Economic Development Department

Annual Report 2010/11

Presentation to the Portfolio Committee

11 October 2011

Presentation outline• Highlights from the 2010/11 Annual Report

– NGP and dialogue– Working with other departments– Engaging provincial and local government– Oversight of agencies– Green Economy– Retirement Conference– International work

• Key performance areas in the 2010/11 Annual Report– Policy and analytical papers– Policy platforms– Intergovernmental engagements– Engagements with DFIs and ERBs– Sector, spatial and national plans– Special financing– Leveraging state expenditure and procurement– Social dialogue and capacity building– Economic development agreements

• Corporate services

• Annual Financial Statements

• Concluding remarks

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Highlights from the 2010/11 Annual Report

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NGP and dialogue

• EDD drafted the New Growth Path (NGP) approved by Cabinet in October 2010

• Led social dialogue on key measures of NGP

• Engaged with various forums of government to align key aspects of work with the principles of the NGP

• EDD and DPME developing a system to measure the employment impact of government programmes and policies

• Promoted dialogue to save and create jobs at sector and workplace levels

• Held three meetings of the Economic Advisory Panel

• Held capacity building workshops with social partners

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Working with national departments• EDD, the dti and NT finalised the Delivery Agreement of Outcome 4: Decent

Employment through Inclusive Growth

• Worked with the dti and NT in proposing changes to procurement regulations

• Worked with Department of Energy and the IMC, finalised South Africa’s new electricity plan, the IRP2

• Worked with DMR on development of the beneficiation strategy

• Worked with DIRCO and DEA in preparing South Africa’s position for the Climate Change Conference of the Parties (COP 17)

• Worked with DOH on National Health Insurance

• Did initial work on the Youth Employment Strategy, economic inclusion and the social economy

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Engaging provincial and local government• Participated in the Anti-Poverty visits of Deputy President Motlanthe

• EDD engaged with provincial and local governments to align the provincial growth and development strategies and integrated development plans to the NGP

• Convened Economic MinMecs to discuss the NGP, IPAP2 and the Green Economy

• Initial work done on economic spatial perspectives as part of the envisaged regional economic planning framework

• Provided project facilitation support by intervening to address blockages hindering the progress of province-led projects

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Oversight of agencies• EDD assumed oversight responsibilities over six agencies

• Secured additional funding for agencies

• Worked with agencies to realign, where appropriate, their mandates to the employment-focus of government

• Merging the small business lending facilities of the Industrial Development Corporation (IDC), Khula and Samaf

• Participated in the Walmart/Massmart merger hearings convened by the Competition Tribunal

• Supported conditions for Kansai/Freeworld merger

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Green Economy

• EDD engaged in a number of government initiatives including COP 17 and the Upington Solar Park Initiative

• EDD completed a comprehensive research report on the efficiencies and opportunities presented by different solar energy generation technologies

• EDD collaborated with the IDC on various initiatives including a business plan for a Green Fund and concessionary financing

• EDD worked to resolve regulatory challenges faced by renewable energy, energy efficiency and waste management investors

• EDD hosted a Green Economy workshop on the construction industry, co-hosted the Green Economy Summit and hosted a Green Economy Business Forum

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Retirement conference

• Conference “Investing in the New Growth Path: Mobilising Savings/or Retirement Funds for Development” held on 18 February 2011

• Conference served as a platform for industry stakeholders to engage with the establishment of a viable financial instrument, such as the development bond

• Related stakeholder engagements took place between EDD and: the Government Employees Pension Fund, the Association for Savings and Investment South Africa and private sector players

• EDD also engaged the International Finance Corporation on Green Economy investment opportunities

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International work

• Deputy Minister Mahlangu-Nkabinde attended the Crans Montana Forum in Brussels on 7-10 April 2010

• Minister participated in the drafting of the Beijing Declaration (Comprehensive Strategic Partnership Agreement)

• Accompanied President Zuma on a State visit to Beijing in August 2010

• Minister participated in Bi-National Commission with China in November 2010

• Minister visited Saudi Arabia in December 2010

• Minister participated in the World Economic Forum in Tanzania in May 2010 and in Davos in January 2011

• Minister accompanied Deputy President Motlanthe on a working visit to the United States in March 2011

• Minister visited Oman and UAE from 7-10 May 2011

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Key performance areas in the Annual Report

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Policy and analytical papers

