Economic Development Department Annual Report 2011/12

1. Economic Development DepartmentAnnual Report 2011/12 Presentation to the Portfolio Committee v5 October 2012

2. Presentation Outline Mission Context Challenges Going Forward Significant Developments Highlights: Some Case Studies Key Performance Indicators Corporate Services

3. Vision and Mission 3 • Vision • Decent work through meaningful economic transformation and inclusive growth • Mission - EDD aims to: • Coordinate the contributions of government departments, state entities and civil society on economic development; • Contribute to efforts that ensure alignment between the economic policies and plans of the state and its agencies and government’s political objectives and mandate; and • Promote government’s goals of advancing economic development with decent work opportunities.

4. Success indicators • Outcomes to be measured against the targets of the New Growth Path and Outcome 4 • Main indicators: • Employment creation • 300 000 new employment opportunities created in 2011/12 • Above target, but disproportionately in the public sector • Most evidence suggests inequality has not improved • The economy grew by 2,8% in the 2011 fiscal year compared to the 2010 fiscal year

5. Context • EDD is 3 years old • Focus on implementation • National Infrastructure Plan • Alignment within the state • Refocusing of the IDC • Accords (social partners unblock projects) • Consolidation of programmes and internal systems

6. From policy development to implementation… 2009: Establishment of a Ministry for policy integration work 2009-2010: Establish a functioning Department with strong governance systems 2009-2010: Coordinate response to recession/global economic crisis that started in 2008 2010: Transfer six public entities to EDD and begin process of mandate alignment on jobs 2010: Finalisation of the New Growth Path (NGP) 2011-2012: Work with other departments and spheres of government to align economic policy around the NGP and refocusing of the IDC 2011-2012: Dialogue to develop social accords on key NGP areas 2011-2012: Support development and implementation of National Infrastructure Plan 2011-2012: Reform of small business entities

7. Challenges going forward • External • Slow economy in 2011/12, with a threat now of downturn in Europe and possibly the US and China • Pressure appearing especially in terms of exports and financing for the infrastructure plan • In South Africa: Persistent inequalities lead to conflict (workplace and outside) • Internal (within EDD): • Shortage of high-level personnel reflected in staffing challenges • Establishing new systems • We have mitigation strategies for all of these • The Portfolio Committee can play a key role in coordinating parliamentary inputs across ministries and departments

8. IMPORTANT DEVELOPMENTS2011/12

9. The National Infrastructure Plan Support for the Secretariat to the PICC in the development and coordinated implementation of the National Infrastructure Plan

10. Funding development • Alignment of the IDC’s activities with the New Growth Path and a major increase in its resourcing of development projects • The consolidation of samaf, Khula, and the small business lending operations of the IDC into sefa • Doubling of the resources available • Expansion in kinds of funding provided and the provincial footprint of activities

11. Support for investment and employment Engagements around the takeover of Massmart by Walmart ensuring sensitivity to employment Kansai intervention led to job guarantees and commitment for additional industrial capacity

12. Social Accords The 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. The Basic Education Accord (13 July 2011) provides for stakeholders to support individual schools in poor communities in line with agreed guidelines. The 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. The 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.

13. Spatial Development Work with the DRDLR and other departments to identify key projects in the worst-served 23 municipal districts Work with the DRDLR to develop a coherent, integrated spatial approach to development Training programme on economic development established for officials from municipalities and provinces

14. Conferences and platforms • In May 2011, a Conference on the New Growth Path, bringing together Cabinet Ministers and Members of Parliament with high-level experts, officials and stakeholders to reflect on, and debate about, a number of key issues in the NGP • Draft discussion document on Inequality formed the basis for a high-level platform held in May 2012 addressed by the Minister, Deborah Hargreaves of the UK High Pay Commission, Zwelinzima Vavi of COSATU and Bobby Godsell of BUSA • Conference on Assets and Inequality held in conjunction with Studies in Poverty and Inequality Institute

