THINA SINAKO PROJECT REFERENCE LGSF2/PT/07-07-021

Camdeboo Municipality

STRATEGIC LOCAL ECONOMIC DEVELOPMENT PLAN

MARCH 2009

FUNDED BY IN PARTNERSHIP WITH CO-FUNDER DELIVERY PARTNER

LED Vision Statement To grow a vibrant economy that integrates people and places into one economy, that will attract investment, create employment and enhance the quality of life of our inhabitants.

LED Mission Statement Camdeboo Municipality needs to create an enabling environment for economic growth, investment attraction, enterprise development and retention and this must happen in terms of a strategic approach with sustainable, measurable results that will make a meaningful and positive impact on the lives of our people.

EXECUTIVE SUMMARY

Introduction and Overview This Executive Summary provides an overview of significant conclusions, findings and recommendations that are relevant to the LED Strategic Planning exercise. The summary is divided into the following five sections that correspond with the approach to this LED strategic planning. Socio-Economic Development and Economic Development – the focus is on the findings and

recommendations of the Socio-Economic Survey and the Business Survey.

Institutional Structures, and Systems and Capacity – the focus is on the analysis of the Camdeboo Municipality’s budget and finances, IDP, organogram and capacities.

Infrastructure and Resources – this combines the findings of the Socio-Economic Survey with the

Institutional and Financial Analysis of the Municipality. Sector Focus summarizes the findings and recommendations of the Analysis of the Camdeboo

Economy. Urban and Rural Environment – the focus is on the environmental issues that arose and give

focus to smaller urban towns.

Socio-Economic and Economic Development Quality of Life: Basic Needs Overview The Socio-Economic Survey focused on Quality of Life issues in the Camdeboo Municipality. Major outcomes include: The Camdeboo Municipality is characterised by a very young population. Almost half of the entire

population is younger than 25 years; and of this group of people, nearly a third is younger than 15.

The unemployment rate for the Camdeboo Municipality as a whole – expressed as a percentage of all people between the ages of 18 and 65 – stands at 25.3%. This aggregated figure, however, hides certain extremes at a more local level.

Four employment sectors dominate the situation of employed people in the Camdeboo

Municipality, namely Trade (business – wholesale/retail) 29%; Community Services (Government departments – national, provincial, local) 20.5%; Construction 11.6%; and Domestic (home maker, domestic service) 11.2%.

Education – less than 40% of adults have completed Grade 7; less than 30% have completed

Grade 12; and about 10% have a tertiary qualification. The predominant monthly household income – in the case of about 65% of all households –

varies between R801 and R3,500, with the largest share (37.6%) falling within the R801 – R1,500 income category.

Government Grants play a significant role in assisting households in making a living, with 41% of

all households in this context relying on an Old Age Pension and 28.1% on a Child Support Grant, for example.

Poverty is a major concern with more than 25% of all households that cannot always afford food, clothing, health care, transport and education.

Material deprivation manifests at considerable levels, with 68.8% of all households without a

motor vehicle in working order; more than 85% without a computer; 55% without an electrical washing machine; while 70.9% do not enjoy the luxury of a hot water geyser.

Dwellings in the three urban settlements of the Camdeboo Municipality are fairly well serviced.

96.7% of all dwellings either have a flushing toilet inside or outside the dwelling; 98.6% are electrified; 98.2% of all dwellings have piped water, either inside the dwelling or inside the yard; and in the case of 87.2% of all dwellings, refuse bags are removed by the local authority at least once a week.

Levels of satisfaction with municipal services are remarkably high. Sanitary services (toilet),

electricity supply, main water source and refuse collection all attract satisfaction levels above the 79.7% mark.

The five biggest neighbourhood-based concerns include (a) the quality of roads in the

neighbourhood; (b) pavements / sidewalks; (c) the draining of storm water after rainfall events; (d) the quality of police protection; (e) and the safety of persons and their possessions.

The three services that are generally most important to households are all health related and

include (a) accessible primary health care services; (b) an accessible hospital; and (c) ambulance services.

