Department of Economic Development and Tourism Budget Speech 2015

Growing the economy and creating jobs is not the easiest job at the best of times.

But when you throw in policy uncertainty, unreliable electricity supply and restrictive regulations it becomes almost impossible.

Yet, despite this, in the Western Cape, we are making the impossible, possible.

In the past five years we have made great strides in getting our economy to work for the people of the Western Cape.

Today over 200 000 more people have jobs than in 2008.

Our Red Tape Reduction Unit has resolved more than 2 000 cases, helping businesses to expand their operations.

Over the past five years, we have increased the value of new foreign investments by R25 billion.

We have given over 26 000 entrepreneurs the support they need to make this economy grow.

At the start of a new term, we are building on this momentum to give even more hard-working residents the chance to play a part in achieving the Western Cape dream. Mr Speaker, our dream is of a province where companies are growing, where jobs are plentiful, where people have the wherewithal to take up these opportunities, and to escape poverty if they work hard.

Today, I am tabling a budget aimed at creating the enabling environment to achieve just that.

In total, The Department of Economic Development and Tourism receives R518 million to drive the Western Cape Government’s first Provincial Strategic Goal – creating opportunities for growth and jobs.

To start, we’ve taken a whole new approach to delivery by becoming much more focused and by embarking on the deepest consultation process ever conducted a provincial government before deciding on its budget and plans. While we will of course continue to support the entire economy, we have pulled out special areas – those with the greatest potential to accelerate growth and job creation for our residents – and we’re giving them dedicated attention.

These are Tourism, Agri-Processing and Oil and Gas.

This process is called Project Khulisa, the first economic Game Changer of the Western Cape Government. Under a high growth scenario, and with the full support of government and the private sector, this project can deliver over 200 000 jobs.

If we are going to back your ideas by investing resources, we want to know that you, the private sector, are investing in your ideas too.

In tourism, to facilitate the implementation of a ramped up growth strategy for the sector, the Tourism, Arts and Entertainment programme receives R42.4 million in the 2015/16 financial year.

This sector is transforming the lives of the people who live in this province, giving young people the opportunity to start their own businesses and providing livelihoods for hundreds of thousands of households. It is our sector with the highest growth, and its where most our jobs come from. That makes it BIG business.

Today I have the honour of welcoming Nisreen Bulbulia here. At 26 years old, Nisreen has her own airport shuttle, Citihopper.

Through the business development support rendered by our department and her own hard work, Nisreen’s business has grown from strength to strength.

Nisreen is no stranger to these chambers, having attended the Premier’s State of the Province Address last year. She is also no stranger to accolades, having won a major prize at a national tourism awards ceremony in 2013.

Nisreen is one of the 204 000 people formally employed in the tourism sector in the Western Cape. Through Project Khulisa, under a high growth scenario, we can grow this sector so that it provides jobs for 324 000 residents of this province and generate R28 billion for our economy.

Over the next few months, the Western Cape Government, in partnership with industry, will host a series of engagements to investigate and design comprehensive actions plans to take this sector to the next level.

Possible interventions under investigation include, amongst others:

• Driving low season tourism by promoting business tourism, events, and special niche offerings which aren’t weather dependent like heritage tourism;
• Expand our cruise tourism offering. This is a lucrative niche industry, with cruise liner tourists spending up to R1000 a day while docked in the city. Possible initiatives include VAT refund centres and transport links to other retail areas, such as the Cape Town CBD. Recently Transnet announced it would be selected a successful bidder for the cruise liner terminal shortly. This is excellent news for the industry and we must capitalize on it;
• Improving air access to the destination. Research shows that there is a clear link between improved air access and economic growth. In this financial year, we will develop an implementation plan focusing on developing direct routes to key source markets; and
• Decreasing regulatory burdens affecting travel to the destination by lobbying the national government to relax the job-killing visa regulations it put in place last year.

Through these initiatives, and others, tourism is poised to become the shining star of the Western Cape economy.

Our second focus area is agri-processing. During the Department of Agriculture budget speech yesterday, I reported on the key points discussed at the agri-processing design lab held last week.

Agri processing presents great potential to provide economic opportunities for families living in rural areas.

To support this sector, I am happy to announce today that we are set to launch a new fund to help kick-start small businesses in agri-processing.

The R6.6 million Cape Capital Fund will provide 44 businesses with the support they need to buy equipment and improve their business processes. In further support of agri-processing businesses, we will also select high-potential small businesses for a concentrated incubation programme.

This incubation programme also extends to our third and final Khulisa sector, Oil and Gas.

The Oil and Gas sector, underpinned by the designation of the Saldanha Industrial Development Zone, is projected to be a powerful economic catalyst for the region and the country.

Focusing specifically on upstream and midstream services such as rig repair, this sector already provides 35 000 formal jobs opportunities in the province. Through Project Khulisa, we have the aspirational goal of adding a further 60 000 formal jobs in this sector and increasing its economic contribution to R11 billion, from its current R5 billion.

We seek to grow this sector by transforming Saldanha into a world class rig repair hub and by equipping local residents with the skills they need to take advantage of the opportunities that will arise.

To help us to achieve this goal, the development of local suppliers will be an important economic priority. Entrepreneurs in the industry have to be ready to service the increased number of port vessels arriving along the West Coast.

