2012/13 Annual Report Presentation to the Portfolio Committee 8 October 2013

1. 2012/13 Annual ReportPresentation to the Portfolio Committee8 October 2013 Performance Information

2. VISION, MISSION AND VALUES EDD Vision is to create decent work for all through meaningful economic transformation and inclusive growth. EDD Mission is to: • co-ordinate the contributions of government departments, state entities and civil society to effect economic development; • improve alignment between economic policies, plans of the State, its agencies, government’s political and economic objectives and mandate; and • promote government’s goal of advancing economic development via the creation of decent work opportunities. EDD upholds the following values: • Promotion of decent work for all citizens (opportunity of work & quality of employment); • Social partnership and dialogue; • Equity and development; and • Sustainability (environmental, social and economic)

3. STRATEGIC OUTCOME ORIENTATED GOALS • Promote decent work through meaningful economic transformation and inclusive growth • Provide participatory, coherent and coordinated economic policy, planning and dialogue for the benefit for all citizens ENTITIES REPORTING TO MINISTER OF ECONOMIC DEVELOPMENT [1] Competition Commission [2] Competition Tribunal [3] International Trade Administration Commission (ITAC) [4] Industrial Development Corporation (IDC) [5] Small Enterprise Finance Agency (sefa)

4. STRATEGIC ROLE OF EDD In implementing the NGP, the department develops strategies & implementation plans in cooperation with relevant government departments & agencies. These include: • Coordinating the implementation of the National Infrastructure Plan • To support inclusion of historically marginalised & vulnerable groups • Supporting strategic implementation of competition policies to encourage inclusive, sustainable economic development • Identifying & supporting catalytic projects • Aligning the work of the IDC and sefato support dynamic and inclusive growth, and economic diversification 4

5. POLICY AND OTHER MANDATES POLICY FRAMEWORK State of Nation of Address (SONA) annually New Growth Path October 2010 (strategy) National Infrastructure Plan February 2012 (jobs driver) National Development Plan November 2012 (policy) Industrial Policy Action Plan 2 April 2013 (jobs driver) Outcome 4, 5, 6, 7 delivery agreements Outcome 4: Decent employment through inclusive economic growth Outcome 5: Skilled and capable workforce to support inclusive growth Outcome 6: Efficient, competitive and responsive infrastructure Outcome 7: Vibrant, equitable, sustainable rural communities Framework for South Africa’s response to the international economic crisis • LEGISLATIVE FRAMEWORK • Existing acts – • Industrial Development Corporation Act, 1940 • The Competition Act, 1998 • Competition Amendment Act S16 (2008) s16 promulgated 2013 • International Trade Administration Act, 2002 PRESIDENTIAL INFRASTRUCTURE CO-ORDINATING COMMISSION Minister of Economic Development as head of the PICC Secretariat: EDD co-ordinates, integrates and provides secretariat services to the PICC • ACCORDS THE DEPARTMENT FACILITATED AND MONITORS: • Basic Education Accord • National Skills Accord • Local Procurement Accord • Green Economy • October 2012 Social Accord • Youth Employment Accord

6. EDD PROGRAMMES & SUB-PROGRAMMES

7. ECONOMY HIGHLIGHTS Annual employment grew by 199 000 new jobs Total employment 13,62 million Jobs held by women 5,96 million Jobs held by youth 5,77 million GDP annual growth R240 billion Size of GDP R3,2 trillion Infrastructure spending (estimate) R204 billion Investment grew by R50 billion (year on year) Factory output grew by R14 billion (year on year) Agricultural production grew by R7,6 billion (year on year) Agricultural jobs grew by 83 000 jobs Employment growth since adoption of NGP 647 000 jobs

8. EDD AND AGENCY HIGHLIGHTS IDCfunding approvals R13,1 billion IDC funding approvals for BBBEE companies R4,4 billion IDC funding disbursements R15,9 billion – up by 87% Jobs created /saved through IDC funding 22 872 jobs Reduction in IDC project approval times (non-complex) 37% sefa facilitated funding approvals R432 million Penalties imposed by the competition authorities R731 million Competition penalties grew by 33% Mergers where employment conditions were imposed 10 mergers Accords concluded 2 EDD staff numbers increased by 21% EDD budget spent (incl. transfers) 96,7% Jobs on PICC projects 180 000 PICC monitored infrastructure projects (value) R807 billion ITAC tariff increases 10

