In Conversation with Business and Government

Establishing and growing the Western Cape as a significant economic hub and key part of the SA economy, is something which requires collaboration amongst all role players. A clear, shared understanding of the main regional success drivers and economic constraints is needed. At our recent CEO breakfast, we were joined by Alan Winde, Minister of Community Safety, Beverley Schäfer, Minister of Economic Development and Tourism, as well as senior officials from each of these departments.

First, we heard from Minister Winde who opened the session emphasising the importance of ongoing conversations and collaboration between business and government. He went on to say that the most pressing conversations for the region are those relating to safety, public transport, job creation, as well as water and energy resilience.

With 1567 murders between November 2018 and March 2019, crime has an obvious impact on the economy and Minster Winde said that we need to collaborate and take a whole-of-society approach towards dealing with the problem. He said that while the issue of crime is a complex one, we have a major civil “values” crisis at hand, and everyone has a role to play with respect to the battle against crime.

Cape Town’s ailing public transport system is having a major impact on the economy as there is a significant loss of productivity with thousands of employees struggling to get to their places of work on a daily basis. Minister Winde said that in order to take the region to the next level, we need to get more commuters onto the public transport system. He said that on time, efficient and cost-effective public transport is the backbone of any growing economy and this will only be possible through private and public sector collaboration.

Moving to resilience, Minister Winde said that Cape Town is celebrated globally for the best behavioural change the world has ever seen as individual water usage was brought down to 50 litres per day during the height of the city’s drought. He reminded us that we still have a long way to go with respect to water resilience and urged corporate Cape Town to provide comment on the City’s draft Water Strategy, once again highlighting the importance of collaboration. We would strongly urge all Accelerate Cape Town members to review and comment on the strategy as it proposes tariff increases of up to 20%, which is well above an inflationary increase and could prove problematic in a business environment characterised by sub-1% growth.

Minister Winde said that energy infrastructure is a critical component that underpins economic activity and growth in South Africa. With aging infrastructure, South Africa is not producing the energy it should be and this is likely to get much worse as we start decommissioning the oldest stations. Speaking to IPPs, Minister Winde said that in this region alone, there are numerous IPPs of varying sizes that could play a critical role with respect to energy security. He said that municipalities are currently trying to simplify the process, and licensing requirements, to purchase up to 10 megawatts of privately generated electricity from small-scale IPPs. In closing, he said that we need to focus on becoming energy positive so that we can create a resilient economy going forward.

We then heard from Minister Schäfer who spoke about the Red Tape Reduction Unit. She said that this is a unit that takes up the fight on behalf of business, improving the environment in which companies operate by actively reducing onerous bureaucratic processes. The unit was established to help cut government red tape – which often leads to a loss of productivity and income. Since inception, the Red Tape Reduction Unit has achieved R1-billion in economic savings, and it will continue with this work through to 2020.

The biggest constraint to investment and growth in the Western Cape is a lack of demand. With respect to Manufacturing, Minister Schäfer said that we import too much and produce far too little locally. She went on to say that investing in an economy with energy shortages, such as South Africa, is far too risky and it is becoming increasingly difficult to convince businesses, both local and foreign, to commit to investment into the Western Cape. These investments are critical to improving productivity, growing GDP, and creating much-needed jobs.

Shifting the focus to youth unemployment, Minister Schäfer shared some alarming statistics with us. South Africa has a growing youth population, with approximately 70% of our population below the age of 35. Whilst this should be viewed as an opportunity for the country, with such a pronounced “youth dividend”, it easily has the potential to become a crisis unless we find a solution to youth unemployment. In Q4 of 2018, it was reported that 3.9 million youth in South Africa are unemployed – 382 000 of those youth live in the Western Cape. Only 14% of the Western Cape population has a degree or diploma – the new economy requires skills that are fit for purpose and Minister Schäfer said that the importance of skills development cannot be stressed enough.

In closing, Minister Schäfer urged corporate Cape Town to continue to partner with local government in an effort to build a stronger, more collaborative business/government relationship. The session ended with a lively Q&A discussion and we would once again like to thank Deloitte for their generous sponsorship of this event.

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