Confusion reigns over who controls township industrial parks

Recent statements by DTI Director General Lionel October and Small Business Development Minister Lindiwe Zulu illustrate government’s inability to provide clear direction over the future of South Africa’s industrial parks.

These parks were set up in the 1970s and 80s in the former homelands and townships to provide work spaces for black-owned small and medium enterprises which were prevented from operating in white-designated areas under the Group Areas Act. The parks have been left to decay over many years with virtually no investment in maintaining the buildings, transport infrastructure or marketing.

On July 15^th the DTI released a statement in which October announced “the department has set aside R80 million for the refurbishment and resuscitation of the country’s industrial parks”.

In a workshop convened last week by the Portfolio Committee on Small Business Development, Minister Zulu confirmed the parks include those owned by the Small Enterprise Finance Agency, Sefa, which in April was transferred to her department from the Department of Economic Development.

When asked why her department was not leading this refurbishment initiative, she said it did not have the resources to do so.

On questioning a DTI official at the workshop, it emerged that the Presidency had issued a directive to the DTI mandating it to lead the initiative. The DTI convened a workshop on July 14^th to which representatives of provincial and municipal government as well as Sefa were invited. Inexplicably, Sefa did not attend.

These parks are mainly occupied by businesses which should be the responsibility of Minister Zulu’s department, not the DTI. Most are small businesses employing less than ten people and turning over a few hundred thousand or a few million Rands a year.

This illustrates the confusion that exists over who really controls the parks and what role the Department of Small Business Development has in giving leadership to the small business sector.

In a separate presentation at last week’s workshop, the Gauteng Province Industrial Parks Association (GAPIPA) claimed Sefa had for years left the parks to decay and had reneged on a commitment to transfer ownership of the parks to the tenants.

When Business Partners, a joint venture between Johan Rupert’s Rembrandt Group and the government, established the parks in 1981, the tenants were promised ownership would pass to them after ten years’ continuous occupation so long as their rental payments were kept up to date. Business Partners was split up in 1995 with government-controlled Khula taking over the parks. Khula was merged with the South African Micro Finance Apex Fund to form Sefa in 2012.

All these organisational changes have led to executives passing the buck and not taking the issue seriously. Until June the parks were managed by JH Isaacs property management but their contract was not renewed, leaving Sefa with the task of managing them.

Things began to improve after the Portfolio Committee met tenants at the Orlando West Industrial Park in Soweto during a Parliamentary oversight visit in January. In February, however, the CEO of Sefa admitted that Sefa had not communicated with the Gauteng government over the latter’s Township Revitalisation Programme. It seems the right hand does not know what the left hand is doing.

These parks, home to thousands of struggling small businesses, should be the lifeblood of township and peri-urban economies. Government has announced countless initiatives to revive them but little has been done. This latest DTI-led initiative cannot succeed unless all stakeholders, including the tenants, are properly consulted and involved.

The refurbishment and resuscitation of the parks on its own is insufficient. The parks require hands-on support, both financial and non-financial, to bring them back to life. This is something both the DTI and Sefa, as well as the municipalities where they are located, are plainly incapable of providing.

Minister Zulu must take a leadership role in finding a long-term solution to the country’s industrial parks. This requires a strong statement of intent to provide the parks’ tenants with financial support, training and mentorship so they can take control of their own destinies once the parks have been restored and modernised.

In the meantime, Minister Zulu must take a stand in Cabinet and insist that the Department of Small Business Development be given responsibility for the parks. The DTI has, over the years, demonstrated it is culturally and organisationally unsuited to helping the small business sector grow and create jobs we so urgently need.

I will be calling on the Portfolio Committee to put pressure on Minister Zulu to fulfil the duties her office demands of her.