Key project promoters and funders include:

National Department of Higher Education

Mining houses

SASOL

[7]

Proposed project

budget

Three budget components are as follows:

Component 1 budget – feasibility study on location

relative to Emalahleni and Steve Tshwete

Construction of the campus

Funding of the institution

[8]

Project perceived

challenges

Key challenges include:

Lack of political will to implement project

Competition for project location with Emalahleni and

Steve Tshwete

Inadequate budget support from government and

private sector

[9]

Project possible

benefits

Key project benefits include:

Improved technical and engineering skills within

local space

Improved employability of young locals in mining

and manufacturing sectors

90


[10]

Time for

Implementation

Since the Mpumalanga University main campus in

Nelspruit (Mbombela) is still under construction; this project

should be regarded as long term catalytic project

[11]

Project Value chain

linkages


Although the project is not directly located within sector

value chains, it however has multiplier effects due to

linkages to both manufacturing and mining sectors; as well

as the social impacts on communities within Govan Mbeki

[12]

Project

Implementation

Recommendations

The key issues to be addressed for implementation

success include:

Political lobbying for government support

Lobbying private sector support

6.3.2.6 Programme & Project Name: Marketing & Investments Promotion –Develop

Investments Promotion Prospectus of Packaged Projects


[1]

Project Description

(nature of project)

The project entails the development of an investment

prospectus of all packaged products. Feasibility studies

should detail all technical, market and financial information

on the project; information that is packaged in the form of

business plans. Key information meant for investors should

then be packaged in booklets for marketing of the

investment initiatives.

[2]

Project Rationale

Beyond strategy review, feasibility studies and business

plans are the actual investments. Marketing of projects to

foreign and local investors is critical during summits or such

other similar platforms.

[3]

The project is a municipal wide project where initiatives

from all 4 segments should be promoted

91


Proposed project


segments

[4]


and support

institutions

Lead project drivers – GMLM, VNG International, GSDM

Support Institutions – DEDET, DTI, Mining houses, SASOL

[5]

Proposed business

implementation

models

Partnership between government and private sector

[6]

Key project



Project promoters and funders – GMLM, GSDM, VNG

International

[7]

Proposed project

budget

Limited budget required mainly for:

Compilation of information as extracted from

feasibility studies and business plans

Development of booklets and printing thereof

[8]

Project perceived

challenges

Project failure can only be attributed to failure in conducting

feasibility studies and development of business plans which

then become source documents.

[9]

Project possible

benefits

Key benefits include:

Easy marketing of investment opportunities and

projects at various platforms

Improved investments within locality (national and

FDI)

[10]

Time for

Implementation

Project implementation is entirely dependent upon

completion of feasibility studies and business plans; as well

as need for marketing of projects at summits and or such

other platforms.

92


[Project logical steps]

[11]

Project Value chain

linkages


Project not necessarily linked to value chain networks but a

fundamental cog towards projects implementation (as part

of forward linkage towards investors)

[12]

Project

Implementation

Recommendations

Key to the success of this project and subsequently the

whole strategy is performance of following:

Securing finance for conducting feasibility studies

and development of business plans

Quality of research findings and business potential

of projects

Municipal willingness to market investment

initiatives for growth and development

This project is a must for bringing investments into local

space.

6.4 Govan Mbeki Investment Promotion Plan: Strategy for Development of Policy and

Incentive Packages

6.4.1 Introduction

Investment incentives are government schemes aimed at stimulating private sector

interest in specified types of capital expenditure, or investment in areas of high

unemployment or backwardness. These incentives may take the form of direct subsidies

(investment grants) or corporate income tax credits (investment credit) that compensates

the investors for their capital costs.

Review of the Govan Mbeki LED strategy and subsequent identification of sector and

industry based programmes and projects poses implementation challenges around how

private sector driven investments can be attracted into the local space. Development of

investment promotion policy and specific incentive packages is critical for successful

implementation of LED programmes and projects. However, such an exercise requires

extensive research and consultations that include benchmarking (national and

international best practices); and undertaking extensive consultations with businesses

across sectors within the local space, with the aim of understanding investor pull and push

93


factors. Based on this understanding, Govan Mbeki Local Municipality is able to craft

investment incentive schemes that will attract and retain businesses within the local

space.

