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Briefing to the Select Committee on Economic and Foreign Affairs 23 May 2007

MTSF 2007 - 2010. Briefing to the Select Committee on Economic and Foreign Affairs 23 May 2007. 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

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Briefing to the Select Committee on Economic and Foreign Affairs 23 May 2007

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  1. MTSF 2007 - 2010 Briefing to the Select Committee on Economic and Foreign Affairs 23 May 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 MTSF 2007 - 2010 • 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 MTSF 2007 - 2010 Challenges • Increased imports exerting pressure on 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 MTSF 2007 - 2010 Policy & Strategy Responses • Asgisa introduced; identifies key binding constraints & interventions to address them • the dti key in Asgisa conception & dti MTSF is informed by Asgisa aims • the dti 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 • As the key part of the NIPF the Regional Industrial Development Strategy (RIDS) being finalised 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 • Strategies in the following key sectors in advanced stage: • Capital Equipment, Metals • Automotives & Aerospace • Agro-processing, forestry • Clothing & Textiles • Chemicals, Plastics & Pharmaceuticals • ICT/Electro technical • BPO & Services • Cultural Industries

  13. 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 • Roll out of Seda with a network of 47 offices across the country • Rollout of SAMAF progressing well through network of 38 institutions country wide having 4 346 borrowers & 14 353 savers over 15 month period

  14. 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

  15. 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 13.9 billion and R 2.49 billion has been disbursed. • 01 April 2006 to date: 3 337 approved projects with a projected qualifying investment of R17.2 billion. The value of incentives approved is R 3.8 billion and R 676.5 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

  16. 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

  17. 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 17 productions have been completed and received rebate of R122 million • Since 01 April 2006 to date : Approved 19 productions and value of QSAPE R1.17 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 • 405 projects approved to the value of R218 million. R 10 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

  18. 2006/07 DELIVERABLES MTSF 2007 - 2010 Enterprise & industry support & development • Broad Based Black Economic Empowerment • The codes of good practice 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 • 891 projects approved to the value of R46.9 million. • R25 million disbursed during the year.

  19. 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 subject to public consultation & inputs being incorporated. Bill will promote a fair & competitive market place for consumers • Credit Law Reform: Act proclaimed & National Credit Regulator established. 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 address anti-competitive behaviour in concentrated sectors.

  20. 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 bodies adopted by SACU Council in December 2006

  21. 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

  22. 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 • Several publications disseminated

  23. 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

  24. 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

  25. 6 YEAR EXPENDITURE TRENDS MTSF 2007 - 2010 the dti SPENDING TRENDS

  26. 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 2006/07 was largely due to: • R20m i.r.o. the joint dti/ Dept. of Health Staple Food Fortification project delayed • R70m i.r.o. the BPO&O project (project scheduling constraints)

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

  28. 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

  29. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • Implementation of National Industrial Policy Framework (NIPF) • 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

  30. 2006/07 DELIVERABLES MTSF 2007 - 2010 Continue Sector Strategy development in alignment with NIPF & implementation of key sector initiatives • BPO & Tourism • Metals • Chemicals • Clothing & Textiles • Capital Equipment • Agro-processing • Creative Industries & Craft, including Film & TV

  31. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • 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

  32. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • Continue technology support to enterprises via current schemes • Finalise regional growth support strategies, including IDZs • Increase targetted support for women owned enterprises • Implementation & monitoring of BBBEE strategy focusing on Codes of Good Practice and Advisory Council

  33. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • Increase financial support of the BBBEE through the DFIs • 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

  34. 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: • Business Services • Training & mentorship • Manufacturing support • Technology support • Information & advice to businesses

  35. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT • 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

  36. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 CONSUMER & CORPORATE REGULATIONS • Corporate governance & company formation to be enhanced through enactment of new Companies Bill & institutional framework • Consumer rights & redress to be strengthened through enactment of new Consumer Bill & institutional framework, as well as review of regulation of Estate Agents • Innovation & IP protection to be 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

  37. 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

  38. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 International Trade & Investment • 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

  39. 2007 - 2010STRATEGIC DELIVERABLES MTSF 2007 - 2010 Marketing & Communications • Intensify communication & outreach efforts focusing on major policy initiatives & offerings with particular emphasis on second economy • Build a positive profile, effectively manage perceptions and protect reputation of the dti

  40. CHALLENGES MTSF 2007 - 2010 PART FOUR

  41. INSTITUTIONALCHALLENGES MTSF 2007 - 2010 Recruiting and retaining requisite capacity & requisite skills Ensuring continued good corporate governance Ensuring continued sound financial management Oversight over dti agencies & their alignment to priorities Increase the budget to support the dti’s expanding mandate

  42. RESOURCE MANAGEMENT MTSF 2007 - 2010 PART FIVE

  43. 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

  44. RESOURCE MANAGEMENT MTSF 2007 - 2010 • 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

  45. MTEF ALLOCATION MTSF 2007 - 2010

  46. MTEF ALLOCATIONADDITIONAL FUNDING MTSF 2007 - 2010

  47. ANALYSIS OF CURRENT MTEF MTSF 2007 - 2010

  48. 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

  49. 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

  50. ECONOMIC CLUSTER MTSF 2007 - 2010 PART SIX

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