LED Strategy

uThungulu District Municipality

LOCAL ECONOMIC DEVELOPMENT STRATEGY

Final Draft

October 2006 Submitted by:

P O BOX 810 KLOOF 3640 TEL: (031) 2029673 FAX: (031) 2029675 EMAIL: [email protected]

LED Strategy TABLE OF CONTENTS 1. Introduction 1.1. Project Background 1.2. Methodology

2 2 4

2. Understanding LED 2.1. Defining and Understanding LED 2.2. Aims of LED

10 10 10

3. Policy Environment 3.1. Constitution 3.2. Municipal Systems Act (no.32 of 2000)

11 11 11

3.3. Local Government: Municipal Finance Management Act (No. 56 of 2003) 3.4. Integrated Development Plan

12 13

3.5. Broad-Based Black Economic Empowerment Act (No. 53 of 2003) 14 3.6. National Strategy for the Development and Promotion of Small Business in South Africa 15 3.7. Industrial Development Strategy 3.8 Accelerated and Shared Growth Initiative for South Africa (ASGISA) 3.9 Regional Industrial Development Strategy (RIDS) 4. Local Economy Assessment 4.1. Regional Context 4.2. Land use 4.3. Demographics

15 16 17 18 18 20 21

4.4. Access to Services 4.5. Socio-Economic Analysis 4.6. Employment 4.7. Education 4.8. Income levels 4.9. Implication for LED 4.10 Overview of Socio-Economic Profile

23 26 29 30 31 32 32

5. Overview of Local Municipalities’ LED Strategy Framework

38

5.1 Ntambanana 5.2 Umlalazi

38 39

5.3 Mbonambi 5.4 uMhlathuze

39 40

5.5 Mthonjaneni 5.6 Nkandla

42 43

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LED Strategy 6. Creating District Cohesion 6.1 LED Good Practices

44 44

7. In Depth Sector Analysis 7.1 Employment

50 50

7.2 Soft Infrastructure 7.3 Physical Infrastructure and Services

52 52

7.4 Manufacturing 7.5 Exports and Imports

52 54

7.6 Agriculture 7.7 KZN Agricultural Trends

57 59

7.8 District 7.9 Tourism 7.10 Retail and Services

59 63 64

8. Development Framework 8.1 Introduction 8.2 Porter’s Diamond 8.3 SWOT Review

65 65 65 71

8.4 LED Vision 8.5 LED Strategy

72 73

8.6 Development Framework

77

9. Implementation 9.1 Introduction 9.2 Institutional Arrangements

94 94 94

9.3 Practical Management of the LED Process 9.4 Potential Funding Sources

94 95

9.5 Comparative Advantages 9.6 Implementation Matrix

96 97

9.7 Monitoring and Evaluation

98

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LED Strategy SECTION 1: INTRODUCTION 1.1

Project Background

The objective of this study is to create an integrated district level Local Economic Development (LED) Strategy for uThungulu, derived from the outcomes of the local municipalities’ LED Strategy Process. This is essentially a bottom-up approach that allows for the greatest amount cohesion for uThungulu District Municipality’s LED. Each local municipality has undergone strategy planning for their unique LED and these in turn are to fed into the district level strategy. This allows for the unique needs of each local municipality to be addressed at both a local and district level, insuring that the district wide strategy is coordinated and aligned in terms of the local municipalities’ needs. This project was initiated by uThungulu District Municipality and part funded by the European Union through Gijima KZN. The project has been implemented under following framework illustrated below: PROJECT ORGANOGRAM

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LED Strategy The project organogram represents the lines of responsibility between the different parties involved. Gijima KZN and uThungulu District Municipality are the sponsors of the project and Urban-Econ was appointed as the lead consultants responsible for formulating the uThungulu Family of LED Strategies. Urban-Econ in turn identified local consultants that would manage the LED process for the local municipalities, these consultants report to both Urban-Econ and their respective municipalities. The steering committee comprises of representatives from the consultants, Gijima KZN and uThungulu and meets on a regular basis to ensure that project deadlines are met. The management forum is the project team meeting facility for the consultants. The stippled line between the local consultants and the local municipalities indicates that while there is a relationship between the two parties the consultants are responsible to Urban-Econ. The inclusion of the LED Forum in the diagram indicates the importance of this body as a discussion and workshop round-table to the entire process. This report details the local economic analysis for uThungulu District and also covers the introduction to the Local Economic Development Strategy framework that we have adopted for this family of LED strategies. This project has been designed in three phases, these are outlined below: Phase One – Orientation General data and information collation at both district and local municipality level was done to allow for in depth local economic analysis to be undertaken. Process clarity, goal setting and acceptance of responsibilities by all consultants in the project as well as consultation with the district’s LED Forum were key initiator steps in the project. Basic disaggregated economic data was be made available at the LED Forum meeting to help enable the Local Municipalities. Phase Two – Local Municipality LED Formation The local municipalities were guided in their LED process. Detailed sectoral analysis has been undertaken in order to help identify the relevant comparative advantages and growth opportunities in each locality. Workshops addressing prioritisation needs as well as LED implementation were held. Local Municipalities were encouraged to complete the process by July in order to fully participate in the formation of the district level LED, this has occurred. LED Forum meetings, held on a bi-monthly basis presented an important opportunity to allow for idea sharing and best practises to emerge and as part of the local feed back loop. Key programs in each local municipality were identified along with relevant institutional and implementation frameworks. These strategies form the basis of holistic structure of phase three. Phase Three – District Municipality LED Formation This phase, that we are initiating presently, allows all the local municipalities an opportunity to create a synergetic structure for the District Level LED. The six local municipalities Nkandla, Umlalazi, uMhlathuze, Mbonambi, Ntambanana and Mthonjaneni’s respective LED’s are to be aligned in order to make a comprehensive strategy for the uThungulu District Municipality. Once more, sectoral

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LED Strategy analysis will aid in the identification of an LED strategy that will afford all local municipalities the ability to own their district’s strategy. Essential to the development of this LED will be the participation of the LED Forum. The creation of an implementation strategy is key to this phase, with the integration of all the local municipalities’ LEDs into a single unified strategy. The terms of reference require that the following outputs are realised with respect to the local strategy: a detailed economic analysis of the study area identify specific projects to be undertaken with business strategies and potential funding sources, specifically identifying an ‘anchor project’ for the area create a suitable implementation and monitoring framework for LED The purpose of this study is to develop the economic capacity of the study area by identifying opportunities and impediments to development. It should be seen within the context of the overall Integrated Development Programme (IDP) process and will formulate strategies in order to realise the development objectives for the area. LED aims to ensure that scarce resources are well targeted and utilised in the most efficient manner and that priority issues are addressed for development purposes.

1.2

Methodology

This study has two major methodological components; a rigorous technical socio-economic analysis and an inclusive local consultative process. These components are utilized in the three phase approach set out below. Essentially, the methodology follows the activity plan as set out in the Terms of Reference. Phase One: District Level Focus 1.

Orientation Collect all existing documentation and previous studies done in the area and with respect to the existing and planned initiatives of the municipality e.g. the various IDP’s, LED’s, etc. Assess documents to establish their main findings and recommendations. Identify specific gaps and shortcomings in the data available. Establish the detail institutional arrangements and responsibilities for the execution and final deliverables of the study.

Identify important role players and stakeholders in the district and local economies to be involved in the project

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LED Strategy Phase Two: Local Municipality LED Focus 2.

Developing a Local Economic Profile Analysis Undertake a focused economic and socio-economic evaluation of the municipalities using secondary data sources, based on Census 2001 and Household Surveys 2004 data. Determine the economic status quo of the study area with emphasis on historical growth, growth potential, composition (economic sectors), comparative and competitive advantages, population size, distribution and growth patterns, Income and expenditure levels (disposable income and affordability levels). The main sectors to be focused on are agriculture, tourism, business and industry (including agri-business) but not to the exclusion of other sectors such as public and private services, transport, construction and housing. Conduct a trend analysis to project population growth and economic development potential. Determine future resource demand for the area and guidelines towards future development requirements and land-use patterns. Use economic techniques e.g. SWOT-analysis, location quotients and economic scenario modelling in order to determine the growth possibilities of the various economic sectors of the economy. Consultative workshops will be held to obtain specialist inputs on needs, opportunities and current support mechanisms. Sectoral work sessions will be held with key role-players and stakeholders inclusive of individual interviews as and when necessary. A detailed record of all meetings and workshops needs to be kept.

3.

Consultations with the LED Forum Consultations will be made through the LED Forums at district and local level to allow a coordinated approach through the interaction of the local and district municipalities.

4.

Designing Holistic Sector Integration Integrate the information generated during the previous two steps and identify sectors potentials, key issues and development opportunities, by means of a focused sectoral analysis and verified by a prioritisation workshop. Particular emphasis will be placed on unlocking economic development potential in a rural context.

The economic analysis will utilise techniques such as: i. ii. iii. iv.

the growth performance indicator comparative advantages indicator agglomeration effects impact assessments

6

LED Strategy Based on the labour and skills requirements identified via the analysis indicated above, specific human resource development and skills development options will be formulated to facilitate and enhance the lead sectors and business opportunities. 5.

Development Framework Design Formulate a strategy framework with key programmes based on the lead sectors and opportunities identified in the preceding steps. Focus on the geographical orientation of programmes and projects with appropriate referencing. Interpret the sectoral programmes in terms of strategic targets focused on unlocking the inherent development potential, exploiting comparative and competitive advantages as well as intensifying sub regional specialisation. Undertake a systematic prioritisation process of the recorded projects based on a generic classification framework

6.

Creating Institutional and Marketing Options Develop an appropriate institutional and marketing framework focused on capacity building and development facilitation (including marketing). Conduct an analysis of the institutional framework appropriate for effective LED facilitation. Specification will be given to the assessment of the institutional capacity for Marketing and options how to best incorporate and facilitate this as an integral function of the unit.

7.

Anchor Project Identification and Packaging Package selected anchor projects as business plans and evaluating potential funding sources. Identify potential funding sources that can be targeted for project funding. Important in this regard, is the institution of joint ventures to share responsibility, funding and ownership.

8.

Designing an Implementation Strategy Integrate the different projects into a coherent LED strategy consisting of functional programmes. A project implementation plan structured according to functional programmes will be formulated. A municipal financial plan that relates to the IDP budgets to focus project phasing in terms of financial requirements in accordance with a phasing schedule. Specific attention will be given to budgeting specifications to ensure integrated and strategic management of institutional resources. A purpose-directed management plan, which relates and integrates the programmes and projects in terms of the spatial and non-spatial visions. This plan will also address the need for an appropriate institutional structure that can facilitate the development process. The guidelines will take on the form of a mini-business plan, specifying who (human resources) and how (financial resources and institutional instruments).

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LED Strategy Institutional Framework: Guidelines will be provided for the establishment and operation of an economic development promotion body as part of the local municipality to take responsibility for the implementation of the economic strategy. Marketing Plan: An important aspect of an economic development is to facilitate investment. This can be attained by appropriate marketing of the local comparative advantages of the study area. Innovative Funding Sources:

Potential funding sources will be identified, and innovative

funding options will be reviewed to propose implementation alternatives for the projects. Risk Assessments: The implementation capacity and probability of the programmes will be evaluated in terms of a set of criteria. Performance Management Framework: Strategic development planning and the linking of such planning results to be budgetary process are dynamic processes, implying that it should be monitored, evaluated and revised on an ongoing basis. To ensure that the necessary monitoring and evaluation actions do take place, an appropriate monitoring and evaluation mechanism should be devised. This mechanism will be based on focus areas, which have been interpreted in terms of key performance indicators (KPI). The main objectives of this mechanism should be to monitor progress with the implementation of programmes and projects and to evaluate the KPI against the baseline data and originally projected development impacts. Capacity building and training: capacity building and training programmes for LED staff and councillors. 9:

Feedback Workshop/Forum for Local Municipalities Consultations will be made with individual local municipalities and stakeholders, after which a workshop will be held to ensure that the district strategy is aligned and integrated with those of the local municipalities.

Phase Three: District Level Municipality LED Focus 10:

Designing Holistic Sector Integration Integrate the information generated during the previous two steps and identify sectors potentials, key issues and development opportunities, by means of a focused sectoral analysis and verified by a prioritisation workshop. Particular emphasis will be placed on unlocking economic development potential in a rural context.

The economic analysis will utilise techniques such as: v. vi. vii.

the growth performance indicator comparative advantages indicator agglomeration effects

8

LED Strategy viii.

impact assessments Based on the labour and skills requirements identified via the analysis indicated above, specific human resource development and skills development options will be formulated to facilitate and enhance the lead sectors and business opportunities.

11:

Development Framework Design Formulate a strategy framework with key programmes based on the lead sectors and opportunities identified in the preceding steps. Focus on the geographical orientation of programmes and projects with appropriate referencing. Interpret the sectoral programmes in terms of strategic targets focused on unlocking the inherent development potential, exploiting comparative and competitive advantages as well as intensifying sub regional specialisation. Undertake a systematic prioritisation process of the recorded projects based on a generic classification framework

12:

Creating Institutional and Marketing Options Develop an appropriate institutional and marketing framework focused on capacity building and development facilitation (including marketing). Conduct an analysis of the institutional framework appropriate for effective LED facilitation. Specification will be given to the assessment of the institutional capacity for Marketing and options how to best incorporate and facilitate this as an integral function of the unit.

13:

Anchor Project Identification and Packaging Package selected anchor projects as business plans and evaluating potential funding sources. Identify potential funding sources that can be targeted for project funding. Important in this regard, is the institution of joint ventures to share responsibility, funding and ownership.

14:

Designing an Implementation Strategy Integrate the different projects into a coherent LED strategy consisting of functional programmes. A project implementation plan structured according to functional programmes will be formulated. A spatial representation of the proposed development vision and projects in terms of economic activities and supporting infrastructure will be provided that is aligned to the IDP and LUMS. A municipal financial plan that relates to the IDP budgets to focus project phasing in terms of financial requirements in accordance with a phasing schedule. Specific attention will be given to budgeting specifications to ensure integrated and strategic management of institutional resources.

9

LED Strategy A purpose-directed management plan, which relates and integrates the programmes and projects in terms of the spatial and non-spatial visions. This plan will also address the need for an appropriate institutional structure that can facilitate the development process. The guidelines will take on the form of a mini-business plan, specifying who (human resources) and how (financial resources and institutional instruments). Institutional Framework: Guidelines will be provided for the establishment and operation of an economic development promotion body as part of the local municipality to take responsibility for the implementation of the economic strategy. Marketing Plan: An important aspect of an economic development is to facilitate investment. This can be attained by appropriate marketing of the local comparative advantages of the study area. Innovative Funding Sources: Potential funding sources will be identified, and innovative funding options will be reviewed to propose implementation alternatives for the projects. Risk Assessments: The implementation capacity and probability of the programmes will be evaluated in terms of a set of criteria. Performance Management Framework: Strategic development planning and the linking of such planning results to be budgetary process are dynamic processes, implying that it should be monitored, evaluated and revised on an ongoing basis. To ensure that the necessary monitoring and evaluation actions do take place, an appropriate monitoring and evaluation mechanism should be devised. This mechanism will be based on focus areas, which have been interpreted in terms of key performance indicators (KPI). The main objectives of this mechanism should be to monitor progress with the implementation of programmes and projects and to evaluate the KPI against the baseline data and originally projected development impacts. Capacity building and training: capacity building and training programmes for LED staff and councillors. 15:

Feedback Consultation – LED Forum Consultations will be made through the LED Forum to allow a coordinated approach through the interaction of the local and district municipalities.

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LED Strategy SECTION 2: UNDERSTANDING LED 2.1 Defining and Understanding LED Local Economic Development, as defined by the DPLG, is an outcome based on local skills and initiatives and driven by local stakeholders. It involves identifying and using primarily local resources and skills to stimulate sustainable economic growth, regeneration and development. It is most often a participatory approach, encouraging input and participation from all interested parties to address the needs of a community or region. It should also be noted that LED is an ongoing process rather than a single project and is about continually upgrading the investment environment to improve competitiveness and generate income and employment. LED is about promoting local approaches to respond to local needs and conditions, but also within the context of national and global economic trends and events. It aims to base economic activity on social conditions and local resources as well as regional capabilities and local competitive advantage.

2.2 Aims LED aims at maximising the economic potential of a particular area by encouraging the public sector, the business sector and communities to work together in creating conditions favourable to economic growth and employment generation. Specific targets of LED include: Create employment Develop local markets Promote and support SMME’s Decrease poverty and hardship Ensure community empowerment LED is about creating favourable locational factors to do business, these include not only infrastructure and training but also for example improving the efficiency of local administration. It is also about promoting business – encouraging startups, but also facilitating and creating a general enabling environment in which to conduct business such as attracting investors and creating linkages. In this regard LED also focuses on making markets work better and making better use of locally available resources and skills. LED also targets previously disadvantaged peoples and promotes formal participation in the local economy, local ownership and community involvement.

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LED Strategy SECTION 3: POLICY ENVIRONMENT Local Economic Development is guided by the policy environment that has been created by the various spheres of government at national, provincial and municipal level.

3.1 The Constitution The overarching piece of legislation guiding the functions of LMs is the Constitution. Section 152 of the Constitution outlines the objectives of local government. These objectives are: To provide democratic and accountable government for local communities; To ensure the provision of services to communities in a sustainable manner; To promote social and economic development; To promote a safe and healthy environment; and To encourage the involvement of communities and community organisations in the matters of local government. Relevance to LED Local authorities have a legal mandate to promote social and economic upliftment within their areas of jurisdiction. These objectives form part of an integral set of principles from which LED strategies are formulated and implemented. Furthermore, a municipality is required in terms of Section 153 of the Constitution, to structure and manage its administration and budgeting and planning processes to give priority to the basic needs of the community and to promote the social and economic development of the community.

3.2 Municipal Systems Act (no.32 of 2000) The Municipal Systems Act lists the duties of a municipal council, within its financial and administrative capacity, as follow in Section 4(2): Exercise the municipality’s executive and legislative authority and use the resources of the municipality in the best interests of the local community; Provide, without favour or prejudice, democratic and accountable government; Encourage the involvement of the local community; Strive to ensure that municipal services are provided to the local community in a financially and environmentally sustainable manner; Consult the local community about: The level, quality, range and impact of municipal services provided by the municipality, either directly or through another service provider; and

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LED Strategy The available options for service delivery. Give members of the local community equitable access to the municipal services to which they are entitled; Promote and undertake development in the municipality; Promote gender equity in the exercise of the municipality’s executive and legislative authority; Promote a safe and healthy environment in the municipality; and Contribute, together with other organs of state, to the progressive realisation of the fundamental rights contained in sections 24, 25, 26, 27 and 29 of the Constitution. Relevance to LED Local Economic Development is one of the most strategic tools through which local municipalities adhere to its duties, as prescribed by the Municipal Structures Act. Section 25 (1) of the Act states that each municipal council must, within a prescribed period after the start of its elected term, adopt a single, inclusive and strategic plan for the development of the municipality which: Links, integrates and co-ordinates plans and takes into account proposals for the development of the municipality; Aligns the resources and capacity of the municipality with the implementation of the plan; and Forms the policy framework and general basis on which annual budgets must be based. Specific reference to LED is made in the following section of this Act: Section 26(c) of the Municipal Systems Act further specifies that the Integrated Development Plan of a Local Municipality must contain its Local Economic Development aims. This awards the municipal LED Strategy legal status as part of the Integrated Development Planning (IDP) process.

