Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour, , dated 7 December 2021

NCOP Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour

Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour, Jointly with Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure at the City of Cape Town and The West Coast District in Western Cape Province, dated 7 December 2021

The Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour, jointly with Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure, having undertaken an oversight visit to the City of Cape Town and West Coast District Municipality in Western Cape Province, from the 17 - 20 August 2021, reports as follows:

Introduction

One of the core challenges of the South African economy is the disparity between provincial economies, and within provinces, regions, cities and towns. Larger cities and towns are growing faster than small regions and towns. The key is to reduce the disparities between larger cities and towns. These inequalities were also clearly demonstrated during the oversight visit in the City of Cape Town and the West Coast District Municipality.

Over the medium term government has set key objectives to address unemployment, poverty and inequality across the country. This requires that government interventions balance private sector activities and the demands to lift economic growth and development. What is more concerning, is the continuing inequality in the economic performance of the regions, despite government economic development interventions.

The delegation expressed the need to find sustainable solutions to improve economic governance at a local level, to address imbalances between regions and within regions. Partnerships between government at all levels with the private sector should be strengthened to drive regional economic development. Coordination at all spheres of government (including development agencies) in partnership with the private sector in implementing economic development initiatives should be supported, and cemented.

Purpose of the visit

The purpose of the visit by the joint Select Committees was to receive economic growth and development performance reports from the City of Cape Town and West Coast District Municipality. The presentations covered achievements and implementation plans in relation to the local economic development programmes covering investments in areas such as Transport, Tourism, Special Economic Zones (SEZs) and the status report on the taxi violence in the City of Cape Town. The delegation also visited projects implemented by the Department of Public Works and Infrastructure Development (Integrated Facilities Management – South African Police Service (SAPS) Forensic Science Laboratory), Department of Transport (Public Transport Interchange – DuNoon), Department of Small Business and Development (Honest Chocolate), Department of Employment and Labour (Bellville Labour Centre) and Department of Trade and Industry and Competition (Sigma International, Blue Sapphire Pearls), and the Department of Tourism ( West Coast National Park). Further, the delegation visited the Saldanha Bay Industrial Development Zone SOC Ltd (SBIDZ).

Delegation

The following members form part of the delegation:

Mr MI Rayi (ANC): Chairperson of the SC on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour;
Mr K Mmoiemang (ANC): Chairperson of the SC on Transport, Public Service and Administration and Public Works and Infrastructure;
Ms ML Moshodi (ANC);
Ms ML Mamaregane (ANC);
Mr T Brauteseth (DA); and
Ms HS Boshoff (DA).

The delegation was accompanied by the following officials: Ms M Koff and Mr H Mtileni (Committee Secretaries); Mr Z Ngxishe, Mr A Ganief and Mr T Makhanye (Committee Researchers); Mr L Sishuba (Content Advisor); Mr Johnny Van Der Westhuizen (Committee Assistant).

Building an inclusive economic growth: Growing the economy and creating jobs

The City of Cape Town is the main driver of the provincial economy and a valuable source of economic growth for the country. Cape Town is the third largest contributor to national gross domestic product (GDP), accounting for 9,8 per cent of output in 2018, whilst its contribution accounts for 71,0 per cent of the Western Cape province’s economic output. Largely the economic activity in Cape Town (and the Western Cape) mirrors national trends, although in most instances outperforming the national average annual GDP growth rate. The Cape Metro area spans approximately 2 446.4 square kilometres and is bordered by the West Coast, Cape Winelands and Overberg Districts. The metropolitan area is not only the commercial hub of the Western Cape Province, and the second biggest economy following City of Johannesburg. It also a valuable national port and tourist destination.

Cape Town’s economic performance, as measured by GDP-R (value), is driven by the finance, community services and trade sectors, followed closely by the manufacturing sector. Between 2014 and 2018, average annual growth remained fairly stable across the broad sectors, with the exception of agriculture, electricity and mining.

The informal sector has often been an overlooked part of South African economy including Cape Town’s economy. The importance of the informal economy is now gaining more attention as a strategic sector that could support South Africa including provincial and local economies to become more inclusive.

Consistent with vulnerability (including poverty and unemployment), limited access to healthcare, and population density, the following areas are most vulnerable: Gugulethu, Khayelitsha, Mitchells Plain, Macassar and DuNoon. These areas are most in need of economic opportunities.

The population group with the highest percentage of people living in poverty is the African population group with a total of 61.4 people living in poverty, using the upper poverty line definition. The proportion of the African population group, living in poverty, decreased by 7.16 percentage points, from 61.40 in 2008 to 54.24 in 2018. In 2018 0.92 per cent of the White population group lived in poverty, as compared to the 0.89 per cent in 2008. The Coloured and the Asian population group saw a decrease in the percentage of people living in poverty, with a decrease of 5.54 and 3.09 percentage points respectively.

Unemployment remains one of the highest risks in South Africa. South Africa unemployment rate reached 34.4 per cent in the second quarter from 32.6 per cent in the first quarter. This unemployment rate is characterised by the StatsSA as the highest since the institution introduced the quarterly labour force survey in 2008. The expanded unemployment rate, which includes people who are discouraged from seeking work, sits at 44.4 per cent from 43.2 per cent in the first quarter.

The City of Cape Town is the second largest contributor to national employment. Although unemployment rate in the City of Cape Town remains lower than the Country’s average. Employment creation initiatives need to be accelerated. Global evidence continues to point to the direction that more equal economy generates stronger and more stable growth, lower social costs and greater wellbeing. Prosperity and economic justice are no longer seen to be in conflict to each other.

The global financial crisis during 2008 and 2009 had a severe impact on the economy of South Africa, which also affected the Cape Metro’s economy. Since Covid-19 reached Cape Town and South Africa, the economic effects of the pandemic and the resulting lockdown are still being felt, particularly by the most vulnerable groups. Many people still live in poverty, and are with-out jobs. Inequality is worsening. The economy is not growing as expected.

The Western Cape Provincial Department of Economic Development and Tourism submitted that in order to gauge the impact of Alert Level 4 lockdown on the hospitality sector it conducted an industry poll (as from 8 July 2021). The findings of this poll was as follows:

Over 400 businesses completed the survey with most responders belonging to the accommodation and restaurant subsectors (other subsectors were reflected as well)
Lockdown prevented almost a third of responders from legally operating
Roughly 40 per cent of responding businesses were closed temporarily due the lockdown
Five per cent of responders have had to permanently close their businesses
Approximately two thirds of businesses that completed the survey say that will lose between 75- 100 per cent of their expected revenue for July/ August 2021
Almost a third of responders have had to retrench staff

Programmes of the Western Cape Provincial Department of Economic Development and Tourism to create jobs and mass employment include the Artisan Development Programme which seeks to assist youth and school leavers with on the job training, the funding allocated to this programme is R65 million. The Department has partnered with Sectoral Education and Training Authorities (SETA) which have co-funded the programme. To date 4153 youths have been placed at host companies.

To rebuild the economy, and to create much needed jobs, the City of Cape Town submitted that it has a developed an inclusive economic growth strategy, and economic recovery plan. The strategic documents aim for the City of Cape Town to improve and enhance coordinated action between all sectors of society and spheres of government. The City of Cape further aims to build a business-friendly environment that will enable firms to grow and create jobs, whilst adapting to market changes, and will empower individuals to be economically active and socially mobile.

In a bold move recognising unemployment, poverty and inequality as key risks to an inclusive economic growth agenda. The City of Cape Town submitted that it will ensure it plays its role in creating more shared and greater prosperity. The City further indicated that it will focus on programmes that will place the City as one of the global competitive cities with a strong business climate to attractive investment. It will further focus on promoting and supporting business opportunities, and in partnership with the private sector invest in infrastructure including maintaining physical assets to create economic opportunities.

There is a need not only to create a conducive business environment to ensure that businesses grow, but also to ensure that the economy is much fairer to the people. Covid-19 pandemic has exacerbated the conditions that many small businesses including informal enterprises are operating, and affected many livelihoods of many households.

Whilst the Western Cape Province did not suffer economic inactivity as a result of violent unrest that crippled Gauteng and KwaZulu-Natal provinces’ economic and business activity, it has suffered due to violent taxi conflict that happened in the City of Cape Town. The taxi violence has hampered some of the businesses’ operations, and put jobs of many people, particular from vulnerable groups at risk.

In an attempt to restore and rebuild the economy, and revive formal and informal business industry, the City of Cape Town has created economic and financial incentives covering:

Prioritising single-point investment facilitation;
Fast tracking building plan and land use applications; including building plan application fee waiver and land use application fee waiver;
Fast tracking occupancy certificates;
Development contribution deferral and write off up to R1 million;
Special electricity tariffs for a period of two years;
Engaged with some 247 companies and organisations, resulting in breaking ground on investment projects valued close to R15 billion;
Realised the expansion of the Atlantis Investment Facilitation Office which will focus on broadening investment opportunities in and around the area. Further stimulating greentech industry;
Roll-out the Business Retention and Expansion (BR&E) programme;
Accelerate Covid-19 Industrial Action Plan.

