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Department of Economic Affairs Policy Speech
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Speeches and Media Release
 Provincial Treasury, Economic Affairs, Environment & Tourism

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EASTERN CAPE PROVINCIAL GOVERNMENT
 DEPARTMENT OF ECONOMIC AFFAIRS, ENVIRONMENT AND TOURISM'S
POLICY SPEECH 2001/02
 BY  MEC GODONGWANA
 12 MARCH 2001



Introduction

Mr Speaker, Honourable Premier, Members of the Executive Council and Members of the Provincial Legislature, the Policy Speech for the 
Department of Economic Affairs, Environment and Tourism for the period April 1 2001 to March 31 2002 reflects the imperative for 
strengthening a broadly-based platform of growth, development and stability that is supported by an overall context of sound macro-economic 
fundamentals at the National level.

The nature of those fundamentals, and the state of our nation, have been outlined in a number of key statements regarding economic policy 
and the performance of the national economy that have emerged from crucial milestone speeches delivered by President Thabo Mbeki, Minister 
Alec Erwin (Trade and Industry) and, most recently, Minister Trevor Manuel (Finance). Moreover, in his speech on the state of the Eastern 
Cape Province, the Honourable Premier, the Rev Makhenkesi Stofile, also alluded to the growing economic strength of the nation and the 
encouraging diversity of responses that have been evident at the provincial level.

These developments are not fortuitous accidents. They represent the outcome of diligent application, prudent spending and macro-economic 
discipline. They are the results of on-going processes that involve strategic choices, refinement, implementation and evaluation.

In the words of Minister Manuel, they are &#133; the sweet fruit of liberty.

The overall growth rate of national Gross Domestic Product (GDP) for 2000 was revised upward from 2.9 percent to 3.0 percent, and is 
expected to increase by 3.5 percent per annum over the next three years.

GDP growth stemmed largely from an increase in agricultural production, specialised manufacturing industries, financial services and 
telecommunications, whilst tourism and related service sectors attracted significant investments with a strong growth potential.

Increased output contributed to a sustained increase in exports, which reached almost 19 percent of GDP in 2000, reflecting the extent to 
which South Africa has become integrated into the global economy. Prospects for improved export performance are sound in view of the 
diversification towards manufacturing and beneficiation that has emerged in recent years. Growing export opportunities are also expected to 
arise from international trade arrangements, including the US Africa Growth and Opportunity Act, the EU Free Trade Agreement, and expanding 
trade links with Latin America and the SADC countries.

An important economic and political development partnership amongst African governments, the private sector and civil society has emerged 
in the form of the Millennium Africa Plan, driven by President Mbeki, President Obasanjo of Nigeria and President Bouteflika of Algeria. 
This represents a new and powerful initiative that augurs well for constructive development co-operation in the broader African context, in 
which South Africa increasingly plays a vital leadership role. In this context, President Mbeki has referred to South Africas role as a 
reliable partner in the African and global struggle for democracy, peace, development and an equitable process of globalisation.

Labour market trends were indicative of more efficient production processes necessitated by adjustments to the competitive global economic 
environment and rationalisation in government employment. Consequently, formal sector employment declined during 2000, although significant 
growth in employment and income growth in the informal sector was evident.

Despite the volatility in the international petroleum industry (which resulted in an overall increase of some 58 percent in the price of 
oil), and a weakening of the Rand, the rate of inflation decreased from 9.3 percent in the first half of 2000 to 6.2 percent in the second 
half. It is expected that inflation will continue to fall during 2001, and the prospects for meeting the inflation target of between 3 and 
6 percent by 2002 are favourable.

President Mbekis State of the Nation address, delivered on February 9 2001, outlined the imperatives and set the scene for moving the 
economy onto a high growth path, increasing its competitiveness and efficiency, raising employment levels and reducing poverty and 
persistent inequalities.

Towards this end, the Honourable President emphasised a number of initiatives that constitute key points of departure that we need to take 
cognisance of in terms of our own economic growth and development within a national context. Some of these are the following:

* In order to promote a climate of certainty for public and private sector investors, a managed liberalisation approach will be adopted 
in the restructuring of the energy, transport and telecommunications sectors,
* Prioritised investment in economic infrastructure in support of high growth areas, the integrated rural development strategy and the 
urban renewal programme. This includes focused development of the Coega Industrial Development Zone, the Wild Coast SDI, and nodal points 
in the O R Tambo, North East, Ukhahlamba and EG-Kei District Municipalities,
* Particular attention will be accorded to export-oriented production sectors with potential for higher growth rates and job creation. 
These are the agro-processing, motor vehicles and components, mining technology, minerals beneficiation, and the clothing and textiles. 
Agriculture, tourism, cultural industries and the information and communication sectors will also receive special attention,
* The capacity for growth and development amongst small and medium-sized enterprises will be improved through the provision of access to 
capital, and
* Further strengthening of mutually beneficial partnership relationships amongst government, business and labour interests.

