Economic Development Department on its Organisational Structure; Committee Reports

Economic Development

05 April 2011
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Economic Development Department approved organisational structure consisted of 265 posts: 86 to Programme 1: Administration, 68 to the Economic Policy Development programme, 81 to Economic Planning and Coordination and 30 for the Economic Development and Dialogue Programme. The number of posts funded for 2010/11 was 98. This would be extended to 129 funded posts for 2011/12 and 142 posts for 2012/13. Out of the 98 posts funded for 2010/11, 41 were filled permanently and 38 were filled on contract. The approved structure of 265 posts could not be funded during the current Medium Term Expenditure Framework (MTEF) without an increase in the baseline. Recruitment would continue within budgetary constraints. The original intention was for a five-year window and hence, the EDD still felt the need to prove that, in practice, they were able to implement plans and programmes, and show their effectiveness as a department. This would allow them to “pressurise” for an increase in the EDD's baseline, which would allow them to secure the necessary funding for the eventual approved organogram.

The Committee asked if the EDD had decided on a topic for their Economic Development Conference and how much it would cost, how the EDD's social dialogue differed from Nedlac's, if the current staff establishment would help the Minister achieve the EDD vision, why the Extended Public Works Programme (EPWP) had not been included in its Plan, and if the EDD had done any work in promoting stokvels. The Committee felt it was time to talk about the “emerging second economy financial sector”. There was a concern that some EDD programmes duplicated the work of National Treasury, the Department of Trade and Industry and the National Planning Commission, that there was no quantitative way of measuring the EDD's effect on the country's GDP and on job creation. If there was a way to qualify and quantify the EDD's role, then it would enhance the EDD's position in justifying the filling of all its posts.

The Committee adopted its Committee Reports on Public Hearings on SMME Access to Funding and on Oversight Visits to the Western Cape and KwaZulu-Natal Focusing on Impact of Financial Services Co-operatives Funded by the South African Micro-Finance Apex Fund. Adoption of the Committee Report on the EDD 2011 Strategic Plan and Budget was postponed until 8 April 2011.

Meeting report

Briefing by the Economic Development Department (EDD) on its Organisational Structure
Prof Richard Levin, EDD Director-General, briefed Members on the process to finalise the EDD's structure. He said that a strategic plan was drafted in May-June 2009 with an organisational structure aligned to that plan. The approved structure consisted of 265 posts. The Minister consulted with the Minister of Public Service and Administration and approved the organisational structure in December 2009.

The EDD consisted of six programmes:
· Programme 1 Administration provided strategic support and administration services to the Minister, Deputy Minister, Director-General, and the EDD itself.
· Programme 2 Economic Policy Development.
· Programme 3 Economic Planning and Coordination, which centered on developing sector, spatial and national economic plans. It also promoted investment for economic development, and competitiveness for trade and decent work.
· Programme 4 Economic Development and Dialogue, focused on leading national social dialogue and implementing strategic frameworks, engaging in sector and workplace dialogue, supporting capacity building for economic development, and fostering productivity, entrepreneurship and innovation.

Of the 265 posts available, 86 would be allocated to the Administration Programme, 68 would be given to the Economic Policy Development programme, 81 would be allocated to Economic Planning and Coordination and 30 for the Economic Development and Dialogue Programme. In December 2009 the EDD received medium term allocation of approximately R100 million for 2010/11, R130 million for 2011/12 and R150 million in 2012/13. Funding the approved structure would cost approximately R160 million per year. The number of posts funded for 2010/11 was 98, 129 posts were funded for 2011/12 and 142 posts were funded for 2012/13. Out of the 98 posts funded for 2010/11, 41 were filled permanently and 38 were filled on contract. 42% of the staff complement was male while 58% were female. The EDD employed one disabled person.

