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ILEMBE DISTRICT MUNICIPALITY IDP PHASE ONE: ANALYSIS REPORT SECTOR REPORT 3: ECONOMIC DEVELOPMENT DATE: 11 JANUARY 2002 RESPONSIBLE OFFICIAL: MR MIKE NEWTON RESPONSIBLE CONSULTANT: MULTICONSULT ENGINEERING TEL: 031 – 207 2330 FAX: 031 – 209 9161 E-MAIL: email@example.com 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO TABLE OF CONTENTS 1. 1.1 1.2 2. 2.1 2.2 2.3 3. 3.1 3.2 3.2.1 3.2.2 3.2.3 3.3 3.3.1 3.3.2 3.3.3 4. 4.1 4.2 4.2.1 4.2.2 4.2.3 4.3 4.3.1 4.3.2 4.3.3 4.4 4.4.1 4.4.2 4.4.3 4.5 4.5.1 4.5.2 4.5.3 4.6 4.6.1 4.6.2 4.6.3 INTRODUCTION Purpose of the Report Background SIZE AND NATURE OF THE ECONOMY Spatial Economy Size and Growth of the Economy Employment and Job Creation CURRENT ECONOMIC DEVELOPMENT INITIATIVES Introduction Ilembe District Council Job Creation Study Aim of the Study Market Niche and Competitive Strategy Outputs and the Way Forward The North Coast Economic Development Cluster Purpose of the Project Key Economic Development Projects Identified The Way Forward SECTORAL ANALYSIS OF ECONOMY Introduction Agriculture The Current Situation Potential Opportunities Key Issues Impacting on the Sector Manufacturing The Current Situation Potential Opportunities Key Issues Impacting on the Sector Tourism The Current Situation Potential Opportunities Key Issues Impacting on the Sector Commerce The Current Situation Potential Opportunities Key Issues Impacting on the Sector Other Economic Sectors The Government Services Sector The Transport Sector The Construction Sector PAGE PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 2 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO PAGE 5. 5.1 5.2 KEY ISSUES RELATING TO ECONOMIC DEVELOPMENT Summary of Key Features of the Economy Key Issues PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 3 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO 1. 1.1 INTRODUCTION PURPOSE OF REPORT This report presents an overview of the economic status quo in the Ilembe Distrct Municipality. It forms part of a series of sector based reports prepared for Phase 1, the Analysis Phase, of the Ilembe District Municipality integrated development planning process. In broad terms the report presents an overview of three aspects, viz. 1.2 the size and nature of the economy (Section 2); economic development initiatives in the municipality (Section 3); and trends and issues relating to the various economic sectors (Section 4). BACKGROUND The report is primarily based on information gleaned from previous economic development studies undertaken for Ilembe as a whole or specific areas now falling within the Ilembe District. No primary research was therefore undertaken in the preparation of the report. The large number of economic development studies undertaken for the region is an obvious reflection of the importance which is assigned to the development of this sector by all stakeholders, but also specifically by local government. In light of the wide range of studies, this report attempts to synthesize and integrate the information generated through the prior studies. 2. 2.1 SIZE AND NATURE OF THE ECONOMY SPATIAL ECONOMY Three distinct zones of economic development, each with its own set of characteristics can be identified within the Ilembe District, viz. the coastal strip, the inland corridor and the rural hinterland. The Coastal Strip: Essentially tourism related development is located in the coastal strip with the focus of development being in the Dolphin Coast area. Further smaller generally upmarket residential settlements with a tourism focus have been developed along the coast. The coastal strip is also characterised by substantial natures area with traditional settlements to the north. The Inland Corridor: Straddling the N2 which runs in a south-west to north-east direction the inland corridor is essentially viewed as an area of commercial agriculture, with sugar cane being the dominant activity. The important urban centres of KwaDukuza and Mandeni, together with smaller formal settlements, are located in this corridor. This corridor is viewed as the current economic core of the district. The Rural Hinterland: This area is in terms of economic developed underdeveloped due to the impact of previous policies. Settlement in these areas, specifically Ndwedwe and Maphumulo, is generally of dispersed rural nature. Very little to no economic development activities are located in this area. PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 4 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO 2.2 SIZE AND GROWTH OF THE ECONOMY Information on the size of the Ilembe District economy, specifically in terms of GGP contribution is not available at present as previous statistics focussed on the providing this information on a Magisterial District level. These boundaries do not necessarily correspond with the new local government demarcations. In a study undertaken by Urban-Econ (2001) the GGP contribution of the various economic sectors is estimated based on 1997 GGP figures compiled on a Magisterial District Level. This information, comparing Ilembe with the province as a whole, is reflected in Diagram 2.1 below. DIAGRAM 2.1: PERCENTAGE GGP CONTRIBUTION (1997) OF ECONOMIC SECTORS: KWAZULUNATAL AND ILEMBE Agriculture Mining Manufacturing Construction Utilities Transport Trade Community Services Financial Services Government Other 0.00 2.00 1.49 1.90 0.94 1.63 1.05 5.21 18.35 28.39 28.14 2.94 3.06 1.91 0.78 5.33 8.36 10.90 16.48 6.34 15.54 13.09 26.13 5.00 10.00 15.00 20.00 25.00 30.00 PERCENTAGE ILEMBE Source: Urban-Econ 2001 The above clearly