Limpopo Socio-Economy Recovery Plan

LIMPOPO SOCIO - ECONOMY RECOVERY PLAN T h i s p lan represent s the sum total of the government and its partners’ commitment to implement economic and social relief measures in mitigating against the impact of the COVID - 19 p a n d e m i c on the economy and the social fabric

1. BACKGROUND

The combined effects of COVID-19 and the recession will be a double-edged sword for the South African economy. In the last quarter of 2019, the South African economy experienced a technical recession, as the economy slowed down to -2% in 2020: Q1 from -1.4% in 2019: Q4 following a decline of -0.8% in the preceding quarter. With the latest statistical release for 2018, the Limpopo economy also slowed down to growth of 0.6 from 2.1% in 2017. Given that the Limpopo economy is part of the national economy, the negative effects from the national economy will have spillover effects to the Limpopo economy. Unemployment has risen from 23.1% in Q4: 2019 to 23.6% in Q1: 2020. In the same period under review, Limpopo lost 13 000 jobs mostly in manufacturing and mining.

The COVID-19 pandemic has resulted in the slowdown of the global economy and countries have applied various measures in an attempt to curb the spread of the virus. The most effective measure that countries have adopted from the “Wuhan lesson” is the measure for social distancing and subsequently locking down the territories to flatten the curve of new infections.

The results of the measures against COVID-19 does, unfortunately, impact negatively on the economy everywhere in the world. Therefore, there is a strong correlation between the application maximum measures such as lockdown and slowing down of economic and industrial activities and subsequently, the economic decline.

Before the COVID-19 pandemic, the long-term global outlook appeared positive. The coronavirus will have a negative impact in the short to medium growth outlook. According to the International Monetary Fund forecast, the global economy will contract by -3.1% in 2020 from a growth of 2.9% in 2019 before recovering to 5.1% in 2020. The Advanced and Emerging Market Economies are expected to contract to -6.1% and -1.0% in 2020, respectively. China, which has been a growth engine of the world for more than a decade will also decline and their growth outlook has been revised from 6.1% t to 4.8%.

See figure 1 for illustration:

Figure 1: The Impact of COVID-19 on the Global Economic Outlook (Source: OECD Economic Outlook)

World Economy Growth Projections The Covid 19 will have severe impact on economic activity in 2020 Emerging market & Developing Global Economy Advanced economies economies 8 5,8 4,5 6,6 6 3,7 4 2,9 2 0 0 -2 2019 2020 2021 2019 2020 2021 2019 2020 2021 -4 -3 -1 -6 -6,1 -8 Source IMF 2020

Sub-Saharan Africa is also forecast to decline to -1.6%. South Africa’s short-term economic outlook also remains bleak as a result the impact of COVID-19, as well as the recession in the last two quarters of 2019 and the sovereign credit downgrade by all three major credit rating agencies, namely: Standard and Poor, Fitch and Moody. It is now forecasted that South Africa will experience a decline (recession) by -6.1% in 2020.

The most affected countries will be resource-intensive countries, tourism-dependent countries and oil exporters and the majority of African economies fall within these categories. From figure 2 (below), the IMF has forecast that in 2020, the tourism-dependent countries will contract by -5%, whilst the resource- intensive and oil exporters will contract by -3%. South Africa’s and Limpopo’s economies are dependent on the extractive industries and tourism and the impact from the reduced export demand and reduction in both international and domestic tourists will be felt in the economy for a foreseeable period.

Figure 2: The Impact of COVID-19 on the Resource-Intensive, Tourism-Dependent and Oil Exporting Economies (Source: IMF)

Figure 3: RSA Growth Projection (Source: SARB)

South Africa GDP Growth Projections 2011-2022 4,00

3,50 3,30

3,00 2,70 2,50 2,50 2,20 2,20

2,00 1,80

1,40 1,50 1,20

1,00 0,80

0,40 0,50 0,20

0,00 11 12 13 14 15 16 17 18 19 20 21 22 -0,50

-1,00 Source StatsSA and SARB 2020 -1,02 -1,50

The South African Reserve Bank (SARB) expects national GDP in 2020 to contract by -6.1%, compared to the earlier forecast of -0.2%. The economy will however recover and grow by 2.2% and 2.7% in 2021 and 2022 respectively (see figure 3 above for illustration). The growth forecast for Limpopo, whilst not yet determined, can be expected to be negative following the decline of the South African economy. The decline that was experienced from 2.1% to 0,6% in 2017 and 2018, respectively, pointed to a further decline and a worse recession in 2019 onward.

Whilst the long-term global outlook is still positive, policymakers in many countries are concerned about the prospects for long-term economic development. This is partly because the current expansion appears to be cyclical, bolstered by exceptionally low interest rates rather than by the fundamental drivers of structural growth.

Across the globe, it has become important for nation-states to develop economic recovery plans to deal with the negative impact of the recession and the COVID-19 pandemic. The stimulus packages by the two largest economies in the world (US and China) of US$2 trillion and US$1 trillion respectively will resuscitate global production and aggregate demand.

2. ECONOMY STIMULUS AND RECOVERY

Governments across the world have devised stimulus packages to support their industries and people in mitigating against the economic slowdown caused by the lockdown. The idea around the stimulus and relief package has historical precedence such as the United States New Deal, which was a government stimulus programme to kick-start the economy after the Great Depression in 1929 and subsequently expanded to deal with the effects of the Second World War. In recent history, countries around the world have developed stimulus packages to counter the effects of the global recession in 2008/2009. In light of the current COVID-19 pandemic, many countries have now developed stimulus packages and relief mechanisms for the population and industries that cover the following:  Relief mechanisms and tax breaks for corporates and small, micro and macro businesses to support the liquidity, wage bill and cash flow problems;  Manufacturing and supply of COVID-19 testing kits, sanitizers and personal protective equipment;  Support for the vulnerable in societies through cash transfers and food parcels.

The following are the case studies of the US and China on the employment of stimulus packages to mitigate against the effects of COVID-19:

2.1. Case Studies on Stimulus and Recovery Programmes

CASE STUDY 1: The US Economic Stimulus

The US has a long history of providing stimulus packages during an economic downturn. During the 2008/2009 global recession, the US government allocated a stimulus package of US $1 trillion covering all the industries and its effect can be felt today, where the economy has been growing ever since and unemployment has been on average 7%. It was only in 2020 that unemployment has risen to 14% (2020: Q1) because of the COVID-19 impact. As a mitigating measure against COVID-19, the US government enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The act became the largest economic stimulus bill in modern history, more than doubling the stimulus act passed in 2009 during the financial crisis.

Table 1 below provides a visual representation of where the US $2 trillion will be spent. Broadly speaking, there are five components to the COVID-19 stimulus bill: Category Total Amount Share of the Package

Individuals / Families $603.7 billion 30%

Big Business $500.0 billion 25%

Small Business $377.0 billion 19%

State and Local Government $340.0 billion 17%

Public Services $179.5 billion 9%

Some of the highlights of how the money will be spent per categories are as follows:

a. Direct cash payments to individuals and families ($603.7 billion)

The centrepiece of this plan is a US $1,200 direct payment for those earning up to US $75,000 per year. For higher earners, payment amounts will phase out, ending altogether at the $99,000 income level. Families will also receive $500 per child. The direct cash payment will be segmented as follows:

 There will be a temporary suspension for any student loan held by the federal government. This means no payments required and no interest accrued until the end of September 2020;  Borrowers with federally backed loans can request forbearance on mortgage payments for up to six months;  There will be an expansion of unemployment benefits, including a four-month enhancement of benefits. This plan includes freelancers, workers in the gig economy and furloughed employees. b. Big Business (US $500.0 billion)

This component of the package is aimed at stabilizing big businesses in the hard-hit sectors. The most obvious industry to receive support will be the airlines. About $58 billion has been earmarked for commercial and cargo airlines, as well as airline contractors. Perhaps in response to recent criticism of the industry, companies receiving stimulus money will be barred from engaging in stock buybacks for the term of the loan plus one year.

One interesting pathway highlighted is the US $17 billion allocated to “maintaining national security”. While this provision does not mention any specific company by name, the primary recipient is Boeing. The bill also indicates that an inspector general will oversee the recovery process, along with a special committee.

c. Small Business (US $377.0 billion)

To ease the strain on businesses around the country, the Small Business Administration (SBA) has been allocated US $350 billion to provide loans of up to US $10 million to qualifying organizations. These funds will be for mission critical activities, such as paying rent or keeping employees on the payroll during COVID-19 closures. As well, the bill sets aside US $10 billion in grants for small businesses that need help covering short-term operating costs.

