Support for the growth of New Industries and SMME in the Eastern Cape

1. Support for the growth of New Industries and SMME in the Eastern Cape 27 September 2012

2. CONTENT • INTRODUCTION AND MANDATE OF THE ECDC • EASTERN CAPE NATURAL ENDOWMENTS • NEW INDUSTRY SECTORS (ECDC & SMME INVESTMENTS) - NATURAL FIBRE - BAMBOO - AGAVE AMERICANA - BERRIES - FRESH WATER FISH/AQUA-CULTURE - PINEAPPLE • CONCLUSIONS

3. INTRODUCTION • ECDC’s mandate is to finance, market ,promote and stimulate key economic sectors for growth, job creation and skills development as per its founding ECDC Act No.2 of 1997 promulgated by the Eastern Cape Provincial Legislature. • ECDC is an entity which is wholly owned by the state and is listed as a schedule 3(D) in terms of the PFMA. • For the past 2008/9 to date, the ECDC has disbursed R741m to approximately 1,500SMME’s in various economic sectors. • Over this period it has had an ‘unqualified audit opinion as expressed by the A-G.

4. NEW INDUSTRY SECTORS The Province of the Eastern Cape is rich in the following natural resources and endownments: • Natural Fibres • Bamboo • Agave Americana • Blueberries • Fresh Water Fish / Aquaculture • Pineapples Apotential exists for the complete beneficiation in these industries within the Eastern Cape to produce high-value nichè products and thereby create the associated employment and income generating opportunities

5. NATURAL FIBRE INDUSTRY

6. ECDC Contribution to Natural Fibre Industry • ECDC decided to research and invest in NF industry in 2008 • Contributed R6 million into its research within the Eastern Cape • Established strategic partnership with the IDC and CSIR • Original EC initiative found expression in the Industrial Policy Action Plan of the thedti. • ECDC is currently considering the feasibility of registering a National Fibre Industry Association and further financial support.

7. Advantages of promoting the Natural Fibre Industry • Natural fibres are a healthy products: these products contain oxidants which are good for metabolism • Natural fibres are a responsible choice: they provide livelihoods and food security to millions of small-scale farmers and processors. • Natural fibres are a sustainable choice : The emerging "green" economy is based on energy efficiency, renewable feed stocks in polymer products, industrial processes that reduce carbon emissions and recyclable materials. • Natural fibres are a high-tech choice : In Europe, car makers are using an estimated 80 000 tonnes of natural fibres a year to reinforce thermoplastic panels (bumpers, dashboards, etc.) • Natural fibres are a fashionable choice : Natural fibres are at the heart of an eco-fashion or "sustainable clothing" movement that seeks to create garments that are sustainable at every stage of their life cycle, from production to disposal

8. Use of Fibre Products by Vehicle Manufacturers • AUDI A2, A3,A4,A6 & A8 models: Seat backs, side and back door panels, boot lining, hat rack, spare tyre lining • BMW 3,5,7 series models: Door panels, headliner panel, boot lining, seat backs, noise insulation panels, mouldedfoot well linings • MERCEDES BENZ A, C, E and S-class models: Door panels, windshield, dashboard, business table, pillar cover panel • FORD Mondeo & Focus: Door panels, B-pillar, boot liner • VOLVO Models: Seat padding, natural foams, cargo floor tray • TOYOTA cars: Door panels, seat backs, Spare tyre cover • VOLKSWAGEN Golf & Passat models: Door panel, seat back, boot lid finish panel, boot liner

9. Wool & Mohair Products from Natural Fibre Opportunities exist for products in knitted and woven garments for the clothing and textile industry The rich cultural heritage of the Eastern Cape provides opportunities for products in clothing brands using wool and mohair In addressing rural economic development the ECDC is targeting to finance cotton producing co-operatives for the promotion of local economy

10. BAMBOO INDUSTRY

11. ECDC Contribution to Bamboo Industry • Initiative started during 2010 when ECDC realised that the Bamboo Industry could be a catalyst for economic development in rural areas of the Eastern Cape • ECDC invested a cumulative investment amounting to R3m in 2011 for trials in five (5) small bamboo growing sites • Already, 20 new jobs have been created as a result of the five ECDC-funded projects, while another 77 are expected to be created by February 2013. • ECDC successfully hosted a World Bamboo Day celebrations in EL on the 18 September 2012 in partnership with the IDC and other role players. • ECDC secured additional funding to implement two small bamboo value adding community projects and plant 111 hectares of bamboo. • Currently in the process of establishing a National Steering Committee to drive the implementation of Bamboo planting and value-add projects.

