Inanda, Ntuzuma and KwaMashu (INK) KwaZulu ... - Business Trust

Note on the INK node groupingNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz For the purpose of this study, Inanda, Ntuzuma and KwaMashu werecombined as one area, “INK”, for the following reasons:– The areas are in close proximity and the boundaries between them areblurred– While differences exist in the level of development, the areas face thesame broad challenges– The current practice by the eThekwini Municipality is to manage them asone administrative unit (There is an INK office responsible for thedevelopment of the entire area)– Local councillors are responsible for wards that cut across the three areasUUP-WRD-INK Profile-301106-IS3

Research processSummary of what we have doneNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKActivitiesDocumentsInterviewszzzDesk researchTwo visits to node:12/6/06-15/6/06: Metlocal champion, touredarea, held severalinterviews; focused onfamiliarising ourselveswith area and keyissueszzINK Economic StrategyINK Five YearBusiness Planz INK 2005-2006Business PlanzINK NeighbourhoodResearch SurveyzzzzPublic officials / civilservantsLocal bank managersLocal formal businessownersLocal informalbusiness ownersz 28/6/06-30/6/06:Continued interviews,attended SMME fair;focused onunderstating the nodaleconomyzzINK PoliticalChampionsPresentationINK Cabinet ReportzzzAcademics / privateconsultantsNGOsLocal citizen interceptsUUP-WRD-INK Profile-301106-IS5

INK poverty nodeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Research processz Overviewz Economyz Introductionz Key data pointsz Current action– Overview– External– Internalz Themesz Summaryz AppendixUUP-WRD-INK Profile-301106-IS6

OverviewNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIntroductionKey data pointsCurrent actionIntroduces the node;summarises key issuesLists pertinent factsand figuresDescribes currentinterventionsSnapshotGeographyGovernanceArea summarySpatial developmentProjectsKey challengesDemographyIncome and employmentEducationHealthDevelopment scorecardUUP-WRD-INK Profile-301106-IS7

IntroductionSnapshotNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKKey informationEst. population: 2006 580,000Inanda / Ntuzuma / KwaMashuArea 70.1 km 2Population density: 2001 6,325 Inhabitants / km 2Estimated GDP: 2004ProvinceMain town / cityR2.42 billionKwaZulu NataleThekwiniHistorical overviewInanda, the oldest of the areas, was established in the mid 1800s as a “reserve” for African people. Asizable Indian population also settled in the area, until it it was declared a “Released Area” for exclusiveoccupation by Africans in 1936KwaMashu was built by the City of Durban between 1957 and 1968 to accommodate Africans forced torelocate from other parts of the city, including Cato Manor. Throughout the 1980s, the area experiencedhigh levels of political mobilisation and criminal activityNtuzuma, the youngest of the three areas, was built by the City of Durban in 1970 as a planned AfricanTownship. Varying political affiliations and disparities in tenure arrangements and service levels sparkedpolitical violence in the 1980sSource: Stats SA Census 2001; Interviews; INK ABMOUUP-WRD-INK Profile-301106-IS8

IntroductionArea summaryNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKzzzINK is a large residential area with an estimated population of between 500,000 and600,000, situated approximately 20 km northwest of eThekwini (Durban)The INK areas have the dual status of being a presidential poverty node within thenational Urban Renewal Programme (URP), as well as being one of five Area BasedManagement (ABM) Learning Areas within the eThekwini MunicipalityAlthough Inanda, Ntuzuma and KwaMashu lie in close geographic proximity to each otherand are grouped together as “INK” for the purpose of the URP, the three areas aredistinct from one another across several dimensions:– KwaMashu and Ntuzuma comprise predominantly formal housing, whereas Inandahas large informal settlements and faces the most severe housing backlogs– Inanda is significantly worse off than the other two areas, in terms of income andemployment levels, and has the lowest levels of basic service provision– KwaMashu has been the greatest beneficiary of investment and has become thenode’s economic hub due to its favourable location in relation to Durban and majortransportation corridorszDespite these important differences, the three nodes share a common set of challenges,and as residential areas with low levels of internal economic activity, their growthprospects are strongly linked to external areas (chiefly Durban)UUP-WRD-INK Profile-301106-IS9

IntroductionSummary of key development challengesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKInterviews across INK stakeholder groups have identified a list of seven main challenges thatthe INK areas currently faceInfrastructure andservicesbacklogsInadequate housingThough main roads between KwaMashu and Durban are well developed, roads within INKremain unpaved or in disrepair, while water and electricity are still not available to large sectionsof the populationComplicated by land tenure issues, adequate housing provision remains a major challenge forINK, and there are several crowded informal settlements with extremely poor living conditionsCrime and securityAnecdotally, crime has improved significantly with the redevelopment of the KwaMashu TownCentre, however, the area still has high levels of crimeHIV / AIDSIn a country with one of the highest rates of HIV infection in the world, KZN is the most infectedprovince, and INK is one of the most infected areas within the provinceLow skilllevelsINK has limited capacity for self-initiated change, due to poor education levels and poor skillsdevelopment (from trade skills to business skills)Limited internaleconomicactivityEconomic activity that would allow for large-scale employment generation is non-existent in INK,while the majority of consumer spending leaks out of the INK areasHigh unemploymentand lowincomesFinally, as a result, and a cause, of the challenges listed above, INK faces pervasiveunemployment and widespread povertySource: InterviewsUUP-WRD-INK Profile-301106-IS10

IntroductionSegments of local peopleNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKSegment 1 Segment 2 Segment 3Name of segmentGovernment employeesExternally employedLocally employedEconomic activityAll government employees,like teachers, nurses,doctorsEmployees in unskilled(domestic work,construction) and skilledSingle entrepreneurs(spaza, construction, taxis)and cooperatives(agriculture, arts & crafts)How to increasetheir productivity?n/aReduce transport costs,improve skillsIncrease scale ofoperations andmanagement capabilitiesHow could theyincrease theirpersonal incomes?n/aImprove skillsFollow up on more diversebusiness ideasHow could theydecrease theirpersonal costs?n/aReduce transport costs;reduce job-seeking costsIncrease business skills toassist in better-runbusinessesConstraints toeconomic growththey are facingSalaries are “capped”Their skills set limit theearnings potentialAccess to market, accessto capitalInvestmentopportunities in thissegmentBuild more institutionsIndustrial parksBusiness hives and tradingcentresUUP-WRD-INK Profile-301106-IS11

IntroductionLocal people portrait – Ntombenhle HlengwaNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKNtombenhle Hlengwa (40 years of age) owns a small catering company. Afterher retrenchment in a clothing manufacturing company located in Springfield(15km away) a number of years ago, she struggled to find a new job to supporther family. With the money left over from her retrenchment package andsavings, she decided to start her own catering business, and purchase aCadac gas cooker and some basic kitchen utensils. It was an obvious choice,as she had often prepared food at family and friends’ parties. She understoodwhat people wanted and how to meet their needs.Although her market has since expanded to weddings, parties and funerals inthe greater INK community, she still struggles to earn sufficient money to paythe monthly school fees for her two children and provide money for herhusband’s job search in the Durban CBD. That is also why her family oftenhelps out, as she cannot afford to employ an assistant; nor is she able to affordimportant equipment, like a refrigerator, for the business.Typically, demand is highest over weekends and nearly non-existent during the week. However, as she is gaining experienceand her business is becoming reputed as “best caterer in her community”, demand for her services is increasing and she is ableto charge slightly higher prices, despite the heavy competition – catering is a popular start-up. Reputation is her most valuableasset, because her informal business is not listed in a directory.Her greatest challenge is finding transport facilities: taxis complicate traveling in INK, especially when pots and food trays needto be transported. She tries to use her personal network to find friends with bakkies who can help, and she prepares most foodat home, to reduce transport needs. A major improvement to her operation was the opening of the Spar at KwaMashu TownCentre, where she can now locally buy all her supplies. Before, she would travel to Game City in Durban, the cost of whichnarrowed her margins. She rarely shopped at the Shoprite in KwaMashu, because she felt that Shoprite did not sell quality food.Ntombenhle dreams of opening a B&B at her home. She believes that there is a clear demand within INK, and if she managedto find international guests, she could make use of her skills to cook South African traditional dishes for her visitors. The greatestobstacle to achieving her dreams is access to capital, because she would need to invest heavily in her house. She has, as yet,not considered approaching support projects for assistance, and would not know where to find such programmes.Source: Qualitative interviews; Monitor analysisUUP-WRD-INK Profile-301106-IS12

OverviewNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIntroductionKey data pointsCurrent actionIntroduces the node;summarises key issuesLists pertinent factsand figuresDescribes currentinterventionsSnapshotGeographyGovernanceArea summarySpatial developmentProjectsKey challengesDemographyIncome and employmentEducationHealthDevelopment scorecardUUP-WRD-INK Profile-301106-IS13

Key data pointsGeographyNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKINK lies on the urban periphery north of Durban and inland from a number of growingsuburban and commercial areas along the North Coast, including La Lucia and UmhlangaNode mapGeographical featuresSub-areasz18 wardsTransportationzzzThe area’s main transport hub (rail station andtaxi rank) is in KwaMashu, which lies 20 km fromthe city centre70% of INK residents commute to the city usingrail transport, while the rest travel by minibus taxiand busesKwaMashu is well connected to the city via railand the KwaMashu highway, but travel within thearea itself is constrained and costlyTerrain and natural resourceszINK is a primarily a residential area, and ischaracterised by a shortage of land with hillyterrain covered by dense housingUUP-WRD-INK Profile-301106-IS14

Key data pointsSpatial developmentNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe area has a mix of formal and informal housing, and over 25% of households do not havebasic access to water and electricityKey indicators: : 2001z Population Density: 6,325 persons / km 2zRural / Urban Split: Rural 0%, Urban100%z Dwellings: Formal 64%, Informal 36%zzObservationsInanda is comprised largely of informalsettlements, whereas Ntuzuma andKwaMashu are predominantly formalWhile land is generally scarce in thearea, some tracts of undeveloped landstill exist in KwaMashu and on theoutskirts of Inanda% of Households80%70%60%50%40%30%20%10%0%Note: 1For electricity, basic access is defined as having electricity as the home’s source of lighting. For piped water, it is defined as having running waterwithin 200m of the home. For telephone, it is defined as having a landline or cellular phone at the home’s disposal. Note that data are from 2001.Source: Stats SA Census 2001UUP-WRD-INK Profile-301106-ISHouseholds Without Basic Access toServices: 2001 126%30%2%Electricity Piped Water WasteRemoval67%Telephone15Separate HouseInformal Dwelling / ShackFlat in Blocks of FlatsTraditional HousingOther6%5%10%Type of Housing: 200136%43%0% 10% 20% 30% 40% 50%% of Households

Key data pointsDemographyNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe INK population is young – nearly a third are under the age of 15% of Residents40%30%20%10%31%Age Distribution: 200134%23%Total Population: 443,5991110%3%% of Residents100%80%60%40%20%Gender Distribution: 200149% Male 57%51% Female43%0%0%0-14 15-29 30-44 45-64 65 +Total PopulationHead of Household% of Households80%60%40%20%55%Household Size: 2001Total No. of Households: 110,24335%11%% of Residents100%80%60%40%20%Language Distribution: 200195%3% 1% 1% 1%0%0%1 to 3 4 to 7 8 +IsiZulu IsiXhosa English Sesotho OtherNote: 1 This figure is as of 2001 – in 2006, the INK population was estimated at 580,000Source: Stats SA Census 2001UUP-WRD-INK Profile-301106-IS16

Key data pointsIncome and employmentNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKAround a third of the INK population is not economically active, while only 27% are employed;consequently, 75% of households earn less than the subsistence level of R1,600 per month80%Annual Household Income: 200150%Employment Figures: 2001% of Households% of Employed Persons60%40%20%0%50%40%30%20%10%0%UUP-WRD-INK Profile-301106-IS56%BelowR9,60019% 18%Retail &Wholesale19%Source: Stats SA Census 2001R9,601 -19,200Community,Social &PersonalServices15%R19,201 -38,400Household SubsistenceLevel: R19,200 per annum16%Manufacturing7%R38,401 -76,80011% 10%PrivateHouseholds2% 1%R76,801 -153,600AboveR153,601Employment by Industry (Top Five): 2001Financial &BusinessServices17% of Residents% of Employed Persons40%30%20%10%0%100%80%60%40%20%0%27%93%5%40%1% 1% 0%Paid Employee Self-Employed Employer Paid FamilyWorker33%Employed Unemployed Not EconomicallyActiveWork Status: 2001Unpd.Familyw orker

Key data pointsEducationNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKPoor education and low skill levels are perhaps the greatest impediment to economicdevelopment in the INK areas80%60%40%20%0%School Attendance (Aged 5-24) : 2001 Education Levels (Aged 20+): 200174%50%22% 22%34%25% 30% 20%17%19%15% 15%13%12%9%10%7% 6%2% 1% 3%6%4% 5%67% INK64%INK38%All Nodes40%All Nodes32%Rest of SA29%28% Rest of SA30%0%None Pre-school & School TertiaryNone Some Complete Some Std 10 / HigherPrimary Primary Secondary Grade 12100806040200Number of Schools: 2005814728Inanda Ntuzuma KwaMashuKey issuesz INK currently has no tertiary educationfacilitiesz Limited English instruction limits opportunitiesfor employment in eThekwini’s knowledgeeconomyz Pass rates and university exemption rates arelowNote: Tertiary education includes university, college, technikon and adult educationSource: Stats SA Census 2001; InterviewsUUP-WRD-INK Profile-301106-IS18

