City Planning Commission Theme: Growing an Enabling and Transformative Economy March 2016

City Planning Commission Theme: Growing an Enabling and Transformative Economy March 2016

SUB-THEME 1: DEVELOPING AN ENABLING ENVIRONMENT FOR INVESTMENT • Studies: • World Bank Doing Business in South Africa 2015 • SAPOA Municipal Service Cost Analysis (February 2015) • Assessment of the Investment Climate of Durban (December 2015)

Study i: World Bank Doing Business in South Africa 2015

Study i: World Bank Doing Business in South Africa 2015 • Key findings: • There is no relationship between the size of the city (as measured by population) and the rankings, and no single city performs equally well on all indicators • eThekwini’s performance is average – some good (getting electricity; enforcing contracts; starting a business); and some not so good (dealing with construction permits; and registering property)

Study ii: SAPOA Municipal Service Cost Analysis (February 2015) • Key findings: • Town planning fees - eThekwini is the third most expensive • Consent use application fees - eThekwini is the second most expensive • Building line relaxation application fees - eThekwini is the third most expensive • Consolidation application fees - eThekwini is the second most expensive • Medium density residential building plan fees - eThekwini Municipality is nearly two and half times cheaper than the average cost • Retail centre development building plan fees - eThekwini is nearly one and a half times cheaper than the average cost • Commercial office development building plan fees - eThekwini is one and a half times cheaper than the average cost • Industrial development building plan fees - eThekwini is nearly one and a half times cheaper than the average cost • Average electricity fees - eThekwini is the third most expensive metro

Study ii: SAPOA Municipal Service Cost Analysis (February 2015) • Key recommendations: • National Treasury and municipalities have to develop structures to unify all records • It is recommended that a regulating authority, made-up of professional individuals with practical experience, be assigned to assist municipalities in compiling fees charged for services • It is also recommended that municipalities focus on streamlining communication with consumers. Customer Interface Desks within each municipal department would be useful in this regard • Each municipality should abide by the eight Batho Pele principles developed with regard to service delivery: Consultation; Setting Service Standards; Increasing Access; Ensuring Courtesy; Providing Information; Openness and Transparency; Redress; Value for Money • Municipalities are essentially businesses; customers should be their priority

Study iii: Assessment of the Investment Climate of Durban (December 2015) • Key local business climate issues that firms were facing include: • High cost of doing business in Durban, specifically related to electricity prices and outages, reducing water pressure and municipal property rates; • Lower business performance (compared to Johannesburg) as a result of the relatively smaller size of the market in Durban than Johannesburg; • Utility constraints such as electricity, effluent treatment and roads; • Crime and grime at specific precincts; and • Unavailability of higher skilled personnel. • Key institutional weaknesses include: • Insufficient outreach interventions by the City in promoting its business support services; • Long turnaround times for development-related queries; and infrequent investment climate surveys.

Study iii: Assessment of the Investment Climate of Durban (December 2015) • Key recommendations: • Utility and infrastructure improvements– road conditions, networks and capacities; promotion of renewable energy; adoption of smart technologies; improve effluent infrastructure; unlock land for new development • Institutional improvements- Re-instate the Durban Investment Promotion Agency; and adoption of e-Government technologies • Safety and security – manage inner-city crime and grime • Business-outreach interventions– engage with firms which have indicated an interest in making investments; create a systematic process of consultation with the private sector; prepare an annual investment climate survey report (indicators should include: municipal costs, GDP growth, business confidence levels, overall cost of business and quality of lifestyle indicators)

SUB-THEME 2: SKILLS Studies: Investigation of youth education and employment interventions in the eThekwini Municipal Area (May 2015) Constraints to growth and employment in South Africa: Analysis of data from a medium and large manufacturing firms survey in the eThekwini area (June 2015)

Study i: Investigation of youth education and employment interventions in the eThekwini Municipal Area (May 2015) • Key findings: • Critical success factors for youth education and employment interventions are: scale; innovation; service offering/quality; cost; staff; target group; and location(s) • The provision of informationabout opportunities available to young people is crucial at the school-level • There is a general lack of job preparedness among youth • The lack of effective communication between the public and private sectors • The stand-alone NPO model is not a sustainable one • There is a lack of full, holistic support that includes mentorship, coaching and guidance for job seekers, first time employees and young entrepreneurs.

