PRESENTED BY: MOJALEFA MOHOTO THE ACTING DDG – BPD 11 JULY 2014

1. BRIEFING ON THE BROADENING PARTICIPATION DIVISION OF the dti & THE NATIONAL EMPOWERMENT FUND (NEF) TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY PRESENTED BY: MOJALEFA MOHOTO THE ACTING DDG – BPD 11 JULY 2014

2. CONTENT • OUTCOME 4 AND BROADENING PARTICIPATION DIVISION’S (BPD) PURPOSE • BPD’S STRATEGIC OBJECTIVES • BPD’S SUB PROGRAMMES • BPD’S CORE FUNCTIONS • LEGISLATIVE MANDATE • BPD’S ACHIEVEMENTS • KEY CHALLENGES • PRIORITIES • ENTITIES CONTRIBUTING TO THE DELIVERY OF BPD OBJECTIVES • DEPENDENCY ON OTHER SISTER DEPARTMENTS • NATIONAL EMPOWERMENT FUND

3. OUTCOME 4 AND BPD’s PURPOSE OUTCOME 4: Decent employment through inclusive economic growth. PURPOSE: Develop policies and strategies that create an enabling environment for small, medium and micro enterprises, and enhance the competitiveness of local and provincial economies to achieve equity, growth and job creation. (To be revised given the establishment of the new department)

4. BPD’S STRATEGIC OBJECTIVES • Create an enabling environment conducive to the development and growth of SMME’s and cooperatives; • The creation and expansion of economic opportunities for enterprises, previously disadvantaged citizens (i.e. black people, women, youth and people with disabilities) and underdeveloped regions; • Fostering entrepreneurship and innovation through skills development and business support services; • Enhance the competitiveness and productivity of enterprises through promotion of access to appropriate technologies, enabling infrastructure and skills; and • Improve efficiency of organizational and institutional arrangements (To be revised given the establishment of the new department)

5. BPD SUB-PROGRAMMES • Enterprise Development: Enterprise Development comprises of the Innovation and Technology Unit and Skills for the Economy Unit. • Equity and Empowerment: This sub-programme comprises of Black Economic Empowerment Unit. • Regional Economic Development: This sub-programme comprises of Economic Infrastructure and Logistics, Industrial Clusters and Special Economic Zones.

6. BPD CORE FUNCTIONS Black Economic Empowerment Purpose: To create an enabling environment for the implementation of Broad- Based Black Economic Empowerment. Skills for the Economy Purpose: To advocate and facilitate the implementation of evidence-based skills policies, programmes and systems for the achievement of greater productivity and competitiveness of the economy. Innovation Technology Purpose: To enhance industrial development and competitiveness through technology support measures.

7. BPD CORE FUNCTIONS cont… Economic Infrastructure & Logistics Purpose: To implement existing economic infrastructure and logistics policies and programmes Regional Industrial Development Purpose: To develop policies and interventions to improve regional industrial competitiveness of the SA economy and build partnerships between government and its social partners.

8. LEGISLATIVE MANDATE Broad-Based Black Economic Empowerment Act, Act No. 53 of 2003 as amended • The purpose is to establish a legislative framework as follows: • for the promotion of black economic empowerment; • to empower the Minister to issue Codes of Good Practice and publish transformation charters; • to establish the Black Economic Empowerment Advisory Council; • to promote compliance by organs of state and public entities and to strengthen the evaluation and monitoring of compliance; • to include the creation of incentive schemes to support black owned enterprises; • to establish the B-BBEE Commission to deal with compliance of broad-based black economic empowerment; and • to provide for offences and penalties; and to provide for matters connected therewith.