These represent key opportunities for growing the economy, which are equally relevant at the national and the provincial level.

The Provincial Context

The economy of the Eastern Cape Province remains fragile and the challenges of poverty and unemployment continue to be a cause for grave 
concern. Severe structural and spatial inequalities characterise the Provinces economic base, and there is little doubt that it will take 
many years of dedicated public and private sector commitment to address the debilitating effects of these inequalities.

Nevertheless, the potential and prospects for sustained economic growth and development are substantial. The essential challenge is to 
strengthen and combine the capacities of government, business and civil society towards achieving the common objective of building a sound 
economy.

The Gross Geographical Product (GGP) of the Province was estimated at around R 57.3 billion in 1999, with a per capita GDP of some R 9 000, 
which is about half of the national GDP per capita. The Provinces economic structure is dominated by the services and government sector 
(27 percent of GGP) and the manufacturing sector (26 percent of GGP), which provide more than half of the formal sector employment 
opportunities in the Province. The GGP growth rate between 1991 and 1996 was determine by the DBSA to be 1.5 percent per annum, and the 
current growth rate is probably of this order of magnitude.

Manufacturing confidence in the Eastern Cape, as measured by the SACOB Business Confidence Index, reflected an increase of 35 percent in 
January 2001, compared to an increase of around 3 percent in the index of manufacturing confidence at the national level.

Despite the fact that the manufacturing sector is heavily concentrated in the major urban centres (Nelson Mandela Metropole and Buffalo 
City), it represents the most important potential for investment, economic growth and employment creation in the Province, particularly in 
terms of export-oriented manufacturing production.

The leading industry in the manufacturing sector is the motor vehicle and motor components industry, which experienced significant new 
investment and growth in 2000/01. Volkswagen, Daimler-Chrysler and Delta accounted for almost 40 percent of total vehicle sales in January 
2001. This is indicative of an increasing trend towards dominance of the industry by these three Eastern Cape firms, which employ more than 
13 000 workers, constituting around 14 percent of manufacturing employment in the Province.

The second largest manufacturing sub-sector in the Province is the Textiles, Clothing and Leather industry, which benefits from being 
located at the port cities of Port Elizabeth and East London. The industry has experienced severe structural difficulties over the past few 
years, but has adopted a clear export-orientation, which provides a basis for substantial future growth; despite the relocation of an East 
London-based blanket factory during 2000.

Trade, transport, financial and business service-related sectors accounted for over 38 percent of provincial GGP and employed about 28 
percent of the labour force. These are crucial sectors that facilitate the distribution of goods and services throughout the province, and 
are particularly important in non-metropolitan local economies and rural areas.

Retail sales in the Eastern Cape increased by more than 12 percent during 2000, compared to a national increase of around 10 percent. 
Purchases of food products made up almost one-third of these retail sales, followed by domestic appliances, household furniture and 
crockery, cutlery and kitchenware. It is evident that the Province represents an important market for a wide range of consumer goods and 
essential business services.

Important new challenges and opportunities for economic development arise from the conclusion of the municipal demarcation process and the 
establishment of democratically elected Metropolitan, District and Local Councils in December 2000. The imperative for facilitating the 
emergence of developmental local government, in terms of Local Economic Development initiatives, in order to create sustainable job 
opportunities and a viable revenue base, lies at the core of this challenge.

Integrated regional, district and local development planning, together with the re-alignment of provincial and local government 
involvements, have brought a new and vibrant meaning to the principle of co-operative governance. This is particularly important in terms 
of ensuring that planned growth and development initiatives are extended to the more remote and rural areas of the Province.

A critical aspect of building developmental capacity at the local government level concerns the appropriate devolution of functions, 
together with financial and human resources, to Metropolitan, District and Local Municipalities. However, Local Economic Development, based 
on local initiatives and devolved functions and resources, will not simply happen. It requires a significant depth of insight and 
commitment, together with strong and inspired leadership. In this respect, the essential decision-making has been concluded. What remains 
is to mobilise the will and determination to ensure that co-operative partnership relationships are established between provincial 
government, local government and civil society, supported and guided by national government.

Review and Evaluation

During 2000/01, the Department of Economic Affairs, Environment and Tourism came to grips with the new organisational structure implemented 
at the beginning of 2000. The process has not been easy and significant operational and management challenges have had to be dealt with.

Nevertheless, we have adhered to the principles of the strategic perspective of provincial economic development that were adopted to guide 
the Department. The most significant adjustment undertaken by the Department concerned the amalgamation of the Eastern Cape Development 
Corporation (ECDC) and the Centre for Investment and Marketing in the Eastern Cape (CIMEC).