Key data pointsHealthAdditionally, INK suffers from one of the highest rates of HIV infection in the countryNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK250Per Capita Health Expenditure: 200150%HIV Infection Rate: 2001 1R / Person20015010050179135199% Tested With HIV40%30%20%10%39%24%26%0INK Node Average Rest of SA0%INK Node Average Rest of SAPatients perNurse403020100Daily Number of Patients Per Nurse: 200132.426.8 26.3INK Node Average Rest of SAzzzHealth centresINK has 26 clinics and one hospital(2005)Plans exist to build two new hospitals,each providing 450 beds, which will bethe first 24-hour facility in the areaThe municipality has launched a projectto support and grow the local homebasedcare industryNote:1 Statistics for eThekwini Municipality were used; the INK rate is not likely to be lower than the municipal average, and is in all likelihood greaterSource: Health Systems Trust Reports: The District Health Barometer, 2005 and Health and Related Indicators, 2005UUP-WRD-INK Profile-301106-IS19

Key data pointsDevelopment scorecardNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKOverall, INK falls below the average for urban poverty nodes in the areas of householdincome, employment and water provisionINKUrban NodeAverageINK development scorecardAll NodeAverageNationalAverageDifference vsNationalAverageRank out ofUrban Nodes1=Best, 7=WorstPoverty incidence(% of households 75.2% 67.1% 81.0% 65.3% 9.9% 6below HSL) 1Employment rate 27.4% 33.2% 19.3% 33.7% 6.3% 4Householdswithout basic 30.3% 18.1% 55.1% 27.9% 2.4% 7access to water 2Householdswithout access to 26.1% 26.5% 50.3% 30.3% 4.2% 3electricity 3% of Adults withlow / no education 4 36.0% 32.2% 54.1% 40.3% 4.3% 6Better Than National Avg.Worse Than National Avg.Note:1HSL = Household Subsistence Level and is equal to R19,200 per annum (R1,600 per month); 2 Defined as not having piped water within a distanceof 200 m of dwelling (govt. policy on minimum basic human need); 3 Based on households that do not use electricity as a source for lighting;4All adults aged 20+ with no schooling at secondary level or above (Stats SA indicator of educational deprivation)Source: Stats SA Census 2001UUP-WRD-INK Profile-301106-IS20

OverviewNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIntroductionKey data pointsCurrent actionIntroduces the node;summarises key issuesLists pertinent factsand figuresDescribes currentinterventionsSnapshotGeographyGovernanceArea summarySpatial developmentProjectsKey challengesDemographyIncome and employmentEducationHealthDevelopment scorecardUUP-WRD-INK Profile-301106-IS21

GovernanceOrganisational chartNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKA number of government functions at various levels contribute to INK’s development;however, as the coordinator of all public sector initiatives, the INK URP / ABM Office(henceforth the INK Office), is the key governance bodyPremierMayorDept. of Housing,Local Govt andTraditional AffairsLineDepartmentsExecutiveCommitteeProvincialCoordinatorCity ManagerSustainableDevelopmentCommitteeINK URP / ABMOfficeNode ManagerLine DepartmentsDevelopmentPlanning & MgmtUnitJoint GovernmentTechnical ForumINK StakeholderForumLegendProvincial GovernmentMunicipalityForums / CommitteesSource: Adapted from GTZ, Comparative Overview of Institutional Arrangements in Urban Renewal Nodes, their Effectiveness and Emerging Lessons,November 2004UUP-WRD-INK Profile-301106-IS22

¢¢¡¡¢¢¡¡¢¢¢¢¡¡¡¡¡GovernanceThe INK ABM / URPNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe INK Office has the dual responsibility of administering the Urban Renewal Programme(URP) and the Area Based Management (ABM) ProgrammeUrban Renewal Programme (URP)Inanda and KwaMashu were identified as a URPnode in 2001 (Ntuzuma has since been included)The programme’s goals are to eradicate povertyand underdevelopment; build socially cohesivecommunities; ensure equity; build municipalcapacity to deliver; and ensure integration ofresources across the spheres of government andother agencies 1 targeted at poverty pocketsImplementation of the URP is planned over aseven-year periodArea Based Management Programme(ABM)INK was identified as one of five pilot areas for themunicipality’s ABM Programme in 2003The ABM Programme is a mechanism to implementthe municipal IDP at submunicipal levelsThe goal of ABM is to integrate the initiatives of linedepartments with those of civil society, the privatesector and other spheres of governmentThe system is being tested for a period of five years,after which it it may be rolled out to the wholemunicipalityRoles andresponsibilitiesThe INK Office’s role is to coordinate the planning, budgeting and action of all threelevels of government and their various programmes and projects in the poverty nodeIt does not implement projects, rather, the line departments are responsible for projectexecutionThe office defines its responsibilities as (1) defining desired strategic outcomes, (2)ensuring all government activity is coordinated to achieve these ends, (3) defining andrealising (opportunistic) synergies between the whole range of government actions, (4)developing INK programmes only where they are strategic and where no institutionalhome is available, and (5) gearing private sector investment and building social capitalSource: GTZ, Comparative Overview of Institutional Arrangements in Urban Renewal Nodes, their Effectiveness and Emerging Lessons, November 2004; INKPolitical Champions Presentation, March 2005UUP-WRD-INK Profile-301106-IS23

¡¡¡¡¡¡¡¡GovernanceImpact areasFour impact areas guide the INK Office’s effortsNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIntegratedgovernanceDesired Outcome: To ensure well-established systems, capacity and processesthat facilitate sustainable integrated service delivery, government policy and actionCore Initiatives:– Joint Government Technical Forum (once monthly), INK CommunityStakeholder Forum (once monthly), councillor meetings, and many othersINK OfficeProjectManagerLivingenvironmentimprovementIncomeenhancementDesired Outcome: To improve the living environment and the quality of life of theINK residents (covers crime, HIV, environment and other social issues)Core Initiatives– Victim Trauma Support Centres, Safer Cities Project, Home-based Care,Sports Facilities Upgrade, Cultural Renaissance Programme, City Greening,Housing and othersDesired Outcome: To improve the capacity of INK residents to generate incomeand wealth, and to ensure that systems are in place to retain those incomesCore Initiatives– Job Shops, Co-operatives Development Programme, Business SupportProgramme, INK Business Fair, Business Against Crime and othersInfrastructureinvestmentDesired Outcome: To coordinate infrastructure delivery (especially via spatialplanning and urban design) in the INK areas and budget / fund infrastructureprojects not adequately funded out of line department budgetsCore Initiatives:– Town Centre Rejuvenation, Bhejane Rd., P577 (highway) and othersSource: GTZ, Comparative Overview of Institutional Arrangements in Urban Renewal Nodes, their Effectiveness and Emerging Lessons, November 2004;INK Political Champions Presentation, March 2005; INK 2005/2006 Annual Business PlanUUP-WRD-INK Profile-301106-IS24

¡¡¡¡¡¡GovernanceFundingNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe INK Programme has a 2005/2006 budget of R23.9 million, and its funding stems fromvarious levels of government and line departments, in addition to the European Union30INK Programme BudgetOperationalCapitalIncomeEnhancementOperational Budget AllocationAmong Impact Areas: 2005/20062.00252022.02.021.023.97.4LivingEnvironmentInfrastructureInvestment1.901.80Rands(Million)156.0IntegratedGovernance1.750 0.5 1 1.5 2 2.5 3Rands (Million)105020.015.016.52003 / 2004 2004 / 2005 2005 / 2006FundingThe European Union supplies 15% of the overallbudgetThe municipality contributes funding from itscapital budget directly to the INK ProgrammeThe National Government contributes directly tothe INK programme through a portion of itsEquitable Share GrantSource: INK Political Champions Presentation, March 2005; INK 2005/2006 Annual Business Plan; interviewsUUP-WRD-INK Profile-301106-IS25

GovernancePerformanceNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKzzzzThe INK Office plays a crucial role in coordinating the many development activitiesoccurring in, and planned for, the INK areasIt seems to be performing this function well, and the programme is well managed by aqualified and dedicated local championIts key success has been in bringing together an array of stakeholders in INK’sdevelopment, through frequent consultations and the establishment of the monthlyStakeholder ForumOne common criticism of the INK Office has been the lack of physical presence in thearea (it is located in central Durban) and its limited accessibility to INK residents– However, in 2006 the programme opened an additional office within INK to ensurethat it is both close to INK residents, and remains close to the municipality with its cityofficezProgramme funding for the INK Office will end in May 2008, and the office’s futureremains uncertain– The loss of the INK Office would leave a void in the strategic and operationalmanagement of INK’s developmentUUP-WRD-INK Profile-301106-IS26

ProjectsAnchor projectsNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKFive Anchor Projects, in additional to several other projects, are currently underway orplanned for the INK areasProject Description Status ValueKwaMashuTownCentrePhysical infrastructure projects, business development andsupport projects, safety and security programmes (includingthe building of a new police station) are all designed toestablish the town centre as a major economic hub for the areaIn Progress (physicalinfrastructure largelycompleted)R76mInandaHeritageTrailDevelopment of several sites of historical interest in the Inandaarea for tourism includes upgrading sites and building accessroads, as well as educating tour operators.CompletedNot StatedSafer CitiesProgrammeFocus is on providing safety in schools, increasing policepresence in the area, and mobilising the community againstcrimeIn Progress /Facing DelaysR1.0mP577RoadBuilding of a 14.1 km dual carriageway urban arterial thatincorporates a new road link over the Umgheni River. In INK,this involves building 5 km of road between Duff’s Rd andInanda RdIn ProgressR550mBridgeCityA joint venture between the city and private developerMooreland Properties, Bridge City is 60 ha of commercial landthat will become a major economic hub for the area. Alsoincludes building of 450-bed hospital, upgrading of areainfrastructure, and establishment of new transportation linksIn ProgressNot StatedSource: dplg, INK Urban Renewal ProgrammeUUP-WRD-INK Profile-301106-IS27

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe “INK Economy” can be conceptualised as a combination of welfare provision,employment mostly outside of the node, and limited internal economic activityThe INK economy“Welfare Economy”The“External Economy”The“Internal Economy”zzUUP-WRD-INK Profile-301106-ISHigh prevalence ofjoblessness among theINK population– Unemployment =40% 1Result is highdependency on socialgrantszzINK is essentially aresidential area within thebroader municipality, andthe vast majority ofresidents who areemployed work outside ofthe nodeIts growth and employmentprospects are closelyintertwined with theDurban metro, which itselfis experiencing joblessgrowthNote:1 Among total population aged 15-65. Unemployment is 59% among the economically active population.Source: Stats SA Census 200129zzThere is a limited mix ofinformal and formaleconomic activity thatoccurs within the node(predominantly retail /small business)The recentredevelopment of theKwaMashu Town Centrehas increased thepresence of, and futureprospects for, economicactivity within the node

An economic map of the area highlights regions of internal economicactivity as well as external economic linkagesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKINK areaoverviewThe area’s originalneighbourhoodcommercial centreswere vandalisedduring the 1980s –most continue to to liederelictThe KwaMashu TownCentre is is the economicand transport hub of ofINK, with several largeretailers and banks,and both the main trainstation and taxi rank70% of of INK-to-Durbantravel occurs by rail at ata cost of of R3.70 (oneway) and a travel timeof of 30 minutes.Residents can alsomake the trip by taxialong the high-qualityKwaMashu Highway at ata cost of of R6.00 and atravel time of of 20 mins.Note: Map not to scale – schematic onlySource: Monitor analysisUUP-WRD-INK Profile-301106-IS#NtuzumaPinetownRailRoadInandaKwaMashuN3TownCentre#Main Transport PointsDubeVillageKwaMashuHighway30BridgeCity# Phoenix#N2Umgeni Rd. /SpringfieldUmhlangaGatewayDurbanNorthDurbanEconomic HubIndustrial ZoneLa LuciaOld Neighbourhood CentresThe Gateway Centreand Umhlanga aremajor residential andcommercial growthareas and are in in closeproximity to to INKBridge City is is a 60 hacommercial andhospital site in in an earlyplanning phaseThe Phoenix IndustrialPark provides limitedemploymentopportunities(mostly warehousing)The Durban CBD is isthe main site of of INKemployment &expenditure – it it liesapprox. 20 km fromthe KwaMashu TownCentre

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKINK has seen significantly lower real GDP growth, and has a drastically lowerper capita GDP than both the municipality and the provinceINK GDP has grown by an estimated 1.1% annually, while growth averaged 3.4% for theentire eThekwini DM; however, employment growth has been next to zero for both areasRands(Billions)3.02.52.01.5INK GDP (Constant 2000 Prices): 1995-2004CAGR (1995-2004) = 1.1%2.19 2.24 2.232.35 2.39 2.42CAGR(%)5%4%3%2%1%1.1%Real GDP Growth3.4%3.0%1.3%3.6%3.7%INKEthekwiniDMKZN1.01995 1997 1999 2001 2003 20040%1995 - 2004 2000 - 200440,0002004 GDP per Capita (at 2000 Prices)INK3%Employment Growth30,00020,00010,00005,25730,54718,029EthekwiniDMKZNCAGR(%)2%1%0%0.90%0.62%0.29%0.06%1995 - 2004 2000 - 2004INKEthekwiniDMNote: Data are based on estimates from Quantec modelSource: QuantecUUP-WRD-INK Profile-301106-IS31

Three-quarters of INK households earn less than the householdsubsistence income of R19,200 per annum, or R1,600 per monthNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKApproximately 70% of household incomes are derived from formal wages, with the remaindercoming from pensions / grants (14%) and informal economic activity60%50%Annual Household Income: 200156%INK49%South AfricaSources of Household Income: 2005Grants4%Other2%40%% of of Households Living BelowHousehold Subsistence Level:Pension10%% of Households30%20%10%19%16%INK: 75.2%South Africa: 65.3%15%13%9%7% 7% 6%Informal13%Formal71%2%1%0%Below R9,600R9,601 - 19,200R19,201 - 38,400R38,401 - 76,800R76,801 - 153,600Above R153,601Source: Stats SA Census 2001; Delca Research / DreamPlus, INK Neighbourhood Centre Research Report, September 2005UUP-WRD-INK Profile-301106-IS32

