Business Plan for Establishment of Trade and
Business Plan for Establishment of Trade and Skills Development Plaza and Multi-Purpose Community Centre for Greater Kokstad Municipality Submitted To: The Local Economic Development Fund of the Department of Provincial and Local Government 31st March 2003 McIntosh Xaba & Associates A partnership of institutional and development research and facilitation specialists P O Box 61221 Bishopsgate 4008 T (031) 5634335 F (031) 5634334 Email: [email protected] Web: http://www.mxa.co.za Contents Page 1 Project Summary ________________________________________ 1 2 Project Details __________________________________________ 3 3 Context 0f The Project: Status Of The Local Economy ______________ 5 4 Detailed Project Description ________________________________ 7 5 Compliance with Local Economic Development Criteria ___________ 15 6 Institutional Arrangements ________________________________ 18 7 Development and Operational Plans _________________________ 21 8 Sustainability __________________________________________ 23 9 Implementation Plan ____________________________________ 24 10 Finance and Funding ____________________________________ 25 McIntosh Xaba and Associates 2 1 Project Summary Applicant Greater Kokstad Municipality Project Multi-Purpose Trade and Taxi City Plaza for Greater Kokstad Municipality Project Classification: SMME Development New Commercial Infrastructure Project sector: SMME Development/Infrastructure Estimated Duration Start 1st July 2003 Complete 1st June 2006 Estimated duration 156 weeks Budget 2003/4 R18 million Total Budget: R 20 000 000.00 1.1 Brief Project Summary The purpose of the project is to establish a Multi-Purpose Trade and Skills Development Plaza and Multi Purpose Community Centre on municipal land within the town of Kokstad which will promote local economic development by: Providing a retail node for emerging retailers and hawkers, Providing a skills development centre which will offer appropriate training and capacity building for SMMEs as well as training in key strategic areas defined in the broader economic regeneration strategy to be defined for the municipality; Providing a hub for economic support services, particularly for SMMEs’ including micro-credit, Telecentre, Business Retrieval Information Centre (BRAIN) and Public Information Terminal (P.I.T). Provide a safe and serviced transport hub with the necessary support services for the taxi and bus industry and commuters (taxi city); Providing the infrastructure and services to improve the retail experience of rural buyers from the broader region including proper waiting and toilet facilities, information and communication services, and the provision of key social services (Home Affairs, Department of Health, Department of Welfare) situated in a one stop Multi-Purpose Centre; Providing a node for Non-Government Organisations (NGOs) and Community Based Organisations (CBOs), to establish accessible public information and service centres The project will be set up as a Community-Public-Private Partnership between the Municipality, Ithala, provincial and national government departments, local business McIntosh Xaba and Associates 1 interests, emerging micro-enterprises, the taxi industry and NGOs and CBOs. The total value of the project is estimated at R18 to R20 million and the project will be completed in 12 months. The detailed design of the multi-purpose plaza will be finalised after consultation between Ithala, Greater Kokstad Municipality, Taxi Industry Associations and other key stakeholders. McIntosh Xaba and Associates 2 2 Project Details 2.1 Project Manager Mr B Terblanche, Kokstad Municipality Greater Kokstad Municipality P.O Box 8 Kokstad 4700 Greater Kokstad Municipality 75 Hope Street Kokstad 4700 Telephone no:039 -7273133 Cellular no: 0836350226 Telefax no: 039 7273676 e-mail address: mail to: [email protected] 2.2 Name of Local Municipality Municipality: Greater Kokstad Municipal manager (Acting): Mr Andile Mdletye P.O Box 8 Kokstad 4700 75 Hope Street Kokstad 4701 Tel: (039) 7273133 Cellular no: 0834542995 Tele facsimile no: (039) 7273676 e-mail address: [email protected] 2.3 Name of District Municipality: Sisonke Municipality District Municipal Manager: Mr M Mabaso P O Box 5719 McIntosh Xaba and Associates 3 Ixopo 3276 39A Margaret Street Ixopo Tel: (039) 8342644 Tele facsimile no:(039) 8341750 .................. e-mail address: mailto:[email protected] McIntosh Xaba and Associates 4 3 Context 0f The Project: Status Of The Local Economy 3.1 Status of the local economy The Greater Kokstad Municipality is situated in the Sisonke District Municipal area, and is well located on the corridor between the KwaZulu-Natal South Coast, the Eastern Cape, Lesotho and the Natal Midlands. The town of Kokstad is the largest service centre in the district and is also the commercial and educational hub, providing a service to the whole East Griqualand area and much of the north-eastern parts of the Eastern Cape. Kokstad provides a base for the location of several government departments, which provide services to the surrounding rural areas. The Greater Kokstad economy is dependant on four (4) economic sectors: Trade; Agriculture; Government; and Industry Trade The Greater Kokstad Municipal area has strong links with the surrounding neighbouring provinces and countries, because of its location as a border area. The municipality is more economically developed than its neighbours, in particular the Eastern Cape and Lesotho. As