Cluster's Programme of Action (Cycle Four Report) by the Honourable Minister of
Trade and Industry, Mandisi Mpahlwa
6 November 2007
Introduction
As with previous media briefings held this year, this report will focus on
progress made in the three strategic areas that comprise the Economic Cluster's
programme of action, namely
* to increase economic efficiencies,;
* to promote dynamic growth sectors through the implementation of our
industrial policy;
* to ensure we offer integrated service to assist small- and
micro-enterprises
In this report we will also report on the Apex priority projects which the
July 2007 Cabinet Lekgotla allocated to the Economic Cluster.
1. Increase economic efficiencies
The work on increasing economic efficiencies focuses on three key network
industries: energy, information and communication technology (ICT) and public
transport.
In January 2007 Cabinet agreed that energy had to be one of the major
strategic issues for the Cluster.
There are three components to our approach; monitoring supply and demand,
the provision of energy infrastructure and leveraging expenditure to promote
industrial development.
In terms of managing energy demand and supply, we are monitoring supply and
demand and looking at ways to manage energy demand in the short term. The
multimedia energy efficiency campaign has been completed and a report on energy
efficiency in the public sector will be completed this month. As part of this
work DEAT will be monitoring air quality.
Further to this, there is a need to implement measures to achieve renewable
energy targets with a view to reducing our dependence on coal-fired power
stations and imported fuels. This will include measures to achieve renewable
energy targets. In this regard the biofuel strategy has been finalised by an
inter-ministerial committee that has suggested changes to our biofuels strategy
which will now be submitted to Cabinet for consideration.
Regarding energy infrastructure, we have previously reported on the rollout
of further capacity focused mainly on Eskom's R150 billion built programme.
This work remains on track. In addition, the work on the Pebble Bed Modular
Reactor initiative continues.
On the industrial development dimension of the energy infrastructure
roll-out the work on the Competitive Supplier Development Programmes continues
with Eskom anticipated to implement its development plans by March 2008 and
PBMR by July 2008.
Vital to our work in this area is the Intsimbi Programme, an
all-encompassing turnaround strategy for the tool-, die-, mould, jig, fixture,
mining tooling and related precision machining products manufacturing
industry.
The Electronic Communications Act (ECA) amendment has been gazetted for
public comment and will be debated in Parliament with a view to finalising it
this month. The amendment is aimed at facilitating government's intervention in
respect of investments in strategic ICT infrastructure.
On increasing access to ICT infrastructure, Department of Communications and
National Treasury, are at an advanced stage of finalising the plan to
capitalise Sentech. Capitalisation of Sentech will enable the provision of
wireless government services to communities. The investment into submarine
cable is crucial to connect Africa to European countries and assist in driving
down international connectivity costs for Africa. In this regard, draft
guidelines setting out the parameters for the landing of submarine cables will
be gazetted by the end of this month.
Competition is vital to increasing economic efficiencies and growth. In this
regard our work focuses on a review of import tariffs and Competition Policy.
With regard to promoting competition in upstream industries, import tariffs on
carbon and stainless steel have been removed and a review of intermediate
tariffs in other sectors, namely paper and pulp, chemicals and aluminium has
begun. The Competition Policy review and draft amendments have been
finalised and will shortly be considered by Cabinet.
We are looking at resolving organisational issues with respect to skills
development and a draft review report on SETAs has been tabled by the
Department of Labour at the National Economic Development and Labour Council
(Nedlac). This work is being undertaken as part of the revised National Human
Resource Development Strategy (NHRDS) approved by Cabinet in July 2007.
2. Implementing the National Industrial Policy Framework (NIPF)
The Cluster is implementing the Industrial Policy Action Plan focusing on
the four lead sectors; chemicals and pharmaceuticals, automotives, pulp and
paper forestry and furniture and capital equipment, metals and transport
equipment as well as clothing and textiles. As part of this, Key Action Plans
in sectors such as clothing and textile; metals and engineering and capital
equipment have been completed. However, we are not simply waiting for the
finalisation of sector plans but are implementing plans where they are ready.
For example, government is implementing the tooling initiative in the capital
goods sector.
In terms of chemicals and pharmaceuticals the review of input tariffs is
underway. Nedlac is also considering a strategy to increase domestic
fabrication of pharmaceuticals.
In terms of clothing and textiles, we are implementing measures to recapture
and stabilise the domestic market. Measures include a review of import duties
of key inputs into the clothing sector; fast tracking the development of an
alternative support mechanism to the existing Duty Credit Certificate Scheme in
collaboration with the IDC; the design of a customised industrial upgrading
programme for a sector to ensure sustainability and the creation of a textiles
engineering centre of excellence.
Ongoing implementation of key action plans continues in Business Process
Outsourcing (BPO) and Tourism. In BPO, the Government Assistance and Support
Programme (GAS) for the development of the sector has approved six applications
with an approximate investment of R500 million that will create about 9 000
jobs over the next three years. To support the BPO sector, a discounted
telecommunication pricing model for the BPO operators has been completed and
the Department of Communication will soon make a statement in this regard.
On the tourism sector, an implementation framework for the tourism Second
Economy has been developed as part of the tourism development programme.
Through the Tourism Enterprise Programme 993 small, medium and micro
enterprises (SMMEs) were provided with support ranging from business linkages
to the development of business or marketing plans.
In terms of the investment call centre, which is to service investors who
are investing over R100 million, pre-feasibility for the establishment of the
call centre and costing of the project have been completed. Proposals for the
call centre will be evaluated in November 2007.
For industrial policy to be successfully implemented we will require
appropriate industrial financing instruments. We are in the process of
developing specific instruments for sectors as well as key generic instruments
such as our re-formulated Small and Medium Enterprise Development Programme
(SMEDP), the Enterprise Growth Programme. We are engaging National Treasury on
developing these instruments of industrial policy.
3. Integrate small- and micro-enterprise service delivery
The implementation of the Integrated Small Enterprise Development Strategy
is underway and significant progress can be reported.
The service delivery network integrating both financial and non-financial
support has been extended. On creating a national service delivery network,
there are 47 Small Enterprise development Agency (seda) offices and 103
Enterprise Information Centres have been established.
13 Retail Finance partners through which Khula lends and 13 Khula Mentorship
Offices have been established.
On increasing access to finance, South African Micro-finance Apex Fund
(SAMAF) partner organisations have increased from 39 to 41 and approximately 18
500 clients have been funded since the launch of the fund in April 2006. To
leverage the Financial Services Charter R5 billion commitment, Khula and the
top four commercial banks have agreed to a revised Credit Indemnity Scheme that
will boost access to finance for small enterprises. In addition, the Industrial
Development Corporation (IDC) in the 2006/07 financial year allocated R597
million to businesses operating in or near townships, and the IDC Risk Capital
Facility has allocated R190 million to 90 companies creating 5 310 jobs.
Part of the work of promoting SMMEs is to improve demand side measures for
small enterprises. In this regard we will be making announcements on these
issues soon.
In terms of accelerating land and agrarian reform an implementation plan on
land and agrarian reform has been finalised in line with the Provincial Growth
and Development Strategies and Integrated Development Plans.
Conclusion
The Cluster has made significant progress but there are still challenges
that exist in fast-tracking implementation in certain areas. More efforts will
be required to ensure that items with December 2007 deadlines are completed on
time for consideration by Cabinet at the January 2008 Lekgotla.
Issued by: Department of Trade and Industry
6 November 2007