9. NATIONAL INFRASTRUCTURE PLAN HIGHLIGHTS • National Infrastructure Plan adopted in February 2012, providing guidelines for integrated infrastructure provision to transform economic landscape, create jobs directly and indirectly, strengthen service delivery and advance regional integration • Promotion of productive investment through local procurement, improved logistics, water and electricity for both emerging and established enterprises • Aims to create economic opportunities in underdeveloped areas through improved roads, rail, ports and broadband as well as water and energy • In financial year, estimated (unaudited) spending on infrastructure across the state was more than R200 billion • This administration is expected spend about R1 trillion , doubling the achievement of the previous administration & 2.3 times higher in any five year period in more than 40 years • Construction of infrastructure monitored by the PICC sustained about 180 000 direct jobs • Eighteen strategic integrated projects (SIPs) developed to integrate more than 150 individual infrastructure project clusters • In April 2012, EDD Annual Conference provided a platform for launching the National Infrastructure Plan

10. NATIONAL INFRASTRUCTURE PLAN HIGHLIGHTS • The SIPS cover social and economic infrastructure across all nine provinces, with an emphasis on poorer regions. Over the past financial year, 16 SIPs were formally launched • In October 2012, EDD facilitated the National Infrastructure Investment Conference of the PICC • In February 2013, Infrastructure Development Bill was published for comment, and is currently under review for processing through Cabinet

11. SOCIAL PACTS FOR THE NEW GROWTH PATH • Two major social accords were concluded during the financial year. • The October 2012 social accord helped settle a strike wave in the mining industry. This accord included: • Strengthening confidence in the labour market • Addressing income inequalities and building social cohesion • Taking action to combat violence and lawlessness during disputes • Addressing key social challenges , amongst others supporting the infrastructure build programme and a commitment to conclude a Youth Employment Accord • In February 2013, Cabinet approved the Youth Employment Accord , which is anchored on six pillars • Improving education and training opportunities for the gap grouping between school leaving and first employment • Connecting youth with employment opportunities • Increasing the number of youth employed in the public sector • Setting aside youth targets in particular industries • Improving youth entrepreneurship and youth co-operatives • Working with the private sector to expand the intake of young people

12. SOCIAL PACTS FOR THE NEW GROWTH PATH • The department also supported implementation of the four social accords signed in 2011, namely The Basic Education Accord, The National Skills Accord, The Green Economy Accord and The Local Procurement Accord • Key highlights in implementing the accords are: • Nearly R3b committed by sefaand IDC to provide special finance for executing the Youth Employment Accord. This also serves as a stimulus for private sector and other social partners to increase support for youth • Under the Basic Education Accord the social partners and public officials adopted 700 schools for which they provide support. • Parties involved in the National Skills Accord increased their support for training substantially – over 17 000 entered artisan training, of which 8 650 completed their courses. • Since the signing of the National Skills Accord about 15 000 students have been places in companies, of which one third were in the Engineering field • State-Owned Companies have started setting up state-of-the-art workshops in FETs • Government installed 330 000 solar water heaters in accordance with the Green Economy Accord • From 1 October 2012 the rebate for installation of solar water heaters with local content was increase by between 10% and 20%

13. A GREEN LIGHT FOR HOT WATER TO THE POOR THROUGH A 1 MILLION SOLAR WATER HEATER ROLL OUT During the apartheid era, one of the most common images of poverty and Inequality was the sight of people washing themselves from buckets of water at dawn, in the heart of winter. Now, those days are gone for hundreds of thousands of families across the country. By March 2013, over 330 000 households had already benefited, through the government-sponsored solar water heater programme. For some people it has been the first time in their lives that they have had access to running hot water. Current government plans provide for at least a million people living in some of the poorer communities in South Africa to be proud recipients of tapped hot water.

