Economic Development 1 st and 2 nd quarterly report

Economic Development 1st and 2nd quarterly report

Presentation to the Portfolio Committee

26 October 2010

Presentation outline

• Outcomes approach

• Progress against the Strategic Plan

• Performance against ENE targets

• Financial performance

• Equity status

2

Outcomes approach• The electoral mandate for 2009-2014 requires that government

focus on five priorities: education, health, rural development, employment creation and combating crime and corruption

• The Presidency developed an outcomes based approach and identified 12 outcomes for government for 2014

• One of the outcomes is “Decent Employment through Inclusive Economic Growth”, led by the Economic Cluster of departments of which the Economic Development Department is part.

• Between the January and July Cabinet Makgotla the Delivery Agreement for Outcome 4 was designed and discussed between the affected departments

• The Delivery Agreement has been signed by a number of the signatory Ministers

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Strategic Plan outline • Programme 1: Administration

– Ministry– ODG– General Management Services

• Programme 2: Economic Policy Development– Growth Path and the Creation of Decent Work– Economic policy– Broad-based BEE– The Second Economy– Economic Development Institute and Research

4

Strategic Plan outline, cont• Programme 3: Economic Planning & Coordination

– Spatial, Sector and National Economic Planning– Investment for Economic Development– Competitiveness and Trade for Decent Work– Economic Development, State Budgeting and Financial and

Procurement Processes – Green Economy

• Programme 4: Economic Development and Dialogue– National Social Dialogue and Strategic Frameworks– Sectoral and Workplace Social Dialogue– Capacity Building for Economic Development– Productivity, Entrepreneurships and Innovation

5

Programme 1: Ministry• Ministry supported the Minister in:

– Cabinet, Cabinet Committees, IMCs and Presidential Councils

– Economic Sectors and Employment Cluster– MinMec and MECs of FS and EC– Foreign delegations and multilateral organisations– Travel to WEF, UAE and China– Replies to 30 questions– Portfolio and Select Committee meetings– Consultations on the Growth Path– Tabling of strategic plans and annual reports– Convening Leadership Team meetings

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Programme 1: Ministry,cont• Ministry supported the Deputy Minister in:

– Cabinet and Cabinet Committee meetings– Crans Montana Forum in Brussels– Provincial visits– Engaging stakeholders on cooperatives and SMMEs– Engaging COGTA, SALGA and other stakeholders on

local economic development– MinMec and MECs of FS and KZN– Meetings of Nedlac EXCO– Meetings with Ambassadors of Korea and Malaysia– Community engagements

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Programme 1: ODG• The ODG supported the DG in:

– Implementation of the Recruitment Plan– Implementation of the Strategic Plan– Planning and reporting (Annual Report, quarterly

reports)– ESEC Cluster meetings and consultations on the

Growth Path– Technical MinMec meetings and engagements with

provincial Economic Development HODs– Presentations for Parliamentary Committees– Liaison with the Ministry and Department– Efficient administration and document flow

8

Programme 1: General Management Services (1)• Human Resource Management

– EDD had 3 permanent staff on 1 April 2010– Selection processes for 4 DDGs, 4 CDs and three

corporate managers– Take home project and exam – DDG: Economic Policy Development, CD: Growth

Path, CD: Economic Planning, CFO, CD: HR and D: ODG appointed in July

– 14 other staff appointed during second quarter– 23 jobs (53 posts) job-evaluated– Currently selection of Senior Economist and Policy

Analyst and Director: Legal Service in progress

9

Programme 1: General Management Services (2)• Chief Financial Officer

– Financial Maturity Capability Report submitted to the National Treasury

– Submitted EDD 2011 MTEF submission to National Treasury

– Submitted monthly PFMA section 40 reports– Prepared the expenditure plan for the remainder of

the financial year– Made progress in securing additional accommodation– Performed the procurement function with the support

of the dti

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Programme 1: General Management Services (3)• Legal Services

– Post advertised and shortlisting underway

• IT services– Support from the dti– One contract worker appointed

• Communications– MLO assisting– JE awaiting approval

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Programme 2: Economic Policy Development• Growth Path and Creation of Decent Work

– Various officials assisted the Minister with aspects of the development of the Growth Path

– A summary and executive summary have been prepared

– Policy papers have been drafted– The Minister, DG and officials led delegations to

Ministries and Departments– The Growth Path was discussed at the ESEC

Ministers and DG Cluster– The Growth Path was presented to the July Cabinet

Lekgotla– A special Cabinet has been held to discuss it further

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Programme 2: Economic Policy Development• Economic policy

– Discussions have been held in the Cluster and with coordinating departments on macro-economic issues