a result the center acts as a supplier of goods and services and as an employment base for these areas. Agriculture Agriculture is a major employer and a major contributor to the local economy within the municipal area. The agricultural sector employs 26% of the work force in the area. The largest commercial agricultural activity is dairy (40%), followed by beef and maize (18%) and to a limited extent heep. There is a need for greater beneficiation as well as diversification in ownership and production within this sector. Government The government is also a major employer within the municipality, in particular in rural communities. The number of teachers, nurses, social workers and municipal/ utility-maintenance employees mainly coming from the rural areas evidences this. Budget cuts may pose a threat to this sector, which limits its opportunities for growth. McIntosh Xaba and Associates 5 Industry Various sites were zoned for industrial development within Kokstad Town, however many of the sites earmarked for light, general and service industrial sites are used for warehousing and wholesale activities. This phenomenon can be ascribed to demand for service and commercially oriented uses. This is mainly experienced within the Mill Stream Industrial Area. Most of manufactured items within the municipality are imported. Development of manufacturing industries can prove to be major boost in the economy of the municipality. The railway line provides good opportunity for rail transportation of goods. McIntosh Xaba and Associates 6 4 Detailed Project Description 4.1 Project description The project is a commercial infrastructure development of retail and service facilities located to the close proximity to a taxi and bus rank. For this reason the co-operation buyin and partnership of the local taxi association is critical. The business model is based on the following proposition; The Greater Kokstad taxi associations form an investment company say TAXICO TAXICO negotiates a 99 year lease for land from the Greater kokstad municipality at favourable rates or nominal value e.g. R100 per annum, no rates on the taxi / bus rank facilities and low rates on the commercial property for the first five years. In return the municipality will be relieved of its obligation to erect a proper taxi / bus rank facility with public ablution facilities The proposed location of the development site is in Kokstad town centre next to the showgrounds TAXICO mobilise funding from Ithala or DBSA for the commercial property development of approximately 5000 square meters for shops, hawkers, government and public service facilities at a cost of approximately R19 million The complex will have approximately 20 to 25 shops or rental premises of approximately 20 square meters and a number of smaller shops or kiosks facing the taxi / bus rank. The hawkers facilities will be situated closer to the loading offloading facilities. Sufficient space will be reserved for a strong anchor tenant like Rhino Cash and Carry (negotiations are currently underway with Rhino) TAXICO obtains a grant funding from DEDT / DPLG amounting to R1 million and land lease from the municipality to be used as a bridging finance, own contribution and development of hawkers facilities TAXICO appoints a developer and property management company (probably Ithala) for a negotiated fee and a % of rental income The proposed development site should be big enough to cater for current space requirements for shops, hawkers, service facilities and for future expansion requirements for motor vehicle requirements like petrol service station, tyres, sparesshop, quick-fit, facilities etc. Thus the total space requirements should be approximately 10 000 square meters and be zoned accordingly for commercial and light manufacturing 4.2 Project Purpose, Objectives and Strategies 4.2.1 Project Purpose As the context report above has shown, the Kokstad CBD is a major trading centre for the surrounding communities of the Northern Transkei and Umzimkhulu (Eastern Cape), Lesotho and and KwaZulu-Natal, with as many as 15000 people commuting to the Central Business District of the town of Kokstad on any given payday to purchase goods. In McIntosh Xaba and Associates 7 addition it services the needs of the town and the farming community within a radius of about 100 kilometres This project seeks to consolidate and expand Kokstad’s competitive advantage as a trade and service centre through the establishment of a trade and skills development plaza and multi-purpose community centre on municipal land in the central business district of Kokstad that will: (a) stimulate the integration of small retailers, HDI (Historical disadvantaged individuals) business entrepreneurs and hawkers into the mainstream economy; (b) Provide key skills development, capacity building and training programmes for SMMEs as well as specialised training in key strategic areas as defined in the economic regeneration study undertaken between January and March 2003 (c) Provide a hub for economic support services, particularly for SMMEs’ including micro-credit, Telecentre, Business Retrieval Information Centre (BRAIN) and Public Information Terminal (P.I.T). (d) Provide a safe and serviced taxi hub with the necessary support services for the taxi industry and commuters (Taxi City); (e) Provide the infrastructure and services to improve the retail experience of rural buyers from the outlying region, (particularly Lesotho, Umzimkhulu and Northern Transkei) which would