The merger was successfully concluded towards the end of 2000, and resulted in the establishment of a more focused investment promotion and 
business development agency. Regional personnel previously engaged in small business and industrial development functions have largely been 
re-aligned to the new ECDC/CIMEC as well as to District Municipalities.

Some highlights of the Departments pursuit of the core elements of a strategic economic perspective are the following:

* The promotion of spatially focused investment strategies resulted in important advances in terms of the SDI programme and the Industrial 
Development Zones at Coega and East London.
* Significant investment decisions regarding projects in the Wild Coast/Fish River SDI were announced by Minister Alec Erwin in February 
2001. These included tourism, land acquisition and Nature/Game Reserve development projects at Port St Johns, Mkambati and in the vicinity 
of the Fish River and the Addo Elephant Park.
* Reconstruction of the Kei Cuttings section of the N2 is nearing completion and the national government has undertaken to provide further 
investment in re-routing and maintaining the N2, which is a crucial service artery for the Wild Coast SDI area.
* Preparatory development work at the Coega IDZ site was commenced in February 2001, following President Mbekis announcement that the 
Coega project would be the first gazetted IDZ in the country. An amount of R 40 million was allocated to the Coega IDZ project by the 
Province in February 2001, and Minister Jeff Radebe confirmed that R 1.6 billion would be spent on developing the port over the next three 
years. Portnet CEO, Siyabonga Gama also announced the allocation of R 25 million to the project.
* Honourable Speaker, these developments should demonstrate once and for all that we are serious about the development of the Coega IDZ. It 
represents an important initiative in inter-governmental co-operation towards the objective of creating a facilitating environment within 
which sustainable private sector investment can take place.
* Encouraging progress has been made towards the establishment of the East London IDZ and an announcement regarding its registration is 
expected during the course of 2001. This project represents an important example of inter-governmental co-operation and the Buffalo City 
Municipality is closely involved in the development since it owns most of the land designated for the IDZ.
* The Department was closely involved in planning and organisational arrangements for several key programmes and projects involving inter-
departmental co-operation. Amongst these are:

* The Sustainable Rural Livelihood project, which represents a comprehensive pilot undertaking in the implementation of the Integrated 
Rural Development Strategy announced by President Mbeki.
* The East London-Umtata Railway project, which involved the preparation of a detailed economic and technical feasibility study for 
improving the quality and reliability of the railway link serving the rural communities between East London and Umtata.
* The Rural Economic Development Zones initiative launched by the Department of Local Government, Housing and Traditional Affairs, and 
which is also part of the Integrated Rural Development Strategy.

* Substantial improvements in the investment climate in the Province that have resulted in major new investment decisions and several 
others that are currently under consideration. Perhaps the most important of these was the Malaysian Ramatex investment in a new textile 
and clothing development in the Buffalo City area.
* The complexities involved in the preliminary negotiations for such projects are sensitive and intricate. These are seldom articulated in 
public because they constitute an essential component of the investment negotiation process.
* Some general aspects of the Ramatex deal can be noted here as an example of the kinds of negotiations that are necessary before an 
investment decision is confirmed.

* Arrangements needed to be concluded with Eskom regarding the supply of electricity at an appropriate tariff,
* Arrangements with the DTI regarding the applicability of the tax holiday scheme required to be determined,
* Human Resource Development arrangements with the Department of Labour required attention, and
* Specific agreements regarding wharfage charges and land costs needed to be concluded with the relevant authorities.

Such negotiations also require to be backed up with extensive technical and economic research and model building in order to arrive at 
carefully crafted alternative packages to guide the investors decision-making.

* Similar kinds of research and negotiations were applied in determining arrangements associated with a number of prospective primary 
production initiatives. It is imperative that we should maximise the local beneficiation potential that is inherent in our primary 
products.
* Such value-adding processes increase the overall worth of the Provinces GGP and provide significant opportunities for creating 
employment. Possibilities for value-adding primary production were examined in collaboration with the Department of Agriculture and other 
local and foreign interests, and represent the fundamental importance of co-operative governance in terms of increasing the synergies 
amongst the skills and competencies that are at our disposal. These include the following:

* The prospects for developing a diversified industrial initiative based on Sugar Beet have received attention for several years. There are 
clear possibilities in this regard, particularly in the Cookhouse area, and the development will provide a basis for sustainable 
agricultural opportunities to produce the crop.
* Hemp is an important industrial fibre that can be used to produce a variety of products and to provide opportunities for developing small 
farmers. Extensive research and exploratory investigations have indicated positive prospects in this regard, and pilot plantings were 
undertaken in Addo, Libode, Qamata and Mthiza in order to determine the most appropriate conditions under which different varieties of hemp 
can be economically produced.
* Plans to establish an integrated Chicory production and processing plant in the Peddie area are well advanced. This involves an 
investment of R 780 million by Belgian interests that will create 2 500 jobs, and will provide important downstream opportunities for 
further processing and the manufacture of a wide range of food products based on ingredients produced by the chicory plant.
* The fact that a significant proportion of the Provinces Wool and Mohair is exported with little beneficiation has been a source of 
concern for many years. The prospects for downstream labour intensive processing and manufacturing developments in this key sector are 
significant and intensive investigation are on-going in collaboration with the CSIR and organised agricultural interests.
* Whilst the Province does not have a wealthy mineral resource base, the prospects for mining Titanium and related minerals in coastal dune 
areas are significant. Such activities have potentially serious environmental implications, and it is imperative that a sustainable balance 
between resource exploitation and protecting sensitive environments should be established, particularly where such resources occur in 
impoverished areas with few development alternatives. Investigations by Iscor and its foreign partners, together with the Department of 
Minerals and Energy are on-going, in this regard.

Whilst all of these initiatives ultimately involve private sector investments, it is important to emphasise the critical importance of the 
public sectors role in promoting and facilitating the essential investigations that are required, and in the planning and provision of key 
infrastructure installations that are necessary for the realisation of prospective investments. Such undertakings illustrate very well the 
crucial responsibility of the state in creating an enabling environment within which private sector investment can take place.

This is the essence of co-operative partnership relationships between the private and public sectors in joint endeavours to strengthen the 
Provinces economic base and to grow the economy.

Strategic Direction (Mcebisi/Thembela)
 Review of Activities by Programme
 Programme 1: Administration

The Departments Administration Programme is responsible for four core functions, which operate from Head Office with parallel services in 
the five District Offices. These functions are the following:

* Financial management, including expenditure control and revenue collection, and the organisation of the FMS and Persal management 
information systems;
* Human resource management, including the efficient and effective organisation of personnel appointments, and the formulation of 
appropriate plans related to human resources, skills development, employment equity, affirmative action and gender considerations;
* Provisioning management, including the organisation of transport services, asset and stock control, risk management and tender 
administration;
* Special Programmes management, including youth, gender and disability considerations, and the arrangement of internal sensitising and 
training programmes.

Achievements for 2000/01 include the completion of the post-to-person matching process and arrangements for capturing the new personnel 
structure into the Persal system, completion of training programmes in disciplinary procedures and accounting systems, establishment of a 
computerised asset register, and the appointment of Programme Managers, together with financial delegation.

On the other hand, progress in all of these critical areas was hampered by chronic personnel shortages, capacity and competence 
shortcomings, and inadequate management systems, and these represent areas in which significant improvements are expected during 2001/02.

Towards this end, Programme 1 plans for 2001/02 include the appointment of a Chief Financial Officer in accordance with the PFMA, staff 
training and development in basic management procedures related to the PFMA, completion of the computerised asset register, and re-
organisation of all Departmental stores.

In addition, specific attention will be accorded to the filling of critical posts, implementing a strategy for dealing with additional 
staff, and targeted staff training, based on Departmental requirements.

The Special Programmes Unit will also be strengthened, and will participate actively in the formulation of an integrated youth development 
strategy for the Province, including the establishment of a planning information base related to youth development.

Programme 2: Research, Policy Planning and Information Systems

This Programme provides an essential service and support research function and is responsible for the development and maintenance of the 
Departments information systems and information technology facilities.

The Programmes activities were inhibited by personnel shortages, and much time was allocated to establishing appropriate working 
relationships with Provincial and other Government departments through extensive participation in joint projects.

During 2000/01, preliminary arrangements were concluded for a comprehensive review of the provincial economic base, in association with the 
DBSA, and this project will be concluded during 2001/02, on the clear understanding that it represents an on-going initiative to establish, 
maintain and continuously up-date a basic data and information source for utilisation by public and private sector interests.

In fact, most of the research and policy planning activities undertaken by the Programme during 2000/01 are associated with on-going 
investigations that will extend into 2001/01 and, in some instances, into succeeding years in terms of MTEF arrangements and involvements. 
These include participation in the following programmes:

* The Integrated Rural Development Programme, including the Rural Livelihoods project, the Rural Economic Development Zones project and 
other initiatives undertaken by the Office of the Premier,
* The Devolution of Functions to Local Government, including on-going assessments of the implications of devolution in terms of economic, 
environmental and other service-related functions; particularly in view of the imperatives arising from the Integrated Provincial Support 
Programme,
* An on-going assessment of the status and prospects for value-adding process and manufacturing activities arising from new and existing 
primary production initiatives,
* An on-going assessment of the prospects for establishing industrial incentives at the Provincial and Local government levels, together 
with the development of an export-promotion strategy,
* The formulation and implementation of strategic plans for developing the SMME sector and the Provincial Tourism industry,
* On-going planning and implementation relationships with the Industrial Development Zones established at East London and Coega,
* Co-ordinated engagements to extend and conclude research and policy planning undertakings related to a wide variety of environmental 
issues, including the Environmental Implementation Plan, the State of the Environment Report, Agenda 21 Implementation, Wild Coast SDI 
considerations, the Centre of Excellence Programme in Nature Reserves, and many others,
* Participation in Spatial development considerations associated with the Office of the Premier, including the Provincial Spatial 
Development Plan, the Provincial Development Plan, the formulation of Planning and Development Legislation, the Provincial Infrastructure 
CAPEX Plan, and IDP and LDO considerations for Local and District Municipalities. These initiatives are closely related to the 
reformulation of the Provincial Growth and Development Strategy, which was referred to in last years policy speech,
* Participation in the Provincial preparations for the Census 2001, planned for October 2001.

Mr Speaker, the imperative for closely integrated co-operative relationships in the approach to all of these issues cannot be understated. 
Towards this end, the Research and Policy Planning Programme works in association with a wide rage of interests, including Provincial, 
National and Local Government interests, parastatal and statutory organisations, external private sector interests and tertiary educational 
institutions. Whilst considerable progress has been made in this regard, much remains to be achieved in the spirit of on-going co-operative 
governance.

As far as the Information Systems function is concerned, the following activities were undertaken during 2000/01:

* Maintenance and extension of Departmental IT systems, including hardware and software installation and the provision of basic operating 
instructions,
* A Departmental Intranet facility was established, extended, updated and maintained,
* Facilities for Regional Intranet input management were established and basic training provided,
* A Database was established for the Liquor Boards Licensing systems,
* Essential input was provided towards the formulation of a Master Systems Plan,
* Preliminary arrangements were concluded for establishing a Departmental Information (IT) Management Policy,
* Participation in the activities of the Provincial GIS Committee towards the identification and sourcing of data sets, developing access 
mechanisms and technical capacity building requirements.

These also represent on-going functions related to the establishment of comprehensive information management and dissemination systems that 
are crucial in an age of increasing electronic systems.

Programme 3: Economic Affairs

Direct responsibility for a number of key functions related to economic development and process management were transferred to the 
parastatal and statutory organisations that were established to deal with such matters.

These include small business development, industrial development, export promotion, tourism development and promotion, gambling and betting 
and liquor administration.

These functions are developed and managed by the ECDC, the ECTB, the Gambling and Betting Board and the Liquor Board, all of which have 
clear reporting and policy-related obligations to the Department through established channels.

The principal activities undertaken in terms of Programme 3, therefore, are associated with Consumer Affairs, and four key performance 
areas were addressed during 2000/01:

* Personnel capacity building, which involved a comprehensive programme to familiarise officials with a variety of technical, legal and 
consumer education-related issues that are necessary for an understanding of the essential principles of consumerism. In this regard, a 
number of conferences, workshops and courses arranged by national and international consumer-related organisations were attended by the 
Head Office and District personnel,
* Consumer education, which involved the organisation of a wide variety of workshops and primary training sessions that were conducted 
through the District Offices, particularly in small towns and rural areas. These engagements were conducted with NGOs, CBOs and local 
government institutions, and included radio talk shows in order to propagate the principles of consumerism and consumer rights,
* Trade inspection functions are a crucial aspect of consumer protection and activities in this regard were conducted throughout the 
Province, particularly amongst SMMEs that are generally unaware of their responsibilities and obligations in terms of legal requirements 
under the Trade Metrology Act and the Credit Agreements Act. More than half of the over 300 businesses inspected were found to be in 
violation of the law, and it is evident that this matter requires further concerted attention,
* Complaints handing is the main activity of the consumer affairs divisions in all District Offices and takes up most of the personnel 
time. Since consumers have become aware of the service offered, and the success rate achieved in resolving complaints, officials have 
become inundated with requests for assistance. During 2000/01, more than 3 000 consumer complaints were attended to, and over 80% of these 
were finalised, resulting in redresses in cash and kind amounting to over R 500 000.

Mr Speaker, it is evident that these are fundamentally important services, which have been denied to the majority of the Provinces people, 
and it is imperative that they should be strengthened and extended. It is also evident, however, that consumer-related services lend 
themselves to effective and efficient devolution to the local government level, and the prospects in this regard will be thoroughly 
examined during 2001/02.

Progress towards the establishment of an Eastern Cape Consumer Tribunal has been satisfactory, and it is anticipated that the Tribunal will 
be operational by June 2001.

