Action (cycle one report) briefing by the Honourable Minister of Trade and
Industry, Mandisi Mpahlwa
10 May 2007
Introduction
At the January 2007 Cabinet Lekgotla the Cluster outlined a Critical Path to
grow the economy to meet the Accelerated Shared Growth Initiative for South
Africa (AsgiSA) 2014 goals. Cabinet approved ten priorities for the Cluster for
the next three years. Achieving the ten priorities will make an important
contribution to transforming the structure of the South African economy to
promote employment, growth and halve poverty in line with the AsgiSA
objectives. The ten priorities are:
Priorities to increase economic efficiency:
1. strengthen economic regulator capacity in key industries
2. amend competition policy to support effective regulation
3. increase access, uptake and usage of Information Communication Technology
(ICT) infrastructure
4. phased roll-out of overhauled public transport network
5. monitor implementation and impact of infrastructure roll-out
6. co-ordinated National Human Resources Development Strategy (NHRDS), with
focus on AsgiSA priorities
Priorities to promote dynamic growth sectors:
7. implement industrial policy framework, focusing on key sectors and
leveraging public spending
8. supportive macro-economic management (especially competitive and stable real
effective exchange rate)
Priorities to integrate small and micro-enterprises:
9. integrated small enterprise service delivery (including comprehensive
procurement strategy, marketing cooperatives, business development support and
access to finance)
10. reduced small, micro and medium enterprises (SMME) regulatory burden
(including by-laws)
The Programme of Action of the Economic Cluster will be directly related to
achieving these priorities. As highlighted earlier this year, the Cluster has
thirty eight actions this year, clustered within the priorities.
Progress Report
For this report, the Cluster will focus on areas of significant progress.
Strengthen economic regulator capacity in key industries
This priority will be addressed in 2007 through the development of a
framework for regulators and research into administered prices. This
intervention is aimed at lowering the cost of doing business across the economy
and reducing the cost of living, for example, through better and cheaper public
transport. Ultimately this will improve the competitiveness of our key sectors
and promote growth and labour-absorption. The Presidency is leading the
development of the framework for regulators.
Increase access, uptake and usage in ICT
This intervention is targeted towards bringing ICT costs within a
competitive range with comparator countries and increasing access to ICT
infrastructure. Currently a task team led by the Presidency and including the
Directors-General (DGs) from Department of Communication (DOC), Department of
Education (DOE), Department of Public Enterprise (DPE) and National Treasury
(NT) is elaborating on this initiative and has finalised a report for the
consideration of Cabinet.
Amend competition policy to support effective regulation
This intervention is aimed at enhancing competition policy to address
monopoly rents, particularly in upstream and network industries. The
competition policy review is being finalised and will be presented to Cabinet
during May 2007 or the earliest opportunity.
Phased roll-out of overhauled public transport network
This intervention will support implementation of a fully integrated,
mass-transit public transport strategy, with the first phase focusing on the
host cities for the 2010 World Cup. The Public Transport Investment Plan is in
the process of being finalised by the Department of Transport.
This intervention includes the project to merge Shosholoza with Metrorail,
and effecting the necessary legislative amendments. The Department of Transport
is continuing to implement the Taxi recapitalisation Programme with the
scrapping of old taxis initiated in all provinces. The second draft of the
subsidised road-based Public Transport Strategy has been prepared and is
currently being discussed within government.
Monitor implementation and impact of infrastructure roll-out
Led by the Department of Public Enterprises, this intervention is important
in light of the high priority of infrastructure roll-out, and the need to
facilitate its smooth progress. This intervention focuses on monitoring
progress and impact, and also pays attention to ensuring that infrastructure
input price hikes are addressed.
The infrastructure monitoring system has been developed and is being piloted
with Eskom and Transnet. The information on the system is being updated on a
quarterly basis. Results of the monitoring will be fed into the Cluster for
analysis.
The Competitive Supplier Development Programme has been approved by Cabinet.
The programme targets the development of the local supplier industry in a
manner that meets build infrastructure timelines. Transnet and Eskom are
expected to participate in the programme, and are working on draft sector
investment projects to be finalised in June. Next in this initiative will be
the inclusion of the Square Kilometre Array.
An integrated Port and Rail Master Plan has been approved by both Transnet
and the Department of Public Enterprises and will be considered by the Cluster.
Regarding ports, an Independent Ports Regulator has been established.
Co-ordinated National Human Resource Development Strategy (NHRDS), with
focus on AsgiSA priorities
This intervention includes a review of National Human Resource Development
Strategy targets and strengthening co-ordination including Joint Initiative on
Priority Skills Acquisition (JIPSA) to ensure long-term provision of core and
critical skills.
