EDD Presentation on the 2nd Quarter 2016/17

Presentation to the Portfolio Committee

Economic Development

15 November 2016

The report covers the period 1 July 2016 to 30 September 2016 unless otherwise stated.

Quarter 2 refers to the same period

1

Overview • New economic context: slower growth on the

continent

• Highlights from the Department‟s Report for the

quarter

– Infrastructure: biggest gas storage facility

– Manufacturing: new vehicle assembly plant announced

– New industries: investment in film sector

– Local economic development: example of Sutherland

• Standard report on KPIs

• Focus on human resources

• Standard report on finances

2

Hole in the Wall

3

BUT first, a promise to

the Portfolio Committee

Stunning areas - but infrastructure and marketing

could be improved.

4

Activities at Hole in the Wall

Hole in the Wall has a hotel, self catering accommodation

and a back packers lodge

BUT difficult to access

Getting to and staying at Hole in the Wall

Economic Context – additional data

5

154

156

158

160

162

164

166

168

170

172

Jan Feb March April May June July Aug Sep

Manufacturing Sales, Current Rand Bn, Jan-Sept 2016, Seasonally Adjusted

Retail Sales, Current Rand Bn, Jan-Sept 2016, Seasonally Adjusted

The latest available employment and GDP data was presented to the PC recently. New labour market data is expected to be available shortly. Additional economic data is

included above.

72

73

74

75

76

77

78

Jan Feb March April May June Jul Aug

• Since 2000, growth rates on the African continent have been

faster than global averages, driven by expanding commodity

demand, rising urbanisation and growing investment levels. SA

focussed on strengthening economic links with the rest of the

continent: trade, outward investment and infrastructure links are

being upgraded.

• BUT African growth is now slowing sharply. Major economies

are faced with lower commodity prices and demand, impacting

on economic performance.

• It raises the issue of the African growth path dependency on

mineral exports and the need to speed up economic

diversification.

• South African growth will be affected by weaker continental

growth.

6

Focus 1: New African context

The African growth and integration story

Trade with the

continent

2010: 19% of total trade

2015: 22% of total trade

7

Africa: contributor to SA

economic development

Biggest contributor to SA

export jobs: 240 000

Forex earner through positive

trade balance: R184bn

Africa: now our largest

export market, 2015

Africa: R276bn (31%)

Asia: R258bn (29%

Europe: R192bn (22%)

Americas: R 85bn (9%)

Africa: main export market for key SA products

Cars and Trucks: 26%

Machinery and mechanical appliances: 52%

Electrical machinery and equipment: 64%

Plastics: 76% Light trucks: 34% Tubes, pipes, hoses: 96% Washing machines: 99% Machine tools: 89% Medical instruments: 80% Milk 99% Suits 98%

Oil importing sources.

2005 2015

1. Saudi Arabia 39% Nigeria 54%

2. Iran 35% Saudi Arabia 18%

3. Nigeria 10% Angola 14%

4. Angola 5% UAE 4%

5. UAE 4% Kuwait 3%

• Other African countries – now our largest sources of imported oil

• 2005: Nigeria and Angola accounted for 15% of crude imports

• 2015 Nigeria & Angola accounted for 68%, displacing oil sourced from Middle east

SA presence

8

2015: Main Imports and Exports: Rest of Africa, and Top Product for Each

Export Import

1. Namibia (Trucks) Nigeria (Crude Oil)

2. Botswana (Refined Oil) Angola (Crude Oil)

3. Zambia (Refined Oil) Mozambique (Liquefied Natural Gas)

4. Mozambique (Electricity) Swaziland (Aromas for Food or Drink)

5. Zimbabwe (Soya Bean Oil) Namibia (Cattle)

SA retail stores in rest of

Africa including franchise and Group

Pick n Pay: 98

Shoprite: 401

Woolworths: 86

PEP Group 488

STANDARD BANK IN AFRICA

Angola Malawi Swaziland

Botswana Mauritius Tanzania

DRC Mozambique Uganda

Ghana Namibia Zambia

Kenya Nigeria Zimbabwe

Lesotho

E&Y 2013 Attractiveness Survey found that South

Africa has created almost 46 000

cumulative jobs through foreign direct investment in African

since 2003

SA initiative - Guidelines for Good Business Practice for SA companies operating on the continent

EDD agencies IDC Investments Rand Millions, 2015

1. Mozambique R 4 540

2. Ghana R 1 569

3. Uganda R 1 503

4. Zimbabwe R 1 172

5. Namibia R 1 134

6. Zambia R 1 052

7. Kenya R 897

8. Senegal R 691

9. Tanzania R 638

10. Nigeria R 577

11. Togo R 411

12. Sudan R 361

13. Ethiopia R 299

14. Botswana R 231

15. Mali R 190

16. Congo R 168

17. Ivory Coast R 154

18. Malawi R 136

19. Rwanda R 96

20. Lesotho R 2

TOTAL R 15 824 9

Selected IDC projects on the continent Cement plants in Namibia, Ethiopia and Mozambique

Airport and port in Senegal Energy in Angola, Ghana and Zimbabwe

Hotels in Mozambique, Zimbabwe, Uganda, Nigeria. SEE MAP ON NEXT PAGE.

Competition Commission on the continent - Member of the African Competition Forum

- Support for Namibia with Walmart transaction - MoUs with Kenya, Namibia and Mauritius

ITAC manages tariffs on behalf of Botswana, Namibia, Lesotho and Swaziland. ITAC provides trade policy support

and capacity building to other African countries, which recently included week-long sessions on the trade legal framework and instruments in Zimbabwe and Ghana

MOZAMBIQUE • Mining & Beneficiation • Agro-processing • Energy • Forestry • Transport equipment • Tourism • Cement

NIGERIA • ICT • Cement • Media • Hotel

GHANA • Energy • Hotels &

Accommodation • ICT

TOGO • Financial services •Transport

NAMIBIA • Agric. / agro-processing • Mining •Metal products •Financial services • Cement •Energy

BOTSWANA • Hotel &

Accommodation

MALAWI • Food and

Agriculture • Franchising

(Tool Hire)

SUDAN • Infrastructure (Water)

KENYA • Energy (Wind) • Sugar • Financial

services

UGANDA • Hotels &

Accommodation

• Infrastructure

TANZANIA • Sugar

MAURITIUS • Communications

ZAMBIA • Storage

and warehousing

• Healthcare • Energy • Mining • Metal

products • Chemicals

SWAZILAND • Basic chemicals • Wood products • Agro-processing • Financial services

D.R. CONGO • Mining • Franchise

(Fast Foods)

LESOTHO • Energy

ANGOLA • Energy

ETHIOPIA • Agro-

processing • Cement

ZIMBABWE • Mining • Telecommunication

s • Energy • Financial services • Healthcare • Metal products • Plastic products

Sierra Leone • Bio-Energy

SENEGAL • Airport • Port

development

Côte d’Ivoire • Financial

services

MALI • Wood

products

RWANDA • Wood and

wood products

The IDC’s rest of Africa portfolio (as at July 2016)

Over the last 15 years, Africa grew faster than the world economy. But now it has slowed sharply, below global averages.

Real GDP % Change, 2000-2015, World and Sub-Saharan Africa

The most recent forecast has revised Sub-Saharan growth downward for 2016 to 1.4%, significantly lower than the global 2016 rate of 3.1%. For 2017 and 2018, growth forecasts are also lowered, at 2.9% and 3.6%. The 2016 result will in all likelihood be the lowest growth in 2 decades.

