ZDM LED - Phase 3 Status Quo Part 4 - Business Sector_21_67.pdf

ZULULAND LED FRAMEWORK 

FINAL DRAFT PHASE 3: BUSINESS SECTOR REPORT 

CHAPTER 4: THE BUSINESS SECTOR 

1. INTRODUCTION 

1.1 PURPOSE OF REPORT 

Chapter 4 of the Status Quo Report forms part of the Phase 3 product of the Zululand Coordinated 

Local Economic Development Framework project focussing specifically on the Business Sector. 

Whereas Chapter 1 of the report provides a general introduction to local economic development and the 

context for local economic, Chapters 3 to 4 of the document presents a status quo analysis of what has 

been identified as the key economic sectors in the Zululand District Municipality, the sectors being 

respectively the Tourism Sector (Chapter 2), the Agricultural Sector (Chapter 3) and the Business 

Sector (Chapter 4). Although the Status Quo Report is structured on a sectoral basis it is widely 

acknowledged that close linkages exists between the various sectors and economic development 

activities within each of the broad sectors. These linkages will be addressed in more detail in Phase 4 

of the project, the strategy development phase. 

The Business Sector Status Quo Report is aimed at providing: 

 

 

 

an overview of current activities within the business sector and highlighting key issues impacting on 

the development of the sector; 

an evaluation of the potential for the future development of the sector; and 

an identification of key opportunities relating to the sector. 

1.2 DEFINING THE SECTOR 

The Business Sector, as defined for the purpose of this project, does not relate to any established 

industrial sector classification system. The Business Sector does, however, include a number of 

generally recognised industry sectors including commerce, manufacturing, construction, transport and 

mining. By establishing the Business Sector it was attempted to group all those sectors functioning on 

the same basic set of business principles together in order to facilitate discussion and participation. 

Most of these sectors are generally represented by established business organisations/associations, 

whereas farmers associations are in place for the agricultural sector and tourism associations for the 

tourism sector. 

An overview is provided below of the activities included in each of the industry sectors forming part of 

the Business Sector. 

 

 

 

 

Commerce: Including retail and wholesale sales, private sector services (e.g. medical, financial, 

property and others). 

Manufacturing: Including all types of factories, engineering works, arts and crafts and agriprocessing. 

Construction: Including the construction of facilities, housing, infrastructure 

Transport: Including road freight, rail transport, air transport and public transport 

PREPARED BY: IYER ROTHAUG PROJECT TEAM – MAY 2003 120



 

Mining: This sector is primarily focussed on the coal mining sector, although attention should also 

be afforded gold mining and quarries. 

1.3 CONTENTS OF THE REPORT 

This Chapter of the report includes four sections. The Sections following the general introduction are: 

 

 

 

Section 2: The Business Centres: This sections considers existing business centres within the 

District and provides an indication of future planning relating to the establishment of Regional 

Service Centres. 

Section 3: Business Organisations and Support: Existing business organisations and business 

support services in Zululand is discussed. 

Section 4: Consider the Sectors: Each of the industry sectors forming part of the business sector 

is discussed in this section under three broad headings, viz. (1) an overview of the sector, (2) the 

competitiveness of the sector, and (3) the opportunities in the sector. The key focus is on the 

discussion of the competitiveness of each of the sectors. 

PREPARED BY: IYER ROTHAUG PROJECT TEAM – MAY 2003 121



2. THE BUSINESS CENTRES 

2.1 INTRODUCTION 

At present economic development, and specifically the activities of the business sector, both formal and 

informal, is primarily concentrated in five urban centres within the Zululand District Municipality. Some 

thirteen smaller underdeveloped centres, historically established to service the agricultural sector and 

large concentrations of the rural population, also exist in the rural areas. Importantly, Table 2.1 below 

reflects that there are a total of 872 settlements in the District Municipality area. This provides an 

understanding of the settlement patterns within Zululand, but also illustrates the large dependence on 

the five major urban centres for access to commercial and social services. 

TABLE 2.1: ZULULAND DISTRICT MUNICIPALITY SETTLEMENT PATTERN 

MUNICIPALITY URBAN 

RURAL RURAL 

RURAL 

SCATTERED 

VILLAGE SCATTERED 

FARMS 

TOTAL 

eDumbe 1 7 14 8 8 38 

uPhongolo 1 31 43 19 1 95 

Abaqulusi 2 39 4 6 15 66 

Nongoma 1 290 72 - - 363 

Ulundi 1 198 60 22 29 310 

Zululand Total 6 565 193 55 53 872 

Source: WSDP Viewer (2001) as in ZDM IDP 2002 

The ZDM IDP (2002) further estimates that 80.5% of the district’s population resides in rural 

settlements. The majority of this population is at present totally or partly dependent on the five major 

centres for access to commercial and social services, again illustrating the important role that the 

centres fulfil in the District economy. 

2.2 THE MAJOR CENTRES 

2.2.1 Introduction 

A total of five established urban centres exist with the Zululand District Municipality. The fact that the 

local government demarcation process ensured that at least one established urban centre is located in 

each of the local municipalities is important for the future development of the economies of each of the 

municipalities. The municipalities and the urban centres relating to them are: 

 

 

 

 

 

Ulundi Municipality – Ulundi town; 

Nongoma Municipality – Nongoma town; 

uPhongola Municipality – Pongola; 

Abaqulusi Municipality – Vryheid; and 

eDumbe Municipality – Paulpietersburg. 

Although each of the towns listed above has been identified as the municipal centre for the specific 

municipality they vary considerable in terms of size, functions and character. A brief overview of the 

structure and function of each of the municipal centres is provided below. 




2.2.2 Ulundi 

Ulundi as a town fulfils a major administrative function in the Provincial and District context. According 

to Robinson (1999) this brings a “sizeable resident population with secure incomes” to the town. The 

town further serves as service centre for the large rural population of the Ulundi Municipality and to a 

lesser extent the Nongoma Municipality. At peak times it is estimated that there are 200 taxes serving 

the centre with more than 450 informal traders trading in the town. 

Although there are a substantial number of historical and cultural attractions in the area it has been 

difficult to promote the town as a tourism destination for a number of reasons. Most importantly is the 

appearance of the town dominated by administrative and lower order commercial buildings (Robinson 

1999). However, it is stated that Ulundi can be developed into a gateway for a variety of attractions in 

the area. 

The town is undersupplied in terms of professional, business and personal services. It is reported that 

the lack of suitable office accommodation in the town is a constraint to the town developing its 

commercial potential (Robinson 1999). 

2.2.3 Nongoma 

Nongoma town is the only urban centre within the Nongoma Municipality which has a population of 

approximately 230 000 people. The population of the town itself only approximately 4 000 people. The 

rural landscape of the Nongoma Municipality is characterised by rural settlements of various densities. 

Nongoma town is home to a range of public sector and formal and informal commercial sector activities. 

The general characteristic of Nongoma is that of large rural market town. 

2.2.4 Pongola 

Pongola is located on the N2 between Piet Retief and Richards Bay. The town has a well-developed 

commercial sector and CBD which straddles the N2. A comprehensive range of business in the town 

serves the population of the town and the commercial farming sector and rural population of the 

municipality, as well as the wider region and the through traffic on the N2. A key characteristic of the 

town centre is its orientation towards the passing traffic on the N2. 

The Illovo Sugar Mill located in proximity to the town is a major employer and also one of the only major 

beneficiation activities currently underway in the District. 

2.2.5 Vryheid 

The town of Vryheid operates as a service centre for a large rural population, including areas such as 

eMondlo, Hlobane, and Coronation and areas further afield such as Ulundi and eDumbe. However, its 

economic base and reason for existence is as service centre for the primary sector activities of mining 

and agriculture. This economic base has, however, been eroded in recent years with the closure of 

major mines in Hlobane and Coronation. 




Regarding this Robinson (1999) suggests that the town “held up reasonably well after the closure of the 

coal mines, but in recent years it has been adversely affected by national economic conditions”. 

Accordingly the town has become increasingly dependent on the output achieved in a specific 

agricultural season. 

Robinson (1999) further indicates that the town lack the “pre-conditions” for becoming a major industrial 

centre, i.e. it is located in a peripheral area without strategic raw materials or a metropolitan sized 

market. The economy of the hinterland of the town is based on (Robinson 1999): 

 

 

 

 

coal production – which has declined significantly; 

livestock farming – which is starting to decline; 

timber – which is growing; and 

maize and tourism – which is starting to pick up momentum. 

Other key issues relating to the town mentioned by Robinson (1999): 

 

 

 

 

 

the informal sector and the lower end of the formal commercial market is growing; 

the town has potential strengths as a freight distribution centre; 

the airport has the potential and capacity to handle more landings per day; 

Vryheid has well established civic and business institutions; and 

as a commercial centre Vryheid needs to attract more national chains stores. 

2.2.6 Paulpietersburg 

The local economy of Paulpietersburg is based on the provision of services to the agricultural sector 

and the surrounding rural population. The town offers a range of commercial and social services, but 

retains a strong rural town character. The town further has a strong German heritage. 

Major economic developments in the vicinity of the town include the Natal Spa and the Valaqua bottling 

plant. The Coal Line Study (1999) viewed the tourism sector as presenting a number of opportunities 

for economic development in Paulpietersburg. These opportunities relate to key activities such as 

annual paragliding events and the timber marathon, the German heritage and other eco-tourism 

opportunities. 

2.3 OTHER BUSINESS CENTRES 

Besides the municipal centres discussed above the only other urban complex of note is eMondlo which 

have a distinct urban character due to the historic levels of development. Other rural settlements such 

as Louwsburg, Magudu and Mahlabatini at present only provides rural dwellers access to basic 

commercial services. With this in mind the spatial development frameworks of the District and Local 

Municipalities as contained in the 2002 Integrated Development Plans are of strategic importance. The 

ZDM IDP (2002) states that the essence of the spatial development framework “is to improve 

accessibility to, and within the District, and to increase the range and quality of services available to 

communities in all settlements, so as to provide a base to encourage productive activities at all scales”. 




This is to be achieved through: 

 

 

the development of the towns as service centres on which a large number of people depend for 

specialised services and higher order functions; and 

the establishment of a number of Rural Service Centres aimed at extending the range of services 

available to rural comities. 

The table below reflects the settlements identified as possible Rural Service Centres in the 2002 

Integrated Development Plans. 

TABLE 2.2: TOWNS AND POTENTIAL RURAL SERVICE SYSTEM HUBS 

MUNICIPALITY TOWN RSS HUBS 

Abaqulusi 

Vryheid 

eMondlo 

Kambi 

Coronation / Mining Complex 

Louwsberg 

eDumbe 

Paulpietersburg 

Gluckstadt 

Frischgewaagd 

Nongoma 

Nongoma 

Luneberg 

Buxedene 

Mona 

uPhongolo 

Pongola 

Mahashini 

Belgrade 

Ulundi 

Ulundi 

Magudu 

Babanango 

Ceza 

Nqulwane 

“Ulundi 19” 

Source: Local Municipality IDPs as in 2002 ZDM Integrated Development Plan 

The levels of existing development in the rural service centres (also called RSS Hubs) vary substantially 

and a specific strategy will need to be developed for the development of each of the centres. However, 

the intention is that each of these centres provides rural residents with access to a range of basic social 

and commercial services. The viability of this will depend to a large extent on the improvement of the 

road infrastructure as well as the appropriate planning of each centre. Other than the provision of basic 

social and commercial infrastructure at these nodes it may also present the opportunity for the 

development of higher density fully serviced low income housing and middle income housing aimed 

specifically at public servants employed in the rural areas. 