include proper waiting and toilet facilities, information and communication services, and the provision of key social services (Home Affairs, Department of Health, Department of Welfare) situated in a one stop Multi-Purpose Centre. An improved and integrated retail and service experience will further consolidate the towns position as the premier consumer and service centre of the broader region and increase the portion of the regional spend into the municipality. (f) Providing an accessible shared service node for Non-Government Organisations (NGOs) and Community Based Organisations (CBOs), to establish accessible public information and service points. (g) Promote dynamic partnerships between the established private sector, the public sector, service organisations (NGO/CBO) and emerging business entrepreneurs (small and micro). The presence of public services such as Home Affairs and Dept of Social Welfare, NGOs and CBOs will contribute towards poverty alleviation through improved access to social grants etc. 4.2.2 Project Objectives to improve the local economy (a) Promote and support the emergence of small, medium and micro trade retailers and producers; (b) Provide a co-ordinated programme of critical skills development, training and capacity building geared towards key strategic areas to be identified in the economic regeneration study; McIntosh Xaba and Associates 8 (c) (d) Improvement of the retail and service experience of purchasers from outlying regions thereby consolidating the areas competitive advantage as the premier retail and service centre for the broader region. Provide a safe and serviced transport hub for the benefit of the taxi / bus industry and commuters (e) Provide an integrated trade, communication, information and social service hub which will improve access to information (AIDS, legal rights), communication social services (grants, pensions) which will contribute towards poverty alleviation, particularly with respect to rural commuters from the outlying regions; (f) Fostering partnership and collaboration between public-private and community sector 4.2.3 Project Strategies The critical strategy is to consolidate and expand the areas competitive advantage as a trade and service centre. The establishment of a mixed use trade plaza and multi-purpose centre will simultaneously promote and support SMMEs’, while increasing the town’s desirability as a retail and service centre, particularly from retail and service consumers from the outlying parts of the region. The public services provided at the centre, particularly those relating to the access of social grants and entitlements (Social Welfare, Home Affairs) will contribute towards poverty alleviation. The following strategies will be used to achieve the goals and objectives of the project: Place marketing of the Greater Kokstad Municipality The establishment of the Plaza will enhance the attractiveness of Kokstad as a desirable service and retail destination which serves the needs of the majority of the rural commuters who support the town. Integration of PDI business into the mainstream economy The project aims to give ownership and equity to the Taxi associations owned by PDI individuals of the commercial centre and accompanying future rental income Business retention and expansion The Greater Kokstad Municipality needs to focus on consolidating the central role that the town plays within the sub-region. SMME promotion and support The Plaza is intended to provide an opportunity for emerging business people, with SMME promotion and support being on site. This will create a critical mass of opportunity and support within a carefully designed space. McIntosh Xaba and Associates 9 Community Economic Development The provision of skills development and accessible social services will contribute towards poverty alleviation and greater self-reliance. This brings together a synergy of social services, employment training and enterprise development. 4.3 Project Key success factors Acquisition of a favourable land lease from the municipality Commitment from the local taxi associations A committed developer with a proper vision General public support and key stakeholder buy-in Ongoing management expertise and adherence to stringent standards Access to funding and proper financial structuring. 4.4 Project Benefits and Beneficiaries 4.4.1 Anticipated project benefits during operation stage It is estimated that this project will benefit the following classes of entrepreneurs and jobseekers; Local taxi operators – Taxi operators derive their income from transporting commuters to and from work. Most of these commuters reside in the outlying rural hinterlands and spend a considerable amount of their income on transport. Taxi fares have been kept artificially low because most of the passengers earn low incomes and cannot afford to pay market related fares. The taxi industry has been one of the few industries to have benefited HDI entrepreneurs over the past. However recent times have shown that the taxi business is currently over-traded and there is a need for business diversification to avoid quarells over routes and taxi permits. The current taxi rank has inadequate loading and offloading facilities, it creates a lot of traffic congestion in the town centre and will be unable to offer sufficient facilities for the proposed new midi-bus vehicles proposed in the taxi restructuring project. The taxi rank is not integrated with the bus rank facilities and this further causes problems with