KwaZulu-Natal faced tough economic times, MEC of Finance Belinda Scott told the African Economic Expansion Summit (AEES), in Durban, this week.

As the second-largest contributor to the country’s economy, at 16.5%, the province had generated an estimated real gross domestic product of R328.9-billion in 2013 and was home to some of the country’s biggest infrastructure upgrade projects.

However, the province was due for severe budget cuts between now and 2016 and it would take “a juggling act” to ensure services were not affected and that economic growth targets and job creation were achieved, she said.

The expected budget cuts were a combination of the fiscal consolidation announced by Finance Minister Nhanhla Nene, which would see national spending cuts of R25-billion over the next two years, and a reduced allocation owing to a decline in the province’s population.

Scott explained that, in terms of the 2011 National Census, KwaZulu-Natal’s population growth rate had declined and, therefore, the province’s equitable share reduction amounted to R5.6-billion over the 2013/14 Medium-Term Expenditure Framework. A buffer period would cushion the impact, but this would be felt at the end of 2016.

She added that KwaZulu-Natal's share of the fiscal cuts would amount to about R560-million in 2015/16 and R522-million in 2016/17. KwaZulu-Natal's approach to these budget cuts would be announced in March next year, when the provincial budget was tabled.

Scott pointed out that the AEES was being held at a critical time for the South African economy.

In a mixed economy such as South Africa’s, she said the burden of development could not be carried by government alone and that a more active role needed to be played by the private sector.

However, this presented challenges. “The first challenge is to encourage greater private sector investment in the economy. Private investment has remained restrained since the [start] of the global financial crisis in 2008 and this is reflected in economic performance.

“In a mixed economy like ours, vibrant markets and private investment complement public action to improve people’s lives, create jobs, reduce inequality and, thus, contribute significantly towards higher economic growth. Hence, the … removal of obstacles to private investment is one of government’s top priorities. We believe that this summit is a step towards that,” she stated.

The second challenge was to improve government’s capacity to plan, manage and maintain its programmes and infrastructure. “Recent and current supply failures in electricity, water and postal services have had a negative impact on the economy and wear down public confidence. Greater State capacity and efficiency are prerequisites for more rapid development,” she added.

Scott highlighted that the Presidential Infrastructure Coordinating Commission, which had been appointed by Cabinet to coordinate, integrate and accelerate implementation of infrastructure projects in terms of the National Infrastructure Plan, had formulated 18 strategic infrastructure projects of which 15 were directly relevant to KwaZulu-Natal.

The provincial government had also recently established a KwaZulu-Natal Provincial Infrastructure Coordination Workgroup tasked with developing the KwaZulu-Natal Provincial Infrastructure Master Plan, she explained.

Examples of infrastructure development programmes and projects identified by all role players included the development of coastal areas extending from Richards Bay to Durban and on to the Hibiscus Coast. The development of additional port capacity and the proposed 
dig-out port would provide a massive injection into the KwaZulu-Natal region, said Scott.

She added that there were also plans to unlock the northern mineral belt. This would support the export of minerals via Richards Bay. Key infrastructure projects planned for Richards Bay included the establishment of a new and separate coal export terminal with an anticipated export capacity of 32-million tonnes a year. This would be a greenfield development which would require the basin and berths to be dredged to a depth of -17.5 m and the construction of two berths for Cape-size vessels.

Another intervention was the development of a dry port and inland logistics hub at Cato Ridge and the release of 119 ha of land for private sector industrial development.

Strategic developments at KwaZulu-Natal’s airports to improve connectivity both at domestic and international level, the development of road and rail networks, the development of information and communication technology, the improvement of water resource management and supply, and energy production and supply to meet the development needs of KwaZulu-Natal were also on the agenda.