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2UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Context
In 2001, State President Thabo Mbeki announced an initiative to address underdevelopment in the most severely impoverished rural and urban areas (“poverty nodes”) in South Africa, which house around ten million people.
In 2001, State President Thabo Mbeki announced an initiative to address underdevelopment in the most severely impoverished rural and urban areas (“poverty nodes”) in South Africa, which house around ten million people.
The Urban Renewal Programme (urp) and the Integrated Sustainable Rural Development Programme (isrdp) were created in 2001 to address development in these areas. These initiatives are housed in the Department of Provincial and Local Government (dplg).
The Urban Renewal Programme (urp) and the Integrated Sustainable Rural Development Programme (isrdp) were created in 2001 to address development in these areas. These initiatives are housed in the Department of Provincial and Local Government (dplg).
Bushbuckridge
Maruleng
Sekhukhune
Alexandra
Maluti-a-Phofung
Galeshewe
Kgalagadi
Central Karoo
KhayelitshaMitchell’s Plain
MotherwellMdantsane
Chris Hani
Ukhahlamba
OR Tambo
Alfred NzoUgu
Umkhanyakude
Zululand
Umzinyathi
I-N-KUmzimkhulu
3UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Agriculture
– Selected sector: Tourism
z Investment opportunities
z Summary
z Appendix
� Activities
� Documents
� People
4UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboResearch processSummary of what we have done
ActivitiesActivitiesActivities DocumentsDocumentsDocuments PeoplePeoplePeople
z Desk research
z Two visits to node
– 24-28 July 2006, 31 July-3 August 2006
– understanding of potential for economic growth, specific opportunities for investments
– visits to potential economic growth initiatives across the tourism and agriculture sectors
z Thirty-one different types of documents – five Integrated
Development Plan (IDP) review documents
– ten Local Economic Development (LED) documents
– seven business plans/feasibility studies/proposals
– one economic profile of OR Tambo
– six documents regarding economic sectors
– two documents with listed projects
z Some of them available electronically
z Meetings with government / public sector and private sector / local people
– 13 meetings with district and local municipalities
– seven meetings with SMMEs, big businesses, independent consultants, local people
5UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Agriculture
– Selected sector: Tourism
z Investment opportunities
z Summary
z Appendix
� Introduction
� Key data points
� Current action
6UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Overview
SnapshotSnapshot
Area summaryArea summary
Key challengesKey challenges DemographyDemography
Income and employmentIncome and employment
HealthHealth
Development scorecardDevelopment scorecard
GovernanceGovernance
IDP assessmentIDP assessment
EducationEducation
IntroductionIntroductionIntroduction Key data pointsKey data pointsKey data points Current actionCurrent actionCurrent action
Introduces the node;summarises key issues
Lists pertinent acts and figures
Describes current interventions
GeographyGeography
Spatial developmentSpatial development
Development projectsDevelopment projects
Local people portraitLocal people portrait
7UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIntroductionSnapshot
Key information
Population: 2001 1 740 664
Area 15 535 km2
Population density: 2001 107.92 / km2
Estimated GDP: 2004 R 6.84 billion
Province Eastern Cape
Main town / city Mthatha
Historical overviewHistorical overviewHistorical overview
� A major part of the former Transkei is situated in OR Tambo
– The Transkei was one of eight black homelands founded in 1959 by the apartheid regime in order to ethnically divide the people of South Africa
� In the democratisation process in 1994 the Transkei became part of South Africa
� Nelson Mandela, South Africa's first democratic president, was born in the Transkei in 1918, and still has a home in Qunu
� The region is named after Oliver Tambo who was an anti-apartheid politician and central figure of the African National Congress (ANC). He was born in Mbizana in 1917 and became General Secretary of the ANC in 1955
� A major part of the former Transkei is situated in OR Tambo
– The Transkei was one of eight black homelands founded in 1959 by the apartheid regime in order to ethnically divide the people of South Africa
� In the democratisation process in 1994 the Transkei became part of South Africa
� Nelson Mandela, South Africa's first democratic president, was born in the Transkei in 1918, and still has a home in Qunu
� The region is named after Oliver Tambo who was an anti-apartheid politician and central figure of the African National Congress (ANC). He was born in Mbizana in 1917 and became General Secretary of the ANC in 1955
Source: Stats SA Census 2001, Eastern Cape Tourism, Wikipedia
OR TamboOR OR TamboTambo
8UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIntroduction Area summary – OR Tambo
z A very densely populated rural region covering most of the former Transkei
z The district municipality (DM) is divided into seven local municipalities (LM)
z Mthatha is the largest city and the commercial centre of the region
z Beautiful and untouched Wild Coast extending for 120 km
z Coastal climate with 25% of all the rainfall in South Africa
z Home of the great freedom fighters, Nelson Mandela and Oliver Tambo
z Very few commercial farmers
z Potential for forestry around Mthatha and in Pondoland
z A very densely populated rural region covering most of the former Transkei
z The district municipality (DM) is divided into seven local municipalities (LM)
z Mthatha is the largest city and the commercial centre of the region
z Beautiful and untouched Wild Coast extending for 120 km
z Coastal climate with 25% of all the rainfall in South Africa
z Home of the great freedom fighters, Nelson Mandela and Oliver Tambo
z Very few commercial farmers
z Potential for forestry around Mthatha and in Pondoland
Source: Monitor interviews, Monitor analysis
9UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIntroductionSome observations about OR Tambo
“It is just to difficult to get anything done here” – CEO Wilderness Safari
“Our biggest investment opportunity is Madiba’s future grave” – Eastern Cape Development Corporation (ECDC) Mthatha
“There are no big projects in the region hence the smaller ones cannot survive” –Municipality manager
“The IDP only consists of inaccurate high-level information” – Municipal manager
“In our region everybody is a farmer” – Department of Agriculture
“The municipality is not competent to do what it should do” – ECDC Mthatha
“Port St Johns’ land is under siege” – Wild Coast Development Forum
“Mbizana cannot build houses because of ten-year-old land claims” – Wild Coast Development Forum
“Since the region is believed to be unsafe the banks do not want to invest” – Development Bank of Southern Africa (DBSA)
“Everybody is doing everything” – LED manager about the lack of communication and co-operation
“It is just to difficult to get anything done here” – CEO Wilderness Safari
“Our biggest investment opportunity is Madiba’s future grave” – Eastern Cape Development Corporation (ECDC) Mthatha
“There are no big projects in the region hence the smaller ones cannot survive” –Municipality manager
“The IDP only consists of inaccurate high-level information” – Municipal manager
“In our region everybody is a farmer” – Department of Agriculture
“The municipality is not competent to do what it should do” – ECDC Mthatha
“Port St Johns’ land is under siege” – Wild Coast Development Forum
“Mbizana cannot build houses because of ten-year-old land claims” – Wild Coast Development Forum
“Since the region is believed to be unsafe the banks do not want to invest” – Development Bank of Southern Africa (DBSA)
“Everybody is doing everything” – LED manager about the lack of communication and co-operation
Source: Mail and Guardian Online 19 July 2006, Monitor interviews
10UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIntroduction Key challenges
� Complicated land tenure system
� Access to land is highly complex, leading to slow development and high property prices
� Lack of co-ordination of growth initiatives
� Complicated land tenure system
� Access to land is highly complex, leading to slow development and high property prices
� Lack of co-ordination of growth initiatives
Source: OR Tambo IDP Review 2006/2007, Monitor interviews, Monitor analysis
Nodal economyNodal economyNodal economy
Nodal politicsNodal politicsNodal politics
OthersOthersOthers
� Poor roads system
� Limited skills base
� Lack of any large-scale commercial presence
� No tradition of business or entrepreneurship in the node
� Poor industrial base
� Poor infrastructure support for business/industrial development
� Poor roads system
� Limited skills base
� Lack of any large-scale commercial presence
� No tradition of business or entrepreneurship in the node
� Poor industrial base
� Poor infrastructure support for business/industrial development
� Very densely populated region with few opportunities for large-scale farming
� Growth of informal settlements is depleting valuable grazing land
� The reputation of the former Transkei
� High crime rate
� Very densely populated region with few opportunities for large-scale farming
� Growth of informal settlements is depleting valuable grazing land
� The reputation of the former Transkei
� High crime rate
11UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIntroduction Local people portrait – Vuyiswa Dlabutshe
IncomeVuyiswa earns R590 at the clinic and R570 from the children’s grant, making up R1,160 a month in total. She has the following spending pattern: R700 on food, R250 to buy food for her children who attend school in town, R60 to pay funeral cover, and R150 on other things.
Other thoughtsHer parents passed away some years ago, so she has to look after those who come after her. Her husband left home in 2004 to seek employment in Gauteng and has not yet returned. She has a dream of becoming a professional nurse, and in 2007 plans to do a one-year course in nursing.
BackgroundVuyiswa Dlabutshe is an assistant at Qaqa clinic inTabankulu. Vuyiswa, who is 36 years old, has a husband who is not working and four children who are 15, 11, 8 and 4 years of age.
Education and careerVuyiswa grew up in Tabankulu where she attended school atBomvini JSS Grade 1 to Grade 9. Thereafter, as there was no high school in the area of her home, she had to move toSukude High School where she completed her matric. Due to the lack of funds she could not afford to further her education.In 2003 she joined a project which runs at the Bomvinilocation local clinic. While she was working as a gardener with two other women, they got an opportunity to be trained as assistant nurses.
12UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Overview
SnapshotSnapshot
Area summaryArea summary
Key challengesKey challenges
GeographyGeography
DemographyDemography
Income and employmentIncome and employment
HealthHealth
Development scorecardDevelopment scorecard
GovernanceGovernance
IDP assessmentIDP assessment
EducationEducation
IntroductionIntroductionIntroduction Key data pointsKey data pointsKey data points Current actionCurrent actionCurrent action
Introduces the node;summarises key issues
Lists pertinent acts and figures
Describes current interventions
Spatial developmentSpatial development
Development projectsDevelopment projects
Local people portraitLocal people portrait
13UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
MapMapMap
Key data pointsGeography
Geographical featuresGeographical featuresGeographical featuresLocal municipalities, population and major towns
� King Sabata Dalindyebo: 429,000 (Mthatha and Mqandili)
� Nyandenii: 294,000 (Libode)
� Qaukeni: 269,000 (Lusikisiki and Flagstaff)
� Mbizana: 255,000 (Mbizana)
� Mhlontlo: 213,000 (Qumbu and Tsolo)
� Port St Johns: 152,000 (Port St Johns)
� Ntabankulu: 128,000 (Ntabankulu)
Transportation
� Airport in Mthatha with daily flights to Johannesburg
� The N2 connecting Durban with Cape Town passes throughMthatha – The proposed N2 toll road would connect also Port St Johns – Most smaller roads are in poor condition
� Sixty-five per cent of the population have no bus service and 25% are more than 30 minutes away from a taxi service
� Proposed Kei Rail will link Mthatha to East London
Terrain and natural resources
� The Wild Coast is one of South Africa’s most beautiful andunspoilt regions with beaches, water falls and fishing
� Timber plantations close to Mthatha and in Pondoland
� Many rivers and 25% of all the rainfall in South Africa
Local municipalities, population and major towns
� King Sabata Dalindyebo: 429,000 (Mthatha and Mqandili)
� Nyandenii: 294,000 (Libode)
� Qaukeni: 269,000 (Lusikisiki and Flagstaff)
� Mbizana: 255,000 (Mbizana)
� Mhlontlo: 213,000 (Qumbu and Tsolo)
� Port St Johns: 152,000 (Port St Johns)
� Ntabankulu: 128,000 (Ntabankulu)
Transportation
� Airport in Mthatha with daily flights to Johannesburg
� The N2 connecting Durban with Cape Town passes throughMthatha – The proposed N2 toll road would connect also Port St Johns – Most smaller roads are in poor condition
� Sixty-five per cent of the population have no bus service and 25% are more than 30 minutes away from a taxi service
� Proposed Kei Rail will link Mthatha to East London
Terrain and natural resources
� The Wild Coast is one of South Africa’s most beautiful andunspoilt regions with beaches, water falls and fishing
� Timber plantations close to Mthatha and in Pondoland
� Many rivers and 25% of all the rainfall in South Africa
Densely populated area
Source: Municipal Demarcation Board, dplg, Stats SA Census 2001, Department of Transport
14UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data points Geology
Note: After climate, geology is the second most important factor in the formation of soil-terrain landscapes. It affects natural fertility and erodibility and is thus indirectly responsible for a variety of soil-plant niches or habitats.Source: Agricultural Geo-Referenced Information System
Rock types vary throughout the node
Adelaide
Dwyka
Ecca
Drakensberg
Natal
Witwatersrand
Zululand
GeologyGeologyGeology
15UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data points Vegetation
Source: Agricultural Geo-Referenced Information System
Tropical forest occurs near the coast while other forest and scrub types may be found inland
Coastal tropical forest types
Karoo and Karroid types
Pure grassveld types
Temperate and transitional forest and scrub
False grassveld types
Vegetation (Acocks veld type groups)Vegetation (Vegetation (Acocks veldAcocks veld type groups)type groups)
16UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Aridity aonesAridity aones
Key data points Aridity zones
Source: Agricultural Geo-Referenced Information System
Most of OR Tambo is described as humid
Dry subhumid zone
Humid zone
17UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Rainfall (mean annual)Rainfall (mean annual)Rainfall (mean annual)
OR Tambo receives high levels of rainfall
Key data points Rainfall (mean annual)
Source: Agricultural Geo-Referenced Information System
0-200 mm
201-400 mm
401-600 mm
601-800 mm
801-1,000 mm
> 1,000 mm
18UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data points Spatial development
Key indicators: 2001Key indicators: 2001Key indicators: 2001
z Population Density: 107.9 persons/km2
z Population: Rural 92.4%, Urban 7.6%
z Dwellings: Formal 97.3%, Informal 2.7%
z Population Density: 107.9 persons/km2
z Population: Rural 92.4%, Urban 7.6%
z Dwellings: Formal 97.3%, Informal 2.7%
ObservationsObservationsObservations
z Lack of housing in most of the towns, especially for the middle-class segment
z A very densely populated region makes large-scale farming difficult
z Lack of housing in most of the towns, especially for the middle-class segment
z A very densely populated region makes large-scale farming difficult
Predominantly rural without access to basic services
72%
84%91%
81%
0%
20%
40%
60%
80%
100%
Electricity Piped Water WasteRemoval
Telephone
Households without access to basic services: 2001
2.7%
2.7%
2.9%
6.5%
67.2%
18.0%
0% 20% 40% 60% 80% 100%
Type of housing: 2001
Per
cent
age
of H
ouse
hold
s
Traditional Housing with Traditional Material
Separate House or Brick Structure
Flat in Blocks of Flats or Town / Cluster /
Semi-detached House
Other
Informal Dwelling / Shack
House / Flat / Room in Backyard
Note: Definitions of basic access: Electricity for lighting; piped water within 200 m; waste removal by municipality or communal dump; phone or cell phoneSource: Stats SA Census 2001
National Average
30%
41%
28%
58%
19UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data points Demography
% o
f Hou
seho
lds
Source: Stats SA Census 2001
A young, predominantly Xhosa-speaking population
18%
45%38%
0%
20%
40%
60%
80%
1 to 3 4 to 7 8 +
Household size: 2001
% o
f Res
iden
ts
1% 0% 0% 0%
98%
0%
20%
40%
60%
80%
100%
IsiXhosa English IsiZulu Sesotho Afrikaans
Language distribution (mother tongue): 2001
Total No. of Households: 339 273Total No. of Households: 339 273
Gender distribution: 2001
% o
f Res
iden
ts
55% 61%
39%45%
0%
20%
40%
60%
80%
100%
Total Population Head of Household
Male
Female
45%
13% 10%6%
27%
0%
10%
20%
30%
40%
50%
60%
0-14 15-29 30-44 45-64 65 +
Age distribution: 2001
% o
f Res
iden
ts
Total Population: 1 676 482Total Population: 1 676 482
20UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data pointsIncome and employment
The majority of the population is not economically active resulting in low household incomes
% o
f Em
ploy
ed P
erso
ns
9%3% 2% 2%
84%
0%
20%
40%
60%
80%
100%
Paid Employee Self-Employed Paid FamilyWorker
Employer Unpaid FamilyWorker
% o
f Res
iden
ts
67%
21%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Employed Unemployed Not EconomicallyActive
Employment figures: 2001
% o
f Hou
seho
lds
Annual household income: 2001
18%16%
12%
6% 5%
0%
10%
20%
30%
Community,Social &PersonalServices
Private Sector Wholesaler &Private Sector
Financial &BusinessServices
Construction
% o
f Em
ploy
ed P
erso
ns
Source: Stats SA Census 2001
3% 2% 1%6%13%
74%
0%
25%
50%
75%
100%
BelowR9,600
R9,601 -19,200
R19,201 -38,400
R38,401 -76,800
R76,801 -153,600
AboveR153,601
Household Subsistence Level: R19,200 per annumHousehold Subsistence Level: R19,200 per annum
Work status: 2001Employment by industry (Top 5): 2001
Of this 67%, 51% are included in this category because they are
below the age of 14 or above the age of 65 years
21UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data points Education
� Compared with the rest of SA and especially with the other nodes, the education levels in OR Tambo are very low
� There is one university based in Mthatha (The University of Walter Sisulu)
� Compared with the rest of SA and especially with the other nodes, the education levels in OR Tambo are very low
� There is one university based in Mthatha (The University of Walter Sisulu)
Education overviewEducation overview
Other factorsOther factors
� 95% of all learners walk to school, of which 36% walk for longer than 30 minutes. This means that there are 245,000 children who walk for more than an hour a day to get to and from school
� 95% of all learners walk to school, of which 36% walk for longer than 30 minutes. This means that there are 245,000 children who walk for more than an hour a day to get to and from school
1% 3%1%
24%
75%
25%
74%67%
30%
0%
20%
40%
60%
80%
None Pre-school & School Technikon / University /College / Adult
Education
OR Tambo
Nodes
Rest of South Africa(non-nodes)
School attendanceSchool attendance Education levelEducation level
Note: A negligible ‘other’ category has been excluded from the School Attendance graph (the ‘rest of South Africa’ average amounted to 0.2%)Source: Stats SA Census Data 2001; Monitor analysis; Department of Transport
Percentage of OR Tambo, nodal and non-nodal populations (aged 5-24 years) attending educational Institutions
Education levels of OR Tambo, nodal and non-nodal populations (aged 20+ yrs)
Low education levels in the node
38%
49%
9%5%
29%
53%
13%5%
15%9%
22%
53%
0%
20%
40%
60%
80%
No Schooling Some Primary /SecondarySchooling
Grade 12 Higher Education
OR Tambo
Nodes
Rest of South Africa(non-nodes)
22UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data points Health
Health-related variables Explanation OR Tambo statistics Node average1
Rest of South Africa Average1
Number of clinics 169 N/A
Per capita expenditure: 2001 R91 R135.29 R199.28
Number of people per clinic 10,300 N/A
Utilisation rate: 2004 Average number of clinic visits per person per year 1.9 2.08 2.08
Nurse clinical workload Number of patients per nurse per clinical day 22.6 26.78 26.31
HIV prevalencePercentage of HIV-positive
clients among antenatal clients tested
25.4% 24% 26%
Communicable diseases
Diseases that are usually transmitted through person-to-person contact or shared
use of contaminated instruments/materials
TB / HIV / AIDS - -
Environmental health IssuesNo licensed waste site; sewerage
discharging directly into the MthathaRiver
- -
Note: 1Weighted to node population. The number of clinics refer to health clinics, community health centres and district hospitals Source: Health Systems Trust Reports: The District Health Barometer, 2005, and Health and Related Indicators, 2005; OR Tambo IDP; Monitor analysis, Department of Health
Better than national avg.
Worse than national avg.
23UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboKey data points Development scorecard
OR Tambo Rural node average
All node average
National average
Difference vsnational average
Rank out urban nodes
Poverty incidence (% of households below HSL)1
88.0% 84.7% 81.0% 65.3% 22.7% 13
Employment rate 11.0% 15.4% 19.3% 33.7% -22.7% 14
Households without basic access to water2
84.0% 64.9% 55.1% 27.9% 56.1% 14
Households without access to electricity3
72.0% 56.7% 50.3% 30.3% 41.7% 11
Percentage of adults with low / no education4
63.4% 60.3% 54.1% 40.3% 23.1% 12
OR Tambo development scorecard
Note: 1HSL = Household Subsistence Level and is equal to R19,200 per annum (R1,600 per month); 2Defined as not having piped water within a distance of 200 m of dwelling (government policy on minimum basic human need); 3Based on households that do not use electricity as a source for lighting; 4All adults aged 20+ years with no schooling at secondary level or above (Stats SA indicator of educational deprivation)
Source: Stats SA Census 2001
Better than national average Worse than national average
Overall OR Tambo falls below the average for rural poverty nodes in the areas of household income, employment and water provision
1=Best, 14=Worst
24UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Overview
SnapshotSnapshot
Area summaryArea summary
Key challengesKey challenges DemographyDemography
Income and employmentIncome and employment
HealthHealth
Development scorecardDevelopment scorecard
GovernanceGovernance
IDP assessmentIDP assessment
EducationEducation
IntroductionIntroductionIntroduction Key data pointsKey data pointsKey data points Current actionCurrent actionCurrent action
Introduces the node;summarises key issues
Lists pertinent acts and figures
Describes current interventions
GeographyGeography
Spatial developmentSpatial development
Development projectsDevelopment projects
Local people portraitLocal people portrait
25UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboGovernanceDistrict and Local Municipality structure
OR Tambo District Municipality
OR Tambo District OR Tambo District Municipality Municipality
QaukeniLocal
Municipality
QaukeniLocal
Municipality
MbizanaLocal
Municipality
MbizanaLocal
Municipality
MhlontloLocal
Municipality
MhlontloLocal
Municipality
NyandeniLocal
Municipality
NyandeniLocal
Municipality
Source: OR Tambo IDP 2006/2007; The Wild Coast Spatial Development Initiative
King Sabata Dalindyebo
Local Municipality
King Sabata Dalindyebo
Local Municipality
Port St Johns Local
Municipality
Port St Johns Local
Municipality
NtabankuluLocal
Municipality
NtabankuluLocal
Municipality
The Wild Coast
26UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboGovernance Political structure of the OR Tambo District Municipality
Source: OR Tambo District Municipality
Office of the Municipal Manager
Office of the Municipal Manager
District Municipality
District Municipality
Finance and Asset Management Department
Finance and Asset Management Department
Human Resources Department
Human Resources Department
Office of the MayorOffice of the Mayor Office of the Speaker
Office of the Speaker
Development Planning
Department
Development Planning
Department
Infrastructural Department
Infrastructural Department
Community Development Department
Community Development Department
Responsible for IDP
27UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboGovernance Sources of funding and budget breakdown
2004/2005 (actual) 2005/2006 (full year forecast) 2006/2007 (budget)
Operating revenue 305,821 238,050 227,314
Grants and subsidies 422,952 520,716 468,180
Total financing 728,773 758,766 695,494
Total expenditure / Budgeted expenditure 612,860 758,381 693,890
Operating expenditure: Budget year 2006-2007
Millions of
Rands
� 67% of the total financing is government grants
� A municipality initiative to raise more revenue is discussed in the latest IDP review
� 67% of the total financing is government grants
� A municipality initiative to raise more revenue is discussed in the latest IDP review
Note: All amounts are given in R1,000Source: IDP OR Tambo 2006/2007
0.13.3
24.3
37.5 227.1
25.11.86.44.05.92.08.5
67.7
40.4
0
50
100
150
200
250
300
Execu
tive &
Cou
ncil
Finance
& A
dmin
Plannin
g & D
evelo
pmen
tHealt
h
Community &
Socia
l Servi
ces
Housing
Public
Safe
ty
Enviro
nmen
tal P
rotec
tion
Waste
Wate
r Man
agem
ent
Road T
ransp
ortW
aterElec
tricity
Touris
m
Total
28UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboGovernance Overview of nodal management – private sector point of view
Capability
� Lack of understanding of LED at local and district municipality level– More focus on social uplifting than economic development
� Lack of strategic insight
� Generally low skills level
� Consultants generate key documentation
Inter-nodal politics