Activities related to Consumer Affairs at the Head Office level extend to a number of initiatives, including the following:

* Co-operation with other Departments to improve the personal financial planning capacity of civil servants, particularly through the 
Employee Assistance Programme,
* Participation in the Provincial HIV/Aids Awareness Campaign through appropriate training for consumer educators,
* Building the capacity of NGOs through on-going workshops and training sessions related to key aspects of consumerism,
* Strengthening consumer networks for disabled persons to ensure improved access to protection services,
* Providing extended consumer advice services in rural areas.

The Departments Consumer Affairs division was nominated as a candidate for a National Award by the South African Consumer Union in 
acknowledgement of outstanding achievements. This is a significant recognition for work well done!

Programme 4: Environmental Affairs

A considerable proportion of the Departments annual budget is allocated to this Programme, which is responsible for the overall management 
of nature conservation and environmental protection services in the Province.

Most services and functions, in these respects, were maintained during 2000/01, often under difficult circumstances; although much remains 
to be achieved in terms of organisational arrangements, policy planning and the proper co-ordination of environmental functions and 
services.

The key consideration, in this regard, is to determine realistic and achievable targets that fall within the operational capacity of the 
Programmes management and personnel complement.

Towards this end, the following objectives have been determined for the Departments Environmental Affairs Programme for the 2001/02 
financial year:

* Responsibility for managing the Provinces Protected Areas, such as game and nature reserves, will be transferred from the Departments 
Chief Directorate to the Game reserve Division of the Eastern Cape Tourism Board with effect from April 1 2001;
* The Dwesa-Cwebe Nature Reserve land claim will be finalised with the Dwesa-Cwebe Land Trust;
* The Department and the ECTB will arrange and undertake a Joint Provincial Game Auction Sale in June 2001;
* The Provincial Environmental Conservation Bill will be tabled in the Legislature during 2001;
* The Eastern Cape Environmental Implementation Plan will be presented to the relevant MinMec forum as required by the National 
Environmental Management Act; and
* Infrastructure facilities in Protected Areas will continue to be improved, in association with the new organisational arrangements with 
the ECTBs Game reserve Division, as indicated above.

Parastatal and Statutory Organisations
 The Eastern Cape Development Corporation

The merger between ECDC and CIMEC will create a stronger organisation capable of making strategic interventions to unlock income and 
employment opportunities in the Provinces private sector, particularly in the SMME sector.

Historically, the ECDC was primarily engaged in the provision of loan finance for small businesses. During the past year loans to the value 
of R26.6 million were disbursed, but the real development impact of ECDCs lending has been disappointing. Loans have been made primarily 
to businesses in the retail sector, and loan repayments have been unacceptably low. The ECDCs total loan book amounts to nearly R400 
million, more than half of which are in arrears, mostly in excess of six months.

As a result of this situation, a temporary moratorium was placed on new loans in September 2000, except in cases of clearly viable 
investment proposals. Efforts were intensified to collect loan arrears and steps are being taken to improve the developmental relevance of 
ECDC lending.

The corporation is at an advanced stage of negotiations with a leading financial institution to launch new SME financing products early in 
the new financial year. This will entail a joint venture arrangement, initially for a period of one year, and will involve the provision of 
equal financing by the two parties, with equal risk sharing. Funds available for SME financing will therefore be doubled. Scope will be 
created for the further gearing up of ECDC finance by the participation of other financial institutions in the future.

In order to improve the development relevance and quality of its new loan book ECDC is in the process of establishing two new operating 
units:

* A Business Development Services Unit and
* A Trade Promotion Unit.

Steps are being taken to secure donor support to provide the necessary Technical Assistance to establish these new initiatives.

Based on the outcomes of a comprehensive SMME ThinkTANK, held in February 2001, a number of strategic actions and targets were determined, 
and these have been formulated into a series of proposals regarding a more focused and specific approach to promoting small and medium 
business enterprises in the Province. These include new approaches in the following respects:

* Market access through local authority involvement and improved business linkages,
* Skills development, based on a thorough skills audit and need assessment amongst SMME operators,
* Access to finance through more appropriate public-private partnership arrangements,
* Improved institutional support through strengthening business chamber capacity and associations with local government institutions, and
* Non-financial support measures associated with infrastructure development, improved legal frameworks and research facilities.

The ECDC will determine appropriate operating strategies and key success factors associated with these activities, extending over a three- 
to five-year period.

In terms of performance against targets that were set last year for the number of investment completions, the total value of investments 
and the number of jobs created, the outcomes were mixed.

These are indicated below:

         Target set      Actual achieved
Investment completions (number of companies)     24      7(29%)
Total investment (R millions)    400.0   452.5 (113%)
Jobs created     3 750   2 952(79%)

It is evident that greater care needs to be given to setting targets in terms of what is achievable. Investment negotiations are often 
complex and protracted and tend to have a long gestation period, which makes accurate target setting difficult.

Accordingly, this matter will be thoroughly reviewed over a three- to five-year perspective, beginning with the 2001/02 financial year, in 
order to accommodate shifts in the economic environment and investor requirements, which have an influence on negotiation outcomes.

