Although the whole of South African is enjoying a surge in economic growth, perhaps nothing sums up the feeling of dynamic optimism bubbling under the surface of KwaZulu-Natal’s growing economy better than a comment made by Dr Zweli Mkhize, provincial minister for finance and economic development, when he delivered his budget speech recently: “This year the journey to prosperity for all in the province continues.”

The statistics prove the point as the province of KwaZulu-Natal achieved the highest economic growth rate in South Africa this past year with figures projected to be in the region of 5,2 to 7 percent. This follows a trend of improvement from 2,8 percent in 2003, up to 4,9 percent in 2004 and is set to continue as a result of strategic government planning, in partnership with the private sector, to position KwaZulu-Natal as the trade gateway into Africa. 

“I am highly optimistic about the growth in South Africa, and KwaZulu-Natal in particular. Its 7 percent growth rate is the highest amongst the provinces,” said a bullish Jonathan Naidoo, Chief Operations Officer for Trade and Investment KwaZulu-Natal (TIKZN). He expects the province to reach 7,7 percent growth targets and beyond in 2006 and sees a positive growth trend for the next 10 years.

The multi-faceted approach from government includes a number of initiatives to stimulate further growth in the economy, to attract private sector investment, encourage, support and empower small to medium size businesses and to create access to markets and employment opportunities for all. But it is MEC Mkhize’s policy of stimulating economic growth through coordinated infrastructure investment that is likely to have the biggest impact.

Dube TradePort

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 Dube TradePort 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.

"The fact that South Africa’s hub container port at Durban is not in close proximity to aeronautical infrastructure that can provide direct intercontinental air connectivity puts South Africa out of step with long established international trends,” said Erskine.

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.

"King Shaka International Airport (KSIA), as part of the DTP, is not just about relocating an airport. It is a completely new business model with integrated logistics and sea-air transhipment,” said Rohan Persad, CEO of DTP.

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.I

n addition 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.

The DTP will unlock economic development in the province,” said Naidoo from TIKZN. He added that part of the success of the project involves reaching freight logistic volumes through the DTP and that there needs to be a coordinated effort to encourage growth in the agricultural market and other areas that would benefit from the new time-sensitive freight logistics offered – like JIT products, fresh flowers and fish exports, and pharmaceutical products or automotive parts.

2010

Preparation for 2010 is not just about stadium infrastructure investment in Durban said Naidoo. “The municipalities of Amajuba, Ugu, uMgunggundlovu and uThungulu will also be building infrastructure and facilities to provide training and base camps. This will bring welcome growth into those smaller towns.” He added that there were a host of other opportunities related to the World Cup, especially in the taxi, hospitality and catering industries. 

Port Developments

The multi-billion rand investment to upgrade the Port of Durban and focus on its container cargo potential will not only increase the handling capacity of South Africa’s largest port, but also improve service and delivery. “You can already notice the difference in turn-around time in container handling,” said Naidoo.

He also noted an increase in efficiency from the coal terminal at the port at Richard’s Bay. This port is poised on the brink of expansion around a R190-million investment in the Richard’s Bay Industrial Development Zone and a further R160-million in a transportation corridor linking Richard’s Bay to Ulundi and eventually Vryheid. Richard’s Bay has land and water area available that could see the Port grow with demand to become one of the largest ports in the world. 

Durban

“Durban has become the de facto coastal ‘gateway’ to Southern Africa,” said Professor Bonke Dumisa, Chief Executive of the Durban Chamber of Commerce and Industry.  “It is the major port city on the African continent and is ideally located to access the international shipping routes between East and West.”

Dumisa said that Durban had a good logistics and communication infrastructure, a diverse and developed economy, with skilled labour – as well as a quality living environment. That coupled with its location, and extensive road network leading to and from any destination in South Africa made Durban a major into the African continent.

Identified as the most favoured domestic tourist destination and the second most popular destination for incoming international visitors tourism is earmarked as one of the key economic drivers of Durban’s economy.

He added that the new automotive component supplier park in Prospecton south of Durban is set to generate millions of rand for KwaZulu-Natal and the South African economy.

But it’s certainly not all in Durban… 

Province-wide

The construction industry is perhaps the best indicator of an economic boom, and as MEC Mkhize reported in his budget speech: “Growth in the construction industry is surging.” In 2004 the construction industry grew by 28 percent and this trend has continued through 2005 into 2006.

Naidoo from TIKZN concurred. “There is a massive boom in the construction industry – commercial, residential, industrial. You see cranes on our horizons; at Sibaya, Zimbali, in Durban. It’s a good sign. There is an absolute buzz in the market,” said Naidoo.

From this one can only come to one pervading conclusion: there is a buzz and great optimism in KwaZulu-Natal economy.

 This article appeared in the WITS Business School Journal.