PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS
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PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS. 2006/07 ANNUAL REPORT. 20 FEBRUARY 2008. PRESENTATION CONTENT. 2006/07 ANNUAL REPORT. Economic Context dti Strategic Objectives 2006/07 Achievements and Progress Six Year Expenditure Comparison

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2006 07 annual report

PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS

2006/07 ANNUAL REPORT

20 FEBRUARY 2008


Presentation content

PRESENTATION CONTENT

2006/07 ANNUAL REPORT

  • Economic Context

  • dti Strategic Objectives

  • 2006/07 Achievements and Progress

  • Six Year Expenditure Comparison

  • Analysis of 2006/07 Under Expenditure

  • Analysis of current MTEF

  • YTD Expenditure – 31 August 2007

  • Conclusion and challenges


Economic context

ECONOMIC CONTEXT

2006/07 ANNUAL REPORT

  • Economy has been growing for seven consecutive years driven by domestic demand

  • SA economy registered 5% real GDP in 2006 remaining constant for 3rd consecutive calendar year.

  • Aggregate real domestic expenditure grew by 8,7% with contributions by households (7,3%); government (5,4%) & private & public sector fixed investment (12,8%)

  • Current economic performance is widening the current account deficit (6,4% of GDP in 2006) driven by demand exceeding supply, import penetration & weak export performance

  • Domestic CPIX within the 6% range in 2006 but came under increased pressure in early 2007

  • Approx. 500 000 jobs per annum being created

  • Modest improvement to manufacturing, growing 5% last year driven by buoyant domestic market


Economic context1

ECONOMIC CONTEXT

2006/07 ANNUAL REPORT

  • Aggregate exports grew 5,5% in real terms during 2006

  • However, key constraints emerging likely to dampen manufacturing & export growth:-

    • Capacity

    • Rising input costs

    • Exchange Rate

    • Interest Rates

  • Investment remains robust with Gross Fixed Capital Formation across the economy forecast to grow by 13,3% in 2007

  • These conditions make a strong case for a robust industrial policy to support manufacturing , exports & employment

  • It is therefore imperative for the dti& government to ensure the effective & sustained implementation of the National Industrial Policy Framework and key sector action plans


Strategic objectives

STRATEGIC OBJECTIVES

2006/07 ANNUAL REPORT

  • Promoting coordinated implementation of the accelerated and shared growth initiative

  • Promoting direct investment and growth in the industrial and service economy, with particular focus on employment creation

  • Raising the level of exports and promote equitable global trade

  • Promoting broader participation, equity and redress in the economy; and

  • Contributing to Africa's development and regional integration within the NEPAD framework


Achievements and progress

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

The department seeks to organise its work in terms of the following areas on which the annual report is based:-

  • Industrial development

  • Trade, investment and export

  • Broadening participation

  • Regulation

  • Administration and coordination


Achievements and progress1

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Industrial Development

Purpose:Provide leadership in the development of policies and strategies that promote competitiveness, enterprise development and the efficient administration of support measures.

  • Progress

  • Cabinet endorsement of National Industrial Policy Framework, followed by outline of the Industrial Policy Action Plan

  • Finalisation of key sector strategies (eg chemicals & pharmaceuticals; automotives, metals & capital equipment; forestry, pulp, paper & furniture; & clothing & textiles)

  • Implementation of key sector strategies (BPO&O, tourism)

  • Implementation of the National Industrial Participation Programme (150 projects, US$7.5 billion 12,000 direct jobs)


Achievements and progress2

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Industrial Development

  • Progress – cont.

  • Key incentives have contributed to the manufacturing & services industries:

    • SMEDP - 11,309 projects approved since 2000 with R12,7b in incentive value. Since April 2006 2,501 projects approved with incentive value of R2,96b

    • Strategic Industrial Projects (SIP) – 45 approved projects in July 2005 when scheme expired. Estimated value of ongoing investment of R28,7b with estimated 8,446 direct & 104,545 indirect jobs being created. 22 of the approved projects already established with investment of R10b.


Achievements and progress3

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Industrial Development

  • Progress – cont.

    • Critical Infrastructure Programme (CIP) – 19 projects approved to date with qualifying investment of R32b & infrastructure investment of R9,2b

    • Industrial Development Zones – attracting growing investor interest with commitments currently valued at R28b.

    • Film & TV production – 31 productions approved since 2004 with R1,8b in local expenditure. In 2006/07 four local productions assisted to the value of R31,3m incl. Oscar winning Tsotsi

  • Support for technology & innovation:-

    • Support Programme for Industrial Innovation (SPII) – 85 projects endorsed to the value of R250m (18% female & 34% BEE)


Achievements and progress4

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Industrial Development

  • Progress – cont.

