Document

STRATEGIC BUSINESS PLAN | 2009 - 2014

[email protected] | cell: 071 603 4704 | tel: 043 735 1673

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Contents 1 Introduction .................................................................................................................................................... 3 2 Background and Context to AsgiSA-EC establishment ................................................................................. 4

2.1 Provincial Growth and Development Plan (PGDP) .............................................................................. 4 2.2 Eastern Cape Industrial Strategy ........................................................................................................... 5 2.3 District Growth and Development Summits ......................................................................................... 5 2.4 Accelerated and Shared Growth Initiative of South Africa (AsgiSA) .................................................. 6 2.5 Political Context .................................................................................................................................... 7 2.6 AsgiSA-EC Development Mandate ...................................................................................................... 8

3 Key Strategic Considerations and the AsgiSA-EC Paradigm ....................................................................... 10 3.1 Strategic Focus and drivers ................................................................................................................. 10 3.2 Institutional alignment ........................................................................................................................ 11 3.3 Geographic focus ................................................................................................................................ 14 3.4 Rural Development Strategy and Policy ............................................................................................. 14 3.5 Political Support .................................................................................................................................. 15

4 Organisational Strategy and Design ............................................................................................................. 16

4.1 Vision and Mission ............................................................................................................................. 16 4.2 Strategic Goals and Objectives ........................................................................................................... 16

4.2.1 Establishment of a Competent and Effective Organisation ............................................................ 17 4.2.2 Effective co-ordination and implementation of High Impact Priority Programmes ....................... 18

4.2.3 Building the Organisation’s Brand and Reputation ........................................................................ 18 4.2.4 Strengthening of Institutions at Local Level ................................................................................... 19 4.2.5 Effective and Complementary Stakeholder Relationship Management .......................................... 19

4.3 Operating principles ............................................................................................................................ 20 4.4 Organisational Structure ...................................................................................................................... 20

5 High Impact Priority Programmes (HIPPs) .................................................................................................. 23

5.1 Agriculture and Agro-processing Portfolio ......................................................................................... 23 5.2 Forestry Development ......................................................................................................................... 24 5.3 Water Resource Development ............................................................................................................. 25 5.4 Hydro and Alternative Energy ............................................................................................................ 26 5.5 Tourism Development ......................................................................................................................... 26

6 Development Impact ..................................................................................................................................... 27

7 Finance and funding requirements ................................................................................................................ 28

7.1 Funding: Key principles ...................................................................................................................... 29 7.2 Funding of AsgiSA-EC ....................................................................................................................... 29

8 Business Model to drive implementation ..................................................................................................... 31

9 Conclusion ....................................................................................................................................................... 32

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1 Introduction The purpose of this document is to summarise the organisational strategy and business plan

for AsgiSA-EC. Given the nature of its mandate and rationale for its establishment AsgiSA-

EC identifies agrarian reform as the main driver for rural development. The organisation

identifies the need to focus its efforts on areas that impact positively in the lives of the rural

communities by improving participation, creating sustainable jobs and improving their

incomes.

The Provincial Growth and Development Plan is identified as a key informant of AsgiSA-EC

initiatives and therefore monitoring and evaluation mechanisms that ensure this alignment

should be developed over time.

This document covers the background and context to AsgiSA-EC establishment, discusses

strategic considerations, organisational design, programmes and summarised budget.

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2 Background and Context to AsgiSA-EC establishment

2.1 Provincial Growth and Development Plan (PGDP) The PGDP, a blue print for the Eastern Cape’s growth and development has targeted an

economic growth rate of 5-8% per annum, reduction of unemployment by 50% by 2014,

Reduction of poverty by 50% by 2014, food self-sufficiency of the Province by 2014, clean

water and elimination of sanitation backlogs by 2010 and halt the spread of HIV and AIDS.

As part of the Provincial Development Growth Programme review process in 2007 the

province came to a conclusion that there are uneven development and spatial imbalances;

pervasive poverty (dependency and poverty trap); lack of skills; sub-optimal growth in the

north eastern part of the Eastern Cape Province (mainly characterised by the dominance of

public sector); unequal terms of trade (high external account and sub-optimal local

beneficiation); high unemployment; complex regulatory bottlenecks (particularly relating to

land); sub-optimal impact of existing agrarian and rural development initiatives; significant

infrastructure backlogs (lack of enabling infrastructure and logistics for economic

development); sub-optimal resources at provincial and local level for investments

requirements; state capacity (planning, implementation, project development, partnership

facilitation, monitoring); and absence of viable growth coalitions.

A recent assessment1 of the PGDP commissioned by the Office of the Premier makes the

following important and relevant conclusions to the mandate of AsgiSA - EC:

• While poverty has reduced marginally, nearly seven out of ten people are still living in

poverty;

• Poverty in the Eastern Cape emanates from structural factors that confine the province’s

residents to a life of perpetual deprivation;

• The accelerated development of productive and human capability in the former

Bantustans in particular requires national support to accelerate rural industrialisation and

investments in infrastructure that can support increased economic activity;

• There is too little coordination and collaboration among department and spheres of

government; and

• The objectives of systematic poverty eradication and social protection, agrarian

transformation, food security and manufacturing diversification should remain core pillars

1 Assessment of the Eastern Cape PGDP review facilitated by ECSECC, July 2008

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of the PGDP underpinned by human resource development and education and social

and economic infrastructure.