CASE STUDY 2: CHINA

China has set aside a stimulus totalling US $812. 4 to boost lending to small and medium-sized enterprises (SMEs). The liquidity or allocated additional lending is worth $232 billion and the remainder, US $ 16.4 billion for financial relief and stimulus aimed at fighting the virus. The stimulus aims to double temporary cash handouts to low-income families and the unemployed from March to June 2020 and this will cover 67 million people. The funds will be used to revitalize the automotive industry after sales plunged by 42% in January and February 2020. The government will extend subsidies and tax breaks on electric vehicles by two years, while cutting sales tax on used cars from May 2020 through the end of 2023.

2.2. South Africa’s Stimulus and Relief Programmes

South Africa also has a historical precedence of implementing the economic stimulus package to resuscitate the economy. During the global recession in 2008/2009, the South African government developed a “Framework of Measures to Support the Economy against Global Recession” which introduced new jargons such as employment layoff scheme and SMME Relief Fund, amongst other programmes.

The South African government has set aside an economic stimulus of R800 billion to mitigate against the impact of COVID-19 on the population and the economy. The stimulus is equivalent to 15% of GDP and this is in line with the precedent of stimulus that have been developed by industrialist countries. Of the stimulus, 26% or R130 billion will be sourced from reprioritizing funds from South Africa's existing budget. About US $4.2 billion will be sourced externally from international finance institutions like the New Development Bank, the World Bank, IMF and the African Development Bank. An estimated R300 billion will be injected from the monetary and fiscal policy operations. The remainder will be sourced from existing programmes in public institutions like the Unemployment Insurance Fund and the Industrial Development Corporation.

Briefly, the stimulus will be spent as follows:

 R200 billion loan scheme with major banks - A R200 billion loan guarantee scheme will be introduced in partnership with major banks, National Treasury and the South African Reserve Bank to help companies with operational costs, salaries, rent and supplier payments, amongst other things.

 R50 billion boost for grant recipients - A six-month coronavirus grant will be introduced for those "most desperately affected by the coronavirus". Child support grant beneficiaries will get an extra R300 in May and from June to October; they will receive another R500 per month. All other grant beneficiaries will get an extra R250 per month for the next six months. An additional special Social Relief of Distress grant of R350 per month will be available for the next six months to those who are unemployed and not receiving other forms of grants or UIF payments.

 R100 billion for jobs - To date, the Unemployment Insurance Fund's COVID-19 benefit has already paid out R1.6 billion, assisting over 37 000 companies and thousands of workers. An additional R100 billion will be set aside to protect and create jobs. Government will also continue to give assistance in the form of loans, grants and debt restructuring to small businesses, spaza shops and other informal businesses, which have been given R100 million so far.

 R70 billion in tax relief - A range of tax relief measures will be introduced to ease the pressure on businesses and individuals such as a four-month holiday will be granted for companies' skills development levy contributions; VAT refunds will be fast-tracked; and a delay will be granted for the filing and payment of carbon tax. Businesses will also be given some relief measures, including an increase in the turnover threshold for tax deferrals to R100 million per year, while the proportion of PAYE payments that can be deferred will be increased to 35%. Moreover, no penalties will be applied for late payments if taxpayers can show they were disadvantaged by the coronavirus pandemic.

 R20 billion for municipalities - Municipalities will get a boost in the form of an additional R20 billion in funding for emergency water supply to assist sanitation, as well as public transport and providing food and shelter for the homeless.

 250 000 Food parcels - The Department of Social Development is working with NGOs, the Solidarity Fund and others to distribute 250 000 food parcels across the country.

 Over R100 billion to help protect frontline workers - This fund will be managed by IDC support companies for the procurement of personal protective equipment in addition to the earlier allocation.

The breakdown of all the funding, beneficiaries and the allocation is summarized below:

Table 2: Relief measures for the population

RELIEF MEASURES FOR THE POPULATION FUND/MEASURE DESCRIPTION ALLOCATION/SET ASIDE Solidarity Fund Fund to combat the spread of Government (R150 million) the virus, help to track the Private Individuals spread, care for those who are (R2,5 billion) ill and support those whose lives are disrupted

Countercyclical measures The Reserve Bank has lowered Monetary policy interest by 2% (in March/April) intervention by the Reserve to stimulate aggregate demand Bank in the economy by injecting a liquidity of R70 billion Protection of Frontline R100 million set aside for the R100 million Personnel procurement of PPE for frontline personnel Food parcels to 250 000 Food parcels to households who Department of Social households have a combined income of less Development targeting that than R3 500 segment of the population that is living below the food poverty line Jobs Fund To protect and create jobs, the R130 billion from the payment of Unemployment Unemployment Insurance Insurance Fund (UIF) as a relief Fund comprising R30 billion to employees who have lost UIF and R100 billion job their jobs during the COVID-19 protection and creation fund lockdown

Qualifying employees apply directly with the Provincial UIF Commissioners to be considered Social Wage Child support grant R50 billion beneficiaries will get an extra R300 in May and from June to October, they will receive

RELIEF MEASURES FOR THE POPULATION FUND/MEASURE DESCRIPTION ALLOCATION/SET ASIDE another R500 per month. All other grant beneficiaries will get an extra R250 per month for the next six months.

An additional special Social Relief of Distress grant of R350 per month will be available for the next six months to those who are unemployed and not receiving other forms of grants or UIF payments

Loan Guarantee A R200 billion loan guarantee scheme will be introduced in partnership with major banks, National Treasury and the South African Reserve Bank to help companies with operational costs, salaries, rent and supplier payments, amongst other things

SMME/CORPORATE FUND FUND/MEASURE DESCRIPTION ALLOCATION/SET ASIDE Industry Support Fund An IDC set aside to assist R3 billion industries in terms of liquidity and cash flow SMME Fund This fund has 3 funding R2 billion programmes: (i) Business Growth facility - 16 manufactured products in response to COVID-19. A database of manufacturers was developed and has been sent to DSBD

SMME/CORPORATE FUND FUND/MEASURE DESCRIPTION ALLOCATION/SET ASIDE (ii) SMME Relief Fund - To keep a company afloat that experiences cash shortfall (iii) Restructuring of SEFA- Funded SMMEs - Debt restructuring for companies that are funded by SEFA

Qualifying enterprises must register on the DSBD SMME portal to be considered Municipal Infrastructure Set aside for funding for R20 billion Funding emergency water supply to assist sanitation, as well as public transport and providing food and shelter for the homeless SME Fund (Business Grants and loans to qualifying R2 billion (allocated by Partners) SMEs for up to R100 million, private individuals) re-payment holiday of up to 12 months Informal Business Fund To support informal businesses DSBD allocation of to register and inject liquidity R30 million Spaza Shop Fund To support South African owned DSBD allocation of and managed spaza shops to R500 million register and to buy stock at wholesalers Limpopo has been pre- approved for support for 2 690 spaza shops of the total 25 000 nationally The spaza shops can qualify for R3 500 grant and a further R3 500 loan SARS Support Measure R70 billion for tax relief to cater R70 billion rebate for:  Four-month delay in the payment of skills 11

SMME/CORPORATE FUND FUND/MEASURE DESCRIPTION ALLOCATION/SET ASIDE development levy, carbon tax  Tax subsidy of up to R500 per month for the next four months to private sectors earning below R6, 500 - 4 million will be helped  SARS to accelerate payment of employment tax incentive - twice per year  Tax compliant businesses with turnover below R50 million will be allowed to delay 20% of pay-as-you- earn in the next four months. 75 000 small and medium enterprises are targeted Banking Sector Measures  Instalment cash flow relief, Temporary relief measure during which no instalments/repayments will be due for the three- month period  A preferential interest rate will apply to the COVID-19 relief interventions given  No initiation fees will be charged for any relief granted  Assistance with processing credit insurance claims, where possible  Loan repayment holiday for three months and other measures for qualifying individuals and companies and rental holidays to

SMME/CORPORATE FUND FUND/MEASURE DESCRIPTION ALLOCATION/SET ASIDE SMMEs leasing bank-owned buildings Tourism Relief Funding To support SMMEs in the R200 million tourism and hospitality sector under particular distress due to travel restrictions Agricultural Disaster Support Support for small-scale farmers R1, 2 billion Fund for Smallholder and in poultry, vegetable, fruit, Communal Farmers livestock and winter crops who have been in production for a minimum of 12 months National Empowerment Sustenance for Black R200 million Fund’s Black Business businesses to assist with Funding machinery and equipment to manufacture products in response to COVID-19 Monetary and Fiscal Policy Relief to mitigate the negative R300 billion Operations impact of COVID-19 International Financial Relief to mitigate the negative US $4.2 billion/R75 billion Corporations impact of COVID-19

TOTAL R800 billion

3. LIMPOPO SOCIO-ECONOMY RECOVERY PLAN

3.1. The impact of COVID-19 on the Limpopo Economy

In terms of Disaster Management Act Regulations of March 2020, certain services and goods have been categorized as essential during the lockdown. The majority of enterprises in the agricultural value chain and mining (coal and phosphate) qualify as essential services under the regulations published by the Minister of Co-operative Governance and Traditional Affairs, Dr Nkosasana Dlamini-Zuma. The Regulations permit activities involved in the production and sale of essential goods, such as food items, to continue operating under the national lockdown, but subject to strict hygiene, sanitation and social-distancing protocols.