linkages in the intermodal transport network. The Kokstad Taxi association has approximately 90 members who will benefit from participating in the project ownership and equity participation. This project will improve their income generation potential and probably improve the salaries paid to their staff members. Ordinary commuters and workers stand to benefit from this project because it will result in descent and safer loading and offloading facilities with the necessary ablution and waiting facilities to protect them against adverse weather conditions. Depending on the profitability of this project, commuters may benefit from crosssubsidisation of their fare income from additional income and profits derived from this McIntosh Xaba and Associates 10 project. As indicated earlier this may result in the increase of the commuters disposable income since they a spent a bigger percentage of their income on transport. Hawkers and street-vendors will be afforded descent and safe trading facilities which will increase ultimately result in better working conditions and income. They will benefit by having an improved access to their customers since their stalls will be located in a close proximity to their customers. It is hoped that these facilities will be integrated with a focussed training and mentoship program on basic business skills and business management. This will give a chance of formalising informal businesses into the mainstream of the economy. Micro-traders The plaza will offer small trading facilities for micro-traders who would normally operate on caravans and shacks along street corners. These facilities will be located in the close proximity of the rank and close to their target market. Examples of such traders include haircut saloons, tearooms, kiosks, shoe repairs, tailors, phone shops etc. Other SMMEs will benefit by having their businesses located in a busy environment with significant passing trade. Such businesses may include a wholesaler anchor tenant, butchery, furniture shop, laundry, bakery, milk shop, hardware selling seeds and fertilisers, motor vehicle spares shop, franchise and fast food outlets, security company, bicycle retail and repair shop, micro-lender, arts craft and entertainment centre. Community A variety of community facilities will be provided including a multipurpose and training centre, Business support centre, information and councelling desk, youth advisory centre, government service multi-purpose centre, community ablutions etc. Development of a one stop community and LED centre would be economically viable for both the end users and the council. There is nothing more tedious than to travel on foot to visit a barber, then take another corner to visit a grocery shop, a community service centre and finally travel another distance to catch a bus or taxi. Municipality will be saved of the cost to erect taxi and bus rank facilities. The location of this site will ease traffic congestion in the present site. This development will further enhance the town regeneration and its attractiveness as the economic hub and service centre of the region. The centre will ultimately generate additional rates income and clear the streets of unpleasant sites of strret vendors and hawkers who pose nuisance to the town’s traders and businesses. This project will also create municipal credibility and confidence amongst local people by showing them that it cares about job-creation and entrepreneurial support of the HDI communities. 4.4.2 Estimated Employment generation during operation Shops – 20 to 25 shops will be created with an average employment of 5 people per shop this will translate into about 100 employed people Hawkers - The centre will create trading facilities for at least 20 hawkers Micro-businesses – The plaza will have small trading facilities for approximately 15 microbusinesses Taxi association members – About 90 taxi owners will be equity owners or shareholders of the development project. They will derive their income from premises rental. McIntosh Xaba and Associates 11 Community service centre – community service centre will create indirect jobs by providing entrepreneurial support to unemployed people and struggling entrepreneurs. This centre will benefit local NGOs and CBOs by proving support services and programmes defined in the municipal LED strategy framework and implementation plan. 4.4.3 Planned Employment Generation during construction It is estimated that 400 to 500 temporary jobs will be created during the construction phase of the plaza. Local emerging contractors will be given preference over outside contractors to minimise economic leakages. Wherever possible HDI owned contractors will be given preference. It is however important to note that affirmative procurement policy may result in longer project construction period and a subsequent loss of rental income. For this reason the developer needs to incorporate key experienced contractors to subcontract and train emerging contractors. 