City poised to tackle ob­sta­cles

With a clean au­dit and good gov­er­nance, Cape Town is firmly on the world map as a des­ti­na­tion for global in­vestors, writes Pa­tri­cia de Lille

Weekend Argus (Sunday Edition) - - OPINION -

OUR COUN­TRY is in a dire eco­nomic po­si­tion with a tech­ni­cal re­ces­sion and two rat­ings down­grades. It is clear this eco­nomic sit­u­a­tion is in large part caused by our na­tional po­lit­i­cal sit­u­a­tion and the se­vere lack of lead­er­ship to drive through eco­nomic pol­icy that will be at­trac­tive to in­vestors and cre­ate the right cli­mate for busi­nesses to flour­ish.

That is the na­tional con­text in which the city has to op­er­ate. How­ever, in­ter­na­tion­ally cities more than na­tion states are the driv­ers of eco­nomic growth.

So we in Cape Town can con­tinue to drive eco­nomic growth for our res­i­dents and for the coun­try. The city’s ef­forts in at­tract­ing in­vest­ment have been recog­nised in­ter­na­tion­ally. Cape Town was last year ranked 21st on the list of cities with the best for­eign di­rect in­vest­ment strate­gies by fDi In­tel­li­gence – a di­vi­sion of the Fi­nan­cial Times.

We are the only African city to ap­pear on this pres­ti­gious rank­ing and we are in the com­pany of cities such as Am­s­ter­dam, Mi­ami and Auck­land. We have now set our sights on get­ting into the top 10. Our con­tri­bu­tion was to en­sure that we de­liver on in­fra­struc­ture in­vest­ment to cre­ate the con­di­tions con­ducive for eco­nomic growth.

We have com­pleted 99% of the projects in our In­te­grated De­vel­op­ment Plan (2011-2016). In­vest­ment of R22 billion has been in in­fra­struc­ture, with R9bn of that funded from the city’s cash flow.

We spent an ex­tra R3bn on re­pairs and main­te­nance.

We in­stalled al­most 790km of fi­bre-op­tic ca­bling as part of our ex­ten­sive broad­band roll-out as fast re­li­able in­ter­net con­nec­tiv­ity is vi­tal for eco­nomic ac­tiv­ity.

We is­sued 219 000 pur­chase or­ders to ven­dors who com­plied with broad-based black eco­nomic em­pow­er­ment leg­is­la­tion to the value of R13.96bn (92% of to­tal pur­chase or­ders). We are look­ing to take Cape Town to the next level and con­tinue with the work started.

Fol­low­ing the over­whelm­ing man­date we re­ceived from the elec­torate on Au­gust 29, 2016, we im­ple­mented a ma­jor change with the adop­tion of the Or­gan­i­sa­tional De­vel­op­ment and Trans­for­ma­tion Plan (ODTP).

The ODTP is aimed at mak­ing the city a more re­spon­sive, proac­tive, cus­tomer-cen­tric and glob­ally com­pet­i­tive busi­ness des­ti­na­tion.

City gov­ern­ments don’t have all the levers we would like to drive, such as eco­nomic pol­icy. But what we do have, we in­tend to use as ag­gres­sively as pos­si­ble to sus­tain and grow the city’s econ­omy.

Our ad­min­is­tra­tion has a com­mit­ted fo­cus on clean, cor­rup­tion-free gov­ern­ment and this is ev­i­dent from our record of four con­sec­u­tive clean au­dits, with the au­di­tor-gen­eral con­firm­ing on Wed­nes­day that Cape Town was the only mu­nic­i­pal­ity in the coun­try to re­ceive a clean au­dit for the 2015/2016 fi­nan­cial year.

This is a key fac­tor in­vestors look for and we will be con­tin­u­ing this trend of sound fi­nan­cial management and clean gov­er­nance.

In the lat­est quar­terly Labour Force Sur­vey, it was again con­firmed that Cape Town has the low­est broad-based unem­ploy­ment of any metro in the coun­try at 25.1% com­pared to the na­tional per­cent­age of 36.4%. At 25.1% this is still far too high and it is im­per­a­tive that we bring this down quickly and that is what we in­tend to do with our eco­nomic growth strat­egy.

We have un­der­taken an ex­ten­sive study to un­der­stand what sec­tors of Cape Town’s econ­omy we can look to for fu­ture eco­nomic growth and which rep­re­sents the high­est po­ten­tial for job cre­ation.

The sec­tors which show the great­est po­ten­tial are those with the most promis­ing global growth prospects. Th­ese are busi­ness process out­sourc­ing, the tech sec­tor and the green econ­omy sec­tor, par­tic­u­larly re­new­able en­ergy. Cape Town is al­ready the leader on the con­ti­nent when it comes to th­ese in­dus­tries.

