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
The Acting Director-General
Board Members and Executive Heads of our parastatals
Our Honourable Mayors and councillors
Trustees of the
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
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.
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
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
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
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
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
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: