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Medium Term Strategic Framework 2008 - 2011

PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY, AND THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS. Medium Term Strategic Framework 2008 - 2011. 26 March 2008. CONTENTS. 2008 MTSF. Introduction - The Strategic Context Overview of the dti’s Strategy

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Medium Term Strategic Framework 2008 - 2011

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  1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY, AND THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS Medium Term Strategic Framework 2008 - 2011 26 March 2008

  2. CONTENTS 2008 MTSF • Introduction - The Strategic Context • Overview of the dti’s Strategy • Key interventions over the MTSF period • Allocated resources • Institutional mechanisms • Conclusion and challenges

  3. Introduction –The Strategic Context

  4. STRATEGIC CONTEXT • The South African Economy grew by 5.1% in 2007, the 3rd consecutive year that growth exceeded 5% per annum • Longest period of economic growth • 500,000 jobs have been created every year for the past three years • Growth and employment creation in South Africa has been assisted, by strong commodity demand, consumer spending and a favourable global economy • the dti and government Programme of Action shifting from macroeconomic stabilisation to microeconomic transformation

  5. STRATEGIC CONTEXT • Focus on deepening economic transformation by addressing the following challenges: • Exports, while increasing, are not driving GDP growth • Public investment needed in network infrastructure and improved logistics to support a competitive economy • Employment growth has been positive but insufficient • Output deficit is attracting imports, and worsening the current account deficit • Current account deficit is financed by large portfolio flows • Domestic manufacturing needs substantially increased investment in upgrading and capacity • Leverage opportunities, particularly through industrial policy, to revive or create competitive local supply industries for State capex programmes

  6. 10 8 Other (e.g. Govt, & 6 Inventories) Net exports 4 Fixed Percentage investment 2 Consumer spending 0 Total GDP -2 -4 -6 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 KEY CHALLENGES FACING THE ECONOMY Source: SARB GDP growth driven by consumers not exports

  7. KEY CHALLENGES FACING THE ECONOMY 1,60

  8. 7 GDP growth 6 Total employment Manufacturing employment 5 4 3 2 % Change (y-o-y) 1 0 -1 Average annual growth : 2000 - 2007 -2 GDP : 4.3% Tot. employment : 1.8% -3 Manuf. employment : -0.4% -4 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007* Note: * GDP for first three quarters; Source: SARB, Stats SA, Quantec Jobs for year to March '07 KEY CHALLENGES FACING THE ECONOMY Positive but insufficient employment growth

  9. Manufacturing ‘output deficit’ 160 Manufacturing production 150 Retail sales (Demand) Demand 140 130 120 Index: 2000 = 100 110 Supply 100 90 80 70 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: SARB, Stats SA KEY CHALLENGES FACING THE ECONOMY

  10. KEY CHALLENGES FACING THE ECONOMY Rising imports, current account deficit grows 4 40 2 20 0 0 BoP: R billion -2 -20 -4 -40 -6 -60 % of GDP -8 -80 -10 -100 -12 -120 -14 -140 Current account balance: R Billion Current account balance: % of GDP -16 -160 -18 -180 1997 1998 2001 2002 2011 1999 2000 2003 2004 2005 2006 2007 1990 1993 1994 1995 1996 1991 1992 2008 2009 2010 Source: SARB, IDC

  11. 200 39.5 150 19.5 "Unrecorded transactions" Other 100 investments 24.1 61.7 R billion Net portfolio 8.8 130.6 flows 50 29.9 Net FDI flows 42.9 33.9 9.9 0 -17.1 -47.4 -50 2002/4 2005 2006 Source: SARB KEY CHALLENGES FACING THE ECONOMY Current account deficit largely financed by portfolio flows

  12. KEY CHALLENGES FACING THE ECONOMY Local industries at full capacity (Quarter 3 of 2007) Total manufacturing Furniture & other manufacturing Motor vehicles & parts Radio & TV's Most sectors at or above full capacity utilisation, and must increase investment Electrical machinery Metals & Fabricated metal products Non-metallic mineral products Petroleum & chemical products Wood, paper & printing Textiles, clothing, leather & footwear Food and beverages 76 78 80 82 84 86 88 90 92 94 96 Percentage Source: Stats SA

