Mandisi Mpahlwa, MP, at the National Council of Provinces (NCOP)
30 May 2007
Chairperson
Members of the Executive Council of NCOP
Honourable members
Ladies and gentlemen
South Africa's wealth lies in our diversity, our people and natural
resources. From the sands of the Kalahari, a tourist attraction, to the
platinum deposits in the North West which feed the manufacture of catalytic
converters, our natural resources contribute to economic development. Indeed,
all our provinces have enormous economic potential and it is therefore
imperative that we tackle the paradox of underdevelopment of some regions in
our country.
In addressing this challenge we are well aware of the root causes for the
spatial legacy of underdevelopment and that this legacy traps many areas,
particularly those in formerly mining based or in the former homelands into
stagnant or low growth conditions. To solve this challenge of uneven
development will therefore require a concerted and coordinated local and
national effort.
In my address to the National Assembly yesterday, I reported on the positive
trajectory of the South African economy. I also cautioned that we needed to
develop a deep understanding of the various drivers of this positive trajectory
and with this understanding, actively intervene to ensure accelerated shared
and sustainable growth across all sectors and provinces.
The Department of Trade and Industry (the dti) is convinced that an
important element of achieving this vision is an active industrial policy. We
have observed that a major weakness In the South African economy is the
relatively poor performance of non-traditional tradable goods and services in
low skill intensive sectors and the need to address this weakness and the
related challenge of unemployment. We believe that a strong industrial policy
is essential in driving the structural diversification of the economy. However,
industrial policy cannot succeed without coherent and simultaneous supporting
policies. The most critical of these are a competitive exchange rate; a skills
development system which is aligned to our industrial policy priorities and
traditional and modern infrastructure of the necessary quantum, quality and
pricing necessary for our industrialisation needs; a supportive regulatory
environment which encourages investment and employment creation amongst firms
of all sizes. Industrial policy is the role of the whole of government,
including all three spheres and in this regard we seek to take advantage of
ongoing improvements in intra-governmental co-ordination.
Being part of the national economy, our provinces are affected to a great
extent by economic activities in the national economy including the realignment
of the manufacturing sector away from traditional heavy industry input markets
and low value added production towards sophisticated, high value added
production in the agriculture and mineral sectors.
Honourable members, to facilitate the integration of our efforts, regional
industrial development is incorporated as an essential element our industrial
policy and we believe this will enhance the implementation and impact of the
National Spatial Development Perspective. We have therefore over the past year
been engaged in an extensive consultation process designed to facilitate
provincial input into our regional industrial development approach, I am glad
to report that the engagement with provinces proved so fruitful that we were
able to improve our approach. While the basic principles of the approach to be
taken are not in question, what has emerged is a need to strengthen its planned
implementation. In this regard, issues of development finance, enhancement of
support measures such as the industrial development tones programme and a clear
indication of proposed priority sectors will be given our co-ordinated
attention. Our experience of this engagement process thus far gives us the
confidence that the end result will be a much stronger regional industrial
development approach with fewer potential pitfalls in implementation. To this
end we intended tabling our regional industrial development proposals to
Cabinet in due course.
Chairperson, in respect to Industrial Development Zones (IDZs) specifically
you will recall that I announced the lifting of the moratorium in last year's
speech to this House. Since then the programme has gathered good momentum to
the extent that the dti is currently considering extending it, including the
proposal from the North West province for designation of an IDZ next to
Mafikeng Airport.
To accelerate the implementation of the existing IDZs, the dti is
investigating appropriate co-operation measures by the three spheres of
government in relation to IDZ companies including immediate funding and related
corporate governance issues. This process is at an advanced stage with regards
to the two Eastern Cape IDZs and experience will guide us in relation to other
and any future IDZs. The current proposal which has been developed on the basis
of the accumulated experience of the dti and stakeholders, envisages a stronger
dti role in IDZ companies. Parallel to this process, we are developing an IDZ
Policy which will outline the strategic direction of the IDZ programme as well
as providing for an IDZ dedicated Act. The policy is to be presented to Cabinet
in the near future, subsequent to which the legislation will be developed.
Similarly we have already begun to use our available financial resources to
more effectively support spatial development. In 2006/07 the industrial
Development ·Corporation (IDC) played a key role on a number of fronts.
Investment approvals for the financial year are anticipated to be in excess of
R5,9 billion and these will support businesses ranging from participation in
the Gautrain end the launching of Neotel, to support for small enterprises
throughout the country. These investments will have a significant impact on job
creation end regional development.
Honourable members, I also reported to the National Assembly I that the dti
is acutely aware of the need to broaden participation in the economy and the
inclusion of marginalised people, regions and enterprises. In particular, we
believe in the potential for Small Medium Enterprises (SMEs) to contribute to
growing our economy and creating employment in a geographically dlspersed
manner. The dti therefore seeks to create an environment where the location of
an SME is limited only by the location of entrepreneurial spirit. For this
reason the Department continues to place great emphasis on the roll out and
effective implementation of programmes for supporting SMEs.