3. BUSINESS ORGANISATIONS AND SUPPORT 

3.1 BUSINESS ORGANISATION 

3.1.1 The Purpose of Business Organisations 

Business organisations fulfil an important role in the development of the business sector in a specific 

area. The roles and functions, as well as the structure, of business organisations will differ from area to 

area, but services offered to members generally include: 

 

 

 

 

lobbying with local and other spheres of government on key issues such as rates and taxes; 

providing business support and business related information to members; 

establishing an effective forum through which business can network; 

promoting and marketing the area in which the members of the organisation operates; etc. 

As an example the Zululand Chamber of Commerce, a well-established business organisation operating 

from Empangeni, sees the following as some of the activities contributing to it achieving its vision 

(Zululand Chamber of Commerce Web Site 2002), viz. 

 

 

 

 

Forming partnerships with local government, NGO's, and the labour movement to address 

issues of general concern; 

Utilising to the advantage of small members, the vast pool of expertise present in the large 

companies that are established in our area; 

Assisting with Black Economic Empowerment through the forging of links with the 

predominantly black SMME's and other black business organisations. 

Together with other organisations attracting new business into the area 

Services offered by the Zululand Chamber includes business information, certificates of origin, trade 

delegations, new business queries, assistance to emerging businesses through the Business Advice 

Centre and promoting links between emerging businesses and the formal business sector. 

3.1.2 Business Organisations in Zululand 

The Inyanda Chamber of Business is a business organisations with membership across the whole of 

KwaZulu-Natal. This Chamber is active in the Zululand area and has strong linkages specifically with 

the Ulundi Business Association. Membership of the Chamber is made up of small emerging 

businesses including Women’s Clubs as well as membership from a range of associations. Members 

are involved in a wide range of business, i.e. not limited to a specific sector. 

On a more regional level it is interesting to note that the Zululand Chamber of Commerce, based in 

Empangeni, is not at all active in the Zululand District Municipality. At present only one member of the 

Chamber is located in the uPhongolo Municipality. 




On a local municipality level the following business organisations have been identified (see Table 3.1 

below). 

TABLE 3.1: BUSINESS FORUMS/ASSOCIATIONS IN THE DISTRICT 

MUNICIPALITY BUSINESS FORUM / ASSOCIATIONS CHAIR / CONTACT 

eDumbe 

None identified 

Abaqulusi 

Afrikaanse Handelsinstituut 

Mr S Pieters 

Chamber of Commerce 

Mr Geoff Smith 

Ulundi Ulundi Business Association Mr Sifiso Mbatha 

Nongoma Nongoma Business Forum Mr Jeffrey Mthetwa 

uPhongolo 

None identified 

In eDumbe and uPhongolo no business organisations has been identified as yet. From initial 

discussions with members of the various business organisations it would not appear as if any interaction 

between organisations on a District level occurs. Cooperation does, however, exist between the two 

business organisations in the Abaqulusi Municipality. 

In a Business Sector Working Group workshop held on 15 April 2003 all stakeholders supported: 

 

 

 

the establishment of business organisations in all local municipalities; 

the establishment of relationships between the business organisations in the various municipalities; 

and 

the establishment of better channels of communication between the business sector and local 

government. 

3.2 BUSINESS SUPPORT 

No dedicated business development centres or similar institutions have been identified in the Zululand 

District Municipality. A training centre that operated in Hlobane, in the Abaqulusi Municipality, in the late 

1990s has closed down. This training centre provided a wide range of skills training including literacy, 

garment making, curtains and draperies, catering, crèche and pre-school training, bricklaying, arc and 

gas welding, painting and decorating, motor and motor body repairs, spray painting, office skills, 

entrepreneurship and self-employment, entering the market place, management and capacity building 

(Robinson 1999). In 1999 the establishment of a Business Development Centre related to the Training 

Centre was considered. 

A company based in Ulundi, ETA Consult (previously Altak and Partners), is a Ntsika accredited 

business support service provider. Further to this the Indonsa Arts and Crafts Centre in Ulundi, which 

is supported by grants from the Department of Education, and managed by the District Municipality, 

provides support to this specific sector. 

The April 2003 Business Sector Working Group workshop suggested that two distinct forms of business 

support are required in the District, viz. (1) business support services and (2) business information 

services, e.g. where and how to access funding. It was suggested that Tourism Centre’s in each of the 

towns could potentially fulfil a role in the dissemination of business related information. 




3.3 FUNDING SUPPORT 

Funding support for business development is discussed in more detail in Part 1 of this report. 




4. CONSIDERING THE SECTORS 

4.1 INTRODUCTION 

Each of the industry sectors forming part of the Business Sector is discussed in this section under three 

broad headings, viz. 

 

 

 

an overview of the sector; 

the competitiveness of the sector; and 

the opportunities in the sector. 

The competitiveness of each of the industry sectors is evaluated using a model developed by Porter in a 

book The Competitive Advantage of Nations (1990). Porter’s model, more commonly referred to as 

“Porter’s diamond”, was developed in an attempt to explain why specific industries perform better (is 

more competitive) in certain nations and why the same industries fail to make any impact in others. In 

his analysis of a range of industries, e.g. the watch industry in Switzerland, the motor manufacturing 

industry in Germany, bulk transport vehicles in Sweden, the household appliance industry in Japan, he 

concludes that nations develop a competitive advantage in certain industries due to the unique 

interaction between a number of factors or elements. The four key elements of Porter’s model are: 

 

 

 

 

 

Factor conditions: Refers to the regions’ position in factors of production necessary to establish a 

competitive industry – distinction can be made between basic production factors (incl. natural 

resources, climate etc.) and advanced production factors (incl. labour force, knowledge, capital 

resources etc) 

Demand conditions (Markets): Specifically the nature of the home demand for the industry’s 

product or service is important – This includes the composition of demand, size and growth of 

demand and others 

Related and supporting industries: Refers to the presence or absence in the district or region of 

supplier industries and related industries that are internationally competitive. This suggests the 

importance of clustering. 

Structure of firms and rivalry: The way in which companies/businesses are created, organised, 

and managed and the nature of domestic rivalry. 

Government: Government is viewed as the 5th element impacting on competitiveness of the 

industry. 

Porter’s competitiveness model is used for the analysis of the various sectors in the remainder of this 

section. As stated, Porter initially developed the model to develop a better understanding of the 

competitiveness of certain industries in specific nations. In the Zululand context it is used to identify 

areas where specific attention or even intervention is required to build stronger industry sectors. It is 

essentially used as an alternative to the SWOT (Strengths, Weaknesses, Opportunities and Threats) 

analysis, as it is directly orientated towards the business environment. 




4.2 COMMERCIAL 

4.2.1 Overview of the Commercial Sector 

4.2.1.1 The Commercial Sector in eDumbe 

The Paulpietersburg/Dumbe node is the primary commercial node within the eDumbe Municipality. A 

scan of the Local Economic Regeneration Study (Scott Wilson, 2001) and the eDumbe Integrated 

Development (Udidi, 2002) suggests that there are no major gaps in the commercial sector servicing the 

eDumbe Municipality. The IDP does, however, propose the establishment of rural service centres which 

implies the need for amongst other things decentralised commercial services which rural communities 

can access. 

The Local Economic Regeneration Study for eDumbe provided the following breakdown of businesses 

within the municipality, based on a telephone directory survey. 

TABLE 4.1: EXISTING BUSINESS CONCERNS – EDUMBE MUNICIPALITY (2000) 

TYPE OF ACTIVITY NUMBER PERCENTAGE 

Food & Beverage 35 23% 

Agricultural Products and Support 22 15% 

Vehicle Sales & Repairs 16 11% 

Government Services 11 7% 

Education 10 7% 

Financial 7 5% 

Religious Organisations 6 4% 

Clothing & Hair 6 4% 

Business Support 5 3% 

Construction 5 3% 

Professional Services 5 3% 

Accommodation 4 3% 

Computer & Electrical 4 3% 

Property 3 2% 

Home and Furniture 3 2% 

Gifts and Florists 2 1% 

Transport Operators 2 1% 

Garden & Leisure 1 1% 

Service Industry 1 1% 

Recreation 1 1% 

149 100% 

Source: eDumbe Local Economic Regeneration Study (Scott Wilson 2001) 

It is evident from the above list of primarily commercial and service sector activities that a wide range of 

services are available to the population of eDumbe. The fact that 15% of businesses in the Municipality 

is classified as providing Agricultural Products and Support confirms the important role of the town as a 

service centre for the agricultural sector. 




4.2.1.2 The Commercial Sector in Abaqulusi 

Vryheid, the main commercial centre within the Abaqulusi Municipality, is generally viewed as a regional 

service centre. This is ascribed to the increasing interaction with neighbouring towns and settlements, 

as well as with neighbouring regions. Riel & Associates (2001) suggests that the commercial sector 

historically enjoyed good growth because of this. The dominance of Vryheid within the municipal 

economy is mentioned as one of the factors to which the underdevelopment of nodes such as eMondlo, 

Louwsburg and others can be ascribed. 

Commercial enterprises in Vryheid are primarily locally owned interspersed with some national chain 

stores, specifically in the food and clothing sectors. Riel & Associates (2001) suggests that the users of 

the commercial centre are primarily from the Abaqulusi Municipality area, but that because of the high 

quality educational services available its catchment area is much wider (including Pongola, Richards 

Bay and Dundee). Some sources go further to suggest that Vryheid has a catchment area of in excess 

of one million people. In general it can be stated that Vryheid offers users a comprehensive range of 

services and, within the context of the Zululand District, the most comprehensive range of commercial 

services available. 

The 2001 Economic Regeneration Study acknowledges that the health of the commercial sector is 

dependant on that of the larger economy. The condition of the primary sector (i.e. mining and 

agriculture) specifically impacts on the commercial sector in Abaqulusi. The closure of mines, together 

with high levels of uncertainty in the agricultural sector, is currently having a negative impact on this 

sector. 

The possibility of developing a regional shopping centre facility in Vryheid is the one major project 

relating to this sector previously identified. 

4.2.1.3 The Commercial Sector in Ulundi 

Development in the commercial sector of the Ulundi Municipality is limited to the town of Ulundi. The 

retail sector is dominated by large wholesale and bulk “Cash & Carry” stores, with the most important 

concentration of retail activity located in the Ondini Centre of the Ulundi CBD. A range of clothing and 

furniture stores are located in this node, however, the trend for shops to provide almost an identical 

range of products is identified (Robinson Ellingson 2000). 

Business and financial services is also concentrated in the Ulundi CBD. These services remains a main 

reason for people to visit the CBD and thus LED strategies should focus on retaining these businesses 

in the CBD. 

The Ulundi Local Economic Development Plan (2000) identifies the following gaps in the commercial 

and retail sector: 

 

 

 

retail outlets aimed at servicing the needs of the business community (e.g. stationary suppliers, 

photocopying etc); 

retail outlets catering specifically for the tourist market; and 

demand for recreational facilities such as cinemas, restaurants and indoor sporting facilities. 




The following table illustrates the economic activities by sector in Ulundi town (no information in this 

regard is available for the rest of the municipal area). 

TABLE 4.2: EXISTING BUSINESS CONCERNS – ULUNDI TOWN 

SECTOR SECTOR NO 

Mining & quarrying Quarry depot 1 

Manufacturing Engineering 4 

Construction Building 14 

Commercial 

General retail 17 

Food 8 

Furniture 6 

Services 

Wholesale 4 

Motor vehicle 14 

Personal 24 

Professional 17 

Finance & insurance 15 

Transport 3 

Utility services 5 

TOTAL 132 

Source: From Ulundi Local Economic Development Plan, 2000 as in Ulundi IDP (Vuka 2002) 

The service centre function of the town of Ulundi is evident from the above table, with the majority of 

businesses relating to the commercial and services sectors. In the year 2000 only four manufacturing 

concerns were operating from Ulundi. 