2.2 Eastern Cape Industrial Strategy The Eastern Cape Industrial Development Strategy (ECIDS), whose basis is the national

Regional Industrial Development Strategy and the PDGP also provides a useful bedrock

upon which AsgiSA-EC is founded. The ECIDS captures the rationale for the establishment

of AsgiSA-EC when it points out that:

‘After ten years of democracy the structure of the Eastern Cape economy has not

shifted significantly. After three years of implementing the PGDP (provincial growth

and development plan) there is still too little real engagement between the public and

private sectors and the objectives of economic transformation are largely based on

fairly broad strategies for agrarian transformation, diversifying the manufacturing

sector and overcoming the structural constraints associated with the legacy of

apartheid.

However we need to formalize an agenda for economic transformation and industrial

development by developing a programmatic response through which to tackle the

challenges of economic growth and employment creation facing the province. It is

increasingly obvious that this cannot be done without engaging the private sector,

targeting growth and labour absorptive sectors, developing Industrial Action Plans

which emerge out of intensive sector engagements, and building greater co-

ordination capacity within government and between government, labour and the

private sector’.

2.3 District Growth and Development Summits The District Growth and Development Summit Agreements (DGS) adopted by the various

district municipalities in the Eastern Cape Province also provide a useful guide for AsgiSA-

EC. Despite commitments by various parties who were signatories in the agreements there

is little progress in the implementation of the identified priority programme in particular

around economic growth and development. The parties to the DGSs all recognize the need

for accelerated and shared growth in their respective municipalities and need to build the

capacity of the developmental State to implement successful and sustainable programmes.

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2.4 Accelerated and Shared Growth Initiative of South Africa (AsgiSA)

The provincial government did recognise that in order to achieve provincial targets a new

approach and impetus to economic growth and development is required. At a national level

the National Spatial Development Perspective, Macro Economic Strategy, Regional

Industrial Development Programme and the Accelerated and Shared Growth Initiative of

South Africa are the main informants of AsgiSA-EC programmes.

AsgiSA plans to improve skills, remove logistical bottlenecks and increase economic

participation. AsgiSA is an implementation programme, around the following themes:

• Infrastructure Programmes

• Sector investment (or industrial) strategies

• Skills and education issues

• Second economy interventions

• Macro-economic issues

• Public Administration issues

AsgiSA aims to accelerate levels of growth in the country, with targets of 4, 5% until 2009,

and 6% between 2010-2014. It puts measures in place to ensure that growth reduces

poverty and inequality in the country, through calling on the state to play a more active role

in correcting market failures and accelerating economic transformation. In order to pick up

levels of economic growth, AsgiSA aims to remove a number of obstacles to growth,

including:

• Reducing the cost and ease of doing business;

• Reducing barriers to entry through targeting pro-poor growth sectors and through a

range of 2nd economy interventions including the provision of support packages and

use of state procurement to enable BBBEE participation and partnerships in major

investments;

• Reducing the cost and efficiency of logistics through the development of world-class

logistics capability in the IDZs, and access linkages to the rural economy;

• De-bottlenecking regulatory barriers through addressing EIA obstacles and

identifying red tape issues in municipalities;

• Addressing our skills deficit through a targeted skills plan, and the establishment of

JIPSA to prioritize and co-ordinate skills development; and

• Beefing up the capacity of the state to facilitate economic planning and development.

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2.5 Political Context The 52nd national conference of the ruling party, the African National Congress, held in

Polokwane in December 2007, provided a basis for a number of wide-ranging strategic

debates that culminated in policy affirmations and adjustments2.

The governing party’s resolutions provide a sound political mandate for national

development policy in the country. Amongst other considerations, the conference stressed

the importance of integrating and adapting programmes for rural development, land reform

and agrarian change into a clear policy context, including strategies to empower people who

derive their livelihoods from the utilisation and development of productive land.

The conference further affirmed a determination to strengthen state capacity and to devote

more resources to the challenges of rural development, land reform and agrarian change. In

particular, this determination includes the following:

• To create an over-arching Agency with the resources and authority to drive and

coordinate integrated programmes of rural development, land reform and agrarian

change;

• To plan and implement large-scale programmes to establish new smallholders and to

improve the productivity of existing small-scale and subsistence farmers;

• To integrate smallholder activities into forward and backward linkage production

value-chains and to link them with appropriate markets;

• To build dedicated state and private institutions to deliver effective support to land

reform beneficiaries, in general, and to smallholder agriculture and family farms in

particular;

• To improve the ability of government to take the lead in innovation, research and

development and extension services appropriate to the development of a sustainable

and integrated smallholder farming sector;

• To work together with commercial agricultural interests and the private farming sector

to promote black economic empowerment;

• To create partnerships between emerging and established farmers through

establishing linkages among large and small farmers, through procurement and

contracting-out relationships;

2 African National Congress: 52nd National Conference. 16-20 December, Polokwane. www.anc.org.za.

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• To build institutions that will contribute towards more equitable structures of

production and ownership in rural areas, including through collective ownership,

employment equity, skills development and support for new enterprises in the

agricultural sector;

• To support the growth of rural market institutions, through the provision of

infrastructure and by assisting rural communities and small farmers to build

organisations which help them to access markets, to build links with formal sector

value-chains and to coordinate their activities to realise economies of scale;

• To ensure that such initiatives are able to include producer co-operatives, small-

holder associations, input supply co-operatives, marketing co-operatives and state

regulated institutions designed to support and promote market access and collective

action amongst small rural producers;

• To ensure that the allocation of traditional land is democratised in a manner which

empowers rural women and supports the building of democratic community

structures at village level that are capable of driving and coordinating local

development processes;

• To accelerate the development of rural infrastructure, including roads and services to

deliver potable water, electricity and irrigation;

• To ensure that the former Bantustan areas are properly provisioned with an

infrastructural base for economic and social development and that farm dwellers

benefit from universal access to free basic services; and

• To improve coordination and synergy between departments, agencies and all

spheres of government so as to ensure an integrated approach to land reform and

rural development.

