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Date : 30/10/2005
Source: Ministry of Trade and Industry
Title: Mpahlwa: Monitoring and Evaluation media briefing, October 2005


    Media briefing by the Honourable Minister of Trade and Industry Mandisi Mpahlwa: Economic, Investment and Employment Cluster’s Programme of Action (Cycle Four report), Cape Town

Introduction

This media briefing provides an update on Government’s Programme of Action (POA) in Cycle 4, as reported to the Cabinet Committee on 19 October 2005. As President Thabo Mbeki explained in his State of the Nation Address this year, the aim of the POA is “to achieve higher rates of economic growth and development, improve the quality of life of all our people, and consolidate our social cohesion”. President Mbeki further stated that the POA for the 2005/06 financial years is “premised on the broad objectives to increase investment in the economy, lower the cost of doing business, improve economic inclusion and provide the skills required by the economy.” The focus of this media briefing is therefore on the significant progress that has been achieved towards implementing these strategic objectives and the key activities of the POA. The key activities discussed here are as prioritised and nominated for discussion by lead Economic Cluster Departments to Cabinet.

1. Broad Economic Stance

1.1. The target for accelerated growth over the period 2004-2014 has been set at between 6 and 7% for GDP, investment growth of 10%, employment creation of 500,000 jobs, and export growth of 10%.

1.2. The efficient and effective implementation of the Micro Economic Reform Strategy (MERS) has attained useful momentum. To support this momentum, the Economic Cluster is undertaking a review of the alignment between the POA, the Medium Term Strategic Framework (MTSF) and MERS. Initial work is being led by The Presidency in consultation with lead Departments of the Cluster. A planning workshop to consider next year’s POA will seek to focus the efforts of the Economic Cluster on the most critical issues to achieve accelerated and shared growth.

2. Increased levels of investment in the public sector

2.1. A consultation document on the National Electricity Regulator (NER) to establish developmental electricity tariffs has been completed, with all stakeholder comments incorporated. The main objective of this study is to facilitate investment by 2006. A proposal for tariffs for the next three years is to be approved by the NER on 14 February 2006.

3. Increased levels of investment in the First Economy

3.1. The Department of Labour is reviewing the efficiency and effectiveness of (National Economic Development and Labour Council) NEDLAC as a vehicle for social dialogue and partnerships. Completion of this study is expected by January 2006. Thus far, substantive progress has been made and two NEDLAC reports have been presented to the President’s Joint Working Group. A progress report on Growth and Development Summit (GDS) implementation has been finalised and will be presented at the next President’s Joint Working Group.

4. Lower cost structures and enhanced competition

4.1. Government is keen to enhance competition in the transport sector. This is being pursued through the introduction of multiple competing operators for rail and ports. A Branch Line Strategy will be completed by January 2006. In this regard the revival of some parts of branch lines in the Northern Cape and KwaZulu-Natal has already begun.

4.2. Other initiatives to intensify competition in South Africa are being undertaken in the information and communications technology (ICT) sector, where the Department of Communications is facilitating broadband technology for the needs of the first and second economies. A benchmark study on best-in-class practice and a stakeholder discussion paper on broadband policy are in the process of being developed. A programme to modernise ICT infrastructure is also being initiated.

4.4 Government is in the process of implementing the taxi recapitalisation programme. Vehicle safety requirements have been published in September 2005 and an intermediate phase will target taxi operators that want to exit the industry and old and unsafe vehicles. These will be taken off the road by the end of 2005.

4.5 With regard to Import Parity Pricing, Cabinet deliberated on the matter and concluded to continue engaging with the private sector to ensure that Import Parity Pricing is phased down to Non-discriminatory Pricing within a reasonable timeframe. Furthermore, the Competition Act and Policy will be strengthened, and future fiscal incentives will be designed to encourage more favourable pricing behaviours within the market.

5. Key sector development strategies

5.1. In the cultural industries, intensive interaction has been undertaken with all stakeholders to strengthen coordination between national, provincial and local government. A Cultural Industries Inter-departmental Body, inclusive of all spheres of government is to be established by January 2006.

5.2. Government is undertaking rigorous procedures to support the implementation of e-education, e-health and e-government. The development of digital lessons commenced in October 2005, and an e-education prototype lesson plan tool will be completed by the end of October 2005. Research of user and business requirements for small, medium and micro enterprises (SMMEs) is on track and the project is moving at a commendable pace.

5.3. In order to enhance the competitiveness of the clothing and textiles sector, a review of the tariffs on textiles is being conducted. The aim of the review is to achieve lower input costs for the clothing sector. Further research is being undertaken on the value chain as part of the Customised Sector Programme (CSP) process. Other interventions include improving customs inspection to reduce illegal or under-invoiced imports of clothing.

7. Enhance economic inclusion and impact on the Second Economy

7.1 The final Black Economic Empowerment (BEE) Codes of Good Practice was presented to Cabinet on 12 October 2005 and the second phase is due to be issued for public comment at the end of December. On this note, Government anticipates strategic and constructive input from the public on the BEE Codes.

7.2 The agricultural credit scheme to provide capital for emerging farmers and accelerate the emerging farmer support programmes has been rolled out in Sekhukhune, OR Tambo and Mkhanyakude districts. The production loan scheme has been implemented and Credit Evaluation Committees have been successfully established. Enhancing the development and competitiveness of the agricultural sector in rural areas is a key intervention to bridge the gap between the first and the second economies and is high on Government’s agenda.

7.3 The Integrated Small Business Strategy has been completed and approved by Cabinet subject to amendments. The Integrated Strategy to support Small Business Development presents a more refined effort to direct tailored support for stimulating SMMEs. Cabinet approved the strategy in October 2005 and agreed that the strategy be modified to augment government’s procurement policies, improve access to finance for small business (especially in the R10 000 to R250 000 bracket), and encourage the creation of women-owned, rural and community enterprises. Key implementation aspects will be discussed at an SMME Summit taking place at Sun City from today.

8. A labour force with skills needed by the economy

8.1 Good progress is being made on strengthening the South African skills base and enhancing the institutional capacity of Government. A Human Resource Development (HRD) strategy has been presented to government Departments. The Department of Labour has implemented performance agreements with sector education and training authorities (SETAs) and National Skills Fund service providers. Government will be looking at mechanisms to strengthen implementation co-ordination.

9. Increased Research and Development (R&D) Spending and the diffusion of new technologies

9.1 The development of our region as a global hub for astronomy and science and technology has progressed, with the planning for the launch of the Southern Africa Large Telescope (SALT) in November 2005. Consultation on a South African space agency has been broad and is ongoing and the project is running according to schedule.

10. Co-ordinated second economy interventions

10.1 Several strategies are being employed to address the development of the Second Economy. Amongst these, the completion of the financing protocol for the Urban Renewal and Urban Development Nodes is a priority. Business plans for all Government Forum of South African Directors-General (FOSAD) Clusters’ Nodal interventions are being finalised. The identification of specific project plans that will address direct challenges and priorities in the nodes is also being finalised.

11. Conclusion

Since Cycle 3 of the POA, progress has been made in key areas of research and implementation although challenges do exist in meeting stipulated deadlines of project completion. Government is geared towards achieving its stipulated POA objectives. The Economic Cluster is determined to overcome all challenges by forging the necessary strategic alliances and partnerships to enhance job creation and grow the economy, with a particular focus on bridging the gap between the first and second economies.

Issued by: Ministry of Trade and Industry
30 October 2005
   

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