3.3 Local Government: Municipal Finance Management Act (No. 56 of 2003) The object of this Act is to secure sound and sustainable management of the fiscal and financial affairs of municipalities and municipal entities by establishing norms and standards and other requirements for: Ensuring transparency, accountability and appropriate lines of responsibility in the fiscal and financial affairs of municipalities and municipal entities: The management of their revenues, expenditures, assets and liabilities and the handling of their financial dealings

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LED Strategy Budgetary and financial planning processes and the co-ordination of those processes with the processes of organs of state in other spheres of government: Borrowing; The handling of financial problems in municipalities; Supply chain management: and Other financial matters. Relevance to LED The institutions to which the Municipal Finance Management Act applies, as stipulated in Section 3 of the Act, is all municipalities, all municipal entities and national and provincial organs of state to the extent of their financial dealings with municipalities. It is therefore necessary that local municipalities adhere financial procedures presented in the Act when engaging in financial matters relevant to any LED activities. The Act makes reference to municipal bank accounts, cash, investment and asset management, municipal budgets and debt management. Furthermore the Act stipulates the financial responsibilities of the mayor and municipal councilors. All sections of this act should be adhered to when implementing LED and therefore the Act should be consulted.

3.4 Integrated Development Plan IDP is a process by which municipalities prepare 5-year strategic plans that is reviewed annually in consultation with communities and stakeholders. These plans adopt an implementation approach and seek to promote integration by balancing social, economic and ecological pillars of sustainability without compromising the institutional capacity required in the implementation, and by coordinating actions across sectors and spheres of government. Relevance to LED LED must be developed within the context of the provincial Integrated Development Plan (IDP), as described in Section 25 of the Municipal Structures Act, as previously discussed. In view of the ten government mandates discussed, it is critical for local municipalities to: Understand the government approach to LED; To plan and implement LED strategies within the context set out by various national and provincial policy and legislative frameworks; Understand their functions and duties as municipalities and the impact of each of these on Local Economic Development; and have clarity on LED roles and responsibilities for the different spheres of government and civil society in order to affect a more coordinated effort in realising LED ideals.

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LED Strategy 3.5

Broad-Based Black Economic Empowerment Act (No. 53 of

2003) The objective of Broad-Based Black Economic Empowerment (BEE) Act is to substantially increase the number of black people who have ownership and control of new and existing enterprises and the number of black people in executive and senior management of enterprises. In this Act “black people” refers to Africans, Coloureds and Indians. “Broad-based black economic empowerment” means the economic empowerment of all black people including women, workers, youth, people with disabilities and people living in rural areas through diverse but integrated socioeconomic strategies that include but are not limited to: Increasing the number of black people that manage, own and control enterprises and productive assets; Facilitating ownership and management of enterprises and productive assets by communities, workers, cooperatives and other collective enterprises; Human resource and skills development; Achieving equitable representation in all occupational categories and levels in the workforce: Preferential procurement; and Investment in enterprises that are owned or managed by black people: Relevance to LED The successful implementation of BEE will be evaluated against the following policy objectives: Promoting economic transformation in order to enable meaningful participation of black people in the economy; achieving a substantial change in the racial composition of ownership and management structures and in the skilled occupations of existing and new enterprises: Increasing the extent to which communities, workers, cooperatives and other collective enterprises own and manage existing and new enterprises and increasing their access to economic activities, infrastructure and skills training: Increasing the extent to which black women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure and skills training; Promoting investment programmes that lead to broad-based and meaningful participation in the economy by black people in order to achieve sustainable development and general prosperity; Empowering rural and local communities by enabling access to economic activities. land, infrastructure, ownership and skills; and Promoting access to finance for black economic empowerment.

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LED Strategy 3.6 National Strategy for the Development and Promotion of Small Business in South Africa This strategy is an enabling environment for small enterprises. Given such an enabling environment it is expected that SMMEs will themselves accept responsibility for the operation, growth and progress of their enterprise. Key objectives of the National Small-Business strategy are to: Create an enabling environment for small enterprises; Facilitate greater education of income, wealth and earning opportunities; Address the legacy of apartheid-based disempowerment of black business; Support the advancement of women in all business sectors; Create long-term jobs; Stimulate sector-focused economic growth; Strengthen cohesion between small enterprises; Level the playing fields between bigger and small business as well as between rural and urban businesses; and Prepare small businesses to comply with the challenges of an internationally competitive economy. Relevance to LED Such a national framework will need to be complemented with programmes developed and implemented at regional and local level. Policies need to be in tune with national and regional as well as sectoral developments, taking into account differences between sectors like manufacturing, tourism or construction, as well as differences between categories of SMMEs; namely: Survivalist enterprises Micro enterprises Small enterprises

3.7 Industrial Development Strategy The IDS forms part of the KZN Provincial Growth and Development Strategy and aims at developing KZN’s manufacturing industry and related services. In doing so it sets out the short to medium term programmes that have been identified by the Department of Economic Development to address these issues. The aims of the strategy are to promote growth and employment by moving away from an import substitution base to an export oriented economy; to promote equity through BEE and women’s empowerment and improve the deployment of growth expanding technologies. The strategy seeks to increase the level of development diversity in the provincial economy. The provincial government has two broad areas for which relevant policies and programmes are to be focussed: addressing the needs of those enterprises that are on their way to achieving global competitiveness and directing

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LED Strategy convergence to narrow the gap in economic participation of the population. In order to achieve this, the human capital potential of the provincial economy will need to be further enhanced, thus sustainable sector development in less developed and rural areas is a priority. Relevance to LED: In order to achieve the desired positioning of the provincial economy, the following programmes have been identified: Logistics and transport which will involve the investment in and improvement of key infrastructural and service projects Black and women’s economic empowerment Investment and access to finance Small enterprise development Export development and support Develop technology and innovation. Specific sectoral programmes have also been identified which include agriculture and agroprocessing, clothing and textiles, wood and wood products, ICT and electronics, creative industries and crafts.

3.8

Accelerated and Shared Growth Initiative for South Africa

(ASGISA) This government instituted initiative is aimed at promoting a growth for all strategy for South Africa that is intended to halve poverty and unemployment by 2014. Maintaining a steady growth in GDP of above 4.5% in the short term, and then adopting envisaged growth of 6% between 2010 and 2014 is a cornerstone of the initiative. Developing labour absorbing industries that generate value added activities is at the core of the initiative. Investment in infrastructure, education and skills development are significant components of the initiative. The elimination of the second economy by enhancing access to micro-finance, SMME support and the reduction of gender inequality issues in conjunction with government’s macro-economic and good governance strategy focussing on the role of local government and service delivery forms the remainder of the initiatives outline. Relevance to LED: This national initiative is routed in local level implementation. This shared growth strategy has been designed to help eradicate inequality and poverty, which are the desired outcomes of the LED Strategy process. The emphasis on the infrastructure and skills development also speaks to the LED framework, and the development of LED Strategies needs to be considered within the ASGISA initiative framework.

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LED Strategy 3.9 Regional Industrial Development Strategy (RIDS) Although at the time of writing this strategy was still in draft, public comment has been invited and it is likely that the finalisation process will soon be undertaken by the DTI. The Regional Industrial Development is essentially and extension of the National Spatial Development Framework (2003) that is focussed on bottom-up approaches to local regional industrial development. The major points of this strategy are summarised by the following four points described in the foreword of the document: ‘RIDS is intended to Help to achieve the national industrial development objectives as set out in the NSDP and the Redistribution and development Programme, Further the goals of the Accelerated and Shared Growth Initiative for South Africa (ASGISA), Conform with the principles of the Growth, Employment and Redistribution (GEAR) Strategy, the integrated Manufacturing Strategy (IMS), the Microeconomic Reform Strategy (MRS) and the current draft National Industrial Police framework’. Relevance to LED: The draft document is also closely associated with LED and the strategy is tasked with: ‘Enhancing the capabilities and potentials identified in the Urban Spatial Competitive Framework and the proposed Local Economic Development (LED) Framework that seeks to address spatial constraints and opportunities related to industrial development in municipalities, Conform to principles of enterprise development and black economic empowerment (BEE).’ RIDS has been formulated to help municipalities engage in the difficulties in attracting industrial development into areas that are currently dealing with the difficulty of the dual economy and reduce the lag that these areas are experiencing.

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LED Strategy SECTION 4: LOCAL ECONOMY ASSESSMENT 4.1 Regional Context The purpose of this section is to provide a background and overview of the current demographic, social and economic characteristics of the district and to place this in context within KwaZulu-Natal. uThungulu District In Context Within Kwazulu-Natal

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LED Strategy uThungulu is located on the east cost of KwaZulu-Natal and comprises of six local municipalities: KwaMbonambi (KZ 281) uMhlatuze (KZ 282) Ntambanana (KZ 283) Umlalazi (KZ 284) Mthonjaneni (KZ 285) Nkandla (KZ 286) These six local municipalities are indicated below: Local Municipality Make Up Of uThungulu District

Each local municipality has their own highly varied demographic structure, and these become evident in the comparison of figures in the tables below. These differences essentially dictated the necessity of formulating individual LED Strategies for each of the local municipalities that speak to the existing

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LED Strategy strengths and weaknesses in each locality. These highly differentiated strategies then feed into the district level LED Strategy in order to insure that the specific local municipalities are represented and able to benefit from the districts’ overarching LED strategy. In terms of regional context, uThungulu plays a critical role in both the provincial and national economies as a major conduit of trade through the local port of Richards’ Bay. Significant economic centres in the district are focused in uMhlatuze local municipality, in both Richards Bay and Empangeni. These industrial centres form the major part of the supporting network of service provision for the settlements in Esikhaweni, Eshowe, Nkandla and Ntambanana.

4.2 Land Use Natural Environment uThungulu district has a good climate and an abundance of natural resources. The available arable land is suitable for large-scale agricultural initiatives, like the present sugar and forestry as well as specialised and intensive agrigon opportunities like natural oils and fruits cultivation. The intrinsic beauty of the area enhances the opportunities for tourism in the district. The terrain of uThungulu varies from the flat coastal belt, to the escarpment 900m above sea level. The broad spatial structure of the district consists of a coastal plain or corridor that is rich in natural and built resources. A ‘shadow corridor’ comprising of commercial agriculture forms a rim of higher lying land around the coastal plain. The land is characterised by undulating topography containing commercial agriculture, which is dominated by forestry, rural settlement and small towns. The rest of the district is characterised by high lying dramatic landscape with rural settlement and forestry. The general spatial trend is that access to services and economic opportunities appears to lessen as one moves inland (IDP). Also found in the area are a variety of river valleys, the best known the Tugela River on the western boundary of the district. The variety of soils, temperate climate and good annual average rainfall as well as the large water catchments area of the Thukela catchments area all combine for added attractiveness. Built Environment The district is host to a wide variety of infrastructure and services. Richards Bay, Empnageni, Gingingdlovu, Mtunizini and Eshowe all have reasonably good levels of infrastructure and services. Formal, urban infrastructure is focussed on these centres and in some of the secondary nodes in the district like Melmoth and Heatonville. The district’s transportation infrastructure is under pressure. The road network connects the major nodes, like Richards Bay and Empangeni to the national network, however the heavy vehicles servicing the Port of Richards Bay and the adjoining industrial areas are placing considerable strain

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LED Strategy on the infrastructure. Rail is a declining transport sector, with no major commuter networks in place a limited industrial linkages (with the exception of the coal link from Mpumalanga to the Richards Bay Coal Terminal at the Port of Richards Bay.

4.3 Demographics Population As noted in the IDP document Uthungulu has the third highest population (762791 people) in the province after Durban Metropolitan Council (32.9%) and Umgungundlovu (10.4%).

uThungulu's Population Per Local Municipality Nkandla 15%

Mbonambi 12%

Mthonjaneni 6% uMhlathuze 32% uMlalazi 25% Ntambanana 10%

Source: Quantec Research 2006

The population of uThungulu district is estimated according to Census 2001 to be 885941 persons, with just under a third residing in uMhlathuze municipality, while only 6% of the district’s population lives in Mthonjaneni municipality as indicated above. Age And Gender The population in uMhlathuze has increased by nearly 50% over the past decade, at an average of 4.2% per annum between 1995 and 2004, which speaks not only to trends in fecundity but also to the pull of urbanization. The population of uMlalazi municipality has actually decreased by an average of 0.6% per year between 1995 and 2004. Just more than 50% of the population in Nkandla is of working age (15-64 years), creating a high dependency ratio in Nkandla, i.e. for every possibly worker, there is one dependent. It is only in uMhlathuze where more than 60% of the population is of working age, or nearly two possible workers per dependent. The majority of the population across all local municipalities is female, with the highest disparity apparent in Umlalazi.

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LED Strategy The age profile of uThungulu indicates that the majority are persons are of working age, only 4% of the population is over 65 years of age according to Census 2001 statistics. This has both positive and negative implications for the district. The low numbers of the aged indicates limited reseources required for aged health care or housing. A potential negative could be experienced with regards to the high prevalence of HIV (indicated in the table below) in the district and the implication that the loss of economically active individuals between ages 15 and 65 would leave a gap of care for those under 14 years of age. The gender ratio in the district is skewed in favour of women (as indicated below), with 53.1% of the populous being female, this in turn relates to the traditional migratory work patterns in the province. Basic Age And Gender Of Municipalities In Uthungulu In 2004 Population 2004

Ave. annual Pop. Growth 1995 - 2004

% of Population (2004) Aged 15 – 64 yrs

Male

Female

HIV+

Mbonambi

109,097

1.0

55.8

47.4

52.6

14.9

uMhlathuze

297,566

4.2

64.1

49.0

51.0

16.3

Ntambanana

86,358

1.4

54.2

47.0

53.0

14.4

uMlalazi

223,834

-0.6

55.4

45.9

54.1

14.1

Mthonjaneni

51,515

3.2

56.5

46.4

53.6

15.3

Nkandla

135,360

0.1

50.4

43.7

56.3

12.7

uThungulu District

903,730

1.5

57.5

46.9

53.1

14.8

Source: Quantec Research 2006 HIV The concerns about the impact of HIV on uThungulu were mention briefly above, however, it needs to be reiterated as KwaZulu Natal has the highest HIV prevalence rate of all the provinces. The prevalence rates for people aged two years and older stands at 16.5% and for the youth aged 15 to 24 it is 16.1%, both of which are the highest percentages for all the provinces (HEARD). The greater proportion of females to males in the district also has an impact on these statistics, as they some, like the DOH statistics, are gathered predominantly at antenatal clinics, frequented solely by pregnant women. The average rates of HIV in the district according to the 2004 Quantec data is at 14.8%, which lower than the provincial average is still exceptionally high. Similarly, the HIV prevalence rate among women attending antenatal clinics is also the highest for KZN at 40.7% however, uThungulu district’s rate is higher at 43% (KZN DOH annual report 2002/03).

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LED Strategy Antenal HIV Infection Rates KZN

(Source KZN DOH) Although there is a lack of clear and reliable data regarding HIV at a local municipal level, it is nonetheless clear that it is a very serious issue and should be incorporated into whatever strategies or developments are undertaken in the study area. The effects of AIDS include decreased productivity of workers, increased absenteeism and additional costs of training of new workers. It also represents a greater demand and pressure health facilities and as the statistics garnered from antenatal clinics indicate a very real problem of AIDS orphans and child headed households. These factors must be taken cognizance of when devising local economic development strategies.

4.4 Access To Services Water Water access is highly varied across the district. Over a quarter of all households access to water is via local river and stream. The next most likely scenario is piped water outside of the dwelling, but within the property (just over 20%) and then piped water within the home (just under 17% percent). This has major implications on issues of health, economic opportunity and sustainable livelihoods. If households need to spend excessive time on water collection they are being restricted in the amount of time that they are able to spend on economic activity. The implications of a lack of water speak to the issue of household sanitation and associated problems. The low level of water access in individual dwellings could prove a constraint to the formulation of local economic development strategies if it is not taken fully into consideration. This constraint also

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LED Strategy provides a variety of opportunities and these in turn need to be explored with the key stakeholders in uThungulu district. Water Access In uThungulu At Household Level (Source Census 2001) Piped water inside dwelling

30.00

Piped water inside yard

25.00 Piped water on community stand: distance less than 200m from dwelling

Percentage

20.00

Piped water on community stand: distance greater than 200m from dwelling Borehole

15.00 Spring

10.00 Rain-water tank

Dam/pool/stagnant water

5.00

River/stream

0.00 Type of Water Access

Water vendor

uThungulu’s IDP identified the backlog in water and sanitation service provision as a major facet of the district’s development plan. The district’s target is to provide 90% of the population with basic water resources of 5L per day per person within 1km from abode, and to reach the RDP level of 25lt of water per day within 200m for 35% of the population. Water Backlogs For Supply To Rdp Standard

25

LED Strategy Sanitation distribution is focussed on basic education roll out to 90% of the district’s populous with an aim to provide basic VIP latrine system for at least 25% of the population. Currently, as indicated by the tables below the current backlogs on provision of water is 53.9% for uThungulu, with Mbonambi and uMlalazi most affected. The backlog in sanitation is at 78.9%, with Mthonjaneni and Mbonambi both most affected. Sanitation Backlogs For Supply To Rdp Standard

The figure below, taken from uThungulu’s IDP indicates the backlogs in sanitation, water, housing and electricity infrastructure provision in the district. Nkandla and Ntambanana have the greatest backlog in the district, while uMhlatuze has the least. Nkandla’s backlog is approximately one third higher than the district average. Infrastructure Backlogs In Local Municipalities

Source uThungulu IDP Review (2005/2006)

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LED Strategy Fuel Type of household lighting is a good indication of service access across the district. In uThungulu electricity is available for lighting in just over 52% of all households according to Census 2001 data. Candles are the next most popular choice of light at 44% indicating just how big a service delivery gap is present. Sources Of Lighting In uThungulu District Source of Lighting

Percentage of Households

Electricity Gas

52.57 0.42

Paraffin Candles Solar Other

1.94 44.30 0.25 0.52 Source Census 2001

4.5 Socio-Economic Analysis Economic Sectors The biggest sector in uThungulu is the manufacturing sector, constituting about one third of the total uThungulu economy in 2004. Transport, General Government Services, and Wholesale and Retail Trade sectors contributed about 10% each to district economy in 2004.The sectors contributing less than 2% to the district economy were the Electricity and Water, Catering and Accommodation, and Communication sectors.

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LED Strategy Sector Breakdown Of uThungulu Economy In 2004

General government services 10.4%

Agriculture, forestry and fishing 7.4% Mining 9.1%

Community, social and other personal services 7.1%

Business services 5.7% Finance and insurance 3.3% Communication 1.8% Manufacturing 30.9%

Transport 9.9% Catering and accommodation 0.8% Wholesale & retail trade 10.2%

Construction 2.2%

Electricity & water 1.2%

Source: Quantec Research 2006 Manufacturing is the main sector in uMhlathuze, followed by the transport and the mining sectors. The Agricultural, Forestry and Fishing sectors are the biggest sector in four of the other five municipalities in uThungulu. The biggest economic sector in Nkandla is General Government Services, contributing over 40% to the Nkandla economy. The Wholesale and Retail Trade sector is the second biggest sector in uMlalazi and third biggest in Mthonjaneni. Only in Mbonambi municipality does Catering and Accommodation, a tourism related sector, contribute more than 1% to the local economy.

