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Date : 28/05/2004
Source: Ministry of Science and Technology
Title: M Mangena: Parliamentary Media Briefing, May 2004


ECONOMIC CLUSTER II PARLIAMENTARY MEDIA BRIEFING BY THE DEPARTMENTS OF SCIENCE AND TECHNOLOGY, MINERALS AND ENERGY AND COMMUNICATIONS CHAIRED BY MINISTER MOSIBUDI MANGENA, 28 May 2004

Preamble

Colleagues, members of the media, ladies and gentlemen, our presentation today forms the second part of an economic cluster briefing, the first part of which was given on Monday 24 May. The 2004 briefings are intended to elaborate on the programmes through which government will implement the programme of action outlined in the President's State of the Nation Address.

On Monday you will have received an outline of the economic cluster's strategy that is designed to address the restructuring of the economy, the creation of jobs and the eradication of poverty. This strategy has been successful in ensuring that our economy maintains relative resilience to the global slowdown and the woes of emerging and developing markets. This positive stance is largely the result of our sound macroeconomic fundamentals. With the achievement of stability in this sphere, the government is correctly focusing attention on the dual challenges of job creation and poverty eradication.

However for South Africa to be competitive in the world economy, there is a need to unlock the potential of three sectors represented in the briefing today, to increase output; jobs; exports; value-addition; and innovation. It is on this platform that we will ensure that our economic growth rates are accelerated and that we are enabled to improve the quality of life for all our people.

DEPARTMENT OF SCIENCE AND TECHNOLOGY

Consensus exists in government that Innovation and Technological Advancement are vital to the achievement of our growth and developmental goals. Government has adopted the National Research and Development Strategy to ensure that coherence is attained and that our interventions ensure positive systemic returns. This has been backed by increased science budget to indicate further commitment to supporting research and development.

Just to give you a brief background after 1990, when strategic priorities changed, defence and nuclear spending dropped dramatically. As percentage of GDP, research and development spending dropped from 1.04% in 1991 to 0.75% in 1993 and to 0.69% in 1997. However, I am pleased to report that we have turned the corner and spending has risen again to 0.76% of GDP. We still have a long way to go, however, before reaching our intermediate target of 1% of GDP, which is a target many developing countries have committed to. The OECD average, however, is at about 2.3%, more than twice our target. As the President mentioned in his state of the nation address we will be increasing our investment in this area to meet this target.

The department has partnered with the National Research Foundation to implement and manage the Centres of Excellence programme. The process commenced with a call for pre-proposals in 2003, 70 applications were received by the National Research Foundation, out of which 13 were invited to submit full proposals. On 29 July 2004 we will be launching the final six Centres of Excellence that will be funded by the department.

As identified in the National Research and Development Strategy, the creation of Centres of Excellence is aimed at stimulating sustainable excellence in research and effecting the capacity building of highly qualified human resources.

Funding for the centres of excellence programme has been budgeted at R15million a year from 2003/4 to 2005/6, with plans to increase this amount as the programme develops.

We have provided the state of science but what is our vision for the future? For research and development to really thrive it needs to be linked to the economy or to some strategic objective. This has always been so. So the big new drivers of the modern knowledge economy, first information and communication technology, second biotechnology and third, still in the future, nano-technology, are much on our minds when we develop a Research and Development policy. It is for that reason that we are planning to re-organise the governance system of scientific research councils and other state - owned laboratories in order to establish a more effective innovation system and to ensure greater co-ordination and oversight in research and development.

There are very interesting new developments in terms of our international work, for example, we have realized that providing a service in Research and Development at a more competitive rate than is available elsewhere in the world in certain niche areas is emerging as a competitive advantage for us. Astronomy is an obvious example here, with a huge effort currently underway to position the subcontinent in all relevant areas of the spectrum, from radio, to optical to gamma ray. The best optical and gamma ray observatories of their kind in the world have been built at Sutherland and in the Gamsberg in Namibia respectively, largely with international funds, but with highly favourable terms for African astronomers. The South African Large Telescope at Sutherland in the Northern Cape will be completed in December 2004.

We have now put in a bid for the mother of all radio telescopes, the so-called Square Kilometre Array, possibly the most ambitious scientific instrument ever built. The location of the SKA here would mean an inflow of a significant portion of the 1 billion US$ cost of the instrument to South African high technology firms and construction companies. The location on the African continent, of the most sophisticated scientific instrument ever built will be a statement of geopolitical confidence in our region. Together with the other projects, it will greatly strengthen the region's contribution to skills development and knowledge generation in these fields, as well as acting as a locus for capacity building and public understanding of science.