This is a budget which recognises that small businesses in all sectors, with the right support and the right environment, can take their ideas to action.

The Integrated Economic Development Services programme receives R59.2 million to foster an enabling environment for emerging and existing businesses.

For them, unnecessary red tape poses the biggest threat.

To help us break down these barriers and make it easier to do business in our province, the Red Tape Reduction Unit receives R10 million this year.

Engaging national government on regulations has been identified by Project Khulisa as a key enabler.

In the tourism sector, international best practice shows that relaxing visa restrictions has a direct impact on increasing tourism numbers. In Laos, entry visas were offered at selected checkpoints, and international arrivals grew fivefold over four years.

Other regulatory blockages in the sector include delays in obtaining abnormal vehicle registrations and abnormal load permits.

There are also sections of the Customs and Excise Act (Act 91 of 1964) which affect the temporary importation of oil and gas vessels and parts.

In this financial year, the Red Tape Reduction Team will conduct a study to determine the cost of unnecessary regulations in our three high-potential sectors. The findings of this study will tell us where we need to focus our efforts, and will allow us to monitor the impact of our red tape reduction efforts.

Another critical enabler for our economy is a stable supply of energy. Alongside Project Khulisa, this is our second Game Changer, and we have already made great strides.

The Western Cape Government, the City of Cape Town and businesses in our region are working closely together to find solutions to minimise the impact of load shedding on economic growth.

In tandem, we’ll continue to foster the supply of alternative energy, and our work on landing Liquefied Natural Gas in our province continues.

In a major development for renewable energy, we are soon to apply for designation of the Atlantis Special Economic Zone (SEZ). The draft regulations for SEZ applications have just opened for comment, and we will be sure to follow this process closely.

A reliable water supply is also essential to support economic growth. As we focus on resource efficiency, we will analyse the availability of water and lobby for interventions to improve availability. We will do this in conjunction with our sister departments, local municipalities and the national government, which holds the mandate for this resource.

As our economy continues to grow, we have to make sure our residents have the skills they need to take advantage of it.

To illustrate the projected demand for one area – Oil and Gas -, 1 500 people from 30 different occupations are needed to repair one rig. By the time the IDZ comes online, there will be demand for 18 000 jobs in Saldanha. We currently fall far short of this, and must encourage the development of new artisans.

The agri-processing sector is also experiencing skills shortages in research and development, specifically in testing, labelling, new product development and disease prevention.

The Skills Development and Innovation programme is allocated R51.2 million in the 2015/16 financial year.

Broadband is another enabler I’d like to speak about. It’s also one our strategic priorities because studies have shown us that fast, reliable and affordable internet results in economic growth.

In her State of the Province address, Premier Helen Zille outlined the progress of our plan to connect every resident to broadband.

Just last week, we launched a new home for tech entrepreneurs called the Barn, which is located in Khayelitsha. Through this facility, local entrepreneurs will be able to grow their businesses ideas.

We are also in the final stages of developing the I-Can Centre in Elsies River, which is set to launch in the next few months. This digital access centre centre will provide a space for the entire community. Residents will have access to Wi-Fi hotspots, meeting rooms, video-conference facilities, training workshops, study rooms and sound-proof recording booths.

By July next year, over 2000 Western Cape Government sites will be connected through our partnership with Neotel and the State Information Technology Agency.

Through our pilot WiFi project in Delft, Robertson, Atlantis and the Garden Route, over 50 000 unique users have been connected to the net.

At the same time as we are rolling out fibre infrastructure, we need to make sure that residents and businesses can make the most of this access.

To do this, we will implement an e-skills project through which residents can learn to use the internet effectively. For businesses, we will develop a tool-kit which provides mentorship on using broadband to increase business competitiveness.

The final key enabler we will focus on this year is promotion. A key part of growing our economy comes through exporting our goods to world markets, and through drawing investment and visitors to our region.

Our produce and our tourism industry are achieving international acclaim. Just last month, the Groot Constantia’s 2013 Chardonnay was named the best in the world at the 22^nd annual Chardonnay du Monde competition. Just this week, Cape Town was again ranked amongst the top ten visitor destinations by voters on Tripadvisor. This shows that we are already doing a great job marketing our province. It is now time to put the Western Cape front and centre on the world stage.

To drive our strategic initiatives like broadband, and to promote our province through Wesgro, the Trade and Sector Development programme receives R257 million in the 2015/16 financial year.

Today I have tabled a budget which invests in our jobs and growth agenda.

This budget seeks to give more families opportunities to escape poverty. It seeks to create the right environment for investors and entrepreneurs and it continues to build a Western Cape in which residents can take control of their own economic destiny.

I would like to thank my Head of Department, Mr Solly Fourie, and his dedicated team, including the leads of the Project Khulisa areas, for showing immense strength and agility in adapting to our more focused approach. I am confident that this is going to be Game Changing for our economy and I am looking forward to executing it with you. 

I would also like to thank Premier Zille, my Cabinet Colleagues, and the departments with which we are working ever more closely, for their continued support. Delivering on an economic vision of this scale is requiring input and hard work from the entire government. I have no doubt that the results are going to be well worth the effort, when we see growth and new jobs in our economy.

I thank you.