2.6 AsgiSA-EC Development Mandate

The development mandate that has led to the establishment of AsgiSA-EC rests on six

pillars, namely:

a) Agriculture and agro-processing aimed at managing 1 million livestock units and

putting 40 000ha under irrigated cultivation and 500 000 ha under dry-land

cultivation, focusing primarily on food as well as industrial crops for agro-processing

and bio-fuel production;

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b) Forestry Development through 100 000 ha of new afforestation, the improved

management of existing forests, and the development of downstream manufacturing

opportunities in the timber industry;

c) Water resources development aimed at optimizing water resources in the

Mzimvubu Catchment as a catalyst for agrarian transformation. Key areas of focus

include using 640 million m3 for forestry, agricultural, livestock watering, domestic

and industrial use in the surrounding area.

d) Hydro-power and alternative energy aimed at generating 1 500 MW of clean,

renewable energy.

e) Tourism Development linking eco-tourism on the Wild Coast with the adventure

hotspots of the Southern Drakensberg through a branded tourism corridor that

includes Mandela’s Birthplace and the Mandela Museum in Mthatha; and

f) Addressing unsustainable human settlement patterns through the rural, urban

and economic renewal of targeted areas.

This mandate demonstrates a rural focus that goes beyond agriculture but seeks to address

the broader developmental aspects as informed by the identified high impact priority

projects. Overarching issues impacting on this mandate include land reform, education and

skills development, human and financial resources availability and local leadership and

community capacity development.

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3 Key Strategic Considerations and the AsgiSA-EC Pa radigm

3.1 Strategic Focus and drivers

Evidence, as illustrated in the PGDP review, suggests that without meaningful agrarian

reform little impact if any will be made on rural development. The diagram below depicts the

proposed AsgiSA – EC strategic focus and paradigm.

The vision for rural development is based on creating sustainable and vibrant rural economic

development cluster and zones that result in decent jobs, incomes and sustainable

livelihoods. Agrarian reform is seen as the main driver that will ensure the attainment of this

vision.

Agrarian reform focuses not only on land reform and agriculture but also on a broader set of

issues: the class character of the relations of production and distribution in farming and

related enterprises, and how these connect to the wider class structure (Cousins: 2005).

Agrarian reform concerns the fundamental re-orientation and redistribution of the agricultural

structures and resources of a country and also relates to the broader issues such as credit,

taxations, rents, markets, land consolidations, infrastructure, extension support, production

support services, etc. Although distinct, and presenting different challenges, land reform and

agrarian reform are inseparable3.

3 Agrarian reform and the ‘two economies’: transforming South Africa’s countryside, Ben Cousins (2005)

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Infrastructure

Water development

Capacity, competence

Capital

LandTourism

Agro -processing

Timber Processing

Energy

Agrarian Reform

Social mobilization, institutional alignment, stake holder management

Creating a Vibrant and Sustainable Rural Economy t hat Improves Livelihoods

Resources Needed Key Driver Opportunities

People Human Settlement

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This development paradigm remains relevant to the mandate of AsgiSA-EC but takes a

broader strategic focus as informed by the objective realities confronting the rural

communities.

3.2 Institutional alignment

Summary of Options

Engagements with various role players have necessitated a need for a rethink on the

institutional alignment of AsgiSA-EC. The proliferation of organisations involved in rural

development was identified as a major challenge and has proven to be frustrating and

inefficient at provincial, local and community levels. An evaluation has been done on the

institutions which have been established as subsidiary entities of Provincial Government in

order to assess a possible consolidation between AsgiSA-EC and one or more of the

organisations. The fact that AsgiSA-EC was not yet institutionalized in terms of the

legislative framework and PFMA also informed this strategic consideration.

After an evaluation of the various4 institutions the ECDC and ECRFC were identified as

being more aligned to AsgiSA-EC. Both institutions have similar mandates on economic

development with the ECRFC more focused on rural development whilst the ECDC mandate

is on the broader economic development with a biased focus on project (SMME) finance,

trade and investment promotion and property management.

The ECRFC Act and legislative context for AsgiSA-EC

The organisation which has the closest alignment to AsgiSA - EC is the Eastern Cape Rural

Finance Corporation (ECRFC). The ECRFC is 100% owned by the Eastern Cape

Department of Agriculture (ECDoA). The Eastern Cape Rural Finance Development

Corporation Act, 9 of 1999, cites as its object the following:

"to promote, support and facilitate rural development in the Province by:

• mobilising financial resources and providing financial and supportive services to

persons domiciled, ordinarily resident or carrying on business within the Province;

4 Other institutions looked at include RuLiv, ECATU, IDZs. Ntinga OR Tambo Development Agency, Amatole Development Agency (Aspire), EC Parks Board and EC Tourism Board. The conclusion reached was that there is more scope to co-ordinate and work closely with all these institutions with the possibility of consolidating programmes with others such as ECATU in the long run.

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• promoting and encouraging private sector investment in the Province and the

participation of the private sector in contributing to economic growth;

• promoting, assisting and encouraging the development of the Province's human

resources and financial infrastructure, in association with other institutions having

similar or related objects;

• acting as the government's agent for performing any development-related tasks and

responsibilities that the government considers may be more efficiently or effectively

performed by a corporate entity"

From the above, it is apparent that the reformulation of the ECRFC as an implementing

agent to fulfil the development vision of the Department of Agriculture falls clearly within the

ambit of the legislation that established it. It is further evident that the strategic objectives of

AsgiSA-EC also falls within the current objects cited in the ECRFC Act, and that new

enabling legislation may therefore not be required for AsgiSA-EC.