3.1.1 Agricultural Sector

Agriculture and food supply services have been categorised as essential services. Consequently, most activities within the food production value chain system continue to function during the lockdown. Although the impact of the outbreak of COVID-19 on the sector is projected to be minimal in the immediate term according to the analysts, the softening of the demand on agricultural products cannot be overruled.

a. Local supply and demand Locally, the supply and availability of agricultural products locally is reported to be adequate for the immediate term. This is boosted by the expected bumper maize harvest for 2020. Maize production is estimated at 15.5 million tons, of which 9.1 million tons is white maize. South Africa’s total human consumption of maize as a basic staple food is estimated at 5.4 million tons per annum and total feed consumption amounts to 5.8 million tons per annum (BFAP, March 2020). This implies that there will be ample maize to meet demand in the human and feed markets, with sufficient stock for export. There is also general optimism about the 2020 harvest in the fruit industry. However, the demand for agricultural produce could somewhat be affected by loss of income on the part of consumers. This would imply less income for farmers.

b. Export market demand and supply South Africa’s agricultural exports amounted to US $10 billion in 2018, which was underpinned by increased exports of citrus (oranges, lemons and grapefruit), grapes, wine and wool, amongst others. This led to a 21% increase in SA’s agricultural trade balance to US $3,9 billion (Agbiz, June 2019). Equally, at export market level the analysis points to potential softening on the demand for agricultural products due to a general decline in the consumer demand, attributed mainly to the absence of activity, more especially at public dining outlets.

On the other hand, loss or reduced income of the consumers may also imply a re-adjustment of products in the food basket. This would mean consumers would focus only on basic essential foodstuff because of affordability. Low demand therefore means low commodity prices. The implication of falling commodity prices is less income for the farmers, which might lead to shedding of jobs in certain instances. Moreover, potential disruptions because of logistical challenges due to restrictions on the movement of goods will have a negative economic impact on South African producers, agribusinesses and exporters. Consequently, producers will likely face a challenge of lower prices in an event where products that were destined for export are diverted into the local market, thus causing temporary seasonal local surpluses and lower prices in the domestic market. Limpopo is a major producer of horticultural products nationally, most of which are for the export market, namely citrus and avocados, at 42% and 65% respectively.

c. Input supply South Africa is highly dependent on imports of agricultural inputs. It is estimated that more than 80% of domestic fertilizer demand and more than 95% of plant protection chemicals are imported (BFAP, March 2020). This implies that local prices are subjected to the same supply and demand forces that drive international markets. Therefore, possible disruptions in the global supply chain would mean low supply and in turn higher production costs for producers.

d. Jobs Harvesting of most horticultural crops, as well as potatoes has started in most parts of the province. Harvesting of maize will start soon, along with preparations for winter crop planting. The period from April to September is the most critical and busy period for the agriculture sector in Limpopo.

StatsSA 2017 Census report on commercial agriculture, released on 24 March 2020 showed that Limpopo is second to the Western Cape in terms of the number of jobs created by the agricultural sector, making national contribution of 24,7% and 12,9% respectively. For Limpopo, the major contributor was the horticulture industry at 48 079 employees or 49,4% of the total, followed by mixed farming (24 881 or 25,5%).

The potential impact of COVID-19 is therefore on the numbers of workers, particularly on managing harvesting teams to permissible numbers in order to comply with social distancing requirements. Another potential challenge is workers not showing up at work or becoming unproductive because of fear or uncertainty around the pandemic. To address this, employers were urged to promote and allow continuous information sharing to raise awareness on the pandemic. Furthermore, Limpopo Department of Agriculture & Rural Development (LDARD), in partnership with organized agriculture will conduct periodic spot checks on farms, which are also aimed at inspecting compliance to the COVID-19 protocols to curb its spread.

3.1.2 Mining Sector

Except for the coal industries that were deemed essential services during the first phase of the lockdown starting on 26 March 2020, the majority of mines were shut down during that period. Coal mining and phosphate were deemed essential, as they are an input into electric generation and agriculture respectively. The closure was, of course, detrimental to the economy, as mining contributes 24.8% or R90 billion value addition to the economy and employs 86 000 of the total workforce of 1.2 million. The indirect impact will have been felt throughout the mining input supplier companies in manufacturing, retail, agriculture, utilities, finance, banking and real estate, etc. Whilst the impact of the lockdown has not been quantified yet, the social and socio-economic manifestation of the lockdown point to the fact that the lockdown has contributed immensely to increased levels of poverty within the mining towns and the rest of the province.

The Lockdown Alert Level 4, which came into effect on 01 May 2020 made provisions for the re-opening of the mining sector, allowing for the operation of smelters, full operation of open-cast mining and 50% operations of other mines, except for coal and phosphate mines that never closed. There are strict conditionalities and accountability that is placed on mining companies to only start operations upon complying with the following stipulation in line with Regulations under Section 27(2) of the Disaster Management Act, 2002. Sub-section 30 (4a-e):

 Appropriate measures to protect the health and safety of workers must be implemented (issued by the Department of Mineral Resources and Energy (DMRE);  A rigorous screening and testing programme must be implemented as employees return to work;  Mining industries must provide quarantine facilities for those who have tested positive for COVID-19;  Data for screening and testing must be submitted to government authorities; and  Mining companies must provide transport to RSA employees who will be returning to work.

The Mining Weekly of the 8th May 2020 asserts that the global mining industry is facing a new reality amid the COVID-19 pandemic. In Limpopo Province, the current measures used to curb the spread of the virus are impacting on mining operations resulting in downscaling their supply chains, manufacturing industries and, consequently, the demand for minerals and metals. The new reality for the mining industry includes increasingly volatile commodity prices, executives taking pay-cuts, staff being retrenched or forced to go on unpaid leave, limited mining and processing operations.

COVID-19 has caused uncertainty around the immediate future of many mining operators and this is going to be a further motivation for automated and digital mine solutions.

3.1.3 Tourism Sector

Tourism is currently one of the most severely affected sectors by the outbreak of the COVID-19 pandemic. In early 2019, the United Nations World Tourism Organisation (UNWTO) stated that the number of international tourist arrivals slowed down to 4.0% growth. This was the slowest rate since 2016 due to a cooling global economy, geopolitical tensions and uncertainty regarding Brexit. With the recent COVID-19 virus outbreak, UNWTO estimates that international tourist arrivals could further decline by 20% to 30% in 2020. This would translate into a loss of US $ 300 to 450 billion in international tourism receipts (exports) - almost one third of the US $ 1.5 trillion generated globally in the worst-case scenario. These estimates should be interpreted with caution in view of the magnitude, volatility and unprecedented nature of this crisis. SARS and the 2009 global economic crisis are the existing references, but it is clearly stated that this crisis is like no other. It is furthermore stated that this impact is felt across the whole tourism value chain. The UNWTO also indicated that estimated impacts at this point in time must be treated with caution and is likely to be updated as the pandemic prolongs. Continuous monitoring of the impact of COVID-19 on international tourism should therefore receive priority on international, national, regional and local levels.

