Appropriation Bill 2022 - Budget Vote 12: Department of Economic Development

Today, Minister Maynier tabled the Main Appropriation of Vote 12: Department of Economic Development and Tourism 

1. Introduction 

Last week we tabled “A Budget to Push Forward”, so that we can get up, so that we can get out, so that we can push forward and so that we can do even better in the Western Cape.  

And today, we table the main budget for the Department of Economic Development and Tourism [Vote 12], in the amount of R514.7 million for the 2022/23 financial year  to deliver on five strategic objectives:  

• accelerating the ease of doing business;  
• boosting private sector investment and promoting exports;  
• enterprise development;  
• scaling up work opportunities; and  
• ensuring economic resilience.

2. Accelerating the Ease of Doing Business 

To push forward, we will: 

• spend R23.5 in the 2022/23 financial year  on accelerating the ease of doing business so that we make it easier to start a business, or to expand a business in the Western Cape.

Last week, I had the pleasure of visiting Shonaquip Social Enterprise, a local business which manufactures and supplies equipment to help disabled children and adults become mobile so they can be part of their communities. 

Through the Ease of Doing Business hotline, the Executive Director of Shonaquip approached us for help with an outstanding and overdue payment owed to her business for goods delivered. 

Following our intervention, Shonaquip received the outstanding payment and was able to pay the salaries of 84 staff members and stay open for business. 

Shonaquip is just one example of the hundreds of businesses that our Ease of Doing Business Unit has helped to overcome inefficient government bureaucracy that was restricting their growth.  

This financial year alone, the Ease of Doing Buisiness Unit have dealt with over 600 cases and have maintained an overall resolution rate of 88%.    

And, to build on the good work already done, last week, we launched the Western Cape Government’s R10 million Municipal Ease of Doing Business Fund, which will provide capacity and funding support to municipalities to make it easier for businesses, especially for small business in the formal and informal sector, to do business in the Western Cape. 

One of our major focus areas when it comes to ease of doing business is the Port of Cape Town.   

We know that removing obstacles to exports is a critical lever in our strategy to grow the economy and create jobs in the Western Cape.  

We know that to become the most competitive region in Africa, we need the most competitive port in Africa. 

While the Western Cape government does not have a formal mandate or jurisdiction over the port of Cape Town, we could not sit back and do nothing. 

That is why we created a port task team, including key stakeholders and decision makers across the port logistics chain, to address the numerous challenges at the port. 

A big part of the issue at ports across South Africa is massive capital under expenditure- which translates into a shortage of equipment, and poor maintenance of equipment, which in turn has severe consequences for a port’s ability to manage inevitable breakdowns. 

Over the last three years, Transnet Port Terminal’s capital under expenditure amounted to R2.3 billion or almost 30% of its capital budget. The situation is even worse when it comes to Transnet National Port Authority with capital under expenditure amounting to R4.2 billion over the last three years, or 57% of its capital budget. 

Which is why it is now time to look at privatising the port of Cape Town. 

Because, at the end of the day, when the port works, our economy works in the Western Cape. 

3. Boosting private sector investment and promoting exports 

To push forward, we will: 

• spend R127.6 million in the 2022/23 financial year  on boosting investment, trade and tourism promotion so that we attract investment, expand trade and scale up tourism. 

Growing exports, primarily through trade promotion and the removal of obstacles to exports, is a critical lever in our strategy to grow the economy and create jobs in the Western Cape.  

On Wednesday, 16 March 2022 we celebrated the one-year anniversary of the US-Western Cape Trade and Investment Promotion Partnership.  

The United States is a key tourism and business market for the Western Cape. 

The United States was the Western Cape’s largest export market for the first time in 2021, with exports totalling close-on R17 billion, an increase of 57.5% on 2020’s value of R10.8 billion. 

For the past decade, the United States has also been the largest investor in the Western Cape by Capex - investing R2.9 billion and R4.4 billion into the Western Cape in 2020 and 2021, respectively. 

