2012/13 Annual Report Presentation to the Select Committee 05 November 2013

1. 2012/13 Annual ReportPresentation to the Select Committee05 November 2013 1st DRAFT

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 [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 • Supporting inclusion of historically marginalised & vulnerable groups • Supporting strategic implementation of competition policies to encourage inclusive, sustainable economic development • Identifying & supporting catalytic projects • Aligning 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. 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

7. 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

8. 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 • Promotes 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 • 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

9. HIGHLIGHTS OF ENTITIES PERFORMANCE IDC approved funding to the value of R13,1b, while disbursements amounted to R15,9b – 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 sefa records, 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 R1,4b against colluders in the construction and infrastructure sector and R650m in the telecommunications (part of which was finalised in 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. 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. 9 9

10. 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 • 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.

11. Value of IDC funding approvals by province (R’ million) For the period beginning on 1 April 2009 and ending of 31 March 2013, the IDC’s loans are expected to create and save 151 907 jobs on an approval of R55.5 billion, this works out to an average cost of R362 064 per job created. In the preceding period between 2004 and 2008, the IDC created 117 997 jobs on an approval of R25.8 billion, on an average cost of R218 650 per job created. Increased focus on the chemical, green and ICT sector which are capital intensive is likely to have increased the cost of jobs created.

12. Value of IDC funding approvals by province (R’ million) Cont...

13. Provincial Spread of sefa

14. 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 • 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 NGP

15. 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

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

17. Overall Performance Per Programme Continued

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

19. 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 .

20. 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 Sectorsand 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

21. 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 systematically 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

22. 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.

23. 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

24. 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 : • Compile d 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)

25. 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

26. 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 • 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

27. Financial Performance per Programme

28. Year on Year Performance per Programme

29. Financial Performance per Economic Classification

30. Financial Performance per Economic Classification

31. Reasons for Under Expenditure • For the year under review the department had spent 96,7% of the allocated budget. The reasons for the under expenditure largely relate to:- • Compensation of Employees (R8m): due to vacancies during the year and at financial year end • Goods & Services (R11m): this largely relates to R20m that was allocated during the Adjustments Estimate processfor capacity building for the Economic Regulatory Bodies • Machinery & Equipment (R3.7m): The vacancies and the delay in the procurement of a video conferencing largely contributed to this under expenditure

32. Revenue Performance Revenue collection increased from R593m to R671m and this was largely due to the increase in fines and penalties imposed by the Competition Commission.

33. Transfers to Agencies

34. Transfers to Entities and Agencies

35. Human Resources • At inception of EDD in 2009, 265 posts were approved – for filling on incremental basis over MTEF • Human Resource Planning Strategy to fill 166 funded posts over the MTSF period was developed • Annual targets for funded posts in 2011/12 was 129 and 142 in 2012/13 • By 31 March 2013, 139 funded posts were filled • Funded posts for remaining MTEF period was expanded to 166 posts • EDD recruitment strategy was prioritised to enable the delivery of targets forecast in Strategic Plan and APP • In 2012/13, recruitment of appropriate staff decreased vacancy rate to 2.1% by year end • Difficulties were encountered around recruitment of staff with specialised and critical skills, as well as women in senior management positions

36. Human Resources Cont... • EDD achieved 45% of women employed in senior management posts • EDD achieved the national target of 2% for people with disabilities • Core staff complement ranges from 20 to 35 years • An Employee Assistance Programme was implemented to render a 24hr service to staff and their families, as well as a Health Promotion Programme to provide HIV/ AIDS counselling and testing in partnership with GEMS • Performance Management and Development system was implemented in 2012/13 • In 2012/13, 14 governance policies were developed internally and approved

37. Human Resources Action Plan 2013/14 • Rationalisation and alignment of structure • Head hunt strategic posts, specialists & senior levels • Prioritise recruitment and selection processes – e.g. CD: CM, PLO, D: HR, D: Strategic Management, D: Communications, DD: Planning and Reporting, DD: Security • Monthly Human Resource reports – constant monitoring and reporting to improve performance data

38. Staff complement as at 31 March 2013

39. Staff complement as at 31 March 2013

40. SIYABONGA DRAFT