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LED Strategy

Uthungulu District

Nkandla

Mthonjaneni

uMlalazi

Ntambanana

uMhlathuze

Mbonambi

Sector Breakdown Of Economies In Local Municipalities In 2004

Agriculture, forestry and fishing

22.6

2.4

21.5

22.7

39.4

2.6

7.4

Mining

17.7

10.2

12.4

0.7

3.3

1.8

9.1

Manufacturing

19.3

36.0

15.5

16.3

9.3

10.8

30.9

Electricity & water

0.4

1.2

1.3

1.5

1.9

0.0

1.2

Construction

4.2

2.1

1.6

1.9

1.9

3.3

2.2

Wholesale & retail trade

9.0

9.1

4.6

18.4

10.2

6.7

10.2

Catering and accommodation

3.5

0.6

0.2

0.8

1.0

0.7

0.8

Transport

7.4

11.6

10.3

3.4

2.4

4.6

9.9

Communication

0.4

1.5

8.6

1.9

1.7

7.0

1.8

Finance and insurance

0.8

3.7

1.5

2.5

2.6

1.2

3.3

Business services

3.8

6.2

4.7

3.8

2.7

10.3

5.7

Community, social and other personal services

5.0

6.7

9.3

9.4

4.8

9.9

7.1

General government services

5.9

8.6

8.5

16.7

18.9

41.1

10.4

TOTAL

100

100

100

100

100

100

100

Source: Quantec Research 2006 The communication sector is the fastest growing sector in uThungulu, growing at an average of 8.2% per year in real terms between 1995 and 2004. This was still lower than the provincial and national average growth rates for this sector over the same period. The same applies to the Finance and Insurance sector, where real growth was on average, 6.9% per year between 1995 and 2004. The Manufacturing sector grew at an average of 5.8% per year between 1995 and 2004 in real terms, more than double the provincial and national growth rate of this sector over the same period. The real growth in Community and Social Services was also substantially higher in uThungulu than in KZN and South Africa between 1995 and 2004. The Mining sector in uThungulu contracted at a real rate of nearly 2% per year between 1995 and 2004, following the provincial trend, while the sector as a whole only grew at a real average of about 1% per year over this period. The real average growth rate of the General Government Services and Construction sectors in uThungulu was also negative between 1995 and 2004, but was positive at provincial and national levels.

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LED Strategy The sector breakdown gives a good indication of the areas of emphasis for the district’s LED strategy – these are reviewed in more detail in section 5, where a review of the LM’s strategy is presented.

4.6 Employment Employment By Sector of

% Growth 1995 - 2004

Employment in uThungulu

% Total

Per Annum

Total

Agriculture, forestry and fishing

13,554

14.3

7.0

83.4

Mining

3,572

3.8

-6.0

-42.8

Manufacturing

14,244

15.0

-0.2

-1.5

Electricity & water

352

0.4

-2.4

-19.3

Construction

4,182

4.4

-3.5

-27.7

Wholesale & retail trade

11,121

11.7

6.2

72.0

Catering and accommodation

1,291

1.4

-3.4

-27.0

Transport

2,333

2.5

-1.7

-14.2

Communication

397

0.4

-4.4

-33.4

Finance and insurance

1,873

2.0

1.1

10.2

Business services

7,449

7.8

8.4

107.2

Community, social and other personal services

18,095

19.0

3.1

32.2

General government services

16,644

17.5

0.5

4.8

Total

95,108

100.0

1.8

17.8

Source: Quantec 2006, based on Census 2001 To put these low growth figures in perspective, the low level of employment growth in uThungulu is mirrored in each of the six local municipalities. The uThungulu Quality of Life Survey (2004) indicated that the number of households with no members employed is as high as 83.64% in Mthonjaneni, with only uMhlathuze falling below the 50% barrier. The average for uThungulu is close on 60%, these figures do however include all members of households, i.e. children, the elderly and housewives, whose economic impact is not valued.

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LED Strategy Percentage Persons Unemployed In Each Local Municipality And Uthungulu

Area

Employed

Unemployed

Not Active

Uthungulu District Municipality

23.84

24.18

51.99

Mbonambi

20.13

28.71

51.16

uMhlathuze

36.17

24.72

39.11

Ntambanana

16.11

22.70

61.19

uMlalazi

18.92

21.52

59.55

Mthonjaneni

23.98

23.61

52.41

Nkandla

7.22

24.71

68.07

Economically

Source Census 2001 The figures displayed above require a brief explanatory note, as the strict definition of unemployment has been made use of by the census data. Essentially, a non-economically active person is defined as being someone who has not actively sought work in the past 4 weeks. Given the nature of the district, in that the major economic nodes are concentrated in two out six local municipalities the time and distance constraints faced by job seekers could severely hamper the availability of work opportunities. This attempts to account for the high proportion of economically inactivity in the district as 57.5% of the population falls within the 15 – 65 years age category and yet the economic inactivity is recorded at 51.99% of the total employable population. Employment levels are lowest in Nkandla followed by Ntambanana, both local municipalities have over 60% of their potential workforce recorded as being economically inactive. This table highlights the need to develop economic development strategies that are tailored to each of the local municipalities’ needs to bolster workforce participation levels in the district.

4.7 Education The general level of education in uThungulu according to the 2001 and 1996 Census data is low and indeed worsened over the five year period. 31% of the population not exposed to any form of formal schooling in 2001, almost 5% up on 1996 figures. A further 18% entered the schooling system but left before completing primary school according to Census 2001. Interestingly roughly the same percentage of people have completed primary level education as obtained a higher education qualification in 2001. The vast difference between the number of higher persons with a higher education degree dropped close on 15% in 5 years from 18% in 1996 to a paltry 6% in 2001.

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LED Strategy Education Levels In uThungulu 35.00 30.00 25.00 20.00

2001 1996

15.00 10.00 5.00 0.00 No schooling

Some primary

Complete primary

Some Std secondary 10/Grade 12

Higher

Source: Census 2001

4.8 Income Levels The graph below indicates the disparity in income levels between the local municipalities. uMhlatuze, followed by uMlalazi and then Mbonambi have the most number of income earners. The level of income only peaks around the R3200 mark in uMhlatuze, however, the other municipalities average income is far lower, Nkandla and Ntambanana peaking at R800. Umlalazi income earners are clustered from R0 to R800 too, decreasing sharply thereafter. The average income in uMhlatuze is far higher than the remaining six districts, as is clearly indicated below by the height of uMhlatuze’s income line. 13500 persons earn approximately R3200 per month in uMhlatuze, in comparison, 7891 persons, split between the remaining five local municipalities earn a like amount.

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LED Strategy Comparison Of Income Across The District 15000 13500 12000 10500

Mbonambi

9000

uMhlathuze Ntambanana

7500

uMlalazi

6000

Mthonjaneni

4500

Nkandla

3000 1500 R 204801 or more

R 102401 - R 204800

R 51201 - R 102400

R 25601 - R 51200

R 12801 - R 25600

R 6401 - R 12800

R 3201 - R 6400

R 1601 - R 3200

R 801 - R 1600

R 401 - R 800

R 1 - R 400

No income

0

Source Census 2001

4.9 Implication for LED Each of these socio-economic factors plays a significant role in the formulation of potential LED strategies for uThungulu. The role of education and HIV impacts on the skill level and availability of labour in the district; provision of basic services relates to both health and available time resources for economic activities. Unpacking the relevant strengths and weaknesses of existing economic sectors aids in directing new efforts for growth and development. Importantly, LED is an inclusive process that each local municipality must participate and own in order to align their specialised strategies into a district wide integrated LED strategy that will benefit uThungulu.

4.10 Overview of Local Municipality’s Socio-Economic Profile 4.10.1 Mbonambi According to the population trends, population is increasing at Mbonambi despite the impact of HIV/AIDS. Most of the income is spent on food which is an opportunity for Mbonambi community to supply food. The rate of unemployment is increasing, therefore people should engage in the informal sector to become economically active using local resources. Literacy is improving in the youth category, however adults should not be left out. Adult Education Programmes such as ABET could be of assistance in improving adult literacy. According to sector and SWOT analysis the Agricultural, Manufacturing and Tourism have been identified as sectors with a high potential and they could be developed further.

33

LED Strategy There should be regular interaction between the municipality and key stakeholders to ensure that LED is a success. This will avoid repetition of project support and create sustainable LED projects. 4.10.2 uMhlatuze A key feature of uMhlatuze’s economy is the dominance of large capital-intensive companies producing commodities essentially for export. However they have little in common with each other besides the port and the relatively low cost of industrial land and services, especially electricity. The aluminium and ilmenite smelters rely on low cost electricity and account for the fact that uMhlathuze consumes 8% of the power generated in South Africa. The cost advantage will be lost in about 2007/8 when Eskom runs out of surplus generating capacity and begins to invest in new power stations. There is an opportunity to overcome this by generating power locally using readily available discard coal. There is also scope to build on local tourism assets in a variety of ways. The tourism sector is fairly labour intensive and has lower barriers to entry than most others but industrial pollution in the area is a disadvantage that will not be overcome easily. Unemployment and poverty is clearly a key issue and the 2001 Census records that more than 46 000 people or 40% of the workforce is out of work. It also reports that nearly 34 000 households exist on a monthly income of R800 or less, yet shows 101 people as having annual incomes in excess of R2,5 million. Low levels of education and skill were cited by industry as an obstacle to investment. It also affects the rate at which successful small businesses can be created. Less than two thirds of the population over 20 years of age has progressed beyond primary school while 18% have no schooling at all. Overcrowding in the better resourced government schools makes it difficult for industry to recruit and retain key staff. There are sharp contrasts in the spatial distribution of infrastructure and services, although most of the poorer communities are better off than those in the surrounding district in this respect. The port has excellent bulk handing facilities but lacks container handling capacity The John Ross Highway is in the process of much needed upgrading. Housing is a problem at all levels. A quarter of all households occupy one-room dwellings while at the other end of the scale there is a shortage of housing for the professional and technical staff on which major industries depend. A number of initiatives have been stalled by unresolved land claims. 4.10.3 Ntambanana The economy of Ntambanana is very poorly developed and is mostly based on agriculture, municipal employment and small shops. There is little economic activity within Ntambanana itself and it is reliant on surrounding areas such as Empangeni and Richards Bay for employment and consumer goods and services. This

34

LED Strategy means there is much leakage of income to outside areas and there is a need for initiatives, such as building small scale retail, in order to retain some of this income and stimulate economic activity within the area. The municipality has no rates base, therefore funding is an issue and it is reliant on donor grants. There are large backlogs in terms of service delivery and many households especially in the more sparsely populated tribal areas are without any formal provision of water, electricity and sanitation. Unemployment is very high. Census 2001 puts it at 58,5%. Education and skills levels among the population tend to be quite low, therefore skills and training programmes will be necessary. Income levels are depressed, lagging behind district and provincial averages, with 56% of the population earning less than R800 a month. It is mostly rural, no large or formally established towns. The primary node is Buchanana. It is anticipated that nodal development should take place as most of the region is sparsely populated which makes service delivery difficult. There is a need to develop the town centre, such as developing businesses, a taxi rank, clinic, spaza shop etc. Developing the town will also make service provision easier. Land ownership of the area consists of privately owned commercial sugarcane farms in the Heatonville district, and the rest of it lies in the hands of the traditional authorities and owned by the Ingonyama Trust Board. The municipality does not own any land of its own, which may provide challenges in developing the area. The most promising anticipated development for the area is the Royal Zulu Biosphere which proposes to increase the size of the Hluhluwe-Umfolozi game park by nearly 50% down into the Ntambanana municipality. This has enormous development potential for the area, increasing tourism, creating jobs and attracting investment should it be implemented. At this stage the phase of implementation of the biosphere is unknown. 4.10.4 Umlalazi Local Economic Profile uMlalazi Local Municipality is the largest municipality in South Africa in terms of geographic area and boast kilometres of pristine beaches. uMlalazi Municipal area is anchored by three urban centres; Eshowe fulfils the role of the subregional centre and has most diversified economy. Gingindlovu is a small urban area, which acts as a service centre for its immediate surrounding area. Mtunzini is a dormitory town in respect of the University of Zululand and to certain extend in respect of Empangeni and Richards Bay. The population distribution in the municipal area is characterised by relatively high population densities within urban nodes, and low densities in rural areas as a result of farms under white ownership. Over the last few years, local economic development has become one of most important functions of local government. The Municipality’s vision summaries the challenge induced by poverty and emphasises the important role of local government to eradicate poverty by means of local economic development.

35

LED Strategy By far the largest proportions of services backlogs occur in the areas and the provision of these services requires a substantial amount of funding. The area appears to have sufficient sources for the provision of water. The complicating factor is however the undulating topography that is characteristic of the entire municipal area. In some instances it therefore becomes difficult and expensive to provide these services. The national route (N2 Motorway) between Durban and Richards Bay is located to the south-east of the municipal area and is aligned parallel to the coastline and to the immediate west of Mtunzini. Arterial roads through the area are in good condition. There are various district roads in the area together with smaller farm or agricultural roads. In practically all instances these roads are in a poor condition and in need of upgrading. The major challenge that faces uMlalazi Municipality is the lack of capacity building and the lack of basic services that characterises this area. Economic development is influenced negatively as a result of the locality of the uMlalazi Local Municipality adjacent to Mhlatuze Local Municipality. The emphasis is on creating stronger interrelationships between uMlalazi Local Municipality and uThungulu District Municipality, particularly with promotion of the local economy. The LED will serve as a means of investigating various options and opportunities available in the municipality to broaden the local economic base of the area in order to address the creation of employment and other economic spin offs. 4.10.5 Mthonjaneni The Mthonjaneni Municipality has a population of 50 383 people. Of this number, 90% of the population reside in the traditional & farming areas, which surround the town of Melmoth. Only 27.6% of the entire population is employed. The Municipal area has shown a growth of 4.4% in the number of people employed between the 1996 and 2001 period. These two years are based on the last two Census counts that were undertaken. However, unemployment and poverty levels have increased by 64.3% and 72.2% respectively. The number of people employed in the informal sector has increased by 66% over the 1996 to 2001 period. Annual household income has increased by 22.5% amongst the Black population and by 8.6% amongst the White population. The Census information recorded no Indian or Coloured people residing in the area. Municipality’s GGP contribution to the province has decreased by almost 10%. Overall the Human Development Index (HDI) of the Municipality has increased by 0.04%. The dominant economic sectors operating in Mthonjaneni are agriculture, community services, manufacturing, trade, and households. However, business performance has declined and businesses have been closing down. A general summary of the above is that the municipality, like many other rural municipalities is in economic decline and is in need of economic regeneration.

36

LED Strategy The main problems that are experienced in Mthonjaneni are as follows: Economic leakage from the area. People don’t spend their money in Mthonjaneni and many people working in the area are temporary residents. The presence of the Chinese retailers in the town of Melmoth is a serious threat to local businesses as the local prices are too high to compete with that of the Chinese products. The economy is highly dependent on agriculture. Most of the timber and other crops are grown commercially. Local people are still growing traditional products in their gardens. They know that there is a need for change but are unaware of what the possible opportunities are. Arid areas don’t have agricultural potential and require investigation into other possibilities. There is a large number of unskilled people in Mthonjaneni. These people want employment, but cannot access it. There are also a limited number of employment opportunities currently existing in the area. The possibility of the moving of Government offices from Ulundi to Pietermaritzburg could have hazardous effects on Mthonjaneni as many people reside in Melmoth and commute to Ulundi on a daily basis. The development of Nkandla as a town means less people buying in Melmoth. The effects of this are already being felt in the area. 4.10.6 Nkandla KwaZulu-Natal is the fourth poorest province in South Africa but Nkandla (with other “deep rural areas”) suffers from further income inequality within the province. There are very few local opportunities for employment. Many men have migrated out of the area in search of work in the coastal areas of the province. The Gini coefficient of 0.58 is higher than in the rest of the country. The average income earned by Nkandla workers is R400-R800 per month compared with R800R1600 per month earned by employed people across the province. This presents a case for a weighted deployment of Uthungulu District resources to the marginalised rural areas. The skills level at Nkandla is relatively low. The proportion of people over the age of 20 years with no schooling is double the provincial average. The proportion of people with secondary levels, matric and tertiary education is about half those achieved in the province. This also indicates that there is substantial leakage of people with managerial, business and technical skills to the cities. An effective skills development programme is needed to create an enabling environment for LED. As a result of the low skills base, Nkandla has a particularly high proportion of people seeking work in comparison to those who are actually employed. There is a sense of hopelessness about obtaining work - the number of people in the 15-64 year age group who are not actively seeking employment is very high in comparison with the provincial and national figures. Unemployment will impact on crime levels, creating unfavourable conditions for further business investments in the area. There is a desperate need to create broad-based employment schemes. The local municipality will not be able to do this on their own. Creative partnerships with provincial and national government programmes must be pursued aggressively.

37

LED Strategy The end result of these inequalities is reflected in household incomes. The average annual household income is R4800 to R9600 at Nkandla compared with R19200 to R38400 in the Ethekweni Metro. Uthungulu District has a similar profile to Nkandla but with significantly higher proportion of households falling into the higher income brackets. More than 80% of households at Nkandla are living below the poverty datum line compared with a national average of about 50%. Households survive through adopting a key strategy – that is to obtain income from a diversification of sources. The important point for the Nkandla LED, is that a traditional sectoral analysis of the economy will not be very helpful when trying to find ways of generating income among the vast majority of the Nkandla population. It may be more useful to consider ways of strengthening and expanding household capital in poor rural areas. There are internal inequalities within Nkandla with indications of extreme poverty, and has areas that are poorly serviced in terms of protected water. However health and education facilities appear to be fairly evenly spread - although, the available data says nothing about the ratio of children per classrooms and teachers, or the quality of schools. Land extension is a sensitive issue within this sub-region as this is not accommodated within the Land Reform legislation. Since most of Nkandla falls under Tribal Authorities, land reform solutions are complex. Land Reform will contribute to the increased opportunities for commercial farming thus aiding in the economic development of Nkandla.

38

LED Strategy SECTION 5: OVERVIEW OF LOCAL MUNICIPALITIES LED STRATEGY FRAMEWORK 5.1 Ntambanana The key goals and objectives of the Ntambanana Local Municipality’s LED strategy are summarised in the table below: Goals Expand the economic capacity of the Ntambanana municipality through the agriculture and tourism sectors Improve the small business environment so that it is supportive and enabling of emerging businesses Promote nodal development Improve LED capacity in the Natambanana municipality

Objectives • Diversify and expand the agricultural sector • Beneficiation of primary products • Develop opportunities related to tourism • Provide business support functions • Develop rural service centre • Develop municipal structures for LED

Ntambanana’s LED Strategy is focussed on the development of agricultural diversification through the development of co-operatives, accessibility to machinery and equipment as well as the establishment of periodic markets. Focus on beneficiation schemes related to agri-processing like a local abattoir and skills development are also key foci. The much discussed Royal Zulu Biosphere remains a key feature of the tourism sector development, along with improvements in marketing and institutional structures. Business support services and skills training programmes will help facilitate an enabling environment for the furthering of the municipality’s LED goals.

