Programme of Action by Public Enterprises Minister A Erwin, Union
Buildings
4 July 2006
In contributing towards government's effort to halve unemployment and
poverty by 2014, the Economic Cluster is working towards a critical growth
path, drawing on the priority projects of the Programme of Action (PoA). The
recent interest rate hike and the anticipated slowdown in global economic
growth confirms the strategy taken by government â namely, to prioritise those
Accelerated and Shared Growth Initiative of South Africa (AsgiSA) interventions
that will create the basis for sustainable economic growth and employment
creation in South Africa.
This media briefing highlights progress along this path.
Strategic focus
The Cluster is constantly reviewing strategic projects and has discussed
relevant constraints and bottlenecks with Cabinet. The Cluster will be
presenting a number of options to Cabinet to sharpen its focus for 2006/07,
with a view to having fewer and more strategic projects that will deliver
significant results towards the achievement of that critical path.
This report provides an update on existing projects of the Economic
Clusterâs Programme of Action for 2006/07.
The Cluster focus groups are as follows (with lead departments in
brackets):
* Ensuring aligned and supportive macro-economic approaches (National
Treasury (NT) / Policy Unit in The Presidency (PCAS)).
* Building a competitive and labour-absorbing economy (Department of Trade and
Industry (DTI) / Department of Science and Technology (DST)).
* Massively increase public investment (Department of Water Affairs and
Forestry (DWAF) / Department of Transport (DOT)).
* Equity and development (Department of Public Enterprises (DPE) / Department
of Provincial and Local Government (DPLG)).
* Ensure priority skills for the economy (Department of Labour (DOL)
/Department of Education (DOE)).
Key issues from the Cluster focus groups
The work of the Modelling focus group has begun and is to be integrated into
the economic cluster. Initial work has been presented. The work affirms the
need for increased infrastructure investment, particularly social
infrastructure in less developed areas. It affirms the positive spin-offs of
social infrastructure investment in areas with relatively limited economic
potential.
Work of the presidential task team on bio-fuels is on track to report to the
Cabinet Lekgotla in July, with a final strategy due in December 2006.
Within the industrial strategy framework, the Cluster will be focusing its
attention on growth constraints and opportunities. The strategy is on track to
go to the July Cabinet Lekgotla and will include a focus on Cluster
implementation and an alignment to Governmentâs budgetary processes.
In terms of bringing down the costs of Information and Communication
Technology (ICT), the Minister of Communications has announced a number of
interventions including: reducing the cost of international connectivity
through the New Partnership for Africaâs Development (NEPAD) terrestrial and
sub-marine broadband network, increasing access and services through wireless
broadband, removing monopoly on the last mile, unbundling the local loop,
removing monopoly on international gateway access and establishment of a
broadband task team.
Government is positive and committed to ensure that that these efforts will
result in a substantial decline, on the cost side, of an already established
and reliable network.
The strategy for business process outsourcing and off shoring (BPO&O)
currently includes marketing, incentive package design, skills development,
quality assurance and industry mobilisation. The potential of the sector has
been confirmed with growing interest in South Africa as an outsourcing
destination. The first targeted company has indicated its intention to set up a
2 500 seat centre. In addition the training programme for 4 000 matriculants
has been designed.
This will go towards addressing the skills shortage that exists in the
sector. An Assistance Programme for BPO&O has been designed and will be
offered to companies that are to invest in the sector. In terms of the project
aimed at the development of call centres in five poor communities (led by
Department of Public Enterprises) a number of benefits (e.g. subsidised
training and low cost building infrastructure) have been packaged for small
businesses. To further this project, government is to determine specific policy
directives to encourage the use of rural call centres and to finalise the
design of specific industrial incentives.
In terms of the promotion of the tourism sector, led by Department of
Environmental Affairs and Tourism (DEAT), the launch of Tourism Enterprise
Programme with funding of R185 million for 2006/07 to 2008/09 has been given
the go-ahead. The Business Trust has committed an additional R43 million to
this project, and we thank them for their efforts in the promotion of this
labour-intensive sector. The Cluster is speaking to the Department of Home
Affairs to develop improved data collection.
In our project aimed at promoting Research and Development (R&D) through
increasing public sector R&D and increasing total R&D spending to 1% of
Gross Domestic Products (GDP) (led by DST), the economic modelling of a tax
incentive for private sector spending on R&D has been completed. The
Minister of Finance is to allow for 150% expensing treatment of spending by
private sector, as well as a higher rate of depreciation for R&D capital
equipment.
