President Jacob Zuma: 2015 Mid-year State of the Nation Address implementation update

11 Aug 2015

Mid-year State of the Nation Address implementation update to the media by President Jacob Zuma, Union Buildings, Pretoria

Ladies and gentlemen of the media
Good afternoon,

We held an extended Cabinet meeting or Lekgotla late last month to take stock of progress made since the adoption of government’s programme of action, the Medium Term Strategic Framework (MTSF), which is based on the National Development Plan.

I am pleased to provide an update on the work done thus far in implementing the first year of the MTSF, based on the programme outlined in the State of the Nation Address (SoNA) in February.

The South African economy, as with many economies in the world, continues to struggle to fully regain its pre-financial crisis growth momentum.

We committed ourselves to a 5% growth rate by 2019. The 1,5% economic growth rate attained in 2014, is a distance from that National Development Plan (NDP) ambition.

However, despite the slow growth globally, economic growth is expected to increase steadily to at least 3% over the next three years, because we expect the electricity constraint, which is our major obstacle, to ease.

Our estimate is that electricity shortages are currently costing the economy close to 1 percentage point in economic growth.

We have decided to look inward for growth opportunities, hence the development of the Nine Point Plan that we announced in February.

The components of the plan are the following:
1 Revitalisation of the agriculture and agro-processing value-chain;
2 Advancing beneficiation (adding value to our mineral wealth);
3 More effective implementation of a higher impact Industrial Policy Action Plan (IPAP);
4 Unlocking the potential of SMME, co-operatives as well as township and rural enterprises;
5 Resolving the energy challenge;
6 Stabilising the labour market;
a Scaling-up private-sector investment;
b Growing the Ocean Economy as well as
c Cross-cutting Areas to Reform, Boost and Diversify the Economy such as the following:
         i. Science, technology and innovation
                ii. Water and sanitation
                iii. Transport infrastructure
                iv. Broadband rollout  and
                v. State owned companies.

What government has achieved, so far, through the implementation of previous annual versions of IPAP shows that the policy is working.

Government support has taken the automotive sector from the production of 356 800 units in the year 2000 to over 566 000 units in 2014.

This support has grown auto exports from 11 000 units in 1995 to over 270 000 units in 2014.  As a result, 300 000 jobs have been created in the automotive sector.

Significant investments have also been made in key manufacturing sectors such as the auto sector, agro-processing and electronics.

A few examples include R5 billion by Mercedes Benz, R3 billion by Ford, R4 billion by Unilever in four plants over the past for years and R228 million from Samsung.

We have also experienced a strong turnaround in manufacturing exports. Auto exports amounted to R115 billion in 2014 which is 12,7% of total exports in the country.

Government’s intervention aimed at arresting the decline of the clothing, textiles, leather and footwear sector resulted in the retention of 68 000 jobs in the sector.

By the end of March this year, a total of R3,7 billion in support of the private sector, had been approved since the inception of the Clothing and Textile Competitive Programme in 2010.

Since 2009, government, through the Department of Trade and Industry (the dti) has also supported agro-processing industries, to the value of R1,2 billion through various schemes.

There is a need to further scale up industrial development in the country. In this regard, among interventions, we have a introduced the Black Industrialists Programme which is designed to transform the manufacturing sector and unlock the potential of black entrepreneurs.

Initial funding of R1 billion has been secured from the dti for the current financial year, and R23 billion from the Industrial Development Corporation for the next three financial years.

With regards to infrastructure development, government and public agencies have invested just over R1 trillion in infrastructure, between 2009 and 2014.

The investments are in energy, road, rail, ports, public transport, bulk water and sanitation, hospitals, basic and higher education infrastructure and innovative projects such as the Square Kilometre Array and Meerkat.

To date 41 351 km of fibre optic cables have been rolled out to provide the broadband capability for the economy from 2009.

South Africa continues to be confronted by the challenge of electricity supply.  Since the inception of the five-point plan in December 2014, substantial progress has been made in resolving the energy challenge.

