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Date : 09/05/2006
Source: Department of Public Enterprises
Title: Erwin: Updating of Programme of Action – May 2006


Economic, Investment and Employment Cluster’s Programme of Action briefing by The Honourable Minister of Public Enterprises, Alec Erwin, Cape Town

Combined efforts and synergies between departments will ensure that Government is able to reach its economic and developmental targets. The Economic Cluster prioritised those projects of the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) that require co-ordinated effort of departments or are of strategic importance to the achievement of these goals, while continuing to exercise oversight of implementation of all the activities in the economic section of the Programme of Action.

This briefing on the process initiated at the January 2006 Cabinet Lekgotla highlights progress along this path.

The January 2006 Cabinet Lekgotla provided an agenda for the Economic Cluster that emphasised the implementation of key projects within AsgiSA. The intervening months have seen the Cluster Departments focusing on finalising planning and implementation of the projects. This has been an intensive and inclusive process, with involvement of all key Cluster departments. Strategic Focus

The five focus groups of the Cluster meet once a month to discuss project implementation. These Focus Groups not only assist in developing synergies in projects but also assist in the identification of blockages and other critical issues for intervention, where necessary strategic issues are elevated for discussion at Cluster plenary meetings.

The Cluster is currently developing a Management Information System (dashboard) to support implementation monitoring.

The Cluster focus groups are as follows (with lead departments in brackets):

* Ensuring aligned and supportive macro-economic approaches (NT/PCAS);
* Building a competitive and labour-absorbing economy (DTI/DST);
* Massively increase public investment (DWAF/DOT);
* Equity and development (DPE/DPLG);
* Ensure priority skills for the economy (DOL/DOE);

The implementation of key AsgiSA projects for which the Cluster has assumed responsibility will be greatly enhanced by the structured synergies that have been initiated by this approach. Initial progress is reported below.

Key issues from the Cluster focus groups

At the core of the macroeconomic focus group’s work is a modelling exercise focusing on analysing the six binding constraints to growth and strengthening a positive relationship between micro- and macro-economic approaches. Together with relevant Government departments, a team of international and local experts (academics and private sector economists) is being utilised to undertake detailed research, identify policy gaps and policy options. The modelling and scenario planning will be a two year programme starting from January 2006, ending in the middle of 2008. The first growth workshop took place between 16 and 20 January 2006.

The task team on bio-fuels has been established and work has begun. Areas that the task team are focusing on include crop suitability, establishing support for developing small-scale farmers, the technical standards for bio-fuels, an analysis of the viability of crops, and economic feasibility. The project is ensuring it takes on other important issues such as the potential impact of its roll out on the environment, food security and land use. The task team will prepare a bio-fuel strategy in time for the July Lekgotla.

In terms of the industrial policy framework, the Cluster is focusing its attention on how departments can achieve synergies within the framework. The Department of Trade and Industry (dti) is to take the framework to Cabinet within the next two months. The framework will emphasise an integrated and coordinated government approach for the Cluster.

In terms of bringing down the costs of Information Communication Technology (ICT) connectivity, the Electronic Communications Act, in terms of which the Minister of Communications will be announcing new policy directives targeted at reducing the cost of communications has now been signed by the President making it possible for these the directives to be issued on schedule, by the end of June 2006. Substantial progress has been made with respect to creating an environment for reducing the cost of international connectivity. A meeting of Ministers of the twenty-two countries participating in the New Partnership for Africa Development (NEPAD) terrestrial and sub-marine broadband network project will be taking place in the first week of June to consider the recommendations of officials regarding the main principles in terms of which the East African Submarine Cable System (EASSy) will be built, namely, open, non-discriminatory and affordable access. The sub-marine cable is scheduled to be operational by 2008.

Also in terms of ICT, the plan for the roll-out of Sentech’s wireless broadband network is in the final stages of completion and discussions on the funding of this project are equally advanced.

An initial incentives package has been developed for Business Process Outsourcing and Off-shoring, one of the immediate priority sectors of AsgiSA. Government is in the process of marketing the initiative to international investors and eleven investors of at least 1000-seat operations focussed on offshore business have already been short-listed. Progress on the development of call centres in five poor communities has advanced with the identification of FET facilities for utilisation as Call Centres (maximum 100 seats).

