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Briefing to the Portfolio Committee on Trade and Industry 14 March 2007 PowerPoint Presentation
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Briefing to the Portfolio Committee on Trade and Industry 14 March 2007

Briefing to the Portfolio Committee on Trade and Industry 14 March 2007

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Briefing to the Portfolio Committee on Trade and Industry 14 March 2007

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  1. MTSF 2007 - 2010 Briefing to the Portfolio Committee on Trade and Industry 14 March 2007

  2. MTSF 2007 - 2010 Presentation covers: Part One - Context & Strategic Objectives Part Two - 2006/07 Key Outputs Part Three - 2007 -2010 Strategic Deliverables Part Four - Challenges Part Five - Resourcing the Strategy Part Six - Economic Cluster

  3. MTSF 2007 - 2010 CONTEXT & STRATEGIC OBJECTIVES PART ONE

  4. ECONOMIC CONTEXT • Step change in economy towards a higher growth path well established, with GDP growth of 5% in 2006 • Key drivers have been robust consumer spending & increased fixed investment by both public & private sector • Leading growth sectors: construction (13.2%), finance & business services (7.9%), trade (6.9%), transport & communication (5.6) • Business confidence high, despite rising inflation, interest rates & import competition

  5. ECONOMIC CONTEXT MTSF 2007 - 2010 Annual growth % Unemployment rate: 31.2 (2003), 27.9 (2004), 26.5 (2005), 25.6 (2006)

  6. ECONOMIC CONTEXT Challenges • Increased imports exerting pressure in trade balance • Unemployment still high despite improving job creation • Exports & FDI performance modest • Millions still on economic margins & poverty stricken • Economy’s fortunes tied to global economic developments (e.g oil price), although prospects positive

  7. ECONOMIC CONTEXT Policy & Strategy Responses • Asgisa introduced; identifies key binding constraints & interventions to address them • dti key in Asgisa conception & dti MTSF is informed by Asgisa aims & plays lead role in Economic Cluster’s implementation of Asgisa • Economic Cluster POA 2007-2009 to focus on: • Increasing economic efficiencies • Promoting dynamic sectors • Integrated small enterprise service delivery

  8. STRATEGIC OBJECTIVES MTSF 2007 - 2010 • Promoting co-ordinated implementation of the accelerated & shared growth initiative • Promoting direct investment & growth in the industrial & service economy, with particular focus on employment creation • Contributing towards the development & regional integration of the African Continent within the Nepad framework • Promoting broader participation, equity & redress in the economy • Raising the level of exports & promote equitable global trade

  9. MTSF 2007 - 2010 KEY OUTPUTS – 2006/07 PART TWO

  10. KEY OUTPUTS IN 2006/07 MTSF 2007 - 2010 This section will broadly cover the following areas: Enterprise & Industry Support & Development Consumer & Corporate Regulation International Trade & Investment Marketing & Communication Resource Management

  11. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • ASGI-SA identified need to develop a robust industrial policy to promote diversification, competitiveness & labour-absorption • The National Industrial Policy Framework finalized & approved by Cabinet with directive to implement immediately • Implementation being planned, focusing on priority sectors and key interventions • strategies in the following key sectors in advanced stage: • Capital Equipment, Metals, Rail • Automotives & Aerospace • Agro-processing, forestry • Clothing & Textiles • Chemicals, Plastics & Pharmaceuticals • ICT/Electro technical • BPO & Services • Cultural Industries • Finalisation of Regional Industrial Development Strategy (RIDS) to stimulate growth in slower growing provinces, towns & rural areas so as to deal with regional disparities

  12. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • National Industrial Participation created over 12 000 direct jobs • 150 projects, US$7,5b investment, sales & exports, implemented since 1996 from investments made & exports generated • Launched SEDA & SAMAF provincial offices to widen reach & improve access to services • Rollout of SAMAF progressing well through network of 30 institutions country wide having 2 600 borrowers & 9 000 savers over 3 year period

  13. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • Support for Enterprise Development • Established National Small Business Advisory Council • Khula loans & advances increased from R34m(2002) to R137m (2006); three new funds launched & capitalised at R300m • Products for targeted procurement by Government Departments (set asides) have been identified and will be implemented • IDC approved investments anticipated to be in excess of R6b • Co-operatives • 15 co-operatives from 6 provinces (Eastern Cape, KZN, Gauteng, North West, Northern Cape & Limpopo) supported financially benefiting 205 youth & 188 women