The City of Cape Town has set key priority initiatives to develop the right conditions for SMMEs to start, grow and thrive. In a drive to grow businesses and create jobs, the City will focus on the following areas:

Reducing regulatory barriers by ensuring that laws and policies promote a business friendly environment;
Drive reforms that prioritise an ease of doing business environment and improve the overall business climate by addressing any systemic constraints holding back growth of enterprises;
Provide an SMME One Stop service that;
Ensures that entrepreneurs and small business owners have access to in-demand information, tools and resources through the Business Hub, to enable economic recovery post Covid-19;
Prioritises red tape reduction;
Support retention and expansion of small businesses; Facilitate enterprise and supplier development;
Facilitate access to employment opportunities (Workforce Development) by linking employers to skilled pools of talent they require to grow their operations as well as facilitating partnerships to support skills for the economy; and
Promote economic inclusion.

Programmes of the Western Cape Provincial Department of Economic Development and Tourism to assist Small Medium and Micro Enterprises (SMME’s) include the Transversal SMME Support Programme. Projects under this programme include the SMME Booster Project which seeks to support SMME’s seeking to increase or improve capacity. In addition, this project sees to the provision of trading spaces for SMME’s. Funding allocated to the project assisting SMME’s amount to R26.3 million and to date 370 SMME’s have been supported.

In an effort to grow the economy by creating a positive and enabling environment to do business, develop skills and promote trade and investment, the City of Cape Town fund identified Strategic Business Partners (SBPs) to deliver sector projects (The Catalytic Development Projects) facilitate investment, create jobs, skills development opportunities. The Catalytic sectors contributes to the following:

Facilitating investment and trade in identified sectors;
Defining and facilitating programs that promotes skills development training and business development in priority sectors;
Monitoring the implementation of sector development strategies and programmes;
Stakeholder management and relationship building; and
Strengthening priority sectors through collaborations with key partners on research and industry events/initiatives.

The City of Cape Town in partnership with the Western Cape Government and private sector will put plans to unlock the value of the following priorities:

Attracting investment in Cape Town's catalytic growth sectors, namely Oil and gas;
Agro-processing, financial services, corporate head offices, medical technology;
Green industries, tourism and events and business process outsourcing;
Promoting Cape Town-based businesses in South Africa and abroad;
Attracting visitors and recruiting talent, particularly scarce skills;
Attracting large strategic events to promote tourism and investment.

The Western Cape Government Provincial Department of Economic Development and Tourism reported it will support and promote growth of the pharmaceutical industry. It supports the national initiative invest on the growth and of Biovac in Western Cape.

The City of Cape Town reported that in 2020/21 it has supported identified sector projects with an amount of R R55 million, facilitated investments to the value of R9,7 billion. The initiative has created 10 194 jobs, and through various training initiatives, 3405 people were trained in industries IT, call centre, greentech, craft and design, and clothing and textile. The Western Cape Provincial Department of Economic Development and Tourism reported that it has facilitated 17 investment projects closed to the value of R4,37 billion, against a target of R2,77 billion. This resulted in the creation of 1 830 jobs. With regard to export promotion, the Western Cape Provincial Department of Economic Development and Tourism indicated submitted that 66 business agreements were signed, with an estimated economic value of R4,66 billion, resulting in 357 jobs.

The Film industry is one of the essential industries that is seen an important industry in terms of employment. It was reported by the Western Cape Provincial Department of Economic Development and Tourism that it has facilitated 7 declarations to the value of R612 million, which were signed, resulting in the facilitation of 413 full-time equivalent (FTE) jobs.

The City further reported that through the investment facilitation it has forged collaborative initiatives with key stakeholders and partners. The investment facilitation initiative has yielded the following:

Supports development processes for investments exceeding R20 million or deemed strategically important;
Identifies systemic bottlenecks in City processes that need to be addressed in order to make it easier for all investors;
Manages the Atlantis Investment Facilitation Office (AIFO);
Manages the City’s investment incentives programme;
Supports the Atlantis Special Economic Zone for Green Technologies;
Provides aftercare and business retention services to investors;
Supports special economic infrastructure related initiatives port, airport, Bellville innovation district;
Focuses on productive investment in the real economy i.e. manufacturing;

Provides support to domestic and foreign investment with respect to City mandates;

Provides links to governmental and non-governmental actors in the rest of the investment support ecosystem.

Marketing initiative remains the key priority for the City. The City of Cape Town further indicated that it will continue to invest in marketing initiatives to promote the City as a premier destination to visit, live, work, study, play and invest. Current, the City reported that it is aggressively lobbing the Department of Home Affairs to consider granting Remote Work visa. Long-stay visitors (Remote Workers) hold significant potential for Cape Town’s economy, positively impacting several key sectors.

Tourism is one the strategic and important industries in terms of employment creation and contribution to economic growth. It one of the industries that was severely affected by Covid-19 pandemic. The City reported that it will continue to support tourism industry, and through the implementation of the Tourism Development Framework 2019

2024 it as expecting to implement the following:

Covid 19 Standard Operating Procedures throughout industry;
Building Destination Confidence;
Community Readiness to exploit tourism opportunities;
Schools programme;
Responsible Tourism Ambassador programme;
Tourism Law Enforcement Unit;
Deployment of Tourism Monitors (NDT)
Air Access Initiative;
Support and promotion of cruise liners.

Further, the City submitted that it has developed a ten-point tourism strategy, which aims to breathe life back into the tourism industry. In the main is to boost economic recovery.

Investor and business confidence in the South Africa is low. This has the potential to affect investments in other critical strategic sectors identified having a potential to drive an inclusive economic growth agenda. This view was also highlighted by the Western Cape Government’s Department of Economic Development and Tourism.

It was emphasised that both the City of Cape Town, and the Western Cape Government will continue to support initiates that promote investment in strategic sectors. Investment will be deployed to boost skills in the Western Cape to support strategic catalytic economic projects. Further to strengthen partnerships with higher education institutions including research institutes, and invest in Research and Development to support science and innovation. City Western Cape Government including the City of Cape Town in partnership with private sectors would boost investment in infrastructure (transport, energy, water and sanitation).

Further support and promote investment in ICT and creative industries. Investment in the ocean and green economy would be prioritised. There are various initiatives that have been formed to support the ocean and green economy. The Western Cape Government in partnership with the City of Cape Town have established and operationalise the GreenTech Special Economic Zone in Atlantis. There are development initiatives focusing on Oil, Gas and Marine services in the Industrial Development Zone that can result in investment recruitment and job creation in Saldanha Bay. Further, it was reported by both the City and Western Cape Government that there are plans in place to position the Western Cape as renewable energy hub to support economic growth and jobs creation initiative.

Building trust across communities remains a challenge. The City of Cape Town would need to work closer with all communities to bridge the trust gap, particular with African communities. Further, the City of Cape Town would need to work closer with all the three spheres of government, communities and the private sector to implement an inclusive economic recovery plan. For the City to succeed it should see prosperity being realised by all communities, particular the vulnerable groups, women, youth and people with disabilities.

Observations:

Before the Covid-19 pandemic, the economy was experiencing a period of protracted economic weakness. The Western Cape economy grew by only 0.8 per cent in 2018 and this declined to a projected 0.2 per cent in 2019, by the time lockdown happened, South Africa was already in a technical recession. The impact of the pandemic and the resultant lockdown was widespread, hardest hit sectors in the Western Cape are tourism, informal sector, construction, trade and manufacturing. Despite these prevailing conditions, provincial employment rebounded stronger than expected, the Fourth Quarter of 2020 the Western Cape’s employment growth was 5.5 per cent. This growth is attributed to agriculture, agri-export, retail trade and construction. The Western Cape Provincial Department of Economic Development and Tourism recovery area is to create an enabling environment for job creation focussing on the following themes, namely: Accelerate Ease of Doing Business; Boost investment and exports; Boost infrastructure; Scale up work opportunities and skills for people without jobs and Economic Resilience.
In alignment with the National Economic Reconstruction and Recovery Plan, which identifies priorities for the economic recovery from the socio-economic consequences of the pandemic, the Western Cape Recovery Plan shares numerous priority interventions with the national plan, including infrastructure development, export promotion, energy security and the green economy, tourism recovery and growth, mass employment interventions and increasing food security. In respect of economic recovery, the Western Cape Recovery Plan will focus on the underlying reasons for lack of growth. The province has taken into account the increase in unemployment, reduction is economic provincial economic activity and lack of investment and has developed a plan to help the economy “bounce back” and “bounce up”. These relate to immediate and medium term interventions which seek to revive and stimulate demand and sort out binding constraints and core fundamentals. In terms of immediate interventions, the plan to help the Western Cape economy “bounce back” has involved the provision of immediate public sector support to provide capital and jobs for the economy and to boost business and consumer confidence. In the medium term, the aim is to help the economy “bounce up” by fast tracking private and public sector infrastructure projects and addressing some of the fundamentals and constraining economic growth and job creation. Due to educational gaps owing to school closures and loss of revenue and earning capacity, a critical component of the recovery strategy is to address these gaps.
The City of Cape Town reported that initiatives are in place to provide the necessary support to businesses to mitigate the worst of the economic crisis as a result of the Covid-19 pandemic. Relief measures provided by the City of Cape Town to assist in economic recovery include initiatives such as the Investment Facilitation Unit and its incentives policies which help potential investors navigate municipal processes. This unit furthermore provides financial and non-financial incentives and are working towards making policies more inclusive, allowing more diverse businesses to grow. Incentives include prioritising single point investment facilitation; fast tracking building plan, occupancy certificates and land use application fee waivers. Additional incentives include special electricity tariffs for a period of two years. The Metro has instituted lease deferment to those businesses leasing from it; provided industry support through strategic business partners. These strategic business partners helped bring R9.7 billion is direct investments into Cape Town, directly creating 10 194 jobs and contributing to the training of a further 3405 people in various skills suitable for sectors of information technology, call centre agencies, greentech, craft design, clothing and textile sectors. Furthermore, the Metro has regrouped special purpose vehicles (i.e., repurposing clothing factories to produce Public Protective Equipment).
In terms of support to the township economy, the City of Cape Town reported that it is running three incubator programmes in township communities to assist individuals in accessing new employment opportunities and growing their own businesses. Programmes include the Small Business Incubation and Development Programme, which provides local business incubators with funding, facilities and business development workshops. The nature of the training provided by these incubators empower entrepreneurs in townships with knowledge that enables them to sustain their businesses. Incubators furthermore enable participants to understand the requirements of tendering to the City’s supplier development and smart procurement workshops which are also now being held virtually.
In terms of urban management, it was noted that the pavement economy of informal traders will be assisted through easing the application process, easing regulations, digitisation of permits. The City of Cape Town is working towards ensuring that informal traders have the infrastructure needed to form a key part of the City of Cape Town economic growth plan.
Of key concern to the Committee was how resources were distributed particularly with regard to spatial framework to close the gap between communities and address the structural constraints in advancing communities.
The spatial mismatch, with disconnections between people, skills, jobs and investment, is a persisting legacy of apartheid and inadequate coordination of development planning policies, resulting in transport inefficiencies, long travel distances and high travel costs for the poor. The City recognise this challenge. The City submitted that it has developed plans and interventions that seek to tackle spatial inequalities, including social and economic inequalities. Further, it was reported that the City of Cape Town has developed strategies and interventions towards the creation of economic opportunities within townships, and making investment (transport, water and sanitation and energy) in these areas to attract investors and businesses.

4.1 Public Transport Planning and Investment

City of Cape Town has approximately 4,6 million citizens. 49 per cent of morning travelling is made up of public transport. Further, 95 per cent of low to lower middle income use public transport. 51 per cent of travelling is composed of high to middle income communities.

The transport system is faced with capacity constraints that need to be tackled. The rail infrastructure is declining, and the road transport is experiencing congestion. Rail transport is experiencing overcrowding, late arrival of trains, cancellation of services, vandalism, crime and security. Although the City of Cape Town is not an exception to other cities around the world in terms of congestion of road transport, a need for general public transport investment. But the situation in the City need urgent attention. As it has the potential to compromise the realisation of the inclusive economic growth agenda.

The City acknowledged that roads are getting more congested as the city’s economy grows and more people choose to live and work in Cape Town or visit as tourists. However, there is a need to address the spatial planning in the City. It was reported that there is a poor spatial relationship between jobs and residents, and that results in inefficient and unsustainable travel demand.

The City of Cape Town submitted that it has developed infrastructure investment plans to improve road infrastructure to reduce bottlenecks, build missing links and extend cycling and walking paths. The deterioration of the rail transport has caused a significant increase in the usage of mini-bus taxis. The decline of the rail services need to be urgently addressed. This pose a risk that could compromise the City’s economic growth potential.

Good public transport is needed to address inequality, and building an inclusive economy and society. Lower income, and lower middle income households depend on public transport. It is important for the City to tackle the following challenges:

There is a need to improve spatial planning, and tackle the disjuncture between transport and land use;

The deterioration of the rail service in Cape Town, which has caused an increase in the usage of road transport;

Poor households are experiencing high cost of transport, and thus make transport unaffordable and increase costs of searching for work opportunities;

Hence it is important to investment in initiatives to improve public transport. The City acknowledged that rail is the backbone of public transport, and it will continue to engage other spheres of government to address constraints faced by rail transport system. The City highlighted that public transport is characterised by fragmented governance. It is difficult for the City to achieve interoperability and multi-modalism when it only has complete control over the operation and implementation of two modes even though it is responsible for the long term strategic planning of all public transport. Rail service is not managed by the City, it is managed by MetroRail, a division of the Passenger Rail Agency of South Africa (PRASA), which is a National Government responsibility.

There is a need to improve coordination to accelerate investment in public transport to accommodate growth, and to further meet environmental and social policy considerations. There is a need to devolve public rail transport (allow concessions to operate rail transport) to the cities to improve effectiveness, and efficiency of the rail transport, and to improve safety and security, this is the policy area that the City of Cape Town supports.

Over the medium term, the City of Cape Town submitted that it will undertake the following initiative to improve transport system, and boost efforts to realise an inclusive growth agenda:

Review of the Integrated Public Transport Network Plan with a focus on demand responsive public transport provision at the appropriate time;
Developing a framework for our new 5 year CITP;
Review of the Cycling and NMT Strategies;
Review of the Freight Management Strategy;

Development of our Transport Operating Company model to promote formalisation of the MBT industry over time;
Continued focus on the travel demand management initiatives such as the flexible working programme and future of work initiatives;
Continue collaboration and engagement with a wide range of transport stakeholders through the Land Transport Advisory Board and Intermodal Planning Committee and associated sub committees;
It will further continue with the NMT roll out programmes of building cycle lanes and pedestrian facilities including universal access;
Using the pavement management and bridge management systems and to continue to maintain road network (nearly 12 000km);
Continue to engage and push the City’s transport department to address the fundamental built form disparities that result in transport inefficiencies and to embed these principles in the IDP;
Engage with national government for policy and grant reform relating to the need for a paradigm shift in Public Transport planning, funding, provision and management.

4.2 Status update on the taxi violence in Cape Town

The delegation received a status update on the work around bring peace on the taxi violence from the Western Cape Government Department of Transport and Public Works. The report covered three areas, namely statistics on the related taxi violence crimes, integrated interventions, and update on development after the closure of ranks.

Integrated interventions

The integrated interventions to stop taxi violence involved the invoking of the Notice in terms of section 91 of the National Land Transport Act. The Notice of intention was published on 9 July 2021. This provides for the areas in respect of which the Member of the Executive Council (MEC) of Transport is required, when the needs arise to can take the extraordinary measures. This includes the closure of routes and ranks in consultation with the South African Police and the Planning Authorities. The National Department of Transport, Legal Advisory Services procured services of an external legal counsel who verified the content and the legality of both the notice and actions that may follow. The affected parties were informed that they can make their representation not later than 16 July 2021 and the two representations were received and considered. The regulation was published on 23 July 2021.

On 23 July 2021 MEC of Transport in the Western Cape, Mr Mitchell published Regulations for the closure of ranks and routes after having considered the two received representations. On the same day, 23 July 2021 Transport Contingency Plan was finalized, it was presented to the South African Police Services (SAPS) and other enforcement authorities. The SAPS and Transport Priority Committee prepared the Transport Contingency Plan and was signed by the stakeholders which included deployment plans for SAPS, South African National Defense Force (SANDF), Law Enforcement and Traffic departments. On 24 – 25 July 2021 a separate meeting was initiated by the trade union, the South African Federation of Trade Unions (SAFTU) and the political party United Democratic Movement (UDM). The meeting was both attended by Cape Amalgamated Taxi Association (Cata) and Congress of Democratic Taxi Association Codeta.

On 25 July 2021 the security cluster ministers were briefed by SAPS and the Western Cape Department of Transport on the situation around the taxi violence and the deployment of the SANDF to taxi hotspots was confirmed. On 26 July 2021 the MEC Mitchell was briefed in relation to the draft unsigned peace agreement by Mr Vavi and Mr Holomisa representing SAFTU and UDM respectively in the presence of Cata and Codeta leaders. On 26 July 2021, the ranks were closed and the deployment plan operationalized.

With regard to the interventions after ranks and the routes closures, on 27 July the B97 Arbitration started after a one-day delay due to the unavailability interpreter. Codeta formally informed stakeholders that their affiliates would resume services on 29 July 2021 on routes that were not affected by Section 91 closures. On 27 July 2021 Santaco national office abandoned plans to host talks with Cata and Codeta after Codeta withdrew following a shooting incident.

On Friday 30 July 2021, the Western Cape Department of Transport and Public Works officials met with Cata leadership at PRE offices to assess the ‘Bridging Agreement’ option in context of Arbitration submissions and legal opinions. On 31 July 2021 the Western Cape Department of Transport and Public Works officials met with Codeta leadership at their office in Khayelitsha. Sunday 1 August 2021, the Minister of Transport , Mr Mbalula and Mr Mitchell met with parties in Cape Town for Final Facilitated Talks to find a ‘Bridging Agreement. Monday 2 August 2021 Minister Mbalula and MEC Mitchell instructed officials to prepare an Agreement on Cease Fire and Resumption of Services.

