Presentation to the Standing Committee on Appropriations 12 November 2014.

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Economic Development Department2014/15 AENE

Presentation to the Standing Committee on Appropriations

12 November 2014

PRESENTATION OUTLINE

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1.Performance of the Department for the first six months of the 2014/15 financial year ending 30 Sept 2014.

2.Expenditure of the department for the first 6 months of the 2014/15 financial year

3.Details and motivation for the virements of 54.5 per cent and 48.8 percent

4. Implications of funding shifts on service delivery indicators

INTRODUCTION

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The 2014/15 financial started the with an election in May 2014, ending one administration and beginning a new administration. This then meant that the department had to table a new APP for the 2014/15 financial year after the elections.

This provided an opportunity to the department to recraft its indicators, refocus its work and properly align its work to its 6 high level strategic objectives to increase its service delivery and impact.

The exercise was intended at sharpening the work of the department, increase service delivery and reemphasise the role of the department to achieve a greater impact.

The EDD’s core roles

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• Develop strategies and measures to make economic growth more inclusive, especially supporting and encouraging job creation

• Encourage and help all state agencies to work together for inclusive growth and job creation

• Provide secretariat and technical support for the Presidential Infrastructure Coordinating Commission – act as secretariat to meetings; manage monitoring and evaluation; unblock projects; and propose cross-cutting models and guidelines

• Facilitate social dialogue• Oversees the Industrial Development Corporation (IDC) and the Small

Enterprise Finance Agency (sefa)• Oversees two national regulators – the competition authorities (the Competition

Commission and the Competition Tribunal) and the International Trade Administration Commission (ITAC).

• Undertake other activities as required to assist investments and programmes that lead to new kinds of economic activity and job creation, for instance by speeding up bureaucratic authorisations, assisting in obtaining infrastructure or finding sources of financing (although the EDD itself does not provide funding)

ANNUAL PERFORMANCE PLAN FOR 2014/15

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Subsequent to the elections in May 2014, the department retabled its APP for the 2014/15 financial year.

The performance covered in this presentation reports against the tabled APP which has 22 KPIs which is a consolidation of the earlier version of the APP which had 35 KPIs.

QUARTERLY PERFROMANCE TO DATE

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Q 1 Indicators Q 2 Indicators

KPI 4 : A quarterly report on trends in inclusive growth, reviewing the targets set for Outcome 4 of the MTSF

EDD Proposed annual targets for Outcome 4 under the new MTSF, which was approved by Cabinet.

KPI 1

Various interventions were made around the mining value chain, which is a Jobs Driver in the New Growth Path, to promote the capacity to beneficiate raw materials locally and address critical social issues

KPI 5:

EDD hosted a conference on “Manufacturing led growth for employment and equality”. Attended by 200 academics including stakeholders from Mozambique, Zambia, Mauritius, Zimbabwe and other African countries. Partial EU funding

KP1 2Two Cluster meetings were attended by the Ministry during the quarter. EDD was tasked by the Cluster to coordinate preparation of a discussion document infrastructure and economic development. Drafted a discussion document on how infrastructure supports inclusive growth, with a review of some key trade-offs opportunities and risks.

KPI 7:

An analysis of employment, migration and growth trends by province was undertaken.

EDD developed recommendations on the programme for radical economic change that forms part of the MTSF

KPI 3:Minister presented at the DRICO heads of mission conferenceMinister was part of the development of the approach on the BRICS Development BankTOR for policy dialogue work with UNDESA on financialisation of the South African Economy developed

KPI 8An EDD research paper for the manufacturing conference analysed trends in employment, equity and growth in manufacturing, overall and by subsectors

KPI 4Assessment of 5 provincial APPsMinister and Premier of Gauteng launched an incubation hub in Diepsloot


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KPI 8 : Minister engaged with a number of companies in the clothing and textile industry to evaluate the impact of government programmes and identify additional requirements.

Minister launched a R25 million design centre TCIA as part of a focus on improving fashion innovation in South Africa.