The recruitment process was actively in progress: 28 positions had been advertised and were being filled. The EDD embarked on an Executive Search for critical posts. The EDD had contacted the Ministry of Women, Youth and People with Disabilities regarding a database of people with disabilities. The EDD had funding for 129 posts in the coming year. The approved structure of 265 posts could not be funded during the current Medium Term Expenditure Framework (MTEF) without an increase in the baseline. In filling vacant posts, the EDD had to consider the ratios of line to administrative staff and senior management to middle management. Recruitment would continue within budgetary constraints.

Discussion
Dr P Rabie (DA) congratulated the EDD on its achievements thus far. He referred to Programme 4: Economic Development and Dialogue. The EDD had mentioned that it was organising an Economic Development Conference and the first one was scheduled for May. He asked if the EDD had decided on a topic and venue for the conference, and what the approximate cost of the conference would be. The EDD also wanted to develop a policy framework for increasing productivity, and for enhancing innovation and entrepreneurship. Some countries had a prize that they awarded to the top innovator or entrepreneur. He asked if the EDD would be following this practice.

Prof Levin replied that the conference would focus on the New Growth Path (NGP) and it would bring together a wide range of players to look at various aspects of the NGP. To ensure cost savings, the conference would not take place at an expensive venue. The EDD did not want to exceed the budget of R1,2 million for the conference. As plans went on, they would be able to see a more accurate costing of the event. He said that the EDD had not decided on whether an award would be given for the top innovator or entrepreneur; however, they would take the suggestion into consideration.

Mr S Marais (DA) addressed the EDD's equity status. He was glad that the EDD had appointed one person with a disability. He asked what the nature of the employee's disability was. He noted other bodies such as DEAFSA, Blind South Africa and the National Council of People with Physical Disabilities that had databases of disabled persons that the EDD could employ. He noted the different EDD programmes, but wondered if they were not duplications of what the National Treasury, the Department of Trade and Industry (DTI) and the National Planning Commission (NPC) were doing. For example, BBBEE was a core function of DTI in terms of policy, scorecards, charters and legislation. He was concerned that there was no quantitative way of measuring the EDD's effect on the country's GDP and on job creation. So to a large extent, the EDD was dependent on other bodies to set measurable targets and achievments. If there were a way to qualify and quantify the EDD's role, then it would enhance the EDD's position in justifying the filling of its posts.

Mr Molefe Matsomela, Chief Director: Human Resources (EDD), answered that the disabled employee used crutches to walk. He understood that the EDD should hire more disabled persons and they would consult with the databases suggested by the Member.

Prof Levin said that he would take the Member's criticism about duplication into consideration as he had made an important point. There might be areas of duplication amongst the different bodies, but there were a lot of areas, particularly in the micro-policy field, where there was no duplication and where there was acknowledgment of the role the EDD had to play. For example, the BBBEE issues that the EDD was focusing on was in the area of the New Growth Path (NGP); how they could refine the BBBEE policy to broaden its base and create employment opportunities, and how it could strengthen the small business and micro-enterprise environment through various growth path initiatives.

Mr Z Ntuli (ANC) asked if the EDD had done any work in promoting stokvels in townships. He wanted to know how the EDD's social dialogue differed from Nedlac's. There was a huge vacancy rate in the EDD even though there was a high unemployment rate in the country and a great need for job creation. He asked what the EDD's role was in the area of job creation.

Prof Levin answered that the second economy and the social economy were not the same thing although there was an overlap. The social economy focused on the not-for-profit sector such as stokvels and community trusts. The EDD supported social economy initiatives in various areas. The EDD, together with South African Micro-Finance Apex Fund (SAMAF), was looking at stokvels in particular. SAMAF was already involved in the funding of stokvels. This was an area of priority. The EDD wanted to look at all the various initiatives within the social economy and second economy that could promote and sustain livelihoods. There were other community initiatives that the EDD would have to look at over time.

Prof Levin replied that the EDD's social dialogue was not an attempt to substitute for Nedlac; it aimed to complement it. There were obviously particular social dialogue processes within Nedlac's framework. For example, when it came to the recrafting of regulations on procurement, it was a process that the EDD undertook with Nedlac together with the NT and DTI. Nedlac was a national body that facilitated social dialogue. The EDD wanted to go into sectors and work places to focus on particular companies in distress and to intervene where possible.