9. BPD ACHIEVEMENTS 2013/2014 FY • Broad – Based Black Economic Empowerment (B-BBEE) - The B-BBEE Amendment Act has been assented to by the State President and is awaiting promulgation into law. The Amended B-BBEE Codes of Good Practice were gazetted in October 2014 with a provision for an elective transitional period up to the end of April 2015. • The Support Programme for Industrial Innovation (SPII) received 43 proposals and the Adjudication panel successfully approved 31 projects exceeding the target of 20. The total value approved amounted to R76.8 million with disbursements of R65.3 million during the financial year under review.

10. BPD ACHIEVEMENTS 2013/2014 FY Cont… • The Technology and Human Resources for Industry Programme (THRIP) supported 1541 students and 1135 researchers from 364 projects approved. • The Workplace Challenge Programme implemented productivity training programme in 318 new companies and supported 47 807 jobs. • Planning work around the proposed 10 new SEZs is underway. The proposed zones are in Eastern Cape (Wild Coast region), Free State (Maluti-a-Phofung), Gauteng (Johannesburg), KwaZulu-Natal (eThekwini-Dube Trade Port), Limpopo (Tubatse and Musina), Mpumalanga (Nkomazi), Northern Cape (Upington), North West (Bojanala), and Western Cape (Atlantis).

11. KEY CHALLENGES The division is faced with the following key challenges: • Insufficient funding to implement all programmes of the Division • Fronting retarding progress of the B-BBEE implementation

12. PRIORITIES 2014/15 FY • Implement the Broad Based Black Economic Empowerment Act And The Codes Of Good Practice • Establishment of the B-BBEE Commission. • Development of regulations to give effect to the Amendment Act • Finalise phase 2 amendment Codes of Good Practice (Statement on Specialised entities, Qualifying Small Enterprises statement; Sector Charters statement and Statement on multinationals) • Finalise the process of establishing the B-BBEE Verification Industry regulator • Review of the Preferential Procurement Policy Framework Act (PPPFA) to align to B-BBEE objectives

13. PRIORITIES 2014/15 FY cont… • Implement the Regional Industrial Development (RID) strategy Continue to finalise business cases for viable Special Economic Zones (SEZs) and phased in operationalisation. 3. Finalisation of the Industrial Cluster Framework Finalise the development and approval of the Industrial Cluster Framework and related programmes. 4. Implementation of the Innovation and Technology programmes Pilot Techno Industrial Facilities. Finalise the National Commercialisation Strategy.

14. PRIORITIES 2014/15 FY cont… 5. Implementation of the Skills for Economy programmes To upscale the number of Supported companies through the Workplace Challenge (WPC) productivity programme. To finalise the SEZ Skills Strategic Framework, the development of IPAP Artisan Plan with employers and roll-out of the Itukise Unemployed Graduate internship programme. 6. Implementation of the Economic Infrastructure programmes Forging strategic partnerships for infrastructure development across the 18 Strategic Integrated Infrastructure Projects (SIPS).

15. DEPENDENCY ON OTHER SISTER DEPARTMENTS

16. DEPENDENCY ON OTHER SISTER DEPARTMENTS

17. National Empowerment Fund

18. NATIONAL EMPOWERMENT FUND (NEF) MANDATE • Established by the National Empowerment Fund Act No105 of 1998, the NEF is a driver and a thought-leader in promoting and facilitating Black economic participation through the provision of financial and non-financial support to black empowered business, as well as by promoting a culture of saving and investment among Black people. 18 18

19. A HIGH PERFORMING ORGANISATION A High-Performing Organisation

20. CONTEXT • FOCUS ON RECAPITALISATION • MORATORIUM ON NEW APPROVALS • PORTFOLIO HEALTH • CLOSING THE GAP BETWEEN APPROVALS AND DISBURSEMENTS • PROPAGATING BRAND REPUTATION • HIGH NUMBER OF RESIGNATIONS 20

21. RECAPITALISATION INITIATIVES MTEF • Application for R2.3 billion submitted on time. However no allocation was made to the NEF during the 2014 budget vote. Reclassification and Limited Borrowing Rights • Made an application for limited borrowing rights and followed up on application for the PFMA reclassification application made in the past. NEF/IDC Fund • Developed the model for the fund that assisted in exploring and better understanding the impact of the proposed IDC pricing 21