This section of the report seeks to outline some of the international investment promotion

best practices; highlights national investment promotion incentive packages available; as

well as incentive package schemes applied in other local spaces or municipalities (without

outlining Govan Mbeki specific incentive packages; in the absence of extensive research).

6.4.2 International Investment Promotion Best Practices

Municipalities, like other government departments and agencies are regarded as

investment promotion intermediaries (IPIs); since they play a critical role of facilitating

private sector investments through incentive packages. According to the Global

Investment Promotion Best Practices (GIPBP) 2012, “the responsiveness of investment

promotion intermediaries to investor inquiries is low with 80% of IPIs not responding to

the sector specific investor inquiries”. This translates into IPIs missing on investment

opportunities, even when investors come knocking on their doors. On a positive note,

significant improvement in facilitation leading to winning investment opportunities is

possible even with limited resources.

To this end, GIPBP recommends 14 steps to becoming a best practice investment

facilitator or intermediary as follows:

1. Build a staff with public and private sector experience

2. Offer salaries and bonuses closer to private sector standards

3. Secure operational freedom and high level reporting channels

4. Establish and concentrate efforts on a few priority sectors and industries

5. Coordinate facilitation with networks and partners (local, national and international)

6. Maintain staff in sufficient numbers and with range of facilitation skills

7. Continually train and develop staff especially in soft skills

8. Establish minimum level of in-house research capacity

9. Develop account based (sector based) managers into reservoirs of knowledge

10. Make facilitation a priority within the overall strategy

11. Ensure the accumulation of knowledge and its relevance

12. Maintain the equipment and practices to be easily reached and quickly return calls

and emails

13. Demonstrate professionalism and dynamism through the website with frequent

news updates of importance to investors

14. Follow detailed guidelines on content, style, timeframes and quality assurance of

inquiry responses.

94


The basic premise is that Govan Mbeki Local Municipality is an investment promotion

intermediary and is therefore responsible for crafting incentive packages that resonate

with international best practices, capable of attracting investors into the local space.

6.4.3 The South African Government Investment Incentive Schemes

Three broad categories of incentives exist, namely;

a) Concept and R&D Incentives

b) Incentives for Specific Industries

c) Other Incentives

6.4.3.1 Incentives for Research and Development

Concept and R&D incentives are available to private sector enterprises that invest in the

creation, design and improvement of new products and processes. These businesses

conduct investigative activities with the aim of making a discovery that can either lead to

the development of such new products and processes or the improvement of existing

products. Major incentives include:

a) Grants for small R&D projects

b) Grants for large R&D projects

c) R&D tax incentives

d) Grants for feasibility studies

e) Technology and Human Resources Industry Programme (THRIP)

f) SEDA Technology Programme

g) Technology Venture Capital Fund

h) R&D in the automotive industry

The above incentives can be tapped into and provide leverage for the promotion of

investment inflows into Govan Mbeki

6.4.3.2 Incentives for Specific Industry Sectors

Various categories of industry specific incentives are identified as follows:

a) General manufacturing

b) Automotive industry

c) Aquaculture

d) Business Process Services (BPS)

e) Textiles

f) Film and Television

g) Tourism

h) Other Incentives

95


General Manufacturing

Key incentives within the general manufacturing sector include the following:

a) Manufacturing Competitive Enhancement Programme (MCEP)

b) Capital Goods Industry or Capital Projects Feasibility Programme (CPFP)

c) Additional tax allowance for manufacturers

d) Foreign Investment Grant (FIG)

Automotive Industry

Two types of incentives exist, namely;

a) Automotive Investment Scheme (AIS)

b) People-Carrier Automotive Investment Scheme (P-AIS)

Aquaculture

The only incentive that exists in this category is the Aquaculture Development and

Enhancement Programme (ADEP)

Business Process Service

The Business Process Services scheme (BPS) is the only incentive that exists in this

category.

Textiles

Within the textiles sector, the Clothing and Textiles Competitiveness Programme (CTCP)

exists to promote investment in the sector.