� Lack of communication between local municipalities
� Evidence of antagonistic relationship between local municipalities and district municipalities – “Local municipalities want to belong to KwaZulu Natal (KZN)”
� Although the IDP for the district should be based on the local IDPs, this district IDP was completed before
Corruption
� Media coverage indicates– Ghost workers– Nepotism– Theft
Source: Based on Monitor interviews of private sector participants
29UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboGovernance Assessment of nodal managers
Very poor communication between district and local municipalities
CommunicationCommunication CapabilityCapability
Source: Monitor interviews, Daily Dispatch 28 July 2006
� Lack of understanding of LED at local and district municipality level
– More focus on social uplifting than economic development
� Lack of strategic insight
� Generally low skills level
� Consultants generate key documentation
� Lack of understanding of LED at local and district municipality level
– More focus on social uplifting than economic development
� Lack of strategic insight
� Generally low skills level
� Consultants generate key documentation
� Lack of communication between local municipalities
� Evidence of antagonistic relationship between local municipalities and district municipalities
– “Local municipalities want to belong to KZN”
� Although the IDP for the district should be based on the local IDPs, this district IDP was completed before
� Lack of communication between local municipalities
� Evidence of antagonistic relationship between local municipalities and district municipalities
– “Local municipalities want to belong to KZN”
� Although the IDP for the district should be based on the local IDPs, this district IDP was completed before
CapacityCapacity CorruptionCorruption� Media coverage indicates
– Ghost workers
– Nepotism
– Theft
� Media coverage indicates
– Ghost workers
– Nepotism
– Theft
� Motivation levels not optimal
� No sector experts (forestry)
� Few people have to cover all relevant sectors
– Compared with other nodes, the number of LED managers is low
� Motivation levels not optimal
� No sector experts (forestry)
� Few people have to cover all relevant sectors
– Compared with other nodes, the number of LED managers is low
30UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboGovernance Example of political mismanagement
Note: 1KSD = King Sabata Dalindyebo (one of seven local municipalities) Source: Daily Dispatch, Friday 28 July 2006
The council is paying people who do not exist
Manager was paid two salaries for
more than a year
Report shows examples of fraud and nepotism in KSD1 local municipality
Employee resigned in 2004 but was paid
until 2006
31UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIDP assessmentKey facts of the IDP
Geographic area covered
Geographic area covered
Month / year of latest publication
Month / year of latest publication
Author / main contributors
Author / main contributors
Process of creation
Process of creation
Key aspects
Key aspects
TimingTiming
Length / formLength / form
� OR Tambo District Municipality – Includes seven local municipalities
Covers more than the nodeCovers exactly the nodeCovers less than the node
Includes consultantsDoes not include consultantsRelies only on consultants
� 2006
� The actual document is 77 pages in length including 20 pages of tables showing focus areas and budget breakdown
� Mainly text and tables; four maps in total
� Process started with the five-year plan in 2000
– Focused on improving the lives of the people through development and addressing service backlogs
� Annual reviews with refinements of the strategy
� N/A
Public sector mainlyPrivate sector mainlyBoth equally
Other key related documents
Other key related documents
� The Wild Coast spatial development framework
� For each local municipality – Separate IDP– The LED strategy
Source: IDP Review 2006/2007, Monitor analysis, Monitor interviews
� Compiled by the Department of Planning and Development at OR Tambo District Municipality
– No use of external consultants
– Mayors, managers and local municipalities contributed through mass meetings
32UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIDP assessment Key characteristics of the IDP
Other aspectsOther aspects
AccessibilityAccessibility � IDP reports from 2003 are available online
Actual user group / key current recipients
Actual user group / key current recipients
� Focuses entirely on government and municipality
� Very few ideas for the private sector
Government mainlyPrivate sector mainlyBoth equally
Easy to find / accessDifficult to find / access
Focus / purposeFocus / purpose
� Provides insight into needs and the strategy for growth and development on a district level
� Does not provide much information / data
Provides insight mainlyProvides information mainly
Extent of usage / impactExtent of usage / impact � N/AIs viewed as key guiding documentIs used minimally, very little impact
Both equally
PrecisionPrecision
� Generally high level needs assessment and objectives
� Lack of precision for growth strategies and understanding of LED
Generally, very vagueGenerally, quite precise
Source: IDP Review 2006/2007, Monitor analysis, Monitor interviews
� Even if the IDP review does not provide many details for growth initiatives there is a project databank available online
– For each project, well defined goals, strategies and target groups are presented
– Most of the projects have the nature of social upliftment (e.g. HIV awareness campaign) rather than economic growth
� The IDP review of the district municipality should be based upon the IDP review of the seven local municipalities
– This is obviously not the case since the IDP review for OR Tambo DM was finished several months before the local IDPs
33UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Types of information contained in the IDPTypes of information contained in the IDPTypes of information contained in the IDP
Examples of key issue areas covered
Examples of key issue areas covered
Examples of key issue areas not covered
Examples of key issue areas not covered
Typical level of detail provided across issue areas
Typical level of detail provided across issue areas
AssessmentAssessmentAssessment
IDP assessment Contents of the IDP relevant to the node
� IDP planning process
� Current situation
� Development strategy
� IDP implementation plan
� Sector plan
� IDP planning process
� Current situation
� Development strategy
� IDP implementation plan
� Sector plan
Quality of information contained in the IDPQuality of information contained in the IDPQuality of information contained in the IDP
� Lessons and follow-ups from previous IDP reviews
� Lessons and follow-ups from previous IDP reviews
� The IDP 2006/2007 is based on the Census 2001 data
� There is reason to believe that the data are not accurate – The census survey of OR Tambo was done when there was violence in some regions– Statistics for some of the regions are based on guesses
� The IDP 2006/2007 is based on the Census 2001 data
� There is reason to believe that the data are not accurate – The census survey of OR Tambo was done when there was violence in some regions– Statistics for some of the regions are based on guesses
Highly comprehensive
Key issuesnot covered
AssessmentAssessmentAssessment
Highlyreliable
Very risky to use forinvestment decisions
� Detailed description of the current situation and key challenges
� Only six (out of the total 77) pages describe the development strategy, and no data are given
� Hardly any details are given about the relevant sectors or actual projects
� The sector plans are high-level summaries of LED plans or spatial development frameworks
� Detailed description of the current situation and key challenges
� Only six (out of the total 77) pages describe the development strategy, and no data are given
� Hardly any details are given about the relevant sectors or actual projects
� The sector plans are high-level summaries of LED plans or spatial development frameworks
breadth depth
Source: IDP Review 2006/2007, Monitor analysis, Monitor interviews
34UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Actions proposedActions proposed
Examples of key actions proposed in IDPExamples of key actions proposed in IDP
AssessmentAssessment
IDP assessment Action orientation of the IDP for the node
� The IDP review lacks proper key actions. Ten pages of tables with key performance areas and relevant projects are presented without any form of prioritisation
� The IDP review lacks proper key actions. Ten pages of tables with key performance areas and relevant projects are presented without any form of prioritisation
Support of implementation of the proposed actionsSupport of implementation of the proposed actions
� Implementation plan is available – Not a single project is associated with a time line – Key persons for the projects have only been identified for projects involving external stakeholders like
government departments or private initiatives
� Implementation plan is available – Not a single project is associated with a time line – Key persons for the projects have only been identified for projects involving external stakeholders like
government departments or private initiatives
Highlyaction-oriented
Key action areasnot covered
AssessmentAssessment
Drives implementation well
Does not drive implementation
Examples of key actions not proposed in IDPExamples of key actions not proposed in IDP
� Skills development programme for municipal managers
� Ideas of how service delivery could be improved (e.g. performance measurement)
� Skills development programme for municipal managers
� Ideas of how service delivery could be improved (e.g. performance measurement)
Source: IDP Review 2006/2007, Monitor analysis, Monitor interviews
35UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
General assessment – Does the IDP deliver what it promises?General assessment – Does the IDP deliver what it promises? AssessmentAssessment
IDP assessment General assessment of the IDP in relation to the node
� The important goal of “providing efficient and effective service delivery” is not consistent with giving the lowest possible priority to the two objectives– Facilitate the provision of electricity– Co-ordinate public transport services
� If the promised economic growth is to be achieved more focus on LED rather than social upliftment is needed
� The important goal of “providing efficient and effective service delivery” is not consistent with giving the lowest possible priority to the two objectives– Facilitate the provision of electricity– Co-ordinate public transport services
� If the promised economic growth is to be achieved more focus on LED rather than social upliftment is needed
Highlysatisfactory
Delivers less than it promises
IDP contribution to stimulating economic growthIDP contribution to stimulating economic growth
What to keep doingWhat to keep doing
AssessmentAssessment
� In its current status the IDP does not contribute to real economic growth
� In its current status the IDP does not contribute to real economic growth
Very useful to growth debate
Does not contribute to growth debate
What to do differentlyWhat to do differently
� More focus on economic growth � More focus on improvements of basic
infrastructure
� More focus on economic growth � More focus on improvements of basic
infrastructure
Source: IDP Review 2006/2007, Monitor analysis, Monitor interviews
36UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboIDP assessmentSummary of IDP assessments
Level of detailLevel of detailLevel of detail
Highly comprehensive
Key issuesnot covered
Quality of informationQuality of Quality of
informationinformation
Highlyreliable
Very risky to use forinvestment decisions
breadth depth
Actions proposedActions proposed
Highlyaction-oriented
Key action areasnot covered
Support of implementation
Support of implementation
Drives implementation well
Does not drive implementation
IDP delivers what it promises
IDP delivers what it promises
Highlysatisfactory
Delivers less than it promises
Contribution to stimulating growth
Contribution to stimulating growth
Very useful to growth debate
Does not contribute to growth debate
37UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboDevelopment projectsExamples of Ntinga Development Agency1 initiatives
Note: 1Ntinga OR Tambo Development Agency facilitates and implements the LED initiatives of the municipality Source: Ntinga OR Tambo Development Agency 2004/05 Annual Performance Review
Project Description Status
Nelson Mandela Cultural Precinct Public private partnership (PPP) for the development of a cultural precinct inMthatha Proposal
Multi-purpose sports stadium National stadium seating 35,000 people to be used as venue for 2010 World Cup (demonstration and warm-up games)
Site allocated and investments in infrastructure
Academy of Sports National sports academy for all Olympic sports Feasibility study needed
Mthatha Plaza Shopping Centre Shopping centre (25,000 square metres) on site of the Independence Stadium Ninety per cent let with large national tenants
Owen Dam Office Park Proposal for the development of a 15,000 square metre office park and lifestyle centre Proposal
Nduli Knuckle Game Park and Tourism Centre “Revitalisation of game park essential to the future of Mthatha as a tourism node” Proposal
Residential housing development Development of residential accommodation to supply much needed middle- and upper-income housing
Opportunity for lenders to invest
The development agency implementing LED projects focuses on too many different areas and on developing Mthatha and its surroundings
Current and proposed projects by Ntinga OR Tambo Development Agency1: 2004/05
38UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboDevelopment projects Examples of Ntinga Development Agency1 initiatives (continued)
Note: 1Ntinga OR Tambo Development Agency facilitates and implements the LED initiatives of the municipality Source: Ntinga OR Tambo Development Agency 2004/05 Annual Performance Review
Project Description Status
Agricultural development
Several projects focusing on
� Grain clusters
� Maize production
� Vegetable production
� Sorghum production
� Essential oils
� Beef production
� Sheep production
� Goat production
Running
Tourism development
High level tourism plan with the following objectives
� Increasing business opportunities for emerging entrepreneurs
� Creating employment
� Increasing contribution from tourism to the gross geographic product
Running
OR Tambo District Municipality Timer Cluster Concept – Langeni
Massive programme to use the potential for forestry and to ensure that the whole district benefits from the production Running
The development agency implementing LED projects focuses on too many different areas and on developing Mthatha and its surroundings
Current and proposed projects by Ntinga OR Tambo Development Agency1: 2004/05
39UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Agriculture
– Selected sector: Tourism
z Investment opportunities
z Summary
z Appendix
� GDP and employment
� Prioritisation of economic sectors
40UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
3,97
9
4,01
0
3,98
9
3,89
4
3,90
4
3,93
9
3,90
4
3,87
4
3,91
0
3,93
5
10,9
74
11,0
55
11,0
91
10,8
28
10,8
56
11,0
14 12,0
32
10,9
89 12,3
99
11,8
97
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
GDP per capita for the nodeGDP per capita for the province 6.
