Publish Date: 01 Jan 2004
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The third term of government saw the formal launch of the Provincial Growth and Development Plan (PGDP) in 2004 by then Premier Nosimo Balindlela.

The PGDP set out "the vision and plan for the development of the Eastern Cape until 2014,” and spelt out what would be done to fight poverty, drive economic growth and social development, create jobs and generally improve the lives of the people of the province. The goal was to create a common agenda in all spheres of government and, as Director-General Mvuyo Tom noted, departments would work closely with municipalities "to ensure that government is coordinated and that the local sphere of government is strengthened”.

The third five-year term was marked by a series of cabinet reshuffles that affected key portfolios including Finance, Economic Development, Environmental Affairs and Tourism and Education and culminated in the post-Polokwane period with the election of a new premier and a number of new appointments to the provincial cabinet. Some of the provincial parastatals, particularly the Eastern Cape Development Corporation (ECDC), were not immune from the changes.

It was, however, also the term in which the investment in infrastructure in the Port of Ngqura and Coega Industrial Development Zone (IDZ) started to bear fruit, with the first vessel docking in the new harbour in 2008 and Dynamic Commodities becoming the first investor to operate in the IDZ. In addition, a start was made with the provision of infrastructure at the East London IDZ.


INSTITUTIONAL DEVELOPMENT AND GOVERNANCE 

The third term took place against the background of two overarching national government initiatives – the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) and the Joint Initiative for Priority Skills Initiative (Jipsa). At provincial level, the PGDP had recently been launched, with a number of flagship projects. 

Nine high-impact priority projects were identified including the Mzimvubu Catchment development; N2 Corridor development; agricultural beneficiation that embraced biofuels, Magwa Tea and Pondoland sugar, the 2010 World Cup – work was also underway on the Mthatha Stadium upgrade - and various initiatives around HIV/AIDS, strategic skills and support to municipalities in the area of financial viability.

This was also the period in which social compacting took centre stage. Multi-stakeholder sector compacts as well as regional compacts were attempted, driven mainly by government’s (the Presidency’s) imperative of assembling "new development coalitions”. Summits were held in numerous sectors such as transport, education, health, the economy – the jobs summit – as well as district growth and development summits. The summits were successful in improving intergovernmental coordination and focusing stakeholder efforts within different sectors, but were limited by a lack of follow-through and accountability despite sector strategies being developed in a number of instances.

The third term also saw the start of the process to reassess the PGDP. Prior to this a Rapid Assessment Survey was conducted in more than 12 000 households which revealed, inter alia, that government was "not sufficiently reaching out” to people and that there was no easy access to free services. Among  issues flagged during the assessment of the PGDP were:

  • The absence of a provincial industrial strategy, and
  • The fact that some entities and institutions were not using the PGDP as a platform for planning and prioritisation

Against the background of the world economic crisis a commitment was made at the end of the term to finalise and implement the Provincial Industrial Development Strategy action plans.

The Interim Management Team (IMT) appointed in 2002 had submitted its report in March 2004, but there were still significant challenges and its work continued into the third term. The IMT reported, for example, with regard to Education that implementation of the turnaround plan "is constrained by the massive over-expenditure burden,” adding that relations between management and unions "have also created a particularly unhealthy institutional environment”. There were concerns around the sustainability of post-IMT interventions and it was recommended that monitoring and oversight should continue for a minimum period of one year after which the situation would be evaluated. The IMT said that a one-year "high-level monitoring and oversight” of the turnaround plans of the departments of Health, Social Development and Roads and Public Works should be carried out. Education was the subject of a "special proposal” on sustainability for one year as the "IMT model was not successful in the department”.


FINANCE

The administration began the third term with debts totalling R3.5 billion which meant that the budget had to be top-sliced before departmental allocations could be made. By March 2007, however, it was able to state that as a result of effective expenditure control, the province had moved from "a position of near bankruptcy in March 2004, to a position of strong solvency in March 2007”.

However, the financial performance from an expenditure perspective was described as "very discouraging and provincial treasury estimated that the end-year under expenditure could be close to R3 billion. It was predicted that the area where under-expenditure would be greatest at R1.5 billion was on transfer payments and subsidies to households, state institutions, municipalities and non-profit organisations (NGOs) with the bulk of this amount being the housing conditional grant.

 This trend was to continue, and at the end of the third term withthe roller coaster of under and over-expenditure  continuing as it had from inception,  Premier Mbulelo Sogoni  reported in the final State of the Province Address for the term, that expenditure had been "very close to budget for most of the time”. At the same time, however, he pointed to significant under-spending in 2007-08 resulting in more than R500 million being suspended from the provincial budget.

In the 2007-08 financial year, five departments received unqualified audit reports, which was the highest tally since 1994. There were, however, still significant problems in Health and Education that were pointed out by the auditor-general.


