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PRESENTATION TO THE SELECT COMMITTEE

PRESENTATION TO THE SELECT COMMITTEE. Tuesday, 29 July 2014. New Growth Path. The New Growth Path (NGP) was developed to address the legacy of inequality with regard to access to resources, skills, investment economic growth and development that still reflect in our economy

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PRESENTATION TO THE SELECT COMMITTEE

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  1. PRESENTATION TO THE SELECT COMMITTEE Tuesday, 29 July 2014

  2. New Growth Path • The New Growth Path (NGP) was developed to address the legacy of inequality with regard to access to resources, skills, investment economic growth and development that still reflect in our economy • The NGP outlines how to respond to these challenges and create the much needed jobs • The NGP further articulates the need for us to achieve a common vision as a society so that all of us – the public sector, the private sector/ business, labour unions and civil society work together to achieve our goal of creating 5 million jobs by 2020. • The NGP is essentially a comprehensive response to the structural crises of poverty, unemployment and inequality in South Africa

  3. Jobs Drivers Main economic sectors: Agriculture & agroprocessing Mining and beneficiation Manufacturing (IPAP2) Tourism/other services Infrastructure Energy, transport, communications, water, housing. Look for employment opportunities in “jobs drivers” and implement policies to take advantage of them Spatial opportunities: Rural development African regional development New economies: Green economy Knowledge economy Social capital: The social economy The public sector 3

  4. II. National developments • Outlook is improving • Employment losses in the first quarter 2014, • Share of investment in GDP has grown somewhat • Mostly due to the public sector investment • Increased trade with Africa, especially manufactures, in past 2-3 years • Substantial increase in industrial financing through the IDC • But concerns: • External balance remains poor due to • Reduction in mineral prices compared to 2011 • Very volatile capital flows associated with depreciation • Continued over-reliance on imports of consumer goods and exports of commodities • Workplace conflict apparently linked to persistent inequalities and poor supervisory management as well as inadequate bargaining structures

  5. I: International developments • The uneven recovery from the 2008/9 downturn continues • Mixed signals from the global economy regarding economic growth outlook • Growth forecasts for the US and the Eurozone have been revised downwards. The contraction of the US economy in the first quarter is the reason for the downward revision in the US forecast. • Weak industrial output in Germany in May, and slowing growth in France and Italy is one of the reasons for the downward revision in the forecasts for Europe • The Chinese economy is expected to grow just under 7,5 per cent in 2014 • Continued stagnation in commodity prices would affect South Africa’s largest exports • The fragility of EU economy affects SA’s exports

  6. GDP Growth in Percentages

  7. Investment

  8. Employment by youth and gender • Youth employment (15 to 34 years) increased by 322 000 from the quarter before the inception of the NGP (3rd Quarter 2010) to the end of the first quarter of 2014 • Of the new jobs created from the quarter before the inception of the NGP (3rd Quarter 2010) 794 000 were taken up by women whilst 613 000 were taken up by men. In this period, more employment was taken up by women than men. • Because most new jobs were in services, women benefited most from job growth. • Between Q1: 2013 and Q1: 2014 women have gained 300 000 (4,5%) jobs. • Most of the jobs gained were from the formal sector (288 000), whilst employment in the agricultural sector decreased by 47 000 during the period under observation. • The biggest employment industries were government services (130 000), trade (115 000) and finance (73 000). • The labour absorption rate among women has increased by 1,1 percentage points, having moved from 36,1% in the 1st quarter of 2013 to 37,2% in the 1st quarter of 2014. • Women gained almost 794 000 jobs from the third quarter of 2010 to the 1st quarter of 2014.