12. Typical products/uses from Bamboo Trees • Bamboo in normal daily life of Art and in Gardens • Bamboo in used manufacturing sport equipment and musical instruments. • Bamboo is used as an as a preservative in some food items, it is medicinal and can be used in packaging products • Bamboo is also used in construction of Houses and Boats • Bamboo is also used in Composites and Charcoal • Bamboo is used in Tissue Culture Laboratories and Nurseries • Bamboo is also used in bath soap and other cleaning products

13. Advantages of Bamboo for Rural Development • Bamboo grows fast. After four to six years, it can be used for the production of timber and edible shoots. • Bamboo’s root system helps bind soil and prevents erosion. • Bamboo can be managed with very few agricultural inputs, even on small areas of land unsuitable for agricultural crops. This provides a low-maintenance and regular source of income for smallholder farmers and households. • Bamboo, with its lightweight and linear-splitting nature, is comparatively easier to process than timber. This provides opportunities to engage in initial processing and increase the smaller farmer role in value addition. • Bamboo has multiple arrays of high-value end-uses such as laminated plywood, flat pack furniture and activated charcoal • Markets for bamboo are growing rapidly as many countries have an increasingly insufficient capacity for wood production. Bamboo is a very versatile and highly effective substitute for timber.

17. AGAVE AMERICANA INDUSTRY

18. Wool & Mohair Opportunities for Agave Industry Agave Americana is an indigenous plant prevalent in the Eastern Cape from which products like Tequila is made out of. Opportunities exist for products of inulin, Fibres from the Agave leaves can be used for the production of technical textiles and reinforced composites Waste fibres from Agave can be used to generateproduction of paper products. In addressing rural economic development the ECDC is targeting financing of Agave Americana beneficiation by local communities in order to promote local economies

24. BERRIES INDUSTRY

25. ECDC contribution to the Berries Industry • ECDC has invested R5,2m in this sector, mostly as an equity partner to an existing private company • Berries are produced in Stutterheim in EC mainly for an existing export market in Europe and Saudi Arabia • To date, the project has been able to achieve 32 tons of produce • From 2007 a concerted effort was made by ECDC and other partners to make the Eastern Cape the berry capital within SA • Today there is a 38 hectares blueberry farm plus a further 3 hectares of a small scale out-growers. • The ECDC is currently planning to establish a packing and processing infrastructure at Stutterheim in order to benefiate the berries

29. FRESH WATER FISH/ ACQUACULTURE

30. ECDC contribution to the Aquaculture Industry • The ECDC has invested R10 million in the province to develop an Aquaculture Industry for ramping up production of Cog Fish for the existing markets in CT, JHB and DBN • The company is operating from the East London Industrial Development Zone • The company produces eggs, hatch them and then ensure they grow into marketable levels • The company has extensive expertise in fish farming since 2003 • The ECDC has further incentivise a company that produces fish by a further R370 000 through the Jobs Fund

33. PINEAPPLE INDUSTRY

34. ECDC contribution the Pineapple Industry • The ECDC assisted in revitalising the Pineapple Industry in the Eastern Cape through the establishment of the Eastern Cape Fibre Hub • The ECDC has invested R10 million as a combination of a loan and equity into a private company that processes the fruit into Juice • The juice is currently exported mainly into Europe and the Arabian Countries • Further investments has been made by the ECDC in research for the viability for micro cellulose (production of capsule covers) and bromelin (fibre) from the pineapple leaves for the Pharmaceutical Industry • The research is costing the ECDC about R2 million • Once the potential has been established, the ECDC will look into investing more through mobilising other funding agencies to create this industry in the province

35. CONCLUSION • Arable Land with natural endowments is available in the Eastern Cape to plant primary produce for the commodities listed above • The Eastern Cape(including Transkei and Ciskei) has irrigation schemes, currently not in use, this natural resource base provides opportunities for primary produce and processing for world markets. • EC has opportunities for agro-processing , green economy , bio-energy , food production to diversify its economic base. • ECDC’s role is to further harness and invest in these value chains for the Eastern Cape economy to achieve rural development and private sector (SMME) development the same time

36. END OF PRESENTATION THANK YOU FOR LISTENING ANY QUESTIONS? SITEMBELE MASE ECDC +27 43 704 5611 smase@ecdc.co.za