    • Technology & Human Resources for Industry Prgramme (THRIP) – assisted 746 researchers; 3,178 students & 371 industry partners (36% female & 55% BEE)

    • The South African National Accreditation System (SANAS) & the South African Bureau of Standards are also major contributors to this area of the dept’s work

  • Centres of Excellence established to increase manufacturing skills (i.e. Aerospace, Clothing & Textiles, Advanced Eng., etc.)

  • Launched support measures for the development of the aerospace industry (eg. aerospace village)

  • Comprehensive review of all major incentives undertaken to guide future support for Industrial Policy


Achievements and progress5

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Trade, Investment and Export

Purpose:To promote economic development by working to build an equitable multilateral trading system that facilitates development; strengthening trade and investment links with key economies; and by fostering African development including through regional and continental integration and development co-operation in line with NEPAD

  • Progress

  • Leadership role in WTO Doha Round negotiations

  • Key bilateral trade links and negotiations (EU, EFTA, USA, India, Brazil (and IBSA), China)

  • EFTA agreement ratified by South Africa. Lesotho, Namibia & Swaziland to ratify agreement

  • SACU-Mercusor PTA – major progress made & negotiations expected to be finalised in the current financial year.


Achievements and progress6

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Trade, Investment and Export

  • Progress – cont.

  • SACU-US – a Trade Investment & Development Co-operation Agreement proposed as framework for these relations

  • Clothing and textile quotas against import surges from China instituted to provide relief to local manufacturers

  • Ongoing negotiations to promote African and regional economic integration

  • Bilateral Investment Treaties - signed with one country; negotiations concluded with 7 countries; ongoing negotiations with 3 countries; & planned negotiations with 9 countries

  • Engaged in the set-up of new SACU institutional arrangements


Achievements and progress7

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Trade, Investment and Export

  • Progress – cont.

  • Ongoing export promotion activities on the basis of a revamped export strategy, including trade missions & national pavilions, identification & dissemination of trade leads & financial assistance to exhibitors & market researchers

  • Wide range of investment promotion activities undertaken, including investment pavilions & seminars; ministerial & presidential missions; international investment council meetings; investment conferences & sector specific briefs


Achievements and progress8

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Trade, Investment and Export

  • Progress – cont.

  • Networks established with Provincial Investment Agencies, with meetings every quarter

  • Joint collaboration and co-ordination with Provinces on investment & international projects

  • EMIA scheme hosted workshops in all provinces

  • Provinces encouraged to participate in all missions & pavilions locally & internationally & access funding through the EMIA scheme

  • 5 export ready seminars attended by 410 SMEs


Achievements and progress9

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Broadening Participation

Purpose:Lead in the development of policies and strategies that promote enterprise growth, empowerment and equity in the economy

  • Progress

  • Support for small enterprise development through increased financing of SMEs by Khula, NEF & IDC and the rollout of SEDA & SAMAF:-

    • 47 SEDA offices

    • 103 Enterprise Information Centres

    • 18 Incubation Centres

    • 13 Retail finance partners through which Khula lends

    • 13 Khula Mentorship offices

    • 8 SA Micro finance Apex Fund (SAMAF) Provincial offices


Achievements and progress10

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Broadening Participation

Purpose:Lead in the development of policies and strategies that promote enterprise growth, empowerment and equity in the economy

  • Progress

  • Codes of Good Practice for BBBEE adopted by Cabinet, gazetted in February 2007 & under implementation (incl. Sector Charters)

  • Regional Industrial Development work being linked to the National Industrial Policy Framework & Local Economic Development work

  • BEE and women empowerment also supported by key incentive schemes:- BBSP, SPII & THRIP


Achievements and progress11

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Broadening Participation

  • Progress – cont.

  • Training workshops on women empowerment and access to finance through SAWEN

  • Cooperative legislation developed and support to cooperatives provided – 4 large projects totaling R9m & 16 small projects totaling R3,78m

  • Products for targeted procurement from SMEs by government departments identified

  • Publications, road shows and imbizo’s to promote awareness of the dti’s services and offerings


Achievements and progress12

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Regulation

Purpose:Develop and implement coherent, predictable and transparent regulatory solutions that facilitate easy access to redress and efficient regulatory services for economic citizens.

  • Progress

  • National Credit Act proclaimed and Regulator established

  • Companies Bill published for public comment

  • Consumer Protection Bill published for public comment

  • Competition Policy Review completed & drafting of amendments to Act started

  • Corporate laws Amendment Bill introduced in 2006

  • Processed the FIFA request for trademark protection & issued public notice


Achievements and progress13

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Regulation

  • Progress – cont.