Film and Television

The Film and Television Production Incentive (FTPI) is the only scheme in place to

promote investments in this sector

6.4.3.3 Other Incentives

A number of other incentive schemes exist in South Africa across sectors and industries;

and these include the following:

a) Black Business Supplier Development Programme (BBSDP)

b) Critical Infrastructure Programme (CIP)

c) Cooperative Incentive Scheme (CIS)

d) Employment Creation Fund (ECF)

e) Export Marketing Investment Assistance (EMIA)

f) Incubation Support Programme (ISP)

g) Isivande Women’s Fund (IWF)

h) Specific-Sector Assistance Scheme (SSAS)

i) Support Programme for Industrial Innovation (SPII)

96


j) SEDA Technology Programme (STP)

k) Technology for Human Resource for Industry Programme (THRIP)

The above investment promotion incentive schemes are applicable within the Republic of

South Africa, across sectors and industries. The Govan Mbeki LED strategy identifies 6

programmes and 36 projects across various sectors and industries; and some of the

national incentives schemes come in handy in the promotion of investment opportunities

within the local space.

6.4.4 Municipal Investment Incentive Benchmarks

Although investment push and pull factors differ significantly between local spaces, it is

imperative that Govan Mbeki Local Municipality undertakes benchmarking of its incentive

schemes with other municipalities within South Africa. This section of the report

summarises incentive packages used in Johannesburg Metro (Gauteng Province),

Mbombela Local Municipality (Mpumalanga Province).

Name of

Municipality

Key Municipal Investment Incentive Packages

Johannesburg

Metro

Institutional effort to improve local business environment

Monitor and continuously improve issues identified by

business as critical, such as crime, skills and infrastructure

Improve information flow to investors through an information

portal

Forge mutually beneficial partnerships with investor

community through regular interactions such as quarterly

forums

Packaging of existing DTI incentive offerings and other

departments; and ensure investor access to these packages

Developing clear after investment assistance and

management policy

Fast-tracking investor requests on zoning, town and building

plans and EIAs

Develop accessible and most recent, reliable economic

information (with regular updates)

97


Develop database of investors in City and available

industrial land and warehousing space to accommodate

potential investors

Conduct annual business retention surveys designed to

monitor investor sentiments and appropriate response

mechanisms

Mbombela

Local

Municipality

Rebate on property rates and taxes, water, electricity and

refuse removal

Fast-track processing of development applications such as

EIAs, zoning, building plan approvals

Assisting investors secure additional local and international

markets

New and additional jobs creation incentives for new and

expanding businesses

As seen on the table above, contrast exists on how investments are promoted between

the two local spaces; signifying the need for Govan Mbeki to undertake research studies

before crafting the specific incentive packages.

6.4.5 Constraints to Investment Promotion & Opportunities for Enhancing Investments

International and national research studies have identified a number of macro and micro

factors that affect the extent of investment inflows into a continent, region, country and

even local space; and these include;

a) Absence and or inadequate macro and micro economic frameworks and

approaches to investment promotion

b) Inadequate infrastructural and human capital

c) Deteriorating economic and social conditions (such as high crime levels)

d) Lack of political stability

e) Low rates of return on investment

f) Chronic shortages of basic services such as water and electricity

g) Cumbersome investment legislation (policies, by-laws, incentive schemes) and

procedures (business approval waiting periods)

h) Insufficient/inefficient incentive packages

98


i) Inefficient financial management and control systems and poor local resource

mobilisation

j) Narrow local, provincial and regional markets

k) Image issues, due to poor leadership, bad governance and poor service delivery

However, a number of measures or strategies can be put in place to improve the

investment climate within local spaces such as Govan Mbeki; and these include the

following:

a) Setting macro and micro-economic policy frameworks with clear role of the

municipality and other stakeholders

b) Definition and implementation of proper incentive packages

c) Tackling the image issue by addressing issues of good governance, leadership

and basic service delivery

d) Providing assistance to companies in expanding their markets

e) Increasing public investment towards human capital and infrastructure

development

f) Building reliability through political stability, predictable set of rules and regulations;

and dependable basic service delivery

g) Regular engagements with the business community on matters that affect their

bottom-line.

6.4.6 Conclusion

From the preceding sections, it can be safely concluded that promotion of investment

inflows (domestic and foreign) into the local space takes more than mere identification of

LED programmes and projects. The process entails understanding international

investment promotion trends and best practices, various national investment promotion

incentive packages relevant to the local space; and how different local spaces position

themselves to attract and retain investors. Development of the Govan Mbeki investment

promotion policy and incentive packages should follow from the above, in addition to the

need for undertaking comprehensive research and stakeholder consultations for the

identification and customization of these incentives to the local conditions.