39

LED Strategy 5.2 Umlalazi Goals Diversification of agricultural sector, greater inclusion of smaller scale rural farmers in agrieconomy Tourism sector development

Create and enabling environment for local business development Growth in SMME development Improve institutional strength in LED

Skills development and capacity building

Objectives • Identify agri-beneficiation opportunities • Generating value adding employment opportunities • Creating additional market access Enhance visitor numbers Generate further employment opportunities Create and enabling environment for Generate imputes for clustering Additional investment in infrastructure Addressing urban transport issues Encourage business co-operatives Focus on empowering co-operatives Develop an innovation centre LED internship programme LED skills development focus for municipal workers Focussed in agriculture, tourism and business sectors • Enhance local knowledge base • Encourage better natural resources management • Enhance general best practices • • • • • • • • • • • •

Umlalazi’s agricultural sector LED focus is primary based on beneficiation activities; potential identified programmes include an agri-processing plant, bio-diesel production and the introduction of further farmer co-operatives and additional market spaces. The tourism sector LED projects are focussed on improved service delivery and better clustering of locally available services. Trade and industry related LED initiatives relate predominantly to generating a more enabling environment for local business.

5.3 Mbonambi Goals Agricultural sector development and move away from unsustainable short term poverty-alleviation projects Manufacturing sector expansion and diversification Focus the tourism sector on craft in order to capture the unique skills present in the municipality

Growth in informal economy SMMEs

Objectives • Improve local job opportunities • Grow local skills base • Discourage financial leakage out of the municipality • Increase local participation in this sector • Focus on existing strengths in textile sub-sector • Grow local business opportunities in the municipality • Increase local participation in economic activity related to crafting • Incorporate this sector into the overall tourism strategy for the municipality • Focus on the hospitality and catering sector and develop co-operatives for engaging informal SMMEs and enhancing their access to formal support

40

LED Strategy Mbonambi’s LED Strategy is anchored in the tourism sector, with the key local project being the development of the N2 Gateway Cultural Village and the development of the Mbonambi Craft Emporium Project. Other key sectors are agriculture with focus on forestry products and agri processing through the formation of co-operatives as well as additional commercial food production schemes. Manufacturing sector initiatives are centred around block and furniture making.

5.4 uMhlatuze Goals

Develop cluster strategies for growth in manufacturing sector and enhance the growth in this sector

Improve critical infrastructure and services in the municipality to better local advantages

Improving soft infrastructure and harnessing competitive advantages

Objectives • Increase employment opportunities and enhance local competitiveness through development of secondary and tertiary industry around existing key producers • Develop clusters in key service and ancillary industries • Generate a competitive supplier base within the municipality • Create a regulatory framework that reduces the barriers to entry for emerging firms and potential international investors • Maintain and enhance the competitive advantage of the port • Reduce the threat of disrupted electricity supply for big industry • Develop a mechanism to resolve conflicts over the use of the harbour area • Address land constraints to industrial development on all levels • Develop the IDZ as the key infrastructure element in the clustering process • Develop broadband capacity to compete with rival investment destinations and linked to the proposed landfall at Mtunzini • Develop an integrated road network, encompassing both rural and urban roads that meets the needs of both the community and industry • Establish economic nodes at Esikhaweni, Ngwlezane and Nseleni • Incorporating recycling and buy-back schemes as job generators • Upgrade the airport to SADC status • Establish a strategic partnership to lead LED of local stakeholders • Co-ordinate activities of LED roleplayers to endure that priorities are addressed • Improve skills base by coordinating a technical training initiative along ‘Shannon model’ lines • Facilitate the successful merger of BDC and MAC into SEDA in Esikhawini and Nseleni • Establish local venture capital scheme • Reduce the negative impact of crime by improved CCTV and BAC involvement • Establish a partnership to adequately address

41

LED Strategy Goals

Generate additional employment opportunities in the tourism sector

Improve employment opportunities in agriculture by focussing on commercialising and diversifying production and market access

Strengthening the local stake in commerce

Objectives HIV/Aids • Register uMhlatuze as a biosphere • Obtain endorsement of the municipality and UTA for the Strategic Tourism Development Plan • Develop an uMhlatuze Tourism Association with the resources necessary of effective destination marketing, management and development • Develop a tourism marketing strategy and align it to that of the district • Establish a set of busaries and training in tourism development • Promote better access to information and improved signage • Develop cultural tourism linked into the Ongoye Triangle • Revitalise the Empangeni Arts and Craft Centre • Promote the production of indigenous crafts • Investigate the potential of a ‘scenic road’ development along the coast • Establish stakeholder partnership with the capacity to facilitate the implementation of agricultural strategy. • Negotiate a co-ordinated approach to support and development with all roleplayers including commercial and rural farmers • Establish a fresh produce market and collection system • Identify, promote and support the production or robust higher value cash crops suitable for small scale farming • Initiate a ‘buy local’ campaign in which locally owned businesses are promoted and celebrated • Establish a formal policy to provide equitable opportunities for local businesses in new developments • Commission feasibility study into distribution hub options for Empangeni • Negotiate, implement and provide facilities for a graded system of informal markets in which traders are registered and receive appropriate skills training

Umhlatuze’s LED strategy is multi-sectoral and integrated as both the formal and informal economies in the municipality are well developed. A key area of focus is the manufacturing sector, and the development of the ‘missing middle’ or SMME suppliers of services and goods to large firms as well as in technical skills and capacity building. Interestingly, despite the highly developed multiple sector economy, emphasis remains on the enhancement of infrastructure in order to better develop an enabling environment for LED growth.

42

LED Strategy 5.5 Mthonjaneni Goals

Develop the agricultural sector

Develop the tourism sector

Business retention and Expansion

Identification of Capital Investment Projects, New Product Development & Facilitation of Access to Funding for Development Promotion of Capacity Building, Training, Mentoring & Support Services

Promotion of Market Research, Marketing, Knowledge & Awareness Campaigns Implement BEE, PDI, Gender Promotion & HIV/AIDS Awareness in LED

Objectives • Promote food security and commercialised production • Support the establishment of new and existing commercial farming ventures • Promote livestock farming • Ensure sustainable and profitable agricultural sector • Identify and prioritise tourism potential in the municipality • Establish linkages with existing tourism infrastructure throughout the district • Promote the development of R66 • Encourage TKZN branding and grading in the municipality • Develop Phobane Lake • Identification of local blockages • Development retention mechanisms for the municipality • Improve infrastructure provision for economic activities • Identify, Package & Motivate New Development Opportunities • Facilitate Business Related Education & Training Courses in the Municipality • Formulate & Implement Systems for Information Dissemination & the Capacity Building of Local Communities • Knowledge & Awareness Campaigns • Formulate Marketing Strategies & Tools to Attract Investment & Create Awareness Regarding the Opportunities in the Area. • Encourage Participation of Vulnerable Groups • Adopt & Implement A BEE as a policy across the municipality

Mthonjaneni’s LED is focussed primarily on the agricultural and tourism sectors. Formulating and integrated agricultural plan, developing local markets as well as generating and enabling environment for agricultural growth are all key features. Tourism related LED programmes are fairly diverse, key issues relate to the recognition of local potential, intensive marketing as well as environmental concerns. Business retention plans are an essential component of Mthonjaneni’s LED, centred on infrastructure improvements and retention mechanisms.

43

LED Strategy 5.6 Nkandla Goals Develop infrastructure using a nodal model

Exploit tourism opportunities Protect and utilise natural resources Facilitate skills development and job creation Build local participation in LED planning and implementation Link LED to social programmes

Objectives • Enable infrastructural and institutional development of primary node at the town of Nkandla • Enable infrastructural and institutional development of primary node at key secondary LED nodes • Provide access to key tourism sites • Co-ordinate tourism strategy with neighbouring municipalities • Promote forestry processing facilities at Nkandla • Promote agri-processing facilities at Nkandla • Facilitate multiplier effects from EPWP projects through a comprehensive skills development programme • Business retention and expansion and new business attraction • Facilitate social cluster planning with Health and Welfare departments and NGOs working in Nkandla.

Nkandla’s LED is focussed on infrastructure development in order to create a more conducive environment for economic activity to occur in the area. The proposed programmes and projects are all designed to make use of local content (skills and inputs) and to generate greater capacity building. Tourism and agriculture are two key sectors in Nkandla with clearly identified projects, from better access to tourism sites, the development of a cultural village through to the development of a comprehensive tourism strategy for the municipality. LED initiatives in agriculture are focussed on the forestry sub-sector as well as agri-processing, utilising established best practises from the already existing Nkandla essential oils’ project and the Ntingwa tea estate project. Soft infrastructure is also addressed in considerable detail in the LED strategy, with a key emphasis on skills development and participation of local stakeholders to better encourage local economic development.

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LED Strategy SECTION 6: CREATING DISTRICT COHESION This section builds on the descriptions of the LM’s LED Strategies described above and intended to start identifying gaps and potential areas of synergy that UDM can begin to build upon for the development of a cohesive district LED strategy.

6.1 LED Good Practices The World Bank’s LED Primer (Swinburn, Goga, Murphy: 2006) identifies the following aspects as being critical ‘good practise’ for an LED Strategy: The approach must be integrated to incorporate social, environmental and physical as well as economic issues in the area. A carefully considered strategy must be developed utilising local partners working towards a common vision. All spheres of economic activity both formal and informal must be taken into account in the development of the strategy. A mix of projects, encompassing short term, medium term and long term are necessary in order to grow stakeholder confidence and form lasting partnerships in the area. Encouraging effective local leadership and governance is critical to promoting credibility with all stakeholders. Capacity building of both management and implementation teams is necessary to ensure best possible project implementation. Essential that municipal government be a key driver of LED and that there is exists “strong political will”. Inter-governmental support in terms of financial, technical and political support made available from other key departments at both a local and national level. Projects and actions should only be undertaken if there is clear indication of a local driver committed to the project’s success. The LED Best Practises table on the following page indicates that the local municipalities have addressed these “good practise” measures in their LEDs and highlights the shortfall in the arena of inter-governmental support, this primarily related to coordination issues with the representatives of the Dept of Agriculture, Department of Water Affairs and with the SETA’s and FET colleges in the local municipalities.

45

LED Strategy LED Best Practise Matrix Local

Integrated

Local

Dual

Short,

Local

Capacity

Municipal

Inter-

Municipality

Strategy

Partners

Economy

Medium, Long Term

Leadership

Building

Government Involvement

government support

Local Driver

Mbonambi













uMhlatuze















Ntambanana

















Umlalazi

















Mthonjaneni

















Nkandla















 







The local municipalities’ LEDs are structured according to the recommended best practises discussed above. Each of the municipalities have strategies that speak to their local conditions, take cognisance of the dual economy, have identified local partners and stakeholders as well as indicated a range of projects spanning the next 5 year period. Local leadership has emerged as a critical factor across the board and the strategies are being driven by municipal government and relevant key local stakeholders (like farmers groups and co-operatives and local business chambers). Where possible, projects that are immediately implementable have identified local champions or drivers. The majority of the local municipalities have however experienced some difficulty in achieving coordination with other government departments, and this is perhaps the key area of involvement for the UDM within the context of LED Best Practises. The role of the District however is discussed in greater detail below, following on from the LED Gap Analysis Matrix below.

46

LED Strategy LED Gap And Opportunity Analysis Matrix LOCAL MUNICIPALITY

Mbonambi

uMhlatuze

Ntambanana

Umlalazi

CAPACITY BUILDING

TOURISM SECTOR DEVELOPMENT

AGRICULTURE SECTOR DEVELOPMENT

SMME DEVELOPMENT

INFRASTRUCTURE DEVELOPMENT

TRADE AND INDUSTRY DEVELOPMENT

Cross cutting issue, present in agricultural strategy and SMME development strategy Cross cutting issue, dealt with most comprehensively within the improvement of soft infrastructure

Highly strategy tourism crafting

focused on cultural and local

Growth in local job opportunities and skills, encourage the development of a market network

-

Focussed on growth opportunities in the textile sub-sector.

Grow employment opportunities in this sector through the development of specialised local strategy

Improve employment opportunities by focussing on commercialisation and diversification of production and market access

Informal sector focus in the catering and hospitality sub-sector, aimed at enhancing access to formal support mechanisms Part of the Trade and Industry focus, aimed at developing small supplier base for local big industry

Develop cluster strategies for growth and manufacturing

Improve LED capacity within the municipality via the development of municipal structures for LED Improve institutional strength of LED via an internship programme and a

Develop opportunities for tourism linked to the Royal Zulu Biosphere Project

Diversify and grow local crop production and encourage beneficiation of primary products

Improve the small business environment so that it is enabling and supportive on of emerging businesses

Improve critical infrastructure and services in the municipality, to enhance economic attractiveness • Improving soft infrastructure and harnessing competitive advantages Promote nodal development to enhance service access for more rural areas

Enhance the existing sector by promoting an enabling environment and encouraging local

Diversification of agriculture, and greater inclusion of smaller scale rural

Focus on empowering cooperatives through the development of an innovation centre

Focus on investment in infrastructure tied to inducing business investment,

Encouraging business cluster development and the formation of co-operatives

47

•

-

LED Strategy LOCAL MUNICIPALITY

CAPACITY BUILDING

TOURISM SECTOR DEVELOPMENT

AGRICULTURE SECTOR DEVELOPMENT

skills development focus for municipal workers

employment generation opportunities

Capacity building, training, mentoring and support services – facilitating training and building systems in the municipality

Developing a sector utilising district infrastructure building on brandings

farmers and co-opts in the agri-economy. Renewed focus on agri-beneficiation and market access Focussing on moving beyond subsistence and into the commercial realm, notably developing new crop choices and focussing on animal husbandry

Build local participation in LED planning and implementation

Exploit tourism opportunities by providing access to key sites and better coordination with adjacent municipalities

tourism existing tourism and TKZN’s

SMME DEVELOPMENT

Nkandla

48

TRADE AND INDUSTRY DEVELOPMENT

addressing urban transport issues

Linked into business retention and expansion strategy

Mthonjaneni

Protect and utilise natural resources via the promotion of forestry processing facilities and agriprocessing facilities

INFRASTRUCTURE DEVELOPMENT

Facilitate skills development and job creation through the EPWP projects

• Identify capital investment projects, new product development and funding access. • Promotion of market research and marketing knowledge and awareness campaigns • Implement BEE, PDI, Gender Promotion & HIV/AIDS awareness in LED Soft infrastructure – link LED to social programmes

Business retention and expansion strategy, linked to improved physical infrastructure provision for economic activities

-

LED Strategy The question that then arises out of this is what is the role of UDM in driving LED, is it to plug these gaps or to help enable an environment conducive to LED in each of the local municipalities? The following table, LED Gap Analyis Matrix on the following page attempts to begin to address this issue. Some measure of district level cohesion is required within all of the categories outlined above, however at varying levels of intervention. Capacity building is defined with slightly different focus in each municipality, and in order to insure that LED is undertaken along similar lines throughout the area it does require district level support in order to insure that there is a set standard of skills being developed across the district. Despite a district level tourism strategy, there is little cohesion in the LMs approach to this sector, this is primarily due to the high levels of variance, due to the development of local tourist attractions across the district. UDM’s role in this sector would most likely require a review of the tourism strategy and attempting to align the LM’s foci into strategy.

Agriculture is a unifying feature throughout the district, with an emphasis on growing commercial activities, agricultural beneficiation and improved market access. This in turn allows UDM to be involved in the formation of a more enabling environment for the agricultural sector, possibly through the development of a fresh produce transit network or a series of local markets that encourage the introduction of the cash economy into the sector, as well as discourage the leakage of monies beyond the district boundaries. SMME development is closely associated with the issues surrounding capacity building. A nonintegrated approach could mean that local municipalities not adequately equipped to provide SMMS training and skills development, or manage initiatives to encourage SMME development would be unable to adequately develop this critical sector. SMME development is a critical LED issue that the UDM should be involved in driving this for the district. Infrastructure development remains a central feature of LED, and this is already a key element that the UDM involved in, and indeed is the major driver of. Potential further involvement could centre on the much discussed nodal development model. Soft infrastructure that could be focussed upon at a district level include a revamp of the existing LED forum; the already under-way incentive policy as well as the promotion of local services and products in the district to enhance local consumerism. Trade and industry strategies within the district are primarily aimed at business retention and expansion as well as at opportunities surrounding the formation of business clustering to better capture local skills and capacity and provide better service to the sector. The focus of the UDM in this regard could be on the examination of business clustering not just within the IDZ in uMhlatuze but examining opportunities throughout the district.

49

LED Strategy The evaluation of the economic situation in the district provides the starting point from which the development of an integrated LED strategy can begin. The identification and reiteration of the seriousness of the demographic issues surrounding education, HIV and quality of life in the region must be taken into consideration alongside the economic analysis. The differing skills and income levels across the district provide direction for positive intervention strategies to be developed. As the local municipalities’ LED foci indicate uThungulu is a diverse region with a myriad of economic opportunities and strengths. Throughout the district there is concern about municipal LED institutional capacity and creating an enabling environment in both hard and soft infrastructural terms. The more rural municipalities are focussing on their strengths in agriculture and adopting news ways of looking at the economic opportunities available – choosing high value and high demand crops, pursuing agriprocessing strategies and sharing skills through the development of co-operatives. uMhlatuze and Umlalazi’s LEDs have a wider range of strategies that speak to the local criteria, however, emphasis remains on infrastructure and an skills development as well as critical facilitation of a favourable business setting. The next phase of this study is essentially the development a district level SWOT analysis, delving into considerable depth across all economic sectors that will incorporate the data gathered in the local economic analysis and then feed into the district wide analysis. This in turn will enable the development of the holistic sector integration framework to begin and following on from that the creation of a development framework, identifying key strategies and potential projects to foster local economic development in each local municipality and enable a district wide integrated strategy to emerge and be implanted.

50

LED Strategy SECTION 7: IN-DEPTH SECTOR ANALYSIS uThungulu District Municipality is an area of remarkable economic diversity. Both rural and urban settings contain a myriad of economic undertakings, from tourism through to agriculture, business services and manufacturing as well as transport and community services are all present in varying intensities across the UDM. This section is designed to highlight the three major sectors present in the district: agriculture, manufacturing and tourism, so as to best indicate areas where the greatest opportunities for further LED are possible. Mining is a significant sector in the local economy – and presided over by a handful of key specialised companies - and, the opportunities for LED within the sector are constrained by the high barriers to entry so does not enter into the fray. Before discussing of the key sectors follows below it is useful starting point to examine the existing employment patterns in the district.

