2006/07 ANNUAL REPORT

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2006/07 ANNUAL REPORT2006/07 ANNUAL REPORT

PRESENTATION TO THE PORTFOLIO PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRYCOMMITTEE ON TRADE AND INDUSTRY

24 OCTOBER 2007

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PRESENTATION CONTENTPRESENTATION CONTENT

Economic Contextdti Strategic Objectives2006/07 Achievements, Progress and ChallengesSix Year Expenditure ComparisonAnalysis of 2006/07 Under ExpenditureAnalysis of current MTEFYTD Expenditure – 31 August 2007Conclusion


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KEY OUTPUTSKEY OUTPUTS

The department seeks to organise its work in terms of the following areas on which the annual report is based:-

Industrial development

Trade, investment and export

Broadening participation

Regulation

Administration and coordination


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ACHIEVEMENTS AND PROGRESSACHIEVEMENTS AND PROGRESS

Industrial DevelopmentPurpose: Provide leadership in the development of policies and strategies that promote competitiveness, enterprise development and the efficient administration of support measures.


ProgressCabinet endorsement of National Industrial Policy Framework, followed by outline of the Industrial Policy Action PlanFinalisation of key sector strategies (eg chemicals & pharmaceuticals; automotives, metals & capital equipment; forestry, pulp, paper & furniture; & clothing & textiles)Implementation of key sector strategies (BPO&O, tourism)Implementation of the National Industrial Participation Programme (150 projects, US$7.5 billion 12,000 direct jobs)

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Industrial Development


Progress – cont.Key incentives have contributed to the manufacturing & services industries:

SMEDP - 11,309 projects approved since 2000 with R12,7b in incentive value. Since April 2006 2,501 projects approved with incentive value of R2,96bStrategic Industrial Projects (SIP) – 45 approved projects in July 2005 when scheme expired. Estimated value of ongoing investment of R28,7b with estimated 8,446 direct & 104,545 indirect jobs being created. 22 of the approved projects already established with investment of R10b.

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Industrial Development2006/07 ANNUAL REPORT2006/07 ANNUAL REPORT

Progress – cont.Critical Infrastructure Programme (CIP) – 19 projects approved to date with qualifying investment of R32b & infrastructure investment of R9,2bIndustrial Development Zones – attracting growing investor interest with commitments currently valued at R28b. Film & TV production – 31 productions approved since 2004 with R1,8b in local expenditure. In 2006/07 four local productions assisted to the value of R31,3m incl. Oscar winning Tsotsi

Support for technology & innovation:-Support Programme for Industrial Innovation (SPII) – 85 projects endorsed to the value of R250m (18% female & 34% BEE)

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Industrial Development2006/07 ANNUAL REPORT2006/07 ANNUAL REPORT

Progress – cont.Technology & Human Resources for Industry Prgramme (THRIP) – assisted 746 researchers; 3,178 students & 371 industry partners (36% female & 55% BEE)The South African National Accreditation System (SANAS) & the South African Bureau of Standards are also major contributors to this area of the dept’s work

Centres of Excellence established to increase manufacturing skills (i.e. Aerospace, Clothing & Textiles, Advanced Eng., etc.)Launched support measures for the development of the aerospace industry (eg. aerospace village) Comprehensive review of all major incentives undertaken to guide future support for Industrial Policy

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Trade, Investment and ExportPurpose: To promote economic development by working to build an equitable multilateral trading system that facilitates development; strengthening trade and investment links with key economies; and by fostering African development including through regional and continental integration and development co-operation in line with NEPAD


ProgressLeadership role in WTO Doha Round negotiationsKey bilateral trade links and negotiations (EU, EFTA, USA, India, Brazil (and IBSA), China)EFTA agreement ratified by South Africa. Lesotho, Namibia & Swaziland to ratify agreementSACU-Mercusor PTA – major progress made & negotiations expected to be finalised in the current financial year.

