OPENING REMARKS BY KWAZULU-NATAL PREMIER SIHLE ZIKALALA DURING THE AFRICAN SUB-SOVEREIGN GOVERNMENTS CONFERENCE, AT MOSES MABHIDA STADIUM, DURBAN ON 18 NOVEMBER 2021
Good Morning to you all.
It’s an honour to welcome you this morning at this crucial session of the Intra-African Trade Fair (IATF) 2021.
We applaud the secretariat of the IATF for ensuring that we dedicate time to promote an understanding of the power and roles of African sub-sovereigns in trade and investments.
This session was conceived to be a platform to facilitate business exchanges and the development of a Sovereign Network to promote trade and investments among African sub-sovereigns.
Professor Benedict Oramah and other representatives from Afreximbank will elaborate further on how, starting from today, we will take a step forward in concretising plans for the establishment of a pan-African Sub-Sovereign Network to facilitate trade within the broad objectives of the AfCTA.
Africa and indeed us here in the province of KwaZulu-Natal, we are honoured to have strong a relationship with Afreximbank. In this regard, allow me to congratulate our sister country, Nigeria, for signing on our shores a $1.4 billion facility with the Nigerian National Petroleum Corporation (NNPC) on Tuesday to finance the exploration of petroleum, which is one of the major deals signed at this trade fair.
Afreximbank continues to show leadership and funding the deals that seek to grow the slice of the African economy while building bridges among different African countries, states, provinces, and local municipalities.
Indeed, there are many lessons that other financing institutions can learn from Afreximbank on how they are able to deploy innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, thereby accelerating industrialization and intra-Africa trade.
There is a consensus in the world that Africa is the new growth frontier. The potential for growth is in municipal wards, local municipalities, district municipalities, provinces or states, and indeed at country level.
Our own country just emerged from local government elections. It is clear that 27 years after Nelson Mandela voted for the first time here in Durban in 1994, that South Africans, black and white, are demanding improved delivery of services and an improved quality of life. Each day, our citizens are demanding access to clean water, decent sanitation, and access to electricity. They want decent shelter and tarred roads.
While our country has done extremely well in delivering decent human settlements since 1994 and expanding water and electricity provision, the backlogs that we inherited from the past are beginning to make citizens, in particular the poor black majority in our rural areas and townships, to question the meaning of freedom and democracy.
In KwaZulu-Natal, the provincial government in 2019 identified the delivery of basic services, water in particular, to be a key priority of the 6th provincial administration. We have recently published the KwaZulu-Natal Water Master Plan to address the water backlog in the next ten to fifteen years at a cost of R150-billion. This plan presents investment opportunities for finance institutions as well as the private sector through PPPs.
South Africa is a water scarce country. It is said that water demand for our country will reach 17.7 billion cubic metres in 2030 while supply, on the other hand, will be around 15 billion cubic metres. The situation can even be worsened by climate change through draughts and aging infrastructure which results in significant amount of water being wasted.
As we gather today during Global Entrepreneurship Week 2021, we place our hopes to Africa’s innovators, entrepreneurs, and most importantly, the financial institutions to collaborate in providing sustainable solutions to Africa’s developmental challenges. It is indeed in the nature of entrepreneurs to see opportunities where others see problems.
Twenty-seven years since democracy, South Africa is still battling to overcome the legacy of segregated spatial planning. From national, to provincial, and to local government, we find ourselves having to make important choices based on budgetary constraints between rural development and urban development that corrects entrenched Apartheid-era spatial planning.
Apartheid geography continues to affect travel costs as well as job searches and effectively disadvantage many individuals from equal participation in the economy.
In our case, infrastructure delivery remains a critical enabler of export performance, especially for South Africa given the inland concentration of economic activity.
Given that spatial development is the responsibility of a number of government departments from the local, provincial, and national spheres, integrated planning and policy coherence can be challenging.
