Minister Alan Winde – Provincial Minister of Economic Opportunities (Responsible for Agriculture, Economic Development and Tourism), Western Cape Government
Provincial Minister of Economic Opportunities for the Western Cape Government of South Africa, Alan Winde, shares the major economic achievements of the government over the past few years including a stunning three percent GDP growth rate, the successful establishment of the Saldanha Bay Industrial Development Zone (SBIDZ), the only IDZ dedicated to the oil and gas sector in the country, and the Government’s commitment to the oil and gas industry.
Minister Winde, having met you five years ago, what have been some major developments you would like to highlight?
“The Western Cape Government is run by a different political party to the national government so there is obviously a policy differential.”
As the provincial government, our first job is to create an enabling ecosystem for the private sector to grow, whether by removing red tape, ensuring skills supply meets demand, or putting the right infrastructure in place, amongst others. We have been quite successful on this front and as a result, have very strong finance, BPO (business process outsourcing), tech and retail sectors.
But we also take a proactive approach in certain areas that we have identified as having huge growth potential if they are unblocked, under what we call Project Khulisa (‘cause to grow’ in isiXhosa). The three areas are tourism, agri-processing and oil and gas.
The oil and gas industry globally has seen its ups and downs over the past few years, most notably the drop in oil price. However, what is reassuring is that oil and gas is not a ‘flash-in-a-pan’ industry but a long-term one. Five years ago, we announced our vision to leverage on the Western Cape’s strategic position along global oil shipping routes by building the Saldanha Bay Industrial Development Zone (SBIDZ) as an oil and gas, and marine services and support hub. We took note of studies and surveys conducted on the number of rigs that pass our coastline every year, in need of these services. We identified some inherent strengths of Saldanha Bay that we could capitalize on, including its natural deepwater harbor – the largest and deepest natural port in the Southern hemisphere – and its strategic positioning to the E&P boom in West and East Africa.
We have made significant progress in bringing this vision to reality. Between the national, provincial and local governments, R750 million has now been invested in the development of the SBIDZ, and investments are continuing. Some of the quayside projects are being tendered by the Transnet National Ports Authority (TNPA) right now. Within the next couple of months, we will see the first companies constructing buildings and facilities in SBIDZ.
While we did see a slowdown in activity as a result of the oil price, none of the companies that had initially expressed an interest and signed NDAs with us pulled out; they understand that oil and gas is a long-term game. In fact, before the fall in the oil price, we had 32 interested companies – and today, we have 43.
How strong do you think the Western Cape’s value proposition is, particularly against global competitors like Singapore but also other South African ports like Durban and Richards Bay?
First and foremost, I love competition because if you do not have competition, you do not improve.
Singapore is somewhat ahead of us in the game. I see them more as partners. Once the IDZ is fully in position, we will be quite aggressive in marketing to companies based on Jurong Island. We have already made trips to Singapore and Malaysia to discuss the potential for collaboration. The idea is that these companies do not need to limit themselves to being based in Singapore, they already have international presence in other hubs, so it makes sense for them to establish an African footprint – starting in South Africa.
Similarly, with other South African ports, and ports in our neighbor countries, I think our value propositions are all strengthened by our proximity to each other. In fact, I have been saying to our upstream and midstream industry association, the South African Oil & Gas Alliance (SAOGA) that they should be renamed the ‘Southern African’ Oil and Gas Alliance. This is because no matter how efficient and advanced Saldanha Bay becomes, we cannot cater to the 100-odd rigs coming past the Cape every year requiring services. We also each have particular niches. The market is big, and diverse.
With competition and collaboration across not just South African ports but also other ports in Southern Africa, we can become a world-leading hub to develop and share best practices. Each port has its pros and cons, so it would make a tremendous amount of sense for us to capitalize on our strengths and specialize in a specific service offering. The ultimate question is how can South Africa – as an ecosystem – compete effectively within the global industry?
As a provincial government, there are more constraints on what the Western Cape government can do in terms of increasing infrastructure capacity and such like. How do you manage this and advocate for further measures where necessary?
It is true that we do not have a lot of wiggle room with regard to some mandates. We certainly push as much as we can. But it is also about internal governance: good governance is critical to economic and industrial development. Our goal is to have a positive and enabling attitude to business in as many areas as possible, because business creates growth and jobs for our residents.
According to some indicators, while national GDP growth is around 0.5 to 0.6 percent, the Western Cape is seeing around three percent. Despite being in the third year of a severe drought, we have still created 84 000 jobs in the Western Cape in the past year, and a business confidence level ten points higher than anywhere else. Property prices in some Cape Town nodes are increasing at around 12 to 16 percent each year. We have succeeded in building a thriving ecosystem here despite external and circumstantial pressures.
The Western Cape Government is run by a different political party to the national government so there is obviously a policy differential. We have worked very hard to minimize corruption and instill good governance principles.
At the same time, we have also cultivated a strong relationship with the Department of Trade and Industry. A lot of the SBIDZ funding has come from that department and we are excited to once again be partnering with the DTI to establish a second IDZ in the Western Cape, this time focused on the green economy.
With this successful track record, what best practices can the Western Cape share with other parts of the country?
I am very proud of our work on the West Coast Industrial Plan, where we analyzed the current skills and expertise of our workforce as well as the future demand. For instance, we realized that our current average artisan age is far too high at around 57 to 58 years old. When South Africa became a democracy, many people shifted away from artisan-type occupations to professional careers in law and medicine, which has resulted in an unbalanced workforce. There was also a national policy decision to stop apprenticeship programs because the idea was that our colleges would be able to produce the right skills mix. This has not turned out to be the case.
In this province, we now actively fund apprenticeship systems. This is especially relevant for the oil and gas sector given the highly technical demands. We also go as far as to implement school-level interventions around subjects like mathematics, which are essential for the engineering courses that technical industries like oil and gas require. These programs are meant to meet the skills demand we anticipate as the IDZ starts to come on-stream.
We also work on building up local suppliers on the West Coast. We are linking small, medium and micro-sized enterprises (SMMEs) with large companies requiring services through an innovative online platform, which facilitates better local procurement. There are already around 1,600 companies on the platform.
We engage extensively with the business community to hear about their needs, demands and challenges. Both Wesgro and IDZ are very active as well at international trade shows in promoting the region and our capabilities.
A final message, perhaps?
The Western Cape has the ecosystem and the right fundamentals, including the skills base and competitive pricing, to support the oil and gas industry.