15. Examples of achievements Over 262 000 solar water heaters rolled out The IDC created 45 900 jobs from investments and loans The IDC supported Innowind which won bids for 3 wind farms to be implemented in the former Transkei and Ciskei The EDD supported RiseUp Cooperative Bakeries in the Western Cape, contributing to empowerment, food security and jobs

16. KEY PERFORMANCE INDICATORS FROM THE APP

17. Main challenges A challenge for EDD is that the targets in the APP often do not adequately reflect new tasks that arise as conditions change during the year Work on the PICC in particular was not foreseen in the APP for 2010/11, due to Cabinet resolving on the matter in July 2011 The audited outcomes in this year’s report therefore somewhat understate our achievements

18. Programme Structure Taskteam to support the PICC

19. Support for the PICC

20. The PICC and the APP The PICC is critical for implementation of the NGP But the PICC was only established in the second half of 2011, as a result of work on implementation of the NGP It is therefore not included as a separate programme in the APP or the budget Some PICC achievements are included as part of Branch work, but here provide a more holistic overview

21. Support for the PICC • Based on EDD proposals, PICC established in 2011 – President heads the Commission and members are relevant Ministers • Minister of Economic Development chairs the Secretariat, which consists of Ministers and Deputy Ministers • Technical secretariat of experts from SOEs and departments • EDD staff provide various key supports • Assist with conceptualisation and planning • Logistics and co-ordination • Monitoring and evaluation • Staff are both employed directly for the PICC work and seconded full time or part time from branches

22. Key achievements • Work with PICC structures to develop the National Infrastructure Plan, which was adopted in the first quarter of 2012 • Development of an integrated needs assessment • Identification of existing projects as well as gaps and potential for synergy and ways to increase developmental impact • Process required intensive collaboration across spheres and departments • EDD helped to co-ordinate expertise from relevant functions across the state • EDD work resulted in: • 17 SIPs being identified • More than 150 projects identified and documented in an infrastructure book • Costing of key programmes • Skills audit on engineers and other scarce skills in the public sector

23. Key achievements (2) Initiation of work on financing and skills plans to implement the National Infrastructure Plan Management and launch models developed for SIPs, leading to launches through the first half of the 2012 fiscal year Development of monitoring and evaluation framework to track progress on SIPs

24. Economic Policy Development Purpose: To strengthen the economic development policy capacity of government

25. APP objectives and measures 25 Monitor implementation of the NGP and produce quarterly reports Issue policy papers Convene policy platforms Provide analytical data on the real economy Establish an economic development index Develop BBBEE policy frameworks Establish Economic Development Institute Develop, implement, monitor and evaluate strategies for youth employment, gender and the second economy

26. Policy: AchievementsMonitor NGP progress Regular analyses of key economic trends, risks and opportunities provided as part of the Outcome 4 quarterly reports, in collaboration with the National Treasury and the dti Detailed assessment of progress on the New Growth Path supplied for the July 2011 Cabinet lekgotla, which contributed to the adoption of critical interventions by Cabinet, including the establishment of the PICC

27. Policy: AchievementsMonitor NGP progress • Two surveys conducted on the impact on employment of state activity by all national and provincial departments, in collaboration with the DPME • Surveys were backed up by a detailed research paper commissioned from the Development Policy Research Unit of the University of Cape Town on the role of the state in employment creation • Reports were made to Cabinet makgotla on findings

28. Policy: AchievementsPolicy inputs and analyses Sector inputs amongst others on iron and steel; the Eastern Cape auto industry; scrap metals; the retail industry; infrastructure inputs; elements of the mining value chain in the Eastern Cape, Limpopo and the Northern Cape; the production of rolling stock; and the dairy industry Assessment of the Broad-based BEE Codes from the standpoint of the NGP leading to specific proposals for strengthening incentives for employment creation, enterprise development and local procurement Research commissioned on the impact of the BEE Codes on listed companies

29. Policy: Achievements Policy inputs and analyses (2) • Draft document on a multi-pronged strategy for youth employment discussed in the Cluster at the end of 2011 and tabled in NEDLAC for preliminary discussions with stakeholders early in 2012 • Data analyses finalised on gender and the NGP and on inequality, with several presentations to stakeholders inside and outside of government • Initial study towards the establishment of an Economic Development Index by staff members and TIPS

