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SESSION 1: ‘Economic development in the Western Cape’ - Brendon Roberts Head: Dept of Economic Development & Tourism Western Cape Province 4 March 2004. IDP Conference 2004 “Developmental Governance in Action”. CONTENT. Economic Development WC Context ‘ iKapa elihlumayo’

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Idp conference 2004 developmental governance in action


‘Economic development in the Western Cape’

-Brendon RobertsHead: Dept of Economic Development & TourismWestern Cape Province4 March 2004

IDP Conference 2004“Developmental Governance in Action”

Idp conference 2004 developmental governance in action


  • Economic Development WC Context

  • ‘iKapa elihlumayo’

    • Growth and Development Summit

    • Latest developments: ‘iKapa elihlumayo’

  • Progress with Micro-economic Strategy

    • Drafting process

    • Preliminary picture

    • Provincial response

  • Closing remarks

1 economic development wc context
1. Economic Development WC Context

Our Reference Points

  • Within national policy framework - i.e. RDP and GEAR

  • Social Dialogue through NEDLAC over many years

  • Nat. GDS: President’s call: Social partners work together!

    => Government, labour, business & community constituency=> To address key economic challenges:

    = Growth

    = Investment

    = Employment

    = Overcoming poverty and inequalities

    = People–centred development

1 economic development wc context1
1. Economic Development WC Context

Common Plan of Action by Social Partners

  • Promoting and mobilising investment and creating decent work for all

  • Ensuring economic empowerment for all, especially for black people, workers, people with disabilities, women and youth

  • Eradicating poverty and addressing the legacy of under-development

  • Strategically engaging globalisation to the best advantage of the country

1 economic development wc context2
1. Economic Development WC Context

Common Plan of Action by Social Partners

To give effect to this vision, the constituencies commit to:

a) Building an enduring partnership through a shared vision.

b) Addressing urgent challenges:Selecting from many possible interventions those which hold the promise of the greatest possible impact in the shortest possible time for accelerated investment, job creation, improved efficiency and productivity, greater social equity, and a fairer distribution of economic opportunities and rewards, while undertaking serious social dialogue on broad policy frameworks.

c) Lending a hand through active participation

1 economic development wc context3
1. Economic Development WC Context

National GDS vision

Making South Africa …

  • The leading emerging market - destination of first choice for investors -whilst retaining and expanding social equity and fair labour standards.

  • A productive economy with high levels of service, highly skilled workforce & modern systems of work organisation and management.

  • A society in which there are economic opportunities for all, poverty is eradicated, income inequalities are reduced and basic services are available to all.

  • A society in which our people, our most precious resource, are given opportunity/support to develop to full potential.

  • A society that promotes the values of social equity, fairness and human dignity in the global economy.

2 ikapa elihlumayo
2. iKapa elihlumayo

iKapa Elihlumayo: Growing & Sharing the Cape

The Provincial Growth & Development Strategy


  • promoting economic growth

  • creating empowerment

  • reducing inequality

  • broadening ownership

  • providing a sustainable social safety net

  • fight poverty, reduce disparity & improve living standards

2 ikapa elihlumayo1
2. iKapa elihlumayo

iKapa Elihlumayo: Growing & Sharing the Cape

  • Shift in paradigm: from welfare dependence to participation in the economy

  • Reorganization of Government budgets: pro-poor

  • Reorganization of service delivery: integrated & cooperative

  • Recognition that Government cannot do it alone: we need our social partners to join us to achieve our goals

Idp conference 2004 developmental governance in action

  • An effort of “provincialising” the National Growth and Development Summit

  • Invitation to social partners to participate in a Provincial Growth and Development Summit

    - Preparation: National GDS as point of departure

    - Negotiation: on 6 ‘themes’

    - Provincial G & D Summit: on 14 November 2003

Idp conference 2004 developmental governance in action

  • More Jobs, Better Jobs and Decent work for all

  • Infrastructure, Investment and the logistics challenge

  • Economic participation and enterprise development

  • Human Resource Development

  • Governance and Local Development

  • Institutional arrangements for social dialogue and partnership formation

6 themes of GDS

Idp conference 2004 developmental governance in action

  • A ‘Framework Agreement’ on Growth & Development in the Western Cape Province

  • Commitment to making the WC a world-class region

  • Agreement on the need for on-going, institutionalised social dialogue beyondGrowth and Development Summit

Key outcomes of Provincial Growth & Dev Summit

Idp conference 2004 developmental governance in action


  • 100 000 nett new jobs by 2008(within priority economic sectors)

  • Investment in priority economic sectors(through supply-side support measures, co-ordinated marketing campaigns focused on key global markets and public-private investments in collaborative sector platforms and projects)

  • Expanded Public Works Programme(as short term amelioration for high unemployment of low skilled people and for critical economic and community requirements.)