Local Economic Development (LED) Needs Overview The Socio-Economic Survey focus included two LED components – spatial shopping behaviour and migration. The economy of the greater Camdeboo area is small, unsophisticated and underdeveloped. Growth is stunted due to a large leakage of income to other areas. A low skills profile, high unemployment and poverty levels add to curtail the economic growth and development of this area. Key findings include the following: 37.3% of all household heads feel that the economic situation of their households has

deteriorated over the past 5 years, while 28.3% are of the opinion that it actually has improved over this time.

Almost 20% of all households in the Camdeboo Municipality sometimes buy goods and/or

services in another town. Leakage, more specifically, includes 73.7% for Nieu-Bethesda (Town); 63.5% for Aberdeen (Town); 60.7% for Nieu-Bethesda (Pienaarsig); and 47.7% for Graaff-Reinet (Town).

For the Camdeboo Municipality to increase its economic profile substantially, profitable economic activity within the area needs to be identified and encouraged. This will ultimately raise local employment levels, encourage training and skills development activities, and bring about increased income levels. This will encourage further economic development.

Recommendations The development of a One-Stop-Business Agency, a Camdeboo Development Agency with a PDI

department offering mentoring, support and access to finance for PDI businesses. The development of policies for the management and promotion of “Informal Trading”. This is to

include by-laws, leases, land demarcation, aesthetics and support. That the CM LED officer, and possibly staff in the proposed Development Agency, should be

trained in the services offered by business support agencies and thereafter advise small business in this regard, and mentor them on an ongoing basis.

Those occasional workshops with the above agencies are conducted in the CM area, and that the

CM organizes these. In order to encourage existing businesses to take on BEE partners, the CM should work with, for

example, the ECDC, to create a fund of capital that could be lent to prospective BEE partners to buy shares in an existing company, thereby making the BEE deal both attractive financially and an opportunity to re-finance the company.

That the CM conduct a workshop with local business people, the intention of which is to identify

opportunities (and possibly people) who could open new businesses to supply existing Camdeboo businesses, and also to satisfy existing opportunities and openings for new businesses as may exist.

That the Municipal LED Officer be tasked to identify all opportunities for Job Creation Projects

(Department of Social Development), and to promote CM as a vehicle for these projects. That the LED Officer works with the Provincial Departments of Education and Health to obtain

funding for SMMEs to provide gardening, security and maintenance services at state schools and hospitals, and begin a programme in this regard.

The Camdeboo IDP lists a number of unfunded projects with Socio-Economic potential. These need to be revisited as private/public partnerships, for instance:

Aberdeen Heritage Archive and Tourist Bureau (Private initiative) Divu Kilae Ceramic Sculpture Project (Private initiative) Upgrading of Tourism Office (Formation of LTO structure) Upgrading of Camdeboo National Park Infrastructure (SANParks) One-Stop Truck Inn (Private initiative)

Institutional Structures and Systems, HR Capacity Development Agency Overview The Development Agency approach has the advantage of bringing a new player into Camdeboo’s Local Economic Development; bringing the local business community into an organisation designed around LED; and providing other financial sources (IDC, etc.) to multiply the CM contribution to LED. Thought could be given to establishing separate premises and seconding the Municipal LED officer, and the proposed SMME specialist, to this organisation; as well as housing the Publicity Tourism Office in this new Development Agency.

Recommendations That the CM approach the IDC regarding funding to set up a Camdeboo Development Agency.

That a suitable private sector benefactor be approached to donate suitable premises for this

organization. That CM considers seconding their LED officer and the proposed SMME officer to this

organization. That the CM approaches the Publicity Toursim Office with regard to placing it under the umbrella

of the proposed Development Agency. That CM negotiates with the backers of the proposed Karoo Development Foundation, to house

this also in Graaff-Reinet in the proposed Camdeboo Development Agency premises. That the CM lobby for the creation of a School of Entrepreneurship, and a Small Business

Support Unit, to be set up within its jurisdiction. That the CM LED Officer, or the to-be-formed Development Agency, will assemble information re

business opportunities, etc., and disseminate this within the Camdeboo Small Business Community.

Municipal Structure and Capacity Overview The Camdeboo Municipality is well run, financially strong and is delivering the full spectrum of municipal services. LED stakeholders interviewed for the quality of services delivered, praise it. Points of concern, however, exist: The municipality has a relatively small total income, which constrains spending on critical

projects and on building up a LED capacity.

Backlogs exist in the provision of a number of municipal services, particularly housing. Rapid development of low income housing puts strain on all other municipal services.

