1. Economic Development Strategic Plan and Budget Presentation to the Select Committee on Economic Development 13 April 2010

2. Presentation outline Background Medium Term Strategic Plan –Aim and Focus of EDD –Programmes, sub-programmes, outputs and activities –A phased approach to implementation Medium Term Expenditure Framework –Budget per programme and sub-programme Concluding remarks 2

3. A new department EDD established following the announcement of the new Cabinet President Zuma on 10 May 2009: –“A new Department of Economic Development has been established to focus on economic policy-making.” President Zuma SONA 3 June 2009: –“The creation of decent work will be at the centre of our economic policies” President Zuma in Budget Vote speech 24 June 2009: –“The Economic Development portfolio will have a strong domestic focus and will address, amongst others, matters of macro and micro-economic development planning.” 3

4. Medium Term Strategic Plan 4

5. Aim of EDD The aim of the Economic Development Department is to promote economic development through participatory, coherent and coordinated economic policy and planning for the benefit of all South Africans –Coordinate economic development contributions of government departments, state entities and civil society –Contribute to coherence between government objectives and the public sector economic policies and plans –Promote government’s ability to achieve its goals of advancing development with decent work opportunities 5

6. Focus of EDD The Department will be responsible for – Administration (Programme 1) Developing economic policy with a broad, cross-cutting focus so that macro and micro-economic policy reinforce each other and are both aligned to the electoral mandate (Programme 2); Economic development planning and will work collegially with other departments to ensure coordination around a programme that places decent work at the centre of government’s economic policies in order to secure better employment outcomes (Programme 3); and Facilitating social dialogue as a means to address the economic development challenges facing society, build a common national vision and enhance partnerships in the workplace and in the broader society (Programme 4). 6

7. Overview of Programme Structure Economic Policy Development Growth Path and Creation of Decent Work Economic Policy BBBEE Second Economy Economic Development Institute Economic Planning and Co-ordination Spatial, Sector and National Planning Investment for Economic Development Competitiveness and Trade for Decent Work Economic Development, Financing and Development Green Economy Economic Development and Dialogue National Social Dialogues and Strategic Frameworks Sector and Workplace Social Dialogue Capacity Building for Economic Development Productivity, Entrepreneurship and Innovation Administration 7

8. Economic Policy Development Growth Path and Creation of Decent Work Economic Policy BBBEE Second Economy Economic Development Institute Purpose: Strengthen the economic development policy capacity of government and review, develop and propose the alignment of economic policies. 8

9. Economic Policy Development Growth path and Creation of Decent Work Focuses on identifying policies to realise a growth path that addresses the economy’s structural constraints, expands the industrial base and creates decent work opportunities on a larger scale Economic Policy Evaluates macro and microeconomic policy tools utilised by government to promote its developmental agenda and improve the alignment, efficiency and impact of those tools. Will utilise a formal and quantified framework (economic modelling) to establish synergy between various policies BBBEE Aims to ensure that the economy is transformed to enable meaningful participation of the majority of its citizens Focuses on employment equity, staff training, preferential procurement, enterprise development and the advancement of cooperatives Second Economy Develops policies that will create and sustain livelihoods and transform second economy activities into dynamic, competitive activities that are part of the economic mainstream and included in the country’s tax and other regulatory arrangements, and to ensure decent incomes for entrepreneurs and workers Economic Development Institute Purpose is to draw together leading economic researchers and economic development practitioners Provide analysis of data collected by the state and other institutions Produce research and policy papers Popularise and make accessible issues of economic policy as a means of empowering citizens 9

10. Economic Planning and Coordination Spatial, Sector and National Planning Investment for Economic Development Competitive- ness and Trade for Decent Work Economic Development, Financing and Development Green Economy Purpose: Promote economic planning and coordination through developing economic planning proposals for consideration by Cabinet, provinces and local government. Provide submission to the National Planning Commission. Oversight and policy co-ordination of identified development. Finance institutions and economic regulatory bodies. 10

11. Economic Planning and Coordination sub-programmes Spatial, Sector and National Planning Focuses on coordinating economic plans that help realise government’s broader goals including spatial plans that embrace provincial and local government, sector plans and national government plans. Investment for Economic Development Provides policy oversight and strategic direction to the Industrial Development Corporation, the Khula Enterprise Finance Limited, the South African Micro Finance Apex Fund and provincial agencies. Provides information, analysis and options regarding mechanisms through which government is able to channel and direct public and private investment into economic development Competitiveness and Trade for Decent Work Provides policy oversight and strategic direction to the Competition Commission, Competition Tribunal and the International Trade Administration Commission. Provides information, analysis and options regarding the use of competition and trade measures to promote economic development goals and also develops proposals for promoting economic goals through regional, continental and international economic engagement. Economic Development, Financing and Development Undertakes research and analysis on government’s development programmes and processes, budgeting and procurement to identify opportunities to improve local procurement and production. Green Economy Co-ordinates work to identify and realise job and economic opportunities related to long term environmental and climate change challenges. 11