Africa: fast growth sharply down…

11

-2

-1

0

1

2

3

4

5

6

7

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

South Africa

World

Sub-Saharan Africa

12

Our top 5 export destinations: Have all had growth forecasts cut for 2016 Are all expected to have higher rates of growth in 2017, except Zimbabwe Forecast growth

Country 2016 2017

Namibia 4.2 5.3

Botswana 3.1 4.0

Zambia 3.0 4.0

Mozambique 4.5 5.5

Zimbabwe - 0.3 - 2.5

Biggest economies struggle Nigeria: projected to be in recession in 2016, followed by slow growth (0,7%) next year Angola: growth expected to be zero this year, and 1,5% next year Egypt: currency has been devalued on 4 November and is now roughly 50% of its previous level. Country went to IMF for a $12bn loan.

The continent needs to break from reliance on oil, mineral and agricultural exports. This requires a new growth path based on deepening manufacturing, more processing of raw materials (mining and agriculture), stronger domestic and regional markets and larger, more productive services sectors.

Opportunities:

- World’s fastest urbanisation: cities as engines of growth, productivity and consumption

- Youthful population and workforce projected larger than China and India by 2034*

- Regional integration: build larger markets for local manufacturers and industrialisation

- Cross-border infrastructure investment

- Coordinated tourism campaigns

- Agricultural productivity gaps that can be closed

- Action against corruption, illegal financial flows offshore and tax evasion can generate resources for investment and social services

- Technology can support rapid development, improved connectivity, increased access

- Action to address social inclusion is a source of growth

Africa’s new growth path…

13

• Angola is a potential market for increased SA manufacturing exports

• SA generally has a large negative trade balance with Angola: exports are limited, whilst we import large amounts of crude oil from Angola

• For example:

– We make up only 4.5% of Angola’s imports of cars

– We make up only 15% of Angola’s imports of trucks

14

2013 2014 2015

Trade Balance (Rands Bn)

- 9.2 - 10.5 - 7.8

Crude Imports (Rands Bn)

18.6 21.7 15.3

-20

-15

-10

-5

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bill

ion

s

South Africa's Trade with Angola in ZAR 2006-2015

Trade balance Total exports Total imports

Case-study: Angola and SA

Trade Balance and Crude Imports:

Angola-SA, 2013-2015

Trucks ZAR 000 (2015)

1. China 368 439

2. South Africa 241 373

3. Qatar 151 863

4. Portugal 133 053

5. Brazil 99 707

Angola imports car from:

ZAR 000s (2015)

1. Korea 275 873

2. USA 272 283

3. Qatar 245 216

4. China 219 450

5. India 180 199

9. South Africa

94 444

0

500

1000

1500

2000

2500

Portugal Brazil SA

US

$m

illo

n

Imports and exports to and from Angola by SA, Portugal & Brazil, 2015

Exports to Angola

Imports from Angola

These statistics show that Angola continues to have a stronger trade relationship with Portugal than with

South Africa, particularly on the import side, with larger value of Portuguese-made products finding their way

into Angolan markets. This represents an opportunity for South African exporters given our location advantage.

Angola’s main imports from Portugal 1. Wine 2. Medicine 3. Furniture 4. Sausages 5. Beer 6. Industrial structures

16

EDD and agency interventions: • Ministerial oversight visit to construction of one of the

largest gas storage facilities in Africa, in Saldanha (funded by IDC)

• Progress with market inquiry into Liquid Petroleum Gas (LPG) looking at structural features of the market; limited usage of LPG at household level

• Facilitated investment for a woman entrepreneur to develop a high technology LPG Cylinder Plant

Background: • A major supply source of SA gas is the oil refineries which are

aging infrastructure. SA is also dependent on gas imports • Gas is used increasing in industry, synthetic fuels and households • Bottlenecks to increasing supply include: import and storage

facilities, refinery shutdowns, and wholesale licence requirements and price monitoring and review of methodology

Product Initiative to secure gas supply by developing storage facilities for imported gas in Saldanha

14 700 tons gas cylinders imported 2015

Estimated to be 1 600 000 cylinders imported 2015

2,9 million tons gas imported in 2015

26% increase in gas imported (by tons) in 5 years

560 200 households use gas for cooking

Focus 2: infrastructure Gas pipeline and storage

The LP Gas Value Chain

17

Refinery

Logistics

Gas Bottle Manufacturing

Gas Bottling Plant

Bottled Gas Distribution

Cooking Heating

Imports

Depot/ Bulk Storage

SUPPLIER/ INDUSTRY SIDE

WHOLESALERS/ RETAILERS

18

Product

Ministerial visit to gas pipeline and new infrastructure

The SIP 5 Coordinator held an alignment session with the Western Cape government to review the SIP 5 Business Plan, on 24 August 2016

Product

Initiatives or meetings facilitated on SIP 5 What else to add?

Sunrise LPG Gas Terminal Project

South Africa is constructing one of the

largest gas terminals facilities in Africa.

This new infrastructure contributes to our:

• Security of energy supply

• Developmental agenda

• Environmental concerns

• Regional integration

Number of households able to benefit:

– 785 700 in phase 1

– 2 357 000 when complete

20

Product

Initiatives or meetings facilitated on SIP 5

The Competition Market Inquiry

completed its preliminary report

and during the quarter engaged

stakeholders. A copy of the

preliminary findings were

published. A summary of some

key findings is contained in the

next slide. Further details will be

provided in the next quarter.

SA is using more gas . We used:

• 132 million Gigajoules in 2010

• 170 million Gigajoules in 2013

• 120 million Gigajoules used by

Sasol each year making synfuel

21

Preliminary Findings and Recommendations of the LPG Market Enquiry The Market Enquiry made preliminary findings and recommendations in 4 areas with a request for submissions on them and how they could be implemented. Below are highlights and examples of recommendations

1. Long term supply agreements Finding: Wholesalers with long term supply agreements from refineries have a competitive advantage Recommendation: Reduce the length of supply agreements or cancel automatic renewal clauses in long-term supply agreements

3. Sale of LPG through cylinders Finding: Cylinder exchange practice may lead to anticompetitive behaviour and is open to abuse Recommendation: Abolish cylinder exchange programme amongst wholesalers (in its current form); customers fill at LPG filling sites – number to be expanded

2. High cost of switching Finding: switching by bulk users is not seamless e.g. problems in relation to the existing supplier removing equipment Recommendation: Have clear and transparent agreements on the cost and use of LPG equipment and another agreement on the supply of LPG

4. Regulatory environment and limited domestic supply Finding: Refinery shutdowns exacerbate limited domestic supply Recommendation: Competition Commission requested input on how shutdowns can be better managed to ensure supply & whether it is feasible to create a strategic reserve of LPG

22

Product

Initiatives or meetings facilitated on SIP 5

Sunrise LPG Gas Terminal Project

Constructing the LPG Gas Terminal • Pipes are welded together into lengths of 156m.

The pipes are large – 300 mm in diameter. • Once welded together, a barge pulls them out to

sea. The pipe is covered in concrete to weigh it down and stop it from floating.

• Once it is in its final position in the sea it will be covered with a rock filling

• The total length of the pipe in the sea will be 3,2km

• Total pipe length overland is 2,1km • All pipes are constructed locally – about R200

million – creating jobs and stabilising the steel value chain

• 400 people are employed during the construction phase and approximately 95% are from the local area

Key facts: • Allows for importing 17,500 tons

of LPG per month • Storage capacity: 5 500 tons • Project cost: R1 bn • Phase 1 complete date: 2017 • Build is modular – additions can

be made to respond to growth in demand

• Ultimate throughput capacity: 52 000 tons per month

• Ultimate storage capacity: 16 000 tons

•

Shareholders: • Mining Oil and Gas Services

(subsidiary to Royal Bafokeng) 60%

• IDC 31% • Ilitha Group Holdings (IGH) 9%

Case study: Investing in localisation

• Government support has re-

established South Africa‟s cylinder

manufacturing

• SA had lost its capacity to make

cylinders with closure of the last major

plant in 1990

• Manana Bogatsu, a black women

industrialist, has an IDC-loan to build

an advanced LPG cylinder

manufacturing plant in Coega, Eastern

Cape.