The recent survey conducted by the National Department of Tourism in collaboration with IFC, Tourism Business Council of South Africa (TBCSA) and all its member associations provided more insight on the impact felt in South Africa. The results clearly indicated that 99% of the responding firms are affected by COVID-19 and as reported at a global level, small and medium sized enterprises that make up around 80% of the tourism sector are particularly exposed including vulnerable communities, relying on tourism. The most commonly applied mitigation measures by businesses in South Africa are temporary closure at 69%, supporting deferment instead of cancellation at 60% and significant downscaling at 58%. All businesses prioritized financial support for cash flow, financial support for recovery and tax relief. Most of the tourism Industry respondents applied for the UIF/TERS scheme and the Tourism Relief Fund. Over 50 000 workers from the travel, tourism and hospitality sector have applied for UIF relief thus far.

While 83% of firms reported that revenues in March 2020 are down with more than 50% compared to March 2019, 34% of firms say revenues are 100% less. It is believed that the impact will escalate as long as the current lockdown restrictions prevail. A follow-up impact assessment will be conducted in June to determine the impact of alert level 4 and 3 on the industry. This will provide a clear picture of the current situation in the tourism industry.

While certain accommodation establishments are permitted to operate that provide services to essential workers and/or serve as quarantine sites, as per the required regulations and protocols (Government gazette No. 43200, Government Notice No. 235 of 2 April 2020), a drive to de-risk the tourism industry is underway. The aim is to open certain tourism activities and domestic travel as a matter of priority. This will not only assist the industry to recover earlier than anticipated, but also lead to the development of

17 operating protocols to ensure compliance to COVID-19 regulations and all other health and safety requirements at tourism facilities that are in operation.

3.1.4 Transport Sector

The Department of Transport has suspended all new projects due to the reprioritization of programmes necessitated by the COVID-19 pandemic and the subsequent budget cut. The development of new subsidy networks and contracts and the development of the Collins Chabane Integrated Transport Plan will also be delayed due to distorted travel patterns caused by COVID-19 Public Transport directives. Both these projects require transport surveys, which can only commence once all businesses, schools and services are in full operation.

The public transport industry is one of the industries mostly affected by the outbreak of COVID-19. COVID- 19 Public Transport directives, limiting travelling and loading capacity, has had a devastating financial impact on the industry. Buses were not allowed to operate during lockdown level 5, except those that were contracted to transport essential workers. In terms of COVID-19 Public Transport directives, buses are allowed to load only 50% of their capacity and minibus taxis 70%. With the current limitations on buses, 50% fewer commuters will benefit from subsidised transport. It is difficult to project the number of passengers who will be benefitting from the bus subsidy programme in the 2020/2021 financial year not knowing for how long the loading capacity restrictions will apply. The department has used a worst-case scenario when setting the targets for the number of passengers who will be benefitting through subsidized bus transport. Targets will have to be reviewed on a quarterly basis, depending on lockdown levels and the loading capacity restrictions.

3.2 The Limpopo relief measures against COVID-19

The provincial government, unlike the national government cannot use the fiscal and monetary policies expansion to increase liquidity in the economy. Limpopo businesses will certainly benefit from the funding programmes that are set aside at a national level. It will be difficult for the province to fully replicate a stimulus package similar to that which has been set up nationally, but the province can supplement with similar initiatives provided that there is no duplication to the national effort and that the qualification criteria for enterprises is similar to the national one.

Limpopo government has set aside R3,5 billion to mitigate against the impact of COVID-19 on the economy and the population. The larger proportion of the provincial government funding is allocated to the social cluster, that is health, education and social development. Of this total amount, the economic stimulus has been budgeted for R500 million for financial year 2020/21 for enterprise development, farmer support and road infrastructure. The total economic stimulus for Limpopo economy is detailed in Annexure 1 and it 18 covers both the national and provincial government allocations as well as funding from cooperative partners.

The Limpopo Socio-Economic Stimulus is borne out of the fact that the national funding will not be sufficient to provide the desired relief to enterprises and the population. The provincial government will have to use its own resources and that from cooperating partners to mitigate against the impact of COVID-19 in the short-term and the resuscitation of the economy in the long-term. The short-term measures (R500m) will be implemented in 2020/21. The medium to long-term measures will be implemented in the outer years of the MTEF period and beyond in line with the Limpopo Industrialization Master Plan (2020-2030) and sectoral plans.

Given the economic stress that business (formal and informal in various sectors) is experiencing, it will be important to introduce supplementary support measures such as the following:

3.2.1 Short-Term Measures

These measures are meant to be implemented during and the immediate post-lockdown period up to the end of the financial year 2020/21 to ameliorate the effects of the COVID-19 lockdown.

Table 3: Limpopo provincial short-term measures to resuscitate the economy

Numbe Cost Description of Unit Cost r of per Months Total Cost Full Description Expenditure Items Project 1. SMME and R10 000 LEDA R10 4 months R10 000 This project entails co-operative 000 loan 000 000 existing loan book Relief Fund book 000 financial relief to (LEDA) SMMEs and cooperatives. Number of job opportunities: 3 600 direct job opportunities.

2. National R10 000 NEF R10 4 months R10 000 This project entails Empowerme 000 provinc 000 000 existing loan book nt Fund (NEF) ial loan 000 financial relief to funded by book SMMEs and co- Limpopo operatives in Limpopo Government 3. COVID-19 Range from Varies R7 800 Once off R7 800 Purchase of waste relief fund to R15 000 to per 120 120 bailers, scales and support R250 000 applica- crushers to ensure that waste per tion waste re- recyclers/ applicant claimers/waste waste re- recyclers are claimers/ supported. This will waste ensure that waste processors pickers are back at (Environment workplaces and ) recyclers buy the recyclables. Funding will also include operational costs to revive waste recycling in the province to mitigate stockpiling and the negative earnings suffered by waste re- claimers and waste pickers. 4. Completion R1 792 000 1 EMF R1 792 6 months R1 792 Motivation for of the 1 SEA 000 000 appointment of a 20

Numbe Cost Description of Unit Cost r of per Months Total Cost Full Description Expenditure Items Project Vhembe service provider to Environment finalize the al development of the Management incomplete Vhembe Framework EMF (halted due to lack (EMF) and of funds). A service Strategic provider is required to Environment develop a detailed SEA al as part of the EMF. The Assessment SEA is required for the (SEA) Musina-Makhado (Environment Special Economic Zone ) and to address objections from interested and affected parties, including the request by the Centre for Environmental Rights (CER). 5. Specialist R2 939 000 1 EIA R2 939 10 months R2 939 Appointment of main review of the 000 000 service provider who environment will appoint other al impact specialists to assist in assessment the review of the application environmental and specialist authorisation EIA reports for application for the the Musina- Musina-Makhado SEZ. Makhado The service provider Special will also assist in Economic addressing current Zone (SEZ) objections (more than (Environment 26 in total) from ) interested and affected parties, including the request by the Centre for Environmental Rights. The service provider will also assist to handle appeals on behalf of the department and

Numbe Cost Description of Unit Cost r of per Months Total Cost Full Description Expenditure Items Project possible litigation that is inevitable. 6. Provincial R50 000 per 200 R10 00 6 months R10 000 Support tourism Tourism application 0 000 000 SMMEs, tourist guides, Relief Fund community tourism (Tourism) projects and homestay initiatives with relief funding as per pre-set criteria to supplement relief funds made available from the National Department of Tourism to deal with COVID-19. 7. Production Maximum 1150 R57 50 According R57 500 Relief support for inputs to of R50 000 farmers 0 000 to the 000 farmers, as per the set farmers per farmer production criteria to supplement cycle of the relief funds made identified available from the commoditi National Department of es Agriculture, Land Reform and Rural Development. Support is for the following commodities: - Vegetables: seedlings, fertilizer, pesticides, herbicides, and soil correction - Poultry (day old chicks, point of lay, feed, medication, and sawdust) - Other livestock feed and medication 8. ROADS As per page R400 m As per page R400 m Prioritization of 28 28 unfinished roads in the Province

Numbe Cost Description of Unit Cost r of per Months Total Cost Full Description Expenditure Items Project 9. Provincial R10 000 per 360 R3.6 m 4-26 August R3.6 m Implementation of the COVID-19 artist Artists 2020 relief fund for artists Relief for who lost income as a Artists result of COVID-19 TOTAL R500 M LIMPOPO RELIEF SUPPORT

Table 4: Short Term Support Measures

PROGRAMME/PROJECT SUPPORT MEASURES BENEFICIARIES The implementation of Local Ensuring that the Limpopo based SMMEs and Procurement Accord government and industries cooperatives procure locally (to be measured in terms of an increase of the proportion of local procurement of the total procurement budget Manufacturing Support For Limpopo based SMMEs Ensuring that Limpopo Programme that manufacture COVID-19 based SMMEs are registered products such as masks, on the Treasury gloves, sanitizers, other PPE, Procurement Portal and etc. production support and market access Food parcel provisioning Expansion of the food bank Department of Social to cater for households Development programme whose income is less than R3000 per month

3.2.1.1 Sector Support Plans

Departments and agencies have developed sector support plans to operationalize the listed programmes.

a. Agriculture Short-Term Plans

For cash crops such as vegetable and field crops, timely availability of inputs is critical in order to optimize both the quantity harvested and quality of the product. Currently, the 2019/20 summer crop is at the end of the growing season and harvesting has already begun. For 2020/21 winter crops, the planting period will be commencing shortly. Producers need to start with land preparations and planting, which requires sufficient production inputs.