14. SOCIAL PACTS FOR THE NEW GROWTH PATH • Some key highlights in implementing the accords (cont.) • IDC approved 40 projects worth R3,8b for green energy such as solar, wind and hydro, creating over 5 000 jobs in construction as well as 941 jobs in operations and the manufacture of inputs • The Ministry assisted in ensuring a speedy implementation of an appropriate incentive scheme for the development of bio-fuels. As a result IDC approved the establishment of the AringoBiofuels plant in the Eastern Cape • Substantial progress was made in implementing the Local Procurement Accord. In July 2012 government designated the local procurement of bus-bodies, pylons, rolling stock, canned vegetables, clothing, textiles, leather and set-top-boxes. • In November 2012, the designations were extended to solid pharmaceuticals, school and office furniture and bed bases and mattresses • A localisation unit housed in the IDC was set up for the PICC. The purpose of the unit is to review infrastructure projects and identify which components can be made locally. • Adjustments of import tariffs for set-top boxes by the ITAC were increased from 0% to 15% • Discussions on interventions in the scrap metal sector commenced to prevent job losses and address local beneficiation

15. A STATE-OF-THE- ART SOYA BEANS CRUSHING PLANT IN MPUMALANGA A R600 million investment by a Singapore company – Noble Resources – is set to accelerate change in Mpumalanga’s economic landscape. The construction of the plant for crushing soya beans to produce bio-fuel, edible oils and animal feeds is at an advanced stage. The Standerton plant aims to create 120 jobs, produce 2 000 tons of oil per day and stimulate the creation of thousands more jobs on feeder farms. Small scale farmers, transport industry players and local communities are set to benefit as the company requires a million tons of soya beans every year, while dozens of trucks are required to deliver oil to markets every day. Noble Resources has already invested R2 million in training 150 local people who have been awarded NQ3 certificates.

16. SOCIAL PACTS FOR THE NEW GROWTH PATH • Some key highlights in implementing the accords (cont.) • The Department of Health set a global benchmark with local manufacturing of a single ARV dose to fight HIV and AIDS • Eskom set a local content target of 51% for its R234b power plant rollout • Johannesburg, Cape Town and Pretoria have implemented local content threshold of 80% for bus bodies to be manufactured and supplied • PRASA and Transnet have placed the local content threshold of the purchase of locomotives and wagons at 65% with the aim of 100% assembly of stock in South Africa • The Department supported two new investments in the local manufacturing of minibus taxis in collaboration with the dtiand the IDC. This resulted in 9 040 taxis assembled locally, which is approximately 38% of the demand in SA during this period – up from 0% in the previous year.

17. TAXI ASSEMBLY FACTORY IN SPRINGS BRINGS HOPE In October 2012, the BAW taxi assembly plant opened its doors in Springs, Gauteng. It is an investment of the Chinese Beijing Automobile Works (BAW). The factory is part of a plan to ensure that half of new taxis purchased are assembled in South Africa by the end of 2013, and more than two-thirds at the end of 2015. It has already created 143 new jobs, with a target of 460 over the next few years. Ms MamoroesiNkosi is an assembler and quality controller at the BAW factory. She says, ‘The opening of this factory has changed my life. I am the first lady operator and assembler at this factory. As a 49 year old, my age was not an issue as the management gave me the opportunity to reach my potential. They do not differentiate between men and women in assigning responsibilities. The assembly plant has recognised my engineering qualifications and gave me this job, which also assisted me in supporting my five children as a breadwinner. I am definitely proud of my achievements and believe my future is bright.’

18. HIGHLIGHTS OF ENTITIES PERFORMANCE IDC approved funding to the value of R13,1bn while disbursements amounted to R15,9bn – an increase of 87% - enhancing industrialisation, local manufacturing, job saving or creating Improved alignment of state efforts to support small businesses was realised in the first year of sefa’s operation, doubling the value of approved funding from its predecessors (Khula and samaf) in 2011/12 According to sefarecords, 47 000 SMME’s were assisted and maintaining 53 700 jobs Competition authorities launched an comprehensive investigation into collusive behaviour in key sectors – construction, infrastructure, telecommunications – leading to penalties worth R1,4bn against colluders in the construction and infrastructure sector and R650m in the telecommunications (part of which was finalised after the end of the financial year) Competition Appeals Court judgement in Walmart-Massmart settlement raised public profile and interest in role of jobs and local industrial capacity in mergers and acquisitions. The settlement led to establishment of R240m fund to support local suppliers. 18 18