  13. IMPLICATIONS FOR THE ECONOMIC CLUSTER/ the dti • The economy’s performance and challenges call for intensified implementation of interventions identified in ASGI-SA and National Industrial Policy Framework and Action Plans focusing on: • Diversification beyond traditional reliance on minerals and mineral-processing, with emphasis on job creating sectors • Competitive domestic supply infrastructure • Infrastructure investment • Development of competitive local suppliers, including SOE Supplier Development Programmes, sector strategies & industrial financing • Competition law • Ensuring availability of skills and HRD • Broadening on Economic Participation • In undertaking these interventions, the dti will continue to work with other govt departments as coodinator of the Economic Cluster, focusing on Apex Priorities that fall within our mandate, and in line with the “Business Unusual” motto

  14. Overview of the dti’s strategy

  15. STRATEGIC OBJECTIVES 2008 MTSF • Promoting the coordinated implementation of the accelerated and shared growth initiative; • Promoting direct investment and growth in the industrial and services economy, with particular focus on employment creation; • Raising the level of exports and promoting equitable global trade; • Promoting broader participation, equity and redress in the economy; and • Contributing to Africa's development and regional integration within the NEPAD framework

  16. Key interventions over the MTSF period

  17. KEY INTERVENTIONS 2008 MTSF The work of the dti is organised in terms of the following themes:- • Industrial development; • Trade, Investment and Exports; • Broadening participation; • Regulation, and • Administration and co-ordination

  18. KEY INTERVENTIONS 2008 MTSF Industrial Development • Fast track the effective implementation of the National Industrial Policy • Framework (NIPF) and Action Plans (IPAP) through the following • strategic interventions: • Sector Interventions • Fast-track implementation of four lead sectors: • Capital/transport equipment and downstream metals • Automotives and components • Chemicals, plastic fabrication and pharmaceuticals • Forestry, pulp and paper, and furniture • Stabilise Clothing and Textiles to preserve capabilities and employment. • Maintain momentum on ASGI-SA sector priorities: Tourism, BPO, and Biofuels. • Ongoing development and finalisation of additional sector strategies (eg. agriculture/agro-processing, mining and benefication, creative industries, etc)

  19. KEY INTERVENTIONS 2008 MTSF Industrial Development • Industrial Financing: • Introduce new incentives in support of NIPF and IPAP • Revised SMEDP • Tax incentive Package • Competitiveness Incentive • IDC to upscale and align support to IPAP priorities • Critical Infrastructure Programme (CIP) • Film & TV production • BPO&O • National Industrial Participation Programme

  20. KEY INTERVENTIONS 2008 MTSF Industrial Development • Technology & Innovation • Support Programme for Industrial Innovation (SPII) • Technology & Human Resources for Industry Programme (THRIP) • Strengthen legislation around South Africa’s Standards, Metrology and Quality Assurance systems • Centres of Excellence to increase manufacturing skills • Centurion Aerospace Village

  21. KEY INTERVENTIONS 2008 MTSF Industrial Development • Contribution to National Electricity Response Team • Fast-track amendments for energy efficient building and product standards • Ramp-up production of energy efficient household products (Solar Water Heating, Compact Fluorescent Light-bulbs) • Industrial Development Zones • Strengthening the IDZ regulatory framework by finalising IDZ policy and the IDZ Act

  22. KEY INTERVENTIONS 2008 MTSF Trade, Investment and Export • Promote economic development through equitable multilateral trading system that will lead to higher export growth and investment flows by strengthening trade and investment links with key partners. • Interventions • Various bilateral, multilateral and regional negotiations and cooperation forums: • Continue active role in Doha Round WTO negotiations. • Support to UNCTAD at XII Conference (April 2008) • India-Africa Summit (April 2008) and Forum for China-Africa Cooperation • Advance regional integration in SADC & AU • Promote cross-border infrastructure development on the continent through SDI’s and NEPAD

  23. KEY INTERVENTIONS 2008 MTSF Trade, Investment and Export • Interventions (continue) • IBSA cooperative preparations for Summit in Oct 2008 and Partnership for Growth and Development with China • Strengthen trade links with newly acceded EU Members • Review AGOA implementation in broader market access strategy • Enhance bilateral, institutional and technical cooperation with key African countries • SACU-Mercusor PTA (May 2008); SACU-India PTA. SADC EPA negotiations to align with TDCA

  24. KEY INTERVENTIONS 2008 MTSF Trade, Investment and Export • Interventions (continue) • Export and Investment • the dti’s export and investment strategies are being implemented and rolled out to the Provinces • New high growth markets are prioritised and targeted to increase exports in under-exploited markets and to change the basket of products from resources to manufactured • Increase the number of exporters by 200 per annum through targeted interventions • Investors and exporters will be also be serviced through a one stop facilitation centre, including a call centre, staffed by people with disabilities