  • Provincial ‘rapid response unit’ to defend current investments/jobs(comprising the social partners)

Idp conference 2004 developmental governance in action


  • Strengthening the Proudly South Africacampaign(locally, in particular through public and private procurement processes)

  • Investment in economic and social infrastructure(from the current 1.1% of GRP to 2.5% of the GRP by the year 2008 guided by our Provincial Strategic Infrastructure Plan (informed by a Provincial Spatial Development Framework) and the integrated development planning process, aligned to the National Spatial Development Perspective)

  • Improveinvestment environment(by increasing capacities and efficiencies and by co-ordinating policies and processes across and between different spheres of government, with respect to safety and security, and the regulatory environment for planning and environmental impact.)

  • New investment in priority sectors (R5 billion by 2006)

Idp conference 2004 developmental governance in action


  • Human Resource Development Strategy(preparing youth for employment through 10 000 new learnerships, and alignment of Further Education and Training priorities with economic reality: prioritise HIV/Aids, TB and fetal alcohol syndrome treatment)

  • Effective SETAs and Provincial Skills Development Forum(to implement HR Dev strategy)

  • Review regulatory framework for informal trading(conducive to developing micro and small traders)

  • Comprehensivebroad-based empowerment strategy(access for historically marginalized groups to procurement opportunities in public and private sectors)

Idp conference 2004 developmental governance in action


  • Opportunities for co-operatives(nurtured in key econ. Sectors)

  • Service delivery to small business(Integrated system)

  • Incubate 100 emerging entrepreneurs(pilot project to graduate entrepreneurs - 30% women) – through integrated system offering full spectrum of services)

  • Integrated transport system(linked to urban planning)

Idp conference 2004 developmental governance in action

Extract: GDS Framework Agreement


6.1 Planning and Resource Allocation

6.1.1 In the first instance, it is govt’s role to ensure effective provincial-municipal co-operative planning and budgeting through a provincial growth and development strategy (PGDS) that is aligned with the annual municipal integrated development plans (IDPs), which specifically support sector development strategies at the local level and include the Integrated Rural Development Strategy and Urban Renewal Programme.”

Idp conference 2004 developmental governance in action

Extract: GDS Framework Agreement

“In this work government will ensure that the national spatial development perspective (NSDP) pervades the planning perspective throughout the province, that it guides sectoral and investment development spending and that there is an alignment of parastatal and state-owned enterprises delivery in support of PGDS.”

Idp conference 2004 developmental governance in action

  • Effectively, iKapa Elihlumayo became the Provincial Development Strategy

  • It is informing the provincial budget

    Six “pillars” of the IE strategy:

    • A human resource development strategy

    • A strategic infrastructure and Logistics plan;

    • A micro-economic strategy;

    • plan for building social capital;

    • A co-ordination/communication strategy, and

    • A spatial development framework


Idp conference 2004 developmental governance in action

  • 2004: Six “pillars” being developed simultaneously

  • Post Provincial Growth Summit process:

    • Municipalities part of the “Government Sector”& part of post–PGDS talks at PDC

  • Municipalities to be kept informed of GDS and PGDS process

3 progress with micro economic strategy
3. Progress with Micro-economic Strategy

  • Province developing a micro-economic strategy

  • Goal?

    • “To guide and direct Provincial involvement in the private sector”

    • “.. and the public sector for the purpose of achieving a growing sustainable (globally competitive) labour-absorbing Economy – (see MTBPS 2003)

Micro economic strategy mes
Micro-Economic Strategy (MES)


Key Questions

  • Is there meaning in a provincial MES?

  • If so … What are the most appropriate actions that a provincial government can take to achieve a sustainable, growing, labour–absorbing economy?

Micro economic strategy mes1
Micro-Economic Strategy (MES)


  • Look at global context

  • Look at economic trajectory without intervention

  • Look at SWOT to determine outlook for industry over 5 years and labour absorption (i.e unskilled)

  • Framework: National strategy

    • Micro-Economic Reform Strategy (MERS)

    • National Research & Development Strategy (NRDS)

    • Integrated Manufacturing Strategy (IMS)

    • SMME development (empowerment creator in response to market failure = govt intervention)

Micro economic strategy
Micro-Economic Strategy


Phase 1: ‘quick & dirty’ exercise(team: academics, prov. depts, officials ) – not comprehensive - threats/ opportunities

