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Date : 12/04/2005
Source: Ministry of Trade and Industry
Title: Hendricks: Trade and Industry Dept Budget Vote 2005/2006


Budget Vote 32, address by the Deputy Minister of Trade and Industry, Lindiwe Hendricks

Madam Speaker;
Cabinet Ministers and Deputy Ministers;
Members of the National Assembly;
MECs and HODs;
Officials of the dti and COTII;
Leaders of business and labour;
Distinguished guests; and,
Ladies and gentlemen

I feel honoured to present to you, alongside my Minister, the budget of the dti for the financial year 2005/ 2006. The Minister in his address outlined the key issues facing the department, and I will speak to the strategic alignment within the department and agencies so that we are able to effectively advance higher, sustained and shared growth.

It is a mere decade ago that our country was freed from the shackles of racial oppression and economic devastation through the institution of a democratic government. Many had doubted that this country would survive. The prophets of doom undermined the resilience and determination of the South African people to succeed and turn their birth-land into a strong and viable country.

Within a few years, South Africa was able to restructure state organs, instil prudent fiscal and monetary policies, and ensure macroeconomic stability. According to a report compiled by the Bureau for Economic Research, which has been distributed here today, the South African economy currently enjoys its sixth calendar year of economic upswing. Real economic growth accelerated by 5 percent during the second half of 2004 and averaged 3.7 percent for the full year. Both Statistics South Africa’s formal non-agricultural employment series and the BER’s business tendency survey data indicate evidence of faster employment creation in the formal sector of the economy, which is in sharp contrast to the job-shedding of the 1990’s. The democratic government has done well.

The Minister has provided a very comprehensive report on how the dti has contributed to broadening participation in the economy, enhancing competitiveness and increasing levels of investment. The sterling performance of government broadly, had been echoed by equally sterling performance at departmental level. In short, Madam Speaker, despite the challenges that remain, we can confidently say that we have achieved much.

The credit for our success can be attributed to many factors. Success can be attributed to our policies and programmes. Success can be attributed to the support and bonds formed with social partners. For me, a critical success factor is the degree to which policy coherence and alignment is achieved within the organisation. It is not sufficient to have good policies, programmes and projects, with resources to ensure its implementation. Effective programme implementation that will impact positively on the South African economy requires a coherent understanding of what is to be achieved, an alignment of how it is to be done and sound planning. Better planning means better budgeting, less under-spending and a balanced budget. Over the past year we have made significant strides in this regard.

This, however, was not the case a few years ago. A critical assessment of the dti in 1999 revealed an organisation that had made considerable progress in several areas since 1994 but, which required a more streamlined structure, greater coherence of policy and action; better analytical capacity; and more stringent monitoring and control. The weaknesses extended to the governance of the many agencies and statutory bodies reporting to the dti. A major restructuring process was therefore embarked upon.

By 2004 significant steps had been taken towards creating a department that is able to meet the needs of a well-functioning, modern and adaptive economy. The organisational structure was reconfigured to enhance coherence and better implementation of the organisation’s mandate and objectives. A marketing division was established to enhance awareness and accessibility of the dti products and services. A strategic planning unit was established and a structured, formalised approach to strategic planning was introduced.

The introduction of structured, formalised strategic planning allowed for a greater alignment of the department’s goals and objectives with the broader objectives of government. Activities sought to generate outputs linked to objective-related outcomes, and better synergy between planning and budgeting was created, thereby improving interdepartmental coherence. The consequences of this alignment were significant. Divisions are more accountable, as performance reviews of selected business units and flagship projects occur every quarter. The budget is utilised more efficiently as it is directly linked to activities and outputs. Significant improvements in strategic planning have led to improved spending on the right things. From 2001/02 to 2004/5 the average increase in the budget of the dti was 13.7 percent. The annual average increase from 2005/6 to 2007/8 is a mere 1.1 percent.

The dti, however, is primarily a policy-making body. It is dependent on nineteen institutions for the realisation of its objectives. We have as part of our council of trade and industry institutions, organisations that deal with access to finance – these include the National Empowerment Fund, the Industrial Development Corporation, and Khula Enterprise Finance. We also have organisations that deal with regulatory issues – these include the Competition Commission and Tribunal, the Gambling and Lotteries boards, the Estate Agencies board, the Micro Finance Regulatory Council, and the Companies and Intellectual Property Registration Office (CIPRO). We have specialised service institutions that deal with a range of issues and include those dealing with Small Business Development, which is the recently launched Small Enterprise Development Agency; institutions dealing with quality, standards, technology and innovation, which includes the South African Quality Institute, the South African National Accreditation Society, the South African Bureau of Standards and the Technology and Human Resources for Industry Programme (THIRP); and institutions dealing with women in business, which includes the Technology for Women in Business Programme. Finally we have institutions dealing with trade issues, which include the International Trade Administration Commission of South Africa (ITAC) and the Export Credit Insurance Corporation.

These agencies consume 41 percent of the department’s budget, and the collective asset base of these institutions exceeds R30 billion and the group employs more than 5000 people. Noting the diverse roles of the institutions, and their high degrees of relative autonomy, it is difficult to imagine an alignment of programmes and activities. Yet, an alignment is essential if we are to achieve higher, sustained and shared growth, hence the department established an Agency Management Unit to ensure structured coordination.

It is a pleasure to announce that the institutions reporting to the dti have demonstrated that they are willing and eager to co-operate with the department and comply with new processes that are being introduced. This spirit of cooperation has been present since the formation of the Council of Trade and Industry (COTII) Institutions in August 2000, aimed at information sharing and the development of a common identity; to our more recent meetings aimed at integrating COTII institutions with the dti planning process.

For the current financial year, COTII Institutions have submitted their strategies to the department, and the process of approving business plans is near completion. The monitoring and evaluation system is currently being rolled-out to include COTII and policy coherence and programmatic alignment within the dti family is becoming a reality. This coherence and alignment is not only occurring between the specific institution and the department; institutions with common mandates are also working more closely together to ensure more efficient use of resources. To assist this process the dti has established an impact assessment unit to improve policy coherence and targeting of interventions. Furthermore, the dti will also revising relevant performance indicators, both to better assess and enhance its internal operations and its impact on the real economy.

As announced by President Mbeki in February this year, the compliance burden for SMMEs will be eased. The dti is working with the Presidency and National Treasury on institutionalising regulatory impact assessments to minimise any adverse effects of new legislation on SMMEs. Along these lines, my department has already established an Impact Assessment Unit that will monitor the impact of policies and legislation on the real economy.

The search for coherence in policy and alignment of programmes, resources and activities is an ongoing one. We are making significant progress at a departmental level and this progress is being translated into tangible results in respect of delivery. The system however is not flawless, but regular meetings, monitoring and evaluation assist us in addressing any flaws.

What is certain, is that all our institutions, many of them are present here today, share a common vision for the economy; which is to create an adaptive and restructured economy characterised by growth, employment and equity, based on the full potential of all people, communities and geographic areas by the year 2014. And a shared vision provides a solid platform for tighter cooperation.

To conclude I would like to thank the Minister for the leadership and vision he has given the dti. I would also like to thank the outgoing director-general Alistair Ruiters who has left a legacy of the new dti campus, a restructured department, and improved systems of co-ordination. I would also like to recognise the leadership of the Council of Trade and Industry Institutions, you are the drivers of our microeconomic reform strategy, and it is good to know that the citizens of this country are receiving support from such capable people. Finally I would like to thank members of the Portfolio and Select Committees, for your advice and support. Members, we table Vote 32 before you for endorsement.

Issued by: Ministry of Trade and Industry
12 April 2005

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