SECTION 3

SECTION 3: LOCAL ECONOMIC DEVELOPMENT PROGRAMME- REGULATION 46 (c)

3.1 Social and Economic Background Information - Regulation 46 (c) (i)

The Zululand Anthracite Colliery (ZAC) falls under the Zululand District Municipality which is located on the northern regions of the KwaZulu-Natal Province and it covers an area of approximately 14 810 km². Approximately half of the area is under the jurisdiction of traditional authorities while the remainder is divided between commercially owned farms and conservation areas. The District comprises of five local municipalities: eDumbe, uPhongolo, Abaqulusi, Nongoma and Ulundi.  ZAC falls within the jurisdiction of Nongoma and Ulundi local municipalities. The local municipality areas overlap with four (4) Traditional Authority areas i.e.  Zungu, Matheni, Mandlakazi and Mhlaba Tribal Authorities

A desktop background socio-economic study on ZAC’s area of operation has been provided in the District and Local Socio-Economic. The following was undertaken as part of the consultation with stakeholders:

  • A detailed consultation process with relevant unions of ZAC, Core contractors of ZAC, government authorities and affected communities,

  • The undertaking of a socio-economic need’s analysis in the surrounding communities and major labour sending communities,

  • Identifying the impact of ZAC activities on the surrounding socio-economic environment and major labour sending areas.

This section of the IDP provides an analysis of the current situation within the ZDM. It opens with an overview of the socio-economic conditions including demographic trends and patterns as well as the spatial structure of the district. It focusses mainly on the review of the state of the district in relation to the five local government key performance areas

3.1.1. Population

 

The Zululand District is located on the northern regions of the KwaZulu-Natal Province and it covers an area of approximately 14 810 km². In terms of population figures, the majority of the population in ZDM have been born in and are citizens of South Africa.

POPULATION SIZE: ZULULAND DISTRICT WITHIN KZP PROVINCE Zululand; 892310; 8% Umkhanyakude; 689090; 6% Amajuba; 531327; 5% Umzinyathi; 554882; 5% King Cetshwayo; 971135; 9% Ilembe; 657612; 6% Umgungundlovu; 1095865; 10% Uthukela; 706588; 6% Harry Gwala; 510865; 5% Ugu; 753336; 7% Ethekwini; 3702231;

The Zululand District has the third largest population in the KwaZulu Natal Province, with 892 310 people. It accounts for 8% of the total KZN population (11 065 240). According to the 2016 Community Survey (Stats SA), the Ethekwini Metropolitan Municipality is the most populated municipality in the province (33%), followed by uMgungundlovu District (10%) and King Cetshwayo District (9%). More than 50% of the provincial population resides in a municipality that has the largest urban centres, that is Ethekwini, uMgungundlovu and King Cetshwayo Municipalities.

The Map below shows the tribal authorities that overlap with Nongoma and Ulundi local municipalities under the Zululand District Municipality.

Figure 2: Illustration of the Tribal Authority areas

 

3.1.2. Economic Activity

The 2016 Community Survey results indicate that a total population of 448 330 in Zululand is considered economically active (ages of 15-64). 57% of the working age group was not economically active in 2011, with only 19 % of this group employed. The representation of the not economically active population is higher compared to the provincial average of 45% and the national average of 39%. This implies a relatively low labour participation rate at 23,7%.

3.1.3. Employment levels    

 

The 41% overall unemployment rate in the Zululand District is higher than the provincial average of 33%. It is the second highest in the province, after uMkhanyakude District. Similarly, youth unemployment rate of 51,2% in the district is higher than the provincial average of 42.1%.

The total number of unemployed people in the district increased from 68 945 to 95 575 from 1998 to 2018, translating to 28% increase. Over the years, most employment opportunities in the district have been in Abaqulusi and Ulundi LMs. The trends illustrated in the table above shows that these opportunities have slightly decreased between 1998 and 2018 in all LMs with the exception of the Nongoma LM. The employment trends in the Nongoma LM have increased from 10,5% to 14,7%, from 1998 – 2018.

