Limpopo

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Limpopo has agriculture focus

rd topLimpopo Regional Manager Kgampi Bapela 

Most of the fresh produce consumed in Gauteng comes from Limpopo. Given this, the regional IDC has a strong emphasis on agro-processing concerns. Mining is another leading sector.

The Limpopo Industrial Development Corporation regional office is tapping into the economic potential of the province, with plans to inject millions into growing the agro-processing industry. Also, the mining industry’s future is looking quite prosperous, with the sector looking into overtaking agriculture as the main economic driver.

Regional manager Kgampi Bapela says the IDC has R7.2-billion earmarked for the next five years for agro-processing. “We as a region want to take a chunk of that budget. It’s not allocated to regions but we want to at least be able to disperse R200-million per annum so that by the end of the five years we have used R1-billion in viable agro-processing projects.”

Agriculture is main economic driver in Limpopo, according to Bapela. He says 95% of the fresh produce consumed in Gauteng is from Limpopo, “but unfortunately [it is] not processed here”.

Mining, however, is fast growing and is anticipated to dominate economic activity in the region in the future. “The province has nearly 100 new mines and might be the new Gauteng,” he says.

Another sector the corporation is eyeing is contract mining. He explains: “We believe there are huge opportunities there, especially with the PGM mines we have here. Most of them are open cast and they can easily outsource. We want to say you don’t necessarily have to be the mine owner but the miner.”

Most of these are platinum group metals (PGMs) mines, which include platinum and chrome. Bapela points out that the IDC takes strategic equity in some mines and in others it is just a funder. “We don’t get involved in early exploration though, but will get involved in mines that will last at least 20 years.”

He added that some of the world’s largest reserves of coal are in Limpopo.

Limpopo regional office

The regional offices are in Polokwane, in a business complex in the hustle and bustle of the city centre. Kgampi Bapela, the regional manager explains: “The reason for setting up regional offices was to reach out to people. As the IDC our mandate is industrial development throughout the country and not just Johannesburg. This office was set up five years ago to be closer to clients and potential clients – not only to wait for them to knock on our doors but for us to go seek them too.”

There is an IDC regional office in every province to promote the corporation’s commitment to economic growth and industrial development countrywide. The IDC’s first regional offices were in KwaZulu-Natal and Western Cape. Offices were later opened in Mpumalanga, Limpopo, North West, Northern Cape, Eastern Cape and Free State.

How people can learn about the IDC

The IDC shares offices with other government agencies such as the Small Enterprise Development Agency (Seda) as they have an extensive reach. There are also smaller offices in other towns. Bapela says: “In Tzaneen, Thohoyandou, Groblersdal and Tubatse we have satellite offices which are accessible as we cannot expect all of them to able to come to Polokwane.

“We first make sure the Seda and other government agencies know all about our requirements so they are able to give people correct guidelines.”

The corporation also places advertisements in local newspapers as well as on radio, especially on Capricorn FM, a wholly black-owned regional radio station. The station is an IDC success story – the corporation funded it.

“With all our projects we have benchmarks in the sectors that we can refer to, to see when other projects of a similar nature will start making money.” The difference between the IDC and banks, he explains, is that banks give you money today and at the end of the month they expect re-payment, while the IDC gives the business model a chance until it is able to make money before seeking re-payments.

“We don’t take what the client gives us but we go and interrogate it further by looking at cash flows. We look at them and we decide at what point the client can and will be able to start paying back. We generally have a 12-month capital moratorium that the client will not be paying, depending on the nature of the project.”

Some flagship projects

One project of which the regional office is very proud is Capricorn FM which started making money way before the five years it was predicted to take at the beginning of operations.

“Another one of the projects we have funded is the Marula Nuts Project, where oils are extracted from the nuts and soaps are made. There had been piles of the nuts being unused after Amarula crème liqueur was made and these new entrepreneurs figured a way to make money from them.”

The corporation also invested in Westfalia, one of the world’s leading growers and suppliers of avocado, and just a year ago it helped to bring the first private hospital to Phalaborwa.

Plans for the future

Bapela says the IDC engages with government departments such as Economic Development to try to link developmental strategies. “I, for example, sit on some technical working groups in the Premier’s Office where we focus on different areas such as development finance and industries.”

It also looks at projects in specific sub-sectors and is more of an advisory board that tries to see what areas of policy it can influence as well as where it can pick potential projects in which to participate. “It fits with the mandate of the provincial government because they are also looking at agro-processing being the main economic driver in the province.”

There are other opportunities. “Did you know that 75 percent of the Kruger National Park is in Limpopo and not in Mpumalanga? We need the government to also make use of this to market Limpopo as a tourist destination.”

With new mines in the province the biggest problem the region has is with water supply. “Some of the biggest reserves of platinum are here in Limpopo but to mine them you need a constant supply of water. If you look at the Water Act, first preference is to humans, agriculture, environment and then industry,” says Bapela.

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