KPI 5

18 SIP Construction reports reviewed that formed the core of briefing within Cabinet Processes

KPI 6

EDD facilitated the unblocking of Water Use Licence Application for Rustenburg Bus Rapid Transport and SANRAL N$

KPI 12:

Supported a small enterprise owned by Ms B Taho to develop her perfume business, as a result she has received inquiries from chain stores.EDD networked with SARS and the Textile Federation to assist in curtailing illegal blanket imports. The Federation has agreed to provide technical support to SARS.Various support to Noble Resources a soya producer in Lekwa provided by EDD.Supported Sihlela Community to develop forestry plantation on a 350 hector land.Help negotiate a settlement between IDC and Mediterranean Textiles to restructure a loan to save jobsEDD mediated a dispute between an investor and the IDC which avoided legal action

KPI 7Operationalisation of the Infrastructure Development Act including appointment of members of governance structuresPublication of an in-depth report on “Skills for and Through SIPs”

KPI 8

PICC commenced work under the new Infrastructure Development Act

KPI 9Assisted potato processors to increase duties resulting in enhancing the industries sustainability.Negotiated with Tshwane municipality to managed power cuts at Babelegi that was negatively affecting Nestle production


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KPI 15 : Supported KZN and Limpopo Province with their strategic planning session

KPI 9 Phosphate Pricing was constrained by a previous Tribunal decision, once clarity was reached on pricing, Bosveld could resume production

KPI 16:

EDD complied 18 SIP reports for January-March quarter 2014 for the PICC5 site visits conducted to enhance SIP reportsMinister attended sod turning at Mzimvubu DamEDD provided the 11th special report on progress on the SIPs to Cabinet Lekotla in June 2014EDD convened and provided assistance to PICC secretariat and MancoMinister provided strategic overview of priorities to SIP coordinators

KPI 9

Arranged a lease agreement for Silvapen from Department of Rural Development, this opened the way for a bio-fuel investment.

Unblocked the conclusion of DST processes to allow the IDC to begin work on Ketlaphela, a production facility to produce ARVs

KPI 10Minister engaged with the IDC on its corporate plan and annual report

KPI 17:

EDD unblocked the following PICC project:-Hobhouse in Mantsopa in the Free State-Ngobi in Moretele in North West-Gibson Bay Wind Farm in the Eastern Cape

KPI 10

EDD completed an evaluative report on IDC/sefa funding and turnaround times

KPI 11

KPI 18Ministerial engagement with IDC to identify key priorities

A baseline report on the levels of government and DFI industrial funding industrial funding by IDC, sefa, NEF and provincial DFI was developed


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KPI 19 : IDC and sefa road shows to market their offering Minister participated in a road show in Delft and met with women in constructionEDD developed a small business toolkitMinister convened a small business conference on 7 April 2014Minister opened the Shanduka Black Umbrella Enterprise Development Awards

KPI 11

In Q2 IDC approved R2,2 billion and disbursed R1.9 billion; sefa approved R163,7 million and disbursed R164.9 million

KPI 12

Minister site visit to Chic Shoes, a shoe factory

KPI 20:

Target for sefa and IDC funding was R1,25 billion, actual approvals were R2.2 billion and disbursement R3.7 billion.IDC funded 41 enterprises in the Q1 of which, 21 were black empowered and 11 had at least 25% women ownership.

Evaluative report on jobs created and saved was completed

Minster worked with IDC on a report identifying the IDC’s impact on industrial development using case studies

KPI 14Minister participated in the strategic session of the Competition Commission (CC)

KPI 21:

EDD evaluated the impact of its regulatory agencies on job creation, in the period under review ITAC measures lead to the creation or saving of 100 jobs while the decision of the Competition Commission on certain mergers saw 119 jobs saved

A keynote speech on government’s approach to competition policy was unveiled at the CC conference on Competition Law

KPI 15

Progress report on the AFGRI Development Fund was prepared


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KPI 22 : Minister held 3 meetings with the competition authorities to discuss strategic issues arising under the new administrationITAC published draft policy guidelines on scrap metal for comment and finalised 6 investigations, and an anti-dumping investigation on soda ash and wheelbarrows. It made a preliminary determination on frozen chicken, completed a sunset review on welded chain link, issued 4615 import and 3351 export permits. Conducted 218 scheduled and 157 unscheduled investigations. ITAC also researched local manufacture of boats.