An unfortunate incident happened on 4 August 2021 at which taxi driver belonging to Codeta was shot. However, the spokesperson of Codeta immediately addressed the media to confirm that peace agreement still intact. On 6 August 2021 MEC Mitchell published ‘Amendment of Notice of Extraordinary Measures. On 12 August 2021 SANTACO national executive committee met with Cata, Codeta and the Eastern Cape affiliated taxi associations. Consequently, on 14 August 2021, B97 Arbitration resumed.

5. Development Projects Visited

5.1 Du Noon Public Transport Interchange (PTI)

The Du Noon PTI upgrade involves the construction of a new multiple level building, new covered waiting area for commuters and public open spaces. The project budget is R37 million and the delegation was informed that the project encountered numerous challenges. Having encountered numerous challenges, the project managed to progress to a point where the Contractor has completed the construction works for Phase 1 and is in the process of completing the construction works for Phase 2. The inclusion of feeding back into the community by ways of participation goals of 2% target value for targeted enterprises and targeted labour was set out in this contract with the Contractor meeting and exceeding these values.

5.2 Integrated Facilities Management – South African Police Service (SAPS) Forensic Science Laboratory

The delegation received a short briefing and tour of the facility. It was explained to the delegation that the project seeks to deliver Integrated Facilities Management Services (“IFM”) to the strategic and critically important Forensic Science Laboratory, the facility is based in Parow, Western Cape. The five year IFM service commenced in November 2017 and is in month 44 of 60 months, being 73 per cent complete, with expenditure of 72 per cent certified to date and the contract value sit at approximately R52 million. In terms of the contract, the IFM Contractor (Bidvest Facilities Management Pty Ltd) is providing ongoing operational services, attending to all reactive maintenance and selected soft services. The helpdesk system is operational, which SAPS and the DPWI Service Manager (“SM”) are logging both technical maintenance and contractual deliverables against. Bidvest’s performance is being audited and reviewed monthly by the Service Manager.

5.3 Bellville Labour Centre

Bellville is part of northern suburbs in the City of Cape Town and the Bellville Labour Centre is situated within the Bellville Middestad shopping mall. Industrial areas around Bellville include; Stikland Triangle Park, Sacks Circle, Bellville South and Oakdale. Bellville South is an industrial zone of Bellville producing paper and food products, bricks, tiles and fertilizers. Bellville is the centre of automobile retailing and is located on the main railway from Cape Town to Johannesburg. Bellville South has the largest Marshalling yard in the Western Cape.

The Stikland Industrial Park is home to many companies including Beekman Canopies, Absolute Logistics, Consol Glass, Sun Couriers, Brights Hardware, Delta Steam Systems, CJ Distribution Warehouse, SK Technologies, Sofaplanet, Envirochem, McM Blasting & Coating, Hose Manufactures of South Africa, Elco Plastics, Tanker Services and South African Breweries (SAB).

Access Park has many factory shopping outlets including; Cape King Foods, Nike Factory Store, The Biltong Company, Lee Cooper, New Balance, Wire World, Hertex Fabrics, Levi’s Factory Outlet and Aristea Dairy Farm. Brackenfell in the north is the Head Office of Shoprite/Checkers and houses Pick’nPay Hypermarket. Bellville area also consist of rich and diverse area economy with many shopping malls within its perimeter. Among others are Climor Shopping Mall in Stikland, but other shopping malls nearby are Bellville Mall, Noble Park, Tygervalley Shopping Centre and Cape Gate. Sanlam and Metropolitan Life head offices are also based in Bellville. A sizeable number of employees from the above mentioned companies use Bellville Labour Centre to deal with labour issues encountered at various workplaces. The Labour Centre render the following frontline client services to the public:

Attend to walk-ins for all core business;
Council for Conciliation Mediation and Arbitration (CCMA) referrals;
South African Social Security Agency (SASSA) referrals;
Labour related complaints;
Work-seeker Registration;
Injury on Duty Reporting;

5.3.1 Unemployment Insurance Fund (UIF)

The UIF contributes to the alleviation of poverty in South Africa by providing short-term unemployment insurance to all workers who qualify for unemployment related benefits. The benefit types further include:

Unemployment benefits (service terminations, contracts expired, retrenchments);
In-service benefits (maternity, illness, parental, commissioning and adoptions);
Deceased benefits (spouse, dependent, nominees);

5.3.2. Inspection and Enforcement Services (IES)

Inspection and Enforcement Services registers incidents relating to Labour Relations and Occupational Health and Safety matters, as reported by members of the public, and communicates these to the relevant structures within the Compliance, Monitoring and Enforcement sub programme for investigation. Inspection and enforcement services also ensure that employers and employees comply with labour legislation through regular inspections and following up on reported incidents. On the other hand, Occupational Health and Safety promotes health and safety in the workplace by regulating dangerous activities and the use of plant and machinery.

The IES structure comprise of the following:

Employer services (Basic Conditions of Employment Act - BCEA inspectors);
Occupation, Health and Safety – OHS inspectors;
IES back-up support (Administrators for Inspectors);

The key service delivery indicators in terms of inspection and enforcement include:

Employers inspected to determine compliance;
Non-compliant employers served with notices;
Non-compliant employers who failed to comply after notices served, referred for prosecution;

5.3.3 Public Employment Services (PES)

The public employment services division assist companies and workers to adjust to changing labour market conditions and to regulate private employment agencies. PES registers job vacancies and other work opportunities, facilitate placing of work seekers with employers or in other work opportunities and provides the counselling of registered work-seekers.

The following are key service delivery indicators for public employment services:

Work-seeker registration at client services frontline
Work and learning opportunities registered
Registered work-seekers provided with employment counselling
Registered work and learning opportunities filled by registered work-seekers

5.3.4 Compensation Fund (CF)

The Compensation Fund provides compensation for disability, illness and death resulting from occupational injuries and diseases. The structure of CF comprises of:

Medical adjudication;
Pension administration;
Claims processing;
Client service;

Service delivery indicators for Compensation Fund include:

Registered Workmen’s Compensation Act (WCA) claims adjudicated
Compensation benefits authorised
Medical invoices paid
Pre-authorisation for specialised medical interventions

5.3.5 Management and Support Services

This division manages delegated administrative and financial responsibilities, coordinates all planning, monitoring and evaluation functions, security and office support. The following are some of the challenges facing the Management and Support Services:

Labour Centre location in the Middestad Mall
Information Technology (IT) system down time and poor signal
Imbalance between the Support Structure and Core Business Structure
Lack of sufficient tools of trade to adjust to the new working conditions (e.g. working from home) owing to the Covid -19 pandemic.

Observations

The Bellville Labour Centre is the second biggest in the Western Cape Province following the Cape Town Central Labour Centre;
The centre is very busy and highly accessible due to its geographic positioning and proximity to multimodal transport corridor consisting of bus terminus, taxi rank and train station;
The Covid – 19 pandemic has reduced the capacity of staff complement by more than half and hard lockdown have resulted to plummeting of lay-offs and by implication rising UIF claims and Temporary Employee Relief Scheme (TERS);
The centre has staff establishment of 122 employees with a vacancy rate of 5 percent with 42 of these officials deployed at frontline services. The Centre has about 30 Occupational Health and Safety (OHS) officers;
In a month the labour centre deals with 5000 people and there are no case backlogs encountered albeit the ever increasing applications for rendered services. This defines the level of efficiency in achieving short turnaround times;
On referrals dealing with fund adjudication and analysis of compensation benefits and medical reports the Compensation Fund programme is achieving a commendable 100 percent performance rating;
On management support services, the structure has grown by 9 percent over the period of two years while the support structure remains constant;
The location of the Labour Centre within the Middestad Mall is proving to be a challenge as the shopping centre regulations compels the use of one entrance resulting to long queues with adverse effect to the client service experience particularly during extreme weather conditions;
The official business of the centre resumes at 07h30 and closes 16h00 whilst the Mall closes at 21h00;
About 13 000 UIF claims pertaining to retrenchments and non-renewal of contracts were reported as settled during the oversight visit;
The Department of Employment and Labour reported that the sectors of manufacturing, services, hospitality, wholesale, retail and security services were the most affected during the height of Covid – 19 hard lockdowns;
The DEL have entered into ‘working from home agreements’ with the workers and progress monitoring is done on a daily basis to enhance service delivery;
The statutory service outcomes on prosecution of referrals and declaratory orders pertaining to non – compliance in implementation of labour legislative framework by delinquent employer organisations is a prerogative of the justice system and the courts of the Republic of South Africa (RSA);
The defrauding of the state by unscrupulous companies in administering the payment of TERS is diligently monitored by risk management teams which then escalate cases of fraud to the head office of the UIF. The employers were able to defraud the state because the UIF and the TERS systems were not aligned;
An amount of R30 million was reported as recouped by Special Investigating Unit (SIU) from the implicated officials and defrauding companies during the administering of TERS following the hard lockdowns emanating from the Covid – 19 pandemic;
In respect ICT glitches such as poor signal and downtime, calls are logged and cases escalated to the head office for amicable solution with short lead times;
The Provincial Department of Employment and Labour together with the Labour Centre are content with the proximity of the office to the multimodal transport node. However, the office should be moved away from Middestad Mall to another available building within the equidistance;
The Western Cape Province was allocated 30 inspectors from the 500 employed by the Department of Employment and Labour in year 2020;

5.4 Sigma business process outsourcing company

Sigma is affiliated to DigiCall Group and is based in Diepriver in City of Cape Town. This is a call centre business which started its business operations in 2011 and is now reported a key player in youth employment services within the City of Cape Town. The company received financial support from the Department of Trade Industry and Competition as part of the industrial development and promotion of Foreign Direct Investment (FDI) towards advancing the implementation of the country’s growth and development strategy in lieu of National Development Plan.