For horticultural industries such as avocados, nuts and citrus, harvesting season is just beginning. Beyond the end of the harvesting season, farm-level activities continue, with post-harvest care applied to orchards, including irrigation, fertilizer application and the pruning of trees to prepare for the next harvest.

Therefore, appropriate support measures are paramount in order to minimize disruptions in production and, in turn, continuity of food availability.

In order to cushion off farmers and households who rely on agriculture for livelihoods from the negative impact resulting from the COVID-19 pandemic and ensuring continued food supply to the nation, the national Department of Agriculture, Land Reform and Rural Development has set aside an allocation amount of R1.2 billion towards assisting with provision of production inputs to smallholder and communal farmers.

Furthermore, some farmers on Proactive Land Acquisition Strategy (PLAS) farms will also benefit from the R1.2 billion in line with the former Department of Rural Development and Land Reform’s Stimulus Package. The Minister’s intervention, in general, is aimed at ensuring food security whilst the country grapples with the COVID-19 pandemic. This support is targeted at certain key agricultural commodities that have been identified for support with specific production inputs. The commodities have been prioritized as follows:  Poultry: Day-old chicks, point-of-lay chickens, feed, medication and sawdust.  Vegetable: Seedlings, fertilizers, pesticides, herbicides, soil correction.  Fruit: Chemicals for final spray in preparation of harvest.  Other livestock: Feed and medication.  Winter field crops: Soil correction, fertilizers, seeds, herbicides and pesticides.

The process has been concluded on 16th May 2020. For Limpopo, 7 249 applications were received and processed. 2 049 were approved, while 5 200 were not successful. It must be noted that although some of the farmers were unsuccessful, the fact remains that they still need support. Upon analysis of the disapproval applications, which reasons were largely related to PTOs (permission to occupy) and proof of R20 000 minimum annual turnover, a decision is that further possibilities ought to be explored to find ways to assist these farmers to comply.

Over and above this intervention, at a provincial level, the Limpopo Department of Agriculture and Rural Development (LDARD) will, through its 2020/21 budget allocation, provide support across the three categories of farmers, which are subsistence, smallholder and commercial. The support will range from 25 inputs for primary production to value adding and market access and will cover both the 2020/21 crop season, as well as livestock production, which is year round.

Table 5: Agriculture short-term sector plan PROGRAMME SUPPORT MEASURES TARGET Support programmes to enable Provision of production inputs to 11 128 farmers primary agricultural production farmers Production stock for aquaculture 15 000 fingerlings for fish fish production production Support for red meat production 210 livestock provided to farmers Producers supported with 22 435 producers supported technical agricultural advice to enhance production knowledge Production economic services 2 150 agribusinesses supported provided to agribusinesses, including agricultural cooperatives Support households to produce 6 000 households own food to improve household food security Producers trained on various 1 050 farmers trained aspects of production Youth owned agricultural 30 youth owned agricultural enterprises supported to enterprises contribute towards reduction of youth unemployment Agro-processing Agro-processing and value 3 facilities adding facilities supported Contribution to job creation Jobs created through agricultural 3 500 (EPWP) support interventions

4. Provincial Economic Infrastructure

There is a very strong association between economic development, in terms of per capita gross national product (GNP), and road infrastructure. There is a significantly high correlation of 0.76 between PGNP and paved road density per capita. The total road network in the province is 20 091 km, with 6 175 km of paved roads (31%) and 13 916 km (69%) of unpaved roads.

Table 6 below shows the Limpopo road network distribution.

Table 6: Limpopo road network distribution

District Paved (km) Gravel/Unpaved (km) Total (km)

Capricorn 1 222 3 284 4 506

Mopani 1 168 1 715 2 882

Sekhukhune 1 134 1 476 2 610

Vhembe 1 323 2 430 3 754

Waterberg 1 328 5010 6 339

Total 6 175 13 916 20 091

 The Roads Agency Limpopo (RAL) currently has 19 upgrading projects in implementation phase.  The total required funding of the projects is R1.1 billion for the 2020/21 FY.  There is a shortfall of R440 million.  There is a possibility of budget reduction by an amount of R459 million as proposed by Provincial Treasury.  Strategic roads for provincial growth points include: - Musina-Makhado SEZ: 76km worth R759 million - Polokwane Logistics Hub: 3, 44km worth R34 million - Lephalale: 54, 9km worth R549 million - Mogalakwena: 35 km worth R350 million - Fetakgomo-Tubatse SEZ: 51 km worth R510 million

 The roads prioritization list for the next 5 years (per district municipality) is as follows:

Table 7: Roads prioritization for the next 5 years

District Total km (km) Estimated Budget (R’m)

Capricorn 1 221 12 209

Mopani 596 5 957

Vhembe 405 4 049

Sekhukhune 513 5 128

Waterberg 1 059 10 592

Total 3 793 37 935

Table 8 below depicts the Roads Agency Limpopo (RAL) socio-economic recovery projects:

Table 8: RAL socio-economic recovery projects

District Total km (km) Estimated Budget (R’m)

Capricorn 40.44 404

Mopani 80.7 807

Vhembe 125.9 1259

Sekhukhune 81 810

Waterberg 125.22 1252.2

Total 453.26 4532.6

Table 9: Roads for socio-economic recovery

Limpopo Roads Agency (RAL) has identified the following socio-economic recovery projects:

Traffic Type Count Estimated (Residential, SMME Employment Road Total Traffic Impact Road District Municipality Project Description Budget Tourism, Contribution Opportuniti Number km Count (low, in SEZ (R'm) mining, (R' m) es (R' m) Medium, Agricultural High) Upgrading of Ntsime to Capricorn Polokwane D3337 3.44 34 259 Medium Residential No 10.32 3.44 Sefateng road D4090, Lepelle- Maralaleng/Malimati D4093, Capricorn 25 250 258 Medium Residential No 75 25 Nkumpi road D4094& D4096 Blouberg health center Residential/ Capricorn Blouberg via Bahananwa Tribal D3278 12 120 471 Medium No 36 12 Agricultural Office to Buffeslhoek Greater Mopani Homu 14B-Vuyehli D3812 14.3 143 332 Medium Residential No 42.9 14.3 Giyani Greater Thaphane cross- Residential/ Mopani D3248 10.8 108 427 Medium No 32.4 10.8 Tzaneen Mandlakazi -Nwamitwa Agricultural Madeira ring road D3902 and Mopani Maruleng (Sekororo Madeira and 6.6 66 389 Medium Residential No 19.8 6.6 D3903 D21-Madeira) Ba- Mopani Letaba ranch to Eiland P43/3 37 370 237 Medium Tourism No 111 37 Phalaborwa Greater Belvue-Ntata to D3212 and Residential/ Mopani 12 120 247 Medium No 36 12 Letaba Seaphole D3213 Agricultural Makhudutha Sekhukhune Glen Cowie to Ga-Malaka D4283 6 60 210 Medium Residential No 18 6 maga

