Grant Adlam
Grant Adlam



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KwaZulu-Natal is on the Move - Grant Adlam

2014-08-01

KwaZulu-Natal is on the Move
Grant Adlam

KwaZulu-Natal, along with the rest of South Africa is on the move. In 2014 the country proudly celebrates twenty years of true democracy. Much change has been made in many areas of socioeconomic development, which has set the stage for future growth and progress.

One of nine South African provinces, KwaZulu-Natal (KZN) has historically been a key component of the South African economy. The province is a prosperous and vibrant region having an advantageous location, abundant resources, effective infrastructure, stable governance, a thriving economy and an excellent lifestyle.

Location

Of major significance to the success of the region is KZN"s position on the eastern coast of South Africa on the Indian Ocean seaboard. The two ports of Durban and Richards Bay are both located on world trade routes with excellent shipping links to major global markets.

Durban and Richards Bay ports are southern Africa"s busiest in terms of handling cargo by value and bulk respectively. The ports provide a competitive advantage and effectively position the region to increase its share of the global market.

Stability

The 2014 general elections judged were free and fair with the ruling African National Congress party retaining the majority vote. Under the new leadership of Premier Senzo Mchunu, the provincial government continues to be committed to providing stability, effective governance as well as service delivery.

The KZN economy is the second largest contributor to South Africa"s GDP after Gauteng. The KZN economy has grown (as measured in terms of 2005 Rand value) from R 270 billion in 2010 to R347 billion in 2014. The provincial economy is projected to grow at 3, 0% in 2014 and around 3, 5% to 4, 0% in 2015. The government of KZN recognises that investment is critical to the growth of the provincial economy and aims to ensure that an environment conducive for investment to thrive is created. The common time zones, banking laws and general awareness of financial concepts are also assets in the global market place.

KZN's well-developed infrastructure includes roads, railways and telecommunications, a sophisticated commercial and financial business structure, complemented by a full spectrum of professional services.

The transport and logistics sector within KZN is a large contributor to GDP and plays a significant role in the growth of the provincial economy. To meet the growing demands of a competitive global world, one of the recent flagship projects in the province of KwaZulu-Natal is the King Shaka Airport and Dube TradePort, which have been constructed north of the city. The Dube TradePort is a catalyst for global trade and a portal between KwaZulu-Natal and the world.

The Dube TradePort will incorporate an industrial development zone, an agricultural zone, perishables facility, inter-modal freight transfer facility and other commercial and retail opportunities as well as a cyber zone. A wide range of business opportunities will emanate from this development, including the direct export of fresh produce, motor components, electronics, clothing and textiles. Linkages with the Dube TradePort and the availability of agricultural land will pose significant growth opportunities to the agricultural sector.

Current strategy proposes that an aerotropolis is developed. This airport city will provide a costeffective solution by creating a vast logistics platform, offering a significant means to expand the capacity of KwaZulu-Natal to import and export goods as well as enhancing international competitiveness and promoting job creation. In addition, both Dube TradePort and the Richards Bay IDZ are to be declared as special economic zones.

The impact of the King Shaka International Airport is particularly evident in the growth of Ballito, adding to its status as the fastest growing node in the country.  New investment in commercial and residential property developments along the north coast is apparent. The iLembe District Municipality is particularly active in seeking out new investors.

The KZN government intends to further invest in infrastructure development initiatives in the province that will create more employment. A key objective is to ensure that a multi modal service is provided to supply potential investors with sea, air, road and rail and pipeline connectivity.

KZN has a well-developed freeway system linking roads to national highways. Many of which are currently being upgraded to accommodate the increasing traffic and to counter congestion challenges. Future plans include improving the Durban-Free State-Gauteng logistics and transport corridor, expansion of the ports as well as lowering port tariffs. The plans for a huge dug-out port on the site of the old international airport, to expand the city port capacity, will become a major boost to investment in the province. An inland dry port at Cato Ridge is also proposed, which will be an asset to the Durban-Gauteng transport corridor.

In addition, the government of KZN budget plans include various projects for much needed public infrastructure delivery including housing, schools and health facilities. These programmes not only improve services but will benefit local suppliers and boost the construction sector enormously.