7.1 Employment Employment and unemployment figures in the district are on a par with the provincial averages, although some of the local municipalities, like Mthonjaneni indicated in the uThungulu Quality of Life Survey (2004) that more than 83% of households have no employed persons living in the household. Only in uMhlathuze does this figure drop below 50%, with the average for uThungulu being about 60%. Census 2001 is the latest complete and reliable unemployment data available at district and local levels. In 2001, 52% of the working age population were considered economically inactive, i.e. have not taken any steps in the 4 weeks prior to Census to look for work. Of those that are considered economically active, more than 50% are unemployed. Unemployment, as measured by Census 2001, was just above 40% in uMhlathuze, but was near 60% in Mbonambi and Ntambanana and over 75% in Nkandla. Percentage Persons Unemployed in each Local Municipality and uThungulu

Area

Employed

Unemployed

Not Active

uThungulu District Municipality

23.84

24.18

51.99

Mbonambi

20.13

28.71

51.16

uMhlathuze

36.17

24.72

39.11

Ntambanana

16.11

22.70

61.19

Umlalazi

18.92

21.52

59.55

Mthonjaneni

23.98

23.61

52.41

Nkandla

7.22

24.71

68.07

Source: Census 2001

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Economically

LED Strategy The district average for employment in 23.84%, with Mhlatuze experiencing employment levels of 36.17% and Nkandla of only 7.22%. Unemployment figures are close on a par with each other across the district, averaging between 21 and 24% throughout, with Mbonambi indicating the highest level of unemployment at 28.71%. It is estimated that employment in uThungulu has increased at an average of 2% per year between 1995 and 2004 to over 95,000 in 2004. The Community and Social services sector is the biggest employment sector with an estimated 18,000 employment opportunities in 2004, followed by the General Government Services with over 16,500. The manufacturing sector had just below 15,000 employment opportunities in 2004. The growth in employment varied by sector, with employment in the agriculture, forestry and fishing sector nearly doubling between 1995 and 2004, increasing at an average of 7% per annum over this period. Employment in the business services sector more than doubled between 1995 and 2004 to nearly 7,500 in 2004. Employment in the mining sector in uThungulu has dropped by more than 40%, or 6% per annum, between 1995 and 2004. Interestingly, employment in the construction sector dropped by nearly 28% between 1995 and 2004 which is a telling sign of low growth in hard infrastructure development. Breakdown of employment per sector and estimated employment growth Employment uThungulu

in

% of Total

% Growth 1995 - 2004 Per Annum

Total

Agriculture, forestry and fishing

13,554

14.3

7.0

83.4

Mining

3,572

3.8

-6.0

-42.8

Manufacturing

14,244

15.0

-0.2

-1.5

Electricity & water

352

0.4

-2.4

-19.3

Construction

4,182

4.4

-3.5

-27.7

Wholesale & retail trade

11,121

11.7

6.2

72.0

Catering and accommodation

1,291

1.4

-3.4

-27.0

Transport

2,333

2.5

-1.7

-14.2

Communication

397

0.4

-4.4

-33.4

Finance and insurance

1,873

2.0

1.1

10.2

Business services

7,449

7.8

8.4

107.2

18,095

19.0

3.1

32.2

General government services

16,644

17.5

0.5

4.8

Total

95,108

100.0

1.8

17.8

Community, services

social

and

other

personal

Source: Quantec Research 2006

52

LED Strategy 7.2 Soft Infrastructure At first glance the soft infrastructure of the District is impressive, there is well organized local government and business interest groups, as well as farming interest groups – grower associations and farmers groups. The level of soft infrastructure is not constant across the district, and many of these support structures have limited reach into the deep rural areas, particularly agricultural and business support extension services. While HIV/Aids management systems are in place, the sheer volume of need reduces the effectiveness of available resources. The HIV/Aids crisis is adding to the chronic skills shortage being experienced in the district, with many local businesses choosing to source employees from outside of the district, Anti-personnel and property crime remain a major concern within uMhlatuze. Environmental degradation remains a serious concern in the District most notably in areas of the district experiencing high levels of heavy industrial development.

7.3 Physical Infrastructure and Services uThungulu District Municipality is the mass water and power supplier to all areas of the district with the exception of uMhlatuze. There are backlogs in service delivery, with the majority of these linked to lack of facilities provided in what was KwaZulu. These backlogs are being addressed. The District’s infrastructure includes a myriad of national, district and rural roads as well as physical infrastructure of the port – predominantly bulk orientated with some discussions currently underway regarding the addition of container handling facilities. A dedicated coal rail link is in place, from the hinterland through to the port. The development of the IDZ in Richards Bay is well underway, with zoning and tenants being identified. Communications is one area that UDM needs to explore in greater detail, especially as the opportunities surrounding the cable landfall at Mtunzini.

7.4 Manufacturing Metals and related products is the biggest industry in the uThungulu manufacturing sector, contributing more than 40% of the nearly R4.6 billion worth of manufacturing output in 2004. The second biggest contributor to the manufacturing sector in uThungulu was the petroleum, rubber, plastics and chemical industries which contributed 18% or R830 million in 2004, followed by the wood, paper and printing industry that contributed 13% in 2004. The manufacturing of food, beverages and tobacco products, transport equipment products, and furniture products, contributed more than R350 million each to the uThungulu economy in 2004.

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LED Strategy Breakdown of the manufacturing sector in uThungulu in 2004

8%

Food, beverages and tobacco

9% 1%

Textiles, clothing and leather goods

8% 13%

0% 1%

Wood and paper; publishing and printing Petroleum products, chemicals, rubber and plastic Other non-metal mineral products Metals, metal products, machinery and equipment

18%

Electrical machinery and apparatus Radio, TV, instruments, watches and clocks Transport equipment

40% 2%

Furniture and other manufacturing

Source: Quantec Research 2006 The real rate of growth in the Manufacturing sector was just below 6% per annum between 1995 and 2004. However, there were significant differences in the growth rate of the different industries. The furniture industry experienced real growth of 15% per annum between 1995 and 2004, i.e. real output increased by over 250% between 1995 and 2004. The petroleum and chemical manufacturing industry had real annual growth of over 13% between 1995 and 2004. This contrasts sharply with the clothing and textile industry, where manufacturing contracted by about 30% in real terms between 1995 and 2004, or nearly 2% per annum. The food and beverages sector also experienced negative growth over this period.

54

LED Strategy Real annual growth rates of manufacturing industries in uThungulu between 1995 and 2004 Total: Manufacturing Furniture & other manuf. Transport equipment Radio, TV, instruments, watches Elec. machinery & apparatus Metals, machinery & equipment Other non-metal mineral products Petroleum, chemicals, rubber & plastic Wood, paper; publishing Textiles, clothing & leather Food, beverages & tobacco -2

0

2

4

6

8

10

12

14

16

%

Source: Quantec Research 2006

7.5 Exports and Imports Total exports from uThungulu to the rest of the world was over R14.5 billion in 2005, while imports from the rest of the world was just under R4.5 billion in 2005. The nominal growth of exports from uThungulu to the rest of the world was 19% per year between 2000 and 2005, while the nominal growth in imports into uThungulu from the rest of the world was 21% per year over the period. Exports of base metals and related products grew at a nominal rate of 78% per year between 2000 and 2005, and constitute over 50% of products exported from uThungulu to the rest of the world in 2005. Chemical products is the second biggest export product from uThungulu, but grew only at about 7.8% per year in nominal terms. Imports of chemical products have increased in nominal terms at a rate of 29% per annum between 2000 and 2005 to about R2.8 billion in 2005, more than half of all imports from the rest of the world into uThungulu. The importation of motor vehicle parts and components has fallen dramatically in nominal rand value terms from a high of R106 million in 2000 to R46 million in 2005, a reduction of 16% per year.

55

LED Strategy Selected Exports and Imports of uThungulu district to and from the Rest of World exceeding R10million in 2005 (HSC4 Classification)

Vegetable products

Exports 2005 (R '000)

Imports 2005 (R '000)

24,777

Prepared foodstuffs; beverages, spirits, vinegar 18,951 & tobacco products

Nominal Annual Growth 2000 - 2005 Exports

Imports

20

31.2%

-40.5%

2,708

18.2%

20.6%

Mineral products

1,677,433

526,502

-5.0%

24.0%

Chemical products

2,378,620

2,791,259

7.6%

29.0%

Plastics & rubber products

8,439

36,853

37.8%

4.3%

Products of wood, cork, straw, esparto or other 853,236 plaiting materials; basketware & wickerwork

124

26.7%

12.6%

Pulp of wood; waste, scrap & quality paper or 415,959 paperboard

4,667

-14.1%

-46.3%

13,170

-1.6%

-3.7%

209,410

40.2%

46.3%

Textiles & textile articles

898

Articles of stone, plaster, cement, asbestos, 3,310 mica, ceramic & glass Base metals & articles of base metal

7,696,004

79,025

78.0%

1.0%

Machinery; electrical equipment & accessories

177,615

452,952

15.1%

12.3%

Vehicles, aircraft, vessels & associated transport 1,398,143 equipment

291,471

18.6%

19.5%

Optical, photographic, cinematographic, measuring, precision or medical instruments; 4,456 clocks & watches; musical instruments & parts

22,870

25.7%

-1.1%

Original equipment components/parts for motor vehicles

42,595

-100.0%

-16.7%

4,480,721

18.7%

21.0%

Total: All commodities

14,674,951

Source: Quantec Research 2006 Within the UDM the most significant manufacturing sector is established in the Umhlatuze municipality, there is some manufacturing present in Umlalazi and Mthonjaneni and Mbonambi. In Mthonjaneni these are predominantly small scale ventures, while Mbonambi is dominated by the big three: RBM, Sappi and Mondi with almost no other manufacturing taking place. Umhlatuze: there is a well established mix of manufacturing sector industry in Richards Bay and Empangeni. According to the recently completed LED strategy two major investments have recently been given the environmental go-ahead and a Pulp United proposal to build a bleached pulp plant on the former is currently under negotiation. RHI Refractories are considering IDZ and Alton sites for a plant to produce three grades of refractories for export. Announcements are awaited about the Grafex project, a proposed granite processing plant with the potential to create 200 permanent jobs.

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LED Strategy The “Hot Metal Road” concept has received a favourable environmental record of decision and has attracted the interest of half a dozen companies. Funding is being sought to develop a business plan for an aluminium extrusion plant and also for a second DACT (downstream aluminium converter SMMEs) stream. It is proposed to establish a synthetic wood extrusion plant in the IDZ using locally available sawdust and waste together with plastic waste processed by a BEE company through Zululand Centre for Sustainable Development (ZCSD). Proposals to produce fuel pellets from sawdust and forestry waste are also being explored. National government agencies are exploring the possibility of establishing a titanium dioxide pigment plant with international companies. Food processing production as well as automotive related manufacturing is growing in the area (uMhlatuze Led: 2006) Umlalazi: the manufacturing sector contributes to 5% to the local economy. The manufacturing sector is influenced by the agricultural sector. This is a direct result of the mills that exist in the area namely the mills at Amatikulu and Entumeni. The manufacturing sector has been stunted growth and will essentially result in higher unemployment rates as there is no evidence of labour intensive industries in this region. One recent new addition to the manufacturing sector is a tile manufacturing plant that has been built in Eshowe, however it not in operation as yet. This will provide a much needed boost to employment in the area. Mthonjaneni: the manufacturing sector is a very small and highly diversified component of the economy. Some of the small scale manufacturing concerns are involved in: Food, beverages and tobacco production; Textiles, clothing and leather goods manufacture Wood and wood products; Metal products, machinery, and household appliances; and Furniture and other items NEC and recycling. It has also been established that this municipality’s economy focuses on primary and tertiary sectors, while the intermediate processing sector only contributes a small percentage to the economy. Interestingly, based on the telephone directory survey, there were no manufacturing concerns listed, indicating the ad hoc nature of there development.

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LED Strategy 7.6 Agriculture 7.6.1 Overview of national agriculture Agricultural activity is the mainstay of the rural economy; however, there available statistics (based on Census 2001 data) indicate that rural poverty is an increasingly significant constraint to growth in this sector. Indeed 48.5% of all South African’s live below the poverty line (Noyoo 2006; May 2000). The limited opportunities for trade in agricultural goods within the rural areas means that despite production being based locally, very little of the benefits or value adding activities result in remuneration locally. Added to these ‘market constraints’ the legacy of limited support to emerging farmers continues to exacerbate these conditions. Agriculture is of course highly reliant on the environment in which it occurs, and climatic variability and pests as well as international market trends and a lack of local policy integration have all contributed to the slow development of this critical sector. Commercial agriculture has been promoted by capital-intensive mechanisms, focussed on improving skills and technology to grow yields. These activities however have not been implemented across smaller scale rural and deep-rural farmers in what were the former homeland areas, limiting these farmers’ ability to interact meaningfully within an economic context and hindering the market forces. The effective exclusion of black farmers from land tenure, financial backing, support services and market share under the Apartheid era governments stunted the development of the entire rural economy. Employment opportunities in rural areas remain predominantly for unskilled farm labourer with low income earning potential, with the majority of employment opportunities remaining seasonal. Limited growth in agricultural beneficiation processes due to insufficient emerging industry support and protection resulted in South Africa remaining an exporter of raw agricultural goods rather than higher valued, employment generating processed items. 7.6.2

Agricultural Policy

Existing agricultural policy environment is focussed in two distinct spheres, established commercial farmer protection and emerging farmer promotion. This dualism has not helped foster an integrated policy environment. The current policy processes are attempting to level the playing fields. The major changes in policy have been centred on the following issues: Removal or regulations for the marketing of agricultural products; Removal of some tax incentives aimed solely at large scale producers; Lowering of direct government spending in the sector; Land reform processes have been widely instituted; Liberalisation of agricultural products trade, including FTAs new tariff structures; Promotion of institutional reform in the sector;

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LED Strategy Introduction of more stringent labour regulations While these reforms have led to increased productivity in the sector, farmers are now more susceptible to international shocks, worsening weather conditions, increased debt crises and diminishing terms of trade. When coupled with more stringent labour and land reform legislation and reduced direct government subsidisation levels the impact has once more been most critically felt in the rural areas by emerging farmers and commercial farm workers. Small scale farmers find it difficult to establish themselves, while established large scale farmers are reducing the number of employees due to the higher associated costs of labour and the instability of international trade. Despite this negative overview, there are many opportunities in the sector for growth, and local trade magazines are upbeat on trade predictions with emerging economies in the Far East and established trade partners in Europe. Some key agricultural sector trends include: Increased focus on animal husbandry and horticulture at the expense of field crop production. Recent increases in fixed investment in the sector Despite regulation, rural wages are still lagging behind other sectors Employment in the sector decreased substantially between 1970 and 1995 (only 11.06%). Currently 8.42% of the labour force is employed in the sector nationally (source: LFS 2005). There has been a shift in the sector towards favouring skilled workers as farmers improve technological inputs. Environmental degradation continues at alarming rates in South Africa In current market trends, we have remained a net importer of meat and meat products (indicate figures) South African agricultural growth is restricted by the limitations of natural resources, climate, labour, community involvement and government policies. Sizes of commercial farms have tended to increase over the past 30 years Agriculture remains an keystone of the South African economy, critical to national food security, contribution to GDP, share of labour force and as forex earner. Export value of agricultural goods grew from R15819.7m to R22074.3m from 2000 to 2004 (2004 figs are still recorded at preliminary by DOA). Important field crops include: maizem sugar canem wheat, hay, sunflower seed, tobacco and groundnuts. Significant horticultural crops include: deciduous fruit, viticulture and sub-tropical fruit production. Key animal products were slaughtered fowl, calves and cattle. Fresh milk, eggs and slaughtered goats and sheep. Horticultural crops and animals crop production has grown at the expense of field crop production. This growth in diversified production has strengthened the sector, allowing for better use of marginal

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LED Strategy and semi-arid areas by livestock production and by better management of field and horticulture crops to increase yields.

7.7 KZN Agricultural Trends Despite KZN’s high rainfall and productive soils, the sector employs only 228726 individuals, or 10.25% of the total employed populous in the province (Labour Force Survey 2005). At a provincial level some of the key issues hampering the growth of this sector are the following: low yields under utilization of the natural resources; low skills level leading to poor planting decision making poor land management systems problems and land degradation; poor natural resource management systems; land access and land ownership; access to finance poorly organised and funded agricultural co-operatives. Certainly many of these issues are in the process of being addressed, however, the repercussions are present in the province and certainly their impact is felt in the district. From 1972 to 1997, the Gross Product growth trend for uThungulu was 4,5 %; and that of KwaZuluNatal was 2,3 %. This indicates that uThungulu‘s economy outstripped that of KwaZulu-Natal in the said period. That potential would still be tapped when the growth and development plans have been implemented. However, in 2005 figures, uThungulu’s share of agricultural exports for KZN had dropped to 2.93%, indicating some stagnation in the sector – in due in no small measure to the aforementioned constraints.

7.8 District The agricultural sector in uThungulu District comprises predominantly of sugar and forestry with some citrus, nuts and animal husbandry. As indicated in the national overview of the sector, there is very little homogeneity amongst those involved in the sector. There is a significant split between deep rural subsistence farmers and commercial farmers and their levels of productivity and market access. However, issues surrounding infrastructure, markets, declining interest in the sector from the youth, access to capital and poor transport networks affect both segments of the farming community. The uThungulu Agricultural Plan (2003) envisages the creation and development of meaningful livelihoods and the alleviation of poverty through sustainable growth, sustainable development and the effective provision of sustainable services by optimizing the vast agricultural potential of

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LED Strategy uThungulu; thereby enhancing food security, environmental preservation, economic and social stability within the district. Agricultural development is viewed as the core of any economic development in the district. The easiest way to provide an overview of the district’s agricultural activity is to present it in a matrix format, indicating major activities and employment as well as current issues facing the local municipalities. The following table indicates the level of agricultural related employment in the district. These figures are low, but the do not capture the full picture of agricultural employment as much employment is seasonal and may not be adequately reflected. Agriculture

as

a

Percentage

of

Employment

in

the

District

and

Municipalities Area

Total Employed

Agriculture, hunting; Percentage forestry and fishing

Uthungulu District Municipality

510512

18995

3.72

Mbonambi

59692

2987

5.00

uMhlathuze

186252

4091

2.20

Ntambanana

45867

1486

3.24

uMlalazi

122704

7666

6.25

Mthonjaneni

28436

2585

9.09

Nkandla

67561

180

0.27

An over view of the district follows bellow.

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Local

LED Strategy Local Municipality

Agricultural Production

Mbonambi

• • •

Forestry Community gardens sponsored by RBM) Small scale agriculture, subsistence farming

(100 mostly

Employment and Remuneration Trends 2 large players, SAPPI and MONDI dominate the market. Both have extensive out grower schemes. Agricultural employment is 5% of total employment in Mbonambi.

Challenges •

• •

• Umhlatuze

Ntambanana

• Sugar • Timber • Small scale vegetables and poultry.

• Large scale farming

commercial

• Small scale subsistence poultry, vegetables, cotton.

sugar

Employment in agriculture is indicate at 2.2% of total employment in the LM in Census 2001 figures.

Employment in this sector is recorded at 3.24% of total employment.

• •

•

farming:

•

• Pilot hydroponics scheme growing tomatoes.

•

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Sector is highly vulnerable to natural disasters such as drought and pests. HIV/AIDS is serious concern in the LM. Small scale farmers find it difficult to access external markets due to the lack of economics of scale Limited number of co-operatives or shared grower schemes Poor rural road infrastructure is a major concern. High levels of discourdnce between small scale and commercial farmers

Lack of adequate water supply in the study area constrains farming activities. Farmers lack the relevant equipment and skills to farm effectively. There is no credit facility available and farmers have no security for financial approval.

Opportunities Sappi has established a community forum for the identification of agricultural projects. A local market system would greatly increase the ability of small scale farmers to interact in the cash economy.

•Periodic Markets and regional fresh produce markets that would bolster local buying. •Agri-processing production as better skills levels available in this municipality. • This sector can form a base for agro-processing activities eg packaging of products. • Possible opportunity to make use of an old abattoir that is nearby. • The potential for new business development in this sector could relate to ploughing, hydroponics and livestock farming. • There is good potential to establish more co-operatives. • Ntambanana is conveniently situated to large markets, the closest being Empangeni and there is potential to develop the local market for products. • Mambuka area represents good prospects for further agriculture projects in terms of its soil potential and has available water nearby in the form of a dam.

LED Strategy Local Municipality

Agricultural Production

Employment Trends

Umlalazi

Sugar cane and timber

Provides 33% of ggp, and employs 6.25% of the working populous.