Based on these observations, it is therefore recommended that the Govan Mbeki LED

project focusing on Development of Investment Promotion Policy and Incentive Packages

be given priority as part of LED strategy implementation. The policy and incentives should

be anchored around the following:

a) International best practice benchmarks

b) National Investment Incentive Packages

c) Municipal best practice benchmarks

d) Sector and industry based research studies and stakeholder consultations

99


The Govan Mbeki Investment Promotion Policy and Incentive Packages will seek to

attract and retain investors within the local space.

SECTION SEVEN: MONITORING AND EVALUATION FRAMEWORK

Monitoring and evaluation of the Govan Mbeki LED programmes and projects is needed

to gauge how well the strategy is being implemented as well as how the economy is

performing; against certain set benchmarks. The evaluation component is also intended

to incorporate lessons learnt into the decision-making process of implementing further

development programmes and projects as well as during future LED strategy review

exercises.

The indicators used in the monitoring and evaluation framework were selected on the

basis that they would be reflective of the objective that they were designed to measure.

They were also designed to be able to be measured on an annual basis, and be based

on reliable data. The first step in the LED monitoring and evaluation process is the

development of a framework for assessing or evaluating various LED programmes and

projects under implementation; by specifying indicators against which performance is

measured. For the Govan Mbeki LED strategy programmes and projects; three indicators

chosen for LED monitoring and evaluation are:

a) LED strategy implementation index,

b) LED programmes and projects index and

c) LED development impact assessments.

7.1 LED Strategy Implementation Indicators

The indicator in this category gives an indication of how effective Govan Mbeki

Municipality and key stakeholders are in implementing the LED Strategy. The Index thus

seeks to measure the effectiveness of the LED Department in implementing some of the

programmes and projects in this strategy document. Through this index, the LED

Department can measure its performance in implementing this strategy and its effect on

the local economy. The indicators utilised as performance proxies for the performance

include:

The number of LED projects per programme successfully implemented

The number of LED actions per programme successfully facilitated

The number of direct permanent employment opportunities created

The number of direct temporary employment opportunities created

The level of collaboration among stakeholders in LED projects implementation

Resources allocated per programme and project etc.

100


7.2 LED Programmes and Projects Monitoring and Evaluation Indicators

The programmes and projects implemented should be monitored and evaluated annually

(for the whole 5 year period) using different sets of indicators as shown below. Each of

these indices will be tailored to suit specific circumstances of each of the projects.

PROGRAMME/

PILLAR

PERFORMANCE INDICATORS

(Measured annually)

2015

-

1016

201

6-

201

7

2017

-

2018

2018

-

2019

2019

-

2020

Govan Mbeki

Industrialisation

Programme

Number of LED manufacturing

projects implemented

Number of other new businesses

developed from industrial projects

Number of direct & indirect

permanent employment from the

projects

Number of direct & indirect temporary

employment from the projects

GDP & GVA contribution of

manufacturing to economy

SMME/Cooperatives

Incubation

Programme

Number of registered SMMEs

enrolled into the incubation

programme

Number of registered co-operatives

enrolled into the incubation program

Overall GDP & GVA contribution of

Agric to economy(Increase in

GDP…)


permanent employment created


employment created

Number of SMMEs/Cooperatives in

the Incubation Programme in agric,

mining, manufacturing etc.

Warehousing and

Logistics Hub

Development

Programme

Number of new distributors

established within the locality

Number of new facilities for storage

and distribution

Number of new direct & indirect

permanent employment created

Number of new direct & indirect

temporary employment created

101


PROGRAMME/

PILLAR

PERFORMANCE INDICATORS

(Measured annually)

2015

-

1016

201

6-

201

7

2017

-

2018

2018

-

2019

2019

-

2020


the sectors to local economy

Qualitative improvements in storage

and transportation of goods

Tourism Development

and Promotion

Programme

Number of old tourism products

revived

Number of new tourism products

introduced


jobs created


permanent jobs created


sector to local economy

Education, Skills and

Capacity

Development

Programme

Number of institutions of higher

learning established

Number of local learners enrolled into

institutions of higher learning

programmes

Number of SMMEs assisted in

construction, engineering and related

fields by established businesses

Number of new graduates in

employment

Number of unemployed new

graduates from local institutions

Marketing and

Investments

Promotion

Programme

Number of anchor projects

researched on, packaged and

marketed

Number of new local, national and

foreign investors in local space

Number of projects taken up by

investors per programme

As can be seen in the table above, the index will lead to the development of a matrix

which over the years shows the performance in strategy implementation as well as the

performance on each project. The framework above should operate as a basic guideline

for the monitoring and evaluation of all projects implemented in this strategy; but is not

exhaustive.