  9. Social Pacts for the New Growth Path An important part of EDDs work has been fostering social dialogue with social partners: • National Skills Accord (13 July 2011) sets targets for government, SOEs and the private sector to expand training and internships and to support SETAs and the FET sector. • Basic Education Accord (13 July 2011) provides for stakeholders to support individual schools in poor communities in line with agreed guidelines. • Local Procurement Accord (31 October 2011) commits government, state-owned enterprises and the private sector to expanding procurement of locally produced goods and services so as to maximise employment creation and deepen industrial capacity, with a target of 75% local procurement. • Green Economy Accord (17 November 2011) promotes the greening of the economy, including increased production of renewable energy, the installation of solar water heaters on a mass scale and energy efficiency, through appropriate regulations, investments and collective action by the stakeholders. • October 2012 Social Accord focuses on strengthening confidence in labour market institutions; addressing income inequalities and building social cohesion; taking action to combat violence during industrial disputes; supporting the infrastructure build programme • Youth Employment Accord - In February 2013 Cabinet approved the youth employment accord after all parties in NEDLAC reached consensus on a common approach to address the spiralling challenges of youth unemployment in South Africa

  10. Employment by province since the adoption of the NGP • Nationally, employment has increased by 10,3% since the adoption of the NGP in the 3rd quarter of 2010. Employment has declined by 0,9 percentage points in comparison to the previous quarter. • Gauteng, WC, Limpopo and KZN saw the largest gains in numbers quarter on quarter. • In percentage terms, the largest gainers were Limpopo and Mpumalanga • The Free State is the only province that has lost jobs during this period.

  11. Performance Progress on Jobs Drivers in last year

  12. III: Jobs Drivers: Progress & challenges • 1.41 million more employed people since the inception of the NGP (3rd Quarter 2010 to 1stQuarter 2014) • Improved employment intensity of growth • BUT the number of people who want work and can’t find it is now 7,4 million, up from 6,7 million • Inequality has come down although still very high by international standards • Growth recovered from 2008/9 downturn • New challenges from • Worsening global environment • Rising electricity and other user costs • Workplace and community conflicts

  13. Infrastructure • Not a standard statistical category, so report on construction employment and value add (which includes private residential construction also) as well as total public investment: • The construction industry reported an annual increase of 116 000 ( or 9.7%) employees in March 2014 compared with March 2013. • Most jobs were gained in Gauteng (43 000), KZN ( 38 000), and Limpopo (18 000). • Employment increased were observed in eight provinces, Eastern cape is the only province that shed jobs (- 4 000).

  14. Key Achievements • Government increased investment in public infrastructure from R610 billion to R1,1 trillion • Projects included in the National Infrastructure Plan sustained 200 000 jobs • Public investment equalled 7,7% of GDP in the first quarter of 2014, compared to 6,9% at end 2010 • Impact increased through local procurement • Infrastructure Development Act was tabled and approved by Parliament • In the next five years, government plans spend R1.5 trillion in public infrastructure to provide a strong platform for inclusive growth and job creation

  15. Agricultural value chain and rural development • During the period Q1:2013 and Q1:2014 employment in agriculture fell by 55 000. Agricultural output shrank down to -7.8% year on year. Some contributing factors could be high input costs ( as a result of increased agricultural commodity prices) and weather uncertainty, ultimately hampering the production process. • In terms of year on year, growth in agricultural employment was only reported in Western Cape (20 000), Gauteng (14 000) and North West (5 000). • Free State (-31 000), Mpumalanga (-22 000), Eastern Cape (-21 000) and Limpopo (-19 000) were provinces that shed the most jobs. No changes were reported in KZN. • This is cause of concern as this undermines efforts made towards employment creation and rural development.

