Report on the LED Indaba, Dr Kenneth Kaunda District
22 July 2008
Matlosane Recreation Centre

The Local Economic Development initiative is an interactive drive by the provincial Department of Economic Development and the National Government.

This programme was established and initiated in 2007. The aim of this initiative is to develop economic activities at a local level. It was identified that many local or district municipalities fall short when it comes to creating a conducive environment for local or district economic activities. As a result the National and Provincial government saw it fit to establish this drive. In essence this initiative was established to encourage coalitions co-operatives among local and district business people.

The strategy is to form coalitions between big businesses and small medium and micro enterprises (SMME). Although smme’s were in attendance, it was noted that there was a challenge of big businesses not attending such workshops. Notably major companies did not even send their representatives to the workshop, even though invitations were delivered. This was seen as the continuing reluctance on the part of major businesses to form partnerships with SMME’s.
For instance, Matlosana is a mining town however; the mining community had only two representatives who have already have partnerships with SMME’s.
The D.E.D is striving to establish Business .Network Development, SMME Development and Job creation in the Province.

The Dr Kenneth Kaunda District comprises out of the following areas:

Matlosana
Maquassie Hills
Merafong
Ventersdorp
Tlokwe

And houses approximately 1 million people with 300 000 households. It is fast becoming the hub of Agriculture and Mining, the latter being Gold, Uranium and Diamonds. Potchefstroom is focusing on Manufacturing whilst Ventersdorp and Maquassie focuses on Agriculture. The problem this district is experiencing at present is rapid growth of urbanization.

It is therefore their aim to:

Create Jobs
Alleviate Poverty
Promote Trade and Investment
Retain business and create competitiveness
To mobilize Skills Experience and informal networks
To promote citizenship and good governance (Project linkage with growth strategy to provide the necessary economic infrastructure & support.

Three main projects have been identified that are aligned to the economic pillars.

• Industrial Cluster Development Business Retention & Support (Potchefstroom)

E.g. Tlokwe Breweries. The municipalities talk to one another in order for SMME’s to plant wheat which they in turn provide to the brewery. A partnership is thus formed.

• King Food (Farmers)

Josh Levi – Importing beans from Canada.
Chubby chicks – Chickens
Local SMME’s to grow beans and breed with chickens which they provide to the various entities.

• Industrial Cluster Development (Ventersdorp)

Schoonspruit Distillers (Pty) Ltd – (Wine/Whisky ) – Will provide land to be developed to SMME’s to have grapes planted. They will then purchase the grapes from the SMME’s to make wine and sell it and will then give the SMME’s a percentage of the wine sales etc.

Two other projects:

The Treasure Route (N12 and N14) – It was noted that the Vredefort Dome is a heritage site on the same scale as Table Mountain and Robben Island but it is exploited more by the Free State Province though Dr. K. Kaunda owns 2/3 of the land. As a way forward there was a need to industrialize rural areas and strengthen the local private sector.

Merafong Flora Project – Supply flowers to Pretoria and Johannesburg Markets who in turn supplies to Denmark and the Netherlands.

CHALLENGES:

There is a demand for Information & Communication Technology Services.
Increasing Demand for tertiary education.
Merafong Simunye Agricutural Trust – no heating system
Maquassie Hills – Water
The Need is there to fast track Lucern in Maquassie.
SMME’s – There is a stringent and rigorose requirement of financial institiititions & Government Agencies.
SMME’s – Have few resources or nothing to offer as Collateral.
Strenghen and build Human resources Capacity (Ventersdorp, Maquassie & Merafong)
High Levels of Poverty
Increasing Impact of HIV/AIDS.
SMME’s lack proper Managerial & Business Know How.

According to MEC Darkey Africa, each district municipality has one or no LED Manager, as a result LED’s tend to draft menus on how to go about addressing issues of critical importance such as assisting SMMEs. This is mainly due to lack of conceptualization on the part of those responsible. It was further noted that systems were weak and could not address socio-economic problems.

The M.E.C further noted that there was a coalition effort to engage with the North West University (Potchefstroom Campus) to develop a science park. This science park will be a collective effort of both the campus and the North West Development Corporation (PTY) Ltd.

The highlight was on the turn-asides and are described as projects that should and will be allocated to SMME’s they were identified by the National Government in conjunction with the Provincial Governments.

These are:

• Advertising, Media and Communication
• Internal and External cleaning suppliers
• Clothing and Textile
• Computer equipments, repairs and sales
• Internal and external decorations
• Events co-ordination and Marketing
• Maintenance, repairs of office spaces
• Travel co-ordination and courier services
• Food and Perishables
• Stationary services

Industrial Development Corporation (IDC)

The IDC focuses on SME assistance. By their own standards and classification, an SME is a business that employs less than 200 employees, has a turn over of less than 35 million rands and has total assets worth less than 40 million.

Their area of focus include:

• Franchising
• Risk Capital facility
• Special development financing scheme (Pro-Orchards, Pro-Forestry, Pro-Hospital)
• Non-financial forms of business support i.e. entrepreneurial skills development.
• Capacity building for Provincial Development Corporations

According to Mr. D. McGluwa, it is his dream to establish or develop private hospitals in local communities, so that they can have access to top class medical care at reasonable rates. This of course is in partnership with local business people.
The Department of Trade and Industry (DTI)

The DTI laid down a LED Frame Work this frame work is established mainly to assist SMME’s to participate in the development of local economic activities.

The DTI is committed to assisting SMME’s with Project planning. It has come to the attention of the department that there is lack of planning on the part of SMME’s. It is either, they do not have the necessary skills or do not have the capacity. This in turn results in their operations or projects not being sustainable.

Another area of concern for the department is the carrying out of a feasibility study. As a result the DTI has committed itself to ensuring that they find companies who can conduct feasibility studies for SMME’s and as a result pay them. The compilation of business plans and support in both (Capacity building and Financial support) are some of the challenges.

Areas of support for that were identified are the Bio-Fuel and Agro-Processing that will be under the auspices of Mafikeng Industrial Development Zone (MIDZ).

SMME’s will also be given Competency Certificates once evaluated.

Compiled by the Marketing & Communication Department: Karen Poley & Tsireletso Nkalese