24 July 2013 Director General Lionel October

1. Presentation to the Portfolio Committee on Trade and Industry – the dti’s2013/14First Quarter Report 24 July 2013 Director General Lionel October 1

2. Presentation Outline Introduction Strategic Objectives Economic overview Key Achievements Performance assessment Departmental Expenditure versus Budget Audit findings and interventions Key Challenges 2

3. Introduction – Global Economic Context • Three track growth pattern emerging. • Emerging Markets’ growth strong although moderating in China. • US recovery gathering momentum. • EU recovery remains very weak (UK expected to do better than EU average). • SA growth performance and forecast very similar to Australia – both countries are commodity export dependent. • But Africa’s growth outlook is strong and SA well-positioned to benefit if structural features of SA manufacturing sector are addressed.

4. GDP Growth Rates, Forecast 2013-14, IMF

5. Domestic Employment Trends • Economy continued to create jobs in Q1 2013 even while unemployment rose due to new job seekers entering the market. • Quarterly Labour Force Survey data is used as this reflects informal sector employment better than Quarterly Employment Survey. • Q1 2012 compared to Q1 2013: • Modest gains in a range of productive sectors such as Agriculture, Mining and Manufacturing. • Substantial job losses in Wholesale and Retail Trade as impact of constrained household spending is felt. Consumer spending remains under significant pressure.

6. Domestic Employment Trends, StatsSA

7. Manufacturing Trends – Q1 2013 • Manufacturing sales grew modestly - weak global conditions and consumer spending in SA. • Merchandise exports subdued - although demand for commodities such as coal and platinum have begun to recover. • Solid Auto exports has helped to sustain manufactured export levels. • Imports stable - expected to remain weak due to the exchange rate.

8. Outlook 2013 • Global economy • Africa, China and US positive, strength of US recovery surprising – the possibility of ‘tapering’ Quantitative Easing has rattled markets. • Domestic economy • SA manufacturing well positioned to benefit from Africa’s strong growth outlook over medium-term. • Designation of sectors - especially supporting infrastructure build programme has contributed to sectoral optimism and ‘tooling up’ in sectors Capital Goods/Machinery sectors. • Growing number of applications for the dti’s incentives suggest higher level of optimism in manufacturing than is commonly assumed. • A number of leading business and multilateral publications have pointed to the improving and positive SA investment environment.

9. Strategic Goals • Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation; • Build mutually beneficial regional and global relations to advance South Africa’s trade, industrial policy and economic development objectives; • Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth; • Create a fair regulatory environment that enables investment, trade and enterprise development in an equitable and socially responsible manner; and • Promote a professional, ethical, dynamic, competitive and customer-focused working environment that ensures effective and efficient service delivery.

10. Key Achievements1 April – 30 June 2013 10

11. Key Achievements Industrial Development 11

12. Key Achievements Industrial Development 12

13. Key Achievements Industrial Development 13

16. Trade, Investment & Exports

17. Trade, Investment & Exports

18. Trade, Investment & Exports

19. Trade, Investment & Exports

20. Broadening Participation

21. Broadening Participation

22. Regulation

23. Administration & Co-ordination

24. Key Achievements Performance Assessment 24

25. Departmental expenditure versus budget

26. Summary of Projections vs Expenditure per programme– total dti 30 June 2013

27. Summary of Projections vs Expenditure per economic classification– total dti 30 June 2013 NB: The expenditure based on the year to date projections of R2,406 billion, is 82% or R1,973 billion, implying an under-spending of R432 million (18%).

28. Year-to-Year comparison of actual expenditure: 2012/13 vs 2013/14

29. Reasons for material expenditure variance

30. Reasons for material expenditure variance (continued)

31. Reasons for material expenditure variance (continued)

32. Interventions to address AG Audit Findings

33. Interventions to address AG Audit Findings…cont

34. cont…Interventions to address AG Audit Findings

35. cont…Interventions to address AG Audit Findings

36. Key Challenges • Outlook for EU economies remains very poor – now includes Germany, France and UK. • SA exports to EU still not recovered to pre-GFC levels • Emerging protectionism in EU e.g. Citrus Black Spot • Imports from the EU growing rapidly and undermining domestic production in key sectors such as Poultry • Domestic demand remains quite weak – household indebtedness suggests consumption-led recovery unlikely in short-term. • Global uncertainty is making Rand volatile – current level suggests overshooting and Rand has already begun recovering making it difficult for manufacturers to plan investments and export contracts. • Competitiveness of manufacturers is being addressed but firms are still not proactive enough in export markets.

37. Thank You 37