We are also see­ing great growth in ad­vanced man­u­fac­tur­ing and elec­tron­ics, with com­pa­nies in Cape Town pro­duc­ing satel­lites for the global mar­ket. Hisense re­cently cel­e­brated pro­duc­ing its mil­lionth TV and fridge at its fac­tory in At­lantis.

In terms of the busi­ness process out­sourc­ing sec­tor, Busi­ness Process En­abling South Africa (BPESA) has fa­cil­i­tated investments that have cre­ated around 4 000 jobs in Cape Town in the last year alone and while this sounds like a lot, we be­lieve this is just a small po­ten­tial of this in­dus­try.

The Philip­pines has over a mil­lion jobs in this sec­tor and we be­lieve we have an of­fer­ing that is as com­pet­i­tive that should be able to pull in far larger num­bers of jobs over the next few years.

To pro­mote th­ese in­dus­tries we are fund­ing var­i­ous spe­cial pur­pose ve­hi­cles such as GreenCape, Citi and BPESA who are at­tract­ing in­ward for­eign in­vest­ment and ad­dress­ing con­straints in the skills arena to en­sure th­ese sec­tors con­tinue to grow.

We have also taken a de­lib­er­ate de­ci­sion this year to pilot two skills train­ing pro­grammes for high growth of both the tech and busi­ness process out­sourc­ing sec­tors and we will in­vest in the re­gion of R7m in th­ese pro­grammes with the hope of up­scal­ing them in sub­se­quent years to en­sure a steady pipe­line of skills to sup­port what are clearly grow­ing in­dus­tries.

This is part of the Mayor’s Job Cre­ation R340m pro­gramme whereby we are pro­vid­ing the fund­ing to train job-seek­ers and young peo­ple and the onus is on the in­dus­try to pro­vide per­ma­nent em­ploy­ment.

Last year, we also launched the In­vest Cape Town brand ini­tia­tive in which we are look­ing to ac­tively pro­mote Cape Town in­ter­na­tion­ally as a for­ward-look­ing, glob­ally com­pet­i­tive busi­ness city.

We are thank­ful that peo­ple around the world al­ready know Cape Town as an iconic tourist city but this has of­ten over­shad­owed the huge eco­nomic of­fer­ings of our city. This ini­tia­tive aims to change the nar­ra­tive around Cape Town to let the world know we are open for busi­ness.

The city has al­lo­cated sig­nif­i­cant fund­ing to prop­a­gate this new in­vest­ment brand over the next year and we are grate­ful that a num­ber of part­ner or­gan­i­sa­tions have agreed to use this brand to fur­ther lever­age the unique in­vest­ment of­fer­ings of Cape Town.

As stated pre­vi­ously, one of the sec­tors show­ing strong growth in the city is the green econ­omy sec­tor, par­tic­u­larly the re­new­ables sec­tor where about 60% of the com­po­nents man­u­fac­tured for the na­tional re­new­able en­ergy pro­gramme are sup­plied from Cape Town.

Un­for­tu­nately, how­ever, the na­tional re­new­able Independent Power Pro­duc­ers (IPP) pro­gramme and the re­fusal of Eskom to sign power-pur­chase agree­ments with the suc­cess­ful bid­ders is plac­ing this in­dus­try in jeop­ardy with a num­ber of com­pa­nies re­port­ing to us that they might have to close down.

We are de­ter­mined to do what­ever we can to avoid such a sit­u­a­tion. This is one of the rea­sons why we are in the process of tak­ing the en­ergy min­is­ter to court to fight for our right to pro­cure en­ergy from the re­new­able en­ergy IPPs and not be forced to buy all our elec­tric­ity from the state mo­nop­oly util­ity, Eskom.

If we are suc­cess­ful in this chal­lenge, this will also open up the op­por­tu­nity for other mu­nic­i­pal­i­ties in the coun­try to pro­cure power from th­ese IPPs, thereby helping to sus­tain an in­dus­try that is be­ing brought to its knees through the de­struc­tive ac­tion of our poorly run na­tional util­ity Eskom.

If Eskom re­fuses to sign th­ese power-pur­chase agree­ments then cities such as Cape Town should be al­lowed to sign such agree­ments.

Also in terms of the green sec­tor, a fur­ther con­tri­bu­tion we are mak­ing to the green econ­omy is the is­suance of our in­au­gu­ral green bond to the value of R1bn. I am proud that Moody’s has given us a letter of com­men­da­tion and awarded our green bond with a GB(1) rat­ing – which means it has been im­pressed enough with the green cre­den­tials and con­trols around this bond to con­sider it “Ex­cel­lent”.