01 6.21
6.27
6.20
6.31 6.47
6.51
6.56 6.71
6.84
0
2
4
6
8
10
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Economy overviewNodal and provincial GDP
Ran
ds
Total GDP per node (constant 2000 prices)
Bill
ions
of R
ands
Source: Quantec, Monitor analysis. GDP Gross Domestic Product; CAGR Compound Annual Growth Rate
GDP per capita: 2004 (constant 2000 prices)
36.3% 36.3% 36.0% 36.0% 36.0% 35.8% 32.4% 35.3% 31.5% 33.1%
Comparison of GDP per
capita with the provincial
average
CAGR (1995-2004)-0.1%
0.9%
67.4
5
69.6
7
70.9
0
70.5
9
72.2
9
75.4
2
77.4
5
78.6
7
80.6
3
84.3
3
0
30
60
90
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Total GDP per province (constant 2000 prices)
Bill
ions
of R
ands
CAGR (1995-2004) = 2.5%
CAGR (1995-2004) = 1.5%
The GDP per capita for the node has grown at a much lower rate than that for the province, and the same has occurred for the total GDP
41UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboEconomy overview Contribution to GDP and employment by economic sector
Contribution to GDP by sector 2004 (constant 2000 prices)
Contribution to employment by sector: 2004
General Government
Services33.6%
Wholesale and Retail Trade; Catering &
accommodation14.5%
Finance and Business Services
18.1%
Transport & Communication
9.3%
Agriculture, Forestry & Fishing1.9%
Community, Social and Other
Personal Services12.7%
Manufacturing5.2%
Construction 3.4%
Mining0.4%
Electricity and Water 1.0%
Source: Quantec, Monitor analysis
Government remains by far the largest employer and the largest contributor to GDP in the node, although tourism is quite large as well
General Government
Services35.0%
Wholesale and Retail Trade; Catering &accomm
13.7%
Finance and Business Services
9.8%
Transport and Communication
1.7%Agriculture, Forestry & Fishing
3.9%
Community, Social and Other
Personal Services24.7%
Manufacturing5.3%
Construction 4.3%
Mining 1.4%Electricity and
Water 0.4%
42UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
0
500
1,000
1,500
2,000
2,500
0% 2% 4% 6% 8% 10%
Economy overviewGDP by sector
Source: Quantec, Monitor analysis
GDP by sector: 2004 (constant 2000 prices)
GD
P in
Mill
ions
of R
ands
: 200
4
Mining
Agriculture,Forestry & Fishing Construction
Finance & Business Services
General Government Services
Wholesale & Retail Trade; Catering & Accommodation
Transport & Communication
Community, Social & Other Personal Services
Manufacturing
CAGR: 1995-2004
Electricityand water
359
432
106
203
0 200 400 600 800
Transport & Communication
828
900
110
91
700 800 900 1,000 1,100
Wholesale & Retail Trade; Catering & Accommodation
2004
1995
Transport Communication Trade CateringAverage CAGRfor GDP: 1.5%
68% 32%
77% 23%
91% 9%
88% 12%
Combining size and growth rate allows us to start identifying sectors that may have good growth potential
382
459
640
781
0 500 1,000 1,500
109
234
0 100 200 300
Construction
2004
1995
Finance Business
37% 63%
37% 63%
Finance & Business Services
43UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
0
5,000
10,000
15,000
20,000
25,000
30,000
-12% -9% -6% -3% 0% 3% 6%
Economy overviewEmployment by sector
Source: Quantec, Monitor analysis
Employment by sector
Em
ploy
men
t: 20
04
Mining
Construction
Finance and business services
Manufacturing
CAGR (1995-2004)
Community, social and other personal services
General government services
Wholesale and retail trade; Catering and accommodation
Agriculture,Forestry and fishing Transport and communication
Electricity and water
1,627
1,811
2,781
5,451
0 2,000 4,000 6,000 8,000
7,062
9,031
2,872
1,15
5
0 5,000 10,000 15,000
Wholesale and Retail Trade; Catering and Accommodation
2,158
1,380
1,13
4
572
2,478
1,949
0 2,000 4,000 6,000 8,000
Manufacturing
2004
1995
2004
1995
Finance Business Trade
Food Wood Other
Finance and Business Services
CateringAverage CAGRfor employment: -0.6%
25% 75%
37% 63%
89% 11%
71% 29%
37% 20% 43%
35% 15% 50%
In terms of jobs created, government and community services are the most significant sectors
1150
789
688
482
0 500 1000 1500 2000
Transport and Communication
Transport Communication
62% 34%
63% 37%
44UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboEconomy overview Quantitative prioritisation using economic data
2,301,807,460
2,301,807,460
Sectors
GDP Employment
Average index2004 GDP at constant 2000
prices (Rmillion)GDP index
Number of employees:
2004
Employment index
1 General government services 2,301,807,460 100 26,023 100 100
2 Community, social and other personal services 865,793,155 37 18,345 70 54
3 Wholesale and retail trade; Catering and accommodation 991,012,074 42 10,186 39 40
3 Finance and business services 1,239,855,229 53 7,262 27 40
5 Transport and communication 635,387,818 27 1,272 4 15
6 Manufacturing 354,012,136 14 3,900 14 14
7 Construction 234,131,813 9 3,159 11 10
8 Agriculture, forestry and fishing 129,838,260 5 2,889 10 7
9 Mining 24,166,848 0 1,017 3 1
10 Electricity and water 68,314,190 2 265 0 1
/100 /100 /100
Source: Quantec, Monitor analysis
High
Low
The average index (from 100 – high, to 0 – low) represents a quantitative assessment of the potential for economic growth and job creation of the ten different sectors
45UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboEconomy overview Qualitative prioritisation of top five sectors
Sectors Average index Potential for growth Assessment
General government services
100
� Limited opportunities for growth– Lack of suitable intervention points– No sustainable wealth creation for the people who live in the node
Community, social and other personal services
54
� Limited opportunities for growth– Lack of suitable intervention points– No sustainable wealth creation for the people who live in the node
Wholesale and retail trade, Catering and accommodation
40
� Huge potential for growth– Untapped market in tourism– Many areas of unique natural beauty– Large variety in leisure activities– Historically significant area (birthplace of many freedom fighters)
Finance and business services 40
� Some potential for growth, but linked to performance of the other sectors (tourism)– Very skills intensive
Transport and communication 15
� Limited potential for growth– Very capital intensive – Lack of supportive infrastructure – Growth in other sectors is needed to create the right demand
Source: Monitor analysis
High growth potential
Low growth potential
46UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboEconomy overviewAgriculture as a prioritised sector
� Rainfall and soil quality make the area well suited to agricultural production
� Although the number of commercial farmers is small there are many subsistence farmers whose production could be increased
� With increasing demand from the bio-fuel industry, maize could potentially be exported
� Additionally, the area has ample grazing land for livestock and dairy farming
� Additional value can be extracted through the development of downstream processing industries
Agriculture (crops and livestock)
Agriculture Agriculture (crops and (crops and livestock)livestock)
� The Eastern Cape (EC) has been identified as one of the only areas remaining in South Africa that is available for new forestation
� Furthermore, demand for timber products is strong in South Africa and abroad
� OR Tambo has potential for large-scale forestation, especially of pine
� The components of a forestry cluster are already emerging, with billion-rand investments in the nearby nodes of Ukhahlamba and Alfred Nzo
Agriculture (forestry)
Agriculture Agriculture (forestry)(forestry)
Although its current contribution to the OR Tambo economy is limited, the agriculture / forestry / fishing sector presents good opportunities for growth
Source: Monitor interviews
47UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Tourism
– Selected sector: Agriculture
z Investment opportunities
z Summary
z Appendix
� Description of current value chain
� Growth constraints and solutions
� Potential for sector� Past and current efforts
48UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: TourismOverview of the tourism sector
Unique potential exists for tourism development
z Home of the great leaders Nelson Mandela and Oliver Tambo
z Wild Coast, 120 km ofunspoilt beauty
z Ecotourism– Natural beauty– Endemic species
z The Xhosa cultural heritage
z Pondoland with traditionalAmampondo lifestyle
What do they rely on?What do they rely on?What do they rely on?
z Adventure-based tourism– Most hotels along
the coast offer hiking, horse riding, canoeing, etc.
z Mainly 2- and 3-star accommodation
z Lack of good accommodation inMthatha
What do they do / produce?
What do they do / What do they do / produce?produce?
z Many domestic tourists but few of them use the hotel establishments – The region
suffers from a bad reputation
z International tourists, especially backpackers, make up the major group of visitors
Who do they serve / target / sell to?
Who do they serve / Who do they serve / target / sell to?target / sell to?
Target marketsTarget marketsProductionProductionInputInput
Source: Monitor interviews
49UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Inputs
Source: Eastern Cape Tourism Board (ECTB)
The beautiful beaches together with places of historical and cultural significance are the major attractions
Major attraction
Tourism activitiesTourism activities
� Excellent beaches
� Hiking, fishing, horse riding and whale watching
� 4x4 driving
� The Wild Coast Sun Casino
� The Nelson Mandela legacy– Museum in Mthatha– School house in Qunu– Birthplace in Mvezo
� Waterfall Bluff– One of the few waterfalls going
right into the ocean
� Excellent beaches
� Hiking, fishing, horse riding and whale watching
� 4x4 driving
� The Wild Coast Sun Casino
� The Nelson Mandela legacy– Museum in Mthatha– School house in Qunu– Birthplace in Mvezo
� Waterfall Bluff– One of the few waterfalls going
right into the ocean
Tourism eventsTourism events
� Imana Mountain Bike Ride� Imana Mountain Bike Ride
Map showing attractions in the OR Tambo node
Wild Coast Sun Casino
Hole in the Wall
Mthatha and Nelson Mandela Museum
Qunu Mvezo
Mkambathi Nature Reserve
Waterfall Bluff
Coffee Bay
Port St Johns
50UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Production
Lack of quality accommodation drives up prices and occupancy rates
ProductsProducts
� The Wild Coast has about 70 establishments
– Between Coffee Bay and Port St John’s there are about 3,250 beds catering for the 2- and 3-star markets
– The Upper Wild Coast1 offers 100 camp sites and 1,783 beds distributed according to
� Top end (5-star): none
� Upmarket (4-star): 715 (71% occupancy)
� Mid-market (3-star): 373 (72% occupancy)
� Low (1-2 star): 695 (37% occupancy)
– The Upper Wild Coast is mainly dominated by two establishments, i.e. Wild Coast Sun and Umngazi River Lodge
� In addition to the coastal establishments the number of inland B&Bs and guest houses is growing
– In Mthatha the hotels cater mainly for the many business travellers
� The Nelson Mandela Museum with 44,708 visitors in 2003/04
� The Wild Coast Sun Casino with 563,000 visitors per annum
� The Wild Coast has about 70 establishments
– Between Coffee Bay and Port St John’s there are about 3,250 beds catering for the 2- and 3-star markets
– The Upper Wild Coast1 offers 100 camp sites and 1,783 beds distributed according to
� Top end (5-star): none
� Upmarket (4-star): 715 (71% occupancy)
� Mid-market (3-star): 373 (72% occupancy)
� Low (1-2 star): 695 (37% occupancy)
– The Upper Wild Coast is mainly dominated by two establishments, i.e. Wild Coast Sun and Umngazi River Lodge
� In addition to the coastal establishments the number of inland B&Bs and guest houses is growing
– In Mthatha the hotels cater mainly for the many business travellers
� The Nelson Mandela Museum with 44,708 visitors in 2003/04
� The Wild Coast Sun Casino with 563,000 visitors per annum
Profitability Profitability � The Wild Coast market is highly seasonal with 40% of the visitors
between December and April
� Low prices and occupancy rates during off-season indicates low profitability
� The upmarket establishments (e.g. Wild Coast Sun) are usually fully booked the whole year round
� The Wild Coast market is highly seasonal with 40% of the visitors between December and April
� Low prices and occupancy rates during off-season indicates low profitability
� The upmarket establishments (e.g. Wild Coast Sun) are usually fully booked the whole year round
PricesPrices
� Prices (per person per night) for accommodation on the Wild Coast2
– Upmarket R600-R1,200
– Mid-market R400-R1,000
– Low R80-R650
� High demand and lack of facilities drive up the cost of accommodation in Mthatha
– The Garden Court hotel charges R699 pp without meals
� The Nelson Mandela museum is free of charge
� Prices (per person per night) for accommodation on the Wild Coast2
– Upmarket R600-R1,200
– Mid-market R400-R1,000
– Low R80-R650
� High demand and lack of facilities drive up the cost of accommodation in Mthatha
– The Garden Court hotel charges R699 pp without meals
� The Nelson Mandela museum is free of charge
Note: 1The Upper Wild Coast is defined as the region between Port St Johns and Port Edward 2The lower prices represent low season and the higher represent high season Source: Ntinga OR Tambo Development Agency, SA Casino Group, Nelson Mandela Museum; Monitor analysis
51UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Production (continued)
Most of the accommodation in the area is in Coffee Bay, Port St Johns and Mthatha
B&B / guest house
Self-catering
Other
Hotel / motel / inn
= 15 places for accommodation
OR Tambo accommodation
� 21 Hotels / motels / inns
� 29 B&Bs / guest houses
� 10 Self-catering
� 5 Other
OR Tambo accommodation
� 21 Hotels / motels / inns
� 29 B&Bs / guest houses
� 10 Self-catering
� 5 Other
Accommodation by type
Source: Grant Thornton
Included in this region areMthatha, Coffee Bay,
Butterworth, Mazeppa Bay,Qolora Mouth and Qunu
52UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Target markets – Overview
Source: Eastern Cape Tourism Board, SA Casino Group, Travel Africa, National Gambling Board, Monitor interviews
Market / customers Market / customers
� The VFR (visiting friends and relatives) group is the major driver for the domestic market in OR Tambo
– Most visitors are from Western Cape, Eastern Cape and Gauteng
� Two-thirds of the visitors at establishments along the Wild Coast are foreigners
� The VFR (visiting friends and relatives) group is the major driver for the domestic market in OR Tambo
– Most visitors are from Western Cape, Eastern Cape and Gauteng
� Two-thirds of the visitors at establishments along the Wild Coast are foreigners
The Wild Coast attracts many international backpackers and adventure-seeking tourists
Wild Coast Wild Coast
Major market segments Major market segments
Competitors / threat of substitute products Competitors / threat of substitute products
Mthatha Mthatha
� Beach and scenic coast
– The Garden Route
– The Sunshine Coast in Eastern Cape
– The South Coast in KZN
� Beach and scenic coast
– The Garden Route
– The Sunshine Coast in Eastern Cape
– The South Coast in KZN
� Many international backpackers
� The adventurous type enjoying 4x4 driving, surfing and horse riding
� Eighty-five per cent of the visitors to the Wild Coast Sun Casino originate from Durban
� Many international backpackers
� The adventurous type enjoying 4x4 driving, surfing and horse riding
� Eighty-five per cent of the visitors to the Wild Coast Sun Casino originate from Durban
� Municipality and government workers attending conferences and workshops
� Business people� Municipality and government workers attending conferences and
workshops
� Business people
� History and culture
– Better-known establishments like Robben Island in Cape Province or the Apartheid Museum in Gauteng
� Casino
– Popular establishments in Port Elizabeth and East London
– Several casinos in KZN
� History and culture
– Better-known establishments like Robben Island in Cape Province or the Apartheid Museum in Gauteng
� Casino
– Popular establishments in Port Elizabeth and East London
– Several casinos in KZN
53UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Domestic target markets
Source: SA Tourism
Eastern Cape is the third most popular domestic destination and almost half the tourists in EC go to the Wild Coast / Transkei / Ciskei
Types of Domestic Trips to Eastern Cape: 2000/01
Wild Coast/Transkei/
Ciskei
43%
KarooHeartland
5%
Sunshine Coast & Country
22%
Amathole7%
Friendly N622%
28%
17%
15%
11%
9%
7%6%
5%
2%
0%
5%
10%
15%
20%
25%
30%
KwaZulu-N
atalGau
teng
Easter
n Cap
e
Weste
rn Cape
Limpo
poFre
e Stat
eNorth
Wes
tMpu
malang
a
Northern
Cap
e
Destinations for Domestic Overnight Trips in 2002/2003
Tsitsikamma 5%
54UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Domestic target markets (continued)
Leisure20.4%
Note: 1VFR = Visiting Friends and RelativesSource: SA Tourism 2001
VFR1 is the major reason for domestic tourism in OR Tambo
Religious7.8%
Health1.6%Business
1.2%
VFR 69.0%
Types of trips to Wild Coast / Transkei / Ciskei: May 2000-April 2001
Types of trips to the Sunshine Coast and Country: May 2000-April 2001
Leisure37.5%
Religious 8.3%
Health 0.4%
Business2.7%
VFR 51.1%
55UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
49.6%
25.9%20.8%
15.2%9.7% 8.9% 8.5%
5.3%2.5%
0%
25%
50%
75%
Gaute
ngW
ester
n Cap
eKwaZ
ulu N
atal
Mpumala
nga
North
Wes
tEas
tern
Cape
Free S
tate
Limpo
poNor
thern
Cap
e
Selected sector: Tourism International target markets
Source: SA Tourism
Few international tourists go to the Eastern Cape