19. HIGHLIGHTS OF ENTITIES PERFORMANCE Pioneer competition settlement led to R250m worth of penalties earmarked for bringing new entrants into agri-processing; thus creating jobs and expanding production. ITAC conducted 55 tariff investigations, aiding domestic competitiveness in goods such as set-top boxes, windscreens, taps, television antennas , frozen chickens. 19 19

20. STRATEGIC SUPPORT FOR INDUSTRIAL DEVELOPMENT • IDC approved funding of R13,1 billion and disbursed funding of about R16 billion, with disbursements almost 90% higher than the previous year • Approvals are estimated to support the creation of 18 900 new jobs and saved 4000 • IDC co-funding a number of strategic industries across the provinces • Northern Cape: construction of the world’s largest manganese sinter plant to produce 2,4 million tons a year and create an estimated 800 jobs in the sinter plant and manganese mine • Eastern Cape: a number of green economy manufacturing projects, to create over 200 jobs, including in manufacturing of Solar PV panels at the East London IDZ and towers for wind turbines in the Coega IDZ • Western Cape: expansion of Cape Town Film Studios with a new water-tank facility for production of ocean scenes, creating a further 500 jobs • Mpumalanga: small farmers will supply a new state of art oilseed crushing facility in Standerton • KwaZulu-Natal: new factory in Durban for manufacturing plastic moulded components for motor vehicles, create 450 job

21. STRATEGIC SUPPORT FOR INDUSTRIAL DEVELOPMENT • Limpopo: upgrading of sawmill near Tzaneen retaining 449 existing jobs • Gauteng: semi-automated material recycling facility able to process over 6 000 tons of waste per month • Free State, R308 million mining project to re-develop a diamond mine in the Kroonstad area, creating 159 jobs • North West, R6 million from the Green Energy Efficiency Fund (GEEF) to assist in funding a R11 million co-generation project close to Leeudoringstad.

22. ATLANTIS INDUSTRIAL RECOVERY PLACES FOOD ON MRS GAMIELDIEN’S TABLE In June 2013, Hisense, a smart TV and fridge factory was officially launched in Atlantis. The Chinese company – Hisense – invested R350 million to establish the state-of-the-art factory, while government, through the Manufacturing Investment Programme (MIP) assisted Hisense with a R26.8 million cash grant. For three years Ms Gamieldien, a mother of three, had been jobless following the closure of the Tedelex factory in March 2010. Now, she is one of 300 workers at the new Hisense plant. Some 50% of them are women and over 60% are youth. The opening of the factory marked the realisation of the goal of government to reverse job losses in Atlantis through the development of the industrial area as a hub of manufacturing. It also highlighted the benefits of the Beijing Declaration signed by the People’s Republic of China and South Africa during President Jacob Zuma’s visit in 2010. The agreement and the subsequent adoption of the New Growth Path in 2010 formed part of broader efforts by government to help the economy recover from the global economic crisis. Mrs Gamieldien is one of 647 000 people who found jobs since the adoption of the NGP in 2010.

23. BUILDING CAPACITY: ECONOMY/ECONOMIC GOVERNANCE • EDD has developed a virtual Economic Development Institute capacity, which in its first phase refers to major research projects undertaken in collaboration with experts from academia and outside of government, as well as supporting high-level roundtables and workshops • Roundtable on industrialisation in Africa in conjunction with the International Economics Association (organised with the Nobel Prize-winning economist Professor Joseph Stiglitz and the World Bank past-Chief Economist Justin Lin) • Research project on financialisation in South Africa, in collaboration with the UN Department of Economic and Social Affairs • Project to identify the potential for regional value chains, in with research entity at University of the Witwatersrand • PICC initiated work to quantify the skills required to roll out the 20 year Infrastructure Plan - critical and scarce skills categories and develop action plans to address gaps • EDD with Graduate School of Public and Development Management (PDM) at Wits University implemented training course for 91 municipal officials • EDD partnered with South African Institute of Chartered Accountants to train graduates to assist smaller enterprises with accounting and financial services

24. BUILDING CAPACITY: ECONOMY/ECONOMIC GOVERNANCE • Partnership agreement with the University of Johannesburg to develop technical capacity of regulatory bodies • EDD undertook capacity building programmes with social partners and provincial stakeholders, including workshops on measuring the impact of state activities on job creation, supply-chain issues to support small business, and knowledge of policy frameworks to allow provincial and local plans to be aligned with the national plans • EDD worked with a task team of the Human Resources Development Council of South Africa to align skills planning with the NGP