12. Development Finance Institutions Economic Development Department (EDD) Industrial Development Corporation (IDC) Khula Enterprise Finance (Khula) South African Micro-Finance Apex Fund (SAMAF) Oversight through the Investment for Economic Development sub- programme 12

13. Economic Regulatory Bodies Economic Development Department (EDD) Competition Commission Competition Tribunal International Trade Administration Commission (ITAC) Oversight through the Competitiveness and Trade for Decent Work sub- programme 13

14. Economic Development and Dialogue National Social Dialogues and Strategic Frameworks Sector and Workplace Social Dialogue Capacity Building for Economic Development Productivity, Entrepreneurship and Innovation Purpose: Promote social dialogue to foster social and economic development. Coordinate the implementation of measures to address the impact of the global economic context. Strengthen productivity, entrepreneurship and innovation 14

15. Economic Development and Dialogue sub-programmes National Social Dialogues and Strategic Frameworks Contributes to social dialogue on economic development issues and policy development and coordinates, monitors and ensures the development and implementation of action plans and framework agreements on the global economic downturn. Sector and Workplace Social Dialogue Promotes workplace and sector agreements and social pacts that address challenges of growth and development, and productivity and innovation. Capacity Building for Economic Development Promotes and builds the research output and knowledge of social partners of the economic development of sectors and issues relating to equity and productivity. It will also harness economic development expertise through an advisory panel, knowledge networks and learning events. Productivity, Entrepreneurship and Innovation Develops a policy framework for increasing productivity and enhancing entrepreneurship and innovation. The results will inform the work of the other three sub- programmes in this programme. 15

16. Provincial dimensions Alignment: National, provincial and local economic development to be better aligned and connected Strong partnerships with provinces Identify provincial dimension of the growth path, to address and transform the spatial inequities of the past Develop support for distressed areas and regions (eg Dimbaza and Doringbaai) Example 1: rural development and E Cape/Limpopo Example 2: green economy and N Cape 16

17. Provincial dimensions Corridor opportunities across provinces Economic clusters across sectors and regions Identify competitive advantages in each province and linkages between them Build strategic relationships with SALGA and the metropolitan councils Build coherence between national and provincial development agencies Identify social partnership opportunities and social pacts at provincial and local levels 17

18. Provincial dimensions Ensure equitable focus by development finance institutions on provinces Micro-economic policy (eg small business development) need to take the spatial dimension into consideration Host Policy Platforms in partnership with provinces (example of KZN and rural economic development) Annual economic development conference to look at spatial dimensions Create common database on economic development budgets 18

19. A phased approach Strategic plan sets out the medium term framework for the EDD Requires a phased, step-by-step implementation plan Building an initial capacity in each programme Outputs and activities phased in over the full MTEF period 19

20. Year 1: 2010/11 Establish basic capacity in the 4 programmes Basic policy work and planning in each of the areas Limited number of sub-programmes created initially and progressively expanded Key posts will be filled, particularly high-level ones

21. Targets for 2010/11 21 IndicatorProgramme2010/11 Number of policy and analytical papers on economic policy challengesEPD10 Number of policy platforms on economic policy challengesEPD10 Number of engagements with provincial and/or local governmentEPC10 Number of strategic engagements with development finance institutions and/or economic regulatory bodies EPC6 Value of special financing facilitated for small businesses, targeted growth sectors and companies in distress EPCR2bn Number of sector plans produced or reviewedEPC5 Number of spatial plans produced or reviewedEPC10 Number of interventions in relation to promoting economic development through leveraging state expenditure and procurement EPC10 Social dialogue and capacity building engagementsED&D10 Number of economic development agreements (sectoral, workplace and national) facilitated with social partners ED&D10

22. Year 2: 2011/12 Expanded operational staff capacity in each of the sub- programmes Level of policy work and planning significantly enhanced – would cover the full range of areas within the mandate of the department Stronger focus on areas that have been prioritised