Provincial distribution of foreign tourists: Q4 2004
Percentage of all visitors
56UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
61.2%58.4%
36.2%
23.9%
14.3% 12.3% 10.2% 8.3%
0.6% 0.5%0%
25%
50%
75%
Nature
Res
erve
s
Beach
es /
Wild
Coa
stJe
ffrey’s
Bay
Fleamar
kets
/ Cra
ftmar
kets
None
Coffee
Bay
Towns
hip T
ours
Port S
t Joh
ns
Board
Walk
Sho
pping
Mall
Green
acre
s Mall
Selected sector: Tourism International target markets (continued)
Source: SA Tourism
The beaches are the major attraction in Eastern Cape
Attractions / landmarks visited by foreign tourists in Eastern Cape: Q4 2004
Percentage of all visitors
Attraction relevant to OR Tambo
57UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism International target markets (continued)
Attractions / landmarks in OR Tambo visited by foreign tourists in Eastern Cape, Q4 2004
� Text– Text
� Text– Text
Source: SA Tourism, Eastern Cape Tourism Board, Monitor analysis
Only a small portion of the international tourists visit the Wild Coast
58.4%
8.3%12.3%
0%
25%
50%
75%
Beach / WildCoast
Coffee Bay Port St Johns
Approximately 15% of the
tourists visiting the coastline in EC go to the Wild Coast
% of all Visitors
The major attraction, except for Coffee Bay and Port St Johns on the Wild Coast, is the Wild Coast
Sun Casino, close toBizana
Eighty-five per cent of the visitors are domestic
originating from Durban
58UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Barriers / solutions related to inputs
Barrier / constraint Potential solution
Very poor infrastructureA big problem especially for the backpacker market which generally depends on public transport
Main focus for municipality is to guarantee good infrastructure
Land claim and land tenure issues prohibit many projects and investments
Government initiative to facilitate and add transparency to the land claim process
The region has no tradition of entrepreneurship within the tourism sector
Teach people the value of the tourism market and help them to get to the market with their products and services
Competing projects like the proposed XolobeniMineral Mining Project
N/A
Source: Monitor analysis
59UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
FiveYears
Theoretical process as noted by Wild Coast tourism development policy
Step 1: Preparation of a properly prepared technical proposal
Step 2: Submission of application to the Department of Land Affairs (DLA) and Department of Economic Affairs, Environment & Tourism (DEAET) (and Department of Water Affairs and Forestry [DWAF] where applicable) once it has the support required
Step 3: Approval by DLA of transparent and democratic procedures and approval by DEAET (and DWAF) of compliance with prevailing tourism related policy and strategy context
Step 4: Preparation of Ministerial Memorandum by the Eastern Cape Provincial Land Reform Office on the basis of the proposal as well as the inputs from DLA and DEAET
Step 5: Negotiation of terms related to the cost (rental / lease fee) of the ‘head lease’payable to government and other contracts with respect to the lease
Consult and appoint steering committee
� Chiefs
� Municipalities
� Development agencies
Private Sector Investor (Represented in a trust)
Form a Joint Venture (JV)
Total time = Six years +
(Negotiate an equity and profit share)
� Investigation if all parties are happy
� Finalised with steering committee
Put out Public Notice
JV Makes Changes
Final Report
Proposal Accepted in Principle by Stakeholders DLA; DEAT (National and Provincial); Steering Committee
Preparation of Ministerial Memo by Provincial DLA
Dept Environmental Affairs & Tourism (DEAT) Signs Lease
Record of Decision Issued by Provincial DLA
Appoint Environmental Assessors
Prepare Technical Proposal for Lease
Provincial Department of Land Affairs (DLA)
Environmental Impact Assessment (EIA)
ApprovedNational DLA Conducts
Investigation
Community
Selected sector: TourismComplexity of land claim process
The diagram below describes the process and time lags experienced by a property developer for a development in Coffee Bay
OneYear +
1 Year
Source: Monitor work on tourism
60UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Barriers / solutions related to target markets
Barrier / constraint Potential solution
Especially among domestic tourists, the Wild Coast has a bad reputation and is believed to be unsafe
Train South African Police Services (SAPS) personnelTeach the local population the value of tourism
Lack of tourism statistics – no proper survey of visitors in OR Tambo is available
District initiative to do a survey
Not enough good accommodation in Mthatha to cater for visitors to the Nelson Mandela Museum,Qunu and Mvezo
Develop more facilities, especially in the upmarket segment
Source: Monitor analysis
61UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Assessment of the potential of the tourism sector
If basic infrastructure and the land claims issue could be improved, the region has huge growth potential
Source: Stats Census 2001, SA Tourism, Monitor analysis
Create the right environment for private sector investment
� Land tenure process
� Municipality capability to deal with tourism investment
� Transparent investment process
Create the right environment for private sector investment
� Land tenure process
� Municipality capability to deal with tourism investment
� Transparent investment process
Doubling the number of domestic and foreign tourists in OR Tambo would mean approximately:
� 400,000 more tourists every year
� 1,200 direct employments
Doubling the number of domestic and foreign tourists in OR Tambo would mean approximately:
� 400,000 more tourists every year
� 1,200 direct employments
Current situation Current situation
Skills for tourism workers (understanding of potential for tourism)
Marketing strategy
Skills for tourism workers (understanding of potential for tourism)
Marketing strategy
Platform for growth Platform for growth
Full usage of potential Full usage of potential
62UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Tourism – Barriers / solutions to investments
Idea Business plan Funding Implementation
Blockages / barriers
People have no experience of writing a proper business plan
People have no security to warrant a loan from a bank
The bad reputation of the region makes the banks reluctant to invest in the node
Political mismanagement and complicated bureaucracy
Land tenure and land claims issues
No tradition of business and entrepreneurship means that many investors are met with mistrust
Potential solutions
Municipality initiative to guarantee the basic infrastructure
Workshops and training offered by the Chamber of Commerce
Locally-based initiatives for investment within the node
More transparency in approval and land claim processes
A proposed centre of excellence (CoE) to support municipality and local government and to bring investor confidence
63UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Key contacts
NameName Position /Position /organisationorganisation Reason to contactReason to contact
Vijay Makanjee CEO Hluma (Joint venture by DBSA and Old Mutual)
� Runs a R500 million investment fund
� Wants to invest in the Wild Coast
� Showed great interest in the Investment Atlas
Phumi Mokoena Co-ordinator: Eastern Cape Development Corporation
� Has good understanding of potential investments
� Engaged in fast-tracking stalled projects
Nokuzola Tetani Co-ordinator: Nelson Mandela Museum,Mthatha
� Key person for discussions about the proposed Freedom Route
� Has good understanding of the tourism sector in the area aroundMthatha
� Involved in developing a master plan for attractions around Nelson Mandela
Lope Quist LED Manager, Port St Johns
� Has a good understanding of LED
� Involved in developing Port St Johns as a major tourism centre
N/A Wilderness Foundation
� A key person to involve in discussions about investments and constraints on the Wild Coast
� Experienced how a major investment became stranded
� Could be used to test the concept of CoE
64UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Stranded projects
Many projects have failed in the implementation phase
Source: Eastern Cape Development Corporation; Monitor interviews
ImplementationImplementationFundingFundingBusiness planBusiness planIdeaIdea
Reasons for failure Reasons for failure
� Lack of transparency in the land claims process
� Complicated bureaucracy
– A planned R80 million investment was delayed for five years before approval was given
� Lack of capability within the municipality
– No spatial development framework
� Lack of capacity within the municipality
– A R60 million project has been stalled because documentation was lost by the involved department
� Competition between different government departments
– Several examples of how closed deals were declared invalid because certain stakeholders felt left out
� Lack of transparency in the land claims process
� Complicated bureaucracy
– A planned R80 million investment was delayed for five years before approval was given
� Lack of capability within the municipality
– No spatial development framework
� Lack of capacity within the municipality
– A R60 million project has been stalled because documentation was lost by the involved department
� Competition between different government departments
– Several examples of how closed deals were declared invalid because certain stakeholders felt left out
65UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Stranded Project – Hlungulwana Cultural Village in Coffee Bay
ConceptConcept Data and CommentaryData and CommentaryDescription The plan is to develop a resort facility with:
� Twenty free-standing self-catering units each accommodating five to six people
� Five boat houses
� A meeting hall/boma
� Slipway for ski-boat launching
Project cost R 22 million
Employment Direct: 25, indirect: 50
Reason for delay in approval
Project was held up due to the absence of spatial development planning framework for the area. The process of reaching the decision took approximately 22 months
Current status Awaiting the completion of the spatial development framework by KSD Municipality
Contact ECDC – Mthatha office
Municipality delays
Source: ECDC Mthatha
66UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected Sector: Tourism Stranded project – Mapuzi Fishing Village in Coffee Bay
ConceptConcept Data and commentaryData and commentary
Description The plan is to develop a resort facility with:
� Thirty rondawel-style accommodation units ( a traditional village)
� A restaurant seating 50 people
� Boardwalk and steps to provide access to the beach
Project cost R12 million
Employment Direct: 10, indirect: 24
Reason for delay in approval
Project was held up due to the absence of spatial development planning framework for the area. The process of reaching the decision took approximately 22 months
Current status Awaiting the completion of the spatial development framework by KSD Municipality
Contact ECDC – Mthatha office
Municipality delays
Source: ECDC Mthatha
67UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Stranded project – The Ridge development in Coffee Bay
ConceptConcept Data and commentaryData and commentary
Description The plan is to develop a resort facility with:
� Fifty single-storey chalets
� A restaurant seating 50 people
� Traditional boma accommodating 100 people
� Bar and lounge seating for 150 people
� Swimming pool
� Curio shop
� Informal craft market
Project cost R80 million
Employment Direct: 48, indirect: 200
Reason for delay in approval
Five years of delays before approval was given
Current status Commencement has begun and the construction should be completed by 2008
Contact ECDC – Mthatha office
Five-year delay
Source: ECDC Mthatha
68UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Stranded project – Mkhweni Lodge in Pondoland
ConceptConcept Data and commentaryData and commentary
Description The developer, partnered with the community, to develop a resort establishment with
� Thirty-two luxury chalets overlooking Mpande Estuary just south of Port St Johns
� Restaurant and bar seating 30 people
� Swimming pool
� Boat launching area
Project cost R12 million
Employment Direct: 24, indirect: 80
Reason for delay in approval
Decision is being upheld due political interference by outsiders who feel left out of the process. A meeting has been scheduled for 25 August 2006 to attempt to solve the impasse. This development has been in the making for the past 11 years
Current status Project has been stalled
Contact ECDC – Mthatha office
Stalled
Source: ECDC Mthatha
69UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Stranded project – Mpande resort in Pondoland
ConceptConcept Data and commentaryData and commentary
Description The developer envisaged developing an 80-room hotel on a site from where his family was forcefully removed in the seventies. The development has been in the making since 1996 when the developer won the land claim case. A school, a clinic, as well as road, water and electricity infrastructure would have been made available to the community as part of the development
Project cost R60 million
Employment Direct: 40, indirect: 100
Reason for delay in approval
All the necessary steps were taken as dictated by the various government departments involved but a PTO (Permission To Occupy) was not granted due to the interference of senior people
Current status The project has to be restarted due to lost documentation by government departments
Contact ECDC – Mthatha office
Political mismanagement
Source: ECDC Mthatha
70UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Stranded project – Mkambathi Nature Reserve in Pondoland
ConceptConcept Data and commentaryData and commentary
Description Wilderness Safari, the largest eco-tourism company in South Africa, planned a major investment including a 5-star lodge in the reserve
Project cost R150 million
Employment N/A
Reason for delay in approval
� Conflicts between factions of the provincial African National Congress
� According to the recently fired Eastern Cape Tourism and Economic Affairs minister the deal was invalid and must return to the drawing board
� Department of Land Affairs could not agree on the land tenure conditions in the deal
Current status � After spending more than R14 million on marketing, Wilderness Safari decided to stop the project in July 2006
� Five years of “haggling with politicians and bureaucrats” was enough for Wilderness Safari and the company is now looking for investment opportunities outside South Africa
Contact Wilderness Safari
Political interference
Source: Daily Dispatch Online 19 July, 2006
71UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Tourism Successful project – Amadiba Adventures
Source: International Trade in Services and Sustainable Development: The case of tourism in SA, International Institute for Sustainable Development 2003
The EU-supported Wild Coast initiative, Amadiba Adventures, is a successful community-owned initiative
Amadiba Adventures Amadiba Adventures
� A horse and hiking wilderness trail in the former Transkei
– Accommodation in tented lodges, hire of horses, tour-guiding and catering is supplied by small business enterprises owned by members of the local community
� Initiated by PondoCROP (a regional NGO) in conjunction with the Amadiba Coastal Community Development Association (ACCODA)
– The trail, use of land and the funds generated are all the property and responsibility of the Amadiba community
– PondoCROP and ACCODA work together with Triple Trust, an NGO focusing on skills development
� The project is part of the Wild Coast Spatial Development, mainly funded by European Union (EU) (R80 million)
� A horse and hiking wilderness trail in the former Transkei
– Accommodation in tented lodges, hire of horses, tour-guiding and catering is supplied by small business enterprises owned by members of the local community
� Initiated by PondoCROP (a regional NGO) in conjunction with the Amadiba Coastal Community Development Association (ACCODA)
– The trail, use of land and the funds generated are all the property and responsibility of the Amadiba community
– PondoCROP and ACCODA work together with Triple Trust, an NGO focusing on skills development
� The project is part of the Wild Coast Spatial Development, mainly funded by European Union (EU) (R80 million)
The three NGOs act as an interface between the EU and the local community
ACCODA
Community
Outcome Outcome � Today considered a business rather than only a pro-poor
project
� Significant positive impact on participating households
� Today considered a business rather than only a pro-poor project
� Significant positive impact on participating households
PondoCROP
EU
Triple Trust Reason for success Reason for success
� Not land tenure dependent
� Lots of pressure from the EU to reconstruct the project and bring it more in line with private sector norms
� Not land tenure dependent
� Lots of pressure from the EU to reconstruct the project and bring it more in line with private sector norms
72UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Tourism
– Selected sector: Agriculture
z Investment opportunities
z Summary
z Appendix
� Description of current value chain� Growth constraints and solutions
� Potential for sector
� Past and current efforts
73UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: AgricultureOverview of the agriculture sector
z Coastal climate with 25% of all of the rainfall in South Africa
z Poor basic infrastructure – Roads– Water and
irrigation
What do they rely on?What do they rely on?What do they rely on?