25. REPORT BY AUDITOR –GENERAL • The department obtained an unqualified audit report with one emphasis of matter relating to the restatement of corresponding figures • Commitments on addressing Audit Issues • A consolidated ‘heat map’ reflecting all audit issues that have been identified has been compiled with responsible persons and timeframes to rectify these • Biweekly meetings to track progress on implementation of mitigation plans • Internal Audit to review evidence for adequacy as per the audit coverage plan • Progress reports to be presented to the Audit Committee, Executive Authority, DG and EXCO

26. Performance Overview for the 2012/13 Overall Performance Per Programme

27. Overall Performance Per Programme Continued

28. Percentage of targets achieved 2.3% of targets under achieved 52.4% of targets met

29. Programme 1: Administration Purpose: to coordinate and render effective, efficient, strategic support and administrative services to the Minister, Deputy Minister, Director General, the Department itself, and its agencies MINISTERIAL ACTIVITIES • Meetings of Cabinet, Cabinet Committees, Presidentially-coordinated Councils and structures (PICC, HRD Council, Anti-Poverty IMC, BBBEE Council), Inter-Ministerial Committees, Ministerial Cluster meetings and MinMEC meetings • PICC Secretariat and support of work of the PICC Manco • Presentations on infrastructure, and NGP to two Cabinet Makgotla (September 2012 and February 2013) • Engagement with investors and social partners at home and abroad, and with a range of international institutions and business delegations - including the World Economic Forum in Davos in January 2013, BRICS Summits in eThekwini, South Africa (March 2013) • Community engagements and meetings with workers including at trade union congresses (Cosatu, Numsa, Nehawu, Saccawu and Sactwu) and with union leaders (Fedusa and Nactu) as well as with youth structures, women’s organisations, civic structures and other community representatives .

30. Programme 1 … continued MINISTERIAL ACTIVITIES • Community and workplace meetings or visits were undertaken, including in Mqwangqweni Village, Mitchells Plain, Lephalale, Rosslyn, Elsies River, Midrand, Doringbaai, Vredendal, Kyalami, Claremont and Kuils River • Visits to vulnerable communities and municipalities, including KwaDolwane, Nongoma, Alexandra, Diepsloot and Saldanha Bay. The areas visited included poor , rural municipalities, economically depressed inner city communities and areas lying around farms. OFFICE OF DIRECTOR GENERAL • Ensured Department functioned effectively in the Economic Sectors and Employment Cluster, and as a coordinating Department in Outcome 4, setting of the 4 Technical MinMEC and MinMEC meetings, in coordination with the dtias the co-chairs • Regular meetings with the corporate services of the entities were held by the DG and senior managers • Dashboard was established to enhance accountability of entities. • Several management meetings held to achieve improvement in service delivery and achievement of APP targets

31. Programme 2: Economic Policy Development Purpose: to strengthen the economic development policy capacity of government; review, develop and propose the alignment of economic policies; and develop policies aimed at broadening participation in the economy and creating decent work opportunities • Quarterly reviews of progress on Outcome 4 • An annual in-depth assessment of progress on the NGP and Jobs Drivers - an extensive and detailed submission to Cabinet, leading to a number of practical action plans to strengthen implementation • Biannual surveys conducted of departments on their employment impact • Capacity-building sessions with departments and provinces on how to evaluate their overall effect on employment; • Worked with the Department of Performance Monitoring and Evaluation and the Cabinet Office to ensure that regulatory impact assessments take employment and inclusion into account • EDD worked with the Department of Higher Education and Training (DHET), the HRD Council of South Africa on alignment of skills planning systems with the NGP and National Infrastructure Plan

32. Programme 2 continued • EDD developed a ‘virtual institute research capacity’ to undertake, sponsor or coordinate work on various matters by drawing local and global experts together - including financialisation of SA economy and African regional development and industrialisation • EDD provided research to support engagements around iron and steel pricing, electricity, the green economy, access to broadband, skills development and the provision and pricing of economic infrastructure, amongst others. • Support for the Youth Employment Accord • Various research on - improving the environment for SMMEs, proposals for strengthening the incentives for employment creation and local procurement in Codes of Good Practice for broad-based BEE, women in the economy • Number of policy platforms included issues around - gender, African industrialisation, impact of BBBEE and financialisation. • EDD Conference which was held on 19-20 April 2012, with the theme of infrastructure and development.

