Minister on Department of Economic Development Strategic Plan

Economic Development

04 March 2010
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Committee was briefed on the newly created Department of Economic Development’s Strategic Plan. The aim of the Economic Development Department was to promote economic development through participatory, coherent and coordinated economic policy and planning for the benefit of all South Africans. The Committee was given a breakdown of each of the Department’s four programmes i.e. Administration (Programme 1), Economic Policy Development (Programme 2), Economic Planning and Co-ordination (Programme 3) and Economic Development and Dialogue (Programme 4).  The expected work and outputs of the department for the next three years were explained: 

● Year 1 (2010/2011) was considered the year with the hardest targets. Basic capacity in the four programmes had to be established. Basic policy work and planning in each of the areas would take place. There would be a limited number of sub-programmes created initially which would be progressively expanded. Key posts would be filled, particularly the high-level ones.

● Year 2 (2011/12) required the expansion of operational staff capacity in each of the sub-programmes. The level of policy work and planning would be significantly enhanced. There would also be a stronger focus on the areas that have been prioritised.

● Year 3 (2012/13) meant that there would be full staff capacity in each of the sub-programmes. There would be a full range of policy and planning services set out in the Strategic Plan. Targets that had been set in previous years would have to be affirmed or adjusted.

It was the first interaction by the newly formed Department with the Committee and questions were wide ranging. One of the issues raised was how the work of the Department tied in with the National Planning Commission and the Department of Trade and Industry. The response was that partnerships were at the heart of how government worked and hence co-operation was imperative. Issues surrounding international trade and the global economy were also discussed. The traditional trade links with the USA and EU still existed but the focus was more on a south-south trade relationship with Latin America. China and India were also growth centres that showed promise. The presentation had alluded that the Department wished to change its growth path, the issue was raised given that it was a difficult task. Members were also interested to know when organisations like the IDC and Khula were to report to the Department rather than to DTI as was done in the past. Accountability to the Department by the Industrial Development Cooperation (IDC) and Khula would commence on the 1 April 2010, when the Department officially commences operations. Questions on the filling of posts within the Department were also asked. Posts were currently being filled. 

Meeting report

Minister on Department of Economic Development Strategic Plan
Minister Ebrahim Patel briefed the Committee on the Department of Economic Development’s Strategic Plan. It was emphasised that the Strategic Plan was not the growth plan of the economy. It was a plan for the Department in terms of its structure, work areas, outputs, activities and partnerships. The aim of the Economic Development Department was to promote economic development through participatory, coherent and coordinated economic policy and planning for the benefit of all South Africans. The Department had four programmes:

Administration (Programme 1) – The Minister chose not to deal with administration.

Economic Policy Development (Programme 2) –
Strengthen the economic development policy capacity of government and review, develop and propose the alignment of economic policies. The programme had five areas of focus or sub programmes i.e. growth path and creation of decent work, economic policy, broad Based Black Economic Empowerment (BBEE), the second economy and finally the Economic Development Institute. Some of the outputs and activities include: developing the growth path and consulting on it, and drafting other policy papers, including analytical papers; establishing the Economic Development Institute and developing policy frameworks on BEE and the second economy.

Economic Planning and Co-ordination (Programme 3) – Promote economic planning and coordination through developing economic planning proposals for consideration by Cabinet, provinces and local government. It furthermore had to provide a submission to the National Planning Commission. There was also oversight and policy coordination of identified development finance institutions and economic regulatory bodies. The programme had five areas of focus or sub programmes i.e. spatial, sector and national planning, investment for economic development, competitiveness and trade for decent work, economic development, financing and development and lastly a green economy. Some of the outputs and activities include: submitting economic planning proposals to the National Planning Commission, Cabinet and the provinces; coordinating sector plans for key sectors and developing proposals for the harmonisation of national, provincial and local economic plans.

Economic Development and Dialogue (Programme 4) – Promote social dialogue to foster social and economic development. Coordinate the implementation of measures to address the impact of the global economic context. Strengthen productivity, entrepreneurship and innovation. The programme had four areas of focus or sub programmes i.e. national social dialogues and strategic frameworks, sector and workplace social dialogue, capacity building for economic development and finally productivity entrepreneurship and innovation. Some of the outputs and activities include: promote social dialogue and productivity, entrepreneurship and innovation in the workplace by convening and participating in national social dialogue forums on economic development and by facilitating social pacts at workplace, sector and national levels.