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Trade, Investment and Export2006/07 ANNUAL REPORT2006/07 ANNUAL REPORT

Progress – cont.SACU-US – a Trade Investment & Development Co-operation Agreement proposed as framework for these relationsClothing and textile quotas against import surges from China instituted to provide relief to local manufacturersOngoing negotiations to promote African and regional economic integrationBilateral Investment Treaties - signed with one country; negotiations concluded with 7 countries; ongoing negotiations with 3 countries; & planned negotiations with 9 countriesEngaged in the set-up of new SACU institutional arrangements

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Trade, Investment and Export2006/07 ANNUAL REPORT2006/07 ANNUAL REPORT

Progress – cont.Ongoing export promotion activities on the basis of a revamped export strategy, including trade missions & national pavilions, identification & dissemination of trade leads & financial assistance to exhibitors & market researchersWide range of investment promotion activities undertaken, including investment pavilions & seminars; ministerial & presidential missions; international investment council meetings; investment conferences & sector specific briefs

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Broadening ParticipationPurpose: Lead in the development of policies and strategies that promote enterprise growth, empowerment and equity in the economy


ProgressSupport for small enterprise development through the rollout of SEDA & SAMAF, and increased financing of SMEs by Khula, NEF & IDCCodes of Good Practice for BBBEE adopted by Cabinet, gazetted in February 2007 & under implementation (incl. Sector Charters)Regional Industrial Development work being linked to the National Industrial Policy Framework & Local Economic Development workBEE and women empowerment also supported by key incentive schemes:- BBSP, SPII & THRIP

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Broadening Participation2006/07 ANNUAL REPORT2006/07 ANNUAL REPORT

Progress – cont.Training workshops on women empowerment and access to finance through SAWENCooperative legislation developed and support to cooperatives provided – 4 large projects totaling R9m & 16 small projects totaling R3,78m Products for targeted procurement from SME’s by government departments identified & to be endorsed before implementation of the scheme Publications, road shows and imbizo’s to promote awareness of the dti’s services and offerings

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RegulationPurpose: Develop and implement coherent, predictable and transparent regulatory solutions that facilitate easy access to redress and efficient regulatory services for economic citizens.


ProgressNational Credit Act proclaimed and Regulator establishedCompanies Bill published for public commentConsumer Protection Bill published for public commentCompetition Policy Review completed & drafting of amendments to Act startedCorporate laws Amendment Bill introduced in 2006Processed the FIFA request for trademark protection & issued public notice

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Regulation


Progress – cont. Legislation passed:

Measurement Units & Measurements Standards Act (Act 18 of 2006) Accreditation for Conformity Assessment, Calibration & Good Laboratory Practice Act (Act 19 of 2006)Amendments to the Close Corporations Act, 1984

Subordinate legislation introduced:Regulations under the Cooperatives Act, 2005Regulations under the National Credit Act, 2006Amendments to regulations made under Legal Metrology Act 1973

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RegulationWork undertaken on the following legislation for introduction in 2007/08


The Consumer Protection BillIntellectual Property Laws Amendment BillCompetition Amendment BillCompanies BillNational Gambling Amendment BillNational Regulator for Compulsory Specifications BillThe Standards BillThe Lotteries Amendment Bill

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Administration and co-ordinationPurpose: Ensure efficient and effective coordination and systems within the dti and with stakeholders & partners


ProgressHR is a critical challenge & ongoing efforts made to fill key vacancies, incl. use of specialized recruitment agencies213 vacancies were filled out of 323 in the year to 31 March 2007, & the vacancy rate stood at 27% An integrated HRD strategy under development, covering recruitment, retention & trainingGreater alignment, co-operation & co-ordination with dti agencies (COTII), including leveraging capacity in agencies (eg. IDC)

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Administration and co-ordination


Progress – cont.

Strong Corporate Governance maintainedUnqualified dti audits over several years & unqualified COTII audits in 2006/07, except for two agenciesAll COTII agencies tabled annual reports timeously

Key Boards of Directors & CEO appointments madeEstate Agency Affairs Board (EAAB)Small Enterprise Development Agency (SEDA)South African Bureau of Standards (SABS)SABS Trade Metrology Advisory Committee (TMAC)National Credit Regulator (NCR)International Trade Administration Commission of SA (ITAC)

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Administration and co-ordination


Progress – cont.South African Micro-finance Apex Fund (SAMAF)Companies & Intellectual Property Registration Office (CIPRO)National Metrology Institute of South Africa (NMISA)Commissioner of the Competition Commission

Effective & efficient use of allocated funds

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Six year comparison ofSix year comparison ofbudget vs expenditurebudget vs expenditure