  16. Key Achievements • The Fetsa Tlala programme, launched on 24 October 2013, includes land preparations for 230 000 hectares are underway in Limpopo, Eastern Cape, Free State, Northern Cape, North West and KwaZulu Natal, with half the land allocated to smallholders. • DAFF has established two commodity based cooperatives: • Itsha-Lima Secondary cooperative in Piet Retief (Mpumalanga province) participating in the school nutrition programme and supplying schools in the Mkhondo local municipality with fresh vegetables. • eDumbe Marketing Agricultural cooperative in Paul pietersburg (KwaZulu- Natal) established to supply Spar with cabbages, with an option of adding other vegetables. • EDD assisted Noble Resources (Soybean Crashing Plant) to acquire land from the Lekwa/ Standerton Municipality to create a parking space for trucks • A draft Agricultural Policy Action Plan (APAP) has been developed that focuses on five strategic value chains: red meat and poultry, which include maize; wheat; forestry; aquaculture and small-scale fisheries; and biofuels. The implementation of APAP will be take place in the current administration

  17. Key Achievements ….2 • The Russelstone Soya Crushing Plan, the first dedicated oil cake focussed commercial-scale soya crushing facility in South Africa, was launched in the Bronkhorstspruit Industrial Area. • Organic food sector: The dti and DAFF have consulted with industry and organic farmers that will participate in the retail supplier programme. 130 Farmers were organically trained in preparation for listing with formal retailers (Pick ‘n Pay) • Small-scale milling industry: Agreement with the Foundation for African Business and Consumer Services (FABCOS) to establish a number of Small Scale mills in four provinces for 24 small scale milling projects. An amount of R260 million was ring-fenced • Aquaculture: A total of 9 projects were approved under the Aquaculture Development & Enhancement Programme (ADEP) with total investment projected between R55 mill and R71 mill. • Forestry Cluster Development: Action plans have been developed for the establishment of clusters in KZN and Eastern Cape

  18. Mining Sector

  19. Mining • Employment in mining decreased by approximately 19 000 between Sept 2010 and March 2014 • Quarter on Quarter the employment losses were 13 000 • The mining industry has been hard hit with on going industrial action in the platinum mining and engineering sector • There is some probability of platinum producers closing or downsizing shop which will result in further employment decreases.

  20. Key Achievements • Agreement with major stakeholders in the mining industry on moves to strengthen bargaining structures and end violence. The agreement includes commitments to address longer-term issues such as unfair lending to miners, housing in mine areas, inequalities in the workplace, and the lack of career pathing. • Work has been undertaken by dti, DMR and EDD to develop beneficiation plan with a stronger focus on fabrication (stage 4). • Amendments to the MPRDA, now in Parliament, aim to provide security of minerals supply for local industrialisation. The dti will indicate to the DMR anticipated requirements for iron-ore, manganese, chromium and nickel. • Work is under way to finalise pre-feasibility reports for Special Economic Zones (SEZs) for the platinum belt in Rustenburg and Tubatse; the DubeTradePort in KZN; a solar corridor in Upington; and to include Atlantis in the Saldanha Bay SEZ • The purpose of SEZs is to promote the creation of a regionally diversified industrial economy by establishing new industrial hubs in underdeveloped regions of the country

  21. Manufacturing

  22. Manufacturing • The manufacturing sector experienced slight increase in employment since the adoption of the NGP • The Provinces that contributed positively are Western Cape, Gauteng, Mpumalanga and Limpopo • The manufacturing industry reported an annual decrease of 52 000 employees (-2,9%) in March 2014 compared with March 2013. • According to Stats SA this was mainly due to decreases in employment in the manufacture of furniture; manufacture of other chemical products; manufacture of dairy products; and manufacture of plastic products.

  23. Key Achievements • Manufacturing Competitiveness Enhancement Programme (MCEP): A total of R509,5 mill was approved in grants to 82 companies with an expected investment of R2,1 billion and an estimated 17 721 jobs to be created over a two year period. • Draft National Automotive Value Chain proposal completed • 11 enterprises were approved for funding with the projected value of investment amounting to R493.4 million and 394 jobs for the 2013/14 financial year • 40% of taxis now locally assembled by Toyota and BAW, compared to virtually none in 2012 • A truck and bus assembly plant worth R600m which is a joint venture between Iveco SA and Larimar group is under development in Rosslyn and is expected to create 1000 new jobs • Automotive Investment Scheme (AIS): A total of 16 Projects were approved with a grant funding of R243,4million. An estimated 341 jobs will be created with an investment estimated at R915,8 million.

