Golden corridor’s agonising wait

2009-06-24 00:00

Some view the Howick-Durban corridor as a potentially abundant source of future economic growth and job creation. However, its successful development as a prime logistics hub will rest largely on the commitment of financial and human resources from the two major municipalities that stand to gain the most out of this vision - Msunduzi and eThekwini.

What are some of the benefits?

•Local Economic and Social Development, including new temporary and permanent jobs;

•Development of the Logistics Industry, as well as Value-Added activities such as Re-Assembly Plants.

 

Who are the Potential Key Players?

•Provincial Government, Local Government (Msunduzi, eThekwini and Mkhambathini), Private Sector (Companies, Property Developers, Consultants), Wholesale Financial Institutions (e.g. Development Bank of Southern Africa).

How long will it take to develop into a proper, fully-fledged logistics hub/corridor?

•One economist believes it will take 30 to 60 years.

Which nodes are most attractive?

•Camperdown, Umlaas Road, Lynfield Park, Cedara and Howick.

Which node is likely to fully develop first?

•Cato Ridge.

 

Because of lack of “implementation muscle” from both the public and private sectors, as well as the current recession, the corridor is unlikely to experience rapid development in the short term.

Local experts believe that the (local and provincial) government is unable to respond to the imperative of making it easier to invest and do business in this corridor. But they also believe that the private sector has been slow to partner with the government in developing this corridor, notwithstanding the current recession.

Complicating matters further is the fact that a new threat to the vision is emerging in the form of the Richards Bay-Durban corridor, which could pull potential investments away from nodes along the Howick-Durban corridor.

Analysts and stakeholders in the government and private sector alike have peddled the idea of a ‘new Midrand’ located between Pietermaritzburg and Durban for some time.

Cato Ridge and Mkondeni have both attracted major logistics and manufacturing-related investments from multi-national companies in the recent past.

However, experts agree that this requires bold and decisive financial and implementation-centred interventions by the government, particularly at municipal level.

They believe that “implementation muscle” from one or both of the major players – the government or the private sector – will be the spark that will ignite the growth of this corridor.

It is also clear that such a corridor development centred primarily on logistics activities is likely to take place over several decades and may only be fully realised after 2040.

 

Some recent research:

- The development of specific nodes between Howick and Durban as a tool for significant job creation was most recently given prominence in Dr Jeff McCarthy’s published paper entitled “Realistic strategies for a million jobs: the case of KwaZulu-Natal”.

- McCarthy is a senior research consultant to the Centre for Development and Enterprise (CDE).

- The working paper formed part of the CDE publication “How to add five million new jobs to the South African economy over the next five years”.

- Several 1000-hectare nodes were identified, including Pietermaritzburg/Msunduzi, Lynfield Park, Camperdown, Cato Ridge, Inchanga and Shongweni.

 

Speed up land acquisition and usage:

- In McCarthy’s view, required interventions include the active pursuit of planning deregulation by local authorities, in order to speed up the land-acquisition and development process.

“The processes [and planning controls] can be onerous, lengthy and problematic. The department of agriculture for example has a one size fits all approach to converting failed farms into industry. Industry is saying that we can’t wait forever. There is quite a lot of interest in the area [Cato Ridge and other nodes] from estate agents in Johannesburg. But they find that there’s not enough approved land and getting land approved is such a lengthy and problematic process.”

- McCarthy, who consults mainly to the private sector and international development agencies on the economics of urban and regional development, believes that this needs to become a properly coordinated provincial initiative.

- McCarthy believes that nodes such as Camperdown, Umlaas Road, Lynfield Park, Cedara and Howick remain very attractive.

 

Long term viability a key consideration:

- Durban-based economist Kwanele Gumbi, who is also a senior board member of the Durban Chamber of Commerce and Industry (DCCI), believes that the development of the corridor needs to be sustainable:

“These corridors seem to be lead by property developers – which to some degree will give rise to a bubble that is not supported by government, business and other stakeholders. This idea in my view, if properly planned can take as much as 30 to 60 years, considering the economic pace over time as well as the amount of ‘proper investment’ that would need to be made and sustained by private companies,” he argues.