The maintenance of all new infrastructure puts additional responsibility on an already depleted

staff complement. Many senior posts in the organogram need to be speedily and suitably filled, or constraints on

service delivery will occur as well as organisational malfunctions. Unless these senior positions are speedily and adequately filled, service delivery could be threatened, as could institutional coherence.

Recommendations That CM review unfilled posts and prioritize the importance of LED and recruit an LED Officer,

and Town Planner.

That the LED Officer develop an LED budget and plan based on the Strategic Priority Areas identified in the LED Strategic Plan.

That there is a review of the Camdeboo Supply Chain Management Policy, with an inspection of

the preference points system for both local and PDI businesses.

Infrastructure and Resources Municipal Infrastructure Overview Backlogs exist within the areas of infrastructure services. A 2005 municipal survey by the Cacadu District Municipality suggested the following backlogs in service provisions: 15% of households did not have electricity.

4% of households did not have portable drinking water accessible within 200 meters of the

dwelling.

Generally, as noted in the Camdeboo IDP document, “Camdeboo Municipality does not have adequate water supplies and has an unstable situation”.

20% of households have septic tanks and non-Municipal sewerage. 18% of households do not have weekly refuse removal. The housing backlog is variously estimated at between 4,000 units and 12,327 units.

This indicates that a considerable amount of work remains to be done in this regard. There is also the issue of maintenance of the new infrastructure. Recommendations That the CM develops a business plan to build as many houses as are necessary to

eliminate its backlog.

That the CM identifies and then advertises a site suitable for an ‘Ultra City” transport hub for private sector development. This in conjunction with the TIA previously mentioned.

That the CM compile a Business Plan for efficient sorting and re-use of waste deposited at

its waste disposal site. That the CM encourages the development of a golf estate at the present golf course. That the CM identifies and then advertises sites for further Retirement Complexes to

encourage the growth in the local reticulation industry. That the CM develops an annual maintenance programme for the upkeep of the all the new

systems that are put in place. Land Overview The issue of land availability for business and industrial purposes manifests itself in all three of the urban areas. Most land for business or industry is confined to the traditional town centres. Little if any is to be found in the townships. This is an inhibiting factor in trying to encourage and engage people in work in the townships. Graaff-Reinet has additional physical constraints because of its geographic location.

Recommendations A comprehensive Land Plan for Camdeboo is required, which outlines ownership of the land,

present zoning and erf sizes. This should be commissioned soonest. Thereafter a programme for releasing of land for industrial and other use must be created.

At this stage, possible brownfields projects (the old Power Station and Tennis Courts in Graaff-Reinet, for example) are identified and considered for proposal calls.

That the CM workshops with existing industrialists the opportunities for outsourcing existing work

done, and other opportunities to manufacture locally products at present bought from out of town, particularly as far as such opportunities can involve PDI businesses.

Bring to the market industrial and commercial land, which is made available to PDI developers

and businesses on a preferential basis. That the CM considers offering property tax concessions for any new business that purchase land

from the CM, the cost of which could be built into the selling price of the land. Sector Focus Agriculture The Mohair Industry Overview The Mohair industry appears to be well-organised and mostly self-sufficient. The private sector produces mohair, and shears, classes, scours, cards, combs, washes, draws, spins, weaves, knits, dyes and finishes this mohair, all to a lesser or greater extent. Industry cooperative organisations like Mohair SA organise the industry and do marketing and co-ordination. The industry is functioning well, is profitable (as of now) and is well informed of future trends in all relevant variables. Clearly, in all of the above, it would seem unnecessary for a Municipality to attempt to become a role-player. Recommendations There are, however, three areas in the industry which appear to be able to accommodate sensitive government intervention. Angora Goat Farming: A feasibility study on the costs outlined possibilities and the potential of

setting up a small farm relying on angora goats within the area of the Cacadu District Municipality (Source: AgricDIS from the University of the Free State, July 2006).

Small Scale Beneficiation of Wool and Mohair: A Business Plan for Knitting Mohair and Wool in the Cacadu District Municipality proposes a model for small scale knitting of mohair and wool. 92% of South Africa’s nearly 50 000 tons of wool, and about the same percentage of our 3000 tons of mohair, is exported non-value added. Plainly this must create value-added opportunities.

