Business Plan for Establishment of Trade and

Transcription

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: mxa@mxa.co.za
Web: http://www.mxa.co.za
Contents Page
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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
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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
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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.
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2 Project Details
2.1 Project Manager
Mr B Terblanche, Kokstad Municipality
P.O Box 8
Kokstad
4700
75 Hope Street
Kokstad
4700
Telephone no:039 -7273133
Cellular no: 0836350226
Telefax no: 039 7273676
e-mail address: mail to: municipality@kokstad.org.za
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: municipality@kokstad.org.za
2.3 Name of District Municipality: Sisonke
Municipality
District
Municipal Manager: Mr M Mabaso
P O Box 5719
3
Ixopo
3276
39A
Margaret Street
Ixopo
Tel: (039) 8342644
Tele facsimile no:(039) 8341750 ..................
e-mail address: mailto:mmabaso@futurenet.co.za
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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.
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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.
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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
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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;
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(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.
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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
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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.
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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)
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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
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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.
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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)
33%
Disable
d
2%
Other vulnerable
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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
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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
Local hawkers organisations
Greater Kokstad civics organisation
Local business chamber
Local LED forum and steering committee
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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.
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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
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.
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.
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.
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.
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
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
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
R 250 000
3rd Quarter
R250 000
4th Quarter
R 250 000
Total
R1 000 000
26

Business Plan for Establishment of Trade and

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