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKRetail trade, social services (e.g. education), and manufacturing stand out asthe major sectors of employment for those who have managed to find work25%INK Employment by Major Industry (Employed Population Aged 15-65): 2001 120%19%18%% of Employed INKPopulation Aged 15 - 6515%10%16%11%11%8%7%5%0%Wholesale /Retail TradeCommunity;Social &PersonalServicesManufacturingPrivateHouseholdsFinancial /BusinessServicesTransport;Storage &CommunicationConstructionNo. ofWorkers15,689 14,976 12,952 9,391 8,624 6,510 5,429Note: 1 Irrespective of employment locationSource: Stats SA Census 2001UUP-WRD-INK Profile-301106-IS34

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKHowever, the majority of INK workers tend to engage in so-called“elementary occupations” 1 like cleaning and street trading40%Occupation (Employed Population Aged 15- 65): 200135%30%33%“Elementary Occupations” 1 include domestic workers, streettraders, office cleaners, security guards, waiters, etc.% of Employed INKPopulation Aged 15-6525%20%15%14% 14%12%10%5%9%7%6%3%2%0%ElementaryOccupationsServiceWorkers /Shop & MarketSales WorkersCraft &RelatedTradesWorkersPlant &MachineOperators &AssemblersClerksTechnicians &AssociateProfessionalsUndetermined ProfessionalsLegislators,SeniorOfficials &ManagersNo. ofWorkers27,046 11,382 11,351 10,152 7,128 5,967 4,766 2,243 1,675Note: 1 As defined by Stats SASource: Stats SA Census 2001UUP-WRD-INK Profile-301106-IS35

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIt is estimated that some 95% of employed INK residents travel outside ofINK to their place of employmentEmployment vs UnemploymentAmong Economically Active INKResidents: 2001100,000Location of Employment82,02880,0004,546WithinINK60,000NotEmployed:118,699Persons(59.1%)Employed82,028Persons(40.9%)Number ofEmployedINKResidents40,00077,482OutsideINK20,0000Source: Stats SA Census 2001; Urban Econ / Expectra, INK Economic Strategy, February 2006; Monitor analysisUUP-WRD-INK Profile-301106-IS36

£££££££Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKDurban and growing towns along the North Coast provide INK residents withjobs in sectors like retail, construction, security and domestic servicesThe Durban CBDDurban lies approximately 20 km from INK, is accessible by both rail andtaxi, and is the main location of employment for INK residentsKey employment sectors include manufacturing (mainly textiles, chemicals,metal products and food products), transport (Durban is Africa’s largest seaport), security, domestic or commercial cleaning services, and retailDurban North / La Lucia / Mt Edgecombe / UmhlangaSeveral areas along the coast north of Durban are currently the fastestgrowingresidential, commercial and retail nodes in South AfricaINK is well positioned to take advantage of the associated employmentopportunities, including construction, retail, domestic services and securitySource: Interviews, www.gatewayworld.co.zaUUP-WRD-INK Profile-301106-ISGateway MallThe Gateway Mall is situated in the Umhlanga Ridge Newtown centre(approx. a 15-minute drive from INK)The R1.4 billion complex contains nearly 300 stores and draws an averageof 1.3 million visitors per month, making it one of the largest retail sites inAfricaINK residents find employment here in shops and restaurants, as well asassociated services (security, cleaning, parking, etc)37

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKINK residents also find work in the nearby mixed-use industrial areas ofPhoenix, Springfield and PinetownPhoenix: Located rightnext to to INK, mostlywarehousing andbuilding materialsUmgeni /Springfield Park:Large mixedindustrial andbusiness parkPinetown: Severalsmall industries,including textiles andsmall factoriesUUP-WRD-INK Profile-301106-IS38

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKTransportation links are well established between INK and sites of externalemploymentKwaMashu HighwayKwaMashu Train StationBhejane RdzzzzzTransportationThe KwaMashu Town Centre serves as the main transport hub for the INK areasA high quality network of roads and highways in combination with a large minibus taxi industryconnect INK to the Durban CBD and employment areas along the North CoastRoad connectivity will improve further with the construction of the P577 road, providing adirect connection between INK and PinetownAdditionally, a rail line links KwaMashu to Durban and is used by an estimated 70% ofcommutersIn fact, INK residents claim that it is easier to travel outside of INK and back, than within theINK area itselfSource: InterviewsUUP-WRD-INK Profile-301106-IS39

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKBut daily commuting constitutes a significant financial burden1,800INK Major Monthly Household Expenditures: 20052681,708Rands1,6001,4001,2001,0008001961371291147557545351600400200574Public transport costs arethe second largestmonthly expenditure forINK households0Food &GroceriesPublicTransportSavings Apparel Electricity /EnergyPersonalCarePhoneDurables & HousingAppliances ExpensesEntertainmentOtherTotal% of Total 34% 11% 8% 8% 7% 4% 3% 3% 3% 16% 100%Note: “Other” includes medical, motor vehicle, education, family support, other household expenses, water and sanitation, and child careexpensesSource: Delca Research / DreamPlus, INK Neighbourhood Centre Research Report, September 2005UUP-WRD-INK Profile-301106-IS40

INK poverty nodeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Research processz Overviewz Economy– Overview– External– InternalFocus on metro-urban areaz Key types and locations ofemploymentz Challengesz Solutionsz Themesz Summaryz AppendixUUP-WRD-INK Profile-301106-IS41

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKFocusing on the external economy of INK means understanding itscomposition, its links with INK and the trends that affect its sectorsComposition of Durban’s economyTrends affectingDurban’s economy1) Growth /Shrinkage2) Sector ShiftsUnderstanding in which sectors employmentand economic activity takes place, allows usto understand what INK needs to focus onto participate in the benefits of the economyDurban’s economy can grow, or thecomposition of the economy can change.To understand these dynamics, individualsector dynamics need to be analysedNote: Graphs are schematic onlySource: Monitor analysisUUP-WRD-INK Profile-301106-IS42

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKManufacturing, financial & business services, transportation, and retail /wholesale are the mainstays of the broader municipal economyContribution to TotalMunicipal GDP: 2004Share ofEmployment: 2004Manufacturing25.0%0.3%Manufacturing24.1%0.2%Finance & Bus. Services19.3%0.2%Community, Social, & Personal17.1%0.2%Transport & Communications16.9%0.2%General Govt. Services16.4%0.2%Wholesale & Retail Trade15.4%0.2%Finance & Bus. Services15.9%0.2%General Govt. Services10.1% 0.1%Wholesale & Retail Trade15.0%0.2%Community, Social, & Personal0.1% 5.9%Transport & Communications3.6% 0.0%Construction0.0% 2.3%Construction0.0% 3.5%Electricity & Water0.0% 2.0%Catering & Accommodation0.0% 2.2%Agric., Forestry, & Fishing1.6% 0.0%Agric., Forestry, & Fishing1.4% 0.0%Catering & Accommodation0.0% 1.1%Electricity & Water0.0% 0.5%Mining0.0% 0.5%Mining0.0% 0.3%0% 10% 20% 30%Percentage of eThekwiniMunicipality GDP0% 10% 20% 30%Percentage of FormalEmployment in eThekwiniMunicipalitySource: QuantecUUP-WRD-INK Profile-301106-IS43

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKWithin Durban’s manufacturing sector, textiles is the largest employer,followed by chemicals, paper & furniture, automotives, and food / beverage40%Distribution of Manufacturing Employment in the GDMA by Sector: 2003 135%32.6%% of Manufacturing Jobs30%25%20%15%10%14.1%13.0% 12.9%12.2%The automotive sector has acomparatively small number of large(50+ employees) firms, but theaddition of just one firm can create alarge number of jobs5%0%TextilesChemicalProductsPaper &FurnitureVehicles &AutoComponentsFoodProcessing &Beverages5.4%Electrical &ElectronicMachinery3.4% 3.1% 2.6%MetalProductsMineralProductsLeather &Footwear0.7%Iron & Steel# of Firms 1 152 123 85 41 61 31 49 24 26 8Avg. Jobs / Firm 1 350 187 249 513 326 285 114 207 162 138Note: 1 Among firms with at least 50 employeesSource: Devey, Valodia & Velia, Constraints to Growth and Employment: Evidence from the Greater Durban Metropolitan Area, 2005UUP-WRD-INK Profile-301106-IS44

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007Unfortunately, the city faces significant growth and employment challenges INKin its own rightEmployment levels in Durban are lower than in Johannesburg and in Cape Town, and the cityhas experienced flat job growth over the last decade80%Employment Rate in South Africa’s Major Cities: 2001% ofPopulationAged 15-6560%40%20%36.9%45.8%47.2%27.9%35.2%27.3% 27.0%19.4%33.4%DurbanJohannesburgCape Town0%Employed Unemployed Not Economically ActiveYear-on-Year Growthin No. ofJobs8%6%4%2%0%-2%Employment Growth in South Africa’s Major Cities: 1995 - 20041995-2004 Employment CAGR:Johannesburg: 2.10%eThekwini: 0.29%Cape Town: -0.74%1.02%-0.04%-1.21%City of JHBMunicipalityCity of CPTMunicipalityeThekwiniMunicipality-4%1996 1997 1998 1999 2000 2001 2002 2003 2004Source: Stats SA Census 2001, QuantecUUP-WRD-INK Profile-301106-IS45

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKManufacturing, the most important sector with regard to providing jobs ineThekwini, is facing negative employment growthMeanwhile, finance & business services, a sector that INK residents have less access to, isbecoming increasingly important to the municipal economy6%5%4%Total 1995-2004 Employment CAGR: 0.3%Total 1995-2004 GDP CAGR: 3.3%Analysis of eThekwini Economic SectorsFinance &BusinessServices1995-2004EmploymentCAGR3%2%1%0%-1%-2%-3%GeneralGovernmentServicesGeneralgovernmentservicesElectricity &WaterCommunity,Social &OtherPersonalServicesManufacturinManufacturing gAgriculture,Forestry &FishingMiningWholesale& RetailTradeTransport &Communication-4%-5%ConstructionCatering &Accommodation-6%-1% 0% 1% 2% 3% 4% 5% 6%Source: Monitor analysis, QuantecUUP-WRD-INK Profile-301106-IS1995 - 2004 Real GDP CAGR46= 50,000Jobs

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKOf particular concern is the fact that most sectors which are significant forINK (especially manufacturing) are threatened by decreasing employmentSectorSignificance for INKReasoningPositive employment growthFinance / business services low highWholesale/retail trade low high Retail provides considerable jobs to INK, as it requiresvaried skills and its centres are located close to INKCommunity / social / otherpersonal serviceslowhighThe required skills for activity in the sector are generallylacking in INKAgriculture / forestry / fishing low high eThekwini has limited activities in the sectorMost jobs in this sector for INK residents are located inthe area, with only a few in the external economyGeneral government services low high Owing to the skills profile in INK, INK would supply mostlyunskilled labour in this sectorNegative employment growthElectricity / waterMiningManufacturingTransport / communicationlowlowlowlowhighhighhighhighThis is a negligible employer (INK and eThekwini)This is a negligible employer, as eThekwini has verylimited mining activityThe sector is labour intensive, a major INK employer, especially insurrounding industrial parks, and allows “skills uptrading”INK is well located to benefit from the new Dube TradePort / Airport with skilled / unskilled employmentCatering / accommodation low high Low entry barriers and many indirect jobs, e.g. in cleaningservices, are provided, especially in the tourism sectorConstruction low high The labour intensity and requirement for unskilled labourmakes construction significant for INKNote: Significance levels are estimatesSource: Monitor analysisUUP-WRD-INK Profile-301106-IS47

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKFurthermore, within the manufacturing sector, clothing and textiles, thelargest employer in the Durban municipality, is in declineEmployment numbers are declining across most manufacturing industries with textiles mosthard hit1995-2004EmploymentCAGR3%2%1%0%-1%-2%-3%-4%-5%-6%-7%-8%Textiles,clothing Clothing andand leather LeatherGoods goodsElectricalMachinery andApparatusAnalysis of eThekwini Manufacturing SectorsWood andPaper;Publishingand PrintingOther Non-metalMineral ProductsFurniture &othermanufacturingFood,BeveragesandTobaccoTransportEquipmentMetals, MetalProducts,MachineryandEquipmentPetroleumProducts,Chemicals,Rubber andPlasticTotal 1995-2004 Employment CAGR: (1.9)%Total 1995-2004 GDP CAGR: 2.2%-1% 0.0 1% 2% 3% 4% 5%1995-2004 GDP CAGR= 10,000JobsSource: Monitor analysis, QuantecUUP-WRD-INK Profile-301106-IS48

This provides a challenge to INK, as most of its employees work indeclining manufacturing industriesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKSectorSignificance for INKReasoningPos. growthFurniture / OtherManufacturingMetals / Machinery /EquipmentlowhighThe required skills for the sector are generally lacking inINK; however, some potential exists to upskill labourlow high The sector requires trained personnel, which INKgenerally cannot provide on a large scaleNegative employment growthPetroleum Products /Chemicals / Plastics / RubberWood / Paper / Publishing /PrintinglowhighThis sector does provide INK employment in lightmanufacturing / chemicals, but less in large refining activitiesTransport Equipment low high This sector requires a wide variety of labour skills, which INKcan supplyTextiles / Clothing / LeatherGoodsOther Non-metal MineralProductsElectric Machinery /Apparatuslow high This sector requires a wide variety of labour skills, whichINK can supplylowhighThis labour-intensive industry provides considerableemployment for INK and has low entry barriers for labourFood / Beverages / Tobacco low high This sector requires a wide variety of labour skills, whichINK can supplylow high This sector is a negligible employer (INK and eThekwini)low high This sector is a negligible employer (INK and eThekwini)and generally requires highly skilled labourNote: Significance levels are estimatesSource: Monitor analysisUUP-WRD-INK Profile-301106-IS49