  14. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • Support for Enterprise Development – cont. • Investment Incentives • Small Medium Enterprise Development Programme: • Since Inception 2000 to date: 11 309 approved projects with incentive value of R 12.7 billion and R 2.3 billion has been disbursed. • 01 April 2006 to date: 2 501 approved projects with a projected qualifying investment of R13.4 billion. The value of incentives approved is R 2.96 billion and R 598 million has been disbursed. • Strategic Industrial Projects (SIP) • 45 projects approved with qualifying investment value of R28,7 billion. 22 projects have established with actual investment value R10 billion

  15. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • Support for Enterprise Development – cont. • Critical Infrastructure Program (CIP) • 19 projects approved to date with qualifying investment value of R32 billion and infrastructure investment of R9.2 billlion • The following Technology Support delivered • SPII Projects worth R52m • Technology & Human Resources for Industry Programme – 746 researchers, 3 178 students & 371 industry partners assisted • SANAS accredited 134 facilities • Standards South Africa (STANSA), division of SABS developed & revised 639 standards

  16. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • Support for Enterprise Development – cont. • Film & TV production rebate • Since Inception 01 August 2004 : Approved 31 productions. Value of Qualifying South African Production Expenditure (QSAPE) is R1,8 billion. To date the 17 productions have been completed and received rebate of R122 million • Since Inception 01 April 2006 to date : Approved 16 productions and value of QSAPE R1.07 billion • Industrial Development Zones • Investment in infrastructure of R1,07 billion • Facilitated investment to the value of over R28 billion • Export marketing and Investment assistance • 438 projects approved to the value of R 29 million. R 15.8 million disbursed during the year. Top 3 sectors supported : Agro-processing, Electro-technical, Metals. • Sector Specific Assistance Scheme • 28 projects approved to the value R13 million

  17. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • Broad Based Black Economic Empowerment • The codes of good practice were gazetted. • BEE Advisory Council to be established which will oversee & monitor implementation • National Empowerment Fund has disbursed R424m from approved investment of R590m • Black Business Supplier Development Programme • 854 projects approved to the value of R46 million. • R25 million disbursed during the year.

  18. 2006/07 DELIVERABLES MTSF 2007 - 2010 CONSUMER & CORPORATE REGULATIONS • Corporate Law Reform: New Companies bill approved by Cabinet & published for comment. Expected to increase investment in firms by reducing regulatory & administrative burden on small & medium size firms • Consumer Law Reform: New consumer protection bill subjected to 12 months of consultation & amended to reflect public inputs & will revert to cabinet in March 2007. Bill will promote a fair & competitive market place for consumers • Credit Law Reform: Act proclaimed & regulation published for implementation. Will improve consumer protection, remove discrimination & create single market for credit. Will remove adverse data for approx. 1,7m consumers • Competition Policy Review: Review completed & amendments to be drafted. Will improve competitiveness of concentrated sectors & address ant-competitive behaviour.

  19. 2006/07 DELIVERABLES MTSF 2007 - 2010 International Trade & Investment • Contributed to Jan 2007 resumption of WTO Doha Round • Led development of position on industrial tariffs in Doha • Led development of SADC negotiating position on Economic Partnership Agreement with EU/aligned to SA-EU TDCA • SACU-EFTA FTA ratified Dec 2006: on entry into force, duty free quota free market access for SACU industrial exports • New SA-EU Agreement on Auto trade in force in Dec 2006: Will encourage new investment in SA and increased auto exports to the EU • Implemented SA-China MOU on economic co-operation to provide relief to textiles and clothing sectors • Annexes on SACU tariff board & national body adopted by SACU Council in December 2006

  20. 2006/07 DELIVERABLES MTSF 2007 - 2010 International Trade & Investment • Export Promotion activities undertaken: • 3 International Trade initiatives supporting 79 companies • 33 National Pavillions generating R589 million in exports • 42 Trade missions to 36 countries and from 6 countries • Export Development assistance given to exporters • 577 verified trade leads • 1 400 customers advised on the export process • 4 000 publications distributed • Investment Promotion activities undertaken: • 5 Investment seminars • 5 Investment pavilions • 18 Sector specific presentations and 31 briefs • 2 Presidential International Investor’s Council meetings

  21. 2006/07 DELIVERABLES MTSF 2007 - 2010 Marketing & Communication interventions • Various road shows and workshops were held to make communities aware of the services of the dti • The customer contact centre has been in-sourced which resulted in large cost savings & better accountability