  • Legislation passed:

    • Measurement Units & Measurements Standards Act (Act 18 of 2006)

    • Accreditation for Conformity Assessment, Calibration & Good Laboratory Practice Act (Act 19 of 2006)

    • Amendments to the Close Corporations Act, 1984

  • Subordinate legislation introduced:

    • Regulations under the Cooperatives Act, 2005

    • Regulations under the National Credit Act, 2006

    • Amendments to regulations made under Legal Metrology Act 1973


Achievements and progress14

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Regulation

Work undertaken on the following legislation for introduction in 2007/08

The Consumer Protection Bill

Intellectual Property Law Amendment Bill

Competition Amendment Bill

Companies Bill

National Gambling Amendment Bill

National Regulator for Compulsory Specifications Bill

The Standards Bill

The Lotteries Amendment Bill


Achievements and progress15

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Regulation

  • Progress

  • Quarterly meetings of the National Consumer Protection Forum, which include Provincial offices of consumer protection, to co-ordinate consumer protection activities.

  • Capacity building programmes in alternative dispute resolution arranged by Office of Consumer Protection & to be rolled out to Provinces

  • Liquor Awareness Campaign is a partnership between the National Liquor Authority, provinces, SAPS, business and civil society. Campaign encourages responsible trading and drinking.

  • Bi-annual meetings of the National Gambling Policy Council and the National Liquor Policy Council to advise the Minister on policy issues


Achievements and progress16

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Administration and co-ordination

Purpose:Ensure efficient and effective coordination and systems within the dti and with stakeholders & partners

  • Progress

  • HR is a critical challenge & ongoing efforts made to fill key vacancies, incl. use of specialized recruitment agencies

  • 213 vacancies were filled out of 323 in the year to 31 March 2007, & the vacancy rate stood at 27%

  • An integrated HRD strategy under development, covering recruitment, retention & training

  • Greater alignment, co-operation & co-ordination with thedtiagencies (COTII), including leveraging capacity in agencies (eg. IDC)


Achievements and progress17

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Administration and co-ordination

  • Progress – cont.

  • Strong Corporate Governance maintained

    • Unqualified dti audits over several years & unqualified COTII audits in 2006/07, except for two agencies

    • All COTII agencies tabled annual reports timeously

  • Key Boards of Directors & CEO appointments made

    • Estate Agency Affairs Board (EAAB)

    • Small Enterprise Development Agency (SEDA)

    • South African Bureau of Standards (SABS)

    • SABS Trade Metrology Advisory Committee (TMAC)

    • National Credit Regulator (NCR)

    • International Trade Administration Commission of SA (ITAC)


Achievements and progress18

ACHIEVEMENTS AND PROGRESS

2006/07 ANNUAL REPORT

Administration and co-ordination

  • Progress – cont.

    • South African Micro-finance Apex Fund (SAMAF)

    • Companies & Intellectual Property Registration Office (CIPRO)

    • National Metrology Institute of South Africa (NMISA)

    • Commissioner of the Competition Commission

  • Effective & efficient use of allocated funds


Six year comparison of budget vs expenditure

Six year comparison ofbudget vs expenditure

2006/07 ANNUAL REPORT


Analysis 2006 07 under expenditure

ANALYSIS 2006/07UNDER EXPENDITURE

2006/07 ANNUAL REPORT

Under-expenditure in 2006/07 occurred in mainly in the following areas for which roll-overs have been approved:


Analysis of current mtef

ANALYSIS OF CURRENT MTEF

2006/07 ANNUAL REPORT

On average, the allocation of the budget over the MTEF period is as follows:

  • 27% to agencies

  • 53% to incentive payments

  • 10% to compensation, after deducting the budget for agencies (8% of total budget)

  • 12% for goods and services, of which 7% is already committed


Analysis of current mtef1

ANALYSIS OF CURRENT MTEF

2006/07 ANNUAL REPORT


Challenges

CHALLENGES

2006/07 ANNUAL REPORT

In conclusion

  • Overall we have achieved our targets for the reporting period

  • Challenge is to enhance impact of the department through:-

    • Ensuring effective programme & project performance

    • Stronger strategic & operational management

    • Greater integration of work, including with agencies

  • Adequate financial resources for extensive dti programmes

  • HR challenge of recruitment, retention and development

  • Improved cluster co-ordination


2006 07 annual report

2006/07 ANNUAL REPORT

THANK YOU

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