Date: 13/04/2005
Source: Ministry of Trade and Industry
Title: Mpahlwa: Trade and Industry Dept Budget Vote debate, NCOP
Budget Vote 32 National Council of Provinces address by the Minister of Trade and Industry Mandisi Mpahlwa
Chairperson of the NCOP;
Honourable Members of Parliament;
Distinguished guests; and,
Ladies and gentlemen
Delivery on the People’s Contract
Government has developed a work programme detailing key activities of every national department, thus ensuring a coordinated and integrated approach to fighting poverty and unemployment. This programme of action, which forms the essence of the People’s Contract, is available on the government website as a public commitment to delivery. Departments submit monthly reports on progress in respect of these commitments, complemented by imbizos or media briefings.
This degree of accountability and transparency is unprecedented. Through publishing an updated programme of action on its website, our government is enabling its citizens to monitor its progress in respect of its commitments. Chairperson, where else in the world would you expect to find such an approach by government?
Our government has performed well at a national level, meeting 72 percent of the commitments in the programme of action within the specified time frame. This high level of delivery was emulated by the dti, which delivered on 13 of its 16 flagship programmes identified last year, with significant progress on the remaining three.
Some of our key achievements include the launch of the BEE Codes of Good Practice, merging of NAMAC and Ntsika into the Small Enterprise Development Agency, completion of the first phase of the Apex Fund, submission of a cooperatives policy and Bill, and publishing a consumer protection policy.
In that period we have seen stronger economic performance and higher levels of business and consumer confidence. Economic growth was 3.7% in 2004 and is expected to increase to 4.3% in 2005. Our growth range has increased from 2%-3% to 3%-4%. Our investment rate has increased from 14% to 17% of gross domestic product. Business confidence is at a record high.
This positive performance is reflected at the Provincial level. The recent Labour Force Survey statistics released by Statistics South Africa indicate a marked downward trend in unemployment in some provinces. Unemployment in the Northern Cape decreased from 27.6% in 2003 to 22.3% and in the Western Cape, unemployment declined from 20.7% to 16.9%.
This is good progress, and we must commit to advancing these gains much further. In this regard, most provinces have hosted Growth and Development Summits involving the social partners, and have established important compacts. We applaud these efforts and commit to fully support provinces in the implementation of these agreements.
An active, coordinated approach for a growing economy
To reinforce and sustain this positive trajectory, government is focusing on three key areas of intervention, namely increasing the rate of investment, improving levels of competitiveness, and broadening economic participation. This requires that we accelerate the Microeconomic Reform Strategy, which is government’s primary strategy for addressing constraints to economic growth and employment creation. The coordinated implementation of MERS will ensure that the economy grows in a manner that generates decent work for South Africa’s people and realises the full potential of our country’s resources, diversity and creative energies.
Higher levels of investment
Efforts will be intensified to increase investment in key areas of the economy. The customised sector programmes will channel investment into sectors that demonstrate significant growth and/ or employment creation potential, such as business process outsourcing, aerospace, film and agro-processing. Government will also provide active support to those sectors, such as mining and clothing and textiles, which are in distress, with the aim of protecting jobs and enhancing long-term sustainability of the sectors.
In order to maximise the benefits derived from a more targeted approach to sector development, interventions in priority sectors must be mutually reinforced by Provincial Growth and Development Strategies. This requires that the development of sectors of local relevance be well aligned with national strategies to build a growing, competitive economy.
Our work in sectors will be complemented with the provision of critical economic infrastructure. In this light we will continue to promote industrial development zones (IDZs), to create a more equitable geographic spread of industrial activity.
The last two years has also witnessed positive progress in the construction of the IDZs in East London and Coega. Having signalled government’s commitment to support these projects, interest is being received from a number of potential investors. Valuable lessons have been gained during the construction process. This includes the need to amend the current regulatory framework, better clarification of roles and responsibilities, and the need for enhanced coordination across the three spheres of government. The regulatory amendments will be completed by September 2005. We are also actively engaging relevant departments and entities across the three spheres of government to provide appropriate incentives and services to such investors.
Chairperson, trade policy is an important component of our efforts to expand market access and increase levels of efficiency and investment in our economy. Continued negotiation for preferential market access, and continued expansion of market size through domestic economic empowerment and regional economic integration, makes our economy more attractive to both domestic and international investors. It remains important, however, that there is greater collaboration and coherence between what provinces do to attract investment and the work that is done through TISA, the foreign economic representatives and the department of foreign affairs.