102


7.3 LED Development Impact Assessments

Impact refers to effect and assessment relates to measurement. Impact assessment

studies are therefore success or failure measurement studies that seek to establish the

results associated with implementation of specific LED programmes and projects. Unlike

LED monitoring and evaluation activities that are conducted during project

implementation; impact assessment studies are conducted at the end of a reasonable

period. In essence, these studies measure the development impact of programme and

project implementation by assessing relationships among the following indicators of

performance:

a) Inputs

b) Activities

c) Outputs

d) Outcomes

e) Impacts

f) Goal Alignment during next strategy review process

The indicators are assessed in the context of economy, efficiency, effectiveness and

equity.

103


Fig 11: Indicators of Performance Measures

The next phase of the LED strategy review must be influenced by the results of the impact

assessment studies and the feedback provided should dictate the terms and conditions

of the review; mainly focusing on the implementation framework.

SECTION EIGHT: INSTITUTIONAL ARRANGEMENTS AND FRAMEWORK

8.1 Internal Institutional Arrangements

By comparison and in contrast to the 2009 situation, Govan Mbeki Local Municipality has

and is making strides to ensure that a fully fledged department responsible for planning

and economic development is in place. This effort reflects how recommendations of the

2009 LED Strategy were and are being implemented. The creation of the Department

was the first step, followed by ‘housing’ of all related planning and development functions

IMPACTS

OUTCOMES

OUTPUTS

ACTIVITIES

INPUTS

Equity

Effectiveness

Efficiency

Economy

Indicators

104


within this department; and now populating of the LED structure with personnel relevantly

qualified and experienced.

The other key aspects of institutional arrangements include to addressed include

continuous revitalisation of the LED Forum, capacity and skills development of LEDF,

LED Department and Portfolio Committee on LED. Finally, the coordination of all key LED

stakeholders would require a clear marketing and communications strategy, given the

envisaged stakeholder management, business research and investment promotion

activities recommended in this strategy.

Within communities, the business development models to be created require extensive

consultation followed by capacity building. Without the right type of business models

(institutions), the implementation of projects may falter. Thus for instance, cooperatives

as a business model should not be seen as a panacea to solving unemployment

challenges. In certain circumstances other business models may achieve better results.

The following is a brief summary of the roles and responsibilities of different spheres of

government and other stakeholders; as they champion LED implementation.

8.2 LED Roles and Responsibilities

LED involves government, the private sector and civil society. It is not a specific action or

programme, but occurs when a spectrum of stakeholders harness their individual and

collective resources and ideas to strive for a better economic status; with responsibilities

and roles to play in the process. The roles and responsibilities of the various tiers of

government, as well as civil society, in local economic development are outlined by the

Resource Book for Municipal Councilors and Officials (2001) as follows;

National Government

Co-ordinate and align support to

municipalities for LED through

their IDP process;

Provide support to municipalities

to implement their developmental

mandate;

Provide the overall legislative and

regulatory framework for LED;

Maintain strong inter-

governmental relationships and

institutions;

Provide the necessary resources

to municipalities for the

implementation of LED;

Disseminate information to

provincial and local government

about LED;

Increase administrative efficiency

(such as access to land and

finances); and

Monitor the outcomes and impact

of municipal-led LED activities.

Provincial Government

105


Align LED initiatives with national

and local priorities;

Strengthen and support the

capacity of local government;

Make available financial and

technical resources to implement

and sustain LED;

Share information regularly

(provincial economic trends, land

use, investment, new

developments) with

municipalities; and

Monitor and evaluate the impact of

LED initiatives provincially.