Draft service level agreements will be concluded with Sector Education and
Training Authority (SETA) before 31 July 2007. The agreements will include a
consolidated target of at least 12 500 artisans to be registered during the
2008 to 2009 financial year. SETA service level agreements and performance
assessment scorecards are aimed at strengthening annual monitoring and
reporting on SETA performance.
Implement National Industrial Policy Framework (NIPF) focusing on sector
strategies
An Action Plan to implement the National Industrial Policy Framework is
being finalised within the Cluster. The Action Plan will focus on key projects
across the priority sectors that will be implemented over the medium-term in
addition to the on-going implementation of BPO and Tourism and the advanced
work of bio-fuels, chemicals and clothing and textiles.
With regard to the BPO strategy, the Government Assistance and Support
Programme was launched in March 2007. The process to pilot the Monyetla Work
Readiness Programme is underway. Negotiations on Telecommunication pricing
packages are at an advanced stage.
On tourism, a National Tourism Skills Development Forum has been constituted
by DEAT to drive the work on tourism skills. In addition, a tourism skills
audit is under finalisation, with the final report due in May 2007. Other work
includes; conducting an investigation into incentives for tourism, development
of an airlift action plan under the leadership of DoT and ensuring alignment
between the Tourism black economic empowerment (BEE) score card with the Codes
of Good Practice. Finally, work is underway to develop a national tourism
safety and security plan.
Stakeholder consultation in all provinces on the draft bio-fuels strategy
has been completed and the refined strategy will be submitted to Cabinet in May
2007. In clothing and textiles, quotas on imports from China are under
implementation. South African Revenue Service (SARS) is working on measures to
reduce illegal and under-invoiced imports. Country of Origin Labelling
amendment legislation has been published and consultation at the Southern
African Customs Union (SACU) level is underway.
In metals and engineering State Owned Enterprise (SOE) supplier development
plans are being formulated. In Chemicals, a sector summit agreement between
government, business and organised labour is to be signed later this month.
The implementation of the National Export Strategy is underway, including
the determining of priority markets and projects, finalising the market access
programme, implementing the trade information system, supporting emerging
exporters in the Small Exporter Development Programme, and strengthening of
export finance.
In terms of promoting Research and Development (R&D), Section 11D of the
Income Tax Act amendment took effect on 2 November 2006 and SARS and DST
Department of Science and Technology (DST) are finalising changes to the Income
Tax Return forms to accommodate the new tax incentives. A questionnaire that
will be included in company tax returns as a means of verifying R&D claims
has been drafted. Regarding cutting edge technologies, a draft concept on the
Foundation for Technological Innovation will be considered by Cabinet in August
2007. This initiative involves amendments to the Innovation Development
Act.
Integrated small enterprise service delivery
The intervention is targeted towards developing integrated delivery support
to small and micro-enterprises across the different sectors and tiers of
government. A DTI-National Treasury task team has identified ten products for
targeted procurement from SMMEs by government. The task team has also
identified other key implementation and monitoring mechanisms, including the
enforcement of government's commitment to pay SMMEs within 30 days.
Work continues on strengthening and increasing the reach of small enterprise
support network. During 2006/07, 39 partner organisations were approved by
SAMAF with funding commitments of R69 million. Khula has also achieved success
in reducing bad debts, with write-offs declining substantially to 5% of all
approvals. SEDA infrastructure rollout continues and 40 branch offices will be
operational nationwide by the end of 2007.
Other initiatives of the cluster
On the Second Economy, a draft framework for Second Economy interventions,
including possible avenues for scaling up projects, is being developed. It is
important to communicate such projects to the beneficiaries and an
inter-departmental task team has been established to finalise agreement with
private sector associations and SOEs on communication initiatives. This
includes provincial publications detailing the economic opportunities in the
provinces. Beneficiary workshops will be held by GCIS working closely with the
Regional Managers at selected provinces. Radio will be used to detail the
extent of the programme on economic opportunities in the provinces, including
support for the Vuk'uzenzele programme. Development of a television series
demonstrating the extent of the programme on economic opportunities is also
planned. Ongoing research is being used to assess the impact of the campaign at
every stage.
To improve the possibilities for better economic utilisation of communal
land, regulations under the Communal Land Rights Act (CLaRA) were finalised on
30 March 2007. Workshops on these regulations are envisaged to take place
between April and June 2007. The regulations will be tabled in Parliament by
the end of July 2007.
Conclusion
The focus on the ten priorities over the next three years will enable the
Cluster to take advantage of the many economic growth and development
opportunities that are emerging, as well as enable us to better address some of
the complex challenges. The three year timeframe also allows us to strengthen
the implementation, monitoring and evaluation capacity of the Cluster to
support the ten priorities.
Issued by: Department of Trade and Industry
10 May 2007