Small growers co-ops

Mthonjaneni

Nkandla

Citrus Community gardens Major crops include: • Agronomy: Maize, potatoes, beans • Horticulture: Vegetables wide range covering mainly cabbages, chillies, tomatoes • Fruits wide range covering mainly citrus, banana, avocados

Key crop is forestry, severe underutilization of arable land results in 400t on maize imports per month. Subsistence agriculture: • maize, • beans and • vegetables • small livestock Essential oil production Tea Production at the Ntingwe Tea Estate

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and

Remuneration

Challenges

• Poor transport infrastructure • Low skill levels • Limited market access

12% of employment, predominantly as • Difficulty to access resources (e.g. wage labour, informal sector impact not inputs) quantified (according to local LED • Lack of co-ordination amongst all role strategy, recorded at 9% in 2001 players with regard to Agricultural Census figures). development. • Low level of support (e.g. Mentorship) • Negative image of agriculture amongst youth • Poor infrastructure (e.g. roads) • Low level of interaction/co-ordination between emerging farmers • Limited involvement of applied research • Deterioration of natural resources • HIV/Aids Generates about 16% of all household • Need to factor in the impacts of income in the area, wages generates HIV/AIDS on development planning only 0.5%. • Inherent problems with institutional vehicles such as co-operatives Formal employment only recorded at • the possibility of Nkandla being 0.27%. marginalised in the district’s agricultural development strategy, • a strategy to bring the youth into agriculture is needed

Opportunities

• Paper making • Canning, other agri-processing

• Agricultural beneficiation marmalades from citrus; potato and sweet potato chips; tomato sauce production; maize and pawpaw relishes; banana, guava, mango, pumpkin and tomato jam • Aloe production • Improved animal husbandry – branding and dipping to improve quality of livestock.

Increasing out growers schemes for both forestry and essential oils crops.

LED Strategy 7.9 Tourism A national tourism growth strategy was formulated in 2002 that is continuously updated, revised and refined. Tourism is recognised in the strategy as one of the important future growth sectors of the country and the Departments of Trade and Industry and (KZN) Finance and Economic development further enhances that view by the inclusion of tourism into their sector strategies. The information in this section is drawn from Haley Sharpe’s 2003, uThungulu Tourism Development Plan. The current status of the tourism sector within uThungulu has been found to be relatively weak, with the exception of business tourists related to the industrial strength of the Richards Bay area. Market research, conducted as part of the study, has determined that neither foreign nor domestic tourists presently see the uThungulu district as a ‘tourism destination’. However, market research has identified that potential does exist to develop some of the area’s inherent tourism assets and to embark upon a programme to develop catalytic tourism attractions, to change and market a new ‘tourism destination’ image for uThungulu and to broaden ownership and economic activity within tourism product amongst the historically disadvantaged sectors of the uThungulu people. The Vision for the future of tourism, as developed with the key uThungulu stakeholders was agreed upon as follows: “To create, develop and manage ‘Uthungulu’ to become a preferred tourism destination, for both foreign and domestic tourists, offering wildlife, cultural and coastal tourism attractions in an economically and environmentally sustainable manner that will deliver local socioeconomic benefit to all the people of the district.” Based upon this vision, together with the assimilation of the findings of the sector study, the following are the key recommendations for implementation of the Tourism Development Plan by the uThungulu District Municipality: Agreement to the principle that uThungulu be developed, managed, branded and marketed as a ‘unique tourism destination’ within the context of tourism sector activities of the KZN North Coast and the provincial branding of the ‘Kingdom of the Zulu’, with the objective of improving the number of domestic and foreign tourists attracted to the area. That uThungulu District Municipality is responsible for the overall management and marketing of the uThungulu district tourism sector, within the context of Local Economic Development jurisdictional powers and functions of local government. This includes liaison on tourism issues with adjacent District Municipalities, as well as Provincial and National Tourism Bodies, liaison and coordination with the six Local Municipalities within uThungulu in terms of setting up and

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LED Strategy operations of Community Tourism Associations and associated tourism product development and infrastructure needs. Liaison and communication with representatives from the Private Sector involved with tourism activities within uThungulu. What was evident from the local municipalities’ LED Strategies is that many of the projects identified in the Tourism Strategy have yet to be fully implemented. Most notable among these is the Royal Zulu Biosphere project which is once more stalled in process. The Tourism Strategy makes mention of the ‘growing interest in the Northern KwaZulu-Natal area, particularly relating to the overseas market. New markets such as bird watching, cruise tourism, educational tourism, etc. increase the tourism development opportunities in the region as a whole. The Uthungulu region already attracts a significant number of business tourists and has the potential to increase its share of overseas and domestic holiday tourists to the greater region’. What has thus far been identified by the local municipalities is the need for greater support and co-ordination from the district in aiding the development of tourism related SMMEs and new opportunities across the district.

7.10 Retail and Services The more established townships and cities in the district, notably Richards Bay and Empangeni, Eshowe are the major retail sectors. Gingindlovu, Melmoth, Nkandal Town, Heatonville are emerging nodes with a much smaller retail and services mix on offer. The second economy (informal sector) is noticeable throughout the district with small make-shift markets present on most weekdays and especially at grant and pension payout points. Traders face constraints related to the access finance and support services and this exacerbates the low level of economic development that this sector is able to achieve. Due to the nature of the sector it is also extremely difficult to quantify all the constraints facing participants. This sector analysis has allowed us to examine the economic structures of the district in greater detail, and provides a more in-depth breakdown of what the economic realities are in the UDM. The Development Framework follows on as the next discreet piece of work, building upon this base in order to deliver a realistic LED Framework for the district.

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LED Strategy SECTION 8: DEVELOPMENT FRAMEWORK 8.1 Introduction The previous sections provided an assessment of the internal structure and the potential of the district’s economy. Based on this assessment, it is now possible to identify the strategic framework to address the need for further, and inclusive local economic development. This development framework has to be set in context of the long term vision for the local economy. The purpose of this section is to delineate a LED vision, goals, objectives for the area and how it can be implemented in terms of strategic initiatives (broad economic opportunities). In order to present a development framework, a brief review of the District’s multi-varied economic strengths and weaknesses has been detailed utilising the tool of Porter’s diamond. This brief review of the local economic and development status quo within the district indicate that there is considerable scope for LED to act as a coordinating function for sustainable economic growth within uThungulu. Key concerns surrounding skills shortages, HIV/Aids and international commodity prices all intertwine and indicate that there are some very real structural shifts within the local economy that are needed to insure that uThungulu experiences job creation and economic prosperity. The direction of these shifts is already indicated by the highlighted opportunities in the matrix above, the movement away from extractive processes towards sustainable fuels, the support of the agricultural sector, notably within the context of value-adding activities as well as the thrust for further integration into the information and communication sector all offer exciting opportunities for local economic development.

8.2 Porters’ Diamond The constraints and opportunities facing the district were further unpacked using the model of Porter’s Diamond. This model allows for the competitiveness of uThungulu’s economy to be evaluated, to glean a better understanding about why one sector may be a better choice for future investment than another. While the model is usually used to explain competitiveness on a national level, it can be used to breakdown the impact of key sectors on a much more localised level. There are four key elements to Porter’s model: Factor conditions: refers to uThungulu’s position with regards to the availability of the factors of production necessary to establish competitive industries – distinction can be made between basic production factors (natural resources, climate etc.) and advanced production factors that include labour force, knowledge, skills and available capital resources.

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LED Strategy Demand conditions (markets): specifically the nature of the local demand for the specific products and services, this includes composition of demand, size and growth of demand. Related and supporting industries: examines the presence of absence of local suppliers that are internationally competitive, this speaks in essence to the issue of clustering. Structure of firms and rivalry: indicates the way in which businesses are created, organised and managed. This provides an overview of internal rivalry. Government: this element is usually viewed as an external impact upon the competitiveness of an area. 8.2.1

Factor Conditions

Infrastructure Established industrial areas (+): All locall municipalities with the exception of Nkandla and Ntambanana have established industrial development areas currently accommodating a broad range of industries. The major focus has thus far been based in uMhlatuze. Areas with no infrastructure for industrial development (-): Nkandla and Ntambanana have no developed industrial areas and can therefore not draw significant investment in the industrial sector. Quality of service delivery (-): Unreliable electricity, limited telecommunications infrastructure and water supplies constraints beyond major nodes undermine business productivity. This is viewed as a major constraint attracting industry used to operating in a global environment is dependent on reliable services. Good logistics infrastructure (+ or -): Most of the industrial areas are located in close proximity to the N2 which makes it ideal for the effective movement of goods. The rail link is used exclusively for coal and the airport has lost its international status, which represent a key part of the logistics infrastructure platform. The development of Dube Trade Port to the south does bode well for future international linkages; however, road haul will also be required. Goods transport is road based (+ or -): The fact that goods transport is road based is seen as an advantage due to the time transits to major centres within KZN and SA., however, there is very poor linking road network onto this national grid. Low skilled labour force (-): Generally the skills levels of the labour forces are low. The availability of skilled labour is impacted on by the limited take up of training at FET colleges, and lack of industry specific training facilities, the impact of HIV/AIDS and the lack of a critical mass of industry ensuring a constant supply of skilled labour. Migration to major centres within the district means that some smaller centres are experiencing sever shortage of skills.

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LED Strategy Negative impact of HIV/AIDS on the workforce (-):HIV/AIDS has a major impact on operations due to the loss of skilled and semi-skilled labour, as well as related costs to company. Natural Resources Diversified agricultural sector (+): The District has a diversified agricultural sector which currently generates substantial agribusiness activity. Current and future agricultural activity adds numerous opportunities for agri-industry development. Strong natural resource base (+): The District has a strong natural resource base including nature areas, water, sea and beaches. These provide opportunities for mining and further industrial development, but also contribute to the creation of a pleasant living environment. Sufficient land available for further industrial development (+ or -): Although there are some restrictions for extending existing industrial areas, there appears to be substantial areas of land within the District suitable for future industrial development. However, significant amounts of this land is controlled by the Ngoyama Trust which has in the past proved difficult to consult and work with. Living Environment Exceptional climate (+): The area has an exceptional year round sub-tropical climate that makes the year round enjoyment of natural resources such as beaches, lakes and valleys as possible. High quality living environment (+ or -): Three major urban areas, Richards Bay, Empangeni and Eshowe are well developed and generally all amenities are in or in close proximity to residential areas. This is viewed as an incentive for attracting investors, managerial staff and workers to the area. These three towns are concentrated within uMhlatuze and Umlalazi only. Synopsis – Factor Conditions: Strong factor conditions for the development of the industrial sector exist in the uThungulu District Municipality. Considering the availability of infrastructure, labour, natural resources and a good living environment, there are few locations within the province and even South Africa that can compete with what is on offer. A major concern relates to the availability of developed land in appropriate locations for the establishment of modern industries aligning to global standards and requirements outside of uMhlatuze Other negatives relate to issues common in most areas of KwaZulu-Natal. It will be extremely important that these issues, such as the low level of skills, the impact of HIV/AIDS and the quality of service delivery, should be addressed as priorities. 8.2.2

Firm Structure And Strategy

Large scale labour intensive industries located in the area (+): A number of large scale skill intensive industries area already located in uThungulu. Predominantly within uMhlatuze. Some are global leaders, most notably within the aluminum sub-sector. These industries provide a strong basis

68

LED Strategy for further industrial development and specifically for local service provider and subsidiary development. National / International corporates located in the District (+): The District is integrated into the national and global economy through some of the major corporates operating in the area. National pulping and paper interests are also present. Export focus is key (+): A significant number of firms currently focus on the export market. Fluctuations in exchange rate and commodity prices are major impacts on these businesses. Competition (-): The extent of healthy competition between industries in the District is not easily discernable as key dominant players remain in the foreground across the manufacturing sector. The significant level of internal focus among industry appears to indicate that there is limited competition, the barriers to entry as suppliers to larger firms are experienced by local smmes. Synopsis – Firm Structure And Strategy: Firm structure and strategy impacts negatively on the overall competitiveness of the uThungulu District in terms of industrial development. The one strength of the District in this regard is the presence of a number of major corporates within this sector, a resource that few District Municipalities have access to. A concern in this regard would be that these companies are predominantly large internationals that operate in isolation from their surroundings, having a limited impact on regional development. A need exists to create an environment within which smaller firms want to grow and expand. 8.2.3 Markets Large local markets (+ or -): The uThungulu District Municipality is home to 885941 people. This represents a substantial local market for industries focussing on basic household goods such as food, clothing and furniture. Due to the limited available spaces to trade, much commerce is conducted away from the smaller nodes and is instead concentrated in the larger centres which removes the economic opportunity for many local traders. Strong competition in local markets (-): The retail centres of Empangeni and Richards Bay are strong competition for small scale producers. And these towns are in turn threatened by the variety of goods available from eThekwini. Low local income levels (-): Income and employment levels in the uThungulu District Municipality are low with this impacting directly on the extent of diverse markets for locally produced goods. Strong and growing tourism industry (+): The tourism and holiday market on the North Coast of KZN is diversified and presents a range of opportunities for manufactured goods. This includes basic

69

LED Strategy household goods such as food, clothing and furniture, but also opportunities relating to arts and crafts, niche market foods, building material and many others. Regional markets (+): Would allow for local goods to be maid available to a larger regional buyers group. Access to export markets (+): The location of the port in Richards Bay as well as the proximity to eThekwini ensures access to internationally significant export facilities. The establishment of Dube Tradeport will enhance local industries’ access to export facilities. New local markets are emerging (+): New housing developments like those in Umlalazi (near Eshowe and Mtunzini) create new markets for manufactured goods and service industries. Synopsis – Markets: As a result of local conditions, the regional development dynamics and existing regional infrastructure as well as the close proximity of the District to eThekwini, good access to local, regional, national and international markets exist for uThungulu products. The development of DTP presents additional opportunities. 8.2.4 Related And Supporting Services/Businesses Business / manufacturing support services (+/-): Basic business / manufacturing support services exist within the District, and are currently being shared through the mobile business support service centre programme. There is currently no full scale skills development programme present in the UDM. There is highly limited agri-business support available due to the poor integration of DOA within the district. Access to finance (+/-): A range of financial support mechanisms (including incentives, grants and loans) are available for the establishment of industries and specifically SMMEs. A concern relating to this is, however, the difficulties small businesses experience in accessing the funding. Formal business associations (-): A formal business association is established and operating in the uMhlatuze and Umlalazi Municipalities, however both are experiencing difficulties. Farmers’ abd growers associations are present too, however are predominantly small scale and geographically located. No district wide business organisation focused on either the industrial or agricultural sector has been established as yet. Limited skills development capacity and focus (-): The shortage of integrated skills development facilities in the District have been identified as a severe constraint to LED growth.

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LED Strategy Lack of strong inter-firm linkages (-): There is limited clustering eveident within the district and this too requires more detailed investigation and consideration. Support services concentrated in major nodes (+ / -): Although industries are located throughout the District the only area really offering a comprehensive range of supporting services for industry is in the major nodes of Mbonambi, Melmoth, Richards Bay, Empangeni and Eshowe. This could impede the growth of more rural areas within the district as well as within the municipalities of Nkandla and Ntambanana which have very little in the way of support services. Synopsis – Relating And Supporting Industries: The District has no real competitive advantage in terms of related and supporting industries. This is discussed within the development framework in terms of clustering studies. 8.2.5 Government Substantial planning for expansion of industrial sector (+): The development of the IDZ indicates the commitment of the district to industrial sector growth. The negative viewpoint that needs to be incorporated is that this industrial growth is once more focused within uMhlatuze. Strong support for growth of manufacturing sector (+): This most recently has been experienced in the initiative to formulate and incentive policy for the district. Strong government support for SMME development (+/-): There is s strong support from provincial government for the establishment of SMMEs, adequate support mechanisms still need to be effectively undertaken by the district. Government focus on key uThungulu Manufacturing Sectors (+): The current policy environment places additional emphasis on a variety of key industries (as outlined in the ASGISA strategy) The key industrial sectors in uThungulu are included in this focus and this provides an opportunity for the district to derive greater benefit from government support measures. Some of the key sectors focussed on by government are timber and timber products and agri-processing which are major contributors to the local economy. Local government focus on tourism and agriculture (+): The assessment of current municipal strategic planning has clearly shown the bias towards tourism and agricultural development. This is necessary as these sectors have traditionally not be given as much support as ‘big industry’ Government support programmes available i.t.o. new Regional Industrial Development Strategy (+): From initial assessments it would appear as government will make substantial resources available to support industrial development in terms of the new Regional Industrial

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LED Strategy Development Strategy. Appropriate planning to access this support must be undertaken by the District and Local Municipalities, and this is something to be taken into consideration. Government red-tape to access finance and support services (-): The red-tape involved in accessing government support is a well-known factor negatively impacting on the ability of small businesses benefit from this support and uThungulu is faced with these constraints. Synopsis – Government: The assessment of government (all spheres) policies, strategies and plans provide mixed messages for industrial development in uThungulu. Strong support for industrial development is reflected in national and provincial government strategies, however, this is not acknowledged and confirmed in local government planning. Good diverse support across all sectors is evident. Accessing funding for smme’s remains difficult, this is by and large attributed to red-tape, including complicated application forms and processes, limited feed-back on the processing of applications etc. Local government planning shows commitment to the development of the manufacturing sector, tourism sector and agricultural sector and this provides an excellent starting point for LED. To enhance the findings of the Porter’s diamond analysis we have included a summarised SWOT analysis of the district too. This is stylised simply into the positive and negatives present in UDM and likely to impact on LED.

8.3 SWOT Review Positives • Well developed commercial agriculture (timber, sugar, citrus) • Numerous emerging growers • High yields • Specialised products grown • Well developed manufacturing sector in uMhlatuze • Numerous tourism sites and diverse facilities • Export market access for both agriculture and manufactured goods already established • Port and national road infrastructure • Mineral resources • Tertiary education facilities • Industrial development Zone • Large informal sector • Agricultural land available • IDZ growth • Port expansion • 2010 soccer tourism potential • Film tourism • Cultural tourism growth • Opportunity for Bio-diesel production • Clustering of key sectors • Fresh produce market • Value-adding in agriculture • ICT development

Negatives • Low skills levels • Poor education levels • High dependency on social grants • Poor road and support infrastructure • Low capacity for LED • Limited public transport • Crime • Urban-rural divide • Limited cooperation with Ngoyama Trust • Poor rural road infrastructure • High migration to uMhltuze • Limited smme support structures in place • Discordance in LED expectation throughout district • Environmental degradation • HIV/Aids • Access to funding • Lack of business plans • Centralisation of government focussed resources away from more rural nodes • FDI viewed with suspicion • Low commodity prices • Growing electricity costs • Exchange rate fluctuations

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LED Strategy 8.4 LED Vision A vision is a point of reference to keep the community focused on the important issues and heading the right direction. A vision provides an opportunity for the community and relevant stakeholders to think in a broad and general terms about the future. The World Bank defines these LED elements as follows: Vision: The vision describes the stakeholders (community, private sector, municipality, nongovernmental organizations) agreement on the preferred economic future of the economy Strategies:

Strategies are based on the overall vision and specify desired outcomes of the economic planning process

Objectives:

Objectives set performance standards and target activities for development. They are time bound and measurable.

Programmes:

Programmes are set out approaches to achieving realistic economic development goals. They are time bound and measurable.

Projects and Action Plans: Projects implement specific programs components. They must be prioritized and alls costs must be established. They are time bound and measurable.

Source:

World Bank: Local Economic Development Plan, 2006

8.4.1 uThungulu District Municipality LED Vision The vision is a key element of the LED study and one of the first steps to strategy implementation. From the assessment of the local economy and the sector analysis of the LED, it is clear that there are real challenges and constraints facing the district due to a combination of the existing high levels of poverty, lack of basic services, low levels of formal employment opportunities and severe skill shortages. However, the district also plays host to a wealth of opportunities across a variety of sectors, from good potential for agricultural diversification through to the opportunities in the services and manufacturing sectors clearly apparent.