z Very few commercial farmers – Tea plantations – Sugar estates
z Most people farm in their garden– Field crops
Mainly maize– Vegetables
Mainly cabbage
– Livestock
What do they do / produce?
What do they do / What do they do / produce?produce?
z Maize is the only field crop with export potential
z Small-scale farmers totally lack access to the market
Who do they serve / target / sell to?
Who do they serve / Who do they serve / target / sell to?target / sell to?
Target marketsTarget marketsProductionProductionInputInput
Source: Monitor interviews, Monitor analysis
74UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Inputs
Poor infrastructure and land claims stop development of agricultural sector
Source: Department of Agriculture and Land Affairs, Monitor interviews
OverviewOverview
z Natural resources
– Receives 25% of all the rainfall in SA
– Many rivers potentially used for irrigation
z Capital assets
– People usually get about 2 ha from the traditional leaders to use for farming
– Land claims and land tenure issues stop development of large-scale farming
– Very poor infrastructure prohibits production
– Water and electricity is limited
– Road access is very poor
z Skills
– No commercial farmers and most of the small-scale farmers have limited skills
z Natural resources
– Receives 25% of all the rainfall in SA
– Many rivers potentially used for irrigation
z Capital assets
– People usually get about 2 ha from the traditional leaders to use for farming
– Land claims and land tenure issues stop development of large-scale farming
– Very poor infrastructure prohibits production
– Water and electricity is limited
– Road access is very poor
z Skills
– No commercial farmers and most of the small-scale farmers have limited skills
75UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Inputs (continued)
No commercial livestock farmers but a large portion of the communal farmers in Eastern Cape
Source: Eastern Cape Livestock Census Figures 2003, Monitor interviews
Potential for livestockPotential for livestock Livestock census figures: 2003Livestock census figures: 2003
� Cattle
– Commercial 0 (0% of EC total)
– Communal 632,530 (31%)
� Sheep
– Commercial 0 (0%)
– Communal 1,225,244 (36%)
� Goats
– Commercial 0 (0%)
– Communal 715,478 (38%)
� Pigs
– Commercial 0 (0%)
– Communal 69,570 (57%)
� Poultry
– Commercial 0 (0%)
– Communal 148,034 (16%)
� Cattle
– Commercial 0 (0% of EC total)
– Communal 632,530 (31%)
� Sheep
– Commercial 0 (0%)
– Communal 1,225,244 (36%)
� Goats
– Commercial 0 (0%)
– Communal 715,478 (38%)
� Pigs
– Commercial 0 (0%)
– Communal 69,570 (57%)
� Poultry
– Commercial 0 (0%)
– Communal 148,034 (16%)
Most goats inPondolandwhere the potential is
low!
76UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Inputs (continued)
Large potential for forestry in OR Tambo, but limited due to infrastructure constraints
Source: Department of Water and Forestry
Areas of forestry potential within the Eastern Cape: 2006
Indicates good potential incorporating infrastructure constraintsIndicates moderate potential incorporating infrastructure constraints
Potential for an additional 50,000 ha of forestry development in OR Tambo
This will create 1,500 direct jobs, and 6,000 indirect jobs
77UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
VegetablesVegetables
Selected sector: Agriculture Production
Source: Ntinga OR Tambo Development Agency, Monitor interviews, Department of Water and Forestry, Monitor analysis
OverviewOverview
� Less than 5% of the land is used for intensive agriculture
� Few significant agricultural producers
– Tea (Magwa Tea Estate is the second largest tea producer in South Africa)
– Sugar estates (production of sugar cane and sugar beet)
� Most of the agricultural activity is within the informal sector and on a very small scale
– Subsistence farmers: 84 %
– OR Tambo is by far the biggest communal livestock farming practice in the whole country
� Existing forestry plantations in the area – approximately 30,000 ha
� Less than 5% of the land is used for intensive agriculture
� Few significant agricultural producers
– Tea (Magwa Tea Estate is the second largest tea producer in South Africa)
– Sugar estates (production of sugar cane and sugar beet)
� Most of the agricultural activity is within the informal sector and on a very small scale
– Subsistence farmers: 84 %
– OR Tambo is by far the biggest communal livestock farming practice in the whole country
� Existing forestry plantations in the area – approximately 30,000 ha
Predominantly subsistence farming with maize as the basic crop
Four main productsFour main products
Field cropsField crops
� Maize 70%
� Beans 10%
� Pumpkin 10%
� Sorghum 10%
� Maize 70%
� Beans 10%
� Pumpkin 10%
� Sorghum 10%
LivestockLivestock
� On communal grazing
� Cattle and goats (Pondoland)
� Sheep (around Mthatha)
� On communal grazing
� Cattle and goats (Pondoland)
� Sheep (around Mthatha)
� Mainly along the rivers
� Cabbage 80%
� Potatoes and carrots 20%
� Mainly along the rivers
� Cabbage 80%
� Potatoes and carrots 20%
ForestryForestry
� Plantations in Pondoland
� Near Matiwane
� Softwood (pine) 90%
� Plantations in Pondoland
� Near Matiwane
� Softwood (pine) 90%
78UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
Note: 1LSU=LiveStock Unit; 2The figures for commercial farmers are based on provincial data Source: Ntinga OR Tambo Development Agency, Monitor interviews
Production and PricesProduction and Prices
LivestockLivestock
� Gross income per LSU1 for commercial farmers was calculated at R1,2072
� The communal farmer equivalent is R309-R535
� Gross income per LSU1 for commercial farmers was calculated at R1,2072
� The communal farmer equivalent is R309-R535
VegetablesVegetables
� N/A
� N/A
Profitability Profitability
Production and pricesProduction and prices
Field cropsField crops ForestryForestry
LivestockLivestock
� For commercial farmers the off-take norm is 25-30%
� For communal farmers it is 5-7%
� For commercial farmers the off-take norm is 25-30%
� For communal farmers it is 5-7%
VegetablesVegetables
� N/A
� N/A
Field cropsField crops ForestryForestry
� N/A
� N/A
� N/A
� N/A
� Determined by market dynamics
� Long-term shortage in South Africa; therefore, prices are predicted to increase
� Determined by market dynamics
� Long-term shortage in South Africa; therefore, prices are predicted to increase
� Small margin in forestry plantations (40-year investment period)
� Margins increase with value-added processing
� Small margin in forestry plantations (40-year investment period)
� Margins increase with value-added processing
Selected sector: Agriculture Production (continued)
79UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Production (continued)
Most of the agricultural production located to King Sabata Dalindyebo local municipality
Source: OR Tambo DM
Gross Geographic Product (GGP) in agriculture, OR Tambo District Municipality: 1996
80UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Production (continued)
Source: Monitor interviews, Monitor analysis
Projects
Name Description Implementer
Massive Food Programme Focus on food security (mainly vegetables) for homesteads OR Tambo Department of Agriculture
Syakole People with access to 1-49 ha are supplied with tools and fertilisers OR Tambo Department of Agriculture
“Big project” People with access to 50-200 ha are supplied with tools and fertilisers
OR Tambo Department of Agriculture
Comprehensive Agricultural Support Programme (CASP)
Infrastructure
� Irrigation equipment
� Dams
� Poultry / piggery houses
� Linkage to veterinary service
OR Tambo Department of Agriculture
Crop production Support to maize producing farmers (operations and input) Ntinga OR Tambo Development Agency
High value crops
Support programme for production of
� Vegetables
� Sorghum
� Essential oils
Ntinga OR Tambo Development Agency
Livestock development and red meat production
Support programme for production of � Beef
� Sheep
� Goat
Ntinga OR Tambo Development Agency
Examples of current agricultural projects in OR Tambo District Municipality
81UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Target markets
Few people have access to the market and export is limited
z Markets / customers
– Very little export
Export of maize to be used for bio-fuels is the only crop planned
– Main markets are Gauteng and Free State
– Today all livestock products (primary and processed) are imported
1.7 million people buy milk, beef and mutton outside the node
– Export of pork meat from the Eastern Cape is prohibited
– Potential for export of goat meat to the Middle East
– Major markets for forestry plantations are Sappi’s pulp mill in Umkomaas, and the sawmills inKokstad
z Channel / interface
– Few people have access to the market. Most people sell their products to the local shop
z Marketing
– No targeted marketing campaign
z Competitors / threat of substitute products
– The tea industry is severely threatened by larger production facilities, e.g. in Tanzania
To survive the tea plantations try to convert into eco-tourism facilities
z Markets / customers
– Very little export
Export of maize to be used for bio-fuels is the only crop planned
– Main markets are Gauteng and Free State
– Today all livestock products (primary and processed) are imported
1.7 million people buy milk, beef and mutton outside the node
– Export of pork meat from the Eastern Cape is prohibited
– Potential for export of goat meat to the Middle East
– Major markets for forestry plantations are Sappi’s pulp mill in Umkomaas, and the sawmills inKokstad
z Channel / interface
– Few people have access to the market. Most people sell their products to the local shop
z Marketing
– No targeted marketing campaign
z Competitors / threat of substitute products
– The tea industry is severely threatened by larger production facilities, e.g. in Tanzania
To survive the tea plantations try to convert into eco-tourism facilities
Source: Ntinga OR Tambo Development Agency, Monitor interviews
82UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
-18%
-13%
-8%
-3%
2%
7%
12%
17%
0% 1% 2% 3%
Sunflower seed
Selected sector: AgricultureGrowth of share of global exports vs share of global exports
Source: Monitor work done for the Department of Agriculture and Land Affairs, 2005
Share of global exports vs growth of share of global exports
Share of Global Exports
Gross value 2004/05
R5,000 million
Rye (0.06%, 106.20%)
Sugar cane (0.00%,
100.00%)
Cotton (0.07%, 48.32%)
IIIIVMaize
Groundnuts
Deciduous and other fruit
Oats (0.01%, 21.97%)
Viticulture
Citrus fruit
Wool3
Sheep and goats slaughtered
Pigs slaughtered
Tobacco
III
Grain sorghum
Subtropical fruit
Nuts
Vegetables
Potatoes
Poultry meat
Eggs
Cattle and calves slaughtered
Wheat
Barley
Dry peas
Soya beans
Milk1Dry beans
Growth of Share of Global Exports
Decreasing global exports for South Africa will make it harder for farmers in OR Tambo to enter the domestic maize market
83UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Barriers / solutions related to Inputs
Barrier / constraint Potential solution
Poor basic infrastructure – many farmers without access to proper drainage, water supplies or electricity
Major upgrade of the basic services
Mainly emerging farmers with low skills levels Municipality initiative to train people
No tradition of large-scale farming – lack of understanding of irrigation, fertilisers and breeding
Mentoring programme with commercial farmers from other districts
Wrong breeding practices have led to breed of low quality
Mentoring programme with commercial farmers from other districts
Low quality of produced products – people tend to think that quantity is better than quality
Teach people agricultural processing and the value of high-quality products
Water and irrigation – barrier for medium and small farmers
Subsidies for irrigation systems granted to medium farmers
Source: Monitor interviews
Lack of infrastructure and lack of skills impede future growth
84UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Barriers / solutions related to target markets
Barrier / constraint Potential solution
Lack of proper road and rail network impedes forestry industry – getting produce to market
Extension of N2 to Port Edward, Kei Rail road network from East London to Mthatha
No understanding of market dynamics – people sell at whatever price they are offered in the local shops
Teach people market dynamicsGather people in co-operatives to increase their buying/selling power
No value-add processing within the node Potential for high volume produce to be processed in the node
Lack of interest from the meat industry in meat from communal land
Let the meat industry play an active role in any livestock improvement programme
Source: Monitor interviews
Lack of road and rail network is a key impediment for forestry
85UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Assessment of the potential of the agriculture sector
Investing in the agriculture sector will create jobs and enable other sectors to develop in the node
� Better roads and rail network
� Skills development of emerging farmers
� Better roads and rail network
� Skills development of emerging farmers
� Increase in production volumes
� Skills and networks developed
� Increase in production volumes
� Skills and networks developed
� Promote co-operatives between farmers
� Agricultural value-added processing inside the node
� Promote co-operatives between farmers
� Agricultural value-added processing inside the node
� Employment created
� Enhanced competitiveness with farmers outside the node