4.2.1.4 The Commercial Sector in Nongoma 

(Await information from Nongoma Local Economic Regeneration Study) 

4.2.1.5 The Commercial Sector in uPhongola 

Pongola town represents the only major concentration of business in the uPhongola Municipality. As is 

the case for eDumbe and Ulundi, Pongola also offers a wide range of services to the local and 

surrounding rural population. The table below provides an indication of the number of businesses 

located in the uPhongola Municipality. 

TABLE 4.3: EXISTING BUSINESS CONCERNS – UPHONGOLA MUNICIPALITY (2000) 


Food & Beverage 45 18% 

Government Services 31 13% 

Vehicle Sales & Repairs 25 10% 

Professional Services 22 9% 

Agricultural Products and Support 20 8% 

Clothing & Hair 17 7% 

Construction 12 5% 

Financial 10 4% 

Education 10 4% 





Gifts and Florists 10 4% 

Home and Furniture 8 3% 

Religious Organisations 7 3% 

Accommodation 6 2% 

Computer & Electrical 6 2% 

Garden & Leisure 4 2% 

Service Industry 4 2% 

Business Support 3 1% 

Property 2 1% 

Transport Operators 2 1% 

Recreation 1 0% 

245 100% 

Source: uPhongola Local Economic Regeneration Study (Scott Wilson 2001) 

As is the case in eDumbe, a substantial number of businesses (20) offers agricultural products and 

support, this confirming the important role that the town fulfils 

4.2.2 Competiveness of the Commercial Sector 

4.2.2.1 Factor conditions 

Established commercial centres (+): Each of the local municipalities in Zululand have an established 

commercial centre offering residents a wide range of commercial services, viz. Paulpietersburg, 

Vryheid, Ulundi, Nongoma and Pongola. The range of commercial services available includes financial 

institutions, retailers, wholesalers and supporting services. Of these commercial centres Vryheid offers 

the widest range of services and are the best established. 

Lack of developed Rural Service Centres (-): Residents of the District are dependent on the main 

commercial centres for commercial services. Limited concentrations of commercial activity exist outside 

of the main commercial centres. Secondary service centres such as Louwsburg, eMondlo and 

Babanango offers limited commercial services. Through the spatial frameworks developed in the 2002 

Integrated Development Planning process a number of Rural Service Centres has, however, been 

identified. A focus in the development of these rural centres will be the establishment of more locally 

orientated commercial services. 

Primary Road infrastructure (+): All commercial centres have good primary road access. Pongola is 

located on the N2, linking Mpumalanga with the coast of KwaZulu-Natal. Paulpietersburg and Vryheid is 

accessed via the R33 and R44 which also serves as an alternative route between Mpumalanga and the 

KwaZulu-Natal coast. At present Ulundi and Nongoma is not located on a through road as a section of 

the R66 between Nongoma and Magudu has not been surfaced. 

Secondary Road Infrastructure (-): Although primary road access to commercial centres is wellestablished 

internal road networks within each of the local municipalities can be said to be 

underdeveloped. Most communities access the primary roads through gravel roads and tracks. This 

situation specifically impacts on the Nongoma and Ulundi Municipalities, as well as the Simdlangentsha 

area, where the largest concentration of the rural population of the District resides. 




Lack of planning frameworks (-): Planning frameworks for the primary commercial nodes are 

generally available and land/space for future extension of commercial activities are available within 

these centres. Limitations for the expansion of the commercial sector appear to be most severe in 

Nongoma. Planning frameworks for Rural Service Centres as identified in the 2002 Integrated 

Development Planning process, guiding and coordinating commercial development in the rural centres, 

is generally not available. 

4.2.2.2 Firm structure and strategy 

Small locally owned formal businesses (+): The majority of businesses in the primary commercial 

centres are small and locally owned. This suggests a substantial local capacity in the commercial 

sector which can potentially serve as a basis for the future extension of the sector. 

Large informal sector (+): A large and growing informal sector exists within the Zululand District. The 

sector provides an important basis for the future development of the commercial sector. Developing a 

better understanding of this sector, its linkages and opportunities, will therefore be important. 

Components of this sector includes street traders, the so-called “bakkie” industry (linking rural areas 

with established wholesalers), informal financial services, taverns and spaza shops. 

National chains (+/-): A number of national chain stores specifically in the clothing and furniture retail 

and wholesale sub-sectors are established in the main commercial centres. The presence of these 

stores is particularly evident in Ulundi and Vryheid. The national chain stores offers an important 

service to the residents of the District, but the potential impact of attracting major retailers to the area, 

on smaller local businesses, needs to be established. This impact can potentially be either positive, in 

that it creates further opportunities for local entrepreneurs linking to these stores, or negative, in that it is 

difficult for local business to compete with established retail and wholesale chains. 

4.2.2.3 Markets 

Large local markets (+): The Zululand District Municipality have a total population of close to one 

million people which represents a substantial market for local business. Due to the location of Zululand 

in relation to other major provincial and regional centres, i.e. Durban, Richards Bay/Empangeni and 

Newcastle, the level of income leakage from the District is estimated to be low. Income leakage is, 

however, expected to be higher in the high income category. 

Low local income levels (-): Income and employment levels in the Zululand District Municipality are 

notoriously low (at least 75% of households earning below R1 500 per month) with this impacting 

directly on the extent of opportunities in the commercial sectors. The key opportunities relating to the 

local market is anticipated to be in basic household goods such as food, clothing and furniture. 

Regional markets (+): Some of the commercial centres in Zululand, most notably Vryheid and 

Pongola, serve larger regional markets falling outside of the District. In the case of Vryheid its market 

area extends outside of the Abaqulusi area to the west. Pongola serves a wider market to the east with 

people as far east as Sodwana and north to Ingwavuma, both located in the uMkhanyakude District 




Municipality, using it as a regional service centre. Due to the location of these centres it is anticipated 

that they will continue to fulfil the role of regional services centres serving the wider area. 

Potential tourism markets (+): To date there is little evidence of the commercial sector catering 

specifically for the tourism market. This can partly be attributed to the low level of tourism development 

in the area. Once appropriate tourism development and marketing strategies are in place this situation 

is set to change opening up a range of opportunities for local entrepreneurs. The opportunities could 

include travel related services, curio shops, speciality food stores, entertainment and others. 

4.2.2.4 Related and supporting services/businesses 

Business associations (+/-): Business associations exists in three of the five municipalities of the 

District, viz. Abaqulusi with both a Chamber of Commerce and the Afrikaanse Handelsinstituut, Ulundi 

and Nongoma. At present there exists no district based business association, with the Zululand 

Chamber of Commerce only having one member within the District. The Inyanda Chamber of 

Commerce, which is provincially based, has a presence in the District and is linked to local business 

associations. In terms of business organisation a strong base, therefore, exists and appropriate 

approaches to a greater level of cooperation and representivity needs to be established. 

Business support services (-): No dedicated business support centres in the Zululand District 

Municipality has been identified. A support centre that operated in Hlobane has closed down. A 

company based in Ulundi, ETA Consult (previously Altak and Partners), is however a Ntsika accredited 

business support service provider. 

Access to finance (-): The availability of finance is most often mentioned as the major constraining 

factor in commercial development. This is also expected to be the case in Zululand. 

4.2.2.5 Government 

Limited involvement (+/-): Government and more specifically local government has had limited 

involvement in the development of the commercial sector to date. Local government can and should in 

future fulfil a key role in establishing an environment conducive to economic development. 

Support for SMME establishment (+): Government policies support the development of Small, 

Medium and Micro Enterprises in all sectors of the economy, this includes business development and 

funding support through various programmes. 

Lack guidelines for the development of the informal sector (-): No guidelines for supporting and 

developing the informal sector exists within the District. As this sector makes up a major part of the 

local economy it is essential that clear guidelines for supporting and the developing the sector is 

established. 

Appropriate planning frameworks (-): Appropriate planning frameworks for the development of the 

commercial sector in rural service centres needs to be established by local municipalities. 




4.2.2.6 Synopsis: Competitiveness of the Commercial Sector 

The commercial sector is well established in the towns of the District, however, is not easily accessible 

for the majority of the rural population. A number of potential commercial markets exist. The lack of 

business support services will, however, limit entry of emerging entrepreneurs into these markets. Prerequisites 

for the development of the sector include the development of planning frameworks, the 

provision of business support and informal sector support. 

4.2.3. Activities Supporting Commercial Sector Development 

Two basic activities aimed at supporting the realisation of opportunities in the commercial sector have 

been identified, viz. the provision of business support services and guidelines for the support and 

development of the informal sector. 

 

Business Support Services: Most integrated development plans and economic development 

studies for the district and local municipalities identify the need for the establishment of business 

support services (See Table 4.? below providing an indication of the types of business support 

projects proposed). The need for business support services is, however, not limited to a specific 

sector. A strategy to the establishment of business support services in the District needs to be 

established. 

TABLE 4.4: BUSINESS SUPPORT RELATED PROJECTS PREVIOUSLY IDENTIFIED 

PROJECT NAME MUNICIPALITY SOURCE 

Hlobane Entrepreneurial Training and Support Centre Abaqulusi ZDM Investment Brochure (2002) 

Establish LED Office + LBSC Abaqulusi Abaqulusi IDP 

Skills Development Plan Abaqulusi Abaqulusi IDP 

Computer equipment and trainer for the Mkabayika Jama Multi- eDumbe eDumbe/uPhongola LER Study (2001) 

Purpose Training Centre 

Investigate: Small Business Hive Establishment eDumbe eDumbe IDP 

Establish linkages with Local Business Service Centres eDumbe eDumbe IDP 

SMME Support Programme uPhongola uPhongola IDP 

Investigation of SMME opportunities in various sector uPhongola uPhongola IDP 

uPhongola Procurement Policy uPhongola uPhongola IDP 

 

Guidelines for the Support and Development of the Informal Sector: A limited understanding 

of the functioning of the informal sector exists within the District. It will be essential that a better 

understanding be established, and that clear guidelines for the development of the sector be 

developed. This will amongst other things ensure that formal sector initiative does not impact 

negatively on the informal sector. 

4.2.4 Opportunities in the Commercial Sector 

From a survey of the integrated development plans and economic development studies undertaken in 

the district the following projects relating to the commercial sector have been identified. 




TABLE 4.5: PREVIOUSLY IDENTIFIED COMMERCIAL SECTOR OPPORTUNITIES 

PROJECT NAME 

MUNICI- 

PALITY 

SOURCE 

Vryheid Regional Shopping Centre Abaqulusi ZDM Investment Brochure (2002) 

eMondlo Taxi City and Retail Outlet Abaqulusi Abaqulusi IDP 

Investigation: Formalisation of Market Stalls / Taxi Rank in eDumbe eDumbe/uPhongola LER Study (2001) 

Paulpietersburg 

Investigate: Commercial Sector Expansion eDumbe eDumbe IDP 

Periodic Market - Paulpietersburg/Dumbe eDumbe eDumbe IDP 

Periodic Market - Frischgewaagd/Bilanyoni eDumbe eDumbe IDP 

Facilitate Catering Project (Paulpietersburg/eDumbe) eDumbe eDumbe IDP 

Ulundi Medical Centre Ulundi ZDM Investment Brochure (2002) 

Taxi Rank and Informal Trader Facilities (Phase 2) Ulundi Ulundi LED Plan (2000) 

Fresh Produce Market in Ulundi Ulundi Ulundi LED Plan (2000) 

Ulundi Health Club/Gym Ulundi ZDM Investment Brochure (2002) 

Ulundi Entertainment Centre Ulundi ZDM Investment Brochure (2002) 

The abovementioned represents specific opportunities in the commercial sector based on needs 

identified by local people. However, over and above these a series of more general opportunities 

relating to the sector should be considered. The realisation of these opportunities is, however, 

dependent on specific pre-conditions being met. 