In a more applied area, the partnership between the Department of Science and Technology, and the Department of Health has made it possible for the Medical Research Council to win a bid to host the European Developing Countries Clinical Trials Partnership Programme (EDCTP) in South Africa, a major initiative by the European Union to combat poverty-related communicable diseases. This is a 400 million Euro programme and significant proportion of these funds is now likely to flow into our medical research programmes. As we talk the European Union is setting up an African Branch Office, which will be launched in July 2004. The key in these very large global ventures is knowing your own strength and how to match them with the world's needs.

Similarly, we are making our contribution to second economy interventions. We are currently participating in the poverty alleviation programmes separately financed by Treasury. T here have been positive outcomes in, among others, bee keeping, papermaking, African design incorporation in clothing and textiles based on natural fibres, indigenous cattle production. Treasury has renewed financing for these programmes at a higher level in 2004.

Poverty reduction projects are concentrated in the poverty nodes as identified by the government's Integrated Sustainable Rural Development Plan (ISRDP) and have yielded over 2899 job opportunities; employing 1675 women, 862 youth and 68 people with disabilities.

There are other two-second economy interventions worth mentioning, namely, the Godisa and Tshumisano Programmes in which continuous learning and innovation are supported by research. A critical objective of these programmes is black economic empowerment in terms of both new Small Medium and Micro Enterprise (SMME) development and productivity improvements or technical mentoring for existing SMMEs.

We have over seven hundred small scale miners and almost one hundred manufacturing Small and Medium Enterprise's supported so far, but Godisa is set to double the level of services to SMMEs in terms of technical support over the next two years. Establishment of a further two centres is underway this year supporting the National Public Works' Emerging Contractors programme in Limpopo and KwaZulu-Natal and the Biodiesel Initiative in Limpopo.

Similarly the Tshumisano partnership programme which aims to bring a closer partnership between stations based at participating Universities of Technology and SMMEs has doubled its SMME client base from 206 in the 2002/2003 year to just over 400 SMMEs with about 1000 development projects. This will grow to a target of 800 SMEs this year.

DEPARTMENT OF MINERALS AND ENERGY

PETROLEUM

In terms of the prescribed price calculation formulas the retail price increase of petrol to be implemented 2 June 2004 needs to be 38 cents the retail per litre, the wholesale price increase for diesel (0,3 per cent sulphur) 30 c/l, the wholesale price increase for illuminating paraffin 42 c/l.

The Minister of Minerals and Energy and the Finance Minister is looking into ways of cushioning the price, a final announcement will be made on Monday.

The current price increases culminate from a combination of higher international crude oil prices, higher international petroleum product prices and a stronger US Dollar. Since the beginning of 2004, the price of Brent crude oil prices increased from a level below USD 30 per barrel to USD 38 per barrel on 10 May 2004. International product prices followed this same upward trend.

The average Rand/Dollar exchange rate weakened when compared with the previous price determination period with the average Rand/Dollar exchange rate for the period 26 April 2004 to 25 May 2004 was 6, 85 compared to 6,48 during the previous period.

The sharp increases in international crude oil and petroleum product prices can mainly be attributed to:

* Market uncertainties due to the current situation in the Middle East and lack of transparency in the crude oil industry;
* Crude oil supply cut-backs by OPEC in recent months;
* Higher demand emanating mainly from the US and China; and
* The strengthening of the US Dollar against other major currencies.

Future oil and refined petroleum prices are extremely difficult to predict but Government will continue to monitor these prices and consider whatever means to soften the impact for consumers.

It should however be noted that consumers will nevertheless be faced with substantial fuel prices. Consumers and especially motorists are therefore advised to acquaint themselves with fuel saving tips and use fuel as efficiently and as wisely as possible.

MINERAL DEVELOPMENT

Promulgation of the Minerals and Petroleum Development Resources Act took off without a hitch. As a result a number of applications have been received and the department is processing these applications. The applications are for greenfields/new applications and prospecting and companies already mining.

The department has trained officials on policies, legislation and regulations. Guidelines on how this would be implemented were also provided. A workshop on the implementation was arranged between the department and mining companies. A crack team will deal with any problems in this regard.

With regards to the companies' readiness for conversion, most companies have already presented their readiness to the department.

With regards to the mining charter, a lot of progress has been achieved and I refer you to the attached annexure on the kind of transactions that have taken place to date.