1. The New Growth Path document and summaries

2. Discussion document on the social economy

3. Discussion document on the knowledge economy

4. Discussion document on mining and beneficiation

5. Discussion document on manufacturing

6. Discussion document on the public sector

7. Discussion document on agriculture and rural development

8. Socio-economic assessment of Integrated Resource Plan

9. Review on the introduction of a fabric rebate

10.Alignment of B-BBEE and HRD with NGP

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Policy platforms

1. The 2nd Next Economy National Dialogue on lessons from the World Cup

2. EDD-ILO workshop on the construction sector and the green economy

3. Co-hosting of Green economy summit

4. Seminar on exchange rates

5. Policy Platform on Food Sufficiency

6. Green Economy Business Forum

7. Public Lecture by Prof Joseph Stiglitz

8. Seminar by Prof Joseph Stiglitz and Dr Jomo Kwame Sundaran

9. Discussion with the Mining Industry Growth, Development and Employment Task Team (MIGDETT) on implications of NGP for mining

10.Workshop on assessing the direct and indirect impact of the state on employment

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Intergovernmental engagements

1. MinMEC 24 June

2. MinMEC 14 October

3. Technical MinMECs 6 August and 13 September

4. Minister and Deputy Minister visits to Free State MEC

5. Minister engagement with Eastern Cape MEC on strategic infrastructure projects

6. Minister engagement with Eastern Cape MEC regarding an Eastern Cape clothing firm

7. Deputy Minister engagement with KwaZulu-Natal (KZN) MEC

8. Engagement with local government on small business (Western Cape)

9. Visit to Nkandla

10. President’s Coordinating Council

11. Engagement on strategy with Mpumalanga province

12. Engagement with Gauteng Provincial Government

13. Engagement with Tshwane Metro’s New Growth Path workshop

14. Presentations to the Ekurhuleni Metro’s Economic Development Department

15. Meeting with the Western Cape Department of Economic Development

16. Meeting with KZN on the New Growth Path

17. Meeting with the Eastern Cape provincial government on the New Growth Path

18. Meeting with the North West Province provincial government on the New Growth Path

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Strategic engagements with DFIs and ERBs

1. The DG and Minister engaged the agencies on their strategic plans

2. Meeting with all agencies on 4 June

3. COTII meeting on 30 June

4. Minister’s engagements with the IDC

5. Minister’s and Department’s engagements on Khula Direct

6. Minister’s engagements with the Competition Commission

7. Pioneer Foods settlement

8. Engagements with SOEs on the New Growth Path

9. Departmental engagements with the IDC

10.Khula Direct budget request

11. IDC Workshop with provincial and regional agencies

12.Quarterly dashboard reporting of public entities

13.Ministerial engagement with DFIs to discuss merger

14.Evaluation of entities’ strategic plans

15.Kansai/Freeworld merger

16.Walmart/Massmart merger

17.Agro-processing Competitiveness Fund budget request 15

Sector, spatial andnational plans

• Sector plans

1. Green economy

2. Agricultural value chain

3. Steel sector

4. Sector assessment of the clothing and textile industry

5. Report on SKA for the Northern Cape Province

• National economic planning processes

1. National Industrial Development Zone Policy

2. Engagement with DOE on energy

3. Land Use Management Bill

4. Engagements with SOEs

• Spatial Plans

1.N2 Wild Coast Toll Road 2.Bitou Municipality3.Coega IDZ4.Atlantis5.Ntunda 6.Economic Spatial Perspective7.The Greater Taung Municipality8.Peace Island9.The Matzikama Municipality

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Special financing

• Value of special financing for small businesses , targeted growth sectors and companies in distress

Target: R2bn

Achieved: R3,097 bn

 

IDC distress funding: Value: R2,096bn

Jobs saved: 12 182

No. of Companies: 43

 

UIF Fund (excluding funds used for distress funding): Value: R1,001bn

Jobs Saved: 11 847

No. of companies: 48

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Leveraging state expenditure and procurement

1. New procurement regulations

2. Engagements with pharmaceutical sector

3. Local stationery procurement project

4. Local procurement of textiles

5. Engagement with SABS

6. The implications of the NGP on intergovernmental fiscal relations

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Social dialogue and capacity building

1. Company-level dialogue

2. Leadership Task Team

3. Clothing sector

4. Solar Water Heaters

5. Procurement (Nedlac)

6. Electricity sector (Nedlac)

7. Eastern Cape Clothing Firm

8. Atlantis

9. Engagement with the Human Sciences Research Council (HSRC) on the social impact of the downturn

10.Dialogue with the Metals and Engineering Industry

11.Dialogue with a company regarding the Training Layoff Scheme

12. Dialogue with the construction sector13. Engagement with the Furniture

Industry14. Meetings with manufacturers and the

dti on Green Economy15. Meeting with the Eastern Cape Socio-

Economic Consultative Council16. Meeting with the Solar Photo Voltaic

(SPV) Industry Association17. High level engagement with social

partners on the NGP 25 November 2010

18. High level engagement with social partners on the NGP 8 February 2011

19. Clothing Accord20. MEIBC engagement

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Economic development agreements

1. Clothing agreement

2. Procurement agreement

3. Training layoff procedures agreement

4. Agreement to improve coordination on the Framework agreement

5. National Agreement on the Training Layoff Scheme

6. Agreement on a pilot project to build decent work in the construction industry

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Corporate services

• EDD assumed responsibility for its finances, supply chain and human resource management and put the necessary systems in place

• EDD underwent first full audit by the Auditor-General and achieved an unqualified audit

• The internal audit function was established and the Audit Committee was established and was functional towards the end of the financial year

• Various committees were established: Bid Adjudication Committee, Training Committee, Employee Health and Wellness Committee and Moderating Committee

• As at 31 March 2011, 90 staff had been appointed, 15 of whom were due to commence work on or after 1 April 2011. 4 officials were seconded from other government departments. There were 37 males (41%) and 53 females (58%) in the employ of EDD.