• The plant will at peak produce 500 000

to 1,5m cylinders per year

• The project partnered with a Turkish

cylinder manufacturer for access to

best technology

23

R170 million

IDC funding

approved in 2015

174 permanent

jobs will be created

• Local Film industry contributed R3.5 billion to GDP and created the

equivalent of more than 25 000 full time jobs

• Encompassed over 2 500 direct service providers

• South African Film Industry has an economic multiplier of 2.89 Source: SA Film Industry economic baseline study, 2013. NFVF

24

Developed the film value chain:

• Pre-production / development

• Production

• Post-Production

• Marketing and distribution

• Plus for SA: localisation & procurement

Focus 3: Film industry

Government has supported a thriving film industry that:

- creates local jobs and earns export revenues,

- helps South Africa to tell our own stories,

- renews urban areas and

- develops and showcases our talent and country to promote tourism.

25

Key government measures supporting investment in

the film industry:

1. IDC: funding for producing feature films, television

shows, animation and documentaries as well as

focus on emerging black filmmakers and studios

2. DTI incentives:

• Foreign Film and Television Production and

Post-Production Incentive: attract foreign-

based film productions to shoot in SA

• South African Film and Television Production

and Co-Production Incentive: assist local film

producers in producing local content

3. National Film and Video Foundation, agency of

the DAC, funds film & documentary production

4. Tax incentive – Section 24 F of the Income Tax

Act, grants a deduction of the production cost of a

film to the film owner

Provincial and local government

initiatives:

• Gauteng Film Commission

• Western Cape Destination Marketing,

Investment and Trade Promotion

Agency

• KZN Film Commission

• Eastern Cape Film Office

Investment in the film industry

• EDD gave strategic direction to the IDC, mobilising

the funding for new industries

• Since 2001, the IDC has approved funding of R1.2

billion to produce 83 films

• 37 of these films were produced and/or directed by

Black Filmmakers

• The IDC launched the Emerging Black Filmmakers

Transformation Fund (EBFTF) in July 2014, with the

dti and the National Film and Video Foundation

• This Fund specifically targets new local black entrants

to the film and production industry

IDC Investment in the film industry IDC total

approvals for

media and motion

pictures 2015/16

6 films funded

5 black directors

5 black

producers

R45.8m disbursed

3 youth

shareholding

SECTION BREAK HEADER

27

IDC Funded Films Films made in South Africa

28

In October 2016, the Minister officially launched a

new film studio in Joburg – Sky Rink Studios. It is

located at the top of the Carlton Centre. The

development helps to advance a number of goals

• Job creation: 150 permanent new jobs and 450

part-time jobs

• Telling our stories: it expand the film-

infrastructure for local film-makers.

• Urban renewal: it helps to develop the Joburg

inner-city and is part of a wider city rejuvenation

plan.

• Building African infrastructure: the facility can

also be used for television shows for other

African countries and discussions are taking

place with Kenya and Rwanda TV stations

Launch of new Sky Rink Studios in Johannesburg

The idea was developed by Mr

Frank Mohapi – to address

shortage of studio filming

facilities in Gauteng

EDD introduced him to City Of

Joburg to include the Sky Rink

project in their inner city

development plan. IDC

approved R 187 million

Minister at launch

• R1,6 bn attracted in

2015/16 by City of

Johannesburg’s

tax incentives for

urban renewal

• 52 buildings will

benefit

• R14 billion attracted since

2004

• Carlton Centre currently

attracting

investment

Johannesburg inner-city urban renewal

SECTION BREAK HEADER

IDC investments helped to build critical film

making infrastructure in Cape Town and Gauteng

Cape Town Film Studio

• R70 million to construct a flexible,

double stage for TV and feature film

production

• R14 million to construct the water tank

facility

• Highlight of achievements:

• Successfully hosting the adventure

drama series “Black Sails”.

• Attracting large productions such as

• Safe House

• Mad Max: Fury Road

• Long Walk to Freedom

• Judge Dredd

Benefits of support for the film

industry:

• Job creation

• Cape Town Film Studios created

77 500 temporary jobs (Black

Sails TV series and 19 film

productions job opportunities)

• Youth jobs (a third of those

employed are youth)

• Showcases SA tourism

• Establishes SA as a destination

for film making

• Helps reclaim our culture and our

stories

• Helps reclaim our cities

• Spurs innovation & job creation in

other sectors

Long Walk to Freedom created 294

temporary crew jobs and 11 974 cast and

extras temporary jobs

Film funding: some examples the dti funding: 2011/12 to 2015/16

• Total investment approved R2.8

billion

• Number of productions 478

the dti FY 2015/16

• Investment approved R839 million

• Number of productions 115

NFVF has invested R527 million

between 2010 to 2013

73 NVFV projects approved in

2015/16 for filmmaker support -

63% blacks and 41% female

R27 million by NVFV in 2015/16

created:

Direct employment 884

Indirect employment 443

NFVF funded Ayanda in

2015/16 – female producer,

directed and produced by

young black team.

“Of Kings and Prophets”

KZN film commission • KwaZulu-Natal Film Fund, launched

in 2014 has approved 85 projects

• The fund secured 3 local major

productions that shot in the province

in 2015 and 2016 - Beyond The

River, The Number, and Keeping

Up with the Kandasamys.

Qhude Manikiniki is a

13-part reality series that

exposes the

undiscovered world of

Maskandi super-star

artists; their power,

influence and larger than

life characters.

Known as the King of the

Zulu guitar, Madala

Kunene, the documentary

follows Madala's journey

from KZN, living through

forced removals and the

atrocities of the apartheid

regime, to being booed off

stage at an ANC youth rally

by commercially hungry

youths.

DRAFT PRESENTATION: NOT FOR QUOTING OR DISTRIBUTION

34

Product

Fast tracking and unblocking of investment in the

auto sector

Planting the seeds

2009 : Global economic crisis New Growth Path

2010: State visit to China

2014: IDC started exploratory talks with BAIC – testing appetite

2015: China state visit to SA

Agreement signed by President of BAIC & IDC

August 2016: Sod turning BAIC Automotive Assembly plant in the Coega IDZ

Commitment to partner to

industrialise SA & expand China’s investment in manufacturing

1st new light

passenger vehicle

assembly plant

built in SA in more

than 40 years

26 agreements

signed valued at

R94 billion

Focus 4: Auto investment

BAIC sod-turning event

KPI 4 1st phase of BAIC investment

• R4.3 billion will be invested in the

first phase

• 2 500 jobs will be created in the

construction of the plant

• 784 permanent jobs will be created

during the first phase of the project

2nd phase

• R6.7 billion invested in the second

phase

• 2 500 jobs will be created by 2023

• At full capacity the plant will

produce 100 000 vehicles per year.

40% of these will be for the

domestic market and the rest will

be exported

Significance of BAIC investment Initiative: Marks a move

away from export of raw materials to China, to inward

investment into SA.

R4,3 bn investment

37

Product

Fast tracking and unblocking of investment in the auto

sector KPI 4

Case study: Coega IDZ promotes SMME

development in the promotion of the auto

sector

• Site preparation was needed before

building could begin for BAIC investment

• This included – clearing the land and

preparing it for construction

• Instead of one large contractor, the project

was split into six contracts worth R3

million in total. Workers clearing the land for construction

The Automotive Production and Development Programme

(APDP) is a government’s programmes to support and

develop SA’s automotive industry.