There are currently 31 investment projects under consideration, which are either confirmed and fully funded, probable and subject to 
various formalities, or possible with early potential. These investment prospects cover a number of industrial sectors, mainly in the 
Nelson Mandela Metropole and Buffalo City, and involve total investments of almost R 2 billion, with around 10 000 prospective job 
opportunities. Appropriate indicators and benchmarks to measure the actual outcomes of these prospects will be determined within realistic 
time frames.

Most of these prospects arise from overseas marketing trips undertaken by Cimec personnel since 1997, strengthened by subsequent networks 
and contacts arising from these trips. The outcomes clearly demonstrate the worth of such undertakings.

The Eastern Cape Tourism Board

Comprehensive activities associated with promoting tourism awareness, product development, and training/mentorship initiatives in terms of 
an empowerment programme, were undertaken by the ECTB during 2000/01.

These included domestic and international marketing campaigns, direct participation in a variety of tourism-related trade shows, the 
development of tourist route guides and educational initiatives to increase the exposure of domestic and foreign media and travel agent 
interests to the unique selling features of the Eastern Cape as a tourist destination.

Mr Speaker, a key consideration with respect to the activities of the ECTB is the formulation of a clear tourism policy framework, together 
with a comprehensive tourism development strategy. These imperatives arise from the Tourism Indaba held in 1999, and the process will be 
concluded by September 2001.

The ECTB has also provided extensive support services to the Wild Coast SDI, particularly in terms of the EU support programme associated 
with various projects at the designated SDI nodal areas. These have predominantly involved training and capacity building in business and 
environmental skills development amongst the disadvantaged communities in the SDI area.

It is imperative for the ECTB to develop a clear programme of action, which reflects its commitments and responsibilities over the rolling 
three-year MTEF period. This must include current activities associated with tourism promotion, product development and training, 
particularly related to facilitating opportunities for SMME operators in the tourism industry. Visits to trade fairs and exhibitions must 
also be supported by clear evaluations of the benefits arising from such events, particularly when groups of SMME operators are taken to 
trade fairs, like the Indaba Trade Show.

The Board undertook a number of poverty alleviation projects specifically related to tourism facilities and programmes, and these resulted 
in the realisation of more than 750 permanent job opportunities and many more temporary opportunities to ease the plight of unemployed 
persons. However, such initiatives tend to be unco-ordinated interventions based on funding secured from the national department and 
generally have little lasting impact on the root causes of poverty in the Province.

It is imperative that this matter should be approached in a more strategic context that will be directed towards the development of basic 
infrastructure, for example, that will address the identified longer-term needs of the tourism industry, as well as creating job 
opportunities. The ECTB will give attention to this imperative during 2001/02.

The Boards Conservation Division continued to manage the Double Drift, Mpofu and Tsolwana Game Reserves, which generated R 5.9 million in 
revenue in 2000/01, including an amount of R 2.1 million arising from a game auction sale, which was conducted in July 2000 in 
collaboration with the Departments Environmental Affairs division. A further game auction event is planned for June 2001, and indications 
are that it will also result in significant revenue.

Successful game hunting and translocation projects were also undertaken, and twenty rhino were received from KwaZulu-Natal. These 
activities represent important international promotional and revenue-generating functions that have significant prospects for further 
development.

During November 2001, the World Wilderness Congress will be held in Port Elizabeth. This will provide an admirable opportunity to discuss 
the Provinces wilderness areas with world-renowned experts, as well as to provide a showcase of what the Province has to offer.

Honourable Premier, the operational and management responsibility for all Nature Reserves managed by the Department in the Province will be 
transferred to the ECTB as from April1 2001. The administrative, operational and personnel implications of this transfer will be determined 
in collaboration with the Departments Environmental Affairs Chief Directorship, based on a carefully developed programme, extending over 
the 2001/02 financial year.

There are serious gaps in accurate and appropriate statistics on which to base tourism operations and plans in the Province, and this 
matter will receive the attention of the ECTB, in association with the Departments Research and Policy Planning Unit during 2001/02. A 
dedicated research and development Directorate has been established by the national department responsible for tourism, and the Board and 
the Department will work in close association with developments arising from this arrangement.

The Eastern Cape Gambling and Betting Board

The casino in the R 533 million Emfuleni Resorts development in Port Elizabeth commenced operations in October 2000, and over 1 500 
permanent job opportunities have been created in the complex as a whole, including the casino and the associated hotels, restaurants and 
shops.  Constructive empowerment initiatives were involved in the awarding of contracts for developing the complex and over 90% of the 
workforce utilised was locally recruited.