reflects the dominance of the agricultural (18%), the manufacturing (28%) and the government services (26%) sectors in the District. Both the agricultural and government services sector makes substantially larger contributions to the Ilembe District economy than is the case in the Provincial economy. This indicates that the district economy is less diversified than that of the province as a whole. The GGP contribution of the manufacturing sector is high this sector includes the industrial development in Isithebe and the activities of the sugar and paper mills in the area. Table 2.1 again reflects the contribution of the various economic sectors to the District and Provincial economy, as well as reflects the average annual growth of the various sectors for the period 1972 to 1997. KZN PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 5 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO TABLE 2.1: ECONOMIC CONTRIBUTION (1997) AND ECONOMIC GROWTH 1972 – 1997 FOR ILEMBE AND KWAZULU-NATAL KZN ILEMBE ECONOMIC SECTOR % contribution % growth % contribution % growth Agriculture 18.35 -1.65 5.21 3.38 Mining 1.05 1.38 1.63 0.74 Manufacturing 28.14 -1.23 28.39 1.83 Construction 3.06 -6.46 2.94 -1.30 Utilities 0.78 8.28 1.91 1.15 Transport 5.33 1.67 10.90 3.68 Trade 8.36 -2.79 16.48 3.04 Community Services 0.94 3.53 1.90 3.10 Financial Services 6.34 3.8 15.54 2.98 Government 26.13 -4.57 13.09 2.32 Other 1.49 -0.03 2.00 2.54 Total/Average 100.00 100.00 Source: Urban-Econ 2001 Of specific concern in the above is that the three sectors contributing the majority of the GGP, i.e. agriculture, manufacturing and government services, have all experienced a negative growth rate over this period. This is compared to the positive growth rates experienced in these sectors in the Province, i.e. it is an area specific trend and not a general trend. General issues which would have impacted on growth rates are the phasing out of subsidies relating to industries located in Isithebe and the subsequent closure or relocation of industries, the generally negative conditions in the agricultural and specifically the sugar industries, and changes in the government sector since 1994. 2.3 EMPLOYMENT AND JOB CREATION The establishment of the Job Creation Model by the Ilembe District Municipality is a fair indication of the importance which job creation and unemployment receives in the municipality. Considering Table 2.2 below it is evident why such a focus is placed on this aspect. For the District as a whole the unemployment rate is close to 40%, with unemployment in Maphumulo and Ndwedwe being estimated at 68% and 56% respectively. Only in KwaDukuza the unemployment is found to be slightly lower than the national unemployment rate. PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 6 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO DIAGRAM 2.2: UNEMPLOYMENT IN THE ILEMBE DISTRICT MUNICIPALITY TOTAL WORKFORCE: 149 527 DC AS A WHOLE 39% 61% MAPHUMULO 68% 32% NDWEDWE 56% 44% KWADUKUZA 20% 80% MANDENI 0% 33% 67% 20% 40% 60% 80% 100% PERCENTAGE Unemployed Employed Lack of employment in the district and concentration of opportunity in the coastal corridor, and Durban Metro area demands that these opportunities be exploited to their maximum. Agriculture is the primary activity of the rural areas, and comprises predominantly subsistence practices. The need is to establish more commercial agricultural pursuits in the rural areas. Whilst employment in the district is concentrated in the commercial farming area and the coastal corridor, there are insufficient levels of employment in those areas to satisfy even the needs of the communities in those generic zones. The coastal corridor represents one of the district’s greatest assets and it is essential that the opportunities encapsulated in this corridor are maximised in all respects, including tourism, agriculture and the spatial development initiatives identified in provincial planning strategies. These areas of economic potential, inclusive of the Durban Metro area, represent the district’s crutches which must be leaned on to the full until restructuring provides greater economic sustainability in the rural areas. 3. 3.1 CURRENT ECONOMIC DEVELOPMENT INITIATIVES INTRODUCTION The Ilembe District and specific areas within the District has been the focus of a range of economic, local economic and job creation studies over the past few years. Considerable resources have been devoted to specifically two of these studies, viz. the Ilembe District Council Job Creation Model (2001); and the North Coast Economic Cluster (2001). PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 7 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO Other studies specifically focussing on economic development include: Mandeni - A Local Economic Strategy for Sustainable Development in the TLC Area (undated); Development of a Local Tourism Strategy and Business Plan – Mandeni Region (2000); Mandeni Local Economic Development Initiative – Business Plan (1999); Economic Opportunity Scan in the KwaDukuza/Stanger Municipal area (undated); A Strategic Tourism Planning Framework for the Dolphin Coast (1999); and Dolphin Coast Economic Development and Marketing (1999). The Job Creation Model and the North Coast Cluster, both completed in 2001, is viewed as the most comprehensive of these studies. This section therefore reflects the key findings from these studies. 