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007Conceptually, the discussed trends mean that, first, the Durban economy is INKin danger of shrinking, and secondly, INK’s share is under threat1 2Threat of a shrinkingDurban economyThreat of INK’s share in Durban’seconomyshrinkingINK’s share inDurban’seconomyINK’s share inDurban’seconomyRest of DurbaneconomyRest of DurbaneconomyIf the greater Durban economy does notembrace growth sectors and continues torely on industries like textiles manufacturing,the city will shed employment and economicsignificanceIf INK continues to service only the shrinkingsectors of the Durban economy rather thanthe growing sectors, it will not share inpotential growth and will be affected by joblossesSource: Monitor analysisUUP-WRD-INK Profile-301106-IS50

Thus, two levels of intervention are required to increase employmentopportunities for INK residents in the broader municipal economyNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK1Ensure expansion of the municipal economy:“Grow the Pie”2Improve INK residents’ linkage to the external municipality:““Grow INK’s Share of the Pie”Source: Monitor analysisUUP-WRD-INK Profile-301106-IS51

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKSince INK’s growth prospects are inherently linked to Durban,efforts to grow the Durban economy will also impact INKThe City of Durban is currently working on building five pillars of future economic growth:Build Durban as a centre of entrepreneurialactivity, particularly for micro / small businessesGrow Durban’s economyand employment opportunitiesBuild Durban as a centre of excellencein export-focused manufacturingBuild Durban as a freight logistics centre andstrengthen the related transport sectorBuild Durban’s s presence, especiallyin the growth sector of tourismRest of DurbaneconomyINK’s sharein Durban’seconomyBuild the required infrastructure / services baseand support flagship projects to catalyse growthGrowing the Durban economy will alsobenefit INK by growing the size of INK’scurrent shareSource: Monitor Group, Long Term Development Framework – eThekwini Municipality November 2001UUP-WRD-INK Profile-301106-IS52

¤¤¤¤¤¤¤¤¤¤¤¤¤¤Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe city should prioritise its efforts against those sectors withthe strongest growth potentialManufacturing:– Petroleum andchemicals– Metal and metalproductsKnowledge economy– Financial services– Telecommunications– ICTDurban has traditionally shown strong manufacturing capabilitiesHowever, growth within the sector has shifted strongly from traditional sectorslike textiles and assembly, to higher value-add sectors like chemicals andmetals – this will require new skillsEntry barriers to the knowledge economy are high, requiring high levels ofeducation and technological literacyConsiderable growth will continue to be seen in the financial and Informationand Communications Technology (ICT) sectors, with opportunities foremployment arising in call centres, processing functions and back officeoffshoringTransport and logisticsAlthough the sector has seen a reduction in employment in the last ten years,Durban is strategically positioned to grow the sectorThe new Dube Trade Port and international airport will create new employment,and with the transport hub relocating to the north, INK is well positioned tobenefit from associated employment opportunitiesRetail and servicesThe tertiary sector will continue strong growth, as the Durban economydevelops from a secondary-sector economySource: Monitor analysisUUP-WRD-INK Profile-301106-IS53

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKGrowth prospects for Durban are limited in the short term, however, ifthe city can realign its economy, the long term is promisingIt will be crucial for the city to convert its plans, and leverage unused potentialShort-term outlookLong-term outlookzzCurrently, Durban is badlypositioned on a sector levelto achieve growth required foremployment creationThe outlook for Durban’ssectors is unlikely to changein light of globalisation andthe developments of theSouth African economyRequired change has beentargeted,i.e. strategic sectors havebeen definedDurban has theendowments needed foreconomic restructuring,e.g. Infrastructure andgeographic locationzzIf Durban is able to convertits plans to strengthengrowth sectors like tourism,logistics and high-valuemanufacturing, then bothemployment and growth canbe createdThere is a lack of informationon which actions Durban willrely on to implement its fivepillarplan, highlighting therequirement for greater actionorientation in planningSource: Monitor analysisUUP-WRD-INK Profile-301106-IS54

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKAs well as growing the Durban economy for more employment creation,growing INK’s share in that economy can be exploredz Currently, there is no explicit reference either inthe IDP or the INK ABM Office’s documentation onhow INK’s share of the Durban economy can begrownz Few of the direct linkages between INK’s internaland external economy are explored in policydocuments; the spatial development plan that iscurrently in development is starting to look atspatial issues to link INK more intensively witheThekwiniGrow INK’s Share in Durban’s Economyand Employment OpportunitiesRest of DurbaneconomyINK’s share inDurban’seconomyz Some initiatives like the “Job Shop” address theneed for making Durban’s job market moreaccessible to INK labourSource: Monitor interviews, INK Draft Spatial Development PlanUUP-WRD-INK Profile-301106-IS55The difficulty from a system-wideperspective is that this approachcannibalises employment from other areas ifthe total economy does not grow

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKINK’s share of labour in the Durban economy depends on three leversthat need to be individually addressed to increase employmentI.Demand for employeesIII.Transaction costsII.Supply of employeesDemand for INK employeeswill be governed by the sizeand labour requirement ofDurban’s economy, and bythe competitiveness of INKin relation to other areasThe higher transactioncosts are, the more likelythat excess supply ordemand will not be met, assearch and informationcosts become prohibitivelyexpensiveSupply refers not only tothe availability of labour,but also includes thecorrect skills, capabilities,price and profile ofpotential employeesz In a theoretical ideal case, supply and demand reach an equilibrium, i.e. employers are able to fill theirrequired positions and workers find employment. Salaries are the mechanism used to ensure thatdemand and supply match upz In practice, however, labour laws, transaction costs, minimum salaries and the existence of otherrelevant external job markets lead to equilibrium not being achieved or being skewedz The total employment equilibrium achieved can still be influenced by the three levers of demand,supply and transaction costs, all of which are within the analysis scope of this projectUUP-WRD-INK Profile-301106-IS56

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKI. If Durban’s demand for employees from INK were to increase, thenINK would benefit more from its external economyProblemActionsProspectsEconomicrequirementsforlabourz As was shown earlier, INKsupplies labour to mostlyshrinking sectors, wherelabour demand is very lowzzIn order to bring the strongdemand of growth sectorsand low demand of otherlabour into betteralignment, supply must beaddressedAlternatively, the shrinkingsectors need to bereassessed to establishhow their labour demandcan be maintainedzzIt is unlikely that demandfor shrinking sectors willpick up againAt the same time, demandfor growth sector labouris likely to persist,possibly without therequirement for additionalinterventionsINK’scompetitivenessinrelation toother areasz INK was for many years toodistant from Durban’s maineconomic hub of theSouthern Industrial Basinz This has changed with theboom experienced inNorth Durban, includingUmhlangazBy improving access tothe boom area, e.g. bybetter transport links, INKbecame a relevant sourceof labour for the Durbaneconomy, increasing thedemand for labour fromINKzThe demand for labourfrom INK should continueto grow, as the NorthCoast experiences furthergrowth and developmentslike the Dube Trade Portand the new internationalairportSource: Monitor analysisUUP-WRD-INK Profile-301106-IS57

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKII. The supply of suitable personnel from INK for the external economyis severely hampered a mismatch between supplied and required skillsProblemActionsProspectsA skillsmismatchresults inthe supplyof adequatelabourbeing toosmallz Growth in eThekwini willtake place in theknowledge economy andhigh value-addmanufacturing sectorsz The current INK labour forceprofile is badly matchedwith Durban’s future labourrequirementsz Construction and trades willalways remain important,but INK labourers arepredominantly unskilled inthese domainszIncrease English languagetuition to prepare pupils forpotential employment in theknowledge sectorz Ensure computer literacyz Improve quality of /facilities in generalschoolingz Establish tertiaryinstitutions in INK orimprove linkages to externalinstitutionszzEstablish local tradeschools / apprenticeprogrammes to “upskill”existing labourAnalyse future labourrequirements and developskills training projectsaccordinglyzzzCurrently, there is noprogramme aligned toDurban’s employmentrequirements that explicitlytargets skills developmentThe “Economic SectorDevelopment Programme”focuses on training INKinternal businesses foreThekwini’s “strategic”sectorsThe programme should alsotrain for employment inDurban businesses,otherwise INK will notbenefit from Durban’seconomic growthSource: Monitor analysis, interviewsUUP-WRD-INK Profile-301106-IS58

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIII. The reduction of transaction costs will integrate INK labour into theexternal economy, as supply and demand of labour is better matchedProblemActionsProspectsHigh transactioncostsresult insupply anddemand oflabour notachievingequilibriumz Lack of information is akey inhibitor of integrationinto the municipal economyz Businesses and labourwithin INK lack the meansand capabilities to markettheir products andservices outside INKz In part due to hightransportation costs, INKresidents are not aware ofwork opportunities outsideof the INK areas andstruggle to address thesituationzzzHelp INK businessesadvertise their productsand services andunderstand marketopportunities outside ofthe INK areasProvide the link betweenINK labour and employersand recruiters by acting asa “matchmaker”Provide INK residents witha central location toaccess employmentinformation, if possible inINK itselfzzzzThe “Job Shop” , which isin the first phases ofimplementation, will haveoffices within INKThe office allowsemployers to search foravailable skilled labour inINK by means of adatabaseAt the same time, local jobseekers can use thedatabase to find availablepositions and understandemployment requirementsConstruction of roads,e.g. the P577, will lowertransaction costs for INKlabour furtherSource: Monitor analysis, interviewsUUP-WRD-INK Profile-301106-IS59

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIntegrating the three levers that describe INKs external job marketindicate that further jobs in Durban can be captured by INK residentsDemand for employeesTransaction costsSupply of employeesz Demand for employeesfrom INK is expected torise with time,especially as DurbanNorth develops;however, the profile ofdemand is changingz Initiatives are alreadyunderway to lower the(currently considerable)transaction costs thatexist between the INKand Durban labourmarketsz Considerableinterventions arerequired to ensure thatthe supply of labourfrom INK is adequateto meet the needs ofthe Durban economyThe Durban economy will continue to be the crucial employment generatorfor INK, and by intervening on the level of transaction costs and adjustinglabour supply, demand for employees can be harnessedSource: Monitor analysisUUP-WRD-INK Profile-301106-IS60

INK poverty nodeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Research processz Overviewz Economy– Overview– External– Internalz ThemesFocus on INK areasz Key economic activitiesz Challengesz Solutionsz Summaryz AppendixUUP-WRD-INK Profile-301106-IS61

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKEmployment potential exists in three areas of the internal economy, ofwhich “high potential private business” is the most promising1Public sectorz The public sector provides investment in human andinfrastructure capital, which in turn creates employmentz However, the total additional employment potential is verylimited, as any given population size has a long term “ideal”public sector employment level, determined, for example,by the number of schools and hospitalsLowAdditionalemploymentpotential2Low potentialprivate businessz INK is primarily a residential area – this results in certainindustry sectors being unsuitable for local development, e.g.processing industriesz Additionally, INK as an area has further characteristics, likelack of open expanses of land and proximity to Durban, whichaffect viability of industries like tourism and manufacturingLowAdditionalemploymentpotential3High potentialprivate businessz Still, residential areas often exhibit very strong demand forservices and retail opportunitiesz As these are hardly provided in INK at present,considerable potential remainsHighAdditionalemploymentpotentialSource: Monitor analysisUUP-WRD-INK Profile-301106-IS62

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKINK has a small, poorly diversified internal economy characterised by astrong reliance on the public sector and a limited private sector presenceFor an area with over 500,000 residents, INK supports just 4,546 jobs, approximately 70% ofwhich are supplied through government (either directly or in the education and health sectors)Number of Jobs in INK,by Sector: 2006Number of Institutions / Businessesin INK, by Sector: 2006Education &Training2922 (64.3%)Education& Training107(37.4%)Services377 (8.3%)Services40(14.0%)Retail363 (8.0%)Retail39 (13.6%)Government200 (4.4%)Medical 123 (8.0%)Building &Construction169 (3.7%)Automotive &Transport16 (5.6%)Automotive& Transport166 (3.7%)ReligiousOrganisations15(5.2%)Medical 1129 (2.8%)Building &Construction15 (5.2%)ReligiousOrganisationsOther75 (1.6%)145 (3.2%)Total Employees 4,546Total Population: 580,000GovernmentOther14 (4.9%)17 (5.9%)Total: 2860 1,000 2,000 3,000 4,0000 50 100Note:1 Includes traditional healers and private facilitiesSource: Urban Econ / Expectra, INK Economic Strategy, February 2006; North Area Economic Plan, 2005, VancometricsUUP-WRD-INK Profile-301106-ISPublicSectorPrivate Sector :Low Potential63Private Sector:High Potential

The public sector contributes to the local economy throughsocial grants, project funding and employment in public institutionsNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Social grants constitute an important source of income for many INK residentsSocial grantsz Welfare spending reaches approximately 17,700 people in INK, with monthlypayouts totalling R11.9 million 1Public worksand projectfundingDirectemploymentz Government and its various line functions are the key funders of developmentprojects in the INK areasz These generally tend to be construction and infrastructure related, and throughtender processes, are a significant source of temporary employment for localsz Current anchor projects amount to R88 million in investments by line functions,and a further R34m by the municipality, and have created 409 permanent and353 temporary positionsz Finally, it is estimated that nearly 3,000 local jobs are maintained in Stateeducational institutions and a further 129 in health carez Additionally, some 200 people are employed by local governmentz Teachers, health care workers, and government officials are the most affluentmembers of INK society, and their salaries are the lifeblood of the local retailand service economyNote:1 Based on payments at the Department of Social Development’s pay point at KwaMashuSource: Cabinet Report on INK, Monitor analysisUUP-WRD-INK Profile-301106-IS64

