Address by the MEC for Address by MEC for Economic Development, Tourism & Environmental Affairs, Mr Sihle Zikalala at the International Gas Options Conference in Durban on 11 October 2017 Focusing on the Black Industrialists in the economy and energy sector

12 OCTOBER 2017

Address by the MEC for Address by MEC for Economic Development, Tourism & Environmental Affairs, Mr Sihle Zikalala at the International Gas Options Conference in Durban on 11 October 2017
Focusing on the Black Industrialists in the economy and energy sector

Programme Director
Honourable National Minister of Energy; Ms Mmamoloko Kubayi;
Honourable Mozambique Deputy Minister of Mineral Resources & Energy, Mr Augusto de Sousa Fernando;
Chairperson of Portfolio Committee on Energy,
Director-General: Department of Energy,
Advisor on Energy in the Presidency;
Senior Government Officials
Members of the Business Community;
Technical & Research Practitioners in the Energy Industry;
Distinguished Guests;
Members of the Media Present;
Ladies and Gentlemen;
All Protocols Observed

First and foremost, we wish to express our appreciation to all role-players and industry stakeholders for landing their weight to this important International Gas Conference and particularly to today’s programme focusing on Black Industrialists programme.

As Kwazulu Natal provincial government we want to express our delight and support towards all endeavors aimed at strengthening economic development and exploration of opportunities that will direct the realization of Oil and Gas economy. And we believe that the knowledge that will be brought in by the seasoned role players mainly in the energy mix will result in meaningful skills transfer, bring in advanced suited technology and pave a platform for active participation of the previously disadvantaged people with the aim of transforming the economic landscape in a broader scope.

The line-up of speakers and topics for discussions are of critical importance and will enable us as the provincial government to learn more about the diverse interests of industry stakeholders.

We would, from the onset, like to categorically emphasize that the South African government is playing a huge role in ensuring that the market for different sectors of the economy, including the energy sector, is open for many role players, particularly the black Africans people who were previously marginalised. Indeed it would be remiss of a government founded on the notions of equality and justice to close its eyes to the fact that there is an urgent for economic redress in South Africa.  

Failure to engage in this necessary exercise would translate to a dereliction of duty by the current government as our economy, which should be a physical expression of our freedom, remains largely untransformed. The intention is to transform South Africa’s economic structure in a manner that promotes spatial integration, high levels of decent employment, quantitative and qualitative participation of black people in the national economy, thereby ensuring global competitiveness.

It is a fact that in our country that the poor are mainly black Africans; that those who are on the wrong end of inequality are black Africans and that the majority of those who are unemployed are black Africans. If left unchecked, this situation has the potential of derailing our democratic project and undermining stability, itself necessary for accelerated economic growth and development. Therefore, the pursuit of the agenda of radical economic transformation is not a whimsical policy stance, but an intervention necessary for the attainment of a national democratic society. To this end, we introduced a number of interventions and enacted a number of laws to guide the process of transforming our economy.

Significantly, we want single out the Black Industrialist Programme amongst many other programmes that the government has developed with an aim to bolster economic transformation in South Africa. We launched this programme in 2015. The Black Industrialists Programme focuses on transforming the manufacturing industry to prioritize black business people and create market platforms and funding.

The prioritised manufacturing industries are the same as those in the Industrial Policy Action ensuring that Black Industrialists are exposed and included in various sectors which amongst others are; Oil and Gas, Industrial Infrastructure, Information Communication Technologies, Chemicals and others. This prioritization affirms the commitment of government in transforming the economy and also opening the scope of participation.

The continent’s largest development finance institution (Industrial Development Corporation) is also taking this concept very seriously supported by the transactions it has approved over a year amounting to R4.7billion.  Further, as government we have committed in supporting the Black Industrialists with mentorship, incubation and funding to ensure that they are not deterred from playing party in the venturing and exploration of any opportunities that have been closed in the past.

Programme director, over the years we have hosted Energy Summits and other conferences that resulted in the creation of a coherent energy strategy that will eventually ensure energy security and ultimately eradicate energy poverty in all corners of the province. However, there is strong indication that strategies will positively materialize when matched with the support we have now committed to offer through the Black Industrialists Development Programme.

Programme Director and honourable guests, we have systematically identified what we call energy poverty – which in our view is as an environment characterized by the lack of adequate modern energy which is required for things like the provision of quality education and health care for our people including socio-economic development in general.

Importantly, we categorize modern energy as a necessity for all, more than luxury. This therefore affirms that energy should be accessible to everyone. As the provincial government we thrive to play our part and fully participate in platforms that investigate the exploration of the energy alternative.

We are fully aware as KZN government that the South African energy sector has been, and continues to be, at the centre of the country’s development. The origins of the electricity supply industry in the first years of the twentieth century, for example, were driven by the needs of the booming mining industry.  

In the 1950s the then government decided to develop a synthetic petroleum industry as a response to threats to crude oil imports. Today, the present government is focusing on widening household access to electricity, making modern energy services more equitable and also affordable for the poor.  