4.4.4 Brief description of the project beneficiaries in terms of average annual income, employment rate and dependency on social grants Although 65% of economically active population in the area is employed, 75% of the population earns less than R 20 000 per annum. This is largely attributable to the dominant role of primary agriculture, which employs 26% of the total workforce in the area. Although no statistical data on educational levels was available, the low wages earned by the employed people can be attributed to low educational levels, which impedes people to compete effectively for high-wage job opportunities. This can also be attributed to lack of high-wage paying jobs within the municipality 4.4.5 Improvement of beneficiaries’ access to the local economy The Kokstad CBD is a major trading centre for the surrounding communities of the Northern Transkei and Umzimkhulu (Eastern Cape), and KwaZulu-Natal, with as many as 15000 people commuting to the Central Business District of the town of Kokstad on any given payday to purchase goods. In addition it services the needs of the town and the farming community within a radius of about 100 kilometres. The key objectives of this project are to: Give local HDI communities meaningful ownership and equity to productive asset resources to stimulate the integration of small retailers, business entrepreneurs and hawkers into the the mainstream trade economy to provide skills development opportunities to SMME’s and strategic economic sectors in the municipality to provide a safe, secure and efficient taxi hub (taxi city) McIntosh Xaba and Associates 12 to improve the retail experience of rural buyers from outlying rural areas, particularly the Transkei, Umzimkhulu and Lesotho. To alleviate poverty through the presence of key administrative and social services provided by government and non-government agencies. 4.5 Market and Marketing Plan 4.5.1 Target Market The core target markets for the project are: Direct Customers Private sector tenants including small, micro enterprises and retail outlets and repackaging outlets for larger wholesalers, service providers including telecentres, office services outlets, ID photographers, packaging outlets; Skills Development agencies and trainees including emerging SMMEs, employees of established businesses and new strategic sectors. The Taxi Industry and commuters; Public Sector and NGO tenants who will establish information and service offices within the multi-purpose centre particularly the Department of Social Welfare, the Department of Home Affairs, the Consumer Council, training NGO’s, micro-credit institutions; Community based organisations, savings clubs, Aids Information Centres; Indirect Customers The rural / local retail customers and suppliers. 4.5.2 Marketing plan The market will be accessed through a number of different initiatives: The public sector tenants of the project will be sought through a process of detailed consultation to establish their commitment to providing the service within the centre; The small, medium and micro-enterprise will be canvassed through a carefully structured research process that will establish their exact needs and financial capacities. Rural buyers who travel from outlying areas will be consulted in order to tailor the product offering and the range of services supplied within the centre. In summary it is worth mentioning that anywhere in the country there is a direct relationship between the transport hub and commercial activity. The success of this plaza will be derived from a volume of commuters and passing trade offered by the transport hub. The buy-in, ownership and support by the local taxi and transport operators is crucial for the success of this plaza. Passenger transport operators can also play a meaningful role in providing marketing activities through recorded advertising tapes in their vehicles that inform passengers about McIntosh Xaba and Associates 13 existing commercial and retail activities in the plaza. They can also distribute pamphlets and leaflets to their passengers. The local municipality can play a significant role to promote the centre through their community participation structures and by negotiating with different government departments to set-up offices and community outreach and training services in the plaza. 4.5.3 Marketing Budget The primary role of marketing the centre will be the responsibility of the developer. Marketing budget will be part of the overall project administration fee charged by the property developer. Once the centre is operational, negotiations will take place between the developer, property equity owners and property tenants regarding the marketing strategy and budget for its implementation. 4.5.4 Time Frame to secure Market The key public sector tenants and retail outlets will be secured during the construction process of the SMME trade and multi-purpose centre. Premises will be leased off-plan, negotiations are currently underway between Ithala and potential anchor tenants. It is important to develop the rank first and establish the necessary commuter movement and traffic to attract potential tenants. Construction of the centre will take approximately 12 months to complete, during which time negotiations should be concluded with key stakeholders and future tenants. McIntosh Xaba and Associates 14 5 Compliance with Development Criteria Local Economic 5.1 Compliance with LED and economic regeneration strategies This project was identified and approved through a consultative economic development stakeholder workshop for Greater kokstad LED. The project is also inline with broader LED strategies which seek to; Encourage local business growth Avoid economic leakages and use local resources Encourage new enterprises Invest in hard and soft infrastructure Area targeting or nodal development Cluster development strategies SMME development strategies BEE (Black Economic Empowerment strategies) and integration into the economic mainstream Urban Renewal strategies Provincial and National Department of Transport SMME development strategy Development of informal economy Creation of Public Private Sector Partnerships and linkages Job-creation and economic growth with a special focus on historical disadvantaged communities 5.2 Short and Long term jobs Approximately 400 short-term jobs will be created in the construction phase. Approximately 200 permanent jobs will be created by the retail and services business in the centre. Approximately 20 Hawkers will benefit from an increased profitability of their businesses. 