Mohair Value Chain Potential: (a much larger-scale version of the opportunities than the two

above). The project planned by Cape Mohair Spinners has 3 phases namely:

Phase I: Mohair Goat Farming - establish 10 new farmers. Phase II: Processing - utilize existing facilities and technical expertise. Phase III: Value added manufacturing, - establish an operation to make

fashion garments.

(Source: Commission of the European Communities, March 2006)

Conclusions The above three examples suggest some areas where a municipality could be an active player, with others, in promoting the mohair industry, and in promoting access for PDI persons to enter this industry. Plainly, a mohair industry-specific LED officer, with experience and energy, housed in a Development Agency, could play a meaningful role in developing opportunities in this industry. The Wool Industry Overview Essentially the same comment can be made re the mohair industry. The industry is extremely complex and relies on a variety of variables most of which are beyond the control of the farmer (weather and particularly rainfall; wool prices on the international market; exchange rates, etc.) What role, if any, a municipality can play is not obvious. The Wool Industry has (National Wool Growers Association, SA) an organisation that is extensively involved in aiding traditional farmers to improve productivity and thereby their income. These programmes include Genetic Improvement Scheme, ComMark Trust, Parasol Project (Vetenarian), Master Mentorship Programme and Infrastructure Provision. (Source: National Wool Growers Association of SA, Annual Report July 2006 to June 2007).

Recommendations Small Scale Merino Farming by PDI Farmers: A feasibility study similar to that of the mohair

industry analysed the costs, the possibilities and potential of setting up a small farm relying on merino sheep farming in the Cacadu District. (Source: AgriDIS from the University of the Free State, July 2006).

Value Added: Small Scale Knitting Opportunities: Similar to Mohair industry. (Source: AgriDIS from the University of the Free State, July 2006).

Small Scale Merino Farming by PDI Farmers: Similar to the feasibility study for the mohair industry.

(Source: AgriDIS from the University of the Free State, July 2006). Value Chain Improvements in PDI Farming of Wool: there is an opportunity to rollout the

technology improvement initiative that was started by brokers and the ARC for small wool growers in the Eastern Cape. The scope and magnitude of any expansion of the programme would be subject to a feasibility study to ensure continued uptake of the wool produced by the small growers. (Source: Dr Grey van der Hoff).

Other Non-Traditional Industries Overview

In addition to the traditional agricultural products (wool, mutton, mohair and ostrich), a range of new niche products is emerging. These include the "biblical fruits" (pomegranates, figs and olives), indigenous plants (hoodia, skeletium and aloe ferox), leather works, hydroponic vegetable production, agave plants (fibre, alcoholic drinks, and medicinal products), essential oils (such as lavender and wild rosemary), aquaculture (fish farming in Karoo dams), and goat's milk products.

Cattle: AgriDIS has again looked at the possibility of creating small-scale PDI beef farmers, and their study suggests the following: if land can be bought on a government grant and as such is not a project cost,

a capital cost of R468,000 is required to purchase 40 cows and 1 bull, create pastures, fencing and water points, and annual operating costs of R57,588 are set-off against project income of R185,180, giving the project

an income of R45,000 per annum after servicing a Land Bank loan of R46,800. Ostriches: This paper suggests that the world market could absorb the product from 240,000 Eastern Cape ostriches (there were 50,000 at time of writing). This would require the establishment of new feeding farms; 3 feed growing farms and a feed mixing factory. Abattoirs and tanneries would be further utilized, and value-added opportunities for providing shoes, handbags, wallets etc. would be created. Aloe: According to the analysis in van Schalkwyk (2003), the global demand for Aloe Ferox derivatives is estimated to reach an annual maximum of 1,2 billion litres of non-concentrated gel of whole leaf extract for soft drinks and liquid supplement, 18,6 tons of 200x concentrated gel powder for dietary supplements and cosmetics and 107,6 tons of filleted leaves for the food industry. This demand is complemented by 30 000 kg of dried leaf powder for herbal tea/supplements and 75kg of aloesin. If capacities and opportunities are optimally used, the total value of the aloe derivatives could peak at US $8,2 billion per year. The Camdeboo Municipality has, commendably, begun operations for the beginning of an Aloe Ferox industry in Camdeboo. 114 hectares of municipal land has been leased to the Living Aloe Company (Pty) Limited, which in turn is 40% held by the Zikhuliseni Rhafu Trust, a local empowerment Trust. The Kellogg foundation had made some seed capital available, and a start is being made on a Camdeboo Aloe Ferox initiative. Agave: Karoo cultivated Agave Americana has resulted in the plant being used, mostly in its beginning phase, in three potential industries in Camdeboo. Alcohol Production - A large factory was established just outside of Graaff-Reinet and is about to

restart operations. This could be the basis of an excellent PDI farming project.