Progress continues on the other immediate priority sector of AsgiSA, tourism. Public comment has been received on the draft Tourism Customised Sector Programme. Departments are formulating a tourist airlift strategy that will form part of an overall aviation strategy. Government is also making progress on enhancing the marketing of South Africa as a tourist destination.

The Cluster is reviewing capital expenditure procurement of State Owned Enterprise (SOE), presently assessing how existing government policies are affecting the ability to optimise the development impact of the SOE Capex procurement. A Local Content Procurement Policy will be ready for Cabinet consideration in July 2006. This project will be enhanced by the development of system to monitor infrastructure implementation and impact utilising accessible electronic access.

The Cluster is also finalising the identification of the set-aside products and services for small, medium and micro enterprises (SMMEs). In terms of finance for SMMEs, the Apex fund was launched on 1 April 2006. Khula and Business Partners have launched the Start-up Fund with initial capitalisation of R150 million as part of efforts to address the financing gap for SMMEs and consolidating SMME finance. Disbursements have already begun.

The Cluster is monitoring progress on the authorisation appeal for the development of the Olifants River System. In future, we envisage environmental impact assessments to be enhanced through the adoption of the New Environmental Management Act environmental impact assessment (EIA) process. Government is also giving urgent attention to addressing the backlog of environmental impact assessments.

Progress continues on the City Deep supply chain and the development of a freight logistics plan for Durban as part of the development of a Durban-Gauteng Corridor. This project is subject to capacity assessments as part of the Department of Public Service and Administration’s work on strengthening government capacity.

Four sites have been identified for street trading infrastructure, namely Alexandra, Khayelitsha, Mdantsane and Motherwell. Funding for the infrastructure will be secured from the Municipal Infrastructure Grant. A process for the review of by-laws to accommodate street trading infrastructure has been set in motion.

One of the key constraints identified in AsgiSA is a lack of skills that are required for economic growth. In our efforts to achieve our 2006/7 annual targets for National Skills Development Strategy all Sectoral Education and Training Authorities (SETAs) have submitted Sector Skills Plans (SSP), which are being evaluated to identify scarce and critical skills. The SSP analysis will be aligned to the Joint Initiative on Priority Skills Acquisition (JIPSA). A report on scarce skills has been released.

In its efforts to improve labour market information, Government is in the process of creating an Employment Services System; a comprehensive and integrated database for all employment services related systems is being development. Broad public access will be facilitated through labour centres and other platforms such as the internet.

Four hundred schools have been identified for intensive support to improve maths and science. The number of schools will grow to 529 in 2007. As part of the Quality of Education (QUIDS UP) Programme the provision of a basic basket of items such as books, equipment, supplies, infrastructure and personnel to the poorest primary schools in South Africa. The primary schools in the nodal zones have been targeted for the first year of intervention. The financial year 2006/07 will be used to research and plan for the appropriate delivery of equipment and books to schools.

In support of JIPSA, the Cluster is developing a consolidated scarce skills database. This will form the basis of a discussion between the Economic Cluster and the JIPSA implementation team to clearly define critical and scarce skills needs and agree on a common approach to address these.

Following consultations between the Departments of DOHA, DTI and DOL, the quotas for work permits for scarce skills have been gazetted in the following fields and amounts: Science and Engineering (1500), Education professionals (1000), Information Technology Specialists (3500), Health and Medical Science Professionals (5450), and Agricultural Science Professionals (1500). An updated gazette is planned for August / September 2006.

Conclusion
There is no doubt that much progress has been achieved in recent years, particularly in terms of raising the rate of economic growth and creating the basis for a more competitive economy. Enhancing this trajectory, whilst massively increasing employment and ensuring that the benefits of sustainable growth are shared, is a focus of AsgiSA and the Economic Cluster.

The Government Communication and Information Systems will be publishing a project by project report of the Economic Cluster’s Programme of Action on the Government website.

Issued by: Department of Public Enterprises
9 May 2006
   

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