  22. RESOURCE MANAGEMENT MTSF 2007 - 2010 • Human Resources • Targeted filling of 150 vacancies by 31 Jan. Filled 135 = 90% • Launched special recruitment project on identified posts via a recruitment agency • Establishment reflects a 25,8% vacancy rate at 28 February 2007 • Extensive training provided via bursaries, in-house training, internships, Adult Basic Education & Training programs & Regional Trade & Investment Capacity building programs • Department certified for Employment Equity Act compliance

  23. RESOURCE MANAGEMENT MTSF 2007 - 2010 • Finance • Unqualified audit report for 2005/06 • Auditor General’s interim audit for 2006/07 – no major issues • Payment of suppliers – minimum 7 days and maximum 14 days • Yearly spending trend reflected in attached graph which reflects an average of 95% spending of allocated budget over the past four years

  24. 7 YEAR EXPENDITURE TRENDS MTSF 2007 - 2010 the dti SPENDING TRENDS

  25. REASONS FORUNDER-EXPENDITURE MTSF 2007 - 2010 Over the past three years the under-expenditure was largely due to limited spending on critical infrastructure resulting from the nature of the incentive scheme which requires:- • Payment to be made only after expenditure is incurred • Only 30% of the expenditure to be reimbursed, which has not proven optimal in attracting investment in infrastructure The under expenditure in 2005/06 was largely due to: • R50m on APEX fund which only became operational on 01 April 2006 • R166m on critical infrastructure for reasons mentioned above

  26. MTSF 2007 - 2010 2007 - 2010STRATEGIC Deliverables PART THREE

  27. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 This section will broadly cover the following areas: Enterprise & Industry Support & Development Consumer & Corporate Regulation International Trade & Investment Marketing & Communication

  28. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • Implementation of National Industrial Policy Framework (NIPF) • Continue Sector Strategy development in alignment with NIPF & implementation of key sector initiatives (eg, BPO & Tourism) • Over 40% of budget to support enterprise through incentives • Develop a human capital strategy to support critical skills areas, including industrial centres of excellence to develop, design & engineering capabilities • Continue technology support to enterprises via current schemes • Finalise regional growth support strategies, including IDZ’s • Increase targetted support for women owned enterprises • Implementation & Monitoring of BBBEE strategy focusing on Codes of Good Practice and Advisory Council

  29. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • Increase financial support of the BBBEE through the DFI’s • Increase financial support for small business through Khula, including repositioning the agency • Continue with financial support for co-operatives through the co-operatives fund • Finalise & implement review of current incentive schemes to support NIPF & customised sector interventions

  30. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • Continue & step up non-financial enterprise development support through effective SEDA service delivery network providing the following: • Export readiness for SMEs • Training & mentorship • Manufacturing support • Information & advice to businesses • Continue & step up roll out of micro finance through SAMAF: • Average of R62m disbursements per annum • Average Increase of 2 000 borrowers per annum • Average Increase of 2 000 savers per annum • A minimum of 50 partner organisation for 2007/08

  31. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 CONSUMER & CORPORATE REGULATIONS • Corporate governance & company formation enhanced through enactment of new Companies Bill & institutional framework • Consumer rights & redress strengthened through enactment of new Consumer Bill & institutional framework, as well as review of regulation of Estate Agents • Innovation & protection IP rights holders promoted by reviewing & reforming regulatory framework for intellectual property rights • Improving competition in concentrated sectors & reducing harm to downstream industries by strengthening Competition law & institutions • Assessing effectiveness of existing regulation in areas of Liquor & Lotteries

  32. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 International Trade & Investment • Pursue successful development outcome in WTO • Deepen regional integration/cooperation in Africa under NEPAD Framework, notably SADC and SACU • Review customs union options following SADC Summit, Oct 2006 • Pursue common policies and institutional development in SACU • Strengthen investment and trade links with dynamic emerging markets (key African countries, India, Brazil, China, Gulf). • Develop 100 emerging exporters through a Small Exporter Development Programme • Advance trade cooperation under IBSA • Align SA-EU TDCA/SADC-EU economic partnership agreements • Implement SACU-EFTA FTA and raise awareness of its opportunities to business • Pursue Trade and Investment Development Cooperation with US • Implement revised Export and Investment strategies in alignment with NIPF and sector priorities • Review the strategic alignment of Foreign Office network to enhance trade and investment facilitation

  33. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 Marketing & Communications • Intensify its communication and outreach efforts focusing on major policy initiatives & offerings with particular emphasis on second economy • Build a positive profile, effectively manage perceptions and protect its reputation