– Work was completed on economic overview and trends (macro and micro issues)

– Fact sheets and policy briefings:– Integrated Resource Plan on Energy– Assessment of conditions in Bitou– Task Team on Arcelor Mittal / Kumba

– Partnerships explored on economic modelling

• Broad-based BEE– Supported the Minister’s participation in the BBBEE Advisory

Council13

Programme 2: Economic Policy Development• Second Economy

– Multi-pronged strategy to reduce youth unemployment• Initial research undertaken• Engagements held with NT and the dti• MTEF submission submitted• Fact sheet prepared

– Strategy to integrate the second economy into the mainstream• Initial research undertaken• Engagements held with NT and the dti• Review of informal trader conditions conducted

– Cooperatives strategy• Initial research undertaken• Engagements held with NT• Further consultations with the dti and ILO• Draft concept paper on the social economy prepared• MOA drafted with academic institution

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Programme 3: Economic Planning & Coordination• Spatial, Sector and National Economic Planning

– National Economic Planning• Working with dti in fast-tracking IDZ policy approval• Developing package for Coega• Consulted with Eastern Cape Economic Development Dept

– Spatial Economic Development Action Plans• EDD held consultative meetings with the dti, COGTA,

DRDLR and NPC to understand criteria for intervention• Forum planned for 27 October to discuss criteria and

harmonise programmes• Participated in the National Planning Commission Spatial

Planning Seminar

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Programme 3: Economic Planning & Coordination• Spatial, Sector and National Economic Planning

– Coherence of Provincial and Local Economic Development Plans and Agencies

• MinMec held on 24 June• Focused on the Growth Path and IPAP2• Presentation made on Outcome 4 Delivery Agreement• Technical Minmecs held on 6 August and 13 September in preparation for

the MinMec• First meeting focused on the functioning of the MinMec and ways of

prioritising themes and projects for discussion at MinMec• Second meeting considered presentations on the Green Economy,

preferential procurement and IDZs• National and provincial agencies are invited to the MinMecs and Technical

MinMecs to align their work to the strategic priorities of government

– Sector Economic Development• Discussed under ENE

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Programme 3: Economic Planning & Coordination• Investment for Economic Development

– Development Finance Institutions• Engagement with DFIs and ERBs on 4 June• Entities required to review their strategic plans in line with the Growth Path

and IPAP• Special focus required on employment creation, green economy, youth

employment and cooperatives strategy• Prepared a dashboard of indicators for measuring performance of entities• Major engagement with the IDC on 3 September focusing on Green

Economy, agro-processing, spatial plans, IDZs • Undertook evaluation of entities’ revised strategic plans• Engaged with Khula and Samaf on corporate governance • Consultations held with NT on Khula Direct

– Investment and Development• The IDC and UIF launched a development bond of R2 billion on 14 April• R104 million committed for 12 companies creating or saving 736 jobs at

R142 000 per job

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Programme 3: Economic Planning & Coordination• Competitiveness and Trade for Decent Work

– Economic Regulatory Bodies• Engagement with DFIs and ERBs on 4 June• Entities required to review their strategic plans in line with the Growth Path

and IPAP• Special focus required on employment creation, green economy, youth

employment and cooperatives strategy• Prepared a dashboard of indicators for measuring performance of entities• Engagements regarding competition policy, the budget of the Competition

Commission, the Competition Amendment Act• Undertook evaluation of entities’ revised strategic plans

– Continental and International Interface• Major focus was State Visit to China from 21-27 August• Beijing Declaration finalised, three paragraphs from EDD• Minister met China Africa Development Fund and China Development Bank• Steps taken to prepare for workshop between Chinese and South African

Green Economy entrepreneurs and businesspeople

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Programme 3: Economic Planning & Coordination• Economic Development, State Budgeting

and Financial and Procurement Processes

– Budgeting and Financing• EDD has been engaging with the budget process

to ensure that the strategic priorities of the new Growth Path are prioritised

– Procurement• The Preferential Procurement Regulations

substantially revised to promote local production• Work done by NT, the dti and EDD

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Programme 3: Economic Planning & Coordination• Green Economy

– Engaged with the IDC, DEA, NT, DBSA and the ILO to promote the Green Economy

– Participated in interdepartmental work on the rollout of solar water heating, concentrated solar thermal, establishment of a Solar Park in Upington and developing sector strategies for labour-intensive sectors in renewable energy

– Database of Green Economy companies being developed– Aim to hold a workshop with SA entrepreneurs and business-

people and then a workshop with SA and Chinese Green Economy entrepreneurs and businesspeople