5.2 Target Beneficiary Profile The project management company will strive to recruit project beneficiaries according to the following formular; Wome n 33% Youth (16 to 25) McIntosh Xaba and Associates 33% Disable d 2% Other vulnerable 15 5.3 Sources and Amounts of Project Income Ithala – Development Finance Corporation Limited – R18 mill Department of Provincial and Local Government Affairs – R1 mill to R3 mill bridging finance for TAXICO to acquire equity and ownership of the property Department of Economic Development – Project planning and logistics Department of Labour – Training interventions Greater Kokstad Municipality – Land access, custodianship and accountability. Ithala has shown a keen interest to develop this Plaza in partnership with the local taxi operators. The Greater Kokstad Municipality is has agreed in principle to lease or sell development site at favourable rates to TAXICO. 5.4 SMME Budget Allocation The entire budget (100%) is focused on the development of Small Medium Micro Enterprises. 5.5 Linkages to the IDP The project is linked to the Greater Kokstad IDP in the following ways: The promotion of the safety and security strategy and its objective of establishing Kokstad as a clean and safe environment; The promotion of the local economic development strategy particularly the objectives relating to: expanding business opportunities, particularly SMMEs’, the establishment of a “Taxi City” the development of hawker sites the development of arts and crafts consolidation of Kokstad as the premier regional goods and service centre Provide a market for other SMMEs’ particularly those relating to agriculture production, processing, recycling and textiles The development of entrepreneurial skills 5.6 Role of the Municipality The Municipality must be the key facilitator, ensuring the establishment of a key community-public private initiative that will empower emerging small and micro entrepreneurs. The key role of the municipality will be: To secure the initial funding for the project To facilitate the establishment of a dynamic community-public-private-partnership (cppp) around the project McIntosh Xaba and Associates 16 To leverage the land and a portion of the project budget. The preferred site is municipal owned land situated in the Kokstad town centre. (municipal show-grounds next to the new technical institute) Although no formal agreements have been reached yet, the key stakeholders appear to agree on the broad terms and conditions for this project. To empower small and micro enterprise business enterprises to optimise opportunities arising from the project 5.7 Local Stakeholders The key local partners will include: Kokstad Taxi Association Greater Kokstad Municipality Local hawkers organisations Greater Kokstad civics organisation Local business chamber Local LED forum and steering committee McIntosh Xaba and Associates 17 6 Institutional Arrangements 6.1 Ownership and Management Structure Project ownership will vest with TAXICO. The council will release land to TAXICO through a 99 year lease subject to favourable terms or nominal value. TAXICO will then sublease the property to the developer who will develop the property and the accompanying taxi rank. TAXICO may either elect the developer to manage the property or contract an independent property management company to administer the centre. The taxi rank and hawkers facility will be managed jointly by TAXICO, hawkers and Greater Kokstad Municipality. The Kokstad taxi association members will register an investment company TAXICO LTD with a board of directors to manage its business operations. Additional directors may be recruited outside the taxi industry to contribute to managerial expertise. The company will employ the services of an external professional service provider in the form an accountant and auditor to advice it on the deal structuring and investment advise. The company may also need to consider the services of a qualified attorney to structure legal agreements with other key stakeholders. The company’s primary function will be to engage in investment activities for the benefit of its shareholders. The company may at a later stage consider to be engaged in operational activities related to the transport industry. This may include the acquisition and operation of a service station, quick-fit facilities, spares shop, insurance brokerage, fleet maintenance and diversification into other modes of transport like bus and freight truck operation. It will be important to negotiate rates exemption on the taxi-rank portion and a favourable rates policy to apply on the commercial portion for the first five years to lower operational costs. Currently, the LED steering committee will oversee the project conceptualisation and planning until such time that the contractual agreements are concluded between key stakeholders. The project implementation plan will then be transferred to the developer subject to an oversight responsibility by the Kokstad Municipality. The project will be closely linked to the proposed LED institutional arrangements planned for Greater Kokstad. Currently there is no agreement on the establishment and management of a Section 21 company to spearhead LED projects. It will be imperative that the project is managed on a commercial basis and employs the services of a professional developer and management company to make this development to be commercially viable and sustainable from the first instance. 