A new far-reaching industrial strategy for the Kwazulu-Natal (KZN) province is due to be completed this month, Engineering News can today exclusively report.

In its third draft at the time of going to press, the strategy document will contain an in-depth analysis of the KZN economy and chart the way forward for economic development and growth, KZN Economic Development Minister Roger Burrows and sector manager Libby Dreyer tell Engineering News in an exclusive interview in the well-located ministerial offices that overlook the busy port of Durban, itself a logistics hub that is destined for renewal and upgrading.

The KZN province, as South Africa’s second-biggest contributor to overall national gross domestic product, commissioned economic- development specialist Kaiser Associates to undertake the task of drawing up the new industrial strategy and also to assist with its successful implementation.

Sceptical of the slightly contradictory pictures of the KZN economy that were emerging from some commercial houses and even research institutions, Burrows considered it prudent to undertake fresh analyses in order to ensure an accurate mapping of the way forward for the province’s economic development.

Sectoral analyses completed thus far already point to areas of the KZN economy that lend themselves to important downstream development, as well as to areas of weakness, where carefully-devised developmental strategies need to be implemented in order to increase capacity and lay a foundation for successful economic development where it is most needed.

Burrows expects completion of the strategy document by month end and its submission to the KZN provincial Cabinet prior to implementation.

One of the industries considered conducive to more downstream development is the aluminium industry, where beneficiation both by large com-panies and financially-assisted small, medium and micro enterprises (SMMEs) is considered to be economically feasible.

Another downstream target is agriculture, though in a constrained form, as a result of the province’s overconcentration on sugar-cane and timber growing.

While there is no major upstream problem with timber– which is already the main feedstock of the province’s large world-class and expanding pulp-and-paper industry – there is a current major sugar-cane inhibitor, brought about by the impact of the volatile rand on an already-low world sugar price.

The closure of one sugar mill has already left many small emergent sugar-cane farmers stranded, without a market.

The provincial response has been to encourage the production of better-priced organic sugar, which is sugar which is produced without the use of pesticides and fertilisers and which is ideally suited to the small cane grower.

At R18 a pound, organic sugar fetches six times what normal sugar does.

Instead, the province is studying nontimber and nonsugar agribusiness prospects, including honey farming, the growing of cut flowers, the production of essential oils for on-sale into the pharmaceuticals and cosmetics markets, and the cultivation of plants that can be marketed as indigenous medicines.

Meanwhile, several seasons of poor rainfall in northern Kwazulu-Natal have affected cattle farming badly and the response of provincial leadership to this crisis has been to advocate conversion to low-rainfall-conducive game farming, for both venison production and tourism promotion.

The new strategy also deals with intervention in support of key lead sectors, the most pressing being the clothing-and-textile industry, which is a large job creator that is in crisis.

Interventions envisaged include greater collaboration with the industry and the playing of a greater role in negotiations with labour.

The KZN Department of Economic Development has met with the Textile Federation, which has also been in discussion with Trade and Industry Minister and Deputy President Jacob Zuma.

The federation views with very grave concern the lowering of tariff protection at the quickest possible speed by national government, arguing that the World Trade Organisation (WTO) gave developing countries the opportunity to reduce tariff barriers over a lengthy period of seven years and that South Africa has done so far faster than required.

As a result, they are suffering the strains of landed costs from Taiwan and China, which undercut the entire South African industry.

The province is supporting the federation’s request for an extension of tariff reduction to the maximum period that the WTO allows.

Having also won the support of labour and other regional textile pro-ducers, the federation is now awaiting national government’s response.

Burrows sees the rand’s volatility as hurting the textile and footwear industries the worst, with R150 ladies’ shoes at South African cost levels being landed for R27.

To counter this, the footwear industry is moving into higher-value export niches, and marketing successes at the Birmingham Trade Fair in particular, where orders were taken for large volumes of high-value niche products, has prompted the KZN Department of Economic Development to offer incentives to the footwear and textile industries to allocate more money towards research and development of high-value opportunities.

Receiving support similar to that afforded the textile, clothing and footwear sectors is the wood and wood-product sector, with the province encouraging the furniture industry, in particular, to discover higher-value markets and to build capacity within the industry to be able to penetrate these.