Ground breaking decision by the Tribunal on excessive pricing by Sasol for purified propylene and polypropylene

Agreement was reached with Afgri as part of the Competition Commission’s review of a takeover by Agrigroupe

KPI 15Refined quarterly dashboards on performance of trade and competition authorities was developed

KPI 16

A socio-economic impact assessment system is being introduced to ensure that impact assessments are aligned with national priorities of inclusive growth

EDD concluded SEIAS training for Tshwane and Ekurhuleni Municipalities

KPI 18

An updated report on the implementation of the Local Procurement Accord was prepared

KPI 23:

EDD engaged with Economic Regulatory Bodies (ERBs) on their security strategies

Minister conducted a site visit to AMAN, a factory seeking to produce anti-theft cabling systems.

KPI 19

KPI 25Minister engaged with manufacturers in Atlantis to discuss constraints to growing manufacturing there.

As part of the work with the Alexandra Renewal initiative, Minister launched the concept of the Green Skills Hub in Alexandra.

EDD compiled and produced an initial report on the implementation of the Green Economy Accord


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KPI 26 : Minister engaged with Minister of Health on the Lodox Scanner produced in South Africa, as a result the Gauteng Health Department purchased 12 scanners at R3 million each.

KPI 21An assessment of the implementation of the youth employment accord was prepared and a publication on successes of the youth employment accord was drafted.

KPI 28:

The Presidential Youth Indaba Western Cape report back forum was successfully held on 10 April 2014 in Cape Town

EDD briefed Gauteng government on progress on the Youth Employment Accord.

Minister addressed a Harambee conference on youth, this is an initiative that provides work placement and job readiness training for young people.

KPI 29:

EDD undertook a monitoring and evaluation of progress on youth employment initiatives under the Youth Employment Accord

Report on the implementation of the other social accords for the fourth quarter of 2013/14 was completed.

KPI 31EDD facilitated funding for and sits on the steering committee of the Western Cape Furniture Cluster


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KPI 32 : Hosted 2 small business knowledge network sessions on unlocking the economic potential of townships in the North West and Eastern Cape

KPI 33:

EDD arranged for a training session on local chicken production

KPI 34:

EDD developed a booklet on the indigenous chickens user friendly guide for small scale farmers.

Minister launched the Mitchells Plain Skills Centre in April following technical support and premises supplied through EDD intervention.

Expenditure Performance per Programme

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Programmes

2014/5

Annual Budget Expenses Variance Spent Funds available for reprioritisation

R'000 R'000 R’000 % R’000 %

Administration 79 460 35 045 44 415 44% 4 685 6%

Economic Policy Development 23 075 5 645 17 430 24% 5 892 26%

Economic Planning and Coordination 579 064 273 189 305 875 47% 16 343 3%

Economic Development and Dialogue 15 261 4 611 10 650 30% 3 019 20%

Total 696 860 318 490 378 370 46% 29 940 4%

Expenditure Performance per Programme

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Classification

2014/5

Annual Budget Expenses Variance Spent Funds available for

reprioritisation

R'000 R'000 R’000 % R’000 %

Compensation of employees 107 728 35 660 72 068 33% 18 204 17%

Goods and services 52 909 17 505 35 404 33% 8 949 17%

Transfers 534 030 264 068 269 962 49% * *

Capital expenditure 2 193 1 257 936 57% (160) -7%

Total 696 860 318 490 378 370 46% 29 940 4%

• EDD’s second term of existence in line with the new MTSF, adopted 5 core strategic objectives and re-aligned the Annual Performance Plan (APP) to these. – The revised objectives and APP have necessitated a review of the

organisational structure and skills sets required to achieve the mandate. – The governance processes of finalising the revised organisational

structure aligned to the new strategic direction is an advanced stage of finalisation

• Compensation of Employees’ baseline allocation (ENE 2014) is for 166 funded posts. The targeted number as per the approved APP2014/15 was 146. As at 30 Sept 2014, EDD had 116 filled posts.

