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Visa red-tape is suffocating SA’s ailing industries says Helen Zille

Energy Security is the platform we need for our second game-changer, called Project Khulisa - achieving significant growth in three economic sectors best placed to create jobs.

Visa Red Tape Is Suffocating SA’S Ailing Industries Says Helen Zille

They are

• Tourism including business and leisure tourism, as well as niche tourist markets;
• Agri-processing to add value to a range of agricultural products; and
• Servicing the growing oil and gas sector, particularly through mid-stream services such as rig-repair.

Project Khulisa also focuses on ensuring that we have the right infrastructure, services and skills to support the growth of these (and other) sectors.

We already know that tourism is a major contributor to job creation in the Western Cape, pumping R17 billion into the economy and underpinning 204 000 formal jobs.

However, we believe the sector can contribute even more.

Benchmarking ourselves against other regions that have undertaken similar, focused initiatives, tourism has the potential to increase its contribution to the economy by another 50%, adding almost 100,000 jobs by 2019.

However, it will be impossible to grow our tourism sector at the rate required if our visa regulations chase visitors away. Until recently Home Affairs seemed intent on killing South Africa’s new tourism growth market (particularly China, India and Africa) through onerous visa regulations, seemingly designed to make travellers choose destinations other than South Africa.

We are pleased that during his SONA address, President Zuma promised a review of these regulations in order to strike a balance between what he termed “national security “and tourism growth.

We must also try to prevent the peaks and troughs in our tourism industry by growing niche markets during the winter months.

The design laboratory for our tourism action plan will draw from best international practice. We can learn a lot from Africa. Kenya, for example, through smart policies and good marketing, has grown tourism to almost a quarter of GDP and created a million additional jobs in one year.

Jordan is a good example of a country that has increased its number of visitors through cultural and heritage niche markets, resulting in a 30% increase in tourism employment in that country over five years.

The second of our Khulisa economic game-changers is agri-processing.
Currently, the sector contributes R12 billion in goods and services to our economy and accounts for 79 000 formal jobs in the province.

Using regions that have revolutionised their agri-processing sectors, we have concluded it is possible for this sector’s economic contribution to grow over 100% by 2019, adding a further 100 000 jobs. This is essential given the rate of agricultural job losses that followed the violent disruptions in the farming sector two years ago.

Again, we are dependent on externalities, like reliable energy and consistent, clean water, and the macro policy climate to attract investment. If the national government would just stick to its own National Development Plan, we would be assured of progress.

This requires bringing down barriers to exports and entering into trade agreements with the BRICS and fellow African countries, our natural trading partners.

Appropriate skills, and high-level research and development are also critical to the success of this sector.

We have identified key opportunities to address these challenges, which we are in the process of evaluating. These include:

• Developing specialized agri-processing parks that provide world class infrastructure, tax and energy rebates, research and development support, skills development and shared services;

• Improving water management through new infrastructure development and water use efficiency; and

• Promoting and supporting of beneficiated agricultural products in both domestic and international markets with a particular focus on products produced by small and medium enterprises.

Again, many lessons come from Africa.

Morocco, for example, has made great progress in the development of agri-processing clusters called “Agropoles” that are located on sites with good road connections, near ports and airports. The clusters are also served by research and development and training institutions to address specific needs in the sector.

Project Khulisa’s third priority arises out of the burgeoning oil and gas sector off the African coastline. The Western Cape is ideally positioned to service both the East-West cargo traffic that is too large for the Suez canal, and the African offshore oil and gas vessels and rigs that are drilling off the Mozambique and Namibian coasts.

That is why we are investing nearly R90 million into the development of the Saldanha Industrial Zone (IDZ) over the next three financial years, in co-operation with the national government.

Currently, the oil and gas sector accounts for 35 000 formal jobs in the province. Looking at similar initiatives elsewhere in the world, we estimate that we could more than double this number by 2019 under a high growth scenario where the Saldanha IDZ becomes the key logistics hub of Africa for the Oil and Gas Services Industry.

However, in order to achieve this we need to overcome two major challenges.
Firstly, the Saldanha Bay IDZ requires additional infrastructure to undertake rig repair at shore. Improved roads around the IDZ as well as increased energy and water provision are essential.

Secondly, we lack the skills that the oil and gas sector requires. Currently there are 1700 artisans employed at the port and we will need 18 000 by 2019 to support accelerated growth in this sector.

We are committed to doing what we can, within our limited budgets and competencies, to overcome these challenges in partnership with other spheres of government and the private sector.

That is why we welcome the national government’s recently launched Operation Phakisa (accelerate). The first phase of the project is focused on unlocking the economic potential of South Africa’s oceans.

Last month, as part of this project, the Transnet Ports Authority (TNPA) and Saldanha Bay Industrial Development Zone Licencing Company (SBIDZ) announced that tenders are being prepared for two major infrastructure projects valued at around R10 billion for the Saldanha IDZ.

The deadline for the completion of these projects is January 2018. These construction projects will make a major contribution towards establishing a flagship oil and gas services hub at Saldanha Bay in the long term and we plan to working closely with the TNPA to ensure that deadlines are met.

We have already introduced a number of interventions to increase rig-repair-specific skills in the province.

The provincial department of Economic Development and Tourism has targeted 1000 unemployed youth to participate in an occupational readiness programmes (ORP), to bridge their enrolment into technical and vocational training colleges (TVET) to gain the necessary qualifications.

We have funding from the national Department of Trade and Industry’s SEZ fund to place these students as assistants to artisans in the engineering and construction environment.
We have also launched a “Recognition of Prior Learning” project in partnership with the South African Oil and Gas Alliance using funding from the Chemical SETA. The project provides training in trade skills such as welding, boiler-making, fitting and electrical skills, which lead to formal certification.

Retired artisans are also being trained as trainers, to pass their knowledge and skills to younger artisans.

However, we recognise that bolder interventions are required if we want to produce almost 16 000 additional skilled workers in the next five years.

This will almost certainly have to include an increase in the number of visas granted to skilled foreign nationals - something that again depends on the national government. If we want our economy to grow, we simply have to create and attract the skills we need.
Let’s follow the example of Brazil that increased their work permit approval rate by 30% between 2009 and 2010, attracting 5000 skilled expatriate workers in their oil and gas sector alone, resulting in growth that, in turn, created thousands more jobs for local residents.

This is necessary while we build our internal skills base.

We will host design laboratories over the next few months with the oil and gas industry and further education institutions to design a “rig repair-skills action plan” with clear targets and timelines that can be implemented over the next five years.

Madame Speaker, it is important to note that the three prongs of Project Khulisa will not displace the many other sectors in our economy that contribute to increasing investment, jobs and growth.

For example, the Business Process Outsourcing sector remains key to the province’s economy, employing over 40 000 people, mostly youth. There are still significant opportunities to grow our province’s market share in niche segments of BPO, such as Legal Process Outsourcing. We will continue working in partnership with Business Process Enabling South Africa (BpeSA), to continue their exceptional success in marketing our province as a leader in the global contact centre industry.

Establishing the Western Cape as a hub of innovative businesses also remains a top priority.

During the current financial year, we have spent just over R45 million through our Entrepreneurship and Enterprise Development programmes to assist new business development, with procurement support and access to finance. R36.3 million has been allocated to this programme for the 2015/16 financial year.

Our Red Tape Reduction unit will continue to resolve issues that negatively affect the establishment and growth of business. Since the launch of the red tape hotline in 2012, the unit has received 3 570 complaints with an 80% resolution rate.

We have also implemented regulatory impact assessments in all provincial departments and almost every municipality, because we recognise that excessive regulation kills investment and job creation.

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