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Staff complement as at 31 March 2011

Programme Number of funded posts

Number of filled posts

Number posts additional to the establishment

Administration 61 53 3

Economic Planning and Coordination

28 15

Economic Policy Development

22 13

Economic Development and Social Dialogue

13 9 1

124 90 4

Annual Financial Statements

• The information presented is based on 2010/11 Audited Annual Financial Statements

• The Auditor-General expressed an unqualified audit opinion on the 2010/11 Annual Financial Statements

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Overview of expenditure

• The total adjusted budget for 2010/11 financial year was R 449.8 million

• Expenditure for 12 months of 2010/11 is R 400.6 million or 89% of the adjusted appropriation

• Excluding transfers expenditure was R 44.2 million or 48% of adjusted appropriation of R 91.3 million

• No comparison with 2009/10 as EDD as a Budget Vote was in its first financial year of operation

• Compensation of employees a major cost driver which accounts for lower expenditure

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Overall expenditure

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Table: 1 Total Economic Development Department

Act Act 2010/11 2010/11

Per Programme 2010/11 % Spent Main Appropriation Adjusted Appropriation

R'000 R'000 R'000

ADMINISTRATION 35,044 78% 44,802 45,127

ECONOMIC POLICY DEVELOPMENT 6,647 39% 18,150 17,101

ECONOMIC PLANNING AND CO-ORDINATION 358,527 95% 344,402 376,900

ECONOMIC DEVELOPMENT AND DIALOGUE 456 4% 11,243 10,712

TOTAL INCL. TRANSFERS 400,674 89% 418,597 449,840

TOTAL EXCL. TRANSFERS 44,214 48% 100,000 91,380

Per Item Classification

COMPESATION OF EMPLOYEES 25,167 46% 59,457 54,273

GOODS AND SERVICES 14,714 46% 35,754 32,318

DEPARTMENTAL AGENCIES AND ACCOUNTS 356,460 99% 318,597 358,460

PAYMENT OF CAPITAL ASSETS 4,333 90% 4,789 4,789

TOTAL INCL. TRANSFERS 400,674 89% 418,597 449,840

TOTAL EXCL. TRANSFERS 44,214 48% 100,000 91,380

2010/11 EXPENDITURE

Rollovers requested

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Rollovers• EDD had requested rollovers amounting to R 35.1 million• Only R 3.3 million was approved for rollovers• Rollovers were requested for the following:

Amount

Program R' 000 Comments

Water Affairs: Working for Water Project 8,000 Not approvedBoitumelo prep costs: EDD office accomodation 3,000 Not approvedWits University: Economic Capacity Building Course 2,000 ApprovedDeneys Reitz Attorneys (Walmart/Massmart case) 1,300 ApprovedCommitments outstanding (Capital and Goods & Services) 750 Not approvedSADC-EAC-COMESA Tripartite Summit (EDD,DTI,NT) 20,000 Not approved

Total 35,050

Total Rollovers Approved 3,300

Overview of revenue

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• Revenue collection for 2010/11 totaled R 547 million• Main revenue generator for EDD is fines and penalties from

Competition Commission• Revenue projected exceeded as a result of Pioneer Food settlement

among others

Departmental Receipts

Act Act 2010/11

Departmental Receipts 2010/11 % of Main App Main Appropriation

R'000 R'000

Sale of goods and Services 3 0% -

Fines, penalties and forfeits 489,337 350% 140,000

Interest, dividends and rent on land 57,897 64% 90,000

TOTAL 547,237 238% 230,000

ACTUAL RECEIPTS 2010/11

Concluding remarks

• EDD has achieved much in its first full year of operation

– Finalised, consulted upon and implemented the New Growth Path– Met or exceeded most targets set in the Annual Performance Plan – Played a critical coordination role between national departments and

with provincial and local government, especially in key areas of energy, green economy, water and environment

– Completed important work in policy and developed plans– Ensured that its entities are aligned to the policy thrust of job creation– Created and saved jobs through the work of the IDC, Khula and

samaf and Social Dialogue– Engaged competition authorities on public interest issues– Established its corporate services and ensured a clean audit

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Siyabonga