3.2 3.2.1 ILEMBE DISTRICT COUNCIL JOB CREATION STUDY Aim of the Study The purpose of this project was “to develop a practical model designed for significantly increasing the number of sustainable jobs and reducing poverty within the newly demarcated Ilembe Region. Furthermore to extend participation in the local economy to previously disadvantaged individuals and communities and effectively position the region within the macro economy of the Province and the Country so as to maximise all possible competitive advantages”. To achieve this the job creation model set out to: identify, develop and implement strategies and catalytic projects best suited to the districts unique attributes; details a range of quantified options which can be packaged for intervention by either the public or private sector; identify and bring all relevant stakeholders into the process with their concerns and needs clearly understood; recognise the importance of participation to make the model work. Market Niche and Competitive Strategy 3.2.2 The study determined that the best possible approach for success is a “niche strategy which differentiated the Ilembe region from its competitors, based on it’s own unique strengths”. The approach is based on the principle that once an area has identified its niche it is able to package its value added products. These products then makes local investment more attractive, marketing more focussed and competition less price sensitive. The Deloitte & Touche (2001) study identified the following competitive advantages of the region: International and local recognition and interest in King Shaka and Zulu culture and history. Strong cultural and historical links to India, the United Kingdom and Mauritius. Location between Africa’s two great ports and it’s excellent transport infrastructure. Potential to capitalise on targeted spill-over from the major initiatives planned for Durban. Quality of natural endowments, coastline, beaches and environmental control. Central location to the province’s other major assets, i.e. game reserves, St. Lucia World Heritage Site, Berg, Battle Fields and Durban. Unique quality of the agricultural attributes of soil types, climatic diversity and rainfall. Outputs and the Way Forward PAGE 8 3.2.3 PREPARED BY: IYER ROTHAUG COLLABORATIVE 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO The final output of the study was the economic sector reports and their recommendations. These reports present comprehensive recommendations for job creation within each economic sector. The sectors focussed on are: Agricultural sector; Commercial and Industrial sector; Tourism sector; and Enabling environment. For implementation of the model three stages are proposed, viz. Immediate actions which will include (a) establishing a Common Purpose Group providing strategic guidance and leadership, the (b) establishment of an Investment, Marketing, Promotion Initiative with authority and resources to develop a regional marketing plan and undertake associated actions, and (c) recognising the tourism potential of the area and planning activities related to this. Short to medium term catalytic projects relating to (a) tourism (including coastal resort(s) and a cultural/historical tourism meander, (b) agriculture (including various projects dependent on tenure security and the identification of markets), (c) commerce and industry (focussing on Isithebe as the industrial heart of the region and the development of Ndwedwe and Mapumulo as regional service centres). Medium to long term interventions which suggest that the model should form the basis of the long term Economic Development Business Plan for the Ilembe Region. THE NORTH COAST ECONOMIC DEVELOPMENT CLUSTER Purpose of the Project 3.3 3.3.1 The purpose of this project was to undertake an economic development cluster study for the North Coast area, the focus being on the KwaDukuza and Mandeni Municipalities. On the basis of this study a business plan(s) for the motivation of funds for the implementation of economic development projects was to be prepared. The study entailed the following steps, viz. orientation and status quo analysis, identification and prioritisation of projects, the formulation of detailed business plans, a financial and institutional analysis, an analysis of the economic profile, a potential analysis and the formulation of implementation guidelines. 3.3.2 Key Economic Development Projects Identified Key projects identified for which business plans has been developed are: The North Coast Tourism Cluster Agriculture Composite Project – Urban Farming / Mvoti Toll Market Cooperation Initiative Manufacturing Advice Centre and Outsourcing Initiative Upgrading of Commercial Activities in Mandeni SMME Cluster, Development, Support and Service Centre Dedicated North Coast Transport Network The Way Forward SECTORAL ANALYSIS OF ECONOMY INTRODUCTION PAGE 9 3.3.3 4. 4.1 PREPARED BY: IYER ROTHAUG COLLABORATIVE 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO From the above analysis of the GGP it is evident that a number of sectors make substantial contributions to the economy of the Ilembe District. This section provides a general overview of activities in each of the key economic sectors. More detailed discussions of each of the sectors on an area specific basis are provided in the various reports of the King Shaka Job Creation Model. 