30. Policy: Achievements Policy inputs and analyses (3) • Development of guidelines for socio-economic impact assessment system (SEIAS) with Presidency and Treasury • Terms of reference developed for an organisational study of the Economic Development Institute

31. Policy: AchievementsPlatforms First Annual Development Conference held in May 2011, on the New Growth Path Preparations for second Annual Development Conference, on the National Infrastructure Plan, from late 2011 – Conference was held in April 2012 Conference on Inequality and Asset Ownership held jointly with SPII

32. Economic Planning and Coordination Purpose: To develop economic planning proposals and the green economy, as well as provide oversight over DFIs and ERBs

33. APP objectives and measures 33 Submit proposals to the National Planning Commission, Cabinet and the provinces Coordinate and develop sector plans for key sectors Develop proposals for harmonising national, provincial and local economic development plans Develop spatial economic development action plans Exercise policy, strategy and budgetary oversight over DFIs and ERBs Develop a strategy to enhance investment for economic development

34. APP objectives and measures (2) 34 Develop papers on leveraging procurement and expenditure to enhance government’s developmental priorities Promote South Africa’s international relations strategy and economic development by engaging with regional and international agencies and multilateral institutions Grow the Green Economy through coordinating government and private sector players, including by establishing a dedicated fund Grow the agro-processing sector by coordinating government and private sector players, including by establishing a dedicated fund to support enhanced competitiveness

35. Planning: Achievements Development finance and SMME support • Establishment of Business Hub for SMMEs with SAICA • Meetings with the dti and Treasury and workshops with departments on 30-day payment deadline for SMMEs • Initial meetings with the PIC on targeted support for developmental investments

36. Planning: Achievements Development finance and SMME support (2) • Quarterly meetings with entities overseen by EDD and targeted meetings with the IDC • Establishment of sefa (samaf, Khula and IDC small business lending unit) • Workshops and documentation (overview, business case, due diligence, risk assessment report) • Available resources doubled, thus more kinds of funding provided to SMMEs, and the provincial footprint expanded

37. Planning: Achievements Special Financing • IDC: • Approvals increased from R11,5 billion in FY2010 to R18,8 billion in FY2012 • Disbursement increased from R6,5 billion to R8,5 billion • Created or saved 45 000 jobs • Transfers to samaf and Khula: R223 million • UIF/IDC bond for companies in distress: R343 million • Raised jobs bond of R2 billion

38. Planning: AchievementsSpatial development • Support for the PICC • Assistance with co-ordination of SIPs 6 and 11 • Work with DRDLR and CSIR on defining and operationalising economic regions • Work with DRDLR on identifying priority projects in the 23 worst-served districts

39. Planning: AchievementsSpatial development(2) • Reviews of the Socio-Economic Development Strategy of the King Sabata Dalindyebo Presidential Initiative; the Northern Cape Provincial Growth and Development Strategy; and the Integrated Development Plan of the Renosterberg Local Municipality in the Northern Cape. • Review of the Standerton (Lekwa Municipality) area, with the view to facilitate the establishment of a soy bean and sunseed oil crushing plant by a private investor in that municipality. • Support for the spatial action plan for the Doringbaai-Matzikama Municipality • Support for RiseUp Bakery cooperatives on the West Coast • Draft framework for the revitalisation of Atlantis

40. Planning: AchievementsThe Economic Development MinMEC • At 25 July 2011 Technical MinMEC, DBSA presented on the Jobs Fund. • At the 18-19 August 2011 Technical MinMEC, key national departments highlighted actions taken to eliminate provincial blockages. • MinMEC on 12 September 2011 adopted a detailed work programme aimed at aligning provincial work programme to the 12 action plans adopted at the 2011 July Cabinet Lekgotla as well as unlocking blockages projects. • MinMECs were also held as follows: • Technical MinMECs on 17 May, 21 June (on the employment impact survey) and 17 October (response to blockages) in 2011 • MinMECs on 10 June and 1 July 2011