The Cluster is reviewing capital expenditure procurement of State Owned
Enterprises (SOEs), assessing how existing government policies are affecting
the ability to optimise the development impact of the SOE Capex procurement. A
Competitive South African Supplier Development Programme will be ready for
Cabinet consideration in July 2006. A challenge that the team is taking into
consideration is to develop a procurement policy, that will not result in
significant price premiums, through giving local industry preference. Hence the
focus is on local supplier upgrading rather than local industry protection. A
further challenge is to rebuild SOE procurement capabilities (of capital goods)
through an incremental process. This project will be enhanced by the
development of systems to monitor infrastructure implementation and impact on
utilising accessible electronic access.
In terms of support for Small and Medium Micro Enterprises (SMMEs), a
project in the Cluster is considering how government procurement can be
targeted to assist SMMEs. The DTI is currently analysing data on Government
Procurement to ascertain a list of relevant products and services, for
procurement preference to SMMEs. In terms of addressing the financing gap for
SMMEs there has been progress on the Apex Fund and MAFISA unifying
infrastructure arrangements. Government is sensitive to ensuring that financial
and non-financial support for SMMEs is addressed concurrently. Therefore the
Cluster has asked the relevant departments to increase their explicit emphasis
on linking financial and non-financial support so that the chances of
enterprise success are increased.
Major development of the Olifants River System led by DWAF, including the
construction of the De Hoop Dam, is to be completed by 2010. We are pleased
that there has been progress on Environmental authorisation to the satisfaction
of relevant parties. The Cluster will be ensuring that we strengthen synergy
with other infrastructure roll-out plans (for example, the laying of fibre
cables).
The project led by DOT that is considering the development of a
Durban-Gauteng Corridor is progressing beyond the conceptual stage with terms
of reference for City Deep Depot completed, and gone out for tender. The
Cluster will be seeking to strengthen inter-governmental cooperation (national,
provincial, and local, SOE) to enhance better integrated planning for
freight.
The DPLG is leading a team within the Cluster that is seeking to improve
street trading infrastructure. This project is expected to impact directly on
the million street traders that are part of the second economy. Currently the
Cluster team is reviewing bylaws seeking ways to better accommodate street
trading infrastructure and seeking the best way to fund initiatives under this
programme.
In terms of our attempts to achieve our 2006/07 annual targets for the
National Skills Development Strategy, work has begun on a framework of
occupations to assist in the identification of scarce and critical skills. The
project is aligned to Joint Initiative on Priority Skills Acquisition (JIPSA)
and has begun initial work on a database of skills needs for AsgiSA
projects.
Closely linked to this project is the implementation of policy framework
relating to immigrant Labour (Department of Home Affairs (DHA)). The list for
skills importation is developed on an annual basis. The DOL has evaluated
sector skills plans for 2006/07 from 23 Sector Education and Training
Authorities (Setas), and is developing revised scarce and critical skills lists
with DTI in time for gazetting in August.
Since its launch, JIPSA has been resourced with a full-time secretariat.
Consultations have begun to develop a better picture of the skills requirements
underpinning AsgiSA projects and initiatives. Priorities are focusing on an
operational plan for Tourism and BPO&O skills requirements, and the
identification of cross-cutting skills in finance, project management and
management in general. Strategies are being finalised for the acquisition of
intermediate artisan and technical skills for ASGISA infrastructure, ICT and
unemployed graduates.
It has been decided that the Unemployment Insurance Fund (UIF) database is
the most suitable for the foundation database for the Department of Labourâs
Employment Services System. To accommodate this, the data fields are being
broadened, and upgrading of the DoL intranet has begun. Linkages between the
new system and related systems such as the Dept of Home Affairs System are
being developed.
Expand Intermediate and High-Level Skills:
Maths and Science Schools (Dinaledi Schools)
DOE has identified 400 schools for intensive support (to grow to 529 in
2007). Additional textbooks and teacher support packs have been delivered to
schools and 40 000 calculators have been procured and delivered. An audit of
ICT facilities has been completed and Dinaledi Schools are to receive priority.
Government has approved a teacher incentive programme and it is to be piloted
in Dinaledi schools.
Another DOE project, the Quality of Education (QUIDS UP) Programme, has
begun the phased provision of essential equipment to 24 000 schools serving
poor learners.
Conclusion
The Economic Cluster is increasingly focussed on ensuring the success of the
strategic projects that are located in the Economic Clusterâs five focus
groups. The Cluster is expecting to report on progress to the July Cabinet
Lekgotla.
Issued by: Department of Public Enterprises
4 July 2006