The Department also had an oversight function from the 1 April 2010 over development finance institutions like the Industrial Development Corporation (IDC), Khula Enterprise Finance (Khula) and the South African Micro Finance Apex Fund (SAMAF) as well as over economic regulatory bodies like the Competition Commission, the Competition Tribunal and the International Trade Administration Commission (ITAC).
The Strategic Plan set out the medium term framework for the Department. It required a phased, step-by step implementation plan, building initial capacity in each programme. Outputs and activities were phased over the full Medium Term Expenditure Framework (MTEF) period.

Year 1 (2010/2011) was considered the year with the hardest targets. Basic capacity in the four programmes had to be established. Basic policy work and planning in each of the areas would take place. There would be a limited number of sub-programmes created initially which would be progressively expanded. Key posts would be filled, particularly the high-level ones.

Year 2 (2011/12) required the expansion of operational staff capacity in each of the sub-programmes. The level of policy work and planning would be significantly enhanced. There would also be a stronger focus on the areas that have been prioritised.

Year 3 (2012/13) meant that there would be full staff capacity in each of the sub-programmes. There would be a full range of policy and planning services set out in the Strategic Plan. Targets that had been set in previous years would have to be affirmed or adjusted. The internal strategic priorities of the Department were the implementation of the recruitment plan, the building of corporate services capacity and the establishment of sound corporate governance practises. These would ensure structures, systems and processes that would allow the Department to become fully functional. Cost effective service delivery was important to the Department and hence it had to build cost effectiveness into its mode of operation.

For greater detail please refer to the attached documents.

Discussion
Ms Coleman asked members to limit questions to those for clarification.

Mr P Rabie (DA) noted that an Advisory Council on Economic Development and an Institute for Economic Development were to be established. How were the two organizations to tie up? He also asked when organisations like the IDC and Khula were to be transferred from the Department of Trade and Industry to the Department of Economic Development.

Minister Patel said that the Advisory Panel or Council would provide high level advice whereas the Institute would perform technical work. Institutions like the IDC and Khula would commence reporting to the Department from the 1 April 2010.

Ms D Tsotetsi (ANC) said that SA had hosted the World Summit on Sustainable Development and asked for comment on the Economic Development Conference.

Minister Patel responded that the Economic Development Conference would deal with sustainability. He hoped it to be successful.

Mr N Singh (IFP) referred to the drafting of the Strategic Plan and asked if it was correct that a Cabinet Legotla had been held. Had there been any inter-ministerial discussions? He felt that the work of the National Planning Commission (NPC) and that of DTI seemed to be the same as the Economic Development Department. It also seemed that large amounts of money were to be contributed towards operations.

Minister Patel said that partnerships were at the heart of the NPC and what made government work. Hence there would be co-operation. The DTI would perform the implementation component of the Department’s work. The issue of whether small businesses were working properly needed to be dissected. Why were they not working properly? What adjustments needed to be made? Proposals in this regard would have to be put together by the Department and DTI.  The notion of governance was cross-cutting.

The Chairperson requested Mr Singh to limit his questioning to the presentation.

Mr Singh referred to worker rights and asked if the Department was considering labour legislation.
It was especially relevant given that 25% of the population was unemployed. How was the Minister to protect the rights of both the employed and the unemployed?

Minister Patel stated that worker rights were the responsibility of the Minister of Labour. The Department had to look at labour markets.

Mr X Mabasa (ANC) pointed out that the success of the Department meant that several role players like universities and technikons for example would have to be taken on board. How was the Minister going to ensure that it did happen?

Minister Patel said that the range of institutions and activities were important. He pointed out that street vendors for instance were to be found in the second economy. The issue of how to bring together co-ops and burial societies etc would be looked at. A presentation by the Department on growth paths would shed light on the issues.

Mr Z Ntuli (ANC) asked what the relationship between the Department and NEDLAC was. He asked whether there was an intergovernmental relationship with provinces and municipalities. Many provinces tended to do their own thing.

Minister Patel said that NEDLAC would be used in the Dialogue Programme. He noted that the Department had a sub-progamme to deal with intergovernmental relationships. Intergovernmental relationships were considered important. 

Mr S Huang (ANC) noting that Economic Development and Dialogue was a sub programme of the Department the issue of labour brokers was considered an important one. He asked the Minister to elaborate on the issue. Was the Department doing work on procurement?

