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Intervention call The province needs to improve on its strategies to curb unemployment

Intervention call The province needs to improve on its strategies to curb unemployment

The amalgamation process of Limpopo’s four state-owned economic development entities is now in the final phase. This follows a year-and-a-half of intense work by an integrated project team representing the four entities and project advisers, KPMG.

The four entities identified by gov- ernment for amalgamation are the Limpopo Development Corp (LimDev), Trade & Investment Limpopo (TIL), Limpopo Business Support Agency (Libsa) The amalgamation process of Limpopo’s four state-owned economic development entities is now in the final phase. This follows a year-and-a-half of intense work by an integrated project team representing the four entities and project advisers, KPMG.

The four entities identified by gov- ernment for amalgamation are the Limpopo Development Corp (LimDev), Trade & Investment Limpopo (TIL), Limpopo Business Support Agency (Libsa) and Limpopo Agriculture De- velopment Corp (LADC).

Carol Read, partner and director at KPMG advisory services, says a com- prehensive and structured process was followed to ensure that every detail of the amalgamation process is in line with the relevant legal and governance principles.

Providing the background and history of how the project started, she says: “In

2011 the executive council of Limpopo

and Limpopo Agriculture De- velopment Corp (LADC).

Carol Read, partner and director at KPMG advisory services, says a com- prehensive and structured process was followed to ensure that every detail of the amalgamation process is in line with the relevant legal and governance principles.

Providing the background and history of how the project started, she says: “In 2011 the executive council of Limpopo made a decision that the province should have a single economic development agency. It was decided that Libsa and TIL should be dissolved and the assets and liabilities of these corporations should be transferred to LimDev and that LADC should be included in the amalgamation process and form part of the single economic development agency. “The pronouncement by Premier Cassel Mathale thus kick-started the amal- gamation process, which would focus on both the internal requirements of optimal service delivery and external requirements of the provincial economy in terms of employment creation and poverty alleviation.”

This initiative is aimed at affording the Limpopo economic development, environment & tourism department the opportunity to remove duplication of services and functions. It is also meant to optimise reporting and cost structures and enable the department to focus on a cohesive strategic direction. The objectives articulated at the start of the process were the amalgamation of the iden- tified entities into a single economic development agency, redesigning structures and systems, improving processes, efficiency and effectiveness, improving service delivery and contributing to eco- nomic growth in line with the Limpopo Employment Growth & Development Plan (LEGDP).

KPMG was brought on board in September 2011 and tasked to conduct due diligence on all the entities and make recommendations on the way for- ward to ensure an integrated entity design for the new agency. The first phase of the project involved due diligence on human resources, information technology, legal and regulatory frameworks, finance as well as conducting a strategy environmental scan and assisting with the change management process.

“There was certainly a compelling case for change,” says Read. “The province had fallen short of its aspirations to boost economic performance, create em- ployment, generate jobs at the right level and reduce poverty and inequality. It was felt that government’s efforts needed to be strengthened to address structural imbalances and constraints that impeded the economy from developing to its full potential.”

It was decided that the strategic in- terventions would focus on higher levels of employment, an improved business and investment climate as well as a more competitive, productive and resilient economy. Other areas of focus included a more coherent regional business brand, a diversified, sector-specific industrial base, improved digital, transport and logistical infrastructure, strong regional co-ordi- nation of activities across the province and a strong working relationship with national government departments and other agencies.

KPMG was appointed again in 2012 to assist with the second phase in which teams from all four entities worked closely with the project advisory team on the design and implementation of the amalgamation process. The most crucial elements of the strat- egy for the Limpopo Economic Devel- opment Agency (Leda), in line with the province’s Vision 2014, are the creation

of decent employment through in- clusive economic growth; a skilled and capable workforce to support an inclusive growth path; an ef- ficient, competitive and respon- sive economic infrastructure net- work; and the stimulation of rural communities that are vibrant, eq- uitable and able to contribute to food security for all.

 

A needed boost The plight of rural communities needs urgent attention

A needed boost The plight of rural communities needs urgent attention

The strategic pillars of the LEGDP were also considered, particularly with regard to the Employment Growth & Develop- ment Plan, enterprise develop- ment, regional economic devel- opment and integration, the green economy, ICT and innovation as well as the Agriculture & Rural Development Programme. The mandates of other development agencies that are active in the province were also examined to assist the new entity in developing a strategy for collaboration. Following a close examination of the mandates, strategic objectives, customer segments, products, services and delivery channels of the four entities, the team set about the important task of defining the new agency, Leda’s “reason for existence”. Read says Leda is not fundamentally different from the previous agencies in terms of service offerings. “The difference that will be seen and felt almost right away is the more focused and structured approach of the new entity. With ev- eryone pulling in the same direction and focusing on the creation of much needed employment opportunities in labour-in-tensive growth sectors, the agency is geared for success.”

Specific growth sectors that Leda will target and participate in have been iden- tified. These include mining and mineral beneficiation, agriculture and agropro- cessing, green industries, innovation and knowledge-enabled industries, tourism and creative industries. However, its work will not be strictly restricted to the identified sectors and will be subject to regular reviews to ensure that it remains relevant and responsive to the needs of the province. Its business activities will also be continuously benchmarked against best practice to ensure innovation and continuous improvement in the way it conducts business. As Read explains: “Leda will be driven by a double bottom line where there is a balance between financial and develop- mental returns. The profits that it’ll gen- erates will be reinvested into the agency and not distributed to shareholders. This will ensure that it is self-sustainable and able to gradually reduce its reliance on the provincial treasury allocations.”

Leda will offer a range of services including finance, training and skills de- velopment, sourcing investment partners for local enterprises, sourcing markets for Limpopo’s produce as well as enterprise development, mentoring and support. It will also offer incubation for small en- terprises that require business develop- ment support, infrastructure and human resources.

An exit strategy will be worked out to ensure that these small enterprises are nurtured and supported for as long as necessary without encouraging depen- dency. Because of the developmental function of the agency, it is envisaged that its payment terms will be more favourable than those offered by private sector institutions. Leda will beef up its communication and service delivery channels to ensure easy access for its customers. This will be done through local offices, social net- works, various publications, an infor- mative website, tradeshows and exhi- bitions and, as far as possible, through face-to-face interactions. A competition was held in January 2012 to give employees the opportunity to come up with a name for the new agency. The MEC for economic devel- opment, environment & tourism chose the name Limpopo Economic Develop- ment Agency (Leda) and it was sub- sequently registered with the Companies & Intellectual Property Commission. Leda’s corporate identity will reflect the multi-layered nature of the province and its commitment to the concept of ubuntu and providing a better life for the people of Limpopo. ■

“Leda will be driven by a double bottom line where there is a balance between financial and developmental returns” — CAROL READ

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