1. Briefing to the Portfolio Committee on Trade and Industry 14 March 2007 MTSF 2007 - 2010

2. Presentation covers: Part One-Context & Strategic Objectives Part Two-2006/07 Key Outputs Part Three-2007 -2010 Strategic Deliverables Part Four-Challenges Part Five-Resourcing the Strategy Part Six-Economic Cluster MTSF 2007 - 2010

3. CONTEXT & STRATEGIC OBJECTIVES PART ONE MTSF 2007 - 2010

4. ECONOMIC CONTEXT  Step change in economy towards a higher growth path well established, with GDP growth of 5% in 2006  Key drivers have been robust consumer spending & increased fixed investment by both public & private sector  Leading growth sectors: construction (13.2%), finance & business services (7.9%), trade (6.9%), transport & communication (5.6)  Business confidence high, despite rising inflation, interest rates & import competition

5. ECONOMIC CONTEXT Unemployment rate: 31.2 (2003), 27.9 (2004), 26.5 (2005), 25.6 (2006) 1993 - 20012001 - 20052006 GDP2.944.9 Private consumption3.65.27+ Fixed investment4.77.211.8 GDE2.768.2 Annual growth % MTSF 2007 - 2010

6. ECONOMIC CONTEXT Challenges  Increased imports exerting pressure in trade balance  Unemployment still high despite improving job creation  Exports & FDI performance modest  Millions still on economic margins & poverty stricken  Economy’s fortunes tied to global economic developments (e.g oil price), although prospects positive

7. ECONOMIC CONTEXT Policy & Strategy Responses  Asgisa introduced; identifies key binding constraints & interventions to address them  dti key in Asgisa conception & dti MTSF is informed by Asgisa aims & plays lead role in Economic Cluster’s implementation of Asgisa  Economic Cluster POA 2007-2009 to focus on: Increasing economic efficiencies Promoting dynamic sectors Integrated small enterprise service delivery

8. STRATEGIC OBJECTIVES  Promoting co-ordinated implementation of the accelerated & shared growth initiative  Promoting direct investment & growth in the industrial & service economy, with particular focus on employment creation  Contributing towards the development & regional integration of the African Continent within the Nepad framework  Promoting broader participation, equity & redress in the economy  Raising the level of exports & promote equitable global trade MTSF 2007 - 2010

9. KEY OUTPUTS – 2006/07 PART TWO MTSF 2007 - 2010

10. KEY OUTPUTS IN 2006/07 This section will broadly cover the following areas:  Enterprise & Industry Support & Development  Consumer & Corporate Regulation  International Trade & Investment  Marketing & Communication  Resource Management MTSF 2007 - 2010

11. 2006/07 DELIVERABLES  ASGI-SA identified need to develop a robust industrial policy to promote diversification, competitiveness & labour-absorption  The National Industrial Policy Framework finalized & approved by Cabinet with directive to implement immediately  Implementation being planned, focusing on priority sectors and key interventions  strategies in the following key sectors in advanced stage: Capital Equipment, Metals, Rail Automotives & Aerospace Agro-processing, forestry Clothing & Textiles Chemicals, Plastics & Pharmaceuticals ICT/Electro technical BPO & Services Cultural Industries  Finalisation of Regional Industrial Development Strategy (RIDS) to stimulate growth in slower growing provinces, towns & rural areas so as to deal with regional disparities MTSF 2007 - 2010 Enterprise & industry support & development

12. 2006/07 DELIVERABLES  National Industrial Participation created over 12 000 direct jobs  150 projects, US$7,5b investment, sales & exports, implemented since 1996 from investments made & exports generated  Launched SEDA & SAMAF provincial offices to widen reach & improve access to services  Rollout of SAMAF progressing well through network of 30 institutions country wide having 2 600 borrowers & 9 000 savers over 3 year period MTSF 2007 - 2010 Enterprise & industry support & development

13. 2006/07 DELIVERABLES  Support for Enterprise Development  Established National Small Business Advisory Council  Khula loans & advances increased from R34m(2002) to R137m (2006); three new funds launched & capitalised at R300m  Products for targeted procurement by Government Departments (set asides) have been identified and will be implemented  IDC approved investments anticipated to be in excess of R6b  Co-operatives  15 co-operatives from 6 provinces (Eastern Cape, KZN, Gauteng, North West, Northern Cape & Limpopo) supported financially benefiting 205 youth & 188 women MTSF 2007 - 2010 Enterprise & industry support & development

14. 2006/07 DELIVERABLES  Support for Enterprise Development – cont.  Investment Incentives oSmall Medium Enterprise Development Programme: Since Inception 2000 to date: 11 309 approved projects with incentive value of R 12.7 billion and R 2.3 billion has been disbursed. 01 April 2006 to date: 2 501 approved projects with a projected qualifying investment of R13.4 billion. The value of incentives approved is R 2.96 billion and R 598 million has been disbursed. oStrategic Industrial Projects (SIP) 45 projects approved with qualifying investment value of R28,7 billion. 22 projects have established with actual investment value R10 billion MTSF 2007 - 2010 Enterprise & industry support & development

15. 2006/07 DELIVERABLES  Support for Enterprise Development – cont. oCritical Infrastructure Program (CIP) 19 projects approved to date with qualifying investment value of R32 billion and infrastructure investment of R9.2 billlion  The following Technology Support delivered  SPII Projects worth R52m  Technology & Human Resources for Industry Programme – 746 researchers, 3 178 students & 371 industry partners assisted  SANAS accredited 134 facilities  Standards South Africa (STANSA), division of SABS developed & revised 639 standards MTSF 2007 - 2010 Enterprise & industry support & development

16. 2006/07 DELIVERABLES  Support for Enterprise Development – cont.  Film & TV production rebate  Since Inception 01 August 2004 :Approved 31 productions. Value of Qualifying South African Production Expenditure (QSAPE) is R1,8 billion. To date the 17 productions have been completed and received rebate of R122 million  Since Inception 01 April 2006 to date : Approved 16 productions and value of QSAPE R1.07 billion  Industrial Development Zones  Investment in infrastructure of R1,07 billion  Facilitated investment to the value of over R28 billion  Export marketing and Investment assistance 438 projects approved to the value of R 29 million. R 15.8 million disbursed during the year. Top 3 sectors supported : Agro-processing, Electro-technical, Metals.  Sector Specific Assistance Scheme  28 projects approved to the value R13 million MTSF 2007 - 2010 Enterprise & industry support & development

17. 2006/07 DELIVERABLES  Broad Based Black Economic Empowerment  The codes of good practice were gazetted.  BEE Advisory Council to be established which will oversee & monitor implementation  National Empowerment Fund has disbursed R424m from approved investment of R590m  Black Business Supplier Development Programme  854 projects approved to the value of R46 million.  R25 million disbursed during the year. MTSF 2007 - 2010 Enterprise & industry support & development

18. 2006/07 DELIVERABLES CONSUMER & CORPORATE REGULATIONS  Corporate Law Reform: New Companies bill approved by Cabinet & published for comment. Expected to increase investment in firms by reducing regulatory & administrative burden on small & medium size firms  Consumer Law Reform: New consumer protection bill subjected to 12 months of consultation & amended to reflect public inputs & will revert to cabinet in March 2007. Bill will promote a fair & competitive market place for consumers  Credit Law Reform: Act proclaimed & regulation published for implementation. Will improve consumer protection, remove discrimination & create single market for credit. Will remove adverse data for approx. 1,7m consumers  Competition Policy Review: Review completed & amendments to be drafted. Will improve competitiveness of concentrated sectors & address ant-competitive behaviour. MTSF 2007 - 2010

19. 2006/07 DELIVERABLES  Contributed to Jan 2007 resumption of WTO Doha Round  Led development of position on industrial tariffs in Doha  Led development of SADC negotiating position on Economic Partnership Agreement with EU/aligned to SA-EU TDCA  SACU-EFTA FTA ratified Dec 2006: on entry into force, duty free quota free market access for SACU industrial exports  New SA-EU Agreement on Auto trade in force in Dec 2006: Will encourage new investment in SA and increased auto exports to the EU  Implemented SA-China MOU on economic co-operation to provide relief to textiles and clothing sectors  Annexes on SACU tariff board & national body adopted by SACU Council in December 2006 MTSF 2007 - 2010 International Trade & Investment

20. 2006/07 DELIVERABLES  Export Promotion activities undertaken:  3 International Trade initiatives supporting 79 companies  33 National Pavillions generating R589 million in exports  42 Trade missions to 36 countries and from 6 countries  Export Development assistance given to exporters  577 verified trade leads  1 400 customers advised on the export process  4 000 publications distributed  Investment Promotion activities undertaken:  5 Investment seminars  5 Investment pavilions  18 Sector specific presentations and 31 briefs  2 Presidential International Investor’s Council meetings MTSF 2007 - 2010 International Trade & Investment

21. 2006/07 DELIVERABLES  Various road shows and workshops were held to make communities aware of the services of the dti  The customer contact centre has been in-sourced which resulted in large cost savings & better accountability MTSF 2007 - 2010 Marketing & Communication interventions

22. RESOURCE MANAGEMENT  Human Resources  Targeted filling of 150 vacancies by 31 Jan. Filled 135 = 90%  Launched special recruitment project on identified posts via a recruitment agency  Establishment reflects a 25,8% vacancy rate at 28 February 2007  Extensive training provided via bursaries, in-house training, internships, Adult Basic Education & Training programs & Regional Trade & Investment Capacity building programs  Department certified for Employment Equity Act compliance MTSF 2007 - 2010

23. RESOURCE MANAGEMENT  Finance  Unqualified audit report for 2005/06  Auditor General’s interim audit for 2006/07 – no major issues  Payment of suppliers – minimum 7 days and maximum 14 days  Yearly spending trend reflected in attached graph which reflects an average of 95% spending of allocated budget over the past four years MTSF 2007 - 2010

24. the dti SPENDING TRENDS 7 YEAR EXPENDITURE TRENDS 7 YEAR EXPENDITURE TRENDS MTSF 2007 - 2010

25. REASONS FOR UNDER-EXPENDITURE Over the past three years the under-expenditure was largely due to limited spending on critical infrastructure resulting from the nature of the incentive scheme which requires:-  Payment to be made only after expenditure is incurred  Only 30% of the expenditure to be reimbursed, which has not proven optimal in attracting investment in infrastructure optimal in attracting investment in infrastructure The under expenditure in 2005/06 was largely due to:  R50m on APEX fund which only became operational on 01 April 2006  R166m on critical infrastructure for reasons mentioned above MTSF 2007 - 2010

26. 2007 - 2010 STRATEGIC Deliverables PART THREE MTSF 2007 - 2010

27. 2007 - 2010 STRATEGIC DELIVERABLES This section will broadly cover the following areas:  Enterprise & Industry Support & Development  Consumer & Corporate Regulation  International Trade & Investment  Marketing & Communication MTSF 2007 - 2010

28. 2007 - 2010 STRATEGIC DELIVERABLES ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT  Implementation of National Industrial Policy Framework (NIPF)  Continue Sector Strategy development in alignment with NIPF & implementation of key sector initiatives (eg, BPO & Tourism)  Over 40% of budget to support enterprise through incentives  Develop a human capital strategy to support critical skills areas, including industrial centres of excellence to develop, design & engineering capabilities  Continue technology support to enterprises via current schemes  Finalise regional growth support strategies, including IDZ’s  Increase targetted support for women owned enterprises  Implementation & Monitoring of BBBEE strategy focusing on Codes of Good Practice and Advisory Council MTSF 2007 - 2010

29. 2007 - 2010 STRATEGIC DELIVERABLES ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT  Increase financial support of the BBBEE through the DFI’s  Increase financial support for small business through Khula, including repositioning the agency  Continue with financial support for co-operatives through the co-operatives fund  Finalise & implement review of current incentive schemes to support NIPF & customised sector interventions MTSF 2007 - 2010

30. 2007 - 2010 STRATEGIC DELIVERABLES ENTERPRISE & INDUSTRY SUPPORT & DEVELOPMENT  Continue & step up non-financial enterprise development support through effective SEDA service delivery network providing the following:  Export readiness for SMEs  Training & mentorship  Manufacturing support  Information & advice to businesses  Continue & step up roll out of micro finance through SAMAF:  Average of R62m disbursements per annum  Average Increase of 2 000 borrowers per annum  Average Increase of 2 000 savers per annum  A minimum of 50 partner organisation for 2007/08 MTSF 2007 - 2010

31. 2007 - 2010 STRATEGIC DELIVERABLES CONSUMER & CORPORATE REGULATIONS  Corporate governance & company formation enhanced through enactment of new Companies Bill & institutional framework  Consumer rights & redress strengthened through enactment of new Consumer Bill & institutional framework, as well as review of regulation of Estate Agents  Innovation & protection IP rights holders promoted by reviewing & reforming regulatory framework for intellectual property rights  Improving competition in concentrated sectors & reducing harm to downstream industries by strengthening Competition law & institutions  Assessing effectiveness of existing regulation in areas of Liquor & Lotteries MTSF 2007 - 2010

32. 2007 - 2010 STRATEGIC DELIVERABLES International Trade & Investment  Pursue successful development outcome in WTO  Deepen regional integration/cooperation in Africa under NEPAD Framework, notably SADC and SACU  Review customs union options following SADC Summit, Oct 2006  Pursue common policies and institutional development in SACU  Strengthen investment and trade links with dynamic emerging markets (key African countries, India, Brazil, China, Gulf).  Develop 100 emerging exporters through a Small Exporter Development Programme  Advance trade cooperation under IBSA  Align SA-EU TDCA/SADC-EU economic partnership agreements  Implement SACU-EFTA FTA and raise awareness of its opportunities to business  Pursue Trade and Investment Development Cooperation with US  Implement revised Export and Investment strategies in alignment with NIPF and sector priorities  Review the strategic alignment of Foreign Office network to enhance trade and investment facilitation MTSF 2007 - 2010

33. 2007 - 2010 STRATEGIC DELIVERABLES Marketing & Communications  Intensify its communication and outreach efforts focusing on major policy initiatives & offerings with particular emphasis on second economy  Build a positive profile, effectively manage perceptions and protect its reputation MTSF 2007 - 2010

34. CHALLENGES PART FOUR MTSF 2007 - 2010

35. INSTITUTIONAL CHALLENGES  Recruiting and retaining requisite capacity & requisite skills  Ensuring continued good Corporate Governance  Ensuring continued sound financial management  Oversight over agencies  Increase the budget to support the dti’s new & expanding mandate MTSF 2007 - 2010

36. RESOURCE MANAGEMENT PART FIVE MTSF 2007 - 2010

37. RESOURCE MANAGEMENT  Reducing the level of vacancies to less than 15%  HR development & capacity building  Dedicated HRD strategy  Competency enhancement & development  Programme on investors in people  University network – bursary programme  Development of supportive dti organisational culture  Maintain and improve best practice Corporate Governance, including agencies  Information Technology  Continue with Implementation of Enterprise Content Management strategy  Completion of Disaster Recovery project  Strengthen Supply Chain Management MTSF 2007 - 2010

38. MTEF ALLOCATION MTSF 2007 - 2010

39. MTEF ALLOCATION ADDITIONAL FUNDING MTSF 2007 - 2010

40. ANALYSIS OF CURRENT MTEF MTSF 2007 - 2010

41. ANALYSIS OF CURRENT MTEF On average the structure of the budget allocation over the MTEF period is:  34% to agencies of the dti  44% to incentive payments  7% to compensation (11% after deduction to agencies)  12% to goods & services, of which a large percentage are for committed expenditure expenditure  3% to Capital & Other Payments MTSF 2007 - 2010

42. STRUCTURE Ministry Office of the DG Policy co- ordination International Trade and Economic Development Enterprise and Industry Development Consumer and Corporate Regulation The Enterprise Organisation Trade and Investment South Africa Marketing 18 Agencies

43. ECONOMIC CLUSTER PART SIX MTSF 2007 - 2010

44. ECONOMIC CLUSTER MTSF 2007 - 2010  the dti chairs the Economic Cluster of Departments  The Cluster’s three-year programme of action for 2007-2009 was adopted at the Cabinet Lekgotla in January 2007  The programme of action focuses on: - Increasing economic efficiencies - Promoting dynamic sectors - Integrating small and micro enterprises

45. CLUSTER’S KEY INTERVENTIONS (3) Integrate small- and micro-enterprises 9.Integrated small enterprise service delivery (incl. comprehensive procurement strategy, marketing cooperatives, business development support and access to finance) 10.Reduced SMME regulatory burdens (incl. by-laws) (2) Promote dynamic growth sectors 7.Implement industrial policy framework, focusing on key sectors and leveraging public spending 8.Supportive macro-economic management (esp. competitive and stable real effective exchange rate) (1) Increase economic efficiencies 1.Strengthen economic regulator capacity in key industries 2.Amend competition policy to support effective regulation 3.Increase access, uptake & usage of ICT infrastructure 4.Phased roll-out of overhauled public transport network 5.Monitor implementation & impact of infrastructure roll-out 6.Coordinated NHRD, with focus on ASGI-SA priorities MTSF 2007 - 2010

46. ADDITIONAL STRATEGIC CLUSTER  ICT Infrastructure, especially Broadband  Critical to success of knowledge economy and integration of marginalised households into the economy  Public transport  Intervention that will support labour mobility and reduced cost of living  Energy  Economy needs more energy whilst rebalancing energy sources  Transformation of Second Economy  Second Economy interventions are crucial to the achievement of the 2014 unemployment and poverty targets MTSF 2007 - 2010

47. CONCLUSION The department will build on the considerable momentum already established i.t.o its strategic objectives, focusing on:  Coordinated implementation of Economic Cluster projects as per the three-year Cluster POA and the NIPF three-year Cluster POA and the NIPF  Implementation of sector strategies that have been completed (e.g. BPO, Clothing and Textiles, Tourism etc.) as a force for Textiles, Tourism etc.) as a force for investment, diversification and job creation investment, diversification and job creation  Strengthening of regional integration initiatives & support for NEPAD  Strengthening of enterprise development initiatives  The implementation and enforcement of policy & legislation in the areas of companies, consumers, credit, competition & BBBEE consumers, credit, competition & BBBEE  Implementation of Export & Investments strategies and the pursuit of developmental outcomes in both WTO & bilateral trade negotiations developmental outcomes in both WTO & bilateral trade negotiations This will requires strengthened Monitoring and Evaluation, a technically skilled and highly motivated workforce, continued improvements in government coordination, and continued engagement with and support of Parliament and other stakeholders

48. MTSF 2007 - 2010 THANK YOU