Commercial facilities in Rural Service Centres: The establishment of Rural Service Centres present 

opportunities for both formal and informal commercial development. In planning for the development 

of each service centre land for commercial development should be clearly demarcated in locations 

identified through the application of accepted planning principles. The detailed planning processes for 

each of the service centres should further provide prospective investors with clear indications of the type 

and extent of the local market to be catered for. Ithala (previously the KwaZulu Finance Corporation) 

would be an appropriate first stop in an attempt to identify potential investors for commercial 

development. 

Markets and taxi ranks in all Service Centre: Appropriate markets and taxi ranks will be a basic 

requirement in each of the existing, or to be established, rural service centres. As the majority of the 

population makes use of public transport a market and taxi rank then also becomes the central point of 

convergence within the service centre. It is anticipated that all other services and facilities to be 

provided in the service centres will relate to the public transport facilities in some way. 

Commercial enterprises focussed on tourism market: The commercial market related to the tourism 

sector is unexplored to date. Current investment in tourism suggests that this sector will in future 

present specific commercial opportunities, e.g. the sale of locally produced goods, the restaurant 

industry, travel agencies/services and others. 




4.3 MANUFACTURING 

4.3.1 Overview of Manufacturing Activity in the District 

At present manufacturing activity within the District is low, at an estimated 11% contribution to the GGP 

for the area. The Zululand Regional Plan suggests that 80% of the manufacturing activity in Zululand 

takes place in the Abaqulusi Municipality, however, other studies suggests that manufacturing activity 

only contributes 5% to the total GGP of the Vryheid Magisterial District (Abaqulusi IDP 2002). Further to 

this it is suggested that the manufacturing industry in the Vryheid area can only be viewed as a service 

sector for mainly the mining and agriculture sector and is not an exporter of goods (Abaqulusi IDP). The 

only agri-processing of note in the District is the Illovo sugar mill in uPhongola Municipality. 

Local economic development and integrated development plans make limited mention of manufacturing 

activities. The Ulundi Local Economic Development Plan (2000) suggests that the manufacturing sector 

is “dominated by small scale activities including metal work and furniture production”. For both Ulundi 

and Abaqulusi the agri-processing opportunities relating to niche markets linked to agricultural activities 

are promoted. Nearly all plans (integrated development and local economic development) prepared in 

the District supports a future focus on agri-processing, beneficiation and local value addition. These 

proposals, however, usually remain general (some of the more specific opportunities are discussed in a 

later section). 

Despite the lack of large scale manufacturing in the District a number of interesting ventures have been, 

or are in the process of being, established. These activities generally relate to the raw materials and 

skills available in the District. The ventures include (1) arts and crafts production and marketing, (2) 

taxidermy, (3) mineral water and (4) charcoal manufacturing for export. 

 

 

 

Arts and Crafts Production and Manufacturing: It is not possible to quantify the extent of the 

arts and craft sector, as activities in this sector are generally of an informal nature. There is, 

however, various attempts throughout the district to provide a more formal base for the production 

and marketing of arts and crafts. One such initiative in the uPhongola Municipality, is aimed at 

promoting job creation and income generation in three formally established Community Trusts. 

These Trusts are in a partnership relationship with KwaZulu Private Game Reserve and aims to 

produce and market needlework, candles, beadwork, crafting, weaving and leatherwork. The 

market for the art and craft items will be tourists visiting private lodges and camps as well as the 

Ithala Game Reserve. The initiative aims to create 34 jobs in the manufacturing sector (Taljaard 

pers com April 2003). 

Taxidermy: A further manufacturing industry, directly related to the tourist industry in KwaZulu- 

Natal, is taxidermy. A taxidermy operation in the uPhongola Municipality, focussing on the 

preparation of trophies for the professional hunting industry, creates some 30 jobs. The target 

market of this business is both international and national hunters although it would appear as if a 

large percentage of current business is international (Taljaard pers com April 2003). The increase 

in the number of upmarket game farms in the area and the establishment of a stable hunting 

industry in the area will set to increase such opportunities. 

Valpre Mineral Water: The Coal Line Study (1999) identifies the Valaqua mineral water plant 

located in the eDumbe Municipality as one of the “world class” manufacturing initiatives in the 

District. Spring water is bottled and distributed from here under the Valpre label to markets country- 




 

wide. In the three years leading up to 1999 production at the plant increased by 100% per annum. 

The Coal Line Study (1999) suggests that the complex array of linkages associated with this type of 

industry “… provide pointers to opportunities for enhancing economic development”. 

Charcoal Manufacturing and Export: This initiative exports charcoal briquettes to the barbeque 

market in Europe and is also identified as a “world class” manufacturing initiative by the Coal Line 

Study (1999). Supplies of charcoal, produced from “waste” timber, is received by the central plant 

located in eDumbe, from small producers operating in a 120km radius. The charcoal pieces is 

separated and smaller pieces are treated with a binding starch, condensed and packaged as 

briquettes. A Swiss based company is responsible for the marketing of the product overseas. 

Other manufacturing activities in the District includes Roses’ nougat which is produced in Vryheid for 

Woolworths stores, a venison export plant currently being developed by KwaZulu Private Game 

Reserve in uPhongola and a carcass and blood meal plant to be established in Abaqulusi. 

4.3.2 Competitiveness of the Manufacturing Sector in Zululand 


Land available for industrial development (+): Land available for industrial development is not 

viewed as a major constraint on the development of the sector (it is also indicated in previous sections 

that the majority of smaller scale manufacturing activity is conducted on farms). Industrial sites and land 

is generally available in Vryheid. It is estimated that 50% of the available industrial land in Vryheid is 

serviced. Currently the possibility of sub-dividing these sites is being considered to make it accessible 

and appropriate for smaller manufacturing concerns. In the Ulundi CBD development plan provision is 

made for the establishment of industrial sites. The location of the land, which requires access through 

the already congested CBD, is viewed as one constraint for manufacturing development. The land in 

Ulundi also forms part of the Ingonyama Trust and freehold ownership is therefore not available. As 

financial institutions are reluctant to finance development on Ingonyama land this places a further 

constraint on industrial development (Cullinan pers com April 2002). 

Cost of services (+/-): From discussion with key stakeholders it does, however, appear as if the cost 

of municipal services within the various localities are in line with that in similar localities elsewhere. 

Although this is suggested to be positive the fact that the district has limited other comparative 

advantages in terms of location, availability of raw materials etc. this does little to attract new 

investment, i.e. the same is available elsewhere in areas with greater comparative advantages. 

Lack of comparative advantages (-): As indicated above, the District has limited comparative 

advantages in terms of the manufacturing sector. Some aspects mentioned as presenting a 

comparative advantage includes the (1) location in relation to transport routes, the (2) location of the 

area in relation to the major east coast ports and Gauteng, and a (3) primary sector related to both 

mining and agriculture. Its location between the ports of Durban and Richards Bay and Gauteng 

presents opportunities but cannot be viewed as a comparative advantage as various locations such as 

Harrismith, Ladismith and Newcastle offers the same advantages. The availability of land for industrial 

development is of little benefit if it can only be offered at prices similar to that on offer in similar areas. 




Raw material availability (-/+): The primary sector, including mining and agriculture activity, provides 

the region with access to a limited range of raw materials. Economic regeneration studies have shown 

substantial opportunities, specifically in the agricultural sector, for diversifying the range of raw materials 

available in the District. At present the level of beneficiation undertaken within the District is limited, 

exceptions being the charcoal/briquette production in eDumbe, venison processing in uPhongola and 

the carcass and blood meal plant in Abaqulusi. 

Large unskilled workforce (+/-): There is no doubt that the District has access to a large workforce, 

however, due to the current lack of economic activity the workforce is generally unskilled and does not 

present the region with a comparative advantage. 

Location (+/-): As mentioned the location of the District in relation to the east coast ports presents an 

advantage, but this is expected to have a limited impact on attracting industrial investment to the area. 

Availability of transport infrastructure and services (+): This is viewed as a comparative advantage 

for the District, specifically its location in relation to the Coal Line, as well as generally good road 

infrastructure and air transport facilities. Specifically industries dependent on rail for accessing the 

export market (potentially through the port of Richards Bay) will benefit from a location in towns such as 

Paulpietersburg, Vryheid and Ulundi. 


Manufacturing linked to declining sectors (-): The manufacturing sector in Vryheid, where the only 

major concentration of manufacturing activity is located, is dependent on the mining and agricultural 

sectors. Both of these sectors have in recent years been in decline due to a range of factors discussed 

elsewhere. 

World class industries (+): The Valpre Mineral Water, the charcoal production and 

Roses’ nougat ventures illustrates that it is possible to establish world class industries within the District. 

It is interesting to note that the majority of current manufacturing initiatives is dependent on the available 

local raw materials. This provides a clue as to the types of industries with potential in the area. These 

industries should be used as examples of what can be achieved within the region. 

Small manufacturing concerns (-): At present the majority of manufacturing concerns are of a small 

scale nature, viz. engineering works, metal work, furniture production etc. These smaller concerns have 

limited upstream or downstream linkages and therefore contribute little to the overall growth of the 

economy. The establishment of larger scale manufacturing concerns or the growth of small 

manufacturing concerns will potentially have a snowball effect on the economy of the District. 

Lack of any form of clustering (-): To date there is no indication of the development of competitive 

industrial clusters within the district. Industrial clustering is viewed as important as cluster formation 

presents both vertical and horizontal opportunities. Continued efforts should be made to identify 

possible clusters to be nurtured and developed in the District. 





The local market for manufactured goods (+): With a large local population the local market 

presents possibly the best opportunities for industrial development in the District. It is generally easier 

for emerging entrepreneurs to access and produce for the local market. This presents a basic 

opportunity for the development of an industrial sector which can grow into a globally competitive sector. 

Products for the local market would include basic household and consumer items such as food, 

beverages, clothing, textiles, footwear, furniture, building materials, appliances and others. 

Access to export markets (+/-): At present limited production in the District is undertaken for the 

export market, the charcoal initiative being the exception. A number of potential opportunities for 

accessing export markets exists, but for this to be realised a number of pre-conditions exists. The preconditions 

would include the availability of capital for the establishment of appropriate production 

facilities, well-trained labour, effective quality control and appropriate capacity. It is important to note 

that production for the export market should generally not be endeavoured on until such time as a 

secure market for the product has been identified. 


Lack of business support services (-): As noted in the discussion on the commercial sector, no 

dedicated business development support services exist within the District. 

Access to finance (-): Although various funding sources support the establishment of new 

manufacturing businesses, local people generally do not understand the range of funding available or 

the appropriate routes for accessing the funding. Lengthy bureaucratic processes are often mentioned 

as one of the reasons for entrepreneurs not accessing the available funding sources. 

Lack of supporting industries (-): Due to the small scale of current manufacturing activities in the 

District supporting industries for the establishment of a healthy manufacturing sector are severely 

lacking. 


Support for agri-industries (+): At present there exists a strong focus specifically in the Provincial 

Department of Economic Development and Tourism on supporting the establishment of agri-industries 

throughout the province. Examples of projects currently supported by the Department include traditional 

medicine production, bio-diesel production, small sugar mill establishment and the processing of 

specifically organically grown vegetables and fruit. Within government there is general 

acknowledgement of the importance of agri-processing in economic development in the rural areas of 

KwaZulu-Natal. 

Support for black economic empowerment (+): Black economic empowerment and SMME 

establishment is promoted and supported through various government departments and institutions. 

This ensures that a range of resources, both institutional and financial, is available to support new 

business establishment and entrepreneurial development. 




4.3.2.6 Synopsis: Competitiveness of the Manufacturing Sector 

This sector is underdeveloped in the District, however, a number of very competitive small industries 

relating to the natural resources in the District have been established (illustrating that this can be done). 

Lack of skills and business support services are viewed as major constraints in the development of the 

sector. The District does, however, have certain comparative advantages in terms of location, raw 

material availability and the extent of the local market. 