¤¤¤¤¤¤¤¤¤¤¤¤¤Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKSome private sector opportunities exist, which are extremely small andoffer limited employment potentialTourismCurrent statusInanda Heritage Trail– Gandhi Settlement– Ohlange Institute– Inanda Seminary– Shembe ChurchRationale for loweconomicpotentialLittle tourist interestLow job generation (largely selfguidedday travel, no restaurants oraccommodation)AgricultureSome small vegetablegrowing cooperativesoperate in INKOne small start-up dairyfarmSignificant scale not possibledue to shortage of landProcessingindustriesNone in the INK areasLimited land availabilityIndustry already exists nearby inmore competitive areas, labour willtravelManufacturingSmall-scale home manufacturingis taking place (mainlyfurniture and clothing)Light manufacturing zone isplanned for Bridge City areaLack of an existing manufacturingcluster makes it difficult to attractplantsOther manufacturing areas existnearby, including the PhoenixIndustrial ParkSource: InterviewsUUP-WRD-INK Profile-301106-IS65

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKLike all residential areas, rich or poor, local economic activity is almostentirely based on private sector retail and services basedPrivate business activity is characterised by a mix of predominantly informal SMME’s andexternally owned national retail chainsThe Businesses of INKExternalOwnershipLocalGrowing in numberAttracted by an improvingconsumer economy andcommercial centredevelopmentsIncludes Spar, majorbanks, national fast foodchains, furniture andclothing retailersLimited in numberMainly comprisesconstruction companiesthat have formalised inorder to gain access togovernment tendersn/aLarge in number buthighly limited in scaleTypically includes taxis,taverns, food stalls,salons and tuck shopsAlso catering, home-careservices, arts & crafts,and contracting / tradesworkFormalEconomyInformalSource: Monitor analysis, Monitor interviewsUUP-WRD-INK Profile-301106-IS66

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe KwaMashu Town Centre is INK’s main economic hub and thekey transport node for the area, where most retail activity takes placeThe Town Centre Rejuvenation Project, which is underway, has attracted a number of largechains to the area, including Spar, Cash Build, Jet Stores and Standard BankSports andrecreationfacilitiesWelfare officesGreening ofarea androadsPotential forhigh-end,high-densityresidential flatsNational brandshoppingfacilitiesTaxi rank andtrain stationTrading hivefor small localbusinessesPolice stationto increasesafetyInformaltradingfacilitiesSource: INK ABM officeUUP-WRD-INK Profile-301106-IS67

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKOther significant economic hubs include Dube Village in Inanda, and,eventually, the 60 ha Bridge City commercial siteIn addition, a number of old vacant commercial sites are to be redevelopedCurrently activeDube VillagezzA privately built shopping centre along the KwaMashuhighway, with banking and retailing facilities (Nedbank, PEPStores, OK Furniture and others) constitutes the hub of DubeVillageThere are plans to construct a taxi rank in the near futureIn planningBridge CityNeighbourhoodCentreszzzzBridge City is a 60 ha mixed commercial and public complex inthe early planning phase as a public private joint venture betweenMoreland developers and the municipalityPlans include shopping, entertainment, civic buildings, a hospital,magistrates’ courts, mixed commercial, office and residentialbuildings, petrol stations and an inter-modal transport facilityThere is a desire to redevelop 12 derelict old neighbourhoodcentres throughout INK, which were destroyed in politicalviolence during the 1980sHowever, redevelopment plans have been halted byunresolved ownership issuesSource: Monitor interviews, Moreland websiteUUP-WRD-INK Profile-301106-IS68

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe aim of growing the internal economy can best be achieved bystrengthening formal local enterprises. There are two ways to do this1 2Drive local business growthEnable external investment catalystThe Businesses of INKThe Businesses of INKExternalOwnershipLocalGrowing in numberExternalAttracted by improvingconsumer economy andcommercial centredevelopmentsIncludes Spar, majorbanks, national fast foodchains, furniture andclothing retailersLimited in numberMainly comprised ofconstruction companiesthat have formalized inorder to gain access togovernment tendersFormal LocalLarge in number buthighly limited in scaleTypically includes taxis,taverns, food stalls,salons and tuck shopsAlso catering, home careservices, arts and crafts,and contracting / tradesInformal workLocalExternalOwnershipLocalGrowing in numberExternalAttracted by improvingconsumer economy andcommercial centredevelopmentsIncludes Spar, majorbanks, national fast foodchains, furniture andclothing retailersLimited in numberMainly comprised ofconstruction companiesthat have formalized inorder to gain access togovernment tendersFormal LocalLarge in number buthighly limited in scaleTypically includes taxis,taverns, food stalls,salons and tuck shopsAlso catering, home careservices, arts and crafts,and contracting / tradesworkInformal LocalFormalEconomyInformalz Local formal businesses capture localopportunities and pass on benefits to the localcommunity and must therefore grow stronglyz Barriers to entry to informal business as“business start-up segment” should bereduced, and informal business then besupported in their move to becoming formalFormalEconomyInformalz External investment will contribute considerablyto the growth of local formal businesses, asthey attract local spending and can use localsuppliersz External investments also create localemployment, increasing local spend, whichbenefits local businessesSource: Monitor analysisUUP-WRD-INK Profile-301106-IS69

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKDiscussions with local entrepreneurs, external investors and other relevantstakeholders identify seven critical constraints on local business growthThese constraints must first be understood, and then initiatives identified to address possibleshortcomings1Drive local business growthAccess tocapitalExternalOwnershipLocalGrowing in numberExternalAttracted by improvingconsumer economy andcommercial centredevelopmentsIncludes Spar, majorbanks, national fast foodchains, furniture andclothing retailersLimited in numberMainly comprised ofconstruction companiesthat have formalized inorder to gain access togovernment tendersFormal LocalThe Businesses of INKLarge in number buthighly limited in scaleTypically includes taxis,taverns, food stalls,salons and tuck shopsAlso catering, home careservices, arts and crafts,and contracting / tradesInformal workLocalFormalInformalEconomy“ Competition”fromexternalareasCrime andsecurityLandavailability/tenureConstraints toeconomicgrowth/employmentinINKScaleSkills andcapabilitiesMarketaccessSource: Monitor analysisUUP-WRD-INK Profile-301106-IS70

Constraints on local economy – Access to capitalNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK“ Competition”fromExternalAreasCrime andSecurityLandAvailability/TenureAccess toCapitalConstraints toEconomicGrowth/EmploymentinINKScaleSkills andCapabilitiesMarketAccess“No, we do not do long-term loans –people cannot give you any collateral, sowe limit our risk by giving a maximum of6 months’ loan”– Bank agent in INKzzzzzzzThe constraint cited most frequently by local INKbusiness owners, both formal and informal, isaccess to capitalSavings are often insufficient to fund ventures, anddisposable income is used for daily necessitiesNumerous lending institutions have a presence inthe area, including all of the major SA banks, theIthala Development Finance Corporation, andseveral private microfinance enterprisesHowever, lending decisions are not made at thelocal branch level, requiring loan applicants to travelinto the cityFrom the lenders’ perspective, informationasymmetries and risk profiles are too great, in mostcases, to approve financingAccording to banks, most applicants have– No / weak business plan– No savings account or account history– No assets (e.g. property) to offer as securityThe issue of access to capital, therefore, is linkedthe broader problem of business skills deficienciesSource: InterviewsUUP-WRD-INK Profile-301106-IS71

Constraints on local economy – Skills and capabilitiesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK“ Competition”fromExternalAreasCrime andSecurityLandAvailability/TenureAccess toCapitalConstraints toEconomicGrowth/EmploymentinINKScaleSkills andcapabilitiesMarketAccess“How can I grant a loan to somebody whois unable to write a basic business plan,never mind not knowingwhat ‘cost of goods sold’ is?”– Bank manager in INKzzzzzzSkills deficiencies and inadequate capabilities lie atthe core of a weak INK economyPoor business skills constrain existing entrepreneursfrom growing their businesses and prevent newones from getting their ideas off the groundThe most critical business skill gaps include:– Business plan writing– Inventory management– Financial management and pricing / costing– Advertising / marketingThe municipality has set up a Business SupportUnit, but it does not have a location within the INKareas and local business owners are generally notaware of the service or how to access itA lack of trade skills also serves as a majorconstraint on the local construction business and onlabour employed in the sectorIn the absence of adequately skilled labour,contractors are not able to win government tendersor must import the skilled component of theirworkforce from outside the nodeSource: InterviewsUUP-WRD-INK Profile-301106-IS72

Constraints on local economy – Market accessNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK“ Competition”From ExternalAreasCrime andSecurityLandAvailability /TenureAccess toCapitalConstraints toEconomic Growth /Employment inINKScaleSkills andCapabilitiesMarketAccess“Our biggest challenge is findingcustomers. Right now there is a whitewoman who buys our stuff sometimesand sells it overseas for a huge price, butshe pays us almost nothing”– Local craft co-op memberzzzzzzzThe issue of inadequate market access includes:– Lack of adequate trading space– Weak or no access to consumers and marketsoutside of INKA frequently cited constraint on informal business isthe absence of a secure, permanent, high-trafficarea to trade inFurthermore, existing informal trading spaces lackkey amenities like storage, electricity, water andrefrigerationAs a result, small businesses, which currently tendto operate from owners’ homes, are not able toreach a sizable consumer base within INKSimilarly, artists and craft producers, in particular,have low internal demand for their product and havedifficulties reaching an external consumer baseSeveral INK craft makers noted that they currentlysell their works to a “white woman” who buys in bulkat exceptionally low prices and then sells theproducts in overseas marketsA “digital hub” with internet access was only recentlyestablishedSource: InterviewsUUP-WRD-INK Profile-301106-IS73

Constraints on local economy – ScaleNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKAccess toCapitalzMany SMMEs are disadvantaged by limitedproduction and / or workforce scale“ Competition”From ExternalAreasSkills andCapabilitieszThis is particularly true of construction, agriculturaland tuck shop businessesCrime andSecurityConstraints toEconomic Growth /Employment inINKMarketAccesszConstruction companies are often unable tocompete for tenders because they are too small,and developers / engineers do not want to incur theinefficiencies associated with using several differentcompanies on one projectLandAvailability /TenureScale“The owner of the store in INK is allowed tobuy from wherever he wants, but I can’t thinkof anything that INK produces, or producesenough of, that he could buy. There is somevegetable growing, but simply not enough”– Representative from large grocery chainzzAgricultural producers require a minimum scale togain contracts to supply large local grocers – thiscan be difficult to achieve, owing to a lack of landTuck shops lose out on discounts due to insufficientpurchasing volumesSource: InterviewsUUP-WRD-INK Profile-301106-IS74

Constraints on local economy – Land availability / tenureNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK“ Competition”From ExternalAreasCrime andSecurityLandAvailability /TenureAccess toCapitalConstraints s toEconomic Growth /Employment inINKScaleSkills andCapabilitiesMarketAccess“You practically have three layers ofownership in some cases – just imagineplanning a commercial development andwading through the required paperwork.”– Municipal project managerzzzzzAt the most basic level, there is little undevelopedland available in INK, which prevents opportunitieslike larger scale manufacturing and agriculturalproduction / processing– Land availability is fixed and little can be done toalleviate this constraintOn another level, however, there is a complicatedhistorical land tenure situationIn most cases there are multiple claims to a givenpiece of land and no clear ownerAs a result, it is difficult and cumbersome to transferland ownership rightsThis serves as a major deterrent to would-becommercial investorsz The same situation exists in the property market –people often move into the homes of friends orfamily who have died, without acquiring formalownership rightszAs a result, they are unable to utilise their home orproperty to access creditSource: InterviewsUUP-WRD-INK Profile-301106-IS75

Constraints on local economy – Crime and securityNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKzSince the 1980s, crime has been rampant in INKAccess toCapitalzRobberies and employee theft deter small businessowners from opening or expanding operations“ Competition”From ExternalAreasSkills andCapabilitieszMore critical is that high crime incidence deterslocals from shopping in the areaCrime andSecurityLandAvailability /TenureConstraints s toEconomic Growth /Employment inINKScaleMarketAccess“The biggest problem is crime. Whenthere are no police it can be verydangerous for businesses. But if a policecar is visible, things are usually OK.”– Local business ownerzzz– Rather, they make the trip to large malls likeGateway Centre where security is providedExternal investors are unlikely to invest in INK if theyfeel either personally unsafe, or perceive a threat totheir assetsThe situation has drastically improved in recentyears, however, with the rejuvenation of the towncentre, which has included better lighting and alarge police presenceThe situation should improve further with theconstruction (currently underway) of a large newpolice station directly in the town centreSource: InterviewsUUP-WRD-INK Profile-301106-IS76

Constraints on local economy – “Competition” from external areasNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK“ Competition”From ExternalAreasCrime andSecurityLandAvailability /TenureAccess toCapitalConstraints s toEconomic Growth /Employment inINKScaleSkills andCapabilitiesMarketAccess“If I get double the return on investmentin Umhlanga, why should I invest inKwaMashu – I love the place, but hey …”– ConsultantzzzzThe INK internal economy competes directly withbetter positioned external areas in terms ofconsumer spending, property investment andcommercial investmentINK consumers are willing to incur the time andexpense to travel to the Durban CBD and / or theGateway Centre in order to experience moreattractive shopping destinations complete withentertainment centresFurthermore, the development of a “higher-end”property market within INK is constrained by the factthat the area is located next to other lower incomeareas with comparatively nicer homes and safersurroundings– Wealthier residents prefer to move to nearbyareas like Newlands and Phoenix rather thanupgrade their homes in INKFinally, the presence of industrial clusters near theINK areas prevents the construction of such areaswithin INKSource: InterviewsUUP-WRD-INK Profile-301106-IS77