Sigma is servicing clients from afar field as United States of America (USA) and the United Kingdom (UK) with a particular focus on energy supply industry (electricity bills) and pharmaceutical industries responsible for Covid 19 vaccine production and administering.

The BPO sector companies are concentrated in large cities finding more prominence in the City of Cape Town metropole and eThekwini metropole commonly known as Durban city. The BPO sector is highly contested sector in terms of foreign direct investment hosting and South Africa is competing with countries such as India, Egypt, Philippines and Kenya to mention just a few. According to Sigma company, the BPO sector is considered an aspirational job largely for first time workers from the youth ranks. This sector offers growth opportunities and employees are able to carve a progressive career path from call centre agents to team leaders and ultimately management echelons. However, other employees regard this sector as a stepping stone which enables them to transcend to other industries after acquiring requisite work experience.

In South Africa, the BPO sector have an estimated contribution of about 70 000 jobs while in Philippines 1.5 million jobs are ascribed to the industry. India and Philippines are highly competitive in terms of labour unit price while the comparative advantage of South Africa is relative stability with fewer divestments by foreign companies compared to its competitors.

Sigma is servicing wide range of clients predominantly from UK and USA namely; Eon Scottish power, Vanquis, SES Water, the Kennel Club, Corona Energy, South African collections and government vaccine pure planet (arranging appointments for vaccination).

Sigma reported that, the employees in their establishment are earning a decent income and are able to support their families. The success of the BPO sector in terms of employment creation within the City of Cape Town is testament to the implementation of the District Development Model and formidable partnership between the Department of Trade Industry and Competition (DTIC), Provincial Department of Economic Development and Tourism (DEDAT) and the City of Cape Town.

Observations

The inter racial representation of the youth employees in the sector within the City of Cape Town is not clear.
Call centres are predominantly based in the Central Business District (CBD) areas of the FDI hosting cities, however efforts are underway to bring such job opportunities closer to where the majority of the people reside particularly in the townships.
International companies are using skills development incubators to train local members of the youth in areas like Athlone, Cape Town CBD and Diepriver. In selecting an area to house an incubation centre the foreign companies consider issues such as accessibility of public transport, crime levels and available skills set in the area.
Sigma recruit youth from ages 18 to 35 with a split of 80 to 20 percent between women and men respectively.
Sigma uses the database from Expanded Public Works Programme (EPWP) and other private sector databases as pool for selecting trainees. The reality is that black townships are still lagging behind in respect of awareness for such opportunities.
Cape Town attract investment from foreign companies better than Eastern Europe.

5.5 Honest Chocolate

The Honest Chocolate factory is situated at Woodstock Exchange, 7 Barron Street, Woodstock. It is a small artisanal chocolate company in Cape Town. The company believe in keeping things hand-crafted using old school methods, using quality organically produced ingredients and making a pure chocolate that has a deliciously distinct feel and taste.

Honest Chocolate is a 100 per cent South African owned company doing their bit to positively impact chocolate production on the African continent. The business is owned by Anthony Gird and Michael de Klerk. All the products are vegan and contain no dairy, preservatives or additives.

The journey of the company. It all started from a bit of experimentation with raw cacao. Anthony made a few simple chocolates from raw cacao powder as a healthy treat for himself and friends. When they were polished off in seconds, with demands for more, he knew he was onto something. Over the next few months he taught himself more about the art and science of chocolate making, an endeavour that eventually developed into Honest Chocolate.

Meanwhile Michael was also experimenting with raw chocolate in London, with similar results. So on his return to Cape Town, when the opportunity came to join Anthony on his chocolate adventure, the decision wasn’t all that difficult. The attraction was the diversity of making chocolate and being involved in something that continually changes, something both fun and rewarding.

The first years of Honest Chocolate were spent working with raw cacao from Ecuador, but with the chain of positivity in mind our, the slabs are now made with organically produced Tanzanian cacao beans which, the company roast, grind, and temper in the Woodstock production kitchen. It took three-years for the company to find and build a relationship with Kokoa Kamili, who supply it the Tanzanian beans. The has created Bean to Bar ethical chocolate with a smaller footprint on the environment.

Honest Chocolate also owns a café, which is situated at 64A Wale Street, Cape Town CBD, South Africa. It located between the bustling streets of Loop and Bree, the café has a relaxed atmosphere. Settle down in the sunny outside courtyard, which is part of the original building, or in the cosy inner café.

The café offers coffees, teas and hot chocolates, as well as a selection of chocolate truffles, tarts and cakes. A large portion of the treats are vegan friendly, with the choice of dairy free ice cream from Sorbetiere. It also offers soya milk, or silky nut milk made by the Almond Creamery. The specialties of the café are dairy-free milkshakes, and the trademark ‘coconut dream’ drink which ranked as the trademark of the café, and the banana bread bunny chow. In the evenings, the Secret Gin Bar opens up behind the Café in the courtyard.

Honest Chocolate can be found in the following stores:

Pick ‘n Pay;
Checkers;
Spar;
Wellness Warehouse, and
Independent stores.

It was reported that Seda is supporting the company to fully acquire the Food Safety System Certification (FSSC) 22000. As a Pick ‘n Pay supplier, Honest Chocolate was required to get the FSSC, and to be fully recognised by the Global Food Safety Initiative (GFSI) which is based on existing ISO Standards. The FSSC 22000 is used as an instrument to effectively manage the organisation's food safety responsibilities. It is also a prerequisite in order to export to certain countries.

Through the Covid-19 Business Relief Fund, Honest Chocolate received R157 642 from the Western Cape Government’s Department of Economic Development and Tourism (DEDAT) as part of the assistance of the provincial government to support SMMEs hard hit by the Covid-19 pandemic. Further, the company is set to receive funding from the Seda’s Technology Transfer Assistance, if it meets the requirements. The funds would help the Honest Chocolate to scale-up its production capacity, and boost its revenue.

Observations

The enterprise imports cocoa from Tanzania by means of sharing a shipping container and this adds 30 percent to the production cost function. The business prefers to import cocoa from Uganda, however filling a shipping container without sharing it with someone else is expensive and would drive up production costs and rendering business unsustainable.
The business premises were converted from a motorbike mechanic workshop to a chocolate factory. This company owns a subsidiary called Honest Coffee with a separate PTY which is essentially a tourism driven business.
The business employs youth comprising 6 women and one man.
The production equipment is old traditional technique. The company is engaging SEDA for technology transfer and registration of Intellectual Property (IP) rights for this old school equipment.

West Coast District: Fastest Growing Regional Economy with Potential to Accelerate Inclusive Economic Growth in the Western Cape Province

The Delegation received submissions and presentations from the following stakeholders: West Coast District Municipality (District); Department of Trade, Industry, Competition, National Ports Authority, and Saldanha Bay Industrial Development Zone SOC Ltd (SBIDZ). The District is one of the coastal districts in the Western Cape Province, and its headquarters are in Mooreesburg. The District is composed of five local municipalities namely: Matzikama; Cederberg; Bergrivier; Saldanha Bay; and Swartland.

It was further reported that agriculture, forestry and fishing sector contributed the most jobs to the area in 2017 (69 316; 38.5 per cent), followed by the wholesale and retail trade, catering and accommodation sector (30 051; 16.7 per cent) and the community, social and personal services (19 962;11.1 per cent) sector. Combined, these three sectors contributed 119 329 or 66.3 per cent of the 180 050 jobs in 2017. It was highlighted that several industries experienced net job losses over the years between 2014 and 2018, with the agriculture, forestry and fishing sector shedding the many jobs especially in 2014, 2016 and 2017. It should be highlighted that drought has affected the economy of the District in those particular years with effect to the agricultural industry.

It is reported that in 2019, there were 224 000 people living in poverty, using the upper poverty line definition, across District- this is 44.05 per cent higher than the 156 000 in 2009. The percentage of people living in poverty has increased from 42.65 per cent in 2009 to 47.40 per cent in 2019, which indicates an increase of -4.76 percentage. The District’s Gini’s coefficient has been on the rise and is 0.60 and the Human Development Index (HDI) is above 0.7.

The population figures are rising., and thus posing an increase in demand for services. Like the rest of the Country, unemployment remains a key challenge for the District. Investment in skills development, including economic infrastructure and boosting economic activity and investing in strategic industries would boost economic development.