ECONOMIC DEVELOPMENT

Agreements were signed after protracted negotiations with Alcan for the construction of an aluminium smelter at Coega but as a result of a  number of factors, including power supply, the project was scrapped. Given the subsequent challenges around electricity supply and potential difficulties with unions, this was not regarded as a significantly negative development, although it was acknowledged that considerable effort and time had been involved in trying to secure the R20 billion investment at the expense of other initiatives.

The third term did, however, see a number of landmark developments within the Coega IDZ. These included:

  • The signing of a long-term lease with the Nelson Mandela Bay Municipality in 2008 in terms of which the CDC assumed responsibility for the management of the Nelson Mandela Bay Logistics Park;
  • The first ship docking at the Port of Ngqura in 2008; The signing of 23 potential investors in the IDZ and Logistics Park, and
  • Dynamic Commodities becoming the first operational investor in the IDZ in 2007.

There was also progress in the East London IDZ. By the end of the 2003-4 financial year, more than R40 million had been spent on infrastructure development with over R105 million committed to contracts that would extend into 2004-05, a year that would see the start of the investment phase for the IDZ.

The Eastern Cape Development Corporation (ECDC) was beset by a series of changes at senior management level that severely hampered  its operations as the province’s premier development financier. By the end of the third term the disposal of properties, not core to the business of the corporation, had still not been initiated.

AsgiSA (Eastern Cape) was launched during the third term to play a facilitative and catalytic role in unlocking investment opportunities estimated at some R4.2 billion through rural development zones. The programmes included forestry development and timber processing, intensive agriculture and agro-processing.

Business plans for investment by government and SOEs were developed and, in some instances, implementation started although they were not continued into the fourth term following the decision to merge AsgiSA (EC) with the RDA.

The Wild Coast Meander was launched but without full budgetary commitment and it remains on the agenda with insufficient funding to advance the project.

The major success story of the third term in the eastern part of the province was the R1.15 billion investment by Steinhoff in a pressed wood facility in the north-eastern forests of the Eastern Cape which was facilitated by government spending of R148 million on critical infrastructure in and around Ugie and the construction of the Ugie-Langeni road.

Against that, the sugar beet project continued to flounder while initiatives with high-value crops such as hemp continued but failed to make an impact with the legislation required for the cultivation of hemp  still not in place. The sugar beet project did, however, surface again in the fourth term and is likely to come to fruition in the fifth with the finalisation of the regulatory and pricing regime for biofuels.

During the third term, the automotive sector in the province attracted investment in excess of R3 billion, although the global financial crisis triggered a sustained and negative impact on the real economy, affecting the automotive sector in particular.

The unemployment rate fell consistently during the bulk of the term of office from 27% to 23%, although these gains were starting to be reversed towards the end of the period as a result of the global financial crisis.

The challenge at the end of the third term against the background of the global economic crisis was to meet the growing demand for services within the context of a reduced revenue base.


HUMAN DEVELOPMENT 

Following the registration drive in the second term, the number of child support grant beneficiaries  increased from almost 1.3 million in 2004 to 2.3 million by 2008, although this was "largely due to the increase in the qualifying age for child support grants (CSG) to 14 years”. 

It was acknowledged at the end of the term that housing delivery remained one of the most vexing challenges in the province. The province in this term experienced a number of limitations with respect to project management, governance, the quality of housing units, as well as under-spending on the housing conditional grant. One response to this was to separate Local Government and Housing and create a stand-alone Department of Housing aimed at speeding up the delivery of quality houses, encapsulated in an accelerated housing delivery plan. The results were tangible in that 10 136 houses were constructed between March and December 2008 and an additional 10 000 units  neared completion.

Significant strides were also made in addressing the infrastructural needs of both hospitals and clinics and during the course of the third term. 397 hospital and clinics were upgraded or refurbished. The programme’s priorities during the third term were to build new clinics and resuscitate existing ones that were dilapidated provide accommodation for nurses in rural areas and revitalise hospitals. In total, 49 clinics and three new community health centres were built and 145 clinics upgraded. Of significance, was the acceptance of the Public Private Partnership (PPP) model that was applied in the building of the Port Alfred Hospital and Settlers in Grahamstown, as had been the case  earlier in  Humansdorp.

At the end of the term a commitment was made to accelerate the work conceptualised and packaged through the Service Delivery Acceleration Plan in respect of education, health, and housing. This would include embedding the culture of teaching and learning, continuing the roll-out of the anti-poverty campaign, improving the footprint of comprehensive primary health care and accelerating the delivery of quality houses.

At the end of the third term  storm clouds were already gathering with the administration having to operate within the context of the global recession which would see the provincial economy contract, making it necessary to ensure that public finances were allocated "so that service-delivery, job retention and new job creation are optimised”.


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