Chairperson Coleman stated that her understanding was that the EDD's 2009 structure was approved together with its strategic plan. If she was correct, the EDD had to review its structure every year in order to achieve its strategic imperatives. The review had to look at the number of vacancies filled and the renewal or review of the strategic plan. This required the review of the EDD's organogram or staff establishment for the financial year. She asked if the 129 posts that were supposed to be filled in the 2011/12 financial year were in addition to the 98 posts that were funded for the 2010/11 financial year. It was clear that the EDD did not have its own budget allocation at first when it was established, which affected its base line, and that they had still been dependent on the DTI. She asked if the current staff establishment would help the EDD and the Minister to achieve what was envisioned for the EDD. She addressed the allocation of posts per programme and noted that the allocation did not seem to talk to Programme 4: Economic Development and Dialogue. The EDD seemed to be more focused on planning and coordination as well as policy development. She thought that economic development issues were not being catered for. This matter was related to Mr Marais' concern. Would the EDD be able to provide the Committee with information that would help them to analyse the economic development outcomes for the country? It seemed that the recruitment process for filling vacancies was very long. She asked if the delay was due to the verification process or because of the competency assessments. What was the turnaround time for the recruitment process up to the particular post being filled?

Prof Levin addressed the vacancy rate and role of the EDD in public service. Cabinet had taken a decision on the filling of vacancies in the public service. There was an initiative of performance monitoring and evaluation in the Department of Public Service and Administration (DPSA). It was also the EDD’s role to ensure all vacancies were filled across the public service. Whether there was a balance in the number of employees recruited for each programme, was important to look at. There was no straightforward answer for it. However, it was linked to whether the EDD thought that the current establishment would be able to achieve everything that was envisaged. This was also linked to the review of the EDD structure. The 129 employees were the total number that would be recruited. This meant that another 31 employees would be added to the 98 employees for 2010/11. It was correct to say that 265 employees were eventually envisaged for the EDD. When the EDD was first created, the strategic plan was presented by the Minister to Parliament in March 2010. Prior to this, in order for the EDD to become functional, there was a need to put in place a strategic plan, which did not necessarily go through formal processes per se. The strategic plan was crafted in order to develop the organogram and the necessary plans for the EDD to become functional. The original intention was for a five-year window and hence, the EDD still felt the need to prove that, in practice, they were able to implement plans and programmes, and show their effectiveness as a department. This would allow them to “pressurise” for an increase in the EDD's baseline, which would allow them to secure the necessary funding for the approved organogram.

Prof Levin noted that Mr Marais and Chairperson Coleman had referred to the quantitative effect the EDD had on the country. It was important to understand that monitoring and evaluation were an important part of implementation. Monitoring and evaluation was action-orientated research, where entities wanted to establish accountability and lessons for improvement. The EDD was leading a programme together with the Presidency that focused on performance monitoring and evaluation where they wanted to take the Dynamic Social Accounting Matrix System developed by the International Labour Organisation (ILO) and adapt it to measure the employment impact of government policies and programmes. This would place the EDD at the centre of the monitoring and evaluation of various policy initiatives articulated in the NGP and the impact it had on BBBEE, employment creation, economic growth and competition policy. It would also allow the EDD to find its place in the process of macro and micro-economic policy. The EDD wanted to produce its first report for Cabinet by the end of August 2011.

Prof Levin acknowledged that the recruitment process in the public service was a long one. The average time to fill a post in the public sector was six months, which was too long for the EDD given its current challenges. The EDD agreed that it needed to speed up the process. Verification of qualifications and competency tests were factors that delayed the process; however, they could not be blamed completely. The EDD was “stretched” in a number of ways. As the EDD built up its competencies, there were Human Resources (HR) issues that it needed to deal with such as taking over some functions from the DTI, developing its HR development capability, and recruitment of employees. The EDD aimed to speed up its recruitment process by setting itself certain targets, which they would convey to Parliament.