Study i: Investigation of youth education and employment interventions in the eThekwini Municipal Area (May 2015) • Key recommendations: • Development of a public database of available programmes– for distribution at key points which are accessible to youth • Collaborationamongst stakeholders – key areas include: placement, tracking, monitoring; cross referrals; accreditation; and funding opportunities • Funding – eThekwini to assist in identifying sources of funding • Development of a combined database and tracking system – eThekwini should enhance its job seekers database to assist organisations with managing and tracking their candidates. • Work readiness must be addressed at the school-level • Need to develop a dynamic social network through which young people may gain information about available opportunities • Coaching and mentoring, and employer buy-in need to be encouraged • eThekwini Municipality should make use Job Readiness Providers

Study ii: Constraints to growth and employment in South Africa: Analysis of data from a medium and large manufacturing firms survey in the eThekwini area (June 2015) • Key findings: • Around one in two establishments consider the “availability of technical/vocational skills” to be a major constraint to growth • Focus group discussions revealed that many firms emphasised the problem to be withmatric being a poor predictor of readiness to work, as well as the mismatch of tertiary or vocational training to specificities of workplace demands. • Firms are also cautious of high costs of skills given that some firms have to consider sometimes 10% annual increases for those staff members and may rather substitute through expansion with production technologies or new production lines. • Two-thirds of respondents which view skills as a moderate issueare located in the South Basin and the West, while the North and the Westfeature as dominant areas in terms of major problem responses

SUB-THEME 3: SMMES AND INFORMAL ENTERPRISES Studies: Business Development Strategy for eThekwini Municipality (November 2012) Informal Economy Monitoring Study (IEMS): Street vendors in Durban, South Africa (December 2013

Study i: Business Development Strategy for eThekwini Municipality (November 2012) • Key challenges faced by entrepreneurs: • Government top down approach do not meet SMME at the point of need; • Minimal impact of government programmes of one size fit all does not work, and SMME’s needs are not properly assessed; • There are no skilled people within the support institutions to do the proper business diagnosis and support; • Training and skills development of SMMEs; • Access to finance and markets; • Understanding the SMME trends and opportunities with the EThekwini, South Africa, Africa and international; • Entrepreneurial aptitude tests – not all SMME are born entrepreneur; and • Management and growth – there are no compliance measures in place in government for on-going management of SMMEs.

Study i: Business Development Strategy for eThekwini Municipality (November 2012) Key recommendations: Role of government - The main role of the Government is to ensure that the appropriate policy environment is created. Role of the private sector – development of linkages between SMMEs and larger firms, and use of ‘enterprise development spends’. Role of incubators - Umbrella of incubators are required at district level in small spaces (e.g. extension of a library) near the ward business forums. The other role is to engage with the private sector in procurement – the responsibility of the incubator is to assure quality. Clusters - Clusters established through PPPs can provide greater value chain support to SMMEs.

Study ii: Informal Economy Monitoring Study (IEMS): Street vendors in Durban, South Africa (December 2013) • Key findings: • Profits from vending are a key source of household income • Vendors generate employment, with 3 in 10 respondents reporting they had at least one paid employee working for them. • The average vendor in this sample reported a monthly turnover of R2712. • 90% of survey respondents reported they were experiencing increasing competition from new entrants, who started vending due to being unemployed. • 56% of vendors surveyed did not have access to a toilet, while 21% did not have running water. The situation is worse in the city centre than in the outlying areas. • Three in every four vendors operating in the periphery and one in every two operating in the centre reported being harassed by the police. • National and local governmentare regarded by the vast majority of vendors as being unhelpful to vending activities. In the focus groups interviews, the police, the municipality in general, and the Business Support Unit (BSU) in particular were identified as institutions hindering their work.

Study ii: Informal Economy Monitoring Study (IEMS): Street vendors in Durban, South Africa (December 2013) • Key recommendations: • Stop police harassment • Draft new by-laws and review the permitting system • Provision of basic amenities and work-related infrastructure • Improve council–vendor relations through regular meetings • Provide business support and training • Develop trade-specific strategies • Address tensions among foreign and South African vendors

SUB-THEME 7: BUSINESS PRODUCTIVITY AND INNOVATION Study: Innovation needs analysis of eThekwini-based SMMEs (July 2015)