– China Africa Development Fund and China Development Bank have been engaged

– IDC and EDD has conducted research into Green Economy projects in the provinces

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Programme 4: Economic Development & Dialogue• National Social Dialogue and Strategic Frameworks

– Social Partnering and National Social Dialogue• Numerous engagements held including with HSRC, ILO, IMF,

DBSA, Cam clothing, Clinton Foundation, BNDES, pharmaceutical sector, metals bargaining council, working group on the social economy, NUMSA, Naledi

• 2nd Next Economy Social Dialogue on the economic lessons from the World Cup held on 19 July

– Implementation of Strategic Frameworks• Leadership Team on the Framework for SA’s Response to the

International Economic Crisis met on 26 April and 2 July• R1,265 billion committed for 12 companies in distress in Q1 and Q2• R104 million of UIF fund committed to 12 companies• 5532 workers trained or in training on the Training Layoff Scheme• 855 applications in process• Various engagements to promote implementation of the Framework• Rules of the Training Layoff Scheme amended to allow easier

access to the Scheme

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Programme 4: Economic Development & Dialogue• Sectoral and Workplace Dialogue

– Sector and Workplace agreements covered in ENE

• Capacity Building for Economic Development– Capacity Building of Social Partners

• 15 workshops held with the IDC to promote the Training Layoff Scheme and support for distressed companies

– Harnessing Economic Development Expertise• Minister appointed Economic Advisory Panel on 23 March• Panel met on 25 May and 14 July• First meeting presentations on Growth Path and IPAP2 as

well as SA and global economies• Second meeting with President Zuma

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ENE targets for 2010/11

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104Number of economic development agreements (sectoral, workplace and national) facilitated with social partners

1010Social dialogue and capacity building engagements

104Number of interventions in relation to promoting economic development through leveraging state expenditure and procurement

104Number of spatial plans produced or reviewed

53Number of sector plans produced or reviewed

R2bnR2bnValue of special financing facilitated for small businesses, targeted growth sectors and companies in distress

66Number of strategic engagements with development finance institutions and/or economic regulatory bodies

106Number of engagements with provincial and/or local government

103Number of policy platforms on economic policy challenges

107Number of policy and analytical papers on economic policy challenges

TargetQ1 & Q2Indicator

ENE annual targets (1)• Policy and analytical papers (7/10)

1. Growth Path document and summaries• Identifies jobs drivers, policy drivers, institutional drivers for decent work

and inclusive growth2. Discussion document on the social economy

• Research for a cooperatives strategy3. Discussion document on the knowledge economy

• Focus on innovation, research and development4. Discussion document on mining and beneficiation

• Draws on DMR, IDC and other research5. Discussion document on manufacturing

• Identifies interventions to improve the competitiveness of the sector6. Discussion document on the public sector

• Considers public employment schemes and the role of the public service7. Discussion document on agriculture and rural development

• Draws on work of DRDLR and DAFF, analysis of the spatial economy and the potential of various schemes to contrbute to rural livelihoods

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ENE annual targets (2)• Policy platforms on economic challenges (3/10)

1. 2nd Next Economy National Dialogue• Discussing the economic lessons of the Soccer World Cup• Speakers: Dr Danny Jordaan, Dr Nkosazana Zuma and Goolam

Ballim• Filmed for a documentary on the World Cup

2. Co-hosting of the Green Economy Summit• Co-hosted with Department of Environment Affairs• EDD presented a detailed assessment of the potential of the Green

Economy to generate employment opportunities• Highlighted the importance of social dialogue

3. EDD-ILO Workshop on the Construction Sector and the Green Economy• Identified high growth potential sectors including energy efficiency,

renewable energy, mobility, recycling, sustainable forestry and agriculture, environmental services and renewable materials

• The building sectors present significant opportunities to create green jobs

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ENE annual targets (3)• Engagements with provincial and local governments (6/10)

1. MinMec 24 June and Technical MinMecs 6 August and 13 September• Focus on Growth Path and IPAP2 and Outcome 4 Delivery Agreement

2. Minister and Deputy Minister visits to MEC Free State• On strategic provincial projects and SMMEs / cooperatives

3. MEC Eastern Cape on strategic infrastructure projects• N2 Wild Cost Toll Road, Coega IDZ, East London IDZ, biofuels and

forestry projects4. MEC Eastern Cape on an Eastern Cape Clothing Firm

• Intervention regarding potential retrenchments5. MEC KwaZulu-Natal

• Best practice on SMMEs and cooperatives6. Matzikama engagement with local government on small business

• Brought development finance institutions, banks, national, provincial and local government together with small businesspersons