District Municipality

District municipalities are better positioned to provide a coordinating and supporting role

to the local municipalities within their broad geographic areas. They have the following

direct responsibilities:

Plan and co-ordinate LED

strategies within the frameworks

of Integrated Development

Planning (IDP);

Establish the LED structure

comprising of the district and local

municipalities, to foster co-

operation and co-ordinate LED

policies, strategies and projects

within the district;

Identify leading LED sectors that

can kick-start development within

districts by undertaking economic

research and analysis;

Promote joint marketing,

purchasing and production

activities;

Promote networking of firms

within the district (e.g. tourism

routes);

Collect and disseminate

information to assist local

municipalities with LED policies;

Identify resource availability (e.g.

grants, land, infrastructure, etc.);

Maintain a strong relationship with

the province; and

Provide the necessary training to

municipalities.

Local Municipalities

Local municipalities are the key LED implementation agencies of government. They have

a more direct impact on LED in terms of their potential influence on issues and factors

such as by-laws, tender and procurement procedures and other regulations. They also

have a more direct influence on access to land and the necessary infrastructure and

services, promoting a positive image of their area, making their environment more

appealing and welcoming to investors and visitors, facilitating skills development and

being responsive to the needs of the local and potential business concerns. Local

authorities, therefore, need to be proactive in promoting economic development. In view

of the above, local municipalities have the following responsibilities:

Ensure that social and economic

development is prioritised within

the municipal Integrated

Development Plans (IDPs);

106


Conduct local economic

regeneration studies as part of the

IDPs;

Establish capacity within the

municipality to promote

interdepartmental collaboration;

Establish an LED forum within the

community to mobilise the efforts

and resources of local

stakeholders around a common

vision;

Build and maintain an economic

database to inform decisions and

act as an early warning system for

the municipality;

Identify and market new economic

opportunities;

Create an enabling environment

for local businesses through

efficient and effective service and

infrastructure delivery;

Improve the quality of life, and

facilitate economic opportunities

for the local population by

addressing infrastructure and

service delivery backlogs;

Develop an understanding and

communicate the complex local

economic relations, limitations

and advantages to role players;

Network with key sectors and role

players to create partnerships and

projects;

Motivate and support individuals,

community groups and local

authorities to initiate and sustain

economic initiatives;

Mobilise civil society to participate

in LED and encourage public

participation; and

Establish sector linkages and

clustering of economic activity. 5.

Monitor and evaluate the impact of

LED initiatives provincially.

Civil Society

The new developmental form of local government puts emphasis on civil society

involvement in local government activities. For civil society involvement to have the

desired effect, representatives should have the legibility and respect of the people or

organisations they represent. Civil society should also share a common LED vision with

the local municipality within which they reside.

A community must have a core of

local, capable and respected

leaders who are prepared to

commit time and energy to LED.

The active engagement of

women and young people in the

leadership is essential;

Community leaders need to have

or acquire the necessary skills,

knowledge and attitudes

necessary to manage economic

change;

Leaders must operate in a

transparent manner and be

accountable;

Leaders must be willing to report,

listen and ensure the support of

the community;

Leaders should provide

inspiration and participate in

107


developing new layers of

leadership;

The community must adopt a

practical development agenda

which focuses on realistic and

sustainable goals, long-term

plans and achieving small visible

improvements by getting people

involved; and

The goals must be realistic and

address the community's needs.

To achieve this, there needs to

be constant evaluation and

adjustment of the action plan.

8.3 Conclusion

This strategy recommends the implementation of 35 projects under 6 programme

components. However, successful implementation of this strategy depends on the

interplay between and among the following key variables and deliverables:

Establishment of technical team or committee that champions and oversees

implementation of various programmes and projects identified

Project team ability to lobby and secure funding for feasibility studies and business

plans development across programmes and projects

Quality of research findings and marketability of the investment initiatives thereof

Marketing, promotion and communication strategies employed in ‘selling’

investment initiatives to local and foreign investors and appetite for investments

Ability of the investments to share proceeds of economic activity by addressing

challenges of growth, unemployment, poverty, inequality and general living

conditions of the local, district, provincial and national populace

Political, administrative and business will to be part of a brighter future for Govan

Mbeki and

Above all; the state of the local, national and international business and political

environment prevailing in the short, medium and long term have a strong bearing on

success of the strategy, given globalization dynamics of world economies. The above

imperatives therefore underpin strategy implementation and success.

Documents

SUPPORTED BY VNG INTERNATIONAL - Govan Mbeki ......At the national level, the New Growth Path (NGP) and National Development Plan (NDP) were developed to usher in a new trajectory