The operations and maintenance practices at Eskom continue to improve, to ensure that the power plants are appropriately maintained and provide electricity within their capacity.

Eskom has signed Short-Term Power Purchase (STPP) Agreements that bring additional supply of electricity, to cater for the shortfall due to maintenance and to match demand during peak periods.

A further 800 megawatts will be added to the grid through co-generation.

A saving of 450 megawatts have been realized through the energy efficiency programmes.

This is a result of South Africans working together in order to alleviate the impact of the electricity challenge.

Over and above alleviating the impact of the energy challenge, energy efficiency programmes result in savings in energy costs and a reduction in emissions.

Various projects of the Renewable Energy Independent Power Producer Programme (REIPPP) currently supply 1800 megawatts to the grid.

Within the next two and a half years, the 92 projects of the renewable energy programme will bring a total of 6 327 megawatts (MW) to the grid.

The exploration of various other options for electricity generation is underway, including cross-border projects within the Southern African Development Community (SADC) region that include hydro, gas and coal.

For the medium to long term electricity supply, the nuclear build programme is at an advanced stage of planning and the procurement should be concluded within the current financial year.

The updated Gas Utilisation Master Plan will be published, which will stimulate development and investment in the gas industry.

We will continue pursue work towards a reliable energy mix to ensure energy security for now and the future.

In March 2015, Cabinet approved the final amendments to the Broadcasting Digital Migration Policy, which unlocked the project to enable implementation. Cabinet further approved that government provide free set-top-boxes to the five million poor TV-owning households.

The country did not meet the 17 June 2015 analogue switch off date as set by the International Telecommunications Union. However, a lot of work has gone into the process leading to the imminent analogue switch off.

To date, the Ministry of Communications has concluded and signed bilateral engagements with our neighbouring countries namely, Botswana, Namibia, Mozambique, Lesotho and Swaziland, in order to minimise cross border radio frequency spectrum interference.

Ladies and gentlemen,

Among critical points discussed at the meeting of the Presidential Business Working Group on the 7th of August, is the need to improve regulatory efficiency and  turnaround times to support investments.

In this regard, the roll-out of the Special Economic Zones programme will continue.

More importantly, the establishment of an investment facilitation centre or One Stop Shop (OSS) is being implemented to support local and international investments. A pilot has been set up at the DTI.

The Centre will improve the investment climate and enhance the ease of doing business by identifying bottlenecks, remove administrative barriers, reduce regulatory inefficiencies, set up norms and standards, improve turnaround times, coordinate and fast track all investment enquiries.

We have also noted with concern, the complaints about the new visa regulations. I would like to announce the establishment of the Inter-Ministerial Committee (IMC) on Immigration Regulations.

The IMC will address the unintended consequences of the new immigration regulations on various sectors, including tourism and investment.

The IMC is chaired by Deputy President Ramaphosa and comprises the Ministers of Tourism, Home Affairs, Trade and Industry, Social Development and Small Business Development.

We identified small business as big business in the SoNA.

The priority interventions to unlock the potential of small, medium and micro enterprises (SMMEs), cooperatives and township and rural enterprises are continuing. These include working towards the implementation of the 30% set-aside policy to support SMMEs and cooperatives.

The SMMEs will be supported with increased access to markets and finance. On the cards, is also a concerted effort to reduce the red tape for SMMEs which will include a review of existing Small Business legislation.

A special unit has been established in the Department of Planning, Monitoring and Evaluation to investigate cases where there is late or non-payment of suppliers, despite the submission of a legitimate invoice within 30 days.

We had also identified the need to normalize labour relations as being critical, in the State of the Nation Address.

Deputy President Ramaphosa leads the interface between business and labour in this regard.

Consensus on a working definition of a National Minimum Wage has been reached at NEDLAC.

Other mechanisms to reduce workplace conflict include an agreement to develop a Code of Conduct for strikes, lockouts and compulsory arbitration by the CMMA.

On agriculture, much progress has been made in the development of Agri-Parks, with 43 of the 44 sites having been identified. One Agri-Park is ready to be launched in North West.

