Address by Hon Dr Zweli Mkhize, Minister of Cooperative Governance and Traditional Affairs, at the first National Special Economic Zones Investment Conference, Inkosi Albert Luthuli International Convention Centre, Durban

4 April 2019

The Minister of Small Business Development, Ms Lindi Zulu,

Deputy Minister of Economic Development, Mr Madala Masuku,

Mayor of eThekwini Metropolitan Municipality, Councillor Zandile Gumede

Representatives of international organisations

Executives from Special Economic Zones, State-owned Enterprises and Business,

Distinguished guests and delegates,

Good morning to you all.

I wish to thank the organizers for affording us an opportunity to participate in this historic SEZ conference.

The State of the Nation Address delivered by His Excellency President Ramaphosa this year singled out the revitalization of the Industrial Parks and Special Economic Zones (SEZs) as strategic interventions that our government will rigorously pursue to achieve inclusive economic growth.

This first SEZ conference enables us to realise what we have achieved so far with SEZs as industrial development tools of national choice, and which areas to strengthen to optimize the benefits going forward, as we implement the directive that the President gave to the country.

We have been requested to brief the conference on the role of CoGTA and Local Government in supporting special economic zones and industrialization. We say at COGTA that everything happens in a municipality.

The SEZs are located in either a local, district or metropolitan municipality, and for the SEZ programme to succeed, municipalities must be part of the planning, designing and implementation of these spatial development instruments. The local government sector is an important stakeholder therefore, in the drive to build sustainable and successful SEZs.

We are focusing on SEZs with good reason as government.  They are designed for a specific developmental purpose, to develop export-orientated industries, attract foreign direct investment and technology transfer and achieve the generation of employment opportunities. The SEZs stand to be an effective instrument to resolve the disturbing levels of inequality, poverty and unemployment, which are strongly marked by spatial, racial, class and gender factors.

In addition to job creation, the SEZs will also help to broaden the municipal revenue collection base to improve the quality of life in the municipal areas, as well as the quality of municipal services. This makes SEZs one of the key instruments for municipal economic growth and development.

COGTA is charged with the responsibility of ensuring that our intergovernmental system enables a cohesive government that is able to deliver complex programmes such as SEZs. Our intergovernmental relations and planning platforms such as the Presidential Coordinating Council (PCC) and MinMecs continue to provide guidance on how programmes such as SEZs should be supported by all the spheres of government.

At the national level, infrastructure masterplans developed by departments in critical areas such as energy, transport, health, education and human settlements must begin to demonstrate how they will support this programme when implemented in municipalities.

At a local level, COGTA will work with host municipalities to ensure that the SEZ programme is fully integrated in and is supported by Local Economic Development strategies, Integrated Development Plans, Spatial Development Frameworks, Land Use Management Schemes and other critical sector plans.

At the district level, our district municipalities will be encouraged and supported to develop regional development plans necessary for the success of SEZ programme.

As recently as November 2018, our Local Government MinMec adopted the Revised National Framework for Local Economic Development. This framework identifies the creation of inclusive economies as one of its key pillars, seeking to integrate previously marginalised areas and communities into the mainstream economic landscape.

Essentially, the revised framework requires municipalities to review their LED strategies to respond to the imperative of developing local economies that are driven by innovation.

These strategies, particularly at the district level, will facilitate the development of regional innovation systems that will support industries operating in and outside the economic zones. The support provided to SEZ host municipalities as they review their strategies, will ensure that LED strategies are geared towards supporting the designated SEZs and thus taking full advantage of the benefits that accrue from hosting an SEZ.

Our people need jobs and we should do everything possible to bring these jobs closer to them so that they do not spend their meagre resources travelling to work. This makes the location of industrial nodes important because when these are established adjacent to townships or nearby settlements and also rural areas, they will play a crucial role in bringing jobs closer to where people live and advance our goal of building an economically inclusive society.

It is for this reason that following the adoption of the  framework for local economic development, COGTA is embarking on a process of developing an Integrated Township Economic Development Programme.

This programme is designed to develop thriving local economies and position townships as focal points of government interventions as espoused by the recently announced presidential stimulus package.

At the heart of this programme is to get municipalities to be at the forefront of industrial development, including the revitalisation of industrial parks.

The development of the said industrial parks and other instruments of economic development requires an efficient provision of services.