Programme Director, we have alluded to the fact that through past policies that were aimed at the subjugation of people by reason of race, inequalities still exist 23 years into a new democratic order.  These inequalities are accompanied by huge unemployment rates, which interpret to poverty. Therefore, our call to explore development of energy and socio economic development should be aligned with creation of employment opportunities and alleviation of poverty.

Last week, the President of the country, His Excellency J.G Zuma was here to assess progress in Oceans Economy which is accelerated through Operation Phakisa – “simply meaning operation fast track”. The Premier of the Province Willies Mchunu reported positively on the progress of programmes spearheaded by the province in ensuring that the oceans economy is utilized for the economic growth. The Province has undertaken to devise various strategies aimed at utilizing the coastline to the full optimum.

The Richards Bay Industrial Development Zone, in particular, is being developed as a site and an anchor for energy infrastructure – especially Gas. As we move forward, we want to use our Black Industrialists Programme to drive radical economic transformation within the energy sector. We are fortunate as the province to have diverse minerals which we can utilize for the development of wealth and empowerment of our people hence our determination to ensure that our people benefit from these resources and are fully supported.

The factoring of the Black Industrialists programme into the overall global competitiveness for attraction and sway of the locations of productive industrial value chains continues to hold out exploitable possibilities. The introduction of this programme further demands the emergence of a competitive industrialist entrepreneur sector in SA and across Africa.

The demonstration of capabilities in probing for business opportunities and entrepreneurially engaging with the dynamism of South Africa‘s industrialization agenda including, in particular, sourcing and initiating new industrial enterprises is considered to demand of all to come up with industry sector specific perspectives and input contributions to shape up the desired modelling of innovative and dedicated industry sector growth roadmaps.

We have reiterated in many platforms that the economic hubs such as Richards Bay, inherited from colonialism, were geared to serve the interests of the imperial metropolis and the selected few individuals at the expense of ordinary surrounding communities.

As we rebuild these areas, as engines of national and provincial economic development, we want to ensure inclusive economic growth, redistribution of wealth and the creation of an equal society.

We speak here of a South Africa where there are equal access to opportunities, a South Africa whose development is not founded on the exploitation of the many by the few. Poverty creates a vicious cycle of hunger and poverty across different generations. It contributes to social instability such as crime and moral decay, and compounds the impact of under-development.

This government is therefore focusing on the elimination of all the root causes of poverty, under-development and other social ills. We are inviting captains of industry and foreign governments to join us in a journey to create an equitable and prosperous country.  

The Oil and Gas industry presents many opportunities for partnerships in this province. Statistics show that the Oil and Gas industry is employing an estimated number of 7 500 people and has an estimated annual turnover of over R196 billion, with the refining segment of the industry contribution almost 99% to the total industry’s turnover.

Moreover, the industry apparently accounts for approximately more than 90 000 indirect jobs in the distribution and marketing segment of the industry value chain.

Programme director, we want the energy infrastructure programmes to focus extensively in rural areas and labour intensive approach to be used for massive job creation purposes.

We have set an ambitious target of increasing total employment to 4.5 million in 2030 (from 2.4 million in 2010).  This means that an annual growth rate of 5.43% is required in order to achieve the job creation targets.

We are using both investments in energy infrastructure and environmental sustainability as a driving force towards the attainment of our targets. Energy costs and the sustainable generation thereof have in recent times become more important than ever before.

In other words, the pursuit of alternative energy options is both an economic and environmental concern.  We are saying this because of climate change, the rapid loss of non-renewable resources such as coal and the pressures on the current grid to provide increasing supply.

Critically, programme director, we can confirm today that a comprehensive Renewable Energy Zones tool has been developed in this province. It contains all relevant information pertinent to renewable energy development including resource maps for wind, solar, biomass and hydro.

There are projects that have been identified through the Renewable Energy Working Group of the KZN Climate Change and Sustainable Development Council. These include:

•    Development of Provincial Energy Agency and Renewable Energy Fund;
•    Green Transport  and Biofuels Strategy;
•    Development of a Green Procurement Policy;

We are also channeling our energies towards catalytic projects. We have developed 5 catalytic projects in the Industrial Symbiosis and Renewable Energy sector.  The development of these projects will be marketed to potential investors or funders.
Programme Director, before we conclude we would like to mention that we note the assessment which has been made in relation to the Millennium Development Goals indicating that most of the countries which did not meet the MDGs are those with less energy access. This lack of access to efficient modern energy has a significant impact on economic development, educational opportunities and infant mortality.  

Our main focus therefore over the next few years is to improve the lives of our people both socially and economically. It is a fact that without adequate energy, it will be impossible to achieve this because the creation of a healthy society relies heavily on the provision of clean energy.

In conclusion, we would like to assure this gathering that as provincial government we foresee a prosperous future for all and commit to support all deliberations that seek to strategise on the utilisation of natural resources optimally, probe opportunities for business development, address inequality and pave the way for economic transformation for all.

Thank you