4.3.3 Opportunities in the Manufacturing Sector 

A number of manufacturing sector opportunities have to date been identified in integrated development 

plans and economic regeneration studies undertaken for the municipalities in the district. Table 4.? lists 

those opportunities identified to date. 

TABLE 4.6: PREVIOUSLY IDENTIFIED MANUFACTURING SECTOR OPPORTUNITIES 

PROJECT NAME MUNICIPALITY SOURCE 

"Circle of Friends" Craft Work eDumbe eDumbe/uPhongola LER Study (2001) 

Extension to cement brick paving enterprise uPhongola eDumbe/uPhongola LER Study (2001) 

Oil Seed Cluster – Oil Extraction Plant Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Animal Feeds Factory Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Organic Vegetable Packing and Freezing Plant Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Maize Mill Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Tannin Extraction Plant Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Leather Tannery Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Meat Processing Unit Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Furniture Production Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Wrought Iron, Basketry and Weaving Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Traditional Craft Centre Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Leather Work Centre Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Eco Block Manufacture Abaqulusi Vryheid Economic Regeneration (Phase 1) 

Facilitate Waste Selling/Recycling Projects eDumbe eDumbe IDP 

Encourage value adding manufacturing eDumbe eDumbe IDP 

Industry support eDumbe eDumbe IDP 

School Clothing Manufacturing eDumbe eDumbe IDP 

Feasibility Investigation: Candle Making eDumbe eDumbe IDP 

Feasibility Investigation: Silk screening "home" 

eDumbe eDumbe IDP 

industries 

Facilitate Zama Zama Projects: Candles, brick-making, eDumbe eDumbe IDP 

gardens and livestock 

Emerald Acres Farm: Calabash Crafts eDumbe eDumbe IDP 

Pecan Nut Processing eDumbe Economic Rejuvenation Study for the Coal Belt 

Region (December 2002), Vryheid Economic 

Regeneration Study (Phase 1) 

From the above list there appears to be a focus on two broad types of opportunities in the 

manufacturing sector, viz. agri-processing and arts and crafts. A comprehensive list of the type of 

manufacturing opportunities to be further considered in the Zululand District Municipality would include: 




Agri-Processing: Charcoal, venison and sugar production already undertaken in the district represents 

examples of successful agri-processing activities. Agri-processing opportunities generally promoted in 

the region include traditional medicines, venison production for export, leather production, and 

vegetable and fruit processing. The diversification of agricultural production in the District will lead to 

further potential for agri-processing. 

Arts and Crafts: Although there is substantial activity in the arts and crafts sector this is generally of an 

informal nature focussed on production of objects for local home use. Opportunities exist for the 

diversification of the products of the district and the improvement of marketing systems that will open up 

new local, national and international markets. The substantial international investment in game farms 

in specifically the uPhongola Municipality and the focus on attracting international tourists to these areas 

is only one of the markets to be further explored. Other markets for arts and crafts include curio shops 

in national parks, curio shops in private game reserves, arts and craft centres in the District, as well as 

established marketing agents focussing on the national and international markets. 

Timber products manufacturing: The Coal Line Study (1999) reports that attempts to produce 

furniture in the region have been largely unsuccessful. This is attributed to the cost of processing the 

timber. It is, however, suggested that opportunities relating to timber product manufacturing should 

continue to be investigated. Timber construction relating to specifically the tourism industry may present 

opportunities for local contractors in future. 

Building materials manufacturing: Later sections of the report illustrate that limited, specifically low 

cost housing development, is currently undertaken within the District. A greater focus on benefiting from 

the subsidies available from the Department of Housing will present a range of opportunities in the 

building material manufacturing sector. Opportunities will potentially include block-making, window 

frame and door manufacturing and roof construction. 

Clothing and textiles: Although competitive advantages for this industry is limited entrepreneurship is 

often the key ingredient needed for the establishment of ventures in this sector. As an example, a 

factory in Utrecht is producing clothing for Woolworths on a competitive basis with no apparent 

competitive advantages. The potential of exploiting specifically the local school clothing market should 

be considered. 

Other specialised manufacturing: Entrepreneurs in the District are identifying manufacturing 

opportunities on an ongoing basis. These opportunities are often unique and products could be 

marketed nationally. Local support for such entrepreneurs is required to ensure that production relating 

to these opportunities is undertaken in the District. Mechanism to support local entrepreneurs should be 

developed. 




4.4 CONSTRUCTION 

4.4.1 Overview of Construction the Construction Sector 

4.4.1.1 Construction Activity in Zululand 

A comprehensive survey of the construction industry in the District has not been conducted. However, 

considering general trends in this sector it is not at present viewed as a growth sector in the District. 

Major recent and current construction activities in the District would include: 

 

 

 

 

 

 

the general residential market; 

major infrastructure construction, e.g. the Paris Dam and in future the construction of major roads 

such as the P700; 

the building of lodges and tourism facilities, e.g. lodges to be built at Emakhosini, Thakazulu and on 

private game farms; 

the provision of basic services to the previously disadvantaged urban and rural communities within 

the District municipality; 

the provision of low income housing to the urban and rural communities of the District; and 

building of municipal and public sector buildings, e.g. the offices of the District Municipality. 

Low income housing projects currently underway are listed below, whereas detailed project information 

relating to all construction projects of the District Municipality (located within the various local 

municipalities) is available on the IMPI database of the District at www.zululand.org.za. 

TABLE 4.7: HOUSING PROJECTS IN THE ZULULAND DISTRICT MUNICIPALITY 

PROJECT MUNICIPALITY STATUS NO. OF UNITS 

Dumbe: Paulpietersburg (Lindelani) eDumbe Near Complete 200 

Paulpietersburg: Dumbe Phase 1 (Greenfields) eDumbe Near Complete 200 

Paulpietersburg: Dumbe: Phase 2 eDumbe Near Complete 594 

Frischgewaagd Phases 1& 2 (Paulpietersburg) eDumbe Near Complete 3094 

Ncotshane Housing Project uPhongola Start up 1100 

Bhekuzulu Phase 1 Abaqulusi Complete 646 

Vryheid: Bhekuzulu Phase 4 Abaqulusi Complete 300 

Vryheid: Bhekuzulu Abaqulusi Complete 228 

Bhekuzulu Extension Phase 6 Abaqulusi Start up 1179 

Coronation Housing Project Abaqulusi Start up? 225 

Source: Department of Housing 2003 

A number of issues to be noted regarding the above low income housing projects are: 

 

 

 

the majority of the above projects are urban based, this despite the majority of the population of the 

District qualifying for housing subsidies residing in rural areas; 

most of the projects are nearing completion and limited new projects are currently registered on the 

database of the Department of Housing; and 

no projects are currently listed in the Nongoma or Ulundi Municipalities. 




Although the construction sector is not viewed as a future high growth sector in the District economy it 

is, however, a sector that can potentially have a major impact on economic development. This 

potential relates to the budgets available from various government programmes for the provision of 

facilities and infrastructure in the District. If appropriately managed this funding can make a substantial 

contribution to job creation, capacity building, entrepreneurship development and income generation. 

The government programmes currently providing substantial opportunities include: 

 

 

 

 

the Housing Subsidy Scheme; 

the Consolidated Municipal Infrastructure Programme; 

Department of Water Affairs and Forestry funded water and sanitation project; 

the electrification programme of the Department of Minerals and Energy. 

The fact that the Zululand District Municipality has been identified as a node in terms of the Integrated 

Rural Sustainable Development Programme of the national government suggests that it will be in a 

position to maximise the funding available from these sources. 

Various plans on the District level will impact directly on the construction industry in Zululand. These 

plans include (Landman pers com 2003): 

 

 

 

The Water Services Development Plan: This plan is 90% complete and establishes a plan for the 

development of water related infrastructure over the next 25 years primarily making use of DWAF 

and CMIP funding. 

The Cemeteries and Crematoria Plan: This plan has been completed. 

The Solid Waste Plan: A draft plan has been completed. 

Other future plans to be developed include: 

 

 

 

 

Electricity Development Plan; 

Transport Plan (with a Public Transport Focus); 

Community Facilities Plan; and 

(potentially) a Housing Plan. 

4.4.1.2 Construction Firms in Zululand 

An analysis of the construction firms currently registered on the IMPI system of the District Municipality 

is reflected in Table 4.8 below. 

TABLE 4.8: CONSTRUCTION FIRMS REGISTERED ON DISTRICT DATABASE 1 

LOCATION OF CONSTRUCTION FIRMS NUMBER PERCENTAGE 

Ulundi 26 24% 

Abaqulusi 17 16% 

uPhongola 8 7% 

eDumbe 8 7% 

Nongoma 3 3% 

New Germany 4 4% 

1 This table is indicative only as details relating to all contractors could not be confirmed 




LOCATION OF CONSTRUCTION FIRMS NUMBER PERCENTAGE 

Outside Zululand 11 10% 

Unknown 30 28% 

TOTAL 107 100% 

Source: IMPI 2003 (Project Management System of Zululand District Municipality) 

The above suggests that the majority of construction firms in the Zululand District Municipality are 

Ulundi based, with a further large number being based in Abaqulusi. The above illustrates that local 

capacity in the construction industry does exist, however, as the majority of the firms listed are smaller 

emerging contractors substantial support is needed for increasing the capacity. 

4.4.2 Competitiveness of the Construction Industry 


Availability of building materials (+): The availability of building materials is not viewed as a 

constraint on the development of the construction industry. The local manufacturing of building 

materials is rather viewed as an opportunity for economic development. 

Building skills (+/-): Although some building skills have been developed in the District over time no 

major opportunities for the large scale skills development in the sector has emerged. 

Specialised skills (-): No specialised building skills of note has been identified in the District 


Absence of small entrepreneurs / local contractors (-): Considering only the current allocation of 

low income housing projects in the District it evident that a limited number of contractors / developers 

dominate this market. The extent to which skills development is undertaken by these developers needs 

to be determined. 


Tourism related markets (+): Tourism is at present viewed as a key sector to be focussed on in the 

development of the District economy. Kick-starting the development of this sector will potentially open 

up a range of opportunities in the construction sector including the building of lodges, other forms of 

accommodation, cultural centres/villages, infrastructure development and so on. As a key focus in the 

development of the tourism industry will be on eco-tourism and cultural tourism it is expected that 

alternative construction skills, viz. timber and traditional building, will be in high demand. 

Infrastructure provision markets (+): The provision of basic infrastructure, including the provision of 

water, sanitation, electricity and road access, is supported through the availability of substantial 

amounts of government funding in the form of grants. Due to the availability of funding infrastructure 

provision is viewed as a major opportunity for the provision of local economic development. 




Low Income Housing provision (+): Historically low income housing development has only taken 

place within the urban areas of the District. On a provincial level there now appears to be a greater 

focus on ensuring that rural communities also benefit from the Housing Subsidy Scheme, this 

presenting a range of opportunities for the local municipalities in Zululand. 

Middle Income Housing in rural areas (+): To date no attention has been afforded the provision of 

middle income housing in the rural areas of Zululand. Thus, specifically public servants in the education 

and health sector working in the rural areas of the District is not viewed as permanent residents in these 

areas and travel to and from major centres. The establishment of Rural Service Centres present 

opportunities for the establishment of middle income housing. This is viewed as a further market for the 

construction sector to be explored. 

Other opportunities/markets relating to the construction industry is discussed in more detail in Section 

4.4.3. 


Lack of skills development and training (-): As far as could be established no skills development or 

training centres related to the construction sector exists within the Zululand District Municipality. 

Resource Mobilisation (-): Substantial resources for specifically basic infrastructure provision and 

housing development are available and the various local municipality integrated development plans 

identifies priorities in this regard. It appears, however, as if local municipalities lack the resources and 

capacity to mobilise the available resources for priority projects. The resources lacking includes staff 

dedicated and capacitated to identify and prepare business plans for accessing these resources. 