  24. Key Achievements…2 • The family planning tender was the second pharmaceutical tender designated for local procurement, with half of the total tender value (R 116 million out of the total of R234.5 million) been awarded to domestic manufacturers: Aspen (R33.14 million) and Fresenius-Kabi (R82.9 million). • Facilitation of Biovac project (manufacture of vaccines): Medicine Control Regulator inspections in progress / generally on schedule. R 150 million loan approved by the IDC • Monyetla Work Readiness Programme: Skills Programme: The programme currently has more than 2000 learners in training. A total of R6,5 mill was approved in grant funding to 5 companies to be paid over 3 years with an expected investment of R171 mill and 1369 jobs to be created.

  25. The Green Economy • Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and small scale programmes: Substantial progress has been made in Bid Window 1 which is at 86% complete and Bid Window 2 is at 11% complete. • Window 3 projects have been appointed – in total 3900MW from wind, solar photovoltaic, concentrating solar, hydro and biomass has brought over R120bn of FDI into the country • National Green Fund:To date a total of 21 projects are under implementation • Total approved budget of current projects is approximately R534 million, and current disbursement is R188 million. It is projected that a total of 12 937 jobs will be created once the projects are fully implemented, noting that these are multiple year projects

  26. Green economy (2) • Instruction Notes for Power and Telecom Cables and Solar Water Heaters (SWHs) were published by the National Treasury • Launched the Solar PV Localisation Roadmap in conjunction with the Solar PV Industry Association. • Biofuels: Accelerated development in the biofuels sector - Draft Criteria for qualification for a biofuels subsidy has been developed and undergoing consultation. Process was delayed by the need to accommodate other crops, particularly sugarcane, instead of only having sorghum as a reference crop. 

  27. Other Areas of the NGP • Local Procurement and Localisation • The IDC has established an office to support local procurement across the build programme • The SABS Local Content Verification Office was launched in July 2013 • In the City of Johannesburg, Mercedes-Benz SA will be providing 134 busses for the phase 1B of JHB’s Rea Vaya BRT system at a cost of around R400m • The City of Cape Town has awarded the tender to provide 40 busses for its extended MyCiti bus routes to Volvo SA at a cost of R180m • 70% local content has been designated for Solar Water Heaters • Youth Employment Strategy • The IDC and sefa have set aside R2,7 billion for youth employment and entrepreneurship • A revised Employment Tax Incentive Bill was passed by Parliament in October 2013

  28. Future Plans: MTSF 2014 – 2019

  29. National Development Plan • The NDP provides a long term vision through to 2030 • We need the New Growth Path (NGP), the Industrial Policy Action Plan (IPAP) and the National Infrastructure Plan to achieve the vision of the NDP • To achieve this with respect to economic development emphasis is placed on: • Implementing our infrastructure programme ; • Growing the productive sectors of our economy; • Exports and African regional development; • A correct fiscal and monetary stance; • Improving demand-side planning for skills; • Larger upscale in public employment programmes; • Supporting rural development.

  30. Implementation of NGP Job Jrivers • The New Growth Path (NGP) has been identified as an implemnbation plan of the NDP, which sets target of 5% growth and 11 million jobs by 2030 • Meeting these targets, especially in the current worsening economic conditions, require more vigorous action to address constraints to economic growth that fall within the power of the state • In the current MTSF 2014-2019, EDD will facilitate the establishment of structures for coordinating and supporting the implementation of the NGP’s Jobs Drivers • The structures will include all stakeholders across the state, with strong secretariat capacity for coordination, monitoring and unblocking job creation, inclusive growth, industrialisation and social inclusion