KZN's sub-tropical climate, excellent annual rainfall and some of the most fertile land in the country makes the province the national leader in several agricultural products. Although KZN covers a small portion of South Africa"s land area, a significant percentage of the country"s small-scale farmers are based here. The midlands area between Pietermaritzburg and the Drakensberg has a concentration of vegetable, dairy and stock-farms.  The KZN coastal belt yields sugar cane, wood, oranges, bananas, mangoes and other tropical fruit.

Forestry in the areas around Vryheid, Eshowe, Richmond, Harding and Ngome is another major source of income. Key forestry companies operating within KZN include Mondi, Merensky, NCT Forestry Cooperative Limited and Sappi.

Agriculture is a labour-intensive sector, which is especially relevant in a provincial context of high unemployment. According to the KZN Business Barometer May 2014, compiled by Mike Schüssler of Economists.co.za, the agriculture index has grown 7.7% year-on-year. This was driven by a 6% increase in sugar cane crushed, a 14% increase in meat production and a 35% increase in field crops. Forestry, which showed no change, was the only drawback for the agriculture index.

In order to promote growth, the identification of crops and the creation of opportunities for SMME agribusiness prospects are of importance. In particular, sugarcane and the sugar industries are perceived to have the potential for growth and employment especially in rural areas.

The sugar and timber industries have the capacity to provide up to 2 000 megawatts new renewable energy.  In addition, the sugar industry is ready to undertake major alterations and expansions to their mills to also produce vast quantities of ethanol.

KZN"s mineral sands and coal mines are a small economic sector underpinned by companies such as Richards Bay Minerals and Petmin. A current focus on the mining value chain is expected to play a key role in the country"s industrialisation programme.  The aim of the programme is to drive economic growth through increased beneficiation of minerals.

The government is playing a vital role in encouraging the growth of smaller entrepreneurs by offering incentives to large mining companies using services and products of smaller companies at the upstream stages of the value chain.

Superb Economic Growth Rate

A strongly performing regional economy is well correlated with the performance of the business support services sector. For companies to function efficiently, service providers need to provide effective business support. Many of the sub sectors such as finance, real estate and business services, and wholesale and retail trade are amongst the top performing sectors of the province"s economy. New opportunities exist in industries such as the manufacturing of renewable energy products, rolling stock for rail, and marine manufacturing. Of note is that KwaZulu-Natal has much potential with regards to its maritime resources as the oceans offer rich opportunities in the drilling of oil and gas, including fishing and aquaculture.

After Gauteng, KZN"s diversified manufacturing sector is the second largest in the country with nearly a third of South Africa"s manufactured exports produced in the province. Large, globally competitive manufacturers operate in the province in industries involving automobiles and automobile parts, forestry products, petro-chemicals, food and beverages, steelworks metals as well as clothing and textiles.  These manufacturers are represented by Arcelor Mittal, MacDonald Holdings, BHP Billiton, Hulamin, Safal Steel, Tata Steel, Sappi, Mondi, Foskor, Engen and Unilever, which are of some of the major contributors to the economy of the province.

The Durban South Basin is a key manufacturing and industrial zone of the city, contributing 30% of Durban"s Gross Domestic Product and providing 10% of the country"s manufacturing jobs.

KwaZulu-Natal"s textiles and clothing sector continues to be an important employer. Two international safety-footwear firms operate out of Pinetown: Beier Industries and Bata Industrials.

Pietermaritzburg is also known as a centre for carpet manufacture, with Belgotex Floorcoverings having the largest facility in the southern hemisphere at 155 000 square metres. The KwaZulu-Natal Clothing and Textile Cluster (KZNCTC) have established a Sector Business Support Centre in Newcastle, aimed at regenerating the area'sclothing and textile industry.

Major automotive companies including Toyota, MAN Truck and Bus SA, Volvo Trucks and Bell Equipment operate in the province, with many secondary suppliers providing individual components or raw materials to the manufacturers of components or sub-assemblies for motor assembly plants.

The Maritime Vessel Construction and Repair (MVC&R) sector, also known as the ship building industry, is vast and fast evolving. Durban boasts the largest and busiest ship repair facility on the South African coast and one of the most efficient in the southern hemisphere. The firms of Elgin Brown & Hamer, Southern African Shipyards and Dormac Marine each have their own fully equipped repair quays including heavy cranes and machine shops to handle almost any job.

KZN provides nearly a third of South Africa"s plastics demands. The industry uses 150 000 tons of polymer a year and consists mainly of SME enterprises plastics still remain cost-effective products and a vital component in the packaging industry. The chemical industry is well developed with numerous SME enterprises along the value chain. The sectors that enjoy substantial investments into the chemical industry are paint, agricultural chemicals, plastics and synthetic resins.