� Real economic growth
� Employment created
� Enhanced competitiveness with farmers outside the node
� Real economic growth
Sustainable growth in agriculture, and platform created for development of tourism
Ancillary service industries created (service stations, accommodation, etc)
Ste
p 1
Ste
p 2
Source: Monitor analysis
86UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSelected sector: Agriculture Barriers / solutions to investments
Idea Business plan Funding Implementation
Blockages / barriers
People have no experience of writing a proper business plan
People have no security to warrant a loan from the bank
The bad reputation of the region makes the banks reluctant to invest in the node
When projects are implemented for emerging farmers, they are often left alone without the necessary network
Potential solutions
Municipality initiatives to provide basic infrastructure
Work shops and training programmes
Locally-based initiatives for investment within the node
Mentorship programmewith commercial farmersJoint ventures with larger farmersCo-operatives to share experiences
87UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Tourism
– Selected sector: Agriculture
z Investment opportunities
z Summary
z Appendix
88UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboInvestment opportunitiesMkambathi Nature Reserve
ConceptConcept Data and commentaryData and commentaryDescription � Developing accommodation in Mkambathi Nature Reserve covering 7,720 ha between Port Edward and
Port St Johns. According to market analysis the demand is – One 50-200 bed, 3-star hotel/resort– Two 24-48 bed, 4-star lodges– One 12-24 bed, 5-star lodge
� Parallel to this, an activity package needs to be developed
� Today there is not enough accommodation (in total 90 beds) in the reserve and many tourists choose better alternatives elsewhere on the coast
Economic rationale � The major attractions for tourists in EC are beach and nature reserves. By combining these two and at the same time offering upmarket accommodation, many visitors could be attracted to a region with currently untapped potential
� If the facilities are successfully developed it is believed that the number of visitors would be between 25,000 and 35,000 per year
Employment � The proposed scenario would create at least 175 permanent jobs for the establishments and an additional 17 for the park management
� Approximately 420 local jobs would be created over the construction period
Enabling conditions � Need for a new access road with an estimated cost of R80 million
� The tourism support infrastructure needs to be improved to the value of R8.4 million
Other � The required investment for the tourism products is R77,340,000
� The net present value at 5% discount rate over 30 years is R34 million for a fully outsourced commercialised option
� For a community-developed, operations-outsourced option, the net present value (NPV) using the same discount rate and time frame would be just over R31 million
Contact Intact Consulting
Documentation Feasibility study done by Intact Consulting, Cape Town in July 2006Source: Intact Consulting
89UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboInvestment opportunities The Freedom Route
Source: Monitor interviews, Monitor analysis
ConceptConcept Data and commentaryData and commentaryDescription � An internationally recognised tourist route in the Eastern
Cape stretching from the Wild Coast to the southern Drakensberg with a historical focus on the freedom struggle
Economic rationale
� The area currently has a negative image (bad roads, part of former Transkei)
� Establishment of the route will be used as a marketing tool to highlight the various attractions in the area
Employment � The successful establishment of the route will result in an upliftment in the tourism sector as a whole, which will result in a large-scale employment opportunity
Enabling conditions
� Upgrading of key roads across the area
� Large hotel development in Mthatha
� Buy-in from ECTB, ECDC, DEAT and municipalities
� Approval for branding of corridor
Other � Major investment required in rebuilding roads (between R60-R200 million)
� Route is designed to compete with Garden Route, Wine Route and Midlands Meander
Contact Rob Farrington, Dr Bool Smuts
Documentation Feasibility studies and interviews
90UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboInvestment opportunities Commercial dairy enterprise
Source: FarmVision; Picture from www.optive.uk
ConceptConcept Data and commentaryData and commentaryDescription � Three areas around Port St John’s (Selwane, Mantusini and
Mbabalane) could use water from the nearby Umngazi River to irrigate land and create a good environment for cattle. The produced milk would be sold to a proposed processing plant in the vicinity of the project
� Milk production and processing are suppose to work on a co-operative basis where the plant has the right of first refusal of the milk and at the same time provides the farmers with access to a competitive market
Economic rationale
� By being the main supplier of high quality milk to the processing plant it is envisaged that a better milk price can befetched
Employment � For the milk production 15 permanent labourers are needed
� A high degree of management skills is necessary to effectively implement irrigation, fodder and fertilisers
Enabling conditions
� Approval from Dept of Water Affairs and Forestry (DWAF) is needed before water from Umngazi River can be used for irrigation. This is a critical point since the whole region should be under irrigation
� Today the farmers in the region have Permission To Occupy (PTO) the land. Potential land claim issues need to be investigated further
Other � The capital requirement is R13,080,000 (processing plant not included)
� The NPV of the net flow at a 13% discount rate, over a 10-year period, amounts to R1,046,564
Contact details Lieb Venter, Managing Director FarmVision, Tel: (042) 296-0818
Documentation Feasibility study from FarmVision available
91UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboInvestment opportunities OR Tambo maize production
ConceptConcept Data and commentaryData and commentaryDescription � Although the region has high potential (soil,
climate) for crop production almost 70% of the croplands are left unused
� The major reason is that people cannot afford the costs of the operations involved
� The project aims to scale-up the maize production in the region
Economic rationale
� N/A
Employment � N/A
Enabling conditions
� Training is needed in order to give the farmers the right level of skills (chemicals, fertilisers, seed)
Other � Required funding is R18,376,015 which covers production, plant and equipment
Contact Maize Team, Department of Agriculture, OR Tambo DM
Documentation Business Plan
Source: Maize Team, Department of Agriculture, OR Tambo DM; Picture from www.gov.sz
92UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboInvestment opportunitiesMqanduli milling plant
ConceptConcept Data and commentaryData and commentaryDescription � Establishing a plant wherein maize can be
transformed into samp, maize meal or feed (cattle, chicken or pig) as a by-product
� The purpose is to help the many subsistence farmers in the region transform into commercial farmers and also to use the raw material in the region and add value to it
Economic rationale
� N/A
Employment � Thirty low or semi-skilled jobs
� Six jobs requiring managing skills
Enabling conditions
� N/A
Other � An investment of R1.2 million is required over a period of three years before the plant will be self-sustaining
� The factory building and the milling equipment already exist
Contact details LED Manager, KSD Municipality, Tel: (047) 501-4006
Documentation Business Plan
Source: KSD Municipality
NB: This is just an illustration and not the milling plant in Mqanduli
NB: This is just an illustration and not the milling plant in Mqanduli
93UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboInvestment opportunitiesXolobeni Mineral Sands
ConceptConcept Data and commentaryData and commentaryDescription � Mining the heavy mineral sand deposits of an estimated
346 million tonnes at 5.0% mineral content, located inPondoland on the Wild Coast. The lease area extends for 22 km along the coast from Mzamba River in the north to the Mtentu River in the south covering about 3,300 ha
Economic rationale
� Dry mining followed by mineral separation to produce the raw material for a smelter and iron plant producing slag and pig iron
Employment � The project would generate between 200 and 300 direct employment opportunities. The induced employment multiplier is believed to be 4.2 giving 840 to 1,260 additional employment opportunities
Enabling conditions
� Issues to be resolved include water requirements, road traffic to and from Xolobeni, and security of power supplies
� The affected land is owned by the state and held in trust for the local people. Re-settlements and resource loss to the local communities have to be compensated for
Other � Pre-feasibility work shows a 22-year life of mine for a US$220 million capital investment. In 2003 SRK Consulting completed a Desktop Mining Study confirming an indicative pre-tax NPV of US$129 million
Contact Mineral Commodities Ltd
Documentation Early review document
Source: Xolobeni Mineral Sands Project – presented by the Wilderness Foundation; Picture from www.mineralcommodites.com.au
94UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboInvestment opportunities Example of investment process
Old Mutual / DBSA Investment Fund Old Mutual / DBSA Investment Fund
� R500 million fund – Mainly for projects > R30 million
� The joint-venture initiative is called Hluma Development Local Investment Agency
� The Wild Coast (including Mthatha) is the first area to be rolled out
– Three other regions are up for discussion
� Northern Cape
� North West
� Limpopo
� Need for investments since the major banks are reluctant to invest on the Wild Coast
– Land tenure– Safety issues– Low skills level within the municipality
� Focus areas are Mthatha, Port St Johns and Coffee Bay– Current projects mainly within the retail sector– Tourism identified as another high potential sector
� The structure of the deal is either equity or loan
� R500 million fund – Mainly for projects > R30 million
� The joint-venture initiative is called Hluma Development Local Investment Agency
� The Wild Coast (including Mthatha) is the first area to be rolled out
– Three other regions are up for discussion
� Northern Cape
� North West
� Limpopo
� Need for investments since the major banks are reluctant to invest on the Wild Coast
– Land tenure– Safety issues– Low skills level within the municipality
� Focus areas are Mthatha, Port St Johns and Coffee Bay– Current projects mainly within the retail sector– Tourism identified as another high potential sector
� The structure of the deal is either equity or loan
Note: DBSA = Development Bank of Southern AfricaSource: Monitor interviews
Decision process and involved stakeholders
Mandate Statement
Structure of Deal
Concept
Feasibility Study /
Business Case
Early Review Document
If Yes
Consultants (outsourced
function)
Board of Directors (Old
Mutual / DBSA)
Entrepreneur
Entrepreneur Hluma
Hluma
Board of Directors (Old
Mutual / DBSA)
The Investment Atlas would facilitate the process where a project is outlined andtaken to the Board of Directors
Inve
stm
ent A
tlas
to fa
cilit
ate
this
par
t of t
he p
roce
ss
95UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Tourism
– Selected sector: Agriculture
z Investment opportunities
z Summary
z Appendix
� Understanding the node
� Potential sources of economic growth – Short term
� Potential sources of economic growth – Long term
� Assessment of current activities
� What needs to be done now?
96UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSummaryUnderstanding the OR Tambo poverty node
� Negative perception� No commercial
investment
� Poor economy
� Rural
� Lacks infrastructure
� Potential for tourism
� No tourism strategy
� Land tenure
� Potential for crop and livestock farming
� Mainly subsistence farming
� Skills gap
Key observations from OR Tambo
OverviewOverview
Economy, overview
Economy, overview
Economy, tourism
Economy, tourism
Economy, agricultureEconomy, agriculture
Key characteristics of node
� Part of the former Transkei – negative perceptions
� Densely populated
� Lack of significant commercial investment
� Lack of basic infrastructure (roads, water and electricity)
� Ninety per cent rural
� GDP per capita is 33% of the Eastern Cape average
� Seventy-two per cent of households lack electricity
� Eighty-four per cent of households lack piped water
� Underdeveloped sector constrained by lack of infrastructure
� Many areas of natural beauty and many unique leisure activities (untouched coastline, mountains, wildlife)
� Land tenure is a barrier
� No collective marketing strategy
� Lack of infrastructure adds cost and limits productivity (roads, water)
� Both crops and livestock farming in the node
� Mainly subsistence farming
� Lack of skill
97UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSummary Potential sources of economic growth – short term
Economic growth of firm in node
Increase sales?
Where to focus?
Skills gap with municipality
� Sector-related expertise is required
– Forestry
– Tourism
� Capability to deal with potential private sector investments
Provide new product / service
Forexport
Import substitution
Increase quality of current offering
Skills Other
Decrease cost?