It is evident therefore that the ECRFC Act provides the legal framework for the ECRFC to

give effect to the Department of Agriculture's objectives and recorded strategies. The Act, in

promoting, supporting and facilitating rural development is therefore conducive to enable

AsgiSA-EC to execute its delivery mandate within its Strategic and Business Plan, and within

the ambit of the national AsgiSA program.

ECRFC Focus

The initial focus of the ECRFC was on micro finance for emerging farmers. A financial

service division based on micro lending to emerging farmers was established known as

Uvimba. In the last few years it was recognised by the ECDoA that there was a fundamental

flaw in the business strategy of the ECRFC in addition to the operational challenges facing

the organisation. The fundamental flaw referred to was that the primary focus of the ECRFC

was on providing finance to emerging farmers without the necessary developmental support.

In April 2007, a new division was established within the ECRFC referred to as Vulithuba. The

intention of the ECDoA was to develop an agency to implement high impact projects

identified by the department. Vulithuba has gone through a learning curve since its

establishment and is now at a point where it has sufficient experience to take a quantum

leap forward in developing its institutional capacity. The four key strategic focus areas for

Vulithuba are:

• High impact projects which include integrated cropping and livestock;

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• Securing of suitable agricultural land for the purposes of sustainable Agrarian

Transformation. A considerable component of the land is based on the land reform

process initiated by government which requires that 30% of white commercial agricultural

land be transferred to emerging farmers in rural areas. In the Eastern Cape, this means

that a target of 365 000 hectares per annum must be transferred up to 2014 for the

target to be met;

• Farmer rehabilitation is a further key strategic focus area. Huge investments have been

made into agricultural projects over the past decade. Many of the projects are performing

very poorly and can be resuscitated and developed into high performing agricultural

initiatives with the appropriate refocusing and resourcing. Examples of these projects are

the seven irrigation schemes, Magwa Tea, Majola Tea, and Kangela amongst others;

and

• The fourth area relates to client support which is based on initiating a process to assist

emerging farmers who are in financial trouble and unable to pay their loans.

Proposed institutionalisation

In order to achieve the desire impact towards sustainable rural development, it is of crucial

importance to ensure the operational legitimacy of AsgiSA-EC. As such, the immediate

institutionalisation of the organisation has to be prioritised. Given the mandate and strategic

focus of AsgiSA-EC, an alignment has been identified with the ECRFC and a strong

strategic fit established. As a result thereof, it is the direct intention of AsgiSA-EC to

immediately institutionalise itself within the ECRFC.

In order to effect such institutionalisation, the following steps would be necessary:

• AsgiSA-EC established as a subsidiary of the ECRFC; and

• Immediately incorporate Vulithuba5 to the AsgiSA-EC structure.

Proposed integration

Various stakeholders, including Treasury, have identified a need for the integration,

consolidation or compacting of the various organisations involved with rural development in

the province. As such, following the successful institutionalisation of AsgiSA-EC an

evaluation of and negotiation with various institutions would be performed as part of a

process of consolidation and strategic alignment within the sphere of rural development. 5 Vulithuba currently has a small unit led by the Chief Operations Officer. Programme finance support is outsourced to PWC. The focus areas are incorporated in this strategic document.

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Given the institutionalisation of AsgiSA-EC within the ECRFC, such process would inevitably

commence with the evaluation of Uvimba and the following action steps would be proposed:

• Ring-fence and undertake an institutional assessment of Uvimba;

• Possible restructuring of Uvimba so that it responds effectively to the emerging

agrarian reform and rural development mandate. This restructuring depends on a

favourable assessment and negotiation with ECRFC Board; and

• Transfer of consolidated AsgiSA-EC operations into ECRFC legal entity.

The integration of AsgiSA-EC with the ECRFC, as referred to above, would necessitate a

rethink on the name of the consolidated organisation. The strategy proposes the renaming

of AsgiSA-EC to reflect its rural development focus. This includes the consideration of

names such as the ‘Eastern Cape Rural Development Agency’, ‘Eastern Cape Rural

Management Authority’, etc.

3.3 Geographic focus The spatial landscape of the Eastern Cape illustrates that the rural areas are predominantly

on the eastern part of the province and mainly in the former homelands of the Transkei and

Ciskei6. These rural areas are mainly characterized by high concentration of poverty,

unemployment and under development.

The geographic orientation of AsgiSA-EC is proposed to be limited to the rural areas within

the Eastern Cape. However, it is important to note that the organisation would strategically

focus on the prioritisation of poverty stricken areas which have been identified to be primarily

based in the eastern part of the Eastern Cape.

In this context the Mzimvubu Development Zone remains a strategic focus of AsgiSA-EC.

New rural strategic development zone and clusters will be identified and developed.

3.4 Rural Development Strategy and Policy

The need for a rural development policy and enabling legislation is becoming increasingly

important. It is important for the Eastern Cape to become very proactive in the formulation of

6 During the engagements6 with various stakeholders there were strong views that ASGISA-EC whilst focusing on certain rural zones such as the Mzimvubu Basin must have a provincial rural focus. Even if this was the case the eastern part of the province would still be the focus area because of the highly pronounced state of underdevelopment.

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a provincial rural development strategy which can play an important role in informing the

development of national policy. In the long term, organizations such as AsgiSA-EC require

policies that are to inform their actions and approaches. Equally, it is important to ensure

that the provincial rural development policy and strategy initiatives are aligned with national

policy initiatives to ensure sustainability and national support.

3.5 Political Support

It is important that there are key political champions at a provincial level to ensure that there

is the necessary political support in implementing the rural development strategy and AsgiSA

– EC business plan. Whilst the primary catalyst is agrarian transformation, implementation

will require the support of all departments in particular Office of the Premier, Agriculture and

Economic Development and Treasury.