41. Planning: AchievementsLocal procurement Engagement with the dti and Treasury leading to adoption of regulations to support local procurement and first-round designations Industry forum on 22 September 2011 to discuss the designation process and the type of commitments required by the different sectors Meetings with SABS leading to development of a technical standard, SATS 1286, for local  content, which was published for comment on 23 November 2011. Agreement with Proudly South African (PSA) to expand its efforts Increased local procurement of stationery by EDD

42. Planning: AchievementsThe green economy The Director-General led a government-wide steering committee to ensure implementation of the target of installing one million solar water heaters by 2014 Work with the IDC to support business financing for renewable energy generation in terms of the targets set in the Integrated Resource Plan Collaboration with the IDC and the DBSA on the publication of the Green Jobs Report in November 2011. Work with the government team at COP17 in late 2011. Workshops with Western Cape and Gauteng agencies on the green economy Inputs and comments on the Autocatalytic Converters and Diesel Particulate Filters Implementation Plan EDD convened several inter-departmental meetings on the Green Economy with the Department of Environmental Affairs, the dti, the Department of Energy and others.

43. Planning: Achievements African regional development Support for the Tripartite Summit between the regional economic communities of the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) from 8 to 12 June 2011 aiming to establish a Tripartite Free Trade Agreement (FTA) Minister Patel acted as programme director at the launch of the Free Trade Agreement (FTA) talks Participation in development of infrastructure within the North-South Corridor, a regional initiative chaired by President Zuma

44. Economic Development and Dialogue Purpose: To promote social dialogue and build capacity among social partners, as well as implement strategic frameworks (accords)

45. APP objectives and measures 45 Convene national social dialogue forums Facilitate social pacts at the national level in the workplace and within sectors. Facilitate, monitor and report on the implementation of framework agreements and social pacts Host learning events for economic development learning networks Host an annual Economic Development Conference (with Policy Branch) Convene the Economic Advisory Panel

46. Dialogue: AchievementsNational Accords Four social accords under auspices of NEDLAC, with negotiations led by a team of Ministers convened by Minister of Economic Development EDD Officials supported the negotiations through secretariat services and developed implementation frameworks Parties to the National Skills Accord reported on implementation in a workshop with the Department of Higher Education and Training on 29 February 2012 with a report on progress and proposals for addressing blockages

47. Dialogue: AchievementsNational Accords (2) Participation in the Port Elizabeth Factory Tour in July 2011 Report to Minister Patel in September 2011 on implementation of the National Response to the Global Economic Crisis Presentation at ILO/Labour Jobs Pact Workshop on 10 December 2011 Training Layoff Scheme Task Team meeting held on 3 May 2011

48. Dialogue: Achievements Capacity building Workshops on the NGP and social accords were conducted with business, labour and community representatives in seven provinces in February and March 2012 Four capacity building workshops on the Social Accords for labour were held in four provinces between October and November 2011 Participation in a panel on jobs at the FEDUSA Congress in November 2011. Initial work was undertaken on setting up knowledge networks for the EDD

49. Dialogue: AchievementsSectoral and workplace Support for the Western Cape Furniture Industry Pilot Project Meetings with Western Cape provincial representatives and stakeholders on ways to support the clothing industry in the second half of 2011 Support for the Isithebe Plan to set up a garment factory in KwaZulu-Natal A social dialogue and capacity building engagement workshop with the Metals and Engineering Industry Bargaining Council (MEIBC)

50. Dialogue: AchievementsSectoral and workplace (2) Support for the Dimbaza Foundry, which is one of the few remaining factories at the industrial site, including obtaining funding for a feasibility study and engagements with relevant officials and stakeholders An intervention to save jobs at a major company in the forestry value chain, where initially more than 1200 jobs were at risk of being shed, involved meetings with the CCMA, stakeholders and officials and saved half the jobs at risk An intervention was also undertaken that secured more affordable leather for a cooperative that manufactures school shoes for needy children