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A new approach

23 May 2006 Angelo Coppola

Roddy Sparks- out-going MD of Old Mutual SA - was present at one of his last official duties in East London, when he presided over the launch of an interesting development initiative in East London, in conjunction with the Development bank of South Africa

Sparks, Thabo Dloti CE of Old Mutual Corporate, Mandla Gantsho also an outgoing CE and MD of the DBSA, and Vijay Makanjee, CEO of the Local Investment Agency (LIA), were on hand to announce the launch of the Hluma Development Local Investment Agency in conjunction with the DBSA.

The multi million rand, multi year campaign is aimed at facilitating investment projects in marginalized areas, and the Hluma initiative is being launched in one of the poorest areas of the country the Wild Coast, which according to Sparks also displays the most potential to benefit the local inhabitants.

They looked at five different areas across the country, and selected the Wild Coast, as it is well-endowered environmentally, and offers the most attractive opportunities to potential investors.

Areas that will be focused on originally, include:

* Mthatha: commercial, services, retail, value add manufacturing

* Port St Johns: tourism facilities, accommodation, and retail

* Coffee Bay: tourism facilities and accommodation

* Kei Mouth: tourism facilities, and high order residential.

LIA CEO Makanjee says that there are positives and negatives. There is huge potential on this coast. The partnership can be an example of the road ahead, although the key issue is meaningful job creation top label jobs, as he calls it.

He went on to say that while they wont get directly involved in the land tenure issue they will be directly involved with the communities and providing information and input into forming trusts and getting groupings organized to take advantage of the investment opportunities.

Dloti says that there is investment potential in the rural areas. The potential he says is not being met because of a lack of finance, but also because of issues around land tenure, and infrastructural and institutional constraints.

Gantsho says that there are many real and perceived impediments to development such as the lack of enabling infrastructure like water and electricity running at 70% in some areas, with unemployment at 73%, and the majority of households earning less than R9000 per annum.

Accelerated development programmes have some history of success internationally witness Singapore and Dubai and inspiration seems to have been taken from this.

The partners in the initiative have committed R250m each for the next five years for projects identified by Hluma. The linkage projects range from manning hiking trails through to gardening services, and everything between.

Added to which the two parties also ceded an R8m loan to capitalize the LIA, to get up and running.

Once the LIA is up and running it will or should become self-funding and generate revenue by charging fees and according to a media statement the initiative has the potential to be profitable.

Note: According to Dloti the involvement in the initiative allows Old Mutual to increase their reach in terms of the social responsibility investment goals. Sparks was one of the initial drivers of the initiative, which was conceived some three years ago.

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