Insight: East Cape digests highs, lows of national budget

FROM an Eastern Cape perspective there were grounds for both considerable satisfaction and a measure of disappointment in last week’s national budget tabled by Finance Minister Pravin Gordhan.

On the negative side, there will be disappointment that Project Mthombo, the oil refinery planned for the Coega Industrial Development Zone, was mentioned as merely one option to address the country’s fuel supply needs, although given that the National Development Plan (NDP) is government’s latest “bible” that should not have come as a surprise.

The NDP recommends that any decision on a new refinery should be delayed until 2017.

There will be disappointment too, that in listing the major projects, the budget review provided little detail with regard to the Mzimvubu hydroelectric and irrigation project, other than to state that the funding of the scheme would be considered once the feasibility study had been concluded.

One could be forgiven for regarding any statement on that project with a dose of cynicism, given the plethora of different statements that have been made with regard to the status of the feasibility study.

It needs to be remembered that the national budget, like the state of the nation address seeks to outline only a framework with individual ministers providing the details when they deliver their budget speeches. So the full extent of the largesse directed at the Eastern Cape may be greater.

If one wishes to nitpick, one could also mention, for example, the lack of clarity as to which metros the human settlements function will be devolved or, in the case of Nelson Mandela Bay, the fact that no funds have been provided to complete a water scheme that will be of considerable importance when the next period of drought emerges – given that the level of the major dams is dropping at a rate of 1.5% a week that might be sooner than anticipated.

On the positive side, there will be a deep measure of satisfaction that the R72 coastal road linking the two Eastern Cape metros is on the project list of the South African National Roads Agency Limited (Sanral) and will cost R5.3-billion to upgrade.

In that regard, one can only applaud the decision announced by premier Noxolo Kiviet in last year’s state of the province address that she would be requesting the agency through the national Department of Transport to assume responsibility for some 2 000km of provincial roads, including the R72.

That duly happened.

When one considers the fact that for well over a decade the province upgraded parts of the road but was never going to be in the financial position to provide the kind of rehabilitation required, that was an illustration of the kind of realism that at times this province has lacked so desperately – at one point it was even proposed that the R72 should become a toll road.

The logic, or rather lack thereof, of clinging to the road was frightening.

The Eastern Cape needs a first-class road linking East London and Port Elizabeth and does it really matter who upgrades it and pays for it?

Further, had the decision been taken earlier, the upgrading of the road would have been completed in time for the 2010 World Cup, possibly allowing East London and other coastal resorts to the east to benefit from additional tourism.

It is just that kind of realism demonstrated by the premier that is one reason for the Eastern Cape to celebrate the national budget, because it finally provided a suite of incentives for the planned special economic zones that IDZs have been agitating for and the country has desperately needed if it is to compete with other nations bent on attracting foreign direct investment.

The reason why that raft of incentives is so important for the Eastern Cape, is that it will benefit the East London and Coega IDZs that will become part of the Special Economic Zone (SEZ) programme once the legislation has been passed by parliament, as well as the planned Wild Coast SEZ that seeks to open up an area of the province to development.

The provincial government has applied to the Department of Trade and Industry to have the Wild Coast declared a SEZ and a number of studies will be conducted including the establishment of two new towns at Coffee Bay and Hole-in-the-Wall.

Kiviet provided only the bones of what is planned in this year’s state of the province address as is customary and it will be left to the line function MECs to provide the flesh when they deliver their policy speeches later this month.

Of specific interest in that regard, will be the speeches of Economic Development, Environmental Affairs and Tourism MEC Mcebisi Jonas and his roads and public works counterpart Thandiswa Marawu, who has the responsibility for the development of the Wild Coast meander, the low volume road that will link the resorts from Kei Mouth along the Wild Coast.

If there is a concern it is to be found with the pace of implementation.

The SEZ legislation was scheduled to have been signed into law last year – but wasn’t – and there is still no indication as to when parliament will pass the bill. Until that happens, the incentives mean nothing and the IDZs with a far lower budget allocation this year than was the case in 2012/13, will have to soldier on as they have done for the past decade.

That they have done well is undeniable – the details are spelt out in the trade and industry budget tabled last week.

One can, however, only speculate as to how much more investment they might have secured had they been armed with the quiver of incentives that would have allowed them to compete on a more equal footing with other investment destinations – and, most importantly, how many more jobs they would have created as a result.

Patrick Cull is a freelance journalist based in the Eastern Cape