4.2 4.2.1 AGRICULTURE The Current Situation Two distinct types of agricultural development is located in the Ilembe District, viz. formal commercial agriculture and subsistence agriculture. In terms of the spatial distribution the KwaDukuza Municipality is the core of the commercial farming sector, with further substantial portions of this land use located in the Mandeni municipality and in the north eastern portions of the Ndwedwe Municipality. The majority of Ndwedwe and Mandeni, and the total land area of Mapumulo, are however focussed on subsistence agriculture. The commercial farming sectors of the district is viewed as some of the most highly productive agricultural areas in the province and is devoted almost entirely to sugar cane (Van Coller 1998). Large corporate firms, farming companies and individual farmers, own most of the agricultural land. Well-known companies in the commercial farming sector include Tongaat-Hulett, Illovo Sugar, Crookes Brothers, Glendale Sugar and New Guelderland Sugar Estates. In the forestry sector Mondi Paper is a key landowner. Five sugar mills historically served the sugar producers in the area, viz. the mills at Darnall, Gledhow, Glendale, Maidstone and Noodsberg. The Glendale Mill was, however, closed down in the late 1990s. The sugar mills is viewed as a major employment generators in the area and is expected to contribute substantially to the manufacturing GGP of the Ilembe District. Two paper mills, located in Stanger and Mandeni respectively, also ensures a strong presence of the forestry sector in the area. Other agricultural activities which appears to be growing in the area are small intensive farming practices focussed on producing for the Durban and export markets. The small intensive farming includes plant nurseries, vegetable farming, tunnel farming (primarily vegetables) and cut-flower production. This sector presents substantial opportunities to be further developed. PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 10 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO In the so-called subsistence farming areas of the Ilembe District located in Ndwedwe, Mapumulo and Mandeni the focus is on production for household use. Although limited income is generated from these activities the production of fruit and vegetables does contribute to higher levels of disposable income available for other household necessities. In the subsistence farming areas a large number of small sugar cane growers has over the past decades been established by the sugar cane industry. These producers have small plots and deliver sugar cane to the mills in the area. 4.2.2 Potential Opportunities The Ilembe District is presented with numerous opportunities to further develop its agricultural production and related to this to promote extensive agri-processing opportunities. The agricultural land potential is the key competitive advantage of the area. The key opportunities are: Diversifying the Agricultural Sector: At present agricultural production in the area is focussed on sugar cane and timber, both which are forms of mono-culture which, even if appropriately managed, have significant impacts on the environment and are not viewed as labour intensive industries. Due to the agricultural potential of the area it is possible to produce a wide range of produce in the area, which could potentially contribute to higher employment and earnings. La Mercy airport: The establishment of the La Mercy Airport to the north of Durban, which is viewed primarily as a transport hub, will increase the potential of intensive farming aimed at the export markets. Specifically highly perishable items such as sub-tropical fruits, certain vegetables, cut-flowers and others will benefit from this development. The Durban and Richards Bay Ports: The location of Ilembe in relation to these two major international ports places it ideally to benefit specifically from trade in agricultural products with the established and emerging Asian markets, China being viewed in the latter category. In this regard it is interesting to note that the Job Creation Model refers only to the potential growing market for South African produce in Europe. Land Redistribution for Agricultural Development (LRAD) Programme: The LRAD programme of the Department of Land Affairs and the Department of Agricultural make subsidies available for a range of agricultural activities ranging from the establishment of small farmers to the establishment of share equity schemes and communal farming practices. This potentially provides the basis for the growth of the agricultural sector. Economic Development Studies: The economic development studies undertaken for the region to date identified various alternative agricultural opportunities to be pursued. These opportunities need to be consolidated in a comprehensive database and appropriate mechanism need to be established to ensure that it is further pursued. The Agricultural Sector Report of the Job Creation Model propose the following “feasible agricultural projects”: PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 11 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO Fibre crops Cut flowers Oilseeds Coffee Cassava Small sugar cane production Mushrooms Key Issues Impacting on the Sector Traditional medicines Indian vegetable production Dahl production Lemon grass Organic vegetable growing and packing project Aquaculture initiative Fresh produce market 4.2.3 Further development of the agricultural sector in the Ilembe District, specifically in Mapumulo and Ndwedwe, is faced by various constraints. The key constraints to be addressed in terms of the integrated development planning process are: Lack of access: Specifically road access to agricultural production areas in Ndwedwe and Mapumulo is poor. This impacts on access of small farmers located in these areas to various support services as well as the ability of these farmers to deliver produce cost effectively to the markets. Lack of access to water: Although the