Integrated development planning (+): The integrated development planning process in which the 

District and all local municipalities are engaged in is a legislative requirement in terms of the Municipal 

Systems Act. It is anticipated that these plans will over the medium term provide strategic direction to 

the development activities in local municipalities and that an important outcome of this will be increased 

activity in the construction sector, specifically focussing on the core function of local municipalities 

relating to service provision. 

Support for basic service provision and housing (+): Government is providing substantial support, 

both financial and institutional, for basic infrastructure and housing provision. This presents a major 

opportunity for the development of the construction sector specifically, and for local economic 

development in general. 

Procurement policy (+): The District Municipality has a comprehensive affirmative procurement policy 

in place. The District also pro-actively supports capacity building aimed at involving local contractors in 

development projects. As far as could be established such a procurement policy is not in place in the 

local municipalities in the District. 




4.4.2.6 Synopsis: Competitiveness of the Construction Sector 

Due to the high levels of poverty the District is attracting substantial government funding for the 

development of basic infrastructure (ISRDS node). This presents an important basis for the 

development of the construction industry. The extent of government funding it attracts can and should, 

however, be increased, specifically in terms of the Housing Subsidy Scheme. Future expansion of other 

sectors (specifically tourism, manufacturing and commerce) will impact positively on the sector. Skills 

development capacity is essential (entrepreneurial + technical). 

4.4.3 Opportunities in the Construction Sector 

A range of opportunities in the construction sector has been discussed in previous sections. This 

section provides a brief summary of more specific opportunities that have been identified to date. 

Private Sector Facilities Development: Development in the majority of other sectors requires support 

from the construction sector. Examples of facilities required in the District identified through other local 

economic development initiatives include: 

 

a truck stop in Vryheid; 

a garage and information complex at Ulundi “19”; 

office accommodation in Ulundi; 

a regional shopping centre in Vryheid; 

Public Sector Facilities Development: A key development strategy of the Zululand District 

Municipality and the various local municipalities is the establishment of a Rural Service System. The 

various Rural Service System Hubs is identified in the Section 2.3 above. The Rural Service Centres is 

intended to provide rural communities with access to a range of government, social and commercial 

services. In order to do this infrastructure and facilities such as multi-purpose community centres needs 

to be developed, this presents opportunities in the construction sector. 

Low Income Housing Development: As indicated, to date low income housing provision has been 

focussed in urban centres within the District. This focus is set to change to also provide rural 

communities with access to the housing subsidies of the Department of Housing. This extension of the 

focus provide a range of opportunities for the establishment of building material manufacturers and 

small scale building and construction contractors. 

Importantly, the management and implementation approach to low income housing projects will 

determine the impact thereof on entrepreneurship development, skills development, job creation and 

income generation. 

Middle Income Housing Development: The lack of appropriate middle income housing in all areas of 

the District presents an opportunity in the construction sector. 

Road and infrastructure construction: Funding for construction programmes is made available 

through various government programmes, including the Consolidated Municipal Infrastructure 

Programme, Department of Water Affairs and Forestry funded water and sanitation project, the 




electrification programme of the Department of Minerals and Energy and road construction and 

maintenance projects of the Department of Transport. As is the case with low income housing the 

management and implementation approach to these projects will determine the impact thereof on 

entrepreneurship development, skills development, job creation and income generation. The IMPI 

project management system of the District Municipality provides detailed information on the current 

status of existing projects. Integrated development plans of the various municipalities further indicate 

the priority projects in the urban and rural areas. 

Tourism related construction projects: A number of major tourism development projects in the 

District have already been identified. Funding for some of these projects, such as the eMakhosini 

project in Ulundi, has already been secured. Other planned developments such as ThakaZulu and 

tourism initiatives around the Paris Dam are still in the process of mobilising funding. Discussions with 

the Manager of KwaZulu Private Game Reserves, currently investing substantial funding in 

infrastructure and lodge development, revealed that overseas investors are making use of local building 

contractors for the construction of multi-million rand lodges in the uPhongola area (Potter pers com 

2003). This approach should be commended and supported on a District level. 

Agriculture related construction projects: Through specifically the Land Redistribution for 

Agricultural Development Programme of the Department of Land Affairs and the Department of 

Agriculture and Environmental Affairs funding for agricultural development is available. Opportunities 

specifically for irrigation projects are currently under investigation and should this be found to be 

feasible will present opportunities in the construction sector. 

4.5 TRANSPORT 

4.5.1 Overview of the Transport Infrastructure and Sector in the District 

The Coal Line Study (Robinson 1999) undertook a detailed analysis of the transport infrastructure and 

the transport sector in the District. A brief overview is provided here of the key transport infrastructure 

serving the district as presented in this study. 

4.5.1.1 Road Transport Infrastructure 

Firstly the study identified the Coal Line Corridor as a route of national significance as one of five road 

links between Gauteng and KwaZulu-Natal. Comparatively the distances of the five main routes are as 

illustrated in the table below: 

TABLE 4.9: SIGNIFICANT LINKAGES BETWEEN GAUTENG AND THE COAST 

ROUTE DISTANCE MAIN COMPONENT 

1 Johannesburg – Durban 578km N3 (not in ZDM) 

2 Johannesburg – Standerton – Newcastle – Ladysmith – Durban 610km (not in ZDM) 

3 Johannesburg – Vrede – Newcastle – Vryheid – Richards Bay 640km (in ZDM) 

4 Johannesburg – Piet Retief – Pongola – Richards Bay 638km N2 (in ZDM) 

5 Johannesburg – Piet Retief – Vryheid – Richards 657km (in ZDM) 

Source: Robinson & Associates 1999 




Within the Zululand District Municipality key road infrastructure includes: 

 

 

 

 

 

 

the N2 stretching from Piet Retief through Pongola south towards Richards Bay; 

the R33 entering Zululand north of Paulpietersburg, passes through Vryheid and links up to Dundee 

(associated with the Coal Line Corridor); 

the R34 entering Zululand to the west of Vryheid, passes through Vryheid and links up to Melmoth 

in the south (associated with the Coal Line Corridor); 

the R66 linking Ulundi with the R34 stretching northwards through Pongola; 

P700 linking Ulundi with the Umfolozi Nature Reserve; 

(Vryheid – Louwsburg – Magudu) 

Robinson & Associates (1999) makes the important observation that the roads associated with the Coal 

Line Corridor “traverse broken and hilly terrain in place, making the route unsuitable for heavy vehicles”. 

This observation is illustrated by the experience of Valaqua located seven kilometres to the north of 

Paulpietersburg who freight their products to Durban via Pongola. Although this route is 50 kilometres 

longer than the Vryheid-Melmoth route it apparently takes four hours less. 

4.5.1.2 Rail Infrastructure 

The Coal Line, which started operations in 1976, links 44 coal mines in Mpumalanga to the bulk export 

port of Richards Bay. The line runs from Witbank through Piet Retief, Paulpietersburg, Vryheid East, 

Ulundi to Richards Bay. Although initially designed to convey 21 million tons of coal exports per annum 

the route was upgraded in 1989 and in 1997 it conveyed 62 million tons of coal to Richards Bay 

(Robinson 1999). This was expected to increase to 70 million tons by the year 2000. Importantly, the 

Coal Line Study notes that the 200 truck dedicated coal trains (of which there are 23 per day) “do not 

stop at stations within the corridor except to changes crews. All these trains return empty”. 

Further to this it was found that there is approximately 17 general freight trains on the line, transporting 

30 000 tons of goods to Richards Bay, including fero-chrome, granite, chrome, steel and timber. 

Although most of the freight is loaded north of Zululand substantial amounts of timber is loaded in the 

eDumbe and Vryheid areas. The trains are reported to return with approximately 10 000 tons of goods 

(Robinson 1999). 

4.5.1.3 Air Transport Infrastructure 

Two airports of note is located in the District Municipality, viz. the Ulundi Airport and the Vryheid Airport. 

The Ulundi Airport is licensed and considered to be a regional airport. The airport consists of two 

bituminous runways, a taxiway, apron, three large hanger, a terminal building and associated parking 

garages (Crous Wolff Associates 2000). Two daily scheduled flights (in and out) is catered for on 

weekdays on the Ulundi-Durban-Pietermaritzburg route. The airport also caters for numerous unscheduled 

flights associated with provincial government, tourism and business. 

The Vryheid airport was built to Civil Aviation standards and has a tar and gravel runway. Robinson 

(1999) reports that it is no longer a licensed airport as scheduled flights to Vryheid was discontinued in 

the mid-1980s partly because of a change in the operating company and partly because of the closure 




of major coal mines in the Vryheid area. The municipal parks department maintains the airport. In 

1999 on average four private flights landed at the airport daily. 

It should further be noted that a private investor, KwaZulu Private Game Farms, has recently 

established a compacted earth and gravel runway in the Magudu area of the uPhongola Municipality. 

This facility will be able to handle freight planes such as a Hercules and up to 20 seater passenger 

planes. The facility is currently also being utilised by neighbouring game farms (Potter and Taljaard 

pers com 2003). 

4.5.1.4 The Transport Industry 

Within the broad transport industry in the Zululand District Municipality distinction can be made between 

various sub-sectors, viz. road freight transport, public road transport, air transport and rail freight 

transport. In terms of the “informal” sector stakeholders also identitify the so-called “bakkie” industry 

responsible for the transport of goods from distributors/wholesalers to a range of retailers located in the 

rural areas. Each of these sub-sectors is discussed in brief below. 

Road Freight Transport: The Abaqulusi IDP (2002) suggests that the road freight industry has 

experienced substantial growth in recent years, the growth relating primarily to the timber industry. In 

Abaqulusi there is an estimated 15 road transport related business, whereas approximately seven such 

business focussing on the timber transport industry is located in eDumbe. The Coal Line Study (1999) 

identifies a “mosaic … in relation to the flow of goods and services” in the region. The two dominant 

patterns are raw materials taken out of the area and neighbouring areas to be processed elsewhere and 

a flow of consumer goods into the area. Raw materials extracted from the region includes: 

timber – from areas around Vryheid, Paulpietersburg and Vryheid; 

maize – from the Vryheid area; 

cattle – from the Vryheid-Ulundi area; 

sugar cane – from uPhongola; and 

coal – from several smaller mines. 

Road Transport: Public transport in the District as a whole is dominated by the mini-bus taxi industry. 

As an example it is estimated that approximately 190 taxis were operating in the Ulundi Municipality in 

2000 (Robinson Ellingson 2000). Although a number of bus companies also operates in the area this is 

suggested to make up a relatively small portion of the public transport sector. Robinson & Associates 

(1999) distinguishes between five distinct movement patterns of people in the Coal Line corridor area, 

viz. 

 

 

 

 

 

business people moving in the corridor and to areas outside of the corridor; 

people coming to do business at various places along the corridor from metropolitan areas and 

neighbouring regions; 

daily commuting from rural areas to smaller urban centres and larger towns for work and to gain 

access to commercial and social services; 

daily influx of public sector workers into provincial, regional and local government offices in Ulundi 

from Melmoth, Vryheid and other areas; and 

tourists, both international and domestic, travelling by coaches or in smaller vehicles to destinations 

such as the battlefield, sites of historic, cultural and eco-tourism significance. 




Rail Transport: See Section 4.5.1.2 

Air Transport: See Section 4.5.1.3 

“Bakkie” industry: The so-called “Bakkie” industry is responsible for the transport of goods from key 

nodes such as Vryheid and Ulundi, and the wholesalers located in these nodes to smaller and rural 

commercial ventures. It is suggested that the “bakkie” industry is an important link in the distribution of 

goods throughout the Zululand area, however, as no studies in this regard has been undertaken this is 

difficult to quantify. 

4.5.2 The Competitiveness of the Transport Industry 


Availability of primary infrastructure networks (+): As previously illustrated the District has access 

to a good primary road infrastructure network linking all the municipal centres. The only substantial 

missing link is the untarred section of the road linking Nongoma to Pongola. 