Through our regular engagements we have seen the impact of this partnership in the securing of investments in the health sector, tech sector and the increase in agricultural exports to the US as well as a significant growth in tourism from the United States to the Western Cape. 

To push forward, we will: 

• spend R41.9 million  on the Saldanha Bay Industrial Development Zone to cover operational costs as it transitions towards self-sustainability; and 

To push forward, we will: 

• spend R39.1 million on the Atlantis Special Economic Zone. 

We are very pleased that, after significant work by the Atlantis Special Economic Zone team and the Western Cape Government, the National Minister of Finance gazetted the Atlantis Special economic Zone as a 3D public enterprise in December last year.

At the end of the day, this is good news for the Western Cape. 

4. Enterprise Development 

To push forward, we will:

• spend R23.5 million on enterprise development to support businesses, especially small businesses in the formal and informal economy in the Western Cape.

We will facilitate the provision of financial and non-financial support for small businesses, create and increase demand for small businesses products and services and support small businesses, especially in retail, in townships in the Western Cape.

We have allocated R17 million to the “SMME Booster Fund”, to support interventions implemented by organizations and municipalities that are geared towards supporting small businesses in the formal economy, and in the informal economy, in the Western Cape.

5. Scaling up work opportunities 

To push forward, we will: 

• spend R96.2  million in the 2022/23 financial year for the coordination, facilitation and implementation of skills development initiatives; and 

To push forward, we will: 

• R32.949 million for Skills Development in the Business Process Outsourcing (BPO) and technology sectors. This will enable candidates to participate in a 12-month training and internship programme to obtain the necessary skills to be placed permanently in the job market. 

We will invest in the development of competitive skills, particularly among young people, as a response to persistently high unemployment levels, which have been exacerbated by the pandemic.  

Our “Work and Skills” programme incentivises companies to offer experiential work opportunities to unemployed youth.  

This work placement programme allows youth to gain experience first-hand, develop technical skills and gain softer skills such as teamwork and interpersonal skills that will make them more rounded and attractive candidates for any employer.  

6. Ensuring economic resilience 

To push forward, we will: 

• spend R12 million in the 2022/23 financial year  to diversify our regional energy mix and improve energy resilience in the Western Cape.  

Our Municipal Energy Resilience project is a bold, and ambitious, project to support municipalities to generate, procure and sell their own power so that we can beat load shedding in the Western Cape.   

Pre-feasibility studies have been undertaken on 5 pioneering projects of which 4 are embedded in municipal networks and the fifth is a municipal pooled buying mechanism for larger projects. 

This work has involved detailed technical, legal, and financial analyses.  

The focus is now on working with the municipalities in a phased manner to further develop the pioneering projects - including the provision of transaction advisory and other advisory support to ensure that the projects are financially, technically, and legally sound before embarking on respective procurement processes.    

The Western Cape Government is currently providing grant funding to 13 projects across 8 municipalities to undertake foundational energy studies.  

These include electricity master plans and cost of supply studies that are aimed at providing a technical and financial basis for increased penetration of renewable energy on municipal networks. 

This will help to unlock both private and public sector energy generation, procurement and trading.  

We are also providing in-depth wheeling support to 7 municipalities which is aimed at enabling private sector players to sell, buy and trade electricity across municipal grids.   

We recognize that enabling the implementation of renewable energy at scale will require major grid strengthening and expansion.

We are working both with municipalities and national stakeholders to identify needs and to develop different ways of how infrastructure may be delivered and financed.  

7. Conclusion 

In conclusion, I would like to take this opportunituy to announce that Velile Dube will join us as the new Head of Department of the Department of Economic Development and Tourism. He brings a wealth of experience and expertise from his long career in private sector and state-owned enterprises and will commence work as head of department on 01 May 2022.

We will soon be saying goodbye to our outgoing Head of the Department, Solly Fourie, and I would also like to take this opportunity to pay tribute and thank him for leading the Department for more than a decade and contributing immeasurably to driving economic growth and job creation in the Western Cape.