PREMIER'S KEYNOTE ADDRESS
“CORRIDOR INVESTMENT OPPORTUNITIES IN MPUMALANGA”
Walkersons Country Hotel, Dullsroom,Mpumalanga Tuesdal, 10 August 1999.
This morning I am going to shock you to the core. I am going to present you with a perspective on Mpumalanga Province which may seem implausible. Indeed, my views might appear contrast so sharply with conventional thought amongst the chattering classes that you question my sources. Please do – because if you make this effort you will see that what I am saying is no more or less than the truth. What I am going to present to you today is the remarkable success story – Mpumalanga – South Africa's fastest growing and most dynamic Province.
I will touch on the following issues:
- Economic development trends in Mpumalanga;
- The Maputo Development Corridor; and, finally
- Zoom in on the Corridor anchor projects which we are presenting today
Economic Development Trends
The economy of Mpumalanga is small but inspirational.
Whilst the Province only accounts for about eight percent of South Africa's economy – it is well diversified and strong. Mpumalanga has powerful energy, manufacturing and mining sectors, which collectively account for about two-thirds of the economy. At just under one-tenth of the economy, agriculture is much more significant in Mpumalanga than for South Africa as a whole. The service sector accounts for the bulk of the rest of the economy.
As a whole, the Industrial Development Corporation project that Mpumalanga Province will grow at about 3.4% between 1998 to 2001. This is very significantly faster than any other province in South Africa – and much faster than the projected national growth rate of just 2.3%. A sectoral breakdown shouts out the opportunities in the Province even louder than the single average figure. The IDC project, over the same period, phenomenal annual growth of over 6% for tourism, over 5% for manufacturing and over 4% for electricity and transport. With the economic cake growing this fast, it is not hard to see why everyone's slice is growing in Mpumalanga.
This dynamic growth performance is only partly explained by the favourable economic structure in the Province. In other words there is an “Mpumalanga effect” at work here which allows the Province to grow even faster than its benign economic structure would suggest.
In many ways Mpumalanga represents a glimpse of what the rest of South Africa could, or maybe even should, look like. We have fully exploited our strategic location between Gauteng, Mozambique and Swaziland. Rather than rest on our laurels, we have demonstrated our readiness to explore policy initiatives like the Maputo Development Corridor, Public Private Partnerships and regional economic integration to maximise the tangible benefits of this fortunate geographical location.
You will have noted that we do not only support partnerships between the public and private sectors in Mpumalanga when the going is smooth. When the chips are down we do not run away from our investors. We did not abandon Biwater when significant opposition to the flagship. Nelspruit water and sanitation concession materialised. Similarly, we will stand up and be counted with TRAC as toll plaza's are opened to public protest – as well as when construction contracts are awarded. Economic development is not always the idyllic scene presented in Masakhane advertisements. It is sometimes tough and ugly and heart breaking. In Mpumalanga, we understand the role of the public sector in public private partnerships and our record shows that we will share with investors the bad times as well as the good.
Maputo Development Corridor
The Maputo Development Corridor is the most advanced Spatial Development Initiative on the Continent of Africa. It links Gauteng, the economic powerhouse of Africa to Mozambique, with one of the fastest growing economies in the World. And a deep water port on the Indian Ocean.
The implications of the Corridor for Mpumalanga are profound. If we get this development initiative right, the Province will never be the same again. More than one billion Rand of primary Corridor infrastructure is being spent in the Province over the next couple of years, from the toll road to the border post and energy transmission. In addition, we have documented some ten billion Rands worth of secondary investment projects in the Corridor area in Mpumalanga, spread across all sectors from agriculture to tourism to mining and manufacturing.
We are determined to spread the benefits of the Corridor into our brothers and sisters in Swaziland and Mozambique. In fact, Maputo Province is currently attracting about twice as much investment as Mpumalanga Province. As South Africans, we must not be selfish with either investment projects. Our response to the investment triumphs experienced by our neighbours has been to develop a powerful regional programme with Swaziland and Mozambique to encourage cross-border projects and to start learning Portuguese. Poverty in our neighbouring states is not only environmentally unsustainable, it is socially and economically unsustainable for the broader region.
Our enthusiasm for the Maputo Corridor partly flows from our awareness that very large development projects are locating in Mozambique and will have a dramatic impact on the growth trajectory of that Country as well as benefiting us.
Corridor Anchor Projects
It would be simplistic to equate all Maputo Corridor investment projects with large industrial developments, like the Mozal aluminium smelter currently under construction near Maputo. Projects like these definitely have their place in a comprehensive development strategy. However, today we are focusing on the tourism and agriculture sectors.
Whilst these ten projects have a private sector investment requirement of only about R130 million in total – or an average of R13 million each – they have been designed to maximise their development impact. These anchor projects are simultaneously highly viable financially and yet inclusive of local community interests. They are partnerships between the public and private sectors which make sense and will make you money – as well as creating very significant job opportunities.
The projects which will be presented to you this morning are the output of a serious and thorough process, which has taken about two years to complete. Because of the complexities, we have packaged the projects to demonstrate the concept, their viability and their institutional and legal arrangements. This effort is intended to help you and to identify the principles which will guide the development. We are not in the business of dictating to you what these projects will look like, we have just worked on the parameters. Shortly after this event we will publicly advertise for Requests for Proposals from interested investors and will then enter a systematic and transparent bidding and evaluation process which will be open to all.
What you are getting today is a preview of the projects which will be brought before the market in the near future. As further projects come through the project identification and packaging process, further events such as this will take place in the future. What this means is that we are today less holding a one-off event, than initiating a relationship. Whether you are bowled over at the first project we present, or find that nothing quite fits in with your strategic goals, we are going to see a lot more of each other in the future.
I would like to thank the Mpumalanga Investment Initiative, the Maputo Corridor Company and the Department of Economic Affairs, Gaming and Tourism for organising this event. Most of all, however, I would like to thank you – the participants – for supporting us. Simply by coming here you have already demonstrated that you are serious investors. Rather than being dazzled by the headlines, you are more interested in the bottom line. May I wish you the best of luck.
I thank you.