KZN"s transport and logistics sector has enormous importance as it links South Africa"s largest market, Gauteng with global traders. KZN"s transport and logistics services encompass sea freight and land based operations such as dry and liquid bulk terminals, intermodal solutions, pipeline, rail, air and port operations and all facets of traditional and specialised logistics.

There are many substantial, well-managed private road transport companies handling all types of freight.  Of note increased road freight is being driven by the increase in the transport of consumer goods destined for neighbouring countries in the southern African region through KZN and other provinces of South Africa.

Local and international shipping lines such as Grindrod under the banners of Island View Shipping and Unicorn Shipping, Submarine and Mediterranean Shipping Company are major seafaring companies.

Tourism

KZN attributes including sunshine and a relaxed lifestyle offer an unmatchable combination of assets.  The province is the market leader for domestic tourism in South Africa, as well as is number two in term of international tourism. KZN has great accommodation facilities, excellent beaches, game parks with the big five and splendid mountains. KZN boasts two World Heritage Sites - the iSimangaliso Wetland Park and the uKhahlamba Drakensberg Park.

The scenic and majestic Drakensberg Mountains remain a powerful drawcard for tourists.
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As such a detailed feasibility study for a cable car is about to get under way. The location proposed is in Mnweni Valley near the Royal Natal National Park and the summit station would be in Lesotho. The cable length would be three kilometres.

Cruise Tourism is a burgeoning niche market and liners such as the Queen Mary, MSC Sinfoni, MSC Melody, and others are popular visitors to our shores. Sea cruising has the potential of boosting our tourism industry.

Economic Nodes

The cosmopolitan city of Durban and surrounding towns form the eThekwini Metropolitan Municipality, which is the economic powerhouse of the province.  The GDP generated ranks eThekwini as the second largest economic centre behind Johannesburg in South Africa. Durban"s bustling harbour has led to the pulsating city being described as the economic hub of KZN and a gateway to Africa.

The eThekwini Metro is not only an investment capital, a tourism and leisure centre, an international logistics management centre, retail node, but also a cultural and entertainment hub. Currently, the municipality is a substantial administrative centre, providing key public services within the metropolitan area as well as to the wider region. There are several corporate head offices in the central business district of Durban and in the decentralised areas of Kloof, Westville and Pinetown.

The scenic Umhlanga Ridge area is burgeoning under the rapid development of new hotels, office parks, luxury homes and apartments as well as medical facilities. The Gateway Theatre of Shopping is a huge asset to this region.

Durban's showcase International Convention Centre Durban is one of eThekwini"s most successful economic catalysts. The ICC, Arena and adjacent Durban Exhibition Centre form The Inkosi Albert Luthuli International Convention Complex, which is the core of the region"s burgeoning business tourism industry. The annual Tourism Indaba serves as an awesome reminder to event planners of just how well the province hosts events. A highlight event of 2014 is the 25th World Congress on Architecture when approximately 5000 delegates are expected to descend on the ICC. UIA2014 Durban will be the largest gathering of architects ever held in the southern hemisphere.

The cumulative economic impact of events such as these is expected to exceed some R100m and attract many thousands of business and leisure tourists to the regional economy.

Delegates and tourists enjoy the proximity of several of Durban"s attractions to the ICC and hotels. Apart from warm tropical beaches, there are beautiful parks and gardens, world-class shopping centres, casinos and restaurants.

Durban"s central beachfront upgrade has transformed Durban"s renowned beachfront into a feature of which the city can be justly proud. The promenade provides kilometres of uninterrupted sea views, restaurants and other amenities to the benefit of all. Visitors to the beachfront will be greeted by the sight of walkers, joggers, bikers, kids playing football or beach volleyball as well as fisherman, surfers and swimmers.  Landscaping has played an important role in Durban"s beachfront upgrade programme and involves protecting and re-establishing the beach dunes by adding and preserving plant life, both on the dunes and along the promenade.

Nearby is uShaka Marine World, Africa"s largest marine theme park. The park, which spans 15 hectares of prime beach front, combines meaningful marine research, with fun-filled activities. The People Mover provides transport from uShaka to the Suncoast Casino and ICC.