 

A stop-start affair:

“There seems to be a lack of coordination of how the place should look like. The support mechanism to develop the area to its full potential is lacking at best, with the exception of ‘commentary support’. Create a shared plan between government, the catalyst and the private sector, the implementer, to have a common vision of the ‘End Game’ and develop it in phases, coordinated with solid investments made in each phase for a sustainable economic impact,” Gumbi advises.

 

Will large municipalities pump money and deploy people?

- Local economist Clive Coetzee envisages a greater role for the two major municipalities along the corridor, namely Msunduzi and eThekwini.

- He believes that the corridor will grow from the midway point of the route – perhaps around Cato Ridge – moving toward both Pietermaritzburg and Durban by creating development nodes in certain areas along the way.

- However, Coetzee says although it is in their long-term interests to pump financial and human resources into this midway location, authorities in Durban and Pietermaritzburg will find it difficult to justify this hefty commitment of resources in the short term.

 

A threat on the horizon:

Coetzee also warns that it is by no means a foregone conclusion that Howick-Durban will emerge as the chief development corridor in the province.

He believes that the corridor between Durban and the export-orientated port of Richards Bay is an attractive option, particularly for manufacturers.

The Maputo-Nelspruit-Johannesburg corridor is another long-term option.

 

How will the recession affect the future of this corridor?

Economists appear to be somewhat guarded on making pronouncements regarding the impact of the current recession on the corridor’s future.

- Gumbi believes that the short-term view looks bleak as most companies will hold back production and expansion plans.

He adds that companies with recently-increased capacities will be particularly reluctant to invest.

“Our economic fate is in global economic hands, at this stage we don’t even know the extent of the crisis, bouncing back is still a premature discussion. The only thing we can start debating is the stabilization of the fall in the world economy, nothing more, nothing less. It’s a long road ahead.”

- McCarthy is more optimistic about the prospects of the corridor, particularly in relation to the recession.

He prefers to view the corridor development as a strategic and therefore long-term imperative for companies.

Companies that are likely to invest in nodes along the corridor will take a 20-year view, looking beyond cyclical peaks and troughs.

 

Road-map for the future development of a logistics and transport hub:

- Assuming that businesses are keen on setting up shop in particular areas, make public land easily available, but in a responsible manner that ensures environmental and social sustainability. Cut out some of the seemingly unnecessary red tape that goes with the land acquisition and usage process (ease of re-zoning land etc.).

- Money and human resources to be pumped in from Msunduzi and eThekwini.

- McCarthy hopes that the government, together with the private sector and wholesale financial institutions (such as the Development Bank of Southern Africa and the Industrial Development Corporation), will drive the development of the corridor through concrete public-private partnerships.

) Local economic and social development, including new temporary and permanent jobs.

) Development of the logistics industry, as well as value-added activities, such as reassembly plants.

) Provincial government, local government (Msunduzi, eThekwini and Mkhambathini), private sector (companies, property developers, consultants), wholesale financial institutions (e.g. Development Bank of Southern Africa).

Because of a lack of “implementation muscle” from both the public and private sectors, as well as the current recession, the corridor is unlikely to experience rapid development in the short term. Local experts believe that government is unable to respond to making it easier to invest and do business in this corridor. But they also believe that the private sector has been slow to partner with the government in developing this corridor, notwithstanding the current recession.

There is also a threat to the vision: The emergence of the Richards Bay-Durban corridor.

Analysts and stakeholders have peddled the idea of a “new Midrand” located between Pietermaritzburg and Durban for some time. Cato Ridge and Mkondeni have both attracted major logistics and manufacturing-related investments from multinational companies recently. However, experts agree that this requires decisive financial and implementation-centred interventions by the government. They believe that “implementation muscle” from government or the private sector or both will be the spark that will ignite the growth of this corridor.

It is also clear that such a corridor development, centred primarily on logistics activities, is likely to take place over several decades and may only be fully realised after 2040.

) The development of specific nodes between Howick and Durban as a tool for significant job creation was most recently given prominence in Dr Jeff McCarthy’s published paper titled “Realistic strategies for a million jobs: the case of KwaZulu-Natal”.