 

LED projects which will result in long-term and sustainable job creation and employment opportunities for the host communities as well as procurement opportunities and downstream business activities for HDSA businesses from the major labour sending areas.

3.1.4. Age distribution

The total population in Zululand District Municipal Area has increased by 10%. This growth continued between 2001 and 2011 with a further increase of 5.7%. The total Population Size in 2011 was 803,575 people. The number of households have increased significantly between 1996 (104,110 households) and 2001 (141,192 households) and between 2001 and 2011 (157,749 households). The average Household Size has decreased between 1996 and 2011. In 1996, the average household size was 6.6 persons per households. This decreased to an average of 5.1 persons per household in 2011.

The age summary statistics show a Mean age of 28 years the country of South Africa, 26 years for KwaZulu Natal. In comparison, the Zululand District Municipality has a Mean age of 23.6, a Median age of 18 leading to an average of 19.3 which is below the national and provincial average.

The large proportion of the population younger than 15 years is likely to have a strong impact on the creation of employment opportunities, when they move into the economically active bracket. Unemployment may rise significantly if the creation of employment is not achieved. A young population also implies high dependency ratios and increased pressure on the portion of the population that is employed to support the dependent (young and elderly) and unemployed people.

The focus during the implementation of SLP initiatives should thus be on job creation and skills development, in order to absorb the young people finishing school and the economically active but unemployed sectors of the population.

3.1.5. Gender composition

The gender ratio (number of males versus number of females) within the Municipal area has remained relatively constant, i.e. 54% female and 46% male. A possible reason for the higher number of females is that males seek employment outside of the Municipal area, such as at Richards Bay, Durban and Gauteng. In 2011, some 1.5% of households (or 2,315 households) were headed by children. This is most likely because of the impact of AIDS. In 2011, some 18.3% (or 28,936 households) were headed by senior citizens older than 65 years of age. This is also most likely as a result of the impact of AIDS.

3.1.6. Education levels

Educational trends, as represented in Table 25, are similar between the district (ZDM) and the local municipal areas. There are a significant number of people who have not received any formal education. This is an indication that the illiteracy rates in these areas are quite high. Only a few numbers of people have obtained some form of secondary education.

Table 17: Zululand District Municipality Education levels

 

3.1.7. Annual Household income and dependency

The following table indicates that the majority (about 80%) of the population of ZDM earn less than R38 200 per annum, this equates to just over R3 000 per month.

Table 18: Annual household income

 

3.1.8. Infrastructure, Basic Service and Welfare Transportation

The majority of residents in all municipalities are pedestrians. A small number of residents utilises minibus taxis as a mode of travel to places of work and schools. It is of concern, that the use of public transport is nearly non-existent due to the distance between areas and, the condition of, particularly, gravel roads in the district. The passenger transport facilities comprise of taxi ranks, bus stops. Most of the facilities used by passengers are informal with no or poor amenities provided.

3.1.9. Energy

Most households (154 022 or 86%) in Zululand District have access to electricity, 78% have in-house prepaid meter and 6, 1% have in-house conventional meters. The district still has higher numbers of households without electricity, compared to KZN. The main supplier of electricity in the district is ESKOM, with 105 742 households purchasing electricity from ESKOM.

In terms of access to energy sources, the majority of households, 54.2% in ZDM, use wood for cooking purposes, while 24.8% in ZDM, use electricity for this purpose, while 13.6% households use wood for preparing meals. The large number of households who still use wood for cooking purposes is an area of concern, especially for NLM. Electricity provision to these households should be prioritised for the future.

The majority of households, however, are still making use of candles (55, 9% in ZDM. It is assumed that the majority of households that do use electricity are based in urban areas, while those using candles reside mostly in rural areas.

Table 19: Energy for Lighting

 

Most households (154 022 or 86%) in Zululand District have access to electricity. below depicts that out of these, 78% have in-house prepaid meter and 6,1% have in-house

Conventional meters. The district still has higher numbers of households without electricity,in comparison to KZN. The main supplier of electricity in the district is ESKOM, with 105 742 households purchasing electricity from ESKOM.