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LED Strategy LED vision for the uThungulu District Municipality, derived from the uThungulu IDP Review 2006/07:

To Broaden The Economic Base Of The District Economy With The Establishement Of Sustainable And Wide Range Of Employment Opportunities By Strengthening And Diversifying Of Economic Sectors

8.5 LED Strategy The strategies have been derived from the analysis of the local municipalities LED strategies and stakeholder meetings. The role of the district in the management of LED was one topic that was reviewed constantly by role-players, and some consensus was reached about district versus local support mechanisms for LED functions, the district was viewed as providing a more supportive role to the local LED offices based in each municipality – providing training support and an interactive forum as well as some strategic intervention in key sectors – notably in agriculture and SMME development, that will aid localised economic growth. These interventionist strategies are described in greater detail below in the matrix and then unpacked further in the text that follows. What is critical to understand is the methodology by which the district’s development framework was derived. Essentially what was undertaken was a broad analysis of the LED strategies selected by each local municipality, based upon the World Bank’s LED Principles (as set out in the LED Primer, 2006) to identify the areas wherein the District’s focus for LED lies. These in turn where then melded into a modified Porter’s diamond to unpack the existing competitive advantages of the District. These were then utilized in the formation of the framework that forms the closing part of this chapter. The critical components of each LED strategy plan were examined within the following criteria: the emphasis on skill transfer; retention of existing economic activity; broad-based focus of the plan; institutional development strategies; understanding and mitigation of HIV impact and finally the role of SMME development and overarching BEE principles. This is examined overleaf in a matrix format. What emerged out of these processes was an LED strategy for uThungulu District Municipality that is focussed on fostering an enabling environment for sectoral growth that results in additional employment opportunities in the district being developed. Key focus areas for the district are agriculture, tourism and manufacturing.

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LED Strategy LED PRINCIPLES Local Municipality

Skill Mechanisms

Transfer

Retention of Existing Economic Activity

• Focus on literacy development • SMME entrepreneurial skills enhancement • Better usage of existing FET college structures

• Develop a database of existing firms and service providers • Co-operative development focus • Coordination of Zululand Arts and Craft activity within the municipality

• Develop a knowledge network • Revive skills forum • Establish a tehnical training centre • Develop a ‘Shannon Model’ business campus • LED capacity training

• Develop clustering model for the manufacturing sector • Suppliers parks to be established • Enhance hard infrastructure • Strengthen participatory process of local stake in commerce

Mbonambi

uMhlatuze

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Broad-based Economic Development • Continued support of emerging businesses • Better coordination with existing largescale firms • Focus on agriprocessing opportunities • Focus on cultural tourism development

• Biosphere registration • Fresh produce market system • SASA partnership for agricultural sector • Develop better links to UDM Tourism Strategy • Revision of airport status

Institutional Development

HIV Coping Strategy

• Additional support to be developed surrounding access to financial resources for emerging business • Creation of markets for agricultural goods • Co-ordinate agricultural related infrastructural development with Agri-SA Develop a LED Forum comprising of local business, municipal representatives and community members • Establish LED Capacity • Buy back and recycling scheme • Buy local campaign to bolster local suppliers stake in commerce

SMME Focus

and

BEE

• Create opportunities for farmers to enter cash economy • Support services centre for SMME

• Establish working partnerships to monitor and assist management of crisis

• Adopt a BEE charter within the Tourism Strategy • Mentoring and support programme • Support systems to be devised for local suppliers to MNCs

LED Strategy LED PRINCIPLES Local Municipality

Ntambanana

Umlalazi

Mthonjaneni

Skill Mechanisms

Transfer

Retention of Existing Economic Activity

• LED Training to be undertaken by municipal officials • Agricultural training schemes to be developed

• LED capacity training programme (municipality and community focus) • LED internships • Hospitality sector skills development • Entrepreneurial skills development

• Agricultural machinery and equipment sharedepots • Crafting schemes to be integrated into district plan • Agricultural cooperatives to be encouraged • Development of agricultural markets in primary nodes • Clustering of existing manufacturing sector • Incentive roll out

• Agricultural education training • Livestock management training • Agricultural mentors • Tour guide training

• Improve business support mechanisms • Improved irrigation access • Incentive schemes

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Broad-based Economic Development • Extension on the port • Integrated transport plan • Business support centre • Buy local campaigns • Rural services centre • Nodal development plan

Institutional Development

• Institutional arrangements LED to formalised

HIV Coping Strategy

for be

SMME Focus

and

BEE

• HIV/Aids coping strategies training to be developed

• Business support centre fir SMMEs

• Clustering • Co-operative development strategy • SMME development strategy • Innovation Centre • BEE focus for municipal procurement • Focus on enhancing current BEE policy

• Development of agri-processing initiatives • Bio diesel • Agricultural waste management schemes • Additional investment in urban transport

• Tourism database • LED Officers Program

• Training • Youth Awareness Campaign • Business Awareness Campaign`

• R66 tourism promotion • Identification of capital investment projects • Market research

• Development of tourism plan • Training centre development • LED institutional development

• Promote economic participation of HIV positive individuals

LED Strategy LED PRINCIPLES Local Municipality

Nkandla

Skill Mechanisms

Transfer

Retention of Existing Economic Activity

• ICT Training • LED capacity development program • LED forum • LED participatory training • Agri-processing training • Skills development strategy • LEDA capacity building

• Informal sector management • Infrastructure audit • BR & E plan • Seek support from TIKZN • Forestry disposal opportunities

• Nodal development of Nkandla • Electrical substation • Road acces • Incentives • Business plan development for cultural village • Multi-purpose community centre

• Utilisation of existing FET college structures • Incorporate SETA training opportunities • LED capacity building at the District Council and official level • Monitor LED officer internships, and provide assessment • Focus time and funding on agricultural and hospitality industries

• Database of existing service providers • Clustering initiatives • Development of supplier parks • Encouragement of agricultural cooperatives and crafting cooperatives • Mobile business support unit

• Encourage further port development • Mainatinace of road infrastructure • Widening of economic activities within the district (i.e. the diversification of agriculture through promoted agriprocessing opportunities and specialised products like bio-diesel)

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Broad-based Economic Development • Business awareness campaigns

Institutional Development

• Co-ordination of LED plans with social development plans • Link into DM tourism strategy • LED capacity development • LED office support development • Incorporation of traditional leaders into participatory processes • LED forum • Market structures • Local municipal LED institutional structures

HIV Coping Strategy

• Incorporated BR & E plan

SMME Focus

and

BEE

into

• Local procurement policy to focus on local SMME service providers • Training and coordination • SMME support for infrastructure projects

• Key priority for the district • Partnership planning • Coping strategies • Work place management strategies • Support DOH

• SMME support services • Registration of service providers on municipal data base

LED Strategy 8.6 Development Framework This analysis of the local municipalities’ strategies allows for critical areas of additional support to be identified and incorporated into the overarching strategy for the district. Skills development, and essentially LED skills and capacity development is a critical aspect of each local municipality’s LED strategy and some level of coordination is required at a district level to insure that a similar standard is maintained across the board as well as help assist in accessing training for local municipalities which are facing capacity constraints. The focus on tourism bodes well for the LED as a district strategy is already in place, what appears to be a concern throughout the district is the merging of a localized strategy with the district vision and implementation plan. Manufacturing and agriculture are key areas of focus for the district’s LED, with focus once more placed on creating an enabling environment for further development and growth within the sectors. While HIV/Aids and BEE do not appear as direct strategies within the development framework neither are ignored nor set aside. Throughout the LED strategy cognisance must be made of the impact of the HIV/Aids pandemic on the district and training and support mechanisms need to be put in place to help all economic actors to understand the impact on their activities, similarly BEE forms part of the strategies surrounding economic development of the key sectors identified below. The district’s LED strategy calls upon uThungulu to act as both a facilitator and operational role. The facilitation aspect relates to creating an enabling environment for LED to occur within the district by interacting with all the local municipalities and undertaking a coordination role. However, there is also scope for the district to tackle specific district wide projects for which only UDM has the available capacity to implement. These issues are described in some detail in the development framework matrix below. It is however useful to first examine the goals and objectives of the strategy before examining the programmes and expected activities in detail. 8.6.1 Goals and Objectives As the matrix below indicates, each economic development goal is broken up into a series of objectives. These objectives were devised as a supportive objective for the district, and many mirror the objectives of

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LED Strategy the local municipalities – for instance, growing cultural tourism forms part of both Mthonjaneni and Umlalazi’s LED strategies, and the focus for the district would be to insure that all enabling factors are put in place within the district’s overarching tourism strategy. The focus on the film industry is part of the LED focus for the district, and the recent granting of funds for a feasibility study to be undertaken for the development of a film office in the district. Goals

Objectives Grow cultural tourism in the district

Aid SMME development in the sector Grow adventure tourism Grow Tourism

Capture share of 2010 Tourism Film Industry

Clustering Support

SMME development Increases in foreign direct investment Grow Manufacturing Sector

Growth in employment Increased BEE participation Development of ICT sub-sector Expand market access for emerging growers Diversification of crop production

Support Agricultural Development

Increased value adding activities in the sector Increased support services Grow female participation Rural communication network Broadband access

Enhance ICT Sector

ICT Incubators and Industry Support Strategy Grow BEE in the sector

Improve LED Support Mechanisms

Improve institutional support within the local municipalities and between the district and local municipalities Improved training and capacity in LED for both officials and councillors

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LED Strategy The LED Support Mechanism goal is split into two key objectives, improving inter municipality support institutional support as well as intra-local municipality support systems and enhanced training and capacity building in LED for officials and councillors. Each of the objectives indicated above are then further split into a series of specific programmes and arising actions. These are discussed briefly below, with a detailed synopsis of each programme following on from this in the next chapter of this report.

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LED Strategy Strategy: Improve local employment opportunities; foster an enabling environment for the sectoral growth. Key focus areas for the district are agriculture, tourism and manufacturing. LED Strategy for uThungulu Goals

Objectives Grow cultural tourism in the district

Programmes • Incorporate cultural sites into local tourism focus

Activities • Link into the Tourism Association’s strategy in the District, alignment to occur through the identification of stakeholders and the coordination of a series of workshops • Promote R66 utilising the existing district website as well as through TKZN’s site

• •

Identifying supplier opportunities Training and development initiatives

•

Identifying activity based opportunities for quad bikes, 4 x 4 trails and microlights, horse trails, hiking, mountain biking

• Identify small operators in the district • Develop a database of operators identifying services, location and costing with a formal web interface • Promote ICT training to smaller operators in the district • Establishment of learnerships for PDI candidates at local FET Colleges • Encourage participation at local trade shows and at regional events • Promote the involvement of BEE firms in the industry • Develop an adventure tourism route in the district utilising existing businesses • Develop associated maintenance backend SMME businesses Marketing of the route

•

Aligning marketing of the World Cup with the TA’s district strategy. Tourism transport system Promotion of BEE development

• Re-examination of the tourism strategy and inclusion of 2010 principles. • Development of a tourist transport network in the district incorporating the tourism operators • Adopting of a BEE charter for local transport system • Identifying necessary improvements in physical supportive infrastructure.

Develop support mechanisms for the emerging film industry

• Identify potential sites, support systems and film industry requirements • Conduct a feasibility study detailing alternative mechanisms for developing a formal film office in the district

Grow Tourism Aid SMME development in the sector

Grow adventure tourism

Capture share of 2010 Tourism

Film Industry

• •

•

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LED Strategy Goals

Grow Manufacturing Sector

Support Agricultural Development

Objectives

Programmes

Clustering support

•

SMME development

• • •

Increases in foreign direct investment

•

Growth in employment

Increased participation

Activities

Develop a clustering strategy for the district Develop a formal SMME strategy Develop SMME incubator Integrate SMMEs into the districts procurement policies Finalise the uThungulu Incentive Policy and Investment Strategy

• • • • • • •

Identify potential spatial and non-spatial clusters in leading sectors Conduct a feasibility study detailing alternative mechanisms for clustering in the district Undertake research on SMME’s in the district Undertake a feasibility study for an SMME incubator in the district Develop a database of SMME service providers Provide HIV/Aids support services for SMME’s Completion of the policy paper

•

Focussed incentives for employment rich industries

BEE

•

Identify potential industries Identify relevant skills and requisite training needed School leavers focussed employment drives Employ local campaigns Employee health and HIV campagns Focus on identifying BEE SMMEs Incorporate into the SMME development strategy

Development of ICT subsector Expand market access for emerging growers Diversification of crop production

•

Develop specialised support services for BEE firms in line with the SMME strategy Create an ICT Strategy

• • • • • • •

Increased value adding activities in the sector Increased support services

• • •

• • • •

•

Develop regional emerging growers market Organic vegetables Palms Export driven commodities Biodiesel production Agri-processing District coordinated training for extension officers District coordinated interaction programme with commercial farmers

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• Undertake research on ICT in the district • Undertake a feasibility study for an ICT incubator in the district • Undertake a feasibility study • • • • •

Identify growing areas Identify potential crops Identify communities and wards to act as pilot projects Identify potential buyers Undertake feasibility study identifying growing areas and plant costs

• Coordinate efforts with SASEX and farmers associations • Undertake a joint training program with the DOA • Incorporate commercial farmers into the LED structures of the LMs and the district

LED Strategy Goals

Enhance Sector

Objectives Grow female participation

ICT

Rural network

communication

Programmes • Identify and encouragement of women growers and encourage • •

Improve LED Support Mechanisms

Identify solutions for improved rural communication Generate a communication strategy

Activities • Investigate potential training activities for women farmers with both DOA and the FETs • Offer learnerships for candidates • Engage with the private sector to identify available technology • Undertake a feasibility study • Undertake research on the implications and integration of a communication strategy on LED in the district • Undertake feasibility study for development of open access broadband in the district

Broadband access

•

ICT Incubators and Industry Support Strategy

• • •

Grow BEE in the sector

•

Develop specialised support services for BEE firms in line within ICT sector

Improve institutional support within the local municipalities and between the district and local municipalities

• • •

Improved utilisation of the LED Forum Develop a LED newsletter Improved participatory processes in decision making

• Repackaging the LED Forum to meet the districts needs. • Make newsletter available throughout the district • Grow the membership to be a more inclusive body

Improved training and capacity in LED for both officials and councillors

•

Identify officials and councillors as well as community and business owners to participate in LED training workshops

• • • •

Improved accessibility to broadband in the district Develop a formal ICT strategy Develop ICT incubator Promote ICT sector

• Undertake research on the implications and integration of an ICT strategy on LED in the district • Undertake a feasibility study for an ICT incubator in the district • Focus incentives on the ICT sub-sector • Focus on identifying BEE roleplayers • Incorporate into the ICT development strategy

Generate suitable programmes Learnerships Hold participatory workshops Monitor results and hold follow up training

These programmes are described in greater detail below and are placed into a five year budget plan at the end of this chapter to help align with the existing IDP processes within the district.

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LED Strategy 8.6.2 Programmes and Project Plans Tourism Sector

Project Name

Inclusion of Cultural Tourism

Project Description

Incorporate local cultural sites into the an integrated cultural tourism strategy

Project Purpose

Enhance the role of Zulu culture in the district’s tourism

Anticipated Results/Outcomes

Activities to be Undertaken

Greater participation from marginalised communities and increased appeal to national and international tourists • Link into the Tourism Association’s strategy in the District, alignment to occur through the identification of stakeholders and the coordination of a series of workshops • Promote R66 utilising the existing district website as well as through TKZN’s site

Role Players

TKZN, UTA, District Planning

Budget

R80 000

Sources of Funding

Internal

Time Frame

4 months

General Comment

Local service providers need assistance in coordinating their activities; market access and service delivery standards. The uThungulu Tourism Association is best positioned to assist in these regards.

Project Name Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

SMME Participation and Development Identify supplier opportunities within the sector for emerging business, offer training and development for interested SMMEs. Enhance participation by SMMEs in the sector Additional businesses enter the sector, BEE participation figures increase, better understanding of local role players within the sector emerges • Identify small operators in the district • Develop a database of operators identifying services, location and costing with a formal web interface • Promote ICT training to smaller operators in the district • Establishment of learnerships for PDI candidates at local FET Colleges • Encourage participation at local trade shows and at regional events • Promote the involvement of BEE firms in the industry UTA, local municipalities R500000 Gijima KZN, TKZN, DBSA 8 months The local municipalities are not positioned to undertake such a programme on their own – and as such this would prove an ideal district wide initative.

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LED Strategy Project Name Project Description Project Purpose

Anticipated Results/Outcomes

Activities to be Undertaken Role Players Budget Sources of Funding Time Frame General Comment

Project Name Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

Adventure Tourism Enhance the existing opportunities within the district for adventure tourism Identifying areas where adventure activities could take place and finding private sector partners to initiate operations. Adventure activities like quad biking, hores back trails, hiking, mountain biking and wilderness adventures become a focus for district tourism • Develop an adventure tourism route in the district utilising existing businesses • Develop associated maintenance backend SMME businesses Marketing of the route UTA, local municipalities LED officers R250 000 Gijima KZN, TSA, TKZN 6 months Mthonjaneni, Umlalazi and Nkandla all identified adventure tourism as a potential niche market.

2010 World Cup Capture a notable share of KZN’s 2010 world cup tourism market To coordinate and align: marketing of the World Cup with the TA’s district strategy; tourism transport system and for the promotion of BEE development uThungulu captures part of the tourism spinoffs • Re-examination of the tourism strategy and inclusion of 2010 principles • Development of a tourist transport network in the district incorporating the tourism operators • Adopting of a BEE charter for local transport system • Identifying necessary improvements in physical supportive infrastructure. UTA, TKZN R250 000 Gijima KZN, TSA 1 year This programme needs to be aligned with the development of the new sports facility in uMhlatuze.

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LED Strategy Project Name

Project Description

Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame

General Comment

Film Industry Office To undertake a feasibility study examining the response that a support office for the international film industry would have on attracting productions to the district. Develop support mechanisms for the emerging film industry Establishment of a film industry support office • Identify potential sites, support systems and film industry requirements • Conduct a feasibility study detailing alternative mechanisms for developing a formal film office in the district UDM, UTA R300550 Gijima KZN, TSA 6 months This programme builds on the existing tourism charter of the district. A film office could result in additional international exposure and enhance tourism in the district.

Manufacturing Sector Project Name Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame

General Comment

Cluster Strategy Undertake an investigation into the suitability of clustering within the manufacturing sector of UDM. Develop a clustering strategy for the district Spatial and support clustering occurs • Identify potential spatial and non-spatial clusters in leading sectors • Conduct a feasibility study detailing alternative mechanisms for clustering in the district UDM, Zululand Chamber of Commerce R250000 DBSA, Gijima KZN 8 months Clustering would aid strengthen this sector as there are strong geographic considerations in place. Supply chain management and service delivery are two aspects of local manufacturing sector that could be considerably enhanced by a clustering strategy.