It is expected that West Coast District Municipality will grow at an average annual rate of 1.24 per cent from 2018 to 2023. According to the 2020 Municipal Economic Review and Overview (MERO), the District in 2018, contributed 5.2 per cent to the provincial economy. The District experienced an average annual growth rate of 1.5 per cent between 2014 and 2018, which was marginally higher than that of the provincial economy, which grew at 1.4 per cent over the same period. The District ranked the fourth largest contributor compared to the other regional economies. MERO indicates that in the District, the two municipal areas that contributed the most to GDPR in 2018 were the Saldanha Bay (30.7 per cent) and Swartland (27.3 per cent) municipal areas. The economies of the Matzikama and Bergrivier municipal areas are similar in size, contributing 14.5 per cent and 14.7 per cent respectively to the economy of the WCD. The smallest contributor to the GDPR of the WCD was the Cederberg municipal area (12.8 per cent). The estimates for 2019 indicate a decline in the growth rates for all municipal areas in the District.

The economy of the District is already constrained, and the Covid-19 pandemic has caused further contraction. The national lockdown has restricted trade and business activities in an effort to curb the spread of the COVID-19 pandemic. The economy of the WCD is expected to recover somewhat in 2021, with most sectors rebounding after the severe contractions experienced in 2020. As economic conditions improve globally, and at the national and provincial level, the economy of the District is expected to recover over the medium to long term.

In terms of the main economic value chains, it was highlighted that that the District is endowed with cultural and natural resources, and it offers wild floral beauty. Thus tourism is one of the major contributors to the GDPR and employment. It was reported that West Coast National Park is the closest spot outside Cape Town where tourists can experience the spring flower season. The West Coast Fossil Park, which lies just next door to the West Coast National Park, has uncovered 200 different kinds of animals, many of them new to science. Tourism value chain was adding to the growth of the accommodation facilities, tourist attractions, events and local tour operators.

The District reported on the infrastructure spending and explained that a review and analysis of the infrastructure spending within the District was a priority, taking into account the economic spin-offs in terms of attracting investment and enhancing development. The was informed that the development of the Special Economic Zone or IDZ (SBIDZ) in the District is expected to have a direct and continuous impact on the transport in the District. It will have an impact on the road network and the capacity thereof. Freight transport via road and rail will also play a major role in supporting the development of the IDZ. The N7 as well as the R27 are two major corridors in the West Coast and they are major distributors of people, goods and services from the District to other municipalities within the Western Cape, to other provinces as well as cross borders (N7 is the only Cape to Namibia route).

The employment in all municipal areas is predominantly in the agriculture, forestry and fishing industry. Since the agriculture, forestry and fishing industries are valuable source of employment for the rural municipal areas, there is a need for support from government institutions to protect existing jobs, and for the creation of new jobs. Weak economic growth, and inadequate investment in energy, water resources and the impact of Covid-19 could contribute to an increase in poverty in the District.

It was further reported that the steel industry is of importance in the Saldanha Bay municipal area, since it is a significant employer in the municipal area and provides key inputs in terms of raw materials to other sectors such as construction and transport, storage and communication. The possible closure of the possible closure of the ArcelorMittal South Africa plant in Saldanha Bay would have severe impact to economic growth and employment the District. Coordinated approach by all spheres of government in partnership with the private sector will be needed to save the industry and related jobs. Current, the local investor in partnership with the SBIDZ and the SEZ Fund in the SEZ Programme will yield an expansion of the operations of the West Coast Corrosion Protection, and news jobs will be created.

As the SBIDZ expands, the construction industry is expected to benefit. The SBIDZ remains a critical strategic development partner for the District. Some of the essential physical assets have been developed such as the new improved road networks, the Access Complex and the serviced port land. The SBIDZ has to date signed 11 lease agreements with an investment value of more than R3.0 billion. It was reported that SBIDZ is expecting new investments in pipeline 60 investors.

The operation and expansion of the SBIDZ is anticipated that to create much needed jobs, and boost the regional economy. The SBIDZ has established the skills programmes that focus on enterprise and contractor development, and so far the programme has created a total of 2 199 individual training opportunities, with 88 per cent of learners having already graduated. The agriculture, forestry and fishing sector has also experienced noteworthy investments, with the Western Cape Agribusiness Investment Unit securing several agribusiness investment deals worth R350 million and this is expected to create 525 direct jobs for the Western Cape economy.

Further, investments in the pipeline such as the new Saldanha Bay crude oil terminal that has been commissioned will be equipped to blend crude oil and be connected to an existing jetty that can handle very large crude carriers. The crude oil terminal is a joint venture between Oiltanking GmbH, MOGS (Pty) Ltd and Industrial Development Corporation of South Africa Ltd (IDC), is expected to add new economic opportunities in the District.

It was reported that the municipalities will focus on accelerating implementation of basic services and infrastructure in line with economic infrastructure plans, and to attract private sector participation. Further, it was highlighted that investment growth is expected from sectors such as dairy, agro-processing, transport, logistics, retail, services and construction sectors. SBIDZ in development partnership with the private sector and the Transnet National Ports Authority could see the expansion of ship repair and maintenance facilities. Transnet National Ports Authority (TNPA) has plans to further develop both the Port and Saldanha back-of-port site within the zone, to substantially increase the competitiveness of both the port and the zone.

Further, expansion of oyster and mussel farming initiatives is expected to grow the District economy, and create jobs. Investment in digital connectivity, water, energy, waste and green infrastructure would support the transition to an inclusive economy. It was reported that investment plans of municipalities are aligned with the municipal development plans, which are aligned with the provincial priorities and National Development Plan (NDP) and other sector strategies.

Growth, and support of SMMEs including informal businesses, was reported as one of the key priorities of municipalities in the Districts. Creating an enabling environment would add more impetus to the growth of municipalities. Partnerships with development support agencies such as Sefa, Seda and NEF including with the private sector is seen as a critical priority by all municipalities in the District. Further, collaboration with the Department of Employment and Labour would assist employees affected by weak economic climate, which has been exacerbated by the Covid-19 pandemic.

It was reported that the investment plans of the municipalities will yield growth of entrepreneurship and innovation. People will be supported in partnership with other spheres of government and private sector to develop their skills. As reported in this report, support of start-ups, small and medium-sized businesses, and attracting international investment would be key for the growth and development of the District. For instance, Saldanha Bay Municipality provide Special Rebates as an incentive in areas such as the Saldanha Bay Industrial Development Zone; the Langebaan Light Industrial area; the Saldanha Waterfront, and the Vredenburg Light Industrial to support growth of businesses and also promote investment.

Briefing by the Saldanha Bay IDZ Licencing Company SOC Ltd

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

The vision of the vision is to become Africa’s premier oil, gas and maritime services centre implies world-class engineering, fabrication, logistics and a competitive port environment with due tax and SEZ incentives. Some of the main functions of the SBIDZ include the promotion, management and marketing of the zone domestically and internationally. Furthermore, the SBIDZ-LC provide internal infrastructure in the IDZ to suit investor requirements, the leasing of land to investors, and the facilitation of an ease of doing business model for investors.

It was reported that the SBIDZ has establish skills development programme with strong community upliftment element. The initiative is to create a link and forge partnership between the community of Saldanha and SBIDZ. In the main it is to ensure that local individuals are equipped with necessary skills to enable them to take future opportunities presented by the developments in the SBIDZ. As reported in this report the possible closure of the ArcelorMittal South Africa plant in Saldanha Bay would have severe impact to economic growth and employment the District. It would also affect skills development initiatives.

The delegation was also briefed about the progressed achieved with regard to the iThemba Skills Programme. The programme was initiated by the SBIDZ-LC and funded by the MerSETA and the Department of Trade, Industry and Competition with the aim to train 674 candidates in foundational welding, fabrication, rigging, electrical, bricklaying, plumbing and carpentry skills.

Further, SBIDZ has establish an innovation hub in partnership with in partnership with higher education institutions such as University of Stellenbosch, and Witwatersrand University and the private sector. The Saldanha Bay Innovation Campus aims to be a vibrant, inclusive and globally competitive innovative ecosystem in the South African marine and energy sectors. The purpose is to connect, drive and support sustainable research, development and innovation.

As reported elsewhere in this report, SMMEs within the District are set to benefit through the supplier development programme administered by the SBIDZ. The IDZ Business Forum was established to build an inclusive partnership with local business chambers and forums to maximise business opportunities, and enhance local supply opportunities. The business forums would open opportunities for local businesses to take advantage of business opportunities in an oil and gas and marine repairs. The success of the SBIDZ, and potential opportunities for SMMEs largely depend on public-private partnership, with a valuable role that could be played by Transnet and Transnet National Ports Authority.

The SBIDZ reported that it has establish an Ease of Doing Business Unit, which seeks to offer investor responsive and proactive approach by:

Offering a One Stop Shop service to our customers and investors;
Developing systemic and sustainable service models with key partners;
Providing efficient and effective interventions on behalf of our investors;
Making it easy to access information and services.