In November 2000, a provisional casino licence was awarded to Tsogo Sun Emonti and work on the development of a R 222 million entertainment 
complex has commenced in East London. The casino will be opened in September 2001, and the entire complex, including cinemas, a hotel and 
shops, will be completed by May 2002. Almost 700 direct permanent jobs will be created by the development and around 500 temporary job 
opportunities will be involved in the construction phase.

The Wild Coast Sun casino continues to operate at Bizana, but its operations have been severely eroded by the establishment of a major 
casino development in Durban. Direct gambling activities have been downscaled and the complex is being re-developed to target the family 
market.

Applications for the Provinces remaining two casino licences, located in the Graaf Reinet-Queenstown (Zone 3) and Umtata-Port St Johns 
(Zone 4) areas were re-advertised in December 2000, and the closing date for development proposals is April 2 2001.

The registration of manufacturers and suppliers of gambling equipment and of key gambling-related employees has proceeded satisfactorily, 
and 14 manufacturers and 1 148 key employees are now registered.

Licensed Route and Site Operations in the gambling industry constitute opportunities for smaller entrepreneurs to enter into the market. 
Various policy and regulatory issues will be finalised in the near future, and the Board will be in a position to call for applications for 
Route and Site licenses towards the end of 2001, and operations are expected to commence in mid-2002.

There were few significant changes in the Horse Racing Industry during the year. Totalisator, racecourse and bookmaking licences remained 
static, and circumstances are expected to remain much the same during the foreseeable future. It should be noted, however, that the 
industry has been severely affected by other forms of gambling, such as casinos and the national Lottery. The Board will continue to liase 
with horse racing interests to strengthen the sustainability of the industry.

Honourable Premier, the gambling and betting industry provides a significant source of own revenue for the Province in the form of taxes 
and levies. During the 2000/01 financial year, the industry realised some R 40 million through taxes that were paid into the Provincial 
Revenue Fund. The industry also provides opportunities for sustainable job opportunities, as has been indicated above.

But it does have a downside. I refer here to the addictive effects of problem gambling, which has social consequences for poor families; 
and to the incidence of illegal gambling and other potentially negative aspects associated with money laundering and gambling-related 
scams, which also have severe implications that tend to tarnish the industry. The Gambling and Betting Board is well aware of these threats 
and has developed specific strategies to deal with them.

The Eastern Cape Liquor Board

The administration of liquor affairs in the Province was significantly improved during 2000/01, particularly through the installation of a 
computerised data capture and management system related to licensing and the collection of annual fees.

During the 2000/01 financial year, the Liquor Board considered almost 1 000 licence applications, more than 90 percent of which were 
satisfactorily concluded. All applications are currently dealt with within two to four weeks of receipt by the Board, and more than 60 
applications are handled per month.

The most important challenge for the liquor industry in 2001/02 is to secure the finalisation of Provincial legislation to ensure the 
proper regulation and management of liquor licensing in the Province, which represents the core function designated to the Province in 
terms of the Constitution. A draft Provincial Liquor Bill, formulated in the context of national liquor-related legislation, will be 
concluded in the near future, and the Provincial Liquor Act will be promulgated during the course of 2001/02.

Proposed Budget for 2001/02, by Programme (in R million)

Programme        Amount allocated in 2000/01     Amount allocated in 2001/02     Increase/
 Decrease in the amount allocated
Administration   20.183  31.261  + 11.078
Research, Policy Planning and Information Systems        2.702   4.866   +2.164
Economic Affairs         106.790         134.317         +27.527
Environmental Affairs    68.161  78.372  +10.211
TOTAL    197.836         248.816         +50.980

Conclusion

Honourable Premier, the Strategic Management Development Plan for the Department of Economic Affairs, Environment and Tourism, as required 
in terms of the PFMA, was revised and modified at a Departmental workshop held on February 26 2001, and incorporates the details of the 
outline that has been presented here.

We strive towards consolidating a new development path to realise a better life for all, within the context of the principles of co-
operative governance. It is imperative that we work together to realise that vision.

As the world shrinks around us under the influence of e-commerce and instant communication, globalisation has become a new world order that 
binds us together in mutual interdependence. In this regard, we need to guard against the commonly held perspective of globalisation as a 
new kind of corporate colonialism, and to ensure that we participate in the new order on our own terms.

Comrade Speaker, we are keenly aware of the potential threat to economic growth and development that is posed by the incidence of HIV/Aids; 
particularly to the extent that this affects the economically active population in the Province. It is imperative that we remain vigilant, 
in this regard, and provide all the support that we can to the Provincial Campaign against HIV/Aids.

Finally, I would like to extend my thanks to the management and personnel in the Department, including all those in the District Offices 
and in the parastatal and statutory organisations.

We have not had an easy year, but the basic elements are in place, and we look forward to a constructive year as the forerunner for a three 
to five year period of integrated and cohesive economic development.

Thank you.

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