• EDD is able to meet its targets through overtime and assistance received from entities and this has contributed to the cost saving measures

• In the Adjusted ENE, EDD did a straightline projection based on historical spending for the first 5 months of the year and projected for the remainder of the 7 months on a number of posts.

• Savings of R30.895 million from the current largely core unfilled posts and the envisaged vacancies for the remainder of the financial year were identified during the AENE.

Details and motivation for virements

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• Goods and services: Funds (R3.5 mil) were reprioritised for the tenant installations required to house EDD in one office block on the dti campus. Currently EDD officials occupy 3 different building within the campus which is inefficient.

• Funding was reprioritised for phase 2 of the innovative building technologies project commission to the CSIR: (R1.6 mil.)

• A new transfer was introduced to provide for the 30% of the 1% earmarked for training by PSETA

• The biggest amount of the generated savings were recommended to support small businesses as an additional transfer to sefa in order to augment the budget cut of R50 million to the Economic Competitiveness Support Package.

Details and motivation

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• The aforementioned virements were made in line with the “Technical Guidelines for the preparation of Adjusted Estimates of National Expenditure”, as provided for by section 30 of the PFMA 1 of 1999

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“Approval is required from the legislature for the virements which: result in utilisation of funds that amount to more than 8 per cent of the amount appropriated for a programme (shifts between different segments within a programme do not affect overall amount appropriated for a programme, only virements from a programme effectively reduce the programme budget”.

• EDD’s has observed National Treasury requirements that virements do not exceed 8% of the appropriated allocation including the related reporting requirements.

Details and motivation

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AENE 2014/15 virements

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Classification Original Budget 2014/15 Variance

R’000 Virement% Net

movement

Administration 79 460 15 392 19%

Economic Policy Development 23 075 (11 183) (48%)

Economic Planning and Coordination 579 064 2 062 0.4%

Economic Development and Dialogue 15 261 (6 271) (41%)

Total 696 860 0


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ClassificationOriginal Budget 2014/15 Variance

R’000 Virement% Net

movement

Compensation of employees 107 728 (30 895) (-29%)

Goods and services 52 909 2 075 4%

Transfers 533 970 26 564 5%

Capital expenditure 2 193 2 256 103%

Total 696 860 0


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Programme 2: Economic Policy Development: ENE 2014/15 allocation was R23.075 million and R11.272 million(48.5%) was proposed as virement for legislature’s approval mainly in support of small businesses competitiveness and support package. The funds was intended for: -Mainly venues, travel and facilities amount in line with the strict enforcement of the cost containment measures to support or increase small business allocation transfer to sefa – R9.062 million-Compensation of employees – posts not yet filled- R2.21 million

Programme 4: Economic Development and Dialogue: ENE 2014/15 allocation was R15.261 million and R8.377 million (54.9%) was proposed as virement mainly in favour of small businesses competitiveness and support package (R6.151 million) and R2.2 million for labour saving devices.-The funds were initially intended to:-Fill posts and as outlined, these are savings realised from vacant posts that will be filled in line with the revised strategic objectives and APP and operational costs that would have been incurred had posts been filled.

• As EDD is still in the process of reviewing and finalising its structure, care is being taken that its objectives and targets are achieved and, at times, exceeded.

• The HR turnaround strategy is prioritizing the appointments of critical posts to ensure delivery of core business including provincial and local departments initiatives, economic regulatory bodies and job drivers.

Implication of funding shifts on service delivery indicators

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THANK YOU

SIYABONGA

Presentation to the Standing Committee on Appropriations 12 November 2014.

Documents

Transcript of Presentation to the Standing Committee on Appropriations 12 November 2014.