Traffic Type Count Estimated (Residential, SMME Employment Road Total Traffic Impact Road District Municipality Project Description Budget Tourism, Contribution Opportuniti Number km Count (low, in SEZ (R'm) mining, (R' m) es (R' m) Medium, Agricultural High) Fetakgomo- Sekhukhune Atok to Ga-Selepe D4180 30 300 95 Low Mining Yes 90 30 Tubatse Penge to Motodi Fetakgomo- Sekhukhune Praktiseer Mabocha D2537 21 210 1321 High Mining Yes 63 21 Tubatse Makofane Elias Dennilton to Agricultural/ Sekhukhune D2923 14 140 3210 High No 42 14 Motsoaledi Kgobokwane/Kgapamadi Residential Elias Agricultural/ Sekhukhune Dennilton to Ntwane D1399 10 100 472 Medium No 30 10 Motsoaledi Residential Tshivhuyuni to Vhembe Makhado D3730 17.9 179 307 Medium Residential Yes 53.7 17.9 Mamphagi Res/Tour/ Vhembe Thulamela DAMANI TO Ha-Khakhu D3688 40 400 1222 High No 120 40 Agric P135/1-Folovhodwe- D3675, Res/Tour/ Vhembe Musina Muswodi. Tshipise- 42 420 540 High Yes 126 42 D3674 Agric Mutele A Tshipise-Dambale- D3917, Tourism Vhembe Musina 16 160 232 Medium Yes 48 16 Mananzhe-Bale-P135/1 D3760 /Residential Collins Vhembe Bungeni -Tshiphuseni D3754 10 100 2476 High Residential No 30 10 Chabane Tourism and Waterberg Bela LM Vollgelstruis D1118 15.32 153 251 Medium No 45.96 15.32 Agriculture Thabazimbi Waterberg Bela-Bela to Leeupoort D4426 20 200 215 Medium Tourism No 60 20 LM

i. The Medium to Long-Term Measures

Even prior to the COVID-19 pandemic, the Limpopo economy had been struggling from structural rigidities with a stagnant proportionate contribution to the national output at 7.2% and has been unable to attain its Limpopo Development Plan (2014-2019) outcomes as follows:

 Growth - 1.2% against the set target of 3%;  Unemployment - 18.1% against the set target of 16%;  Inequality - 0.57 Gini Co-efficient against the set target of 0.50;  Poverty has worsened and Limpopo has degenerated into the second worst province in terms of poverty level after the Eastern Cape; and  Youth unemployment remains high, given that there has not been industrial expansion to absorb a large number of graduate youth and those that are not in employment, education and training (NEET).

It is for this reason why the government in Limpopo should be deliberate in its policies and practice to industrialize the province, create employment and entrepreneurship opportunities with the objective of reducing inequality and elimination of poverty. In order to address the structural rigidity and the apartheid legacy of economic exclusion, the provincial government took a bold step to industrialize the economy based on the beneficiation of its mineral wealth, which is comparable to no other province.

The last five years of the LDP can be characterized as a planning period, in which the provincial government developed all the necessary industrialization plans and programmes and the next five years (2020-2025) will see the implementation of both mega industrialization projects and sector plans. The following are the provincial plans on industrialization and sector, which if implemented in the 2020 to 2025 period, will lead to a higher growth trajectory and achievements of the LDP macro-economic and social outcomes:

a. Mega Industrialization Projects These mega industrialisation projects are being implemented by the government in partnership with cooperative partners. Table 9 below details the value addition to the economy and the possible number of jobs to be created. These projects will be implemented in the current Medium-Term Strategic Framework (MTSF) and beyond.

Table 10: Mega industrialization projects

PROGRAMMES/PROJECT VALUE ADD JOB CREATION/ SIZE & SAVING LOCATION Musina-Makhado SEZ R150 billion Over 21 700 28 sq. kilometre (R250 billion for the between Musina construction of the and Makhado electricity (Vhembe District) substation is in the process of approval by the Presidency Project Preparation and Development Funds) Fetakgomo-Tubatse SEZ and R25 billion 8 000 1 220 Ha in Industrial Hub (R1.5 billion for Fetakgomo- industrial hub is in Tubatse the process of (Sekhukhune approval by the District) Presidency Project Preparation and Development Funds) Industrial Parks (Nkowankowa) R40 million 3 737 Nkowankowa (Mopani)

Industrial Parks (Seshego) R35 million 1 262 Seshego Township (Capricorn) Industrial Parks (Thohoyandou) R139.5 (application 1 000 Shayandima to the dti) (Vhembe)

Limpopo High Speed Train TBC after feasibility TBC after feasibility Johannesburg to Musina (523,6 km)

PROGRAMMES/PROJECT VALUE ADD JOB CREATION/ SIZE & SAVING LOCATION Tourism: Commercialisation of TBC after feasibility TBC after feasibility Masebe, Limpopo Nature Reserves Lekgalameetse and Rust De Winter Waste Management and the Green TBC after feasibility TBC after feasibility All districts Economy: Establishment of District Recycling Centres and Industrial Symbiosis Cargo Hubs TBC after feasibility TBC after feasibility 35 Hectares at study (Turnaround study (Turnaround Polokwane Strategy) Strategy) International Airport (PIA)

Low cost flights TBC after feasibility TBC after feasibility All airports study (Turnaround study (Turnaround Strategy) Strategy)

Establishment of regional flights to TBC after feasibility TBC after feasibility PIA the SADC study (Turnaround study (Turnaround Strategy) Strategy)

International Convention Centre TBC after feasibility TBC after feasibility PIA study (Turnaround study (Turnaround Strategy) Strategy)

Cold storage facilities TBC after feasibility Tala Food-LEDA Potato Capricorn study (Turnaround Processing, Zebediela Strategy) Citrus, Subtropical Orchard Development, Vhembe Fresh Produce Market etc.

PROGRAMMES/PROJECT VALUE ADD JOB CREATION/ SIZE & SAVING LOCATION Local Manufacturing of windows, Over R1.6 billion Estimated 5700 Capricorn, doors, door frames, wire, wood (TBC) Vhembhe, products, implements & equipment, Sekhukhune, waste recycling products. Mopani and Waterberg Districts

b. 4th Industrial Revolution and Connectivity Projects

Limpopo province will develop a comprehensive 4IR strategy that will provide a framework on how the province should position itself to benefit from the 4IR while managing the challenges it presents. The need for the development of the 4IR strategy to serve as a blueprint for the Limpopo Province has already been expressed by the State of the Province Address, June 2019 and February 2020. The following are recommended Fourth Industrial Revolution projects for implementation, related cost estimates and the impact:

2020/21 2021/22 2022/23 2023/24 2024/25 Estimate Estimat District d total ed Jobs project cost

Project: Limpopo Science and Technology Park

Resources Set up Construction Construction Construction R4.7bn 10,000 Caprico Mobilisatio operatio of Phase One of Phase One of Phase One at the jobs at rn n for the n model Commenced in progress completed end of the end Constructio and and year 20 of year n of Science detail 20 and designs Technology and bill Park of quantitie s develope d

Project: Limpopo Broadband Network

Rollout 150 Rollout Rollout 250 Rollout 250 Rollout 250 R2.3bn Direct All km of fibre 150 km km of fibre km of fibre km of fibre jobs: and 10 of fibre and 20 and 20 and 20 3,200 microwave and 20 microwave microwave microwave Indirect towers microwa towers towers towers jobs: ve 1,400 towers Induced jobs: 7,000

Project: Business Process Outsourcing & Off-Shoring (BPO&O) – Contact Centre

Planning for Establish Extend Extend Extent the a 100 facility to facility to services to establishm seater accommodat accommodat include 800 R 20 mil 2100 Caprico ent of the facility e a maximum e a maximum BPO&O rn BPO&O of 200 seats of 300 seats agents facility

Project: Digital Virtual Incubator for Entrepreneurs

Planning for Incubatio Incubation of Incubation of Incubation of the n of 200 300 300 400 R 10 mil 3000 All establishm enterpris enterprises enterprises enterprises districts ent of es digital infrastructu re and systems

Project: Limpopo 4IR Strategy

Launch 4IR Strategy Implementati Implementati Implementati R 3 mil N/A All Website develope on Plan on of on of Districts and d developed initiatives initiatives Social and Media initiatives campaign implemented

c. Mega Agribusiness Projects

The revitalization of the agriculture and agro-processing value chain plan has identified catalytic projects that aim to contribute to the provincial industrialization strategy, job creation and foreign exchange earnings.

South Africa’s agricultural exports amounted to US $10 billion in 2018, which was underpinned by increased exports of citrus (oranges, lemons, and grapefruit), grapes, wine and wool amongst others. This led to a 21% increase in SA’s agricultural trade balance to US $3,9 billion (Agbiz, June 2019).