It consists of 4 pillars:

1. Stable import tariffs

2. Vehicle assembly allowance

3. Production Incentive

4. Automotive Investment Scheme (AIS)

Current developments:

discussion with

component

manufacturers on

sourcing locally.

Construction may start

as early as mid-January

2017 if no delays occur

38

Sutherland: A small town with two divergent stories:

Home to advanced scientific work:

• Location of the largest telescope in the southern

hemisphere

• Conducts research in astronomy and astrophysics

• Part of the National Astrophysics and Space Science

Programme – developing South African astronomers

• 4 PhD students (2 female and 2 black males), 2

Postdocs employed, further 6 postdoc positions

Place of social exclusion

• 62% of households have a monthly income of R3 183

or less (2011)

• Over 60% of households use pit toilets

• 28% use wood as main source of energy for heat

• 28% use candles as main source of light

• 80% of households have no access to internet Ouma Blaauw

with Councillor

Anthony Meitas

Pit latrine – emptied by

hand – that Ouma Blaauw

is afraid to use

Focus 5: Local economic

development

39

Product

Local economic development KPI 16 Intervention – Ministerial visit to support investment in local and

township economies

The Minister undertook a site visit on 15 July 2016 and did an evaluation of

local economic development in Sutherland. The following was undertaken

as a result:

1. 52 people attended an EDD organised Economic Roadshow in

Sutherland on 28 September 2016.

2. Support received from:

SARS, sefa, seda, South

African Astronomic

Observatory, Municipality,

EDD and Department of Environmental Affairs

40

Product

Local economic development KPI 16

Outcomes of the Economic

Roadshow included:

1. Two Black Owned Bed and

Breakfast (B&B) now:

registered with CIPC, EDD

and Department of Tourism -

assists with Tourism Grading

Advertising in NRF

Newsletter

2. Two women-owned co-

operatives will participate in the

Working for Water Invasive

Plants Programme

EDD organised Economic Roadshow

focus areas:

• Development of business plans

• Assistance completing funding

applications

• Assist with tax compliance

• Identifying & facilitating mentorship

requirements • Assisting with business registration

41

Product

Local economic development KPI 16

3.SARS assisted 57 taxpayers (including walk-ins):

• 14 tax clearance certificates issued

• 41 tax returns submitted

• 2 new tax registrations

4.seda registered a woodcutting and farming

business Companies and Intellectual Property

Commission (CIPC), and is working on business

expansion plans

5.sefa conducted site visit to the woodcutting and

farming business after the roadshow

6.The Municipality registered its first supplier from

this initiative on its supplier database to do routine

maintenance work on municipal vehicles

42

Product

Local economic development

7. SAAO (NRF) – fixed, for free the Community Health Centre washing

machine and drier

8. MEC Health – delivered surgical gloves following Ministry enquiries.

The Community Health Care Centre did not have surgical gloves

9. Economic Development Ministry collected 100 books and donated it

to Sutherland Community Centre

Key Performance Indicator

1. Unqualified audit report

2. Measured improvement in support services to Strategic

Objectives 2,3,4,5 & 6 and the Ministry, as quantified by

users

Programme 1: Administration

43

Strategic Objective 1: Provide strategic guidance to the Department; and

technical and administrative support to the Ministry and the Department to

achieve strategic objectives 2, 3, 4, 5 and 6

• 2015/2016 Annual Report finalised and tabled on 26 September

2016

• An Unqualified Audit Opinion was received.

• Audit findings are included in a “Heat Map” for resolution and

implementation. The “Heat Map” is reviewed fortnightly.

• Repeat audit findings were reduced by 80% (10 to 2) compared to

previous financial year (2014/15).

• Audit Committee meetings held on 25 July 2016 and 25 August 2016.

44

Key Performance Indicator

1. Unqualified audit report

2. Measured improvement in support services to Strategic Objectives 2,3,4,5

& 6 and the Ministry, as quantified by users

Programme 1: Administration

• AGSA requested an change in reporting on predetermined

objectives & evidence collection. Workshop held with AGSA on 21

September 2016 to clarify findings and on SMART KPI‟s for

2017/18 APP.

• Preparation for 2017/18 APP started

• Responses to internal survey evaluating support functions

analysed. Improvement plans are being developed for

implementation in Q3

Key Performance Indicators

3. Number of reports and reviews on NGP framework, integration into economic

policy and infrastructure programmes; and public policy advocacy on jobs and

inclusive growth

4. Number of strategic support provided for the implementation of jobs drivers of

the NGP

5. Number of initiatives to support the green economy and the implementation of

the green economy accord

6. Number of interventions/reports on black women and youth with access to

employment and entrepreneurship opportunities

7. Number of spatial, local and provincial initiatives to promote socio-economic

development

Programme 2: Growth Path and Social Dialogue

45

Strategic Objective 2: Coordinate jobs drivers and implementation of the New

Growth Path economic strategy in support of the National Development Plan

46

Product: reviews and engagements

Report on public policy advocacy on jobs and inclusive growth KPI 3

The NGP provides requires the management of opportunities and risks

which requires tight coordination and regular review Activity: Engagement

with business and labour leaders on jobs and inclusive growth

Minister engaged the following public policy forums on jobs, investments

and social partnerships:

1. Johannesburg Chamber of Commerce and Industry (August 2016) –

discussion on constraints to growth, public infrastructure and potential

partnerships

2. Atlantis Business Forum (August 2016) – outline of key government

interventions, what agencies can assist with development and what is

expected from potential and current entrepreneurs

3. SACTWU Congress (September 2016) – review of impact of

government incentives in the sector as well as the political economy

factors that impact on growth and jobs.

• The Progressive Business Forum Construction Summit was held on the 7th of

July 2016 in Johannesburg.

• The Summit provided the opportunity for the Minister to hold discussions with

various stakeholders from business, government, Chambers, Financial

Institutions, and Regulatory authorities

47

Product

Public advocacy on jobs and investment/infrastructure

investments

KPI 3

KPI 11

Key themes

• Government infrastructure spend (3-5 year

view) and the enhancement of Public Private

Partnerships

• Construction finance, new building technologies

and other private enterprise initiatives

• Human Settlements and construction industry

regulatory matters, including legislative roadmap

issues of transformation in the economy

Product: Initiative One: automobiles

Fast tracking and unblocking of investment in the auto

sector

KPI 4

Initiative 1: Report on BAIC investment in auto-industry

in the Eastern Cape is contained on slides 35 to 37

KPI 4

• Following a Ministerial visit to a Saturday Produce Market, the Philippi Horticultural Area approached EDD to address the rezoning of the land and the loss of agriculture and jobs as a result

• The area has become contested as developers try to gain access to the land for housing and community groups and farmers try to retain the land for agriculture

• EDD investigated and became aware of a letter/directive sent by the delegated authority of the Minister of Agriculture Forestry and Fisheries to the City of Cape Town, rejecting permission for the City to change the land use in Philippi from agricultural use to „urban development‟

• EDD collected information and referred the matter and issues to the Minister of Agriculture. As a consequence the Minister of Agriculture referred the matter to a court to complete due process

49

Product: Initiative Two: urban farming

Support strategic implementation of NGP jobs driver –

agriculture and agro-processing.