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4 Organisational Strategy and Design

4.1 Vision and Mission

AsgiSA-EC visualizes :

A vibrant and sustainable rural economy that improves livelihoods and unlocks the dormant

potential of the land and the people of the Eastern Cape.

The Mission in pursuit of this Vision is:

Through partnerships, high level and focused integration and co-ordination, AsgiSA - EC will

play a direct and catalytic role in building a sustainable and modern, rural-based economy,

primarily through agrarian reform.

4.2 Strategic Goals and Objectives

The Strategic Goals to realise this vision are identified as follows:

Goal 1: Establishment of a Competent and Effective Organisation;

Goal 2: Effective co-ordination and implementation of High Impact Priority Programmes;

Goal 3: Building the Organisation’s Brand and Reputation;

Goal 4: Strengthening of Institutions at local entity level; and

Goal 5: Effective and Complementary Stakeholder Relationship Management

The Strategic Objectives and Interventions through which these Strategic Goals will be

achieved are listed in the Tables below.

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4.2.1 Establishment of a Competent and Effective Organisation

Strategic Goal

Strategic Objectives and Interventions

Establishment of a Competent and Effective Organisation

1. To ensure that the organisation is staffed according to needs and proper management systems are in place.

Strategic Interventions: 1.1 Formulate a Human Resources and Organisational Development Plan

by 31 March 2009. 1.2 Recruit and place key staff according to plan 1.3 Develop and implement appropriate ICT infrastructure plan and

systems by June 2009. 1.4 Ensure that the organisation has an ISO Quality Management System

accreditation by March 2010. 1.5 Ensure that a performance management system policy is approved by

the Board by February 2009.

2. To establish effective corporate governance systems and procedures.

Strategic Interventions: 2.1 Decide on and establish the preferred legal structure by April 2009. 2.2 Facilitate the national listing of the organisation by March 2009. 2.3 Establish and ensure effectiveness of Board Committees by March

2009. 2.4 On an ongoing basis, ensure compliance with relevant legislation and

charters. 2.5 Develop and Implement Risk Management and Fraud Prevention

Plans by March 2009. 2.6 Facilitate the approval of the Delegations of Authority by January

2009. 2.7 Obtain unqualified audits, annually from April 2009.

3. To ensure appropriate funding of the organisation.

Strategic Interventions: 3.1 Develop appropriate funding models for AsgiSA - EC and its

initiatives by June 2009. 3.2 Develop and implement a funding strategy and appropriate models

beyond fiscal flow.

4. To develop appropriate policies to ensure smooth operations.

Strategic Interventions: 4.1 Develop key (priority) policies for Board approval. 4.2 Ensure that all relevant (non-financial) policies and procedures are

approved by financial year end. 4.3 On an ongoing basis, ensure that all policies are in compliance with

relevant legislation and facilitate the smooth running of the organisation.

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4.2.2 Effective co-ordination and implementation of High Impact Priority Programmes

The essence of AsgiSA-EC’s function is to co-ordinate the implementation of HIPPs. Such

HIPPs have been identified as strategic programmes that would lead to economic

development in the rural areas of the Eastern Cape.

Strategic Goal


4.2.3 Building the Organisation’s Brand and Reputation The efficiency and effectiveness of the organisation in meeting its developmental mandate

will ensure that it earns a positive reputation. This will be build through deliberate strategies

including branding.

Strategic Goal


Building the Organisation’s Brand and Reputation

7. To ensure that the organisation is branded and communication with stakeholders enhanced.

Strategic Interventions: 7.1 Develop a communication and consultation strategy. 7.2 Develop mechanisms for continuous reporting and stakeholder

engagement as part of the communication strategy. 7.3 Develop a branding strategy and brand for the organisation.

Effective co-ordination and implementation of High Impact Priority Programmes

5. Generate projects for implementation after careful assessment of potential and impact

Strategic Interventions: 5.1 Review resource assessments previously carried out within the target

areas 5.2 Identify gaps in resource assessments 5.3 Commission carefully targeted resource assessments 5.4 Identify and map potential areas and projects 5.5 Add to list of projects if potential is assessed as viable

6. To ensure that high-impact programme are defined as implementable

projects.

Strategic Interventions: 6.1 Develop project plans and feasibility assessments 6.2 Mobilise and secure resources – technical, managerial, financial,

infrastructural etc. 6.3 Begin implementation of projects that will lead to high impact

programme achievement 6.4 Establish overarching institutions in zones or clusters where

economic scale dictates their viability

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4.2.4 Strengthening of Institutions at Local Level

Communities, local leadership in the form of municipalities, traditional leaders, labour and

other civil society leaders are critical to the attainment of the vision of the organisation.

Strategic Goal


Strengthening of Institutions at local entity level

8. To ensure that institutional capacity is developed at Local level.

Strategic Interventions:

8.1 Identify capacity and institutional gaps amongst participating stakeholders.

8.2 Develop targeted capacity and institutional development strategies and plans

8.3 Implement these development strategies and plans.

4.2.5 Effective and Complementary Stakeholder Relationship Management Building relationships with stakeholders and ensuring effective and beneficial partnership is

essential to the success of AsgiSA-EC.

Strategic Goal


Effective and Complementary Stakeholder Relationship Management

9. To ensure that AsgiSA-EC is complementary and relevant to other key stakeholders.

Strategic Interventions: 9.1 Map stakeholders involved in the rural development programmes and

projects . 9.2 Establish partnerships with relevant stakeholders operating in the rural

development zones or clusters. 9.3 Establish project based management teams with different departments,

municipalities and relevant communities. 9.4 Establish dedicated resources within AsgiSA-EC that will carry out

effective consultation with participating communities and other stakeholders

9.5 Develop and implement social compacts and charters with communities where projects are implemented

9.6 Attract new partners and stakeholders to the organisation and communities

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4.3 Operating principles The following seven key operating principles have been identified to guide the activities of

the organisation:

• Integration and co-ordination;

• Partnerships;

• Transparency, Honesty and Integrity;

• Consultation and communication;

• Shared and Accelerated Growth;

• Optimising local economic benefits; and

• People centred development.