Enhancing competitiveness
Increasing underlying competitiveness, rather than dependence on a weak exchange rate, is critical for the survival and growth of our firms and sectors. A number of incentives are being provided to both large and small businesses to improve their competitiveness. This includes incentives under the Small and Medium Enterprise Development Programme (SMEDP), the Competitiveness Fund, the Sector Partnership Fund and the Black Business Supplier Development Programme.
More than 12 000 enterprises have benefited from the SMEDP. The Competitiveness Fund supported more than 1 200 enterprises. The Sector Partnership Fund has assisted over 85 successful partnerships consisting of over 600 individual enterprises. And the Black Business Supplier Development Programme has assisted over 600 small, black-owned enterprises to improve systems, quality, skills and marketability. We are examining these numbers, and those of our other agencies, to ensure that we are achieving the imperative of strong geographic balance and impact.
As part of our contribution to improving the overall environment for competitiveness, government will address critical pricing structures and efficiencies within the South African economy. This includes streamlining administrative processes and systems, providing cost effective administered pricing, and addressing import parity pricing. Lowering these costs will further stimulate domestic demand and create significant business and employment opportunities.
We also need to lower the cost of business at provincial and local levels, whilst strengthening the framework for sustainable development.
Government is concerned to ensure reliable, affordable and socially efficient provision of essential services at local government level. Provision of these services is critical for the implementation of the Microeconomic Reform Strategy, particularly ensuring increased economic activity in underdeveloped areas and broadening economic participation. The provision of appropriate, cost-effective and accessible social infrastructure remains a critical responsibility of government.
Broadening economic participation
A comprehensive package of interventions exists to increase the number of persons that are participating meaningfully in the economy. The broad-based Black Economic Empowerment Strategy with its regulatory instruments is the overarching framework to broaden economic participation. Complementing this strategy is a number of programmes to facilitate the growth of cooperatives, micro-enterprises and small businesses.
In 2004 the National Small Business Act was amended in 2004 to provide for the merging of Ntsika and NAMAC and the birth of an integrated, single Small Enterprise Development Agency (SEDA). SEDA will be engaging with the provincial and local government to set up local offices. The Integrated Small Enterprise Strategy will also be rolled-out this year.
To address the compliance burden on SMMEs, the dti, alongside the Presidency and National Treasury, is conducting a regulatory impact review. We are also embarking on a study to institutionalise regulatory impact assessments and minimise adverse effects of new legislation on SMMEs. My department has already established an Impact Assessment Unit that will monitor the important developments and policy impacts of policies and legislation on the real economy.
Access to affordable finance is a key element of the comprehensive package to broaden economic participation. In this regard, the National Empowerment Fund (NEF) was relaunched on the 31st of May 2004 and re-capacitated at executive management level in order for it to effectively carry out its mandate. The NEF was capitalised to an amount of R150 million during 2004/2005, which has now been fully committed to BEE transactions. A key development is that the NEF will substantially expand its reach to the poorer provinces.
Furthermore, Khula Enterprise Finance is engaged in a process of repackaging its financing activities and introduced a new strategic direction that is premised on maximising access to finance through increasing its growth in disbursements by 20% per annum, and expanding the impact through focusing on geographic spread of its disbursements. More importantly, Khula will improve its impact and outreach by introducing new delivery channels such as SEDA access points, as well as by forging new corporate partnerships that have better outreach across the country.
In recognition that the financial services needs of micro-enterprises are different to those of small and medium enterprises, the department has established the South African Micro-finance Apex Fund. The fund will provide loans of up to R10, 000. Various retail channels such as micro-credit organisations (MCOs), Financial Services Co-ops (FSCs) and Post Bank, across all the nine provinces, will serve as delivery mechanisms.
Chairperson, the development of co-operatives has also become a critical priority of the government strategy to grow the economy, promote broad participation, and substantially increase sustainable livelihoods. The dti is promoting co-operatives across all sectors of the economy. We have completed consultation with all stakeholders on a new co-operatives policy and strategy. The Co-operatives Bill is currently being debated in Parliament. Indicative of government’s commitment to building the co-operative movement, the work of the department is being strengthened by legislation such as National Treasury’s Co-operative Banks Bill and the Department of Agriculture’s Mafisa. Furthermore, Khula, SEDA and other relevant dti institutions have been given the mandate to strongly support the co-operatives. Instruments to build micro and small enterprises, to strengthen cooperatives, and to increase access to finance will complement each other to ensure maximum impact. For example, the Apex Fund will be an important tool for facilitating the co-operatives programme.