Background on Philippi Horticulture Project

• Half of 3 000 hectares of a rural area in the Cape Flats called the Philippi Horticultural Area is owned by farmers and leased to small farmers

• Nearly 4 000 workers are employed on the land

• Emerging farmers are working approximately 100 hectares and growing vegetables

• The Philipi farm area produces approximately 150 000 tonnes of vegetables and flowers a year. It supplies the majority of Cape Town‟s vegetables

• The land was zoned for agricultural use, however, the City of Cape Town considered rezoning for normal urban use

50

Product: Initiative Three: Agro-processing

Support strategic implementation of NGP jobs driver – agriculture

and agro-processing KPI 4 Activity: Engagement with labour leaders providing support to the

implementation of the support of the agriculture and agro-processing jobs

driver: On the 23rd August 2016 the Minister met with union leadership from

the Food & Allied Workers Union in the sector – representing both regional

and national level

The engagement covered:

- Information on key interventions by government on jobs, including

competition, trade and investment initiatives

- critical infrastructure interventions to support agriculture and agro-

processing

- Review of employment numbers in the sector

- Discussion on a social compact on wages, investment and jobs.

Significance of initiative: It helps to mobilise labour to implement the NGP. It also helps the

department evaluate the NGP based on the feedback from labour

51

Product: Initiative Four: clothing industry

Support strategic implementation of NGP jobs driver –

manufacturing (IPAP)

Activity: Review of government incentives in the clothing industry

The Minister and EDD met with management and worker representatives

over 6 occasions including 4 factory visits at Luomo, Ahlesa Blankets,

Braitex and Seagulls

Key feedback on government‟s support of the clothing industry includes:

• Beginning of 1996 sector employed 266 000 clothing, textile, footwear

& leather workers

• By 2011 there were 100 000 formal sector workers

• 2009 government stepped up efforts to assist the industry (see boxes

on next page)

• Employment stabilised due to government intervention, mainly a

Production Incentive (PI) and new competitiveness programme.

KPI 4

52

Product: four factory visits

Support strategic implementation of NGP jobs driver –

manufacturing (IPAP) KPI 4 Seagulls

Company employs 121 workers and

manufactures rainwear and windbreakers.

Visit identified benefits of PI and challenges

with local sourcing by a municipality.

New machinery were bought for their

clothing range from the PI support.

The company diversified into imports of

plastic and outdoor products to survive

Braitex/Tensilon

Company employs 280 people, making

tapes and narrow-fabric.

A new boiler was purchased, using the

government PI incentive.

Company runs a training college for local

unemployed persons.

Luomo

Company employs 140 persons, making

Brentwood and Dickies trousers for the

local market.

The company has not utilised the PI and

following the visit, the company has now

applied to join the competitiveness

programme.

Ahlesa Blankets

Company employs 207 workers, making

blankets.

Discussions focussed on market feedback

on imports. The company is affected by

increasing imports of mink blankets from

China. The previous anti-dumping duty

does not assist with the new product.

A new reference price is in place to address

illegal imports.

53

Product

Support strategic implementation of NGP jobs driver –

manufacturing (IPAP) KPI 4

Government industrial policy

supporting CTFL from 2009:

1. Stronger tariff protection

2. New clothing competitiveness

fund

3. New co-investment by the IDC

with investors in the sector

4. Crackdown of smuggling and

shoes in the country

5. Local procurement by

government

6. Greater partnership between

government, business and

trade unions

Examples of support in practice:

• R4,1bn committed by the

competitiveness fund in last 5

years

• 500 factories supported by this

programme

• R3,5 bn as loans/ working capital/

shareholding by the IDC in the last

5 years

• IDC funding created or saved

24 000 jobs

• Total of R7bn in funding &

100 thousand jobs supported by these 2 measures

54

Product: Green economy Accord

Report completed on support for and outcomes of the green

economy and opportunities for local production KPI 5

Key Successes: Rollout of

Renewable Energy

1. 6 379 MW of Renewable Energy

Procured

2. R196 billion of Private Investment

attracted

3. 26 246 fulltime jobs created Key Successes: National Cleaner

Production Centre’s Industrial

Energy Efficiency Program

• 1.8GWh of energy saved

(equivalent to powering 280 000

homes for a year)

• 1.7 Mt of CO2 emissions reduction

• Cost savings of R 1.54b

• 5 700 direct and indirect jobs created and preserved

Product: EDD produced an

initial Report on the Green

economy.

Data in this section draws

from the Report.

Green Economy: Key Successes

55

Retrofitting

1. From 2005 to August 2016, 63

million incandescent residential

light bulbs have been replaced

with energy saving lights.

2. Temporary opportunities created

from the programme: 13 494

fieldworkers

IDC investment

• By October 2016 the IDC had invested

R18.7 billion in the green energy sectors • Total investment in these projects

amounted to R 37 billion

• Total permanent direct jobs created:

10 2790

Greening of Colleges Initiative

• 16 TVET Colleges have taken part in developing green profiles and integrating

green issues into training programmes, college policies and strategic plans. Colleges are: Boland, Buffalo City, Capricorn, Ekurhuleni East, Ekurhuleni West, False Bay, Lephalale, Letaba, Lovedale, Majuba, Mopani South East, Northern Cape Urban, Port Elizabeth, Sekhukhune, Vuselela and West Coast

Product

Report identifying support for the green economy and

opportunities for local production KPI 5

Green Economy: Procurement Update

• R30 billion - actual local content spend reported for IPPs that have started construction (Bid Window 1, Bid Window 2 and Bid Window 3).

• R65.7 billion - actual local content commitments for all bid windows in REIPPP by March 2016. This represents 45% of total project spend of R145.2 billion.

Designation for solar water heater components :

• 1st Collectors and storage tanks with a minimum threshold of 70%.

• 2nd Amended to include South African steel

Success of the designation demonstrated by current exports of PV panels: on regional basis 58% for 2014 and 2015 were destined for Europe, 35% to North America, and 5% to rest of Africa. Total export revenues have shown marked increase from under R50 million in 2014 to over R300 million by Q1 2016.

56

Product

Report identifying support for the green economy and

opportunities for local production KPI 5

Green Economy Highlighting 3 Opportunities: 1. Local manufacturing of energy efficient LED lamps

Eskom plans to procure 3 million over next 2 years.

2. Local manufacturing of components for Solar Water Heaters (SWH) (Collectors for energy, tanks and steel structures are designated at 70 % local content)

3. Local professional services and skills development the dti, through the National Cleaner Production Centre

(NCPC-SA) developed 2 professional qualifications on energy efficiency:

– Energy Audit Technician

– Energy Management Advisor

57

Product

Report identifying support for the green economy and

opportunities for local production KPI 5

58

Innovating partnerships and building opportunity

Given challenges in relating to skills development and shortages of

skills the Deputy Minister has led a new initiative in Mpumalanga

called Adopt – a- TVET

• He has worked with the TVET colleges, SETAs and captains of

industry in the province to find common ground, develop

linkages, and improve responsiveness and quality of training

• As a result of the engagements the parties signed an MOU

aiming to:

• Produce high quality skills needed by the industry

• Facilitate the absorption of TVET college graduates into in-

dustry through formalised apprenticeships and learner-ships

• Provide lecture exposure programmes aimed at lectures

Product

Intervention to empower youth and enhance their access to the

labour market/ employment opportunities KPI 6

59

Innovating partnerships and building opportunity

Product

Intervention to empower youth and enhance their access to the

labour market/ employment opportunities

MOU in Action: RCL – Mpumalanga

As a result of the negotiations & MOU, RCL

Sugar & Milling has taken 65 students

through work exposure programme.

Students were trained in civil trades,

electrical, agricultural production,

automotive sector and office administration.

MOU in Action: SABC

In Q2, RCL partnership triggered the

partnership with SABC where SABC

is:

• rolling out a learnership

programme in sound technology

• a new venture creation

programme on teaching people

how to run their businesses.

Currently 10 students from the

college are scheduled to start the

programme with the SABC later this

year.