District has a relatively high rainfall and major rivers traversing the area irrigation schemes are expensive to develop. Developing infrastructure to make irrigation water available to small farmer may be expensive. Land tenure: Major areas of potential agricultural land in Maphumulo, Ndwedwe and Mandeni is under the ownership of the Ingonyama Trust. A permission to occupy currently provides residents with security of tenure. PTOs are generally not accepted by financial institutions as security when finance is applied for and therefore impacts on the potential to establish commercial farmers on this land. Recent developments provides that long term leases can be applied for on Ingonyama land, however, this still requires permission from the tribal authority. Investors will not invest capital if appropriate levels of tenure security cannot be obtained. Agricultural finance, training, education and information: In order to establish a vibrant diversified agricultural sector in the District an environment conducive to agricultural development will need to be established. Such an environment will provide existing and potential farmers with access to adequate finance, appropriate training, education and extension services, and information specifically relating to potential markets for produce. At present the support services available are limited. Uncertainties relating to the LRAD programme: Although the LRAD programme presents a major opportunity for agricultural development it must also be acknowledged that it is a new programme and that there still exists a number of uncertainties relating to how it will be implemented. In the short term this may hamper the implementation of the programme in the District. MANUFACTURING The Current Situation 4.3 4.3.1 The Job Creation Model recognises that the industrial heart of the District is the Isithebe Industrial Estate near Mandini. The Isithebe Estate, together with the sugar and paper mills located in the District, is responsible for the majority of the industrial production. Isithebe, an estate created in terms of the Regional Development Programme of the apartheid government, is however also facing some degree of the PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 12 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO uncertainty due to the phasing out of incentive schemes and subsidies for industrial development in the early 1990s. Despite this there are a number of well-established industries, specifically in the clothing and textile industry, operating from this area. The other area with industries of note is the town of Stanger, where the Gledhow Sugar Mill and the Sappi Paper Mill is viewed as the economic drivers. A wide range of light industry has also developed in this centre. Other than the sugar mills little industry of note is located outside of these two centres. In the Ndwedwe and Mapumulo Municipal areas industrial development, other than small arts and craft producers is non-existent. 4.3.2 Potential Opportunities The industrial sector, if it is positioned right, will benefit from similar opportunities as that relating to the agricultural sector, this includes access to the export opportunities presented by the existing ports and the to be established La Mercy Airport. The economic studies undertaken over recent years also identify a range of new opportunities to be considered for this area (for the full range of opportunities these studies, specifically the job creation model should be consulted). The Job Creation Model concludes that “industry (as opposed to tourism and agriculture) plays a smaller role and should be regarded as a somewhat vulnerable sector, given that the District is unlikely to be able to compete effectively with Durban and Richards Bay”. In line with the above statement the Job Creation Model propose the following “realistic strategies” for the District, viz. business retention: strategies to avoid the exodus of businesses and industry from the area and specifically Isithebe; provision of urban infrastructure/urban efficiency: developing an adequate infrastructural base in support of economic activities; plugging the leaks: ensuring that money invested in the area circulates within it; human resource development: coordination of training on a district level; attracting investment and marketing. The list of projects relating to the industrial and commercial sectors identified through the Job Creation Model includes: Clarification of roles and functions of key places Negotiations on water tariffs, service charges, rail subsidies etc. Coordination of economic development initiatives Rural service centres at Ndwedwe and Maphumulo Business support centres Correction of rates and service cost disparities Textiles and apparel cluster initiative Business retention project Economic linkages project Construction multiplier project Commercial development in support tourism of Related to the future diversification of the agricultural sector it is further proposed that those opportunities that can be linked to the establishment of agri-industries should be given priority (see list of alternative agricultural products identified in Section 4.2.2 above). Limited attention is given to such opportunities in terms of the Job Creation Model. PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 13 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO 4.3.3 Key Issues Impacting on the Sector Economic studies undertaking for the District does not view industrial development as a key growth sector for region. A number of reasons for this are provided, mainly relating to