Purchases Labour Infra-structure
Other
Address skills gap with subsistence farmers
� Training in production techniques
� Selling and marketing skills
Create a market for selling produce
� Crops
� Livestock
� Provide farmers with transparency on market prices
Key focus area
Not a focus area
98UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSummary Potential sources of economic growth – long term
Economic growth of firm in node
Increase sales?
Provide new product / service
Forexport
Import substitution
Increase quality of current offering
Skills Other
Decrease cost?
Purchases Labour Infra-structure
Other
Estimate of cost structure of average firm in node
Where to focus?
Value-added processing in the node for agricultural products
� Increases growth and employment in the node
� Stimulates large private sector investment in the node
� Demand for ancillary services created (garages, accommodation, etc)
Collective marketing strategy incorporating all the attractions and activities in this andneighbouring areas is needed
� Creates awareness of the available tourist attractions in the node
� Changes negative perceptions about the node
� Increases volume of tourists to the node
Encourage private sector investment
� Transparency on land tenure process
� Establish a PPP model
99UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSummary Assessment of current activities
Key observations from OR Tambo
What is being done?What is being done?
� Development of Mthatha as commercial centre
� Different agricultural projects
– Maize
– Vegetables
– Essential oils
– Livestock
� High level tourism strategy
� Development of a forestry cluster
Strategic choice?
Do more of the same
Do different things; do things differently
� Some work is being done on the agricultural sector
� No real focus
� More skills development has to happen in the node, especially within the municipalities
100UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboSummary What needs to be done now?
Key observations from OR Tambo
Solutions to constraints / investment opportunitiesSolutions to constraints / investment opportunities
� Improve basic road, water and electricity infrastructure
� Make the land claim / land tenure process more transparent
� Create a public-private sector model to incentivise private sector investment in the tourism and forestry sector
� Develop marketing strategy for the node
� Address skills gap for subsistence farmers
� Address skills gap within municipalities
Requires involvement ofkey stakeholders
� OR Tambo Municipality
� All local municipalities
� dplg
� Department of Trade and Industry (DTI)
� Department of Environmental Affairs & Tourism (DEAT)
101UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
OR Tambo poverty node
z Research process
z Overview
z Economy
– Overview
– Selected sector: Tourism
– Selected sector: Agriculture
z Investment opportunities
z Summary
z Appendix
Itineraries of field trips
Key stakeholders
Key documentation
Photo collages
102UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboAppendixItineraries of field trips
Monday, 24 July 2006Monday, 24 July 2006
Tuesday, 25 July 2006Tuesday, 25 July 2006
Wednesday, 26 July 2006Wednesday, 26 July 2006
Thursday, 27 July 2006Thursday, 27 July 2006
Friday, 28 July 2006Friday, 28 July 2006
Travel schedule / locationsTravel schedule / locationsTravel schedule / locations Main activitiesMain activitiesMain activities
� Early flight from Johannesburg toMthatha
� Kick off with the local champion
� Meeting with the municipality manager for strategic development
� Meeting with ECDC in Mthatha
� Drive from Mthatha to Coffee Bay
� Meeting with Ntinga OR Tambo development agency in Mthatha
� Meeting with owner of Coffee Bay Hotel
� Coffee Bay – Mthatha – Coffee Bay
� Meeting with the municipality manager for SMMEs
� CEO of Old Mutual/DBSA investment fund
� LED manager in KSD
� Coffee Bay – Mthatha
� Meeting with the Department of Agriculture
� Meeting at the Nelson Mandela museum
CommentsCommentsComments
� Lots of dead time because of delayed meetings
� Working day in Coffee Bay with follow-ups, data gathering and phone calls
� Received maps and other electronic information from the municipality‘s IT department
� Two confirmed meetings cancelled at the last minute
� In Mthatha
� Drive from Mthatha to the Wild Coast and accommodation for the weekend
� Meeting with Department of Economic Affairs, Environment and Tourism (DEAET)
� Meeting with Simpiwe Somdyala -KDBS Consulting
� Meeting with DEAT
� One confirmed meeting cancelled without further notice
103UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboAppendix Itineraries of field trips (continued)
Monday, 31 July 2006Monday, 31 July 2006
Tuesday, 1 August 2006Tuesday, 1 August 2006
Wednesday, 2 August 2006Wednesday, 2 August 2006
Thursday, 3 August 2006Thursday, 3 August 2006
Travel schedule / locationsTravel schedule / locationsTravel schedule / locations Main activitiesMain activitiesMain activities
� Drive from the Wild Coast back toMthatha
� Mthatha – Port St John’s
� Meeting with Graham Harrison
� Follow-up meeting with the local champion
� OR Tambo LED manager
� Ntinga development agency
� Meeting with Dept of Agriculture
� Port St Johns – Bizana – Port St John’s
� Meeting with the LED manager and the LED working group in Bizana
� In Port St John’s
� Meeting with the LED manager in Port St John’s
� Wild Coast Development Forum
� Port St John’s – Mthatha
� Flight from Mthatha back to Johannesburg
� Meeting with Majola Tea Estate close to Port St John’s
CommentsCommentsComments
� Many good meetings and lots of information received
� Six hours of driving� Smaller towns like Flagstaff, Lusikisiki
and Bizana visited
104UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboAppendix Key stakeholders, actors, information carriers
GovernmentGovernmentGovernment Private sector / business
Private sector / Private sector / businessbusiness Local peopleLocal peopleLocal peoplePublic sectorPublic sectorPublic sector NGOsNGOsNGOs OtherOtherOther
LED Manager KSD Local Municipality
= have appointment= have met = key person, suggest to
involve in future discussions
Department of Agriculture
SMME Manager of OR Tambo DM
DEAT
OR Tambo
DEAET
OR Tambo
Department for Strategic
Development
LED Manager OR Tambo DM
LED Manager Bizana Local Municipality
Ntinga OR Tambo Development
Agency
Eastern Cape Tourism Board
Eastern Cape Development Corporation
Nelson Mandela Museum
Owner of the Ocean View Hotel
in Coffee Bay
Old Mutual / DBSA Investment
Fund
Wilderness Safari
Simpiwe Somdyala /KDBS
Consulting
Majola Tea Estate
Magwa Tea Estate
The PondolandSugar Company
Ken Small (landownerUmdumbi)
Vuyiswa Dlabutshe
Wilderness Foundation
ACCODA
PondoCROP
Triple Trust
European Union
= have appointment
The Wild Coast Sun hotel
= referred to
105UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboAppendix Key stakeholders, actors, information carriers (continued)
GovernmentGovernmentGovernment Private sector / business
Private sector / Private sector / businessbusiness Local peopleLocal peopleLocal peoplePublic sectorPublic sectorPublic sector NGOsNGOsNGOs OtherOtherOther
LED Manager Port St Johns
Local Municipality
= have appointment= have met = key person, suggest to
involve in future discussions
= have appointment= referred to
106UUP-WRD-OR Tambo Profile-301106-IS
Nodal Economic Profiling Project Business Trust and dplg, 2007
OR Tambo
TitleTitleTitle
OR Tambo IDP Report 2006/2007
Author / org.
Author / Author / org.org. YearYearYear
OR Tambo District
Municipality2006
Main issues coveredMain issues coveredMain issues covered
Planning report for the district municipality
King Sabata Dalindyebo IDP Report 2005/2006 KSD Local Municipality 2005Planning report for the local municipality
Ntinga OR Tambo Development Agency –2004/2005 Annual Performance Report
OR Tambo District
Municipality2005Review of economic activity in OR Tambo
Mqanduli Milling Plant KSD Municipality 2006Revised business plan
Xolobeni Mining Sands Wilderness Foundation 2005Background and basic feasibility study
Major Tourism initiative in Pondoland Grant Thornton 2005Major tourism project in the Xolobeni area –Comparison with the mining project
KEI Rail Development Corridor: Economic Initiative
2005Overview of Kei Rail project and its major stakeholders
Economic Profile of OR Tambo District Municipality
Eastern Cape Socio-Economic
Consultative Council (ECSECC)
2002
tick if on file
Overview of the municipality and its economic sectors
Eastern Cape Department of
Transport
Appendix Key documentation
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OR TamboAppendix Key documentation (continued)
TitleTitleTitle
Cluster-based Local Economic Development
Author / org.
Author / Author / org.org. YearYearYear
Simpiwe Somdyala 2003
Main issues coveredMain issues coveredMain issues covered
Cluster based economies – theory and concepts
LED Implementation strategyOR Tambo
District Municipality
2002Assessment of the local economy and the LED initiatives
Vulindela Study ReportOR Tambo
District Municipality
N/AStudy of SMMEs in OR Tambo
OR Tambo Regeneration Strategy KDBS / Dube N/ACluster based economic strategy for OR Tambo
Vision 2030 KBDS N/AEconomic Development Strategy for OR Tambo
The South African Forestry and Forest Products Industry 2002
Forestry South Africa 2002Overview of the forestry sector in South Africa
The Eastern Cape Forestry sector potential N/AOverview of the forestry sector in Eastern Cape
Spatial Development FrameworkOR Tambo
District Municipality
N/A
tick if on file
Current spatial patterns and development strategies
Simpiwe Somdyala
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OR TamboAppendix Key documentation (continued)
TitleTitleTitle
Mkambathi Nature Reserve
Author / org.
Author / Author / org.org. YearYearYear
Intact Consulting, Cape Town
2006
Main issues coveredMain issues coveredMain issues covered
Tourism feasibility study
Singisi Forest Products Singisi Forest Products Ltd N/AOverview of projects in the Langeni area
Eastern Cape Park Board ECTB 2004Strategy 2004/2005
SDF and state of the district economy KBDS N/AOverview of the district’s economy
Wild Coast conservation and sustainable development project
CSIR Environmentek 2005Resource use and land tenure in the Wild Coast
Eastern Cape Project list DEAT 2006Overview of the DEAT’s project in the Eastern Cape
Project List 2006Overview of current projects in South Africa
Capital Investment FrameworkOR Tambo
District Municipality
2006
tick if on file
Financial section of the Spatial Development Framework
DEAT
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OR TamboAppendix Key documentation (continued)
TitleTitleTitle
Proposed Tourism Sector Development Plan
Author / org.
Author / Author / org.org. YearYearYear
Ntinga OR Tambo Dev.
Agency2006
Main issues coveredMain issues coveredMain issues covered
Strategy to develop the tourism sector
Proposal for Livestock MarketingNtinga OR
Tambo Dev. Agency
2003Marketing strategy for communal farmers
Business Plan for Livestock ImprovementProgramme
Ntinga OR Tambo Dev.
Agency2003Improved output from livestock
Five-year Agricultural Development PlanOrganised Agriculture,
Eastern regionN/AFramework aimed at sustaining agricultural
growth and economic development
Port St John’s Local Municipality IDP Report 2006/2007
Port St John’s Local
Municipality2006Planning report for the local municipality
Port St John’s Spatial Development Framework Port St John’s
Local Municipality
2006Current spatial patterns and development strategies
Port St John’s LED plan 2005Current plan for local economic development
Status Quo ReportMlungiseleli
Rural Development
Consulting 2006
tick if on file
Review of the state of Agri-business in Port St John’s
Port St John’s Local
Municipality
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OR TamboAppendix Key documentation (continued)
TitleTitleTitle
Port St John’s Dairy Project
Author / org.
Author / Author / org.org. YearYearYear
FarmVision 2005
Main issues coveredMain issues coveredMain issues covered
Feasibility study
tick if on file
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OR TamboAppendix Photo collage #1 – Constraints to economic growth
The absolute majority live in rural
areas
The absolute majority live in rural
areas
Poor road conditionsPoor road conditionsA rural area with huge infrastructural backlogs A rural area with huge infrastructural backlogs
Land claim and land tenure issuesLand claim and land tenure issuesHigh crime rate and bad reputationHigh crime rate and bad reputation
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Nodal Economic Profiling Project Business Trust and dplg, 2007
OR TamboAppendix Photo collage #2 – Opportunities for investments
The absolute majority live in rural
areas
The absolute majority live in rural
areas
Development of the forestry sectorDevelopment of the forestry sectorThe Wild Coast and its beautiful beaches The Wild Coast and its beautiful beaches
Attractions around Nelson Mandela’s birthplace Attractions around Nelson Mandela’s birthplace Scenic mountains with hiking trailsScenic mountains with hiking trails
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OR TamboAppendix Photo collage #3 – People of the node
The absolute majority live in rural
areas
The absolute majority live in rural
areas
Children travelling to school Children travelling to school Vibrant street life in FlagstaffVibrant street life in Flagstaff
Tourists enjoying the unspoilt natureTourists enjoying the unspoilt nature Large distances and expensive taxis force people to walk several hours every day
114UUP-WRD-OR Tambo Profile-301106-IS
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OR TamboAppendix Photo collage #4 – Businesses of the node
The absolute majority live in rural
areas
The absolute majority live in rural
areas
A thriving retail sectorA thriving retail sectorB&Bs and holiday resorts B&Bs and holiday resorts
Petrol stations serving the traffic on the N2Petrol stations serving the traffic on the N2 The informal sector is huge. Here a hairdresserThe informal sector is huge. Here a hairdresser