  25. KEY INTERVENTIONS 2008 MTSF Trade, Investment and Export • Interventions (continue) • Work has begun to strengthen networks with Provincial Investment Promotion agencies and implement coordinated outward trade and investment projects to key priority markets • Investment attraction activities has moved from a generic to a more targeted approach resulting in a pipeline of R206 billion worth of investment projects • the dti will also implement a reviewed and refocused Foreign Economic Representative strategy in collaboration with DFA

  26. KEY INTERVENTIONS 2008 MTSF Broadening Participation Implementation and monitoring of the Codes of Good Practice for BBBEE. • Sector charters aligned to the Codes. • Alignment of the BEE Act and PPPFA. • Set up institutional systems for effective implementation of BBBEE (Advisory Council, Verification).

  27. KEY INTERVENTIONS 2008 MTSF Broadening Participation • Finalisation of the draft Strategic Framework on Gender and Women’s Economic Empowerment. • Strengthening of SAWEN programmes. • Implementation of ISIVANDE Women’s Fund. • Promote access to ICT and Technology for women through TWIB. • Continue to promote BBBEE and women empowerment through key incentive schemes:- BBSDP, SMEDP, BPO, TOURISM, SPII & THRIP

  28. KEY INTERVENTIONS 2008 MTSF Broadening Participation • To implement the Integrated Small Enterprise Development Strategy through: • Supply of financial and non-financial services to all forms of enterprises including co-ops, Khula, Samaf, NEF and seda • Creation of demand for products and services • Promotion of appropriate regulatory environment • Enhance the implementation of the integrated Enterprise Development Strategy by incorporating work done under Co-operatives, and Regional Development Agencies. • Promote awareness of and access to the dti services and offerings through outreach activities (Izimbizo) and multi media programmes, incl. television and involving COTII agencies

  29. KEY INTERVENTIONS 2008 MTSF Regulation Develop and review policy and legislation in the areas of consumer, intellectual property and corporate regulation, with enhanced focus on enforcement, monitoring and evaluation • Develop effective, modern and internationally aligned legislation to correct market failures, protect consumers and promote good corporate citizenship, focusing on: • Companies Bill • Consumer Protection Bill • Competition Amendment Bill • Intellectual Property Laws Amendment Bill • Review of estate agency regulatory framework in light of growing property sector • Review of trade metrology regulatory framework • Review and amend Lotteries Act • Develop Regulations following enactment of the bills

  30. KEY INTERVENTIONS Regulation Ensure effective and efficient implementation of legislation that aligns outcome of enforcement with poIicy and legislative objectives • Establishing the Companies and Intellectual Property Commission and the National Consumer Commission • Strengthening the powers of the existing enforcement agencies (such as the Competition Commission) • Ensuring that the enforcement agencies are well resourced and capacitated to carry out implementation • Overseeing the work of agencies for purposes of consistency, alignment and synergy • Building internal expertise and skills in the area of liquor enforcement as a dti directorate

  31. KEY INTERVENTIONS Monitoring compliance levels and the impact of regulation on the economy • Continuous monitoring with specific focus on alignment of implementation with policy and legislative objectives • Periodic impact assessment to identify and address unintended consequences • Enhance the interaction between the dti and the agencies through COTII and other fora • Draw lessons from key success areas such as the implementation of the National Credit Act Regulation

  32. KEY INTERVENTIONS 2008 MTSF Administration and co-ordination Strategic Focus (1):Attract, develop and retain professional and skilled officials through the following initiatives: • Special project to fast-track recruitment and selection. • Human Resource Plan to determine the skills gap between the demand and supply • Retention Strategy • Revised Human Resource Development Strategy to drive staff development and training as opposed to a demand driven approach • Revised Performance Management System

  33. KEY INTERVENTIONS 2008 MTSF Administration and co-ordination Strategic Focus (2):Implement transformation through Employment Equity and Broad Based Black Economic Empowerment: • Interventions: • Implementation of the 2008 Employment Equity Plan • Step up efforts to appoint women in senior management positions in line with the 50% target • Appointment of a Disability Focal Person • Promotion of BBBEE through our procurement spending

  34. KEY INTERVENTIONS 2008 MTSF Administration and co-ordination Interventions (continue) • Strengthening alignment: • Effective management of the Economic Cluster of departments and its Industrial Strategy and Equity and Development Focus Groups. • Implementation of the dti internal cluster system • Greater alignment, co-operation & co-ordination with the dti agencies (COTII), including leveraging capacity in agencies (e.g. IDC). • Greater alignment and coordination with external stakeholders, including NEDLAC TIC, Industry Forum, etc.