4.4 Organisational Structure The vision, mission, goals and strategies of the organisation influence the organisational

structure. In order to give effect to the above, AsgiSA - EC requires capacity in the areas of

research, legal, planning, funding, governance, programme management and stakeholder

management. These requirements have been identified by evaluating the HIPP stages of

development to resultant skills and capacity needs. These skills and capacity requirements

have been translated into a long-term proposed entity structure for AsgiSA – EC which

involves the following units and sub-units.

Unit Unit focus

Office of the CEO � Legal and corporate secretary

� Planning, monitoring and evaluation

� Marketing and communications

� Stakeholder management

� Internal audit

Programme Management Unit � HIPP project co-ordination and implementation

� Research and development

Asset Management Unit � Land reform assets

Financing Unit � Funding sourcing

� Project financing and structuring

� Investment portfolio management

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Unit Unit focus

Support Services Unit � Finance

� Procurement

� Legal support

� Information and Communications Technology

Human Resources � Skills and capacity development

� Labour relations and support

As part of its governance the Board of Directors will establish three committees: Human

resources and remuneration; Project, finance and investments; and Audit.

The following diagram depicts the proposed five-year structure.

Manager – GIS

Research and Development specialist

Project Administrator

Project Manager –Infrastructure

Project Manager –Forestry

Project Manager –Livestock

Project Manager –Cropping

Manager – GIS

Research and Development specialist

Project Administrator

Project Manager –Infrastructure

Project Manager –Forestry

Project Manager –Livestock

Project Manager –Cropping

Financing UnitSupport Services

UnitProgramme

Management UnitAsset

Management Unit

Long-term HR (operational) structure

Office of the CEO

Internal Audit Manager

Stakeholder Manager

Marketing & Communications Manager

Planning and M&E Manager

Company Secretary

Internal Audit Manager

Stakeholder Manager

Marketing & Communications Manager

Planning and M&E Manager

Company Secretary

Resource Mobilisation Manager

Investment Portfolio Manager

Resource Mobilisation Manager

Investment Portfolio Manager

Legal Manager

ICT Manager

Supply Chain Officer

Accountant

Finance Manager

Legal Manager

ICT Manager

Supply Chain Officer

Accountant

Finance Manager

Chief ExecutiveOfficer

Chief ExecutiveOfficer

Chief Operating Officer

Chief Operating Officer

Land Reform Manager

Land Reform Manager

Human Resources

Chief FinancialOfficer

Chief FinancialOfficer

Corporate Finance Specialist

Corporate Finance Specialist

Human Resources Manager

Human Resources Manager

Labour Relations and HR Support Officer

Skills and Capacity Development Officer

Labour Relations and HR Support Officer

Skills and Capacity Development Officer

AsgiSA-EC Board of Directors

Programme Management Unit: Chief Operating Officer – Executive Manager Position, to

drive the project co-ordination and implementation activities of AsgiSA-EC, and to position

the entity as having valuable and relevant competence in project implementation. This is the

centre and engine of the organisation and will mainly adopt project management as part of

its implementation approach.

Asset Management Unit: Land Reform - Manager Position, to ensure that AsgiSA-EC

makes competent and informed interventions to promote successful transfer and

sustainability of agricultural and forestry business to land claim and land reform

beneficiaries.

22

Support Services Unit: Chief Financial Officer – Executive Manager Position, primary role

is to direct and control finance function and co-ordinate the Support Services within AsgiSA-

EC. Beyond this point this individual is expected to be a business partner to other units with

the view to improving operational excellence within the organisation.

Financing Unit: Corporate Finance Specialist – Executive Manager Position, to obtain

funding and resources from private, public and international funders, donors, and partners,

to fund projects and to structure project financing.

Human Resources: Human Resources Manager – Manager Position, to ensure that

AsgiSA-EC has the right number of willing, competent, motivated and aligned staff members,

in compliance with employment law and best practices, to achieve corporate objectives

The above structure excludes the rural finance component as this is still subject to

successful evaluation and negotiation with ECRFC Board.

23

5 High Impact Priority Programmes (HIPPs) This section summarises programmes to be co-ordinated and implemented by AsgiSA - EC

in building a vibrant and sustainable rural economy. There are currently six high impact

priority programmes (HIPPs), each representing a portfolio (focus area of rural economic

development), namely: Agriculture and agro-processing; forestry development; water

resource development; hydro and alternative energy; tourism; and human settlement and

planning.

5.1 Agriculture and Agro-processing Portfolio

High Impact Priority Programmes

Programme 5 year strategic business plan deliverable

Deliverables Target

Agriculture - Dry-land cropping 500 000 hectares over 25 years

2034 100 000 hectares

Agriculture - Irrigated cropping 40 000 hectares over 20 years

2029 10 790 hectares

Agriculture – Livestock development 1 000 000 Large Stock Units

(LSU’s) over 10 years 2019 400 000 LSU

100 fenced grazing paddocks

Agro-processing – Development of regional food processing and bio-fuel industries

Food processing - Maize mills, packhouses, canning, juicing production facilities, oil seed refining, meat processing*

Bio-fuel – Two 100 000 mt bio-diesel and two 100 000 mt bio-ethanol production facilities**

2034 Four maize mills, ten feedlots, five packhouses, one meat processing facility*

* number and location of processing facilities to be determined once Agriculture HIPPs implemented