The relatively high usage of fuel-wood, paraffin and candles for household energy purposes, is indicative of underdevelopment and poverty in the region. Furthermore, this reliance on fossil fuels has significant negative impacts on the health of households, e.g., increased respiratory diseases. The use of these energy sources within the households often also causes house fires resulting in loss of life.  The extensive use of wood for preparing meals, also leads to deforestation of the environment.

3.1.10. Sanitation  

Sanitation is still a challenge in the district as 50 593 households are using Pit latrine toilets

and 13 901 have no access to sanitation (community Survey 2016). In comparisons to KZN,

Zululand has 14,7% households with flush toilets compared to 39,5%. Further, the number

of households without sanitation is higher in the district compared to the province, i.e. 8,2%

vs 2,7%

Table 20: Community Access to Sanitation Facilities (Stats SA)

 

The provision of adequate sanitation and formal waste removal is lacking and limited in ZDM. This poses massive environmental and health risks to people through the spread of diseases such as cholera and other communicable diseases.

The proportion of the population that does not have any form of access to a sanitation service and the majority that still make use of the pit latrine/bucket system, is further indicative of the level of development, poverty and a low level of access to basic services.

3.1.11. Water supply 

The Community Survey (2016) indicates that 100 612 households in the district have access

to safe drinking water, translating to 63,4%. The figure 21 below shows that most

households have piped water inside the yards (36,3%). The district has lower number of

households with piped water inside their houses compared to the provincial figures, at

10,3% versus 32,1%. It is a concern that a significant percentage of households in the district

does not have access to safe drinking water, as 25% access water from the river and 20%

from the source not indicated.

Table 21: Access to Water in Zululand District Municipality (ZDM)

 

It is clear from the above table that ZDM has made significant in-roads into addressing the water backlogs within the Municipal Area.  Some 62.37% of all households within the District have access to piped water within 200m from their respective dwellings (the minimum RDP standard level of service). It is however noted that some 30% of households did indicate, in 2011, that it had no access to piped water.

Table 22: SLP 2021-2025 Budget Summary of Community Development Projects

 

Table 23: Demographics of the beneficiary wards identified with the District Municipality.

 

3.2. Details of the project

The following projects were identified to address socio-economic challenges of the host communities in consultation with the two municipalities and four traditional councils, Ulundi and Nongoma

Table 24: Water and Sanitation Project

 

Table 25: Goat Farming and Borehole Drilling Project

 

Table 25 Budget (Summary) for Goat Farming and Borehole Drilling Project

 

Table 26: Ubumbano Lwabafelokazi Poultry Farming Project

 

Table 26: Budget (Summary) Ubumbano Lwabafelokazi Poultry Farming Project

 

Table 27: Siyakhula Poultry Farming Project

 

Table 27: Budget (Summary) for Siyakhula Poultry Farming Project

 

Table 28: Sizanani Poultry and Egg Laying Project

Table 28: Sizanani Poultry and Egg Laying Project

 
 

Table 28: Budget (Summary) for Sizanani Poultry and Egg Laying Project

 

Table 29: Mayenziwe Community Gardens Project

 

Table 29: Budget (Summary) for Mayenziwe Community Garden Project

 

Table 30: Ncemaneni Community Gardens Project

 

Table 30: Budget (Summary) for Ncemaneni Community Garden project

 

3.3. Procurement Progression Plan

ZAC shares the vision of a globally competitive mining industry whose goal is to create an industry that proudly reflects the demographics of the country and the commitment to the goal of a non-racial South Africa. This emanates from the fact that historically, black people, mining communities, women and disabled persons were largely excluded from participating in the mainstream of the South African economy. Hence it is not only necessary but imperative to redress historical and present economic and social inequalities and to do so, measures designed to promote, affirm, prefer and advance persons, or categories of persons, disadvantaged by unfair discrimination be taken.

3.3.1. Approach

In line with ZAC policy, the mine has identified small business development opportunities and suppliers at the local level to shift the balance of its expenditures where feasible from large, urban businesses to smaller, developing businesses located near or in the mine communities. The objective will be to maximize both job creation and the economic benefit of the mining operation at the mine community level. Integral to this strategy is the need for the mines to be proactive and assist the smaller, local HDSA players in their endeavours to be successful in winning tenders from the mines.