the lack of comparative advantages of the District compared to areas such as Durban and Richards Bay. It is, however, suggested that if the District positions itself correctly and create specific advantages this sector can, together with tourism and agriculture, fulfil an important role in future economic development and job creation. In order to achieve this the following key issues impacting on the sector will need to be addressed, viz. the lack of adequate bulk infrastructure for industry outside of the Isithebe estate; the establishment of a stronger entrepreneurial spirit among the population of the District; the lack of incentives for the establishment of industries in the area (this does not only relate to financial incentives, but also incentives such as appropriate housing for employees, high level training facilities, technically trained staff etc.); and the lack of knowledge regarding the advantages which the area offers or can potentially offer industry, e.g. cheaper land, lower wages, cheaper water etc. TOURISM The Current Situation 4.4 4.4.1 Recent economic development studies view tourism, together with agriculture, as the key economic drivers for the drivers. However, this future potential of tourism is suggested within a current situation where tourism development is concentrated and well-developed only along some parts of the coastal strip of the District (primarily the Dolphin Coast area). The Job Creation Model provides the following statistics for the tourism sector in the Dolphin Coast: 140 000 tourists visit the area per annum; 30% of the tourists are international and 70% are domestic; average length of stay in the area is 3 days for international tourists and 4 days for locals; between 6 000 and 3 000 beds are available for this purpose with only a small percentage of these in hotels. Although it is suggested that the current market is minute in the KwaZulu-Natal context the tourism team for the Job Creation Model suggests that the area should not be viewed in isolation of its context and that it should be recognised that: the Ilembe Region is adjacent to Durban with 8 million visitors a year; and the N2 which bisects Ilembe carries some 1.2 million visitors per year. Other than the potential tourism opportunity offered by coastal resorts the Urban-Econ business plan prepared for the North Coast Economic Cluster identified a number of existing and potential tourism attractions primarily located in the Mandeni and KwaDukuza local municipalities: Shaka’s Rock Tinley Manor Beach Blythedale Beach Zinkwazi Beach Lower reaches of the Tugela Mouth and coastline Harold Johnson Nature Reserve Chief Albert Luthuli Grave and Residence Mvoti Toll Market Place (to be developed) Chief Albert Luthuli Grave and Residence Mvoti Toll Market Place (to be developed) Fort Pearson and War Graves Ultimatum Tree PAGE 14 PREPARED BY: IYER ROTHAUG COLLABORATIVE 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO Amatikulu Nature Reserve Ingwenya Reserve King Shaka Memorial Complex King Shaka Day Celebrations Indaba Tree Mavivane Execution Cliff Shaka’s Spring Shaka’s Pool and Cave High Rock located at Shaka’s Rock Area Observation Rock in the Groutville Area Fort Tenedos Battle of Tugela Ndondakusuka (hill and military kraal) Dunn family legacy (Mangete) KwaDukuza Museum Illovu Sugar Mill (and others) Sappi Paper Mill Tambuti Furniture Manufacturer Kearsney House and Chapel Morewood Memorial Gardens As indicated that above attractions are primarily located in KwaDukuza and Mandeni. No detailed assessments of tourism potential has as yet been undertaken in the Ndwedwe and Maphumulo areas, but it is known that a range of cultural, historical and nature related attractions do exist in these areas. 4.4.2 Potential Opportunities The key tourism opportunity in the area relates to the establishment of a tourism meander which allows for the establishment of specific tourism routes. Such routes will vary depending on the interest of the tourist. The Urban-Econ study and business plan goes some way towards the establishment of such a meander. The potential attractions located in Ndwedwe and Maphumulo should, however, be identified and evaluated for inclusion in such a meander. The Job Creation Study identifies a list of “realistic new tourism products” categorised in terms of large scale and medium scale interventions. The large scale interventions include: a coastal resort or resorts offering protected self-contained entertainment, food, accommodation, relaxation and associated day trip opportunities; a marina/waterfront development or developments accommodating small craft, restaurants, retail and accommodation; and a theme park probably related to the main agricultural activity and potential in the area. PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 15 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO The medium scale interventions include: enhanced popular tourism facilities inter alia at Tugela Mouth; historical site enhancement and marketing; tourism trails in the interior; additional golf course or courses; and a Zulu heritage interpretative centre. Key Issues Impacting on the Sector 4.4.3 It is generally accepted that tourism has the potential to be one of the economic drivers within the District. This will, however, not be achieved on the basis of the natural endowments of the area alone and will require a substantial number of other key issues to be adequately addressed. Lack of coordination with regard to tourism development: At present no coordinating forum for tourism within the district exists. Coordination is important