We also continue to implement other key initiatives of the Agricultural Policy Action Plan to, support growth and employment in agriculture and agro-processing.

The plan includes increasing support for existing smallholder farmers and exploring ways to substantially expand the number of agricultural producers.

Ladies and gentlemen,

Government has identified water as a critical resource for economic development and work continues to implement the five point plan for water and sanitation.

The plan entails the following;

  • Maintain and upgrade existing water and sanitation infrastructure,
  • Build new dams and develop ground water,
  • Improve water quality,
  • Develop SMART technologies for water and sanitation information management and
  • Ensure an enhanced and integrated regulatory regime, for example water use licensing.

A review of both the Water Services and National Water Acts will be undertaken.

In the State of the Nation Address, I announced that we would intervene to stop the leaking of water which costs the country R7 billion a year.

I announced that government, through the Department of Water and Sanitation, would train 15 000 artisans and plumbers who will fix leaking taps in their communities.

This programme will be officially launched in Port Elizabeth on the 28th of August.

The first intake of 3 000 is being recruited for the current financial year.

On basic education, the 2014 Annual National Assessments results indicated that Grade 3 targets in both literacy and numeracy have been exceeded, including Grade 6 Home Language.

We welcome these positive developments and thank parents for cooperation which enables us to register progress as government.

However, performance in Grade 6 and 9 Maths and First Additional Language is still below par.

The implementation of the Maths, Science and Technology Strategy will be strengthened in all schools. In addition, government will ensure improved teacher supply, training and development.

The improvement of the qualifications of Grade R practitioners is also ongoing as part of the long term investments in quality education.

On the health front, South Africa has been praised by the United Nations AIDS programme (UNAIDS) for its successful response to HIV and AIDS.

Among the achievements, access to anti-retroviral treatment for people living with HIV and AIDS was expanded. To date 3,1 million people are receiving treatment. This has exceeded the 2014/15 target of 3 million.

The screening for tuberculosis (TB) has been expanded, with 15,2 million people reached, which exceeded the target of 6 million.

We thank all South Africans for their cooperation which is enabling the country to achieve a turnaround on HIV and AIDS and to improve our response to TB.

But we should not be complacent. The struggle against HIV and AIDS continues, including the fight against the stigma attached to the disease, so that those living with the virus can live productive lives without being ostracized.

Ladies and gentlemen

Cabinet adopted the National Youth Policy in May this year.

The Presidential Youth Working Group has been established, comprising youth formations and government led by the Deputy Minister for Planning, Monitoring and Evaluation. The Working Group helps to coordinate the implementation of the youth policy.

The programmes being implemented include the following;

  • Youth entrepreneurship and cooperatives training and mentorship;
  • Reform and review of the National Students Financial Aid Scheme,
  • To increase enrolments in universities and vocational training colleges,
  • Implementing  youth employment programmes such as the  installation of solar water geyser and set top boxes;
  • Implementation of public employment programmes and fostering values for the formation of an ideal citizen.

Mining remains a critical component of the economy and we want it to remain the backbone of the South African economy.

The threat of job losses in the mining and steel sectors is of serious concern to government as it would have a negative impact on many families, communities and the economy.

To address the current job losses in the mining sector, the Minister of Mineral Resources convened a retreat of tripartite stakeholders in the mining sector, on 5 August 2015, both business and labour.

Stakeholders identified a number of areas to save jobs and to find alternatives to job losses. A task team was established and mandated to develop detailed proposals.

The Task Team will report back to the principals this week.

The Presidential Business Working Group last Friday mandated government and the Chamber of mines to seek an amicable solution outside of the courts, to the notion of “once empowered, always empowered” notion in the Mining Charter. We look forward to a positive outcome.

The Mineral and Petroleum Resources Development Amendment Bill was referred back to Parliament to address, amongst other things, consultation at the National Council of Provinces, which was considered to have not been adequate.

We launched the fast results delivery methodology Operation Phakisa successfully in the health and ocean economy sectors last year. I will launch a Mining Phakisa before the end of the year, which will look at minerals beneficiation.