KPI 6

Significance of the work: To produce learners that are ready

for employment and provide young people with skills, work

exposure and learnerships

60

Product

Secretariat support provided to Minmec KPI 7

60

National government provided more

youth job opportunities than provincial

government but its performance has

slowed over the last 3 years.

Highlights on Work Exposure: National

Total Youth Employed in the

National Government

2013/14 2014/15 2015/16

Total

Youth

Jobs

132 400 128 922 124 773

Youth %

of

national

govt jobs

35% 33% 31%

Economic Development Technical

MinMec

EDD convened a Technical MinMec on 23

June 2016 in preparation MinMec in Q3.

HODs from Eastern Cape, Mpumalanga,

Gauteng, Limpopo and Western Cape

attended. Others sent representatives.

Key issues on the agenda included:

1. Progress reports on funding for

Black Industrialists

2. Progress reports on SEZs

3. Highlights from the Youth

Employment Accord and a case

study of Jozi@work

Key Performance Indicator

9. Number of quarterly Cabinet-level progress reports of infrastructure Strategic

Integrated projects (SIPs)

10. Number of infrastructure projects unblocked, fast-tracked or facilitated

11. Number of Cabinet and PICC strategic decisions on infrastructure implemented

12. Number of PICC meetings held and facilitated

13. Drive implementation of Strategic Integrated Project (SIP) 5 of the National

Infrastructure Plan

14. Support programmes to drive localisation in the infrastructure programme, including

through the PPPFA, and local supplier development initiatives

Programme 3: Investment, Competition & Trade

61

Strategic Objective 4: Coordinate infrastructure development and strengthen its

positive impact on the economy and citizens

KPI 9 Work Completed: Cabinet Level Reports

18 Construction Update Reports were prepared for

Cabinet which provided information on financial,

employment, localisation and construction activities; and

identified progress and actions that Cabinet needed to

consider to ensure the infrastructure build programme was

implemented and able to boost jobs and growth.

Note: implementation of the projects and operational

responsibility remains with the relevant line

Departments.

KPI 9

62

Product

Progress reports to Cabinet on the 18 Strategic Integrated

projects (SIPs)

One infrastructure project was unblocked – Water Use Licence

Approval (WULA) for the Olien Karats 132kv transmission line

• The PICC was requested to assist with unblocking the Olien Karats Water

Use Licence (WULA)

• The project includes the construction of a 20 km overhead power line from

Olien substation to Karats substation

• These activities cross several watercourses based and thus require

WULAs for 22 water use areas

• This project forms part of Eskom's commitment to strengthening the

existing electricity supply to the area

KPI 10

63

Product

Infrastructure unblocking's and/ or fast tracked KPI 10

64

Northern Cape province, in

Kgatelopele Local Municipality (8) Impact of the unblocking:

1. Network will be more reliable

2. Improved voltage levels

3. Four projects depend on this

project:

• Strengthening the Sekgame

Switching Station

• Upgrading supply to 3 large

customers

• Kolomela 20 MVA transformer

(direct customer project)

4. This project will increase the

capacity at Karats Substation for

future IPP connections

The power line is situated between

Kimberly and Lime Acres in the

Northern Cape province, in

Kgatelopele Local Municipality

KPI 10 Product

Infrastructure unblocking's and/ or fast tracked

KPI 11

65

The PICC tabled the Cabinet Memo

on the 7 Water Projects:

28th September 2016

• This forms part of the 6 weekly

Cabinet reporting programme as

directed by Cabinet in August

2016 .

• This is the first of 5 sector

specific reports for Cabinets

attention, on the 20 Mega

Projects acceleration

programme.

Product

Implementation of cabinet and PICC strategic decisions

on infrastructure

Work was done on the development of additional capacity in the state, including adjustment to budget structures and the creation of a

technical project management capacity at a cross-cutting level in the state.

Ministerial level engagements took place with the following portfolios:

- Energy - Water and Sanitation

- Transport - National Treasury

During the quarter, EDD provided technical, secretariat and coordinating

support for the hosting of PICC structures. These structures prepared and

finalized the submissions discussed by PICC Secretariat, PICC Manco and

Cabinet. Seven meetings were supported by the EDD

KPI 12

66

Work completed: PICC meetings held and facilitated:

• PICC MANCO(s) [7]: 29th,28th,26th,21st,15th,8th September

and 12th August 2016.

• The PICC delivered notable presentations and insights on

the National Infrastructure Plan to the Cabinet Lekgotla on

the 17th and 19th August 2016.

Product

Number of PICC meetings held and facilitated

67

Product: Saldanha gas pipeline and gas

infrastructure

Initiatives or meetings facilitated on SIP 5

KPI 13

Initiative on Sunrise Gas Terminal reported on slides 16 -23

Key Performance Indicators

15. Number of investment initiatives facilitated, fast tracked and/or unblocked

16. Establish and monitor industrial funding targets for identified jobs drivers

in township economies

17. Number of reports on the level and impact of industrial finance available

from IDC and departments

18. Number of strategic engagements with IDC

19. Connect infrastructure with productive investment and growth, including

where appropriate through off-take agreements

Programme 3: Investment, Competition & Trade

68

Strategic Objective 5: Promote productive investment, industrial financing and

entrepreneurship for jobs and inclusive growth

69

Investment is a key driver of jobs and growth in the economy. During the quarter,

EDD work included the following:

1. Meeting with investors with and through their representative associations, and at

company level. For example, meetings were held with the Atlantis Chamber of

Business on economic development in the area, as well as a CEO meeting organised

by the Johannesburg Chamber of Commerce and Industry

2. Meeting on investment climate took place with Moody‟s rating agency

3. Site-visit and sod turning of the BAIC launch which involves investment worth R11

billion by the company in Nelson Mandela Bay (see details in the next slides)

4. Social dialogue with business and labour (see KPI 8)

5. Clothing industry review of government incentives: 6 meetings took place

including 4 factory visits to meet with workers and management in the review of

government incentives for the sector (see KPI 4)

6. Unblocking obstacles to maintain or increase levels of investment in the economy or

at enterprise level (see examples that follow)

Product

Fast tracking and unblocking of investment initiatives KPI 15

70

Product: Initiatives on film, food and energy

Fast tracking and unblocking of investment initiatives KPI 15

Initiative 1: the film industry – reported on slides 24 to 34

Initiative 2: Broadway Sweets

• EDD facilitated for Broadway Sweets to get a local supply of sugar to ensuring local sugar supply instead of importing.

• Drought has affected sugar producing area

• Broadway Sweets received notice from their supplier that they were unable to meet Broadways sugar needs

• This would have resulted in Broadway importing sugar for manufacturing

• EDD, through the Impala Water Uses Association, requested a local sugar miller to make arrangement to supply Broadway Sweets

• This resulted in Broadway Sweets getting sugar from domestic producers instead of importing

Significance of Work: Secure input raw materials and sustainability of production facilities

Initiative 3: Solar plant

• Unblock land lease for 250 m2 for R 10

billion concentrated solar park by

Karoshek Solar 1 Ltd. Lease

agreement approved by Northern Cape

Department of Public Works.

• Deeds office refused to register lease

until they received a certificate copy of

deeds document from National

Department (DRDLR).

• EDD intervened to ensure all original

document were found on which

certified copies were prepared and

signed

Significance of Work:

Secure R 10 billion investment which will

enable the 100 MW solar concentrated plant in Upington to be constructed.

KPI 15 Product: initiative Four – cooking stove

Fast tracking and unblocking of investment initiatives

71

Initiative Four – facilitate market access for a small business Arivi

• Arivi is a small business operating in Pretoria

• In 2012, the IDC approved R1.5 million to Arivi for the development of the

Arivi Paraffin stove

• Arivi produces a paraffin stove that is safer to use than normal paraffin

stoves which has been a cause for many shack fires.