¥¥¥Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKAlthough current and planned projects attempt to address constraints oninternal growth, they lack the required reach and uptakeINK Job ShopJob and job seekerdatabases, skillsdevelopment to increaseemployability, job officeCurrent initiativesEconomic SectorDevelopment ProgrammeSector-specific projects togrow sectors deemed asstrategic growth sectors inthe municipalityProgramme offices are located in the city and thus do nothave a local presenceA survey on eThekwini indicated that 88% of sampledinformal economy SMMEs had not received assistanceAwareness about support institutions is very low andmany institutions (e.g. SEDA) are unknown to SMMEsAccess toCapitalJob CreationFacilitation ProgrammeGeneral economicworkshops to ensureunderstanding of basicbusiness backgroundBusiness SupportUniteThekwini unit that supportsdevelopment growth frominformal training to incubatorstatusSEDA SatelliteOfficeAssistance for writingbusiness plans and tenderapplications; businessregistration assistanceBusiness SkillsSupport ProgrammeDevelopment of existingbusinesses. Current initiativeis the foundation of a INKChamber of Business“ Competition”Skills andFrom ExternalCapabilitiesAreasConstraints s toEconomic Growth /Employment inCrime andSecurityINKMarketAccessLand Availability/ TenureScaleSource: Monitor interviews, A. Kesper, B. Rajaratnam: Conditions and constraints to growth for formal SMMEs in eThekwini/Durban, p.40, C. Skinner:Falling though the policy gaps?, p.13UUP-WRD-INK Profile-301106-IS78

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIt is suggested to reposition many of the programmes and offer anintegrated support system to SMMEsCreate a single SMME Business SupportCentre in INK ...… and back up the initiativewith baseline development activities… that is linkedwith educationalfacilities… that offers SMMEsstart-up consultingand continuousmentoringInstitute a land reformprogramme… that assistsSMMEs infinding bothinternal andexternalcustomers… that providesaffordable start-upoffice and shopspace… thatassists inidentifyingsources ofcapitalReduce crimeCreate awareness of thebusiness support centrein the INK communitySource: Monitor analysisUUP-WRD-INK Profile-301106-IS79

Thoughts on initiatives to support local SMME growthNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKAccess toCapital“ Competition”From ExternalAreasConstraints s toEconomic Growth /Employment inCrime andINKSecurityLand Availability/ TenureScaleSkills andCapabilitiesMarketAccessz Improve development banking functionalityand volumez Unlock property market to open path tocollateral based loansz Open local, central information centres forbusiness start-up financingz Build a local business support centre toprovide mentoring and consultation to newSMMEs and teach basic business skillsz Develop large-scale skills developmentinitiatives in relevant employment sectorsz Introduce trade schools / tertiary educationz Provide affordable trading space for informaland small formal SMMEs, e.g. build “hives”z Introduce a “marketmaker” institution thatbrings together demand and supply partiesz Encourage mergers / cooperation / internalnetworking of SMMEs, especially in theconstruction sectorSource: Monitor analysis, interviewsUUP-WRD-INK Profile-301106-IS80

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThoughts on initiatives to support local SMME growth (Continued)z Provide skills training to increase labourmarket competitivenessz Address constraints to growth to makeeconomy more dynamic and thus attractinvestmentz Consult SMMEs on sector-specificrequirements for addressing competitionThese measures would benefit both externalinvestments / businesses and local SMMEs“ Competition”From ExternalAreasAccess toCapitalSkills andCapabilitiesz Increase neighbourhood awareness andcrime programmesz Address grievances about corruption intendering processes and publicadministrationCrime andSecurityConstraints s toEconomic Growth /Employment inINKMarketAccessz Target area for rapid land reform andconsolidationz Reassess available public land and openfor market accordinglyz Support training initiatives about propertyvalues to open property marketLand Availability/ TenureScaleSource: Monitor analysis, interviewsUUP-WRD-INK Profile-301106-IS81

Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKLocal business growth can also be supported by attracting externalbusiness to invest in INKThere is a requirement to jumpstart economic activity by attracting large retail chains into INKif local businesses are to start developing in the area and more employment is to be created2ExternalOwnershipLocalEnable external investmentcatalystGrowing in numberExternalAttracted by improvingconsumer economy andcommercial centredevelopmentsIncludes Spar, majorbanks, national fast foodchains, furniture andclothing retailersLimited in numberMainly comprised ofconstruction companiesthat have formalized inorder to gain access togovernment tendersFormal LocalThe Businesses of INKLarge in number buthighly limited in scaleTypically includes taxis,taverns, food stalls,salons and tuck shopsAlso catering, home careservices, arts and crafts,and contracting / tradesInformal workLocalFormalInformalEconomyBenefits of big formal business investmentz Without the presence of national brands,customers will spend outside the areaz Big formal businesses create considerableemployment (e.g. Spar: 120 formal employees)z This leads to skills development, which canthen be transferred to the SMME sectorz Big business invests in infrastructure andsecures infrastructure maintenanceIssues with big formal business investmentz Small retail stores are unable to competewith the large formal businesses on variety oron price, as they do not have the samesupply chain strengthsz Large formal business have a strong brandname, which small operators cannot competewithSource: Monitor analysis, interviewsUUP-WRD-INK Profile-301106-IS82

¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKInitiatives are required to ensure that local people benefit from continuedexternal investmentEmployment creationBusiness networkingTraining / SkillsEmployment agencyBusiness creationSMME growthAimImprove likelihood thatlocal workforce isemployed in externalinvestmentsAssist local workforce inidentifying and makinguse of new employmentopportunitiesAssist localentrepreneurs in linkingup with externalinvestorsAssist SMMEs in theirability to take oncontracts by externalinvestorsExampleof applicabilityLabour requirementsexist in retailmanagementcapabilities (Spar’smanagers are fromoutside the area)Also, there is a lackof advancedtrades/crafts skills,e.g. in constructionProvide a databasewith currentemploymentopportunitiesUse database todevelop skillsdevelopmentprogrammesAssist employees inapplying to jobopportunities indatabaseEnsure that localideas and externalcapital meetEnsure externalinvestment takesplace with localpartners / knowledgeEnsure adequatescale for constructioncompanies to takefull tenders instead oflabour subcontractingEnsure adequatescale for agriculturalcooperatives tosupply retail chainsAssist in tenderingapplication processesNeed toestablish:Academies,workshopsJob shopInvestment promotionagencyBusiness advicecentresSource: Monitor analysisUUP-WRD-INK Profile-301106-IS83

¥¥¥¥¥¥Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe success of Spar in the KwaMashu town centre shows that INK is ripefor external investmentzzzDescriptionSpar opened a store in the new KwaMashuShopping Centre in April 2005It offers the full Spar product line and providesa high quality shopping environment, despitetargeting low-income consumersIn its first month of operations, the storesurpassed its breakeven turnover; it currentlydoubles its breakeven on a monthly basisLessonsSpar’s ongoing success in KwaMashushows that the area has emerged as alucrative consumer market– Despite its massive success, Sparestimates that it it captures less than 5%of INK grocery spend, most of whichcontinues to leak to external areasSpar attributes its success to the followingfactors– A consumer base wanting local shoppingconvenience– The nearby location of a transport hub– Proving an “upmarket” shoppingexperience and a large selectionFinally, Spar stated that its experience ofworking with local officials and thecommunity was a highly positive one,requiring just half as much time as is typicalin the case of an investment of this sizeSource: Interview with James Crawford, INK PresentationUUP-WRD-INK Profile-301106-IS84

¥¥¥¥¥¥¥¥¦¦¦¦¥¥¥¥¦¦¥¥¥¥¥¥Efforts should be made to remove the remaining barriers toinvestment in INK, to enable more “Spar success stories”Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKLack of infoCrimeLand issuesSpendingOpportunity ROIINK is an unknownmarketStatistics show highpersonal andbusiness riskDifficulty of securingland rights impliesrisk in investmentLack of data ondisposable incomeimplies business riskHigh returns/low riskin Durban make INKless attractiveObstacles to entry of external players / external investmentMarket the areaOpen area, e.g.publish road map,create point of of contactImprove economicinformation flow to tobusiness communityImprove security,especially ineconomic areasCommunicatesuccess, e.g.new police stationin KwaMashuDevelop andexecute landreform planSet time framefor sale ofmunicipal landMarket Spar’ssuccessGenerate publicsurvey dataEnsure INKeconomicgrowthReduce thementionedbarriers toinvestmentRemove sourcesof risk to improveproject discountfactorsSource: Monitor analysis, interviewsUUP-WRD-INK Profile-301106-IS85

¥¥¥INK poverty nodeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Research processz Overviewz Economy– Overview– External– Internalz Themesz SummaryResidential lifeCommerceLinkagesz AppendixUUP-WRD-INK Profile-301106-IS86

The themes approach – ExplanationNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz The rationale for the themes-based approach:– Subsequent to research conducted in Galeshewe and INK, it becameobvious that in the case of the urban nodes there were three dimensionsthat would determine the economic and development prospects of thenodes:{ The quality of residential life, which encompasses the provision of housing andthe effectiveness of the housing market{ The viability of the commercial sector{ Physical and virtual linkages to the rest of the cityz The INK profile was written before it was decided that a themes-basedapproach would be adopted for the urban nodesz As such, the profile does not contain specific sections for each theme, eventhough the issues of residential life, commerce and linkages are addressedwithin the “Internal Node Economy” section of the presentationz The following slides serve to introduce each of the themes and evaluate themaccording to same criteria as the themes in the subsequent profilesUUP-WRD-INK Profile-301106-IS87

IntroductionNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKQuestionWhat would increase the willingness of individuals and developers s to invest inhousing in INK?Core issuesThe following issues are likely to matter most:zzzLocation in relation to workQuality of life issues– Quality of municipal services– Education– Safety and security– Access to shopping and entertainmentThe return on investment in housing– Supply and demand issues– Enforceability of contractual rightsIs INK a good place for developers and home-owners to invest?UUP-WRD-INK Profile-301106-IS88

Residential LifeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz KwaMashu and Ntuzuma comprise predominantly formal housingz Inanda, on the other hand, remains characterised by high-density informalsettlements and faces the most severe housing backlogsz Developers, real estate agents and “wealthy” INK residents have focused theirattention on the nearby and relatively safer, more upmarket low-incomesettlements of Newlands and Phoenixz The barriers imposed by land tenure uncertainty and the inability to enforceproperty rights must be addressed in order to stimulate developmentUUP-WRD-INK Profile-301106-IS89

Evaluation sheet: Residential life themeIs INK a good place for developers and homeowners to invest?Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKCriterionCommentAttractivenessLocation inRelation toWorkProximity to work90% of INK residents work in Durban, which islocated 20km from the node. Rail and taxitransport is efficient and affordable0Quality of municipalinfrastructure / servicesHigh quality infrastructure is a result of themunicipality’s investment over the past decade+The quality oflife in INKEducationCrime levelsPoor education and low skill levels are a greatimpediment to economic developmentCrime levels are high but improving–0Access to shopping andentertainmentThe new town centre in KwaMashu is of a highquality, but entertainment is lacking0Return oninvestmentSupply and demandProperty rightsDemand for housing in INK is low as peopleprefer to locate to nearby Phoenix or NewlandsTenure is unclear and unresolved––UUP-WRD-INK Profile-301106-IS90

IntroductionNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKQuestionWhat would make business in INK more viable and, therefore, encourageinvestment into the sector?Core issuesThe following issues are likely to matter:z The spatial concentration of spending– Density levels– Accessibilityz The existence of commercial infrastructure– Zoned land, well integrated into area– Available space of appropriate qualityz General environment– Levels of crime– The quality of governancez Business opportunities exist– The extent of competition– The income of the community– Gaps in the market and attractiveness of area to national brandsIs INK a good place for businesspeople to invest?UUP-WRD-INK Profile-301106-IS91

CommerceNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Political violence throughout the 1980s resulted in the destruction of most ofINK’s commercial centresz Although there are new developments and some national brands have enteredthe market, much of INK’s commercial activity is informalz However, the recent revitalisation of the KwaMashu Town Centre, strategicallysituated next to the main train station and taxi rank, has spurred a wave ofcommercial investment in the nodez A 60 hectare site between Inanda and KwaMashu has been earmarked for thedevelopment of a mixed commercial and government building developmentknown as Bridge Cityz There are plans to revitalise twelve other derelict neighbourhood centres,though unresolved land ownership issues and inadequate transportation linkshave stalled the progressz A concerted effort needs to be made to ensure that as commercialdevelopment continues, local residents are afforded ownership opportunitiesand informal SMMEs are not displaced by national chainsUUP-WRD-INK Profile-301106-IS92

Evaluation sheet: Commercial activitiesIs INK a good place for business people to invest?Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKCriterionCommentAttractivenessThe spatialconcentrationof spendingDensity levelsAccessibility (public transport)Distance to city and spendingleaving areaDensity levels vary between urban settlementsTrain and taxi stations are conveniently locatedLittle consumer spend is retained in INK asmost people spend their money in Durban++–Availability of commerciallyzoned land for developmentLand has been zoned and is being developedfor mixed purposes, including commerce–InfrastructureAvailability of commercialspaceBridge City, a 60 hectare development, is beingdeveloped between KwaMashu and Inanda0Quality of commercial spaceNew developments are of a high quality+Commercial space integrationinto town planningCommercial centres are located close totransport hubs such as train stations / taxi ranks+GeneralenvironmentLevels of crimeGovernanceCrime levels are high but improvingThere are efforts to improve business climate–+The extent of competitionFormal sector faces informal competition–The income of the communityThe community is poor but has a high spend0BusinessopportunityRemaining opportunities in themarketLimited opportunities exist in terms ofentertainment, cinemas and restaurants+National brands attractspending active in areaNational brands such as Spar, Shoprite, Pep,KFC, etc attract spending–UUP-WRD-INK Profile-301106-IS93

IntroductionNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKQuestionWhat would make INK a place in which members of the working class s wouldwant to live?Core IssuesThe following issues are likely to matter:zzzBetter access to employment prospectsBetter access to trainingOther factors:– Better access to capital for home loans or to startbusinesses– Better social and political integration into the life of the cityIs INK better integrated into the circuits of the economy of Durban?UUP-WRD-INK Profile-301106-IS94

LinkagesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz An estimated 95% of employed INK residents travel outside the node to theirplace of workz The Durban CBD is quickly and conveniently accessible by taxi or railz INK is also well positioned to take advantage of employment opportunitiesalong Durban’s North Coast, one of the fastest-growing areas in South Africaz Much potential lies in the development of the Dube Trade Port and therepositioning of the international airport close to INKz The municipality should focus on preparing INK residents for employment inkey growth sectors in the eThekwini economy, and on facilitating linkages tocentres of opportunity like the North Coast and the Dube Trade PortUUP-WRD-INK Profile-301106-IS95

Evaluation sheet: City linkagesIs INK better integrated into the circuits of the economy of Durban?Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKCriterionCommentAttractivenessTransport linksGood transport links to the Metro exist+Better accessto employmentprospectsBusiness incubationPreferential job selection andtrainingThe INK Job Shop has recently opened but itssuccess is yet to be determinedThere is no preferential job selection for INKresidents0–CriterionCommentAttractivenessTransport linksGood transport links to the Metro exist+Better accessto trainingBusiness incubationPreferential job selection andtrainingThere are plans to establish a CIDA office inINKNo preferential training for INK residents0–UUP-WRD-INK Profile-301106-IS96

¥¥¥¥¥INK poverty nodeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Research processz Overviewz Economy– Overview– External– Internalz Themesz Summaryz AppendixUnderstanding the nodePotential sources of economic growth – Short termPotential sources of economic growth – Long termAssessment of current activitiesWhat needs to be done now?UUP-WRD-INK Profile-301106-IS97

¦¥¦¥¦¥¦¥¦¥¦¥¦¥¦¦¥¥¦¦¥¦SummaryUnderstanding the INK poverty nodeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKOverviewINK is made up of three areas totalling 580,000 inhabitants and issituated 20km outside DurbanWhile the three areas are in fact unique from one another, theyshare a common set of challenges, the most critical being highlevels of unemployment and widespread povertyINK’s development is managed by a specialised municipal office,which fulfils a coordination role for all stakeholders in the areaKey characteristicsof nodeLargeYoungUnskilledEconomyOverviewEconomy,ExternalEconomy,InternalThe “INK Economy” can be conceptualised as a combination ofwelfare provision, employment mostly outside of the node, andlimited internal economic activityAbout 60% of the economically active population is unemployedRetail trade, social services (e.g. education), and manufacturingare the major sectors of employment for those who are working95% of INK workers are employed outside the node in residential,commercial and industrial areas in and around DurbanHowever, Durban itself is experiencing mostly jobless growth, andhas seen considerable decline in key manufacturing sectorsInterventions are needed to close the skills gap between INK andthe requirements of the new Durban economyWithin INK, the public sector is the main employer; otherwise, theinternal economy is largely made up of formal and informal retailand service businessesLocal SMMEs face considerable challenges with respect to startup,growth and market accessExternal “big business” investment in retail and services is a keyfeature in INK and is likely to grow in the coming yearsLow economicactivityDependent on cityand its fortunesPoor housingWeak infrastructureand basic servicesHigh unemploymentRipening consumereconomy but …… no localownershipUUP-WRD-INK Profile-301106-IS98

¦¦¦¦¦¦¦SummaryPotential sources of economic growth – Short termNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKEconomic growth of individual household in nodeIncrease income?Decrease cost?ProvidejobIncreasequality of jobHousing Food Transport Other10% 30% 15% 45%Estimate of coststructure of individualhousehold in nodeExternalto nodeWithinthe nodeSkillsOtherWhere to focus?Durban, andother externalareas, willalways remainthe major sourceof employmentfor INK residentsFocus: Increasethe number ofINK residentsemployed inexistingindustriesThe internaleconomy offersless opportunityfor large scaleemploymentgenerationHowever, arobust internaleconomy helpsretain spend inthe area andreducestransport costsfor residentsIn the short term,upgrading ofbusiness andtrade skillsshould be thecore focusGoal is tosupport localSMMEdevelopment andupgrade “manuallabour” jobsCreating a“matchmaker”service to helpINK residentsfind new jobs /better jobs in theexternaleconomy canhave immediateimpactNot aFocus AreaKey FocusAreaUUP-WRD-INK Profile-301106-IS99

¦¦¦SummaryPotential sources of economic growth – Long termNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKEconomic growth of individual household in nodeIncrease income?Decrease cost?ProvidejobIncreasequality of jobHousingFood Transport Other10% 30% 15% 45%Estimate of coststructure of individualhousehold in nodeExternalto nodeWithinthe nodeSkillsOtherWhere to focus?In the long term, employmentwill continue to be driven bythe Durban economyFocus: Position key Durbanindustries for future growth,increase number of INKresidents employed in keyindustries for future (e.g.knowledge economy)Long term skills-relatedinterventions should be aboutimproving basic educationand providing access totertiary education in order toprepare INK residents foremployment in theknowledge economy / highvalueadded manufacturingindustriesUUP-WRD-INK Profile-301106-IS100

¦¦¦¦¦¦¦SummaryAssessment of current activitiesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKKey observations from INKWhat is being done?The INK Office has developed a comprehensive development strategy and coordinates stakeholder involvementThe major development focus to date has been on rejuvenating the KwaMashu Town Centre. These efforts have had several positiveeffects on the area, including attracting a growing private sector presence, improving security and generally enhancing the livingenvironmentContinued infrastructure building and / or upgrading is making the area more attractive and has improved internal and external transportlinksPlanned efforts against joblessness (the INK Job Shop) and business skills deficiencies (Business Support Service Centre) havepromise for reducing information asymmetries and supporting SMME growth, but have yet to be implemented on a large scaleStrategic choiceDo more ofthe sameDo different things;do things differentlyRationaleThe INK Office is addressing a broad range of growth challenges in an integrated mannerIt is engaging in the right actions for growth (e.g. SMME support, job search assistance, attracting commercial investment,improving infrastructure, increasing police presence, etc) – this package of interventions will take time and continued effort tohave impactImproved basic education and access to tertiary institutions remains a key gap, and should be prioritised for long-termeconomic developmentUUP-WRD-INK Profile-301106-IS101

¦¦¦¦¦¦¦¦¦SummaryWhat needs to be done now?Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKSolutions to constraints / Investment opportunitiesClose skills gap: Raise quality of basic education, improve English language skills, establish tertiary institutions in area / trade schools,establish apprenticeship and internship programmes, etc– Target growth sectors in the Durban economy (knowledge industries, chemicals, metals, transport and logistics), as well asconstruction and trade skills to help workers access employment opportunities along the growing North CoastSupport local SMMEs: Reduce constraints to local business growth through an ongoing business support service that would providementorship and help entrepreneurs create business plans, apply for funding, and access larger markets. Also, build quality tradingspace located in high traffic, secure areas.Market the area to large private investors and continue to improve the environment for external businessesRequires involvement ofkey stakeholdersDepartment of EducationDepartment of LabourDepartment of Trade and IndustryeThekwini Municipality (Business Support Unit)Industry leaders / AssociationsLocal PeopleUUP-WRD-INK Profile-301106-IS102

§§§§INK poverty nodeNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKz Research processz Overviewz Economy– Overview– External– Internalz Themesz Summaryz AppendixUUP-WRD-INK Profile-301106-ISItineraries of field tripsKey stakeholdersKey documentsAdditional materials103

¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦AppendixItinerary of field tripsNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKTravel schedule / locationsMain activitiesCommentsMonday, 12 June20067h30 – 11h30am: In transit13h00 – 17h00: Durban CBD (INKABM office)Travelled to DurbanMet with Linda Mbonambi andMusa Mahlamba (localchampions)Lengthy, productive kick-offmeeting with the INK ABMOTuesday, 13 June200610h00 – 13h30pm: Around INK14h00 – 17h00: Durban CBD(Tourism KZN, Univ. of KZN)Met with manager of ABSA in KMTour around INK with ZamoConducted interceptsMet with Tourism KZN and UKZNDetailed tour around INK,covering main sites of economicactivity and future sites ofcommercial developmentWednesday, 14 June20069h00 – 10h30: Umhlanga10h30 – 12h00: Durban CBD12h30 – 17h00: INKSet up meetings, conductedinterceptsMet with KZN CBO Coalition,local shop owners in INK, and acouncillor for Inanda / KMNoneThursday, 15 June20069h00 – 10h30: Umhlanga11h00 – 13h00: KM13h00 – 15h00: Durban CBD(DIPA)Met with James Crawford (Spar),Councillor Ndaba, Onke Mkwalo(entrepreneur), Akhona Ngobo(DIPA)NoneFriday, 16 June 2006public holidaypublic holidaypublic holidaySaturday, 17 June2006n/an/an/aSunday, 18 June2006n/an/an/aUUP-WRD-INK Profile-301106-IS104

¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦AppendixItinerary of field trips (Continued)Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKTravel schedule / locationsMain activitiesCommentsMonday, 12 June2006n/a n/a n/aTuesday, 13 June2006n/a n/a n/aWednesday, 14 June20069h00 – 11h00: In transit13h30 – 14h30: Durban CBD15h00 – 16h00: Durban CBD16h00 – 18h00: Durban CBDTravelled to DurbanMet with Jelina Shole at IthalaMet with Bev Khanyil (consultant)Met with Musa Mahlambi (INK)xThursday, 15 June20069h00 – 10h30: Durban CBD11h00 – 13h00: Durban CBD13h00 – 15h00pm: Durban CBDMet with Thulani Nzami (BSU)Met with Len Baars (KM TownCentre Developer)Met with Skhonza Nxasana(consultant)NoneFriday, 16 June 20068h00 – 5h00: Around INKAttended INK SMME Fair– Exhibition– WorkshopsNoneSaturday, 1 July 2006n/an/an/aSunday, 2 July 2006n/an/an/aUUP-WRD-INK Profile-301106-IS105

AppendixKey stakeholders, actors, information carriersNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKGovernmentPublic sectorPrivate sector /BusinessLocal peopleNGOsOtherLinda Mbonambi(PM: INK ABMO)James Crawford(SPAR)Several LocalCommunityMembersThemba Blose(KZN CBOCoalition)Caroline Skinner(UKZN)Musa Mahlambi(Econ Dev Mgr.:INK ABMO)Onke Mkwalo(MkwaloConstruction)Akhona Ngcobo(DIPA)Eugene de Beers(Consultant)Zamo Ngobese(INK ABMO)Eric(Owner: ChickenLickin’)Miller Matola(CEO: TourismKZN)Skhonza Nxasana(Consultant)Councilor Ndaba(Local Councilor)Gloria(Manager: ABSA)Bev Khanyile(Consultant)Thulnai Nzami(Business SupportUnit)Natshi Mitshni(Manager: FNB)Len Baars(PM: KM TownCentre)Jeline Shole(Ithala Bank)15 entrepreneursat the SMME FairSeveral otherFormal & InformalLocal Businesses= have appointment= have met = key person, suggest toinvolve in future discussionsUUP-WRD-INK Profile-301106-IS106

AppendixKey documentationNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKTitleINK Five-Year Strategic Business PlanUseful contentArea overview, programme goals, challenges,high-level areas of opportunity, strategy andbudgetAuthor /Org.Matthew Nelland AssociatesYear? MABM programme overview, role of ABMO andINK 2005-2006 Annual Business Plan funding, area history, governance challenges, ? 2005 Hoverview of impact areas, challenges, projectsINK Economic StrategyINK Neighbourhood Research SurveyStakeholders, basic demo and eco data (census2001), economic activity, challenges, propertymarket, mapsDetailed coverage of town centre issues andshopping patterns as well as income andexpenditure survey dataUrban-Econ /ExpectraConsultingDelcaResearch /Dream PlusFeb. 2006Sept. 2005Maps, basic demo data, great pictures,INK Presentation governance issues, current projects, town? ? Hcentre, heritage trailHHKZN Provincial Growth and DevelopmentStrategyNone – provincial level only, no mention of INKdplg 2004 LINK ABMO overview, budget, concise summaryINK Political Champions Presentation ? March 2005 Lof INK strategy and projectsINK “org chart”, summary of institutionalComparative Study of the URP GTZ Nov. 2004arrangements in all urban nodesMUsefulness (High / Medium / Low)UUP-WRD-INK Profile-301106-IS107

AppendixKey documentation (Continued)Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKTitleUseful contentAuthor /Org.YearINK Cabinet ReportHealth info, project and programmedescriptions, overview, crime stats? ? HINK Pres for Cities Alliance Conference Node Overview, ABMO overviewINK ABMO Nov. 2004 HNode overview, challenges, Durban economicINK URP Document ? ? Hoverview, existing strategy, priority programmesAnnexure 4 INK No useful content? 2002 LOverview of Town Centre related projects, goodKwaMashu Town Centre eThekwini EDU ? MmapKZN Economic ReviewOverview and data on KZN industriesKZN Econ DevDept2005 LEconomic Baseline Study for 10 NominatedDistricts in KZNIdentification of main Durban sectors (incl.employment numbers by sector)UKZN Jan. 2005 MBhejane Road and Dube Village ConceptPlanningMapsFutureworks ?LUsefulness (High / Medium / Low)UUP-WRD-INK Profile-301106-IS108