** number of bio-fuel production facilities dependant on crop suitability pilots and issue of licenses

24

Diagrammatically, the priority programmes within agriculture are as follows:

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Biofuel

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Food OtherAgriculture: High impact priority programmes (HIPP’ s)

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Food OtherAgriculture: High impact priority programmes (HIPP’ s)

Maize

Soybeans

Canola

Sunflower

Sorghum

Sugar cane

Flowers

Sugar beet

Dairy

Meat

Dairy

Leather

Targets

Irrigated40 000 Hectares

Dry-land 500 000 Hectares

Fruit production

High impact priority programmes

Large Stock Units (LSU’s)1 millionLivestock

Cropping

25 Years

20 Years

10 Years

5.2 Forestry Development

Forestry presents significant opportunities for rural development in the Province. The figure

below illustrates the potential to develop 100 000 ha of new forestry plantations which should

yield an additional 1, 8 million m3 of timber per annum, thereby creating 80% more wood for

processing.

25

Ensuring fibre availability is the main strategic focus of forestry development portfolio. The

targets for this focal area are illustrated in the table below.


Programme 5 year strategic business plan deliverable Deliverable Target

Forestry: Development of new forestry plantations

Establishment and management of 100 000 ha of new plantations

2024 Identification and scoping of 100 000 ha of suitable land for afforestation

Facilitate implementation of 30 000 hectares of plantations

5.3 Water Resource Development

The development of water resources in the Mzimvubu Basin as a key catalyst for growth and

development is the focus areas of the Water Resource Development portfolio. Preliminary

studies are currently being conducted on the various aspects including irrigation, hydro,

pumped storage and forestry. The targets for this focal area are illustrated in the table below.


Programme 5 year strategic business plan deliverable Deliverables Target

Water Resource Development: Development of water infrastructure

Development of new water and hydro-electric power generation infrastructure (to be informed by Mzimvubu Catchment

Development feasibility study) to support irrigated cropping and hydro and alternative energy HIPPs

Revitalisation of seven existing irrigation schemes to support irrigated cropping HIPP

Development of 40 000 ha new irrigation schemes in low rainfall areas to support irrigated cropping HIPP

2034 Feasibility study for pumped storage schemes

Feasibility study for Hydro-electric power generation

Operationalise 7 940 hectares of existing irrigation schemes

Develop 2 850 hectares of new irrigated schemes

26

5.4 Hydro and Alternative Energy

Active partnerships will drive the implementation of this portfolio. Feasibility studies, to be

undertaken with DWAF support, will inform the interventions in particular on hydro. Work has

already begun on assessment of the hydro electricity power generation potential.



Hydro and Alternative Energy: Renewable energy generation

Development of 1 500 MW of clean renewable energy generation

2034 Pre-feasibility study on renewable energy strategy

Implementation of short and medium term renewable energy strategies

Facilitate implementation of identified viable hydro and alternative energy projects

5.5 Tourism Development

The development of tourism will be mainly influenced by research, market opportunities and

partnership development. The Master Plan currently facilitated by DEDEA will inform the

AsgiSA-EC interventions.



Tourism: Nelson Mandela precinct

Develop and operationalise the approved tourism strategy and plan

2010 Develop and begin operationalising tourism masterplan for the Mthatha precinct

Tourism : Ntlangano conservancy Support the development and implementation of the strategy

2011 Support the development and implementation of the strategy

27

6 Development Impact

Over the next five year AsgiSA-EC aims to create more than 22 000 direct jobs and thereby

directly impacting on the lives of 132 000 citizens within the Eastern Cape rural community.

This is in line with AsgiSA-EC’s focus on the implementation of programmes which have the

potential of making high impacts on the rural economies of the Eastern Cape.

The long term impact of the AsgiSA-EC programmes is depicted in the table below.


Programmes Deliverables Target

Development Impact

New Direct Jobs

Community impact

Agriculture – Dry-land cropping 500 000 hectares 2034 20 000 120 000

Agriculture - Irrigated cropping 40 000 hectares 2029 32 000 192 000

Agriculture – Livestock development

1 000 000 Large Stock Units (LSU’s)

2019 20 000 120 000

Agro-processing – Development of regional food processing and bio-fuel industries

Food processing - Maize mills, packhouses, canning, juicing production facilities, oil seed refining, meat processing

Bio-fuel – Two X 100 000 mt production facilities (1X bio-diesel, 1X bio-ethanol

2034 3 500 20 400

Forestry: Development of new forestry plantations

100 000 ha of new plantations 2024

4 000

24 000

Total 79 500 476 400 Both short and long-term developmental impacts, as identified in this section, are only for

those programmes which relate to Agriculture & Agro-processing and Forestry HIPPs. The

impact would therefore be positively affected by the introduction and roll-out of HIPPs within

the Water Resource Development, Hydro and Alternative Energy and Tourism portfolio’s.

These have been excluded due to these portfolios being at inception phases within their

development cycle.

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7 Finance and funding requirements

The funding requirements which have been identified for AsgiSA–EC include operational

funding (running costs), infrastructure related funding and direct project funding (including

intra-project infrastructure).

The table below depicts the five-year (inflation adjusted) funding requirements for the

organisation:

AsgiSA – EC funding requirements

2010 – 2014 - R’million

Extracts Year 2010 Year 2011 Year 2012 Year 2013 Year 2014

Revenue – HIPPs - (220) (535) (931) (1 401)

Total expenditure - HIPPs 492 786 1 399 2 100 2 330

Net funding requirement – HIPPs 492 566 843 1 169 930

Operational funding requirements 54 56 61 67 74

Funding requirements 546 622 905 1 236 1 004

Committed by Treasury (250) - - - -

Net funding shortfall 296 622 905 1 236 1 004

The five-year funding requirements totalled R4.3bn with R250m secured from Provincial

Treasury for the 2010 financial year, resulting in a net funding shortfall of some R4.1bn.