22. RECAPITALISATION INITIATIVES cont…. Temporary Moratorium • Developed up to 11 scenarios that were meant to explore funding options available and that would be viable for the NEF in the short to medium term. • These were narrowed to a few options that were presented to the Board for final decision. • Monthly unencumbered cash position tracked, and culminated in the proposal made in both Jan and April 2014 for the moratorium to be lifted. 22

23. NEF INVESTED PROCESS 23

24. STRATEGIC PROJECTS FUND (SPF) MANDATE 24

25. DEVELOPMENT AND ECONOMIC IMPACT

26. SPF INVESTMENT SECTOR FOCUS SPF Investment Sector Focus 26

27. SPF PROJECT DEVELOPMENT STAGES

28. NEF EQUITY RIGHTS

29. RENEWABLE ENERGY PROJECTS KC ENERGY The cogeneration project aims to develop a Combined Heat and Power (CHP) plant producing steam (60 tph) and electrical power (6MWp) for process plant usage and will be based in Newcastle, KwaZulu-Natal province. The plant is currently under construction and is expected to come online in July/Aug 2014.

30. RENEWABLE ENERGY PROJECTS MABELE FUELS 30 The project intends to develop a roughly 154 million litre per annum fuel grade bio ethanol plant, in Bothaville, in the Free State Province. The plant feedstock is grain sorghum and the production methodology involves a process utilising grain milling through starch conversion to sucrose as well as fermentation and drying that ultimately culminates in the production of saleable bio ethanol.

31. INFRASTRUCTURE & MANUFACTURING BUSA MED 31 Busamed is the first black-owned hospital group to compete with the big three. The vision is to be a consolidator of the fragmented health care market. This will be kick-started with the commercialisation of 4 hospital licenses for 630 hospital beds, spread over three provinces, namely Gauteng, Cape Town and the Free State. With the first being in the Western Cape, this hospital will be a world class cardiologic centre of excellence. The aim is to develop centres of excellence which will provide world-class services.

32. INFRASTRUCTURE & MANUFACTURING LINK AFRICA 32 The project aims to deploy Last Mile Fibre Optic cables across the national landscape of South Africa. Fibre optic infrastructure that is 4 times faster at less than half the cost of normal fibre will be deployed. Licensed patented technology that uses existing sewer and other currently existing infrastructure rather than the normal method of digging up trenches to lay fibre optic cables, will be utilised. An initial capital investment of ZAR300 million will lead to the establishment of a South African Last Mile Fibre Optic Infrastructure Company, i3 Africa.

33. TRUE TO THE MANDATE Over the years the NEF has implemented this mandate through two core divisions, namely Fund Management and Asset Management, whose respective functions and outputs are outlined below:

34. ACHIEVEMENTS FOR 2013/14

35. ACHIEVEMENTS FOR 2013/14 cont…..

36. CASH COLLECTED Over R1 billion collected cumulatively from loans disbursed across the country, in black-owned and managed businesses across virtually all sectors of the economy.

37. PRIORITIES GOING FORWARD “The total assets of our Development Finance Institutions amount to some R230 billion. However, their impact on development is not sufficiently broad-based and their investment programmes are not well coordinated. The institutions will be repositioned in the next five years to become real engines of socio-economic development.” State of the Nation Address By His Excellency Jacob G Zuma, President of the Republic of South Africa on the occasion of the Joint Sitting Of Parliament Cape Town, 17 June 2014 37

38. Thank you 38

39. APPENDICES 39

40. NEF APPROVED & DISBURSED DEALS BY VALUE SINCE INCEPTION

41. NEF APPROVED & DISBURSED DEALS BY VALUE SINCE INCEPTION

42. GRAPHIC ACTIVITY 42