Meanwhile, the Department of Mineral Resources continues to issue orders to companies that do not comply with the law.

The matter regarding the suspension of the licence of Optimum Coal has been resolved.

Following engagements with the company, the suspension was lifted and the company was directed to address issues relating to non-compliance.

Ladies and gentlemen,

We launched the Back to Basics programme in September last year to revitalise local government.

In the past year municipalities have been supported in various areas to implement the programme.

An important point to note is that while municipalities have been directed to pay their debts, debt owed to municipalities is not given sufficient attention.

To date, debt owed to municipalities is close to R100 billion, which is almost double the amount since 2009.

We urge government entities and the private sector to pay their debts to enable municipalities to function effectively.

Ladies and gentlemen,

With regards to safety and security, the South African Police Service (SAPS) is responding effectively to shopping mall robberies.

The various units of the SAPS, including crime intelligence, the tactical response team, visible policing, the Hawks, together with Business Against Crime, cellular phone shops, the South African Banking Risk Information Centre and private security companies have been successful in dealing with this problem.
  

Police have found that the majority of the shopping malls were being targeted primarily to rob cellular phone shops. Cellphones and other electronic equipment that were stolen were taken out of the Republic.  Several suspects, including so-called kingpins, have been arrested.

The rate at which police are being attacked and killed calls for united action by both government and society at large.

Fifty five (55) police officers have been killed since January this year. I have requested the Police Minister to re-examine the police safety strategy to enable the police to respond effectively when attacked.

An attack on police officers is an attack on both the authority of the state and on the nation.

I appeal to the people of South Africa to play an active role to curb attacks by identifying those who kill police officers as they live within our communities. The people should also continue to provide information to the police about all who are involved in criminal activities, so that we can build safer communities, together.

On the 6th of September, we will hold the annual service at the Union Buildings to commemorate all our fallen police officers.

The implementation of the report on the tragic incidents that took place in Marikana, leading to the killing of more than 44 people, is receiving top priority.

The response of the National Police Commissioner to the recommendations of the Commission about her fitness to hold office is receiving attention.

I am also in discussion with the Ministers whose portfolios are affected by the Marikana report such as Police, Labour, Mineral Resources as well as Justice and Correctional Services.

We will provide feedback in due course to the nation on progress being made in the implementation of the recommendations. All interventions are aimed at ensuring that such an incident never occurs again in our country.

You will recall as well that tragic incidents took place in April this year, the attacks on foreign nationals, especially African nationals.

The Inter-Ministerial Committee on Migration remains seized with the matter of ensuring that we do everything possible to prevent a recurrence of the attacks.

Measures being undertaken include legislative and regulatory reform, improved policing through Operation Fiela and the promotion of peaceful co-existence and togetherness between citizens and nationals of other countries.

The IMC on Migration will meet with organisations representing foreign and African nationals soon, to take forward the discussions I had with them in April.

Ladies and gentlemen of the media,

In our discussions in the Presidential Business Working Group last Friday, we agreed that in addition to the implementation of the Nine Point Plan, as a country we need to be more proactive and awake to opportunities.

For example, faster growth in the African continent provides an opportunity for broader product and services markets. Growth in the sub-Saharan region is expected at 4,5% in 2015.

As the region develops, it will require industrial supplies.

In this regard, our industrialization policy is not misplaced, especially since SADC is also focusing intensively now, on finalizing the industrial policy for the region.

We will continue working within the African Union and SADC to participate in the establishment of the continental free trade areas and to boost the industrialization strategies of the continent.

Ladies and gentlemen,

We are making progress in many other areas and aspects of the government programme of action.

On Thursday, I will provide a progress report on the implementation of Operation Phakisa which is part of the Nine Point Plan.

The Nine Point Plan serves as a response to the challenge of limited growth of the South African economy.

As a collective effort, the Nine Point Plan could potentially accelerate the growth of the economy by as much as 0.8% in the short term and 1% in the medium to long term, in addition to the projected growth of 2% in 2015.

We thank all our stakeholders and sectors who work with us to ensure the success of the Plan.

I thank you.

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