6.2 Human Resource Development Plan The Greater Kokstad LED situational analysis and implementation framework identified and prioritised a need for a comprehensive skills development strategy and implementation plan that is linked to key growth sectors. A core component of the project is human resource development and skills enhancement. It combines employment training, human resources and enterprise development to enhance access job-creation, jobs, careers and self-sufficiency for members of disadvantaged communities. McIntosh Xaba and Associates 18 It is anticipated that the skills development and human resource development activities will be supported through the partnership between the Greater Kokstad municipality, DEDT / DTI, Department of Labour and the SETA’s. The skills development and human resource development processes will focus on the following: - Building the skills and capacity of emerging entrepreneurs through business skills training; Sectoral skills development for re-skilling and upgrading current workers in new products and services defined through the economic regeneration study project which will be identified during the period January to March 2003. This training is likely to be focused around agricultural processing and beneficiation; building the capacity of adult learners from disadvantaged communities particularly with respect to basic literacy and numeracy 6.3 Proposed Training Intervention 6.3.1 The following table serves as example to illustrate targeted training interventions and related costs to be implemented for SMME support and job creation: Type of training Women Literacy Youth Subtotal Cost (R) Men Cost (R) Total Value (R) 175 175 215000 150 155000 325 370000 175 175 215 000 150 155000 325 150 150 115000 150 115000 300 230000 5 5 10 50000 8 40000 18 90000 70 70 140 280000 60 240000 200 520000 5 5 10 50000 5 50000 15 100000 430 230 660 925000 523 755000 1183 1680000 370000 Numeracy Life Skills Instructors Vocational & task related Leadership Other Totals The targeted gender and age profiles of training beneficiaries : 44% Men 36% Women 19% Youth It is important to note that a separate programme will be implemented for Education Training and Mentoship intervention. This programme will be essential to support future SMMEs and hawkers to operate on the proposed trade plaza. The programme will be packaged and funded separately from this project. It will however be important to integrate this project with the emerging contractor capacity building courses during the construction phase of the plaza. Recent Case McIntosh Xaba and Associates 19 Study - Ithala co-ordinated a similar programme during the construction of a 4200 square metre development of the Durban’s Wilson’s Wharf recently. The project was used as a high profile training ground for 32 emerging contractors who used this fast-track economic empowerment programme as a springboard into the main construction industry. The project taught participants technical and management skills. Ithala provided R300 000 in the Wilson Wharf project for the training programme and certification of contractors. It is hoped that this example will be duplicated in the construction of the Greater Kokstad Trade Plaza. McIntosh Xaba and Associates 20 7 Development and Operational Plans 7.1 Land and Locality 7.1.1 Nature of location The centre will be situated on a municipal owned property located in the central business district. The proposed development site is situated on the municipal show-grounds next to the technical college. The criteria used for the site selection was; Proximity to the proposed transport hub (taxis, buses) Research on retail users needs and requirements Spatial integration with the core trade operators Capability for future expansion Correct zoning Name of area: Kokstad Central Business District Name of local municipality:............... Greater Kokstad Municipality Name of district municipality: Sisonke District Municipality Name of province: KwaZulu-Natal 7.1.2 Finalisation of project site Further negotiations between key stakeholders are essential to finalise the business model and correct zoning of property for commercial and light industrial usage: Key stakeholder interviews will be undertaken to assess commuters needs and future participation of large and small scale traders before the finalisation of site selection and development plans . A full inventory of available municipal land will be carefully assessed. 7.1.3 Land ownership arrangements The proposed site will be one of three sites owned by the municipality and are available for the project. The municipality will enter into a lease agreement with a TAXICO or a developer. 