Paper-making uses - a pre-feasibility study, to be followed by a three-year research programme, in two phases, (begun on 1 April 2008) While still in its early stages, the project is suggesting very valuable uses for AA.

Inulin Production - Inulin is used increasingly in foods because it has unusual nutritional

characteristics. A recent (21 July 2008) article from Time Magazine outlines some of the potential of Agave in the Inulin industry; and indicates some of the recent growth of this industry.

Bream: An innovative project, the opportunity created by a drop in pilchard quotas has been seen by the Camdeboo Satellite Aquaculture Project (CSAP) as an opportunity. Aquaculture is the rearing of aquatic organisms in captivity, and CSAP are proposing to rear oreochromis mossambicus. The fish will then be sold under contract (the details of which are already agreed and signed), and will be sold into the gap in the market left by the reduction in the pilchard quota.

Tourism General Overview

The tourism industry is growing in the Karoo. A recent survey in the Little Karoo identified open spaces and unspoiled scenery as a major attraction for urban and foreign tourists. This includes eco-tourism (spring flower tours, national parks, private conservation areas and game farms), small-town tourism (based on Victorian Karoo architecture), railway tourism, gastro-tourism (star-gazing and telescopes), bicycle riding and hiking, hot-air ballooning, palaeontology, horse shows, the new Richmond book town, and the most valuable commodity of all – the space, emptiness and solitude which is possible in the Karoo.

Camdeboo Municipality has a Tourism Sector Plan, (currently under review) which consists of the following three documents: A Situation Analysis, outlining the (then) state of the tourism industry in Camdeboo (dated

November 2004),

An Infrastructure Assessment Report (undated), and A Final Tourism Sector Plan, dated March 2005. Recommendation That the Camdeboo Municipality updates its Tourism Sector Plan, taking into account: The existing Camdeboo Tourism Sector Plan,

Clear budget implications for all proposed projects and overheads, and income streams, The need for dedicated staff to promote Camdeboo Tourism, possibly from the proposed

Development Agency, Skeleton business plans for:

o Conference facilities, o Entertainment facilities (cinema etc), o Backpackers facilities, o Adventure tourism products, o The proposed expansion of the Red Reinet Stigting to Aberdeen and Nieu-Bethesda, o Greatly increased use of the Graaff-Reinet airport, including microlite flights, o Train-based tourism facilities, including,

Port Elizabeth-Graaff-Reinet-Cradock-Port Elizabeth trips, Graaff-Reinet to Clifton trips,

o The use of the Dam and its facilities, o Festivals o A family hotel, o The possibility of expanding the Camdeboo National Park up to the Mountain Zebra

National Park, and the implications thereof, o The promotion of the Royal Block and other township-based attractions, o The promotion of any other recommended tourist attraction.

Heritage Tourism Overview The historic heritage of Graaff-Reinet (4th oldest town to be established in SA) has created a unique urban environment with 220 national monuments. It is unique in the Eastern Cape. This unique resource has given Graaff-Reinet a competitive advantage that has led to a strong tourism industry. This has both a local and international market profile. Houses of architectural and aesthetic merit and a host of B&B’s compliment the many historic buildings. The weakness of this industry is that it is confined essentially to the horseshoe of Graaff-Reinet, is not linked to other areas of Graaff-Reinet and to Camdeboo’s other two urban centres (Aberdeen, Nieu-Bethesda), it competes for space with local consumer retail stores, and national through traffic, and links with other aspects of tourism (national parks and game farming) are tenuous and informal. Recommendations The Camdeboo Municipality should commission a Traffic Impact Assessment in this regard, and

request solutions re possible re-routing of large trucks, etc., from the commissioned traffic engineers.