  35. Strengthening alignment: Economic Cluster’s priorities (2007-2009) KEY INTERVENTIONS • Increase economic efficiencies • Strengthen economic regulator capacity in key industries • Amend competition policy to support effective regulation • Increase access, uptake & usage of ICT infrastructure • Phased roll-out of overhauled public transport network • Monitor implementation & impact of infrastructure roll-out • Coordinated NHRD, with focus on ASGI-SA priorities • Promote dynamic growth sectors • Implement industrial policy framework, focusing on key sectors and • leveraging public spending • Supportive macro-economic management (esp. competitive and stable • real effective exchange rate) • Integrate services to small-and micro-enterprises • Integrated small enterprise service delivery (incl. comprehensive • procurement strategy, marketing cooperatives, business development • support and access to finance) • Reduced SMME regulatory burdens (incl. by-laws)

  36. Allocated resources

  37. MTEF BUDGET

  38. MTEF BUDGET(PER CLUSTER)

  39. ANALYSIS OF CURRENT MTEF 2008 MTSF On average, the allocation of the budget over the MTEF period is as follows: • 21% to agencies • 42% to incentive payments • 7% to compensation • 18% to capital payments • 12% to goods and services (of which 7% is pre-committed)

  40. SIX YEAR COMPARISON OFBUDGET VS EXPENDITURE NB: 2007/08 Projected to 31 March ‘08

  41. Institutional mechanisms

  42. INSTITUTIONAL MECHANISMS • dti structured into seven (7) programmes and 19 public entities (herein referred to as Council of Trade and Industry Institutions, COTII) • Each programme and entity has its own medium-term plan which contributes to the achievement of the dti’s strategy

  43. STRATEGY MAP 2008 MTSF Over 2008-2011

  44. MONITORING, EVALUATION AND REPORTING • Monitoring, Evaluation and Reporting to take place by a combination of internal structures, as well as Cabinet and Parliament. • Executive Board (EXBO) will oversee planning, monitoring and reporting processes, to ensure quality and accountability. • Planning and prioritisation at the dti are informed by bi-annual Cabinet Makgotla. • Agreements made in other forums, such as NEDLAC, inform the implementation agenda. • Divisions jointly and separately responsible for timely delivery of products or outputs. • Emphasis on joint implementation, inclusive of COTII and Economic cluster.

  45. CONCLUSION & CHALLENGES 2008 MTSF • the dti, in general, achieved its targets for the previous reporting period (as reported in the 2006/07 annual report) • Challenges are to enhance the impact of the dti through:- • Ensuring effective programme & project performance; • Stronger strategic & operational management; • Greater integration of work, including that of agencies; • Adequate financial resources for extensive dti programmes; • HR challenge of recruitment, retention and development; and • Improved cluster co-ordination

  46. 2008 MTSF QUESTIONS ?

  47. ANNEXURE: ADDITIONAL INFORMATION ON INSTITUTIONAL MECHANISMS

  48. INSTITUTIONAL ARRANGEMENTS Programme 1: Administration • Provide strategic leadership to the department and its agencies, and facilitate successful implementation of the departments mandate through sustainable and integrated resources and customer centric services Programme 2: ITED • Provide leadership in trade policy formulation to promote economic development by building an equitable multilateral system; and • Strengthening trade and investment links with key economies by fostering African development through regional and continental integration, and development co-operation in line with NEPAD

  49. INSTITUTIONAL ARRANGEMENTS Programme 3: EIDD • Provide leadership in developing industry and enterprise policies that create an enabling environment for competitiveness, equity, growth and job creation Programme 4: CCRD • Develop and implement coherent, predictable and transparent regulatory solutions that facilitate easy access to redress, and efficient regulations for economic citizens Programme 5: TEO • Stimulate and facilitate the development of enterprises through the provision of incentive measures that support investment, job creation and regional economic development, such as through the Industrial Development Zones

  50. INSTITUTIONAL ARRANGEMENTS Programme 6: TISA • Increase South Africa’s capacity to export by developing and implement strategies for targeted markets; • Increase the level of direct investment flow; • Effectively manage the department’s network of foreign offices. Programme 7: Marketing • Promote greater awareness of the department’s role and its products and services; and facilitate access to, and uptake of these products and services

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