0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

R'0

00

Budget

Expenditure

Unspent

% Unspent

Budget 2,280,062 2,554,826 2,796,350 3,623,291 3,907,420 3,942,028

Expenditure 2,015,888 2,495,504 2,659,342 3,424,138 3,631,304 3,804,720

Unspent 264,174 59,322 137,008 199,153 276,116 137,308

% Unspent 12% 2% 5% 5% 7% 3%

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07

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ANALYSIS 2006/07ANALYSIS 2006/07UNDER EXPENDITUREUNDER EXPENDITURE

Under-expenditure in 2006/07 occurred in mainly in the following areas for which roll-overs have been approved:


R'000

BPO 70,000

Staple Food Fortification Programme 20,000

SMEDP 7,000

Disaster Recovery 8,000 World Bank 4,400

Total 109,400

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ANALYSIS OF CURRENT MTEFANALYSIS OF CURRENT MTEF

On average, the allocation of the budget over the MTEF period is as follows:

27% to agencies

53% to incentive payments

10% to compensation, after deducting the budget for agencies (8% of total budget)

12% for goods and services, of which 7% is already committed


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ANALYSIS OF CURRENT MTEFANALYSIS OF CURRENT MTEF

2006/07 2007/08 2008/09 2009/10R'000 R'000 R'000 R'000

Total allocated budget A 3,942,028 4,845,583 4,667,364 5,291,423Less: Payment to agencies B B/A 1,366,404 34.66% 1,466,059 30.26% 1,264,255 27.09% 1,318,505 24.92%Sub Total C 2,575,624 3,379,524 3,403,109 3,972,918Less: Compensation D D/C 283,591 11.01% 323,457 9.57% 343,223 10.09% 358,555 9.02%Sub Total E 2,292,033 3,056,067 3,059,886 3,614,363Less: Incentives F F/A 1,710,529 43.39% 2,465,707 50.89% 2,447,349 52.44% 2,980,765 56.33%

Incentives capital G G/A 539,598 13.69% 1,054,502 21.76% 968,641 20.75% 1,327,714 25.09% Other Incentives H H/A 1,170,931 29.70% 1,411,205 29.12% 1,478,708 31.68% 1,653,051 31.24%Sub Total I 581,504 590,360 612,537 633,598Less: Goods & Services J J/A 375,303 9.52% 548,371 11.32% 572,067 12.26% 585,046 11.06%

Committed K K/A 301,573 7.65% 343,975 7.10% 368,101 7.89% 383,399 7.25% Uncomitted L L/A 73,730 1.87% 204,396 4.22% 203,966 4.37% 201,647 3.81%Sub Total M 206,201 41,989 40,470 48,552Less: Other payments N N/A 41,575 1.05% 24,397 0.50% 25,692 0.55% 31,286 0.59%Less: Capital O O/A 27,318 0.69% 17,592 0.36% 14,778 0.32% 17,266 0.33%

137,308 0 0 0


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YTD ExpenditureYTD Expenditure31 August 200731 August 2007


Annual Available

Programme Budget Budget Actual Variance % Var Budget

Administration 361,180 121,543 102,693 18,850 16% 258,487 International Trade & Economic Development 140,680 54,584 40,139 14,445 26% 100,541 Enterprise & Industry Development 1,776,806 833,101 794,498 38,603 5% 982,308 Consumer & Corporate Regulation 147,698 76,862 62,716 14,146 18% 84,982 The Enterprise Organisation 2,179,806 993,089 997,661 (4,572) 0% 1,182,145 Trade & Investment South Africa 264,511 66,494 56,322 10,172 15% 208,189 Marketing 84,302 21,637 13,892 7,745 36% 70,410 Thefts & Losses – – 335 (335) (335)

Total 4,954,983 2,167,309 2,068,256 99,053 5% 2,886,727

R'thousandsYear to Date

Expenditure to 31 August = 42% of total budget vs straight line projections which would have been 42%

Only 5% under spent against projections

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CHALLENGESCHALLENGES

In conclusion


Overall we have achieved our targets for the reporting periodChallenge is to enhance impact of the department through:-

Ensuring effective programme & project performance Stronger strategic & operational managementGreater integration of work, including with agencies

Adequate financial resources for extensive dti programmesHR challenge of recruitment, retention and developmentImproved cluster co-ordination

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THANK YOU

&

QUESTIONS


2006/07 ANNUAL REPORT

Documents

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