The Camdeboo Municipality should enact, with its Zoning Scheme, Conservation Zone regulations as envisaged in 8.1 above, and as, (probably) spelled out in annexure A of the present Graaff-Reinet Zoning Scheme, to cover all heritage areas and buildings in Camdeboo, as well as natural environments of value.

Attached to the Town Planning Department of the Municipality should be an office of a Municipal

Heritage Officer, tasked to police this legislation effectively. Possibly this officer would also support the Town Planner in other work.

Our recommendation is to request Professor McLachlan to broaden the area of his study to all of

Camdeboo Municipality, and to recommend on all historically valuable areas and buildings within the Municipality.

The Camdeboo Municipality has a wider role to play in the tourism industry than merely tourism

promotion through the Camdeboo LTO, tourism development and HR and entrepreneurial development. There are various other responsibilities that the municipality needs to acknowledge in regard to tourism promotion and development. These responsibilities include:

The maintenance of public amenities;

Safety and security by visible and regular policing at key tourism attractions;

Prioritisation of the tourism industry by all municipal departments by giving favourable consideration of general infrastructure developments that may aid tourism, taking cognizance of tourism in town planning, facilitating tourism development, etc.; and

Standardization of signage.

Game and Nature Reserves Overview A number of studies of game farming in the Eastern Cape conclude that:

2.8 million hectares of the Eastern Cape was game fenced by 2005 – this is nearly 20% of the

entire Eastern Cape, up from 14.5% in 2002,

Possibly 32,000 hunters shot 240,000 animals, which value exceeded R280 million (up from R168 million in 2002), in 2005.

(Source: Prof P. du P. van Niekerk, Nelson Mandela Metropolitan University) There is a trend throughout the Eastern Cape of more game farms and less traditional farming. In the Camdeboo there are now four new game farms. All farms, according to an industry source, do some hunting. However, traditional farming in the Eastern Cape is still the most important form of income generation for the majority of ranches in the Eastern Cape. The main game producing areas in the Eastern Cape coincided with the areas where extensive sheep, goat and cattle farming were practiced. Farmers do mixed farming. When utilization of game was compared to the production norms of the various game species, it became clear that current levels of utilization were within the limits required for sustainability and that game numbers in the Eastern Cape would increase if the current levels of utilization were maintained. This industry (the hunting industry) is possibly worth R25 million to R30 million per annum to the Camdeboo District. Space Tourism Overview A major new possibility is that of "space tourism", which is due to be initiated by Virgin Galactic in New Mexico in 2009. The South African Karoo offers all the features required of spaceports. It is a remote area, far from population centres; it is located at fairly high altitude; it enjoys many sunny, cloudless days; and it provides many other tourism spin-offs (particularly astro-tourism, in the Carnarvon-Williston-Sutherland region). In addition, the skies in the Southern Hemisphere are particularly interesting for stargazers and potential space tourists. Recommendation Such an investment in a spaceport will cost about R2 - 3 billion, and could be done by a public-

private partnership.

Urban and Rural Environment Aberdeen and Nieu-Bethesda Overview Aberdeen and Nieu-Bethesda are considerably less developed than is Graaff-Reinet, and a special focus on development here should be considered. Recommendations That CM works with specific government departments to increase the amount of government

infrastructure in, particularly, Aberdeen; including:

o A possible archive, o An upgrade of the hospital to involve some specialist disciplines, o An upgrade of the schools, to make them attractive as boarding School destinations, o The Municipal Swimming pool, with or without private sector investment, o The road to Klipplaat, and other roads, o To RDP housing stock.

That CM commission a Business Plan for the redevelopment of Fonteinbos Nature Reserve,

including the bottling of water and the provision of overnight accommodation. Environment Overview The Karoo certainly is isolated and extensive, extreme, dry, beautiful, hot and full of natural phenomena of considerable interest, and small, crime-free towns of extraordinary charm. Recommendations That the Camdeboo Development Foundation encourages farmers to establish conservancies,

and endangered species (such as the riverine rabbit) need to be protected. Sustainable farming and town planning should be encouraged.

Preservation of the area’s Palaeontology needs to be a significant focus of the Camdeboo Development Foundation.

Camdeboo Development Foundation should promote its developmental objectives without

destroying its main asset – the space and tranquillity of the region. The key should be to make the region better, but not to change its nature.