ZAC’s approach to procurement is guided by the following principles:

  • To facilitate HDSA’s access to procurement activities with a resultant greater participation in mining related industries through the facilitation of training in technical, business and managerial skills for sustainable business growth.

  • To create awareness, understanding and support for BEE among all local stakeholders and business sectors.

HDSA suppliers will not be treated differently than the norm with regard to quality, price, safety standards, environmental impact or any other commercial or technical requirements. Support for small HDSA suppliers may include setting aside certain tenders, in part or in whole, for procurement from HDSA suppliers only.

  • Preference will be given to HDSA suppliers commensurate with their HDSA status ranked in order of preference as follows:

  • Black company (>50% black owned and managed);

  • Engendered company (30% female owned and managed);

  • Black empowered company (>25% - 50% black owned and managed); and

  • Black influenced company (>5% - 25% black owned and managed).

ZAC’s adopted BEE Procurement Policy has been developed with the vision of identifying, developing and promoting the sustainability of BEE businesses through procurement with the ultimate purpose of fostering entrepreneurship in black communities and increasing the participation of BEE suppliers in the mainstream of the resources industry. A centralized procurement structure currently manages the implementation and reporting on the mine’s BEE procurement levels. In addition, an external certification structure, established in line with the DTI regulations, has been established to verify the BEE status of the applicant companies prior to successful appointment.

In order to implement the above principles, the following strategies may be utilised:

  • Indirect HDSA supplier procurement where the principal contractor/supplier will be required to procure a stated percentage of the contract/value from a ZAC preferred or approved HDSA supplier/s.

  • Joint venture arrangements with HDSA joint venture partners as a condition of tender.

  • The development and empowerment of small suppliers to a level where they can deliver services professionally.

  • Establish a database of local and regional HDSA companies providing goods and services to the mining sector.

HDSA programmes will be monitored utilising various indicators identifying growth in the local BEE sector, particularly amongst those related to the mining sector. Growth will be evidenced through increased products and/or services offered amongst local HDSA’s, successful tender bids, growth in sales and employment as well as improvements in quality of services or products. In addition, improvements in the HDSA sector may be evidenced in an increased demand and participation (enrolment figures) in training courses targeting the HDSA sector facilitated by ZAC.

  • ZAC will report on its HDSA procurement in its Annual SLP Report through Form T (Procurement by Capital, Services and Consumables reflecting HDSA composition).

  • The Procurement Plan has been implemented by means of the following measures to facilitate a preferred supplier status to HDSA based companies

  • Applying this procurement plan to all “Vendors”, which consist of contractors, service providers and suppliers,

  • Undertaking a study to verify the BEE status of existing suppliers, so that a baseline may be determined,

  • Encouraging suppliers to form partnerships, Joint Ventures, or consortiums with HDSA supplier companies where no HDSA company is tendering to supply the required goods or services,

  • Providing a complete list of products and services, which are required by ZAC that can be supplied by HDSAs,

  • Using the DTI’s “codes of good practice” and the guidelines from the Mining Charter to guide the procurement process,

  • Ensuring that tender requirements are comprehensively communicated to vendors,

  • A selection checklist will be developed to discourage subjectivity and “fronting” with regard to supplier selections,

  • Ascertaining the BEE/HDSA levels of the vendors supplying mining goods and services to the Core contractors of ZAC, and

  • The classification applied to BEE/HDSA suppliers, as determined by ZAC, will be an important consideration during the procurement process.

  • Below outline specific targets that have been set by ZAC in order to increase the participation of HDSA supplier companies.

Table 31: Targets for HDSA/BEE spend (South Africa) over the next five years in percentages.

 

3.3.2. Supplier and Enterprise (SMME) Development

Table shows the training of suppliers and new entrants in business principles and management, business compliances and operation. The below programme will be incorporated with the BBBEE’s Youth Employment Service (YES) programme promoting youth employment.

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