Another industry KZN wants to underpin is the information com-munication technology (ICT)- electronics industry.

KZN’s position as the third most competitive ICT-electronics location is poised to be catapulted higher with the commissioning of the Dube Tradeport, a proposed multibillion-rand initiative to establish a trading hub at La Mercy that will contain a ‘cyberport’ and an e-business platform, in addition to a freight terminal and perishables centre, commercial services and retail facilities and the much-celebrated King Shaka International Passenger Terminal.

The cyberport will have both satellite links and undersea cables that come ashore in the vicinity of the Dube Tradeport, whose broadband could be extended to call-centres.

Although KZN would be competing with the likes of India and even South Africa’s own Western Cape in the call-centre business, Burrows sees KZN as having a distinct advantage in being an English-speaking province with a language usage very similar to that of the UK.

"We have actually talked to people in the UK about the possibility of a KZN call centre where the response for banking, insurance and commercial operations will be spoken in a language that will be readily understood by anyone from Glasgow to London, with Yorkshire in between," he discloses.

A key activity within that cyber village would also be import-export processing, dealing with the rapid handling of goods in and out of com-puters and on to aircraft and ships. Burrows views this as an area requiring considerable investment, especially given the unique combination of airport and seaport, which no other cyber village currently combines.

Moreover, as the capacity of local authorities grows, the ability to extend ICT into low-income communities becomes that much greater and the province will be looking at ways of optimising its ICT-electronics industry through incentivising innovation all along the value chain, on the basis of ICT’s inherent ability to cut costs and improve competitiveness.

Burrows sees the proposed new Dube Tradeport and its subhub as presenting a unique selling proposition for the promotion of ICT and providing the platform to take on the huge developmental challenge of locking ICT into local economic development.

Importantly, the Dube Tradeport is located in the heart of what Burrows refers to as the ‘T’; the base of which is the City Deep container terminal in Johannesburg and the cross member made up of Durban in the centre with Port Shepstone and Richards Bay on either side, the combination of which makes up South Africa’s number-one import-export route.

At the moment, 80% of goods carried along the T are carried by road and only 20% by rail.

"That has to be reversed," Burrows insists, foreseeing the establishment of the Dube Trade-port’s 650 ha industrial development zone as being the catalyst that will convert the T’s present fragmented scatter into a single logistical processing entity, the capacity offered by both the satellite and the under-used undersea cable offering a virtual infinite horizon for expansion.

While reaching for the stars in his cyberport vision, Burrows will also be keeping his feet firmly on the ground in the province’s facilitation of arts-and-crafts industry growth.

Individually there is significant craft production under way, but he finds its isolated, fragmented structure counterproductive.

As a result the province will be encouraging cooperative marketing targeted at a larger universe in order to put more of the proceeds into the hands of the initial producers, many of them breadwinners in improverished rural areas.

A combined city, tourism and provincial effort is expected to result in the establishment of an arts-and-crafts emporium, which will probably be located in the expo centre, near Durban’s international conference centre and which will provide a prestigious marketing base for producers.

Simultaneously, a study is under way into the exporting of arts and crafts, which are currently leaving KZN by the container load, largely as a result of online computer-assisted sales.

An attempt will be made to link these exporters more closely to the producers so that the income to the producers can be maximised, through the coordination of local production and exportation.

The aim will be to obtain full buy-in from stakeholder allies, while simultaneously facilitating capacity building and training within the arts-and-crafts arena.

The distinctive KZN beadwork, marketed as a Zulu Kingdom brand, has become a sought-after item at international trade fairs.

On industrial strategy compilation, the province’s point of entry is through market research and arriving at consequent decisions on how the KZN government can best provide assistance.

Burrows expects initial implementation of the new strategy to reach fruition within the current financial year to February 2005 and to contain several cross-cutting issues, the most important two of which are black economic empowerment and SMME-development.

KZN Economic Development Minister since November of 2002, Burrows has been in politics for 20 years, serving for ten years in the central Parliament and for ten years in the KZN province, where he grew up and was educated.