  34. CHALLENGES MTSF 2007 - 2010 PART FOUR

  35. INSTITUTIONALCHALLENGES MTSF 2007 - 2010 Recruiting and retaining requisite capacity & requisite skills Ensuring continued good Corporate Governance Ensuring continued sound financial management Oversight over agencies Increase the budget to support the dti’s new & expanding mandate

  36. RESOURCE MANAGEMENT MTSF 2007 - 2010 PART FIVE

  37. RESOURCE MANAGEMENT MTSF 2007 - 2010 • Reducing the level of vacancies to less than 15% • HR development & capacity building • Dedicated HRD strategy • Competency enhancement & development • Programme on investors in people • University network – bursary programme • Development of supportive dti organisational culture • Maintain and improve best practice Corporate Governance, including agencies • Information Technology • Continue with Implementation of Enterprise Content Management strategy • Completion of Disaster Recovery project • Strengthen Supply Chain Management

  38. MTEF ALLOCATION MTSF 2007 - 2010

  39. MTEF ALLOCATIONADDITIONAL FUNDING MTSF 2007 - 2010

  40. ANALYSIS OF CURRENT MTEF MTSF 2007 - 2010

  41. ANALYSIS OF CURRENT MTEF MTSF 2007 - 2010 On average the structure of the budget allocation over the MTEF period is: • 34% to agencies of the dti • 44% to incentive payments • 7% to compensation (11% after deduction to agencies) • 12% to goods & services, of which a large percentage are for committed expenditure • 3% to Capital & Other Payments

  42. STRUCTURE International Trade and Economic Development Ministry Office of the DG Policy co-ordination The Enterprise Organisation Marketing Enterprise and Industry Development Trade and Investment South Africa Consumer and Corporate Regulation 18 Agencies MTSF 2007 - 2010

  43. ECONOMIC CLUSTER MTSF 2007 - 2010 PART SIX

  44. ECONOMIC CLUSTER MTSF 2007 - 2010 • the dti chairs the Economic Cluster of Departments • The Cluster’s three-year programme of action for 2007-2009 was adopted at the Cabinet Lekgotla in January 2007 • The programme of action focuses on: - Increasing economic efficiencies - Promoting dynamic sectors - Integrating small and micro enterprises

  45. CLUSTER’S KEY INTERVENTIONS MTSF 2007 - 2010 (1) Increase economic efficiencies • Strengthen economic regulator capacity in key industries • Amend competition policy to support effective regulation • Increase access, uptake & usage of ICT infrastructure • Phased roll-out of overhauled public transport network • Monitor implementation & impact of infrastructure roll-out • Coordinated NHRD, with focus on ASGI-SA priorities (2) Promote dynamic growth sectors • Implement industrial policy framework, focusing on key sectors and leveraging public spending • Supportive macro-economic management (esp. competitive and stable real effective exchange rate) (3) Integrate small-and micro-enterprises • Integrated small enterprise service delivery (incl. comprehensive procurement strategy, marketing cooperatives, business development support and access to finance) • Reduced SMME regulatory burdens (incl. by-laws)

  46. ADDITIONAL STRATEGIC CLUSTER MTSF 2007 - 2010 • ICT Infrastructure, especially Broadband • Critical to success of knowledge economy and integration of marginalised households into the economy • Public transport • Intervention that will support labour mobility and reduced cost of living • Energy • Economy needs more energy whilst rebalancing energy sources • Transformation of Second Economy • Second Economy interventions are crucial to the achievement of the 2014 unemployment and poverty targets

  47. CONCLUSION MTSF 2007 - 2010 The department will build on the considerable momentum already established i.t.o its strategic objectives, focusing on: • Coordinated implementation of Economic Cluster projects as per the three-year Cluster POA and the NIPF • Implementation of sector strategies that have been completed (e.g. BPO, Clothing and Textiles, Tourism etc.) as a force for investment, diversification and job creation • Strengthening of regional integration initiatives & support for NEPAD • Strengthening of enterprise development initiatives • The implementation and enforcement of policy & legislation in the areas of companies, consumers, credit, competition & BBBEE • Implementation of Export & Investments strategies and the pursuit of developmental outcomes in both WTO & bilateral trade negotiations This will requires strengthened Monitoring and Evaluation, a technically skilled and highly motivated workforce, continued improvements in government coordination, and continued engagement with and support of Parliament and other stakeholders

  48. MTSF 2007 - 2010 THANK YOU