Limpopo is leading nationally in the production of most export-oriented commodities, namely, citrus and avocado, as well as macadamia nuts, which is second to the Mpumalanga province. The StatsSA report further indicates that Limpopo is second to the Western Cape in terms of the number of jobs created by the agricultural sector, making national contribution of 24, 7% and 12, 9% respectively. For Limpopo, the major contributor was the horticulture industry at 48 079 employees or 49,4% of the total, followed by mixed farming (24 881 or 25,5%). Development support is looking at targeted development, whereby the department will collaborate with various stakeholders who had similar plans, such as DFIs, commodity organisations and established commercial enterprises on their transformation programmes.

Table 11: Mega agri-business projects

PROJECT PROJECT SCOPE ESTIMATED ESTIMATED IMPLEMENTATION DISTRICT NAME TOTAL JOBS TIME FRAME PROJECT (YEARS) COST Fruit Industry Macadamia Establishment of R380 1 500 2020/21-2023/24 Vhembe development macadamia million orchards - 2 200ha at Tshivhase, Mphaphuli & Tshakuma Establishment of a pack house Zebediela Refurbishment of R200 350 2020/21-2024/25 Capricorn Citrus irrigation and million electrical infrastructure, replanting of trees and refurbishment of pack house Limburg Planning and re- R150 270 2020/21-2024/25 Waterberg citrus establishment of million 500 citrus orchards and pack house Avocado Planning and R230 1 100 2020/21-2024/25 Mopani & development establishment of million Capricorn 800ha of avocado orchards - Afrupro, Makgoba & Morebeng Boskop Re-development R160 550 2020/21-2024/25 Mopani Citrus of collapsed million

PROJECT PROJECT SCOPE ESTIMATED ESTIMATED IMPLEMENTATION DISTRICT NAME TOTAL JOBS TIME FRAME PROJECT (YEARS) COST restituted farm to re-establish 350 ha citrus fruit with a pack house Vegetable Potato belt 500ha potato TBC TBC 2020/21-2024/25 Capricorn development development linked with Tala Foods Canning 2500ha tomato TBC TBC 2020/21-2024/25 All districts tomato production production linked to Norjax processing Field Crops Cotton 750ha cotton TBC TBC 2020/21-2024/25 Sekhukhune and development production to Vhembe for broaden Black smallholder producer farmers participation Soybean 1000ha soybean TBC TBC 2020/21-2024/25 Sekhukhune and development production Waterberg for through grower smallholder partnership farmers * Cost analysis on the development of some of the commodities is in the process and would be part of the business plan. This would determine cost estimation for the development and projected number of jobs to be created.

d. Public Private Partnership Project

These are mega local economic development projects that are initiated and led by the private sector and the government role is that of support, especially during the project preparation and development. The list excludes both Vhembe and Sekhukhune Districts since they already have SEZ programmes. The programme are as follows:

Table 12: Public-Private partnership projects

PROJECT VALUE ADD JOB CREATION/SAVING DISTRICT

Lephalale Logistics Projected R 25 billion Projected 8 500 jobs Waterberg (Steenbokpan, Hub in Lephalale when complete when complete 25 km away from Medupi Power Station) Agro-processing Still under Still under Mopani Pharmaceutical Hub conceptualisation conceptualisation

Transport and Still under planning Still under planning Capricorn Logistics Hub in Polokwane

e. Sector Development

Part of the industrialization agenda is the propping up of the manufacturing sector, which has declined from 3% in 2014 to 2.8% in 2019. The government will develop sector support plans for the eight sectors that are considered the dominant and sunrise sectors to ensure they increase the manufacturing and sector share to provincial output and create employment and create new entrepreneurs and Black industrialists as follows:

Table 13: Sector support

SECTOR/SUB- SECTOR SUPPORT ACTIVITIES (2020-2025) STRATEGIC PARTNERS SECTOR PROGRAMMES Mining and • The development of • Offtake from PGM mining • DMR, DST, IDC, Beneficiation battery economy • Research and Commercial Funders, • Catalytic Convertors development (skills CSIR and the dti, Mining development) Council, Mining Houses, • Smeltering Communities and OEMS • Production facilities (Tesla, etc.) • Market access Agro • Increase primary • Establish a stronger linkage • Land Bank, National Industrialization agriculture yield by between primary Department of increasing high value agriculture and agro- Agriculture and Rural production such as processing Development, ARC, citrus • Increase farmer support: Commercial Farmers, • Establish Agri-parks machinery, land, Emerging Farmers, production and market Traditional Leaders, IDC, access Retailers • Develop production infrastructure linked to retail and export

Construction and Expand the construction • Link construction • Public Works and building materials and building material and building material Infrastructure incubators incubator to Departments, government IDC, Retail, infrastructure TVETs, the dti, programmes SEDA (housing, Road, )

SECTOR/SUB- SECTOR SUPPORT ACTIVITIES (2020-2025) STRATEGIC PARTNERS SECTOR PROGRAMMES Furniture Expand the furniture • Develop skills • The dti, Education and incubation programmes programme Health departments, • Develop a sourcing SAFCOL, SEDA, Retail, strategy including take- TVETs off with government and the retail sector • Develop a shared production facility • Develop a market emporium Knowledge-driven • Develop Science and • Establish partnership to • CSIR, TIA, DST, economy and ICT Technology Park deliver on 4IR with the Education, software (4IR Programmes) • Mainstream 4IR following key focus areas: development mechanism • Skills-foundation (coding), companies, hardware • Implement a 4IR technical and academic development Blueprint (hardware and companies, USASA, • Increase connectivity programming) Broadband Infraco, DoC, • Local innovation • Manufacturing of SITA, TVETs, Academia, (Science and interfaces Sentech Technology Park)

Green Economy • Establishment of • Develop offtake • Municipalities, district-based waste agreement with commercial funders, management municipality on the investors (recycling through usage of landfills by-back centres) • Intensify skills • Establishment of development production facilities programmes through industrial • Establish the district symbiosis recycling buyback programme centres • Waste management • Develop district shared • Alternative energy production facilities production Tourism • Tourism policy and • Develop enabling • National Department knowledge tourism policies and of Tourism (NDT) management regulation to respond to

SECTOR/SUB- SECTOR SUPPORT ACTIVITIES (2020-2025) STRATEGIC PARTNERS SECTOR PROGRAMMES new trends, challenges • South African Tourism and opportunities (SAT) • Conduct relevant • Private tourism sector research and impact (tourism Industry) assessment of COVID-19 • Provincial Tourism and economic recession Forum and impact on the provincial community tourism tourism industry associations, SMMEs • Tourism cluster impact and tourism analysis and implement cooperatives re-prioritized actions and • SANPARKS implementation • SANRAL • RAL • Tourism destination • Tourism Growth Strategy • Limpopo Connection and product implementation of • Treasury development revised cluster priorities • DSAC • Refocus and identify new • Municipalities commercial • SEDA opportunities on • LEDA provincial nature • LTA reserves addressing post • Tourism investors COVID-19 trends and support to SMMEs • Expanding product development opportunities to enhance rural, heritage and niche (small group) tourism development through community owned tourism enterprises, products and services • Enhance access by rural tourism products and SMMEs to internet

SECTOR/SUB- SECTOR SUPPORT ACTIVITIES (2020-2025) STRATEGIC PARTNERS SECTOR PROGRAMMES connection and different media platforms • Tourism transformation and • Facilitate and support capacity building SMMEs and cooperatives in tourism to access Tourism Relief funding • Continuous update and maintain database of Tourism SMMEs in Limpopo • Review business models for SMMEs in tourism - new approaches/experience • Facilitate new/relevant tourism training and capacity building programmes e.g. in the digital space • Support women and youth to enhance product and route development in support of transformation and recovery. • Support capacity building initiatives in tourism at local municipal level through deploying youth practitioners programme • Tourism regulation and compliance • Registration of tourist guides, amenities and

SECTOR/SUB- SECTOR SUPPORT ACTIVITIES (2020-2025) STRATEGIC PARTNERS SECTOR PROGRAMMES services and monitor compliance to new standards and norms post COVID-19