33. Programme 3: Economic Planning and Coordination Purpose : to align economic planning across the state, including support to PICC ; provide policy guidelines and oversight for the development finance institutions and economic regulatory bodies under the EDD; and drive catalytic projects • Technical support for implementation of the National Infrastructure Plan through its work with the Secretariat and Technical Task Team of the PICC : • - liaison with external public agencies to ensure the development of business plans for seven SIPs and assisted in the development of the Master Water Plan (SIP 18) together with DWA, TCTA and the regional water boards • - Launch of inter-governmental forums for several SIPs. • Management of drafting of Infrastructure Development Bill, (gazetted for comments on the 8 February 2001) • Worked with DRDLR and the CSIR to develop an improved understanding of economic potential of the rural space economy • To add value to the development of SIP 6, initiated a process to identify functional economic regions as the basis for establishing a more spatially integrated economy

34. Programme 3: CONTINUED • Technical support for implementation of the National Infrastructure Plan through its work with the Secretariat and Technical Task Team of the PICC : • Compiled quarterly construction updates for Cabinet with an analysis of expenditure trends, construction progress, number of jobs created and local procurement percentages against targets, as well as identification of key constraints and blockages • Facilitated signing of MOU between Transnet, Eskom and the IDC to cooperate on accelerated SIP implementation, as well as an MOU with social partners on infrastructure, and with the Engineering Council of South Africa on capacity support • Oversight, guidance and support for the agencies - IDC, sefa, ITAC and the Competition Commission • Facilitation of major productive investments; and back up for local procurement drive • Establishment of team to ‘unblock’ significant projects that faced regulatory delays or required other kinds of support • Number of catalytic projects facilitated (examples - major soya crushing plant in Mpumalanga and biofuels processors)

35. Programme 3 …. continued • EDD worked closely with the dtiand National Treasury to increase local procurement by state, business and public (partnership with Proudly South Africa , supported procurement by government agencies of locally produced stationery and uniforms,) • IDC established a localisation project office to identify opportunities for local suppliers across all 18 SIPs in the National infrastructure Plan. • EDD worked with South African Institute of Chartered Accountants to establish a business hub and training programme to improve practical accounting skills of accounting graduates while improving services for smaller enterprises • Supporting more integrated spatial development, EDD offered advice on development plans for a number of provincial and local governments, working with stakeholders in KwaZulu-Natal to establish an integrated strategy for the Umhlatuze-Llembe corridor • Supporting the green economy, the EDD facilitated investments in renewable energy and biofuels, while supporting the rollout of solar water • Support was provided for multilateral and bilateral economic engagements, including -support for BRICS Summit, bilateral meetings with Peoples Republic of China, work on North-South Corridor for African development

36. Programme 4: Economic Development and Social Dialogue Purpose: to promote social dialogue; implement strategic frameworks; build capacity among social partners; and promote productivity, entrepreneurship and innovation in the workplace • Two new national Accords were completed • In October 2012, an Accord, with business and labour to address workplace conflict in the platinum belt as well as the global downturn, was finalised • In quarter one of 2013, Minister supported engagements with the NEDLAC constituencies and youth organisations, leading to approval of core elements of a Youth Accord by Cabinet in February 2013 (Youth Employment Accord was signed on 18 April 2013) • EDD monitored implementation of the national accords finalised in previous budget year on Green Economy, Skills, Basic Education and Local Procurement, in order to identify actions required to improve outcomes • Publication produced collating key outcomes of the Accords

37. Programme 4: CONTINUED • Sector and workplace dialogue and interventions (included work on poultry industry, action on complaints about illegal imports at trade fairs, procurement in footwear industry and research into iron and steel industry) lead to gazetting of new regulations on scrap metal exports • Establishment of knowledge networks improved government access to expertise - on small business, spatial planning, space economy , regional and local economic development • Range of capacity building workshops were held at district level across three provinces, and value chain competitiveness workshops in four province

38. SIYABONGA