) McCarthy is a senior research consultant to the Centre for Development and Enterprise (CDE).

) The working paper formed part of the CDE publication “How to add five million new jobs to the South African economy over the next five years”.

) Several 1 000-hectare nodes were identified, including Pietermaritzburg/Msunduzi, Lynnfield Park, Camperdown, Cato Ridge, Inchanga and Shongweni.

) In McCarthy’s view, required interventions includes the active pursuit of planning deregulation by local authorities, in order to speed up the land-acquisition and development process.

“The processes [and planning controls] can be onerous, lengthy and problematic. The department of agriculture, for example, has a one-size-fits-all approach to converting failed farms into industry. Industry is saying that we can’t wait forever.

“There is quite a lot of interest in the area [Cato Ridge and other nodes] from estate agents in Johannesburg. But they find that there’s not enough approved land and getting land approved is such a lengthy and problematic process.”

) McCarthy, who consults mainly to the private sector and international development agencies on the economics of urban and regional development, believes that this needs to become a properly co-ordinated provincial initiative.

) McCarthy believes that nodes such as Camperdown, Umlaas Road, Lynnfield Park, Cedara and Howick remain very attractive.

) Durban-based economist Kwanele Gumbi, who is also a senior board member of the Durban Chamber of Commerce and Industry (DCCI), believes that the development of the corridor needs to be sustainable.

“These corridors seem to be led by property developers, which, to some degree, will give rise to a bubble that is not supported by the government, business and other stakeholders.

“This idea in my view, if properly planned, can take as much as 30 to 60 years, considering the economic pace over time, as well as the amount of ‘proper investment’ that would need to be made and sustained by private companies,” he argues.

“There seems to be a lack of co-ordination of what the place should look like. The support mechanism to develop the area to its full potential is lacking at best, with the exception of ‘commentary support’. Create a shared plan between the government, the catalyst and the private sector, the implementer, to have a common vision of the ‘end game’ and devel­op it in phases, co-ordinated with solid investments made in each phase for a sustainable economic impact,” Gumbi advises.

) Local economist Clive Coetzee envisages a greater role for the two major municipalities along the corridor, namely Msunduzi and eThekwini.

) He believes that the corridor will grow from the midway point of the route — perhaps around Cato Ridge — moving toward both Pietermaritzburg and Durban by creating development nodes in certain areas along the way.

) However, Coetzee says, although it is in their long-term interests to pump financial and human resources into this midway location, authorities in Durban and Pietermaritzburg will find it difficult to justify this hefty commitment of resources in the short term.

Coetzee also warns that it is by no means a foregone conclusion that Howick-Durban will emerge as the chief development corridor in the province. He believes that the corridor between Durban and the export-orientated port of Richards Bay is an attractive option, particularly for manufacturers. The Maputo-Nelspruit-Johannesburg corridor is another long-term option.

Economists appear to be somewhat guarded on making pronouncements regarding the impact of the current recession on the corridor’s future.

) Gumbi believes that the short-term view looks bleak as most companies will hold back production and expansion plans. He adds that companies with recently increased capacities will be particularly reluctant to invest. “Our economic fate is in global economic hands. At this stage we don’t even know the extent of the crisis. Bouncing back is still a premature discussion. The only thing we can start debating is the stabilisation of the fall in the world economy, nothing more, nothing less. It’s a long road ahead.”

) McCarthy is more optimistic about the prospects of the corridor, particularly in relation to the recession. He prefers to view the corridor development as a strategic and therefore long-term imperative for companies. Companies that are likely to invest in nodes along the corridor will take a 20-year view, looking beyond cyclical peaks and troughs.

) Assuming that businesses are keen on setting up shop in particular areas, make public land easily available, but in a responsible manner that ensures environmental and social sustainability. Cut out some of the seemingly unnecessary red tape that goes with the land acquisition and usage process (ease of rezoning land, etc.).

) Money and human resources to be pumped in from Msunduzi and eThek­wini.

) McCarthy hopes that the government, together with the private sector and wholesale financial institutions (such as the Development Bank of Southern Africa and the Industrial Development Corporation), will drive the development of the corridor through concrete public-private partnerships.

• kavith@witness.co.za

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