Financing will initially be primarily sourced from Provincial and National Treasury and

alternative funding sourced by the Financing Unit from:

• Revenue generated from an asset base - combination of ECRFC existing asset base

and TDRF asset base;

• Project management fee – for HIPP project management services rendered;

• Administration fee – for Donor agency and co-ordination services;

• International markets – Carbon credits for environmentally responsible projects;

• Treasury – infrastructure and project funding; and

• Strategic partners/investors.

29

A project management fee of 7.5% of budgeted HIPP funding is proposed to fund

operational expenditure requirements. The self-sustainability model does however indicate

that the organisation will require additional operational funding of R17m for at least the 2010

financial year and thereafter the organisation could be self-sustainable should project

funding levels be achieved.

7.1 Funding: Key principles The key funding principles to be adopted by the organisation are:

• Centralised receipt and disbursement of funding through AsgiSA-EC;

• Entering into SLA with departments and other service providers;

• Levying of a project management and administration fee for administering project

funding and implementation;

• Use of revenue generated from the TDRF asset base to be used to fund operational

expenditure;

• Equity participation and involvement of community out-growers;

• AsgiSA-EC to seek equity participation in HIPP related projects, with a clearly outlined

exit strategy being built into the project business plan;

• Minimum BBBEE equity participation of 25.1%;

• Asset base to be used to leverage project funding; and

• Compliance with legislation including the PFMA.

7.2 Funding of AsgiSA-EC The overriding consideration in the development of the funding model for the organisation

has been the pursuit of self-sustainable funding mechanisms. This is to ensure that the

organisation does not unduly rely on grants from the provincial or national fiscal allocations.

As a direct result thereof, the envisaged organisational funding model has been developed

taking into account the funding sources, resultant income streams and then matching these

to the projected funding requirements.

The following are the identified funding requirements for the entity:

• Operations (running costs);

• Infrastructure related expenditure; and

• Direct project expenditures (set up costs, intra-project infrastructure and working capital

requirements).

30

The diagram included below depicts the long-term funding sources and the utilisation thereof

in accordance with the funding requirements.

Proposed Funding Model

31

8 Business Model to drive implementation

AsgiSA-EC has adopted an Agribusiness model (see below) as a main driver for the

implementation of its Agriculture and Agro-processing programmes. The Agribusiness

Model is premised on AsgiSA-EC establishing formal relationships with key constituencies

along the value chain and is premised on the following principles:

• Mitigating project risk that would ordinarily be taken on by the community;

• Creating sustainable community business structures and ownership models;

• Setting up commercial special purpose entities (SPE’s), with varying equity ownership by

AsgiSA-EC, investors or strategic partners and the community;

• Co-ordination of centralised production by SPE which can meet the minimum supply or

off-take agreements;

• Effecting community participation in identified SPE’s through outsourcing some of the

production activities to community based out-growers; and

• Provision of technical support to community based out-growers by the SPE.

Although there may be variations on the theme and detail, the principles of this model may

be applicable in other sectors and not limited to the agricultural sector.

The schematic below illustrates, in a diagrammatic form, the above Agribusiness model.

Construction SPE (illustrative purposes only)

•Agricultural processing and packaging•Stakeholder mobilisation•Export oriented programmes (e.g. ISO certifications and licensing)

Eastern Cape Province

Tourism SPE (illustrative purposes only)

Outgrower 1•Land, labour etc


•Central Production Unit (CPU)

•Off take agreements (e.g. PnP, Woolworths Food etc)

•Bulk input suppliers (e.g. fertiliser companies,, seed houses)•Service level agreements (e.g. transporters)

Agribusiness SPE AsgiSA-EC Value Addition Activities

•Banks, Finance Houses, developmental financial institutions

•BEE Partners

AsgiSA-EC (Proprietary) Limited

Strategic Partners (financing & investments)

Strategic Partners (business)

•Agricultural input support schemes

•Business support•Field and technical support schemes

An Illustrative Structure - The Agribusiness Model

Construction SPE (illustrative purposes only)

•Agricultural processing and packaging•Stakeholder mobilisation•Export oriented programmes (e.g. ISO certifications and licensing)










•BEE Partners
















•BEE Partners







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9 Conclusion

The five-year Strategic Business Plan has been developed for AsgiSA-EC having taken due

cognisance of the key challenges facing rural development in the Eastern Cape. The

organisation aims to become the key enabler to the advancement of sustainable rural

development and a catalyst to the upliftment of rural communities. Within this context, the

development of the Mzimvubu Development Zone remains a strategic focus area.

A number of entities and role-players currently exist within the realm of rural development

and a strategic role to be fulfilled by AsgiSA-EC is to enable a process of compaction,

consolidation and integration of these entities to drive a more cohesive and focused effort

towards improving the lives of rural communities in the Eastern Cape.

AsgiSA-EC would therefore seek to enable the creation and subsequent maintenance of a

sustainable rural economy, through an integrated and controlled land reform process that is

driven primarily by the agrarian transformation of these communities.

AsgiSA-EC has been established to make a difference in the rural communities of the

Eastern Cape and build on the successes of past initiatives. This will only be achieved

through focused implementation, by creating a centre of excellence to co-ordinate and

implement the HIPP strategy, align institutions and develop skills at local community level.

In this way, AsgiSA-EC will become a key pillar in the implementation of government

strategies to overcome rural underdevelopment and contribute towards alleviating rural

communities from the existing poverty and unemployment trap.

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