It is in this regard that our government has introduced the District Development Model (DDM) to end silo planning and silo mentality in government. The District Development Model was introduced to re-engineer the IGR Framework Model for greater specification and detail on how the three spheres of government will undertake joint planning and prudent fiscal investment.
The plan involves all spheres of government (national, provincial, and local) to attend to service delivery bottlenecks.
Last week, President Ramaphosa launched the Eastern Seaboard Development which involves not only all spheres of government, but also two provinces (KwaZulu-Natal and Eastern Cape) to build from scratch post-apartheid smart coastal cities. The new development will place an emphasis on green recovery through the exploitation of green technologies and renewable energy, digitalisation, entrepreneurship, as well as labour-intensive growth through agriculture and agro-processing.
Ladies and Gentlemen,
Our government has a view to turn local municipalities into economic growth areas that attract investments. We are working hard to improve skills, strengthen IGR, and to build a capable developmental local municipality that can tackle the root causes of underdevelopment, poverty, and inequality. There can be no doubt, therefore, that municipalities require investments to deliver services better and improve the lives of communities.
In South Africa, there are two main sources of regulation for municipal bonds. The Constitution as well as the Municipal Finance Management Act (MFMA) (No. 56 of 2003).
Section 230A of the Constitution provides that: “A Municipal Council may, in accordance with national legislation:
(a) raise loans for capital or current expenditure for the municipality, but loans for current expenditure may be raised only when necessary for bridging purposes during a fiscal year; and
(b) bind itself and a future Council in the exercise of its legislative and executive authority to secure loans or investments for the municipality.”
As SALGA argues in one of its reports, our Constitution opens a wide legal space for municipal bonds, especially for long-term bonds that are used to fund infrastructure investments.
Ladies and Gentlemen,
In the report titled: “Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa”, our National Treasury posit that:
· Regional growth opportunities should be harnessed to promote export growth.
· Improving intra-regional logistics requires joint action across a range of areas including border controls, standards, storage facilities, and increasing competition and investment in infrastructure.
· A need for deepening regional industrialization through construction.
· With potential sources of energy spread across the region, institutional models of power generation and distribution need a regional perspective.
· Construction services exports into the continent can be expanded by pursuing a common or harmonized procurement framework for SADC. Need to harmonize border processes and reduce congestion.
· There needs to be a comprehensive management strategy for investment in water resource development, bulk water supply, and wastewater management.
· Lower barriers to entry can be facilitated by reviewing existing regulation around licensing and municipal servitudes and rethinking the role of development finance.
· Access to finance is essential for the implementation and long-term sustainability of agrarian transformation.
· Implement innovative financing solutions required by farmers. Farmers typically require high levels of debt to offset uneven revenue streams which arise from the seasonal nature of the agriculture production cycle.
· Introduce affordable agriculture insurance to cover them during catastrophic events such as drought and hail etc.
· Access to export credit and credit insurance is critical to allow exporters to compete and participate in global value chains. This includes export credit and bridging finance (in local or foreign currency) to finance large projects at internationally competitive rates.
Ladies and Gentlemen, it is important that in our planning we recognise that our subnational economies and indeed our countries are interdependent. KwaZulu-Natal alone shares borders with eSwatini, Mozambique, and Lesotho. Our prosperity and misfortunes are intertwined with these countries and the rest of the continent.
As we navigate through the global pandemic of COVID-19, let us also recognise the real and urgent threat of global warming. As we know, the disastrous impacts of global warming which come in forms of floods, storms, earthquakes, draughts do not recognise any of our borders or nationalities.
While Africa contributes about 4% of the total greenhouse emissions, it is sadly the continent that feels much of the brunt of climate change caused by the industrialised nations of the world. We must insist on a just transition from fossil fuels to cleaner sources of energy which does not arrest Africa’s development or destroy jobs.
In KwaZulu-Natal, we will continue to support new developments that help us reduce the carbon footprint while simultaneously ensuring that our people are adequately skilled to be at the forefront of the new, green industries.
Together Growing KwaZulu-Natal and bridging the bridges to advance African integration.
I thank you.