Increasing intergovernmental cooperation
The issue of intergovernmental coordination has emerged as an important requirement for achieving the goals that we have set for ourselves. There already exists a strong orientation towards getting things done and ensuring provincial-wide outreach through collaboration between the relevant organisations and institutions.
It is essential for economic development and planning that the National Spatial Development Perspective, Provincial Growth and Development Strategies and Integrated Development Plans are effectively aligned. We are therefore looking forward to a more focused programme for Minmec, with a view to deepening coherence and coordination to maximize the impact and reach of government’s programmes. The department will interact with local government in a more structured way.
Attention is being given to increasing the specialized skills of the dti and building its capacity to co-ordinate interventions in the real economy. Key areas for capacity building are: research, sector analyses and development, and policy coordination. In so doing the department will be able to attach greater weight to its role in building the real economy.
Chairperson, as highlighted by the people’s contract, we are committed to drastically reducing poverty and unemployment. We realise that economic growth is a means to a better life for all, and that all our efforts must, ultimately, support the creation of more, better and sustainable jobs and livelihoods for the people of South Africa. Hence, in the year ahead, the dti, through a more active industrial and trade policy, will be hard at work to promote high rates of economic growth, employment and equity. In this regard, the dti will review its performance indicators to ensure that it is making the best contribution it can to fulfil the People’s Contract.
We therefore table Vote 32 for your approval.
I would like to thank the honourable MECs and Heads of Department here today for their cooperation and support. Lindiwe Hendricks, my Deputy Minister and friend, your wisdom and strength as always, is greatly appreciated. Thank you, too, to the staff of the dti and its agencies. A special thank you to the former Director-General, Alistair Ruiters, for his contribution to the restructuring of the dti. Finally, my congratulations to Mr Tshediso Matona, who will be Acting DG until a new DG is appointed.
Issued by: Ministry of Trade and Industry
13 April 2005
Source: Ministry of Trade and Industry
Title: Mpahlwa: Trade and Industry Dept Budget Vote debate, NCOP
Budget Vote 32 National Council of Provinces address by the Minister of Trade and Industry Mandisi Mpahlwa
Chairperson of the NCOP;
Honourable Members of Parliament;
Distinguished guests; and,
Ladies and gentlemen
Delivery on the People’s Contract
Government has developed a work programme detailing key activities of every national department, thus ensuring a coordinated and integrated approach to fighting poverty and unemployment. This programme of action, which forms the essence of the People’s Contract, is available on the government website as a public commitment to delivery. Departments submit monthly reports on progress in respect of these commitments, complemented by imbizos or media briefings.
This degree of accountability and transparency is unprecedented. Through publishing an updated programme of action on its website, our government is enabling its citizens to monitor its progress in respect of its commitments. Chairperson, where else in the world would you expect to find such an approach by government?
Our government has performed well at a national level, meeting 72 percent of the commitments in the programme of action within the specified time frame. This high level of delivery was emulated by the dti, which delivered on 13 of its 16 flagship programmes identified last year, with significant progress on the remaining three.
Some of our key achievements include the launch of the BEE Codes of Good Practice, merging of NAMAC and Ntsika into the Small Enterprise Development Agency, completion of the first phase of the Apex Fund, submission of a cooperatives policy and Bill, and publishing a consumer protection policy.
In that period we have seen stronger economic performance and higher levels of business and consumer confidence. Economic growth was 3.7% in 2004 and is expected to increase to 4.3% in 2005. Our growth range has increased from 2%-3% to 3%-4%. Our investment rate has increased from 14% to 17% of gross domestic product. Business confidence is at a record high.
This positive performance is reflected at the Provincial level. The recent Labour Force Survey statistics released by Statistics South Africa indicate a marked downward trend in unemployment in some provinces. Unemployment in the Northern Cape decreased from 27.6% in 2003 to 22.3% and in the Western Cape, unemployment declined from 20.7% to 16.9%.
This is good progress, and we must commit to advancing these gains much further. In this regard, most provinces have hosted Growth and Development Summits involving the social partners, and have established important compacts. We applaud these efforts and commit to fully support provinces in the implementation of these agreements.
