Premier's Thabang
Makwetla remarks to the launch of the Mpumalanga Growth Fund, Emnotwenin Arena,
Nelspruit
13 February 2009
Members of the Executive Council
Honourable Members of the
Mpumalanga Provincial Legislature
The Acting Director-General
Board Members and Executive Heads of our parastatals
Our Honourable Mayors and councillors
Trustees of the
Mpumalanga Growth Fund and the Fund Executive
Manager
Our traditional leadership, Amakhosi/Magoshi
Business leaders, distinguished guests
Colleagues
Ladies and gentlemen
I wish to thank the honourable MEC for Economic Development and Planning
Craig Padayachee and the Board of the Mpumalanga Economic Growth Agency,
including officials from Mpumalanga Economic Growth Agency (MEGA), for their
efforts in ensuring that our province achieves this important milestone, the
establishment and launch of the Mpumalanga Growth Fund.
The launch of this Growth Fund is one of several initiatives that we have
embarked upon in an endeavour to give impetus to the growth of our regional
economy in an inclusive and equitable way.
Our Provincial Growth and Development Strategy sets out a number of ‘tools’ and
‘initiatives’ that we have advanced in this regard, which include;
- Encouraging investment into our economy, particularly Foreign Direct
Investment (FDI)
- Broad-based Black Economic Empowerment
- Business incubators
- Beneficiation
- Export promotion
- SMME development
- Spatial Development Initiatives, such as the
Maputo and Moloto Development Corridors.
These are initiatives we are convinced will place our province in a better
position to generate much needed jobs and opportunities for sustainable
livelihoods. It is always tempting not to disclose things you know,
people don’t know particularly when the disclosure can result in people judging
you negatively.
However, we have been an administration that thrives on transparency.
Our performance in some of these areas needs to be given time to peak.
Much of this work was initiated with weak institutional capacity, and a low
economic skills-base in the province and leadership challenges.
I have at times been concerned that in the areas of investment promotion,
broad-based BEE, and sectoral beneficiation initiatives we made fairly limited
progress. However, I know that the future of our province is bright, as
long as we can steadily continue to consolidate the capacity of our reorganised
economic institutions versus, the department and our parastatals, MEGA,
Mpumalanga Tourism and Park Agency ( MTPA ) and Mpumalanga Agricultural
Development Corporation ( MADC ).
The Launch of the Growth Fund today is timely for a number of reasons.
Firstly, the uneasy and uncertain global environment so eloquently described by
Minister Manuel in his 2009 Budget speech as the storm that has broken and ‘..
is more severe than anyone has anticipated’, seems to call for creative
responses to heightened risk aversion by investors which if otherwise neglected
would worsen the negative impact of the global economic downturn.
Secondly, the Growth Fund compliments the thrust of our PGDS, and responds to
our identified areas of weakness such as infrastructure, broad-based black
economic empowerment and sectoral interventions that have a potential to
generate beneficial economy-wide impacts.
Thirdly, the state of the
Mpumalanga economy is a sound one.
Economic growth in
Mpumalanga has been broadly in line with the
rest of the country, averaging a 2.5% growth rate between 1996 and 2001, and
more recently moving upwards to 4.7% between 2005 and 2007.
Fourthly, we are blessed with a well-diversified Provincial economy both in
terms of sectors and expansion potential. Recently we have seen large
investments in the province directed towards the mining, manufacturing and
services sectors.
Intentions of the Fund
Mpumalanga has never been better-placed to
exploit its natural endowments to develop its competitive advantage.
However, we have recognised that this will require firstly, decisive unblocking
of the infrastructural deficits which currently hobble growth, and secondly,
smart, focused state intervention so as to change how the Province is perceived
and turn it into an attractive investment destination.
Large Projects to Unlock Growth
Mpumalanga possesses a handful of large
investment projects which, if identified and properly structured, will change
the provincial growth trajectory.
These projects often challenge conventional wisdom and carry considerable risks.
However, this is not a reason to avoid them, rather it is a signal to improve
risk mitigation and project finance structuring.
Over and above their economic impact, breakthrough projects also play an
important symbolic role. They encourage local entrepreneurs and external
investors to re-think their assumptions about the provincial economy and its
investment climate. This re-rating usually stimulates further investment
projects. Flagship projects also stimulate new industries with many direct
and indirect benefits, for example, SMME breeding grounds around large projects.
The Provincial Government of Mpumalanga through its parastatal, the MEGA, has
established the Mpumalanga Growth Fund (MGF) as a provincial government
initiative aimed at facilitating private sector involvement in addressing
infrastructure backlogs in the
Province of
Mpumalanga.
The Mpumalanga Growth Fund (MGF) has been designed to enable economically viable
projects with long payback or high perceived risks, to access commercial
finance.
Even those who often look down on government involvement in the economy
acknowledge that there are times when governments can play an important role in
co-ordinating large complimentary investment decisions.
The beauty of the MGF is that it will lift the old, ‘government vs. bank
debate’, from finger-pointing to a positive conversation about risk/reward and
development. When government leads from the front and puts its money where
its mouth is, the chances of positive partnerships are dramatically enhanced.
Over time this should produce not just successful projects, but also, more
importantly, closer alignment between financial institutions and government
officials, better understanding of each other‘s constraints and knowledge of the
joint efforts required to generate sustainable growth.
MGF should fill the finance gap between profitable, quick payback private sector
projects and long-term social investment projects e.g. water supply, schools and
clinics.
By providing appropriate project appraisal and funding for large break-through
projects above R20 million the MGF will assist in re-shaping the provincial
economy and lift its growth path onto a new trajectory.
As its own contribution the Provincial Government of Mpumalanga has seeded the
first R200 million in the Fund and discussions with private sector investors and
development finance institutions are in progress to bring the total value of the
MGF to R 1,2 billion.
We are hopeful that the tremendous potential that has been identified in our
provincial economy, including our position as a gateway to neighbouring
Mozambique and
Swaziland, will serve to
attract more investors to come on board as we take the economy to a higher
level.
The MGF will be managed by Imvuno Fund Managers who comprises a consortium, made
up of Vunani Capital and Vutsela Investments.
We look forward to a close partnership with Imvuno as we will work together to
ensure that the MGF delivers concretely on projects, empowerment, and employment
opportunities created. The provincial administration’s monitoring role will be
an important one to guarantee that this private and public partnership delivers
on its mandate.
With these few words we thank all stakeholders that have been involved in the
processes that have led to this important occasion.
I wish you all the success as you further grow and transform the economic
landscape of our province.
I thank you.
Issued by Office of the Premier