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LED Strategy Project Name Project Description

Project Purpose

Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

Project Name Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

SMME Development Strategy Encourage the development of additional SMMEs in UDM. This is a three-fold strategy: 1. Develop a formal SMME strategy 2. Develop SMME incubator plan 3. Integrate SMMEs into the districts procurement policies Identification of SMME stumbling blocks, their removal and the emergence of additional SMMEs in the area. • Undertake research on SMME’s in the district • Undertake a feasibility study for an SMME incubator in the district • Develop a database of SMME service providers • Provide HIV/Aids support services guidance for SMME’s UDM, ZCC, DED R 350 000 Gijima KZN, DED, DBSA 8 months SMME development engages across all spheres of LED and is a critical stepping stone in UDM’s economic development.

Employment Generation Strategy Low levels of employment throughout the district necessitate the focus on employment rich industries being developed in UDM. Focussed incentives for employment rich industries Formal employment figures rise • Identify potential industries • Identify relevant skills and requisite training needed • School leavers focussed employment drives • Employ local campaigns • Employee health and HIV campaigns ZCC, UDM R300000 Gijima KZN, ZCC, DED, DBSA 6 months Employment creation is major concern within the district and identifying an integrated strategy to manage this is essential to the development of the LED.

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LED Strategy Project Name

Project Description Project Purpose Anticipated Results/Outcomes Activities to be Undertaken Role Players Budget Sources of Funding Time Frame General Comment

Project Name Project Description Project Purpose Anticipated Results/Outcomes Activities to be Undertaken Role Players Budget Sources of Funding Time Frame General Comment

BEE Participation Undertake a review of the current status of BEE involvement in manufacturing and identify mechanisms to enhance these levels. Encourage BEE participation within the district’s economic activities Additional BEE involvement within the sector. • Focus on identifying BEE SMMEs • Incorporate into the SMME development strategy ZCC, UDM R150000 Gijima KZN, ZCC, UDM 6 month BEE participation needs to be supported and aligned alongside the SMME policy development.

ICT SECTOR DEVELOPMENT Undertake a review of the opportunities within the ICT sector that uThungulu could avail itself of. Create an understanding of the ICT sector and propose a suitable strategy for its inclusion in uThungulu’s economic activity ICT strategy is developed and the sector grows in importance within the local economy. • Undertake research on ICT in the district • Undertake a feasibility study for an ICT incubator in the district UDM, ZCC, other role players to be identified R 450 000 GIjima KZN, DED, DBSA 8 months Involvement of the private sector as well as parastatal, Telkom is likely to be necessary and an integrated approach is required.

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LED Strategy Agriculture Project Name Project Description Project Purpose Anticipated Results/Outcomes Activities to be Undertaken Role Players Budget Sources of Funding Time Frame

General Comment

Project Name Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

Regional Market Undertake a feasibility study to develop a regional market for emerging growers Develop a regional market to improve market access for smaller growers Improved access to the cash economy for smaller growers, additional opportunity to capture formal contracts for grower, to expand crop diversification • Feasibility study UDM, growers associations, commercial farmers’ association, ZCC R200000 Gijima KZN 6 months Market access for small growers is currently highly restricted, this in turn has implications on crops grown and the access to the formal economy. In order to enhance the economic livelihoods of growers, access to a formal market needs to be developed.

Crop Diversification Promote the diversification of crops grown by small growers and emerging farmers in the district Enhance economic opportunities available within agriculture Diversified cash crops to be grown, notably: palms, organic vegetables and nuts • Identify growing areas • Identify potential crops • Identify communities and wards to act as pilot projects • Identify potential buyers UDM, DOA, growers associations R450 000 DOA, Gijima KZN, DBSA 8 months Crop diversification is the key to unlocking economic value within the sector..

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LED Strategy Project Name

Project Description Project Purpose Anticipated Results/Outcomes Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

Project Name Project Description Project Purpose

Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

Value-Adding Activities Identifying value adding activities within the agricultural sector that can be undertaken within the district. Bringing increased value adding activities into the sector Diversification of the agricultural sector, additional rural employment opportunities • Feasibility studies identifying growing areas and processing costs for bio-diesel and other agriprocessing opportunities UDM, local municipalities, DOA, SASA, growers cooperatives, tribal authorities, commercial grower’ unions and other relevant stakeholders R500000 Gijima KZN, DED, DOA, DBSA 1 year Value adding processes can enhance local employment, grow skills, diversify crops and create an injection of disposable income within the rural setting. Improved Support Services for Agricultural Activity Create a better support network for the agricultural sector Improve the on offer support services from the DOA Better coverage, greater support for emerging farmers, better cohesion within the sector through coordinated training of extension officers, district coordinated interaction programme with commercial farmers • Coordinate efforts with SASA and farmers associations • Undertake a joint training program with the DOA • Incorporate commercial farmers into the LED structures of the LMs and the district Sugar Association, farmers association, small scale farmers association, DOA and other related roleplayers R450000 DOA, SASA, UDM 3 years Support services are the back bone of this sector’s smaller farmer aid mechanism, feedback from the local municipalities indicated that this mechanism was however not functioning as effectively as hoped, and this project is directly designed to counter that.

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LED Strategy Project Name Project Description Project Purpose

Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame

General Comment

Project Name Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

Improved Female Participation Grow recognised female participation in the sector Identify and encouragement of women growers and encourage Additional female school leavers will enter the sector; female participants will find accessing services and credit easier and will benefit more from the support systems in place. • Investigate potential training activities for women farmers with both DOA and the FETs • Offer learnerships for candidates UDM, local municipalities, DOA, SASA, growers cooperatives, tribal authorities, commercial grower’ unions and other relevant stakeholders R250000 DOA, Gijima KZN, DBSA 6 months Female growers often face restrictions of market access this in turn has implications on crops grown and the access to the formal economy. In order to enhance the economic livelihoods of growers, access to a formal market needs to be developed.

Rural Communication Network A detailed feasibility study into the possible development of a rural communication network Identify solutions for improved rural communication Generate a communication strategy • Engage with the private sector to identify available technology • Undertake a feasibility study • Undertake research on the implications and integration of a communication strategy on LED in the district DED, UDM, Local Municipalities, other role players to be identified R400000 Gijima KZN, DED, DBSA 8 months ICT is a sector which has not thus far been given much emphasis in uThungulu, however substantial economic positives could be derived from a focus upon this sector.

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LED Strategy ICT Sector Project Name

Project Description Project Purpose Anticipated Results/Outcomes Activities to be Undertaken Role Players Budget Sources of Funding Time Frame General Comment

Project Name Project Description Project Purpose Anticipated Results/Outcomes Activities to be Undertaken Role Players Budget Sources of Funding Time Frame General Comment

Broadband Access Examine the opportunities within the district for generating broadband access within specific geographic areas Improved accessibility to broadband in the district Broadband access becomes an affordable business tool for emerging businesses • Undertake feasibility study for development of open access broadband in the district UDM, ZCC, Telkom, other role players to be identified R400000 Gijima KZN, DBSA, private sector 6 months Affordable broadband access would greatly enhance the marketability and market access for small businesses in the district as well as add impetus to the ICT sector.

Promote BEE Involvement in ICT Identify prospects for BEE enhanced activity to occur within the sector Develop specialised support services for BEE firms in line within ICT sector Services aligned with BEE needs in the sector are developed • Incorporate into the ICT development strategy • Focus on identifying BEE roleplayers ZCC, UDM, private sector role players, FET colleges and other to be identified roleplayers R25000 Gijima KZN, DBSA 4-5months BEE participation needs to be supported and aligned alongside ICT sector policy development.

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LED Strategy Project Name

Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

ICT Support Programme Undertake the development of a formal ICT strategy for the district, complete with implementation framework. Introduce the ICT sector into UDM Develop a formal ICT strategy; Develop ICT incubator; investor promotion for the sector • Undertake research on the implications and integration of an ICT strategy on LED in the district • Undertake a feasibility study for an ICT incubator in the district • Focus incentives on the ICT sub-sector UDM, ZCC, Telkom, other role players to be identified R450000 Gijima KZN, DBSA 6 months In order for the sector to take advantage of the proposed sectoral programmes continued support and assistance needs to be formalized into a strategy for the district.

LED CAPACITY Project Name Project Description Project Purpose

Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

LED Institutional Support Identify institutional shortfalls and generate recommendations to minimise them Improve institutional support within the local municipalities and between the district and local municipalities • Improved utilisation of the LED Forum • Develop a LED newsletter • Improved participatory processes in decision making • Repackaging the LED Forum to meet the districts needs. • Make newsletter available throughout the district • Grow the membership to be a more inclusive body UDM, LED Forum, additional identified roleplayers R50 000 UDM 6 months LED institutional support is critical for the constructive development of LED initiatives and strategy in the district

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LED Strategy Project Name

Project Description Project Purpose Anticipated Results/Outcomes

Activities to be Undertaken

Role Players Budget Sources of Funding Time Frame General Comment

LED Capacity Training Creating training initiatives that are specially designed to enhance the understanding and implementation of LED Strategy within the District Improved training and capacity in LED for both officials and councillors Identify officials and councillors as well as community and business owners to participate in LED training workshops • Generate suitable programmes • Learnerships • Hold participatory workshops Monitor results and hold follow up training LED Forum, UDM, LMs, FET Colleges, other roleplayers to be identified R450000 Gijima KZN 1 year This is a critical aspect of foster better LED within the district.

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LED Strategy 9.

IMPLEMENTATION

9.1 Introduction This section describes the final phase of the LED Study and makes firm recommendations on the implementation of the LED strategy. This would entail the restructuring of institutional arrangements as well as other interventions. The vision as formulated in Section 5, guides the focus of he marketing strategy in terms of the potential development projects. This section provides recommendations on the potential funding sources and a marketing strategy that should initiate the establishment of an investor friendly, vibrant LED and business culture in the uThungulu District Municipality so as to attract greater economic opportunities and activities to the area.

9.2 Institutional Arrangements The aim of this section is to provide guidance to the district towards managing the LED process. Recommendations are made based on the observed capacity of uThungulu District Municipality. It remains central that dedicated resources (human and financial) must be applied in the initiation, management, implementation and monitoring phases of the proposed projects. It is therefore recommended that the uThungulu District Municipality identify, train and position a dedicated person who will act as “project manager” for LED processes within the Development Planning function of the District and also have the duty of liaising with all relevant role players throughout the local municipalities. It is envisaged that the person be totally capable and driven to grow economic opportunity in the study area through the vigorous marketing and initiation of LED projects. This recommendation has been identified by each of the local municipalities, who have each cited the lack of capacity as a major constraint to implementation of LED initiatives.

9.3 Practical Management Of The LED Process When LED projects are to be initiated and implemented on a practical level, five core activities have to be identified. It should be noted that these core activities are inter connected and are not separated from each other. These are the following: Identification- refers to those activities pertaining to the identification of potential projects and opportunities that can be developed in the local economy and is the first step of the LED. Defining Approach –refers to the process if specifically defining the project and implies the actual formulation of business plans.

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LED Strategy Marketing – refers to place marketing as well as the marketing of specific products or services produced by the respective projects Funding- refers to the acquisition of finances for the implementation and development of projects. Implementation- refers to the culmination of the preceding activities resulting in the identified opportunities being put into action. Each of the aforementioned activities/ phases of practical implementation is made up of its components. These components similar to the activities, are independent and progressive and build up to the implementation and evaluation of projects. It is important to note that the District Municipality should assist the local authority in all of the abovementioned activities of practical implementation depending on the capacity and or assistance required.

9.4 Potential Funding Sources A range of institutions have been identified which could possibly be utilised as potential funding sources. The list of potential funding sources could is illustrated in the table 16 below: Potential Funding Sources For Local Economic Development Projects TYPE OF SECTOR

Agriculture

POTENTIAL FUNDING SOURCE Gijima SEDA DTI

Tourism

Business Development

Infrastructure Development

SMME Development

Institutional LED Development

Gijima Land Bank District Municipality Department of Environmental Affairs and Tourism Gijima DTI

COMMENTS Funding source The Small Enterprise Development Agency (SEDA) is the Department of Trade and Industry's agency for supporting small business in South Africa. Agro Industry Development Fund for the development and expansion of the agricultural food sectors Funding source Funding source Align with District Strategy Tourism related activity benefit

Funding source Funding source and programmes To provide investors with the insight into the KwaZulu-Natal TIKZN economy To provide development communication and information to Government and Communication the public to ensure that they become active participants in and Information Systems changing their lives for the better Department of Communications To connect communities together The Small Enterprise Development Agency (SEDA) is the SEDA Department of Trade and Industry's agency for supporting small business in South Africa. • Small Enterprise Development Fund NAMAC • Business Referral and Information Network (BRAIN) • Franchise Advice and Information Network (FRAIN) Ithala Bank Provide funding source DPLG LED fund for job creation LOCATI (Local Economic LED Capacity Building and Implementation Support

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LED Strategy TYPE OF SECTOR

Skills Development & Capacity Building

POTENTIAL FUNDING SOURCE Development Training Initiative of South Africa SETA

COMMENTS Program, and has been running since 2004 Sector Education and Training Authorities have been established to ensure that the skill needs for every sector of the economy are identified and that training is available to provide for these skill needs.

It should be noted that the funding institutions included in the above table does not include all the funding options that are available. Therefore, it is recommended that further investigations be done on the possible funding sources still available. It is also important to note that funds are made available to those who only qualify, therefore it is imperative to contact these institutions and find out whether the project complies with the certain requirements that these institutions might have.

9.5 Comparative Advantages Marketing is considered critical to the long-term success of the LED initiatives. This is especially true in sectors such as tourism, trade where the growth and success of new ventures are solely dependent on the consumer. Marketing campaigns should always start out with an assessment of the comparative advantages in the area. These advantages contribute to also most total to the decision of the potential investor to invest in a specific area, region, site or town. It is therefore imperative that these advantages be aggressively promoted when implementing the marketing strategy. 9.5.1 Comparative Advantages of uThungulu District Municipality Tourism Destination The district has a broad based tourism appeal, from unique bird watching through to luxury accommodation and cultural happenings. One prime example of this is the Dlinza Forest with a new Dlinza Forest and Aerial Boardwalk, the first in Southern Africa and exclusive to Eshowe, is a 160 metre walkway built above the forest floor, which allows visitors to view flora, fauna and avifauna. Opportunities for wildlife and adventure tourism abound throughout the district. Agriculture The agricultural sector dominates the district’s economy, contributing X% to the local economy.. The products that dominate the area are sugar cane and timber production. Animal husbandry (cattle) and citrus farming are also significant commercial ventures. The agricultural sector is one of the basic economic sectors as it impacts significantly on employment, income generation, economic linkages, land tenure and land reform and environmental considerations in the district.

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LED Strategy Linkages The District is criss-crossed by a number of transportation routes, such as the N2 Motorway between Durban and Richards Bay, the R34 between Richards Bay/Empangeni and the Nkwaleni Valley to the north of Eshowe, and the R66 from the N2 Motorway to Gingindlovu , Eshowe, Melmoth, Ulundi and Vryheid. The R66 and the R34 are both routes in need of maintenance as a result of heavy-duty vehicles using the routes on a regular basis. Some upgrading is being done to the R66 to the east of Eshowe. The R102 to Ginngindlovu, which offers access to Richards Bay/Empangeni from the southeastern sector of the uMlalazi municipal area. The P50 is an important route which links Eshowe and Nkandla to the north-west of Eshowe. It also links Entumeni with Eshowe and Mbongolwane is on this route. This route serves a huge agricultural area. The majority of these roads experience heavy traffic (sugar and timber trucks) as well as port related traffic destined for Richards Bay. The smaller nodes are poorly interlinked by a formal road network.

9.6 Implementation Matrix Project Inclusion of Cultural Tourism Tourism related SMME development Adventure Tourism 2010 World Cup Film Office Cluster Strategy Manufacturing related SMME development Employment Generation Strategy BEE Participation ICT Sector Development Regional Market Crop Diversification Value Adding Activities Improved Support Services Improved Female participation Rural Communication Broadband Access ICT Support Programme LED Institutional Support LED Capacity Training

Budget

Yr 1

R80000

R80000

R500000 R250000 R250000 R300550 R250000

Yr 2

Yr 3

R250000 R125000 R300550 R125000

R125000 R125000 R350000

R300000

R300000

R150000

R450000

R150000 R450000 R250000 R225000

R225000 R500000

R100000

R250000

R100000

R100000

R100000

R50000

R200000

R200000

R250000

R400000 R400000

R400000

R450000

R225000

R50000 R450000

Yr 5

R500000

R350000

R450000 R250000 R450000 R500000

Yr 4

R50000 R450000

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R225000

LED Strategy 9.7 Monitoring and Evaluation Monitoring and evaluation is a critical function of the LED process. Without proper examination of the work undertaken, programmes initiated and projects funded there can be no understanding of what has been successfully implemented. Thus, there is no basis for the allocation of future funding and placement of other scarce resources from the District. In order to insure that monitoring and evaluation of all aspects of this LED Strategy occurs it is recommended that the District appoint and external evaluator to undertake a yearly review of LED programmes and projects within UDM. An external evaluator is preferable, as using an official is impractical – they are the implementers of the programmes and projects, they are highly constrained and certainly far from impartial. Using Councillors to fulfil the role of evaluator is also problematic, as the nature of representative governance denudes them of the ability to be fully impartial while still representing the interests of their wards. Evaluation is an essential and critical part of a feedback loop to the decision making body, this is indicated below in the stylised graphic:

Projects and Programmes implemented under LED Strategy

Evaluation under taken by external evaluator

Feedback presented to LED Forum

By incorporating the evaluation into the cycle, the LED Forum will be able to aid decision making about which programmes to continue funding and which to remove the LED Strategy. The DPLG guidelines for LED implementation includes a chapter on monitoring and evaluation (M & E) and points out that M & E is critical for aiding answering the questions of whether or not the LED’s objectives have been met; incorporates aspects of good governance with regards to public resources (budgets and time) as well as help direct project design and implementation.

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LED Strategy The guideline goes on to list the following rationale for M & E importance (DPLG, 2006: 116): It helps to build trust with businesses, financial institutions and investors by openly sharing results The emergence of recorded benefits early on helps reinforce ownership and early warning learning by all regarding emerging problems allows action to be taken before costs rise A well designed M&E system allows for mid-course corrections A reliable flow of M&E information during implementation enables managers to keep track of progress and to adjust operations to take account of experience It allows for the interventions to be adapted to reflect the changing needs of target businesses, sectors and companies It provides important information on how to use limited resources mo6re efficiently by directing investments to programmes and activities that have the greatest impact on productivity, job growth or investment It allows for the benchmarking of LED interventions against examples of good practice It demonstrates the impact of LED interventions in terms of poverty reduction, city GDP growth or employment creation to clients, citizens and potential investors It can help to justify budget requests for further LED interventions Monitoring and evaluation can follow two distinct methods, a convetional audit by an external party or a participatory approach. This is detailed below in the table.

Why

Who What How

When

Conventional Evaluation Accountability . Usually summary judgements about the project to determine if funding continues External experts Predetermined indicators of success Principally cost and production output Focus on “scientific objectivity:. Distancing of evaluators from other participants, uniform complex procedures, delayed, limited access to results Midterm and completion

Participatory Evaluation To empower ,local people to initiate, control and take corrective action Community members, project staff, facilitators People identify their own indicators of success Self evaluation, simple methods adapted to local culture, open immediate sharing of results through local involvement in evaluation processes Any assessment for programme improvement, merging of monitoring and evaluation, hence frequent small evaluations

In order for uThungulu District Municipality to achieve the goals set out in this LED Strategy, monitoring and evaluation need to be given sufficient impetus and the results should be re-applied into the strategy. LED is not a stagnant document; it is a living breathing policy that needs to interact with the local conditions and communities to generate the greatest benefit for the entire uThungulu community.

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