Middelburg aiming to reinvent itself following mine closures
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Middelburg - Following the closures of mines in the Middelburg area, the municipality has had to be innovative in responding to job losses and financial impacts on its residents.
Apart from mining, a few other sectors generally can overhaul a rural province like Mpumalanga. These include tourism, factories and infrastructure development. The province has already ticked the box with tourism but it only benefits towns that are close to attractions.
The Steve Tshwete Municipality has had to go back to the drawing board to seek innovative ways to attract investors. Municipal manager Bheki Khenisa said due to the closure of mines, they decided to focus on infrastructure development as a counter-strategy and become the dominant driver to assist with labour absorption.
"One of the things we have done with service providers has been to ensure that 30% of the workforce is local people. Currently, there is a hotel construction, and our agreement with them is that 70% of the employees must come from our municipality," he said.
But such moves come with their own challenges. Khenisa said after reaching the agreement, they found themselves with the challenge of ensuring that locals possess the necessary skills to participate in the value chain being created.
"We needed to ensure those people are ready for employment. We reached an agreement with the Department of Tourism to train 20 people and keep them ready. We also moved a step further and negotiated that 10% ownership of that hotel must be from locals," he said.
The municipality then had to create favourable capital accessibility for locals in order to put up the 10% of R350 million. That saw an agreement being reached with the National Empowerment Fund (NEF) to create the Steve Tshwete Enterprise. Khenisa said this would ensure that if there are enterprise development programmes from Steve Tshwete, they are looked at favourably.
"But to do that, we also paid a benefit. We donated R20 million to the NEF, and it donated R30 million. The Steve Tshwete Enterprise Development now has R50 million as we speak. We want to ensure our people are looked at favourably and that the cost of capital is cheaper. For every project the NEF funds, 40% will be from the municipality and 60% from NEF. They only get charged interest of 5%. We have already made the cost of capital cheaper by gearing your loan," he said.
The municipality is also trying to lure Clover to set up its cheese factory in the area. This follows talks that the company wants to close down its Lichtenburg factory in the Ditsobotla Municipality in the North West due to poor service delivery. The company wants to move to Queensburgh in Durban, where it already has a plant.
Clover said for years the Lichtenburg factory has been experiencing water and power outages, and the municipality has not maintained the surrounding infrastructure. Despite numerous efforts to engage the municipality on these matters, the issues have not been resolved.
The company added this has negatively impacted production which requires a continuous process, and it is no longer feasible for the business to operate in Lichtenburg.
Khenisa wants to hijack the proposed move to KZN and instead bring Clover to Steve Tshwete Municipality.
"They have raised issues about how the municipality of Ditsobotla is run and how poor road infrastructure is driving up their operational costs. There is also an issue with water and electricity. In the event they are not happy with Ditsobotla, they can come to Steve Tshwete. We are in the middle. We are less than 90 minutes from the airport, we are not far from the border of KZN, not far from Swaziland and Mozambique. Because they have another factory in KZN when they are here, they can take Hendrina, and they are in KZN in no time," he said
"One other advantage we have is the issues they have raised are not affecting us. We have more than enough capacity for both electricity and water. We have reserves and are also building a 40-megawatt substation, which will give us extra reserve. We are also building a 15 megalitre water reservoir to increase our capacity. If you look at our roads, they are up there with the best. It's rare to find a pothole in our municipality because we prioritise fixing them."
Khenisa said they were not competing as municipalities, but they also didn't want to find a situation where they lost an investor.
"From a governance point of view, we are ready. One of the pillars of this city is a safe and clean city campaign. We know from a safety point of view we are ready. We have a law enforcement team that ensures our safety, and the cameras all over town contribute to fighting crime. Our cameras work as a facial recognition system. If you tell us a certain vehicle committed a crime, we can use that system to focus on the particular model and colour. We take crime seriously, and the cleanliness of the city is our priority," he said.
The municipality is waiting to secure a meeting with the company to make a formal presentation. Khenisa said they were mindful of the company's investments in the North West and the possibility of money going to be lost due to the move, but they are prepared to offset some of those losses.
"We are mindful that where they were, they had already made a capital outlay and when they move, they will lose some of that money. We want to see how we can accommodate them and the rebates we can offer them to assist with their capital outlay. The only thing we expect from them is to absorb labour from us. Where they are currently, they have employed around 300-400 people directly, and there are seasonal workers as well. There might be more than that should they come to this side, but we are focusing on the value chain which we wish our people will participate in," Khenisa said.