Locational benefit for transport industry (+): In terms of major national and provincial transport 

corridors the District is well located with access to the N2 and the alternative routes linking the east 

coast ports of KwaZulu-Natal with Gauteng. 

New road infrastructure (+): Plans are in place and, as far as could be established, funding allocated 

for the upgrading of the two “missing links” in the District, viz. the P700 between Ulundi and the 

Hluhluwe Game Reserve and the untarred section between Nongoma and Pongola. 

Underdeveloped secondary infrastructure networks (+/-): Although a number of rural communities 

have difficulty accessing municipal centre the Department of Transport continue to take responsibility for 

the maintenance and upgrading of rural roads. 

Congestion on specific sections (-): Investigations previously undertaken suggests that industries 

transporting goods from the Paulpietersburg and Vryheid to the coast generally prefer to do this over 

Pongola as the section of the R34 between Melmoth-Eshowe experience congestion which causes 

substantial time delays. This will in the longer term not only impact on freight transport, but also on 

other traffic passing through the region. 

Lack of facilities (specifically for trucks) (-): Most studies suggest that lack of specifically truck stop 

facilities on the R33 (Paulpietersburg to Vryheid) and R34 (Vryheid to Ulundi) detract from the use of 

this route by road freight companies. Proposals for the establishment of such facilities in the Vryheid 

and Ulundi areas have previously been considered. 

Overloading of trucks (-): The overloading of bulk freight transport trucks on the routes in Zululand is 

said to be substantial. This overloading impacts on the quality of road infrastructure. 





Bulk freight industry in eDumbe/Abaqulusi growing (+): Indications are that there has been 

substantial growth in the road freight transport industry in eDumbe and Abaqulusi. A total of 15 

transport related businesses exist in Abaqulusi and there is an estimated seven transport businesses in 

eDumbe. Raw materials transported by these businesses include timber, maize, cattle, sugar cane 

(uPhongola) and coal from the smaller mines in the area. The number of transport businesses in the 

area suggests the development of a sector cluster which may benefit from greater levels of cooperation. 

Established sector focussed on timber industry (+/-): The timber industry made a substantial 

contribution to the establishment of the transport industry. As future growth in the timber industry will be 

limited it is not envisaged that there will be substantial growth in the industry is not expected. 

Strong informal component of transport industry (+/-): Both the taxi and the “bakkie” industry fulfil 

an important role in respectively the movement of people and the movement of goods in the area. 

These industries can be viewed as part of the informal sector of the economy. Approaches to 

supporting and strengthening these industries need to be considered. Specifically the impact of the recapitalisation 

process on the local taxi industry needs to be considered. 


The Public Transport Market (+/-): In the absence of other modes of transport it is envisaged that the 

taxi industry will continue to benefit from the transport of people between rural locations and urban 

centres. This is an established market, however, substantial growth in this market sector is not 

envisaged. 

The Bulk Freight Market (+/-): At present production in the primary sector is stagnant and major 

growth is not expected in the short to medium term (with the possible exception of the mining industry). 

Therefore, although a strong market for bulk freight services has been established, major growth in this 

sector is not envisaged. Increased activity in the manufacturing may create further opportunities 

relating to this market. 

The Tourism Transport Market (+): Depending on the extent of growth in the tourism sector 

opportunities in the tourism transport sector could be opened up. Opportunities relating to the tourism 

transport sector could include: 

 

 

 

 

 

the transport of large tour groups in buses; 

the transport of smaller groups for day excursions which would suit the mini-bus taxi industry; 

specialised game viewing vehicles; 

general vehicle rentals; and 

others. 

Further to the above, the airports in the District , both Ulundi and Vryheid, could benefit substantially 

from increased tourist activity in the District and the proposed upgrading of the P700 between Ulundi 

and the Hluhluwe-Umfolozi Game Reserve. 





Growth in other economic sectors (?): Growth in the transport sector is substantially dependent on 

growth in the agriculture, mining and manufacturing sectors. Without these industries limited 

opportunities for growth in the transport sector exists. 

Lack of facilities for trucks (-): The absence of suitable truck stops on major routes through the area 

has previously been discussed. 


Focus on improving road access (+): Provincial and local government are committed to the 

upgrading of the primary road network, i.e. the P700 and the R66. 

4.5.2.6 Synopsis: Competitiveness of the Transport Sector 

At present the District does not benefit substantially from the well developed primary transport 

infrastructure (rail, road, air). The alternative routes offered by the District should be further developed 

and marketed. Approaches to supporting the “informal” transport sector should be investigated. As is 

the case for the construction sector, this sector will benefit from development in the tourism, 

manufacturing and commercial sector. 

4.5.3 Opportunities in the Transport Industry 

Rural Road Upgrading and Maintenance: The Department of Transport continue to take 

responsibility for the upgrading and maintenance of rural roads. The upgrading of rural roads will 

continue to establish better linkages between settlements, rural nodes and municipal centres, this 

increasing access to economic opportunities. At the same time rural road construction creates much 

needed job opportunities. Through the innovative rural road maintenance programme of the 

Department further job opportunities are created and entrepreneurs are developed in the rural areas. 

To maximise the impact of these programmes of the Department of Transport there continues to be a 

need for greater coordination between the integrated development planning processes of local 

municipalities and the planning undertaken by the Department (the Department is currently guided in its 

planning by Rural Road Transport Forums whose activities are not always integrated with that of the 

municipalities). It is essential that prioritisation of road upgrading and maintenance projects is also 

guided by economic development priorities. 

Ulundi “19”: The proposed petrol filling station and information centre is viewed as a lead project 

impacting on both the transport and tourism sector in the District. This strategically located 

development will increase the attractiveness of this alternative route between Gauteng and the 

KwaZulu-Natal coast. It will also provide an opportunity for informing people passing through the area 

of the attractions which the area has to offer. 

Vryheid Truck Stop: The need for establishing a stop-over point for trucks in the Vryheid area has 

been identified in various planning studies. The viability of such an opportunity needs to be further 

investigated. 




Transport Opportunities relating to Tourism Sector: See Section 4.5.2.3. 

Transport Opportunities relating to Manufacturing Sector: See Section 4.5.2.3 

4.6 MINING 

4.6.1 Overview of the Mining Sector 

4.6.1.1 Coal Mining in the National Context 

In 2001 world coal production increased by 5.4%. However, Prevost (2002) notes that in the South 

African context coal production (saleable quality) decreased slightly by 0.6 Mt to 223.5 Mt. Production 

output improved and decreased in various coalfields and in this regard it is interesting to note that the 

production of the Vryheid coalfields increased by 54.1% 2 whereas the output of the Nongoma coalfield 

decreased by 13.6%. Of the saleable coal production in South Africa some 88% was supplied by mines 

controlled by the five larger mining groups, viz. Ingwe (Biliton), Anglo Coal, Sasol, Eyesizwe and Kumba 

Resources. Of the total (run-of-mine) production Mpumalanga’s output was 83% of total South African 

production, followed by the Free State with 9%, Limpopo with 7%, and the remaining 1% by KwaZulu- 

Natal. These figures provides a clear context of the extent of coal mining currently underway in 

KwaZulu-Natal. 

Importantly for the Zululand District is the fact that some 65.9 Mt of coal, representing more than 90% of 

South African exports, was exported through the Richards Bay Coal Terminal (transported on the 

Zululand Coal Line) during 2001, this being 1.4Mt less than the previous year. It is suggested that due 

to the slump in coal prices experienced in the year the three major exporters of coal decreased output 

and exports (Prevost 2002). 

The average price per ton for South African export coal was R245 per ton. Other prices of relevance 

were R292 per ton for anthracite, R449 per ton for bituminous low ash coal and R244 per ton 

bituminous steam coal. Compared to the previous years this represents increase of R92/t, R106/t and 

R86/t respectively (Prevost 2002). 

The domestic market for coal was 152.2Mt, translating into a value of R9 565 billion. Domestic markets 

for coal in 2001 included the electricity sector (89Mt at R51/t), the synthetic fuels sector (48Mtat R64/t) 

and the industrial sector (6Mt at R112/t). Prices of bituminous coal on the local market increase 

by10.7% in 2001, whereas that of anthracite rose by 26.5% (Prevost 2002). 

Again, important in the Zululand context is that the price of anthracite on both the local and export 

market is improving. South African output in terms of quality and volumes is also set to increase as a 

result of higher production and new mines coming on line in 2002 (Prevost 2002). 

Prevost (2002) summarises the outlook for the potential entry of empowerment groups and small mines 

into the coal industry as follows: 

2 It is assumed that this increase in production is from a small base. 




“Some understanding have been reached between the large coal producers and the newcomers in the 

industry in South Africa, especially in the area of exports and sharing of infrastructure. There could also 

be co-operation amongst companies in the task of determining the national coal reserve. Negotiations 

with companies to release unused reserves to economic empowerment companies have been more 

successful thus far, as some of the main producers decided to divest themselves of their non-essential 

reserve blocks.” 

4.6.1.2 Coal Mining in the District Context 

Coal mining historically provided a major impetus into the local economy of Northern KwaZulu-Natal. 

However, over the past 15 years a number of mines in the area ceased operation impacting negatively 

on the regional economy. The Abaqulusi Municipality was particularly affected by the closure of the 

Coronation and Hlobane mines in 1997 and 1998 respectively. 

According to Robinson and Associates (1999) the two remaining mines in the area, owned by Duiker, 

produce about 0.5 million tons per year. These mines also fulfil an important role in handling the output 

from a number of smaller mines. Zululand Anthracite, a mine owned by Ingwe, is located some 50 

kilometres from Ulundi. In 1999 it was reported that this mine experienced considerable security 

problems. Urban Econ (2002) identifies the following “Operating and Developing Coal Mines” in the 

Zululand District, viz. Hlobane Colliery, Heritage Colliery, Vryheid Coronation Colliery, Natal Anthracite 

Colliery and Nyembe Colliery. The Nongoma Municipality listed KwaZiphethe and E-Sinkonkonko 

mines as being inactive, whereas the eDumbe Municipality indicated that the Longridge mine in its area 

is inactive. Map 10 contained in Annexure D reflects the mines currently listed on the Geographical 

Information System of the Zululand District Municipality. 

A paper prepared by Mr Rod Whyte (2003), a consulting geologist active in the Vryheid area for a 

number of years, provides an understanding of the coal mining industry in northern KwaZulu-Natal. He 

notes that coal mining has been undertaken in the area since the late 19 th century, but that the coal 

reserves has been largely depleted. Only a few mines in the area are therefore still in full production. 

Historically the full range of coal, from high volatile bituminous through coking and lean bituminous, to 

anthracitic coals, has been mined in northern KwaZulu-Natal. 

Whyte (2003) distinguishes between a number of coal fields (or subsidiary basins) in northern KwaZulu- 

Natal, viz. 

the Klip River Coalfield (Newcastle/Dundee area); 

Utrecht Coalfield; 

Vryheid Coalfield; 

Zululand Coalfield (Nongoma area); 

Somkele/Msebe. 

The so-called Vryheid and Zululand Coalfields listed above are located in the Zululand District 

Municipality area. The Vryheid Coalfield stretches from west of Vryheid in a broad band to the east of 

Louwsburg and is further divided by Whyte (2003) into the Zuinguin Mountain area, the 

Hlobane/Matshongololo area, the Thabankulu/Enyati Mountain area and the Ngwibi Mountain area. 




The Zululand Coalfied starts to the north of Nongoma town and stretches in a broad band to the south. 

Portions of the eDumbe Municipality is further included into the Utrecht Coalfield. 

Whyte (2003) indicates that in the Utrecht field coal was exploited at Dumbe near Paulpietersburg as 

early as 1889. Coal production in the Vryheid Coalfield was initiated in the Hlobane and Zuinguin 

Mountain area since 1898, with coal being mind at the Hlobane Colliery continuously for more than 100 

years before the closure of the mine in 1999. 