The informal sector plays an important role in the local economy. Entrepreneurs generate their own income and add to the vibrancy, colour and unique character of eThekwini, which is especially evident at the Warwick market. A trip to Durban is not complete without venturing into one of the many surrounding townships to experience the bustling neighbourhood life of the people of the region.

The local indigenous medicinal plant trade is worth more than the annual maize harvest in the Province and is mostly traded in street markets with Umlazi being the largest. Indigenous plants are a source of fuel, craftwork material, medicine and food supplements for many locals.

Further inland lies the beautiful "Valley of a Thousand Hills," offering authentic Zulu cultural experiences, a safari park, curio shops, craft markets and restaurants.  The economy of the Shongweni area is based on the equine industry and tourism.

The Inanda Heritage Route winds its way through the Inanda Valley providing insight into South African history. The route includes the Phoenix Settlement where Mahatma Gandhi"s house, and his International Printing Press and Museum are located. Nelson Mandela cast his vote in this historic election at Inanda"s Ohlange Institute, fitting given that the firstever president of the African National Congress (ANC), Dr. John L. Dube, established this school in 1901.

And Further Afield

The upper south coast road passes through the residential areas of Amanzimtoti, Umkomaas and Scottburgh where some of the country"s finest golf courses are located.

Further along the south coast, Ugu District Municipality"s future plans include upgrading Margate"s airport, Port Shepstone"s beachfront and the establishment of a flagship hotel and conference centre amongst others. Sisonke District municipality"s new steam train is set to become a tourism draw card to the region.

Zululand is a popular destination for wildlife and birding tours. The region is also rich in Anglo-Boer War and Zulu history.
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In uThungulu, Richards Bay"s port, coal terminal, aluminium smelters and mining houses drive the local economy. In addition, the Richards Bay Industrial Zone will assist in attracting investment to the region.  The Pietermaritzburg/Msunduzi area in uMgungundlovu District Municipality is ideally positioned along the N3 national highway corridor to Gauteng. The city is a base for manufacturing, particularly aluminium, chemicals, food, furniture, timber and leather products. Many major companies like Willowton Oil and Hulamin have established themselves in the vicinity and further opportunities exist. Apart from a hub of governance, the city is a regional centre for impressive s ports events, outdoor festivals, shows, education, and the arts such as the Royal Show, the Hilton Arts Festival, Art in the Park and Cars in the Park.

In Amajuba, the town of Newcastle"s major activities are coal mining, steel processing and manufacturing.  Some old coal mines are being reopened to meet South Africa"s power stations" demand for the fuel. This will have a knock on effect of regenerating the economy of this region. The regional shopping mall in Newcastle will also assist in growing the town's economy.

Great Lifestyle

The excellent KZN climate allows many sport and leisure opportunities and a range of business opportunities has grown to meet the demand of these markets. A current provincial strategy focuses on ensuring that world class events are attracted to KwaZulu-Natal, which reinforces our passion for sport, art and culture.  The Moses Mabhida Stadium is undeniably a defining landmark of Durban"s skyline. The stadium is not only a tourist attraction in its own right, but also the centrepiece of the King"s Park Sporting Precinct.

Famous international sporting events hosted in the province include the Comrades Marathon, the Duzi Canoe Marathon, the Mr Price Pro Surfing Competition, the Midmar Mile (the world"s largest inland ultra-swim), Vodacom July Handicap Horse Racing (along with its trendy fashions), the Amashova and Tour Durban cycle races as well as test matches in rugby, cricket and soccer attract spectators and interest globally.

Growing Further

Currently a major theme is that of developing synergy between the more and less developed sectors of the local economy and between the public and private sectors.

In his State of the Province Address on 26 June 2014, Mr Senzo Mchunu, Premier of KwaZulu- Natal said, "We are committed to an ongoing partnership with the private sector in the struggle for economic growth and wealth creation. We have in place the strategy and fora to carry this particular task and we appreciate the spirit of cooperation that we see in our province."

A number of projects are at different stages of development around the province and face different challenges. All role players in the economy need to commit themselves to working in cooperation towards the objectives of inclusive sustainable economic growth. Other possible developments include the construction of a World Trade Centre, Inyanginga Industrial Estate, Cornubia and further growth around the Dube TradePort.

KwaZulu-Natal is well placed for moving vigorously into the future with and welcomes you to participate in the region"s growth and ongoing success story.

Grant Adlam
www.kzntopbusiness.co.za




KwaZulu-Natal is on the Move - Grant Adlam

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