Local Economic Development (LED)

There are many opportunities for entrepreneurs in the Amajuba Distric. This file contains information on some of these projects

Amajuba District Municipality, particularly Newcastle, has been traditionally strong industrially. However, due to changes in the macro-economic environment, there has been stagnation of growth and even decline in some sectors. There are problems such as lack of investment, high levels of unemployment, absence of integrated, focused and pro-active manufacturing strategy, which are all pointers of the fact that the district's comparative advantages with respect to manufacturing development are not optimally utilized, unlocked and capitalized on. The need has arisen to formulate a Manufacturing Strategy, which will serve as a guideline for manufacturing investment and development in Amajuba District Municipality.

CHAPTER 1: INTRODUCTION

1.1 Background

The Department of Economic Development and Tourism (DEDT) has commissioned SiVEST SA (Pty) Ltd to undertake a Local Economic Development Study for the Amajuba District Municipality (ADM) in KwaZulu-Natal.

In terms of the guidelines issued by the Department of Traditional and Local Government Affairs, an LED Plan is a sector plan to form part of the IDP process. From a strategic perspective, the LED Plan itself must provide a framework that is incorporated in to the IDP providing a strategic yet meaningful guideline to the ADM in terms of where it should focus its LED initiatives.

To this end, the LED plan must therefore manifest itself within the IDP, yet be independent as a plan that is purposeful and implementable.

The objective of the LED plan is to provide a framework, with the aim of integrating and co-ordinating activities and decisions made by development agencies within the district. Part of the problem relates to the lack of clarity in terms of roles, functions, and procedures to be followed by the various roleplayers in the filed of promoting economic development.

The LED Plan should also provide a matrix to assist with the prioritisation and selection of projects within the various sectors thereby enabling strategic and focussed decision making. In furtherance of this objective, a communication strategy is to be developed to further amplify co-ordinated decision making.

Industry

Amajuba is poised for accelerated economic development and offers inward investors a focused, structured and rewarding opportunity in South Africa.

The town of Newcastle serves as the regional centre for most of the economic development taking place within the district and hosts a variety of well developed economic sectors.

The town has become the national textile capital, with some 65% of all South Africa’s textile manufacturing headquartered in the surrounding industrial areas, including the country’s largest producer of school wear.

Although the Iscor steelworks and the 500 00 m2 Karbochem synthetic rubber plant dominate Newcastle’s industrial portfolio, a diversity of manufacturing and commercial undertakings share in the region’s success.

Its industrial future is indicated by the new chrome chemical plant. This R700 million joint venture project between Karbochem and the German manufacturing giant, Bayer, makes Newcastle the largest producer of chrome chemicals in Africa.

Other large operations include a diamond-cutting works, heavy engineering concerns, a granite tile factory, steel reinforcement, and a slagment cement factory.

Since January 1988, R439 million has been invested in medium- sized factories employing 9 000 workers. In 2002, Newcastle attracated six new manufacturers from the Far East with a total capital investment of R19 million, creating 523 new jobs.

Newcastle has a fully-serviced modern business industrial estate and sufficient land to accommodate any needs.

A significant factor in an investor’s industrial location assessment is the overall operating cost. In Newcastle all services are available at the most competitive, market-related prices.

Depending on needs, the council will enter into special agreements with industrialists for the bulk supply of services.

Research has shown that Newcastle has a competitive edge for the manufacture of:

aluminum-based products
high quality leather goods
textiles and textile products
clothing
automotive components
metal products and machinery

Local Economic Development (LED) and job creation has been identified as a priority in the Amajuba Integrated Development Plan (IDP).

The coordination of LED within the District is facilitiate by the Amajuba Forum for Local Economic Development (AFLED) which consists of all LED stakeholders involved within Amajuba District. AFLED has created partnerships between the Public and Private sectors and has committees that focus specifically on Tourism, Agriculture and Industry and Commerce sector of the local economy.

It is the intention of Amajuba to develop and implement the Amajuba LED Agency (ALEDA) as an implementing agent for LED in the District.

Commerce: The central business district of Newcastle, with a variety of shops, restaurants, a cinema complex, retail plaza and convenient and ample parking, makes it a centre of attraction for retail, not only within the Amajuba district, but also for surrounding towns, districts and provinces.

All the county’s major chain stores, banks and financial institutions are represented and modern conference facilities are offered to the business community.

Tourism

Amajuba offers significant investment opportunities for tourism development, including several joint venture projects with surrounding districts. The region is close to the majestic Drakensberg mountains and is an integral part of the internationally renowned Battlefields Route, which focuses on the Boer, British and Zulu battles which took place in the area and sculptured the history of South Africa.

Although Amajuba is marketed as the Battlefields destination (Legends of the Zulu Kingdom), other tourism attractions are offered. Adventure tourism includes birding, hunting and annual events, while upmarket conferencing facilities motivate corporate and business tourism.

The Amajuba Birding Meander offers a wide range of activities for the birding enthusiast, with a whole range of species, normally associated with grassveld, bushveld and mountain habitats, found in the district. Other activities include hiking, horse riding, trout fishing, and off-road vehicle trails.