Minister Patel said that labour broking was dealt with by the Portfolio Committee on Labour. The Department’s work focus was more on labour markets. Work would also be done on procurement. There was an entire work stream on it.  

Mr S Ngonyama (ANC) said that it was not clear what the level and depth of micro and macro economic development of the Department was. He referred to job market inefficiencies and asked was the area of focus for the Department. Was it part of dialogue? The presentation did not give an indication that the Department had a strong position on rural development and on the empowerment of females. Where did SA stand in relation to matters of international trade?

Minister Patel said that a whole range of work would be done on the micro economy. The challenge was if decent work opportunities were created how the unemployed would be brought in. He noted that there were serious challenges. A sub programme dealt with the micro-economy. There were tools at enterprise, sector and individual level.

The developmental aspect of the economy was important. Critical areas within the Department’s growth path were the for example the supply chain between rural development and agriculture. An entire pillar of the growth path dealt with it. Gender equality was also to be developed. 

The Department had a section which dealt with international trade. Trade was extremely important. The issue was how to ensure a greater balance on trade outcomes.

The Chairperson said that having many plans was all good and well but having the human capacity to carry them out was another issue. She asked when the Minister intended to fill the key posts within the Department. The Public Service Act (PSA) required an organogram of the Department to go with the Strategic Plan. Additionally information on the finances of Department should also be included. 

Mr L Greyling (ID) said that it seemed that the Department objective was to change SA’s growth path. It was an admirable objective since it would be difficult to achieve. SA’s economy was in a certain growth path at present. How was the Department intending to change it? Vested interests had to be considered as well. He also asked what the link with global economic dynamics was. What about the Public Investment Corporation (PIC),it was a substantial investment sector.

Minister Patel said that the economy was a living organism. It was an evolving process. There were continuing outcomes. What made the challenge more pronounced was to change the economy in the current stormy economic climate. There was a new set of thinking about how to perhaps do things differently compared to what had been done in the past.

The issue of the PIC was covered on page 32 of the Strategic Plan. The link with the global economy was discussed on page 33-34 of the Strategic Plan. A great deal of work had been done.
He said that south-south economic relationships had been fostered. What had emerged over the last couple years was a tectonic shift towards large developing economy countries. SA had a historical relationship with the USA and the EU but there had been more strategic thinking about the trading block in Latin America. Parliament would in due course be asked to ratify a trade agreement with Latin America. There were opportunities available with India and China as they were both important growth centres. The issues were what was SA buying, what was it selling and how would jobs be impacted within SA.  The impact on the rest of Africa was also important. The focus was now on south-south relationships.

Mr Ngonyama said that the presentation provided the Committee with clear direction. However greater detail was needed on growth issues. It was perhaps a good thing that the Department had been established when the world was experiencing an economic crisis.

Minister Patel said that the Department would look at the enhancement of economic development institutions like the IDC and Khula. Can improvements be made? The issue was being addressed and discussions were taking place.

Mr Mabasa also asked when posts were to be filled. What would the Department’s personnel be constituted of in terms of demographics and disabled persons for example?

Minister Patel said that the Department would function from the 1 April 2010. Up until now the Department only had an interim budget. The Department now had an indicative budget for three years. Permanent appointments could now be made. The staff structure had been approved in 2009. Key posts had been advertised and short listing was taking place. He emphasised that the key thing was the phased approach of implementation. The process had been thought through and staff transfers were even taking place from other departments. He stated that the first phase of the growth path work would be completed by the next Cabinet Legotla.

Mr Singh said that a challenge was that municipalities had IDPs. However nine out of ten IDPs just became words on paper. He asked how soon assistance could be given to municipalities by the Department.

Minister Patel said that local economic development had to be done step by step. The Department was working with municipalities and the South African Local Government Association (SALGA). Integrated development plans had to have champions at local level.

Mr Rabie referred to green jobs and green industries and pointed out that not much had been said about the bio-fuel industry. Was it considered part of green jobs?

Minister Patel agreed that bio-fuel was an important opportunity. Bio-fuel played a major role in the Brazilian economy and the Department had carefully studied it. The entire chain from start to finish was looked at. Bio-fuel had a great deal of potential.

Mr Huang said that the green economy was important for the future. More detail on the issue was needed.

The Chairperson reminded the Department to furnish the Committee with its organisational organogram.

The meeting was adjourned.

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