EC must be main beneficiary of Umzimvubu dam project

For the past five years the government has been talking about the construction of Umzimvubu Dam as one of its flagship projects, not only to drive job growth in the Eastern Cape but to ensure sustainable water provision.

The ambitious project was first announced by President Jacob Zuma in his 2012 State of the Nation Address (Sona). He said the government was “committed to building a dam using the Umzimvubu River as the source, in order to expand agricultural production”.

The estimated cost was R12-billion and the project was supposed to create 6000 jobs.

Over the next few years, Umzimvubu continued to feature in Zuma’s annual addresses. Just before the 2014 general elections, the president attended a sod-turning ceremony for the Mzimvubu Catchments Project in Tsolo, and gave a promise that construction would begin in earnest.

But construction never started. The promise of billions being pumped into the Umzimvubu project seemed almost forgotten, like many other promises that politicians make.

Until last week, that is, when it emerged that the project was at the centre of a clash between Finance Minister Pravin Gordhan and his Water Affairs counterpart, Nomvula Mokonyane.

The dispute is over an offer by the Chinese government to fund the project – but on condition that a Chinese company does the construction.

Mokonyane’s department has sought Treasury approval, as per government policy, for the contract to be given to the Chinese government.

But the Treasury has, quite correctly I must add, pushed back, arguing that the contract should be put out to tender as per government policy.

For some time tension has been growing between the Treasury and other ministers over the role of Gordhan’s department. They claim the Treasury is holding government projects to ransom.

Mokonyane and other like-minded ministers see the Treasury as too powerful and its decisions – mostly based on financial prudence – as contradicting ANC expansionary policy plans.

But in the case of Umzimvubu, the condition of a Chinese company being used in the construction has serious implications, particularly for the Eastern Cape.

If projects undertaken by China in Angola and Ethiopia are anything to go by, workers are brought in from China to do much of the work.

If this happens here and if raw materials are also sourced from China it will basically mean that the bulk of the capital outlay flows back to China.

In other words, the funding will grow the Chinese economy, not ours.

Yes, we will be left with infrastructure – and the resultant debt, of course. But any significant economic spin-offs for our province will be minimised.

And what of the 6000 local jobs that have been promised?

What Mokonyane is proposing will not benefit the Eastern Cape and the country as much as it does China.

This is at a time when the Eastern Cape is in desperate need of jobs.

While the latest Quarterly Labour Force Survey (for the last quarter of 2016) released by Statistics South Africa on Tuesday showed a slight decline in unemployment nationally – by 0.6% to 26.5% – the opposite was true for the Eastern Cape.

With the exception of Nelson Mandela Bay Metro, the rest of the province – including Buffalo City – experienced an increase in unemployment compared against the corresponding period in 2015. Our provincial unemployment rate is not only above the national average but grew by 0.2 percentage points to 28.4%.

Statistics also show that the construction industry, despite the decline in other sectors, held its own and continued to create jobs. Without this economic stimulation, our unemployment figures would have been worse.

Our province desperately needs to make good on every job possibility. Gordhan is therefore, entirely correct.

Ironically the same minister leading the charge against Gordhan was reported this weekend by City Press to be running a department that is bankrupt.

The finance minister is acting as a bulwark between the public purse and the brigade of spendthrifts.

But unfortunately Gordhan seems to be a lone figure in the Cabinet – even Zuma has expressed annoyance with him.

Gordhan may have to bow to pressure from Zuma and his inner circle over the Umzimvubu matter.

But government’s infrastructure spend should amount to meaningful economic growth – something we will only enjoy if jobs are created locally and if local companies benefit. It should never be about pleasing other members of the Brics community.

We need the Umzimvubu project in this province, but it needs to benefit us first and foremost. How it will do so must be clearly spelt out, present circumstances considered.