New Gauteng strategy aims to transform South Africa’s powerhouse {writer: Staff reporter}

The Gauteng Provincial Government’s new growth and employment strategy should assist in reducing transaction costs and improve access to services and markets in South Africa’s economic heartland.

The strategy, known as the Gauteng Employment Growth and Development Strategy (GEGDS), released in early October for this region – and which was first mooted during this year’s Budget Speech in June by Gauteng MEC for Economic Development Firoz Cachalia – places special emphasis on network infrastructure investments such as energy, transport, water and sanitation, as well as information and communication technology (ICT).

GEGDS is aimed at reducing the effect of the recession and arresting the increasing unemployment rate, beefing up the green economy, bridging the digital divide, and boosting local manufacturing in the region, which contributes some 35% of the national gross domestic product.

Cachalia told a meeting of businesspeople and academics at the University of Pretoria’s Gordon Institute of Business Science that the GEGDS would guide the work of the provincial government until 2014, and this growth path is intended as a contribution toward the emerging national growth path.

The provincial government believes such a strategy could offer a countercyclical employment and growth engine during periods of economic downturn.

Gauteng’s unemployment rate stood at 27.1% in the second quarter, almost two percentage points higher than the national figure of 25.3%. In the last quarter of last year, 239 000 jobs were lost in the province.

The strategy was approved by the provincial Cabinet in May. It is a broad framework for all provincial departments, incorporating existing projects while investigating the introduction of new ones.

“It is a strategy we are implementing on the ground… In the next few months, you’ll see a number of (new) projects being implemented,” Cachalia said.

Finance Minister Pravin Gordhan has indicated that South Africa would require an annual growth rate of 7% for a sustained period of 20 years to deal with the country’s debilitating unemployment rate, which has moved to above 25% by the recession of 2009. Economic centres such as the Gauteng city region would probably need to grow well beyond the 7% rate to lift the national average.

The aim of the GEGDS was to transform the structure of the city region – which had been severely impacted by the recession – into one that could “create decent work through an endogenously growing, inclusive, innovating and greener economy”.

Work was being done on what could emerge as new flagship infrastructure projects covering energy, freight and passenger logistics, property developments, tourism infrastructure and broadband ICT connectivity, Cachalia said.

Task team

He added that a task team had been created between the province and the Development Bank of Southern Africa (DBSA) as the lead funding arranger, to facilitate the implementation of such projects.

The further development of the Constitution Hill precinct on the western border of Hillbrow in Johannesburg was a top priority alongside plans to create six freight transport hubs on the outskirts of Gauteng, which could dramatically improve freight logistics in the province.

These projects would, however, not be funded off the provincial balance sheet and would be pursued in partnership with the private sector.

A provincial infrastructure fund had been established to attract private sector involvement and to close “significant funding gaps”.

Besides infrastructure, the strategy emphasises the fostering of industrial sectors that have large employment multipliers. This would include so-called “green industries”.

The DBSA had been given a mandate to look at ways to support renewable energy projects, in particular the creation of enterprises able to produce systems and components for the country’s deployment of renewable generation technologies.

To retain jobs, the Gauteng Provincial Government has formed partnerships with the Industrial Development Corporation, the DBSA and other stakeholders to identify distressed companies. They would be provided with financial support, and in return they would have to commit to job creation and retention.

The province aimed to enhance the effect of the Expanded Public Works Programme by launching 10 new community works programme sites in addition to the 10 existing ones.

According to Cachalia, each site employs 1 000 people. As the sites only employ people for 100 days a year, the government was working on a framework to find “secure jobs” for these workers in the economy.

“We are confident that we are on the right track with this growth path, but we remain open to new ideas, dialogue and partnerships,” he said.