7.2 Structure and Construction Phase 1 of the proposed development will be as follows: A shopping mall comprising of approximately 5000 square metres 20 to 25 shop premises of approximately 20 square metres Sufficient space to house the requirements of an anchor tenant. Twenty hawkers trading facilities located in the taxi rank. McIntosh Xaba and Associates 21 Multi use facility of approximately 150 square metres. Approximately 30 % of the floor area will be dedicated for services such as Training facility for skills development, business administration and marketing A number of micro-business premises facing the taxi rank. Customer parking area Loading and offloading facilities, parking bays and shelter for commuters, taxis and buses Community ablution facilities. Phase 2 of the proposed development will require an additional 5000 to 10000 square metres for; Improvement and expansion of commercial facilities Upgrade of the community multi-purpose and training centre Establishment of light industrial facilities like motor vehicle repair shops, service station, tyres, spares and quick-fit facilities Upgrade of bus / taxi rank facilities. McIntosh Xaba and Associates 22 8 Sustainability 8.1 Operations and Maintenance The success of this project will be based on; Key stakeholder participation and buy-in from national and provincial government, municipality, taxi association, civics organisations and project funder Committed developer with a sound vision Institutional arrangements structured along business principles and management practises A viable business proposition and rental recovery plan Rental recovery from trade enterprises Rental recovery from public sector Rental recovery from NGO clients 8.2 Role of Municipality The municipality will provide land at favourable rates and facilitate stakeholder alignment during conceptual and planning stages of this project. Alternatively the municipality may adopt a build operate and transfare (BOT) strategy and lease the premises to a management company. This option is not recommended for the simple reason that the municipality will be competing with other property developers on a non-core business activity. Municipality should rather focus their activities on the provision of essential infrastructure to meet the basic needs of the communities like water, roads upgrades, health services and other social services. The local municipality may however deploy its resources for the training, education and mentoship programme to enable local SMMEs to operate sustainable business through business skills development. The Greater Kokstad municipality will have an oversight function to ensure the sustainability and accountability by requesting periodic perfomance records. McIntosh Xaba and Associates 23 9 Implementation Plan 9.1 Project Time Frames 9.1.1 Total156 weeks 9.1.2 Summary of Implementation Phases (in weeks) Project Phases Finalise negotiations on land acquisition Detailed consultation and agreement between key stakeholders and project commitment including selection of developer and project administrator Finalise user requirements and trade plaza/multi-purpose centre design 2 weeks Finalise TAXICO registration, organisational development structuring 4 weeks Tender for construction and training of local construction participants 8 weeks Construction of rank and hawkers stalls 8 weeks Construction of shopping and service centre Finalise allocations, lease agreements and set up of retailers, producers and service providers Establishment of project systems, procedures and management systems 24 weeks 4 weeks Project monitoring 24 weeks Ongoing support 44 weeks McIntosh Xaba and Associates Duration 2 weeks 4 weeks 4 weeks 24 10 Finance and Funding 10.1 Total Funding Outline Total Construction Costs ITEM RATE / SIZE TOTAL COST New Buildings 5000 M² Approximately R18 mill Hawkers stalls Unconfirmed stalls) Loading and offloading facilities To accommodate 50 midi- R unconfirmed bus taxis and 20 buses (about 20 R unconfirmed Other incidental costs R unconfirmed TOTAL R19 million Total Fixed Costs Existing Property (nominal purchase price from R 25 000.00 municipality or a 99 year lease value) Encumberances on property Nil Rates Nil Legal costs Unconfirmed yet Transfer costs Nil Construction costs R 19 million TOTAL R 20 million On-going Management Per Year Item Rate per month X Total 12 Manager (R15 000.00 X 12) R 180 000.00 Administration / Finance (part- (R3 500.00 X 12) time) R 42 000.00 Maintenance (R2000.00 X 12) R 24 000.00 Marketing and advertising (R5000.00 X 12) R60 000.00 Cleaning (R3 500.00 X 12) R42 000.00 TOTAL RUNNING COSTS McIntosh Xaba and Associates R348 000.00 25 Summary of costs Total Estimated Fixed Costs R 20 mill Total Running Costs R 348 000 10.2 Cost Recovery / Operations and Maintenance Income / Expenditure Unit Numb er Floor Area Rate / M² or per month Main Venue 1 – meeting & functions area 150 R300 per R4 day 500.00 R 000.00 Mobile stalls 20 N/A R50 per day R1 000.00 R12 000.00 Shops & Office space Unconfir med 4500 R40 R15 000.00 R180 000.00 R20 500.00 R246 000.00 TOTAL Per Month Rental (year) 54 Note 1: Negotiations are still underway with Ithala to finalise the development costs of the projects Note 2: The expected rental income at market related income cannot recover the loan repayment instalments. It will not be feasible to charge higher rental rates at Kokstad because of the depressed economic conditions. 10.3 Total funding requests (R) over a possible three year period Year 0 to 1 Year 1 to 2 R 1 000 000.00 R 1 000 000.00 Year 2 to 3 R 0.00 Total R 2 000 000.00 10.4 Summary of projected quarterly expenditure (R) in year 0 to 1 1st Quarter 2nd Quarter R 250 000 McIntosh Xaba and Associates R 250 000 3rd Quarter R250 000 4th Quarter R 250 000 Total R1 000 000 26
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