11 Presentation to the Portfolio Committee on Trade and Industry 9 November 2010

2 Contents Background – 5 year comparison Broad Areas of challenge Comparison of actual expenditure Actual drawings from fiscus as at 31 July and 31 Oct based on cash flow Projections versus expenditure Way forward for the remainder of the 2010/11 financial year Savings identified & redirected 2

3 Background - Five year comparison of budget vs expenditure

4 Broad challenges during first 6 months The Automotive Investment Scheme (AIS) was launched in May 2010 with the start date for qualifying investment being 1 July Applications for 39 entities with 53 projects were received during September All 39 applications will be presented to the AIS Adjudication Committee in December 2010 for consideration. Film Incentive Scheme experienced a slow take up of funds due to lower production activities during the Soccer World Cup. Economic recession impacted on the following: - SPII: impact was on firms doing research and development. - Richards Bay & Coega: impact has slowed down planned investment activities. - BPO: economic downturn in the UK resulted in projects not performing according to projections. A reviewed programme strategy will be implemented in the latter part of the year.

5 Broad challenges during first 6 months SMEDP was phased out and has been replaced by the EIP scheme. Surplus redirected during Adjustment Estimates. EIP The claims payment process was reviewed as it originally allowed for an entity to claim within its relevant claim period, with many entities only being in a position to claim in the next financial year. The process has been revised to assist entities to claim as close to the point of investment. EMIA National Pavillions – funds to be disbursed to the 16 selected pavillions to be done in the last quarter of the financial year.

6 Broad challenges during first 6 months Foreign Mission Accounts – 2 months delay in receipt of mission accounts from DIRCO. To date, only accounts from March to July 2010 were received. Due to financial year end processes for all government departments, the March account was only received in June An estimate of R42 million was paid for the period under review. An MOU was signed with DIRCO to allow the department to pay an advance and reconcile that to the vouchers once received. Compensation of employees - Vacancies (17.9%) - Annual inflation linked salary increases due on 01/07/2010 will only be effected in November Foreign mission accounts in respect of COLA

7 Comparison of actual expenditure – July & October R’000July 2010October ,608,2942,786,372+73% Compensation of Employees150,363281,359+87% Goods & Services132,346243,457+84% Transfer Payments1,323,3432,257,401+83% Incentives440,315713,012+62% Transfers to agencies783,0281,244,389+60% Transfers to IDZs100,000300, % Payments for Capital Assets2,2413,823+70% Financial transactions in assets & liabilities -331 Total expenditure (based on actual funds requested from Treasury) increased from R1,6 billion in July 2010 to R2,8 billion in October 2010

8 Comparison of expenditure against actual & projected drawings 8 It is evident from the graph that the dti practices sound cash flow management by analysing requests for funds on a monthly basis, thus preventing unnecessary built up of excess funds. Interventions put in place to manage this include dedicated monthly support meetings with Division and mid month spending pattern.

9 Actual drawings vs. Expenditure per programme as at 31 July 2010 Actual = funds requested from NT & received. TOTAL dti Revised budget 2010/11 Actual drawings Actual expenditureVariance Percentage variance Available Budget Percentage available ProgrammesR'000 % % Administration444,251137,552119,98317, %324, % ITED131,13827,64830,427-2, %100, % EEDD780,597346,447336,5089, %444, % IDD1,053,114405,751388,73517, %664, % CCRD192,03174,52469,2145, %122, % TEO3,175,296644,560569,09675, %2,606, % TISA291,44772,39782,714-10, %208, % Marketing82,23421,94111,61810, %70, % TOTAL6,150,1081,730,8201,608,294122, %4,541, %

10 Actual drawings vs. Expenditure per programme as at 31 October 2010 TOTAL dti Revised budget 2010/11 Actual drawings Actual expenditureVariance Percentage variance Available Budget Percentage available ProgrammesR'000 % % Administration443,251243,165223,75019, %219, % ITED125,08865,78158,2827, %66, % EEDD796,034491,860485,1026, %310, % IDD1,132,961652,156641,38210, %491, % CCRD195,531126,243117,3338, %78, % TEO3,085,8521,131,7421,066,64265, %2,019, % TISA351,476184,894171,02913, %180, % Marketing64,01541,62322,85218, %41, % TOTAL6,194,2082,937,4642,786,372151, %3,407, % Actual = funds requested from NT & received.

11 Cautionary note on forward-looking statements This presentation includes forward-looking statements. These statements are based on currently available information as at 31 October They reflect the dti’s current expectations, projections and forecasts about future financial performance. All forward-looking statements address matters that involve risks, uncertainties and assumptions. Based on a number of factors, actual results could vary materially from those anticipated by the forward-looking statements. These factors include, but are not limited to, the following: Actual claims paid and the timing of such payments may vary from estimated claims and estimated timings of payments, taking into account the preliminary nature of such estimates. Claims and loss activity may be greater or more severe than anticipated, including as a result of natural or man-made catastrophic events. Economic contraction or other changes in general economic conditions could adversely affect other factors relevant to the dti’s performance. The foregoing list of factors is not exhaustive, and should be read in conjunction with other cautionary statements that are included herein or elsewhere. 11

12 Way forward for the remainder of the financial year 12 Although the 45% expenditure seems low after 7 months, some expenditure is however projected to be paid later in quarter 3 and 4, i.e: R’000Adjusted Appropriation Comments Automotive Production & Development Programme 547,000R147m (Jan 2011); R200m (Feb 2011) & R200m (Mar 2011) Infrastructure632,000(Coega) 414m; East London (198m) and Richards Bay (20m) SMEDP50,000 Research - ERPC3,292 SEDA15,000 IDC SPII10,000 Export Marketing and Investment Assistance 94,000 Centurion Aerospace Village32,454 Trade and Investment SA18,151 Cola – FER allowances SA Bureau of standards11,490

13 Savings identified & redirected 13 Project Mthombo for the IDD Chemicals Sector Desk Case study for local production of benzene, toluence and xylene, styrene aromatics together with butadiene as proposed in IPAP. This has been identified as downstream opportunities from the cost/benefit of the proposed new liquor fuel project Mthombo. The project will take 4 months to complete. Scoping study on the alternative use of wood waste in SA This study will look at the alternative use of wood waste in SA to develop new opportunities for SMMEs. The project will take 6 months to be completed.

14 THANK YOU