The department is also working on the amendment of the Mining Rights Act, specifically to improve access to precious metals and diamonds to enable local beneficiation. The amendment will ensure that precious metals and diamonds are first offered locally before being exported.

In an attempt to facilitate and assist local beneficiation, 16 women from rural areas have left for India last week to get training from TATA (a company in India) in jewellery and other ceramic manufacturing. These women, on their return, will train others in the manufacturing of jewellery and ceramics. This, together with the Virginia school for jewellery making, the Vukani Buntu and Kgabane will lead us into a jewellery-manufacturing era.

In the pursuance of the NEPAD objectives, the African Mining Minister's launched the African Mining Partnership in February, for which South Africa is the chair. Projects identified were for implementation and included beneficiation, ownership, environment, small-scale mining and the social plan. The steering committee is meeting again in Egypt in July to review the progress made on projects.

ELECTRICITY

Integrated National Electrification Programme, which is R1.2bn annual programme, will focus on bulk infrastructure in rural areas.

* Emphasis on developing lines and substations in Eastern Cape, KZN and Limpopo, targeting nodal zones where services are not available
* Highlights:
* Universal access has been achieved insofar as schools in Western Cape and Northern Cape
* Universal access insofar as households in Kgalagadi node
* Report on socio-economic impact, focusing on job creation and poverty alleviation due in November 2004

* Targeting 2000 rural schools in Eastern Cape, KZN and Limpopo this year on non-grid electrification by the end of the financial year
* Includes e-learning facility, audiovisual aids
* Maintenance provide opportunity for learnerships and job creation

Target BEE expenditure for 2004/5 has been set at 50% for BEE. Emphasis on involvement of BEE companies in planning (consulting engineers) where BEE participation needs to be improved.

Backlog is about 3 million households. We completed 258 000 connections in 2003 and this year will be even less due to focus on bulk infrastructure as already indicated.

A number of jobs will be created since 200 black owned SMME companies will be given contracts worth a total of R190 million rands for non-grid electrification.

Biogas is vigorously being pursued to be used as alternative to paraffin. It is safe, environmentally friendly and cheaper and can be used for cooking and heating and will form part of our free basic energy rollout targeting the poorest of the poor especially areas without infrastructure.

This programme will create employment opportunities in the rural areas, related to the distribution of the biogas, at the same time alleviating poverty.

New generation capacity (Independent Power Producer)

With peak demand expected to exceed supply by 2007/8, process has started to procure a new power station. The foreign direct investment is estimated at R15 billion.

DEPARTMENT OF COMMUNICATIONS

In relation to President Mbeki's State of the Nation Address, we will address the following:

* The Department of Communications, together with the Departments of Public Service and Administration, and Provincial and Local Government, are charged with ensuring that modern information and communication technologies (ICTs) are introduced in the development nodes as quickly as possible, to assist in all their developmental and governance efforts. In this regard a strategy is being worked out in consultation with the two departments, premiers and SALGA, and will be announced in the next three months.

* With regard to First and Second Economy Interventions the President highlighted the need for concrete interventions and emphasised the role of ICTs in this regard.

* The Department of Communications is implementing a strategy that has 2 focal points:

i. Programmes that support economic growth in the ICT sector
ii. Examine new ways in which Information and Communication Technologies can be accelerated in the advancement of the second economy and other sectors.

* Underserviced Areas Licenses (Usals)

The Minister has received recommendations from ICASA for the granting of USALs to the following bidders:

i. Amatole Telecoms: Amatole district, Eastern Cape
ii. Bokamoso Communications: Lejweleputswa district, Free States
iii. Bokone Telecoms: Capricorn district, Limpopo
iv. Ilizwe Telecoms: OR Tambo district, Eastern Cape
v. Karabotel: Central district, North West
vi. Kingdom Communications: Zululand district, KZN
vii. Thinta Thinta Telecoms: Ugu district, KZN.

* A decision on granting the licences to the USALs will be taken in the coming week. This should extend ICT to some of the most disadvantaged areas. As the president said, this should facilitate and enhance second economy interventions by government and first economy businesses to spur job creation in these communities.

* The Department welcomes the participation of historically disadvantaged individuals, women and communities in this process. This is a classical example of how policy and licence conditions can help us to meet the need of our people to take advantage of opportunities in and through the ICT sector.

* The licensing of the next 20 USALs will be initiated after a discussion has been held with the regulator to draw lessons from the first process.