23. Targets for 2011/12 23 IndicatorProgramme2011/12 Number of policy and analytical papers on economic policy challengesEPD20 Number of policy platforms on economic policy challengesEPD15 Number of engagements with provincial and/or local governmentEPC20 Number of strategic engagements with development finance institutions and/or economic regulatory bodies EPC12 Value of special financing facilitated for small businesses, targeted growth sectors and companies in distress EPCR3bn Number of sector plans produced or reviewedEPC8 Number of spatial plans produced or reviewedEPC15 Number of interventions in relation to promoting economic development through leveraging state expenditure and procurement EPC20 Social dialogue and capacity building engagementsED&D20 Number of economic development agreements (sectoral, workplace and national) facilitated with social partners ED&D20

24. Year 3: 2012/13 Full staff capacity in each of the sub-programmes Full range of policy and planning services set out in the Strategic Plan Ramped-up targets across all programmes and sub- programmes 24

25. Targets for 2012/13 25 IndicatorProgramme2012/13 Number of policy and analytical papers on economic policy challengesEPD30 Number of policy platforms on economic policy challengesEPD20 Number of engagements with provincial and/or local governmentEPC30 Number of strategic engagements with development finance institutions and/or economic regulatory bodies EPC12 Value of special financing facilitated for small businesses, targeted growth sectors and companies in distress EPCR5bn Number of sector plans produced or reviewedEPC10 Number of spatial plans produced or reviewedEPC20 Number of interventions in relation to promoting economic development through leveraging state expenditure and procurement EPC25 Social dialogue and capacity building engagementsED&D30 Number of economic development agreements (sectoral, workplace and national) facilitated with social partners ED&D30

26. Budget overview: 2010/11 The Budget allocation is R418m, distributed as follows: R18,2 million for policy development work R25,8 million for economic planning and coordination R11,2 million for economic development and dialogue R44,8 million for administration, the Ministry and capital expenditure R152 million for small business funding, through transfers to Khula and SAMAF R102 million for the competition authorities to strengthen their work and R64 million for trade administration to ITAC. 26

27. Medium Term Expenditure Framework 27

28. EDD Budget per programme 28 (R million)2010/112011/122012/13 Programme 1: Administration 44.856.061.3 Programme 2: Economic Policy Development 18.223.129.0 Programme 3: Economic Planning and Coordination 25.834.741.7 Programme 4: Economic Development and Dialogue 11.216.118.0 Sub-total100.0129.9150.0 Transfers and subsidies (Programme 3) 318.6364.4370.3 Total418.6494.4520.3

29. Programme 1: Administration (per sub-programme) 29 (R million)2010/112011/122012/13 Ministry16.320.321.8 Office of the DG4.65.86.3 General Management Services 23.929.933.3 Total44.856.061.3

30. Programme 2: Economic Policy Development (per sub-programme) 30 (R million)2010/112011/122012/13 Growth Path and Creation of Decent Work 4.85.77.5 Economic Policy6.68.610.9 Broad-Based Black Economic Empowerment 4.76.27.4 Second Economy2.12.73.3 Total18.223.129.0

31. Programme 3: Economic Planning & Coordination (per sub-programme) 31 (R million)2010/112011/122012/13 Spatial, Sector and Economic Planning 12.415.719.5 Financing and Procurement 3.85.46.3 Investment for Economic Development 156.6171.4177.0 Competitiveness and Trade for Decent Work 171.6206.7209.1 Total344.4399.1411.9

32. Programme 3: Economic Planning & Coordination: Detail of transfers and subsidies 32 (R million)2010/112011/122012/13 Competition Commission 88.8116.6114.0 Competition Tribunal13.615.215.6 International Trade Administration Commission (ITAC) 64.368.271.7 SA Micro-finance APEX Fund (SAMAF) 82.190.593.1 Khula Enterprise Finance Limited 69.773.975.9 Total318.6364.4370.3

33. Programme 4: Economic Development and Dialogue (per sub-programme) 33 (R million)2010/112011/122012/13 National Social Dialogue and Strategic Frameworks 7.710.812.0 Sector and Workplace Social Dialogue 0.40.50.6 Capacity Building for Economic Development 1.72.53.0 Productivity, Entrepreneurship and Innovation 1.52.32.5 Total11.216.118.0

34. Concluding remarks Mandate and Framework constitute a bold economic vision Strategic Plan is the focus of EDD contribution to realise this vision Will be complemented by operational plans in each programme The Budget as presented contains expenditure estimates for the medium term including transfer payments for the DFIs and ERBs Excluding transfers the budget is R100m – R130m – R150m over the medium term The immediate challenge for EDD will be the building of capacity to implement the department’s programmes and sub-programmes 34

35. Thank you