AppendixKey documentation (Continued)Nodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKTitleUseful contentAuthor /Org.YearYouth in LED Programme Formulation ReportNo useful contentIYCDI July 2005 LUmsobomvu ReportSome ideas for opportunities for youthentrepreneurship, review of Durban IDP, INKchallengesUmsobomvuYouth FundFeb. 2005LMtshebheni and Ohlange (Inanda) DevelopmentPlansNo useful contentMaluleke &Luthuli? LProperty Market Review DurbanNo useful contentVirulyConsultingJun 2006LInformation on Government Projects andProgrammes in INK URP/ABM: Implicationsfor intergovernmental relationsGood overview of projects currently happeningwith high detail levelThabaniButheleziJuly 2006MBasic economic data on INK and the NorthernNorthern Area Economic Plan Vancometrics March 2005 HeThekwini areaINK Spatial Development PlanDRAFT: An overview of spatial development /issues for INKProvided byINK ABMOMay 2006MUsefulness (High / Medium / Low)UUP-WRD-INK Profile-301106-IS109

AppendixSMME Business Fair 2006: Princess Magogo Stadium, KwaMashuz Around 145 exhibitors, bringing togetherSMMEs, banks, public sector and supportprogrammes, showcased their activitiesz The fair had the multiple functions of providingan opportunity for networking, highlighting theSMMEs’ activities for external customers, andproviding workshops for attendeesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKThe SMME Fair provided the ideal opportunity to speak to local business people about theirbusiness experiences in INKExhibitors Overview, SMME Fair: 2006Arts & CraftsExternal OfferingsTextilesServices / RetailPublic SectorManufacturingCateringConstructionBanksAgricultureOther267710111618192923ExternalINK Businesses0 5 10 15 20 25 30 35Source: Monitor analysis: Exhibitors listingUUP-WRD-INK Profile-301106-IS110

AppendixConstruction companiesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKAlthough construction is already of considerable importance, a number of issues should beaddressed to further increase its impact on the INK economyBusiness descriptionKey issueszzzAccording to SEDA, construction is the greatestsource of new SMMEs looking for supportThe sector has benefited greatly from publicspending and the Town Centre projectThe sector requires both skilled and unskilledlabourzzzCompanies in INK depend, in most cases fully,on public tenders, raising the question aboutsustainabilityTendering processes are perceived as nottransparent and corruptibleSMMEs often have insufficient scale or skills,forcing them to act as subcontractors, reducingtheir revenue potential and profit marginszzPicturesHow can access to market be improved forsmall, localised producers?Business support should focus on ensuring thatproducers orientate themselves towardsupmarket activities, to escape the effects ofglobalised textile trade competitionzzzKey considerationsSkills must be improved; main contractors donot have the time and resources to bringSMMEs up to speedAn internal INK construction market must becreated to ensure the sector’s survival after theend of public projectsCompanies should be encouraged to merge toensure greater scale of activitiesSource: Monitor interviewsUUP-WRD-INK Profile-301106-IS111

AppendixArts & crafts producersNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKArts & Crafts is highlighted for its potential as creating start-ups and small-scale economicactivity – however, the potential in the business segment needs to be assessed carefullyBusiness descriptionKey issueszzzArts & Crafts producers focus on producingsmall decorative or functional products, oftenusing fabrics, beadwork and natural materialsThe goods often target tourists and internationalmarketsThe businesses are strongly dominated bywomen, who work from homezzAccess to markets: a number of intervieweescomplained that their only path to market wasby using an agent who did not give themsufficient share in the profitsTo this extent, information asymmetry seemsto play a significant role, as the producers donot know the (overseas) final retail prices oftheir goodszzPicturesHow can access to market be improved forsmall, localised producers?Business support should focus on ensuring thatproducers orientate themselves towardsupmarket activities, to escape the effects ofglobalised textile trade competitionzzKey considerationsIdentifying a specific competitive niche in theArts & Crafts market for INK may improve thechance of the sector’s successGreater exposure must be generated for theINK Arts & Crafts business, to mitigate thedangers of single middlemen pressingproducers’ prices too stronglySource: Monitor interviewsUUP-WRD-INK Profile-301106-IS112

AppendixAgricultural producersNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKNumerous agricultural cooperatives operate in INK and see “scale” as the biggest challengezzzBusiness descriptionWith the support of municipal projects, anumber of agricultural projects were startedSome of these focus on the organic market as aniche marketLarge retailers (Spar, Shoprite) have committedthemselves to buying some of the agriculturaloutput of the areazzzKey issues IssuesLarge retailers highlight constraints to sourcinglocal agricultural produce as quality, price,delivery reliability and scaleA lack of available land is capping potentialgrowth in the sectorLocal producers will struggle to becomecompetitive, owing to lack of scale andmechanisationPicturesKey considerationszzHow can access to market be improved forsmall, localised producers?Business support should focus on ensuring thatproducers orientate themselves towardsupmarket activities, to escape the effects ofglobalised textile trade competitionzzLocal producers should be assisted withpreferential access to markets (like thecontracts with Shoprite / Spar)Also, benefits of targeting niche markets (likeorganic produce) should be highlighted,possibly backed up with skills developmentSource: Monitor interviewsUUP-WRD-INK Profile-301106-IS113

AppendixClothing and footwear producersNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKClothing production in INK does not compete with the manufacturing centres outside INK, butplays in niche marketszBusiness descriptionSmall-scale textiles, clothing and footwearprocessing / production takes place within INKzKey issuesiAccess to markets was, in both cases, seenas very difficult.zTaking into account the scale of local textilesproducers, the operators’ approach of focusingniche market segments should be lauded – oneinterviewee focused on custom contracts, theother on the high-end marketzThe operator producing local contracts alsoraised the issue of cashflow management – thescale of contracts he could accept was limited,as he needed to finance inputszzPicturesHow can access to market be improved forsmall, localised producers?Business support should focus on ensuring thatproducers orientate themselves towardsupmarket activities, to escape the effects ofglobalised textile trade competitionzzKey considerationsHow can access to market be improved forsmall, localised producers?Business support should focus on ensuring thatproducers orientate themselves towardsupmarket activities, to escape the effects ofglobalised textile trade competitionSource: Monitor interviewsUUP-WRD-INK Profile-301106-IS114

AppendixManufacturingNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKClothing production in INK does not compete with the manufacturing centres outside of INK,but plays in niche marketszBusiness descriptionAlthough no light manufacturing area exists inINK, there are indications that a fewentrepreneurs have started small-scalemanufacturing for the local marketzKey Issues issuesiThere is no workshop space available forthese types of business, indicating the need fora light industrial area which is priced lower thanthe areas in DurbanzExamples include furniture, light metalwork (e.g.security bars, gates) and various assemblypartsPictureszzKey considerationsHow can access to market be improved forsmall, localised producers, especially to largermarkets, like Durban?These businesses may represent anopportunity for skills development – both forvocational training, and for improving the skillswithin the companiesSource: Monitor interviewsUUP-WRD-INK Profile-301106-IS115

AppendixSpaza shopsNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKSpaza shops operate in a difficult competitive environment and are of limited value to totaleconomic growth in their current formzzzBusiness descriptionSpaza shops and small food stalls abound inINKTypical locations are around transport hubs,commercial areas, and in neighbourhoodswhere no other retail supply existsServices provided over and the above productassortment can include credit on purchases,split-purchasing lots and variable opening hoursDescriptionKey Issues issuesizzzzSpaza shops developed struggle with especially differentiation, afterandneighbourhood entry barriers are centres very and lowcorner stores werevandalised Spaza shops in cannot the 1980s.compete with formalretailersThey on fulfil price, a different reputation or function to selection. large Largeretailers,commercial since centres they provide can credits, collapse their sell single marketproductWith units increased and have variable awareness opening about hoursprivateproperty value, spaza shops may seeadditional opposition to trade, esp. in suburbszzPicturesHow can access to market be improved forsmall, localised producers?Business support should focus on ensuring thatproducers orientate themselves towardsupmarket activities, to escape the effects ofglobalised textile trade competitionzzKey considerationsSpaza shops will provide limited additionalemployment, as the employment requirementsper stall tend to be limited – slightly largercorner stores should therefore be encouragedThe competition of formal retail and spazashops must be addressed so that room is left inthe market for small operators – e.g. providingvending space in the immediate vicinitySource: Monitor interviewsUUP-WRD-INK Profile-301106-IS116

§§§§§§§§§§§§§§§§§§§§§§§AppendixNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKIncreasing selfsufficiency of theeconomySupporteconomicactivities on anongoing basisListing in Yellow PagesImprove access to marketsAdvanced skills programmesTraining for employment upgradingTender supportTax support / subsidiesCreation of local tax / municipal / service centres,SEDAsSupport startingup of economicactivity in theinternal economyTownship marketingAttraction of big businessBuild commercial centres / areasSet up cooperativesAssist SMME registration / market IDRejuvenate neighbourhood centresIncreasingurgency ofinterventionCreate basis foreconomic activityImprove development bankingImprove access to capitalLand reformSet aside land for agricultureDevelop broad strategy for areaUnlock property marketBuild clinics and schoolsCreate basic InfrastructureEnsure safety / crime reductionLanguage and basic trainingUUP-WRD-INK Profile-301106-IS117

Public sector:Current initiativesNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INK““Priorityprojects” inINKAdditionalline functionprojects /fundingUUP-WRD-INK Profile-301106-ISzzzzzzzzSpent on current projects: R88m by line functions, R34m by the municipalityand the EUz Estimated jobs created: 409 permanent and 353 temporary postsz Anchor Projects: KwaMashu Town Centre, P577 Road, InandaHeritage Trail, Safer Cities Programme, Bridge CityEquitable Share:R44.97m nodal allocations for 2002/2003 to 2004/2005Consolidated Municipal Infrastructure Programme:R39.24m in additional nodal funding for 2002/2003 to 2003/2004South African Police Services:- Repairs and renovations to the existing police station valued at R15.21m- Construction of a new police station in KwaMashu Town CentreDepartment of Environmental Affairs and Tourism:R15.2m allocated for projects for the Medium Term Expenditure Framework periodstarting 2004/2005Department of Housing:R2.4m allocated from the Human Settlement Redevelopment Programme for social,economic, environmental strategy development and for projects such as streetsafety and a job shopDepartment of Justice:Court facilities planned for Ntuzuma in 2005/2007Department of Communications: Funded a Cyberlab each in Inanda andKwaMashuNote: A lack of information system hampers line function project valuations; these data were explicitly capturedSource: INK URP Document118

¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨© © © © © © © ©© © © © © © © © © ©© © © © © © © © ©© © © © © © © © © ©© AppendixConclusion on INK’s internal economyNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKPublic spending will create the required infrastructure and service space required for externalbusiness investment. This, in turn, will create the dynamics for local business to expandLocal BusinessExternally OwnedLocally OwnedExternal BusinessExternally OwnedLocally OwnedGrocery Stores (Spar, Shoprite)Banks (FNB, ABSA, Ithala, Standard Bank, Nedbank)Food (ChickenLicken, KFC)RetailClothing (Jet)Furniture (Scotts, OKFurniture)Hardware (Cashbuild)Petrol stations (Shell)Services (Unilever Drycleaning)TaxisTaverns / ShebeensTuck ShopsHome CareMechanicsManual LabourTelephone BoothsConstructionArts&CraftsCooperatives (agriculture)Formal InformalEconomicActivityin INKPublic SpendingWelfare SpendingWelfare fulfills an important function¨¨ in providing those who are unable toparticipate in economic activity bytheir own means with the necessaryresources to do soHowever, apart from creatingadditional spending in the area, nobenefit is derived in economic terms:skills are not developed andrecipients remain dependent onhandoutsWelfare spending reaches approx.¨¨ 17.700 people in INK 1) 1) , with monthlypayouts totaling R11.9mSustainable?AssessmentEconomicDevelopment?SkillsDevelopment?Direct EmploymentHealth and education are the mainemployment generators in INK –according to banks, the majority ofregular income earners with bankaccounts in INK are teachers andnursesThe two activities improve theemployability of the workforceThe activities are typically located inresidential areas, confirming thedefinition of INK as residential nodeThis employment creates a regularinflow of capital into the area, whichcreates local spending and savingsSustainable?AssessmentEconomicDevelopment?SkillsDevelopment?Once-off project fundingConsiderable inflow of capital intothe area is created by infrastructureprojectsBy employing local labour / SMMEs,this directly, although not sustainablybenefits local earningsThe projects are of investmentcharacter: they create skills andplatforms that the INK populationmust later leverage on its own togenerate further earningsThe value of such projects is approx.R34m by the city and EU, and R88mby government line functionsSustainable?AssessmentEconomicDevelopment?SkillsDevelopment?Grocery Stores (Spar, Shoprite)Banks (FNB, ABSA, Ithala, Standard Bank, Nedbank)Food (ChickenLicken, KFC)RetailClothing (Jet)Furniture (Scotts, OKFurniture)Hardware (Cashbuild)Petrol stations (Shell)Services (Unilever Drycleaning)TaxisTaverns / ShebeensTuck ShopsHome CareMechanicsManual LabourTelephone BoothsConstructionArts&CraftsCooperatives (agriculture)Formal InformalSource: Monitor analysisUUP-WRD-INK Profile-301106-IS119Time

§§§§AppendixQualitative views on present migration patterns into / out of INKNodal Economic Profiling ProjectBusiness Trust & dplg, 2007INKPublic sector managersThere is hardly any migration into the area, asevidenced by the little informal settling activity in INK– “We do not have Alex’s migration problem of a migrant area;people know each other here, so nobody would want to beseen squatting by their friends” – ABM managerXInflow exceeds outflowOutflow exceeds inflowUncertainNo knowledgeHowever, people with increasing earnings move toDurban’s middle-class suburbsPrivate sector viewsNo information regarding inflowsPeople with increasing earnings move to nearby higherincome suburbs or to Durban / the North Coast– “The medium income house prices here will only appreciate toa max of R250,000, and would be worth at least a million inDurban North”– Estate agentXInflow exceeds outflowOutflow exceeds inflowUncertainNo knowledgeXInflow exceeds outflowOutflow exceeds inflowUncertainNo knowledgeOther viewsN/AUUP-WRD-INK Profile-301106-IS120