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Published: 04 Jul 2006
|Erwin: Economic, Investment and Employment Cluster’s Programme of Action (04/07/2006)|
Source: Department of Public Enterprises
Title: Erwin: Economic, Investment and Employment Cluster’s Programme of Action
Media briefing on Economic, Investment and Employment Cluster’s Programme of Action by Public Enterprises Minister A Erwin, Union Buildings
In contributing towards government's effort to halve unemployment and poverty by 2014, the Economic Cluster is working towards a critical growth path, drawing on the priority projects of the Programme of Action (PoA). The recent interest rate hike and the anticipated slowdown in global economic growth confirms the strategy taken by government – namely, to prioritise those Accelerated and Shared Growth Initiative of South Africa (AsgiSA) interventions that will create the basis for sustainable economic growth and employment creation in South Africa.
This media briefing highlights progress along this path.
The Cluster is constantly reviewing strategic projects and has discussed relevant constraints and bottlenecks with Cabinet. The Cluster will be presenting a number of options to Cabinet to sharpen its focus for 2006/07, with a view to having fewer and more strategic projects that will deliver significant results towards the achievement of that critical path.
This report provides an update on existing projects of the Economic Cluster’s Programme of Action for 2006/07.
The Cluster focus groups are as follows (with lead departments in brackets):
* Ensuring aligned and supportive macro-economic approaches (National Treasury (NT) / Policy Unit in The Presidency (PCAS)).
* Building a competitive and labour-absorbing economy (Department of Trade and Industry (DTI) / Department of Science and Technology (DST)).
* Massively increase public investment (Department of Water Affairs and Forestry (DWAF) / Department of Transport (DOT)).
* Equity and development (Department of Public Enterprises (DPE) / Department of Provincial and Local Government (DPLG)).
* Ensure priority skills for the economy (Department of Labour (DOL) /Department of Education (DOE)).
Key issues from the Cluster focus groups
The work of the Modelling focus group has begun and is to be integrated into the economic cluster. Initial work has been presented. The work affirms the need for increased infrastructure investment, particularly social infrastructure in less developed areas. It affirms the positive spin-offs of social infrastructure investment in areas with relatively limited economic potential.
Work of the presidential task team on bio-fuels is on track to report to the Cabinet Lekgotla in July, with a final strategy due in December 2006. Within the industrial strategy framework, the Cluster will be focusing its attention on growth constraints and opportunities. The strategy is on track to go to the July Cabinet Lekgotla and will include a focus on Cluster implementation and an alignment to Government’s budgetary processes.
In terms of bringing down the costs of Information and Communication Technology (ICT), the Minister of Communications has announced a number of interventions including: reducing the cost of international connectivity through the New Partnership for Africa’s Development (NEPAD) terrestrial and sub-marine broadband network, increasing access and services through wireless broadband, removing monopoly on the last mile, unbundling the local loop, removing monopoly on international gateway access and establishment of a broadband task team.
Government is positive and committed to ensure that that these efforts will result in a substantial decline, on the cost side, of an already established and reliable network.
The strategy for business process outsourcing and off shoring (BPO&O) currently includes marketing, incentive package design, skills development, quality assurance and industry mobilisation. The potential of the sector has been confirmed with growing interest in South Africa as an outsourcing destination. The first targeted company has indicated its intention to set up a 2 500 seat centre. In addition the training programme for 4 000 matriculants has been designed.
This will go towards addressing the skills shortage that exists in the sector. An Assistance Programme for BPO&O has been designed and will be offered to companies that are to invest in the sector. In terms of the project aimed at the development of call centres in five poor communities (led by Department of Public Enterprises) a number of benefits (e.g. subsidised training and low cost building infrastructure) have been packaged for small businesses. To further this project, government is to determine specific policy directives to encourage the use of rural call centres and to finalise the design of specific industrial incentives.
In terms of the promotion of the tourism sector, led by Department of Environmental Affairs and Tourism (DEAT), the launch of Tourism Enterprise Programme with funding of R185 million for 2006/07 to 2008/09 has been given the go-ahead. The Business Trust has committed an additional R43 million to this project, and we thank them for their efforts in the promotion of this labour-intensive sector. The Cluster is speaking to the Department of Home Affairs to develop improved data collection.
In our project aimed at promoting Research and Development (R&D) through increasing public sector R&D and increasing total R&D spending to 1% of Gross Domestic Products (GDP) (led by DST), the economic modelling of a tax incentive for private sector spending on R&D has been completed. The Minister of Finance is to allow for 150% expensing treatment of spending by private sector, as well as a higher rate of depreciation for R&D capital equipment.