An active, coordinated approach for a growing economy
To reinforce and sustain this positive trajectory, government is focusing on three key areas of intervention, namely increasing the rate of investment, improving levels of competitiveness, and broadening economic participation. This requires that we accelerate the Microeconomic Reform Strategy, which is government’s primary strategy for addressing constraints to economic growth and employment creation. The coordinated implementation of MERS will ensure that the economy grows in a manner that generates decent work for South Africa’s people and realises the full potential of our country’s resources, diversity and creative energies.
Higher levels of investment
Efforts will be intensified to increase investment in key areas of the economy. The customised sector programmes will channel investment into sectors that demonstrate significant growth and/ or employment creation potential, such as business process outsourcing, aerospace, film and agro-processing. Government will also provide active support to those sectors, such as mining and clothing and textiles, which are in distress, with the aim of protecting jobs and enhancing long-term sustainability of the sectors.
In order to maximise the benefits derived from a more targeted approach to sector development, interventions in priority sectors must be mutually reinforced by Provincial Growth and Development Strategies. This requires that the development of sectors of local relevance be well aligned with national strategies to build a growing, competitive economy.
Our work in sectors will be complemented with the provision of critical economic infrastructure. In this light we will continue to promote industrial development zones (IDZs), to create a more equitable geographic spread of industrial activity.
The last two years has also witnessed positive progress in the construction of the IDZs in East London and Coega. Having signalled government’s commitment to support these projects, interest is being received from a number of potential investors. Valuable lessons have been gained during the construction process. This includes the need to amend the current regulatory framework, better clarification of roles and responsibilities, and the need for enhanced coordination across the three spheres of government. The regulatory amendments will be completed by September 2005. We are also actively engaging relevant departments and entities across the three spheres of government to provide appropriate incentives and services to such investors.
Chairperson, trade policy is an important component of our efforts to expand market access and increase levels of efficiency and investment in our economy. Continued negotiation for preferential market access, and continued expansion of market size through domestic economic empowerment and regional economic integration, makes our economy more attractive to both domestic and international investors. It remains important, however, that there is greater collaboration and coherence between what provinces do to attract investment and the work that is done through TISA, the foreign economic representatives and the department of foreign affairs.
Enhancing competitiveness
Increasing underlying competitiveness, rather than dependence on a weak exchange rate, is critical for the survival and growth of our firms and sectors. A number of incentives are being provided to both large and small businesses to improve their competitiveness. This includes incentives under the Small and Medium Enterprise Development Programme (SMEDP), the Competitiveness Fund, the Sector Partnership Fund and the Black Business Supplier Development Programme.
More than 12 000 enterprises have benefited from the SMEDP. The Competitiveness Fund supported more than 1 200 enterprises. The Sector Partnership Fund has assisted over 85 successful partnerships consisting of over 600 individual enterprises. And the Black Business Supplier Development Programme has assisted over 600 small, black-owned enterprises to improve systems, quality, skills and marketability. We are examining these numbers, and those of our other agencies, to ensure that we are achieving the imperative of strong geographic balance and impact.
As part of our contribution to improving the overall environment for competitiveness, government will address critical pricing structures and efficiencies within the South African economy. This includes streamlining administrative processes and systems, providing cost effective administered pricing, and addressing import parity pricing. Lowering these costs will further stimulate domestic demand and create significant business and employment opportunities.
We also need to lower the cost of business at provincial and local levels, whilst strengthening the framework for sustainable development.
Government is concerned to ensure reliable, affordable and socially efficient provision of essential services at local government level. Provision of these services is critical for the implementation of the Microeconomic Reform Strategy, particularly ensuring increased economic activity in underdeveloped areas and broadening economic participation. The provision of appropriate, cost-effective and accessible social infrastructure remains a critical responsibility of government.
Broadening economic participation
A comprehensive package of interventions exists to increase the number of persons that are participating meaningfully in the economy. The broad-based Black Economic Empowerment Strategy with its regulatory instruments is the overarching framework to broaden economic participation. Complementing this strategy is a number of programmes to facilitate the growth of cooperatives, micro-enterprises and small businesses.
In 2004 the National Small Business Act was amended in 2004 to provide for the merging of Ntsika and NAMAC and the birth of an integrated, single Small Enterprise Development Agency (SEDA). SEDA will be engaging with the provincial and local government to set up local offices. The Integrated Small Enterprise Strategy will also be rolled-out this year.