• The stove produces less pollution

• The stove is manufactured and assembled locally. 90% of the product

components such as plastic and the shell are sourced locally

• The stoves are currently sold in:

• Johannesburg at Jumbo Crown

Mines, Market Cash and Carry, as

well as Africa Cash and Carry

• Pretoria at Mamelodi and

Marabastad

• They are also sold through individual

re-sellers and via the internet

• However, the company needed to

increase sales to expand production

and increase employment

• In July 2016, an EDD intervention

resulted in Massmart placing initial

order of 200 stoves for their 10

Builders Warehouses stores and 8

Superstores

Product

Fast tracking and unblocking of investment initiatives

Significance of Work: Increase

sales through retail sector 72

73

Product: Sutherland and Gauteng

Initiatives for industrial funding for jobs drivers evaluated and

improved for township economies KPI 16

Intervention 1 – To evaluate and support local economic development through

activities in Sutherland – reported on slides 38 to 42 as well as additional

activities reported below.

Intervention 2 – Support investment in township economies by developing Spaza

Shops

Pre-Launch of the My-Spaza Township Enterprise Development Project: On the 28 July 2016 the EDD held a pre-launch engagement with the private sector wholesalers in the retail industry in Gauteng. The purpose of the pre-launch workshop and site visit was to introduce the wholesalers to the 28 operators who are part of MySpaza Township Enterprise Development Project. Through this workshop, wholesalers were requested to partner with a township spaza shop and provide funding for structural/ infrastructure upgrades of the spaza shop. 42 wholesalers attended the workshop and site visit.

Significance of Work: To increase economic activity in townships.

74

75

Product: Initiative in Katlehong

Initiatives for industrial funding for jobs drivers evaluated and

improved for township economies KPI 16

Outcome:

• 26 women owned

businesses were

registered on the day

from the 70 participants

• EDD received 2

referrals for unblocking

Significance of Work:

To increase economic

activity in townships and access to funding.

Township exhibition in Katlehong for women

to promote industrial funding and develop

township economies as part women’s month

• EDD facilitated an event on 27 August 2016 in

Katlehong to promote women in business

• It targeted 20 women owned business in a

range of sectors including:

• Beauty and healthcare

• Clothing and fashion

• Jewellery

• Catering Services

• Presentations were made by EDD and the

Ekurhuleni metro, focused on business

support services – including funding, business

registration, by-law enforcement.

76

Product

Report on increase in industrial finance available from

DFIs and its impact on job creation KPI 17 Report on IDC funding EDD prepared a report on industrial funding, with a summary set out below

IDC funding Q2 only 2015/16

Value of funds approved R 2.7 billion

Value of funds disbursed R 2.6 billion

Jobs created and saved by IDC – 5 008

Eastern Cape 1 722

Gauteng 1 983

KwaZulu Natal 489

Limpopo 413

Mpumalanga 302

Northern Cape 61

Western Cape 38

IDC funding Q2 only 2016/17

Value of funds approved R 3.3 billion

Value of funds disbursed R 2.5 billion

Distribution of jobs per sector

Agro Processing and Agriculture (21)

Automotive and Transport equipment 1 513

Basic Metals and Mining 853

Chemical products and Pharmaceuticals 356

Clothing and Textiles 299

Heavy Manufacturing 1 896

Industrial infrastructure (2)

Light Manufacturing and Tourism 16

Machinery and Equipment 81

New Industries 17

2016 / 17 to date (Q1 and Q2)

Approvals total: R4 billion

Disbursements total: R5 billion

Jobs created or saved total: 5 449

77

Approvals by SBU, Q2 2016/17

Product

Report on increase in industrial finance available from

DFIs and its impact on job creation KPI 17

SBU R million

Automotive & Transport Equipment 1 499.8

Basic Metals and Mining 918.0

Heavy Manufacturing 287.6

Basic & Speciality Chemicals 231.0

Chemical Products and Pharmaceuticals 137.8

Clothing & Textiles 108.3

Machinery & Equipment 81.7

Light Manufacturing & Tourism 78.2

New Industries 52.6

Other -2.5

Agro-Processing and Agriculture -30.7

Industrial Infrastructure -71.8

TOTAL 3 290. 1

During the quarter the Minister engaged the

IDC on a strategic level through:

• The IDC strategic planning session on 29

September 2016

• The board committee meetings during the

quarter on the IDC remuneration and

related policies

• Reviewing and contributing to the IDC

2015/16 Annual Report

• The Fitch Rating interviews on the IDC

• Delivering a speech at the release of the

IDC 2015/16 Financial Results

KPI 19

78

Product

Strategic engagement with the IDC to improve its

performance KPI 18 Strategic guidance by Minister on: 1. Employment 2. Organisational

efficiencies 3. Investment

mandate 4. BEE Status

Fitch affirmed IDC at AA+ with Stable Outlook – 27 Sept 2016

IDC’s status as a BEE facilitator was

approved by the Minister of Trade &

Industry

Impact on Sedibeng Water unblocking

U

79

Case study of electricity rollout impact

on households

Product

Report on initiative linking infrastructure with growth KPI 19

• Rollout of infrastructure boosts growth

and consumption at all levels

• EDD and the PICC started an impact

analysis on the rollout of electricity

• 2 sites have been visited:

• A small area in Kliptown with recently

built houses that were electrified in

September 2016

• Senqu in the Eastern Cape that is in

the process of being electrified

(visited in October 2016)

• Last year we reported on an

unblocking at Sedibeng Water

• EDD‟s intervention resulted in

the tender being changed to

require the use of locally

produced pipes

• This year we evaluated the

impact of the intervention and

can report:

• As a result of the contract 120

workers at Hall Longmore,

who had been working a 3 day

week are now working 5 days

a week

EDD completed Report on Electrification in Kliptown and Senqu looking at impact on communities EDD case studies highlight the impact of the rollout of infrastructure

Case study: Daniel Kumalu in Kliptown • Runs a small shop from his house • Currently uses paraffin and candles – paying about R1 200 per

month for energy • For Daniel getting electricity means that he will now be able to

expand what he sells in his shop • He will also save money – electricity will cost him about R420 a

month • He plans to sell cold drinks and ice cream in the hot summer

months ahead

KPI 19

80

Product

Report on initiative linking infrastructure with growth KPI 19

Case Study : Babalwa Gungunthwa in Senqu

• Ms Gungunthwa is a young woman living in her parents home

with her 3 siblings

• Before getting electricity her family used gas and paraffin as

sources of energy. A 9kg of gas would last them a month and 2

liters of lamp paraffin would last 2 weeks

• After getting electricity the family has bought a kettle, stove,

radio and television and a fridge

• Access to infrastructure raise household productivity

and households to deploy power-assisted tools.

Key Performance Indicators

20. Number of strategic engagements to support and strengthen economic

regulators

21. Number of initiatives on mergers and acquisitions and market enquiries

or reports on compliance with conditions of mergers and acquisitions

22. Number of initiatives to ensure that trade authorities and policies support

industrialisation, employment and other national development objectives

23. Number of engagements with trade and competition authorities to

increase administrative efficiencies

Programme 3: Investment, Competition & Trade

81

Strategic Objective 6: Promote competition, trade and economic regulation in

support of job creation, industrialisation and economic inclusion

Massmart Supplier Development Fund (SDF)

• EDD‟s continued active role in oversight of Massmart‟s Supplier

Development Fund has helped ensure the development and expansion of

new productive capacity.