Mr N Gcwabaza (ANC) asked when the EDD planned on establishing the Economic Development Institute. He wondered why the Extended Public Works Programme (EPWP) had not been included in the EDD's presentation. He thought it would be “coordinated” under this department as well. He understood the role of stokvels and similar initiatives, but felt it was time to talk about the emerging financial sector or “emerging second economy financial sector”.  All the small financial sector activities were taking place in the second economy. They were not coordinated but they could play a significant role in encouraging saving and investment for sustainability and growth. It would also contribute to job creation. The EDD also had to look at the role the Postbank would play in communities as these would be close and accessible to many people. He suggested that the EDD consider the emerging financial sector as one of the issues for social dialogue under their Programme 4.

Prof Levin replied that it was true that the EPWP was missing from the presentation, but it would form an important part the Dynamic Social Accounting Matrix System that EDD had spoken about. The EDD had to be on top of the impact of the EPWP and the community works programme, as well as similar initiatives in order to ensure they were successful.

He noted that more work had to be done on broadening the emerging financial sector in the second economy. All the advantages such as promoting and encouraging savings, and playing an important role in investment for sustainability, growth and job creation would be contained under Programme 3: Economic Planning and Coordination. The EDD would also be focusing on the work of the Postbank.

Chairperson Coleman said she had an issue about EDD retaining its knowledgeable and skilled staff members. The EDD had employed six people on contract. She asked if these employees were not prepared to stay at the EDD on a permanent basis. What was the process for recruiting these employees and how did they plan on attracting people to the EDD?

Prof Levin answered that there were particular processes and regulations, as well as laws that the EDD had to comply with in recruiting and retaining contract workers. There had to be an open process for all advertised positions. The EDD was looking at all contract workers as a talent pool. Many of the contract workers, especially in middle management positions, were young and talented, and would enhance the equity status of the EDD. These employees had to be nourished. The EDD had to compile a database of employees that would look at what they were doing, the length of their employment, the attributes they had, and how the EDD needed to ensure that they would retain them. The EDD would engage with the Minister on the matter and look at how they would retain the talent pool. Contracts could be renewed if needed, but the point was to focus on retaining workers. Once contract workers proved themselves, it would be “crazy” not to retain them.

The Department was thanked for their presentation.

Adoption of Committee Reports
The Committee Secretary noted that some reports had already been adopted the previous week but some changes had to be effected. The Committee would be going through the reports one more time.

Committee Report on the Public Hearings on SMME Access to Funding
The report was adopted.

Committee Report on Oversight Visit to Western Cape & Kwazulu-Natal Focusing on Impact of Financial Services Co-operatives (FSC) Funded by South African Micro-Finance Apex Fund
This report was adopted on 31 March 2011 but the Committee decided to amend and include further recommendations in the report. After amendments, recommendations were as follows:
· SAMAF should ensure its lending criterion was standardised in all provinces
· The EDD should investigate and examine the possibility of regulating SAMAF
· Some of the Committee visits to FSCs and their clients should be unannounced
· When conducting oversight visits in future, SAMAF should arrange separate meetings between the Committee and the FSCs, and the clients of the FSCs.
· SAMAF should brief the Committee on its costs and procedure structures, which they use when lending money to FSCs

The Committee agreed to the amendments.

SAMAF Responses to Questions Posed by the Committee
Chairperson Coleman stated that the Committee should note the responses received from SAMAF on the issues raised during their strategic plan discussions. If Members felt they were satisfied with the responses from SAMAF, they should indicate so.

The Committee Secretary noted that the responses focused on the breakdown of rural and semi-urban borrowers between women, men, the disabled and the youth. The Committee had also wanted more information on the proposed resuscitation fund.

Committee Report on the Budget Vote and Strategic Plan
The consideration of this report was postponed to the 8 April 2011 as it had not been edited and Committee Observations needed to be changed. Where the report indicated responses from the EDD, these could not be classified as Committee Observations. The observations were recorded after the discussion. The report had to show discussion, observations, and then conclusive recommendations.

The meeting was adjourned.



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