for a number of reasons, but most importantly is that a range of similar or diverse opportunities can be grouped together to ensure that the “critical mass” required to attract tourists to the area is achieved. Coordination is also specifically required in order to provide the tourist to the area with an overview of what is available in the district and not only in local municipality. From previous analyses undertaken it is evident that opportunities in the various areas can support each other, but will with difficulty attract tourists as a stand-alone businesses. . Unknown extent and potential of tourism in Ndwedwe and Maphumulo: Various studies identifying tourism opportunities in KwaDukuza and Mandeni has been undertaken, i.e. a comprehensive base of tourism information exists in these areas. In the case of Ndwedwe and Maphumulo no detailed tourism investigations have been conducted to date the consequence being that the full extent of the tourism potential in these areas are not known. Availability of relevant tourism education and training: No specialist education or training relating to tourism is available in the District. A future strategic focus on tourism as an economic growth sector would necessitate access to training and education in this field in order to ensure the full participation of local communities. Lack of appropriate support financial and technical support: The same principle as discussed in relation to education and training also applies to financial and technical support. Crime: In most areas of South Africa crime and the perceptions of crime is a deterrent for tourists. An effective programme to manage the crime situation in Ilembe, with a specific focus on ensuring the safety and security of tourists, needs to be developed. Status of tourism attractions: A common observation of various tourism related investigations is that although worthwhile tourism attractions do exist in the area they are not maintained and therefore not attractive to the tourism public. An approach to preserving these attractions will have to be developed as a matter of urgency. Signage and information: Signage and information related to existing tourism attraction in the inland areas of the District specifically is limited. PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 16 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO 4.5 4.5.1 COMMERCE The Current Situation The Ilembe District includes vast commercial farming and traditional settlement areas. Within these areas commercial/service centres of various size are located. In relation to the commercial sector it can be said that a well-developed coastal strip with an underdeveloped rural hinterland to the west of this exist. In the coastal strip, and therefore in the District as a whole, KwaDukuza is the dominant commercial/service centre. Other major commercial centres in the coastal strip is Dolphin Coast / Ballito and Mandeni. KwaDukuza and Mandeni have both historically developed as service centres for the agricultural sector, however, this function has now extended substantially to service the vast rural settlement areas and other industries located in the area. The commercial sector in Ballito is more focussed on servicing the local population and the tourism industry of the area. Smaller concentrations of commercial activity are located in settlements such as Shakaskraal and Darnall. A number of smaller settlement areas with limited to no commercial activity, such as Salt Rock, Sheffield Beach, Zinkwazi and Tinley Manor. In the inland areas of the District, including the Ndwedwe and Maphumulo Municipalities, the concentration of commercial activity is limited primarily to the small centres of Maphumulo and Ndwedwe. Both of these centres are Municipal Service Centres and this might, if appropriately managed, impact on the level of commercial facilities that would be provided in future. In general, however, residents of the two areas are dependent on the commercial facilities available in the larger centres in the coastal strip and in the Durban and Richards Bay complexes. Income leakages from these areas are therefore extremely high. It is important to note with regard to the commercial sector that the Ilembe District is located between the major provincial centres of Durban and Richards Bay / Empangeni. Both these areas offer a full range of commercial facilities with easy access along the N2 corridor. It is therefore to be expected that substantial leakage of income from the District to both these areas occur. Recent developments to the north of Durban is likely to have an even greater negative impact on the commercial sector in the District. 4.5.2 Potential Opportunities Specific opportunities presented in the commercial sector would include: Tourism Orientated Commercial Development: The development of commercial enterprises related to the tourism sector, should this sector be viewed as a growth sector, presents a key opportunity. This could potentially be facilities such as travel agencies, tour operators, arts and crafts outlets (curio shops) etc. Commercial Development in Rural Centres: Future commercial development in Ndwedwe and Maphumulo should be encouraged. This is important for two basic reasons, viz. making a full range of services accessible to the population of the area which will have a direct impact on quality of life and preventing the leakage of income from the area. Extending Existing Opportunities: An aim of future commercial development should be to prevent the leakage of income from the area. Therefore, gaps within the commercial sector of the