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ENE annual targets (4)• Strategic engagements with DFIs and ERBs (6/6)

1. Engagement on strategic plans• Entities advised on amendments required and resubmitted plans

2. Meeting with DFIs and ERBs on 4 June• Presentation on Growth Path and outlined ways in which entities

should amend priorities to align with national priorities3. COTII

• All dti and EDD agencies addressed on the Growth Path4. Minister’s engagements with the IDC

• Engagement on 3 September to discuss the green economy, agro-processing, spatial plans, IDZs, China and the Middle East

5. Khula Direct• Discussed demand for loans and administrative costs

6. Competition Commission• Competition policy, Competition Amendment Act

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ENE annual targets (5)

• Special financing for small business, targeted growth sectors and companies in distress (R2bn/R2bn)– IDC and UIF development bond launched on

14 April

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• Sector plans produced or reviewed (3/5)1. Green economy

• Worked with IDC and DBSA to assess the employment potential of different elements in the green economy and to identify key policy interventions to achieve that potential

2. Agricultural value chain• Assessed the potential of the agriculture value chain for

employment creation and rural development

3. Steel sector• Supported the dti in developing a proposal for improved

steel pricing, identifying specific measures the state could use

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• Spatial plans produced or reviewed (4/10)1. N2 Wild Cost Toll Road

• Reviewed reports and developed a proposal

2. Bitou Municipality• In preparation for the Deputy President’s Anti-poverty

Campaign visit reviewed LED strategy, Spatial Development Framework and other economic interventions underway

3. Coega IDZ• Developed a package of measures for the IDZ

4. Atlantis• Reviewed LED Strategy of 2008 and work commissioned by

the City of Cape Town

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• Leveraging state expenditure and procurement (4/10)1. Procurement regulations

• Collaboration of NT, the dti and EDD to promote local production in state procurement

2. Pharmaceutical sector• Follow-up on roundtable exploring sector agreement

3. Fifa jerseys intervention• Assisted local firms to compete for a contract

4. Local stationery procurement project• Internally EDD promoting local production

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ENE annual targets (9a)• Social dialogue and capacity building

engagements (10/10)1. Cam clothing

• Engagements resulted in Workplace Social Dialogue Agreement

2. Leadership Task Team• Reviewed and drove implementation of the Framework

3. Clothing sector• ILO-SACTWU-AMSA workshop on productivity

4. Pharmaceutical sectors• Engagements towards a sector agreement

5. Solar Water Heaters• Workshop with key stakeholders including DOE, dti, SABS,

BUSA, Eskom, SESSA, Standard Bank and DBSA

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ENE annual targets (9b)• Social dialogue and capacity building engagements

(10/10) cont6. Procurement (Nedlac)

• Engagements at Nedlac on the Preferential Procurement Regulations

7. Electricity sector (Nedlac)• Engagement on section 77 submission on electricity prices

8. Eastern Cape Clothing Firm• Engagement with SACTWU and firm to avoid retrenchments

9. IDC workshops• 11 workshops on IDC funding and Training Layoff Scheme

10. Atlantis• Engagement with Atlanis Economic Development Task Team

(labour, community, business, provincial government, Wesgro, City of Cape Town)

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ENE annual targets (10)• Sectoral, workplace and national agreements

(4/10)1. Cam Clothing Agreement

• Engagements with Cam and SACTWU led to workplace agreement

2. Procurement agreement• Agreement on a number of areas at Nedlac

3. Training Layoff procedures agreement• Agreement on relaxation of the requirements to facilitate

access to the Scheme4. Agreement to establish a pilot project to build decent

work in the construction industry• Agreement reached at the EDD-ILO Green Jobs Workshop

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Financial Performance (1)

• Overview of Expenditure• Information is based on September 2010 IYM reports or section

40(4)of PFMA reports• Signed by the Accounting Officer and sent to National Treasury

• Total budget of R 418.6 million for 2010/11 financial year• Expenditure in the first six months of 2010/11 is R 171 million or

40.9% of the main appropriation of R 418 million

• Spending is marginally below the norm due to the high vacancy rate associated with the start up and initiation of operations in the new Department

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Table: 1 Total Economic Development Department

