13 June 2006

1. Accelerated and Shared Growth Initiative - South Africa (ASGI-SA) Presentation to Public Works Portfolio Committee 13 June 2006

2. Challenge: Meeting objectives set by Government • Halve poverty from above one third of households in 2004 to less that one-sixth of households in 2014; • Halve unemployment from about 30% IN 2004 to lower than 15% by 2014 • This requires growth averaging over 5% between 2004 and 2014.

3. ASGISA Task Teams • Strategy project driven by Minister of Finance reported on parameters of strategy in July 2005 Lekgotla; • President appointed a team to transform strategy into an initiative: - led by Deputy President; - including Minister of Finance, Trade & Industry and Public Enterprise, Premiers of Gauteng & Eastern Cape and Mayor of Johannesburg.

4. ASGISA Task Teams contd ….. • Objective: not a new economic policy, but initiatives to sustain higher and share growth.

5. Building on firm foundations • GDP Growth in first decade of Freedom averaged about 3% per year • Since 2004 it has averaged over 4% • Reasonable strong employment growth in recent years • Trend towards significant reduction of poverty since 2000 • Strong commodity prices and capital inflows.

6. But growth is somewhat unbalanced • First imbalance is growth profile - Strong commodity prices and capital inflows lead to strengthening of the rand; - Trade deficit of 4.3% of GDP in 2005. • Second imbalance is the fact that one-third of the population cannot directly benefit from the stronger growth – the second economy remains largely excluded except through social grants.

7. Need to focus on key issues and implementation modalities • Approach of identifying the “binding constraints” which, if removed, would have a considerable effect on accelerating and sharing growth in the short to medium term • The key innovations of ASGISA are to focus on key initiatives and provide strong coordinating and monitoring structures

8. To accelerate growth • Overall government plans for infrastructure spending total R370bn over the current MTEF: - Spread in all spheres of government, SOEs, PPPs, DFIs • Considerable second economy benefits: - Developmental opportunities: employment, enterprise development, BBBEE;

9. Sector (Industrial) Strategies • Focus of sectors with potential for high growth, employment creation, enterprise development - Tourism, agriculture / agro-processing: biofuels, timber, food production and processing

10. DPW Contribution to ASGISA • Scale up EPWP in infrastructure and social sectors • Pool EPWP recourses to ensure maximum impact • Improve maintenance of public infrastructure • Prioritise the construction industry as a growth industry

11. DPW Contribution to ASGISA • Ensure that capital budgets are spent without rollovers • Address scarce skills issue (JIPSA) • Expand SMME sector with emphasis on BBBEE

12. DPW Contribution to ASGISA • Placement initiative as a sub-programme of JIPSA : - skills development in the construction, finance and hospitality industries - currently targeting women in these sectors - unemployed graduates, professionals, business women - programme started with placements in UAE

13. Progress with DPW ASGISA Initiatives • Scaling up the EPWP in access roads: • Plan produced to scale up EPWP in roads sector, with dedicated funding • Recently obtained agreement with National Treasury regarding process for funding from 2006/2007 • Now working with DOT and provincial roads departments to develop provincial plans for funding from 2006/2007 (led by DOT)

14. Progress with DPW ASGISA Initiatives contd • Scaling up the EPWP in the social sector: • National Treasury allocated substantial additional funding to provinces from the current financial year • Expansion of Early Childhood Dev and Home Community Based Care led by DSD, Health and Education • DPW and Business Trust providing support to provinces to put in place capacity and management systems, and working with relevant SETAs

15. Progress with DPW ASGISA Initiatives contd • Infrastructure maintenance strategy: • Draft national infrastructure maintenance strategy produced in collaboration with CIDB and CSIR • Currently obtaining final comments from other infrastructure departments • Intend to submit the strategy to Cabinet

16. Progress with DPW ASGISA Initiatives contd • CIDB and DPW developed document on positioning the construction industry as a growth industry in ASGISA • DTI using that document, working with DPW and CIDB, to include sections on the construction industry in the national industrial strategy

17. Progress with DPW ASGISA Initiatives contd • Ensuring that capital budgets are spent without rollovers: • IDIP being implemented in national DPW and all provincial DPW’s • Addressing scarce skills issues in the construction industry under JIPSA: • CIDB, DPW and DPE collaborating on study to determine skills shortages over time • CIDB and DPW carrying out feasibility study on creation of ESDLA to address skills gaps

18. Progress with DPW ASGISA Initiatives contd • Expand SMME sector with emphasis on BBBEE: • Contractor Incubator Programme • Realigned ECDP • Vuk’uphile • CIDB contractor development initiative

19. Progress with DPW ASGISA Initiatives contd • Progress on the placement initiative: - recruitment of candidates (over 500 applicants and 123 selected) - negotiations underway for placements in: > UAE, South Africa, India, Japan, China, Malaysia • Programme to be expanded to other countries in the future.

20. Thank you..