Agriculture

The moderate climate benefits agriculture. Water is readily available and energy costs are low, with high to moderate potential soils found throughout the district. The agriculture related business sector is well developed in the Utrecht and Dannhauser areas.

The vision of the Agricultural Development Plan is to provide information to existing and future agricultural developers (farmers) to assist with decision making on crops, markets, investments, etc., thereby ensuring well planned and successful enterprises.

The Amajuba IDP has identified Local Economic Development (LED) as one of the highest priorities. With the establishment of the Amajuba Forum for Local Economic Development (AFLED) the need has been identified to develop an Agricultural Development Plan. Consultants have been invited by advertising for proposal to be submitted to the Amajuba District Municipality. Ibhongo Consortium has subsequently been appointed on 28 April 2005 to compile the envisaged Agricultural Sector Development Plan.

The terms of reference to the Consultants provided for separate plans for each of the three Local Municipalities, namely Utrecht, Newcastle and Dannhauser. Although responsibility for Local Economic Development is vested in Amajuba District Municipality, it must be emphasized that due to the complexity of issues such as the availability and usage of water, that close collaboration between Local Municipalities would be necessary for the proposals to succeed. It is also essential to form linkages with neighboring District Municipalities. Should the proposed dam in the Mzinyashana river becomes economically viable in the future for example, the Umzinyathi District Municipality needs to “buy-in” to make the project feasible, since there is not enough suitable land in the Amajuba District that can be economically irrigated from the proposed dam. All proposed dams would some or other way affect all the Local Municipalities and even other District Municipalities. DWAF would also need to be consulted at an early stage.

It was established in this study from preliminary economical analysis, based on rough data, that the main agricultural potential of the Amajuba District Municipality, in order of priority in terms of optimum land use, evolves around intensive farming, irrigation, dry land farming and stock farming. Potential intensive farming and irrigation projects therefore need to receive first priority when allocating land for agricultural use. Although it seems from the preliminary economical analysis that the proposed agricultural projects might be feasible from a financier’s point of view, all agricultural projects would require substantial subsidization of the capital cost and also the initial input costs, to make it feasible from a cash flow point of view for the farmers.

Conventional intensive farming projects that have potential and are often on the “wish lists” of communities are poultry projects, piggeries, dairies and feedlots. All these projects require substantial subsidization to be successful and also aftercare for extended periods. It is recommended that these projects be implemented at places where interest and capacity is shown, in a pilot project fashion. The minimum recommended sizes being 10 000 bird poultry, 100 sow piggery, 100 cow dairy and 400 beast feedlot, for economy of scale and management reasons. Each hundred cow dairy unit must include the establishment of at least 30 ha irrigated pastures and 50 ha dry land maize and pastures for silage and hay.

There is presently limited water available for irrigation and the proposed Ncandu, Horn and Upper Buffalo dams need to be constructed to realize the economic viable irrigation potential of 5700 ha. As there are presently a surplus of approximately 23Mm3 available from the Ntshingwayo dam, irrigation development at a rate of approximately 380 ha per year may commence immediately, provided that construction of the Ncandu dam commence simultaneously, with the Horn dam middle 2007 and the Upper Buffalo dam middle 2010.The maximum irrigation area along the Horn/Ngagane rivers up to the Ngagane’s confluence with the Buffalo river, should not exceed 1400 ha. The maximum area along the Ncandu River up to the Buffalo confluence should not exceed 1300 ha (if the water is not transferred). The remaining 3000 ha could be anywhere along the Buffalo river, downstream of the proposed upper Buffalo river dam. The closer the areas are located to the dams the lower the conveyance losses will be. At the same token the previously neglected areas around Madadeni should receive serious attention. Some of the mentioned 3000 ha will fall in the Utrecht Local Municipality area, and further downstream also in the Dannhauser area. Some other less feasible dams are discussed in this study, with an estimated irrigation potential of 4600 ha. This 4600 ha should form part of the proposed dry land area to be revived, in order to secure these areas for possible future irrigation, should the economic viability improve. The total initial un-inflated cost including initial input costs, is estimated to be R 1051M. (Excluding the establishment of the 4600 ha possible future irrigation).

It is estimated that approximately 10 000 ha of dry land that would not be irrigated and that is not utilized fully at present, could be suitable for cultivation and requires reviving. These areas are mostly situated in the black owned/Land Affairs areas around Madadeni and Ozisweni. The total un-inflated initial investment required, including initial input costs, is estimated to be R135M.

There is approximately 30 000 ha of suitable, but degraded grazing land available in the area around Madadeni, which is not suitable for dry land or irrigation purposes, which require fencing, dip tanks and access roads to improve the meat/milk yield. The estimated un-inflated cost to provide this for the mentioned 3000ha, is R42 M.

FIRST REVISION MARCH 2006: Add the following:
Item 2.3.8 Comments by Ibhongo on document submitted by the NRDC on 13 January 2006: AMAJUBA WATER CATCHMENTS INFORMATION VERIFICATION MEETING RE: WATER AVAILABILITY

Attached below is the document in it's entirety.