  31. National Infrastructure Development Plan • The NGP identifies infrastructure as priority jobs driver • The National Infrastructure Plan was adopted in February 2012 • The Infrastructure Development Bill was passed by Parliament on 26 March 2014 • The Plan lays down guidelines for integrated infrastructure provision that will transform the economic landscape • The National Infrastructure Plan was developed by the Presidential Infrastructure Coordinating Commission (PICC) for which EDD provides technical support • As well as providing improved living standards, the plan aims to create economic opportunities in underdeveloped areas through improved roads, rail, ports and broadband as well as water and energy infrastructure • 18 Strategic Integrated Projects (SIPs) have been developed which integrate more than 150 individual infrastructure project clusters into a coherent package

  32. Strategic Integrated Projects 18 Strategic Integrated Projects (SIPs) have been have been developed which integrate more than 150 individual infrastructure project clusters into a coherent package • SIP 1: Unlocking the Northern Mineral Belt with Waterberg as the Catalyst • SIP 2: Durban- Free State– Gauteng Logistics and Industrial Corridor • SIP 3: South Eastern node and corridor development • SIP 4: Unlocking the economic opportunities in North West Province • SIP 5: Saldanha-Northern Cape Development Corridor • SIP 6: Integrated Municipal Infrastructure Project • SIP 7: Integrated Urban Space and Public Transport Programme • SIP 8: Green Energy in support of the South African economy • SIP 9: Electricity Generation to support socio-economic development • SIP 10: Electricity Transmission and Distribution for all • SIP 11: Agri-logistics and rural infrastructure • SIP 12: Revitalisation of public hospitals and other health facilities • SIP 13: National school build programme • SIP 14: Higher Education Infrastructure • SIP 15: Expanding access to communication technology • SIP 16: SKA and Meerkat • SIP 17: Regional Integration for African cooperation and development • SIP 18: Water and sanitation infrastructure

  33. Infrastructure • In the next 5 years: • We will scale up state and private investment in public infrastructure to provide a strong platform for inclusive growth and job creation, with planned spending of at least R1,5 trillion. • Projected spending estimated by cabinet. This is to allow for infrastructure departmental interaction with Budget process and partners. This will be broken down after PICC decision is taken • Job creation will be a priority: at least 250 000 jobs will be sustained in PICC-led construction and operations, with at least 60% of all new workers being youth. • We will issue guidelines under the Infrastructure Development Act to ensure the build programme drives economic and social transformation, turning infrastructure sites into training spaces and opening the door to real participation by black- and women-owned enterprises and co-ops.

  34. Jobs Drivers Main economic sectors: Agriculture & agroprocessing Mining and beneficiation Manufacturing (IPAP2) Tourism/other services Infrastructure Energy, transport, communications, water, housing. Look for employment opportunities in “jobs drivers” and implement policies to take advantage of them Spatial opportunities: Rural development African regional development New economies: Green economy Knowledge economy Social capital: The social economy The public sector 35

  35. Coordination of Provincial Economic Development Plans Current collaboration areas with Provinces: • EDD is responsible for the coordination of the Economic Development MINMECs – current key focus areas have been the Integrated SMME and Cooperatives Development Strategy and the Special Economic Zones (SEZs) programme • Worked with Provinces to determine infrastructure spending and looked at areas of spending improvement in relation to the implementation of the National Infrastructure Plan • Unblocking of strategic projects that have an economic development impact • Oversight function regarding Economic Development Departments with respect to performance reporting to Treasury and alignment to National Departments, has just been initiated Collaboration areas with Provinces going forward: • At strategic the planning level (MTSF) • Prior to implementation we need to collaborate with respect to the strategic economic infrastructure • With respect to implementation of National initiatives the Province is the strategic link between the national and local level-where implementation takes place • The social accords/ pacts need to be implemented across the spheres of government and their respective social partners e.g. Considering potential set asides for youth • We need to collaborate on initiatives with high impact that will address a number of outcomes (inclusive growth, job creation and sustainable and responsible development) • We need to jointly develop a regular schedule of engagements between EDD and Provinces

  36. SIYABONGA

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