To address the compliance burden on SMMEs, the dti, alongside the Presidency and National Treasury, is conducting a regulatory impact review. We are also embarking on a study to institutionalise regulatory impact assessments and minimise adverse effects of new legislation on SMMEs. My department has already established an Impact Assessment Unit that will monitor the important developments and policy impacts of policies and legislation on the real economy.
Access to affordable finance is a key element of the comprehensive package to broaden economic participation. In this regard, the National Empowerment Fund (NEF) was relaunched on the 31st of May 2004 and re-capacitated at executive management level in order for it to effectively carry out its mandate. The NEF was capitalised to an amount of R150 million during 2004/2005, which has now been fully committed to BEE transactions. A key development is that the NEF will substantially expand its reach to the poorer provinces.
Furthermore, Khula Enterprise Finance is engaged in a process of repackaging its financing activities and introduced a new strategic direction that is premised on maximising access to finance through increasing its growth in disbursements by 20% per annum, and expanding the impact through focusing on geographic spread of its disbursements. More importantly, Khula will improve its impact and outreach by introducing new delivery channels such as SEDA access points, as well as by forging new corporate partnerships that have better outreach across the country.
In recognition that the financial services needs of micro-enterprises are different to those of small and medium enterprises, the department has established the South African Micro-finance Apex Fund. The fund will provide loans of up to R10, 000. Various retail channels such as micro-credit organisations (MCOs), Financial Services Co-ops (FSCs) and Post Bank, across all the nine provinces, will serve as delivery mechanisms.
Chairperson, the development of co-operatives has also become a critical priority of the government strategy to grow the economy, promote broad participation, and substantially increase sustainable livelihoods. The dti is promoting co-operatives across all sectors of the economy. We have completed consultation with all stakeholders on a new co-operatives policy and strategy. The Co-operatives Bill is currently being debated in Parliament. Indicative of government’s commitment to building the co-operative movement, the work of the department is being strengthened by legislation such as National Treasury’s Co-operative Banks Bill and the Department of Agriculture’s Mafisa. Furthermore, Khula, SEDA and other relevant dti institutions have been given the mandate to strongly support the co-operatives. Instruments to build micro and small enterprises, to strengthen cooperatives, and to increase access to finance will complement each other to ensure maximum impact. For example, the Apex Fund will be an important tool for facilitating the co-operatives programme.
Increasing intergovernmental cooperation
The issue of intergovernmental coordination has emerged as an important requirement for achieving the goals that we have set for ourselves. There already exists a strong orientation towards getting things done and ensuring provincial-wide outreach through collaboration between the relevant organisations and institutions.
It is essential for economic development and planning that the National Spatial Development Perspective, Provincial Growth and Development Strategies and Integrated Development Plans are effectively aligned. We are therefore looking forward to a more focused programme for Minmec, with a view to deepening coherence and coordination to maximize the impact and reach of government’s programmes. The department will interact with local government in a more structured way.
Attention is being given to increasing the specialized skills of the dti and building its capacity to co-ordinate interventions in the real economy. Key areas for capacity building are: research, sector analyses and development, and policy coordination. In so doing the department will be able to attach greater weight to its role in building the real economy.
Chairperson, as highlighted by the people’s contract, we are committed to drastically reducing poverty and unemployment. We realise that economic growth is a means to a better life for all, and that all our efforts must, ultimately, support the creation of more, better and sustainable jobs and livelihoods for the people of South Africa. Hence, in the year ahead, the dti, through a more active industrial and trade policy, will be hard at work to promote high rates of economic growth, employment and equity. In this regard, the dti will review its performance indicators to ensure that it is making the best contribution it can to fulfil the People’s Contract.
We therefore table Vote 32 for your approval.
I would like to thank the honourable MECs and Heads of Department here today for their cooperation and support. Lindiwe Hendricks, my Deputy Minister and friend, your wisdom and strength as always, is greatly appreciated. Thank you, too, to the staff of the dti and its agencies. A special thank you to the former Director-General, Alistair Ruiters, for his contribution to the restructuring of the dti. Finally, my congratulations to Mr Tshediso Matona, who will be Acting DG until a new DG is appointed.
Issued by: Ministry of Trade and Industry
13 April 2005
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