• This quarter the Massmart SDF provided a pump filter company funding of

R560 000.

• The company needed funding to expand as a result of increased orders for

pumps. It also wanted to do development to improve its sand pool sand filter

extractor pump.

• Funding from Massmart SDF enabled the company to get into full production

and the products will be available in Builders Warehouse stores from

September 2016.

Government follow-ups on AB InBev public interest commitments

An inter-Departmental structure has been set up as a strategic intervention to

combine the efforts of different parts of government to support and monitor the

public interest commitments made by AB InBev.

82

Product

Report on strategic action on competition and public interest KPI 21

Assessment of action on cartel or dominant player – the case of ArcelorMittal

South Africa (AMSA) Competition Settlement

• EDD coordinated actions to address cartels in the steel industry.

• This entailed meeting the company, downstream players, industry experts and

conducting research

• The Ministers of EDD and the dti convened meetings with the companies, industry

associations and unions. They provided strategic guidance to the team working

on the pricing model, in a number of meetings

• AMSA admitted to certain contraventions of the Competition Act and agreed a

remedy for flat steel products including:

• Limits of the EBIT margin to 10% for a period of 5 years

• Investment of R4.6 billion in AMSA‟s plant to enhance their competitiveness

• Will continue to provide rebate to value added exporters of AMSA‟s products

• Will participate in a steel panel convened by ITAC to monitor AMSA‟s pricing

• Pay a fine of R1.5 billion over 5 years

83

Product

Report on strategic action on competition and public interest KPI 21

Significance of the work: Competitive steel pricing for

downstream users

The Department and the Ministry engaged the

economic regulators to improve efficiencies and

impact. This also included reviewing the annual

reports:

1. Competition Commission

2. Competition Tribunal

3. ITAC.

84

Product

Increase administrative efficiencies - engagements with

regulators KPI 23

Additional work undertaken in the quarter included:

- IMC on Public Employment Programmes

- IMC on BRICS Summit

- IMC on small business development

- Joint work on Outcomes (jobs/infrastructure)

- Tourism initiative with Bo-Kaap community

- Legal briefing on scrap metal case

- CEO-level engagement with oil companies

- - Launch of first results of SKA in Carvarvon

- Massmart/Walmart meeting on localisation

- Competition advocacy and stakeholder engagement: Conference at UCT.

85

EDD HUMAN RESOURCES MOVEMENTS 2nd Quarter 2016/17

86

Q1 Q2

Number of funded posts 140 140

Number of funded posts filled 117 119

Personnel additional to establishment 2 2

Number posts filled including additional to establishment 119 121

Staff contracted through a Memorandum of Understanding with Wits 2 4

Staff working for PICC Technical Unit from IDC 10 10

Total staff resources available to Department including Wits and PICC 131 135

Vacancy rate with all staff available to EDD 6% 3 %

Vacancy rate less Wits and PICC specialists 15% 13 %

Vacancy Rates

87

The intent is that University staff be placed on the payroll of EDD in accordance with

Ministerial Framework previously presented to the Portfolio Committee.

2. Addressing Vacancies and Acting Appointments

88

Recruitment Process Pipeline Recruitment process pipeline – 30 September 2016

Page Name Offered

Advertised and

in Recruitment

Process

Not

advertised

1 Political 0 2 5

2 Director General 0 2 1

3 Economic Policy Development 0 2 0

4 Economic Policy Development 0 0 0

5 Economic Planning & Coordination 0 2 0

6 Economic Planning & Coordination 0 2 0

7 Social Dialogue 0 0 0

8 Social Dialogue 0 1 0

9 Spatial/PICC 0 1 0

10 Spatial/PICC 0 0 1

11 Corporate Management 0 0 0

12 Facilities 0 0 0

13 Human Resources 0 0 0

14 CFO 0 2 0

Total 0 14 7

Executive Positions

A specialist in Executive Search was contracted on 24 June 2016 to assist the Ministry with the recruitment of:

• Director General

• Deputy Director General: Economic Planning and Social Dialogue

• Deputy Director General: Economic Policy Development

Recruitment contract extended to end of March 2017 to allow additional candidates to be screened

89

Recruitment of Executives

90

Progress on Structure

1. Proposed structure submitted to the DPSA for technical evaluation;

2. DPSA suggested a mandate analysis workshop;

3. Workshop to be facilitated by the DPSA, attended by EDD, the dti, Small Business, DPME, Treasury;

4. Internal consultations to start after this workshop.

Proposed Project Plan

EDD FINANCIALS 2nd Quarter 2016/17

91

As at 30 September 2016 the department has spent R341.3m out of an allocation of R674.7m i.e. 51% of the total allocated budget.

As at 30 September 2016 expenditure excluding transfers amounts to R73.5m out of an allocated budget of R145.9m i.e. 50% of the baseline allocation.

For the quarter the Department spent R177.4m made up of transfers of R133.9m to entities and R43.5m spent directly by the Department .

Total expenditure is 106% of the quarterly allocation of R167.8m

The following tables reflect the expenditure against the budget per programme and per economic classification.

92

Summary of Expenditure for Q2

Financial Performance per Programme as at 30 September 2016

93

Programmes 2016/17

Budget

YTD

actual

Expenditure Variance Spent

R‟000 R‟000 R‟000 %

Administration 79 208 51 708 27 500 65

Growth Path and Social Dialogue 36 008 13 461 22 547 37

Investment, Competition and Trade-

excluding transfers to entities 30 664 8 348 22 316 27

Investment, Competition and Trade

Transfers to entities only 528 781 267 743 261 038 51

Total including Transfers 674 661 341 260 333 401 51

Total excluding Transfers 145 880 73 517 72 363 50

Expenditure per

Economic Classification Projected

Budget

Actual

Expenditure Variance Spent

‟000 R‟000 R‟000 %

Compensation of Employees 93 995 41 405 52 590 44

Goods and Services 48 974 30 594 18 380 62

Transfers to Entities 528 781 267 743 261 038 51

Payment of Capital Assets 2 911 1 518 1 393 52

Total including Transfers 674 661 341 260 333 401 51

Total excluding transfers to

entities 145 880 73 517 72 363 50

94

Financial Performance per Econ Classification as at 30

September 2016

Q2 Financial Performance per Programme

95

Programmes

Q2

Projected

Budget

Actual

Expenditure Variance Spent

R‟000 R‟000 R‟000 %

Administration 18 804 32 175 -13 371 171

Growth Path and Social Dialogue 8 346 6 308 2 038 76

Investment, Competition and Trade 6 752 5 077 1 675 75

Total including Transfers 167 773 177 431 9 658 106

Total excluding Transfers 33 902 43 560 9 658 128

Expenditure per Economic Classification

Q2

Projected

Budget

Actual Expenditure

Variance Spent

R’000 R’000 R’000 %

Compensation of Employees 23 546 21 551 1 995 91

Goods and Services 9 757 21 130 -11 373 216

Transfers 133 871 133 871 0 100

Payment of Capital Assets 599 879 -280 147

Total including Transfers 167 773 177 431 9 658 106

Total excluding Transfers 33 902 43 560 9 658 128

96

Q2 Financial Performance per Econ

Classification

97

Q2 Financial Performance: Reasons for Variances

Compensation of employees: A process is in place to fill

the vacant critical posts in line with the Strategic Plan and

Annual Performance Plan.

Goods and services: Main cost driver - Legal costs from

Office of the State Attorney. Shifts to be effected during

adjusted estimate process (AENE).

Transfers and Subsidies – Spending is in line with the

planned spending.

Capital assets – The variance relates to the new software

and servers.

98

In case we need further motivation to go to the

Eastern Cape.

SIYABONGA

REA LEBOHA!