The Vryheid Coalfield: The Vryheid Coalfield was previously a large coal producer, but Whyte (2003) 

states that the coal is now largely worked out. Historically the large mines in the area, Hlobane and 

Vryheid Coronation, produced Coking coal. Natal Amonium, NAC and several others produced 

anthracite. According to Whyte (2003) a few small remnants of anthracite are still being exploited. The 

low phosphorous content of coal in certain areas (relating to the “Gus Seam”) “encourages exploitation 

for metallurgical uses”. 

The Zululand Coalfield: The coal found in the Zululand Coalfield is high grade metallurgical anthracite. 

Whyte (2003) states that the Zululand Coalfield is the largest national producer of anthracite, but that 

this coalfield is controlled by one major company, compared to the multitude of companies in the other 

coalfields. 

Whyte (2003) concludes his paper with a statement on the future potential of coal mining in the area 

which reads as follows: “There are still mining opportunities available for small to medium sized 

operators in the coalfield, in areas which large companies discarded as being uneconomical. The 

profitability will be dependent on the cost of mining and rehabilitation, coal quality, marketability and 

export opportunities. A large pool of skills still exists” 

4.6.1.3 Current Mining Activities in the District 3 

The following mining activities of note in the District have been identified by Whyte (pers com 2003): 

Current mining of the remnant pillars in the old Hlobane Mine for coking quality coal by a local 

company 

Planned mining at the Little Hlobane area if proved to be economically viable 

Brockwell mine 15 kilometres south of Paulpietersburg mined for lean/bituminous anthracite by a 

local entrepreneur 

Two shafts (one coking/lean coal and the other anthracite) being mined at the Ami Colliery by a 

local entrepreneur 

The coal in the Zululand coalfield is almost wholly owned by Ingwe who are successfully operating 

the Zululand Anthracite Collieries (ZAC) 

A 25 million ton coal reserve at Somkele is being developed by AfriOre 

A further coal reserve of 40 million ton near Nongoma may be considered for mining in the near 

future (infrastructure problems needs to be resolved. 

The Klipwal gold mine in the uPhongola Municipality is being mined successfully by an Australian 

company 

Dolorite quarries are in existence in Abaqulusi and Nongoma. 

3 Information supplied by RJ Whyte a consulting geologist working in the Vryheid region for the past 25 years. 




4.6.1.4 Possible Future Mining Operations 

Over and above the current mining activities Whyte (pers com 2003) identifies the following potential 

mining operations in the District: 

 

 

 

Capital Coal, who owns the bulk of the coal reserves in the Abaqulusi area, is in liquidation and the 

company assets will be sold off by auction. A new black empowerment company, Leeuw Bros. has 

bought the old Anglo Coal reserves and may buy the Capital Coal reserves and assets which 

include mining equipment, a washing plant, adits for access into the coal reserve and a rail siding at 

Sikame. This is viewed as a potentially promising development. 

The Thabankulu Mountain contains reserves of coal which has been dormant for years. The 

reserves are owned by Richards Bay Minerals who regard the coal as a strategic reserve. 

According to Whyte these reserves can sustain a relatively large mining operation. 

Various other reserves in the Vryheid area is currently considered for exploitation by private 

individuals. 

4.6.1.5 Key Issues to be Considered Relating to the Mining Sector 

Key issues relating to the mining sector in the District to be considered include (Whyte pers com 2003): 

 

 

 

 

 

 

 

 

The potential for large scale mining by corporations in the District is over, however, sufficient coal is 

still available in the area to support several successful small mines. 

The coal reserves in the area is generally in thin seams, thus requiring scraper mining, which 

makes it labour intensive. 

The coal is generally anthracitic with a large proportion having a low phosphorus content. This 

makes it sought after by the metallurgical industry. 

A large pool of mining expertise among all population groups still exists in the Vryheid area. 

A key issue in developing the mines will be the identification of markets – “no markets, no mine” 

Washing facilities are necessary for a large proportion of the remaining reserves. Washing is part 

of beneficiation process before the coal can be sold. Existing plants are both being utilised. 

Illegal mining is considered to be a problem in the area; and 

there exists a local demand for coal in winter. 

4.6.2 Competitivess of the of the Mining Sector in the District 


Skills in mining sector (+): With more than a century of coal mining in northern KwaZulu-Natal 

substantial local capacity has been developed and established. It is accepted that substantial parts of 

this capacity would have been lost to the region after the closure of the key mines in the past decade, 

however, enough capacity would have remained in the area to support attempts aimed at reviving the 

sector. According to Whyte (pers com 2003) these skills exists among all groupings in the Abaqulusi 

area. 

Existing coal deposits (+/-): It is evident from Whyte’s (2003) paper that the geological conditions in 

both the Vryheid and Nongoma areas hamper mining activity, specifically that of large scale mining. He 




states that “… the whole of the KwaZulu-Natal coalfield has been extensively intruded by a number of 

Dolerite Sills and Dykes, which have had a major effect on the structure of the coalfield and the rank of 

coal found within the coalfield”. However, despite this detracting from the viability of large scale mining 

this presents opportunities for small scale mining operations. It is further understood from discussion 

that reference to the depletion of coal in the Vryheid coal field specifically refers to the depletion of coal 

that can be mined on a large scale. 

Transport infrastructure for coal export (+): The coal fields in Vryheid and Zululand is strategically 

located in terms of the Coal Line (railway line for the transport of coal). Road transport distances to the 

rail network can be minimised and the cost of transport from Zululand to the port of Richards Bay should 

also be substantially less compared to coal mined elsewhere. This provides the coal mines in Zululand 

with a comparative advantage. Location will however not be a comparative advantage should the focus 

be on the mining of coal for the South African metallurgical industry. 

Security (-): From interviews conducted for the 1999 Coal Line Study it was evident that the security of 

mine personnel in remote rural locations was an issue of concern. 


Ownership of mining rights (-): Although an analysis of mining rights in the Vryheid and Zululand 

Coal Fields has not been undertaken it is evident that large portions of the mining rights in the areas is 

still owned by the major mining companies previously active in the area. Efforts to establish a strong 

small scale mining industry in the area will be hampered by access to mining rights in the area. New 

legislation, providing for mining rights to revert back to the State, may however reduce this on the 

establishment of small mines. 

Large scale mining not viable (+/-): Opportunities for future large scale mining in the District is 

limited, but not non-existent. This obviously presents a limitation for the development of the industry in 

the area, however, this also presents the area with the unique opportunity for focussing on the 

establishment of small scale mines. 

Illegal mining operations (+/-): According to industry stakeholders there is a proliferation of illegal 

mining activity in the area. Local people continue to mine disused or closed mines without appropriate 

equipment, skills and resources. In doing this the illegal miners put their general health and even their 

lives at risk. The existence of illegal mining operations, however, illustrates that there are people who 

can derive an income from the industry on an informal basis and who are already to some extent skilled 

in the industry. The challenge for the formalisation of these activities will be to achieve formalisation 

without reducing the income of illegal miners and without pushing these persons out of the industry. 


Local demand for coal in winter (+): It is reported that a local demand for coal for energy purposes 

exists within the winter months in Zululand. The potential of these markets and the best possible 

approaches to establishing these markets should be further investigated. 




Stable export market (+): Two issues currently impact on the viability of accessing the export market 

for coal, viz. the downward trend in the price of coal (although 2001 saw some recovery) and loss of 

international market share to the United States and China. However, the growth in the international 

production of coal illustrates that opportunities still exists if quality coal can be delivered at the right 

prices and quantities. 

Domestic markets for coal (+/-): The domestic market is still the major market for coal mined in this 

country, however, the price per ton achieved on the local market is substantially lower than that on the 

export market (the 2001 price for Anthracite on the domestic market was R168 per ton compared to the 

R292 per ton achieved on the export market). Further to this, the location of mines in Northern 

KwaZulu-Natal may make it less viable to deliver to the domestic market. Substantial local markets for 

metallurgical quality coal which is found in the District do, however, exist. 


Support services for mining industry (+): Although the majority of support services for the mining 

industry had to either close down or identify new local markets for their services it is assumed that the 

core skills and expertise needed to support a revival of the mining industry is still available. 

Marketing of coal (-): An important requirement for the establishment of small scale mining activities in 

the area will be the ability of these mines to market their product. Small scale miners will lack both the 

expertise and the capacity to achieve this on their own. Possible approaches to marketing the coal 

produced by small scale miners need to be identified. 

Mine rehabilitation (+/-): Mine rehabilitation is now enforced by new mining legislation and new mines 

established are required to submit rehabilitation plans when applying for mineral rights. In the past 

mines were opened and closed without much attention being afforded rehabilitation. If funding for the 

rehabilitation of now defunct mines can be secured this in itself presents a major opportunity for local 

and district job creation. 


Support for the establishment of small mining sector (+): The government and specifically the 

Department of Minerals and Energy acknowledges that the small scale mining sector requires support 

specifically through the pre-feasibility and feasibility stages of a mining project. For this purpose a 

National Steering Committee of Service Providers to the Small Scale Mining Industry (NSC) has been 

established. Various government departments and government institutions such as Khula Enterprise 

Finance, the Industrial Development Corporation, and Ntsika Enterprise Promotion, and the CSIR is 

represented. In order to support activities on a local level the Department promotes the establishment 

of Regional Small Scale Mining Committees. Various national, provincial and local government 

departments are to be represented on these committees. The Regional Committee “is intended to serve 

as the agent to identify the exact nature and problems created by each specific, illegal and/or suboptimal 

small-scale mining operation in the region, and explore avenues through which these problems 

can be addressed. These committees will also constitute the capacity which will receive applications for 

assistance in developing greenfield projects” (DME 2003). 




Mining legislation (+/-): A strong regulatory framework for the establishment and operation of mines 

exists within South Africa. Although this should be viewed as positive this regulatory framework also 

impacts negatively on the ability of potential small scale miners to obtain access to the industry. The 

Department of Minerals and Energy is, however, fully aware of this and does provide support to small 

scale miners in this regard. 

Environmental legislation (+/-): Although a positive development in the South African mining sector 

environmental legislation also makes it more difficult for small scale miners to obtain access to the 

industry. A key requirement of the Mineral and Petroleum Resources Bill is that the holder of a 

prospecting right, mining right or mining permit must make financial provision for rehabilitation as 

prescribed I the regulations (Swart, undated). 

4.6.2.6 Synopsis: Competitiveness of the Mining Sector 

Although it is not financially viable for major corporates to mine existing coal reserves considerable 

opportunity for small scale mining still exists (in both Abaqulusi and Nongoma). The area has an 

exceptionally strong mining skills base in all communities that can be utilised. Central to the success of 

small scale mining activities will be to gain access to markets (i.e. a marketing strategy). Potential 

markets have already been identified. 

4.6.3 Opportunities in the Mining Sector 

As indicated in previous sections the key opportunity in the mining sector is the establishment of small 

scale coal mines. Small scale coal mines can, however, range considerably in size. In order to place 

the opportunity in context a small scale mine can be described as a scraper mine producing 6 000 

tonnes of coal per month. A mine such as this will cost between R1million and R3million to establish 

depending on the extent of infrastructure already available at the mine. Between 80 to 100 people will 

be employed for underground work in such a small scale mine. Above ground job opportunities will also 

be established (Whyte pers com 2003). An environmental management plan (EMP) for such a mining 

operation will cost anything up to R200 000 to prepare. 

Various opportunities relating to the mining activity will also potentially be established. These 

opportunities include: 

 

 

 

 

Mine rehabilitation 

Engineering support 

Equipment maintenance and support 

Preparing EMPs

ZDM LED - Phase 3 Status Quo Part 4 - Business Sector_21_67.pdf

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