Infrastructure Spend Spearheads Growth in KZNKwaZulu-Natal has the second largest economy in South Africa, and is of growing strategic economic importance to both South and Southern Africa.
Economic activity is concentrated in the metropolitan areas of Durban, Pietermaritzburg and Richards Bay, with the coastal belts utilised for sugar cane plantations, subtropical fruit and vegetables.
The province has a rich endowment of natural resources, well-developed first-world infrastructure and advantageous coastal location - and offers a highly competitive advantage in capital intensive manufacturing, transport, storage and communications, and finance as well as business services. It is also well positioned in agriculture, forestry and fishing, agricultural resource-intensive manufacturing sectors; and in the tourism and accommodation sectors.
Boasting the highest export propensity and the highest level of industrialisation in South Africa, the economic structure in this province is based on a large manufacturing sector in which growth is driven by the paper and paper products industry, and ferroalloys (such as aluminium) and other chemicals. Further significant sub-sectors include motor vehicles and component manufacture, printing and publishing, food and beverage production, non-electrical machinery, iron and steel, wood furniture, and textiles and clothing.
Two strategic ports provide a key competitive advantage and ensure the province's importance for economic growth, effectively repositioning the country to increase its share of the global market. Growth in the importance of the KwaZulu-Natal economy is expected to increase further largely as a result of government and private sector investment in infrastructure development in the province.
Some investments in the region include: An investment of R15-billion by Transnet and the National Ports Authority in upgrading Durban Harbour, a R3,4-billion investment in plant and infrastructure during 2004 and 2005 by Toyota Motor Corporation, an Anglo American investment of R1,4-billion in Mondi and a R630-million investment by Shell and BP in Sapref in Durban.
Durban harbour, one of two harbours in the province, is the largest of seven ports in South Africa as well as the largest and busiest port in Africa, handling in excess of 31,4 million tons of cargo a year, with an average of 83 000 containers passing through the port every month.
Considered KwaZulu-Natal's economic heartland and the gateway to both inland and international markets, the Port of Durban moves cargo valued in excess of R100-billion per annum - approximately 65 percent of the value of all cargo going through South African ports and is set to benefit from a multi-billion investment in upgrades which include the widening of the harbour mouth and the construction of cargo terminals that will facilitate the efficient handling of an increasing growth in container traffic, as well as the automotive and petroleum sectors.
The Port of Richard's Bay, further north, is South Africa's most modern port and the premier bulk cargo handling port in Africa. Built in 1976 for the export of coal it is well situated to serve the KwaZulu-Natal and Mpumalanga coal fields and has expanded into other bulk and break bulk cargos including timber and granite.
The port is well connected with efficient rail links to Gauteng as well as Durban in the south and Mpumalanga Province, Swaziland and Mozambique to the north and handles in excess of 85 million tons of cargo per annum. It is one of the few South African ports with the flexibility to expand with demand to become one of the largest ports in the world.
The provinces flagship investment project is the multi-billion rand Dube TradePort (DTP), north of Durban, targeted to be operational by 2009.
Hamish Erskine, Project Executive for the DTP TradeZone explained that development includes the full relocation of Durban International Airport to La Mercy, and the establishment of a dedicated freight handling and associated support environment known as the TradeZone.
He added that the global trend was to create continental trade gateways like DTP that typically combine seaports, airports, and road and rail networks to offer an integrated multi-modal environment enabling active participation in global supply chains, and offering the full range of time sensitive transport solutions.
"With the DTP only 30km from the Port of Durban, this passenger and cargo orientated air platform will be a new addition to South Africa's strategic transport infrastructure and will begin to address a long standing structural constraint existent in the local transport network. By developing an airport that compliments existing and ongoing investment in national transportation infrastructure, especially port and rail, we will open up the opportunity of establishing a trade and investment gateway in Southern Africa comparable to the rest of the world," said Erskine.
Feasibility studies completed in 2004 project that DTP, including KSIA, will contribute a minimum of R12,3-billion to South Africa's Gross Domestic Product (GDP), create 164 838 sustainable jobs and generate R2,2-billion in taxes over a twenty-year period (with rand values 1995 prices) on a worst case scenario projection. This could increase to a possible R20,5-billion in GDP, R4,3-billion in taxes and more than 250 000 sustainable jobs for the province if best case scenarios come to fruition.
South African exports are expected to gain in competitiveness through delivery efficiencies, reduced transport costs and the opening up of markets for time-sensitive products or just-in-time (JIT) deliveries as a result of efficiencies gained through the establishment of the DTP.
In addition KSIA's 3700-metre-long runway will cater for the new generation large aircraft - the A380 Airbus - effectively re-opening Durban to international carriers. It is hoped that this will reverse the decline in international visitors to the province experienced since the withdrawal of a number of international flights in 1999.
"As a province, KwaZulu-Natal has already dedicated some R8-billion to infrastructural development over the coming years," said the premier of KwaZulu-Natal, S'bu Ndebele. This includes the widening and deepening of Durban harbour and the development if the King Shaka International Airport.
"We are also in the middle of preparation for the 2010 FIFA Soccer World Cup which includes constructing the iconic 70 000-seater Moses Mabhida Stadium in Durban where one of the semi-finals will be played," said Ndebele.
Durban, as a host city for the FIFA Soccer World Cup (with six matches plus a semi-final game in the city), has developed an integrated strategy focusing on a holistic business plan that incorporates infrastructure development, the provision of appropriate information technology, as well as transport - with a view not to just hosting 2010, but with the long-terms vision of becoming Africa's premier sports and events destination (with an eye on the 2020 Olympics).
In addition to building the multi-purpose new stadium, Durban will also be investing in parking facilities, improving road access and public transport facilities, as well as upgrading the beach front area, the Warwick Junction precinct, as well as the Kings Park railway station.
Tourism infrastructure investment over the past five years amounted to well over R5-billion. This includes expansion of Durban's International Convention Centre (ICC) with the addition of the Arena Complex to host the 2010 FIFA Preliminary Draw, as well as development of the Zimbali Coastal Resort, the new Suncoast Casino Hotel and the Sibaya Hotel expansion, and the building of a further 10 new hotels in Durban.
KwaZulu-Natal's position with a leading 32 percent share in the domestic tourist market and as the second most popular destination for international visitors ensures the sustainability of investment in tourism infrastructure, and more investments in coastal resorts such and Blythesdale and the Greater St Lucia wetland Park are in the pipeline.
- This article was written by Sharon Davis for Global Africa Network's 2007/2008 KwaZulu-Natal Business - A Guide to business and investment in KwaZulu-Natal
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