Phase 2: Comprehensive first draft MES

Phase 3: Cabinet engagement: 1st draft – prepare 2nd draft

Phase 4: Consultations with social partners on 2nd draft

Phase 5: Cabinet engagement: key inputs into 3rd draft, - Action plan and consider budgetary implications

Phase 6: Public launch across province

Phase 7: Incorporate into provincial MTEF

Phase 8: Implement interventions: in action plan/budget

Micro economic strategy1
Micro-Economic Strategy


GLOBAL: Powerful forces at work in global economy.= Division of labour= Currency manipulation= Oil price; trade agreements; proximity to ports; job shedding

CONTINENTAL: Afro-pessimism; African Renaissance

REGIONAL: SADC Free Trade Agreement

NATIONAL: Macro-Economic Policy = Currency fluctuation; production move to coast

Micro economic strategy2
Micro-Economic Strategy


The story makes depressing reading…

  • Primary & Secondary sector stagnation

  • Decreasing employment for unskilled=> Skills mismatch(e.g. tourism booming, but part-time labour used to meet skills requirements)

  • Very few sectors in the Western Cape offer significant employment possibilities to the unskilled and semi-skilled !

Micro economic strategy3
Micro-Economic Strategy

Economic trajectory

Growth Industries (if nothing is done)

  • Post & Telecoms (cell phones, 2nd fixed line operator)

  • Wine grapes

  • Indigenous flowers (fynbos)

  • Beverages (wine)

  • Transport equipment (boats & autos)

  • Hotels & Restaurants (tourism)

  • “Other business activities” (film industry)

  • Food

  • Construction (driven by foreign property purchase)

  • Retail

  • Land transport

Micro economic strategy4
Micro-Economic Strategy

Economic trajectory

Shrinking industries (if nothing is done)

  • Citrus

  • Table grapes (water shortages)

  • Dairy & poultry (foreign competition)

  • Aquaculture (long lead time for abalone)

  • Fishing (pressure on fish stocks)

  • Textiles (foreign competition)

  • Leather & footwear (foreign competition)

  • Paper & Publishing (foreign competition)

  • Chemicals (environmental concerns at the refinery)

  • Clothing (foreign competition)

Micro economic strategy5
Micro-Economic Strategy

Economic trajectory

“Stable” sectors (if nothing is done)

  • Everything else (± 30 sectors)

  • Vulnerability to global forces beyond our control

  • Deciduous fruit as an example = Fashion varies demand = New plantings in China = New cold storage technology

  • Prevailing paradigm: “Start from what we have”

  • Complacency

  • Lack of global business knowledge

Micro economic strategy6
Micro-Economic Strategy

Economic trajectory

Consequences for labour (if nothing is done)

  • Very few industries (9 out of 50) in WC use significant numbers of unskilled labour

  • Only 3 out of the 9 are expected to grow significantly in the next 5 years

  • 1 out of the 3 is expected to become more mechanized

  • This leaves 2 sectors to absorb unskilled labour:Hotel & restaurants and/or constructioncombined they are 4.4% of GDPR

Micro economic strategy7
Micro-Economic Strategy

Economic trajectory

CONCLUSIONS (if nothing is done)

  • Based on analysis, GDPR in constant 2004 Rands would be 10% lower in 5 years’ time (all else being equal)

  • The outlook for the poor and marginalized looks very bleak, if nothing is done

  • What’s to be done?=> Select specific sectors => Develop strategies and shape interventions => Intervene !


Micro economic strategy integrated action plan
Micro-Economic StrategyIntegrated Action Plan











Access to Finance



Value Addition




ICT and Business Services



  • Nat. R&D Strategy

  • Biotech Strategy

  • AnimalHusbandry

  • Sheep


  • Harbours


Geographic Regions

Cultural Industry

WC Boat building

WC Oil and gas

WC: Building social capital

Micro economic strategy8
Micro-Economic Strategy


  • Analyse value chains/clusters: forward/backward links in region

  • Region-wide & sector specific inventions/ innovations;R&D for new products and services

  • A ‘facility’ to identify major new areas of economic activity

  • MES to guide municipal – align IDPs with MES.

  • MES to address municipal economic development challenges:

    • Strengthen Provincial local coordination & budget alignment

    • Establish municipal level economic database

    • Address capacity shortage in municipalities

    • Building relations of trust (social capital)

Idp conference 2004 developmental governance in action

4. Closing remarks


  • Can government pick sector “winners”?

  • Should government pick sector “winners’?

  • Should government not focus on “market failures” (like HRD) and generic support (SMMEs)?


  • Intervene in both areas as growing sectors are where SMMEs will develop

  • Government should influence the trajectory by encouraging the emergence of “new areas of economic activity”

  • Government intervention may mean financing initiatives and/or brining its influence to bear