area needs to be identified and strategies aimed at attracting these activities needs to be developed. Key Issues Impacting on the Sector 4.5.3 Key issues currently impacting on the commercial sector includes that: PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 17 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO 4.6 the sector in the District needs to compete with the commercial sector in two major urban agglomerations of KwaZulu-Natal; commercial facilities and infrastructure is nearly non-existent in two municipalities, viz. Ndwedwe and Maphumulo; and the area does not offer residents a full range of commercial facilities and services. OTHER ECONOMIC SECTORS The Government Services Sector 4.6.1 This sector has traditionally been a major contributor to GGP in the District Area. In the short term the presence of this sector will be strengthened through the location of the offices of the District Municipality in KwaDukuza. The establishment of larger services centres, including municipal and other government services, in Ndwedwe and Maphumulo will contribute to the further strengthening of the contribution of this sector. 4.6.2 The Transport Sector It has been noted in previous studies that the transport sector is underdeveloped in the District. This leads to local industries and business making use of transport companies based in Durban and Richards Bay / Empangeni for transport services. The location of the District between these centres presents an unique opportunity for the development of this sector in the area which require further investigation. 4.6.3 The Construction Sector Due to the low levels of income in the District the majority of households qualify for government housing and infrastructure related subsidies. The identification of projects to benefit from these subsidies, specifically in light of the greater rural focus of the Housing Department, presents substantial opportunities for the development of this sector making use of the substantial potential capital injections into the area. This also presents major opportunities for the establishment of small emerging contractors in the fields of material supply and contracting. 5. 5.1 KEY ISSUES RELATING TO ECONOMIC DEVELOPMENT SUMMARY OF KEY FEATURES OF THE ECONOMY The features of the economy of the District can be summarised as follows, viz. disparity in levels of development specifically between the coastal strip and the rural hinterland; high levels of unemployment and low income levels in the rural and peri-urban areas; the major current contribution of the of agriculture and manufacturing to the economy; the underdeveloped tourism potential of the area; PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 18 1ST DRAFT: ECONOMIC DEVELOPMENT STATUS QUO well-developed economic infrastructure in the coastal strip; and the variety and (in some cases) the depth of economic investigations that have been undertaken in the area. KEY ISSUES 5.2 Within the context of the key issues highlighted above and with reference to the preceding discussions a number of issues to be addressed in planning for future economic development can be identified. Specific sector related issues follow the general discussion of the status and opportunities in each of the sectors. With this in mind the key issues relating to economic development to be addressed in planning for the District include: Integration of the findings of economic development studies: As indicated, a range of area specific and general economic development studies have been undertaken in the District Municipality area. It is necessary that the findings of these studies be consolidated in a comprehensive economic development planning guide for the area. Although the King Shaka Job Creation Model has gone some way in achieving this a key requirement will be the preparation of a comprehensive database of economic development and investment opportunities within the District. Such a database should be linked to spatial development strategy to be adopted by the Municipality and the implementation of such projects should be used as a mechanism to strengthen the spatial framework. Establishment of an institution driving economic development: Both the major economic studies finalised in 2001 express the need for the establishment of an institution responsible for driving economic development in the District. It is essential that the two proposals be reconsidered and be integrated. The establishment of such an institution should then be prioritised. Creating and environment conducive to economic development: Establishing an environment conducive to economic development is an essential medium term objective. An institution driving economic development is seen as a first step in such a process. Further components of establishing an environment conducive to economic development will include: o o o o o clarity on the economic development opportunities available in the area; developing a full range of business training opportunities; providing marketing and market information; providing access to a range of finance options for economic development; ensuring that the necessary physical infrastructure is available in appropriate locations. Initiating key economic development projects: A number of major economic development opportunities have been identified for the area, most notably the tourism meander. To illustrate the commitment of the council to economic development these key economic development projects must be initiated as a matter of priority. PREPARED BY: IYER ROTHAUG COLLABORATIVE PAGE 19
"Report 3 - KZN Development Planning"