While Moody’s down­graded the coun­try, it com­mends the work that we are do­ing to pro­mote in­vest­ment and sus­tain­able in­vest­ment and it has main­tained our na­tional scale rat­ing of Aaa.za, the high­est pos­si­ble rat­ing for a mu­nic­i­pal­ity.

Be­sides the spe­cific spend­ing di­rected at dif­fer­ent high-growth sec­tors of our econ­omy, we are also in­vest­ing in the broader in­fras­truc­tural needs of Cape Town so as to con­tinue to cre­ate an en­abling en­vi­ron­ment for busi­nesses to flour­ish.

This is ev­i­dent in the city’s cap­i­tal bud­get of R6.8bn al­lo­cated for in­fra­struc­ture spend that we will be spend­ing into the next year on roads, elec­tric­ity and ex­tend­ing our broad­band roll out, among other projects.

It is not just the spend­ing of the money but the way we in­tend to spend it and the strat­egy be­hind it.

A par­tic­u­larly im­por­tant strat­egy is the Tran­sit Ori­en­tated De­vel­op­ment strat­egy where we are look­ing to cre­ate the crowd­ing in ef­fect by the pri­vate sec­tor for in­vest­ment into pub­lic tran­sit cor­ri­dors with the ul­ti­mate goal of re­vers­ing the apartheid spa­tial legacy by build­ing high-den­sity, af­ford­able hous­ing, stop­ping long dis­tances and ur­ban sprawl and in­creas­ing the com­pet­i­tive­ness of our econ­omy by driv­ing down trans­port costs and time for work­ers.

The city will be the cat­a­lyst in­vestor in projects whereby we will ei­ther make the land avail­able to the pri­vate sec­tor for de­vel­op­ment or we will in­vest in up­grad­ing ex­ist­ing pub­lic trans­port net­works.

On the is­sue of trans­port, we are also proud to be a part­ner in the Air Ac­cess ini­tia­tive hosted by Wes­gro, which is ag­gres­sively bring­ing more flights into Cape Town.

Al­ready over 600 000 seats have been added on flights to Cape Town in the past year and a half. This is im­por­tant both for our tourism econ­omy and also for estab­lish­ing Cape Town as a se­ri­ous busi­ness des­ti­na­tion where peo­ple can eas­ily con­nect with the rest of the world as well as the fast grow­ing African mar­kets.

We see our­selves as a proudly African city and as a part­ner in Africa’s de­vel­op­ment. We also see our­selves as the per­fect launch­ing pad for com­pa­nies want­ing to pen­e­trate the African mar­ket and take ad­van­tage of the fast grow­ing con­sumer base that is there.

Lastly I wish to point out that the city’s Or­gan­i­sa­tional De­vel­op­ment and Trans­for­ma­tion Plan has re­sulted in the con­sol­i­da­tion of many eco­nomic func­tions un­der the new Depart­ment of En­ter­prise and In­vest­ment, in the Direc­torate of the Mayor.

This 50-person depart­ment in­cludes a num­ber of dy­namic func­tions such as: an in­vest­ment fa­cil­i­ta­tion func­tion which works with po­ten­tial in­vestors to nav­i­gate the city’s pro­cesses; an en­ter­prise de­vel­op­ment func­tion which runs our busi­ness ad­vi­sory ser­vice and works to re­duce red tape; a place mar­ket­ing func­tion which strate­gi­cally lever­ages events and pro­motes Cape Town as a de­sir­able place to live, work, play, visit and in­vest in; and an in­ter­na­tional re­la­tions func­tion which sup­ports our strate­gic part­ner­ships and hosts in­com­ing del­e­ga­tions.

The city takes the cre­ation of an en­abling en­vi­ron­ment for eco­nomic growth and in­vest­ment very se­ri­ously, and this is at the top of my agenda.

There is a lot go­ing for Cape Town and as far as pos­si­ble we will not be dragged down by na­tional pol­i­tics and ill-in­formed eco­nomic de­ci­sions.

Cape Town is a great global brand and in­creas­ingly its at­trac­tive­ness as an in­vest­ment des­ti­na­tion will be recog­nised every­where.

We are com­mit­ted to do­ing all we can to main­tain the mo­men­tum and grow the econ­omy even fur­ther so that we can al­le­vi­ate poverty and pro­vide much needed jobs to the peo­ple of Cape Town.

Cape Town was the only mu­nic­i­pal­ity to re­ceive a clean au­dit for 2015/2016

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