Economic Development Department on its 3rd & 4th Quarter 2014/15 Performance, with Minister present

Meeting report

Department of Economic Development (EDD) presentation

Mr Ebrahim Patel, Minister of Economic Development, said that in the third quarter, the Department had achieved 38 of its 54 targets, and in the fourth quarter 90 of its 111 targets. He then went on to discuss the achievements of the department against 22 key performance indicators (KPIs).

For KPI 1, the steering committee had collated information on township economies, promoted integration and held bilateral engagements. A report had been compiled, with 81 projects in construction funded. The Gauteng EDD had conducted 64 training road shows and 269 projects had been approved by National Treasury.

KPI 2 had revolved around the development of a five-point plan as part of a technical implementation of the “War Room” to explore interventions to improve energy supply.

KPI 3 had resulted in a paper on SA’s trade flows, focusing on catalytic converters and the manufacturing sector. It had also looked at Broad-based Black Economic Empowerment (BBBEE) and the impact of transformation policies on ownership and procurement. A conference had been held that looked at aligning economic planning and development across the state. This looked at the green economy, and the involvement of the Department of Science and Technology (DST) in the knowledge and social economy.

KPI 4 supported provincial economic development, including innovation hubs.

KPI 5 and 6 focused on infrastructure projects - unblocking, fast tracking or facilitating these projects and providing progress reports on strategic integrated projects.

KPI 7and 8 dealt with the implementation of Cabinet infrastructure decisions.

KPI 9 revolved around facilitating and fast tracking or unblocking investment initiatives.

KPI 10 and 11 focused on improving the efficiency of institutions, including the Industrial Development Corporation (IDC), and on expanding the level of industrial funding.

KPI 12 dealt with monitoring and facilitating the impact through Department of Trade and Industry (DTI) funding on the improvement of jobs.

KPI 13 reviewed the funding to youth by the IDC and the development goals achieved through women, small businesses, black industrialists, township enterprises and rural development.

KPI 14 focused on strengthening the administrative efficiency of trade and competition.

KPI 15 dealt with the evaluation and strengthening of jobs growth, and the development impact of economic regulators.

KPI 16 revolved around dealing with red tape and unnecessary restrictions on enterprises and improving the impact of assessments of regulatory measures.

KPI 17 concerned building regulatory capacity and effectiveness across the state, through measures such as improved training of regulators and amendment of legislation.

KPI 18 focused on supporting the local procurement of goods and services, and implementation of the procurement accord.

KPI 19 spoke to the support and development of the green economy and jobs in this sector.

KPI 20 revolved around enhancing skills development and the implementation of a national skills accord.

KPI 21 focused on enhancing youth empowerment through employment creation, skills and entrepreneurship.

KPI 22 dealt with the national sector and workplace economic development partnerships, facilitating with social partners covering economic goals.

In the third quarter, the EDD had spent R171.1 million, made up R141.3 million in transfers and R29.8 million in direct Departmental expenditure. This represented 95% of the quarterly allocation of R180.2 million.
 

Discussion

Mr P Atkinson (DA) asked how the IDC and the EDD would be involved in the next round of the renewable energy contracts.

Mr S Tleane (ANC) commented on the Noble Resources Project report. It appeared that the soya beans crushing project had not delivered what it was supposed to, in terms generating jobs. What was the latest situation? He asked whether the new round of renewable projects would assist the ailing energy situation. On KPI 21 -- the generation of skills for youth entrepreneurship -- could the South African Bureau of Standards (SABS) assist? Did the EDD monitor companies to make sure they adhered to their KPI 22 mandates?

Dr J Cardo (DA) asked what the EDD meant when it said it was populating the 18 Strategic Infrastructure Project (SIP) reports for Cabinet. He asked that the Minister provide an update on the youth accord, social and solidarity economy.

Mr I Pikinini (ANC) asked what was being done to address cable theft.

The Chairperson queried the amount that had been spent on Corporate Social Investment (CSI) projects, and asked how the Committee could partner with the EDD in supporting them.

Mr Madala Masuku, Deputy Minister of the EDD, responded that Noble Resources was going through a first phase. They were getting a number of small companies, instead of large companies, to support this industry. There had been a localisation of emerging suppliers. The jobs would come. On the social accords, there had been a snag, but they would be introducing a new approach to deal with it and would provide the results in September.

Mr Patel said that the renewable energy projects had been highly successful. With one hydro project and around 39 solar/wind projects, 1 900MW had been generated so far. It did not produce base load capacity, although it supported it. The EDD looked at supporting and facilitating the procurement process, including the costing, to prevent price shocks. It tried to keep the process as competitive as possible. It considered the localisation of products for renewable energy. Concentrated Solar Power (CSP) could provide a small amount of base level in the evening, as it stored energy.

The Industrial Development Zones (IDZs) in Coega and Saldanha had been encouraged to produce parts. The IDC had pumped R50 billion into the local renewable energy market. It had been highly successful and now private sector investment was becoming involved. IDC capital could now be invested in other areas. If the projects were competitive and met all requirements, they could be approved. Construction phases produced jobs, as did the manufacturing of components.

On Noble Resources, there were a large number of small black farmers supplying soya beans. The EDD was trying to help these farmers get into the supplier chains. Every quarter, the EDD provided the Cabinet with a dashboard of the SIP projects. The challenge was to make infrastructure investments work for the country. There was a short term stimulus in job creation through this type of investment. Bus and rail transport had been a big focus. The EDD had tweaked the legislation to compel municipalities to buy buses locally. There were now seven local manufacturers of buses. The solidarity economy involved activities that were outside the normal market economy, and were survivalist activities such as subsistence farming. The EDD was attempting to bring these into the market economy, and focused on rural co-operatives to do this.

Cable theft would be discussed in detail next week, along with an update on the youth accord.

On CSI, a number of schools had benefited from the Medupi project. At the next meeting, more specific examples would be discussed. Government could get the policy mix right, but a youth development economy must be developed, especially in the Information Technology (IT) sector. Skills to assist this process can be acquired through colleges and universities. How the EDD could improve the quality of these higher education colleges was the next step. Twelve colleges had been identified and the EDD would look at working with them to improve governance and infrastructure. Commercial banks were reluctant to fund youth projects. A fund had been created in the IDC to back the more risky ventures of young people. The IDC had created a programme called SHIP, to offer capital and provide support for new ideas, to prevent them from failing or going overseas. Systems needed to be right so that youth had access to capital and could be workers and creators of jobs.

The meeting was adjourned.