Firms or companies anywhere in the world choose to locate and operate in certain cities, towns and regions because of certain pull factors. These may include the availability of cheap serviced land, basic infrastructure that is well-maintained, efficiencies in the approval of building plans, turnaround times in electricity connections, and so on.

To have this pull factor, municipalities must be ready to perform better and be fully functional. It is because of this recognition that we continue to implement the Back to Basics programme in order to position our municipalities, including the SEZ host municipalities to get the basics of service delivery right.

COGTA is implementing a Back to Basics Municipal Recovery Programme where we are assisting municipalities in distress and those that are dysfunctional to get out of their ICU.

Through this programme, COGTA and the National Treasury assists municipalities to resolve challenges in areas such as - infrastructure and service delivery, financial management as well as governance. We are making progress with our municipal recovery programme. Last year we announced that we had 87 distressed and dysfunctional municipalities.

As of last month, 24 had been removed from this list due to their improvement in the manner in which they manage their infrastructure budgets and programmes and also in governance aspects.  

This is in part due to the work done such as our deployment of more than 81 engineers, town planners and other professionals to the municipalities last year to improve service delivery. Early in February we announced the deployment of more than 90 young graduate engineers, environmental specialists and town planners in the distressed municipalities to further improve performance.

The COGTA support is indeed paying off in many municipalities. We were also happy to announce recently that two municipalities here in KwaZulu-Natal had been released from being under Section 139(1)(b) administration due to improved performance and recovery, that is Emadlangeni and Dr Nkosazana Dlamini Zuma.

Yesterday we visited Maluti-a-Phofung municipality in Harrismith and are working with stakeholders there to achieve a turnaround so that the public and business and other stakeholders can enjoy services they deserve from a functional municipalities.

Progress is being made, but at the same time there are those that still get into trouble. This week I approved the request of the KZN provincial government to place Mtubatuba and Richmond municipalities under administration.

Work will continue in earnest to ensure that all municipalities perform as they should, that they have qualified managers and technical support staff, that there is no corruption, maladministration or incompetence. We are determined to root out such ills from our municipalities.

Financial management must be improved and funds must be spent correctly and prudently in accordance with strategic plans and needs of the people. We have informed our municipal managers that we want zero disclaimers. We need to fix our municipalities so that they can be good hosts for firms and companies that will create jobs for our people.

Functional municipalities will enjoy the confidence of the people, and will also attract investments and improve revenue streams. 

For the benefit of SEZs, the municipalities should be in  position to achieve the following:

They must address issues causing power outages by  upgrading and maintaining substations to improve the reliability of electricity supply. They must put in place security measures to address cable theft, extend basic services to all households and prevent illegal connections.

- They must maintain and extend road infrastructure to sort out potholes.

- They must identify and service vacant land for industrial development adjacent to where people live.

- They must design and implement integrated transport plans to facilitate the flow of goods and workers between the SEZ and residential locations.

- They must develop and implement human settlement plans that support the SEZ.

- They must maintain and extend water and wastewater infrastructure to support the SEZs as well as the surrounding communities.

- They must improve efficiencies in the land development approval – establish special land disposal committees to fast track the disposal of land required for the SEZs.

- They should streamline the regulatory environment. This could be achieved by establishing targeted investment support programmes with streamlined and accelerated regulatory approvals. For example, as a result of this approach building plan approvals in Atlantis take just 5 days.

They must conduct targeted skills audits and training to support supply chain linkages.

The municipalities should also work with a range of national, provincial and local institutions to put in place incubation programmes for local SMMEs. They should also be ready to support informal traders, many of which are the source of income for many families.

The success of the SEZ programme is also very important for us as COGTA because of our national urban policy, the Integrated Urban Development Framework (IUDF), which envisions a new spatial form for South African cities and towns.

Our view is that the ten designated SEZs are intended to be major catalysts towards the achievement of the spatial transformation outcomes in our towns and cities. The SEZs and industrial parks have the potential to catapult towns like Musina to become a big city, and outlying areas like Atlantis in the Cape Metro to become a city within a city.

The SEZ programme is an important intervention in the drive for economic growth and job creation. We should all play our part to ensure its success.

COGTA will continue to organise the sector to play a meaningful and supportive role to the dti and all stakeholders in the SEZ programme.

Issued by Musa Zondi on behalf of Ministry of Cooperative Governance and Traditional Affairs, 4 April 2019