• Tourism marketing • Revise and implement the provincial tourism marketing strategy and recovery plan • Re-organisation of the tourism industry to ensure adequate communication and participation • Refocus on domestic marketing and innovative packaging of the diverse offerings in Limpopo • Optimise the digital market space to market Limpopo Creative Industry • Film sector • Implement sector support • Heritage Council • Arts (including music) programmes • Department of Arts and and crafts Culture • Fashion • Department of Sports • Culture • Music industry bodies • Films and Publications boards • Limpopo Film Commission

5. THE ENABLING ENVIRONMENT

The implementation of the industrialization agenda is dependent on government as an enabler and the following enablers have been identified as the critical success factors in that regard:

Table 14: The enablers for development

PROJECT CHALLENGES PLANNED ACTION

Water Most industrial and mining • Address the implementation investments cannot be effected backlog of water master plan because of the shortage of water • Develop new water resources to unlock industrialization Energy Most industrial and mining  Develop new energy sources investments cannot be effected because of the shortage of energy

Transport Transport enables people access to • Re-design of provincial subsidy areas of economic activity and networks and contracts to ensure subsequent employment. equal access to subsidized public Subsidized public transport is not transport services. The Department of equally spread across the province. Transport & Community Safety will Some contracted subsidized service start advertising tenders for new providers are currently failing to public transport subsidy contracts render subsidized transport services as from the 2020/2021 financial year per their contracts due to fleet challenges. The current state negatively affects commuter access to subsidized services. Investment One-Stop The cost of doing business • Ensure that the investment One- Shop Stop Shop is functional

Investment The national incentive scheme is not • Create a provincial incentive Incentives adequate and there are also new framework industrial incentives that are not incentivised

PROJECT CHALLENGES PLANNED ACTION

Demand-driven skills Mismatch of skills • Ensure that the Limpopo Skills for the Academy is established and functional economy/industry

Project Development There is no dedicated funding to • Set aside the project preparation Fund package projects and development fund and strengthen the Project Management Unit Roads and Transport Poor connectivity infrastructure • Implement Limpopo Infrastructure Infrastructure (Multi- Master Plan (dependent on the modal Transport) proportion of the R7 billion government annual expenditure on infrastructure ) Local Procurement Minimum participation of designated  Implement Local Procurement groups Strategy

Enterprise and • Expand to the targeted group • Implement the Township and Rural Entrepreneurship (women, youth and people with Economy Development Strategy, Programmes disabilities) Informal Business Strategy, the Cooperative Strategy and SMME Strategy LED Capacity Building • Most LED units in municipalities are • Expedite the implementation of the & Support dysfunctional and this creates a Limpopo LED Capacity Building challenge around the Strategy to empower councillors and implementation of projects from the LED officials on planning, LED support national, provincial and local spheres and project management of government

6. INSTITUTIONAL ARRANGEMENT AND RESOURCING THE LIMPOPO SOCIO-ECONOMY RECOVERY PLAN

The Limpopo Socio-Economy Recovery Plan will be implemented by sector departments, its agencies, and the cooperative partners. It can be expected that sector departments and agencies will develop sector implementation plans and ensure that progress on the implementation is reported through cluster programmes of action (POAs).

The financial implication will be borne by the provincial government, its agencies and cooperative partners (normal budgeting, Corporate Social Investments and Social Labour Plan reprioritization). From the public sector, funding will be sourced from government budget reprioritization of the savings made in the first quarter of 2020/21.

7. STAKEHOLDER CONSULTATIONS

It is important for the plan to be consulted with various stakeholders to ensure buy-in. The following stakeholders have been consulted:

Table 15: Stakeholder consultations

STAKEHOLDER DATE OF CONSULTATION Mining Industry May 2020 Provincial Government Sector Departments and May-June 2020 Agencies Limpopo United Business Forum (LUBF) June 2020 ANC Economic Transformation Sub-Committee June 2020 Economic Development MINMEC June 2020 Higher Education Sector June 2020 Tourism Industry June 2020 ANC Study Group July 2020 Labour Formations tbc

ANNEXURE 1: LIMPOPO SOCIO-ECONOMY RECOVERY PLAN FUNDING 1. Government 1.1. National Government-

The national government has set aside relief funds for SMME, Cooperatives and Spaza Shop to mitigate against the impact of COVID-19 to the economy. With regards to SMME Relief Fund, there is no allocation for Limpopo or any other province but it is as per first come basis and in line with qualifying criteria.

Of the R2 billion that has been allocated by the Department of Small Business Development, 123 Limpopo SMME qualified and were approved for R35 million resulting in 1646 jobs been sustained. For the Spaza shops, each Province was allocated a number of beneficiary spaza shop as per the provincial population of the spaza shop. Limpopo was approved of 2690 spaza shops to benefit from the national proportion of 24 000 approved spaza shops. Each spaza shop qualifies to a total disbursement amount of R7 000 and this translate into R18 million set aside for Limpopo Province.

1.2. Provincial Government

The Provincial government has allocated R500 million to mitigate against the economic impact of COVID- 19 for 2020/21 and the funds will be used in line with the following approved programmes:

Departments/Entity Description R'000 Agriculture Production Inputs for Farmers 57 500 Limpopo SMME and Cooperative Support - LEDET NEF 10 000 LEDET Limpopo Waste Management Relief Package 7 800 LEDET Special Economic Zone - EIA 4 700 LEDA Limpopo SMME Loan Book relief package 10 000 LTA Limpopo Tourism Relief Package 10 000 RAL Committed Roads Projects 400 000 500 000

2. Partnership Funding

2.1. National Empowerment Critical Needs Fund

The NEF has approved a R20 million Critical Needs Fund that is aimed at assisting NEF investees suffering distress because of the COVID-19 pandemic and the related lockdown. This fund will be disbursed into

49 distressed investee businesses by way of a concessionary loan, at a fixed interest rate of 5% per annum, with a 12-month interest and capital moratorium, with a maximum tenor of 36 months.

The Critical Needs Relief Fund (CNR) will support the most pressing and immediate needs of existing NEF investees in relation to the following cost categories: i. Salaries - • If the investee has applied to the Unemployment Insurance Fund (UIF) for financial support of its salary bill (which has limitations on amounts), then the CNR Fund may fund the payroll shortfall only; • If the investee does not qualify for the UIF funding due to non-compliance with SARS, then the CNR Fund can be considered to prevent them from heading towards liquidation; • If the investee qualifies for the UIF funding and does not apply, they will not qualify for the CNR funding until they do; • Certain exclusions may be enforced by the NEF in the approval of funds, including any limitation on funding salaries (whether in full or in part) of the Executive Management of the investee, if the NEF is of the view that those costs are excessive or unwarranted. ii. Rental expenses - • Investees can access CNR funding for their property basic rental costs (excluding turnover rental) on their primary business address. • Many lessors have been considering concessions on rental to their lessees, especially in light of the fact that their bankers have made available savings in terms of mortgage payment moratoriums to them. A request by an investee in good standing with their lessor to make these concessions available to them must be presented when making an application under this Fund. • If the lessor conceded to the request, then a reduced rental amount will be funded in the following month. • If a client is not in good standing, then an application to the CNR Fund will be considered on its own merits, having accepted that the rental will remain the same.

iii. Utilities - • The CNR Fund can compensate investees for their essential monthly utilities such as electricity and water to keep their businesses operational and to prevent damage to plant, machinery or stock because of a loss of electricity. iv. Insurance - • The CNR Fund can provide assistance with regard to the insurance cover for the business premises, movable assets and public liability cover. This is to mitigate the risk of financial harm because of the loss of the business’s main assets, which may then affect business continuity.  It is essential that the investee consult with its insurance company to consider whether any reduction of premiums will be applied, given the limited movement and risk during the lockdown period. This is an initiative being offered by certain insurance companies to lessen the burden on their clients. Only once proof of this request has been made, shall the NEF fund the insurance costs. If the insurer approves the request, the amount payable under the CNR Fund will be reduced accordingly in the following month. v. Other critical costs - • A specific funding request may be made for any other costs considered as “critical” or “emergency” in nature, which must be motivated for by the NEF Post Investment team on behalf of the investee and which determination shall lie at the discretion of the NEF committee. • Based on the assessments done on the cash reserves of the various clients, the NEF has granted 47% of its portfolio of clients the interventions stated above. These concessions are an effort to ensure that when the lockdown is lifted, the businesses are not confronted by an ominous debt obligation.

2.2. ABSA Funding

The Provincial Government and Absa have a Memorandum of Agreement wherein ABSA will fund the enterprise development programme for R500 million.