Other programmes are including; Business Development; Transaction and Investor Support; Infrastructure & Environment Development; Development Programmes and Stakeholder Management. The business model is set to provide an attractive value proposition to both local and global markets. The SBIDZ further reported that it offers a Free Port environment, which is a universal benchmark for ports and zones. The Free Port business model offers range of services and incentives ranging from fiscal instruments such as reduced corporate tax, direct vat waivers, direct duty waivers, access to development funds from Department of Trade, Industry, and Competition, simplified process including Visas processing. The business model offers operational efficiencies such as storage of goods without time limitations. Further, investors are benefit through improve their cash flow (no upfront 15 per cent VAT payment on parts and equipment coming in for repairs and maintenance), and also not incurring import and or export duty on goods imported, value added and re-exported from the zone, and thus ensure cost savings to the benefit to the investor located in the SBIDZ.

It was reported that one of the challenges facing the entity is to re-energising and re-purposing of the South African maritime industry, the growth of the zone is largely depending on it. This should include modernising its infrastructure and operational model to be competitive in an international sense, to bring new business and opportunities into our ports and to enhance our trading potential. The SBIDZ could only succeed if it continues to cement relationships with key strategic partners such as the Western Cape Department of Economic Development and Tourism (DEDAT), the Department of Trade, Industry, and Competition, TNPA, Saldanha Bay Municipality, local businesses and the community. Other key strategic partners are Western Cape Government such as the Departments of Transport and Public Works, Environmental Affairs and Development Planning, and Health, National Government departments such as National Treasury and the Department of Labour, organised labour, SARS, financial development institutions (including IDC, DBSA), and commercial banks, industry associations.

The SBIDZ operations are mostly funded by the Western Cape Provincial Government (WCG). The WCG also previously funded the purchase of the Saldok land from the IDC. To date, the Department of Trade, Industry, and Competition has funded an amount of R200 million as the capital expenditure to the SBIDZ. It is one of the critical strategic partners. There are various inventors already tenants and prospective investors in varied industries such as manufacturing, oil and gas, renewables, including shipping services.

The SBIDZ intends in the next phase to be an agent of sustainable economic transformation, whereby it will:

Invest in additional infrastructure, equipment and facilities to support sectoral growth;
Invest in different, efficient processes with the role-players paramount to business’s enabling environment to ensure they are operational sooner;
Conclude the outstanding matters with TNPA and DEA&DP to secure the entity’s natural capital;
Progress on sector-led supply chain programmes;
Progress with the Innovation Campus facility, inclusive of a human development programme targeted towards youth and education.

It was reported that the main issues require finalisation, i.e. signing of the two remaining leases with TNPA and, with the Department of Environmental Affairs and Development Planning (DEA&DP), finding a long-term, mutually satisfactory arrangement on a range of environmental issues that could seriously impair the commercial potential of the zone.

The Port of Saldanha is align to the strategic focus of the SBIDZ. Its aim is to be the premier Dry Bulk Port and Southern Africa’s Oil and Gas Service Hub operating with reliable logistics connectivity and excellent efficiency. The strategic objective is to:

Grow diversify existing commodities;
Become an Energy Supply Services Port;
Position the port as a gateway to the Southern African (and Sub Saharan Africa).

In the short term, the Port of Saldanha intends to invest in the following projects:

Increase Dry Bulk handling capacity (Iron Ore)-storage land area and new berth capacity increase to total port = 75 MTPA;
Liquid Bulk: Storage potential LNG. Diversifying cargo handling to include white fuels;
Break Bulk Terminal berth capacity increased to accommodate other bulk cargo and potential Maritime Engineering. These to consider increased demand and changes vessel forecast;
The relocation of port entrances;
Widening of main logistics corridor within the port to accommodate increased traffic and bulk services routes;
Maritime Engineering: New berth facilities introduced in the western precinct to support industry (incl. Oil and Gas).

In the medium to long term, investment will focus on the following:

Dry Bulk: Additional berth structure on the Langebaan side of the finger jetty for accommodation potential increased demand;
Liquid Bulk: Berth 104 lengthening and re-configuration to accommodate changes vessel forecast;
Liquid Bulk: Off shore supply base facility upgrade to accommodate OPC facilities;
Maritime Engineering: Additional berth facilities as per increased demand in the western precinct (Mossgas) and Break Bulk Terminal area;
Tourism: potential cruise landing facility within the Small Craft Harbour precinct.
Re configuration of western side berths along the causeway and jetty structure to consider demand and vessel size forecast to be accommodated in terminal areas;
Deepening and widening of navigation channels and berth pockets to consider vessel size forecast changes.

As highlighted in this report, the success of the SBIDZ, and potential opportunities for SMMEs largely depend on public-private partnership, with a valuable role that could be played by Transnet and Transnet National Ports Authority. Further, it was reported that SBIDZ to sustain its operations, and build capacity and capability it will need financial and policy capital to deliver on its mandate. This would require the SBIDZ to enhance collaborative initiatives with all the spheres of government including development finance institutions and private sector to fully realise its strategic priorities.

Development Projects visited:

The delegation conducted a site visit to the SIBDZ Project Leasing Facility, which offers 10 hectares of prime laydown and storage area within the Port of Saldanha Bay. It is available for daily and monthly leasing and can be utilised for project purposes of equipment storage, maintenance, repair and assembly activities. It is secure and fully services and includes water and electricity connections with easy access to provincial and national roads.

The delegation further engaged with a tenant at the SIBDZ, ALL HVAC Maintenance (Pty) Ltd, trading as AHM Piping Specialists. The tenant relocated to the West Coast Saldanha Bay from Gauteng as an investor and a strategic job provider. This company provides heating, ventilation and air conditioning services. The Covid-19 pandemic has resulted in project delays, wasted production and loss of revenue. The planned date for start of operations was the 1st April 2021, in the interim, machinery, equipment and raw material costs have doubled in cost. The company is currently applying for funding for machinery and equipment through various government funded initiatives including the Black Industrialists Programme of the Department of Trade, Industry and Competition for the second phase as the top structure funding was approved in 2019. Applications have also been made to the Small Enterprise Finance Agency (SEFA). The company is therefore dependant on the approval of these funding applications in order to continue.

Blue Sapphire Pearls CC

Blue Sapphire Pearls CC, is a B-BBEE Level 4 company funded by the Department of Trade, Industry and Competition. It is primarily based on the aquaculture industry and farms oysters and mussels. It was approved for funding by the Department of Trade, Industry and Competition in December 2018 for an incentive amount of R1.7 million for an expansion of the project. It planned to invest R4.3 million into Leased land improvements, commercial vehicle and workboats, bulk infrastructure, and Machinery and equipment.

To date the project has been paid R1.4 million, while investing R3.7 million to improve its leased land and purchase commercial vehicles and workboats, bulk infrastructure, and machinery and equipment. The project supported 18 jobs; of which 16 is black and 7 is female. According to the latest claim inspection report (August 2020), the project is exporting oysters with an approximate value of R75 000 per month to Hong Kong and China, and Mussels with a total value of R324 000 per month to the USA. It also has a monthly local sales of oysters of approximately R2.2 million, and mussels amounting to R11 000 per month. The project has reported that through ADEP support, it has improved the handling of stock and sped up the growth process for oysters.

Observations:

In terms of levels of education, it was noted that the West Coast District has a disproportionately high level of school drop outs. This is due to limited educational facilities such as high schools. At present there are no high schools in Langebaan and the exorbitant transport costs for learners, as well as additional costs incurred for food and accommodation has resulted in high drop-out rates. In addition, there are no universities and any students wanting to pursue tertiary education need to travel to Cape Town in order to do so. It was noted by the Saldanha Bay Industrial Development Zone (SIBDZ) that in order to mitigate against high school drop outs, it initiated the High School Development Programme with the Western Cape Education Department and the universities of Stellenbosch and Wits.
The winding down operations of the Arcelor Mittal Saldanha Steel Plant towards eventual closure is having a negative impact on the economy of the West Coast district. The closure of the steel plant was announced by Arcelor Mittal in 2019. Despite numerous efforts to save the steel plant the company announced that it was closing and that re-opening in the medium term would be unlikely. One of the reasons attributed to the closure was excess global capacity. The steel plant was a critical economic driver across the West Coast with around 600 permanent employees and 500 sub-contractors.
The Covid-19 pandemic has had a severe impact on plans for the SIBZ, the revenue outlook for 2020/21 was revised downwards and decreased by 40 per cent as a result of the pandemic. This is due to increasing market uncertainty and low investor confidence. The economic environment is different to what it was pre-pandemic and investors have requested more time before committing due to the prevailing economic conditions.
In order to assist Small Micro and Medium Enterprises (SMME’s) to access SMME Covid-19 business relief resources online, the SIBDZ indicated that the SMME Co-Lab Centre was re-opened. The Co-Lab was done in partnership with the Saldanha Bay Local Municipality.

6. West Coast National Park

It is reported elsewhere in this report that the wholesale and retail trade, catering and accommodation sector was affected by the Covid-19 pandemic. The initial restrictions with regard to business activities, the expected reduction in household spending owing to job losses and a decline in tourism are expected to have a significant negative impact on the sector. Hence it is important for all spheres of government in partnership with the private sector to invest in initiatives that would re-boot the tourism industry. Infrastructure investment both public and private would be critical in ‘building back better’ the tourism industry, and boost jobs.