Access to finance remains a key barrier to entry and growth constraint for
SMEs. Over the past year considerable strides have been made in alleviating
this constraint. Since May 2006 South African Micro-finance Apex Fund (SAMAF),
our micro finance agency, has become operational at a national level and
succeeded in disbursing funds to 9 000 savers and 1 700 SMEs. In fact, this is
the first time in the history of this country that a budding entrepreneur from
Middledrift in the Eastern Cape; Hammanskraal in Gauteng, Ixopo in
KwaZulu-Natal; Mathabatha in Limpopo; Embalenhle in Mpumalanga; Mafikeng in the
North West; Phuthaditjhaba in the Free State; Manenburg in the Western Cape has
not had to travel all the way to Pretoria for a loan of this nature.
In regard to the financial support, Khula through its partners has
facilitated much needed access to finance for more than 140 000 entrepreneurs.
This includes both group and individual beneficiaries. Khula has also signed ·a
revised indemnity agreement with some of the commercial banks, with a view to
emphasising developmental imperatives associated with small business
support.
In the year ahead to address the limitations of the current Khula model
particularly with regard to the R10 000 to R250 000 market, we will be looking
to shift the role of Khula to direct lending. This 15 a matter that we are
canvassing within government end will take to Cabinet when appropriate.
We have also continued to assess and improve our non-financial support
services and the Small Enterprise Development Agency has made great strides in
developing a national footprint. Deputy Minister Thabethe will speak more to
this issue, later in the debate.
This brings me to the area of Broad-Based Black Economy Empowerment (BBBEE)
more generally. As you well know the codes of good practice were gazetted in
February this year. In this regard, we note the increase in initiatives by the
private sector which embraces the spirit of the codes especially in relation to
driving preferential procurement and advancing skills development over and
above equity ownership.
In the coming year the dti will develop the institutional mechanisms for
monitoring and evaluating the implementation progress of BBBEE throughout the
economy. In addition, with the dti will ramp up our BBBEE marketing and
communication drive with a view to promoting awareness in the public and
private sector on the implementation of the codes and thereby enable the
necessary capacity in this regard.
Given the certainty and impetus the codes have provided, we anticipate that
the impact will be felt throughout our entire economy especially where
government procures goods and services or licenses operations. Therefore, the
first phase of the marketing and communication drive this year will focus on
provincial, local and municipal government departments in all nine provinces.
Clearly, the role of provinces in the implementation of the economic
transformation agenda is a vital one and we will continue to look for ways of
strengthening co-ordination and co-operation with provinces including through
the Minister and MECs forum (MinMec) for the economic sector which we convene
periodically.
Honourable members, the dti recognises that consumers with proper
information and protected rights are vital to effective markets and overall
economic growth. In a process that began some years ago the dti has been
undertaking major initiatives to promote consumer protection and awareness of
consumer rights to ensure that their interests are protected.
The consultation process and revision of the Draft Consumer Protection Bill
approved by Cabinet in November 2005 is now complete. May I use this
opportunity to recognise the important role of the provincial consumer affairs
offices for their valuable participation in this process and I am glad to
report that they have unanimously welcomed the Bill.
With the rapid advances in technology I we remain vigilant to fronts,
opportunities and threats in regard to consumer protection. Internet gambling
is one such example. We have therefore received Cabinet approval for the
publication for public comment of the National Gambling Amendment Bill. The
Bill aims to provide a lawful basis for the regulation and control of
interactive gambling, in the interest of consumers. It also ensures that minors
and other vulnerable persons are protected from harmful exposure to gambling.
Furthermore, it proposes measures to prevent money laundering.
I raise this matter here specifically, Chairperson, because Provincial
Licensing Authorities (PLAs) were consulted extensively and they have raised
certain issues relating to the incensing structure especially in respect to the
proposal that that interactive gambling be licensed by the National Gambling
Board as opposed to the PLAs·as is the case with other form of gambling. We
believe that this is a matter that can be resolved and the dti intends to work
very closely with Provincial Authorities and the economic affairs departments
to find a solution that serves the interest of all stakeholders, without unduly
delaying the tabling of the Bill.
In drawing to conclusion, Chairperson, the dti recognises the fact that all
of the initiatives I have mentioned depend on sound intergovernmental
partnership and co-operation. Forging and strengthening ties within government
must begin with planning together. In August last year I held a two-day
Lekgotla with the MECs of Economic Affairs of provinces. At this meeting we
focused our attention on strategic projects that would have a high impact on
the Accelerated and Shared Growth initiative (AsgiSA) goals. The 12 projects in
the work programme are being monitored by our technical MinMEC structure
chaired by the Director-General of the dti. This will enhance the quality of
the projects identified, as well as their effective implementation.
Indeed, it has been our experience that engagement with the provinces
improves the depth and robustness of our work. It enables the all important
implementation and broadest possible impact of national policies and
strategies, such as with regard to transforming the structure of the economy to
promote labour absorption and poverty alleviation, in combating regional
disparities, in ensuring economic inclusiveness, in supporting enterprises and
protecting consumers. We also recognise however that much of the success of
local economic development hinges on locally led partnerships and initiative.
In this regard, the dti will play a facilitative, supportive role and provide
appropriate resources in the common pursuit of the objective of accelerated and
shared growth.
I thus a5k you to support vote 32 for the 2007/08 budget of R4,8 billion. I
thank you.
Issued by: Department of Trade and Industry
30 May 2007
