the dtiPresentation to Parliamentary Committee

2 March 2005

Working Towards Growth, Employment and Equity

Contents

• Part One - What we achieved in 2004/5

• Part Two - Our vision and plans for the next three years

• Part Three - How the budget supports our strategy

What we achieved in 2004/5

What we are trying to achieve in the economy over three to five years

• Greater contribution of small enterprises to the economy• Significant progress in broad-based black economic

empowerment• Higher rates of investment• More market access opportunities and higher levels of

exports• A more competitive economy• Greater access to redress for economic citizens• Contribution to African economic development• Bridging the economic divide between the first and second

economies

Key outputs delivered – increasing the contribution of small enterprises to the economy

• Annual Review of Small Business• Regulatory impact study completed• Establishment of the Small Enterprise Development Agency• Establishment of phase 1 of the Apex Fund• Finalised the cooperatives legislation and development

strategy• Khula disbursed R337m in loans • 44 Community Public Private Partnership projects mainly in

rural areas

Key outputs delivered – significantly progressing broad-based black economic empowerment• Implemented the BEE strategy:

– Strategy was revised and released with a new scorecard and the codes of good practice

– Participated in seven sector charter processes– Investigating financing mechanisms

• National Empowerment Fund:– Re-launched in May 2004 with new products and capitalised by

R550m– R25,5m of transactions have been completed and R138m of

transactions are currently being processed– Progress has been made in building the organisation’s capacity to

meet demand• Black Business Supplier Development Programme supported 528

small, black-owned enterprises

Key outputs delivered – raising the level of investment in the economy

• Investment promotion and facilitation:– 15 investment missions, 20 investment seminars, 77 site visits with

potential investors– Negotiations with Alcan, Tata, and other foreign investors– Facilitated major investments in the metals, auto, and agro-

processing sectors– R1,2bn investment facilitated by the dti foreign offices

• Investment financing:– More than 12 000 enterprises received grants from the Small and

Medium Enterprise Development Programme– More than R3bn was disbursed by the IDC– 14 projects qualified for the Strategic Industrial Programme and a

further 6 applications worth R6bn in investment are being considered

Key outputs delivered – increasing market access opportunities and increasing exports (1)• Export development and promotion:

– R3,5bn of exports generated through the dti foreign offices

– More than 1000 enterprises supported through the Export Marketing and Investment Assistance scheme

– Almost 6 500 enterprises received export-related advice or information

– 3 export seminars were held, 13 National Pavilions took place, and 27 trade missions were conducted

– Export Credit Insurance Corporation supported loans to the value of R924m

• Trade negotiations and market access:

– Ongoing participation in the WTO Doha Round

– Ongoing negotiations to conclude the US-SACU trade agreement

– Conclusion of a Mercusor-SACU trade agreement

– Concluded trade agreements with Croatia and Turkey

Key outputs delivered – increasing market access opportunities and increasing exports (2)• Trade administration:

– Counterveiling regulations were completed

– Twenty tariff changes were effected

– R250m rebates to the clothing industry through the Duty Credit Certificate Scheme

Key outputs delivered – contributing towards competitive skills, technology and infrastructure platforms• Technology and Human Resources for Industry Programme supported

292 projects, 208 enterprises, and 2125 students • Support Programme for Industrial Innovation supported 50 projects

and 40 small enterprises• Four sector-specific technology incubators were supported, and 352

small enterprises were supported through the Godisa technology incubators

• Critical skills studies were undertaken in four sectors• Preparatory work on centres of excellence has been completed • 100 enterprises have been assisted through the Workplace Challenge

programme• SABS issued 285 new technical standards and revised 377 standards• Study on technology trends was completed

Key outputs delivered – Repositioning the economy in higher value-added areas• Convened an international conference on

competitiveness• Work has been done to scope the potential of new-

growth sectors including value-added services, paper and pulp, and aerospace

• Research was undertaken and negotiations held with the private sector on import parity pricing

• Competitiveness Fund supported 126 enterprises• Sector Partnership Fund supported 59 projects• Detailed research has been undertaken in the

priority sectors

Key outputs delivered – contributing to providing access to redress for economic citizens (1)• Consumer protection policy approved and published

• Phase 2 of the National Consumer Helpline completed

• Consumer credit bill approved by Cabinet and with State Law Advisor

• Debt counseling project has been implemented

• Corporate Law Reform discussion paper published and consultations undertaken including with Nedlac

• Establishment of the National Liquor Authority

• National Gambling Act regulations published

• 392 consumer cases finalised with an improvement in the average turnaround time from 168 to 61 days

• 10 company investigations; 30 intellectual property investigations completed; 172 Usury Act investigations completed

Key outputs delivered – contributing to providing access to redress for economic citizens (2)• Competition:

– Competition Commission received 263 merger notifications and 86 complaints; six investigations were initiated including investigations into car prices as well as estate agents fees and commissions

– 75 cases heard by the Competition Tribunal

• Micro Finance Regulatory Council:– conducted more than 400 investigations into unregistered micro lenders leading

to 220 successful prosecutions

– Held more than 250 consumer education workshops

– Obtained more than R2,5m in refunds and adjustments to the balances of lenders

Key outputs delivered – Strengthening the department’s capabilities

• Comprehensive training and development programme for staff is underway

• An Agency Management Unit has been established

• A monitoring and evaluation system has been developed

• Completed the move to the campus bringing the majority of the agencies together

• Completed initial investigation into a retail option for the dti

• Reached 33m economic citizens through various advertising campaigns

• Handled more than 680 000 queries through the customer contact centre

• Interacted with almost 400 000 economic citizens at exhibitions

the dti’s vision for 2005 – 2008What do we want to achieve ?

the dti’s strategic plan sets out how we will do to achieve growth, employment and equity

• the dti’s mission and vision are aligned with government’s broader economic policy goals

• the dti’s strategic objectives are aligned with government’s economic programme of action

• A comprehensive set of key performance indicators is being used measure progress in achieving our strategic objectives – first review is almost complete

• Significant improvements in strategic planning and the involvement of agencies in strategic planning has led to improved spending on the right things

We will work to increase the contribution of small enterprises to the economy by

• Flagship Project on Access to Finance

• Implement the Integrated Small Enterprise Strategy

• Implement the cooperatives development strategy

• SEDA will roll-out provincial offices

• Phase two of the Apex Fund

We will make significant progress in achieving broad-based black economic empowerment by• Flagship Project – Implement a women’s economic

empowerment strategy• Complete a national audit on the economic status of women• Continue to implement and monitor the bbBEE strategy• Accredit BEE ratings agencies• Advocacy and education campaign• Participate in charter processes• Develop BEE guidelines for the manufacturing and retail

sectors• R400m for the capitalisation of the National Empowerment

Fund

We will raise the level of investment in the economy as a whole and in priority sectors by

• Flagship Project: Implement a targeted investment promotion strategy

• Flagship Project: Review and impact assessment of competition policy

• Nine investment seminars• Facilitate 36 investment projects in priority sectors• Present the results of the Investment Climate Survey

to Cabinet• Continue to manage the industrial participation

project

We will increase the market access opportunities available to our enterprises and increase exports of South African goods and services by• Implement a national export strategy• Complete a tariff simplification exercise• Manage the Permanent Trade Forum• Participate in the preparations for the WTO Ministerial in

Singapore • Continue bilateral trade negotiations with US and Efta• Technical missions to India and China• 22 trade missions• Complete World Bank study on trade administration and

facilitation

We will contribute to building skills, technology and infrastructure platforms to make our enterprises competitive by• Advocacy and policy coordination with other government

departments• R80,980m for Support Programme for Industrial Innovation• R143,100m for Technology and Human Resources for

Industry Programme• Complete a review of the Workplace Challenge programme• R181,077m for critical infrastructure projects • Revamping of the Industrial Development Zones

programme

We will seek to reposition the economy in higher value-added activities by• Flagship Project – Import parity pricing• Flagship Project – Implement Customised Sector

Programmes in priority sectors• Services sector strategy framework• Review of the Motor Industry Development Programme• Reformulation of the Duty Credit Certificate Scheme

We will contribute to providing economic citizens with better and easier access to redress by • Flagship Project – Consumer Protection legislation• Establish new consumer credit regulator• Continue corporate law reform process• Commence intellectual property law reform process• Impact assessments: gambling, consumer credit, liquor• Policy on internet gambling• Complete 80 consumer investigations and resolve 3000

consumer complaints

We will contribute to the economic development of Africa

• Flagship Project – African economic development strategy

• Finalise intra-African trade strategy• Mid-term review of the SADC trade protocol• Trade negotiations with Kenya, Egypt and Nigeria• Five bilateral investment protection and economic

cooperation agreements• Continue to participate in Nepad processes

including the processes in respect of the African Peer Review Mechanism

We will contribute to bridging the divide between the first and second economies

• R10m for Community Public Private Partnership Programme

• Implementation of the Cooperatives Development strategy

• Implementation of the Women’s Economic Empowerment strategy

• Development of financing mechanisms for broad-based black economic empowerment

• R100m for the first phase of the Apex Fund

We will continue to improve the efficiency, capacity, and accessibility of the dti to deliver

• Flagship Project – An e-commerce system for all dti transactions including incentives

• Strategic alignment of the dti Group (Cotii)• Monitoring and evaluation system to be extended to all of

the Cotii agencies• Piloting of a dti retail outlet• Work with the Department of Foreign Affairs to improve

the functioning of the foreign economic offices• Continue implementing an extensive people development

strategy for staff

How does the budget support the strategy?

Better planning means better budgeting, less under-spending and a balanced budget

Current spending trend vs. budget: 5 yrs comparison

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Budget 2,323,596 2,236,455 2,218,476 2,494,852 2,519,926

Expenditure 1,808,631 2,151,231 1,947,976 2,346,187 2,495,818

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004

What are budget trends over the medium term?

• From 2001/02 to 2004/5, the average annual increase in the budget of the dti is 13,7% (excluding PBMR and NEF capitalisation)

• From 2005/6 to 2007/8 the average annual increase of 1,1%

• Except for the capitalisation of the NEF, the dti has not received any funding for new programmes

• New activities have been funded from savings elsewhere on the budget including Apex Fund, the Film incentive and BPO incentive

Reallocating the budget to support the strategy is a gradual process

• Currently, four strategic areas receive an above average share of the budget:– Investment 22.4%– Market access and exports 14.5%– Building a competitive economy 13.6%– BEE (mainly the NEF) 14.2%

• Currently, two strategic areas receive a very small share of the budget– Access to redress 3.8%– African economic development 0.6%

Economic classification of the dti budget

• Largest share of the budget goes to the dti’s agencies - 41.1%

• Private sector enterprises receive the second largest share of the budget - 31%

• Personnel costs amount to 8.7% of the budget (a drop from 9.9% in 2004/5)

• 12.1% of the budget is used to procure goods and services– 73% of procurement is from small and medium-sized enterprises– 58% from black-owned enterprises– 37% from women-owned enterprises

Which are the programmes that have received more money this year?

• African economic development

• Apex Fund

• Community Public Private Partnership Programme

• BPO incentive

• Film incentive

• National Empowerment Fund

1999 to 2004: A period of consolidation for the dti

• Fundamental transformation of the organisation• Improved strategic planning and allocation of resources to

priority areas• Improved efficiencies• Improved outreach and customer service• Elimination of under spending• New mandates and expanded activities funded from savings

and efficiencies

So, to summarise …

• In 2004, the dti ended a period of consolidation and is ready for improved delivery to economic citizens

• The success of the transformation of the dti since 2000 is evident in the elimination of under spending

• Our strategic planning process gives us confidence that we are supporting government’s goals and that we can deliver

• The results of the first nine to ten months since new strategy was implemented indicate that we are on-track

• Looking forward, the challenge is to demonstrate impact on the economy in the areas of Economic Growth, Employment and Equity

Thank You