* With regard to the Second National Telecommunications Operator, preparations are well underway and are being completed without any further undue delay. The Minister will submit a report on the process to Cabinet for a decision.

* We have completed the market study, which was required by law by December 2003. The Minister will soon be issuing determinations outlining activities.

* Broadcasting constitutes the biggest and most important provider of information to the South African public, especially those in the second economy. Given the potential of broadcasting, especially radio, to assist with meeting the challenges of the second economy, the following will be done:

* The establishment of a Satellite Communication Network has started with service providers still being sought, after which the first batch of 30 radio stations will be selected and thus allowing for the installation and community testing of the network. This network will offer a Dedicated Parliamentary Service, programme sharing among the community stations, as well as government information services. The entire process will be completed before the end of 2005
* Seven Community Radio Stations - 5 in Gauteng and 2 in the Western Cape - will be rolled-out before the end of this calendar year
* We will need in particular, to pay attention to a more adequate balance in terms of programming and language accessibility
* We embarking on a Public-Private-Partnership (PPP) model for Regional TV Services. This model is the accepted PPP project model for the National Treasury
* We are restructuring the Postbank to provide basic financial services to the poor and rural areas. In the next six months, the Post Office will issue a report of a model to deliver social grants using its extensive infrastructure network, based on the pilot projects that are currently running in the North West and Eastern Cape
* The Post Office will complete its roll-out of 600 Public Internet Terminals (PITs) over the MTEF period. The roll-out of 17 more Citizen's Post Offices is envisaged for this year.

* In responding to the need for immediate access to emergency services, we aim to provide one-stop service for emergency and life-threatening situations for all our citizens. The Department has established a pilot project in the Western Cape. The aim is to test the technology that will be rolled-out throughout the country. This service will be rolled out with the core Ministers and Premiers.

* The Department will soon table to Cabinet, the redrafted Convergence Bill. Comments received from the public and stakeholders have been analysed and incorporated into the draft Convergence Bill. It is our intention to table the bill after Cabinet approval to parliament during the last quarter of this year. This Bill is of fundamental importance in terms of ensuring South Africa's competitiveness in the global economy, the introduction of first class ICT infrastructure and services and the harmonization of the communications sector.

* In line with global technological trends, a digital migration strategy for broadcasting, to introduce new technologies and more services and greater choice to consumers - in terms of language and content- will be finalized in 2005.

* Also in line with global trends, we are finalizing regulations within the postal sector, which will bring about certainty to the industry players in the non-reserved areas before the end of this year.

* As part of reducing the cost of doing business in South Africa the Department has started with the process of reviewing the tariff structures in the ICT sector, especially the cost of telecommunications.

* The current industry-led ICT Empowerment Charter process, which seeks to redress the disparities in the ICT sector, is well advanced, following the release of the third draft charter. The Department welcomes the involvement and participation of key stakeholders in the process and supports the developments of internal coherence in respect of discussions on all the issues under debate within the sector. We are setting up an Inter-Departmental Task Team composed of the relevant ministries in order to finalise government position on the charter.

* At a global level there exist a vast gap between access to resources, information and communication technologies, infrastructure, networks and services between the developing nations and the developed nations. As part of addressing this gap, Cabinet has approved the launch of the African Advance Institute of ICT in the third quarter of this year.

REDRESSING AFRICA'S E-MARGINALISATION

* The President also highlighted the importance of South Africa's contribution to the renewal of the African continent.

* The Department of Communications has contributed significantly to the process that led to the establishment of the NEPAD ICT Task Force, the e-Africa Commission which is housed at the CSIR.

* The e-Africa Commission has prioritised two projects. East Africa Submarine Cable System (EASSY) that will complete the submarine cable loop around the African Continent as well as provide links to landlocked countries. This project is expected to be completed within three years. Several South African companies are involved.

* The second project is the NEPAD e-Schools project, whose principle objective is to ensure that all African children leaving our school system have the skills to function and participate in the information society. South Africa is in the group of 16 countries that form the first phase of implementation. Six South African schools will be identified to join other 94 schools from the 15 other African countries, to be part of the demonstration of the NEPAD e-schools project that will be launched before the end of this year.

* In the area of broadcasting, Cabinet recently approved the corporatisation of Channel Africa as a subsidiary company of the SABC. The corporatisation of Channel Africa will be finalised this financial year. A new board has been appointed and will meet by the end of June.

Issued by: Ministry of Science and Technology
28 May 2004

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