The minister of public enterprises, Malusi Gigaba, was yesterday drumming up the Strategic Integrated Project (SIP) II; an ambitious multi-billion rands plan that is passed as the Gauteng-Free State-Durban Logistics Corridor.
While at it, Gigaba was once more on the war path with regards to ensuring that opportunities to come out of the SIPS accrue to black business people in significant amounts. The platform was agreeable to Gigaba’s aggressive transformation talk. He was addressing the Black Management Forum (BMF) in Mangaung, Bloemfontein.
Gigaba said “Companies in South Africa that deal with government or public enterprises must understand that in order to benefit from the government’s infrastructure programme, they are required by law to be ‘empowered’…”
Of course, we are persisting in our effort, working with other government departments, to seek a review in the Preferential Procurement Policy Framework Act in order to be able to achieve the goal of faster and more radical empowerment.”
Gigaba said the Durban-Free State-Gauteng Logistics and Industrial Corridor (SIP II) represent the embedding of “the very notions of long-term planning”.
“SIP 2 is intended to improve access to Durban’s export and import facilities, integrate the Free State Industrial Strategy activities into the corridor, integrate the currently disconnected industrial and logistics activities, and integrate marginalised rural production centres surrounding the corridor that are currently isolated from the main logistics system,” said Gigaba.
It will expand rail capacity and rolling stock to meet forecast demand from 67Mt per annum to 167Mt in 2037. It will be worth R205 billion over the next coming 5 years. By the third quarter of 2013, 11 118 jobs had been created by SIP 2 and 98.2% localization in spend had been achieved.”
It will also build cargo nodes – Harrismith, Cato Ridge, Tambo Springs, the Dube Trade Port – and will further upgrade existing cargo nodes such as City Deep, Pyramid, West Rand and Sentrarand.”
Gigaba said this presents an opportunity for black business to explore both downstream and upstream initiatives, high value-added goods and growth sector in the infrastructure value chain, like cement plants, stone mining, modern brick building and others.
He said “Sustaining the industrial capabilities of this region depends on the qualitative aspects of industrial activities”.
The strategic infrastructure projects will therefore ensure that we are able to upgrade our electricity transmission networks, as well as our ports, our railway networks so that we are able to meet the supply requirements of growing economy.”
For example, one could not think of expanding the Durban Port Terminal by adding the dig-out port without considering how this will impact on the entire freight logistics movement through the logistics corridor from Gauteng, through the Free State to Durban; and how the new port will impact the roads, pipeline, rail, water and electricity infrastructure; and what impact all of this will have on business, not just in Durban or eThekwini metro as a whole, but throughout Ekurhuleni, Harrismith, Ladysmith, and even in the entire Southern Africa region.”
Gigaba said the biggest chunk of these investments in infrastructure will come from State-Owned Companies, mainly Transnet and Eskom. “For example, Eskom will invest R205.1 billion over the next three years, whilst Transnet will spend R27.5 billion in the current financial year on infrastructure investment as part of its rolling seven-year R307 billion plan aimed at rejuvenating its railways, ports and pipelines improving logistics infrastructure.”
Broadband Infraco invested R140 million over the last year and has plans to spend over R700 million to upgrade technology and improve network performance and reach this financial year.”
Gigaba added that “This historic infrastructure programme will, undoubtedly, therefore, result in the development of qualitatively new local industrial capabilities and the comprehensive transformation of the supply value chain of South Africa’s industry as a whole.”
He added that “In order to support infrastructure roll out, we will put in place financing levers intended to support black industrialists and the transfer of wealth into black hands. We recognise that the financing of emerging black industrialists is important for the economy; that BBBEE must have a credible financing component in order to proceed.”
We will confront, and head on, the serious challenges characterised by the low levels of initial capital endowment of the black business community itself; which on their own are characteristic functions of apartheid colonialism.”
We will use financing consortia or ‘special purpose vehicles’, deliberately, effectively, in order to compensate for the shortage of finance in black communities.”
Government will also leverage both private sector funds and state funds to support economic empowerment and to open up space for emerging black industrialists to compete and to thrive.”
Gigaba said “We will not accept the forms of price collusions that have we have seen lately in the infrastructure programmes, particularly in the construction sector, as well as monopolistic partnerships that do not create space for others to participate and to compete competitively, in particular to the disadvantage our small business partners.”
There are many financial institutions that are under the control of government; they must shift in how they finance black business, they must encourage people to take risks to industrialise and boldly support these efforts.”
The minister added that “A strong black industrial class is a prerequisite for robust entrepreneurship and innovation in Africa at large.”