Act Act Act Act 2010/11

Per Programme QUARTER 1 QUARTER 2 YTD % Spent Main Appropriation

ADMINISTRATION 6,620 7,870 14,490 32.3% 44,802

ECONOMIC POLICY DEVELOPMENT 64 637 701 3.9% 18,150

ECONOMIC PLANNING AND CO-ORDINATION 92,517 63,296 155,813 45.2% 344,402

ECONOMIC DEVELOPMENT AND DIALOGUE - 0 - 0.0% 11,243

TOTAL 99,201 71,802 171,003 40.9% 418,597

Per Item Classification

COMPESATION OF EMPLOYEES 3,467 4,982 8,449 14.2% 59,457

GOODS AND SERVICES 2,314 3,581 5,895 16.5% 35,754

DEPARTMENTAL AGENCIES AND ACCOUNTS 92,517 63,101 155,618 48.8% 318,597

PAYMENT OF CAPITAL ASSETS 902 139 1,041 21.7% 4,789

TOTAL 99,201 71,802 171,003 40.9% 418,597

YTD EXPENDITURE


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• Actual spending for Programme 1 as at 30 Sept 2010 is R 14.4 million

Table: 2 Programme 1 (Administration)

Per Sub-Programme QUARTER 1 QUARTER 2 YTD % Spent Main Appropriation

MINISTRY 5,807 5,539 11,346 69.6% 16,292

OFFICE OF THE DIRECTOR-GENERAL 615 942 1,556 33.5% 4,640

GENERAL MANAGEMENT SERVICES 198 1,389 1,587 6.6% 23,870

6,620 7,870 14,490 32.3% 44,802

YTD EXPENDITURE


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• Expenditure for Programme 2 amounts to R 700 000

Table: 3 Programme 2 (Economic Policy Development)


GROWTH PATH AND CREATION OF DECENT WORK - 168 168 3.5% 4,789

ECONOMIC POLICY 64 468 533 8.1% 6,555

BROAD-BASED BLACK ECONOMIC EMPOWERMENT - - - 0.0% 4,738

SECOND ECONOMY - - - 0.0% 2,068

64 637 701 3.9% 18,150

YTD EXPENDITURE


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• Year-to-date expenditure for programme 3 is R 155.8 million of a budget of R 344.4 million

Table: 4 Programme 3 (Economic Planning and Coordination)


SPATIAL, SECTOR AND PLANNING - 195 195 1.6% 12,409

ECONOMIC DEVELOPMENT, FINANCING AND PROCUREMENT - - - 0.0% 3,806

INVESTMENT FOR ECONOMIC DEVELOPMENT 32,432 39,792 72,224 46.1% 156,634

COMPETITIVENESS AND TRADE FOR DECENT WORK 60,085 23,309 83,394 48.6% 171,552

92,517 63,296 155,813 45.2% 344,401

YTD EXPENDITURE


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• No spending to date for Programme 4 from budget of R 11.2 million• Under spending caused by officials in Programme 4 being

erroneously paid under Programme 1• This will be corrected on Persal allocations and journals

Table: 5 Programme 4 (Economic Development and Dialogue)


NATIONAL SOCIAL DIALOGUE AND STRATEGIC FRAMEWORKS - - - 0.0% 7,682

SECTOR AND WORKPLACE SOCIAL DIALOGUE - - - 0.0% 400

CAPACITY BUILDING FOR ECONOMIC DEVELOPMENT - - - 0.0% 1,710

PRODUCTIVITY, ENTREPRENEURSHIP AND INNOVATION - - - 0.0% 1,451

- - - 0.0% 11,243

YTD EXPENDITURE


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• Overview of Revenue• Revenue collection in first six months of 2010/11 is R 67.6 million• No comparison with 2009/10 as EDD is in its first financial year of

operation• Main revenue generator for EDD is fines from penalties from

Competition CommissionDepartmental Receipts

Act Act Act Act 2010/11

Departmental Receipts QUARTER 1 QUARTER 2 YTD % of Adj Est Main Appropriation

Sale of goods and Services - - - 0.0% -

Fines, penalties and forfeits 18,905 48,657 67,563 48.3% 140,000

Interest, dividends and rent on land 96 - 96 0.1% 90,000

TOTAL 19,001 48,657 67,658 29.4% 230,000

ACTUAL RECEIPTS 2010/11

Representivity of staff: race

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Salary level

White Black African Coloured Indian

1-12 13% 87% 63% 17% 6%

SMS 35% 65% 41% 24% 0%

Representivity of staff: gender and disability

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Salary level

Male Female Disabled

1-12 42% 58% 0%

SMS 47% 53% 0%

Concluding remarks• Measure of overlap of Strategic Plan activities and ENE outputs

• Good but uneven progress in implementation of the Strategic Plan

• Major constraint is lack of capacity to drive sub-programmes

• Slower spending linked to lack of staff capacity

• Recruitment a priority but procedures are time consuming

• Progress in relation to the ENE targets is solid

• Need to strengthen representivity at senior management level

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Economic Development 1 st and 2 nd quarterly report

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