The Cluster is reviewing capital expenditure procurement of State Owned Enterprises (SOEs), assessing how existing government policies are affecting the ability to optimise the development impact of the SOE Capex procurement. A Competitive South African Supplier Development Programme will be ready for Cabinet consideration in July 2006. A challenge that the team is taking into consideration is to develop a procurement policy, that will not result in significant price premiums, through giving local industry preference. Hence the focus is on local supplier upgrading rather than local industry protection. A further challenge is to rebuild SOE procurement capabilities (of capital goods) through an incremental process. This project will be enhanced by the development of systems to monitor infrastructure implementation and impact on utilising accessible electronic access.
In terms of support for Small and Medium Micro Enterprises (SMMEs), a project in the Cluster is considering how government procurement can be targeted to assist SMMEs. The DTI is currently analysing data on Government Procurement to ascertain a list of relevant products and services, for procurement preference to SMMEs. In terms of addressing the financing gap for SMMEs there has been progress on the Apex Fund and MAFISA unifying infrastructure arrangements. Government is sensitive to ensuring that financial and non-financial support for SMMEs is addressed concurrently. Therefore the Cluster has asked the relevant departments to increase their explicit emphasis on linking financial and non-financial support so that the chances of enterprise success are increased.
Major development of the Olifants River System led by DWAF, including the construction of the De Hoop Dam, is to be completed by 2010. We are pleased that there has been progress on Environmental authorisation to the satisfaction of relevant parties. The Cluster will be ensuring that we strengthen synergy with other infrastructure roll-out plans (for example, the laying of fibre cables).
The project led by DOT that is considering the development of a Durban-Gauteng Corridor is progressing beyond the conceptual stage with terms of reference for City Deep Depot completed, and gone out for tender. The Cluster will be seeking to strengthen inter-governmental cooperation (national, provincial, and local, SOE) to enhance better integrated planning for freight. The DPLG is leading a team within the Cluster that is seeking to improve street trading infrastructure. This project is expected to impact directly on the million street traders that are part of the second economy. Currently the Cluster team is reviewing bylaws seeking ways to better accommodate street trading infrastructure and seeking the best way to fund initiatives under this programme.
In terms of our attempts to achieve our 2006/07 annual targets for the National Skills Development Strategy, work has begun on a framework of occupations to assist in the identification of scarce and critical skills. The project is aligned to Joint Initiative on Priority Skills Acquisition (JIPSA) and has begun initial work on a database of skills needs for AsgiSA projects.
Closely linked to this project is the implementation of policy framework relating to immigrant Labour (Department of Home Affairs (DHA)). The list for skills importation is developed on an annual basis. The DOL has evaluated sector skills plans for 2006/07 from 23 Sector Education and Training Authorities (Setas), and is developing revised scarce and critical skills lists with DTI in time for gazetting in August.
Since its launch, JIPSA has been resourced with a full-time secretariat. Consultations have begun to develop a better picture of the skills requirements underpinning AsgiSA projects and initiatives. Priorities are focusing on an operational plan for Tourism and BPO&O skills requirements, and the identification of cross-cutting skills in finance, project management and management in general. Strategies are being finalised for the acquisition of intermediate artisan and technical skills for ASGISA infrastructure, ICT and unemployed graduates.
It has been decided that the Unemployment Insurance Fund (UIF) database is the most suitable for the foundation database for the Department of Labour's Employment Services System. To accommodate this, the data fields are being broadened, and upgrading of the DoL intranet has begun. Linkages between the new system and related systems such as the Dept of Home Affairs System are being developed. Expand Intermediate and High-Level Skills:
Maths and Science Schools (Dinaledi Schools)
DOE has identified 400 schools for intensive support (to grow to 529 in 2007). Additional textbooks and teacher support packs have been delivered to schools and 40 000 calculators have been procured and delivered. An audit of ICT facilities has been completed and Dinaledi Schools are to receive priority. Government has approved a teacher incentive programme and it is to be piloted in Dinaledi schools.
Another DOE project, the Quality of Education (QUIDS UP) Programme, has begun the phased provision of essential equipment to 24 000 schools serving poor learners.
The Economic Cluster is increasingly focussed on ensuring the success of the strategic projects that are located in the Economic Cluster’s five focus groups. The Cluster is expecting to report on progress to the July Cabinet Lekgotla.
Issued by: Department of Public Enterprises
4 July 2006