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

Geelbek Restaurant provides a safe haven for the West Coast and South African heritage. The restaurant is situated on the lagoon in the Geelbek main house. This Cape Dutch building is a National Monument and was renovated three times since it was built in 1744. The park falls within the West Coast District Municipality and in the Saldanha Bay Local Municipality, while it adjoins the Swartland Local Municipality in the south. The park forms the northern core of the Cape West Coast Biosphere Reserve, and it is fully integrated in the various integrated development plans (IDPs) and spatial development frameworks (SDFs) of the municipalities. Key attributes include:

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

The park offers the following tourism features:

Open access, limited income generation (via boat permits) water based recreational activity on the Lagoon;
Self-drive sightseeing tourism (views and bird hides);
Recreation at the day visitor sites in the controlled access portion of the park and limited over-night accommodation facilities. These facilities are: Abrahamskraal – a six-bed (two star grading) self-catering unit at the Abrahamskraal waterhole which has been upgraded; Joanne’s Beach Cottage – an eight-bed selfcatering unit (three star grading); The concessionaire managed 44 bed Duinepos rest camp; Two houseboats based at Kraalbaai managed by a concessionaire.
The historical Geelbek homestead is managed by a concessionaire as a restaurant and curio shop;
Park information centre at Geelbek;
A limited hiking and mountain biking network in the park;
The Postberg contractual area which is currently open for wild flower viewing during August and September only;
Kraalbaai and the adjoining Preekstoel are popular day visitor sites during summer and public holidays drawing crowds from the communities surrounding the park;

The delegation was briefed that the Park consists of number of old farm homesteads which have been converted to accommodation unit, offices and a restaurant. In the previous oversight visit to the Park it was highlighted that the Park has challenges that need to be tackled to boost tourism:

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

It was reported that various initiatives have be undertaken to address some of the challenges. Over the medium term, the Park intends to invest on infrastructure covering offices buildings, accommodation facilities, roads including bulk infrastructure. Infrastructure investment in the Cape Region has benefited 6 SMMEs, and there are 66 participants employed in various projects. There are 35 women participating as employees in the development projects, and the number of youth benefiting is 33. The number of people with disabilities employed as beneficiaries in the development project is 3. The Park employs various people in projects such as Working For Water and Umoya projects

The key tourism infrastructure focus of park management over the long term is firstly to unlock the tourism potential through a Public Private Partnership (PPP). The MERO report that the District in terms of tourism, is ranked as the strongest driver for travel, with about 80.2 per cent of visitors primarily travelling for leisure. It is reported that the District offers a diverse tourism offering that include nature, wildlife, adventure and entertainment. The District should exploit these product offering to growing tourism. It was emphsised that investment in infrastructure should be prioritised for the provision of tourism amenities, roads and tourism signage. Upgrading and maintenance of public tourist facilities would enhance visitor’s tourism experience.

Further, it was reported that tourists are increasingly choosing to visit and support destinations that adopt eco-friendly and sustainable approaches to tourism development. There is a need to enhance support awareness of environmental protection and conservation and to minimise its carbon footprint. The West Coast parks intends to enhance initiatives that would ensure that tourism products harmonise with the environment. Further support and promotes the conservation of assets and educating people in surrounding communities on the importance of promoting conservation. In addition, developing guided educational tours on the fauna and flora of the area/providing information on protected areas, animal species. What is also key is to ensure that the Park remains accessible to local communities, particular low income communities.

Recommendations

The oversight visit was mounted on the theme: Resetting the Economy to Boost Economic Growth, Attract Investments and Create Jobs in regional and local economies. The Select Committees took the following recommendations:

Over the 2021 medium term the Minister of Transport, the provincial Minister responsible for transport, and the City of Cape Town should develop detailed plans to tackle current challenges on the public transport, especially rail. The deterioration of the rail service in City of Cape Town, with its resultant sharp increase in road usage needs to be addressed. The most pressing challenge facing the City of Cape Town’s transport network and by extension its economic growth potential, is the decline of rail.
Minister of Transport, and the provincial Minister responsible for transport together with City of Cape Town should improve coordination in terms of regulating the taxi industry. Evidence shows that most South Africans use a taxi to travel to school and work. Modernisation of the taxi industry should be accelerated.
Over the 2021 medium term, national, provincial and local government should scale-up coherency for land development and planning, as spatial mismatch with disconnections between people, skills, jobs and investment hold back social and economic progress.
Over the 2021 medium term, both the City of Cape Town and the West Coast District Municipality should accelerate the implementation of the township economy strategies.
Shared working spaces for entrepreneurs, and small enterprises, including small traders, remain an essential priority. The Minister of Small Business Development and the Minister of Public Works and Infrastructure, including provincial ministers responsible for Enterprise Development and Public Works, the City of Cape Town and the West Coast District Municipality in partnership with the private sector should establish shared working spaces to support growth and expansion of SMMEs and small traders.
The City of Cape Town and the West Coast District Municipality should, over the 2021 medium term, devise strategies and plans to tackle regulatory constraints that are hindering the operations and expansion of small traders.
The Minister of Trade, Industry and Competition and the Minister of Small Business Development through their development agencies such as Seda, Sefa and NEF should work in a coordinated manner with SASRIA to intensify financial literacy and empowerment campaigns targeting small businesses and informal traders. Such programmes should find expression in the expenditure plans of the respective departments and development agencies including expenditure plans of SASRIA. The financial literacy and empowerment initiative should get the necessary support from National Treasury.
The City of Cape Town and the West Coast District Municipality should through their enterprise development agencies or business components design outreach campaigns to encourage small businesses, including informal enterprises, to take-up business insurance cover.
There is a need for SASRIA to accelerate the rollout of insurance products that would cover the underserviced communities. Hence the Minister of Finance should ensure that SASRIA designs implementation plans that would enable the underserviced communities to take insurance cover.
Over the 2021 medium term, the Minister of Employment and Labour, the City of Cape Town and the West Coast District Municipality in partnership with the institutions of higher education and training and industry players should establish and solidify job placement opportunity initiatives, including skills and training initiatives to tackle unemployment and to close the skills gap.
Over the 2021 medium term, the Minister of Tourism and the Minister of Finance in partnership with the provincial and local governments (including development agencies) and in partnership with the private sector (Banks) should develop innovative financing mechanisms that would meaningfully support the recovery and growth of the tourism industry.
Over the 2021 medium term, the Minister of Finance should reconsider the re-introduction of the 12J Venture Capital incentive to broaden the base of capital as an alternative instrument to finance SMMEs. The tourism industry has been severely affected by Covid-19. Many jobs and businesses have been lost in the economy. Innovative solutions in terms of financing businesses, both formal and informal, should be found.
Crime remains one of the risks that deters the growth and expansion of the tourism industry. The City of Cape Town, including the West Coast District Municipality, working closer with the South African Police Service and local communities, should devise measures to tackle crime.
The Minister of Tourism and the Minister of Environment, Forestry and Fisheries should continue to work in a collaborative manner with the provincial government, the City of Cape Town and the West Coast District Municipality to improve public infrastructure and attract private investment to support growth of tourism, and enhance the alignment of environment tourism products. Access to tourism platforms for local communities should be prioritised.
The West Coast District Municipality together with the Western Cape Department of Agriculture, including the national departments of Agriculture, Land Reform and Rural Development; Forestry, Fisheries and the Environment; as well as development finance agencies (such as the Land Bank) need to form development initiatives in collaboration with industry players to restore investment and business confidence in the agricultural industry, and further support growth of SMMEs in the industries such as agriculture and fisheries.
The West Coast District Municipality is one of the fastest growing economic regions in the Western Cape. As such higher levels of economic activity, which would result in an increase in business and job opportunities would certainly cause a growth in the population and increased pressure on the provision of physical, social, economic and environmental infrastructure. To this end, over the 2021 medium term the national and provincial ministries responsible for spatial and development planning should support the District to improve spatial and development planning to improve alignment in terms of investment in infrastructure in areas such as transport, energy, water and sanitation, environment including housing.
The SBIDZ could only succeed if it continues to cement relations with key strategic partners such as the Western Cape Department of Economic Development and Tourism (DEDAT), the Ministry of Trade, Industry, and Competition, the Ministry of Public Enterprises (Transnet, TNPA), Small Business Development, including Ministry of Higher Education, Training and Innovation, Saldanha Bay Municipality, local businesses and the community including the Western Cape Government’s departments of Transport and Public Works, Environmental Affairs and Development Planning, and Health, national Ministry of Finance (including SARS), Employment and Labour, and financial development institutions (such as IDC, DBSA). Over the 2021 medium term, the strategic partners mentioned in this section should support SBIDZ to sustain its operations, and build capacity and capability by unlocking barriers so that the SBIDZ gain much needed financial and policy capital in order to realise its strategic priorities.

Report to be considered.

Documents

No related documents

Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour, , dated 7 December 2021

NCOP Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour

Documents

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