Study i: Innovation needs analysis of eThekwini-based SMMEs (July 2015) • Key findings: • Varied and in some cases, limited understanding of the concept of innovation • Most of the businesses do not have formal programsin place for generating activities for innovation in the organisation • Most businesses have not used the services of patent/ design/ IP attorney in the last 5 yearsto assist in IP protection • Smaller businesses do not necessarily document innovation effortsand are more agile with respect to innovating • Financial obstacles to innovationare significant • Notenough innovation support/ funding organisations for eThekwini-based companies. • Most of the businesses do not attend innovation workshopsrelating to their industry/ business • Majority of the businesses cited lack of skills as an obstacle to innovation. Further, they did not use government support programs to overcome obstacles due to limited skills

Study i: Innovation needs analysis of eThekwini-based SMMEs (July 2015) • Key recommendations: • Development of an innovation toolkit • Increased focus on innovation support workshops/roadshows • Encourage‘worker innovation’/productivity improvement forums • Incentivise business ownersthat invest time and resources on innovation efforts • Create a ‘seed fund/ ring-fenced fund’ that specifically caters for business innovation requirements • Review/ re-look innovation funding support programs • Conduct review/assessment of current workshops/training programsfocusing around innovation and establish their relevance to business • Provide business owners with access to an innovation portal(industry-specific) that allows owners to be up to date with innovation information • Pilot a mentorship program for business owners, that is focused on innovation (target existing businesses that participated in the innovation needs analysis study) • Write up case studiesof successful innovation business mentorships

SUB-THEME 8: INDUSTRIAL REVITALISATION Studies: Constraints to growth and employment in South Africa: Analysis of data from a medium and large manufacturing firms survey in the eThekwini area (June 2015) A pilot study of Greater New Germany for brownfields redevelopment and industrial revitalisation in eThekwini (August 2015)

Study i: Constraints to growth and employment in South Africa: Analysis of data from a medium and large manufacturing firms survey in the eThekwini area (June 2015) • Key findings: • eThekwini’s manufacturing sector experienced a 27.8% decline in the number of firms between 2002/3 and 2013/14. • Almost one in three full-time employees in the manufacturing sector, are employed in the ‘food processing and beverages’ sub-sector. • Key constraints to growth: • Depreciation of the Rand/US$ exchange rate (87% of firms) • Low rates of economic growth in SA (86.5% of firms) • Cost of energy (86% of firms) • Cost of transport (80.5% of firms) • Availability of technical/vocational labour skills (80% of firms) • Crime and theft (79% of firms)

Study i: Constraints to growth and employment in South Africa: Analysis of data from a medium and large manufacturing firms survey in the eThekwini area (June 2015) • Key recommendations: • Maintenance of existing infrastructure – this was reported ahead of investment in new infrastructure. • Firms felt that increases in property rates must be monitored and reduced. • Improving skills and the supply of skills • Preferential procurement from local suppliers may mitigate reduced demand - however a stringent compliance framework will have to be developed, in order to ensure that firms which supply their products to local government are genuinely engaging in value-adding manufacturing activities. • eThekwini Municipality has several sector development programmes, and the survey found that firms find these industrial cluster programmes to be very useful - Involvement in these clusters is extremely beneficial to firms as it allows them to interrogate issues pertaining to competitiveness and productivity, which if improved, can assist firms in addressing their vulnerabilities to demand shocks and rising operating costs.

Study ii: A pilot study of Greater New Germany for brownfields redevelopment and industrial revitalisation in eThekwini (August 2015) • Key findings: • In 2010, there were 761 businessesin the Greater New Germany area. Of these,414 continued to remain in existence in 2015 • Smaller firms in the area have a high mortality rate; larger firms retain their existing position; and medium businesses tend to grow, and exit towards other better locations • Up-keep of properties along arterial roads was of an acceptable standard – this declined as properties were located farther away from arterial roads • Businesses related to the automotive sector, even in locations other than the main arterial roads, tended to demonstrate a higher degree of resilience • There is a steady demand for industrial units of a smaller size • Safety and security in the area is a major issue • Steady overflow of informal housing from Clermont area • The municipal investments in the area have been in facilities like stadiums which are not used as often.

Study ii: A pilot study of Greater New Germany for brownfields redevelopment and industrial revitalisation in eThekwini (August 2015) • Key recommendations: • Focus on automotive sector development • Develop a clear and innovative policy framework • Set-up a Brownfield Development Team • Re-align information systems for brownfields development • Improve City-Business dialogue • Business sustainability support • Improved stakeholder engagement • Develop a suitable incentives and local financing package • Brownfield development modelling

Shivani SinghAssistant Research Officer (Policy, Strategy, Information and Research)Shivani.Singh@durban.gov.za031 322 2996

City Planning Commission Theme: Growing an Enabling and Transformative Economy March 2016